SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23833
UNITED INVESTORS REALTY TRUST
(Exact name of Registrant as Specified in its Charter)
TEXAS 76-0265701
------------------------ ----------------------
(State of Incorporation) (IRS Employer
Identification Number)
5847 San Felipe, Suite 850
Houston, TX 77057
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(713) 781-2860
---------------------------------------------------
(Registrant's Telephone Number Including Area Code)
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_____
Number of shares outstanding of the issuer's Common Stock, no par value, as of
May 8, 1998: 9,514,889 shares.
<PAGE>
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
United Investors Realty Trust
Consolidated Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS: --------- ---------
(Unaudited)
<S> <C> <C>
Operating Properties, at cost
Land $ 26,586 $ 8,119
Buildings and improvements 75,944 31,616
--------- --------
102,530 39,735
Less accumulated depreciation (5,303) (4,862)
--------- --------
97,227 34,873
Cash and cash equivalents 6,824 346
Accounts and accrued rent receivable 1,204 798
Deferred charges, prepaid expenses and other assets 1,769 3,270
--------- --------
Total Assets $ 107,024 $ 39,287
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable 29,319 28,364
Accounts payable, accrued expenses and other liabilities 2,647 1,429
--------- --------
31,966 29,793
Minority interest in consolidated partnerships 1,184 1,571
SHAREHOLDERS' EQUITY:
Redeemable preferred shares of beneficial interest,
no par value; 50,000,000 shares authorized;
10,737 shares issued and outstanding in 1997 - 1,068
Common shareholders' equity; common shares of
beneficial interest, no par value; 500,000,000
shares authorized; 8,514,889 and 914,889 shares
issued and outstanding in 1998 and 1997 77,669 8,345
Accumulated deficit (3,795) (1,490)
--------- --------
Shareholders' Equity 73,874 7,923
--------- --------
Total Liabilities and Shareholders' Equity $ 107,024 $ 39,287
========= ========
</TABLE>
2
<PAGE>
United Investors Realty Trust
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended
----------------------------------
March 31, 1998 March 31, 1997
Revenues: -------------- --------------
Rental $ 2,044 $ 1,222
Recoveries from tenants 565 274
Interest and other income 61 9
------- -------
Total Revenues 2,670 1,505
Property Operating Expenses:
Property operating 257 177
Property taxes 385 189
Property management Fees 76 46
Depreciation and amortization 455 284
Interest (including amortization of
$2,240,652 in bridge financing
costs in 1998) 3,252 611
Advisory fees 127 78
General and administrative 142 28
------- -------
Total expenses 4,694 1,413
------- -------
Income (loss) before minority
interest, extraordinary item,
and preferred share distribution
requirement (2,024) 92
Minority interest in income of
consolidated partnerships (27) (9)
------- -------
Income (loss) before
extraordinary item and preferred
share distribution requirement (2,051) 83
Extraordinary item-prepayment penalties
incurred on early extinguishment
of debt (232) -
------- -------
Net income (loss) (2,283) 83
Preferred share distribution requirement (21) (24)
------- -------
Net income (loss) available for
common shareholders $ (2,304) $ 59
======= =======
Basic and diluted earnings per
common share:
Income (loss) before extraordinary
item and preferred share
distribution requirement $ (0.91) $ 0.09
Extraordinary item-prepayment penalties
incurred on early extinguishment
of debt (0.10) -
Preferred share distribution
requirement (0.01) (0.03)
------- -------
Net income (loss) available
for common shareholders $ (1.02) $ 0.06
======= =======
Weighted average shares outstanding:
Basic 2,266,000 912,489
Diluted 2,266,426 912,489
3
<PAGE>
United Investors Realty Trust
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
3/31/98 3/31/97
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,283) $ 83
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 441 267
Amortization 14 17
Extraordinary item 232 -
Amortization of bridge financing costs 2,241 -
Minority interest in income of consolidated partnerships 27 9
Equity in income of investment in real estate venture - (6)
Changes in operating assets and liabilites (90) (24)
-------- -------
Net cash provided by
operating activities 582 346
-------- -------
Cash flows from investing activities:
Purchase of and capital improvements to investment
real estate (41,844) (26)
Application of escrow deposits 2,006 -
-------- -------
Net cash used in investing activities (39,838) (26)
-------- -------
Cash flows from financing activities:
Proceeds from bridge financing 53,690 -
Payments on bridge financing (53,687) -
Proceeds from short-term notes payable 50 135
Principal payments on mortgage notes payable (16,180) (252)
Principal payments on short-term notes payable (3,275) -
Preferred share retirement (1,068) -
Convertible note retirement (212) -
Net proceeds from public offering 69,324 -
Payment of prepayment penalty (232) -
Payment of bridge financing costs (2,241) -
Preferred share distributions (21) (24)
Distribution to holders of minority interests (414) (17)
-------- -------
Net cash provided by (used in) financing
activities 45,734 (158)
-------- -------
Increase in cash and cash equivalents 6,478 162
Cash and cash equivalents at beginning of period 346 119
-------- -------
Cash and cash equivalents at end of period $ 6,824 $ 281
======== =======
Supplemental disclosures:
Cash paid for for interest (including $2,241 in
cash paid in 1998 for bridge financing costs) 3,250 608
Assumption of mortgage debt in connection
with acquisition of properties 20,570 -
Assumption of property tax and security deposit
liabilities in connection with acquisition
of properties 381 -
</TABLE>
4
<PAGE>
United Investors Realty Trust
Notes to Consolidated Financial Statements
(unaudited)
1. Organization and Basis of Presentation
Organization
United Investors Realty Trust (the "Company") was organized on December 1,
1988 as a Massachusetts business trust and subsequently converted to a Texas
real estate investment trust ("REIT"). The Company operates community shopping
centers in the sunbelt states of Texas, Arizona, Florida and Tennessee. On March
13, 1998 the Company completed an initial public offering (the "IPO") of
7,600,000 common shares of beneficial interest (the "Common Shares").
Basis of Presentation
These unaudited consolidated financial statements include the accounts of
the Company, its subsidiaries and partnerships in which it owns controlling
interests.
The accompanying consolidated financial statements have been prepared by
the Company's management in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles for complete financial
statements. These statements should be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's
prospectus dated March 10, 1998 associated with it's IPO. In the opinion of
management, the financial statements contain all adjustments (which consist of
normal and recurring adjustments) necessary for a fair presentation of financial
results for the interim periods.
2. Investment in Properties
At December 31, 1997, the Company owned eight shopping center properties
containing approximately 754,563 square feet of gross leasable area.
During the first quarter of 1998, the Company acquired six properties for a
total purchase price of $62.5 million. These acquisition properties include
approximately 1,057,970 square feet of gross leasable area, of which 276,450
square feet are anchors that are owned by third parties. As of March 31, 1998,
the geographic diversification of the company's portfolio on the basis of gross
leasable area, consisted of 40.9% in the Houston, Texas area, 21.6% throughout
the balance of Texas, 17.4 % in Florida, 11.7% in Arizona and 8.4 % in
Tennessee.
Houston, Texas Area
Five of the company's properties are located in the Houston, Texas area,
totaling approximately 742,802 square feet, of which 276,450 square feet are
anchors that are owned by third parties. These community shopping centers
include Mason Park, Hedwig, The Market at First Colony, Benchmark and El Campo.
The first four properties were acquired in the first quarter of 1998. The El
Campo center was acquired in 1996. The center, which includes a David's
Supermarket, contains approximately 83,000 square feet of gross leasable area.
Mason Park
Mason Park is a 218,847 square foot community shopping center anchored by
Kroger Supermarket, Walgreen's Drug Store, Palais Royal, Cinemark and Petco. The
58,800 square foot Kroger store is owned by a third party. As of March 31, 1998,
the center is about 92.6 % leased.
5
<PAGE>
The Market at First Colony
The Market at First Colony is a 156,241 square foot community shopping
center anchored by a 62,000 square foot Kroger Supermarket, which is owned by a
third party. The center also includes Stop N Go, World Savings, Burger King,
McDonalds, Kentucky Fried Chicken, Bronx Grill and a Chevron Service Station,
each of which is situated on a free-standing out parcel owned by a third party.
A Taco Bell is also part of the center and is owned by the Company. As of March
31, 1998, the community shopping center is approximately 96.6 % leased.
Hedwig Shopping Centers
Hedwig Shopping Centers is a 226,000 square foot shopping center anchored
by Target (120,000 square feet) and Marshall's (35,650 square feet), each of
which is owned by third parties. The three separate buildings owned by the
Company include approximately 69,500 square feet. The center fronts on
Interstate 10, which is a major east/west thoroughfare. As of March 31, 1998,
the center is approximately 98.2 % leased.
Benchmark Crossing
Benchmark Crossing is a 58,384 square foot neighborhood shopping center
located in northwest Houston, Texas. The center is anchored by Bally's Total
Fitness, which occupies approximately 41,000 square feet. The balance of the
center is occupied by Click's Billiards, the International House of Pancakes,
Burger King and Jack in the Box. The center is 100% leased as of March 31, 1998.
The Phoenix Area
Southwest/Walgreen's Shopping Center
Southwest/Walgreen's Shopping Center is a 83,698 square foot neighborhood
shopping center anchored by Southwest Supermarkets and Walgreen's Drug Store.
The center is located in Phoenix, Arizona. As of March 31, 1998, the center is
100 % leased.
Florida
University Mall Shopping Center
The University Mall Shopping Center is s 315,596 square foot shopping
center located in Pembroke Pines, Florida. (an independent municipality near Ft.
Lauderdale.) The center is anchored by Uptons, Sports Authority, Ross Stores,
Office Max and Eckerd Drugs. Separate buildings are also leased to TGI Fridays,
WAG's and Taco Bell. Additionally, Pollo Tropical and Red Lobster are situated
on out parcels that are owned by third parties. As of March 31, 1998, the center
is about 98.2 % leased.
Pending Acquisitions
As of March 31, 1998, the Company was under contract to purchase three
additional shopping centers. They are Big Curve Shopping Center, a 226,412
square foot community shopping center in Yuma, AZ, Rosemeade Park Shopping
Center, a 49,554 square foot community shopping center in Carrollton (Dallas),
TX, and Town `N Country Plaza, a 158,104 square foot community shopping center
in Tampa, FL.
6
<PAGE>
3. Earnings per share
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("Statement 128"), which specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. Basic earnings per share is computed based upon the
weighted average number of common shares outstanding during the period
presented. Diluted earnings per share is computed based upon the weighted
average number of common shares and dilutive common share equivalents
outstanding during the periods presented. The number of diluted shares related
to outstanding stock options is computed by application of the Treasury Stock
method. The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended
March 31,
------------------
Weighted Average Shares: 1998 1997
-------- --------
Basic 2,266,000 912,489
Effect of dilutive securities:
Advisor share options 426 -
--------- -------
Diluted 2,266,426 912,489
========= =======
The computations above do not assume the conversion of the Company's
redeemable debt and redeemable preferred shares in 1997 as they would be
antidilutive to earnings per share.
4. Financing Activities
On January 30, 1998 and February 18, 1998, the Company received proceeds
from a bridge loan with Nomura Asset Capital Corporation for an aggregate of
approximately $53,700,000. The loan was collateralized by five of the properties
it owned in 1997 (the "original properties") and three of the properties
targeted for acquisition (the "acquisition properties") in connection with the
IPO and carried an interest rate of 8.1875%. The terms of the loan included a 1%
loan origination fee and a 1.75% loan break-up fee. The proceeds of the loan
were used to pay off the mortgages on five original properties, to purchase four
acquisition properties, and for working capital. All but $3,000 of the loan was
repaid out of the IPO proceeds on March 13, 1998. The $3,000 is outstanding to
preserve the first lien position in order to save the Company title insurance
charges if and when it uses the properties as security for a revolving line of
credit and/or permanent financing. All bridge loan costs were amortized to
interest expense in the first quarter of 1998.
On February 2, 1998 the Company retired mortgage loans secured by its
Autobahn, Bandera, Centennial, El Campo and Twin Lakes properties with funds
from the bridge loan. The total refinancing was approximately $16.1 million and
included approximately $232,000 in prepayment penalties. All refinancing costs
and unamortized loan costs for these loans were written off in the first quarter
of 1998 and are reflected as an extraordinary item in the accompanying
statements of operations.
On March 13, 1998, the Company completed the offering of 7,600,000 of the
Company's Common Shares at a price of $10.00 per share. The net proceeds from
the offering, after deducting the related issuance costs, were approximately
$69.3 million. The proceeds of the offering were applied to pay off the bridge
loan, acquire properties, purchase substantially all of the outstanding limited
partners' interests in the partnership that owns the University Park Shopping
Center, repurchase existing short-term and convertible debt, repurchase all
outstanding preferred stock, and for working capital.
5. Advisory Agreement and Related Party Transactions
The Company is managed and advised by an entity ("FCA Corp.") affiliated
with one of the Trust Managers (the "Advisor"). The advisory agreement currently
provides for a fee based solely on 6.8% of adjusted funds from operations, as
defined. Fees paid to the Advisor totaled approximately $127,000 in 1998 and
$78,000 in 1997.
7
<PAGE>
6. Notes and Mortgages Payable
The following table sets forth certain information regarding the
indebtedness of the Company as of March 31, 1998:
Interest Projected
Rate Annual
Balance on Balance Interest
as of Remaining Maturity Payment as
Collateral Property 3/31/98 Outstanding Dates of 3/31/98
- ---------------------------- ------- ----------- -------- ----------
University Park Shopping $ 4,777,881 9.30% 04/01/18 $ 440,099
Center
McMinn Plaza Shopping Center 373,415 8.25% 07/01/03 28,241
McMinn Plaza Shopping Center 673,365 7.63% 11/01/02 46,311
Park Northern Shopping 2,728,486 8.37% 12/01/06 226,000
Center
College Station land 206,250 8.50% 12/27/99 17,531
Hedwig II 1,244,187 10.75% 06/10/99 134,162
Hedwig III 2,313,875 10.75% 06/10/99 255,091
Benchmark Crossing Shopping 3,678,437 9.25% 08/01/05 338,464
Center
University Mall 13,320,096 8.44% 11/01/06 1,119,047
Three Properties 3,000 8.18% 08/01/98 245
----------- ----- ----------
Total Mortgage Indebtedness $29,318,992 8.88% $2,605,191
=========== ===== ==========
The Company's indebtedness has interest rates ranging from 7.63% to 10.75%,
with a weighted average interest rate of 8.88%, and will mature between 1999 and
2018, with a weighted average remaining term to maturity of 9.24 years.
7. Share Options
In connection with the completion of its IPO, the Company granted options
(the "Options") to purchase 300,000 Common Shares to the Advisor for the benefit
of certain Advisor employees, including the Company's executive officers. The
Advisor identified the following persons for receipt of a portion of the
Options: Messrs. Scharar (40,000), Sandler (40,000), Jones (32,000) and Keith
(32,000) and each of the independent Trust Managers (2,000). The remaining
Options to purchase 156,000 Common Shares are held by the Advisor. These Options
are exercisable at $10.00 per share and will vest evenly over a four-year period
commencing January 1, 1999. These Options may also be assigned, in whole or in
part, directly to the beneficiaries for whom the Advisor is holding them. The
beneficiaries of these Option grants are eligible to receive loans from the
Company for purposes of exercising vested Options, all or a portion of which
loans may be forgiven over time.
8. Subsequent Events
On April 22, 1998, the Company announced that it had entered into a
contract to purchase the Colony Plaza Shopping Center, a 26,513 square foot
community shopping center in Houston, TX. The transaction is subject to
completion of due diligence and the lender's consent to the sale.
Effective April 6, 1998, the Company completed the sale of 1,000,000 Common
Shares to the underwriters in connection with their exercise of their over-
allotment option. The sale of these 1,000,000 shares at $10.00 per share
provided net proceeds to the Company of $9,300,000, which will be used for
acquisitions and working capital.
The Company has retired the $206,250 mortgage on the land at College
Station.
Although the Board has approved a dividend reinvestment plan (the "DRIP"),
the time and cost of implementing the DRIP may delay its implementation. The
Company may defer the implementation of the DRIP until the end of the first
quarter of 1999.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the three months ended March 31, 1998.
The following statements should be read in conjunction with the consolidated
financial statements and related notes appearing elsewhere herein.
Overview
The Company has been operating since 1989 as a Texas REIT engaged in the
acquisition, ownership, management, leasing and redevelopment of community
shopping centers in the Sunbelt region of the United States. The Company focuses
on purchasing properties anchored primarily by supermarkets, drug stores and
major retail tenants located in this economically favorable region. At March 31,
1998, the Company owned or controlled 14 community shopping centers located in
Texas, Arizona, Florida and Tennessee. The Company manages and leases space to
over 240 tenants in a variety of businesses.
Since January 1, 1998, the Company has expanded its community shopping
center portfolio through the acquisition of six shopping centers in Texas,
Arizona and Florida. The Company has financed its growth through the issuance of
additional Common Shares and by issuing short and long-term debt that is secured
by its properties. Growth in operating income for the three months ended March
31, 1998, as compared to March 31, 1997, is substantially the result of adding
six new shopping centers during the quarter as well as improved results at
existing locations.
Three Months Ended March 31, 1998
The following discussion of the Company's results of operations is derived
from the following condensed consolidated statements of operating income and the
Company's unaudited consolidated statements of operations for the three months
ended March 31, 1998 and 1997, located elsewhere herein.
9
<PAGE>
<TABLE>
<CAPTION>
Condensed Consolidated
Statements of Operating Income
(in thousands)
(Unaudited)
Comparable Units Total All Units
Three Months Ended Three Months Ended
------------------------ ------------------------
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
Revenue: --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Rental $ 1,270 $ 1,222 $ 2,044 $ 1,222
Recoveries from tenants 288 274 565 274
Other 2 2 28 2
------- ------- ------- -------
1,560 1,498 2,637 1,498
Expenses:
Property operating,
property taxes and
property management fees 438 423 718 423
------- ------- ------- -------
Operating Income $ 1,122 $ 1,075 $ 1,919 $ 1,075
% Change from previous period 4.3% 78.5%
</TABLE>
Increased rents and improved occupancy at mature centers (from 93.2% in
1997 to 94.4% in 1998) account for almost all of the 4.3% improvement in
operating results for the quarter at existing centers. The balance of the
increase comes from the six new centers that were acquired between February 2,
1998 and March 23, 1998.
Revenue:
For the three months ended March 31, 1998, the Company recognized total
revenue from operating properties of $2.637 million compared to $1.498 million
for the three months ended March 31, 1997, an increase of $1.139 million, or
76.0%. The increased revenue was primarily attributed to six new community
shopping centers that were acquired in February and March 1998, and contributed
approximately $1.077 million in revenue.
Interest income at the properties increased by about $26,000 for the
quarter, reflecting interest income on the deposit at Universty Mall, plus
normal interest on operating accounts.
Costs and Operating Expenses:
Property expenses for the quarter were approximately $718,000, or 27.2% of
revenue, as compared to approximately $423,000, or 28.2% of revenue, in 1997.
Lower management fees and net common area maintenance expenses accounted for
most of the improvement.
Interest costs (excluding the amortization of $2.2 million in unamortized
bridge financing costs in 1998) increased from about $611,000, or 40.8% of
revenue, in 1997 to approximately $1 million in 1998, or 38% of revenue. On
January 30, 1998, the Company obtained a six-month bridge loan with Nomura Asset
Capital Corporation for approximately $53.7 million. The proceeds of this loan
were used to close on four of the acquisition properties, pay-off existing
mortgages on five original properties, and to increase the escrow deposit on a
fifth acquisition property. The bridge loan was repaid (except for $3,000) from
proceeds from the offering and all costs of securing and closing the bridge loan
were written off.
10
<PAGE>
For the quarter ended March 31, 1998, advisory fees increased to
approximately $127,000, or 4.8% of revenue, from approximately $78,000, or 5.2%
of revenue, in 1997. General and administrative expenses increased from about
$28,000 to $142,000 in 1998. These costs primarily included $35,000 for legal
and accounting, $17,000 for Trustee fees, $11,000 for insurance, $22,000 in
non-recurring consulting expenses and $20,000 of stock compensation expense.
The Company also incurred an extraordinary charge of approximately $232,000
related to prepayment penalties incurred in the retirement of two mortgages on
original properties with a total balance outstanding of $9.5 million. In total,
approximately $16.1 Million in existing mortgages were repaid. The prepayment of
the Centennial mortgages (approximately $3.875 million) constituted a capital
contribution to Centennial/Park Northern, LP, and increased the Company's
ownership interest from 70% to 86.9% as of February 3, 1998.
Liquidity and Capital resources
Cash and cash equivalents as of March 31, 1998 were $6.8 million, an
increase of $6.5 million from December 31,1997. The increase is due
substantially to the proceeds from the IPO, as well as the slight delay the
Company has experienced in closing Rosemeade Park Shopping Center and Town `N
Country Shopping Center. As a result of the sale of the 1,000,000 overallotment
shares on April 1, 1998, the Company also has the use of an additional $9.3
million.
Cash flows from financing activities were approximately $45.7 million in
the first quarter of 1998, primarily reflecting the proceeds of the offering of
7.6 million common shares, net of repayment of debt. Cash flows used in
investing activities were approximately $39.8 million as the Company invested
the proceeds in new shopping center acquisitions. Cash flows provided by
operating activities were $582,000.
The Company expects to meet its short-term liquidity requirements for
general operations principally through its working capital and net cash provided
by operating activities. The Company considers its cash provided by operating
activities to be adequate to meet operating requirements and to fund the payment
of dividends in order to comply with certain federal income tax requirements
applicable to REITs.
The Company expects to meet its short-term liquidity requirements for
property acquisitions and significant capital improvements initially from
available cash and cash equivalents, obtaining long and short-term debt
financing, and issuances of Common Shares or other equity securities of the
Company. The Company has made arrangements for approximately $6.95 million in
permanent financing through Nomura Capital Asset Corporation, subject to
completion of documentation. It is anticipated that Southwest/Walgreen's and
Centennial Shopping Centers will be security for this financing and the first
mortgage loans will bear interest at approximately 7.5%. In addition, the
Company is negotiating a new $30 million line-of-credit at 150 basis points over
LIBOR to complete any additional acquisitions during the year. The term is for
two years with a one year extension. The line of credit will be initially
collateralized by first liens on five of the Company's properties.
Since completion of the IPO, the owners of Town 'N Country Shopping Center
have indicated that, in connection with the sale of Town 'N Country to the
Company, they would prefer to receive units in a partnership controlled by the
Company in lieu of cash for a portion of the purchase price. The units would be
convertible into the Company's Common Shares after one year at the IPO price of
$10.00 per share. The Board has approved this change, subject to documentation.
In connection with the proposed acquisition of Town 'N Country, the lender
at Town `N Country, South Trust Bank, has agreed that the Company may either
retain the mortgage loan of approximately $2.5 million or reduce the mortgage
loan down to $1,000 for 60 days and then reborrow the principal amount. The
interest rate will be 7.5%.
The Company expects to meet its long-term liquidity requirements (such as
scheduled mortgage debt maturities, property acquisitions, and significant
capital improvements) through long-term collateralized and uncollateralized
borrowings and the issuance of debt or additional equity securities of the
Company.
11
<PAGE>
Funds From Operations
The White Paper on Funds From Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in March
1995 (the "White Paper") defines FFO as net income or loss (computed in
accordance with generally accepted accounting principles), excluding gains or
losses from debt restructuring and sales of property, plus real estate
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Management considers FFO an appropriate measure
of performance of an equity REIT because it is predicated on cash flow analyses.
The Company computes FFO in accordance with standards established by the White
Paper but recognizes that, even so, its calculations may not be comparable with
the method of calculation utilized by other REITS. FFO should not be considered
as an alternative to net income (determined in accordance with generally
accepted accounting principles) as an indicator of the Company's financial
performance or to cash flow from operating activities (determined in accordance
with generally accepted accounting principles) as a measure of the Company's
liquidity, nor is it indicative of funds available to fund the Company's cash
needs, including its ability to make distributions. FFO for the three months
ended March 31, 1998 and 1997 is as follows:
United Investors Realty Trust
Calculation of Funds From Operations
and Funds Available for Distribution
(In thousands, except share data)
(Unaudited)
Three Months Ended
----------------------------
March 31, March 31,
1998 1997
--------- ---------
FUNDS FROM OPERATIONS:
Net income available for common shareholders $ (2,304) $ 59
Plus Depreciation expense 410 246
Plus Loss on early extinguishment of debt 232 -
Plus amortization of bridge financing costs 2,241 -
-------- -------
Funds From Operations 579 $ 305
-------- -------
Funds From Operations per share $ 0.26 $ 0.33
FUNDS AVAILABLE FOR DISTRIBUTION:
Funds Available for Distribution (FAD) is defined as funds from operations,
plus non-real estate related depreciation and amortization, adjusted for capital
improvements, tenant improvements, leasing commission and the impact of
straight-line rents.
Funds From Operations $ 579 $ 305
Plus amortization of financing costs and
leasing costs 19 18
Plus Stock compensation amortization 20
Less Tenant improvements (13) (8)
Less Leasing commissions (12) (31)
Less Capital improvements (8) -
Less Straight line rent (32) (13)
-------- -------
Funds Available for Distribution $ 553 $ 271
-------- -------
Funds Available for Distribution per Share $ 0.24 $ 0.30
Weighted average Shares Outstanding:
Basic 2,266,000 912,489
Diluted 2,266,426 912,489
Note that basic and diluted shares outstanding are the same for FFO and FAD
calculations.
12
<PAGE>
Changes in Securities
On March 13, 1998, the Company completed the offering of 7,600,000 of the
Company's Common Shares at a price of $10.00 per share. Net proceeds from the
offering, after deducting the related issuance costs, amounted to approximately
$69.3 million.
On March 18, 1998, the Company repurchased all outstanding preferred shares
at a 3% premium, plus outstanding dividends. The total repurchase cost was
$1.138 million.
Forward Looking Information
Certain statements in this document constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and section 21E
of the Securities Acts of 1934, and the Company intends that such
"forward-looking statements" be subject to the safe harbors created thereby. The
words "believe", "expect" and "anticipate" and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are subject to many uncertainties and factors relating to the Company's
operations and business environment that may cause the actual results of the
Company to be materially different from any future results expressed or implied
by such forward-looking statements. Examples of such uncertainties include, but
are not limited to, changes in interest rates, increased competition for
acquisition of new properties, unanticipated expenses and delays in acquiring
properties or increasing occupancy rates and regional economic and business
conditions.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Part II Other Information
Item 2. Changes in Securities and Use of Proceeds
The following information is furnished pursuant to Item 701 (f) of
Regulation S-K in connection with the Company's IPO:
The effective date of the Securities Act registration: March 6, 1998.
The commission file number assigned to the subject registration statement:
333-29475.
The date on which the offering commenced: February 17, 1998
The date on which the offering terminated: March 10, 1998
The name of the underwriters: Morgan Keegan & Company, Inc., Dain, Rauscher
Incorporated, Scott & Stringfellow, Inc. and Southwest Securities, Inc.
The title of the securities registered: Common shares of beneficial
interest, no par value.
The number of shares registered: 8,740,000 shares (including underwriters'
overallotment of 1,140,000 shares).
Aggregate price of the offering amount registered: $87,400,000.
The number of shares sold: 7,600,000. (in addition, 1,000,000 shares of the
underwriters' overallotment were sold in April 1998 and the offering terminated
prior to the sale of the remaining 140,000 shares which were subject to the
overallotment option.)
Aggregate offering price of the securities sold: $76,000,000 (upon the sale
in April, 1998, an additional $10,000,000 of securities were sold.)
13
<PAGE>
From the effective date of the Securities Act registration statement to the
ending date of the current reporting period, the amount of expenses incurred for
the Company's account in connection with the issuance and distribution of the
securities registered:
Underwriters' discounts and commissions $ 5,320,000
Accounting fees 446,453
Attorney's fees 230,815
Printing expenses 291,646
Miscellaneous filing fees and other expenses 387,191
-----------
$ 6,676,105
Such payments referred to above were not direct or indirect payments to
officers, directors, trust managers or general partners of the issuer or the
associates or affiliates of the issuer or any person owning 10% or more of any
class of equity securities of the issuer, nor were such payments referred to
above direct or indirect payments to others, except as indicated.
Net offering proceeds excluding the overallotment were: $69,323,895
Net offering proceeds including the overallotment were: $78,623,895
From the effective date of the Securities Act registration to the end of
the current reporting period, the amount of net offering proceed used for any
purpose for which at least 5% of the issuer's total offering proceeds has been
used, were:
Repay Bridge loan $53,683,912
Break-up fee on bridge loan 939,468 (1)
Cash portion of University Mall 4,891,837 (2)
Cash portion of Benchmark Crossing 1,979,876
Purchase of University Park minority interests 891,800 (3)
Purchase preferred stock 1,138,210
Repay 10% and 11% short-term notes 700,000
Repay unsecured lines-of-credit 300,000
Repay 9% Redeemable Convertible Subordinated Notes 218,004
Fee to Southwest Securities, Inc. 184,000
Working Capital 4,396,788 (4)
-----------
$69,323,895
________________________
(1) The bridge loan lender agreed to reimburse the Company for a pro-rata
portion of the break-up fee to reflect any portion of the bridge loan that is
converted into a permanent loan within a reasonable time after the repayment of
the bridge loan. Documents are being prepared to permit the Company to convert
to permanent financing approximately $6,950,000 of the bridge loan financing,
using two of the Company' s properties (the Centennial center in Austin and the
South West/ Walgreen center in Phoenix) as security for such permanent
financing. Accordingly, if and when such conversion is completed, the Company
will recover approximately $122,000 of such break-up fees.
(2) Of this amount, $1,400,000 was applied to the repayment of a loan from
FCMT, a mortgage trust that is also externally advised by FCA Corp, the
Company's advisor. The loan had been used to facilitate the acquisition of the
University Mall shopping center.
(3) The Company acquired all but 3.6% of the outstanding limited partner
interests and now holds an undivided 96.4% in the partnership that holds title
to the University Park shopping center.
(4) The Company expects to apply a portion of the proceeds that have been
allocated to working capital to acquire other properties, including the Town `N
Country and Rosemeade shopping centers. The Company also anticipated acquiring
the outstanding minority interests in the Park Northern and Centennial shopping
centers. However, the owner of these interests has not responded to the
Company's tender for his interests and may have changed his mind regarding the
14
<PAGE>
sale of such interests. Although the Company has used a substantial portion of
the net proceeds to repay debt, the debt repaid was debt incurred primarily to
acquire its properties. Some of these properties are now funded with equity
capital and are debt-free. The Company may use such properties as security to
help finance the acquisition of additional shopping centers. Accordingly, the
Company anticipates that the repayment of some of its debt is temporary.
Such payments referred to above were not direct or indirect payments to
officers, directors, trust managers or general partners of the issuer or the
associates or affiliates of the issuer or any person owning 10% or more of any
class of equity securities of the issuer, nor were such payments referred to
above direct or indirect payments to others, except as indicated.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 First Amended and Restarted Declaration of Trust (Incorporated by
reference to Exhibit 3.1 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
3.2 First Amended and Restated Bylaws (Incorporated by reference to
Exhibit 3.2 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.1 First Amended and Restated Advisory Agreement dated as of June 9,
1997, by and between the Company and Investment Manager (Incorporated
by reference to Exhibit 10.1 to the Company's registration statement
on Form S-11, dated March 5, 1998 (File No. 333-29475))
10.2 1997 Share Incentive Plan (Incorporated by reference to Exhibit 10.2
to the Company's registration statement on Form S-11, dated March 5,
1998 (File No. 333-29475))
10.3 Form of Indemnification Agreement (Incorporated by reference to
Exhibit 10.3 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.4 Loan Agreement dated as of January 30, 1998, by and between the
Company and Nomura Asset Capital Corporation ("Nomura") (Incorporated
by reference to Exhibit 10.4 to the Company's registration statement
on Form S-11, dated March 5, 1998 (File No. 333-29475))
10.5 Promissory Note dated January 30, 1998, executed by the Company in
favor of Nomura (Incorporated by reference to Exhibit 10.5 to the
Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
10.6 Assumption and Modification Agreement dated November 19, 1996, by and
among The Travelers Insurance Company, George I. Brown,, Park
Northern/Centennial Partners, L.P. and George I. Brown, as Trustee of
the Waipio Trust II (Incorporated by reference to Exhibit 10.6 to the
Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
10.7 Promissory Note dated as of July 31, 1995, executed by PFL-290 Limited
Partnership in favor of RFG Financial, Inc. (Incorporated by reference
to Exhibit 10.7 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.8 Promissory Note dated June 10, 1992, executed by Hedwig II, Inc. in
favor of Sun Life Insurance Company of America (Incorporated by
reference to Exhibit 10.8 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
10.9 Promissory Note dated June 10, 1992, executed by Hedwig III Joint
Venture in favor of Sun Life Insurance Company of America
(Incorporated by reference to Exhibit 10.9 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.10 Deed of Trust Note dated April 13, 1993, executed by UIRT/University
Park-1, L.P. in favor of The Franklin Life Insurance Company
(Incorporated by reference to Exhibit 10.10 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
15
<PAGE>
10.11 Promissory Note dated June 15, 1994, executed by UIRT-1-McMinn, Inc.
in favor of Protective Life Insurance Company (Incorporated by
reference to Exhibit 10.11 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
10.12 Promissory Note dated June 11, 1994, executed by UIRT-W-McMinn, Inc.
in favor of Conseco Mortgage Capital, Inc. (Incorporated by reference
to Exhibit 10.12 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.13 Note Secured by Deed of Trust dated November 9, 1990 executed by
George I. Brown and George I. Brown, as Trustee of the Waipio Trust II
in favor of The Travelers Insurance Company (Incorporated by reference
to Exhibit 10.13 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.14 Earnest Money Contract dated October 13, 1997, by and among the
Company, Balous Miller, John K. Miller, Douglas Miller and Louis Vance
(Incorporated by reference to Exhibit 10.14 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.15 Agreement for the Purchase and Sale of Commercial Real Estate dated
December 12, 1997, by and between the Company and the Board of Pension
Commissioners of the City of Los Angeles (Incorporated by reference to
Exhibit 10.15 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.16 Contract of Sale dated December 5, 1997, by and between the Company
and Desert Pacific Properties, L.L.C. (Incorporated by reference to
Exhibit 10.16 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.17 Contract of Sale dated December 5, 1997, by and between the Company
and Rosemeade Park Limited Partnership (Incorporated by reference to
Exhibit 10.17 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.18 Letter Agreement dated November 25, 1997 and October 15, 1997, by and
among the Company, Town `N Country Plaza of Tampa, Limited and James
H. Shimberg, Trustee on Behalf of Landowner (Incorporated by reference
to Exhibit 10.18 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.19 Contract of Sale dated December 5, 1997, by and between Market at
First Colony Joint Venture, Hedwig II Joint Venture, PFL-290 Limited
Partnership, R & R Limited Partnership, Hedwig II, Inc. and the
Company (Incorporated by reference to Exhibit 10.19 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.20 Letter Agreement dated February 17, 1998, by and between the Company,
Town `N Country Plaza of Tampa, Limited and James H. Shimberg, Trustee
on Behalf of Landowner (Incorporated by reference to Exhibit 10.20 to
the Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
**10.21 Contract of Sale dated March 23, 1998 by and between United
Investors, Realty Trust and Dermot Big Curve, LLC.
**10.22 Contract of Sale dated April 17, 1998 by and between United
Investors, Realty Trust and Veriguest Colony Plaza One 1997.
**10.23 Purchase Option dated April 17, 1998 by and between United
Investors, Realty Trust and Veriguest Property Commerce 1995-1, a
Texas joint venture.
**10.25 Promissory Note dated July 31, 1995 executed by PFL-290 Limited
Partnership n favor of RFG Financial, Inc. (Benchmark).
**10.26 Promissory Note dated June 10, 1992 executed by Hedwig II, Inc. in
favor of Sun Life Insurance Company of America.
**10.27 Promissory Note dated June 10, 1992 executed by Hedwig III Joint
Venture in favor of Sun Life Insurance Company of America.
**27.1 Financial Data Schedule
**Filed herewith
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INVESTORS REALTY TRUST
Dated: May 14, 1998 /s/ Daniel M. Jones III
----------------------------
Daniel M. Jones III,
Chief Financial Officer
(principal financial and
accounting officer
17
<PAGE>
INDEX TO EXHIBITS
3.1 First Amended and Restarted Declaration of Trust (Incorporated by
reference to Exhibit 3.1 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
3.2 First Amended and Restated Bylaws (Incorporated by reference to
Exhibit 3.2 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.1 First Amended and Restated Advisory Agreement dated as of June 9,
1997, by and between the Company and Investment Manager (Incorporated
by reference to Exhibit 10.1 to the Company's registration statement
on Form S-11, dated March 5, 1998 (File No. 333-29475))
10.2 1997 Share Incentive Plan (Incorporated by reference to Exhibit 10.2
to the Company's registration statement on Form S-11, dated March 5,
1998 (File No. 333-29475))
10.3 Form of Indemnification Agreement (Incorporated by reference to
Exhibit 10.3 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.4 Loan Agreement dated as of January 30, 1998, by and between the
Company and Nomura Asset Capital Corporation ("Nomura") (Incorporated
by reference to Exhibit 10.4 to the Company's registration statement
on Form S-11, dated March 5, 1998 (File No. 333-29475))
10.5 Promissory Note dated January 30, 1998, executed by the Company in
favor of Nomura (Incorporated by reference to Exhibit 10.5 to the
Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
10.6 Assumption and Modification Agreement dated November 19, 1996, by and
among The Travelers Insurance Company, George I. Brown,, Park
Northern/Centennial Partners, L.P. and George I. Brown, as Trustee of
the Waipio Trust II (Incorporated by reference to Exhibit 10.6 to the
Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
10.7 Promissory Note dated as of July 31, 1995, executed by PFL-290 Limited
Partnership in favor of RFG Financial, Inc. (Incorporated by reference
to Exhibit 10.7 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.8 Promissory Note dated June 10, 1992, executed by Hedwig II, Inc. in
favor of Sun Life Insurance Company of America (Incorporated by
reference to Exhibit 10.8 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
10.9 Promissory Note dated June 10, 1992, executed by Hedwig III Joint
Venture in favor of Sun Life Insurance Company of America
(Incorporated by reference to Exhibit 10.9 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.10 Deed of Trust Note dated April 13, 1993, executed by UIRT/University
Park-1, L.P. in favor of The Franklin Life Insurance Company
(Incorporated by reference to Exhibit 10.10 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
<PAGE>
10.11 Promissory Note dated June 15, 1994, executed by UIRT-1-McMinn, Inc.
in favor of Protective Life Insurance Company (Incorporated by
reference to Exhibit 10.11 to the Company's registration statement on
Form S-11, dated March 5, 1998 (File No. 333-29475))
10.12 Promissory Note dated June 11, 1994, executed by UIRT-W-McMinn, Inc.
in favor of Conseco Mortgage Capital, Inc. (Incorporated by reference
to Exhibit 10.12 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.13 Note Secured by Deed of Trust dated November 9, 1990 executed by
George I. Brown and George I. Brown, as Trustee of the Waipio Trust II
in favor of The Travelers Insurance Company (Incorporated by reference
to Exhibit 10.13 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.14 Earnest Money Contract dated October 13, 1997, by and among the
Company, Balous Miller, John K. Miller, Douglas Miller and Louis Vance
(Incorporated by reference to Exhibit 10.14 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.15 Agreement for the Purchase and Sale of Commercial Real Estate dated
December 12, 1997, by and between the Company and the Board of Pension
Commissioners of the City of Los Angeles (Incorporated by reference to
Exhibit 10.15 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.16 Contract of Sale dated December 5, 1997, by and between the Company
and Desert Pacific Properties, L.L.C. (Incorporated by reference to
Exhibit 10.16 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.17 Contract of Sale dated December 5, 1997, by and between the Company
and Rosemeade Park Limited Partnership (Incorporated by reference to
Exhibit 10.17 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.18 Letter Agreement dated November 25, 1997 and October 15, 1997, by and
among the Company, Town `N Country Plaza of Tampa, Limited and James
H. Shimberg, Trustee on Behalf of Landowner (Incorporated by reference
to Exhibit 10.18 to the Company's registration statement on Form S-11,
dated March 5, 1998 (File No. 333-29475))
10.19 Contract of Sale dated December 5, 1997, by and between Market at
First Colony Joint Venture, Hedwig II Joint Venture, PFL-290 Limited
Partnership, R & R Limited Partnership, Hedwig II, Inc. and the
Company (Incorporated by reference to Exhibit 10.19 to the Company's
registration statement on Form S-11, dated March 5, 1998 (File No.
333-29475))
10.20 Letter Agreement dated February 17, 1998, by and between the Company,
Town `N Country Plaza of Tampa, Limited and James H. Shimberg, Trustee
on Behalf of Landowner (Incorporated by reference to Exhibit 10.20 to
the Company's registration statement on Form S-11, dated March 5, 1998
(File No. 333-29475))
**10.21 Contract of Sale dated March 23, 1998 by and between United
Investors, Realty Trust and Dermot Big Curve, LLC.
**10.22 Contract of Sale dated April 17, 1998 by and between United
Investors, Realty Trust and Veriguest Colony Plaza One 1997.
**10.23 Purchase Option dated April 17, 1998 by and between United
Investors, Realty Trust and Veriguest Property Commerce 1995-1, a
Texas joint venture.
**10.25 Promissory Note dated July 31, 1995 executed by PFL-290 Limited
Partnership n favor of RFG Financial, Inc. (Benchmark).
**10.26 Promissory Note dated June 10, 1992 executed by Hedwig II, Inc. in
favor of Sun Life Insurance Company of America.
**10.27 Promissory Note dated June 10, 1992 executed by Hedwig III Joint
Venture in favor of Sun Life Insurance Company of America.
**27.1 Financial Data Schedule
**Filed herewith
CONTRACT OF SALE
between
DERMOT BIG CURVE, LLC
SELLER
AND
UNITED INVESTORS REALTY TRUST
BUYER
pertaining to the sale and purchase of
Big Curve Shopping Center
Yuma, Arizona
<PAGE>
CONTRACT OF SALE
This Contract of Sale (the "Contract") is made and entered into by and
between DERMOT BIG CURVE, LLC an Arizona limited liability company, having its
principal office at 110 Fifteenth Street, Del Mar, California 92014 ("Seller"),
and UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust having
its principal office at 5847 San Felipe, Suite 850, Houston, Texas 77057
("Buyer").
ARTICLE I
DEFINED TERMS
I.1 Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Anchor Tenant" means any Tenant at the Project listed on Exhibit "J"
attached hereto.
"Business Day" means any day other than a Saturday or Sunday on which
Federal Savings Banks in Yuma, Arizona are open for business.
"Closing" means consummation of the purchase of the Project by Buyer from
Seller in accordance with the terms and conditions of Article VIII.
"Closing Date" means the date specified in Section 8.1 on which the
Closing will be held.
"Contract Date" means the later of the two dates set forth immediately
above each of the signatures of the parties hereto, on the signature page
hereof.
"Delivery Date" means the date specified in Section 5.2(a).
"Earnest Money Deposit" means the moneys deposited by Buyer in escrow with
the Title Company at the time and in the amount specified in Section 3.2.
,
"Improvements" means the neighborhood shopping center (the "Shopping
Center") known as Big Curve Shopping Center (excluding the Albertsons, Western
Warehouse and Michaels parcels), containing approximately 126,402 square feet of
improved retail space, located in Yuma, Arizona, the fixtures and other
improvements now or hereafter situated upon the tract of land described on
Exhibit "A".
"Inspection Period" means the period commencing on the Contract Date and
ending 30 days thereafter.
"Land" means that certain tract of land located in Yuma County, Arizona,
and being more fully described on Exhibit "A", together with all rights
appurtenant thereto.
"Leases" means all currently effective leases for space in the
Improvements, including all amendments and modifications thereto and any and all
other agreements with Tenants.
"Permitted Exceptions" means those exceptions or conditions that affect or
may affect title to the Project that are approved or deemed to be approved by
Buyer in accordance with Section 4.3 or Section 4.4.
1
<PAGE>
"Personal Property" means (a) all tangible personal property owned by
Seller and located on, attached to, and used in connection with, the operation
of the Real Property (but not including any tangible personal property owned or
leased by Tenants), (b) Seller=s interest in all personal property leases,
licenses, permits, plans, studies, and utility arrangements with respect to the
Real Property, (c) Seller=s interest in all service, maintenance, management or
other contracts relating to the ownership or operation of the Real Property, and
(d) Seller=s interest in all warranties and guaranties, if any, relating to the
Real Property.
"Project" means, collectively, the Real Property, the Leases, and the
Personal Property for the Shopping Center.
"Purchase Price" means the total consideration to be paid by Buyer to
Seller for the purchase of the Project.
"Real Property" means the Land and the Improvements for the Shopping
Center.
"Rent Roll" means a schedule for the Project identifying the Tenants at
the Project and providing certain information with respect to the Leases in
accordance with Section 5.2 (a)(i).
"Tenants" means those persons holding rights as tenants of the Shopping
Center.
"Title Company" means Chicago Title Insurance Company, whose address is
3703 Camino Del Rio South, Suite 100, San Diego, California 92108, Attention:
Kathy Robinson, Escrow Officer.
"Trade Name" means the name "Big Curve Shopping Center", as well as any
other name utilized in conjunction with the operation of the Project.
1.2 Other Defined Terms. Certain other defined terms shall have the
respective meanings assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby agrees
to sell and convey to Buyer, and Buyer hereby agrees to purchase and acquire
from Seller, the Project.
ARTICLE III
PURCHASE PRICE
III.1 Purchase Price. The Purchase Price (herein so called) to be paid by
Buyer to Seller equals Eight Million Nine Hundred Thousand and No/100 Dollars
($8,900,000.00). The Purchase Price, net of all prorations set forth in this
Contract, shall be payable to Seller as follows:
(1) $150,000.00, as an earnest money deposit (the "Earnest Money
Deposit"), shall be deposited by Buyer in cash or by cashier's check or wire
transfer of cash credit with Title Company simultaneously upon Buyer's execution
of this Contract and shall be paid to Seller at Closing;
(2) Approximately $5,977,122.00 shall be paid by Buyer to Seller in
the form of Buyer's assumption of the existing promissory note and deed of trust
on the Project (the "Existing Loan"), in favor of Liberty Mortgage Acceptance
Corporation or its successors or assigns (the "Existing Lender"), in accordance
with Section 3.3 below; and
2
<PAGE>
(3) The remainder of the Purchase Price (which shall be adjusted
based on the actual amount of the Existing Loan at Closing) shall be deposited
by Buyer in cash or by wire transfer of cash credit with Title Company on or
before to the Closing Date and shall be paid to Seller at Closing.
III.2 Earnest Money Deposit. The Earnest Money Deposit shall be invested
in short-term commercial paper having a maturity of thirty (30) days or less and
rated P-1 by Moody's Investor Service, Inc. or A-1 by Standard & Poor's Corp.,
or in some other interest-bearing investment acceptable to the Buyer and Seller.
All interest earned thereon shall become part of the Earnest Money Deposit. If
the purchase and sale hereunder are consummated in accordance with the terms and
conditions hereof, the Earnest Money Deposit shall be applied to the Purchase
Price at the Closing. After expiration of the Inspection Period, the Earnest
Money Deposit shall be non-refundable to Buyer.
III.3 Assumption of Existing Loan. Buyer understands that the sale
transaction contemplated herein is contingent upon Buyer qualifying and being
approved by Existing Lender for the assumption of the Existing Loan and upon
Seller being released from all obligations and liability thereunder. Buyer shall
pay all application fees, assumption fees, title insurance premiums and all
other costs, fees and expenses relating to the assumption of the Existing Loan,
regardless of whether the Closing occurs. Buyer agrees to provide to Existing
Lender, within five (5) days after the date hereof, that information listed on
Exhibit "B" hereto with respect to the assumption of the Existing Loan.
Thereafter, Buyer will provide any other information Existing Lender deems
pertinent to the financial condition of Buyer within five (5) days after
Existing Lender requests such information and in the format required by Existing
Lender. Buyer agrees that Existing Lender may determine the suitability of
Buyer's creditworthiness based upon standards that Existing Lender determines
are appropriate. Existing Lender may seek any other information it deems
necessary or required from any source Existing Lender may choose. Buyer
understands that if such information is not provided in the 5-day periods
described above, Seller shall have the right to terminate this Agreement
immediately upon notice to Buyer and Escrow Agent. Buyer's obligation to pay all
fees, costs and expenses associated with the assumption of the Existing Loan
shall survive the Closing or any termination of this Agreement.
III.4 Escrow Instructions. The parties shall deliver to Title Company an
executed copy of this Contract, which shall constitute the sole instructions to
Title Company. Buyer and Seller may elect, in their sole discretion, to execute
preprinted escrow instructions; provided that in the event of any conflict
between the preprinted escrow instructions and the provisions of this Contract,
the provisions of this Contract shall control.
ARTICLE IV
TITLE AND SURVEY AND INSPECTION
IV.1 Title Commitment. Within three (3) days after the Contract Date,
Seller shall order, at its sole cost and expense, a current commitment for Title
Insurance for the Project (the "Title Commitment"), which Title Commitment shall
be furnished to Buyer. The Title Commitment shall contain the express commitment
of the Title Company to issue a standard coverage ALTA owner=s title insurance
policy to the extent permitted by Arizona law for the Project, which shall
otherwise be in form and content satisfactory to Buyer. The Title Commitment
shall be accompanied by legible copies of all instruments that create or
evidence title exceptions affecting the Real Property.
IV.2 Survey. Within three (3) days after the Contract Date, Seller shall
deliver to Buyer the existing survey for the Project in its possession. The
existing survey is the survey dated as of September 4, 1996, prepared by
Nicklaus Engineering, Inc. for the Project (as may be updated, the "Survey").
Buyer shall be responsible for any updates to the Survey requested by Buyer or
Existing Lender.
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IV.3 Review of Title Commitment and Survey. Buyer shall have until the
expiration of the Inspection Period (the "Title Review Period") in which to
review the Title Commitment and the Survey and give written notice to Seller
specifying Buyer's objections to any matters shown on the Title Commitment or
Survey, if any, that would materially and adversely affect Buyer=s contemplated
use of the Project as a retail shopping center or to which Existing Lender
objects (the "Objections"). Any Objections shall specify in reasonable detail
the manner in which any matter materially and adversely affects Buyer=s
contemplated use of the Project or to which Existing Lender objects. If Buyer
shall fail to give written notice of Objections to Seller prior to the
expiration of the Title Review Period, then Buyer shall be deemed to have
approved the condition of title and all exceptions to title shown on the Title
Commitment and Survey shall be deemed to be Permitted Exceptions.
IV.4 Seller=s Obligation to Cure; Buyer's Right to Terminate. If Buyer
shall have timely notified Seller in writing of Objections to the Title
Commitment or Survey, then Seller may, but shall not be obligated to, at any
time prior to the expiration of the Inspection Period (the "Cure Period"), give
written notice ("Seller=s Title Cure Notice") to Buyer of Seller=s intention to
satisfy the Objections prior to the Closing Date. If Seller fails to timely give
Buyer the Seller=s Title Cure Notice, then Buyer shall have the option, on or
before the expiration of the Inspection Period, to either (i) waive the
unsatisfied Objections, in which event those unsatisfied Objections shall become
Permitted Exceptions, or (ii) terminate this Contract, in which event the
Earnest Money Deposit shall be returned to Buyer and Seller and Buyer shall have
no further obligations, one to the other, with respect to the subject matter of
this Contract, except as otherwise set forth herein. If Buyer does not terminate
this Contract before the Inspection Period, then Buyer shall be deemed to have
waived the unsatisfied Objections, in which event they shall become Permitted
Exceptions.
IV.5 Title Policies. At the Closing, Title Company shall issue to Buyer a
standard coverage ALTA owner=s title insurance policy (the "Owner's Title
Policy"). The Owner's Title Policy shall insure that Buyer has good and
indefeasible fee simple title to the Project, subject only to the Permitted
Exceptions. The Owner's Title Policy shall contain no exceptions, other than (i)
rights of tenants in possession, as tenants only, (ii) visible and apparent
easements as shown on the Survey, and (iii) Permitted Exceptions. The basic
premium for the ALTA standard coverage shall be paid by Seller or, at Buyer's
option, the cost of the Owner's Title Policy shall be credited against the
Purchase Price, in which event the requirement for title insurance shall be
waived. At Buyer's option and cost, Title Company shall deliver an extended
coverage policy, together with such endorsements as Buyer may require, so long
as the Closing is not delayed and Buyer pays the incremental increase to the
premium for such policy. The tax exception shall be limited to taxes for the
year of Closing and subsequent years not yet due and payable and subsequent
assessments for prior years due to change in land usage or ownership.
IV.6 Inspection.
(1) Buyer shall have the right during the Inspection Period, to conduct,
and Buyer shall be responsible for, such examinations, studies, tenant credit
checks, appraisals, inspections, engineering, environmental and insurance
underwriting tests and investigations (the "Inspections") of the Project and the
assumption of the Existing Loan as Buyer may deem advisable. Buyer shall comply
with all federal, state and local laws which in any way relate to the
Inspection. Such Inspections shall include, without limitation, review of
current operating statements, operating statements for the prior calendar year,
current rent roll, true copies of the latest real estate tax bills, true and
complete copies of all service contracts affecting the Project, and any and all
other contracts and agreements relating to the Project. Buyer's conduct upon the
Project shall not disrupt the normal operation of the business upon the Project
at any time, and Buyer shall promptly restore the Project after any such entry.
Buyer shall, on demand by Seller, defend, hold harmless, reimburse and indemnify
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Seller from, for, of and against any and all direct and indirect, known and
unknown, obligations, actions, liabilities, judgments, claims, demands, losses,
including consequential losses, damages, costs, including costs of defense,
expenses and fees (including reasonable attorneys' fees and costs) arising from
or relating to the Inspections or any restoration of the Project, except to the
extend arising directly from the gross negligence or wilful misconduct of
Seller. Buyer's indemnification obligations set forth herein shall survive the
Closing and any termination of this Contract. Seller shall reasonably cooperate
with Buyer in making available the Project for Buyer's Inspections, including
any and all non-confidential books and records relating thereto in Seller's
possession. Buyer may also reinspect the Project prior to Closing to verify that
the Project has remained in the same physical shape, ordinary wear and tear
excepted, as the Project was during the Inspection Period, subject to all the
conditions and obligations of Buyer set forth above with respect to the initial
Inspection.
(2) If Buyer determines, in Buyer's sole and absolute discretion, that the
Project is not suitable for Buyer's contemplated purposes, then Buyer shall be
entitled to terminate this Contract by written notice delivered to Seller and
Title Company at any time on or before the expiration of the Inspection Period.
If Buyer fails to notify Seller and Escrow Agent prior to the expiration of the
Inspection Period that the Project is suitable for Buyer=s contemplated purposes
and Buyer intends to continue with this Contract, then Buyer shall be deemed to
have terminated this Contract pursuant to this Section. In the event of such
termination by Buyer, the Earnest Money Deposit shall be refunded to Buyer and
the parties hereto shall have no further obligations to each other under this
Contract except as otherwise set forth in this Contract. After expiration of the
Inspection Period, the Earnest Money Deposit shall be non-refundable to Buyer.
If Buyer fails to consummate this transaction, Buyer shall promptly deliver to
Seller true and current copies of all data, reports, analyses, pro formas, test
results, studies and other non-confidential documents generated by the
Inspection or otherwise in Buyer's possession pertaining to the Project.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS OF SELLER
V.1 Representations and Warranties of Seller. Seller=s representations and
warranties set forth in this Contract are true and correct in all material
respects as of the Contract Date and will be true and correct in all material
respects on the Closing Date except as otherwise disclosed to Buyer. Such
representations and warranties shall survive the Closing for a period of six (6)
months only and shall not be merged therein. Seller hereby represents and
warrants to Buyer as follows:
(1) Seller has the full right, power, and authority to sell and convey to
Buyer the Project as provided in this Contract and to carry out Seller=s
obligations hereunder, and all requisite action necessary to authorize Seller to
enter into this Contract and to carry out Seller=s obligations hereunder has
been, or on the Closing Date will have been, taken.
(2) To Seller's knowledge, there are no adverse or other parties in
possession of the Project, or of any part thereof as lessees, tenants at
sufferance, or trespassers, except Tenants referenced in the Rent Roll to be
delivered pursuant to Section 5.2(a)(i).
(3) The Service Contracts (as defined in Section 5.2(a)(v) below), Leases
and other agreements delivered to Buyer pursuant to this Contract constitute all
contracts, leases or agreements affecting the Project (and the ownership and use
thereof). To Seller's knowledge, the Ownership Documents delivered pursuant to
Section 5.2(a) herein are true and correct copies of the originals and no other
amendments or modifications exist thereto.
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(4) The executed Leases, which are to be delivered by Seller to Buyer at
Buyer=s principal office in accordance with the terms of this Contract, are true
and correct copies of all the Leases. No Leases shall be further modified or
amended without the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Except as reflected on the current Rent Roll to be
delivered to Buyer pursuant to the provisions of Section 5.2(a)(i) below, no
Tenant has given Seller notice of its intention to vacate its leased premises
prior to the end of the primary term (or any current renewal or extended term).
To Seller's knowledge, all of the Leases are in full force and effect without
current default by Seller or the respective Tenants, except as otherwise
disclosed to Buyer.
(5) To Seller's knowledge, the Rent Roll and Service Contracts delivered
by Seller to Buyer are true and correct in all material respects and there are
no omissions of any material facts relating thereon.
(6) To Seller's knowledge, Seller has not received any written notice that
the Project is in violation of any applicable laws, rules, regulations or
ordinances.
(7) To Seller's knowledge, Seller has not received any written notice of
any pending condemnation action with respect to all or any portion of the
Project.
(8) To Seller's knowledge, there is no pending litigation affecting the
Project other than as incurred in the normal course of business and with respect
to which Seller's insurance underwriter is responsible, except as disclosed to
Buyer prior to the expiration of the Inspection Period.
(9) Seller is not a foreign person or entity pursuant to the Foreign
Investment in Real Property Tax Act or the Tax Reform Act of 1986, and Buyer is
not obligated to withhold any portion of the Purchase Price for the benefit of
the Internal Revenue Service.
As used herein, the term "Seller's knowledge" shall mean the current, actual
knowledge of Rebekah Brown, an officer of the manager of Seller, without any
imputation of knowledge or any duty of inquiry whatsoever.
V.2 Covenants and Agreements of Seller. Seller covenants and agrees with
Buyer as follows:
(1) Within ten (10) business days following the Contract Date (the
"Delivery Date"), Seller shall deliver or make available during the Inspection
Period to Buyer the following items to the extent in Seller's possession or
control (the "Ownership Documents") with respect to the Project:
(1) Current Rent Roll, accounts receivable report, amortization of
fees and commissions and operating statements for the Project, which shall
set forth with respect to each Tenant the following;
(1) the name and street or unit number of the Tenant;
(2) the term of the Tenant's Lease, its commencement and
expiration dates, any renewal terms or extensions and the base rent
and percentage rent, if any, payable thereunder;
(3) the amount of monthly base rent and the percentage amount of
percentage rent, if any, payable by and portion of the Project=s CAM
and real estate taxes and insurance premiums recoverable from each
Tenant and any other payments for which such Tenant is liable;
(4) amount of prepaid rent and the amount of refundable security
and other deposits due under the Lease and held by Landlord;
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(5) the amount of any ongoing Lease commission obligations, if
any, and to whom such commission is owed and copies of all brokerage
commission agreements relating to the Leases;
(6) any uncured defaults and the amounts of any unpaid rents,
percentage rents, and other payments past due thereunder;
(7) the amount of any offsets or credits against rental, if any;
and
(8) any concessions granted to the Tenant, including, without
limitation, free rent, rental rebates or credits, lease take-over
arrangements, cash payments, and moving allowances;
(2) Copies of any engineering reports, soil reports or current
certificates of occupancy for the Project;
(3) A schedule setting forth property and liability insurance coverage
on or affecting the Project and the current premiums therefor together with
a brief summary of all claims made against the Project's insurance policies
since January 1, 1996;
(4) Copy of the most recent or current real estate and personal
property tax bills or other documentation showing the amount of current
real property taxes and the assessed value of the Project;
(5) Copies of all existing service, maintenance, operations, and
management and other contracts relating to the management, operation or
maintenance of the Project (the "Service Contracts"), and any commission
agreements affecting the Project;
(6) Copies of operating income and expense statements with respect to
the Project for calendar years 1996 and 1997 and for year-to-date 1998;
(7) A brief summary of all capital expenditures for the Project for
the calendar years 1996 and 1997 and for year-to-date 1998; and
(8) True and complete copies of all Leases, including all amendments,
extensions and modifications thereof.
All materials delivered by Seller to Buyer pursuant to this Section 5.2(a)
shall be held in confidence by Buyer and disclosed only to its attorneys,
accountants, and prospective lenders and securities underwriters and their
respective attorneys. If the parties fail to consummate the transaction
described herein for any reason other than the Seller=s default, Buyer shall
return to Seller all materials delivered by or on behalf of Seller pursuant to
or in connection with this Contract.
(2) From the Contract Date until the Closing Date, Seller undertakes and
agrees, with respect to the Project, that it will:
(1) Operate and maintain the Project as currently operated in its
current condition and in accordance with all applicable laws;
(2) Following the expiration of the Inspection Period, not terminate
or modify any Lease or commence any judicial action against any Tenant
other than in the normal course of business without the prior written
consent of Buyer, which consent shall not be unreasonably withheld;
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(3) Following the expiration of the Inspection Period, not execute any
new lease or agree to the terms of any lease renewal without the prior
written consent of the Buyer, which consent shall not be unreasonably
withheld;
(4) Promptly notify Buyer in writing of any notice received from a
Tenant of its election to vacate its leased premises or terminate its
Lease, or of any election by Seller to terminate any Lease or commence any
judicial action against any Tenant;
(5) Not sell, exchange, transfer, assign, convey or encumber or
otherwise dispose of all or any part of the Project or any interest therein
except with respect to a 1031 exchange as set forth in Section 12.9, nor
shall Seller remove any Personal Property unless Seller shall replace the
removed items with similar items of comparable quality;
(6) Maintain the Project in its existing condition, subject to normal
wear and tear;
(7) There will be no rental or other concessions of any nature granted
to any Tenant other than those set forth in the Leases and on the Rent Roll
delivered to Buyer pursuant to Section 5.2 (a)(i), above;
(8) Not, without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld, enter into or modify any Service
Contracts which are not terminable without cause on or before the Closing
Date; or
(9) Not, without the prior written consent of Buyer, which consent
shall not be unreasonably withheld, consent to any assignment or sublease
or other encumbrance by a Tenant of its interest, or any part thereof, in
its Lease, except as may be permitted or required by the terms of the
Lease.
V.3 Agreements Concerning Existing Loan.
(1) Seller agrees to reasonably cooperate with Buyer, at no cost or
liability to Seller, in connection with Buyer's assumption of the Existing Loan
as set forth herein.
(2) Buyer agrees to pay to Existing Lender any transfer fee or other costs
charged by Existing Lender, in connection with its agreement and consent to
permit the transfer of the Project to the Buyer as set forth herein.
(3) Seller shall not, at any time, either prior to or after Closing, alter,
renew, rearrange, restructure or refinance any indebtedness evidenced by the
Existing Loan or modify the Existing Loan or any instrument securing the
Existing Loan, without the prior written consent of Buyer; and Seller shall
neither accept nor request any extension, postponement, indulgence or
forgiveness of the Existing Loan or the indebtedness evidenced thereby, without
the prior written consent of Buyer.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF BUYER
VI.1 Buyer represents, warrants, covenants, and agrees with, Seller as of
the Contract Date, that Buyer has the full right, power, and authority to
purchase the Project from Seller as provided in this Contract and to carry out
Buyer's obligations under this Contract, and all requisite action necessary to
authorize Buyer to enter into this Contract and to carry out Buyer's obligations
hereunder has been, or on the Closing Date will have been, taken.
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VI.2 No Contracts. Buyer represents, warrants, covenants, and agrees with,
Seller, as of the Contract Date, that Buyer is not a party to any contracts or
other obligations for the sale, exchange or transfer of the Project or any
portion thereof.
VI.3 "AS IS" Condition. Except as otherwise specifically set forth herein,
Buyer acknowledges and agrees that Seller makes no representations and
warranties, express or implied, including, without limitation, any warranties of
habitability, good and workmanlike construction, suitability and fitness for
intended purpose, with respect to any aspect of the Project. Buyer is purchasing
the Project strictly in "AS IS" condition. Buyer accepts and agrees to bear all
risks regarding all attributes and conditions, latent or otherwise of the
Project. Buyer has made or will make prior to the Closing its own inspection and
investigation of the Project and surrounding area, including, without
limitation, its subsurface, soil, engineering and other conditions and
requirements, whether there are any eminent domain or other public or
quasi-public takings of the Project contemplated, and all zoning and regulatory
matters pertinent to the Project and to the present use or occupancy of the
Project. Buyer is entering into this Contract and purchasing the Project based
upon its own inspection and investigation and not in reliance on any statement,
representation, inducement or agreement of Seller except as specifically
provided herein. Buyer agrees that neither Seller nor anyone acting on behalf of
Seller has made any representation, guarantee or warranty whatsoever, either
written or oral, concerning the Project except as specifically set forth herein.
Any engineering data, soils reports, or other information that Seller or any
other party may have delivered to Buyer, including without limitation the
Ownership Documents, is furnished without any representation or warranty
whatsoever. Except as otherwise specifically set forth herein, Seller shall have
no responsibility, liability or obligation following the Closing relating to any
conditions whatsoever respecting in any way the Project, and Buyer hereby
releases Seller, its officers, directors, employees and agents with respect to
such conditions. In particular, but without in any way limiting the foregoing,
Buyer hereby releases Seller from any and all responsibility, liability and
claims for or arising out of the presence on or about the Project or any
property in the vicinity of the Project (including in the soil, air, structures
and surface and subsurface water) of materials, wastes or substances that are or
become regulated under, or that are or become classified as toxic or hazardous,
under any Environmental Law, including, without limitation, petroleum, oil,
gasoline or other petroleum products, byproducts or waste. As used herein,
"Environmental Law" shall mean, as amended and in effect from time to time, any
federal, state or local statute, ordinance, rule, regulation, judicial decision,
or the judgment or decree of a governmental authority, arbitrator or other
private adjudicator by which Buyer or the Project is bound, pertaining to
health, industrial hygiene, occupational safety or the environment, including,
without limitation, the Comprehensive Environmental Response, Compensation &
Liability Act of 1980, the Resource, Conservation & Recovery Act of 1976, and
the Arizona Environmental Quality Act, Title 49, Arizona Revised Statutes, and
all rules adopted and guidelines promulgated pursuant to the foregoing.
ARTICLE VII
CONDITIONS PRECEDENT TO PERFORMANCE
VII.1 Conditions Precedent to Buyer's Obligations. Buyer shall not be
obligated to consummate the transaction described in this Contract unless:
(1) Seller shall have furnished or caused to be furnished or made
available to Buyer all of the items required to be furnished by Seller under
Section 5.2(a);
(2) Seller shall have performed in all material respects all of the
agreements, covenants and obligations contained in this Contract to be performed
or complied with by Seller on or prior to the Closing Date;
(3) All representations and warranties made by Seller hereunder shall be
true, complete and accurate in all material respects as of the Closing Date; and
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(4) Tenant Estoppel Certificates in the form attached hereto as Exhibit
"I" or such other form as required in each of the Leases shall have been
received by Buyer from (i) all of the Anchor Tenants, and (ii) at least 75% (by
square footage at the Project), of all Tenants at the Project, which Estoppel
Certificates shall confirm the information set forth on the Rent Roll delivered
(A) as part of the Ownership Documents, as modified to reflect any
non-substantive changes thereto, or (B) with respect to Tenants who have
executed new leases since the Contract Date, as reflected on the Rent Roll to be
delivered in connection with the Closing; and as to the remaining 25% of the
Tenants, either Tenant Estoppel Certificates in the form required in the
applicable Leases have been received by Buyer or Seller has certified to
Seller's knowledge the same information set forth in such Estoppel Certificates
as to such remaining Tenants.
(5) No Anchor Tenant shall have filed a petition under any section of the
Bankruptcy Code, as amended, and no Anchor Tenant shall have ceased operations
in its space at the Project or shall have notified Seller in writing of its
intention to do so.
VII.2 Conditions Precedent to Seller's Obligations. Seller shall not be
obligated to consummate the transaction described in the Contract unless:
(1) The assumption of the Existing Loan by Buyer representing a portion of
the Purchase Price hereunder pursuant to Section 3.1 above and the release of
Seller from all obligations and liability thereunder; and
(2) Buyer shall have performed in all material respects all of the
agreements, covenants and obligations contained in this Contract to be performed
or complied with by Seller on or prior to the Closing Date; and
(3) All representations and warranties made by Seller hereunder shall be
true, complete and accurate in all material respects as of the Closing Date.
ARTICLE VIII
CLOSING
VIII.1 Date and Place of Closing. The Closing (herein so called) of this
transaction shall take place at the offices of the Title Company on or before
twenty (20) days after the end of the Inspection Period (the "Closing Date").
VIII.2 Items to be Delivered at or Prior to the Closing.
(1) Seller. At the Closing, Seller shall deliver or cause to be delivered
to Buyer or the Title Company, the following items fully executed and
acknowledged where so indicated by all necessary parties in respect to the
Project:
(1) A Special Warranty Deed, duly executed and acknowledged by
Seller, in the form of Exhibit "C";
(2) The original Leases, or, if any original Leases are not
available, copies of any such Leases certified by Seller as being true,
correct and complete;
(3) Duplicate originals of an assignment and assumption of leases
(the "Assignment of Leases") in the form attached hereto as Exhibit "D",
duly executed by Seller;
(4) A bill of sale and assignment in the form, attached hereto as
Exhibit "E", duly executed by Seller;
(5) Duplicate originals of an assignment and assumption of Service
Contracts (the "Assignment of Service Contracts") in the form or
substantially the form, attached hereto as Exhibit "F", duly executed by
Seller;
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(6) An affidavit, in the form, or substantially in the form,
attached as Exhibit "G", in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated
thereunder, stating under penalty of perjury the Seller=s United States
identification number and that Seller is not a "foreign person" as that
term is defined in Section 1445, duly executed and acknowledged by Seller;
(7) A notice of sale in the form, or substantially in the form,
attached hereto as Exhibit "H", (the "Tenant Notice Letter") for each of
the Tenants, duly executed by Seller and Buyer;
(8) All keys or other access devices in the possession of Seller or
its agents to all locks located at the Project;
(9) Originals of all Service Contracts, plans, governmental
approvals, and other contracts and agreements in Seller=s possession
relating to the ownership and operation of the Project;
(10) A certificate by Seller that the representations and warranties
of Seller set forth in this Contract are true and correct as of the
Closing Date, except as otherwise disclosed to Buyer with respect to any
matters beyond Seller=s control;
(11) Letters to all utility companies advising of the change of
ownership of the Project;
(12) An Affidavit of Real Property Value; and
(13) Any other items reasonably requested by the Title Company as
administrative requirements for consummating the Closing.
At the Closing, Buyer shall have the right to copy all non-confidential books
and records in Seller's possession pertaining to the operation of the Project
for the calendar years 1996 and 1997 and for year-to-date 1998.
(2) Buyer. At the Closing, Buyer shall deliver or cause to be delivered to
Seller or the Title Company, the following items:
(1) The cash sum required by Section 3.1;
(2) All documents necessary for Buyer's assumption of the Existing
Loan;
(3) Duplicate originals of the Assignment of Leases duly executed by
Buyer;
(4) Duplicate originals of the Assignment of Service Contracts duly
executed by Buyer;
(5) Appropriate evidence of authorization reasonably satisfactory to
Seller and the Title Company for the consummation of the transaction
contemplated by this Contract;
(6) A certificate by Buyer that the representations and warranties
of Buyer set forth in this Contract are true and correct as of the Closing
Date;
(7) An Affidavit of Real Property Value; and
(8) Any other items reasonably requested by the Title Company as
administrative requirements for consummating the Closing.
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VIII.3 Adjustments at Closing. Notwithstanding anything to the contrary
contained in this Contract or applicable law, the provisions of this Section 8.3
shall survive the Closing. All income and obligations attributable to days
preceding the Closing Date shall be allocated to Seller, and all income and
obligations attributable to days from and after the Closing Date shall be
allocated to Buyer. Without limitation upon the foregoing, the following items
shall be adjusted or prorated between Seller and Buyer as set forth below:
(1) Ad valorem and personal property taxes relating to the Project for the
calendar year in which the Closing occurs shall be prorated between Seller and
Buyer as of the Closing Date based upon taxes actually paid by Seller for the
calendar year in which the Closing occurs, if Seller has paid such taxes prior
to Closing, and otherwise upon the ad valorem and personal property taxes due
assuming payment in December of the year of Closing. If the actual amount of
taxes for the calendar year in which the Closing shall occur is not known as of
the Closing Date, the proration shall be based on the amount of taxes due and
payable with respect to the Project using the latest assessed value and tax
rate. All other assessments affecting the Project, if any, assessed prior to
Closing Date, shall be paid by the Seller and if assessed after the Closing
Date, shall be paid by the Buyer.
(2) Base rents, escalation or reimbursement payments for real estate and
personal property taxes, insurance premiums, CAM or other operating expenses and
charges, payable with respect to the Project for the then current month shall be
prorated as of the Closing Date. Percentage rents for each Tenant obligated
therefor shall be prorated on the basis of the number of days lapsed during the
Tenant=s percentage rent period as of the Closing Date and not on the basis of
the amount of the Tenant's sales which accrued during the current percentage
rent period as of the Closing Date. If the actual amount of percentage rents for
the period in which Closing shall occur is not known as of the Closing Date, the
proration shall be estimated based on the amount of percentage rents that were
due and payable during the previous percentage rent period, and shall be
adjusted between the parties post-Closing to reflect the actual amounts at the
end of the current percentage rent period. The obligation of the parties to
adjust, post-Closing, the percentage rents shall survive the Closing and any
amounts owed shall be paid by the party responsible therefor within ten (10)
days after written demand therefor has been made. With respect to any Tenant who
owes rents and other charges which at Closing are past due (ADelinquent
Tenant@), such past due rents and other charges (ADelinquencies@) shall not be
prorated. Buyer shall use good faith efforts to collect such Delinquencies, if
any, and Buyer shall remit such Delinquencies to Seller immediately as and when
collected by Buyer, provided, however, that any payment received by Buyer from a
Delinquent Tenant may be applied first to any rents or other sums that are past
due by such Delinquent Tenant from and after the Closing Date. The right to
receive and collect all rents and profits, delinquent or otherwise, shall be
assigned by Seller to Buyer at Closing, subject to any adjustment for percentage
rents as set forth above.
(3) All other income and ordinary operating expenses of the Project,
including, without limitation, public utility charges, maintenance, management,
and other service charges, and all other normal operating charges shall be
prorated at the Closing effective as of the Closing Date based upon the best
available information. The obligation of the parties to adjust, post-Closing,
and any operating expenses as of the Closing Date, shall, to the extent unknown
or not provided for at Closing, survive the Closing and shall be paid by the
party responsible therefor within ten (10) days after written demand therefor
has been made. Such demand shall include a copy of the invoice(s) for which
payment or reimbursement is sought.
VIII.4 Deferred Leasing Commissions. The amount of any unpaid leasing
commissions payable on account and over the term of existing Leases shall either
be paid by Seller or treated as a credit to Buyer. Commissions payable on
account of Leases which are subject to renewal at the option of the Tenant and
with respect to which the options have not been exercised prior to the Closing
Date shall not be covered by the preceding sentence and shall be paid by Buyer.
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Buyer shall pay to Seller in cash at Closing, in addition to the Purchase Price,
the unamortized portion of all commissions and tenant improvement costs and
expenses paid by Seller for any new Lease executed after the Contract Date,
based on the amortization of such commissions and costs and expenses over the
term of the new Lease.
VIII.5 Cash. All cash on hand and in any operating or other accounts on
the Closing Date shall belong to Seller and Buyer shall receive a credit for all
refundable security deposits under the Leases as of the Closing Date.
VIII.6 Possession. Possession of the Project shall be delivered to Buyer
by Seller at the Closing, subject to the rights of the Tenants.
VIII.7 Costs of Closing. Each party shall be responsible for paying the
legal fees of its counsel in negotiating, preparing, and closing the transaction
contemplated by this Contract. Seller shall pay for the cost of the title policy
premium for a standard ALTA coverage. Buyer shall pay the balance of the Owner=s
Title Policy premium (including the premium for endorsements required by Buyer),
and for the cost of its own, surveying, engineering and environmental
inspections. All sales, transfer, excise, transaction, privilege, documentary
stamp or similar taxes or fees, and all recording costs and similar closing
costs shall be paid by Buyer in connection with the sale and purchase of the
Project under the terms hereof. The parties shall split the cost of any title
company escrow fees. Any other expenses that are incurred by either party that
are expressly identified herein as being the responsibility of a particular
party shall be paid by such party. All other expenses shall be allocated between
the parties in the customary manner for sales of commercial real properties
similar to the Project which are located in Yuma, Arizona.
VIII.8 Provisions of Article VIII to Survive Closing. The provisions of
this Article VIII shall survive the Closing.
ARTICLE IX
DEFAULTS AND REMEDIES
IX.1 Default by Buyer. If Buyer defaults hereunder, actual damages to
Seller will be difficult to calculate but Buyer and Seller agree that the amount
of the Earnest Money designated above is a reasonable approximation thereof.
Accordingly, if Buyer defaults, Seller shall be entitled to terminate this
Contract and immediately upon such termination by Seller, Title Company shall
pay to Seller, as Seller's sole remedy, the Earnest Money Deposit. If, however,
Buyer contests or opposes Seller's right to collect the Earnest Money Deposit or
fails to cooperate with Seller in collecting same from Title Company and Buyer
is not the prevailing party in the subsequent proceedings, Seller shall also be
entitled to the additional remedies provided for in Sections 9.3 and 9.4 below.
Nothing contained in this Section shall prevent Seller from enforcing Buyer's
obligations and liabilities which survive a termination of this Contract.
IX.2 Default by Seller. If Seller defaults hereunder, then Buyer may, as
Buyer=s sole and exclusive remedy for such default, either (i) bring an action
against the Seller for specific performance of the Seller=s obligations under
this Contract, or (ii) terminate this Contract by giving written notice thereof
to Seller and the Title Company at or prior to the Closing Date, whereupon the
Title Company shall deliver the Earnest Money Deposit (including the interest
earned thereon) to Buyer and thereafter neither party hereto shall have any
further rights or obligations hereunder, except as otherwise set forth herein.
If Buyer institutes proceedings for specific performance, the date of entry of
final judgment on the complaint for specific performance is referred to herein
as the "Judgment Date." If Buyer is the prevailing party in its action for
specific performance on the Judgment Date, the parties shall proceed to Closing
in accordance with the provisions of this Contract. The Closing Date, for
purposes of this paragraph, shall be that day on which all applicable appeal
periods have expired. If Seller is the prevailing party in such proceedings on
the Judgment Date, this Contract shall automatically terminate, Title Company
shall pay the Earnest Money Deposit to Seller, and the parties shall have no
13
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further obligations to each other under this Contract except as otherwise
specifically set forth in this Contract. In the event Seller conveys or
hypothecates the Project to a third party in violation of the terms hereof,
Buyer shall have the right to prosecute an action for damages against Seller in
an amount not to exceed Buyer's actual, out-of-pocket costs and expenses
incurred in connection with the negotiation and enforcement of this Contract and
the Inspection of the Project. In no event shall Buyer be entitled to seek any
punitive, consequential, special or indirect damages from Seller with respect to
any matter arising out of or in connection with this Contract and Buyer hereby
waives any and all rights to seek such damages.
IX.3 Costs and Fees. If either party hereto breaches any term of this
Contract, the breaching party agrees to pay the non-breaching party all
reasonable attorneys' fees, expert witness fees, investigation costs, costs of
tests and analysis, travel and accommodation expenses, deposition and trial
transcript costs, court costs and other costs and expenses incurred by the
non-breaching party in enforcing this Contract or preparing for legal or other
proceedings, at the trial or appellate level, whether or not such proceedings
are instituted. If any legal or other proceedings are instituted, the party
prevailing in any such proceeding shall be paid all of the aforementioned costs,
expenses and fees by the other party, and if any judgment is secured by such
prevailing party, all such costs, expenses, and fees shall be included in such
judgment, attorneys' fees to be set by the court and not by the jury.
IX.4 Default Interest. If any monies become payable by one party to the
other pursuant to this Contract and are not paid when due then all sums unpaid
shall bear interest at the then highest lawful contractual rate from the due
date or, if there is no maximum rate then in existence, at the per annum rate
equal to the greater of (i) 18%, or (ii) 3% in excess of that rate announced
from time to time by Bank One, Arizona, NA, or its successors, as its "prime
rate." The rate provided for in (ii) above shall change together with and be
effective on the date of any change in said "prime rate."
IX.5 Waiver. Excuse or waiver of the performance by the other party of any
obligation under this Contract shall only be effective if evidenced by a written
statement signed by the party so excusing. No delay in exercising any right or
remedy shall constitute a waiver thereof, and no waiver by Seller or Buyer of
the breach of any covenant of this Contract shall be construed as a waiver of
any preceding or succeeding breach of the same or any other covenant or
condition of this Contract.
IX.6 Earnest Money. In the event either Seller or Buyer becomes entitled
to the Earnest Money Deposit upon cancellation of this Contract in accordance
with its terms, such party may deliver a letter of instruction to the Title
Company directing disbursement of the Earnest Money Deposit to the party
entitled thereto. The party delivering such notice to the Title Company shall
concurrently deliver a copy of the notice to the other party hereto. Upon the
expiration of three (3) business days after its receipt of the letter of
instructions, the Title Company may deliver the Earnest Money Deposit to the
party as specified in the letter of instructions unless, within such three (3)
business day period, the Title Company shall have received a written objection
to such delivery from the other party hereto. In such event, the Title Company
shall not deliver the Earnest Money Deposit to either party unless it has a
written authorization to do so signed by both parties or a court order has been
issued by a court of competent jurisdiction to deliver the Earnest Money Deposit
to one of the parties hereto. The Title Company may deposit the Earnest Money
Deposit into a court of competent jurisdiction and thereafter shall have no
further interest in or responsibility for this Contract or for the Earnest Money
Deposit.
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ARTICLE X
BROKERAGE COMMISSIONS
X.1 Amount. If, and only if Closing occurs, Seller hereby agrees to pay a
real estate brokerage commission to Voit Commercial Brokerage (the "Broker")
pursuant to a separate agreement between Seller and Broker. Broker shall be
responsible for cooperating brokerage agreements with CB Commercial.
X.2 Indemnity. Seller hereby represents and warrants to Buyer that it has
not contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction other than as
identified in Section 10.1, and that Seller has not taken any action which would
result in any real estate broker's, finder's, or other fees or commissions being
due or payable to any other party with respect to the transaction contemplated
hereby except as set forth above. Buyer hereby represents and warrants to Seller
that Buyer has not contracted or entered into any agreement with any real estate
broker, agent, finder, or other party in connection with this transaction, other
than as identified in Section 10.1, and that Buyer has not taken any action
which would result in any real estate broker's, finder's, or other fees or
commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or expense
(including, but not limited to, reasonable attorneys' fees) resulting to the
other party by reason of a breach of the representation and warranty made by
such party in this Section 10.2. The indemnities set forth in this Section 10.2
shall survive the Closing.
ARTICLE XI
CASUALTY OR CONDEMNATION
XI.1 Damage or Destruction. Prior to Closing, Seller shall bear the risk
of loss to the Project. Seller shall not be liable to Buyer in any way if there
is any damage or destruction (due to fire or other casualty) to the Project
prior to Closing. Seller, however, shall elect, by delivering written notice to
Buyer and Title Company within fifteen (15) days after such damage or
destruction, to either: (a) repair said damage or destruction, or (b) assign to
Buyer all insurance proceeds, or rights thereto, payable as a result of such
damage or destruction and Buyer shall receive a credit for any deductible amount
under the insurance coverage. If Seller fails to deliver the notice to Buyer and
Title Company within the 15-day period, Seller shall be deemed to have elected
option (b). If Seller elects option (a), then Seller shall exercise reasonable
diligence in making such repairs and shall restore the Project to an equal or
better condition than existed prior to such damage and destruction. If such
repair is effected prior to the Closing Date, Closing shall occur on the terms
and conditions provided for herein. If such repair cannot be effected prior to
the Closing Date, the Closing Date shall be extended, for a period not to exceed
sixty (60) days, to the day after such repairs are completed. If Seller elects
option (b), then the parties shall proceed to Closing with no reduction in the
Purchase Price and Buyer shall receive a credit for any deductible amount under
the insurance coverage. If Seller elects or is deemed to have elected option (b)
and the total damage and destruction exceeds five percent (5%) of the Purchase
Price, Buyer shall have the right to terminate this Contract by written notice
to Seller and the Title Company on or before the earlier of (i) the Closing
Date, or (ii) ten (10) days after Seller elects or is deemed to have elected
option (b).
XI.2 Condemnation. Seller shall not be liable to Buyer in any way if there
is a condemnation (or sale in lieu thereof) of the Project prior to Closing.
Seller shall elect, by delivering written notice to Buyer and Title Company
within fifteen (15) days after Seller receives an offer of award from the
condemning authority, to either (a) terminate this Contract, or (b) proceed to
Closing, subject to the provisions set forth below. If Seller fails to deliver
the notice to Buyer and Title Company within the 15-day period, Seller shall be
deemed to have elected option (b). If Seller elects, or is deemed to have
elected option (b), then Closing shall occur with no reduction in the Purchase
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Price. At Closing, Seller shall (i) pay to Buyer through escrow any condemnation
proceeds received by Seller with respect to the Project, less reasonable fees,
costs and expenses incurred by Seller in connection therewith; and (ii) assign
to Buyer all of Seller's right, title and interest in and to any future
condemnation proceeds with respect to the Project, less reasonable fees, costs
and expenses incurred by Seller in connection therewith. If Seller elects or is
deemed to have elected option (b) and the condemned area constitutes more than
twenty percent (20%) of the gross leasable area of the Project as determined in
accordance with industry standards, Buyer shall have the right to terminate this
Contract by written notice to Seller and the Title Company on or before the
earlier of (i) the Closing Date, or (ii) ten (10) days after Seller elects or is
deemed to have elected option (b). If this Agreement is terminated pursuant to
this Section, the Earnest Money Deposit shall be refunded to Buyer and the
parties shall have no further obligations to each other under this Contract,
except as otherwise set forth in this Contract.
ARTICLE XII
MISCELLANEOUS
XII.1 Notices. All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing, and shall be deemed to be
delivered on receipt if delivered by hand, overnight delivery, or by facsimile,
or whether actually received or not, three (3) days after having been deposited
in a regularly maintained receptacle for the United States mail, registered or
certified, return receipt requested, postage prepaid, addressed as follows:
If to Seller: Dermot Big Curve, LLC
110 Fifteenth Street
Del Mar, California 92014
Attn: Ms. Rebekah Brown
Telephone: (619) 793-2577
Telecopy: (619) 793-0855
With Copy to: Streich Lang, P.A.
Renaissance One
Two North Central Avenue
Phoenix, Arizona 85004-2391
Attn. David L. Johnson
Telephone: (602) 229-5609
Telecopy: (602) 420-5109
If to Buyer: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall Keith
Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to: Lewis H. Sandler, Esq.
United Investors Realty Trust
8080 North Central Expressway
Suite 500
Dallas, Texas 75206
Telephone: (214) 360-3665
Telecopy: (214) 360-3696
James, Goldman & Haugland, P.C.
Attn: Merton B. Goldman, Esq.
8th Floor Texas Commerce Bank Bldg.
201 East Main
El Paso, Texas 79901
Telephone: (915) 532-3911
Telecopy: (915) 541-6440
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XII.2 Governing Law. This Contract is being executed and delivered, and is
intended to be performed, in the State of Arizona, and the laws of Arizona shall
govern the validity, construction, enforcement, and interpretation of this
Contract.
XII.3 Entirety and Amendments. This Contract embodies the entire agreement
between the parties and supersedes all prior agreements and understandings, if
any, relating to the Project, and may be amended or supplemented only by an
instrument in writing executed by the party against whom enforcement is sought.
XII.4 Parties Bound. This Contract shall be binding upon and inure to the
benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and permitted assigns, but shall not inure to the
benefit of another party.
XII.5 Saturday, Sunday or Legal Holiday. If any date set forth in this
Contract for the performance of any obligation by Buyer or Seller or for the
delivery of any instrument or notice should be on other than a Business Day, the
compliance with such obligations or delivery shall be deemed acceptable on the
next following Business Day.
XII.6 Time is of the Essence. It is expressly agreed by Seller and Buyer
that time is of the essence with respect to this Contract.
XII.7 Exhibits. The Exhibits which are referenced in, and attached to,
this Contract are incorporated in, and made a part of, this Contract for all
purposes.
XII.8 Attorney's Fees. If either party hereto shall be required to employ
an attorney to enforce or defend the rights of such party hereunder, the
prevailing party shall be entitled to recover its reasonable attorney's fees and
costs.
XII.9 1031 Exchange. Buyer acknowledges that Seller may wish to perform an
"exchange" pursuant to Section 1031 of the Internal Revenue Code and Buyer
agrees to cooperate with Seller and execute any documents necessary to
effectuate such exchange, subject to the following terms and conditions:
(1) Buyer shall not be required to take title to any property other than
the Project;
(2) Such exchange shall be at Seller's sole cost and expense; and
(3) There shall be no delay in the dates of performance hereunder as a
result of such exchange.
XII.10 Utility Refunds. No agreements or contracts in existence at the
Closing relating to utility refunds or deposit returns are included in the
Purchase Price provided for in this Contract, and Buyer shall have no right,
title or interest therein or in any monies now or hereafter due Seller
thereunder. All refunds, credits and discounts of any nature received by or
accruing to the benefit of Buyer at any time after the Closing relative to the
Project or any part thereof or to any utility for any part of the Project that
were earned or agreed to prior to Closing shall be immediately remitted by Buyer
to Seller in cash. Notwithstanding the foregoing, all amounts deposited with
vendors regularly delivering inventory and supplies to the Project shall, at
Buyer's election, (i) remain on deposit, and such amounts shall be purchased by
Buyer in cash through escrow at Closing, or (ii) be returned to Seller by such
vendors.
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XII.11 Confidentiality. Neither Buyer nor Title Company shall disclose the
terms or existence of this Contract or make, authorize, consent to or confirm
any announcement of the transaction evidenced hereby prior to the Closing or any
termination of this Agreement without the prior written consent of Seller.
XII.12 Expiration of Offer. The execution by one party hereto and delivery
to the other party hereto of an executed counterpart of this Contract shall
constitute an offer to sell or purchase the Project, as may be the case, upon
the terms stated herein. If a counterpart of this Contract executed by one party
hereto without modification is not received by the other party hereto within
three (3) business days after the time and date of the execution by the first,
as indicated below, the offer contained in this Contract shall be null and void.
XII.13 Multiple Counterparts. This Contract may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
agreement, and either of the parties hereto may execute this Contract by signing
any such counterpart.
XII.14 Severability. If any provision of this Contract shall, for any
reason, is held to violate any applicable law, and so much of this Contract is
held to be unenforceable, then the invalidity of such specific provision shall
not be held to invalidate any other provision of this Contract which shall
remain in full force and effect.
XII.15 Assignment. Buyer shall have no right to assign its interest
hereunder without the prior written consent of Seller, and any such assignment
without Seller's consent shall be void at Seller's option. If Buyer is a
corporation, partnership or trust, the transfer or assignment of any stock,
interest or beneficial interest in such corporation, partnership or trust in
excess of forty-nine percent (49%) shall be deemed an assignment within the
meaning of this paragraph. Seller shall not unreasonably withhold its consent to
an assignment by Buyer of its interest hereunder to a wholly-owned subsidiary of
Buyer, provided that the assigning party shall remain liable for all obligations
of Buyer hereunder.
EXECUTED by Buyer on the ______ day of ___________, 1998.
BUYER: UNITED INVESTORS REALTY TRUST, a Texas
real estate investment trust
By: Randall Keith, Chief Operating Officer
EXECUTED by Seller on the ______ day of ____________, 1998.
SELLER: DERMOT BIG CURVE, LLC, an Arizona limited
liability company
By: DICKEY REALTY, LTD., a California
corporation, its manager
By:
Name:
Title:
18
CONTRACT OF SALE
between
VERIQUEST COLONY PLAZA ONE 1997
SELLER
AND
UNITED INVESTORS REALTY TRUST
BUYER
pertaining to the sale and purchase of
Colony Plaza Shopping Center
Missouri City, Texas
<PAGE>
CONTRACT OF SALE
This Contract of Sale (the "Contract") is made and entered into by and
between VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture having its
principal office at 7676 Woodway, Suite 280, Houston, Texas 77067 ("Seller"),
and UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust having
its principal office at 5847 San Felipe, Suite 850, Houston, Texas 77057
("Buyer").
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Business Day" means any day other than a Saturday or Sunday on which
Federal Savings Banks in Houston, Texas are open for business.
"Closing" means consummation of the purchase of the Project by Buyer from
Seller in accordance with the terms and conditions of Article VIII.
"Closing Date" means the date specified in Section 8.1 on which the
closing will be held.
"Contract Date" means the later of the two dates set forth immediately
above each of the signatures of the parties hereto, on the signature page
hereof.
"Delivery Date" means the date on which the last to be received of the (1)
Title Commitment in accordance with paragraph 4.1 herein; (2) the Survey in
accordance with paragraph 4.2 herein; and (3) the Ownership Documents required
by paragraph 5.2(a) herein, are received by Buyer.
"Earnest Money Deposit" means the moneys deposited by Buyer in escrow with
the Title Company at the time and in the amount specified in Section 3.2.
,
"Improvements" means the neighborhood shopping center (the "Shopping
Center") known as Colony Plaza Shopping Center, containing approximately 26,513
square feet of improved retail space, located in Missouri City, Texas, the
fixtures and other improvements now or hereafter situated upon the tract of land
described on Exhibit "A".
"Inspection Period" means the period commencing on the Delivery Date and
ending 15 days thereafter.
"Land" means that certain tract of land located in Fort Bend County,
Texas, and being more fully described on Exhibit "A", together with all rights
appurtenant thereto.
"Leases" means all currently effective leases for space in the
Improvements, including all amendments and modifications thereto and any and all
other agreements with Tenants.
"Permitted Exceptions" means those exceptions or conditions that affect or
may affect title to the Project that are approved or deemed to be approved by
Buyer in accordance with Section 4.3 or Section 4.4.
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"Personal Property" means (a) all tangible personal property owned by
Seller and located on, attached to, or used in connection with, the operation of
the Real Property (but not including any tangible personal property owned or
leased by Tenants), (b) Seller's interest in all personal property leases,
licenses, permits, plans, studies, and utility arrangements with respect to the
Real Property, (c) Seller's interest in all service, maintenance, management or
other contracts relating to the ownership or operation of the Real Property, and
(d) Seller's interest in all warranties and guaranties, if any, relating to the
Real Property.
"Project" means, collectively, the Real Property, the Leases, and the
Personal Property for the Shopping Center.
"Purchase Price" means the total consideration to be paid by Buyer to
Seller for the purchase of the Project.
"Real Property" means the Land and the Improvements for the Shopping
Center.
"Rent Roll" means a schedule for the Project identifying the Tenants at
the Project and providing certain information with respect to the Leases in
accordance with Section 5.2 (a)(iii).
"Tenants" means those persons holding rights as tenants of the Shopping
Center.
"Title Company" means Safeco Land Title Company, having its principal
office at 8080 North Central Expressway, Suite 500, Dallas, Texas 75206,
Attention: Maggie Fielding, Executive Vice President and Escrow Officer.
"Title Underwriter" means Lawyer's Title Insurance Corporation.
"Trade Name" means the name "Colony Plaza Shopping Center", as well as any
other name utilized in conjunction with the operation of the Project.
1.2 Other Defined Terms. Certain other defined terms shall have the
respective meanings assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby agrees
to sell and convey to Buyer, and Buyer hereby agrees to purchase and acquire
from Seller, the Project.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The Purchase Price (herein so called) to be paid by
Buyer to Seller equals Four Million Two Hundred Thousand and No/100 Dollars
($4,200,000.00). The Purchase Price, net of all prorations set forth in this
Contract, shall be payable to Seller through the Title Company at the Closing as
follows:
(a) The agreement of Buyer to assume (except for the matters described in
Section 5.3 hereof), the then current balance of that certain first lien
promissory note (the "Existing Note") as of
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the Closing Date, which is described below, which note is secured by the
following described existing first lien created by that certain deed of trust
(the "Existing Lien") of even date therewith, to-wit:
Promissory Note in the original principal sum of $3,200,000.00, executed
by VeriQuest- Colony Plaza One 1997, a Texas joint venture, made payable
to the order of Holliday Fenoglio, L.P. (the "Lender"), dated as of
November 26, 1997, secured by a deed of trust to William Campbell,
Trustee, also dated as of November 26, 1997, against the Project, such
deed of trust having been recorded in the Deed of Trust Records of Fort
Bend County, Texas.
Seller represents that the unpaid principal balance of the Existing Note equals
approximately $3,200,000.00 as of the Closing Date.
(b) The difference between the Purchase Price and the aggregate unpaid
principal balance of the Existing Note as of the Closing Date shall be paid in
cash to Seller at the Closing, subject to prorations and other credits provided
for in this Contract. The cash portion of the Purchase Price, net of all
prorations set forth in this Contract, shall be payable to Seller through the
Title Company at the Closing in cash or in good federal funds.
3.2 Earnest Money Deposit. Within three (3) business days after the
Contract Date, Buyer shall deliver the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) as an earnest money deposit (the "Earnest Money Deposit")
in cash to the Title Company. The Earnest Money Deposit shall thereafter be held
by the Title Company in escrow to be applied or disposed of by it as is provided
in this Contract. The Earnest Money Deposit shall be invested in short-term
commercial paper having a maturity of thirty (30) days or less and rated P-1 by
Moody's Investor Service, Inc. or A-1 by Standard & Poor's Corp., or in some
other interest-bearing investment acceptable to the Buyer. All interest earned
thereon shall become part of the Earnest Money Deposit. If the purchase and sale
hereunder are consummated in accordance with the terms and conditions hereof,
the Earnest Money Deposit shall be applied to the Purchase Price at the Closing.
In all other events, the Earnest Money Deposit shall be disposed of by the Title
Company as provided elsewhere in this Contract.
ARTICLE IV
TITLE AND SURVEY AND INSPECTION
4.1 Title Commitment. Within three (3) days after the Contract Date,
Seller agrees to order, at the sole cost and expense of Buyer, a current
commitment for Title Insurance for the Project (the "Title Commitment")
countersigned by the Title Company, as agent for the Title Underwriter, which
Title Commitment shall be furnished to Buyer. The Title Commitment shall contain
the express commitment of the Title Company to issue a Texas Form T-1 Owner's
Policy of Title Insurance to the extent permitted by Texas law for the Project,
which shall otherwise be in form and content consistent with Section 4.5 below.
The Title Commitment shall be accompanied by legible copies of all instruments
that create or evidence title exceptions affecting the Real Property.
4.2 Survey. Within three (3) days after the Contract Date, Seller agrees
to furnish to Buyer a copy of the "as-built" survey for the Project in its
possession prepared by Gary Boles of Clark Surveyors (the "Existing Survey").
Buyer has the right to obtain, at Buyer's sole cost and expense, an update of
the Existing Survey to a date subsequent to the Contract Date as certified to
Buyer and the Title Company (the "Survey"). The Survey certification shall be in
such form as Buyer
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may require. The metes and bounds description of the Land contained in the
Survey, if different from that attached as Exhibit "A" hereto, shall be used for
purposes of describing the Real Property in the Special Warranty Deed conveying
title to the Real Property from Seller to Buyer.
4.3 Review of Title Commitment and Survey. Buyer shall have a period of
fifteen (15) days (the "Title Review Period") after delivery to Buyer of both
the Title Commitment and the Survey in accordance with paragraphs 4.1 and 4.2
above in which to review the Title Commitment and the Survey and give written
notice to Seller specifying Buyer's objections (the "Objections"), if any, to
the Title Commitment and the Survey. If Buyer shall fail to give written notice
of Objections to Seller prior to the expiration of the Title Review Period, then
all exceptions to title shown on Schedules B and C of the Title Commitment shall
be deemed to be Permitted Exceptions.
4.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If Buyer
shall have timely notified Seller in writing of Objections to the Title
Commitments or the Survey, then Seller may, but shall not be obligated to, at
any time prior to the expiration of the Inspection Period (the "Cure Period"),
give written notice ("Seller's Title Cure Notice") to Buyer of Seller's
intention to satisfy the Objections prior to the Closing Date. If Seller fails
to timely give Buyer the Seller's Title Cure Notice, then Buyer shall have the
option, prior to Closing, to either (i) waive the unsatisfied Objections, in
which event those unsatisfied Objections shall become Permitted Exceptions, or
(ii) terminate this Contract, in which event the Earnest Money Deposit shall be
returned to Buyer and Seller and Buyer shall have no further obligations, one to
the other, with respect to the subject matter of this Contract.
4.5 Title Policy. At the Closing, Seller shall cause, provided that Buyer
pays the cost thereof, a standard T-1 form Owner's Policy of Title Insurance
(the "Owner's Title Policy") to be furnished to Buyer by the Title Company. The
Owner's Title Policy shall be issued by the Title Underwriter and shall insure
that Buyer has good and indefeasible fee simple title to the Project, subject
only to the Permitted Exceptions. The Owner's Title Policy shall contain no
exceptions other than (i) rights of tenants in possession, as tenants only, (ii)
visible and apparent easements, as shown on the Survey, and (iii) Permitted
Exceptions. At Buyer's option and cost, the "survey exception" in the Owner's
Title Policy shall be modified to read "shortages in area only". The tax
exception shall be limited to taxes for the year of Closing and subsequent years
not yet due and payable and subsequent assessments for prior years due to change
in land usage or ownership.
4.6 Inspection.
(a) Buyer shall have the right, during the Inspection Period, to make such
examinations, studies, tenant credit checks, appraisals, inspections,
engineering, environmental and insurance underwriting tests and investigations
(the "Inspections") of the Project as Buyer may deem advisable. Such Inspections
shall include, without limitation, review of current operating statements,
operating statements for the year 1997 and year-to-date 1998, current rent roll,
true copies of the latest real estate tax bills, true and complete copies of all
service contracts affecting the Project, and any and all other contracts and
agreements relating to the Project. Seller shall cooperate with Buyer in making
available the Project for Buyer's Inspections, including any and all books and
records relating thereto. Buyer may also reinspect the Project prior to Closing
to verify that the Project has remained in the same physical shape, ordinary
wear and tear excepted, as the Project was during the Inspection Period.
(b) If Buyer elects for this Contract to remain in full force and effect
beyond the Inspection Period, then Buyer, at its sole option, shall deliver
written notice (the "Notice to Continue") thereof
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to Seller and Title Company, on or before the expiration of the Inspection
Period. Once the Notice to Continue has been given, the Earnest Money Deposit
shall become at risk. If, however, Buyer does not timely deliver the Notice to
Continue prior to the expiration of the Inspection Period, or if Buyer notifies
Seller and Title Company that Buyer has no further interest in purchasing the
Project, then, in either event, the Earnest Money Deposit shall be returned to
Buyer, and thereafter Seller and Buyer shall have no further obligations, one to
the other, with respect to the subject matter of this Contract. Failure to
deliver the notice to the Seller herein prior to the expiration of the
inspection period shall be deemed to be Buyer's election to terminate the
contract.
(c) Buyer shall indemnify and hold harmless the Seller from and against
all loss, liability, damage, injury and claims resulting from Buyer's testing or
inspection of the Project; provided, however, this indemnity shall not include,
and shall specifically exclude, any loss, liability, damage etc. arising out of
or resulting from Seller's negligence, gross negligence or willful misconduct
and the discovery of any condition that may require remediation under applicable
environmental laws. This indemnity shall survive the Closing or termination of
this Contract for a period of six months, after which this indemnity shall
automatically terminate.
4.7 Additional Delivery Requirements. Buyer has advised Seller that it is
a "reporting" company under the Securities Exchange Act of 1934, and by reason
thereof, Buyer is required to conduct an audit of the Project in conformity with
the rules and regulations promulgated by the Securities and Exchange Commission.
To this end, Seller agrees to cooperate with Buyer to grant access to Buyer's
auditors and authorized representatives in order to permit them to conduct an
audit of the books and records of the Project and to furnish to Buyer and its
authorized agents financial statements, rent rolls and federal income tax
returns associated with the Project for the last three fiscal years, or since
its completion date, if less than three years. Upon completion of the audit,
Seller also agrees to sign a representation letter to Buyer that, to Seller's
best information, all information furnished to Buyer in this regard is true and
complete in all material respects.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS OF SELLER
5.1 Representations and Warranties of Seller. Seller's representations and
warranties set forth in this Contract are true and correct in all material
respects as of the Contract Date and will be true and correct in all material
respects on the Closing Date. Such representations and warranties shall survive
for a period of six months after the Closing Date and shall not be merged
therein. Seller hereby represents and warrants to Buyer as follows:
(a) Seller has the full right, power, and authority to sell and convey to
Buyer the Project as provided in this Contract and to carry out Seller's
obligations hereunder, and all requisite action necessary to authorize Seller to
enter into this Contract and to carry out Seller's obligations hereunder has
been, or on the Closing Date will have been, taken;
(b) There are no adverse or other parties in possession of the Project, or
of any part thereof as lessees, tenants at sufferance, or trespassers, except
Tenants referenced in the Rent Roll to be delivered pursuant to Section 5.2(a);
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(c) Seller has not received written notice from any governmental or
quasi-governmental agency or insurance underwriter requiring or suggesting that
Seller should correct any condition with respect to the Project, which condition
remains uncorrected;
(d) Seller has not received written notice of any pending condemnation
action with respect to all or any portion of the Project and there are no
existing condemnation or other legal proceedings affecting the existing use of
the Project by any governmental authority having jurisdiction over or affecting
all or any part of the Project;
(e) There is no litigation pending or threatened, affecting the Project
other than as incurred in the normal course of business and with respect to
which Seller's insurance underwriter(s) is responsible or with respect to which
Seller shall indemnify and hold harmless Buyer from and after the Closing Date;
(f) There are no unpaid assessments (governmental or otherwise) for
sewers, water, paving, electrical power or otherwise affecting the Project
(matured or unmatured) and no such assessments are threatened;
(g) This Contract constitutes a valid and binding obligation of the
Seller, enforceable in accordance with its terms;
(h) The Seller has good and indefeasible title to the Project, free and
clear of any claim, lien, encumbrance, easement, restriction or other charge,
other than the Permitted Exceptions;
(i) The current use of the Project complies with all currently applicable
zoning ordinances and governmental requirements;
(j) Except as expressly referred to herein, there are no licenses or
security interest against the Land, the Improvements, or the Personal Property
or against any other portion of the Project, nor are there any liens or actions
pending which would result in the creation of any lien against the Land, the
Improvements or against any other portion of the Project, including, but not
limited to water, sewage, street paving, electrical or power improvements, which
give rise to any lien completed or in progress. At the Closing, there will be no
unpaid bills or claims in connection with any repair of the Improvements or
other work performed or material purchased in connection with the Improvements;
(k) The Service Contracts, Leases and other agreements delivered to Buyer
pursuant to this Contract constitute all contracts, leases or agreements
affecting the Project (and the ownership and use thereof); the Ownership
Documents delivered pursuant to Section 5.2 herein are true and correct copies
of the originals and no other amendments or modifications exist thereto; and no
defaults, or events which with notice and/or passage of time would constitute
default, exist thereunder; and each of the Service Contracts (as that term is
defined in Section 5.2(a)(vi)) pertaining to the Project is terminable without
cause prior to the Closing Date;
(l) To Seller's best information, there are no circumstances existing that
would adversely affect the use or value of the Project as a shopping center;
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(m) No permission, approval or consent by any other person, including any
of partners, shareholders, directors or officers of any of the Seller, or
governmental authorities is required in order for Seller to consummate this
Contract, except the holder of the Existing Note;
(n) The existing water, sewer, gas and electricity lines, storm sewer and
other utility systems on the Land as of the date hereof are not impaired and are
sufficient to serve the Project for its current uses. All existing utilities
enter the Land through adjoining public streets or private land in accordance
with valid public or private easements that will inure to the benefit of Seller
and its successors and assigns. All of said utilities have been installed and
are operating, with all installation and connection charges paid in full;
(o) Based on currently applicable taxes, Seller has paid all taxes,
charges, and assessments (special or otherwise) required to be paid to any
taxing authority with respect to the Project (except for taxes and assessments
for the current year not yet due and payable); and no action or proceeding
currently exists by a governmental agency or authority for the assessment or
collection of currently applicable taxes, charges, or assessments with respect
to the Project;
(p) The executed Leases, which are to be delivered by Seller to Buyer at
Buyer's principal office in accordance with the terms of this Contract, are and
shall be true and correct copies, and no Tenants are or shall be entitled to any
rebates, allowances, rent concessions or free rent for any period subsequent to
the Closing. All obligations and items of an inducement nature to be performed
by the Seller as landlord under any of the Leases or to which Seller otherwise
agreed to perform have been fully performed and no commitments have been made to
any Tenant for repairs or improvements other than a general landlord requirement
for normal maintenance in the future. No Leases shall be further modified or
amended without the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Except as reflected on the current Rent Roll to be
delivered to Buyer pursuant to the provisions of Section 5.2 below, no Tenant
has given Seller notice of its intention to vacate its leased premises prior to
the end of the primary term (or any current renewal or extended term). All of
the Leases are in full force and effect without current default by Seller or the
respective Tenants. There are no pending claims asserted by any past or present
Tenants for offsets against rent or any other claims (whether monetary or
otherwise) made against Seller, as landlord, under the Leases or otherwise.
There are no fees or commissions payable to any person or entity in regard to
the Leases or the Project, except as specifically set out in the Rent Roll;
(q) All financial and operating statements, rent rolls, contracts,
agreements and books and records delivered by Seller to Buyer relating to Seller
and its business are true and correct in all respects; and there are no
omissions of any material facts relating thereon;
(r) The Project is not in violation of any applicable laws, rules,
regulations, ordinances, contracts or agreements, including, without limitation,
any and all state, local, city or federal environmental laws, rules and
regulations, any restrictive use agreements, or reciprocal easement or other
similar agreements filed of record in Fort Bend County, Texas and applicable to
the Project;
(s) Seller has full right, title and authority to enter into this
Contract, without the joinder or consent of any other party, and that no other
party has any right, option, interest, or claim to all or any part of the
Project, whether subject to earnest money contract, option agreement, right of
first refusal, reversionary or future interests, or right of reverter; and
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(t) Seller is not a foreign person or entity pursuant to the Foreign
Investment in Real Property Tax Act or the Tax Reform Act of 1986, and Buyer is
not obligated to withhold any portion of the Purchase Price for the benefit of
the Internal Revenue Service.
5.2 Covenants and Agreements of Seller. Seller covenants and agrees with
Buyer as follows:
(a) Within five (5) business days following the Contract Date, Seller
shall deliver to Buyer the following items (the "Ownership Documents") with
respect to the Project:
(i) To the extent that Seller has in its possession, copies of
"as-built" plans and specifications for the Improvements and copies
of the results of all physical inspections, all structural,
mechanical, engineering reports, soil reports and traffic studies
that have been prepared with respect to the Real Property, and a
zoning verification letter from the authorities of Missouri City,
Texas with copies of all applicable zoning ordinances then in effect
which apply to the Project;
(ii) Current certificates of occupancy in the name of the Seller and
building permits (if available) for each building within the
Project, and, to the extent that Seller has in its possession, a
current phase I environmental report and ADA study;
(iii) Current Rent Roll for the Project, which Rent Roll shall set
forth with respect to each Tenant the following;
(A) the name and street or unit number of the Tenant;
(B) the term of the Tenant's Lease, its commencement and
expiration dates, any renewal terms or extensions and the base
rent and percentage rent, if any, payable thereunder;
(C) the amount of monthly base rent and percentage rent, if
any, payable by and portion of the Project's CAM and real
estate taxes and insurance premiums recoverable from each
Tenant and any other payments for which such Tenant is liable;
(D) amount of prepaid rent and the amount of security and
other deposits due under the Lease and held by Landlord;
(E) the amount of any ongoing Lease commission obligations, if
any, and to whom such commission is owed and copies of all
brokerage commission agreements relating to the Leases;
(F) any uncured defaults and the amounts of any unpaid rents,
percentage rents, and other payments past due thereunder;
(G) the amount of any offsets or credits against rental, if
any; and
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(H) any concessions granted to the Tenant, including, without
limitation, free rent, rental rebates or credits, lease
take-over arrangements, cash payments, and moving allowances;
(iv) Copy of the most recent or current real estate and personal
property tax bills or other documentation showing the amount of
current real property taxes and the assessed value of the Project;
(v) A schedule setting forth property and liability insurance
coverage on or affecting the Project and the current premiums
therefor together with a written summary of all claims made against
the Project's insurance policies since January 1, 1997.
(vi) Copies of all existing service, maintenance, operations, and
management and other contracts relating to the management, operation
or maintenance of the Project (the "Service Contracts"), and any
commission agreements affecting the Project;
(vii) Copies of true and correct operating income and expense
statements with respect to the Project, accurately reflecting the
operating history of the Project for calendar year 1997 and for
year-to-date 1998, together with operating budgets for calendar
years 1997 and 1998, if available, for the Project;
(viii)A detailed summary of all capital expenditures for the
calendar years 1997 and for year-to-date 1998, together with the
capital expenditure budgets for calendar years 1997 and 1998, if
available, for the Project;
(ix) All warranties and guaranties currently in force, if any,
relating to the Project or any equipment, appliances or other
personalty located in or used on the Real Property and in the
possession of Seller or its agents;
(x) True and complete copies of all Leases, including all
amendments, extensions and modifications thereof; and
(xi) Such other information and/or documentation as Buyer shall
reasonably request, and which is in Seller's possession or control.
All materials delivered by Seller to Buyer pursuant to this Sections 4.6,
4.7 and Section 5.2(a) shall be held in confidence by Buyer and disclosed only
to its attorneys, accountants, and prospective lenders and securities
underwriters and their respective attorneys. If the parties fail to consummate
the transaction described herein for any reason other than the Seller's default,
Buyer shall return to Seller all materials delivered by or on behalf of Seller
pursuant to or in connection with this Contract.
(b) From the Contract Date until the Closing Date, Seller undertakes and
agrees, with respect to the Project, that it will:
(i) Operate and maintain the Project in a good and workmanlike
manner and in accordance with all applicable laws;
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(ii) Promptly notify Buyer in writing of any litigation, arbitration
or administrative hearing before any court or governmental agency
concerning or affecting the Project which is instituted or
threatened after the Contract Date;
(iii) Following the expiration of the Inspection Period, not
terminate or modify any Lease or commence any judicial action
against any Tenant other than in the normal course of business
without the prior written consent of Buyer, which consent shall not
be unreasonably withheld;
(iv) Following the expiration of the Inspection Period, not execute
any new lease or agree to the terms of any lease renewal without the
prior written consent of the Buyer, which consent shall not be
unreasonably withheld;
(v) Promptly notify Buyer in writing of any notice received from a
Tenant of its election to vacate its leased premises or terminate
its Lease, or of any election by Seller to terminate any Lease or
commence any judicial action against any Tenant;
(vi) Not sell, exchange, transfer, assign, convey or encumber or
otherwise dispose of all or any part of the Project or any interest
therein, nor shall Seller remove any Personal Property unless Seller
shall replace the removed items with similar items of comparable
quality;
(vii) Maintain the Project in good condition and repair, except for
normal wear and tear, and Seller shall not in any manner neglect the
Project;
(viii)There will be no rental or other concessions of any nature
granted to any Tenant other than those set forth in the Leases and
on the Rent Roll delivered to Buyer pursuant to Section 5.2
(a)(iii), above;
(ix) Promptly notify Buyer in writing if Seller discovers any
defect, error or omission in any of the Ownership Documents,
detailing the nature of the defect, error or omission;
(x) Not, without the prior written consent of the Buyer, enter into
or modify any Service Contracts which are not terminable without
cause on or before the Closing Date; or
(xi) Not, without the prior written consent of Buyer, consent to any
assignment or sublease or other encumbrance by a Tenant of its
interest, or any part thereof, in its Lease, except as may be
required by the terms of the Lease.
5.3 Agreements Concerning Existing Note.
(a) Notwithstanding anything to the contrary contained in this Contract,
the Existing Note, the Existing Lien, or in any other document or agreement made
or executed in connection herewith or therewith, it is agreed that Buyer shall
assume payment of the Existing Note and performance of the agreements of the
Existing Liens and any other instrument securing the payment of the Existing
Note which accrue or arise after the Closing Date.
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(b) At the Closing, Seller agrees to use its best efforts to obtain from
the holder of the Existing Note (the "Lender") a Lender's Consent and Estoppel
(herein so called) signed by the Lender, confirming that it has no objection to
the sale to Buyer of the Project, subject to the unpaid principal balance of the
Existing Note as of the Closing Date, provided that Buyer assumes liability for
the payment of the Existing Note and the other instruments securing the Existing
Note, which accrue or arise after the Closing Date. Further, the Lender's
Consent and Estoppel shall state as of the date not earlier than the first day
of the month in which this Contract is closed, the following:
(i) The unpaid balance of principal and accrued interest on the
Existing Note;
(ii) That there are no past due payments either of principal or
interest owing on the Existing Note;
(iii) That to the current actual knowledge of the Lender (without
any investigation), there are no uncured defaults under the Existing
Lien or any other instrument securing the Existing Note;
(iv) That the Existing Note, the Existing Lien and all other
instruments securing the Existing Note are, to the current actual
knowledge of Lender (without any investigation), presently in full
force and effect;
(v) The amount of any impounds held by the Lender for payment of
insurance premiums or ad valorem taxes or other expenses related to
the Project and the Existing Lien securing same; and
(vi) The amount of each monthly payment and the amount of monthly
impounds.
Buyer agrees to provide Lender with all available information reasonably
needed to obtain the Lender's Consent and Estoppel from the Lender.
(c) Seller agrees to pay to Lender any transfer fee or other costs charged
by the Lender, in connection with its agreement to permit the transfer of the
Project to the Buyer and obtaining the Lender's Consent and Estoppel.
(d) Seller shall not, at any time, either prior to or after Closing,
alter, renew, rearrange, restructure or refinance any indebtedness evidenced by
the Existing Note or modify the Existing Note or any instrument securing the
Existing Note, without the prior written consent of Buyer; and Seller shall
neither accept nor request any extension, postponement, indulgence or
forgiveness of the Existing Note or the indebtedness evidenced thereby, without
the prior written consent of Buyer.
5.4 Survival Beyond Closing. The representations, warranties, undertakings
and agreements of Seller contained herein shall survive for a period of six
months after the Closing and shall not be merged therein.
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ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF BUYER
Buyer represents, warrants, covenants, and agrees with, Seller as of the
Contract Date, that, except as otherwise hereinafter expressly provided, Buyer
has the full right, power, and authority to purchase the Project from Seller as
provided in this Contract and to carry out Buyer's obligations under this
Contract, and all requisite action necessary to authorize Buyer to enter into
this Contract and to carry out Buyer's obligations hereunder has been, or on the
Closing Date will have been, taken.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
7.1 Conditions Precedent to Buyer's Obligations. Buyer shall not be
obligated to consummate the transaction described in this Contract unless:
(a) Seller shall have furnished or caused to be furnished to Buyer all of
the items required to be furnished by Seller under Section 5.2(a);
(b) Seller shall have furnished or caused to be furnished to Buyer the
Lender's Consent and Estoppel described in Section 5.3;
(c) Seller shall have performed in all material respects all of the
agreements, covenants and obligations contained in this Contract to be performed
or complied with by Seller on or prior to the Closing Date;
(d) All representations and warranties made by Seller hereunder shall be
true, complete and accurate in all material respects as of the Closing Date;
(e) The Title Company shall be prepared to deliver at Closing the Owner's
Title Policy described in Section 4.5;
(f) UCC searches conducted by the Title Company within five (5) days prior
to the Closing Date shall show that none of the Personal Property has been
pledged, encumbered or transferred;
(g) Tenant Estoppel Certificates shall have been received by Buyer from at
least 80% of the tenants in number and gross revenues of the Project, which
Estoppel Certificates shall confirm the information set forth on the Rent Roll
delivered (A) as part of the Ownership Documents, as modified to reflect any
non-substantive changes thereto, or (B) with respect to Tenants who have
executed new leases since the Contract Date, as reflected on the Rent Roll to be
delivered in connection with the Closing;
(h) If the Project is subject to any reciprocal easement agreements,
agreement of covenants, conditions and restrictions or similar documents
pertaining to the Project and any adjoining properties, Buyer shall have
received an estoppel certificate from all parties to such instruments, which
estoppel certificate shall be dated not more than 30 days prior to the Closing
Date and shall state, inter alia, that there are no defaults by Seller or claims
against Seller arising out of such documents and shall otherwise be in form and
substance reasonably acceptable to Buyer;
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(i) There shall be no material change in the matters reflected in the
Title Commitment or Survey and all municipal and utility services shall be
available to the Project;
(j) No material changes shall have occurred or be threatened with respect
to the Project which would adversely affect the findings made during the
Inspection Period;
(k) The Improvements and Personal Property at the Project shall be in the
same condition as they were during the Inspection Period, ordinary wear and tear
excepted;
(l) There shall be no litigation pending or threatened that could
materially adversely affect the Project; and
(m) No Tenants (other than Einstein Bagels) occupying space under Leases
covering in the aggregate 6,000 square feet of space, have filed a petition
under any section of the Bankruptcy Code, as amended, or under any similar law
or statute of the United States or any State thereof; nor shall any Tenants
occupying space under Leases covering in the aggregate 6,000 square feet of
space have been adjudged bankrupt or insolvent and no receiver or trustee shall
have been appointed for any such Tenants or any of the assets of any such
Tenants; and any Tenants occupying space under Leases covering in the aggregate
6,000 square feet of space shall not "have gone dark" with respect to their
space at the Project or shall have notified Seller of their intention to do so.
7.2 Termination if Conditions Precedent not Satisfied or Waived. If any of
the conditions precedent to the performance of Seller's obligations under this
Contract have not been satisfied, waived, or deemed waived by the Buyer within
the time frame established herein or otherwise by the Closing Date, then the
Buyer may, at its option, by written notice delivered to the obligated party and
Title Company, terminate this Contract, in which event the Earnest Money Deposit
shall be returned to Buyer and thereafter Buyer and Seller shall have no further
obligations, one to the other, with respect to the subject matter of this
Contract, subject to the provisions of Article IX hereof.
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. Provided that all of the conditions of this
Contract shall have been satisfied prior to or on the Closing Date (herein so
called), the Closing (herein so called) of this transaction shall take place at
the offices of the Title Company in Dallas, Texas, thirty (30) days after the
expiration of the Inspection Period or the Title Review Period, whichever is
later, or such earlier date as may be specified by Buyer by not less than five
(5) days advance written notice to Seller.
8.2 Items to be Delivered at or Prior to the Closing
(a) Seller. At the Closing, Seller shall deliver or cause to be delivered
to Buyer or the Title Company, the following items fully executed and
acknowledged where so indicated by all necessary parties in respect to the
Project:
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(i) The Owner's Title Policy to Buyer, at Buyer's expense, in the
form specified in Section 4.5 (unless waived by Buyer in accordance
with the provisions of Section 4.5);
(ii) A Special Warranty Deed, duly executed and acknowledged by
Seller, in the form of Exhibit "C", subject only to the Permitted
Exceptions;
(iii) The original Leases, or, if any original Leases are not
available, copies of any such Leases certified by Seller as being
true, correct and complete;
(iv) Duplicate originals of an assignment and assumption of leases
(the "Assignment of Leases") in the form attached hereto as Exhibit
"D", duly executed by Seller;
(v) A bill of sale and assignment in the form, attached hereto as
Exhibit "E", duly executed by Seller;
(vi) Duplicate originals of an assignment and assumption of Service
Contracts (the "Assignment of Service Contracts") in the form or
substantially the form, attached hereto as Exhibit "F", duly
executed by Seller;
(vii) An affidavit, in the form, or substantially in the form,
attached as Exhibit "G", in compliance with Section 1445 of the
Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder, stating under penalty of perjury the
Seller's United States identification number and that Seller is not
a "foreign person" as that term is defined in Section 1445, duly
executed and acknowledged by Seller;
(viii)A notice of sale in the form, or substantially in the form,
attached hereto as Exhibit "H", (the "Tenant Notice Letter") for
each of the Tenants, duly executed by Seller and Buyer;
(ix) A tenant estoppel letter in the form attached hereto as Exhibit
"I" from each Tenant at the Project, as prescribed in Section
7.1(g), which estoppel letters shall be signed and dated by each
Tenant not more than 30 days prior to the Closing Date;
(x) All keys or other access devices in the possession of Seller or
its agents to all locks located at the Project;
(xi) Originals of all Service Contracts, plans, governmental
approvals, and other contracts and agreements in Seller's possession
relating to the ownership and operation of the Project;
(xii) Originals, to the extent available, and, if not available,
true and correct copies of all books and records pertaining to the
operation of the Project for the calendar year 1997 and for
year-to-date 1998, in the possession of Seller or Seller's agent;
(xiii)Appropriate evidence of authorization and opinion of Seller's
counsel reasonably satisfactory to the Title Company (if required by
the Title Company) regarding the consummation of the transaction
contemplated by this Contract;
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(xiv) Unless waived by Buyer, notices of cancellation, to be
effective within thirty days of the Closing Date, of all Service
Contracts affecting the Project;
(xv) A reaffirmation certificate executed by Seller wherein Seller
reaffirms and confirms that the representations and warranties of
Seller set forth in this Contract are true and such representations
and warranties of Seller remain true and correct as of the Closing
Date;
(xvi) Letters to all utility companies advising of the change of
ownership of the Project and an assignment of any deposits currently
held by the utility company for the benefit of the Seller;
(xvii)Any other items reasonably requested by the Title Company as
administrative requirements for consummating the Closing.
(b) Buyer. At the Closing, Buyer shall deliver or cause to be delivered to
Seller or the Title Company, the following items:
(i) The cash sum required by Section 3.1 and the Assumption Deed of
Trust in the form of Exhibit "C";
(ii) Duplicate originals of the Assignment of Leases duly executed
by Buyer;
(iii) Duplicate originals of the Assignment of Service Contracts
duly executed by Buyer;
(iv) Appropriate evidence of authorization reasonably satisfactory
to Seller and the Title Company for the consummation of the
transaction contemplated by this Contract; and
(v) Any other items reasonably requested by the Title Company as
administrative requirements for consummating the Closing.
8.3 Adjustments at Closing. Notwithstanding anything to the contrary
contained in this Contract or applicable law, the provisions of this Section 8.3
shall survive for a period of six months following the Closing. All income and
obligations attributable to days preceding the Closing Date shall be allocated
to Seller, and all income and obligations attributable to days from and after
the Closing Date shall be allocated to Buyer. Without limitation upon the
foregoing, the following items shall be adjusted or prorated between Seller and
Buyer as set forth below:
(a) Ad valorem and personal property taxes relating to the Project for the
calendar year in which the Closing occurs shall be prorated between Seller and
Buyer as of the Closing Date based upon taxes actually paid by Seller for the
calendar year in which the Closing occurs, if Seller has paid such taxes prior
to Closing, and otherwise upon the ad valorem and personal property taxes due
assuming payment in December of the year of Closing. If the actual amount of
taxes for the calendar year in which the Closing shall occur is not known as of
the Closing Date, the proration shall be based on the amount of taxes due and
payable with respect to the Project using the latest assessed value and tax
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rate. All other assessments affecting the Project, if any, assessed and due
prior to Closing Date, shall be paid by the Seller and if assessed after the
Closing Date, shall be paid by the Buyer.
(b) Base rents, escalation or reimbursement payments for real estate and
personal property taxes, insurance premiums, CAM or other operating expenses and
charges, payable with respect to the Project for the then current month shall be
prorated as of the Closing Date. In respect to those tenant leases with AAA,
Roxie's and Vision Source, Buyer shall be entitled to a credit at Closing an
amount equal to the difference between the higher rental rate which become
payable by the Tenant under terms of such leases and the actual rate payable by
such Tenant as of the Closing Date and for the period of time expiring when such
rent increases takes effect. Percentage rents for each Tenant obligated therefor
shall be pro-rated on the basis of the number of days lapsed during the Tenant's
percentage rent period as of the Closing Date and not on the basis of the amount
of the Tenant's sales which accrued during such percentage rent period as of the
Closing Date. Such proration may not be capable of determination at the Closing
Date, in which event, such prorations shall be made post-Closing. Any rent
concessions granted by the Seller to Tenants for free rent, concessions or
abatements, which apply to periods after the Closing Date shall not be prorated
but shall be credited to the Buyer. With respect to any Tenant ("Delinquent
Tenant") who owes rents and other charges which at Closing are past due, such
past due rents and other charges ("Delinquencies") shall not be prorated. Buyer
shall remit such Delinquencies, if any, if, as and when collected by Buyer,
provided, however, that if a payment is received by Buyer from a Delinquent
Tenant, such payment may be applied by Buyer first to any rents or other sums
that are past due by such Delinquent Tenant from and after the Closing Date. The
right to receive and collect all rents and profits, delinquent or otherwise,
shall be assigned by Seller to Buyer at Closing.
(c) All other income and ordinary operating expenses of the Project,
including, without limitation, public utility charges, maintenance, management,
and other service charges, and all other normal operating charges shall be
prorated at the Closing effective as of the Closing Date based upon the best
available information. The obligation of the parties to adjust, post-Closing,
and any operating expenses as of the Closing Date, shall, to the extent unknown
or not provided for at Closing, survive the Closing and shall be paid by the
party responsible therefor within ten (10) days after written demand therefor
has been made. Such demand shall include a copy of the invoice(s) for which
payment or reimbursement is sought.
8.4 Deferred Leasing Commissions. The amount of any unpaid leasing
commissions payable on account and over the term of existing Leases or Leases
entered into between the date hereof and the Closing Date shall either be paid
by the Seller or treated as a credit to Buyer. Commissions payable on account of
Leases which are subject to renewal at the option of the Tenant and with respect
to which the options have not been exercised prior to the Closing Date shall not
be covered by the preceding sentence.
8.5 Possession. Possession of the Project shall be delivered to Buyer by
Seller at the Closing, subject to the rights of the Tenants.
8.6 Costs of Closing. Each party shall be responsible for paying the legal
fees of its counsel in negotiating, preparing, and closing the transaction
contemplated by this Contract. Seller shall pay for real estate tax searches and
current UCC searches. Buyer shall pay cost of the title insurance premium, its
own engineering and environmental inspections as well as for the charges
attributable to recording the warranty deed and Tenant credit checks. The
parties shall split the cost of any title company escrow fees. Any other
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expenses that are incurred by either party that are expressly identified herein
as being the responsibility of a particular party shall be paid by such party.
All other expenses shall be allocated between the parties in the customary
manner for sales of real property similar to the Project in Houston, Texas.
8.7 Provisions of Article VIII to SurvivThe provisions of this Article VIII
shall survive for a period of six months following the Closing.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Default of Buyer. If Buyer fails or refuses to consummate the
transaction contemplated by this Contract, for any reason other than termination
of this Contract by Buyer pursuant to a right to do so expressly set forth in
this Contract, then such event shall constitute a default by Buyer hereunder and
the Seller may, as the Seller's sole and exclusive remedy for such default,
either (i) bring an action against the Buyer for specific performance of the
Buyer's obligations under this Contract, or (ii) terminate this Contract by
giving written notice thereof to Buyer and the Title Company at or prior to the
Closing Date, whereupon the Title Company shall deliver the Earnest Money
Deposit (including the interest earned thereon) to the Seller which shall
constitute liquidated damages hereunder and thereafter neither party hereto
shall have any further rights or obligations hereunder. It is agreed that the
Earnest Money Deposit is a reasonable forecast of just compensation for the harm
that would be caused by such default, which the parties agree is one that is
incapable or very difficult of accurate estimation, and that payment of the
Earnest Money Deposit upon such default shall constitute full satisfaction of
Buyer's obligations hereunder.
9.2 Default of Seller. If Seller fails or refuses to consummate the sale of
the Project to Buyer pursuant to this Contract at the Closing or fails to
perform any of Seller's other obligations hereunder for any reason other than
Buyer's failure to perform Buyer's obligations under this Contract, then Buyer
may, as Buyer's sole and exclusive remedy for such default, either (i) bring an
action against the Seller for specific performance of the Seller's obligations
under this Contract, (ii) terminate this Contract by giving written notice
thereof to Seller and the Title Company at or prior to the Closing Date,
whereupon the Title Company shall deliver the Earnest Money Deposit (including
the interest earned thereon) to Buyer and thereafter neither party hereto shall
have any further rights or obligations hereunder, or (iii) receive the return of
the Earnest Money Deposit and prosecute an action for damages if Seller has
conveyed or hypothecated the Project to a third party in violation of the terms
hereof.
9.3 Earnest Money. In the event either Seller or Buyer becomes entitled to
the Earnest Money Deposit upon cancellation of this Contract in accordance with
its terms, such party may deliver a letter of instruction to the Title Company
directing disbursement of the Earnest Money Deposit to the party entitled
thereto. The party delivering such notice to the Title Company shall
concurrently deliver a copy of the notice to the other party hereto. Upon the
expiration of three (3) business days after its receipt of the letter of
instructions, the Title Company may deliver the Earnest Money Deposit to the
party as specified in the letter of instructions unless, within such three (3)
business day period, the Title Company shall have received a written objection
to such delivery from the other party hereto. In such event, the Title Company
shall not deliver the Earnest Money Deposit to either party unless it has a
written authorization to do so signed by both parties or a court order has been
issued by a court of competent jurisdiction to deliver the Earnest Money Deposit
to one of the parties hereto. The Title Company may deposit the Earnest Money
Deposit into a court of
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competent jurisdiction and thereafter shall have no further interest in or
responsibility for this Contract or for the Earnest Money Deposit.
9.4 Indemnification of Title Company. Each party hereto hereby indemnifies
and holds harmless the Title Company from any loss, damage or claim therefor
arising out of or in connection with the receipt and disposition of the Earnest
Money Deposit in accordance with the instructions set forth in this Contract.
These indemnities shall survive the termination of this Contract or a closing
pursuant hereto.
ARTICLE X
BROKERAGE COMMISSIONS
10.1 Amount. If, and only if Closing occurs, Seller hereby agrees to pay a
real estate brokerage commission in the amount of $120,000 to Bill Lovejoy and
Ewing King (the "Brokers") to be divided as they may agree. There is no other
broker or agent entitled to commissions under this agreement.
10.2 Indemnity. Seller hereby represents and warrants to Buyer that it has
not contacted or entered into any agreement with any other real estate broker,
agent, finder, or any other party in connection with this transaction, and that
Seller has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due or payable to any other party
with respect to the transaction contemplated hereby. Buyer hereby represents and
warrants to Seller that Buyer has not contracted or entered into any agreement
with any real estate broker, agent, finder, or other party in connection with
this transaction, other than as identified in Section 10.1, and that Buyer has
not taken any action which would result in any real estate broker's, finder's,
or other fees or commissions being due or payable to any other party with
respect to the transaction contemplated hereby. Each party hereby indemnifies
and agrees to hold the other party harmless from any loss, liability, damage,
cost, or expense (including, but not limited to, reasonable attorneys' fees)
resulting to the other party by reason of a breach of the representation and
warranty made by such party in this Section 10.2. The indemnities set forth in
this Section 10.2 shall survive the Closing. ARTICLE XI CASUALTY OR CONDEMNATION
(a) Seller agrees to give Buyer and Title Company prompt notice of any fire
or other casualty affecting the Project or of any actual or threatened taking or
condemnation of all or any portion of the Project. If, prior to the Closing,
there shall occur:
(i) damage to the Project caused by fire or other casualty; or
(ii) a threatened or actual taking or condemnation of all or any portion of
the Project,
then, Buyer shall have the right to terminate this Contract by written
notice delivered to Seller within ten (10) days after Buyer has received notice
from Seller of that event or the date on which Buyer learns of that event,
whichever shall last occur. If Buyer terminates this Contract, the Earnest Money
Deposit shall be returned to Buyer and the parties shall have no further
obligations under this Contract, or to each other with respect to the subject
matter of this Contract. Notwithstanding the foregoing, in the event that the
cost of repairing or restoring such damage shall be covered by
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available insurance and such cost shall be less than $100,000, then Buyer shall
proceed to Closing and Seller shall assign at Closing to Buyer its right, title
and interest in the insurance proceeds available to repair or restore the damage
or destruction and to any applicable rent loss insurance and, in addition,
Seller shall credit the Purchase Price with the amount of any deductible under
such insurance policy(s).
(b) In the event of damage or destruction to the Project, Buyer may
postpone the Closing Date pending a determination of the nature and extent of
such damage or destruction and the availability and adequacy of insurance
proceeds. Such postponement shall be by written notice from Buyer to Seller and
Title Company and shall remain in effect for a period of ten (10) days (the
"Damages Determination Period") following Buyer's determination of the nature
and extent of the damage or destruction and the availability and adequacy of
insurance proceeds for repair or restoration.
(c) If the cost to repair or replace the damage is reasonably estimated by
the Seller's insurance adjuster to exceed $100,000, then at Buyer's election and
in its sole discretion, Buyer may elect to proceed with the Closing and at the
Closing, Seller shall assign to Buyer its right, title and interest in the
insurance proceeds available to repair or restore the damage or destruction and
to any applicable rent loss proceeds, and Seller shall credit the Purchase Price
with the amount of any deductible under such insurance policy(s).
(d) In the event that Buyer fails to notify Seller and Title Company of its
intention to proceed to Closing and accept as assignment of the insurance
proceeds prior to the expiration of the Damage Determination Period, the
Contract shall automatically terminate and the Earnest Money Deposit shall be
returned to Buyer forthwith.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing, and shall be deemed to be
delivered on receipt if delivered by hand, overnight delivery, or by facsimile,
or whether actually received or not, three (3) days after having been deposited
in a regularly maintained receptacle for the United States mail, registered or
certified, return receipt requested, postage prepaid, addressed as follows:
If to Seller: Veriquest Colony Plaza One 1997
7676 Woodway, Suite 280
Houston, Texas 77067
With Copy to: Leo A. Kissner, Esq.
Kissner & Sandvig, P.C.
4265 San Felipe
Suite 550
Houston, Texas 77027-2974
Telephone: (713) 850-0004
Telecopy: (713) 850-1515
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If to Buyer: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall Keith
Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to: Lewis H. Sandler, Esq.
United Investors Realty Trust
8080 North Central Expressway
Suite 400
Dallas, Texas 75206
Telephone: (214) 360-3665
Telecopy: (214) 360-3696
James, Goldman & Haugland, P.C.
Attn: Merton B. Goldman, Esq.
8th Floor Texas Commerce Bank Bldg.
201 East Main
El Paso, Texas 79901
(915) 532-3911
FAX: (915) 541-6440
12.2 Governing Law. This Contract is being executed and delivered, and is
intended to be performed, in the State of Texas, and the laws of Texas shall
govern the validity, construction, enforcement, and interpretation of this
Contract. This Contract is performable in, and the exclusive venue for any
action brought with respect hereto, shall lie in Harris County, Texas.
12.3 Entirety and Amendments. This Contract embodies the entire agreement
between the parties and supersedes all prior agreements and understandings, if
any, relating to the Project, and may be amended or supplemented only by an
instrument in writing executed by the party against whom enforcement is sought.
12.4 Parties Bound. This Contract shall be binding upon and inure to the
benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and permitted assigns, but shall not inure to the
benefit of another party.
12.5 Saturday, Sunday or Legal Holiday. If any date set forth in this
Contract for the performance of any obligation by Buyer or Seller or for the
delivery of any instrument or notice should be on other than a Business Day, the
compliance with such obligations or delivery shall be deemed acceptable on the
next following Business Day.
12.6 Time is of the Essence. It is expressly agreed by Seller and Buyer
that time is of the essence with respect to this Contract.
12.7 Exhibits. The Exhibits which are referenced in, and attached to, this
Contract are incorporated in, and made a part of, this Contract for all
purposes. If one or more exhibits to be
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attached to this Agreement according to the terms hereof are not so attached or
are incomplete upon the actual date of execution hereof, then all such missing
or incomplete exhibits must be prepared or completed by the Buyer prior to the
expiration of the Inspection Period; on or before the expiration of the
Inspection Period, Seller has the right to approve, in its sole discretion, the
form and contents of each such exhibit supplied by the Buyer pursuant to this
paragraph and such approval by Seller is a condition precedent to Buyer to the
Closing.
12.8 Attorney's Fees. If either party hereto shall be required to employ
an attorney to enforce or defend the rights of such party hereunder, the
prevailing party shall be entitled to recover its reasonable attorney's fees and
costs.
12.9 Expiration of Offer. The execution by one party hereto and delivery
to the other party hereto of an executed counterpart of this Contract shall
constitute an offer to sell or purchase the Project, as may be the case, upon
the terms stated herein. If a counterpart of this Contract executed by one party
hereto without modification is not received by the other party hereto within
three (3) business days after the time and date of the execution by the first,
as indicated below, the offer contained in this Contract shall be null and void.
12.10 Multiple Counterparts. This Contract may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
agreement, and either of the parties hereto may execute this Contract by signing
any such counterpart.
12.11 Severability. If any provision of this Contract shall, for any
reason, is held to violate any applicable law, and so much of this Contract is
held to be unenforceable, then the invalidity of such specific provision shall
not be held to invalidate any other provision of this Contract which shall
remain in full force and effect.
12.12 Assignment. This Contract may be assigned by Buyer to any affiliated
entity without the prior written consent of Seller.
EXECUTED by Buyer on the ______ day of April, 1998.
BUYER: UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust
By: /s/ Randall Keith, Chief Operating Officer
------------------------------------------------
Randall Keith, Chief Operating Officer
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EXECUTED by Seller on the ___________ day of April, 1998
SELLER: VERIQUEST-COLONY PLAZA ONE 1997,
a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd., a Texas
limited partnership, a Joint Venturer
By: Veriquest Companies, Inc., a Texas
corporation, its General Partner
By: /s/ Jerry E. Allgood, President
------------------------------------------------
Jerry E. Allgood, President
By: Colony Six CD, Ltd., a Texas limited partnership,
a Joint Venturer
By: CD-GP, Inc., its General Partner
By: /s/ S. Jay Williams, President
------------------------------------------------
S. Jay Williams, President
Receipt of a fully executed copy of the Contract and a check, subject to
collection for the Earnest Money Deposit received this _________day of April,
1998.
TITLE COMPANY: SAFECO LAND TITLE COMPANY
By:
Name:
Title:
EXECUTED BY BROKERS this day of April, 1998.
BILL LOVEJOY
EWING KING
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List of Attachments
Exhibit "A" - Description of Land
Exhibit "B" - Survey Requirements
Exhibit "C" - Form of Special Warranty Deed and Assumption
Deed of Trust
Exhibit "D" - Form of Assignment of Leases
Exhibit "E" - Form of Bill of Sale and Assignment
Exhibit "F" - Form of Assignment of Service Contracts
Exhibit "G" - Non-Foreign Affidavit
Exhibit "H" - Form of Tenant Notice Letter
Exhibit "I" - Form of Tenant Estoppel Letter
23
Excess land contract
EARNEST MONEY CONTRACT
This Contract of Sale (the "Contract") is made and entered into by and
between VERIQUEST PROPERTY COMMERCE 1995-I, a Texas joint venture having its
principal office at 7676 Woodway, Suite 280, Houston, Texas 77067 ("Seller"),
and UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust having
its principal office at 5847 San Felipe, Suite 850, Houston, Texas 77057
("Buyer"). This Contract is dated as of the later of the two dates set forth
immediately above each of the signatures of the parties hereto, on the signature
page hereof (the "Contract Date"). In consideration of the agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
ARTICLE I
The Property
1.1 Property. Subject to the terms and provisions of this Contract, Seller
agrees to sell to Buyer, and Buyer agrees to purchase from Seller, all of the
following described property (collectively, the "Property"):
(a) A certain tract of land located in Fort Bend County, Texas,
being described more fully on Exhibit "A" which is attached hereto and
incorporated herein by reference ( the "Land"). The Land also includes any
interest of Seller in and to (i) any strips or gores between the property
described on Exhibit "A" and all abutting properties and (ii) any land
lying in or under the bed of any street, alley, road or right of way,
opened or proposed, abutting or adjacent to the Land;
(b) Any and all buildings, fixtures, improvements, structures and
personal property situated on the Land;
(c) All rights in and to roads, rights-of-way, ingress and egress
easements relating to the Land, and all other rights of access thereto;
(d) All mineral rights owned and held by Seller relating to the
Land, whether surface or subsurface, or otherwise;
(e) All site plans, surveys, soil and substrata studies, plans and
specifications, engineering plans and studies and other plans, diagrams or
studies of any kind, if any, in Seller's possession or control which
relate to the Land;
(f) All rights, privileges, tenements, hereditaments, reversionary
interests, appendages, appurtenances, riparian or littoral rights
belonging in or in anywise appertaining to the Land; and
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(g) All rights, titles and interests of Seller in and to any award
or awards heretofore or hereafter made by any municipal, county, state or
federal authority or board to the present and all subsequent owners of the
Land.
1.2 Additional Earnest Money ContrReference is here made to that certain
Contract of Sale between Veriquest-Colony Plaza One 1997, a Texas joint venture,
as seller therein (the "Shopping Center Seller") and Buyer as buyer therein (the
"Additional Shopping Center Contract"), dated as of the Contract Date hereof,
pertaining to the shopping center, known as the Colony Plaza Shopping Center,
which adjoins the Property and is shown on the site plan attached hereto as
Exhibit "A-1" (the "Adjoining Shopping Center").
ARTICLE II
Purchase Price
2.1 Purchase Price. The total purchase price ("Purchase Price") for the
Property equals the sum of One Million Fifty Thousand and No/100 Dollars
($1,050,000.00), payable in cash in full at Closing.
2.2 Earnest Money Deposit. On the date of this Contract, Buyer hereby
delivers to Safeco Land Title Company, having its principal office at 8080 North
Central Expressway, Suite 500, Dallas, Texas 75206, Attention: Maggie Fielding,
Executive Vice President and Escrow Officer (the "Title Company"), the sum of
$10,000.00 as Buyer's Earnest Money Deposit (herein so called) which shall be
held by the Title Company in escrow in an interest-bearing account. Interest
earned thereon shall be held for the benefit of Buyer, provided that at the
Closing, the earnest money deposit and interest thereon shall be credited
against the Purchase Price. If the Closing is not held by reason of a Permitted
Termination, the Earnest Money Deposit and interest shall be returned to Buyer.
If the Closing is not held for any other reason, the Earnest Money Deposit shall
be disbursed as provided for herein and the interest shall be paid to the party
otherwise entitled to receive the Earnest Money Deposit.
2.3 Additional Payments.
(a) Notwithstanding anything contained herein to the contrary, it is
specially agreed that Seller is entitled to be paid the Earnest Money
Deposit, together with the additional sum of $15,000 payable by Buyer to
Seller as a "Break-Up Fee", as soon as practicable after the Closing Date
herein provided, if the following events occur: (i) this Contract is not
consummated after Buyer sends the Notice to Continue set forth in Section
3.6(b), except by reason of Seller's default hereunder, and (ii) Buyer
purchases the Adjoining Shopping Center under the terms of the Additional
Shopping Center Contract, or other terms approved by the parties thereto.
Otherwise, Seller is entitled to payment of the Earnest Money Deposit and
the Break-Up Fee as provided under Section 8.1 hereof.
(b) If (i) Buyer elects to proceed with this Contract after delivery
of its Notice to Continue described in Section 3.6(b), or (ii) Buyer
elects not to proceed with this Contract and purchases the Adjoining
Shopping Center under the terms of the Additional Shopping Center
Contract, or other terms approved by the parties thereto, then Buyer is
obligated to pay directly to or reimburse Seller within 15 days of
presentment of invoices therefor, all taxes and common area assessments
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associated with the Property and assessed by the owner, and its
representatives, successors and assigns, of the Adjoining Shopping Center
(the "Additional Sums"), which accrue as of the closing date of the sale to
the Buyer of the Adjoining Shopping Center under the Additional Shopping
Center Contract, through either (i) the two year period following the
closing date of such Adjoining Shopping Center Contract, or (ii) the
Closing Date of this Contract, whichever occurs earlier. Failure of Buyer
to make any such payments entitle the Seller to terminate this Contract
within 10 days of written demand therefor, without waiver of its right to
demand and receive the additional payments set forth in Sections 2.3(a) and
(b) hereof, or receive a credit at the Closing for such amounts.
Notwithstanding anything contained in this Section 2.3(b) to the contrary,
if this Contract is not consummated solely by reason of the default of
Seller, then Seller is liable and obligated to reimburse Buyer for all sums
paid by it under this Section 2.3(b) and Buyer shall otherwise have no
liability or obligation to pay any of the Additional Sums.
ARTICLE III
Title, and Survey
3.1 Title Commitment. Within three (3) days after the Contract Date,
Seller agrees to order, at the sole cost and expense of Buyer, a current
commitment for Title Insurance for the Project (the "Title Commitment")
countersigned by the Title Company, as agent for the Title Underwriter, which
Title Commitment shall be furnished to Buyer. The Title Commitment shall contain
the express commitment of the Title Company to issue a Texas Form T-1 Owner's
Policy of Title Insurance to the extent permitted by Texas law for the Project,
which shall otherwise be in form and content consistent with Section 4.5 below.
The Title Commitment shall be accompanied by legible copies of all instruments
that create or evidence title exceptions affecting the Real Property.
3.2 Survey. Within three (3) days after the Contract Date, Seller agrees
to furnish to Buyer a copy of the existing survey for the Project in its
possession prepared by Gary Boles of Clark Surveying (the "Existing Survey").
Buyer has the right to obtain, at its sole cost and expense, an update of the
Existing Survey to a date subsequent to the Contract Date and certified to Buyer
and the Title Company (the "Survey"). The Survey certification shall be in such
form as Buyer may require. The metes and bounds description of the Land
contained in the Survey, if different from that attached as Exhibit "A" hereto,
shall be used for purposes of describing the Real Property in the general
warranty deed conveying title to the Real Property from Seller to Buyer.
3.3 Review of Title Commitment and Survey. Buyer shall have a period of
fifteen (15) days (the "Title Review Period") after the Contract Date in which
to review the Title Commitment and the Survey and give written notice to Seller
specifying Buyer's objections (the "Objections"), if any, to the Title
Commitment and the Survey. If Buyer shall fail to give written notice of
Objections to Seller prior to the expiration of the Title Review Period, then
all exceptions to title shown on Schedules B and C of the Title Commitment shall
be deemed to be Permitted Exceptions.
3.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If Buyer
shall have timely notified Seller in writing of Objections to the Title
Commitments or the Survey, then Seller may, but shall not be obligated to, at
any time prior to the expiration of the Inspection Period (the "Cure Period"),
give written notice ("Seller's Title Cure Notice") to Buyer of Seller's
intention to satisfy the Objections prior to the Closing Date. If Seller fails
to timely give Buyer the Seller's Title Cure Notice, then Buyer shall have the
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option, within five days of expiration of the Inspection Period, or within five
days of receipt of Seller's written notice of Seller's election not to satisfy
the Objections, if sooner, to either (i) waive the unsatisfied Objections, in
which event those unsatisfied Objections shall become Permitted Exceptions, or
(ii) terminate this Contract, in which event the Earnest Money Deposit shall be
returned to Buyer and Seller and Buyer shall have no further obligations, one to
the other, with respect to the subject matter of this Contract.
3.5 Title Policy. At the Closing, Seller shall cause, provided that Buyer
pays the cost thereof, a standard T-1 form Owner's Policy of Title Insurance
(the "Owner's Title Policy") to be furnished to Buyer by the Title Company. The
Owner's Title Policy shall be issued by the Title Underwriter and shall insure
that Buyer has good and indefeasible fee simple title to the Property, subject
only to the Permitted Exceptions. The Owner's Title Policy shall contain no
exceptions other than (i) visible and apparent easements, as shown on the
Survey, and (iii) Permitted Exceptions. At Buyer's option and cost, the "survey
exception" in the Owner's Title Policy shall be modified to read "shortages in
area only". The tax exception shall be limited to taxes for the year of Closing
and subsequent years not yet due and payable and subsequent assessments for
prior years due to change in land usage or ownership.
3.6 Inspection.
(a) Buyer shall have the right, during the Inspection Period, to make such
examinations, studies, appraisals, inspections, engineering, environmental and
insurance underwriting tests and investigations (the "Inspections") of the
Property as Buyer may deem advisable. Such Inspections shall include, without
limitation, review of true copies of the latest real estate tax bills, common
area assessments, service contracts affecting the Property, and any and all
other contracts and agreements relating to the Property. Seller shall cooperate
with Buyer in making available the Property for Buyer's Inspections, including
any and all books and records relating thereto. Buyer may also reinspect the
Property prior to Closing to verify that the Property has remained in the same
physical shape, ordinary wear and tear excepted, as the Property was during the
Inspection Period. The term "Inspection Period" means the fifteen (15) day
period following the Contract Date.
(b) If Buyer elects for this Contract to remain in full force and effect
beyond the Inspection Period, then Buyer, at its sole option, shall deliver
written notice (the "Notice to Continue") thereof to Seller and Title Company,
on or before the expiration of the Inspection Period. Once the Notice to
Continue has been given, and the Earnest Money Deposit and the Break-up Fee
shall become at risk and payable to Seller, if owed under the provisions of
Section 2.3(a) and Buyer shall be obligated to pay any Additional Sums, if owed
under the provisions of Section 2.3(b). If, however, Buyer does not timely
deliver the Notice to Continue prior to the expiration of the Inspection Period,
or if Buyer notifies Seller and Title Company that Buyer has no further interest
in purchasing the Property, then, in either event, the Earnest Money Deposit
shall be returned to Buyer, and thereafter Seller and Buyer shall have no
further obligations, one to the other, with respect to the subject matter of
this Contract. Failure to deliver the notice to the Seller herein prior to the
expiration of the Inspection Period shall be deemed to be Buyer's election to
terminate this Contract.
(c) Seller hereby grants to Buyer the right to enter upon the Property at
any reasonable time during the term of this Contract prior to Closing to make
surface or subsurface inspection thereof, or for other purposes incident to
Buyer's requirements relative to the acquisition and use of the Property. The
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Property shall be restored to its present condition after any tests, at Buyer's
sole expense Buyer shall indemnify and hold harmless the Seller from and against
all loss, liability, damage, injury and claims resulting from Buyer's testing or
inspection of the Property; provided, however, this indemnity shall not include,
and shall specifically exclude, any loss, liability, damage etc. arising out of
or resulting from Seller's gross negligence or willful misconduct and the
discovery of any condition that may require remediation under applicable
environmental laws. This indemnity shall survive the Closing or termination of
this Contract for a period of six months, after which this indemnity shall
automatically terminate.
3.7 Reports. Within 5 days of the date of this Contract, Seller agrees to
furnish to Buyer copies of all site plans, surveys, environmental reports, plans
and studies in its possession which relate to the Property.
ARTICLE IV
Representations and Warranties
4.1 Representations and Warranties of Seller.
Seller hereby represents and warrants as of the date hereof and as of the
Closing Date that:
(a) There are no contracts or agreements outstanding (whether for
sale, exchange or otherwise) which affect any portion of the Property or
its operation;
(b) The continued ownership, operation, use and occupancy of the
Property does not violate any zoning, building, health, flood control,
fire or other law, ordinance, order or regulation or any restrictive
covenant. There are no violations of any federal, state, county or
municipal law, ordinance, order, regulation or requirement, affecting any
portion of the Property and no written notice of any such violation has
been issued by any governmental authority;
(c) There is no action, suit, proceeding or claim affecting the
Property or any portion thereof, nor affecting Seller or relating to the
ownership, operation, use or occupancy of the Property pending or being
prosecuted in any court or by or before any federal, state, county, or
municipal department, commission, board, bureau or agency or other
governmental instrumentality nor, to the knowledge of Seller, is any such
action, suit, proceeding or claim threatened or being asserted. There is
no proceeding pending or presently being prosecuted for the reduction of
the assessed valuation of taxes or other assessments payable in respect of
any portion of the Property;
(d) No portion of the Property is the subject of any actual or
proposed condemnation or eminent domain proceeding, or any other
litigation or proceeding, (whether for widening of streets, installation
of utilities or otherwise affecting the Property or any portion thereof,
and Seller has not received any written notice and has no knowledge that
any such proceeding is contemplated);
(e) There are adequate means of ingress and egress, for vehicular
and pedestrian traffic, to and from the Land and each adjoining street,
road or highway. All routes of ingress and egress to and from the Land, to
the extent they pass through adjoining land, do so in accordance with
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valid public easements or valid private easements which constitute
part of the Property and will be conveyed to Buyer at the Closing
and will inure to the benefit of Buyer;
(f) Within Seller's current actual knowledge, no Hazardous Material
(as defined below) has been installed, used, generated, manufactured,
treated, handled, refined, produced, processed, stored or disposed of, in,
on or under the Property, including without limitation, the surface and
subsurface waters of the Property except in compliance with Hazardous
Material Law, nor has any activity been undertaken on or adjacent to the
Property which would cause (i) the Property to become a hazardous waste
treatment, storage or disposal facility within the meaning of, or
otherwise bring the Property within, any Hazardous Material Law (as
defined below), (ii) a release or threatened release of Hazardous Material
from or on to the Property within the meaning of, or otherwise bring the
Property under, any Hazardous Material Law, or (iii) the discharge of
Hazardous Material which would require a permit under any Hazardous
Material Law. To the best of Seller's knowledge, there are no conditions
with respect to the Property which would cause a violation or support a
claim under any Hazardous Material Law, and no underground storage tanks
or underground deposits of Hazardous Materials are or were located on the
Property, or to Seller's current actual knowledge, adjacent to the
Property, and subsequently removed or filled. For purposes of this
representation, "Hazardous Materials" means and includes asbestos or any
substance containing asbestos, polychlorinated biphenyls, any explosives,
radioactive materials, chemicals known or suspected to cause cancer or
reproductive toxicity, pollutants, effluents, contaminants, emissions,
infectious wastes, any petroleum or petroleum-derived waste or product or
related materials and any items defined as hazardous, special or toxic
materials, substances or waste under any Hazardous Material Law, or any
material which shall be removed from the Property pursuant to any
administrative order or enforcement proceeding or in order to place the
Property in a condition that is suitable for ordinary use. "Hazardous
Material Laws" collectively means and includes any present and future
local, state, federal or international law or treaty relating to public
health, safety or the environment including without limitation, the
Resource Conservation and Recovery Act, as amended ("RCRA"), 42 U.S.C.
ss.6901 et seq., the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Hazardous Materials Transportation Act, 49 U.S.C. ss.1801 et seq., the
Clean Water Act, 33 U.S.C. ss.1251 et seq., the Clean Air Act, as amended
42 U.S.C. ss.7401 et seq., the Toxic Substances Control Act, 15 U.S.C.
ss.2601 et seq., the Safe Drinking Water Act, 42 U.S.C. ss.300f et seq.,
the National Environmental Policy Act, 42 U.S.C. ss.4321 et seq., the
Noise Control Act, 42 U.S.C. ss.4901 et seq., and the Emergency Planning
and Community Right-to-Know Act, 42 U.S.C. ss.11001 et seq., and the
amendments, regulations, orders, decrees, permits, licenses or deed
restrictions now or hereafter promulgated thereunder;
(g) Seller is not prohibited from consummating the transactions
contemplated in this Contract, by any law, regulation, agreement,
instrument, restriction, order or judgment;
(h) There are no adverse parties in possession of the Property or of
any part thereof and no parties in possession thereof except Seller, and
no party has been granted any license, lease, or other right relating to
the use or possession of the Property;
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(i) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorship or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor
relief laws contemplated or filed by Seller or pending against Seller or
the Property;
(j) Seller will completely discharge at or prior to Closing (whether
or not payable in installments or otherwise) any liens, charges, security
interests or other encumbrances affecting the Property, other than
assessments levied by local municipal authorities;
(k) No portion of the Property has been designated or assessed for
"agricultural use" or as "qualified open space land" within the meanings
of Article VIII, section 1-d or section l-d-1 of the Texas Constitution,
or the statutes codified as Section 23.46 or 23.55 of the Texas Property
Tax Code, as amended, for any portion of the six (6) calendar years
preceding the date of this Contract;
(l) To the best of Seller's knowledge, there are no surface or
subsurface faults, fissures or other geological defects or flaws which
affect the Property;
(m) Seller has full right, title and authority to enter into this
Contract, and that no other party has any right, option, interest, or
claim to all or any part of the Property, whether subject to earnest money
contract, option agreement, right of first refusal, reversionary or future
interests, or right of reverter; and
(n) Seller is not a foreign person or entity pursuant to the Foreign
Investment in Real Property Tax Act, or the Tax Reform Act of 1984, and
Buyer is not obligated to withhold any portion of the Purchase Price for
the benefit of the Internal Revenue Service.
All of Seller's warranties and representations shall survive any inspection or
investigation made by or on behalf of Buyer for a period of six months after the
Closing of the transaction contemplated herein.
ARTICLE V
Conditions Precedent to Buyer's
Obligation to Close
5.1 Buyer's obligation to consummate the transactions contemplated
hereunder is conditioned upon satisfaction of each of the following conditions
at or prior to the Closing (or such earlier date as is specified with respect to
a particular condition):
(a) None of the representations and warranties of Seller set forth
in Article IV hereof shall be untrue or inaccurate in any material
respect.
(b) Seller shall not have failed to perform or comply with any of
its agreements or obligations in any material respect and within the time
periods provided herein.
(c) Notwithstanding anything contained herein to the contrary, if
this Contract terminates by reason of Buyer's failure to send the Notice
to Continue, the Earnest Money Deposit and interest thereon shall be paid
over to Buyer, less the sum of Fifty and No/100 Dollars ($50.00) (the
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"Option Sum"), which is to be retained by the Seller as consideration for
this Contract, which consideration is deemed earned as of the date of this
Contract.
(d) No geological flaw, fault, or defect, soil condition or other
physical defect which would prevent the Buyer from developing the Property
as a shopping center in Buyer's reasonable judgment shall have been
discovered during the Inspection Period.
5.2 Termination if Conditions Precedent not Satisfied or Waived. If any of
the conditions precedent to the performance of Seller's obligations under this
Contract have not been satisfied, waived, or deemed waived by the Buyer within
the time frame established herein, then the Buyer may, at its option, by written
notice delivered to the obligated party and Title Company, terminate this
Contract, in which event the Earnest Money Deposit shall be returned to Buyer
and thereafter Buyer and Seller shall have no further obligations, one to the
other, with respect to the subject matter of this Contract, subject to the
provisions of Article VIII hereof, and except as otherwise provided under
Section 2.3 hereof.
ARTICLE VI
Closing
6.1 Time and Place of Closing. Provided that all of the conditions of this
Contract shall have been satisfied prior to or on the Closing Date (herein so
called), the Closing (herein so called) of this transaction shall take place at
the offices of the Title Company in Dallas, Texas, on or before the second (2nd)
anniversary date following the closing of the transaction contemplated by the
Additional Contract, or such earlier date as may be specified by Buyer by not
less than ten (10) days advance written notice to Seller.
6.2 Events of Closing. At the Closing:
(a) Seller shall deliver to Buyer the following:
(1) A Special Warranty Deed in form and substance reasonably
approved by the parties, but listing only the Permitted Exceptions
as exceptions to title, duly executed and acknowledged by Seller,
conveying to Buyer the Property in indefeasible fee simple, free and
clear of any lien, encumbrance or exception other than the Permitted
Exceptions;
(2) A standard Texas Owner's Policy of Title Insurance issued
by the Title Company, at Buyer's cost, conforming to the
requirements of Article III above insuring Buyer's title in
indefeasible fee simple in the amount of the Purchase Price and
containing no exceptions other than the Permitted Exceptions;
(3) Tax certificates from all taxing authorities having
jurisdiction over the Property, showing payment of all ad valorem
taxes on said Property through the calendar year preceding the
Closing of this purchase and sale;
(4) Possession of the Property;
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(5) A UCC search of the Property reflecting no outstanding
security interests affecting the Property;
(6) A written consent of all of the individuals comprising the
Seller in form and substance satisfactory to Buyer and its counsel,
which reflects the authorization of the transactions herein by Seller
and evidence of the authority of the individual executing the closing
documents to execute and deliver this Contract and the documents
provided for hereunder;
(7) The affidavit in form and substance satisfactory to Buyer
that Seller is not a foreign person or entity subject to the Foreign
Investment in Real Property Tax Act or the Tax Reform Act of 1984; and
(8) Such other evidence of the authority and capacity of Seller
and its representatives as Buyer or the Title Company may reasonably
require.
(b) Buyer shall deliver the following:
(1) The Purchase Price, as required pursuant to Section 2.1
above, in immediately available funds, such as wire transfer or by
Buyer's certified or cashier's check, or Title Company check in U.S.
funds;
(2) Any sums due by Buyer to Seller under the provisions of
Section 2.3(b) or otherwise under the other provisions of this
Contract.
(3) Such other evidence of the authority and capacity of Buyer
and its representatives as the Seller or the Title Company may
reasonably require.
6.3 Expenses. Seller shall pay the cost of tax certificates, one-half of
the escrow fee charged by the Title Company, its share of the prorations as set
forth in Section 6.4 hereof, and its own attorneys' fees. Buyer shall pay the
premium for the Owner's Policy of Title Insurance (including the fee for
amending the area and boundary exception), its proportionate share of the
prorations as set forth in Section 6.4 hereof, one-half of the escrow fee
charged by the Title Company, the recording fees for its Special Warranty Deed,
the cost of to update the Survey, the cost of the UCC search, and its own
attorneys fees. Except as otherwise provided in this Section, all other expenses
hereunder shall be paid by the party incurring such expenses. Additionally, any
expenses, charges and fees of closing, not specifically allocated herein or
incurred by a specific party, shall be borne by the parties according to general
custom in Missouri City, Texas, or, if no such custom exists, shall be borne
equally between the parties.
6.4 Prorations. Rental income, if any, and personal property ad valorem
taxes, if any, prorated to the Closing, based upon actual calendar days
involved. Seller shall be responsible for all ad valorem taxes for any period
prior to and including the date of Closing, except as otherwise provided in
Section 2.3(b). Buyer shall receive credit on the amount of the cash payments to
be made by Buyer pursuant hereto for the prorated amount thereof chargeable to
Seller. In connection with the proration of both real and personal property ad
valorem taxes, if actual tax figures for the year of closing are not available
at the Closing Date, a final proration of taxes shall be made using tax figures
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from the current year. Seller shall, on or before the Closing Date, furnish to
Buyer and the Title Company all information necessary to compute the prorations
provided for in this Section. All special taxes and assessments due to the date
of Closing, and any "roll-back" taxes contemplated under Section 4.1(n), shall
be paid by Seller.
In the event any property taxes levied against the Property have been
deferred pursuant to Section 23.46 or Section 23.55 of the Texas Property Tax
Code, as may be amended from time to time, or any similar law and this sale or
change in the use of the Property causes the amount of the deferred taxes to
become payable, Seller shall reimburse Buyer upon demand for the amount of such
deferred taxes plus any interest and penalty charged thereon. This Section 6.4
shall survive the Closing.
ARTICLE VII
Damage and Condemnation to Property
Seller agrees to give Buyer prompt written notice of any fire or casualty
affecting the Property between the date hereof and the Date of Closing or of any
actual or threatened taking or condemnation of all or any portion of the
Property. If prior to the Closing there occurs the taking or condemnation of all
or any portion of the Property, or notice of such action is delivered, or a
casualty shall occur that materially affects the Property, in such event Buyer
may at its option terminate this Contract by notice to Seller within twenty (20)
days after Buyer has received the notice referred to above or at the Closing,
whichever is earlier. If Buyer does not so elect to terminate this Contract,
then the Closing shall take place as provided herein but the amount of the
condemnation award or insurance proceeds actually received by Seller shall be
credited to the Purchase Price. All risk of loss contemplated by this Article
VII shall be borne by Seller until acceptance by Buyer of delivery of Seller's
deed at the Closing.
ARTICLE VIII
DEFAULTS AND REMEDIES
8.1 Default of Buyer. If Buyer fails or refuses to consummate the
transaction contemplated by this Contract, for any reason other than the
permitted termination of this Contract by Buyer pursuant to a right to do so
expressly set forth in this Contract, then such event shall constitute a default
by Buyer hereunder and the Seller may, as the Seller's sole and exclusive remedy
for such default, either (i) bring an action against the Buyer for specific
performance of the Buyer's obligations under this Contract, or (ii) terminate
this Contract by giving written notice thereof to Buyer and the Title Company at
or prior to the Closing Date, whereupon the Title Company shall deliver the
Earnest Money Deposit (including the interest earned thereon) to the Seller
which shall constitute liquidated damages hereunder and thereafter neither party
hereto shall have any further rights or obligations hereunder. Additionally,
should a termination of the Contract arise and Seller is entitled to remedies
available to it under this Section 8.1, and in fact elects the remedies
available to it under Section 8.1(ii), then Buyer shall remain liable and
obligated to pay to Seller the Break-up Fee under Section 2.3(a) and any unpaid
Additional Sums under Section 2.3(b) for the period specified therein. The
Break-up Fee and any unpaid Additional Sums owed by Buyer are due and payable
promptly after written demand is made, if Buyer is otherwise obligated to pay
same as prescribed herein. It is agreed that the Earnest Money Deposit, the
Break-up Fee and the Additional Sums are a reasonable forecast of just
compensation for the harm that would be caused by such default, which the
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parties agree is one that is incapable or very difficult of accurate estimation,
and that payment of the sums set out herein upon such default shall constitute
full satisfaction of Buyer's obligations hereunder.
8.2 Default of Seller. If Seller fails or refuses to consummate the sale
of the Property to Buyer pursuant to this Contract at the Closing or fails to
perform any of Seller's other obligations hereunder for any reason other than
Buyer's failure to perform Buyer's obligations under this Contract, then Buyer
may, as Buyer's sole and exclusive remedy for such default, either (i) bring an
action against the Seller for specific performance of the Seller's obligations
under this Contract, (ii) terminate this Contract by giving written notice
thereof to Seller and the Title Company at or prior to the Closing Date,
whereupon the Title Company shall deliver the Earnest Money Deposit (including
the interest earned thereon) to Buyer and thereafter neither party hereto shall
have any further rights or obligations hereunder, or (iii) receive the return of
the Earnest Money Deposit and prosecute an action for damages if Seller has
conveyed or hypothecated the Property to a third party in violation of the terms
hereof.
8.3 Earnest Money. In the event either Seller or Buyer becomes entitled to
the Earnest Money Deposit upon cancellation of this Contract in accordance with
its terms, such party may deliver a letter of instruction to the Title Company
directing disbursement of the Earnest Money Deposit to the party entitled
thereto. The party delivering such notice to the Title Company shall
concurrently deliver a copy of the notice to the other party hereto. Upon the
expiration of three (3) business days after its receipt of the letter of
instructions, the Title Company may deliver the Earnest Money Deposit to the
party as specified in the letter of instructions unless, within such three (3)
business day period, the Title Company shall have received a written objection
to such delivery from the other party hereto. In such event, the Title Company
shall not deliver the Earnest Money Deposit to either party unless it has a
written authorization to do so signed by both parties or a court order has been
issued by a court of competent jurisdiction to deliver the Earnest Money Deposit
to one of the parties hereto. The Title Company may deposit the Earnest Money
Deposit into a court of competent jurisdiction and thereafter shall have no
further interest in or responsibility for this Contract or for the Earnest Money
Deposit.
8.4 Indemnification of Title Company. Each party hereto hereby indemnifies
and holds harmless the Title Company from any loss, damage or claim therefor
arising out of or in connection with the receipt and disposition of the Earnest
Money Deposit in accordance with the instructions set forth in this Contract.
These indemnities shall survive the termination of this Contract or a closing
pursuant hereto.
ARTICLE IX
Interim Responsibilities of Seller
Seller agrees that during the period between the date of this Contract and
the Closing Date:
(a) Seller may not further encumber the Property in any manner or
permit or suffer the filing or attachment of any lien of mechanic's or
materialmen. If the Property becomes subject to any such liens or
encumbrances in contravention of this subparagraph (a), Buyer may elect to
terminate this Contract or to consummate the transactions contemplated
hereunder and apply the Purchase Price or so much thereof as may be
necessary to retire any such liens or encumbrances;
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(b) Seller must maintain Seller's existing insurance coverage, if
any, with respect to the Property from the date hereof through the Date of
Closing or earlier termination of this Contract;
(c) Seller shall not file any restrictive covenants or impose, by
grant or otherwise, any deed restrictions affecting the Property, grant
any licenses, easements or other uses affecting the Property, without
Buyer's prior written consent; nor place or permit to be placed on the
Property any buildings, structure or other improvements, nor remove or
permit to be removed from the Property, any buildings, structures, trees,
shrubbery or other improvements of any kind whatever, without Buyer's
prior written consent; and
(d) Seller may not excavate or permit the excavation of the Property
and may not do or suffer to be done any act whereby the value of any party
of the Property may be lessened.
ARTICLE X
Brokerage Commission
Each party warrants to the other that neither of them nor their agents or
representatives have engaged or contacted any broker with respect to the
transaction contemplated herein, that no brokers have been involved with the
purchase and sale hereunder, and each party agrees to indemnify and hold the
other party harmless from any and all claims for brokerage fees arising out of
its actions. The provisions of this Article survive for a period of 6 months
following the Closing Date.
ARTICLE XI
Miscellaneous
11.1 No Assumption of Seller's Liabilities. Buyer is acquiring only the
Property from Seller and is not the successor of Seller. Buyer does not assume
or agree to pay, or indemnify Seller or any other person or entity against, any
liability, obligation or expense of Seller or relating to the Property in any
way except only to the extent, if any, herein expressly and specifically
provided herein.
11.2 Notices. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be deemed to be
delivered and received when actually received, or, if earlier and regardless of
whether actually received, upon deposit in a regularly maintained receptacle for
the United States mail, registered or certified, return receipt requested,
postage fully prepaid, addressed to the addressee at its address set forth
below:
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If to Seller: VeriQuest-Property Commerce 1995-I
7676 Woodway, Suite 280
Houston, Texas 77067
With Copy to: Leo A. Kissner, Esq.
Kissner & Sandvig, P.C.
4265 San Felipe
Suite 550
Houston, Texas 77027-2974
Telephone: (713) 850-0004
Telecopy: (713) 850-1515
If to Buyer: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall Keith
Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to: Lewis H. Sandler, Esq.
United Investors Realty Trust
8080 North Central Expressway
Suite 400
Dallas, Texas 75206
Telephone: (214) 360-3665
Telecopy: (214) 360-3696
James, Goldman & Haugland, P.C.
Attn: Merton B. Goldman, Esq.
8th Floor Texas Commerce Bank Bldg.
201 East Main
El Paso, Texas 79901
(915) 532-3911
FAX: (915) 541-6440
11.3 Survival. All warranties, representations, indemnities, and
agreements contained herein or arising out of the sale of the Property by Seller
to Buyer shall survive the Closing hereof for a period of six months thereafter,
unless a longer period is expressly stated herein.
11.4 Governing Law; Venue. The laws of the State of Texas govern the
validity, enforcement, and interpretation of this Contract. The obligations of
the parties are performable and exclusive venue for any legal action arising out
of this Contract lie in Fort Bend County, Texas.
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11.5 Integration; Modification; Waiver. This Contract constitutes the
complete and final expression of the agreement of the parties relating to the
Property, and supersedes all previous contracts, agreements, and understandings
of the parties, either oral or written, relating to the Property. This Contract
cannot be modified, or any of the terms hereof waived, except by an instrument
in writing (referring specifically to this Contract) executed by the party
against whom enforcement of the modification or waiver is sought. The terms and
provisions of this Contract shall not merge with, be extinguished or otherwise
affected by any subsequent conveyance or instrument by or between the parties
hereto unless such instrument shall specifically so state and be signed by both
Buyer and Seller.
11.6 Counterpart Execution. This Contract may be executed in several
counterparts, each of which shall be fully effective as an original and all of
which together shall constitute one and the same instrument.
11.7 Headings; Construction. The headings which have been used throughout
this Contract have been inserted for convenience of reference only and do not
constitute matter to be construed in interpreting this Contract. Words of any
gender used in this Contract shall be held and construed to include any other
gender and words in the singular number shall be held to include the plural, and
vice versa, unless the context requires otherwise. If the last day of any time
period stated herein shall fall on a Saturday, Sunday, legal or banking holiday,
then the duration of such time period shall be extended so that it shall end on
the next succeeding day which is not a Saturday, Sunday, legal or banking
holiday.
11.8 Invalid Provisions. If any one or more of the provisions of this
Contract, or the applicability of any such provision to a specific situation,
shall be held invalid or unenforceable, such provision shall be modified to the
minimum extent necessary to make it or its application valid and enforceable,
and the validity and enforceability of all other provisions of this Contract and
all other applications of any such provision shall not be affected thereby.
11.9 Binding Effect. This Contract shall be binding upon and inure to the
benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and assigns. Buyer may assign its rights hereunder,
but Buyer shall not be relieved of any duties and obligations hereunder. Except
as expressly provided herein, nothing in this Contract is intended to confer on
any person, other than the parties hereto and their respective heirs, personal
representatives, successors and assigns, any rights or remedies under or by
reason of this Contract.
11.10 Further Acts. In addition to the acts recited in this Contract to be
performed by Seller and Buyer, Seller and Buyer agree to perform or cause to be
performed at the Closing or after the Closing any and all such further acts as
may be reasonably necessary to consummate the transactions contemplated hereby.
11.11 Date of Contract. The date of this Contract shall for all purposes
be the date of the execution hereof by the Title Company acknowledging receipt
of Buyer's Earnest Money Deposit.
11.12 Time. Time is of the essence in this Contract.
EXECUTED by Buyer on the ______ day of April, 1998.
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BUYER: UNITED INVESTORS REALTY TRUST, a Texas
real estate investment trust
By: /s/ Randall Keith, Chief Operating Officer
------------------------------------------------
Randall Keith, Chief Operating Officer
EXECUTED by Seller on the ___________ day of April, 1998
SELLER: VERIQUEST-PROPERTY COMMERCE 1995-1,
a Texas joint venture
By: /s/ Six CD, Ltd.
------------------------------------------------
Six CD, Ltd., a Joint Venturer
By: /s/ CD-GP, Inc.
------------------------------------------------
CD-GP, Inc., its general partner
By: /s/ S. Jay Williams
------------------------------------------------
S. Jay Williams, President
By: /s/ VeriQuest Private Capital Limited
------------------------------------------------
VeriQuest Private Capital Limited,
a Joint Venturer
By: /s/ VeriQuest Companies, Inc.
------------------------------------------------
VeriQuest Companies, Inc., its general partner
By: /s/ Jerry E. Allgood
------------------------------------------------
Jerry E. Allgood, President
Receipt of a fully executed copy of the Contract and a check, subject to
collection for the Earnest Money Deposit received this _________day of
_________________1998.
TITLE COMPANY: SAFECO LAND TITLE COMPANY
By:
Name:
Title:
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EXHIBIT "A"
Legal Description
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***awaiting file***
PROMISSORY NOTE
$3,800,000.00 Houston, Texas
As of July 31, 1995
FOR VALUE RECEIVED, PFL-290 LIMITED PARTNERSHIP, a Texas limited
partnership, as maker, having its principal place of business at 6800 Texas
Commerce Tower, Houston, Texas 77002 ("Borrower"), hereby unconditionally
promises to pay to the order of RFG FINANCIAL, INC., a New York corporation, as
payee, having its principal place of business at 767 Fifth Avenue, New York, New
York 10153 ("Lender"), or at such other place as the holder hereof may from time
to time designate in writing, the principal sum of THREE MILLION EIGHT HUNDRED
THOUSAND AND 00/100 Dollars ($3,800,000.00), 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 (defined below), and to be paid in
installments as follows:
1. PAYMENT TERMS
(a) A payment of interest only on August 1, 1995;
(b) A constant payment of $32,542.51 on the first day of
September, 1995 and on the first day of each calendar month
thereafter up to and including the first day of July, 2005;
each of the payments to be applied as follows:
(i) First, to the payment of interest computed at the Applicable
Interest Rate.
(ii) The balance applied toward the reduction of the principal sum;
and the balance of the principal sum and all accrued but unpaid interest thereon
shall be due and payable on the first day of August, 2005 (the "Maturity Date").
Interest on the principal sum of this Note shall be calculated on the basis of a
three hundred sixty (360) day year based on twelve (12) thirty (30) day months
except that interest due and payable for a period of less than a full calendar
month shall be calculated by multiplying the actual number of days elapsed in
such period by a daily rate based on said 360-day year unless the Highest Lawful
Rate (hereinafter defined) would thereby be exceeded in which event, to the
extent necessary to avoid exceeding the Highest Lawful Rate, interest shall be
computed on the basis of the actual number of days elapsed in the applicable 365
or 366 calendar year in which such interest accrued. The term "Loan Year" as
used in this Note shall mean each complete twelve (12) month period after the
first day of the first full calendar
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<PAGE>
month following the date hereof (or the date hereof if the date hereof is the
first day of a calendar month).
2. INTEREST
The term "Applicable Interest Rate" as used in the Security Instrument
(defined below) and this Note shall mean a rate per annum from the date of this
Note through and including the Maturity Date of the lesser of nine and
one-quarter percent (9.25%) or the Highest Lawful Rate. The term "Highest Lawful
Rate" as used herein shall mean, on any day, the maximum nonusurious interest
rate stated on a per annum basis that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Debt (defined below)
under applicable federal or Texas law, whichever permits the Highest Lawful Rate
that are presently in effect or, to the extent allowed by law, under such
applicable laws that may hereafter be in effect and that allow a higher maximum
nonusurious interest rate than applicable laws now allow. On each day, if any,
that Chapter 1 of the Texas Credit Code establishes the Highest Lawful Rate, the
same shall be the "Indicated Rate Ceiling" as defined herein.
3. DEFAULT AND ACCELERATION
(a) The whole of the principal sum of this Note, (b) interest, default
interest, late charges and other sums, as provided in this Note, the Security
Instrument or the Other Security Documents (defined below), (c) all other monies
agreed or provided to be paid by Borrower in this Note, the Security Instrument
or the Other Security Documents, (d) all sums advanced pursuant to the Security
Instrument to protect and preserve the Property (defined below) and the lien and
the security interest created thereby, and (e) all sums advanced and costs and
expenses incurred by Lender in connection with the Debt (defined below) or any
part thereof, any renewal, extension, or change of or substitution for the Debt
or any part thereof, or the acquisition or perfection of the security therefor,
whether made or incurred at the request of Borrower or Lender (all the sums
referred to in (a) through (e) above shall collectively be referred to as 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 tenth
(10th) day after the date when due or on the Maturity Date or on the happening
of any other default, after the expiration of any applicable notice and grace
periods, herein or under the terms of the Security Instrument or any of the
Other Security Documents (collectively, an "Event of Default").
4. DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event of
Default, Lender shall be entitled to receive and Borrower shall pay interest on
the entire unpaid principal sum at a rate equal to the lesser of (a) five
percent (5 %) plus the Applicable Interest Rate and (b) the Highest Lawful Rate
(the "Default Rate"). The Default Rate shall be computed from the
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<PAGE>
occurrence of the Event of Default until the earlier of the date upon which the
Event of Default is cured or the date upon which the Debt is paid in full.
Interest calculated at the Default Rate shall be added to the Debt, and shall be
deemed secured by the Security Instrument. This clause, however, shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default.
5. PREPAYMENT
(a) The principal balance of this Note may not be prepaid in whole or in
part prior to the sixth Loan Year. During the sixth Loan Year or any time
thereafter, provided no Event of Default exists, the principal balance of this
Note may be prepaid in whole, or in part, upon but not less than thirty (30)
days and not more than forty (40) days prior written notice to Lender specifying
the date on which prepayment is to be made (the "Prepayment Date") and upon
payment of (i) accrued interest to and including the Prepayment Date together
with a payment of all interest which would have accrued on the principal balance
of this Note to and including the first day of the calendar month immediately
following the Prepayment Date, if such prepayment occurs on a date which is not
the first day of a month (the "Shortfall Interest Payment"), (ii) (A) in the
event of a partial prepayment, all other sums then due under this Note, the
Security Instrument and the Other Security Documents, and (B) in the event of a
prepayment in whole, all other sums due under this Note, the Security Instrument
and the Other Security Documents, and (iii) the Prepayment Consideration
(defined below). Notwithstanding the foregoing, Borrower shall have the
additional privilege to prepay the entire principal balance of this Note during
the sixty (60) calendar days immediately preceding the Maturity Date without any
fee or consideration for such privilege provided (i) no Event of Default exists,
(ii) written notice of such prepayment is given by Borrower to Lender in the
manner set forth above and (iii) Borrower shall be required to make the
Shortfall Interest Payment, if applicable.
(b) The term "Prepayment Consideration" shall mean an amount equal to the
present value of a series of payments each equal to the Payment Differential
(hereinafter defined) and payable on the first day of each month ("Monthly
Payment Date") from the date of prepayment through and including the Maturity
Date discounted at the Reinvestment Yield (hereinafter defined) (monthly
compounding) for the number of months remaining from the date of prepayment to
each such Monthly Payment Date. The term "Reinvestment Yield" as used herein
shall be equal to the yield on the U.S. Treasury issue (primary issue) with a
maturity date closest to, but not earlier than, the Maturity Date with such
yield being based on the bid price for such issue as published in The Wall
Street Journal in New York City, New York on a date fourteen ( 14) days prior to
the date of prepayment set forth in the prepayment notice (or, if such bid price
is not published on that date, the next preceding date
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<PAGE>
on which such bid price is so published and converted to a monthly compounded
nominal yield. In the event The Wall Street Journal ceases publication or ceases
to publish the bid price for such U.S. Treasury issues, Lender shall select a
comparable publication to determine such bid price. Absent manifest error, the
determination of the Reinvestment Yield and the calculation of the Prepayment
Consideration by Lender shall be binding on Borrower. The term "Payment
Differential" as used herein shall be equal to the product of (y) a fraction,
the numerator of which is the excess, if any, of a per annum interest rate equal
to the Applicable Interest Rate over the Reinvestment Yield (expressed as a
decimal percentage), and the denominator of which is 12, and (z) the portion of
the principal balance of this Note being prepaid on the Prepayment Date.
(c) If any notice of prepayment is given under this Section 5, the
principal balance of this Note and the other sums required under this prepayment
section shall be due and payable on the Prepayment Date. Lender shall not be
obligated to accept any prepayment of the principal balance of this Note unless
it is accompanied by the prepayment fees and the Prepayment Consideration due in
connection therewith: Notwithstanding anything contained in this Section 5 to
the contrary, provided no Event of Default exists, no prepayment fee shall be
due in connection with a complete or partial prepayment resulting from the
application of insurance proceeds or condemnation awards pursuant to Sections
3.3 and 3.6 of the Security Instrument, but Borrower shall be required to make
the Shortfall Interest Payment, if applicable.
(d) If following the occurrence of any Event of Default, Borrower shall
tender payment of an amount sufficient to satisfy the entire Debt at any time
prior to a judicial or nonjudicial foreclosure sale or sale pursuant to a power
of sale of any Property and prior to the time prepayment of the principal
balance of this Note is permitted hereunder, Borrower shall, in addition to the
entire Debt, also pay to Lender an amount equal to the sum of (i) interest
calculated as set forth in Subsection 5(a)(i) including the Shortfall Interest
Payment, (ii) prepayment fees equal to the present value of all interest
payments which would have accrued on the principal balance of this Note
outstanding as of the date of such tender at the Applicable Interest Rate from
the date of such tender to the first day prepayment is permitted pursuant to
this Note discounted at a rate equal to the Treasury Rate based on U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the date upon which prepayment is first permitted pursuant to this
Note, and (iii) a prepayment consideration equal to the Prepayment Consideration
which would have been payable to Lender pursuant to Subsection 5(a)(iii) as of
the first day of the sixth Loan Year based on the Treasury Rate in effect as of
the date of such tender. If at the time of such voluntary or involuntary
prepayment of this Note, prepayment of the principal balance of the Loan is
permitted, Borrower shall, in addition to the entire Note, also pay to Lender
the Shortfall Interest Payment, and the applicable prepayment fees and the
Prepayment Consideration set forth in Subsection 5(b) above. An involuntary
prepayment shall include any prepayment made in connection with reinstatement of
the Security Instrument under foreclosure
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<PAGE>
proceedings, or exercise of a power of sale, any right of redemption exercised
by Borrower or any other party having a right to redeem or prevent foreclosure,
or which is made or occurs upon the consummation of any sale in foreclosure or
under exercise of a power of sale.
(e) Any permitted partial prepayments may be made only in multiples
satisfactory to Lender. Any permitted partial prepayment shall be applied to the
installments of principal last due under this Note and shall not release
Borrower from the obligation to pay the installments of interest and/or
principal next becoming due under this Note.
6. SECURITY
This Note is secured by the Security Instrument and the Other Security
Documents. The term "Security Instrument" as used in this Note shall mean the
Deed of Trust and Security Agreement dated the date hereof in the principal sum
of $3,800,000.00 given by Borrower to (or for the benefit of) Lender covering
the fee estate of Borrower in certain premises (the "Property") located in
Harris County, State of Texas, and other property, as more particularly
described therein and intended to be duly recorded in said County. The term
"Other Security Documents" as used in this Note shall mean all and any of the
documents other than this Note or the Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guarantee payment of this Note. Whenever used. the singular
number shall include the plural, the plural number shall include the singular,
and the words "Lender" and "Borrower" shall include their respective successors,
assigns, heirs, executors and administrators.
All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security 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.
7. SAVINGS CLAUSE
It is the intention of the parties hereto to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under any such applicable law, then, and in that event,
notwithstanding anything to the contrary in this Note, or in any other
instrument or agreement entered into in connection with or as security for this
Note, whether now existing or hereafter arising and whether written or oral, it
is agreed as follows:
(i) the aggregate of all interest and any other charges constituting
interest, or adjudicated as constituting interest, and that is contracted for,
charged or received under this Note, or under any of the aforesaid instruments
or agreements or otherwise in connection with this Note (whether designated as
interest, fees, late charges, payments or otherwise) shall under no
circumstances exceed the maximum amount of interest permitted by any such
applicable law and
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<PAGE>
any excess shall be canceled automatically and, if theretofore paid, shall be
credited on this Note by Lender (or, if this Note has been paid in full,
refunded to Borrower); and
(ii) in the event that the maturity of this Note is accelerated by
reason of an Event of Default under this Note, or otherwise, including, but not
limited to voluntary prepayment by Borrower, then such consideration that
constitutes interest may never include more than the maximum rate of interest
permitted by any such applicable law computed from the dates of each advance of
the loan proceeds outstanding until payment. If from any circumstance Lender
shall ever receive interest or any other charges constituting interest, the
amount, if any, which would exceed the maximum rate of interest permitted by
such applicable law shall be applied to the reduction of the principal amount
owing on this Note or on account of any other principal indebtedness of Borrower
to Lender, and not to the payment of interest. If such excessive interest
exceeds the unpaid balance of principal hereof and such other indebtedness, the
amount of such excessive interest which exceeds the unpaid balance of principal
hereof and such other indebtedness shall be refunded to Borrower.
All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of the indebtedness evidenced hereby shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the actual rate or
amount of interest on account of any such indebtedness is uniform throughout the
term thereof and does not exceed the applicable usury ceiling.
8. LATE CHARGE
If any sum payable under this Note is not paid prior to the tenth (10th)
day after 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 the unpaid sum or the
maximum amount permitted by applicable law to defray the expenses incurred by
Lender in handling and processing the delinquent payment and to compensate
Lender for the loss of the use of the delinquent payment and the amount shall be
secured by the Security Instrument and the Other Security Documents.
9. NO ORAL CHANGE
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 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.
10. JOINT AND SEVERAL LIABILITY
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<PAGE>
If Borrower consists of more than one person or party, the obligations and
liabilities of each person or party shall be joint and several.
11. WAIVERS
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, protest and notice of protest and non-payment and
all other notices of any kind, except as set forth in the following paragraph
hereof. 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 Security Instrument or the Other Security
Documents made by agreement between Lender or any other person or party shall
release, modify, amend, waive, extend, change, discharge, terminate or affect
the liability of Borrower, and any other person or entity who may become liable
for the payment of all or any part of the Debt, under this Note, the Security
Instrument or the Other Security 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 Security Instrument or the Other Security 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 Security Instrument or any Other Security
Document.)
Notwithstanding the foregoing, Borrower shall be entitled to the notices
and cure periods as set forth in Section 10.1 of the Security Instrument.
12. TRANSFER
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 Security Instrument and the Other Security 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
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<PAGE>
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.
13. WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS
NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE, THIS NOTE, THE
SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
14. EXCULPATION
(a) Except as otherwise provided herein, Lender shall not enforce the
liability and obligation of Borrower to perform and observe the obligations
contained in this Note, the Security Instrument or the Other Security Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower or its partners, except that Lender may bring a foreclosure action,
action for specific performance or other appropriate action or proceeding to
enable Lender to enforce and realize upon this Note, the Security Instrument,
the Other Security Documents, and the interest in the Property, the Rents (as
defined in the Security Instrument) and any other collateral given to Lender
created by this Note, the Security Instrument and the Other Security Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against Borrower or its partners only to the extent of Borrower's
interest in the Property, in the Rents and in any other collateral given to
Lender. Lender, by accepting this Note and the Security Instrument, agrees that
it shall not, except as otherwise provided in Section 11.10 of the Security
Instrument, sue for, seek or demand any deficiency judgment against Borrower or
its partners in any such action or proceeding, under or by reason of or under or
in connection with this Note, the Other Security Documents or the Security
Instrument. The provisions of this Section shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by this
Note, the Other Security Documents or the Security Instrument; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Security Instrument; (iii) impair the
rights of Trustee (as defined in the Security Instrument) and Lender from
exercising their right to sell the Property pursuant to the power of sale
granted in the Security Instrument; (iv) affect the validity or enforceability
of any indemnity, guaranty, master lease or similar instrument made in
connection with this Note, the Security Instrument, or the Other Security
Documents; (v) impair the right of Lender to obtain the appointment of a
receiver; (vi) impair the enforcement of the Assignment of Leases and Rents
executed in connection herewith; or (vii) impair the right of Lender to enforce
the provisions of Sections 13.2, 13.3 and 13.4 of the Security Instrument.
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<PAGE>
(b) Notwithstanding the provisions of this Section 14 to the contrary,
Borrower shall be personally liable to Lender for the Losses (as defined in the
Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, its partners or Guarantor (as deemed in the
Security Instrument) or any of their respective employees, officers, directors
or counsel, or by the appraiser, the environmental consultant or the engineering
company who have prepared and delivered to Lender, respectively, the appraisal,
the Environmental Report (as defined in the Security Instrument) and the
engineering report in connection with the execution and the delivery of this
Note, the Security Instrument or the Other Security Documents; (ii) Borrower's
misapplication or misappropriation of Rents received by Borrower after written
notice to Borrower of the occurrence of an Event of Default; (iii) Borrower's
misapplication or misappropriation of tenant security deposits or Rents
collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards; (v) Borrower's failure to pay Taxes
(as defined in the Security Instrument), Insurance Premiums (as defined in the
Security Instrument), Other Charges (as defined in the Security Instrument)
(except to the extent that sums sufficient to pay such amounts have been
deposited in escrow with Lender pursuant to the terms of the Security
Instrument), charges for labor or materials or other charges at the time of
foreclosure that can create liens on the Property; (vi) Borrower's failure to
return or to reimburse Lender for all Personal Property (as defined in the
Security Instrument) taken from the Property by or on behalf of Borrower and not
replaced with Personal Property of the same utility and of the same or greater
value; (vii) any act of actual waste or arson by Borrower, any principal,
affiliate or general partner thereof or by any Indemnitor (as defined in the
Security Instrument) or Guarantor; (viii) any fees or commissions paid by
Borrower to any principal, affiliate or general partner of Borrower, any
Indemnitor or any Guarantor in violation of the terms of this Note, the Security
Instrument or the Other Security Documents; or (ix) Borrower s failure to comply
with the provisions of Section 4.2 or 7.1, or Article 12 or 13 of the Security
Instrument.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect (1) in the event of Borrower's
default under Section 3.11, 4.3, 8.1, 8.2, 8.3 or 8.4, of the Security
Instrument, (2) if the Property or any part thereof shall become an asset in (i)
a voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary
bankruptcy or insolvency proceeding which has not been instituted by Lender and
which is not dismissed within ninety (90) days of filing or (3) if an Event of
Default described in Subsection 10.1(a), (b), (c), (o) or (t) of the Security
Instrument occurs and continues and Lender, its affiliate or designee fails to
obtain title to the Property pursuant to an exercise of a power of sale, a
consensual foreclosure or a conveyance in lieu of foreclosure, within one
hundred and eighty (180) days of notice to Borrower from Lender or its agent of
such Event of Default by reason of Borrower's or any Guarantor's impeding or
restricting any action to enforce the Security Instrument or failing to deliver
to Lender, its affiliate or designee a deed to the Property in lieu of
foreclosure which conveys title to the Property free and clear of all liens,
encumbrances and other title exceptions other than those, if any, to which the
Security Instrument is subject and subordinate.
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<PAGE>
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Sections 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
indebtedness secured by the Security Instrument or to require that all
collateral shall continue to secure all of the indebtedness owing to Lender in
accordance with this Note, the Security Instrument and the Other Security
Documents.
15. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Instrument and the Other Security Documents
and that this Note, the Security Instrument and the Other Security Documents
constitute valid and binding obligations of Borrower.
16. APPLICABLE LAW
This Note shall be deemed to be a contract entered into pursuant to the
laws of the State of New York and shall in all respects be governed, construed,
applied and enforced in accordance with applicable federal law and the laws of
the State of New York, without reference or giving effect to any choice of law
doctrine.
17. VENUE AND JURISDICTION
Borrower agrees to submit to personal jurisdiction in the State of New
York in any action or proceeding arising out of this Note. In furtherance of
such agreement, Borrower hereby agrees and consents that without limiting other
methods of obtaining jurisdiction, personal jurisdiction over Borrower in any
such action or proceeding may be obtained within or without the jurisdiction of
any court located in New York and that any process or notice of motion or other
application to any such court in connection with any such action or proceeding
may be served upon Borrower by registered or certif~ed mail to, or by personal
service at, the last known address of Borrower, whether such address be within
or without the jurisdiction of any such court. Borrower hereby agrees that the
venue of any litigation arising in connection with the indebtedness, or in
respect of any of the obligations of Borrower under this Note, shall, to the
extent permitted by law, be in New York County.
18. COUNSEL FEES
In the event that it should become necessary to employ counsel to collect
the Debt or to protect or foreclose the security therefor, Borrower also agrees
to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.
19. NOTICES
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<PAGE>
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, (ii) one (1) Business Day
(defined below) 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, addressed as follows:
If to Borrower: PFL-290 Limited Partnership
6800 Texas Commerce Tower
Houston, Texas 77002
Attention: Mr. Joseph W.Peacock and Mr. Thomas V. Grieco
Facsimile No.: (713) 222-1614
With a copy to: Liddell, Sapp, Zivley, Hill & Lagoon, L.L.P.
600 Travis, 32nd Floor
Houston, Texas 77002
Attention: Stephen Jacobs, Esq.
Facsimile No.: (713) 223-3717
If to Lender: RFG Financial, Inc.
767 Fifth Avenue, 28th Floor
New York. New York 10153
Attention: Mr. Barry E. Breeman
Facsimile No.: (212) 421-4630
With a copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Joseph Philip Forte, Esq.
Facsimile No.: (212) 912-7751
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or different
addresses for subsequent notices or communications.
"Business Day" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.
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<PAGE>
20. ENTIRE AGREEMENT
THIS NOTE, THE SECURITY INSTRUMENT AND THE OTHER SECURITY DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDER AND THE OTHER RESPECTIVE
PARTIES HERETO AND THERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF. Borrower has duly executed this Note as of the day and
year first above written.
PFL-290 LIMITED PARTNERSHIP, a Texas
limited partnership
By: UNITEG PFL-290, INC., a Texas
corporation and its general partner
By: /s/ Joseph W. Peacock
Joseph W. Peacock
President
Pay to the order of
without recourse
RFG FINANCIAL, INC.,
a New York corporation
By: /s/ Barry E. Breeman
Barry E. Breeman
- 12 -
320754.1 (Benchmark Note)
<PAGE>
President
- 13 -
320754.1 (Benchmark Note)
<PAGE>
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on July 28, 1995, by JOSEPH W.
PEACOCK, president of UNITEG PFL-290 INC., a Texas corporation which is the sole
general partner of PFL-290 LIMITED PARTNERSHIP, a Texas limited partnership, on
behalf of said corporation and said limited partners.
/s/ Donna L. Egan
Notary Public in and
for the State of Texas
My Commission expires:
9/24/96 Donna L. Egan
Print Name of Notary
- 14 -
320754.1 (Benchmark Note)
PROMISSORY NOTE
U.S. $1,300, 000 June 10, 1992
FOR VALUE RECEIVED, and at the times hereinafter specified, HEDWIG II,
INC., a Texas corporation ("Maker"), whose address is c/o Uniteg Management
Company, 6800 Texas Commerce Tower, Houston, Texas 77002, hereby promises to pay
to the order of Sun Life Insurance Company of America, a Maryland corporation
(hereinafter referred to, together with each subsequent holder hereof, as
"Holder"), at 11601 Wilshire Boulevard, Los Angeles, California 90025-1748, or
at such other address as may be designated from time to time hereafter by any
Holder, the principal sum of ONE MILLION THREE HUNDRED THOUSAND and no/100ths
DOLLARS ($1,300,000.00), or so much thereof as shall have been disbursed to or
for the benefit of Maker, together with interest on the principal balance
outstanding from time to time, as hereinafter provided, in lawful money of the
United States of America.
The balance of principal outstanding from time to time under this
promissory note (this "Note") shall bear interest at the rate of 10.75% per
annum. Interest only shall be payable on July 1, 1992, in arrears, for the
period from and including the date hereof through and including June 30, 1992.
Commencing on August 1, 1992, and on the first day of each month thereafter
through and including June 1, 1999, combined payments of principal and interest
shall be payable, in arrears, in the amount of $12,139.00 each. The entire
outstanding principal balance, together with all accrued and unpaid interest and
all other sums due hereunder shall be due and payable in full on June 10, 1999.
During the first two (2) years after the date of this Note, Maker shall
have no right to prepay all or any part of this Note. At any time after the
second anniversary of the date of this Note, Maker shall have the right to
prepay the full principal amount of this Note and all accrued but unpaid
interest hereon as of the date of prepayment, provided that (a) Maker gives not
less than thirty (30) days' prior written notice to Holder of Maker's election
to prepay this Note, and (b) Maker pays a prepayment premium to Holder equal to
the greater of (i) one percent (11) of the outstanding principal amount of this
Note multiplied by the quotient of the number of full months remaining to
maturity of this Note divided by the number of full months comprising the term
of this Note or (ii) the Present Value of this Note (as defined below), less the
amount of principal being prepaid, calculated as of the prepayment date. Holder
shall notify Maker of the amount and basis of determination of the prepayment
premium. Holder shall not be obligated to accept any prepayment of the principal
balance of this Note unless such prepayment is accompanied by the applicable
prepayment premium and all accrued interest and other sums due under this Note.
In no event shall Maker be permitted to make any partial prepayments of this
Note. Notwithstanding the foregoing to the contrary, Maker shall have no
obligation to pay a prepayment premium in connection with application by Holder
of insurance or condemnation proceeds to the principal balance hereof as
permitted in the Deed of Trust (as hereinafter defined).
The "Present Value of this Note" with respect to any prepayment of this
Note, as of any date, shall be determined by discounting all scheduled payments
of principal and interest remaining to maturity of this Note, attributed to the
amount being prepaid, at the Discount Rate. If prepayment occurs on a date other
than a regularly scheduled payment date, the actual number of days remaining
from the prepayment date to the next regularly scheduled payment date will be
used to discount within such period.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate, when compounded semiannually.
1
<PAGE>
The "Treasury Rate" is the semi-annual yield on the Treasury Constant
Maturity Series with maturity equal to the remaining weighted average life of
this Note, for the week prior to the prepayment date, as reported in Federal
Reserve Statistical Release H.15 - Selected Interest Rates, conclusively
determined by Holder on the prepayment date. The rate will be determined by
linear interpolation between the yields reported in Release H.15, if necessary.
In the event Release H.15 is no longer published, Holder shall select a
comparable publication to determine the Treasury Rate.
Holder shall not be obligated actually to reinvest the amount prepaid
in any treasury obligations as a condition precedent to receiving any prepayment
premium.
Whenever any payment to be made under this Note shall be stated to be
due on a Saturday, Sunday or public holiday or the equivalent for banks
generally under the laws of the State of Texas (any other day being a "Business
Day"), such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest.
The entire balance of principal, interest, and other sums due upon the
maturity hereof, by acceleration or otherwise, shall bear interest from the date
due until paid at the greater of (a) 18` per annum and (b) a per annum rate
equal to 5` over the prime rate (for corporate loans at large United States
money center commercial banks) published in The Wall Street Journal on the first
business day of each month in which a default occurs or continues (the "Default
Rate"); provided, however, that (i) notwithstanding any other provision of this
Note, interest at the Default Rate shall be based on the actual number of days
in the then-current calendar year (whether 365 or 366); (ii) neither the Default
Rate nor any other interest rate under this Note shall exceed the maximum
non-usurious interest rate permitted by applicable state or Federal law (the
"Maximum Rate"); and (iii) the foregoing provision concerning interest at the
Default Rate shall be subject to the Usury Savings Clause, hereinafter set
forth. In the event The Wall Street Journal is no longer published or no longer
publishes such prime rate, Holder shall select a comparable reference.
If any payment under this Note is not made within five (5) days
following the date when due, interest shall accrue at the Default Rate from the
date such payment was due until payment is actually made.
In addition to interest as set forth herein, Maker shall pay Holder a
late charge equal to four percent (4%) of any amounts due under this Note in the
event any such amount is not paid within five (5) days following the date when
due. The provisions of the foregoing sentence shall be subject to the Usury
Savings Clause, hereinafter set forth.
All payments hereunder shall be applied first to the payment of late
charges, if any, then to the payment of prepayment premiums, if any, then to the
repayment of any sums advanced by Holder for the payment of any insurance
premiums, taxes, assessments, or other charges against the property securing
this Note (together with interest thereon at the Default Rate from the date of
advance until repaid), then to the payment of accrued and unpaid interest, and
then to the reduction of principal.
Payments under this Note shall be payable in immediately available
funds without setoff, counterclaim or deduction of any kind, and shall be made
by electronic funds transfer from a bank account established and maintained by
Maker for such purpose.
2
<PAGE>
This Note is secured by a Deed of Trust, Security Agreement, Fixture
Filing, Financing Statement and Assignment of Leases and Rents of even date
herewith granted by Maker for the benefit of the named Holder hereof (the "Deed
of Trust"), encumbering certain property located in Houston, Texas, as more
particularly described in such Deed of Trust. Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Deed of Trust.
Each of the following shall constitute an "Event of Default" hereunder
and under the Deed of Trust and each other document securing or executed in
connection with this Note (collectively, the "Loan Documents"): (a) any failure
to pay when due any sum hereunder or failure to perform any covenant or
agreement herein contained; (b) any default or Event of Default under any of the
Loan Documents; or (c) any default or Event of Default under a promissory note
in the original principal amount of $2,400,000 of even date herewith made by
Hedwig III Joint Venture, a Texas joint venture ("Hedwig"), to the order of
Holder (the "Hedwig Note"), a Deed of Trust, Security Agreement, Fixture Filing,
Financing Statement, and Assignment of Leases and Rents of even date herewith
executed by Hedwig for the benefit of Holder securing the Hedwig Note, or any
other document securing or executed in connection with the Hedwig Note. Upon the
occurrence of any such Event of Default, the entire balance of principal,
accrued interest, and other sums owing hereunder shall, at the option of Holder,
become at once due and payable without notice or demand.
Maker hereby certifies and declares that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this Note, and to constitute this Note the legal, valid
and binding obligation of Maker, enforceable in accordance with the terms
hereof, have been done and performed and happened in due and strict compliance
with all applicable laws.
Maker and all parties now or hereafter liable for the payment hereof,
primarily or secondarily, directly or indirectly, and whether as endorser,
guarantor, surety, or otherwise, hereby severally (a) waive presentment, demand,
protest, notice of protest and/or dishonor, notice of intent or election to
accelerate, notice of acceleration, and all other demands or notices of any sort
whatever with respect to this Note, (b) consent to impairment or release of
collateral, extensions of time for payment, and acceptance of partial payments
before, at, or after maturity, (c) waive any right to require Holder to proceed
against any security for this Note before proceeding hereunder (subject to the
provisions hereof limiting Maker's personal liability hereunder), (d) waive
diligence in the collection of this Note or in filing suit on this Note, and (e)
agree to pay all costs and expenses, including reasonable attorneys' fees, which
may be incurred in the collection of this Note or any part thereof or in
preserving, securing possession of, and realizing upon any security for this
Note.
The provisions of this Note and of all agreements between Maker and
Holder, whether now existing or hereafter made, are hereby expressly limited so
that in no contingency or event whatever, whether by reason of acceleration of
the maturity hereof, prepayment, demand for payment or otherwise, shall the
amount paid, or agreed to be paid, to Holder for the use, forbearance, or
detention of the principal hereof or interest hereon, which remains unpaid from
time to time, exceed the maximum amount permissible under applicable law, it
particularly being the intention of the parties hereto to conform strictly to
the Texas and Federal law, whichever is applicable. If from any circumstance
whatever, the performance or fulfillment of any provision hereof or of any other
agreement between Maker and Holder shall, at the time performance or fulfillment
of such provision is due, involve or purport to require any payment in excess of
the limits prescribed by applicable law, then the obligation to be performed or
fulfilled is hereby reduced to the limit of such validity, and if from any
circumstance whatever Holder should ever receive as interest an amount which
would exceed the highest lawful rate, the amount which would be excessive
interest shall be applied to the reduction of the principal balance owing
hereunder (or, at Holder's option, be paid over to Maker) and shall not be
counted as interest. To the extent permitted by applicable law, determination of
the legal maximum amount of interest shall at all times be made by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of this Note, all interest at any time contracted for, charged, or
received from Maker in connection with this Note and all other agreements
between Maker and Holder, so that the actual rate of interest on account of the
indebtedness represented by this Note is uniform throughout the term hereof.
This paragraph shall be referred to herein as the "Usury Savings Clause."
3
<PAGE>
Maker warrants and represents to Holder that the loan evidenced by this
Note is for business, commercial, investment, or other similar purpose and not
primarily for personal, family, household, or agricultural use, as such terms
are used in Chapter One of the Texas Credit Code.
Except as expressly hereinafter set forth, the recourse of Holder with
respect to the obligations evidenced by this Note shall be solely to the
Property, Chattels, and Intangible Personalty (as such terms are defined in the
Deed of Trust). Notwithstanding anything to the contrary contained in this Note
or in any Loan Document, nothing shall be deemed in any way to impair, limit or
prejudice the rights of Holder (a) in foreclosure proceedings or in any
ancillary proceedings brought to facilitate Holder's foreclosure on the Property
or any portion thereof; (b) to recover from Maker damages or costs (including
without limitation reasonable attorneys' fees) incurred by Holder as a result of
waste by Maker; (c) to recover from Maker any condemnation or insurance proceeds
attributable to the Property which were not paid to Holder or used to restore
the Property in accordance with the terms of the Deed of Trust; (d) to recover
from Maker any rents, profits, security deposits, advances, rebates, prepaid
rents or other similar sums attributable to the Property collected by or for
Maker following an Event of Default under any Loan Document and not properly
applied to the reasonable fixed and operating expenses of the Property,
including payments of this Note; (e) to pursue the personal liability of Maker
under the provisions of Section 5.11 or 5.12 of the Deed of Trust, including any
indemnification provisions under such Sections; (f) to exercise any specific
rights or remedies afforded Holder under any other provisions of the Loan
Documents or by law or in equity (provided that Maker's personal liability shall
be limited as herein provided); (g) to recover from Maker the amount of any
taxes, assessments, and/or utility charges affecting the Property, accruing
prior to the date of foreclosure, that are either unpaid by Maker or paid by
Holder under the Deed of Trust; (h) to collect from Maker any sums expended by
Holder in fulfilling the obligations of Maker, as lessor, under any leases
affecting the Property to the extent that such obligations are specifically and
particularly described in such leases and contemplate expenditure by the lessor
of moneys thereof; (i) to recover from Maker any loss, cost, expense incurred by
Holder as the result of the execution, termination (excluding terminations
permitted without Beneficiary's consent by Section 5.3 of the Mortgage),
amendment or modification of any lease affecting the Property without the prior
written consent of Holder if such consent is required under the terms of the
Loan Documents; and (j) to pursue any personal liability of Maker under the
Environmental Indemnity Agreement. The agreement contained in this paragraph to
limit the personal liability of Maker shall become null and void and be of no
further force and effect in the event (i) that the Property or any part thereof
or any interest therein shall be further encumbered by a consensual lien
securing any obligation upon which Maker, or any general partner of Maker, shall
be personally liable for repayment, whether as obligor or guarantor; (ii) of any
breach or violation of Sections 5.4 or 5.5 of the Deed of Trust; or (iii) of any
fraud or material misrepresentation by Maker in connection with the Property,
the Loan Documents or the application made by Maker for the loan evidenced by
this Note.
If Article 1.04 of the Texas Credit Code is applicable to this Note,
and applicable Federal law does not permit a higher interest rate, the interest
rate ceiling applicable to the loan evidenced by this Note shall be the
"indicated rate ceiling," as defined in Article 1.04 of the Texas Credit Code.
If any provision hereof or of any other document securing or related to
the indebtedness evidenced hereby is, for any reason and to any extent, invalid
or unenforceable, then neither the remainder of the document in which such
provision is contained, nor the application of the provision to other persons,
entities, or circumstances, nor any other document referred to herein, shall be
affected thereby, but instead shall be enforceable to the maximum extent
permitted by law.
Each provision of this Note shall be and remain in full force and
effect notwithstanding any negotiation or transfer hereof and any interest
herein to any other Holder or participant.
4
<PAGE>
Regardless of the place of its execution, this Note shall be construed
and enforced in accordance with the laws of the State of Texas and applicable
Federal law.
HEDWIG II, INC., a Texas corporation
By: /s/ Joseph W. Peacock
------------------------------
Joseph W. Peacock
Name: Joseph W. Peacock
Title: Vice President
PROMISSORY NOTE
U.S. $2,400,000 June 10, 1992
FOR VALUE RECEIVED, and at the times hereinafter specified, HEDWIG III
JOINT VENTURE, a Texas joint venture ("Maker"), whose address is c/o Uniteg
Management, 6800 Texas Commerce Tower, Houston, Texas 77002, hereby promises to
pay to the order of Sun Life Insurance Company of America, a Maryland
corporation (herein after referred to, together with each subsequent holder
hereof, as "Holder"), at 11601 Wilshire Boulevard, Los Angeles, California
90025-1748, or at such other address as may be designated from time to time
hereafter by any Holder, the principal sum of TWO MILLION FOUR HUNDRED THOUSAND
and no/100ths DOLLARS ($2,400,000), or so much thereof as shall have been
disbursed to or for the benefit of Maker, together with interest on the
principal balance outstanding from time to time, as hereinafter provided, in
lawful money of the United States of America.
The balance of principal outstanding from time to time under this
promissory note (this "Note") shall bear interest at the rate of 10.75% per
annum. Interest only shall be payable on July 1, 1992, in arrears, for the
period from and including the date hereof through and including June 30, 1992.
Commencing on August 1, 1992, and on the first day of each month thereafter
through and including June 1, 1999, combined payments of principal and interest
shall be payable, in arrears, in the amount of $22,407.32 each. The entire
outstanding principal balance, together with all accrued and unpaid interest and
all other sums due hereunder shall be due and payable in full on June 10, 1999.
During the first two (2) years after the date of this Note, Maker shall
have no right to prepay all or any part of this Note. At any time after the
second anniversary of the date of this Note, Maker shall have the right to
prepay the full principal amount of this Note and all accrued but unpaid
interest hereon as of the date of prepayment, provided that (a) Maker gives not
less than thirty (30) days' prior written notice to Holder of Maker's election
to prepay this Note, and (b) Maker pays a prepayment premium to Holder equal to
the greater of (i) one percent (1%) of the outstanding principal amount of this
Note multiplied by the quotient of the number of full months remaining to
maturity of this Note divided by the number of full months comprising the term
of this Note or (ii) the Present Value of this Note (as defined below), less the
amount of principal being prepaid, calculated as of the prepayment date. Holder
shall notify Maker of the amount and basis of determination of the prepayment
premium. Holder shall not be obligated to accept any prepayment of the principal
balance of this Note unless such prepayment is accompanied by the applicable
prepayment premium and all accrued interest and other sums due under this Note.
In no
- 1 -
320732.1 - Hedwig III
<PAGE>
event shall Maker be permitted to make any partial prepayments of this Note.
Notwithstanding the foregoing to the contrary, Maker shall have no obligation to
pay a prepayment premium in connection with application by Holder of insurance
or condemnation proceeds to the principal balance hereof as permitted in the
Deed of Trust (as hereinafter defined).
The "Present Value of this Note" with respect to any prepayment of this
Note, as of any date, shall be determined by discounting all scheduled payments
of principal and interest remaining to maturity of this Note, attributed to the
amount being prepaid, at the Discount Rate. If prepayment occurs on a date other
than a regularly scheduled payment date, the actual number of days remaining
from the prepayment date to the next regularly scheduled payment date will be
used to discount within such period.
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate, when compounded semi annually.
The "Treasury Rate" is the semi-annual yield on the Treasury Constant
Maturity Series with maturity equal to the remaining weighted average life of
this Note, for the week prior to the prepayment date, as reported in Federal
Reserve Statistical Release H.15 - Selected Interest Rates, conclusively
determined by Holder on the prepayment date. The rate will be determined by
linear interpolation between the yields reported in Release H.15, if necessary.
In the event Release H.15 is no longer published, Holder shall select a
comparable publication to determine the Treasury Rate.
Holder shall not be obligated actually to reinvest the amount prepaid in
any treasury obligations as a condition precedent to receiving any prepayment
premium.
Whenever any payment to be made under this Note shall be stated to be due
on a Saturday, Sunday or public holiday or the equivalent for banks generally
under the laws of the State of Texas (any other day being a "Business Day"),
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of payment of
interest.
The entire balance of principal, interest, and other sums due upon the
maturity hereof, by acceleration or otherwise, shall bear interest from the date
due until paid at the greater of (a) 18% per annum and (b) a per annum rate
equal to 5% over the prime rate (for corporate loans at large United States
money center commercial banks) published in The Wall Street Journal on the first
business day of each month in which a default occurs or continues (the
- 2 -
320732.1 - Hedwig III
<PAGE>
"Default Rate"); provided, however, that (i) notwithstanding any other provision
of this Note, interest at the Default Rate shall be based on the actual number
of days in the then-current calendar year (whether 365 or 366); (ii) neither the
Default Rate nor any other interest rate under this Note shall exceed the
maximum non- usurious interest rate permitted by applicable state or Federal law
(the "Maximum Rate"); and (iii) the foregoing provision concerning interest at
the Default Rate shall be subject to the Usury Savings Clause, hereinafter set
forth. In the event The Wall Street Journal is no longer published or no longer
publishes such prime rate, Holder shall select a comparable reference.
If any payment under this Note is not made within five (5) days following
the date when due, interest shall accrue at the Default Rate from the date such
payment was due until payment is actually made.
In addition to interest as set forth herein, Maker shall pay Holder a late
charge equal to four percent (4%) of any amounts due under this Note in the
event any such amount is not paid within five (5) days following the date when
due. The provisions of the foregoing sentence shall be subject to the Usury
Savings Clause, hereinafter set forth.
All payments hereunder shall be applied first to the payment of late
charges, if any, then to the payment of prepayment premiums, if any, then to the
repayment of any sums advanced by Holder for the payment of any insurance
premiums, taxes, assessments, or other charges against the property securing
this Note (together with interest thereon at the Default Rate from the date of
advance until repaid), then to the payment of accrued and unpaid interest, and
then to the reduction of principal.
Payments under this Note shall be payable in immediately available funds
without setoff, counterclaim or deduction of any kind, and shall be made by
electronic funds transfer from a bank account established and maintained by
Maker for such purpose.
This Note is secured by a Deed of Trust, Security Agreement, Fixture
Filing, Financing Statement and Assignment of Leases and Rents of even date
herewith granted by Maker for the benefit of the named Holder hereof (the "Deed
of Trust"), encumbering certain property located in Houston, Texas, as more
particularly described in such Deed of Trust. Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Deed of Trust.
Each of the following shall constitute an "Event of Default" hereunder and
under the Deed of Trust and each other document
- 3 -
320732.1 - Hedwig III
<PAGE>
securing or executed in connection with this Note (collectively, the "Loan
Documents"): (a) any failure to pay when due any sum hereunder or failure to
perform any covenant or agreement herein contained; (b) any default or Event of
Default under any of the Loan Documents; or (c) any default or Event of Default
under a promissory note in the original principal amount of $1,300,000 of even
date herewith made by Hedwig II, Inc., a Texas corporation ("Hedwig"), to the
order of Holder (the "Hedwig Note"), a Deed of Trust, Security Agreement,
Fixture Filing, Financing Statement, and Assignment of Leases and Rents of even
date herewith executed by Hedwig for the benefit of Holder securing the Hedwig
Note, or any other document securing or executed in connection with the Hedwig
Note. Upon the occurrence of any such Event of Default, the entire balance of
principal, accrued interest, and other sums owing hereunder shall, at the option
of Holder, become at once due and payable without notice or demand.
Maker hereby certifies and declares that all acts, conditions and things
required to be done and performed and to have happened precedent to the creation
and issuance of this Note, and to constitute this Note the legal, valid and
binding obligation of Maker, enforceable in accordance with the terms hereof,
have been done and performed and happened in due and strict compliance with all
applicable laws.
Maker and all parties now or hereafter liable for the payment hereof,
primarily or secondarily, directly or indirectly, and whether as endorser,
guarantor, surety, or otherwise, hereby severally (a) waive presentment, demand,
protest, notice of protest and/or dishonor, notice of intent or election to
accelerate, notice of acceleration, and all other demands or notices of any sort
whatever with respect to this Note, (b) consent to impairment or release of
collateral, extensions of time for payment, and acceptance of partial payments
before, at, or after maturity, (c) waive any right to require Holder to proceed
against any security for this Note before proceeding hereunder (subject to the
provisions hereof limiting Maker's personal liability hereunder), (d) waive
diligence in the collection of this Note or in filing suit on this Note, and (e)
agree to pay all costs and expenses, including reasonable attorneys' fees, which
may be incurred in the collection of this Note or any part thereof or in
preserving, securing possession of, and realizing upon any security for this
Note.
The provisions of this Note and of all agreements between Maker and
Holder, whether now existing or hereafter made, are hereby expressly limited so
that in no contingency or event whatever, whether by reason of acceleration of
the maturity hereof, prepayment, demand for payment or otherwise, shall the
amount paid,
- 4 -
320732.1 - Hedwig III
<PAGE>
or agreed to be paid, to Holder for the use, forbearance, or detention of the
principal hereof or interest hereon, which remains unpaid from time to time,
exceed the maximum amount permissible under applicable law, it particularly
being the intention of the parties hereto to conform strictly to the Texas and
Federal law, whichever is applicable. If from any circumstance whatever, the
performance or fulfillment of any provision hereof or of any other agreement
between Maker and Holder shall, at the time performance or fulfillment of such
provision is due, involve or purport to require any payment in excess of the
limits prescribed by applicable law, then the obligation to be performed or
fulfilled is hereby reduced to the limit of such validity, and if from any
circumstance whatever Holder should ever receive as interest an amount which
would exceed the highest lawful rate, the amount which would be excessive
interest shall be applied to the reduction of the principal balance owing
hereunder (or, at Holder's option, be paid over to Maker) and shall not be
counted as interest. To the extent permitted by applicable law, determination of
the legal maximum amount of interest shall at all times be made by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of this Note, all interest at any time contracted for, charged, or
received from Maker in connection with this Note and all other agreements
between Maker and Holder, so that the actual rate of interest on account of the
indebtedness represented by this Note is uniform throughout the term hereof.
This paragraph shall be referred to herein as the "Usury Savings Clause."
Maker warrants and represents to Holder that the loan evidenced by this
Note is for business, commercial, investment, or other similar purpose and not
primarily for personal, family, household, or agricultural use, as such terms
are used in Chapter One of the Texas Credit Code.
Except as expressly hereinafter set forth, the recourse of Holder with
respect to the obligations evidenced by this Note shall be solely to the
Property, Chattels, and Intangible Personalty (as such terms are defined in the
Deed of Trust). Notwithstanding anything to the contrary contained in this Note
or in any Loan Document, nothing shall be deemed in any way to impair, limit or
prejudice the rights of Holder (a) in foreclosure proceedings or in any
ancillary proceedings brought to facilitate Holder's foreclosure on the Property
or any portion thereof; (b) to recover from Maker damages or costs (including
without limitation reasonable attorneys' fees) incurred by Holder as a result of
waste by Maker; (c) to recover from Maker any condemnation or insurance proceeds
attributable to the Property which were not paid to Holder or used to restore
the Property in accordance with the terms of the Deed of Trust; (d) to recover
from Maker any rents, profits,
- 5 -
320732.1 - Hedwig III
<PAGE>
security deposits, advances, rebates, prepaid rents or other similar sums
attributable to the Property collected by or for Maker following an Event of
Default under any Loan Document and not properly applied to the reasonable fixed
and operating expenses of the Property, including payments of this Note; (e) to
pursue the personal liability of Maker under the provisions of Section 5.11 or
5.12 of the Deed of Trust, including any indemnification provisions under such
Sections; (f) to exercise any specific rights or remedies afforded Holder under
any other provisions of the Loan Documents or by law or in equity (provided that
Maker's personal liability shall be limited as herein provided); (g) to recover
from Maker the amount of any taxes, assessments, and/or utility charges
affecting the Property, accruing prior to the date of foreclosure, that are
either unpaid by Maker or paid by Holder under the Deed of Trust (h) to collect
from Maker any sums expended by Holder in fulfilling the obligations of Maker,
as lessor, under any leases affecting the Property to the extent that such
obligations are specifically and particularly described in such leases and
contemplate expenditure by the lessor of moneys in the performance thereof; and
(i) to pursue any personal liability of Maker under the Environmental Indemnity
Agreement. The agreement contained in this paragraph to limit the personal
liability of Maker shall become null and void and be of no further force and
effect in the event (i) that the Property or any part thereof or any interest
therein shall be further encumbered by a consensual lien securing any obligation
upon which Maker, or any general partner of Maker, shall be personally liable
for repayment, whether as obligor or guarantor; (ii) of any breach or violation
of Sections 5.4 or 5.5 of the Deed of Trust; (iii) of any fraud or material
misrepresentation by Maker in connection with the Property, the Loan Documents
or the application made by Maker for the loan evidenced by this Note; or (iv) of
any execution, amendment, modification or termination of any lease of more than
2,000 square feet of leaseable space on the Property without the prior written
consent of Holder if such consent is required under the terms of the Loan
Documents.
If Article 1.04 of the Texas Credit Code is applicable to this Note, and
applicable Federal law does not permit a higher interest rate, the interest rate
ceiling applicable to the loan evidenced by this Note shall be the "indicated
rate ceiling," as defined in Article 1.04 of the Texas Credit Code.
If any provision hereof or of any other document securing or related to
the indebtedness evidenced hereby is, for any reason and to any extent, invalid
or unenforceable, then neither the remainder of the document in which such
provision is contained, nor the application of the provision to other persons,
entities, or circumstances, nor any other document referred to herein, shall be
- 6 -
320732.1 - Hedwig III
<PAGE>
affected thereby, but instead shall be enforceable to the maximum
extent permitted by law.
Each provision of this Note shall be and remain in full force and effect
notwithstanding any negotiation or transfer hereof and any interest herein to
any other Holder or participant.
Regardless of the place of its execution, this Note shall be construed and
enforced in accordance with the laws of the State of Texas and applicable
Federal law.
HEDWIG III JOINT VENTURE, a Texas
joint venture
By: UNITEG INVESTMENT COMPANY,
INC., a Texas corporation
By: /s/ Jody W. Peacock
Title: Executive Vice President
By: FINIAL HEDWIG II, INC., a
Delaware corporation
By: /s/ Susan S. Crane
Title: Vice President
By: H.A.D UNITEG LIMITED
PARTNERSHIP, a Texas limited
partnership
By: J.D. Holding, Inc., a
Delaware corporation, its
general partner
By:/s/ Susan S. Crane
Title: Secretary
- 7 -
320732.1 - Hedwig III
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000868196
<NAME> UNITED INVESTORS REALTY TRUST
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.00
<CASH> 6824
<SECURITIES> 0
<RECEIVABLES> 1204
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9797
<PP&E> 102530
<DEPRECIATION> (5303)
<TOTAL-ASSETS> 107024
<CURRENT-LIABILITIES> 2647
<BONDS> 0
0
0
<COMMON> 77669
<OTHER-SE> (3795)
<TOTAL-LIABILITY-AND-EQUITY> 107024
<SALES> 0
<TOTAL-REVENUES> 2670
<CGS> 0
<TOTAL-COSTS> 597
<OTHER-EXPENSES> 845
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3252
<INCOME-PRETAX> (2051)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2051)
<DISCONTINUED> 0
<EXTRAORDINARY> (232)
<CHANGES> 0
<NET-INCOME> (2304)
<EPS-PRIMARY> (1.02)
<EPS-DILUTED> (1.02)
</TABLE>
