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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15d
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
COMMISSION FILE NUMBER: 001-13915
------------------------
UNITED INVESTORS REALTY TRUST
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 76-0265701
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
5847 SAN FELIPE, SUITE 850, 77057
HOUSTON, TEXAS (zip code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (713) 781-2860
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C>
Common Shares of Beneficial NASDAQ Stock Market
Interest, no par value Pacific Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
The aggregate market value of the common shares of beneficial interest held
by non-affiliates was approximately $64,745,177 based upon the closing price on
the NASDAQ Stock Market for such shares of $7.00 on March 3, 1999.
As of March 3, 1999, the number of common shares of beneficial interest
outstanding was 9,514,889.
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<PAGE>
UNITED INVESTORS REALTY TRUST
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>
ITEM NO. PAGE NO.
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<C> <C>
PART I
1. Business 1
2. Properties 5
3. Legal Proceedings 6
4. Submission of Matters to a Vote of Security Holders 7
PART II
5. Market for Registrant's Common Equity and Related
Shareholder Matters 7
6. Selected Financial Data 8
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
8. Financial Statements and Supplementary Data 13
9. Changes in and Disagreements with Accountants or
Accounting and Financial Disclosure 13
PART III
10. Directors and Executive Officers of the Company 13
11. Executive Compensation 13
12. Security Ownership of Certain Beneficial Owners
and Management 13
13. Certain Relationships and Related Transactions 13
PART IV
14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K 13
SIGNATURES
</TABLE>
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this report on Form 10-K incorporates by reference information
from the Registrant's definitive proxy statement relating to the Registrant's
1999 annual meeting to be filed with the Securities and Exchange Commission
within 120 days of the close of the Registrant's fiscal year.
FORWARD LOOKING STATEMENTS
The information contained and incorporated by reference in this Form 10-K
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1993, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). A number of
factors could cause results to differ materially from those anticipated by such
forward-looking statements. These factors include, but are not limited to, the
competitive environment in the retail industry in general and in the Company's
specific market areas, changes in prevailing interest rates and the availability
of financing, inflation, economic conditions in general and in the Company's
specific market areas, labor disturbances, demands placed on management by the
recent substantial increase in number of properties owned by the Company changes
in the Company's acquisition plans and certain other factors described under
"Business" in Item 1 below. In addition, such forward-looking statements are
necessarily dependent upon assumptions, estimates and data that may be incorrect
or imprecise. Accordingly, any forward-looking statements included or
incorporated by reference in this Form 10-K do not purport to be predictions of
future events or circumstances and may not be realized. Forward-looking
statements can be identified by, among other things, the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," "seeks,"
"pro forma," or "anticipates," or the negative thereof, or other variations
thereon or comparable terminology, or by discussions of strategy or intentions.
PART I
ITEM 1. BUSINESS
United Investors Realty Trust is a real estate investment trust which
acquires, develops, and operates neighborhood and community shopping centers in
the "sunbelt" region of the United States. As of December 31, 1998, the Company
owned controlling interests in 25 shopping centers, 24 of which were fully
operational, and one of which was in the early stages of development. The 24
operating shopping centers comprised approximately 3,000,000 square feet of
gross leaseable area, of which approximately 700,000 square feet was owned by
grocery store operators and other third parties. When completed, the shopping
center under development will comprise approximately 60,000 square feet of GLA.
Of the Company's 25 properties, 20 are 100% owned by the Company. Three of
the properties are owned through limited partnerships in which the Company holds
at least 96% of the partnership interests. Two of the properties are owned
pursuant to leasehold interests that have transferred virtually all risks and
rewards of ownership to the Company. The Company owns a 40% interest in a
limited liability company, which is consolidated for financial reporting
purposes, that is the owner of a shopping center under development. The Company
is obligated to purchase the remaining 60% interest upon the completion of
development.
UIRT operated from 1989 until 1998 as a private REIT. On March 13, 1998, we
completed an initial public offering of 7,600,000 common shares of beneficial
interest. In April 1998, we issued another 1,000,000 common shares of beneficial
interest pursuant to the exercise of the underwriters' overallotment options.
Prior to the IPO, we had outstanding approximately 915,000 shares, all of which
remain outstanding as of December 31, 1998.
Our focus is on purchasing properties anchored by major retail tenants,
preferably grocery stores, located in the sunbelt. We believe our best
opportunities for growth will come from acquiring single properties and small
portfolios. We believe our primary competitors for these properties are private
individuals, small REITs, and groups that will not have the resources of a
relatively larger public REIT. Further, we believe that larger public REITs
generally seek to acquire larger portfolios than we seek to acquire.
Of the 25 neighborhood and community shopping centers owned as of December
31, 1998, 17 are located in Texas (including seven in the Houston area and six
in the Dallas/Ft. Worth area), three are located in each of Arizona and Florida
and two are located in Tennessee. The properties are located in areas the
Company believes provide busy working families with the opportunity to do most
of their shopping between work and home. The properties range in size from
approximately 26,000 square feet to approximately 316,000 square feet, and are
anchored primarily by national and regional supermarkets, drug stores and
retailers which offer everyday necessities to their neighborhood communities.
Approximately 95% (based on GLA) of the existing leases at the properties are
triple net, i.e., the tenants under such leases are required to pay base rent
and their respective shares of the common area maintenance charges, real estate
taxes and insurance costs incurred annually at their respective properties. Any
future property acquisitions by us are expected to be in medium to large-sized
sunbelt metropolitan communities, where potential future increases in rental and
occupancy rates are anticipated to be realized as a result of better than
average population and employment growth.
1
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UIRT seeks to maximize growth in funds from operations ("FFO")(as defined
in Item 7) and funds available for distribution ("FAD"), which is FFO adjusted
for certain cash receipts and disbursements, to shareholders through effective
management, operation and acquisition of neighborhood and community shopping
centers. We currently follow five general investment policies to achieve our
objectives: (1) we seek to acquire real estate assets for long-term investment
and income by applying selective criteria and employing the most advantageous
sources of capital alternatives; (2) we seek acquisitions, including
neighborhood shopping centers that are of high-quality and are well-located and
that we can renovate and/or expand, and maintain and intensively manage; (3) we
intend to focus our acquisition efforts on communities in which we already have
properties, in communities within close proximity to such properties or in areas
where we can acquire several properties concurrently, in order to obtain
economies of scale in the use of local personnel, advertising and purchasing of
services; (4) we expect to enhance our existing portfolio by entering into a
limited number of alliances with experienced developers in order to develop new
neighborhood and community shopping centers; and (5) we intend to sell, from
time to time, select properties as dictated by market conditions in order to
realize capital gains and to improve our overall portfolio profile and
valuation.
Historically, we have contracted with local, professional management for
the day to day operation of our properties. During 1998, we assumed property
management and leasing responsibilities for all of our Texas properties except
those in the Dallas/Ft. Worth area. Management anticipates that the six
Dallas/Ft. Worth properties, which are presently managed by third parties, will
be internally managed by the end of the second quarter of 1999. Effective
January 1, 1999, our finance and accounting departments had brought all
accounting and finance functions in-house, whereas prior to the IPO, accounting
for our eight properties was outsourced to third party property managers.
Accounting functions for subsequently acquired properties will also be performed
internally.
Management believes that when acquiring properties in new markets, local
managers possess a valuable understanding of their local markets. Further,
management has concluded that local management, in select situations, is
currently an economical and viable alternative to management by UIRT personnel.
Economic viability will dictate if and when management of these properties will
be brought in-house. Until then, third party management and leasing activities
will remain under the close supervision of and tight guidelines established by
UIRT.
UIRT is managed for a fee by the Investment Manager, FCA Corp. Robert W.
Scharar, Chairman of the Board of UIRT, is the principal shareholder of the
Investment Manager. The Investment Manager originally sponsored the organization
of UIRT in 1989 as a benefit to a number of clients who desired to include real
estate properties in their investment portfolios. In return for the fee paid by
UIRT, the Investment Manager currently provides certain administrative,
accounting, financial, and operating personnel to UIRT. In addition UIRT also
reimburses the Investment Manager for the costs of other personnel, essentially
involved in property operations, and their related cost of occupancy without any
mark-up or add-on. The Investment Manager has dedicated to the administration of
UIRT the full-time services of Lewis H. Sandler, Randall D. Keith, R. Steven
Hamner, and Joseph W. Karp who serve as our Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer and Vice President-Asset Management
and Leasing, respectively.
UIRT is a real estate investment trust formed under the Texas REIT Act. We
elected to be taxed as a REIT under the Internal Revenue Code for its taxable
year ended December 31, 1989 and for each subsequent taxable year. Our principal
executive offices are located at 5847 San Felipe, Suite 850, Houston, Texas
77057, and our telephone number is (713) 781-2860, our fax number is (713)
781-3846, and our internet address is www.UIRT.com.
BUSINESS OBJECTIVES AND STRATEGIES
1998 ACTIVITIES
In February 1998, we acquired four neighborhood and community shopping
centers for approximately $35,000,000 and refinanced approximately $16,000,000
in mortgage debt with proceeds from a $53,700,000 bridge financing arrangement.
In March and April of 1998, we completed our IPO and raised approximately
$79,000,000. We used the IPO proceeds, along with proceeds from mortgage loans
and bank lines of credit to repay the bridge financing arrangement, retire debt,
redeem preferred shares, acquire limited partnership interests in certain
partnerships, and acquire additional properties. In total, we acquired
approximately $121,000,000 in properties during 1998.
2
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Our primary strategy to increase the size of our portfolio is to acquire
well-located neighborhood and community shopping centers in first and second
tier sunbelt cities that are anchored by supermarkets and other national and
regional credit-worthy tenants with long-term leases. We seek strong prospects
for future cash flow stability and capital appreciation. A secondary emphasis is
placed on shopping centers where significant redevelopment opportunities exist.
In either event, we focus on areas where potential future increases in rental
and occupancy rates resulting from better than average population and employment
growth are anticipated. Our acquisition criteria include location along major
traffic arteries in established neighborhoods where the development of competing
shopping centers is impeded by the lack of developable land and zoning
restrictions, and where tenant relocation alternatives are limited.
In evaluating the potential acquisition of any property, management
considers a variety of factors such as (1) the location, visibility and
accessibility of the property; (2) the demographic characteristics of the local
market, including potential for growth; (3) the size of the property; (4) the
purchase price; (5) the availability of funds or other consideration for the
proposed acquisition and the cost thereof; (6) the geographic "fit" of the
property with the Company's existing portfolio; (7) the absence or existence of
environmental problems, if any; (8) the current and projected cash flow of the
property and perceived ability to increase cash flow; (9) the terms of the
leases, including the potential for rent increases; (10) the quality of
construction, physical condition and design of the property; (11) the terms of
existing financing on the property; (12) the potential for expansion or
redevelopment, and (13) existing and the potential for future competition within
the community in which the prospective acquisitions are located.
Redevelopment
Redevelopment activities have been an integral part of our business
strategy and will continue to be an important component of our strategy in the
future. Redevelopment activities generally involve physically upgrading an
existing retail facility in order to meet and, in some instances, help set
current industry standards as well as to accommodate the expansion of existing
tenants and/or the placement of additional tenants. We plan to commence
significant redevelopment of two of our properties during 1999.
Development
We also intend to develop a limited number of new properties. Management
believes that development properties, if well-located and properly leased, can
provide better than average returns. Since the risk inherent in such development
is also potentially greater than in acquisition of mature properties, management
intends to limit such development activities, at any one time, to approximately
20% of our GLA.
When we identify a development opportunity, we enter into an arrangement
with a local developer whereby we are not compelled to take title to or fund the
acquisition of the property unless certain conditions are met. Such conditions
generally include: binding leases with anchor tenants must be executed; the land
entitlement process must be substantially complete; land acquisition and
development costs must be identified; financing sources and costs must be
circumscribed; tenant finish costs must be escrowed and major tenants must have
accepted possession of their respective premises and commenced the payment of
base rent.
During 1998, we entered into three development projects:
- We agreed to purchase two neighborhood shopping centers under
development in Houston from a local developer. Both centers are
anchored by Albertsons, which will own its own space within the
centers. The remaining space must be at least 90% leased to tenants
acceptable to us prior to acquiring the property. We acquired one of
these centers in January 1999, and expect to acquire the other in
April 1999.
- In Tampa, Florida, a local developer is developing a shopping center
that is anchored by a Kash N' Karry grocery store (whose lease is
guaranteed by its parent company, Food Lion, Inc.). UIRT, which owns a
minority interest in the entity developing the center, has agreed to
acquire the remainder of the entity upon the occupancy of Kash N'
Karry and the completion of the remaining tenant space. Leasing of
such space has commenced and we expect to complete this transaction
during the third quarter of 1999.
OPERATING STRATEGY
We believe in an aggressive leasing and property management strategy
conducted by professionals with extensive experience, knowledge of local markets
and an established track record with national, regional and local retailers. Our
leasing and property management activities are conducted by our managers and
3
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representatives as well as by local leasing and property managers, all of whom
are supervised by our officers. We believe that the expertise and relationships
developed by these professional leasing and management teams enhance our ability
to retain existing tenants as well as attract national and regional retailers to
our properties.
Our overall property management and leasing strategy is designed to permit
us to realize opportunities for increased rental revenue and cash flow growth.
Each property has a specific management and leasing program which takes into
account the location, community needs, tenant mix and other factors affecting
such property. Key elements of our strategy include:
- Tenants. We intend to maintain and diversify our core of national and
regional credit-worthy anchor tenants. Supermarkets comprise the
majority of such anchors. Management also recognizes the dynamics
inherent at each of our properties and intends to tailor the
tenant-mix at each property to meet the needs of the local
communities.
- Lease Renewals/Extensions. Our officers and property managers (under
the direction of our officers) expect to aggressively market vacant
space, renew existing leases at higher base rents per square foot, and
utilize base rent escalation provisions in our leases to the extent
allowed by lease and market conditions. We believe that a number of
our leases currently are at below market rents and that opportunities
may exist in the future to renew those leases at higher base rents
upon expiration of existing lease terms.
- Property Management. We seek to maintain attractive facilities through
regularly scheduled inspection and maintenance programs for each
property, placing a strong emphasis on aesthetics, regular
maintenance, periodic renovation and capital improvements. We expect
to continue such programs and will budget annually what we consider to
be appropriate maintenance expenditures. Our property managers are
charged with the responsibility for implementing designated repairs
and improvements, which our officers regularly inspect. We believe
that such hands-on property management enhances the value of our
properties to the tenants and their customers and attracts new tenants
and new customers to our properties.
- Property Sales. We may, from time to time, sell properties, depending
on prevailing market conditions and subject to certain limitations
relating to our taxation as a REIT. We currently have no plans to sell
any of our properties.
FINANCING
In order to pursue our acquisition, redevelopment, development and
operating strategies most effectively, we intend to limit our borrowings such
that earnings before interest, taxes, depreciation and amortization is at least
2.5 times our debt service requirements. We believe this ratio provides an
indicator of our ability to service our debt and make our distribution payments.
In conjunction with our debt service coverage ratio limits, we also expect to
maintain a capital structure with a ratio of debt to total capital of
approximately 50%. At December 31, 1998, we had a debt to total capital ratio of
approximately 46%. We may, however, from time to time increase or decrease our
ratio of long-term debt to total capital in light of then current economic
conditions, relative costs of debt and equity capital, the market values of our
properties, growth and acquisition opportunities and other factors.
We intend to avoid exposure to long-term variable rate debt by utilizing
either fixed-rate debt or entering into interest rate protection agreements. We
intend to finance our acquisitions, redevelopments and developments with what we
consider to be the most appropriate sources of capital, which may include
undistributed FAD, the issuance of equity securities (including preferred
shares, rights, or warrants), the issuance of downREIT units, sales of
investments, bank and other institutional borrowings (secured and unsecured),
the issuance of debt securities and proceeds from the sale of properties.
EMPLOYEES
At December 31, 1998, we had no employees. The Investment Manager had
approximately 16 employees who were utilized on an essentially full time basis
for UIRT business. Subsequent to December 31, 1998, the Investment Manager hired
an additional four employees who will be utilized for UIRT business. In addition
23 other staff members of the Investment Manager are available to assist UIRT.
4
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ITEM 2. PROPERTIES
The following table and notes describe the Company's properties and rental
information for leases in effect as of December 31, 1998:
<TABLE>
<CAPTION>
GROSS LEASABLE AREA
-------------------
ANNUALIZED
YEAR SQUARE FEET STRAIGHT-LINE
TEXAS DEVELOPED/ OWNED SQ. OWNED BY PERCENT ANNUALIZED BASE RENT MAJOR TENANT(S)
SHOPPING CENTERS RENOVATED FT. ANCHORS LEASED BASE RENT PER SQ. FT. (LEASE EXPIRATION)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arlington Shopping Center 1982/1991 65,083 58,000 99% $629,793 $9.77 Kroger (1)
Arlington, TX Little Caesar's Pizza (1999)
Weight Watchers (2001)
Autobahn Shopping Center 1984 28,878 0 97% $324,156 $11.57 Blockbuster Video (2000)
San Antonio, TX
Bandera Festival Shopping 1989 189,438 0 95%(2) $1,506,492 $ 8.37 K-Mart (2013)
Center Solo Serve (2004)
San Antonio, TX Eckerd Drugs (2008)
Benchmark Crossing 1986/1990/ 58,384 0 100% $663,576 $11.37 Jack-In-The-Box (2006)
Shopping Center 1994 Burger King (2010)
Houston, TX IHOP (2013)
Centennial Shopping Center 1970/1984 80,492 0 97% $661,464 $ 8.47 Drug Emporium (2001)
Austin, TX
Colony Plaza Shopping 1997 26,513 53,000 94% $421,932 $16.93 Albertson's Supermarkets
Center (1)
Sugar Land, TX Starbuck's Coffee (2007)
AAA Texas (2002)
El Campo Shopping Center 1985 83,330 0 90% $303,447 $4.05 David's Supermarket
El Campo, TX (2002)
Garland 1984 33,366 0 100% $328,440 $9.84 Blockbuster Video (2003)
Shopping Center
Garland, TX
Hedwig Shopping Centers 1974/1987/ 69,554 155,650 98% $852,485 $12.51 Target (1)
Houston, TX 1989 Marshall's (1)
Ross Dress for Less (2010)
Blockbuster Video (2000)
Hurst Shopping 1982/1993 47,517 0 100% $446,113 $9.39 Southwestern Bell Mobile
Center (2002)
Hurst, TX
Highland Square Shopping 1998 64,171 0 97% $992,532 $15.95 Radio Shack (2002)
Center
Sugar Land, TX
Market at First Colony 1988/1991/ 94,241 62,000 97% $1,320,120 $14.44 Kroger (1)
Houston, TX 1994 TJ Maxx (2002)
Eckerd (2014)
Mason Park Centre 1985 160,047 58,800 94% $1,663,512 $11.06 Kroger (1)
Houston, TX Palais Royal (2006)
Cinemark Cinema (1999)
PetCo (2005)
Walgreen's (2015)
Plano Shopping 1985 81,590 62,000 100% $946,908 $11.61 Albertson's (1)
Center Wendy's (2002)
Plano, TX
Richardson Shopping Center 1984 54,872 62,000 86% $527,600 $11.18 Albertson's (1)
Richardson, TX Blockbuster Video (1999)
Rosemeade Park Shopping 1986 49,554 58,900 61% $353,736 $11.70 Kroger (1)
Center Blockbuster Video (2003)
Carrollton, TX
University Park Shopping 1973/1991 91,654 0 100% $752,988 $8.22 Albertson's (2023)
Center
College Station, TX
Total/Weighted Average -- 1,278,684 570,350 94% $12,695,294 $10.46 --
</TABLE>
5
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<TABLE>
<CAPTION>
GROSS LEASABLE AREA
-------------------
ANNUALIZED
YEAR SQUARE FEET STRAIGHT-LINE
FLORIDA DEVELOPED/ OWNED SQ. OWNED BY PERCENT ANNUALIZED BASE RENT MAJOR TENANT(S)
SHOPPING CENTERS RENOVATED FT. ANCHORS LEASED BASE RENT PER SQ. FT. (LEASE EXPIRATION)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Town 'N Country Shopping 1970/1986 158,104 0 100% $720,996 $4.56 Auto Zone (2002)
Center TJ Maxx (1999)
Tampa, FL Blockbuster Video (2002)
University Mall Shopping 1973/1984 315,596 0 98% $2,071,476 $6.70 Office Max (2004)
Center Ross Stores (2001)
Pembroke Pines, FL Sports Authority (2012)
Total/Weighted Average -- 473,700 0 99% $2,792,472 $5.99 --
TENNESSEE
SHOPPING CENTERS
- ----------------------------------
McMinn Plaza Shopping 1982 99,969 0 100%(3) $420,875 $4.21 Ingles (2002)
Center Wal-Mart (2002)
Athens, TN
Twin Lakes Shopping Center 1986 52,424 0 93% $344,469 $7.06 Food City (2007)
Lenoir City, TN
Total/Weighted Average -- 152,393 0 98% $765,344 $5.19 --
ARIZONA
SHOPPING CENTERS
- ----------------------------------
Big Curve Shopping Center 1969,1983, 126,402 100,010 96% $937,461 $7.73 Albertson's (1)
Yuma, AZ 1990,1996 Michael's (1)
Walgreen's (2004)
Millers Outpost (2004)
Park Northern Shopping 1982 128,378 0 90% $666,408 $5.77 Safeway (2003)
Center
Phoenix, AZ
Southwest/Walgreen's 1975 83,698 0 98% $537,576 $6.55 Southwest
Shopping Center Supermarket(2000)
Phoenix, AZ
Total/Weighted Average -- 338,478 100,010 95% $2,140,416 $6.69 --
----------------------------------------------------------------------------
Grand Total/Weighted Average 2,243,255 670,360 95% $18,393,526 $8.59
</TABLE>
(1) The space is owned by the tenant.
(2) Includes Eckerd Drugs which has vacated its space, but is obligated to pay
rent through October 31, 2008.
(3) Includes Wal-Mart which has vacated its space, but is obligated to pay rent
through November 29, 2002.
ITEM 3. LEGAL PROCEEDINGS
UIRT is a party to legal proceedings that arise in the normal course of
business, which matters are generally covered by insurance. The resolution of
these matters cannot be predicted with certainty. However, in the opinion of
management, based upon currently available information, liability under such
proceedings, either individually or in the aggregate, will not have a materially
adverse affect on our consolidated financial statements taken as a whole.
6
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During 1998, no matters were submitted to a vote of shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Our common shares began trading on the NASDAQ Stock Market and on the
Pacific Exchange on March 13, 1998, under the symbols "UIRT" and "UIR,"
respectively. On March 3, 1999 we had approximately 306 shareholders of record
and approximately 5,700 beneficial owners. The following table sets forth for
the periods indicated the high and low sales prices as reported by NASDAQ and
the distributions declared by us during 1998.
<TABLE>
<CAPTION>
HIGH LOW DECLARED
-------- ------ -------------
<S> <C> <C> <C>
First Quarter (from March 13, 1998)............$ 10.00 $ 9.50 $ 0.000
Second Quarter ................................$ 10.25 $ 9.00 $ 0.215
Third Quarter ..... ...........................$ 9.56 $ 6.88 $ 0.215
Fourth Quarter ................................$ 8.00 $ 6.56 $ 0.215
</TABLE>
Distributions
The fourth quarter distribution amounts to $0.86 per share on an annualized
basis. Distributions paid in 1998, totaling $0.43 per share, were comprised of
ordinary taxable income of $0.19 (44%) and return of capital of $0.24 (56%). In
1999 the return of capital component of the distribution is expected to be
approximately 30 to 35 percent. All distributions will be made by UIRT at the
discretion of the Board of Trust Managers and will depend upon our earnings, our
financial condition and such other factors as the Board of Trust Managers deems
relevant. In order to qualify for the beneficial tax treatment accorded to REIT
under the Internal Revenue Code, we are required to make distributions to
shareholders in an amount equal to at least 95% of our "real estate investment
trust taxable income," as defined in Section 857 of the Internal Revenue Code.
7
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth, on a historical basis, Selected Financial
Data for UIRT. This information should be read in conjunction with the
consolidated financial statements of UIRT, including the related notes thereto,
and Management's Discussion and Analysis of Financial Condition and Results of
Operations. The historical Selected Financial Data for UIRT has been derived
from the audited financial statements.
<TABLE>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ----------- ----------- ----------- -----------
<C> <C> <C> <C> <C>
<S>
FINANCIAL INFORMATION:
Revenues:
Rental revenues.............. $ 17,323,768 $ 6,148,575 $ 4,966,673(1) $ 5,238,466 $ 4,639,010
Interest and other income.... 426,402 27,278 67,409 44,224 10,344
------------ ----------- ----------- ----------- -----------
Total revenue............ 17,750,170 6,175,853 5,034,082 5,282,690 4,649,354
============ =========== =========== =========== ===========
Income (loss) before gain on sale
of investment real estate,
extraordinary item, minority
interest and redeemable preferred
share distribution requirements $ 2,303,710 $ (634,189) $ 299,269 $ 254,580 $ 325,836
=========== =========== =========== =========== ===========
Net income (loss) available for
common shareholders............ $ 1,924,397 $ (771,716) $ 151,032 $ 192,704 $ 277,401
=========== =========== =========== =========== ===========
Net income (loss) per share...... $ 0.25 $ (0.85) $ 0.17 $ 0.21 $ 0.32
=========== =========== =========== =========== ===========
Weighted average common shares... 7,702,709 912,493 909,405 909,397 872,655
=========== =========== =========== =========== ===========
Cash distributions declared per
common share................... $ 0.645 --(2) --(2) --(2) $ 0.40
=========== =========== =========== =========== ===========
BALANCE SHEET INFORMATION:
Investment real estate,
gross........................ $160,329,516 $39,734,731 $39,327,929 $34,166,161 $33,852,985
Total assets................... 164,624,109 39,286,969 37,201,773 32,461,433 32,702,850
Long-term obligations.......... 73,883,884 28,363,899 26,542,992 22,484,845 23,826,831
Total liabilities.............. 80,929,506 29,793,132 27,406,859 23,407,145 24,647,866
Minority interest.............. 2,825,284 1,571,018 1,584,673 699,984 794,730
Preferred shares............... -- 1,068,226 1,068,226 1,068,226 --
Net equity..................... 80,869,319 6,854,593 7,142,015 7,286,078 7,260,254
OTHER DATA:
Cash flows from:
Operating activities........... 6,209,892 1,688,057 1,062,002 958,510 993,272
Investing activities........... (58,150,977) (2,711,802) (1,319,213) (269,479) (2,240,884)
Financing activities........... 57,081,031 1,250,578 (51,293) (384,637) 1,121,241
Funds From Operations(3)......... 7,373,870 1,021,657 1,291,047 1,260,709 1,082,750
Number of Properties (at end of
period)........................ 25 8 8 6 6
GLA (sq. ft.) (at end of
period)........................ 2,243,255 754,563 753,790 542,095 542,095
Percentage of GLA leased (at end
of period)..................... 95% 95% 96% 95% 96%
(1) Base rent was lower in 1996 as a result of the conveyance of the One West
Hills building on January 1, 1996 to Ivy Realty Trust, a privately held
affiliated office REIT managed by the Investment Manager. All shares of Ivy
Realty Trust were distributed to UIRT shareholders in 1995, 1996 and 1997.
(2) For 1997, 1996 and 1995, UIRT distributed a distribution in kind of Ivy
shares with a value of $0.398, $0.40 and $0.20 per common share,
respectively.
8
<PAGE>
(3) The NAREIT White Paper defines Funds From Operations as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation
and amortization and after adjustments for unconsolidated entities in which
the REIT holds an interest. Management believes Funds From Operations is
helpful to investors as a measure of the performance of an equity REIT
because, along with cash flows from operating activities, financing
activities and investing activities, it provides investors with an
understanding of the ability of UIRT to incur and service debt and make
capital expenditures. UIRT computes Funds From Operations in accordance
with the standards established by the White Paper, which may differ from
the methodology for calculating Funds From Operations utilized by other
equity REITs, and accordingly, may not be comparable to such other REITs.
Further, Funds From Operations does not represent amounts available for
management's discretionary use because of needed capital replacement or
expansion, debt service obligations, or other commitments and
uncertainties. Funds From Operations should not be considered as an
alternative to net income (determined in accordance with GAAP) as an
indication of UIRT's financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of UIRT's
liquidity, nor is it indicative of funds available to fund UIRT's cash
needs, including our ability to make distributions.
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
accompanying consolidated financial statements and notes thereto. Historical
results and trends which might appear should not be taken as indicative of
future operations.
UIRT has been operating since 1989 as a Texas REIT engaged in the
acquisition, ownership, management, leasing and redevelopment of neighborhood
and community shopping centers in the sunbelt region of the United States. UIRT
focuses on purchasing properties anchored primarily by national and regional
supermarkets, drug stores and other credit-worthy retailers that offer everyday
necessities and convenience to their neighborhood communities.
RESULTS OF OPERATIONS
QUARTER ENDED DECEMBER 31, 1998
Net income was $1,461,000 or $0.15 per basic and diluted share for the
fourth quarter of 1998, up from ($880,000), or ($0.96) per share, for the same
quarter of 1997. The increase in net income from 1997 to 1998 is due primarily
to UIRT's acquisitions since December 31, 1997 and a charge in 1997 of $788,000
for issuance of stock to the Investment Manager.
Rental revenues were $5,513,000 for the fourth quarter of 1998, as compared
to $1,556,000 for the fourth quarter of 1997. This increase relates almost
totally to acquisitions.
Interest expense increased by $423,000 from $610,000 in 1997 to $1,033,000
in 1998. This increase was due mainly to the increase in the average debt
outstanding between periods, from $25,000,000 for 1997 to $54,000,000 for 1998.
The increase in debt outstanding is primarily a result of expenditures for
acquisitions since December 31, 1997. The increases in depreciation and
amortization, operating expenses, and property taxes were primarily the result
of acquisitions.
TWELVE MONTHS ENDED DECEMBER 31, 1998
Net income was $1,924,000 or $0.25 per share in 1998, compared to net
income in 1997 of ($772,000), or ($0.85) per share. Net income for 1998 includes
the effect of $2,241,000 in amortization of bridge financing costs and $233,000
of extraordinary charges, or an aggregate $0.32 per weighted average share.
Earnings in 1998 before such charges were $4,397,000 or $0.57 per weighted
average share. Net income for 1997 includes the effect of the above mentioned
$788,000 charge. The increase in earnings before non-recurring and extraordinary
charges is primarily a result of operating income generated by properties
acquired since December 31, 1997.
Rental revenues increased 187% to $17,750,000 in 1998, compared with
$6,176,000 for the same period of the prior year. This increase relates almost
totally to acquisitions since December 31, 1997.
Interest expense, before amortization of bridge financing costs, increased
by $1,403,000, from $2,436,000 in 1997 to $3,839,000 in 1998. Weighted average
debt outstanding increased from $25,000,000 for 1997 to $39,000,000 for 1998.
The increase in weighted average debt outstanding is primarily a result of
expenditures for acquisitions, including the amounts borrowed and repaid under
the bridge financing arrangement.
9
<PAGE>
The increases in depreciation and amortization, operating expenses and
property taxes were primarily the result of acquisitions since December 31,
1997. Primarily in order to manage properties acquired in 1998, the Investment
Manager had approximately 11 employees more on December 31, 1998 than on the
same date in 1997; since December 31, 1998 through March 3, 1999, the Investment
Manager employed four additional personnel. All of these employees are assigned
full time to property operations accounting, leasing, and asset management and
their salaries and related benefit costs are reimbursed by UIRT to the
Investment Manager. UIRT believes that the level of staffing at March 3, 1999 is
generally sufficient to operate currently owned properties and additional
properties that may be acquired during 1999.
Liquidity and Capital Resources
UIRT acquired four shopping centers for approximately $35,000,000
(including approximately $7,100,000 in assumed debt) and refinanced
approximately $16,000,000 in mortgage debt in February 1998 with the proceeds of
a $53,700,000 bridge financing arrangement. In March and April 1998, UIRT sold
8,600,000 common shares through the IPO and raised approximately $79,000,000 net
of offering costs. The proceeds were used to repay the bridge financing, acquire
partnership units from minority interest holders, retire preferred shares and
convertible debt, and acquire five additional properties for approximately
$45,000,000 (including approximately $25,300,000 in assumed debt). At December
31, 1998, cash and cash equivalents of approximately $5,486,000 were comprised
of cash flow from operations.
Cash flows provided by operations for the twelve months ended December 31,
1998 were $6,210,000 versus $1,688,000 for the year earlier period.
Substantially all of the year to year difference is the result of operating
income from properties acquired since December 31, 1997 and the effect of
changes in the amounts of and interest rates on mortgage debt as a result of the
refinancing (described below) and the assumption of debt in connection with the
acquisitions.
The 17 properties acquired since December 31, 1997 comprise approximately
1,489,000 square feet of GLA, and were acquired subject to approximately
$57,167,000 in mortgage debt. In addition, one of the properties was acquired by
a limited partnership in which UIRT is the sole general and a majority limited
partner; the limited partnership issued limited partnership units to the sellers
of the property in consideration of the sellers contributing the property to the
partnership. Such limited partnership units were valued at approximately
$2,386,000, and are convertible to 238,600 Common Shares after May 15, 1999.
In connection with our intention to continue to qualify as a REIT for
Federal income tax purposes, UIRT expects to continue paying regular
distributions to shareholders. These distributions will be paid from operating
cash flows that are expected to increase due to property acquisitions and growth
in rental revenues in the existing portfolio and from other sources. Since cash
used to pay distributions reduces amounts available for capital investment, UIRT
generally intends to maintain a conservative distributions payout ratio,
reserving such amounts as it considers necessary for the expansion and
renovation of shopping centers in our portfolio, debt reduction, and the
acquisition of interests in new properties as suitable opportunities arise.
It is our intention that UIRT continually have access to the capital
resources necessary to expand and develop its business. Accordingly, UIRT may
seek to obtain funds through additional equity offerings or debt financing in a
manner consistent with its intention to operate with a conservative debt
capitalization policy. We anticipate that adequate cash will be available from
operations to fund its operating and administrative expenses, regular debt
service obligations and the payment of distributions in accordance with REIT
requirements in both the short-term and long-term.
UIRT executed a revolving line of credit agreement during the third quarter
of 1998. The line of credit, which was initially collateralized by four of our
Texas properties, provides for borrowings of up to $30,000,000 at approximately
150 basis points over a London Interbank Offered Rate. At December 31, 1998, we
had borrowed approximately $7,500,000 under the line of credit, and had issued
letters of credit aggregating approximately $2,000,000. Approximately
$20,000,000 was available under the line of credit at December 31, 1998.
Pursuant to Board approval, UIRT repurchased 80,000 common shares during
the third and fourth quarters of 1998. The prices paid were the market prices on
the dates of purchase and averaged approximately $7.30 per share.
TWELVE MONTHS ENDED DECEMBER 31, 1997
For the year ended December 31, 1997, net income was ($772,000) as compared
to $151,000 in 1996. During 1997, UIRT awarded the Investment Manager and
certain officers and Trust Managers an aggregate of 75,000 common shares, for
which UIRT took a charge of $788,000. Also, UIRT incurred $65,000 in additional
professional costs related to the employment of a contract Chief Financial
Officer, and $55,000 in fees related to a canceled bridge financing. Without
these charges, net income for the year ended December 31, 1997 would have been
$273,000 as compared to $299,000 in 1996, an 8.7% decrease.
10
<PAGE>
Total revenues increased 23% to $6,176,000 for 1997 as compared to
$5,034,000 in 1996. Of the increase, $1,076,000 was attributable to the addition
of two shopping centers in late 1996.
Interest expense increased from $2,132,000 in 1996 to $2,436,000 in 1997,
an increase of 14.2%. Of this amount, $289,000 is directly attributable to
mortgages assumed in connection with the acquisition of the two shopping centers
in late 1996.
Depreciation and amortization expense increased 35.4% to $1,176,000 in 1997
from $967,000 in 1996; most of this increase is attributable to the addition of
the two shopping centers in late 1996.
Trust Manager fees were $33,000 in each of 1997 and 1996. Advisory fees
increased from $279,000 in 1996 to $312,000 in 1997. Advisory fees, which were
based on a percentage of assets of UIRT in 1997 and 1996 increased as a result
of the acquisition of the two shopping centers in late 1996. Effective January
1, 1998 the method of calculating the advisory fee was changed and is currently
based on a percentage of funds from operations (as defined in the Advisory
Agreement). Had this change been in effect in 1997 and 1996, the Investment
Manager would have received $223,000 and $240,000 respectively.
The Year 2000 Issue
Many computer systems were designed and programmed in such a manner as to
be unable to recognize dates beyond December 31, 1999. In such cases, computer
applications could fail or create erroneous results by or at the year 2000.
Management has completed an evaluation of the risks of a material effect on
UIRT's results of operations and financial condition with respect to its
management information systems and the Year 2000 issue. UIRT uses application
software, including its accounting and property management software, which has
been certified by vendors as being Year 2000-compliant. Accordingly, management
does not believe that UIRT's results of operations or financial condition have
been or will be materially affected by any future costs to make its management
information systems Year 2000-compliant. Additionally, management does not
expect to incur any material costs to correct Year 2000 deficiencies in its
management information systems.
In addition to management information systems, the Year 2000 risks include
those related to "embedded technology," such as micro-controllers, and to the
Year 2000 issues of other parties with which UIRT has material relationships.
UIRT has recently completed the process of assessing these risks.
With respect to embedded technology, the assessment process included
surveying each of the properties to determine which systems may be subject to
disruptions. These systems may include climate control, lighting, security, and
telecommunications. Management believes that substantially all such systems, if
not Year 2000-compliant, can be controlled by manual operation and monitoring
for the remainder of their economic lives. Accordingly, management believes UIRT
will not be forced to replace or upgrade non-compliant components (if any) of
such systems and has no present plans for replacement or upgrade. Should such
systems require manual operation and monitoring, UIRT may experience an
immaterial increase in labor costs for its property management operations until
such time as the non-compliant components are replaced in the ordinary course of
business.
Management is not presently aware of any Year 2000 issues related to other
parties that may adversely affect UIRT. Based on the relatively small number of
properties and a low level of reliance on technology for property operations,
revenue collections, and cash disbursements, management believes that
documentation of transactions that might otherwise be disrupted will be
available to recreate transaction records if necessary.
Funds From Operations
UIRT considers funds from operations to be an alternate measure of the
performance of an equity REIT since such measure does not recognize depreciation
and amortization of real estate assets as operating expenses. Management
believes that reductions for these charges are not meaningful in evaluating
income-producing real estate, which historically has not depreciated. NAREIT
defines funds from operations as net income plus depreciation and amortization
of real estate assets, less gains and losses on sales of properties. Funds from
operations does not represent cash flows from operations as defined by generally
accepted accounting principles and should not be considered as an alternative to
net income as an indicator of UIRT's operating performance or to cash flows as a
measure of liquidity. Funds from operations increased to $2,351,000 for the
fourth quarter of 1998, as compared to $163,000 for the same period of 1997. For
the twelve months ended December 31, 1998, funds from operations totaled
$7,374,000, up $6,352,000 from the same period of the prior year. This increase
relates almost totally to the impact of UIRT's acquisitions since December
31,1997.
11
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Calculation of Funds From Operations
and Funds Available for Distribution
Three Months Ended Twelve Months Ended
31-Dec-98 31-Dec-97 31-Dec-98 31-Dec-97
--------------------------------------------------------------------
Funds from operations:
<S> <C> <C> <C> <C>
Net income $ 1,460,871 $ (879,566) $ 1,924,397 $ (771,716)
Plus depreciation expense 859,162 255,242 2,781,508 1,005,873
Plus share grant to advisor and officers -- 787,500 -- 787,500
Plus write-off of costs associated with
unsuccessful acquisition -- -- 115,000 --
Plus loss on early extinguishment of debt -- -- 232,532 --
Plus write-off of unamortized bridge
financing costs -- -- 2,240,652 --
Plus minority interest
(Town 'N Country) 30,501 -- 79,781 --
--------- ------- --------- ---------
Funds from operations $ 2,350,534 $ 163,176 $ 7,373,870 $ 1,021,657
========= ======= ========= =========
Funds from operations per share and downReit
unit $ 0.24 $ 0.18 $ 0.94 $ 1.12
========= ======= ========= =========
Funds available for distribution:
Funds from operations $ 2,350,534 $ 163,176 $ 7,373,870 $ 1,021,657
Plus amortization of financing costs and
leasing costs 43,050 29,403 134,308 76,797
Less tenant improvements (83,227) (38,400) (207,593) (344,686)
Less leasing commissions (62,200) (12,323) (133,520) (108,176)
Less capital improvements (44,448) (32,997) (111,918) (32,997)
Less straight line rents (170,060) (20,602) (346,884) (89,183)
Amounts received from seller
pursuant to master lease 43,014 -- 134,929 --
--------- -------- --------- ---------
Funds available for distribution $ 2,076,663 $ 88,257 $ 6,843,192 $ 523,412
========= ======== ========= =========
Funds available for distribution per share
and downReit unit $ 0.21 $ 0.10 $ 0.87 $ 0.57
========= ======= ========= ===========
Basic and diluted weighted average number of
shares and downReit partnership units 9,711,220 912,489 7,853,174 912,489
</TABLE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have limited exposure to financial market risks, including changes in
interest rates. The fair value of our investment portfolio or related income
would not be significantly impacted by a 100 basis point increase or decrease in
interest rates due mainly to the short-term nature of the major portion of our
investment portfolio. An increase or decrease in interest rates would not
significantly increase or decrease interest expense on debt obligations due to
the fixed nature of the majority of our debt obligations. We do not have any
significant foreign operations and thus are not materially exposed to foreign
currency fluctuations.
<TABLE>
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company and its consolidated subsidiaries
are included in this report on the pages indicated, and are incorporated herein
by reference:
<S>
Page <C>
- -----
F-1 (a) Report of Independent Auditors
F-2 (b) Consolidated Balance Sheets-December 31, 1998 and 1997
F-3 (c) Consolidated Statements of Operations-Years ended December 31,
1998, 1997 and 1996
F-4 (d) Consolidated Statements of Redeemable Preferred Shares and
Common Shareholders' Equity-Years ended December 31, 1998, 1997 and
1996
F-5 (e) Consolidated Statements of Cash Flows-Years ended December 31,
1998, 1997 and 1996
F-6 (f) Notes to Consolidated Financial Statements
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information required under items 10, 11, 12 and 13 is incorporated by
reference to UIRT's definitive proxy statement to be filed pursuant to
Regulation 14A under the Exchange Act.
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Report of Independent Auditors F-1
Consolidated Balance Sheets as of
December 31, 1998 and 1997 F-2
Consolidated Statements of Operations for the years
ended December 31, 1998, 1997 and 1996 F-3
Consolidated Statements of Redeemable Preferred
Shares and Common Shareholders' Equity for the
years ended December 31, 1998, 1997 and 1996 F-4
Consolidated Statements of Cash Flows for the years
ended December 31,1998, 1997 and 1996 F-5
Notes to Consolidated Financial Statements F-6
2. Financial Statement Schedule
The following financial statement schedule of the Company is included
in Item 14 (d):
Schedule III--Real Estate and Accumulated Depreciation F-14
Notes to Schedule III F-16
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
13
<PAGE>
3. Exhibits
Exhibit
Number Description
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))
4.1 Instruments defining the rights of security holders. The instruments
are filed in repose to items 3.1 and 3.2 above and are incorporated
herein by reference.
4.2 Common share certificate (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 Contribution Agreement by and between UIRT-Centennial, L.P., as
"Partnership" and Centennial Acquisition Corp., as "Contributor"
**10.2 Today Green Oaks, L.P. Agreement of Limited Partnership
**10.3 Second Amendment to Acquisition Agreement by and between Six Flags
Joint Venture, Today Melbourne Plaza, L.P., today Northwest Crossing,
L.P., Today Green Oaks, L.P., Today Parkwood, L.P., and Today
Richwood, L.P., as Seller, and United Investors Realty Trust as
assignee of Buyer
**10.4 Lease Agreement By and Between Today Parkwood, L.P., as Landlord and
United Investors Realty Trust as Tenant pertaining to Parkwood Square
Shopping Center Plano, Collin County, Texas dated December 31, 1998
**10.5 Lease Agreement By and Between Today Richwood, L.P., as Landlord and
United Investors Realty Trust as Tenant Pertaining to Richwood
Shopping Center Richardson, Dallas County, Texas dated December 31,
1998
**10.6 Declaration of Trust dated December 31, 1998 by Today Green Oaks GP,
Inc., a Texas corporation ("Trustee") for and on behalf of United
Investors Realty Trust, a Texas real estate investment trust ("Owner")
**10.7 Promissory Note between UIRT Lake St. Charles and First Union National
Bank
**10.8 Construction Loan Agreement between First Union National Bank and UIRT
**10.9 Promissory Note dated as of October 16, 1995 executed by Today
Northwest Crossing, L.P. in favor of First Union National Bank of
North Carolina
**10.10 Promissory Note dated as of October 16, 1995 executed by Today
Melbourne Plaza, L.P. in favor of First Union National Bank of North
Carolina
10.11 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))
10.12 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))
10.13 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))
10.14 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))
10.15 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))
10.16 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))
14
<PAGE>
10.17 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))
10.18 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))
10.19 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))
10.20 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))
10.21 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))
10.22 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))
10.23 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))
10.24 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))
10.25 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))
10.26 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))
10.27 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))
10.28 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))
10.29 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))
10.30 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))
10.31 Contract of Sale dated April 17, 1998 by and between United Investors,
Realty Trust and Veriguest Colony Plaza One 1997. (Incorporated by
reference to Exhibit 10.22 to the Company's Quarterly Report on Form
10-Q dated May 14, 1998)
10.32 Purchase Option dated April 17, 1998 by and between United Investors,
Realty Trust and Veriguest Property Commerce 1995-1, a Texas joint
venture.(Incorporated by reference to Exhibit 10.23 to the Company's
Quarterly Report on Form 10-Q dated May 14, 1998)
15
<PAGE>
10.33 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.34 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
10.35 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee, James H. Shimberg on
behalf of land owner (incorporated by reference to Exhibit 10.30 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.36 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
(incorporated by reference to Exhibit 10.31 to Company's Quarterly
Report on Form 10-Q dated August 14, 1998)
10.37 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT
Town 'N Country, L.P.(incorporated by reference to Exhibit 10.32 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.38 Contract of Sale dated June 4, 1998, by and between the Company and
Highland Square Partners Ltd. (incorporated by reference to Exhibit
10.35 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.39 Promissory note dated as of November 26, 1996 made by Highland Square
Partners, Ltd. to Belgravia Capital Corporation, as beneficiary in the
principal amount of $4,525,000. (incorporated by reference to Exhibit
10.36 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.40 Promissory note dated November 26, 1997 made by Veriquest Colony Plaza
One 1997 to Holliday Fenoglio, L.P., as beneficiary in the principal
amount of $3,200,000.(incorporated by reference to Exhibit 10.9 to
Company's Quarterly Report on Form 10-Q dated November 10, 1998)
10.41 Revolving Credit Agreement dated August 25, 1998 made by and among the
Company and Wells Fargo Bank, National Association.(incorporated by
reference to Exhibit 10.10 to Company's Quarterly Report on Form 10-Q
dated November 10, 1998)
**27.1 Financial Data Schedule
(b) Reports on 8-K
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 11, 1998 for the purpose of reporting the acquisition
of the Big Curve Shopping Center
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 25, 1998 for the purpose of reporting the appointment
of R. Steven Hamner to the position of Chief Financial Officer.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Big Curve Shopping Center.
The Company's Current Report on Form 8-K dated July 31, 1998 and
filed on August 4, 1998 for the purpose of reporting the
acquisition of the Colony Plaza Shopping Center.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Colony Plaza Shopping
Center.
The Company's Current Report on Form 8-K dated October 7, 1998 for
the purpose of reporting the acquisition of the Highland Square
Shopping Center.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Highland Square Shopping
Center.
The Company's Current Report on Form 8-K dated January 15, 1999 for
the purpose of reporting the acquisition of the Dallas Portfolio.
** Filed as an exhibit hereto.
16
<PAGE>
(c) Exhibits
The list of exhibits filed with this report is set forth in response to
Item 14 (a)(3). The required exhibits have been filed as indicated in the
Exhibit Index. The Company agrees to furnish a copy of any long-term debt
instrument wherein the securities authorized do not exceed 10 percent of the
registrant's total assets on a consolidated basis upon the request of the
Securities and Exchange Commission.
(d) Financial Statements and Schedules
Schedule III -- Real Estate and Accumulated Depreciation attached hereto
is hereby incorporated by reference to this Item.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
UNITED INVESTOR REALTY TRUST
(Registrant)
Date: March 15, 1999 By /s/ Lewis H. Sandler
___________________________________________
Lewis H. Sandler
President and Chief Executive Officer
Date: March 15, 1999 By /s/ R. Steven Hamner
___________________________________________
R. Steven Hamner
Vice President and Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Capacity Date
/s/ Robert W. Scharar Trust Manager and
__________________________ Chairman of the Board March 15, 1999
Robert W. Scharar
__________________________ Trust Manager March 15, 1999
Jerry M. Coleman
__________________________ Trust Manager March 15, 1999
Josef C. Hermans
/s/ William C. Brooks Trust Manager March 15, 1999
__________________________
William C. Brooks
/s/ Ira T. Wender Trust Manager March 15, 1999
__________________________
Ira T. Wender
/s/ Lewis H. Sandler Trust Manager March 15, 1999
__________________________
Lewis H. Sandler
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
United Investors Realty Trust
We have audited the accompanying consolidated balance sheets of United
Investors Realty Trust and Subsidiaries (the "Company") as of December 31, 1998
and 1997, and the related consolidated statements of operations, redeemable
preferred shares and common shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1998. Our audits also included the
financial statement schedule listed in the index at Item 14(a). These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of United
Investors Realty Trust and Subsidiaries as of December 31, 1998 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ Ernst & Young LLP
Houston, Texas
February 3, 1999
F-1
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31,
--------------------------
1998 1997
---------- -----------
<S> <C> <C>
Investment real estate:
Land........................................................... $ 44,290,975 $ 8,118,723
Buildings and improvements..................................... 114,716,718 31,616,008
Property under development..................................... 1,321,823 --
----------- ----------
160,329,516 39,734,731
Less accumulated depreciation.................................. (7,434,343) (4,861,957)
----------- ----------
Investment real estate, net.................................... 152,895,173 34,872,774
Cash and cash equivalents........................................ 5,486,095 346,149
Accounts receivable, net of allowance of $120,333 and $41,771
in 1998 and 1997, respectively................................. 2,733,070 797,696
Prepaid expenses and other assets................................ 3,509,771 3,270,350
----------- ----------
Total assets........................................... $164,624,109 $39,286,969
=========== ==========
LIABILITIES, MINORITY INTEREST, REDEEMABLE
PREFERRED SHARES AND COMMON SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable......................................... $ 55,248,437 $24,926,499
Capital lease obligations...................................... 9,914,054 --
Construction note payable...................................... 1,221,393 --
Redeemable convertible subordinated notes...................... -- 212,400
Short-term notes and line of credit............................ 7,500,000 3,225,000
Accounts payable -- trade...................................... 1,761,208 552,996
Accrued property taxes......................................... 2,516,291 769,743
Security deposits.............................................. 722,421 106,494
Distributions payable.......................................... 2,045,702 --
----------- ----------
Total liabilities...................................... 80,929,506 29,793,132
----------- ----------
Minority interest in consolidated partnership.................... 2,825,284 1,571,018
----------- ----------
Commitments and contingencies
Redeemable preferred shares of beneficial interest, $100 par value,
50,000,000 shares authorized, 10,737 shares
issued and outstanding at December 31, 1997.................... -- 1,068,226
----------- ----------
Common shareholders' equity:
Common shares of beneficial interest, no par value,
500,000,000 shares authorized, 9,514,889 and 914,889 shares
issued and 9,434,889 and 914,889 outstanding at
December 31, 1998 and 1997,respectively ....................... 86,571,108 8,345,077
Accumulated deficit............................................ (5,701,789) (1,490,484)
------------ ----------
Total common shareholders' equity...................... 80,869,319 6,854,593
------------ ----------
Total liabilities, minority interest, redeemable
preferred shares and common shareholders'
equity......................................... $164,624,109 $39,286,969
=========== ==========
</TABLE>
See accompanying notes.
F-2
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---------- --------- ---------
<S> <C> <C> <C>
Revenues:
Base rents........................................... $13,231,250 $4,954,820 $4,097,911
Percentage rents..................................... 322,633 26,400 32,822
Expense reimbursements............................... 3,769,885 1,167,355 835,940
Interest and other income............................ 426,402 27,278 67,409
---------- --------- ---------
Total revenues............................... 17,750,170 6,175,853 5,034,082
---------- --------- ---------
Expenses:
Property operating .................................. 1,854,467 609,673 475,701
Property taxes....................................... 2,485,915 793,359 558,000
Property management fees............................. 307,783 178,030 139,780
General and administrative........................... 1,016,508 384,762 182 831
Advisory fees........................................ 794,043 312,000 279,000
Share grant to Advisor and officers.................. -- 787,500 --
Interest (including write-off of $2,240,652 in
unamortized bridge financing costs in March 1998... 6,079,889 2,435,538 2,132,390
Depreciation and amortization........................ 2,907,855 1,309,180 967,111
---------- ---------- ---------
Total expenses............................... 15,446,460 6,810,042 4,734,813
Income (loss) before extraordinary item, minority
interest and preferred share distribution requirements 2,303,710 (634,189) 299,269
Minority interest in consolidated partnership.......... (126,111) (40,894) (51,941)
Extraordinary item-prepayment penalties incurred on
early extinguishment of debt......................... (232,532) -- --
---------- --------- ---------
Net income (loss)...................................... 1,945,067 (675,083) 247,328
Preferred share distribution requirements.............. (20,670) (96,633) (96,296)
---------- --------- ---------
Net income (loss) available for common shareholders.... $ 1,924,397 $ (771,716) $ 151,032
========== ========== ==========
Net income (loss) before extraordinary item and preferred
share distribution requirement per common share...... $ 0.28 $ (0.74) $ 0.27
Extraordinary item per common share.................... (0.03) -- --
Preferred share distribution requirement per
common share......................................... -- (0.11) (0.10)
---------- --------- ---------
Net income (loss) per common share
(basic and diluted).................................. $ 0.25 $ (0.85) $ 0.17
========== ========== ==========
Weighted average shares outstanding.................... 7,702,709 912,493 909,405
========== ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED
SHARES AND COMMON SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
PREFERRED SHARES OF COMMON SHARES OF
BENEFICIAL INTEREST BENEFICIAL INTEREST
------------------- -------------------- ACCUMULATED
NUMBER AMOUNT NUMBER AMOUNT DEFICIT
------ ---------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995.......... 10,737 1,068,226 834,397 $ 7,488,913 $ (202,835)
Issuance of common shares of
beneficial interest................. -- -- 3,092 38,664 --
Income before preferred share
distribution requirements........... -- -- -- -- 247,328
Distributions......................... -- -- -- -- (333,759)
Redeemable preferred shares of
beneficial interest cash distributions,
$9.00 per share..................... -- -- -- -- (96,296)
------ --------- --------- --------- ---------
Balance at December 31, 1996.......... 10,737 1,068,226 837,489 $ 7,527,577 $ (385,562)
Issuance of common shares of
beneficial interest................. -- -- 77,400 817,500 --
Loss before preferred share distribution
requirements........................ -- -- -- -- (675,083)
Distributions......................... -- -- -- -- (333,206)
Redeemable preferred shares of
beneficial interest distributions,
$9.00 per share..................... -- -- -- -- (96,633)
------ --------- --------- ---------- ---------
Balance at December 31, 1997.......... 10,737 1,068,226 914,889 $ 8,345,077 $(1,490,484)
Issuance of common shares of
beneficial interest, net of offering
costs of $7,189,750................. -- -- 8,600,000 78,810,250 --
Redeemable preferred shares of
beneficial interest distributions,
$9.00 per share.................... -- -- -- -- (20,670)
Preferred share retirement............ (10,737) (1,068,226) -- -- --
Treasury share purchases.............. -- -- (80,000) (584,219) --
Income before preferred share
distribution requirements.......... -- -- -- -- 1,945,067
Distributions($0.645 per share)....... -- -- -- -- (6,135,702)
------ --------- --------- ---------- ---------
Balance at December 31, 1998.......... -- -- 9,434,889 $86,571,108 $(5,701,789)
====== ========= ========= ========== =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................... $1,945,067 (675,083) $ 247,328
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 2,812,320 1,094,236 884,173
Amortization...................................... 134,565 81,292 72,605
Extraordinary item................................ 232,532 -- --
Amortization of bridge financing costs............ 2,240,652 -- --
Minority interest in net income of real estate
ventures........................................ 126,111 40,894 51,941
Payment of common shares for services............. -- 817,500 38,664
(Increase) decrease in accounts receivable........ (1,935,374) 166,083 (247,893)
Increase (decrease) in accounts payable-trade..... 1,208,212 302,148 191,717
Changes in other operating assets and liabilities. (554,193) 139,013 (247,893)
---------- ---------- ----------
Net cash provided by operating activities.... 6,209,892 1,688,057 1,062,002
---------- ---------- ----------
Cash flows from investing activities:
Purchase of and capital improvements to investment
real estate....................................... (59,654,366) (406,802) (1,374,675)
Escrow deposits...................................... 1,503,389 (2,305,000) --
Payment received on affiliate note receivable........ -- -- 55,462
---------- ---------- ----------
Net cash used in investing activities........ (58,150,977) (2,711,802) (1,319,213)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from bridge financing....................... 53,689,913 -- --
Payments on bridge financing......................... (53,689,913) -- --
Preferred share retirement........................... (1,068,226) -- --
Convertible note retirement.......................... (212,400) -- --
Proceeds from borrowings............................. -- 135,871 740,000
Proceeds from short-term notes payable............... 7,550,000 2,525,000 --
Principal payments on mortgage notes payable......... (16,931,241) (799,964) (604,574)
Principal payments on short-term notes payable....... (3,275,000) (40,000) (23,103)
Proceeds from construction note payable.............. 1,221,393 -- --
Preferred share distribution......................... (20,670) (96,633) (96,296)
Proceeds from public offering........................ 86,000,000 -- --
Offering costs....................................... (7,189,750) (419,700) --
Payment of prepayment penalties...................... (232,532) -- --
Payment of bridge financing costs.................... (2,240,652) -- --
Payment of distributions............................. (4,090,000) -- --
Purchase of treasury shares.......................... (584,219) -- --
Distribution to holders of minority interests........ (1,697,883) (53,996) (67,320)
Payment of loan acquisition costs.................... (147,789) -- --
----------- ---------- ----------
Net cash provided by (used in) financing
activities................................. 57,081,031 1,250,578 (51,293)
---------- ---------- ----------
Increase (decrease) in cash and cash equivalents....... 5,139,946 226,833 (308,504)
Cash and cash equivalents at beginning of year......... 346,149 119,316 427,820
---------- --------- ----------
Cash and cash equivalents at end of year............... $ 5,486,095 $ 346,149 $ 119,316
========== ========== ==========
</TABLE>
See accompanying notes.
F-5
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
United Investors Realty Trust and Subsidiaries (the "Company"), a Texas
real estate investment trust ("REIT") is engaged in the acquisitions,
development, and management of neighborhood and community shopping centers in
the sunbelt states. The tenants of the Company's shopping centers include
national and regional supermarkets and drug stores and other national, regional,
and local retailers that provide basic necessity and convenience goods and
services to the surrounding population.
The Company operated from 1989 until 1998 as a private REIT. On March 13,
1998, the Company completed an initial public offering (the "IPO") of 7,600,000
common shares of beneficial interest. In April 1998, the Company issued another
1,000,000 common shares of beneficial interest pursuant to the exercise of the
underwriters' overallotment options. Prior to the IPO, the Company had
outstanding approximately 915,000 shares, all of which remain outstanding as of
December 31, 1998.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company,
its subsidiaries, and partnerships in which it owns controlling interests. All
significant intercompany balances have been eliminated.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
INVESTMENT REAL ESTATE
Investment real estate, consisting of 25 shopping centers, is recorded at
cost less accumulated depreciation. The cost of real estate acquired by the
issuance of shares of beneficial interest or other securities is determined by
the estimated value of the securities issued or the real estate acquired. The
allocation of cost between land and building is based on the estimated fair
value at the time of the purchase. Depreciation is computed using the
straight-line method over the estimated useful lives of 20 to 40 years for the
shopping centers and over the lease term for tenant improvements (generally 5 to
15 years).
Expenditures for repairs and maintenance are charged to operations as
incurred. Significant betterments are capitalized.
When assets are sold or retired, their costs and related accumulated
depreciation are removed from the accounts, with the resulting gains or losses
reflected in operations for the period.
Recoverability of investment real estate is evaluated when events or
circumstances indicate a possible inability to recover its carrying amount.
Recoverability is determined on a property-by-property basis utilizing the
undiscounted cash flow method. If undiscounted cash flows would be insufficient
to recover the carrying amount of the real estate, the real estate is reduced to
fair value. No reductions have been recorded to date.
INTANGIBLES
Deferred leasing costs at December 31, 1998 and 1997 were $266,507, net of
amortization of $242,903, and $182,256, net of amortization of $182,089,
respectively. Deferred leasing costs are amortized over the life of the
respective lease.
Deferred financing costs at December 31, 1998 and 1997 were $559,005, net
of amortization of $263,822, and $44,142, net of amortization of $47,970,
respectively. Deferred financing costs are amortized over the life of the
respective mortgage note or line of credit.
REVENUE RECOGNITION
Rental revenue is recognized on a straight-line basis over the terms of the
individual leases. Reimbursements from tenants for their shares of taxes,
insurance and common area maintenance costs are estimated and accrued over the
lease year. Percentage rents are accrued when the tenants' sales exceed the
level that requires rental payments in excess of base rents.
F-6
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NET INCOME PER COMMON SHARE
Net income per common share is calculated by dividing net income available
for common shareholders by the weighted average number of shares of beneficial
interest outstanding during the year. The assumed conversion of redeemable debt
and redeemable preferred shares would be antidilutive in all years presented.
CONCENTRATION OF RISK
The Company's primary business activity is investing in income-producing
real property. The Company's retail shopping center properties are located in
Austin, College Station, Dallas, El Campo, Houston and San Antonio, Texas;
Lenoir City and Athens, Tennessee; Phoenix and Yuma, Arizona; and Tampa and
Pembroke Pines, Florida.
During 1997 and 1996, the Company earned approximately $1,155,000 and
$1,151,000, respectively, in rental revenue from two tenants. These two tenants'
revenues amounted to approximately 19% and 23% of the Company's total revenue
for the years ended December 31, 1997 and 1996. During 1998 no tenant accounted
for more than 10% of rental revenue.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
RECENT ACCOUNTING PRONOUNCEMENT
Financial Accounting Standards Board No. 131 "Disclosures about Segments of
an Enterprise and Related Information" requires business enterprises to report
financial and descriptive information about its reportable operating segments.
Generally, information is required to be reported on the basis that it is used
internally for evaluating segment performance and for decisions concerning
allocation of resources to segments. Under the terms of the statement, the
Company has only one reportable segment, retail real estate.
2. INVESTMENT REAL ESTATE
Of the Company's 25 properties, 20 are 100% owned by the Company either
directly or through single purpose, wholly-owned subsidiaries. Three of the
properties (with an aggregate cost of $17,052,678) are owned through limited
partnerships in which the Company holds at least 96% of the partnership
interests. Two of the properties are owned pursuant to leasehold interests that
have transferred virtually all risks and rewards of ownership to the Company.
The Company owns a 40% interest in a limited liability company, which is
consolidated for financial reporting purposes, that is the owner of a shopping
center under development. The Company is obligated to purchase the remaining 60%
interest upon the completion of development.
The Company acquired 17 properties since December 31, 1997 comprising
approximately 1,488,000 square feet of GLA, and were acquired subject to
approximately $57,167,000 in mortgage debt. In addition, one of the properties
was acquired by a limited partnership in which UIRT is the sole general and a
majority limited partner; the limited partnership issued limited partnership
units to the sellers of the property in consideration of the sellers
contributing the property to the partnership. Such limited partnership units
were valued at approximately $2,386,000, and are convertible to 238,600 Common
Shares after May 15, 1999.
3. DEBT
REDEEMABLE CONVERTIBLE SUBORDINATED NOTES
At December 31, 1997, the Company had outstanding $212,400 of redeemable
convertible subordinated notes payable bearing interest at 9% with semiannual
interest payments due June 30 and December 31 of each year. These notes were
repaid during 1998.
F-7
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHORT-TERM NOTES PAYABLE
During 1996, the Company issued $600,000 of unsecured promissory notes to
individuals. During 1997, the Company issued an additional $400,000 of unsecured
promissory notes to individuals. The notes required quarterly payments of
interest only, at 10% and were repaid in March 1998 with proceeds from the IPO.
CAPITAL LEASE OBLIGATIONS
Property under capital leases, consisting of two shopping centers,
aggregated $13.7 million at December 31, 1998 and is included in buildings and
improvements. Depreciation of the property under capital leases is combined with
depreciation of owned properties in the accompanying financial statements.
Future minimum lease payments under these capital leases total $16.2 million,
with annual payments due of approximately $.8 million in each of 1999 through
2003, and $12.1 million thereafter. The amount of these total payments
representing interest is $6.3 million.
MORTGAGE NOTES PAYABLE
The Company's mortgage notes payable consist of fixed-rate debt of
$55,248,437 and $24,926,499 at December 31, 1998 and 1997, respectively. The
interest rates range from 7.28% to 10.75% with payments of principal and
interest due monthly. The notes mature at various times through 2028. The notes
are collateralized by first lien mortgages on properties with an aggregate
carrying value of approximately $84,330,320, net of $2,528,245 of accumulated
depreciation.
Aggregate annual maturities of fixed rate mortgage notes payable for each
of the five years ending December 31 and thereafter are as follows:
<TABLE>
<S> <C>
1999............................................. $ 4,423,852
2000............................................. 1,020,808
2001............................................. 1,112,045
2002............................................. 3,320,264
2003............................................. 998,231
Thereafter....................................... 44,373,237
-----------
$55,248,437
===========
</TABLE>
CONSTRUCTION NOTE PAYABLE
The Company has a construction note for the purpose of funding the
development of one property. The note is in the amount of $5,620,000, of which
$1,221,393 had been funded at December 31, 1998. Principal and accrued interest,
at a rate of LIBOR plus 1.75%, will be due on June 15, 2000. The note is
partially collateralized by the $1,686,000 letter of credit described in the
Letter of Credit section of Note 3.
REVOLVING CREDIT AGREEMENT
Effective August 29, 1998, the Company entered into a $30,000,000 revolving
credit agreement with a bank. Borrowings are collateralized by first mortgage
deeds of trust on four Texas shopping centers and bear interest at 150 basis
points over selected London Interbank Offered Rates. The facility expires on
August 30, 2000. The Company may elect to extend it for one additional year
upon notification to the lender and payment of an extension fee equal to 0.2%
of the aggregate amount outstanding at such date. At December 31, 1998 the
Company had borrowed $7,500,000 under the line at a one year rate of
approximately 6.7%. In addition, the Company had issued letters of credit
aggregating approximately $2,925,000 (see Letters of Credit below).
Effective August 23, 1996, the Company entered into a $200,000 unsecured
revolving line of credit facility with a bank. Interest of prime (8.25% at
December 31, 1996 and 8.5% at December 31, 1997) plus 1/5% was payable
quarterly. The facility was repaid with proceeds from the IPO.
The Company entered into a $100,000 unsecured revolving line of credit
facility with a bank in February 1996. Interest of prime (8.5% at December 31,
1997) plus 1.5% was payable monthly until maturity in May 1998. As of December
31, 1997 the Company had drawn $100,000 on the bank credit facility. The
facility was repaid with proceeds from the IPO.
The Company entered into short-term mortgage loan agreements with an
affiliate of the Investment Manager (see Note 9) in December 1997. The loan
proceeds, which required interest at 12% and totaled $1,925,000, were repaid
with proceeds from the IPO.
F-8
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LETTERS OF CREDIT
The Company has issued an irrevocable letter of credit in the approximate
amount of $1,686,000 as collateral for a bank loan, the proceeds of which are
being used by a single purpose Florida limited liability company for the
development of a grocery-anchored neighborhood shopping center in the Tampa,
Florida area. At December 31,1998 the Company owned 40% of the limited liability
company and was obligated to acquire the remaining 60% upon completion of
construction of the shopping center and acceptance of possession of its premises
by the anchor tenant. Upon completion, the shopping center will have an
estimated cost of approximately $5,400,000.
The Company has issued an irrevocable letter of credit in the approximate
amount of $878,000 to the seller of a neighborhood shopping center in Houston,
Texas. The Company entered into a master lease agreement in January 1999 (see
Note 9) and is obligated to acquire the shopping center for total consideration
of approximately $2,000,000 subsequent to August 31, 1999.
The Company has issued letters of credit aggregating $361,000 to the seller
of three neighborhood shopping centers in Dallas, Texas. The Company is
obligated to purchase approximately 6,016 square feet of additional retail shop
space for an aggregate price equal to the sum of the letters of credit if the
seller remediates certain environmental contamination at these centers.
For each letter of credit, the Company pays an annual fee equal to 1.5% of
the letter of credit amount. The fee is amortized over the life of the letter of
credit.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, receivables, accounts
payable and accrued expenses are reasonable estimates of their fair values
because of the short maturities of these instruments. The mortgage notes payable
with an aggregate carrying value of $65,162,491 have an estimated aggregate fair
value of approximately $67,480,396 at December 31, 1998. Fair values were
estimated using discounted cash flow analyses, based on interest rates currently
available to the Company for issuance of new debt with similar terms and
remaining maturities (7.5% at December 31, 1998).
4. SHARES OF BENEFICIAL INTEREST:
REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST
In 1995, the Company authorized 20,000, $100 par value, 9% redeemable
preferred shares of beneficial interest ("preferred shares") and issued 5,750
preferred shares at par value and 4,987 shares through conversion from the 9%
redeemable convertible subordinated notes (See Note 3). Distributions on the
preferred shares were cumulative from date of issuance and payable on a
quarterly basis.
The Company purchased and redeemed 100% of the preferred shares outstanding
at a redemption price equal to par value plus a 3% premium in March 1998 with
proceeds from the IPO.
COMMON SHARES OF BENEFICIAL INTEREST
In December 1997 the Company issued 75,000 shares to the its external
advisor, FCA Corporation (the "Investment Manager") (see Note 9) and certain
officers as compensation for past services. The shares were valued at $10.50 for
a total of $787,500 which was charged to expense in 1997. The shares issued to
the Investment Manager and certain officers have certain restrictions as to the
timing of any resale, and accordingly, are valued at an amount lower than the
unrestricted shares issued to the Trust Managers (see Note 9).
The Company issued 2,400 shares in each of 1997 and 1996 to the Trust
Managers for payment of services rendered (See Note 9). The Company issued an
additional 692 shares to unaffiliated parties for payment of lease commissions
in 1996.
UIRT acquired four shopping centers for approximately $35,000,000
(including approximately $7,100,000 in assumed debt) and refinanced
approximately $16,000,000 in mortgage debt in February 1998 with the proceeds of
a $53,700,000 bridge financing arrangement. In March and April 1998, UIRT sold
8,600,000 common shares through the IPO and raised approximately $79,000,000 net
of offering costs. The proceeds were used to repay the bridge financing, acquire
partnership units from minority interest holders, retire preferred shares and
convertible debt, and acquire five additional properties for approximately
$45,000,000 (including approximately $25,300,000 in assumed debt).
F-9
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. EARNINGS PER SHARE DATA
<TABLE>
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 share options is computed by
application of the Treasury share method. The following table sets forth the
computation of basic and diluted earnings per share:
<CAPTION>
Year ended December 31,
Weighted Average Shares 1998 1997 1996
-------- -------- --------
<C> <C> <C> <C>
<S>
Basic EPS 7,702,709 912,493 909,405
Effect of dilutive securities:
Employee share options -- -- --
--------- ------- -------
Diluted EPS 7,702,709 912,493 909,405
========= ======= =======
Distributions per share declared $ 0.645 $ 0.398 $ 0.40
========= ======= =======
The computations above do not assume the conversion of the Company's redeemable
debt and redeemable preferred shares in 1997 as they would have been
antidilutive to earnings per share. </TABLE>
Weighted average shares outstanding includes 75,000 shares granted to the
Investment Manager and certain officers on December 30, 1997 as if such shares
had been outstanding for the entirety of each year.
6. INVESTMENT IN REAL ESTATE VENTURE
In December 1995 the Company formed a new real estate investment trust, Ivy
Realty Trust ("Ivy"). On January 1, 1996 the Company transferred its investment
in One West Hills office building, the related mortgage note payable of $660,426
and net liabilities to Ivy in exchange for 834,397 shares valued at one dollar
per share of Ivy stock (based on the carryover basis of the assets contributed
by the Company) and a $55,462 promissory note. On January 15, 1996 the Company
distributed to its shareholders 500,638 shares of Ivy as a distribution.
One-third of the distribution was treated as a 1995 distribution with the
remainder treated as a 1996 distribution. On August 1, 1997, the Company
distributed to its shareholders the remaining 333,644 shares of Ivy as a
distribution. The distribution was treated as a 1997 distribution.
7. FEDERAL INCOME TAXES
The Company operates in such a manner so as to qualify as a "real estate
investment trust" under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended, and the Treasury Regulations promulgated thereunder. Under
those Sections, the Company will not be taxed on that portion of its income
distributed to shareholders so long as at least 95 percent of the Company's
otherwise taxable income is distributed to shareholders each year and other
requirements of a qualified real estate investment trust are met. Management
believes the Company has satisfied the income distribution and other
requirements through the year ended December 31, 1998 and believes all other
requirements of a qualified real estate investment trust have been met.
The Company has approximately $545,000 of net operating losses that may be
carried forward to offset future taxable income. However, in 1998, sales of
shares of beneficial interest resulted in a change of ownership for federal
income tax purposes. As a result of the ownership change, the amount of net
operating losses generated prior to the ownership change, which may be used to
offset federal taxable income, is subject to an annual limitation imposed by the
Internal Revenue Code. These net operating losses expire from 2009 through 2016.
The tax status of per-share distributions relating to common shares of
beneficial interest declared attributable to the years presented is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Ordinary income.................................. $0.19 $ 0 $0.40
===== ===== =====
Return of capital................................ $0.24 $0.40 $ 0
===== ===== =====
</TABLE>
F-10
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. COMMITMENTS
TENANT LEASES
The Company is the lessor of commercial retail space generally under
operating leases which provide for minimum base rentals plus contingent rentals
based upon a percentage of gross receipts. Most leases also provide that the
tenant must pay as additional rent a pro rata share of real property taxes,
insurance and common area maintenance.
The future minimum base rents for the operating leases in existence at
December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999............................................ $17,289,114
2000............................................ 14,686,551
2001............................................ 12,194,798
2002............................................ 9,653,003
2003............................................ 6,768,008
Thereafter...................................... 25,653,310
-----------
$86,244,784
===========
</TABLE>
GROUND LEASE
The Company has a 40-year ground lease for Park Northern Shopping Center
with an unrelated third party. Rent of $8,333 plus 5% of total gross revenues is
payable monthly through the year 2035. The Company has an option to extend this
lease for four consecutive periods of ten years each. Future minimum lease
payments are as follows:
<TABLE>
<CAPTION>
YEARS AMOUNT
----- ----------
<S> <C>
1998.............................................. $ 100,000
1999.............................................. 100,000
2000.............................................. 100,000
2001.............................................. 100,000
2002 through 2035................................. 3,300,000
----------
$3,700,000
==========
</TABLE>
Ground rental expense included in the statement of operations was $134,329,
$133,652, $8,333 in 1998, 1997 and 1996, respectively.
PURCHASE COMMITMENTS
At December 31, 1998 the Company has entered into agreements with unrelated
parties to acquire two neighborhood shopping centers and complete development of
a third neighborhood shopping center. In connection with these agreements, the
Company has issued two irrevocable letters of credit aggregating approximately
$2,600,000 (see Note 3).
9. ADVISORY AGREEMENT AND RELATED PARTY TRANSACTIONS
The Company is advised by the Investment Manager, FCA Corp. The Chairman of
the Board of Trust Managers is also the principal shareholder and Chief
Executive Officer of FCA Corp. Advisory fee expenses were $794,043, $312,000 and
$279,000 for 1998, 1997 and 1996, respectively. In addition, the Company paid
the Investment Manager approximately $279,185 in 1998 as reimbursements for
salaries of certain employees and certain other operating expenses.
Through December 31, 1997 advisory fees were calculated at .8%, on an
annual basis, of the gross Company assets, as defined, at year-end, increased by
noncash reserves. Effective January 1, 1998, the Company amended the advisory
agreement to provide that the advisory fee be based on 6.8% of adjusted funds
from operations as defined (generally, earnings before interest, taxes,
depreciation and amortization and gains or losses from sales of property). Had
the advisory fee been calculated pursuant to the amended agreement, the fee
would have approximated $223,000 and $240,000 in 1997 and 1996, respectively.
Total fees paid to independent trust managers were approximately $44,433,
$33,000 and $33,000 in 1998, 1997 and 1996, respectively. During 1996 and 1997,
$30,000 of the fees paid to trust managers were satisfied by issuing a total of
2,400 shares of beneficial interest (based on an estimated value of $12.50 per
share).
F-11
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. SUPPLEMENTAL CASH FLOW INFORMATION
The following supplemental information is related to the statement of cash
flows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Acquisition of land for mortgage note payable........... $ -- $ -- $ 206,250
Assumption of mortgage notes payable for acquisition of
investment real estate................................ 57,167,233 -- 4,400,000
Minority interest granted in exchange for investment
real estate contributed............................... 2,794,440 -- 630,000
Net liabilities assumed in acquisition of investment
real estate........................................... 1,372,396 -- 129,983
Exchange of investment real estate for 834,397 shares of
Ivy Realty Trust, an affiliated trust, transfer
of mortgage note payable, issuance of mortgage note
receivable and transfer of net liabilities............ -- -- 1,640,465
Payment of distribution with shares of affiliated trust. -- 333,206 500,639
Cash paid for interest, net of $23,000 of capitalized
interest in 1998 and including $2,240,652 in bridge
financing costs written off in 1998................... 6,079,889 2,433,278 2,112,038
Distribution declared but not paid...................... 2,045,702 -- --
</TABLE>
11. ENVIRONMENTAL ISSUES
Certain tenants in the Company's properties conduct activities that require
the sale or use of hazardous substances, including petroleum products and dry
cleaning chemicals. Should such tenants misuse or inappropriately dispose of
such substances, the Company may become liable for a portion or all of the
remediation costs. The Company attempts to mitigate this risk by limiting the
number of tenants that conduct such operations, requiring such tenants to
maintain environmental risk insurance, and monitoring the operations of such
tenants.
At December 31, 1998 the Company was aware that a dry cleaning company
tenant in one of the Company's shopping centers had allowed hazardous substances
to contaminate a portion of the Company's property. The tenant is in the process
of obtaining engineering studies which will estimate the cost of remediation and
has acknowledged its obligation to fund such costs. Management of the Company
believes there will be no material adverse effect on the Company's operations as
a result.
As part of the Company's due diligence investigation of three shopping
centers acquired in December 1998, the Company discovered that a portion of each
such shopping center was contaminated with varying levels of dry cleaning
substances. As a result of the Company's discovery, the Company acquired only
the portions of the properties that, based on environmental engineering reports,
were not contaminated. The sellers of such properties have placed in escrow
amounts sufficient, based on the engineering reports, to remediate the
contamination. Upon completion by the seller of such remediation, as evidenced
by written confirmation of state environmental authorities, the Company is
obligated to purchase the remaining portions of the shopping centers. The
Company has escrowed letters of credit totaling $361,000 as the purchase price
for these additional retail areas.
12. YEAR 2000 ISSUE
Many computer systems were designed and programmed in such a manner as to
be unable to recognize dates beyond December 31, 1999. In such cases, computer
applications could fail or create erroneous results by or at the year 2000 (the
"Year 2000 Issue"). Management has completed an evaluation of the risks of a
material effect on the Company's results of operations and financial condition
with respect to its management information systems and the Year 2000 Issue. The
Company uses application software, including its accounting and property
management software, which has been certified by vendors as being Year
2000-compliant. Accordingly, management does not believe that the Company's
results of operations or financial condition have been or will be materially
affected by any future costs to make its management information systems Year
2000-compliant. Additionally, management does not expect to incur any material
costs to correct Year 2000 deficiencies in its management information systems.
F-12
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition to management information systems, the Company's Year 2000
risks include those related to "embedded technology," such as micro-controllers,
and to the Year 2000 Issues of other parties with which the Company has material
relationships. The Company has recently completed the process of assessing these
risks.
With respect to embedded technology, the assessment process included
surveying each of the Company's properties to determine which systems may be
subject to disruptions. These systems may include climate control, lighting,
security, and telecommunications. Management believes that substantially all
such systems, if not Year 2000-compliant, can be controlled by manual operation
and monitoring for the remainder of their economic lives. Accordingly,
management believes the Company will not be forced to replace or upgrade
non-compliant components (if any) of such systems and has no present plans for
replacement or upgrade. Should such systems require manual operation and
monitoring, the Company may experience an immaterial increase in labor costs for
its property management operations until such time as the non-compliant
components are replaced in the ordinary course of business.
Management is not presently aware of any Year 2000 Issues related to other
parties that may adversely affect the Company. Based on the relatively small
number of properties and a low level of reliance on technology for property
operations, revenue collections, and cash disbursements, management believes
that documentation of transactions that might otherwise be disrupted will be
available to recreate transaction records if necessary.
13. STOCK OPTION PLAN
In connection with the IPO, the Company has granted options (the "Options")
to purchase approximately 330,000 common shares to the Investment Manager, the
Trust Managers, and certain employees of the Investment Manager (primarily,
officers of the Company). These options are exercisable at $10.00 per share and
will vest evenly over a four year period commencing January 1, 1999. The Company
will provide financing to the optionee for 100 percent of the purchase price; up
to 80% of such purchase price may be forgiven over four years at the discretion
of the Board of Trust Managers.
On January 1, 1999 optionees exercised approximately 82,000 options. The
Board of Trust Managers elected to forgive, over four years beginning January 1,
2000, 80 percent of the loan granted by the Company for the purchase of such
shares, conditioned upon the optionee's continued employment by the Investment
Manager or the Company.
14. SUBSEQUENT EVENTS
On January 11, 1999, the Company entered into a master lease agreement for
the Albertson's Bissonnett Shopping Center, an approximately 78,500 square foot
neighborhood shopping center in Houston of which Albertson's owns its 63,000
square foot anchor space.
15. PROFORMA FINANCIAL INFORMATION (UNAUDITED)
The following unaudited pro forma condensed consolidated statement of
operations is presented as if each of the 1998 property acquisitions described
in Note 2, the related financing activities described in Note 3 and the effects
of the IPO and other equity transactions described in Note 4 had all occurred as
of January 1, 1998.
<TABLE>
<CAPTION>
Table 6
12/31/98
--------
<S> <C>
Revenue $24,972,521
===========
Income before extraordinary item $ 3,137,239
===========
Net income $ 3,137,239
===========
Basic and diluted net income per common
share $ 0.33
===========
</TABLE>
F-13
<PAGE>
<TABLE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 1998
<CAPTION>
Description Initial cost Cost
- ------------------------------------------------- -------------------------------- Capitalized
Subsequent to
Buildings and Acquisition-
Property Location Encumbrances Land Improvements Improvements
-------- -------- ------------ ---- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shopping centers:
Arlington Arlington, TX $ 3,349,960 $ 1,506,595 $ 3,474,887 $ --
Autobahn San Antonio, TX --(1) 515,205 1,726,150 26,634
Bandera San Antonio, TX --(1) 2,350,000 8,759,593 435,713
Benchmark Houston, TX 3,644,012 1,680,174 3,920,406 9,017
Big Curve Yuma, AZ 5,915,332 2,657,118 6,249,350 28,967
Centennial Austin, TX -- 1,400,000 3,527,909 595,883
Colony Plaza Sugar Land, TX 3,175,184 1,258,510 2,936,522 34,080
El Campo El Campo, TX -- 360,000 1,640,350 51,499
Garland Garland, TX 1,842,478 851,265 1,980,784 --
Hedwig Houston, TX 3,542,926 1,710,334 4,940,936 8,000
Highland Square Sugar Land, TX 4,412,206 2,305,673 5,379,903 14,588
Hurst Hurst, TX 1,936,277 1,020,768 2,366,794 --
Market at First Colony Houston, TX --(1) 4,620,502 8,260,308 9,475
Mason Park Houston, TX --(1) 4,560,164 10,640,382 72,508
McMinn Athens, TN 912,375 513,912 2,170,052 83,705
Park Northern Phoenix, AZ 2,676,495 -- 4,410,691 127,991
Plano Plano, TX 6,543,276 2,658,183 6,191,076 --
Richardson Richardson, TX 3,370,778 1,475,441 3,353,961 --
Rosemeade Carrollton, TX 3,453,615 1,379,880 3,047,363 13,289
Southwest Walgreens Phoenix, AZ -- 1,425,812 3,327,240 7,329
Town `N Country Tampa, FL 2,454,791 1,511,833 3,527,611 14,948
Twin Lakes Lenoir City, TN -- 860,706 2,969,230 51,306
University Mall Pembroke Pines, 13,225,513 5,550,000 13,141,475 14,340
FL
University Park College Station, 4,707,273 1,842,331 4,955,490 218,983
TX
Property under development:
Lake St. Charles Tampa, 1,221,393 1,005,537 316,286 --
FL
Undeveloped land:
University Park College Station, -- 276,569 -- --
TX
----------- ----------- ----------- ----------
Totals $ 66,383,884 $ 45,296,512 $113,214,749 $ 1,818,255
=========== =========== =========== ==========
<CAPTION>
Gross Amounts at Which
Carried at Close of Period
-------------------------------
DESCRIPTION
- --------------------------
Building and Accumulated Date of Date
Property Land Improvements Total Depreciation Construction Acquired
-------- ---- ------------ ----- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shopping centers:
Arlington $ 1,506,595 $ 3,474,887 $ 4,981,482 $ -- 1982 1998
Autobahn 515,205 1,752,784 2,267,989 488,136 1984 1990
Bandera 2,350,000 9,195,306 11,545,306 1,712,366 1989 1992
Benchmark 1,680,174 3,929,423 5,609,597 104,588 1986 1998
Big Curve 2,657,118 6,278,317 8,935,435 123,332 1969/1983/ 1998
1990/1996
Centennial 1,400,000 4,123,792 5,523,792 1,094,204 1970 1991
Colony Plaza 1,258,510 2,970,602 4,229,112 45,795 1997 1998
El Campo 360,000 1,691,849 2,051,849 158,751 1985 1996
Garland 851,265 1,980,784 2,832,049 -- 1984 1998
Hedwig 1,710,334 4,948,936 6,659,270 144,656 1974 1998
Highland Square 2,305,673 5,394,491 7,700,164 71,828 1998
Hurst 1,020,768 2,366,794 3,387,562 -- 1982 1998
Market at First Colony 4,620,502 8,269,783 12,890,285 251,576 1988 1998
Mason Park 4,560,164 10,712,890 15,273,054 326,200 1985 1998
McMinn 513,912 2,253,757 2,767,669 526,906 1982 1994
Park Northern -- 4,538,682 4,538,682 331,258 1982 1996
Plano 2,658,183 6,191,076 8,849,259 -- 1985 1998
Richardson 1,475,441 3,353,961 4,829,402 -- 1984 1998
F-14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amounts at Which
Carried at Close of Period
-------------------------------
DESCRIPTION
- --------------------------
Building and Accumulated Date of Date
Property Land Improvements Total Depreciation Construction Acquired
-------- ---- ------------ ----- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Rosemeade 1,379,880 3,060,652 4,440,532 63,077 1986 1998
Southwest Walgreens 1,425,812 3,334,569 4,760,381 101,336 1975 1998
Town `N Country 1,511,833 3,542,559 5,054,392 74,381 1970 1998
Twin Lakes 860,706 3,020,536 3,881,242 773,529 1986 1989
University Mall 5,550,000 13,155,815 18,705,815 334,665 1973 1998
University Park 1,842,331 5,174,473 7,016,804 707,759 1991 1993
Property under development:
Lake St. Charles 1,321,823 -- 1,321,823 --
Undeveloped land:
University Park 276,569 -- 276,569 --
----------- ----------- ----------- ----------
Totals $ 45,612,798 $114,716,718 $160,329,516 $ 7,434,343
=========== =========== =========== ==========
</TABLE>
(1) These properties are collateral for the line of credit, as described in Note
3.
F-15
<PAGE>
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO SCHEDULE III
(a) Initial cost for acquired property is cost at acquisition.
(b) The aggregate gross cost of land, buildings and improvements for federal
income tax and book purposes is substantially the same.
(c)
RECONCILIATION OF REAL ESTATE
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year........ $ 39,734,731 $39,327,929 $34,166,161
Additions -- acquisitions........... 120,501,767 37,520 6,687,611
Additions -- tenant improvements.... 207,593 319,226 117,964
Additions -- capital expenditures... 111,918 50,056 66,160
Deductions.......................... (226,493) -- (1,709,967)
----------- ----------- -----------
Balance at end of year............ $160,329,516 $39,734,731 $39,327,929
=========== =========== ===========
</TABLE>
RECONCILIATION OF ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year........... $4,861,957 $3,767,721 $2,988,031
Depreciation expense................... 2,798,879 1,094,236 886,173
Deductions............................. (226,493) -- (106,483)
---------- ---------- ----------
Balance at end of year............... $7,434,343 $4,861,957 $3,767,721
========== ========== ==========
</TABLE>
(d) See description of mortgage notes payable in Note 3 to the consolidated
financial statements.
(e) Depreciation is computed based upon the following estimated lives:
<TABLE>
<S> <C>
Buildings................................................... 20-40 years
Improvements................................................ 5-15 years
</TABLE>
F-16
<PAGE>
ITEM 14. 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))
4.1 Instruments defining the rights of security holders. The instruments
are filed in repose to items 3.1 and 3.2 above and are incorporated
herein by reference.
4.2 Common share certificate(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 Contribution Agreement by and between UIRT-Centennial, L.P., as
"Partnership" and Centennial Acquisition Corp., as "Contributor"
**10.2 Today Green Oaks, L.P. Agreement of Limited Partnership
**10.3 Second Amendment to Acquisition Agreement by and between Six Flags
Joint Venture, Today Melbourne Plaza, L.P., today Northwest Crossing,
L.P., Today Green Oaks, L.P., Today Parkwood, L.P., and Today
Richwood, L.P., as Seller, and United Investors Realty Trust as
assignee of Buyer
**10.4 Lease Agreement By and Between Today Parkwood, L.P., as Landlord and
United Investors Realty Trust as Tenant pertaining to Parkwood Square
Shopping Center Plano, Collin County, Texas dated December 31, 1998
**10.5 Lease Agreement By and Between Today Richwood, L.P., as Landlord and
United Investors Realty Trust as Tenant Pertaining to Richwood
Shopping Center Richardson, Dallas County, Texas dated December 31,
1998
**10.6 Declaration of Trust dated December 31, 1998 by Today Green Oaks GP,
Inc., a Texas corporation ("Trustee") for and on behalf of United
Investors Realty Trust, a Texas real estate investment trust ("Owner")
**10.7 Promissory Note between UIRT Lake St. Charles and First Union National
Bank
**10.8 Construction Loan Agreement between First Union National Bank and UIRT
**10.9 Promissory Note dated as of October 16, 1995 executed by Today
Northwest Crossing, L.P. in favor of First Union National Bank of
North Carolina
**10.10 Promissory Note dated as of October 16, 1995 executed by Today
Melbourne Plaza, L.P. in favor of First Union National Bank of North
Carolina
10.11 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))
10.12 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))
10.13 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))
10.14 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))
10.15 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))
10.16 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))
10.17 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))
10.18 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))
10.19 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))
10.20 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))
10.21 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))
10.22 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))
10.23 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))
10.24 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))
10.25 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))
10.26 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))
10.27 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))
10.28 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))
10.29 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))
10.30 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))
10.31 Contract of Sale dated April 17, 1998 by and between United Investors,
Realty Trust and Veriguest Colony Plaza One 1997. (Incorporated by
reference to Exhibit 10.22 to the Company's Quarterly Report on Form
10-Q dated May 14, 1998)
10.32 Purchase Option dated April 17, 1998 by and between United Investors,
Realty Trust and Veriguest Property Commerce 1995-1, a Texas joint
venture.(Incorporated by reference to Exhibit 10.23 to the Company's
Quarterly Report on Form 10-Q dated May 14, 1998)
10.33 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.34 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
10.35 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee, James H. Shimberg on
behalf of land owner (incorporated by reference to Exhibit 10.30 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.36 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
(incorporated by reference to Exhibit 10.31 to Company's Quarterly
Report on Form 10-Q dated August 14, 1998)
10.37 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT
Town 'N Country, L.P.(incorporated by reference to Exhibit 10.32 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.38 Contract of Sale dated June 4, 1998, by and between the Company and
Highland Square Partners Ltd. (incorporated by reference to Exhibit
10.35 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.39 Promissory note dated as of November 26, 1996 made by Highland Square
Partners, Ltd. to Belgravia Capital Corporation, as beneficiary in the
principal amount of $4,525,000. (incorporated by reference to Exhibit
10.36 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.40 Promissory note dated November 26, 1997 made by Veriquest Colony Plaza
One 1997 to Holliday Fenoglio, L.P., as beneficiary in the principal
amount of $3,200,000.(incorporated by reference to Exhibit 10.9 to
Company's Quarterly Report on Form 10-Q dated November 10, 1998)
10.41 Revolving Credit Agreement dated August 25, 1998 made by and among the
Company and Wells Fargo Bank, National Association.(incorporated by
reference to Exhibit 10.10 to Company's Quarterly Report on Form 10-Q
dated November 10, 1998)
**27.1 Financial Data Schedule
(b) Reports on 8-K
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 11, 1998 for the purpose of reporting the acquisition
of the Big Curve Shopping Center
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 25, 1998 for the purpose of reporting the appointment
of R. Steven Hamner to the position of Chief Financial Officer.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Big Curve Shopping Center.
The Company's Current Report on Form 8-K dated July 31, 1998 and
filed on August 4, 1998 for the purpose of reporting the
acquisition of the Colony Plaza Shopping Center.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Colony Plaza Shopping
Center.
The Company's Current Report on Form 8-K dated October 7, 1998 for
the purpose of reporting the acquisition of the Highland Square
Shopping Center.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Highland Square Shopping
Center.
The Company's Current Report on Form 8-K dated January 15, 1999 for
the purpose of reporting the acquisition of the Dallas Portfolio.
** Filed as an exhibit hereto.
<PAGE>
Exhibit 10.1
CONTRIBUTION AGREEMENT
BY AND BETWEEN
UIRT - CENTENNIAL, L.P.,
AS "PARTNERSHIP,"
AND
CENTENNIAL ACQUISITION CORP.,
AS "CONTRIBUTOR"
AND
UNITED INVESTORS REALTY TRUST
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") by and among CENTENNIAL
ACQUISITION CORP., a Texas corporation ("Contributor"), and UIRT - CENTENNIAL,
L.P., a Delaware limited partnership ("Partnership"), and UNITED INVESTORS
REALTY TRUST, a Texas real estate investment trust, is entered into as of the
Effective Date (hereinafter defined).
R E C I T A L S
WHEREAS, Contributor, as "Purchaser" or "Buyer," has heretofore entered
into a contract with Josey Investment Joint Venture as "Seller," dated October
14, 1998 (as amended, the "Josey Ranch Contract"), for the purchase by
Contributor of a shopping center and related buildings containing approximately
115,001 square feet of gross leasable area ("GLA") together with approximately
12 acres of excess land, located in Carrollton, Texas (the "Josey Ranch Shopping
Center") for a purchase price of $9,816,560.00, a copy of which, together with
all amendments, is attached hereto as Exhibit "A-1";
WHEREAS, Contributor, as "Purchaser" or "Buyer," has also heretofore
entered into a contract with Today Management, Inc., Today Melbourne Plaza,
L.P., Today Northwest Crossing, L.P., Today Green Oaks, L.P., Today Parkwood,
L.P. and Today Richwood, L.P., collectively as "Seller", dated October 16, 1998
(as amended, the "Brauss Contract") to purchase: (i) the "Green Oaks Shopping
Center" located in Arlington, Texas and containing approximately 65,083 square
feet of GLA, (ii) the "Melbourne Plaza Shopping Center" located in Hurst, Texas
and containing approximately 147,516 square feet of GLA, (iii) the "Northwest
Crossing Shopping Center" located in Garland, Texas and containing approximately
33,365 square feet of GLA; (iv) the "Six Flags Village Shopping Center" located
in Arlington, Texas and containing approximately 76,362 square feet of GLA, (v)
the "Parkwood Square Shopping Center" located in Plano, Texas and containing
approximately 78,798 square feet of GLA, and (vi) the "Richwood Shopping Center"
located in Richardson, Texas and containing approximately 54,872 square feet of
GLA, all for an aggregate purchase price of $31,900,000.00, a copy of which,
together with all amendments, is attached hereto as Exhibit "A-2" (the Josey
Ranch Contract and the Brauss Contract are each a "Contract" and are
collectively the "Contracts"); and
WHEREAS, Centennial desires to contribute all of its right, title and
interest in and to the Contracts for an interest in the Partnership and certain
cash sums, and Partnership desires to assume the Contracts.
W I T N E S S E T H:
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which being hereby acknowledged, the parties hereto agree as
follows:
1. Contribution/Assignment of the Contracts
(a) For good and valuable consideration set forth herein, and in
consideration of Partnership entering into this Agreement, Contributor does
hereby contribute, assign, transfer, and convey to Partnership all of
Contributor's right, title and interest in, under, and to the Contracts,
together with any and all earnest money deposited by Contributor in connection
with the Contracts. By its execution of this Agreement, Partnership hereby
accepts the foregoing contribution and assignment and agrees to, and hereby
does, assume all of Contributor's obligations under the Contracts. The foregoing
assignment and contribution shall in all events be subject to the terms and
conditions of this Agreement. Though this Agreement shall alone suffice to
effect the forgoing assignments, Contributor and Partnership shall, concurrently
with their execution and delivery of this Agreement, execute and deliver the
Assignment and Assumption Agreement (the "Assignment") attached hereto as
Exhibit "B" hereto. Such separate assignment shall not operate to provide
additional rights or impose additional liabilities or obligations on either
party hereto but is intended to provide evidence of the assignments effectuated
hereby to the sellers under the Contracts apart from delivering this entire
agreement.
(b) Notwithstanding the above, if the Contracts, or any of them, do not
expressly permit the free assignment thereof to Partnership (and thereafter to
an affiliate of Partnership if so required by UIRT or Partnership) without a
seller's consent, Partnership's obligations under this Agreement shall be
conditioned upon Contributor having obtained the written consent from the
sellers under each of such Contracts allowing them to be assigned to Partnership
and Partnership's subsequent assignment to an affiliate of Partnership. If such
consent is not obtained from the sellers under such Contracts within five (5)
business days after the Effective Date, Partnership may, at its sole option,
elect to terminate this Agreement entirely or only with respect to such
Contracts that cannot be assigned (in which event the consideration provided for
in Paragraph 2(a) shall be appropriately adjusted). With respect to any such
Contracts, or with respect to all of the Contracts if Partnership terminates
this Agreement, the assignment provided for herein shall be voided and of no
force or effect.
2. Consideration to Contributor
In consideration of the assignment of the Contracts to Partnership:
(a) Upon the closing of a Contract by Partnership, Partnership shall
issue to Contributor partnership units (collectively, "Units") in the
Partnership, the actual number and value thereof, and the rights and
obligations with respect thereto, being set forth in the Amended and
Restated Agreement of Limited Partnership of the Partnership attached
hereto as Exhibit "C" to be executed by Contributor, as a limited
partner, and United Investors Realty Trust ("UIRT"), as general
partner; and
(b) Upon the closing of the first of the Contracts to be closed by
Partnership, Partnership shall pay to Contributor in cash or other
immediately available funds the sum of ONE HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($150,000.00) (the "Cash Payment"). If none of the
Contracts are closed or consummated, the Cash Payment shall not be
paid. Contributor shall not be entitled to any further cash
consideration. Such amount is not a distribution by Partnership but is
simply deferred cash consideration to Contributor for the assignment in
Article 1 above.
3. Earnest Money
Within three (3) business days after the later to occur of (i) the
Effective Date, or (ii) the date upon which all required consents to
assignments, as referenced in Paragraph 1(b) above, have been obtained, and
further provided that Contributor has performed any obligations to be performed
by Contributor up to such date including, without limitation, the execution of
the Assignment and the Amended and Restated Agreement of Limited Partnership
attached hereto as Exhibit "C" (the "Partnership Agreement"), Partnership shall
pay to Contributor the total sum deposited by Contributor under the Contracts as
of such date as "earnest money" or "escrow funds." Contributor represents and
warrants to Partnership that the total "earnest money" or "escrow funds" paid or
deposited by Contributor under the Contracts is as follows: (i) Josey Ranch
Contract - $50,000.00; (ii) Brauss Contract - $50,000.00, for a total of
$100,000.00 (collectively, the "Earnest Money"). Once paid to Contributor, and
except for the Contributor Option (hereinafter defined), Contributor shall have
no further right, title or interest in or to the Earnest Money and agrees to
execute whatever instruments are requested by Partnership to provide evidence to
the sellers and title companies under the Contracts of such fact.
4. Due Diligence
(a) Within three (3) business days after the Effective Date,
Contributor shall deliver to Partnership all due diligence materials provided
pursuant to the Contracts or otherwise obtained or caused to be prepared by or
on behalf of Contributor including, without limitation, to the extent in
Contributor's possession, the following (collectively, "Due Diligence
Materials"): (i) current rent rolls and, to the extent available, rent rolls for
each of the subject properties as of December 31, 1997 and 1996; (ii) site plans
and development plans; (iii) title policies and/or current title commitments
(together with underlying documents) and surveys covering the properties that
are the subject of the Contracts (individually, a "Property" and collectively,
the "Properties"); (iv) copies of all leases (including ground leases) covering
the Properties, together with copies of all amendments thereto, currently in
effect or pending (the "Leases") and lease abstracts for all Leases; (v)
operating and capital expenditure statements for calendar year 1996, 1997 and
year-to-date 1998 for each of the Properties; (vi) CAM reconciliations for 1996,
1997 and, to the extent available, year-to-date 1998; (vii) current real estate
tax bills for each of the Properties or, if not available for 1998, invoices for
1997 real estate taxes and current year assessed values and tax rates; (viii)
operating and capital expenditure budgets for 1999; (ix) copies of any cross
easement or reciprocal easement agreements; (x) engineering inspection and
environmental and soil studies and reports; (xi) copies of any certificates of
occupancy, zoning and permitted use information, photographs and aerial
pictures; (xii) true, correct and complete copies of all management agreements,
leasing and commission agreements, and service and vendor agreements affecting
the Properties; and (xiii) details regarding any pending leases, and outstanding
or pending tenant improvement and leasing commission obligations.
<PAGE>
(b) To the extent that Contributor has not assembled or caused to be
prepared any of the Due Diligence Materials described in subparagraph 4(a)
above, and with respect to reviewing the correspondence and other relevant files
of each of the sellers under the Contracts, Contributor shall use good faith
efforts to obtain for Partnership such information or access to and copies of
such information, or any other information (whether or not specifically
described in subparagraph 4(a) above) as Partnership may reasonably request (and
such shall be included within the definition of Due Diligence Materials).
Partnership shall reimburse Contributor for Contributor's reasonable and actual
costs of obtaining, after October 16, 1998, any such additional information.
Such reimbursement shall be made by Partnership to Contributor within five (5)
days after receipt by Partnership of a written statement therefore together with
supporting documents detailing the costs incurred by Contributor after October
16, 1998 in connection with obtaining such information. In no event will
Partnership be obligated to reimburse Contributor for, or pay any costs incurred
by Contributor with respect to, any costs of due diligence gathering, review or
inspection that were performed, gathered or ordered or contracted for prior to
October 16, 1998. Additionally, Partnership shall not reimburse Contributor for
any professional fees or expenses or internal costs incurred by Contributor (who
for purposes of this subparagraph includes Steven Levin) in connection with the
negotiation, drafting, execution and delivery of the Contracts or this Agreement
and costs incidental or attributable thereto including, without limitation,
attorneys fees. Contributor covenants and agrees to indemnify and hold
Partnership harmless from and against such costs and expenses.
(c) If Contributor discovers any material defect, error, or omission in
any Due Diligence Materials, Contributor will promptly give Partnership notice
with detailed information pertaining to such defect, error, or omission.
5. Administration of Contracts
(a) During the existence of this Agreement, and regardless of the fact
that one or more of the Contracts may not have been assigned to Partnership,
Partnership shall have complete and absolute control over the Contracts, due
diligence efforts and negotiations with the various sellers thereunder
including, without limitation, amendments, price reductions, extensions, giving
of notices and exercise of all rights thereunder including, without limitation,
termination rights, all in Partnership's sole and absolute discretion.
Contributor shall defer to all decisions of Partnership and will not
independently contact the sellers without Partnership's prior approval.
Contributor agrees that Partnership may notify the sellers of the above and
Contributor agrees to acknowledge such fact to the sellers. Contributor agrees
to cooperate with and, upon request by Partnership, assist Partnership in
connection with the administration of the Contracts. Specifically, but without
limitation, Contributor shall cooperate with Partnership in connection with due
diligence efforts, communications and negotiations with sellers and other
necessary parties and shall render such advice and assistance regarding the
Properties and the Contracts as Partnership may, from time to time, reasonably
request. Contributor shall assist Partnership in connection with planning the
post closing management of the Properties and shall, upon request, make
introductions with well-qualified candidates for managers and leasing agents for
the Properties. Contributor agrees in connection with its obligations under this
subparagraph that it will cause its President, Steven Levin, to be directly
involved.
(b) Contributor acknowledges and agrees that Partnership is not
obligated under this Agreement to close under any of the Contracts. Partnership
shall have no liability whatsoever arising as a result of Partnership's failure
to close under one or more of the Contracts regardless of whether any such
failure is due to the exercise of a termination right under a Contract or breach
thereof by Partnership.
6. Omitted
7. Contributor's Representations and Warranties
Contributor hereby represents and warrants to Partnership and
UIRT the following:
<PAGE>
(a) That, to its actual knowledge, (i) except to the extent disclosed
to UIRT in writing, the financial information and the Due Diligence Materials
provided to Contributor and delivered by Contributor to Partnership are true and
accurate in all material respects, and (ii) all of the documentation turned over
to Contributor by the sellers under each of the Contracts has, in all material
respects, been delivered to Partnership.
(b) Contributor has the sole power and authority to contribute,
transfer and assign each of the Contracts to Partnership and that, to
Contributor's actual knowledge, no consents or approvals from any third party,
other than a lender(s) holding a first lien against the Green Oaks Shopping
Center, Melbourne Plaza Shopping Center, Northwest Crossing Shopping Center, Six
Flags Shopping Center, Parkwood Square Shopping Center, Richwood Shopping Center
or on Josey Ranch Shopping Center (which requires a waiver of a right of first
refusal with respect to a portion of this property and consent to prepay), are
required or necessary in order for the Partnership to close title on each of the
Properties, or any of them.
(c) Except as disclosed in the Due Diligence Materials, otherwise
disclosed to Partnership by Contributor in writing or otherwise known by
Partnership Contributor has no actual knowledge that any of the Properties or
the sellers under the Contracts are currently subject to any existing, pending,
or threatened investigation or inquiry by any governmental authority or to any
remedial obligations under any Applicable Laws pertaining to health or the
environment ("Environmental Laws").
(d) Contributor is a duly formed and validly existing corporation under
the laws of the State of Texas. Contributor is authorized to enter into this
Agreement, and the undersigned signatory party for Contributor has been duly
authorized to execute this Agreement. Contributor is duly authorized to
consummate the transaction contemplated by this Agreement.
(e) The agreements attached under Exhibit "A" are true, correct and
complete copies of the Contracts and such have not been amended in any way as
except as set forth therein.
(f) Except as disclosed in the Due Diligence Materials, otherwise
disclosed to Partnership by Contributor in writing or otherwise known by
Partnership and to Contributor's actual knowledge, there are no agreements with
any other person relating to the sale or other conveyance of the Properties, or
any of them, or that would prevent the closing of a sale of the Properties, or
any of them, to Partnership.
(g) To Contributor's actual knowledge, no event of default has occurred
(or if uncured with the passage of time would occur) under the Contracts.
Contributor has not received any actual notice (oral or written) from any of the
sellers under the Contracts of any material default or potential or alleged
material default by Contributor thereunder.
(h) In order to induce the Partnership to issue Units to Contributor,
Contributor hereby acknowledges its understanding that the issuance of Units is
intended to be exempt from registration under the Securities Act of 1933, as
amended, and the rules and regulations in effect thereunder (the "Act"). In
furtherance thereof, Contributor further represents and warrants the following:
<PAGE>
(i) Contributor is acquiring the Units in Partnership solely
for its own account for the purpose of investment and not as a nominee
or agent for any other person and not with a view to, or for offer or
sale in connection with, any distribution thereof within the meaning of
the Act. Contributor agrees and acknowledges that it is not permitted
to offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of ("Transfer") any of the Units issued to it except as
provided in this Agreement and the Partnership Agreement.
(ii) Contributor and its shareholders are knowledgeable,
sophisticated and experienced in business and financial matters;
Contributor and its shareholders fully understand the limitations on
transfer described in this Agreement and the Partnership Agreement;
Contributor and its shareholders are able to bear the economic risk of
holding the Units for an indefinite period and are able to afford the
complete loss of their investment in the Units; Contributor and its
shareholders have received and reviewed the Partnership Agreement and
copies of the documents filed by UIRT under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and all registration
statements and related prospectuses and supplements filed by UIRT and
declared effective under the Act for the last two years (collectively,
the "SEC Documents") and have been given the opportunity to obtain any
additional information or documents and to ask questions and receive
answers about such documents, UIRT and the Partnership and the business
and prospects of UIRT and the Partnership which Contributor and its
shareholders deem necessary to evaluate the merits and risks related to
its investment in the Units; and Contributor and its shareholders
understand and have taken cognizance of all risk factors related to the
purchase of the Units.
(iii) Contributor and its shareholders acknowledge that they
have been advised that (A) the Units may have to be held indefinitely,
and Contributor and its shareholders will continue to bear the economic
risk of the investment in the Units, unless the Units are exchanged
pursuant to the Partnership Agreement or the Put Agreement (hereinafter
defined) or is subsequently registered under the Act or an exemption
from such registration is available, (B) it is not anticipated that
there will be any public market for the Units at any time, (C) Rule 144
promulgated under the Act may not be available with respect to the sale
of any securities of the Partnership (and that upon exchange of the
Units for common shares of UIRT and a new holding period under Rule 144
may commence), and the Partnership has made no covenant, and makes no
covenant, to make Rule 144 available with respect to the sale of any of
the Units, (D) a restrictive legend as set forth below shall be placed
on the certificates or instruments representing the Units, and (E) a
notation shall be made in the appropriate records of the Partnership
indicating that the Units are subject to restrictions on Transfer.
(iv) Contributor and its shareholders also acknowledge that
(A) the exchange of Units for common shares of UIRT is subject to
certain restrictions contained in the Partnership Agreement and the Put
Agreement; and (B) the common shares which may be received upon such an
exchange may, under certain circumstances, be "restricted securities"
under Rule 144 and be subject to limitations as to transfer, and may
therefore be subject to certain of the risks referred to in Paragraph
7(h)(iii) above.
(v) Contributor and each of its shareholders is either an
"accredited investor" (as such term is defined in Rule 501(a) of
Regulation D under the Act) or Contributor [and each of its
shareholders] either alone or with its purchaser representative(s) has
such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the prospective
investment.
<PAGE>
(vi) Contributor hereby acknowledges that each Certificate
representing the Units shall bear the following legend:
"THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
PARTNERSHIP AGREEMENT DATED AS OF [ , 1998] (A COPY OF WHICH IS ON FILE
WITH THE PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT,
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (ii) IF THE
PARTNERSHIP HAS RECEIVED (IF IT SO REQUIRES) A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER."
"Actual knowledge," as used herein, means the actual and conscious
knowledge of Steven Levin. The foregoing representations and warranties shall be
deemed to be repeated by Contributor at the closing of each Contract and shall
survive the closings of the Contracts, or any of them, and the termination of
this Agreement.
8. Representations and Warranties of Partnership
Partnership hereby represents and warrants to Contributor the
following:
(a) Partnership is a duly formed and validly existing limited
partnership under the laws of the State of Delaware and qualified to conduct
business in the State of Texas. Partnership is authorized to enter into this
Agreement, and the undersigned signatory party for Partnership is (i) a duly
formed and validly existing real estate investment trust corporation under the
laws of the State of Texas and qualified to conduct business in the State of
Delaware, and (ii) duly authorized to execute this Agreement, as is the
individual signing on behalf of such entity.
(b) There is no pending or, to its knowledge, threatened litigation
against the Partnership that if adversely determined would have a material,
adverse effect on the Partnership or the ability of the Partnership to perform
its obligations under this Agreement in a timely manner.
(c) To the knowledge of Partnership, it is in substantial compliance
with all material statutes, ordinances, orders, rules and regulations
promulgated by any federal, state, municipal or other governmental authority
which apply to the conduct of its business, except for any non-compliance or
violation, individually or in the aggregate, which would not have a material,
adverse effect on the ability of Partnership to perform any of its obligations
under this Agreement in a timely manner.
<PAGE>
The foregoing representations and warranties shall be deemed to be
repeated by Partnership at each closing under a Contract and shall the survive
the closings under the Contracts, or any of them, and the termination of this
Agreement.
9. Indemnities
Each party hereto agrees to indemnify, defend and hold the other party
harmless from and against any and all claims, demands, causes of action, losses,
damages, liabilities, costs and expenses incurred by the indemnified party
(including reasonable attorneys' fees and court costs) of any and every kind or
character, known or unknown, fixed or contingent, asserted against or incurred
by the indemnified party at any time and from time to time by reason of or
arising out of an act or omission of the indemnifying party or a breach or
default under this Agreement or any representations or warranties contained
herein by the indemnifying party. This Article 9 shall survive the termination
or expiration of this Agreement.
10. Broker Commissions
(a) Contributor represents and warrants that it is not obligated to pay
any brokerage commissions or finder's fees with respect to any of the Contracts
or with respect to this Agreement, except that (i) it may have incurred an
obligation to pay SDM Financial $50,000.00 (the "SDM Fee") if, as and when there
is a closing by Contributor under the Josey Ranch Contract, and (ii) it
acknowledges that Sid Goldstein introduced it and/or Steven Levin to UIRT.
Partnership shall pay SDM Financial the SDM Fee as a commission or finder's fee
if, as and when the Josey Ranch Contract is actually closed by Partnership, but
not otherwise. With respect to Sid Goldstein, although neither Partnership nor
UIRT has any obligation to do so, if all three of the Contracts are closed by
Partnership, Partnership will pay Sid Goldstein an amount not to exceed
$150,000.00 as a finder's fee (the "Goldstein Fee"). If the Contracts close at
different times, the Goldstein Fee will be prorated to reflect the amount paid
at each such closing. In the event that one of more of the Contracts is not
closed, or the prices paid by Partnership are reduced for whatever reason, the
Goldstein Fee will reduced prorata. The provisions of this paragraph are not
intended for the benefit of anyone not a party to this Agreement and may not be
enforced by anyone not a party hereto.
(b) Contributor hereby indemnifies and holds UIRT and Partnership
harmless from any and all claims for commissions and/or finders fees, including,
without limitation, to SDM Financial and Sid Goldstein, who may have been
responsible, or who may claim to be responsible, in whole or in part, for
introducing Contributor and/or Steve Levin to any of the Properties and/or to
UIRT or Partnership; provided, however, that with respect to SDM Financial and
Sid Goldstein, such indemnification shall, upon closing of the appropriate
Contracts pursuant to this Agreement, be to amounts in excess of that which
Partnership has agreed to pay. UIRT and Partnership represent and warrant to
Contributor that the only parties or persons that they have dealt with in
connection with the Properties is Sid Goldstein, but asserts that at the time of
such introduction it had not agreed to compensate Sid Goldstein in any way for
his efforts. UIRT hereby indemnifies and holds harmless Contributor from and
against the claims for any other person claiming by, through or under UIRT or
Partnership with respect to the introduction of Contributor to UIRT, and with
respect to SDM Financial and Sid Goldstein, UIRT indemnifies and holds
Contributor harmless up to the amounts to which it has agreed hereunder to pay.
<PAGE>
(c) The terms of this Article 10 shall survive the termination or
expiration of this Agreement.
11. Default /Remedies
If either party defaults under its obligations hereunder and such
default is not cured within ten (10) days after written notice from the
non-defaulting party specifying such default, the non-defaulting party may (i)
elect to terminate this Agreement, and/or (ii) seek any and all remedies
available to the non-defaulting party at law or equity, provided that monetary
damages shall in all events be limited to actual damages. In no event shall a
party hereto be entitled to recover punitive, speculative, consequential or
similar type damages.
12. Termination
This Agreement shall terminate and thereafter be of no further force of
effect upon the earlier to occur of (i) termination by a party under Article 11;
(ii) closing of the last Contract in effect, and (iii) the date that the last
remaining Contract in effect is terminated. No termination shall relieve either
party hereto from any of its obligations or liabilities that arose prior to such
termination or which by their terms expressly survive termination.
13. Notices
Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery, (b) overnight courier or
delivery service with proof of delivery, (c) United States mail, postage
prepaid, registered or certified mail, or (d) prepaid telegram or telecopy
(provided that such telegram or telecopy is confirmed by mail in the manner
previously described), addressed as follows:
To Contributor: Centennial Acquisition Corp.
12720 Hillcrest, Suite 750
Dallas, Texas 75230
Attn: Steven Levin
Telecopy:(972)934-2710
With a copy to: Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
Dallas, Texas 75201
Attn: Cliff Risman
Telecopy: (214)979-4667
To Partnership or UIRT: United Investors Realty Tr
5847 San Felipe, Suite 850
Houston, Texas 77057
Attention: Chief Financial Officer
Telecopy: (713) 268-6005
With a copy to: Liddell, Sapp, Zivley, Hill & LaBoon
2001 Ross Avenue, Suite 3000
Dallas, Texas 75201
Attention: Mr. Bryan L. Goolsby
Telecopy (214) 849-55
or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party in a notice sent in
accordance with these notice provisions. Any such notice or communication shall
be deemed to have been given at the time of personal delivery or, in the case of
certified or registered mail, three (3) days after deposit in the custody of the
United States Postal Service, or in the case of overnight courier or delivery
service, as of the date of first attempted delivery at the address and in the
manner provided herein, or, in the case of telegram or telecopy, upon receipt.
14. Partnership Agreement
Concurrently with the execution and delivery of this Agreement, the
parties shall enter into and deliver the Amended and Restated Agreement of
Limited Partnership attached hereto as Exhibit "C", the Registration Rights
Agreement attached hereto as Exhibit "D" and the Put Agreement (herein so
called) attached hereto as Exhibit "E".
15. Miscellaneous
(a) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, and their heirs, successors, and assigns. Whenever in
this Agreement a reference is made to any of the parties hereto, such reference
shall be deemed to include a reference to the heirs, legal representatives,
successors, and assigns of such parties.
(b) The titles of the Paragraphs of this Agreement shall have no effect
and shall neither limit nor amplify the provisions of the Agreement itself.
(c) Except for the Partnership Agreement, the Registration Rights
Agreement and the Put Agreement, this Agreement constitutes the entire agreement
between the parties and supersedes and replaces all prior and contemporaneous
agreements, representations, and understandings between Partnership and
Contributor, whether written or oral, including, but not limited to, that
certain Agreement to Contribute Purchase Contracts dated October 16, 1998
between Contributor and UIRT; provided that any liabilities that begin to accrue
thereunder prior to the Effective Date shall not be affected hereby. This
Agreement shall not be amended or changed except by written instrument signed by
the party to be charged therewith.
(d) Time is of the essence with respect to the various times for
performance by Contributor, UIRT and Partnership.
<PAGE>
(e) This Agreement is the result of negotiations between the parties
and, accordingly, shall not be construed for or against either party regardless
of which party drafted this Agreement or any portion thereof.
(f) It is not intended by this Agreement to, and nothing contained in
this Agreement shall, create any partnership, joint venture, or other similar
arrangement between Contributor and Partnership, except as expressly provided in
the Partnership Agreement. No term or provision of this Agreement is intended
to, or shall, be for the benefit or any person, firm, corporation, or other
entity not a party hereto (including, without limitation, any broker), and no
such party shall have any right or cause of action hereunder.
(g) This Agreement shall be governed by and construed in accordance
with the laws, including choice of law rules, of the State of Texas. Venue for
any action in connection herewith shall be in the federal and state courts of
competent jurisdiction located in Dallas County, Texas, shall have exclusive
personal jurisdiction over the parties to this Agreement. Each party agrees to
process being effected upon it by registered mail sent to the address and in the
manner specified in Article 13. Each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to any suit, action or proceeding arising out of or relating to this
Agreement being brought in the federal or state courts of competent jurisdiction
located in Dallas County, Texas, and hereby further irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. In any litigation between the parties to this
Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party all costs and expenses (including, without limitation, fees
and expenses of advisors and attorneys and related court costs) incurred by the
prevailing party in such litigation.
(h) Except as herein expressly provided, no waiver by a party of any
breach of this Agreement or of any warranty or representation hereunder by the
other party shall be deemed to be a waiver of any other breach by the other
party (whether preceding or succeeding and whether of the same or similar
nature), and no acceptance of payment or performance by a party after any breach
by the other party shall be deemed to be a waiver of any breach of this
Agreement or of any representation or warranty hereunder by such other party,
whether the first party knows of such breach at the time it accepts such payment
or performance. No failure or delay by a party to exercise any right it may have
by reason of the default of the other party shall operate as a waiver of default
or modification of this Agreement or shall prevent the exercise of any right by
the first party while the other party continues to be so in default.
(i) Each section of this Agreement constitutes a separate agreement
between the parties. In the event that any provision of this Agreement, which
would not deprive the parties, or either of them, of the benefit of the bargain,
is deemed to be illegal, invalid, or unenforceable on its face or as applied,
then such provision shall be deemed severed herefrom to the extent illegal,
invalid, and unenforceable.
(j) Neither the partners of Partnership (other than the general partner
thereof), nor the officers, employees, or other agents of the Partnership or
UIRT shall be personally, corporately, or individually liable, in any manner
whatsoever, for any debt, act, omission, or obligation of Partnership, and all
persons having claims of any kind whatsoever against Partnership shall look
solely to the property of Partnership (and the assets of the general partner
thereof) for the enforcement of their rights (whether monetary or non-monetary)
against Partnership except to the extent of any liability of Partnership
expressly assumed or guaranteed by Contributor.
<PAGE>
(k) If any date set forth in this Agreement as the last date for the
taking of any action hereunder shall fall on a Saturday, Sunday, or a federal
holiday (a federal holiday being a day on which the United States Postal Service
does not deliver first class mail), then the last date for taking such action
shall be extended to the next succeeding day that is not a Saturday, Sunday, or
federal holiday.
(l) The latter of the two dates that Contributor and Partnership
execute this Agreement shall be the "Effective Date" of this Agreement for all
purposes.
(m) If more than one party constitutes "Contributor," as that term is
defined in this Agreement, then all parties constituting Contributor shall be
and are jointly and severally liable for each and every obligation of
Contributor, of whatever nature, under the terms of this Agreement.
(n) The parties hereto acknowledge that negotiations are underway
pursuant to which Steve Levin may become an employee of UIRT or the Partnership.
The closing of title to one or more of the Properties or the failure to close
one or more of the Properties or the termination of any of the Contracts shall
not affect such negotiations or any agreement regarding such possible
employment. The employment, or failure to employ, Steve Levin by the Partnership
or UIRT shall not affect any consideration payable to Contributor under this
Agreement
(o) Each party agrees that TIME IS OF THE ESSENCE with respect to all
time frames set forth herein and the performance by each party of their
obligations hereunder.
(p) This Agreement may not be assigned by either party hereto without
the prior written consent of the other party hereto, which may be withheld in
such party's sole discretion.
(q) The parties acknowledge that prior to execution of this Agreement
they contemplated the contribution of an additional agreement with Contributor,
as "Purchaser" or "Buyer," and ASG National Plaza, Ltd. and ASG Hulen Pointe,
Ltd., collectively as "Seller," dated August __, 1998 (as amended, the
"Hulen/Northwood Contract"), to purchase (i) the "Hulen Point Shopping Center"
located in Fort Worth, Texas and containing approximately 174,479 square feet of
GLA and (ii) the "Northwood Plaza Shopping Center" located in North Richland
Hills, Texas and containing approximately 144,150 square feet of GLA. The
parties confirm that the Hulen/Northwood Contract is not a part of this
Agreement and that neither Partnership nor UIRT has any obligations or
liabilities with respect thereto. Contributor hereby indemnifies and agrees to
hold Partnership and UIRT harmless from any loss or damage arising out of the
Hulen/Northwood Contract other than that caused by UIRT, Partnership or their
respective agents or contractors.
<PAGE>
EXECUTED by Partnership this ___ day of __________________,1998.
UIRT - CENTENNIAL, L.P., a
Delaware limited partnership
By: United Investors Realty Trust, a Texas real
estate investment trust, General Partner
By:__________________________________
Name: Lewis H. Sandler
Title: President
"Partnership"
EXECUTED by Contributor this ___ day of __________________,1998.
CENTENNIAL ACQUISITION CORP.,
a Texas corporation
By:__________________________
Name:________________________
Title:_______________________
"Contributor"
EXECUTED by UIRT this ___ day of __________________, 1998.
UNITED INVESTORS REALTY TRUST,
a Texas real estate investment trust
By:___________________
Name: Lewis H. Sandler
Title: President
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit "A" - Contracts
Exhibit A-1 - Josey Ranch Contract
Exhibit A-2 - Brauss Contract
Exhibit "B" - Form of Assignment and Assumption Agreement
Exhibit "C" - Form of Amended and Restated Partnership Agreement
Exhibit "D" - Registration Rights Agreement
Exhibit "E" - Put Agreement
<PAGE>
EXHIBIT "A"
CONTRACTS
<PAGE>
EXHIBIT "B"
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF CONTRACT ("Assignment") is executed as of the of ,
1998, by and between CENTENNIAL ACQUISITION CORP., a Texas corporation
("Assignor") and UIRT - CENTENNIAL, L.P., a Delaware limited partnership
("Assignee").
For Ten and No/100 Dollars ($10.00) and other good and valuable
consideration, the receipt, adequacy, and sufficiency of which hereby are
acknowledged, Assignor does hereby assign, transfer, and convey to Assignee, all
of Assignor's right, title and interest in, under, and to those certain
contracts and agreements identified on Schedule I attached hereto and
incorporated herein by reference (the "Contracts"), together with any and all
earnest money deposited by Assignor under the Contracts and any interest thereon
to which Assignor would otherwise be entitled. By its execution hereof, Assignee
hereby accepts the foregoing assignment and agrees to, and hereby does, assume
all of Assignor's obligations under the Contracts.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment to be effective as of the date and year first above written.
ASSIGNOR:
CENTENNIAL ACQUISITION CORP.,
a Texas corporation
By:__________________
Name:________________
Title:_______________
ASSIGNEE:
UIRT - CENTENNIAL, L. P.,
a Delaware limited partnership
By: United Investors Realty Trust, a Texas real
estate investment trust, General Partner
By:_______________________
Name: Lewis H. Sandler
Title: President
<PAGE>
EXHIBIT "C"
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
<PAGE>
EXHIBIT "D"
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT "E"
PUT AGREEMENT
<PAGE>
EXHIBIT 10.2
TODAY GREEN OAKS, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") dated as of the
31st day of August, 1995, by and among TODAY GREEN OAKS GP, INC., a Texas
Corporation, as general partner (as further defined in Article I, the "General
Partner"), and the persons listed on Schedule A hereto as limited partners (the
"Limited Partners") (the General Partner and the Limited Partners are
hereinafter collectively called the "Partners" and individually called a
"Partner").
RECITALS:
The General Partner, as general partner, and the Limited Partners, as
limited partners, desire to form a limited partnership to be known as TODAY
GREEN OAKS, L.P. The Partnership is being formed for the purposes of purchasing
and acquiring the real property being more particularly described on Exhibit A
attached hereto and made a part hereof ("Property").
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby make
and enter into this Agreement and do hereby continue the Partnership as a
limited partnership pursuant to the provisions of the Texas Revised Limited
Partnership Act, and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions.
(a) Adjusted Capital Account Deficit. With respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant fiscal year, giving effect to the
adjustments described in Section 1.1(d) and further adjusted as
follows:
(i) Credit to such Capital Account any amounts which
such Partner is obligated to restore pursuant to any provision
of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations
Section 1.704-2(g)(1) and 1.704-2(i)(5), or any successor
provisions: and
<PAGE>
(ii) Debit to such Capital Account the items
described in Sections 1. 704-1(b)(2)
(ii)(d)(4), (5) and
(6) of the Treasury Regulations.
(b) Affiliate. As applied to any Person, (a) if an individual,
a member of such Person's immediate family; (b) if a business entity,
any partner, shareholder, member, director, officer or manager of such
Person; (c) if a trust, any trustee or beneficiary of such Person; and
(d) any other Person directly or indirectly controlling, controlled by,
or under common control with, such Person. In this definition, the term
"control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such Person, and shall include ownership of ten percent (10%) or
more of the beneficial interest in the firm or entity referred to, and
the term "immediate family" shall mean the spouse, ancestors, lineal
descendants, brothers and sisters of the Person in question, including
those Persons adopted.
(c) Agreement. This Agreement of Limited Partnership as it may
be amended from time to time.
(d) Capital Account. With respect to any Partner, the Capital
Account maintained for such Person in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall be
credited such Partner's Capital Contributions, such Person's
share of any items in the nature of income or gain which are
allocated pursuant to Article IV hereof and the amount of any
Partnership liabilities assumed by such Partner or which are
secured by any property distributed to such Person;
(ii) To each Partner's Capital Account there shall be
debited the amount of cash and the fair market value of any
property distributed to such Person pursuant to any provision
of this Agreement, such Partner's share of any items in the
nature of expenses or losses which are allocated pursuant to
Article IV hereof and the amount of any liabilities of such
Partner assumed by the Partnership or which are secured by any
property contributed by such Person to the Partnership.
(e) Capital Contributions. With respect to any Partner, the
amount of money and the initial Gross Asset value of any property
(other than money) contributed to the Partnership by or for such
Partner.
(f) Cash Available for Distributions. The sum of Operating
Cash as defined herein and Cash From Financings or Refinancings and
Cash from Interim Capital Transactions.
<PAGE>
(g) Cash From Financings or Refinancings. All cash receipts of
the Partnership arising from a Financing or Refinancing less (i) in the
case of a Refinancing, the amount of cash necessary for the payment of
the principal balance of, and accrued interest and premiums, if any, on
the indebtedness being refinanced in such Refinancing; (ii)
INTENTIONALLY DELETED; (iii) in the case of a Financing, the amount
expended from such Financing for the purposes for which the Financing
was incurred other than the amounts, if any, distributed to the
Partners out of such proceeds; (iv) the amount of cash paid or to be
paid by the Partnership for expenses (to the extent not included in
clauses (i) or (ii) above) incurred in connection with such Financing
or Refinancing; and (v) the amount considered appropriate by the
General Partner as reserves.
(h) Cash From Interim Capital Transactions. All cash receipts
of the Partnership arising from Interim Capital Transactions less the
amount of cash paid or to be paid by the Partnership for expenses
incurred in connection with such Interim Capital Transactions and in
the case of an insurance or condemnation award, the amount of cash
required to be paid by the Partnership to any third party out of such
receipts (including a lender) and the amount of cash paid or required
to be paid by the Partnership to replace or repair the Property,
directly or indirectly, due to the casualty or condemnation that gave
rise to such Interim Capital Transaction.
(i) Code. The Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent revenue laws.
(j) Code Section 705(a)(2)(B) Expenditures. Expenditures
described in Code Section 705(a)(2)(B) and any amounts treated as Code
Section 705(a)(2)(B) expenditures under Treasury Regulations Section 1.
704-1(b)(2)(iv)(i)(2) and (3).
(k) Delinquent Partner. As defined in Section 2.6(c)
hereof.
(l) Depreciation. For each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other
period, except that if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of
such year or other period, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal
income tax depreciation, amortization or other cost recovery deduction
for such year or other period bears to such beginning adjusted tax
basis (unless the adjusted tax basis is equal to zero, in which event
Depreciation shall be determined under any reasonable method selected
by the General Partner).
(m) Distributions. Distributions of cash or other property
made by the Partnership to the Partners.
<PAGE>
(n) Financing or Refinancing. The borrowing of money by the
Partnership, including borrowing money for the purpose of paying all or
part of the outstanding balance, including accrued interest and
premium, if any, of indebtedness of the Partnership.
(o) General Partner. Today Green Oaks GP, Inc., a Texas
corporation, and any other Person who becomes a successor, substitute
or additional General Partner of the Partnership as provided herein, in
such Person's capacity as a general partner. Any successor or
substitute General Partner for Today Green Oaks GP, Inc. must be a
single purpose, "bankruptcy remote" entity organized and subject to the
same restrictions as Today Green Oaks GP, Inc.
(p) Gross Asset Value. With respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset as determined by the
contributing Partner and the General Partner.
(ii) The Gross Asset Value of all Partnership assets
shall be adjusted to equal their respective gross fair market
values, as determined by the General Partner and a Majority-in
Interest of the Limited Partners as of the following times:
(a) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for a
Capital Contribution that is not de minimis; (b) the
distribution by the Partnership to a Partner of partnership
property that is not de minimis as consideration for an
interest in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g);
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution;
(iv) The Gross Asset Value of a Partnership asset
shall be increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Code Section
732(d), Code Section 734(b) or Code Section 743(b), but only
to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m) and Section 4.2(d); provided,
however, that Gross Asset Values shall not be adjusted
pursuant to this subparagraph (iv) to the extent an adjustment
pursuant to subparagraph (ii) of this subsection is necessary
in connection with a transaction that would otherwise result
in an adjustment pursuant to this subparagraph (iv); and
<PAGE>
(v) The Gross Asset Value of an asset determined or
adjusted pursuant to this Section 1.1(o) shall be adjusted by
the Depreciation taken into account with respect to such asset
for purposes of computing profits and losses.
(q) Gross Revenues. All receipts of the Partnership arising
from the operation of the Partnership other than Cash From Financings
or Refinancings or proceeds from the sale of all or substantially all
of the assets of the Partnership.
(r) Interim Capital Transaction. Any insurance award (other
than for substantially the complete destruction of the Property),
partial condemnation, sale of easements, rights-of-way or similar
interest in the Property or sale of a portion of the Property or
interest therein and any similar transaction which in accordance with
generally accepted accounting practices, are attributable to capital
but which do not result in the dissolution of the Partnership.
(s) INTENTIONALLY DELETED.
(t) INTENTIONALLY DELETED.
(u) Limited Partners.The persons listed as Limited Partners on
Schedule A hereto and any other person who is admitted to the
Partnership as a limited partner pursuant to Section 8.1(d).
(v) Majority-in-Interest of the Limited Partners. Limited
Partners whose total Capital Contributions equal or exceed 51% of the
total Capital Contributions made by all Limited Partners.
(w) Non-Delinquent Partners. A Partner who is not then a
Delinquent Partner.
(x) Nonrecourse Deductions. Deductions in an amount and of a
type described in Treasury Regulations Section 1.704-2(c) and
2(j)(1)(ii), or any successor provisions.
<PAGE>
(y) Operating Cash. For each taxable year of the Partnership,
an amount equal to (i) all cash receipts of the Partnership plus (ii)
liquidations of reserves during such taxable year in excess of those
required to pay for any working capital needs, improvements,
replacements or any other contingencies for which the reserves were
created, minus (iii) Capital Contributions made to the Partnership
during such taxable year, minus (iv) any amounts considered necessary
by the General Partner for the payment of debts, including but not
limited to the Partnership Loan (hereinafter defined), minus (v) the
amounts considered reasonably appropriate by the General Partner to
provide reserves or working capital needs, funds for improvements or
replacements or any other contingencies, minus (vi) the cash
expenditures and expenses of the Partnership during such taxable year,
minus (vii) Cash From Financings or Refinancings, minus (viii) proceeds
from sale of all or substantially all of the assets of the Partnership.
(z) Partner. Any General Partner or Limited Partner.
(aa) Partner Nonrecourse Debt. Debt of a type defined
in Treasury Regulation Section 1.704-2(b)(4), or any
successor provision.
(ab) Partner Nonrecourse Deductions. Deductions of an
amount and type described in Treasury Regulation Section
1.704-2(i)(2) and (j)(1)(i).
(ac) Partner Nonrecourse Minimum Gain. With respect to
each Partner Nonrecourse Debt, an amount equal to the
partner nonrecourse minimum gain as determined in accordance with
Treasury Regulation Section 1. 704-2(i)(3).
(ad) Partnership. The meaning specified in the Recitals.
(ae) Partnership Act. The Texas Revised Limited Partnership
Act, as amended from time to time, or any successor statute; and any
reference herein to any Section of such Partnership Act shall be deemed
to include any amendment or successor to such Section.
(af) Partnership Minimum Gain. With respect to the
Partnership, the meaning set forth in Treasury Regulations
Sections 1.704-2(d) and (g)(3), or any successor provision.
(ag) Person. Any individual, partnership, corporation,
trust or other entity.
(ah) Percentage Interest. The meaning described in
Section 2.6 (b).
(ai) Quarterly Dates. The last day of each March, June,
September and December of each year.
<PAGE>
(aj) Specified Default. (i) The breach of a material provision
of this Agreement, (ii) the breach of a fiduciary duty to the
Partnership or the Partners (not including matters solely relating to
competence in performance of duties), (iii) the conviction of a felony
(which shall be deemed to include an admission of guilty or plea of no
contest), (iv) an act of bankruptcy, insolvency or similar event by the
General Partner, or (v) the General Partner becomes a Delinquent
Partner by reason of its failure to make additional Capital
Contributions to the Partnership, and such failure is not cured within
thirty (30) days after written notice thereof is given to the General
Partner by any of the other Partners. A "bankruptcy" shall be deemed to
occur when the General Partner files a petition in bankruptcy, or
voluntarily takes advantage of any bankruptcy or insolvency law, or is
adjudicated as bankrupt, or if a petition or answer is filed proposing
the adjudication of the General Partner as bankrupt and the General
Partner either consents to the filing thereof or such petition or
answer is not discharged or denied prior to the expiration of ninety
(90) days from the date of such filing, and the "insolvency" of the
General Partner shall be deemed to occur when the assets of the General
Partner are insufficient to pay its liabilities generally as they come
due and it shall so admit in writing.
(ak) Substitute Limited Partner. Any Person admitted to
the Partnership as a Limited Partner pursuant to the provisions of
Section 8.1(d).
(al) Transfer. The mortgage, pledge, hypothecation, transfer,
sale, assignment or other disposition of any part or all of any
interest in the Partnership, whether voluntary, by operation of law or
otherwise.
(am) Treasury Regulations. The income tax regulations
promulgated under the Code, as such regulations may be amended by
succeeding regulations.
ARTICLE II
THE PARTNERSHIP
Section 2.1 Continuation; Duration.
(a) The General Partner and the Limited Partners do hereby
continue the Partnership under the name of Today Green Oaks, L.P. (the
"Partnership") pursuant to the provisions of the Partnership Act. The
General Partner may take such further actions as it may deem necessary
or proper to permit the Partnership to conduct business as a limited
partnership in such other jurisdictions as may be required by
applicable law.
(b) The term of the Partnership shall expire on December 31,
2013, unless sooner terminated in accordance with this Agreement.
Section 2.2 Name. The business of the Partnership shall be conducted
under the name and style of "Today Green Oaks, L.P." or such other trade name or
names as the General Partner may from time to time designate.
<PAGE>
Section 2.3 Purpose and Powers of the Partnership. The Partners desire
to continue the Partnership for the purpose of purchasing, holding and owning
the Property. The Partnership shall have the power and authority to accomplish
its stated purpose. Except as provided in Section 2.3, and unless the General
Partner and all the Limited Partners consent, the Partnership shall not engage
in any other business or activity.
The Partnership shall:
(a) maintain books and records separate from any other Person;
(b) not commingle assets with those of any other Person;
(c) conduct its own business in its own name;
(d) maintain separate financial statements;
(e) pay its own liabilities out of its own funds;
(f) observe all partnership formalities;
(g) maintain an arm's length relationship with its Affiliates;
(h) pay the salaries of its own employees;
(i) not guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy
the obligations of others;
(j) allocate fairly and reasonably any overhead for shared office
space; (k) use separate stationary, invoices, and checks; (l) not
pledge its assets for the benefit of any other Person; and (m) hold
itself out as a separate entity.
Section 2.4 Registered Office; Agent for Service of Process;
Principal Place of Business.
(a) The registered office and principal place of business of
the Partnership within the State of Texas shall be maintained and
located at 17400 Dallas Parkway, Suite 216, Dallas, Texas 75287, or at
such other location or locations as the General Partner may determine
from time to time.
(b) The Partnership's agent for service of process as required
by the Partnership Act shall be Edward M. Fishman and such agent's
address in the State of Texas is 8117 Preston Road, Suite 440, Dallas,
Texas 75225. The General Partner may, from time to time, designate
other persons to be the agent for service of process by naming such
person in a statement filed with the Secretary of State of Texas as
required by the Partnership Act.
Section 2.5 Capital Contributions. Upon or prior to the execution
hereof, the Partners either have contributed or shall contribute to the
Partnership cash in the amounts and by the means indicated on Schedule A hereto,
which amounts, when so contributed, shall constitute the initial Capital
Accounts of the Partners. Except as provided in Section 2.6, no Partner shall be
required to make any additional contributions to the capital of the Partnership.
<PAGE>
Section 2.6 Additional Capital Contributions. The Partners shall have
no obligation to make any further advances as Capital Contributions or otherwise
other than as hereinafter set forth in this Section 2.6.
(a) In the event that at any time (or from time to time) the
costs, expenses or charges with respect to the ownership, operation,
development, maintenance and upkeep of the Property, including but not
limited to, ad valorem taxes, debt amortization (including interest
payments), insurance premiums, repairs, costs of capital improvements,
advertising expense, professional fees, wages and utility costs
(collectively, "Expenses"), exceed the income, if any, derived from the
Property and the proceeds of any loans made to the Partnership for the
acquisition or development of the Property (such excess being herein
referred to as the "Deficit"), the General Partner may request that
each Partner contribute additional capital to the Partnership to fund
such Deficit.
(b) If the General Partner determines that it will request
additional Capital Contributions from the Partners, the General Partner
shall prepare a written statement containing a reasonably detailed
breakdown of the expenses that result in such Deficit and a statement
of the sum of money required from the Partnership to defray such excess
Expenses. The Partnership may estimate the cash requirements for a
period of ninety (90) days in advance, provided that such estimate
shall not exceed the amount determined by the General Partner in the
exercise of reasonable business judgement to be necessary to defray the
excess Expenses for which the Capital Contributions are required. The
General Partner shall send to each Partner a written notice of capital
call which shall specify the amount of additional Capital Contributions
requested from each Partner, which shall equal the product of such
Partner's Percentage Interest and the aggregate Capital Contributions
so requested. Each Partner shall have a period of fifteen (15) days
after such notice is received to pay to the Partnership, in the manner
indicated in the capital call, the amount of additional Capital
Contribution required. A Partner's "Percentage Interest" shall mean
said Partner's interest in profits, losses and capital of the
Partnership, and shall be initially equal to the Percentage Interest
for said Partner reflected on Schedule A.
(c) In the event that any Partner fails to make any Capital
Contribution for which a capital call has been made pursuant to this
Section 2.6 within the time specified, the Partner so failing to make
such Capital Contribution shall be a "Delinquent Partner", and the
"Non-Delinquent Partners", as defined in Section 1.1(w), shall have the
right to exercise the relevant remedies set forth in Article X at such
time.
(d) No Limited Partner shall be obligated to restore to the
Partnership any deficit balance in its Capital Account. See Section 5.3
hereof.
<PAGE>
Section 2.7 Withdrawal; Loans. No Partner shall be entitled to withdraw
from the Partnership or become entitled to a return of any portion of its
Capital Account or to receive any Distributions from the Partnership, except as
specifically provided herein. No loan or advance made to the Partnership by any
Partner shall constitute Capital Contribution.
ARTICLE III
RIGHTS, POWERS AND DUTIES OF PARTNERS
Section 3.1 Rights, Powers and Duties of the General Partner. During
the continuance of this Partnership, the rights and liabilities of the General
Partner shall be as follows:
(a) The General Partner shall manage the Partnership business
and shall, on behalf and in the name of the Partnership, carry out the
purposes of the Partnership and perform all acts and perform all
contracts and other undertakings which are necessary or advisable or
incidental to the business of the Partnership.
(b) Without limitation of the powers of the General Partner
described in subparagraph (a) above, the General Partner acting for, in
the name and on behalf of, the Partnership, is hereby authorized:
(i) INTENTIONALLY DELETED;
(ii) to acquire the Property and to acquire by
purchase other property which may be necessary, convenient or
incidental to the accomplishment of the purposes of the
Partnership, to lease or otherwise deal with any such other
property, and to sell, assign or transfer same;
(iii) to borrow in the name of the Partnership on an
unsecured basis other amounts not to exceed $50,000 and the
terms of such indebtedness are comparable to terms available
for similar financing by non-affiliated third party lenders
(and it is agreed that subject to Section 3.2 the lender may
be a Partner or an Affiliate thereof), and to issue evidences
of indebtedness, provided, however, in all cases such
indebtedness shall be incurred only in furtherance of any or
all of the purposes of the Partnership;
(iv) to borrow in the name of the Partnership the
approximate amount of $3,492,000.00 from First Union National
Bank of North Carolina secured by a first lien on the Property
("Partnership Loan") on such terms as the General Partner may
in its sole discretion deem necessary and advisable on behalf
of the Partnership, and to execute any and all documents
necessary in connection with the Partnership Loan;
<PAGE>
(v) to enter into any kind of activity and to perform
and carry out contracts of any kind necessary to, or in
connection with, or incidental to the accomplishment of the
purposes of the Partnership;
(vi) to employ, engage, retain or deal with any
Persons, firms or corporations, including, without limitation,
any Affiliate of any Partner (subject to Section 3.2 hereof)
to act as agents, managers, or other service personnel, or
accountants, lawyers or other consultants; without limiting
the generality of the foregoing, the General Partner shall be
authorized to engage, on behalf of the Partnership, Today
Management, Inc. to act as servicing agent or manager for the
Partnership, provided that such engagement is made on terms
consistent with prevailing terms available in similar
arms-length transactions;
(vii) to establish, maintain, deposit into, sign
checks or otherwise draw upon Partnership bank accounts and
execute or accept any instrument or agreement incident to the
Partnership business and in furtherance of its purposes;
without limiting the foregoing, the General Partner may cause
cash funds of the Partnership to be deposited in bank accounts
selected by the General Partner;
(viii) to procure and maintain such insurance as may
be available in such amounts and covering such risks as are
deemed appropriate by the General Partner;
(ix) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims
or demands of or against the Partnership;
(x) to prepare or have prepared and file all tax
returns for the Partnership (but not the tax returns or
information returns of the individual Partners) and make all
tax elections under the Code, or any successor thereto as the
General Partner shall, in its sole discretion, deem to be in
the best interest of the Partners; or
(xi) by written instrument, to authorize a Partner
who is not a General Partner to take any action (and to
exercise his discretion in so doing) that the General Partner
could take hereunder with respect to the matters described in
Sections 3.1(b)(i) through (v); provided, however that such
authorization shall be limited to one transaction or a series
of transactions described in such authorization.
<PAGE>
(c) The General Partner is hereby designated as the "tax
matters partner" of the Partnership for all purposes of the Code. All
Partners consent to such designation and agree to take any such further
action as may be required by regulation or otherwise to effectuate such
designation. All expenses incurred by the General Partner in its
fulfillment of these capacities shall be reimbursed to the General
Partner by the Partnership.
(d) The General Partner shall devote to the Partnership such
time as may be necessary for the proper performance of its duties as
set forth herein. No provision of this Agreement shall require the
officers, directors, shareholders or other Affiliates of the General
Partner to devote his or her full time activities to the conduct of the
affairs of the Partnership or limit his or her activities in other
business activities. The General Partner shall not engage in any other
business or activity other than as general partner of the Partnership.
The Partners understand that Affiliates of the General Partner own
other similar properties in the area of the Property which compete for
tenants. As a result certain conflicts could arise under circumstances
where an existing tenant moves or a potential tenant is directed to
another property owned by Affiliates of the General Partner. Affiliates
of the General Partner may engage in any other business ventures of any
kind, nature or description, including real estate ventures which may
compete with the Partnership.
(e) The General Partner may at any time call a meeting of the
Partners or for a vote of the Partners without a meeting on matters
with respect to which they are required or permitted to vote or consent
to, and shall call for such meeting or vote following receipt of
written request therefor from a Majority-in-Interest of the Limited
Partners. The General Partner shall notify all Partners as to the time
and place of the Partnership meeting, if called, and the general nature
of the business to be transacted thereat, or if no such meeting has
been called, of the matter or matters to be voted upon and the date
upon which the vote will be counted. Actions taken by consent shall be
effective if in writing and signed by Partners having the power to
approve such actions by vote at a meeting of the Partners; provided,
however, that notice of taking such action by consent shall promptly be
given to all Limited Partners who have not consented. All expenses of
the voting and such notification shall be borne by the Partnership.
Section 3.2 Contracts and Loans with Affiliates. The General Partner
may contract on behalf of the Partnership with Affiliates of any Partner for
management, brokerage or other services without the consent of the Limited
Partners and may compensate such Persons for their services, provided that the
material terms of all such contracts and/or such compensation are comparable to
the material terms of contracts and/or compensation charged by non-affiliated
third parties for similar services. The General Partner may obtain loans on
behalf of the Partnership from any Partner and/or any Affiliate of any Partner
without the consent of the Limited Partners, provided such loans have material
terms which are comparable to terms for similar financing available to the
Partnership from non-affiliated third parties.
<PAGE>
Section 3.3 Restrictions and Limitations on Limited Partners. During
the continuance of this Partnership, the Limited Partners shall take no part in
the conduct or control of the Partnership business, other than as specifically
requested by the General Partner, shall have no authority or power to act for or
to bind the Partnership, shall be liable only to make Capital Contributions in
accordance with the provision hereof, shall not be required to lend any other
funds to the Partnership, and shall not be liable for the debts, liabilities,
contracts or any other obligations of the Partnership. The Limited Partners
shall have no rights other than those provided for herein or in any separate
written agreement to which the General Partner and the Limited Partners are
bound, or those granted by law which are not inconsistent with any provision
hereof.
Section 3.4 Appointment of Substitute or Additional General Partner.
(a) In the event the Limited Partners appoint a substitute
General Partner pursuant to the provisions of Section 9.1 of this
Agreement, such substitute General Partner shall contribute to the
capital of the Partnership the sum of $1,000 which shall entitle such
General Partner to a one percent interest in Partnership allocations of
income and loss and Distributions accruing subsequent to the date of
contribution and the allocations and Distributions to each other
Partner shall be reduced, pro rata, by one percent in the aggregate.
The allocations of profits and losses and the Distributions provided
for in Articles IV and V hereof shall be made to the Partners, other
than the appointed General Partner, after the allocations and
Distributions are made to such appointed General Partner.
(b) If a substitute General Partner is appointed pursuant to
the provisions of Section 8.1(a). such General Partner shall have all
the rights, powers and duties as set forth in Section 3.1.
Section 3.5 Unanimous Consent
The consent of all of the Partners shall be required in order to: (a)
file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings; (b) dissolve, liquidate, consolidate, merge or
sell all or substantially all of the assets of the Partnership; (c)
engage in any other business activity; and (d) amend this Agreement.
ARTICLE IV
ALLOCATIONS
<PAGE>
Section 4.1 Allocations for Capital Account Purposes. For purposes of
maintaining Capital Accounts and in determining the rights of the Partners among
themselves, the Partnership's items of income, gain and loss shall be allocated
as follows and in the following order of priority (after giving effect to all
Capital Account adjustments attributable to contributions and distributions of
cash and property made during such fiscal year):
(a) Basic Allocation Principle. After making all allocations
listed below, items of Partnership income, deduction, gain and loss
shall be allocated to the Partners in proportion to the cash
distributions to each such Partner under Sections 5.1(a)(i) and (ii).
Notwithstanding the foregoing, for any year in which substantially all
of the assets of the Partnership are sold or the Partnership is wound
up, any remaining items of income, gain and loss shall be allocated to
the Partners so as to cause the Partners' Capital Accounts to be, as
nearly as possible, equal to the amounts to be distributed to each
Partner under Section 5.2.
(b) Minimum Gain Chargebacks. Notwithstanding any other
provision of this Article IV, if there is a net decrease in Partnership
Minimum Gain or in any Partner Nonrecourse Minimum Gain during any
fiscal year or other period, prior to any other allocation pursuant
hereto, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
an amount and manner required by Treasury Regulation Sections
1.704-2(f) or 1.704-2(i)(4) or any successor provisions. The items to
be so allocated shall be determined in accordance with Treasury
Regulation Section 1.704-2(j)(2) or any successor provision.
(c) Qualified Income Offset. Any Partner who unexpectedly
receives an adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which
causes or increases a negative balance in his or its Capital Account
shall be allocated items of income and gain sufficient to eliminate
such increase or negative balance caused thereby, as quickly as
possible, to the extent required by such Treasury regulation. It is the
intention of the parties that this allocation provision constitute a
"qualified income offset" within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(d).
(d) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any fiscal year or other period shall be allocated to
the Partner that made, guaranteed or otherwise bears the economic risk
of loss with respect to the loan to which such Partner Nonrecourse
Deductions are attributable in accordance with principles under
Treasury Regulation Section 1.704-2(i) or any successor provision.
(e) Nonrecourse Deductions. Any Nonrecourse Deductions for any
fiscal year or other period shall be allocated to the Partners in
proportion to their Percentage Interests.
<PAGE>
(f) Section 704(c) Compliance. In accordance with Section
704(c) of the Code and the applicable Treasury Regulations thereunder,
income, gain, loss, deduction and tax depreciation and amortization
with respect to any property contributed to the capital of the
Partnership, or with respect to any property which has a Gross Asset
Value different than its adjusted tax basis, shall, solely for federal
income tax purposes, be allocated among the Partners so as to take into
account any variation between the adjusted tax basis of such property
to the Partnership and the Gross Asset Value of such property.
(g) Curative Allocations. To minimize any economic
distortions, special allocations pursuant to Sections 4.1(b), 4.1(c)
and 4.1(d) shall be taken into account in computing subsequent
allocations of income, gain and loss pursuant to this Section 4.1, so
that the net amount of income, gain and loss allocated to each Partner
pursuant to this Section 4.1 shall, to the extent possible, be equal to
the net amount that would have been allocated to each such Partner
pursuant to this Section 4.1 if such special allocations had not
occurred.
(h) Basis Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section
732(d), 734 or 743 is required to be taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis) and such gain or loss shall be specially allocated to the
General Partner and Limited Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(i) Minimum General Partner Share. Notwithstanding anything in
this Article IV, for each fiscal year (or part thereof) of the
Partnership, not less than one percent (1%) of the income or loss of
the Partnership shall, in all events, be allocated to the General
Partner pursuant to this Article IV.
Section 4.2 Allocations Among Partners. Profits and losses that are
allocated to the Partners shall be allocated among the Partners, pro rata,
according to their relative Percentage Interests, subject to adjustment pursuant
to Section 10.1 (relating to failures to make additional Capital Contributions).
ARTICLE V
DISTRIBUTIONS
<PAGE>
Section 5.1 Non-Liquidating Distributions. The General Partner shall
make Distributions to each Partner who was a Partner during a fiscal quarter of
the Partnership as soon as reasonably practical, but not later than thirty (30)
days after the end of such quarter, in an amount equal to the Cash Available for
Distribution. Such Distribution shall be made to the Partners on a pro rata
basis according to their respective Percentage Interests at the date of such
Distribution.
Section 5.2 Distribution Upon Refinance. Upon the refinance of the
Property, the Cash Available for Distributions shall be made to the Partners on
a pro rata basis.
Section 5.3 Distributions Upon Dissolution. Upon the dissolution of the
Partnership pursuant to Section 9.1, the assets of the Partnership shall be
distributed to the Partners on a pro rata basis according to their respective
Percentage Interests at the date of dissolution. To the extent consistent with
the foregoing, such distributions shall be made in proportion to the Partners'
positive Capital Accounts (after giving effect to all contributions,
Distributions, allocations and other Capital Account adjustments for all taxable
years, including the year during which such liquidation occurs) in compliance
with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2). Such assets shall be
distributed on the basis of the fair market value thereof (without taking Code
Section 7701(g) into account), and any Partner entitled to any interest in such
assets shall receive such interest therein as a tenant-in-common with all other
Partners so entitled. The fair market value of such assets shall be determined
in the manner set forth in Section 6.3.
Section 5.4 Restoration of Limited Partners' Capital Accounts. No
Limited Partner shall ever be required to contribute to the Partnership the
amount necessary to restore his Capital Account balance to zero.
Section 5.5 Distributions to Limited Partners. Distributions made to
the Limited Partners shall be made among the Limited Partners, pro rata,
according to their relative Capital Contributions, subject to adjustment
pursuant to Section 10.1 (relating to failure to make additional Capital
Contributions).
ARTICLE VI
BOOKS AND RECORDS ACCOUNTING TAX ELECTIONS APPRAISALS ETC.
Section 6.1 Tax Status And Reports; Tax Elections.
(a) The General Partner shall prepare or cause to be prepared
all tax returns and statements, if any, which must be filed on behalf
of the Partnership with any taxing authority.
(b) The General Partner shall, in its sole discretion,
determine whether to make any available election pursuant to the Code,
including, but not limited to, the elections under Code Sections 108,
168, 709, 734, 743, 754 and 1017.
<PAGE>
Section 6.2 Accounting.
(a) The initial tax year of the Partnership shall end December
31, 1995 and thereafter the tax year shall end on December 31 of each
year, unless a change to a different tax year is mandated under the
Code.
(b) The books of accounts of the Partnership shall be kept and
maintained at all times at the place or places approved by the General
Partner. The books of accounts shall be maintained on the method of tax
accounting selected by the General Partner.
(c) Each Partner shall have the right at all reasonable times,
upon twenty-four hours' written notice, during the usual business hours
to audit, examine and make copies of or extracts from the books of
account of the Partnership. Such right may be exercised through any
agent or employee of such Partner or by an independent certified public
accountant designated by such Partner. Each Partner shall bear all
expenses incurred in any examination made for such Partner's account.
Section 6.3 Determination of Fair Market Value. The fair market value
of an interest in the Partnership for purposes of this Agreement shall be
determined by the General Partner and a Majority-in-Interest of the Limited
Partners. If the General Partner and a Majority-in-Interest of the Limited
Partners agree upon a fair market value for an interest in the Partnership, the
fair market value shall be as so agreed. If, within thirty (30) days of the
event which requires that the fair market value of the Partnership interest be
determined, the General Partner and a Majority-in-interest of the limited
Partners fail to agree as to the fair market value of the Partnership Interest
or fail to agree upon an appraiser to determine such fair market value, then the
fair market value of an interest in the Partnership shall be determined by such
other means as the General Partner and a Majority-in-Interest of the Limited
Partners shall determine.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification.
<PAGE>
(a) The General Partner (which, for purposes of this Article
VII shall be deemed to include the General Partner and its successors,
permitted assigns, employees, officers, partners, shareholders of
corporate partners, directors, agents and Affiliates) shall not be
liable, responsible or accountable in damages or otherwise to any of
the Partners for any loss or damage incurred by reason of a act or
omission performed or omitted in good faith on behalf of the
Partnership and in a manner reasonably believed by the General Partner
to be (i) within the scope of the authority granted to the General
Partner by this Agreement or (ii) in the best interests of the
Partnership. The Partnership shall indemnify and save harmless the
General Partner from any liability, loss, damage or expense incurred by
the General Partner by reason of any such act or omission, except where
such act or omission is attributable to the willful misconduct, gross
negligence or bad faith on the part of the General Partner; provided,
however, that the satisfaction of any indemnification or saving
harmless shall be made from and shall be limited to the Partnership's
assets and no Partner shall have any personal liability on account
thereof.
(b) The Partnership shall indemnify and save harmless each of
the Limited Partners from any liability, loss, damage or expense
incurred by any Limited Partner by reason of any action, proceeding or
claim brought against a Limited Partner arising out of or in connection
with the business and operation of the Partnership except where such
action, proceeding or claim is based upon or attributable to (i) the
willful misconduct, gross negligence or bad faith of the Limited
Partner seeking indemnity or (ii) the taking of any actions by such
Limited Partner in violation of or exceeding the authority granted by
Section 3.3; provided, however, that the satisfaction of any
indemnification or saving harmless shall be made from and shall be
limited to the Partnership's assets and no Partner shall have any
personal liability on account thereof.
(c) Notwithstanding the foregoing (a) and (b), the
Partnership's obligation to indemnify a Partner (i) is fully
subordinated to the Partnership's obligations and payments on the
Partnership Loan and (ii) shall not constitute a claim against the
Partnership if cash flow after paying the Partnership Loan is
insufficient to pay such indemnity.
ARTICLE VIII
TRANSFERABILITY OF PARTNERSHIP INTERESTS
WITHDRAWAL AND RELATED MATTERS
Section 8.1 Transferability of Partnership Interests; Withdrawal.
(a) (i) In the event the General Partner commits a
Specified Default, other than a Specified Default defined in
Section 1.1(aj)(v) of this Agreement, the Majority-in-Interest
of the Limited Partners shall have the following rights which
may be exercised singularly or cumulatively:
(A) Remove the General Partner as the
general partner of the Partnership, in which event
the general partnership interest of the General
Partner shall he converted to a limited partnership
interest entitled to allocations of profit and loss
and Distributions in proportion to the General
Partner's Percentage Interest;
<PAGE>
(B) Exercise any other rights or remedies
afforded by law or equity, including causing the
dissolution of the Partnership in accordance with
Section 9.1.
(ii) In the event the General Partner commits a
Specified Default defined in Section 1.1(aj)(v) hereof, the
Majority-in-Interest of the Limited Partners shall have the
following rights which may be exercised singularly or
cumulatively:
(A) Remove the General Partner as the
general partner of the Partnership, in which event
the general partnership interest of the General
Partner shall be converted to a limited partnership
interest, and such interest shall be subject to the
provisions of Article X hereof; and/or
(B) Exercise any other rights or remedies
afforded by law or equity, including causing the
dissolution of the Partnership in accordance with
Section 9.1.
(b) Notwithstanding the foregoing, the General Partner may not
be removed unless (i) another Partner shall give the General Partner
written notice of the alleged grounds for removal for cause, (ii) in
the case of events described in subsection (i) or (ii) of Section
1.1(aj) hereof, the General Partner shall fail, after the receipt of
such notice, to cure the cause for removal promptly and in any event
within thirty (30) calendar days after such written notice, or when the
cure for such cause for removal would reasonably require more than
thirty (30) calendar days to complete, if the General Partner fails to
commence to cure such cause for removal promptly, and in any event
within said thirty (30) calendar day period, and thereafter to
diligently prosecute the same to completion, and (iii) a substitute
General Partner satisfying the requirements of Section 1.1 (o) shall be
appointed.
(c) If the General Partner is removed from the Partnership, it
shall be liable for all of its obligations and liabilities hereunder
incurred or acquired prior to the date of withdrawal and for any damage
arising out of any breach of this Agreement (excluding, however,
obligations arising under Section 2.6 hereof, the remedies for the
breach of which are set forth in Section 10.1). The Partnership may
recover from the General Partner withdrawing in violation of this
Agreement damages for breach of this Agreement and offset the damages
against the amount otherwise distributable to the General Partner or
payable to the General Partner as the purchase price for the General
Partner's Partnership interest.
<PAGE>
(d) No Transfer of all or part of a Partner's interest in the
Partnership may be effected except as permitted in this Section 8.1(d),
and then only if a counterpart of the instrument of transfer, executed
and acknowledge by the parties hereto, is delivered to the Partnership.
A permitted Transfer shall be effective as of the date specified in the
instruments relating there to.
(i) The General Partner shall not withdraw from the
Partnership. The General Partner shall not transfer any part
or all of its general partnership interest, and no Partner
shall Transfer any part or all of its limited partnership
interest except as hereinafter provided. The following
Transfers of a limited partnership interest are permitted:
(A) The Transfer by a Partner of all or part
of its limited partnership interest to any person
with the consent of the General Partner (which
consent may be given or withheld in the sole,
absolute and unfettered discretion of the General
Partner).
(B) The Transfer by a Partner of all or part
of its limited partnership interest, whether on death
or inter vivos (in trust or otherwise), to or for the
benefit of an Affiliate of such Partner.
(C) Any Transfer of the limited partnership
interest of a deceased or incapacitated Partner to
his executors, administrator or legal representatives
or by any of such persons to accomplish any transfer
described under subparagraph (B) above (and as used
in this Section 8.1(d), "transferee" shall include
such Persons). However, (x) the effectiveness of any
of the aforesaid permitted Transfers may be
conditioned, in the discretion of the General
Partner, upon receipt by the Partnership of an
opinion (the cost of which shall be borne by the
transferor), satisfactory in form and substance to
the General Partner, to the effect that such
transaction will not violate the Securities Act of
1933 (the "Securities Act") or any other applicable
securities laws, and (y) no Transfer shall be
permitted if, in the reasonable opinion of counsel to
the Partnership (which may be secured by the General
Partner, in its discretion, at the expense of the
Partnership), the Partnership's continued tax status
as a partnership for Federal income tax purposes
would be jeopardized by such Transfer.
(ii) Notwithstanding anything herein to the contrary,
no Partner shall have the right to Transfer all or part of his
or its Partnership interest to any person if after such
Transfer either the Partner (but only if such Partner
continues to hold an interest in the Partnership) or the
transferee would hold a Partnership interest of less than one
percent (1%) in the Partnership.
<PAGE>
(iii) Notwithstanding anything herein to the
contrary, no Partner shall have the right to Transfer all or
part of his or its Partnership interest if such Transfer is
prohibited or would result in a default under the provisions
of any loan to the Partnership.
(iv) Except as provided in Article X, no transferee
of all or part of the limited partnership interest of any
Partner shall have the right to become a substitute Limited
Partner, unless:
(A) the transferee has stated such
intention in the instrument of assignment;
(B) the transferee has executed an
instrument reasonably satisfactory to the General
Partner accepting and adopting the terms and
provisions of this Agreement;
(C) the transferor to transferee has paid
any reasonable expense in connection with the
admission, of the transferee as a Limited Partner;
and
(D) in the case of an assignee or transferee
who is not otherwise a Partner, the General Partner
consents to such Person's becoming a substitute
Limited Partner (in the sole, absolute and unfettered
discretion of the General Partner).
Until an assignee of a limited partnership interest has been
admitted to the Partnership as a substitute Limited Partner
pursuant to the provisions hereof, the assignor shall continue
to be recognized by the Partnership as a Limited Partner.
(v) If the General Partner should acquire an interest
as a Limited Partner, the General Partner shall, with respect
to such interest, enjoy all of the rights, obligations and
duties of a Limited Partner to the extent of such interest.
Section 8.2 Transfers Causing a Partnership Termination. Without the
consent of the General Partner, no Partner shall transfer, sell assign, pledge
or otherwise dispose of any portion of the Partner's interests in the
Partnership if a termination of the Partnership would result pursuant to Code
Section 708(b)(1)(B).
<PAGE>
Section 8.3 Distributions and Allocations in Respect to Transferred
Interests. If any interest in the Partnership is transferred during any
accounting period in compliance with the provisions of this Article VIII,
profits, losses, each item thereof and all other items attributable to the
transferred Partnership interests for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interest during the period in accordance with Code Section 706(d), using any
convention permitted by law and selected by the General Partner.
Section 8.4 Pledge of Partnership Interests. Notwithstanding any
provision of this Agreement to the contrary, each of the Partners shall pledge
his, her or its interests in the Partnership to secure the Partnership's
obligations to one or more lenders at such times and upon such terms and
conditions as the General Partner may deem necessary in order to accomplish the
purposes of the Partnership. No pledge pursuant to the provisions of this
Section 8.4 shall result in the Partner ceasing to be, a Partner or forfeiting
its power to exercise any rights or powers as a Partner until such time as any
secured party exercises its rights in the collateral.
ARTICLE IX
DISSOLUTION AND WINDING UP
Section 9.1 Dissolution. The Partnership shall dissolve as follows:
(a) Upon the expiration of the term of the
Partnership;
(b) Upon the sale or other disposition of all
or substantially all of the Partnership's assets to any Person; and
(c) By operation of law.
Upon the removal of the last remaining General Partner, or upon the
death, incompetency or dissolution of the last remaining General Partner, the
Partnership shall not dissolve, and (i) the affected General Partner's interest
shall be automatically converted to a limited partnership interest, and (ii) the
other Partners shall by vote of a Majority-in-Interest of the Limited Partners
appoint a substitute General Partner within ninety (90) days of the occurrence
of such event, in which event the Partnership shall be reconstituted in
accordance with Section 8.3 of the Partnership Act.
Section 9.2 Winding Up.
(a) Upon a dissolution of the Partnership, the General Partner
shall take full account of the Partnership's liabilities and assets and
such assets shall be liquidated as promptly as is consistent with
obtaining the fair market value thereof and the proceeds therefrom
shall be applied and distributed in the following order of priority:
(i) To the payment and discharge of all of the
Partnership's debts and liabilities to creditors,
including the Partnership Loan;
<PAGE>
(ii) To the debts and liabilities to creditors
who are Partners;
(iii) To the establishment of any necessary reserves
deemed appropriate by the General Partner; and
(iv) To the Partners in accordance with Section 5.2.
(b) Notwithstanding the foregoing, at the election of the
General Partner, the General Partner may, upon the dissolution of the
Partnership, distribute the Partnership's liabilities and assets
consisting of promissory notes, other evidences of indebtedness and
other securities (and not assets, tangible or intangible, used in the
operation of the business of the Partnership) to the Partners in kind
in lieu of liquidating the Partnership's assets as provided in
subsection (a) of this Section, provided that all such in-kind
Distributions are made to the Partners in accordance with Section
5.2(a).
ARTICLE X
FAILURE TO MAKE REQUIRED CONTRIBUTIONS
Section 10.1 Options of Non-Delinquent Partners. If any Limited Partner
fails to timely contribute all or any portion of any capital made pursuant to
Section 2.6 hereof, whenever such capital call is made (such Limited Partner
being hereinafter referred to as the "Delinquent Partner"), then the other
Partners (the "Non-Delinquent Partners") at their option, at any time within the
ten (10) day period following the date of default and prior to the date such
default is cured, may loan all or a portion of the required additional capital
not paid by the Delinquent Partner to the Partnership in which case said loan
shall be deemed to have been made on behalf of the Delinquent Partner and shall
be repaid to the Non-Delinquent Partners who contribute (the "Subscribing
Partners"), together with interest on the unpaid balance of such loan at the
NCNB Texas, N.A. prime rate ("Prime Rate") plus two percent (2%) or the maximum
legal rate, if less, out of the first available cash distributions from the
Partnership which would otherwise have been paid to said Delinquent Partner and
said Delinquent Partner shall not be entitled to receive any cash distribution
from the Partnership until such loan and accrued interest has been paid in full.
Notwithstanding the foregoing, if the Subscribing Partners have not been repaid
in full by the end of the sixth (6th) month following the date of such loan,
such Subscribing Partners shall have the right to: (i) pursue legal action
against the Delinquent Partner to collect any unpaid loan in such event the
prevailing party shall be entitled to recover its attorney's fees relating to
such legal action; or (ii) convert the unpaid portion of the loan, and accrued
interest thereon, to an additional Capital Contribution in accordance with the
provisions of Section 10.2.
<PAGE>
Section 10.2 Additional Contributions. If all or any portion of the
required Capital Contributions are not loaned to the Partnership on behalf of
the Delinquent Partner pursuant to the foregoing provisions, the Non-Delinquent
Partners may, within fifteen (15) days thereafter, make an additional Capital
Contribution to the Partnership in an amount equal to the said Delinquent
Partner's pro-rata share of the required additional sums (the "Additional
Capital Contribution"). In such event, the Percentage Interest of the Delinquent
Partner shall be reduced proportionately, for all Partnership purposes,
including profits and losses, and the Percentage Interest of the Non-Delinquent
Partners who contributed all or a portion of the Delinquent Partner's share of
the required funds shall be proportionately increased. For the purposes of the
foregoing sentence, the percentage reduction and corresponding increase in the
Percentage Interest shall be adjusted so that each is proportionate to the
Partners aggregate Capital Contribution. Notwithstanding anything contained
herein to the contrary, for a period of six (6) months after an adjustment in a
Delinquent Partner's Percentage Interest hereunder, a Delinquent Partner shall
have the right to repurchase the reduced portion of his Percentage Interest by
delivering to the Non-Delinquent Partners an amount equal to two (2) times the
amount of the Additional Capital Contribution contributed by such Non-Delinquent
Partners.
ARTICLE XI
INVESTMENT REPRESENTATION AND POWER OF ATTORNEY
Section 11.1 Investment Representation. Each of the Limited Partners
represents that it is acquiring or has acquired its interest as a Partner for
its own account as an investment and not with a view to the distribution or
resale thereof.
Section 11.2 Power of Attorney. Each Limited Partner hereby irrevocably
constitutes and appoints the President and any other officer of the General
Partner, as its true and lawful attorney (which appointment is coupled with an
interest and shall survive the death or incapacity of the Limited Partner making
such appointment) and empowers and authorizes such attorney, or any one of them,
in its name, place and stead to make, execute, sign, acknowledge and file in
such place or places as may be required by law:
(a) a certificate of limited partnership and any amendments
thereto, and such other certificates or instruments as may be necessary
to the conduct of the Partnership business (including without
limitation, any documents necessary to qualify the Partnership to
transact business as a foreign limited Partnership in any jurisdiction
where the General Partner deems such qualification to be necessary or
appropriate), and upon termination of the Partnership, a certificate of
dissolution, as required under the Partnership Act;
(b) documents of Transfer of a Limited Partner's interest and
all other documents to effect such Transfer, but only if there has been
compliance with the applicable provisions of this Agreement;
<PAGE>
(c) (i) all amendments to this Agreement regarding a change in
the name of the Partnership, its address, the address of the registered
office or agent or the address of the General Partner or any Limited
Partner, it being agreed that such amendments shall be effective
without the consent of the Limited Partners, (ii) all amendments to
this Agreement for the purpose of ensuring that the allocations for
Federal income tax purposes will be upheld under Section 704(b) of the
Code, any successor statute, and any rules, regulations or
interpretations thereof or the admission or withdrawal of a Limited
Partner, it being agreed that such amendments shall be effective
without the consent of the Limited Partners, and (iii) all other
amendments adopted in accordance with the applicable provisions of this
Agreement; and
(d) restatements of this Agreement which do not amend this
Agreement but which incorporate into such restated agreement the terms
of this Agreement and all amendments adopted in accordance with the
terms of this Agreement.
Each Limited Partner agrees to execute, acknowledge and file such
additional documents as are required by the General Partner, from time to time,
in its discretion, for the purpose of further evidencing this appointment and
ensuring that it constitutes an enforceable durable power of attorney under
applicable state law.
ARTICLE XII
GENERAL
Section 12.1 Notices.
(a) All notices, requests, consents and other communications
hereunder to a Partner shall be in writing and shall be personally
delivered, or sent by certified mail, postage prepaid, addressed to the
person or persons to whom such notice is to be given as follows (or at
such other address as shall be stated in a notice similarly given).
(i) if to the General Partner, such notice
shall be given at the address indicated on Schedule A
attached hereto; and
(ii) if to the Limited Partners, such notice shall be
given to each of the Limited Partners at their respective
residence addresses indicated on Schedule A attached hereto.
<PAGE>
(b) All notices, requests, consents and other communications
hereunder shall be deemed given upon the earlier to occur of (i)
receipt by the party to whom such notice is directed or (ii) the second
day following deposit thereof with the U.S. Postal Service as
aforesaid. Each party, by notice duly given in accordance herewith, may
specify a different address for the giving of any notice hereunder.
Section 12.2 Governing Law. THIS AGREEMENT AND THE OBLIGATIONS OF THE
PARTNERS HEREUNDER SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS. THE PARTIES HEREBY CONSENT TO JURISDICTION
IN DALLAS COUNTY, TEXAS, FOR PURPOSES OF ANY LITIGATION ARISING UNDER THIS
AGREEMENT, AND HEREBY WAIVE ANY OBJECTIONS TO VENUE IN SUCH COUNTY.
Section 12.3 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto relative to the formation of the
Partnership, and no amendment hereto shall be valid or binding unless in writing
and signed by all partners.
Section 12.4 Waiver. No consent or waiver, express or implied, by any
Partner to or of any breach or default by any other Partner in the performance
by such other Partner of its obligations hereunder shall be deemed or construed
to be a consent or waiver to or of any other breach or default in the
performance by such other Partner of the same or any other obligation of such
Partner hereunder. Failure on the part of any Partner to object to or notify any
other Partner of any act or failure to act of any other Partner or to declare
any other Partner in default, irrespective of how long such failure continues,
shall not constitute a waiver of such Partner of his rights hereunder.
Section 12.5 Severability. If any provision of this Agreement or the
application hereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 12.6 Termination. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and vice versa. Titles of
Articles and Sections are for convenience only, and neither limit, nor amplify
the provisions of the Agreement itself, and all references herein to Articles,
Sections or subdivisions refer to Articles, Sections or subdivisions of this
Agreement unless specific reference is made to Articles, Sections or
subdivisions of another document or instrument.
Section 12.7 Binding Agreement. Subject to the restrictions on
Transfers and encumbrances set forth herein, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
<PAGE>
Section 12.8 Counterparts. This Agreement may be executed in any number
of counterparts and each such counterpart shall for all purposes constitute one
Agreement, binding on all of the Partners, notwithstanding that all Partners are
not signatories to the same counterpart. All references herein to this Agreement
are deemed to refer to all such counterparts.
Section 12.9 Amendments. No amendment (other than specified in Section
11.2(c)), modification or waiver of this Agreement, or any part hereof, shall be
valid or effective unless in writing and signed by the General Partner and the
Limited Partners. The unanimous consent of the Partners shall be required to
make any amendment which would render any Limited Partner personally liable for
Partnership obligations or which would allow for the creation of such personal
liability to a Limited Partner without such Limited Partner's consent.
Section 12.10 Voting. Any time the Vote of the Majority-In-Interest of
the Limited Partners is required, the General Partner shall send notice to the
Limited Partners advising in detail of the matter to be voted on, together with
a ballot to be used in voting "for" or against" the matter to be voted on. If a
Limited Partner fails to return the ballot within fourteen (14) days after the
date of mailing of the notice, said Limited Partner will be deemed to have voted
"for" or "in favor of" the matter described in the notice.
EXECUTED AND EFFECTIVE as of this 31st day of August, 1995.
GENERAL PARTNER:
TODAY GREEN OAKS GP, INC.
a Texas corporation
By:__________________________
<PAGE>
TODAY GREEN OAKS, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
LIMITED PARTNER:
ARISTOCRAT
FUND I, L.P., a Texas limited partnership
By:
Aristocrat Fund I GP, Inc., General Partner
By:______________________________
ADDRESS:
17400 Dallas Parkway
Suite 216
Dallas, Texas 75287
<PAGE>
SCHEDULE A
TO
TODAY GREEN OAKS, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
Initial Initial Capital
Partnership Contribution
General Partner Percentage Interest
Today Green Oaks GP, Inc. 1% $ 9,600.00
17400 Dallas Parkway
Suite 216
Dallas, Texas 75287
Limited Partners
Aristocrat Fund I, L.P. 99% $ 950,400.00
17400 Dallas Parkway
Suite 216
Dallas, Texas 75287
TOTAL 100% $ 960,000.00
<PAGE>
Exhibit 10.3
MBG-333888.1
001705-00129
- 1 -
SECOND AMENDMENT TO
ACQUISITION AGREEMENT
by and between
SIX FLAGS JOINT VENTURE, TODAY MELBOURNE PLAZA, L.P.,
TODAY NORTHWEST CROSSING, L.P., TODAY GREEN OAKS, L.P.,
TODAY PARKWOOD, L.P., and TODAY RICHWOOD, L.P.,
as Seller,
and
UNITED INVESTORS REALTY TRUST,
as assignee of Buyer
This Second Amendment to Acquisition Agreement (the "Amendment") is
made to be effective as of the 31st day of December, 1998. This Amendment amends
the terms of that certain Acquisition Agreement dated as of October 16, 1998
(the "Agreement") by and among SIX FLAGS JOINT VENTURE, TODAY MELBOURNE PLAZA,
L.P., TODAY NORTHWEST CROSSING, L.P., TODAY GREEN OAKS, L.P., TODAY PARKWOOD,
L.P., and TODAY RICHWOOD, L.P. (collectively, the "Seller"), and CENTENNIAL
ACQUISITION CORP., a Texas corporation, which assigned its interests therein to
UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust (the
"Buyer") . The capitalized terms used herein have the same meaning given to such
terms in the Agreement.
This Amendment sets forth the following terms and conditions:
1. Allocation of Purchase Price Among Shopping Centers. The parties agree
that the Purchase Price for the five below-listed shopping centers
comprising the Property to be conveyed at Closing, equals the sum of
$24,400,000 and is allocated among such shopping centers as follows:
(a) Parkwood Square Shopping Center - $ 8,650,000
(b) Richwood Shopping Center - $ 4,800,000
(c) Green Oaks Shopping Center - $ 4,900,000
(d) Melbourne Plaza Shopping Center - $ 3,300,000
(e) Northwest Crossing Shopping Center - $ 2,750,000
-----------
TOTAL $24,400,000
2. Closing of Melbourne Plaza and Northwest Crossing Shopping Centers.
This Amendment is being executed and delivered in connection with the
Closing of the sale of Melbourne Plaza and Northwest Crossing Shopping
Centers in accordance with the terms of the Agreement.
3. Contaminated Areas. The parties acknowledge that a due diligence review of
the Parkwood Square, Green Oaks and Richwood Shopping Centers (the "Affected
Shopping Centers") revealed that certain areas thereof (the "Contaminated
Areas") were contaminated with substances commonly defined or classified as
pollutants, hazardous wastes, materials or substances under present or future
applicable federal and state environmental laws ("Hazardous Materials"). A legal
description of each of the Contaminated Areas are annexed hereto as Exhibit's
"A-1" through "A-3" hereof. (The remaining portions of the Affected Shopping
Centers are referred to herein as the "Uncontaminated Areas".) The parties agree
that the following sets forth the portion of the Purchase Price (the "Carve-Out
Amounts") allocated to each of the Affected Shopping Centers which is associated
with the Contaminated Areas:
(a) Parkwood Square Shopping Center - $130,000
(b) Richwood Shopping Center - $143,000
(c) Green Oaks Shopping Center - $ 88,000
--------
Total $361,000
As described below, as of the date hereof, in respect to each of the
Affected Shopping Centers, Buyer has paid to Seller in cash the Cash
Portion of the Purchase Price prescribed under the terms of the
Agreement. The term "Cash Portion of the Purchase Price" means in
respect to each of the Affected Shopping Centers, the Purchase Price,
less the aggregate of the following: (i) the Carve-Out Amount allocated
to such project, (ii) the unpaid principal balance of the debt
associated with such project which is to be assumed by Buyer at
Closing, each of which assumed debt is described on Exhibit "B" (the
"Project Debt"), and (iii) the sums which Seller agreed to pay at
Closing and would have been paid if the Closing occurred as of the date
hereof under the terms of the Agreement, including without limitation,
the title insurance premium and one-half of the estimated amount of the
loan assumption costs, including lender's attorneys' fees ("Seller's
Closing Costs"). Buyer has also deposited in escrow the Carve-Out
Amounts, as provided in Section 4(c)(i).
4. Affected Shopping Centers. As of the date hereof, the parties have
undertaken the following transactions in respect to each of the
Affected Shopping Centers:
(a) Limited Partnership Interests of Today Green Oaks, L.P. As of the
date hereof, (i) that certain First Amendment to Limited Partnership
Agreement of Today Green Oaks, L.P. (the "Green Oaks Partnership"), a
copy of which is annexed hereto as Exhibit "C", has been executed and
delivered by the parties thereto, whereby the Buyer became an
additional limited partner of the Green Oaks Partnership, holding all
of the limited partnership interests therein, and the sole limited
partner thereof withdrew, and (ii) that certain Declaration of Trust, a
copy of which is annexed hereto as Exhibit "D", has been executed and
delivered by the parties thereto, whereby Today Green Oaks GP, Inc., a
Texas corporation, the general partner of the such partnership, on
account of consideration theretofore received, declares that it holds
for the sole benefit of the Buyer the 1% general partnership interest
of such partnership.
In consideration of the execution and delivery of such documents, as of
the date hereof Buyer has paid to Seller the Cash Portion of the
Purchase Price associated with the Green Oaks Shopping Center.
In this regard, Seller and Eric Brauss, jointly and severally,
represent and warrant to Buyer each of the following: (i) The Green
Oaks Partnership has no debts or other financial obligations except for
the Project Debt, and property service and management agreements for
the Green Oaks Project which have been delivered to Buyer;
(ii) The First Amendment to Limited Partnership Agreement of
Today Green Oaks, L.P. will vest in Buyer all of the issued and
outstanding limited partnership interests in said partnership,
and terminate any obligation of the limited partner thereof to
contribute any additional capital to such partnership; and the
Declaration of Trust evidences the beneficial ownership of Buyer
of all of the general partnership interests in said partnership;
(iii)There is no litigation pending or, to Seller's best
information, threatened against the Green Oaks Partnership or, to
the extent such litigation is pending or threatened, Seller and
Brauss, jointly and severally, indemnify and hold harmless Buyer
with respect to claims arising or accruing prior to the date
hereof;
(iv) There are no past due obligations, which are incurred or
accrued as of the date hereof, of the general partner of such
partnership to any third party other than the obligations of the
General Partner with respect to the Project Debt. After the date
hereof, Brauss agrees to promptly retire any such past due
obligations; and
(iv) There are no past due obligations or liabilities, which are
incurred or accrued as of the date hereof, of the limited partner
of the Green Oaks Partnership for the contribution of any sums to
such partnership or the performance of any obligations to any
third party for any reason. After the date hereof, Brauss agrees
to promptly retire any such past due debts or perform any such
past due obligations.
The representations and warranties made herein shall survive the
Closing.
(b) Purchase Price. The parties acknowledge that as of the date hereof,
Buyer has paid to Seller in cash the Cash Portion of the Purchase Price
for the Affected Shopping Centers. The parties have adjusted the
portion of Purchase Price allocated to each of the Affected Shopping
Centers in order to prorate the costs and expenses of such project as
of the date hereof, in accordance with the terms of the Agreement. The
deduction against the Purchase Price for Seller's Closing Costs and the
aforesaid adjustment for prorations are made with the understanding and
agreement that:
(i) Upon Closing, howsoever such Closing shall occur, either
under the terms of the Agreement, or as provided in Section
4(d)(iii), Buyer agrees to assume the Project Debt associated
with such Affected Shopping Center in accordance with the same
terms and conditions as the holder of such debt has agreed to
as of the date hereof, including the release of Seller and
Brauss thereunder on a prospective basis. If the assumption
costs charged by the holder of such debt exceed the actual
amount paid and allocated between the parties as of the date
hereof, then Seller agrees to pay one-half the excess amount
thereof upon Closing, and any other closing costs which it is
obligated to pay under the terms of the Agreement and not paid
by it or credited against the Purchase Price as of the date
hereof.
(ii) Buyer agrees to pay to the party entitled to payment of
Seller's Closing Costs, to the extent Seller has paid such
costs, if and when the Closing occurs, and the date for
prorations of such Closing shall be the date hereof.
(c) Escrow
(i) Carve-Out Deposit. Upon execution hereof, the parties have
executed an Escrow Agreement (herein so called) with the law
firm of Fishman, Jones, Walsh & Gray, P.C. ("Seller's
Attorneys"), and James, Goldman & Haugland, P.C. ("Buyer's
Attorneys"). Under the terms of the Escrow, Buyer has
deposited with Buyer's Attorneys the aggregate sum of $361,000
(the "Carve-Out Deposit") which represents the total sum of
the Carve-Out Amounts set forth in Section 3 hereof. Provided,
Seller is furnished a copy of all default notices given to
tenants of the Contaminated Areas, Eric Brauss, principal of
Seller ("Brauss"), hereby guarantees to Buyer the timely
payment of all payments provided for or required by the
tenants of the Contaminated Area of each of the Affected
Shopping Centers, without regard to whether or not such
tenants are in default under the terms of their tenant lease
("Tenant Payments"), and agrees to promptly pay to Buyer any
sums otherwise required to be paid by such tenants. If Brauss
fails to pay any such sums, in addition to any other legal
right available to it, Buyer has the right to receive a credit
against any of the Carve-Out Amounts in an amount equal to the
Tenant Payments not received by Buyer.
(ii) Closing Documents. Upon execution hereof and the Escrow
Agreement, the parties have delivered to the Seller's
Attorneys to be held in escrow the closing documents
prescribed under Section 9.3(a) of the Agreement, which shall
include the Warranty Deeds, an Assignment of Leases and an
assignment of the escrow accounts held by the holder of the
Project Debts; provided, however, it is agreed that separate
warranty deeds for the Contaminated Area and Uncontaminated
Area of each of the Affected Shopping Centers have been
executed and deposited under such escrow arrangement
(collectively, the "Closing Documents"). The Closing Documents
shall be held in escrow and delivered as described in Section
4(d)(iii) below.
(d) Environmental Matters. Upon execution of this Amendment, the
parties agree as follows:
(i) Brauss agrees, at his sole cost and expense, waiving any
right to use partnership funds and any right of contribution
or reimbursement from the Seller, to immediately undertake all
measures necessary to clean up, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substances
located in each of the Contaminated Areas of the Affected
Shopping Centers, so that once such work is completed, each
such Contaminated Area will satisfy the federal and state
environmental laws and are sufficient to cause the Texas
Natural Resources Conservation Commission to issue its
standard "closure" letter (the "TNRCC Closure Letter") stating
that such Contaminated Area is free of any Hazardous
Substances, and the condition of such area is in compliance
with applicable law ("Seller's Remediation Work"). Brauss
hereby unconditionally guarantees that the Seller will (A)
commence within 15 days of the date hereof, which commencement
shall include, but not limited to, the filing of any requisite
application with the TNRCC, the prosecution of such work, (B)
diligently prosecute to completion Seller's Remediation Work,
and (C) pay all costs and expenses which are necessary to
complete such work. The provisions of this subsection shall
survive the Closing.
(ii) To secure Seller's obligation to complete Seller's
Remediation Work, Seller has deposited in escrow with Seller's
Attorneys the aggregate cash sum of $475,000, which is
allocated to each of the three Affected Shopping Centers as
set forth below, plus an additional sum in cash equal to 50%
of such required deposit, or, at Seller's option, has
delivered to Buyer, in lieu of such 50%, an insurance policy
naming Buyer as the insured party under an environmental
"clean-up" policy providing insurance coverage for any
remediation costs in excess of the aforesaid $475,000 amount
to complete Seller's Remediation Work. Upon delivery of such
policy the additional deposits shall be refunded to Seller.
Estimated Additional
Deposit Total Cost
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Parkwood Square Shopping Center $200,000 $100,000 $300,000
Richwood Shopping Center $ 75,000 $ 37,500 $112,500
Green Oaks Shopping Center - $200,000 $100,000 $300,000
-------- -------- --------
Total $475,000 $237,500 $712,500
</TABLE>
(iii) If Brauss fails to timely undertake or diligently
prosecute to completion Seller's Remediation Work, Buyer shall
serve written notice upon Brauss notifying him of such failure
and its intention to undertake and complete Seller's
Remediation Work. If shall failure continues for a period of
five business days thereafter (other than for "force
majeure"), Buyer shall have the right to undertake and
complete Seller's Remediation Work and utilize the escrow
funds deposited with Seller's Attorneys for such purpose. Such
undertaking and utilization shall not, however, abrogate
Brauss's obligations with respect to Seller's Remediation Work
or paying for the cost thereof.
(iv) Receipt of TNRCC Closure Letter/Closing. Promptly upon
receipt by Seller and/or Buyer of the TNRCC Closure Letter for
the Contaminated Area in respect to any the Affected Shopping
Centers, the parties agree that they will promptly make
application to the holder of the Project Debt associated with
such Affected Shopping Center in order to obtain its consent
(the "Lender's Consent") to the transfer of title to such
Affected Shopping Center to Buyer and the assumption by Buyer
of the Project Debt associated therewith, as provided in
Section 4(b)(i) hereof. Concurrent with the receipt of
Lender's Consent associated with such Affected Shopping
Center, the parties agree to close the sale to Buyer of such
Affected Shopping Center under the terms of the Agreement, as
amended hereby, in which event:
(A) The Closing Documents shall be delivered and/or
recorded, where appropriate, in the real property
records of the county where the Project is located;
(B) Any additional assumption costs and Seller's
Closing Costs, if any, and Buyer's closing costs, as
prescribed in Section 4(b)(i) hereof, shall be paid;
and
(C) The Carve-Out Amount Deposit associated with
respect to such Affected Shopping Center, less any
sums computed under Sections 4(c)(i) and (v) hereof,
if any, and an amount equal to twice any sums Buyer
is required to advance to pay the cost of any of
Seller's Remediation Work which Seller fails to pay
in respect to any Contaminated Area, shall be
disbursed to Seller; and any sums deposited by Seller
under Section 4(d)(ii) above and associated with the
Contaminated Area of such Affected Shopping Center
shall be refunded to Seller.
Without altering or negating the rights of the parties set
forth in the first paragraph of this Section 4(d)(iv) hereof,
and irrespective of whether or not the TNRCC Closure Letter
has been issued by the TNRCC, in further consideration of the
mutual covenants granted herein, Buyer is hereby granted the
exclusive option to purchase at any time either the
Contaminated Area or Uncontaminated Area in respect to any of
the Affected Shopping Centers, upon payment of the option
prices hereinafter specified (the "Option Price"), payable in
cash at Closing. Buyer may exercise the Option for any
Contaminated Area only in conjunction with the exercise of the
Option for the Uncontaminated Area of such Affected Shopping
Center The Option in respect to any Uncontaminated Property is
exercisable by Buyer upon delivery of its written notice of
exercise (the "Option Notice") to the Seller's Attorneys and
the Seller. Buyer may exercise the Option without Lender's
Consent in which event Buyer shall assume any prepayment
penalty obligation with regard to the Project Debt associated
with the Affected Shopping Center. If the parties have
obtained Lender's Consent and Buyer has assumed the Project
Debt as provided in Section 4(b)(i) hereof (except in the case
of the exercise of the Option if the Project Debt is declared
in default as described in Section 4(e) hereof), within 5 days
of its delivery of the Option Notice, the parties agree to
proceed to Closing in respect to the property specified in the
Option Notice. Upon such Closing, Seller's Attorneys shall
release from escrow and deliver to Buyer the Closing Documents
pertaining to property specified in the Option Notice and the
parties agree to proceed to the Closing as to such property
under the terms of the Agreement, as amended hereby. The
Option Price for each Uncontaminated Area shall be $1.00, and
the Option Price for the Contaminated Area shall be the
Carve-Out Amount associated therewith, less any credits
available to Buyer as provided
<PAGE>
herein, but in no event shall the Carve-Out Amount for each
area be reduced below $1.00. The parties agree to execute, in
recordable form, a memorandum in the form approved by the
parties as of the date hereof, evidencing the Option granted
herein.
If, at the time of exercise of the Option for an
Uncontaminated Area, Buyer elects not to exercise the Option
as to any Contaminated Area, then the parties agree to enter
into a reciprocal easement agreement in a mutually acceptable
form. The aforesaid easement agreement shall provide that each
party shall have the non-exclusive right of ingress and egress
over and across and to use such parking and common areas of
the other party's property to the extent that the same may
from time to time be provided by such other party for the
convenience of its tenants and other parties.
(v) Project Debt. If a TNRCC Closure Letter in respect to any
of the Affected Shopping Centers has not been issued prior to
the stated maturity date (without prepayment) of the Project
Debt associated with such Affected Shopping Center, and if
Buyer is required under the terms of the loan documents to
retire such debt, then the Carve-Out Amount associated
therewith, shall also be deemed paid in full except for the
sum of $1.00 and the Carve-Out Deposit allocated therewith
shall be refunded to Buyer.
(e) Acceleration of Project Debt of the Affected Shopping Centers.
(i) If the holder of any Project Debt (a "Mortgagee") declares
such debt in default solely by reason of the presence of
Hazardous Materials in the Contaminated Area of the Affected
Shopping Center associated with such debt, and thereafter
accelerates the sums due thereunder, then Buyer at its option has
the right (1) to retire such debt by advancing the entirety of
the sums due thereunder; or (2) to require Seller and/or Brauss,
(or in the case of Green Oaks, Brauss alone), or a designee
thereof (the "Repurchasing Party"), to repurchase such Affected
Shopping Center for the same Purchase Price paid by Buyer
therefor, increased by the amount of the unamortized portion of
tenant improvement costs and leasing commissions paid by Buyer
(except the Carve-Out Amount associated with such project shall
be refunded to Buyer), in accordance with the terms of subsection
4(e)(iii) below. Upon closing of the purchase by the Repurchasing
Party, the obligations of Brauss under Section 4(d)(i) shall
remain in full force and effect, and within sixty (60) days of
completion of Seller's Remediation Work, Buyer shall have the
right to purchase such Affected Shopping Center from the
Repurchasing Party for the same purchase price paid by the
Repurchasing Party under the terms provided in Section 4(e)(iv)
below, increased by the amount of any unamortized portion of
tenant improvement costs and leasing commissions paid by the
Repurchasing Party.
(ii) If any of the holders of the Project Debt associated with
the Parkwood Square and Richwood shopping centers declares
such debt in default by reason of the execution and delivery
of the Master Lease (defined in Section 5(a) below), then the
parties shall cure such default. Such curing, at Buyer's
option, shall take the form of either Seller repurchasing such
Affected Shopping Center for the same Purchase Price paid by
Buyer therefor, increased by the amount of the unamortized
portion of tenant improvement costs and leasing commissions
paid by Buyer (in accordance with the terms of subsection
4(e)(iii) below), or the Master Lease shall be terminated and
Seller shall transfer to Buyer or its designee a 49% limited
partnership interests in limited partnership which owns such
Affected Shopping Center, and Brauss shall hold in trust the
remaining 50% limited partnership interests and the 1% general
partnership interest under the same terms as the Declaration
of Trust described in Section 4(a) hereof.
(iii) If Buyer elects to exercise its right to require the
Seller to repurchase any Affected Shopping Center, then Seller
(or in the case of Green Oaks, Brauss) shall purchase such
Affected Shopping Center, as provided in this subsection 4(e).
Such transfer shall be effected on the 15th business day (but
in any event at least three (3) business days prior to the
expiration of Mortgagee's cure period thereunder) after
written notice of Buyer's election, such notice must be
accompanied by a detailed statement of the tenant improvement
costs and leasing commissions incurred by Buyer with respect
to the Affected Shopping Center. The rights of Buyer under
this section are specifically enforceable.
(iv) If Buyer elects to exercise its right to re-purchase from
the Repurchasing Party such Affected Shopping Center under
subsection 4(e)(i) above, such transfer shall be effected on
the 10th day after written notice of Buyer's election, such
notice must be accompanied by a detailed statement of the
tenant improvement costs and leasing commissions incurred by
Repurchasing Party with respect to the Affected Shopping
Center. The rights of Buyer under this section are
specifically enforceable.
(f) Management Agreement. Upon execution hereof, Seller and
UIRT-Management Services, Inc. have entered into that certain
Management Agreement whereby the Manager shall manage Green Oaks
Shopping Center in accordance with the terms thereof commencing as of
February 1, 1999. During the month of January 1999, an affiliate of
Seller shall manage such shopping center and receive as compensation
therefor an amount equal to 4% of the payments collected from the
tenants of such projects, other than common area maintenance charges or
adjustments for 1998.
5. Parkwood Square and Richwood Shopping Centers. As of the date hereof,
the parties have undertaken the following transactions in respect to
the Parkwood Square and Richwood Shopping Centers:
(a) Master Lease. As of the date hereof, the parties have entered into
a separate Master Lease (herein so called) for each of the two
properties, in the form annexed hereto as Exhibit "D", whereby the
Buyer agrees to lease the properties from Seller in accordance with the
terms and provisions thereof. The parties agree that during the month
of January 1999, an affiliate of Seller shall manage each Affected
Shopping Center, and receive as compensation therefor an amount equal
to 4% of the payments collected from the tenants of such projects,
other than common area maintenance charges or adjustments for 1998. (b)
Purchase Price. The parties acknowledge that as of the date hereof,
Buyer has paid to Seller in cash the Cash Portion of the Purchase Price
associated with the Parkwood Square and Richwood Shopping Centers, and
the parties have adjusted the Purchase Price in order to prorate the
costs and expenses of such projects as of the date hereof, in
accordance with the terms of the Agreement, and in reliance upon the
same understandings and agreements set forth in Section 4(b) hereof as
they pertain the Parkwood Square and Richwood shopping centers.
(c) Escrow.
(i) Carve-Out Deposit. The parties acknowledge and agree that
the Carve-Out Deposit associated with the Parkwood Square and
Richwood properties shall be held and disbursed under the
terms of the Escrow Agreement and as otherwise provided in
Section 4(c)(i) hereof.
(ii) Closing Documents. The parties acknowledge and agree that
the Closing Documents associated with the Parkwood Square and
Richwood properties, including the Warranty Deeds, an
Assignment of Leases and an assignment of the escrow accounts
held by the holder of the Project Debt, shall be executed and
delivered in escrow under the terms of the Escrow Agreement
and as otherwise provided in Section 4(c)(ii) hereof, which
Closing Documents include separate warranty deeds for the
Contaminated Areas and the remaining portions of such shopping
centers.
6. Guaranty. Eric Brauss has executed this Amendment for purposes of
confirming his obligations hereunder and hereby waives and relinquishes
any right of contribution or reimbursement from the Seller after the
date hereof. The provisions of this section shall survive the Closing.
7. Survival. All of the representations, warranties and covenants made herein
shall survive the Closing.
8. Ratification. Except as amended hereby, the terms and conditions of the
Agreement are ratified and confirmed.
EXECUTED in multiple original counterparts, to be effective as of the
day, month and year first above written.
SELLER: TODAY MANAGEMENT, INC.
By:
Name:
Title:
TODAY MELBOURNE PLAZA, L.P.
By: Today Melbourne
Plaza GP, Inc.
By:
Name:
Title:
TODAY NORTHWEST CROSSING, L.P.
By: Today Northwest
Crossing GP, Inc.
By:
Name:
Title:
TODAY GREEN OAKS, L.P.
By: Today Green Oaks
GP, Inc.
By:
Name:
Title:
TODAY PARKWOOD, L.P.
By: Today Parkwood GP,
Inc.
By:
Name:
Title:
TODAY RICHWOOD, L.P.
By: Today Richwood GP,
Inc.
By:
Name:
Title:
BUYER:UNITED INVESTORS REALTY TRUST
By:
Lewis H. Sandler, President
List of Exhibits
"A-1" - "A-3" - Legal Description of Contaminated Areas
"B" - List of Project Debts
"C" - Amendment to Green Oaks Limited Partnership
Agreement
"D" - Declaration of Trust
"E" - Form of Master Lease
<PAGE>
Exhibit 10.4
333844.1
Parkwood Master Lease
LEASE AGREEMENT
BY AND BETWEEN
TODAY PARKWOOD, L.P..
AS LANDLORD
AND
UNITED INVESTORS REALTY TRUST
AS TENANT
Pertaining To
Parkwood Square Shopping Center
Plano, Collin County, Texas
Dated December 31, 1998
<PAGE>
Parkwood Master Lease
LEASE AGREEMENT
Table of Contents
Page
ARTICLE 1 Definitions............................................1
ARTICLE 2 Premises and Term of Lease.............................3
ARTICLE 3 Rent...................................................3
ARTICLE 4 Taxes and Other Charges................................4
ARTICLE 6 Use of Fire Insurance Proceeds.........................8
ARTICLE 7 Damage and Destruction-No Effect on Lease..............8
ARTICLE 9 This Article intentionally omitted.....................9
ARTICLE 10 Repairs................................................9
ARTICLE 11 Changes and Alterations................................10
ARTICLE 12 Requirement of Public Authorities......................10
ARTICLE 13 Fixtures and Articles of Personal Property.............11
ARTICLE 14 Discharge of Liens.....................................11
ARTICLE 15 Environmental Responsibilities.........................12
ARTICLE 16 Landlord Not Liable for Injury or Damage...............13
ARTICLE 17 Indemnification........................................13
ARTICLE 18 Landlord's Right of Inspection.........................14
ARTICLE 19 Landlord's Rights to Perform Tenant's Covenants........14
ARTICLE 20 Permitted Use; No Unlawful Occupancy...................15
ARTICLE 21 Defaults, Conditional Limitation, Remedies, Etc........15
ARTICLE 22 Notices................................................16
ARTICLE 23 Condemnation...........................................17
ARTICLE 24 Miscellaneous..........................................18
Exhibit "A" Description of the Land
Schedule "I" Base Rent
Schedule "II" Permitted Exceptions
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT, is made to be effective as of December 31, 1998,
between TODAY PARKWOOD, L.P., a Texas limited partnership having its principal
office at c/o Today Realty Advisors, Inc., 17400 Dallas Parkway, Suite 216,
Dallas, Texas 75287 (the "Landlord"), and UNITED INVESTORS REALTY TRUST, a Texas
real estate investment trust having its principal office at 5847 San Felipe,
Suite 850, Houston, Texas 77057 (the "Tenant").
ARTICLE 1
Definitions
ARTICLE 1 Definitions
Section 1.1. The terms defined in this Article, for all purposes of
this Lease and all agreements supplemental hereto, have the meanings herein
specified unless the context otherwise requires.
(a) "Acquisition Agreement" means that certain Acquisition
Agreement between Landlord as one of several parties named as
seller therein, and Tenant's assignee, Centennial Acquisition
Corp. as buyer therein, dated October 16, 1998, as amended,
pertaining to the sale of the Property and other properties.
Reference in this Lease to the "Second Amendment" means the
Second Amendment to the Acquisition Agreement, dated as of
December 31, 1998.
(b) "Buildings" means and includes buildings, improvements
and structures now or hereafter erected (when permitted by
Landlord) upon the Demised Premises, the Equipment and the
Furniture and Fixtures, including all fixtures and appurtenances
therein and thereto and all personal property of every kind and
description, affixed or attached to, or placed in or upon or used
for or adapted to in any way the use, enjoyment, occupancy and
operation of the said buildings, improvements and structures
(other than the property which may be removed by Tenant as
specifically permitted by the provisions of this Lease) and any
and all replacements thereof, additions thereto and substitutes
therefor.
(c) "Commencement Date" means the date of this Lease.
(d) "Demised Premises" means the Land and Buildings.
(e) "Equipment" means to include, but is not be limited to,
all machinery, engines, dynamos, boilers, elevators, air
conditioning compressors, ducts, units and equipment, heating and
hot water systems, pipes, plumbing, wiring, and gas, steam, water
and electrical fittings, used in connection with the operation of
the Buildings.
(f) "Furniture and Fixtures" means and includes all
fixtures, appurtenances, furniture, furnishings, decorations and
other personal property of every kind and description now or
hereafter affixed or attached to or placed in or upon and used
for or adapted in any way to the use, enjoyment, occupancy and
operation of the Buildings or any part thereof and all
replacements and renewals thereof and all additions thereto and
an substitutes therefor.
<PAGE>
(g) "Hazardous Materials" means any pollutant, toxic
substance, regulated substance, hazardous waste, hazardous
material, hazardous substance, oil, hydrocarbon, asbestos or
similar item as defined in or pursuant to the Resource
Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act, as
amended, the Federal Clean Water Act, as amended, the Safe
Drinking Water Act, as amended, the Federal Water Pollution
Control Act, as amended, the Texas Water Code, as amended, the
Texas Solid Waste Disposal Act, as amended, or any other federal,
State of Texas, or local environmental or health and safety
related, constitutional provisions, law, regulation, ordinance,
rule, or bylaw, whether existing as of the date hereof,
previously enforced or subsequently enacted (collectively the
"Environmental Laws")
(h) "Impositions" means all taxes, assessments, water rates,
rents and charges, sewer rates, rents and charges for all steam,
heat, gas, water, electricity, light, power and all other
utilities and other services furnished to the Demised Premises or
to the Buildings or to the occupants of either, excises, levies,
duties, licenses and permit fees and all other payments and
charges of every kind and nature whatsoever, private and public,
ordinary and extraordinary, general or special, foreseen and
unforeseen of any kind and nature whatsoever which at any time
during the term of this Lease may be assessed, levied, charged
upon, imposed upon or become due or payable out of, or become a
lien on the Demised Premises, or the rent and income received by
Tenant from subtenants, concessionaires or licensees of the
Demised Premises, it being the intention of the parties that the
rents reserved herein shall be received and enjoyed by Landlord
as a net sum free from all such taxes, payments, charges and such
other items provided, notwithstanding anything to the contrary
hereinabove contained.
(i) "Land" means that certain tract of land situated in
Collin County, Texas, being described on Exhibit "A" annexed
hereto and made a part hereof for all purposes, which forms a
part of the Demised Premises.
(j) "Mortgagee" means the holder of the Mortgage.
(k) "Mortgage" means that certain Deed of Trust and Security
Agreement dated December 24, 1997, executed by Landlord as
trustor to William Campbell as trustee, securing the Secured
Note, and filed for record as Document No. 97-0110032 in Volume
4067, Page 1866 of the records of the County Recorder's Office of
Collin County, Texas.
(l) "Option to Require Repurchase" means the right granted
to Tenant to require the repurchase of the Project, which option
is set forth in Section 4 (e) of the Second Amendment.
(m) "Secured Note" means that one certain promissory note in
the original principal sum of $6,600,000.00, dated December 24,
1997, executed by Landlord, made payable to the order of Lehman
Brothers Holding, Inc. d/b/a Lehman Capital, a division of Lehman
Brothers Holdings, Inc., a Delaware limited partnership, and any
renewals extensions, consolidations or replacements thereof.
(n) "Property" means the Demised Premises.
(o) "Tenant" means the Tenant named herein and any successor
or assign permitted hereunder.
(p) "Tenant's Option" means the right granted to the Tenant
to purchase all or part of the Property, which option is set
forth in Section 4(b) of the Second Amendment.
(q) "Term" means the term of this Lease as set forth in
Section 2.2 hereof.
<PAGE>
ARTICLE 2
Premises and Term of Lease
ARTICLE 2 Premises and Term of Lease
Section 2.1. LeaseholdSection 2.1. Leasehold. Landlord does hereby
demise and lease to Tenant, and Tenant does hereby hire and take from Landlord,
the Demised Premises, subject to the interests, liens, charges, encumbrances and
matters set forth on Schedule II annexed hereto and made a part hereof (the
"Permitted Exceptions").
TO HAVE AND TO HOLD unto Tenant, its successors and assigns, for the
term described herein, unless such term shall be sooner terminated as
hereinafter provided.
Section 2.2. TermSection 2.2. Term. The term of this Lease (the "Term")
commences as of the date hereof (the "Commencement Date") and terminates on the
first annual anniversary date of the maturity date of the Secured Note, unless
sooner terminated upon the occurrence of the earliest of the following events,
or extended as provided in Section 2.3 hereof:
(a) Transfer of title to the Property unto Tenant under the
terms of the Acquisition Agreement or the Tenant's Option; or
(b) Exercise by Tenant of the Option to Require Repurchase
under the terms of the Acquisition Agreement.
Section 2.3. Quiet Enjoyment.Section 2.3. Quiet Enjoyment. Landlord
covenants that, if and so long as Tenant faithfully performs the agreements,
terms, covenants and conditions hereof, Tenant shall and may peaceably and
quietly have, hold and enjoy the Demised Premises for the Term hereby granted,
without molestation or disturbance by or from Landlord and free of any
encumbrance created or suffered by Landlord, except those to the Permitted
Exceptions.
ARTICLE 3
Rent
ARTICLE 3 Rent
Section 3.1. PaymentSection 3.1. Payment. Tenant shall pay to Landlord
(or as otherwise provided in Schedule I annexed hereto) at such address as
Landlord may designate in writing, a monthly rental equal to the sums set forth
on Schedule I annexed hereto (the "Base Rent"). The Base Rent shall be payable
by wire transfer of funds in equal monthly installments in advance on the first
day of each calendar month during the term of this Lease beginning on the on the
first payment date set forth under the terms of the Secured Note. The rent shall
be in addition to and over and above all other payments to be made by Tenant as
herein provided. Rent for partial months, if any, shall be apportioned. The rent
shall be paid to Landlord without notice or demand and, except as otherwise
expressly provided herein, without abatement, deduction, counterclaim or setoff.
Tenant shall also pay without notice or demand except as may be specifically
required by this Lease, and without abatement, deduction, counterclaim or
setoff, all other costs, charges, deposits and expenses prescribed herein
("Additional Rent").
<PAGE>
Section 3.2 Late ChargeSection 3.2 Late Charge. If payment of any Base
Rent becomes overdue under the terms of the Secured Note, and the holder of the
Secured Note assesses a late charge or default rate, penalties, fees, etc., for
such past due installment, such late charge also becomes due and payable to
Landlord as liquidated damages for Tenant's failure to make prompt payment and
said late charges shall be immediately due and payable by Tenant.
Section 3.3. Net LeaseSection 3.3. Net Lease. It is the purpose and
intent of Landlord and Tenant that the net rent shall be absolutely net to
Landlord so that this Lease shall yield net to Landlord, the net rent specified
above in this Article 3 and that all costs and expenses and obligations of every
kind and nature whatsoever whether now existing or hereafter arising or whether
beyond the contemplation of the parties, shall be timely paid by Tenant. Except
as otherwise specifically provided in this Lease, there shall be no abatement,
diminution or reduction of rent, charges or other compensation claimed by or
allowed to Tenant, or any person claiming under it, nor shall there be abatement
or diminution or reduction of the performance of the other obligations by Tenant
hereunder under any circumstances.
ARTICLE 4
Taxes and Other Charges
ARTICLE 4 Taxes and Other Charges
Section 4.1.
(a) Tenant covenants and agrees to pay to Landlord or on
behalf of Landlord all paving assessments, ad valorem taxes, real
estate taxes (including, but not limited to, those imposed by
independent school districts, municipal governments, County of
Collin, State of Texas, and any other governmental authority
imposing taxes upon the owner of real and personal property
related to the value thereof) and all other governmental charges,
general and special, ordinary and extraordinary, foreseen as well
as unforeseen, of any kind and nature whatsoever, including
further, but not limited to, assessments for pubic improvements
or benefits (all of which taxes, levies and other governmental
charges are included in the term "Impositions" as used herein)
which are assessed, levied, confirmed, imposed or become a lien
upon the Demised Premises, or any part thereof, to the extent
that the same relate to any period of time during the Term
hereof, provided however, that, if, by law, any such Imposition
is payable, or may, at the option of the taxpayer, be payable in
installments (whether or not interest is accrued on the unpaid
balance of such Imposition), the Tenant may pay the Landlord as
and for the same (and any interest accruing on the unpaid balance
of such Imposition) in installments as the same respectively
become due and before any fine, penalty, interest or cost may be
added thereto for the non-payment of such installment and
interest. Landlord covenants and agrees to cooperate with Tenant
so that Tenant is granted access to and is otherwise permitted to
use any funds deposited in escrow with the Mortgagee.
<PAGE>
(b) If, during the Term, under the laws of the State of
Texas or other taxing authority, a tax or excise on rents or
other tax is levied or assessed by the State of Texas or other
taxing authority against the Landlord or the rental expressly
reserved hereunder as a clearly ascertainable substitute, in
whole or in part, for taxes assessed or imposed by said state or
authority on Land and Buildings, or on personal property, the
Tenant covenants to pay and discharge such tax or excise on rents
or other tax but only to the extent of the amount thereof
lawfully assessed or imposed upon the Landlord and lawfully so
assessed or imposed as a direct result of the ownership by the
Landlord of the Demised Premises, or any part thereof, or of this
Lease, or of the rentals accruing under this Lease, it being the
intention of the parties hereto that the rent to be paid
hereunder shall be paid to the Landlord absolutely net without
deduction of any nature whatsoever, except that Landlord shall
pay all mortgages as provided herein. The payment to be made by
the Tenant pursuant to this paragraph shall be made before any
fine, penalty, interest or cost may be added thereto for the
non-payment thereof.
Section 4.2. Tenant agrees that Tenant will make payment to the
Mortgagee on behalf of Landlord for any Imposition and other items of tax
referred to herein no later than ten (10) days prior to the date such tax or
other Imposition is due and payable to the taxing authority. Landlord agrees to
furnish to Tenant a statement of the amount of tax or Imposition due and a copy
of the statement of the taxing authority levying such Imposition, and, in all
events, Tenant agrees to make such payment before the payment of such Imposition
and tax to the taxing authority becomes delinquent. Notwithstanding the
foregoing, Tenant agrees that, if the Landlord is required to escrow tax
payments with the Mortgagee, Tenant will make monthly payments to the Mortgagee
on behalf of Landlord, in advance, on the first day of each month by wire
transfer of funds, each of such payments to be in the same amount paid or to be
paid by Landlord to the Mortgagee. If such monthly payments are insufficient in
amount to pay the aggregate of such Imposition and tax before the same become
delinquent, or the Mortgagee requires a different amount, such deficiency shall
be made good by Tenant promptly upon receipt of Landlord's statement with
respect to the same or a copy of the Mortgagee's statement, and in the event
such monthly payments shall exceed the amount of the aggregate of such
Imposition and taxes when the aggregate amount thereof is actually determined
(unless same is retained by the Mortgagee), such excess shall be credited upon
subsequent payments with respect thereto required of the Tenant.
Section 4.3. Tenant shall have the right at its own expense to contest
the amount or validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith but only after payment of such
Imposition unless such payment would operate as a bar to such contest or
interfere materially with the prosecution thereof, in which event,
notwithstanding the provisions of subparagraph (a) hereof, payment of such
Imposition shall be postponed if and only so long as:
(a) neither the Demised Premises nor any part thereof would
by reason of such postponement, or deferment be, in the
reasonable judgment of the Landlord, in danger of being forfeited
or lost, and
(b) the Mortgage will be complied with and would not be, by
reason of such postponement or deferment, in the reasonable
judgment of Landlord, in danger of being foreclosed.
Upon the termination of any such proceedings, it shall be the
obligation of Tenant to pay the amount of such Imposition or part thereof as
finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any costs,
fees, interests, penalties, or other liabilities in connection therewith.
Section 4.4. Tenant shall have a right to seek a reduction in the
valuation of the Demised Premises assessed for tax purposes and to prosecute any
action or proceeding in connection therewith. Tenant may, if it so desires, but
at its own expense attempt to obtain a lowering of the assessed valuation upon
the Demised Premises or any part thereof for the purpose of reducing taxes
thereon, and in such event, Landlord, at no cost or expense to Landlord, agrees
to cooperate in effecting such a reduction.
<PAGE>
Section 4.5. Landlord shall not be required to join in any proceedings
referred to in Section 4.3 hereof unless the provisions of any law, rule or
regulation at the time in effect shall require that such proceedings be brought
by and/or in the name of Landlord or any owner of the Demised Premises, in which
event Landlord shall join in such proceedings or permit the same to be brought
in its name. Landlord shall not ultimately be subject to any liability for the
payment of any costs or expenses in connection with any such proceedings, and
Tenant will indemnify and save harmless Landlord from any such costs and
expenses. Landlord may require any such proceedings be brought in its name but
in any such event the proceedings shall be for the sole benefit of Tenant.
Section 4.6 Tenant shall be entitled to the benefit of the reduction in
any Impositions during the Term hereof and Landlord agrees to join in any
consent or endorse any payment to which Tenant may be entitled resulting from
such reduction in Impositions.
ARTICLE 5
Insurance
ARTICLE 5 Insurance
Section 5.1. At all times during the term of this Lease, Tenant at its
own cost and expense shall:
(a) Keep the Buildings insured against loss or damage by
fire and all other hazards covered by the usual all risk
endorsement, in an amount sufficient to prevent Landlord and
Tenant from becoming coinsurers under provisions of applicable
policies of insurance, but in any event in an amount not less
than eighty (80%) percent of the full insurable value thereof
(replacement value less physical depreciation) excluding the cost
of excavations and of foundation below the level of the lowest
basement floor, but in any event in such amounts in order to
comply with the requirements of the Mortgage.
(b) Provide and keep in force, insurance against liability
for bodily injury and death and property damage and boiler and
machinery insurance (provided the Buildings contain equipment
ordinarily covered by such a policy), all such insurance to be in
such amounts and in such forms of policies as may from time to
time be reasonably required by Landlord and in compliance with
the Mortgage. Such liability insurance shall be comprehensive
general public liability insurance and shall include specifically
the Buildings, the Demised Premises and all garages, streets and
sidewalks and all areas in the Buildings. In any event:
(i)......the insurance against liability for personal
injury and death and property damage shall be not less than
One Million and No/100 ($1,000,000.00) Dollars for any
occurrence on a single limit "at risk" basis;
(ii).....boiler and machinery insurance shall be in
an amount and in such form as Landlord may reasonably
required.
(c) If a sprinkler system is contained within the Buildings,
provide and keep in force sprinkler leakage insurance in amounts
and forms reasonably satisfactory to Landlord and in compliance
with the Mortgage.
(d) Provide and keep in force plate glass insurance which
may be included in the policy provided for in subparagraph (b)
above.
<PAGE>
(e) Provide and keep in force such other insurance and in
such amounts as may from time to time be required by Landlord and
in compliance with the Mortgage against such other insurable
hazards as at the time are commonly insured against in the case
of premises similarly situated due regard being given to the type
of the Buildings, their construction and their use and occupancy.
Section 5.2.
(a) All insurance provided by Tenant, as required by this
Article, shall be carried in favor of Landlord and Tenant, as
their respective interests may appear, and, in the case of
insurance against damage to the Buildings by fire or other risk,
shall also include the interest of the holder of the Mortgage.
All insurance shall be in such form and shall be taken in such
responsible companies as are reasonably acceptable to Landlord
and acceptable to the holder of the Mortgage. Tenant shall have
the privilege of procuring all such insurance through its own
sources and as a part of any blanket policies maintained by
Tenant.
(b) Tenant shall procure policies for all such insurance for
periods of not less than one (1) year and shall deliver to
Landlord such certificates confirming the effectiveness of such
policies with evidence of the payment of premiums thereon in the
event blanket policies have been issued and shall procure
renewals thereof from time to time at least thirty (30) days
before the expiration thereof. Tenant and Landlord shall
cooperate in connection with the collection of any insurance
monies that may be due in the event of loss and shall execute and
deliver such proofs of loss and other instruments which may be
required for the purpose of obtaining the recovery of any such
insurance monies.
Section 5.3.
(a) Notwithstanding the foregoing, Tenant agrees that if
Landlord is required to escrow insurance premiums with the holder
of the Mortgage, Tenant agrees to make monthly payments to the
Mortgagee on behalf of Landlord, in advance, on the first day of
each month by wire transfer of funds, each of such payments to be
in the same amount paid or to be paid by the Landlord to the
Mortgagee.
(b) All fire insurance policies provided for herein shall
provide for payment of loss to Tenant and the holder of the
Mortgage, as their respective interests may appear,
(c) Tenant shall not violate or permit to be violated any of
the conditions or provisions of any such policy, and Tenant shall
so perform and satisfy the requirements of the companies writing
such policies that at all times companies of good standing
satisfactory to Landlord as herein above provided shall be
willing to write and/or continue such insurance.
(d) Each policy of insurance required to be obtained by
Tenant as herein provided and each certificate therefor issued by
the insurer shall contain an agreement by the insurer that such
policy shall not be canceled without at least thirty (30) days'
prior written notice to Landlord, and to any mortgagee to whom a
loss thereunder may be payable. All such policies shall also
cover any increased risks as a result of construction, repairs,
alterations and additions to the Buildings and shall provide that
any loss shall be payable to Landlord notwithstanding any act of
negligence of Tenant which might otherwise result in forfeiture
of said insurance. All other terms of the Mortgage related to the
terms hereof shall be complied with by Tenant.
<PAGE>
Section 5.4. Landlord and Tenant hereby release the other from any and
all liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any of the extended coverage or supplementary contract
casualties, even if such fire or other casualty is caused in whole or in part by
the other party, or anyone for whom such party may be responsible, provided,
however, that this release shall be applicable and in force and effect only with
respect to loss or damage occurring during such time as the releasor's policies
shall contain a clause or endorsement to the effect that any such release shall
not adversely affect or impair said policies or prejudice the right of the
releasor to recover thereunder. Landlord and Tenant each agrees that it will
request its insurance carriers to include in its policies such a clause or
endorsement. If extra cost shall be charged therefor, each party shall advise
the other thereof and of the amount of the extra cost, and the other party, at
its election, may pay the same, but shall not be obligated to do so.
ARTICLE 6
Use of Fire Insurance Proceeds
ARTICLE 6 Use of Fire Insurance Proceeds
Section 6.1. If the Buildings or any part thereof shall be destroyed or
damaged in whole or in part by fire or other casualty (including any casualty
for which insurance was not obtained or obtainable) or any kind or nature,
ordinary or extraordinary, foreseen or unforeseen, Tenant shall give to Landlord
immediate notice thereof, and Tenant, to the extent insurance proceeds are
available for the purpose, shall promptly repair, alter, restore, replace and
rebuild the same, at least to the extent of the value and as nearly as possible
to the character of the Buildings existing immediately prior to such occurrence;
and Landlord shall in no event be called upon to repair, alter, replace, restore
or rebuild the Buildings nor to pay any of the costs or expenses thereof. All
work shall be done in accordance with the provisions of Article 11 hereof and no
work shall be commenced until all the conditions precedent to the commencement
of changes and alterations as stipulated in Article 11 shall have been
satisfied.
Section 6.2. Landlord agrees to promptly pay over to Tenant, from time
to time, upon the following terms, any monies which may be received by Landlord,
from such insurance provided by Tenant. Landlord shall pay to Tenant, as
hereinafter provided, the entirety of the aforesaid insurance proceeds, for the
purpose of repairs or restoration to be made by Tenant to restore the Buildings
to a value which shall be not less than their value prior to such fire or other
casualty. If any mechanic's lien is filed against the Property, Tenant agrees to
satisfy or otherwise discharge such lien or a bond is posted in accordance with
applicable state law, if any, subject to approval by Landlord as to form, amount
and surety. The terms hereof are subject to the terms of the Mortgage.
ARTICLE 7
Damage and Destruction-No Effect on Lease
ARTICLE 7 Damage and Destruction-No Effect on Lease
Section 7.1. This Lease shall not terminate or be forfeited or be
affected in any manner by reason of damage to or total, substantial or partial
destruction of the Demised Premises or any part thereof or the Buildings or any
part thereof or by reason of the untenantability of the same or any part
thereof, for or due to any reason or cause whatsoever and Tenant notwithstanding
any law or statute, present or future, waives any and all rights to quit or
surrender the Demised Premises or any part thereof, and Tenant expressly agrees
that its obligations hereunder, including the payment of net rent, Impositions,
and other sum or sums of money and other charges hereunder, shall continue the
same as though said Demised Premises or Buildings or any part thereof had not
been destroyed or injured, and without abatement, suspension, diminution or
reduction of any kind.
<PAGE>
ARTICLE 8
Assignment, Subleasing
ARTICLE 8 Assignment, Subleasing
Section 8.1. Tenant may not, without Landlord's prior written consent,
assign the entirety of the Lease or sublet the Demised Premises as a whole.
Section 8.2. Tenant may sublet or grant licenses or concessions with
respect to portions of the Demised Premises or the Buildings without Landlord's
prior written consent, provided that each sublease or license or concession
shall be subject and subordinate to this Lease and to the rights of Landlord
hereunder and subject to the terms of the Mortgage. Tenant shall and does hereby
indemnify and agree to hold Landlord harmless from any and all liabilities,
claims and causes of action arising or accruing from and after the Commencement
Date under any terms and conditions of every sublease, license or concession
agreement. Likewise, Landlord shall and does hereby indemnify and agree to hold
Tenant harmless from any and all liabilities, claims and causes of action
arising or accruing prior to the Commencement Date under any terms and
conditions of every sublease, license or concession agreement.
Section 8.3. The fact that a violation or breach of any of the terms,
provisions or conditions of this Lease, results from or is caused by an act or
omission accruing on or after the Commencement Date by any subtenant, licensee
or concessionaire shall not relieve Tenant of Tenant's obligation to cure the
same.
ARTICLE 9 This Article intentionally omitted.
ARTICLE 9 This Article intentionally omitted.
ARTICLE 10
Repairs
ARTICLE 10 Repairs
Section 10.1. During the Term of this Lease, Tenant, at its sole cost
and expense, agrees to take good care of the Demised Premises, including the
Buildings, all sidewalks, grounds, areas, vaults, chutes, sidewalk hoists,
railings, gutters, alleys and curbs in front of or adjacent to the Demised
Premises and will put, keep and maintain the same in good and safe order and
condition, and make all repairs therein and thereon, interior and exterior,
structural and non-structural, ordinary and extraordinary, and unforeseen and
foreseen, necessary to keep the same in good and safe order and condition
howsoever the necessity or desirability therefore may occur, and whether or not
necessitated by wear, tear, obsolescence or defects, latent or otherwise. Tenant
shall not commit or suffer and shall use reasonable precaution to prevent waste,
damage or injury to all of the same. When used in this Article, the term
"repairs" shall include all necessary replacements, renewals, alterations and
additions. All repairs made by Tenant shall be equal in quality and class to the
original work.
Section 10.2 Landlord shall not be required to furnish any services
whatsoever or facilities whatsoever to the Demised Premises including, but not
limited to, water, steam, heat, gas, electricity, light and power. Landlord
shall have no duty or obligation to make any alteration, addition, change,
improvement, replacement or repair to, or to demolish, the Demised Premises,
except in respect to Seller's Remediation Work of the areas designated as the
Contamination Areas in the Second Amendment. Tenant assumes the full and sole
responsibility for the condition, operation, repair, alteration, improvement,
replacement, maintenance and management of the Demised Premises, except in
respect to the aforesaid Seller's Remediation Work.
<PAGE>
Parkwood Master Lease
ARTICLE 11
Changes and Alterations
ARTICLE 11 Changes and Alterations
Section 11.1. Tenant shall have the right, at any time and from time to
time, during the term of this Lease, to make at its sole cost and expense,
changes and alterations in or of the Buildings, subject, however, to compliance
with the following conditions and the terms of the Mortgage, it being understood
that repairs, restoration and other work done pursuant to the provisions of
Articles 6 and 10 hereof shall be deemed to be changes and alterations:
(a) No change or alteration, involving an estimated cost of
more than $500,000.00, including any restoration, repair, replacement
or rebuilding required by Article 6 hereof, shall be made without the
prior written consent of Landlord, which consent may not be
unreasonably withheld or delayed.
(b) No change or alteration involving an estimated cost of
more than $500,000.00 shall be made except in accordance with plans and
specifications and cost estimates prepared and approved in writing by
Landlord, which may not unreasonably withhold or delay such consent.
(c) Any change or alteration shall be made promptly and in a
good and workmanlike manner and in compliance with all applicable
permits and authorizations and building and zoning laws and with all
other laws, ordinances, orders, rules, regulations and requirements of
all federal, state and municipal governments.
(d) Tenant shall, at its own cost and expense, comply in all
respects with the applicable state mechanic's and materialman's lien
laws as same are now and may from time to time be amended, to the end
that no lien thereunder shall in any way affect the Property.
ARTICLE 12
Requirement of Public Authorities
ARTICLE 12 Requirement of Public Authorities
Section 12.1. Tenant shall at its own cost and expense, during the Term
promptly execute and comply with any and all present and future laws, rules,
orders, ordinances, regulations, statutes and requirements (the "Requirements")
with respect to the removal of any encroachment or the condition, equipment,
maintenance, use or occupation of the Property, whether or not the same involve
or require any structural change or the making of any alterations or additions
in or to any structure upon or appurtenant to the Property; and Tenant, at its
own cost and expense, during the Term shall and will also execute and comply
with any and all provisions and requirements of any fire, liability or other
insurance policy required to be carried by Tenant under the provisions of this
Lease. Notwithstanding the foregoing, Landlord covenants and agrees to discharge
any mechanic's, laborer's or materialman's liens which may arise in connection
with Seller's Remediation Work. Tenant shall give Landlord prompt notice of any
notice of violation of any such Requirement received by Tenant.
Section 12.2. At its own expense, Tenant shall have the right to
contest the validity of any such Requirement or the application thereof.
<PAGE>
ARTICLE 13
Fixtures and Articles of Personal Property
ARTICLE 13 Fixtures and Articles of Personal Property
Section 13.1. Tenant shall keep the Demised Premises fully and
adequately furnished and equipped with all Equipment, Fixtures, and Personalty
necessary for the operation of the Property.
Section 13.2. Tenant shall not have the right, power or authority to
and will not remove from the Demised Premises except for repairs, replacement,
cleaning, other servicing, or compliance with Requirements or in connection with
alterations permitted hereunder, any Equipment, Fixtures or Articles of
Personalty without the prior written consent of Landlord, which consent may not
be unreasonably withheld or delayed.
Section 13.3. Tenant shall keep all Equipment and Fixtures and Articles
of Personalty in good order and repair and shall replace the same when necessary
by items of like quality and value.
Section 13.4. All Equipment and all Fixtures and Personalty shall be
fully paid for by Tenant in cash and Tenant shall not purchase any equipment or
fixtures or articles on conditional bills of sale or chattel mortgages or other
financing or security arrangements or agreements, or other title retention
agreements or arrangements.
ARTICLE 14
Discharge of Liens
ARTICLE 14 Discharge of Liens
Section 14.1. Tenant will not create or permit to be created or to
remain, and will discharge, any lien, encumbrance or charge (levied on account
of any Imposition or any mechanic's, laborer's or materialman's lien,
conditional sale, title retention agreement or chattel mortgage, or otherwise)
which might be or become a lien, encumbrance or charge upon the Property or any
part thereof or the income therefrom, and Tenant will not suffer any other
matter or thing whereby the estate, rights and interest of Landlord in the
Property or any part thereof might be impaired, except as specifically permitted
by this Lease. Likewise, Landlord covenants and agrees to discharge any
mechanic's, laborer's or materialman's liens which may arise in connection with
Seller's Remediation Work.
Section 14.2. If any mechanic's, laborer's or materialman's lien shall
at any time be filed against the Property or any part thereof, Tenant, within
thirty (30) days after notice of the filing thereof, or such shorter period as
may be required by the holder of the Mortgage, will cause the same to be
discharged of record or will post a bond in accordance with applicable state
law, if any. If Tenant fails to cause such lien to be discharged within the
aforesaid 30 day period, then, in addition to any other right or remedy,
Landlord may, but shall not be obligated to, discharge the same either by paying
the amount claimed to be due or by procuring the discharge of such lien by
deposit or by bonding proceedings, and in any such event Landlord shall be
entitled, if Landlord so elects, to compel the prosecution of an action for the
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances. Any amount so paid by
Landlord and all costs and expenses incurred by Landlord in connection
therewith, together with interest thereon at the maximum rate permitted by law
from the respective dates of Landlord's making of the payment or incurring of
the cost and expense shall constitute additional rent payable by Tenant under
this Lease and shall be paid by Tenant to Landlord on demand.
<PAGE>
Section 14.3. Nothing in this Lease contained shall be deemed or
construed in any way as constituting the consent or request of Landlord, express
or implied by inference or otherwise, to any contractor, subcontractor, laborer
or materialman for the performance of any labor or the furnishing of any
materials for any specific improvement, alteration to or repair of the Demised
Premises or any part thereof, nor as giving Tenant any right, power or authority
to contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any lien against the Demised
Premises or any part thereof. Notice is hereby given that Landlord shall not be
liable for any work performed or to be performed or any materials furnished or
to be furnished at the Demised Premises for Tenant or any subtenant, and that no
mechanic's or other lien for such work or materials shall attach to or affect
the estate or interest of Landlord in and to the Property.
Section 14.4. Tenant shall have no power to do any act or make any
contract which may create or be the reason for any lien, mortgage or other
encumbrance upon the estate or interest of Landlord in the Demised Premises.
Within five (5) days after the service on Tenant of a claim or lien or a summons
and complaint in an action or proceeding for the enforcement thereof, Tenant
shall provide Landlord with a true copy thereof.
ARTICLE 15
Environmental Responsibilities
ARTICLE 15 Environmental Responsibilities
Section 15.1. Tenant shall not cause or permit any Hazardous Material
to be brought upon, kept or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees, unless such Hazardous Material is necessary
or useful to Tenant's business and will be used, kept and stored in a manner
that complies with the Mortgage and all laws regulating any such Hazardous
Material so brought upon or used or kept in or about the Premises. If any
Hazardous Material is stored or used on the Premises as specified above, Tenant
shall remove all such Hazardous Material upon the expiration or termination of
this Lease and restore the Premises to a condition satisfactory to Landlord. The
provisions of this Article 15 shall survive the expiration or termination of the
Lease.
Section 15.2 Tenant shall immediately advise Landlord in writing of (i)
any governmental or regulatory actions instituted or threatened under any
Environmental Law affecting the Tenant or the Premises, (ii) all claims made or
threatened by any third party against Tenant or the Premises relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials, (iii) the discovery of any occurrence or condition on any
real property adjoining or in the vicinity of the Premises that could cause the
Premises to be classified in a manner which may support a claim under any
Environmental Law, and (iv) the discovery of any occurrence or condition on the
Demised Premises or any real property adjoining or in the vicinity of the
Premises which could subject Tenant or the Premises to any restrictions in
ownership, occupancy, transferability or use of the Demised Premises under any
Environmental Law. Landlord may elect to join and participate in any
settlements, remedial actions, legal proceedings or other actions initiated in
connection with any claims under any Environmental Law and to have its
reasonable attorney's fees paid by Tenant. At its sole cost and expense, Tenant
agrees when applicable or upon request of Landlord to promptly and completely
cure and remedy every violation of an Environmental Law except in respect to any
such violation which relates to the condition which Seller's Remediation Work is
intended to cure, as described in the Second Amendment, and such Seller's
Remediation Work.
Section 15.3 Landlord covenants and agrees to Landlord undertake and
complete Seller's Remediation Work in accordance with the terms of the Second
Amendment.
<PAGE>
ARTICLE 16
Landlord Not Liable for Injury or Damage
ARTICLE 16 Landlord Not Liable for Injury or Damage
Section 16.1. Except for events occurring or accruing prior to the
Commencement Date, Landlord shall not in any event whatsoever be liable for any
injury or damage to any property or to any person happening on, in or about the
Demised Premises and its appurtenances, nor for any injury or damage to the
Property, nor to any property, whether belonging to Tenant or any other person,
caused by any fire, breakage, leakage, defect or bad condition in any part or
portion of the Property, or from water, rain or snow that may leak into, issue
or flow from any part of the Demised Premises from the drains, pipes, or
plumbing work of the same, or from any place or quarter, or due to the use,
misuse or abuse of an or any of the elevators, hatches, openings, installations,
stairways or hallways of any kind whatsoever which may exist or hereafter be
erected or constructed on the Property, or from any kind of injury which may
arise from any other cause whatsoever on the Property.
ARTICLE 17
Indemnification
ARTICLE 17 Indemnification
Section 17.1. In addition to any other indemnities to Landlord
specifically provided in this Lease, Tenant will indemnify and save harmless
Landlord against and from all liabilities, suits, obligations, fines, damages,
penalties, claims, costs, charges and expenses, including, without limitation,
reasonable architects' and attorneys' fees by or on behalf of any person, which
may be imposed upon or incurred by or asserted (the "Liabilities") against
Landlord by reason of any of the following occurring during the term of this
Lease (the "Activities"), save and except any such liabilities, etc. arising
from or in consequence of any of Seller's Remediation Work required of Landlord
in the Second Amendment:
(a) any work or thing done in, on or about the Demised
Premises or any part thereof;
(b) any use, nonuse, possession, occupation, alteration,
repair, condition, operation, maintenance or management of the
Demised Premises or any part thereof or of any street, alley,
sidewalk, curb, vault, passageway or space adjacent thereto;
(c) any negligence on the part of Tenant or any subtenant or
any of its or their agents, contractors, servants, employees,
licensees or invitees;
(d) any accident, injury (including death) or damage to any
person or property occurring in, on or about the Demised Premises
or any part thereof or in, on or about any street, alley,
sidewalk, curb, vault, passageway or space adjacent thereto;
(e) any failure on the part of Tenant to perform or comply
with any of the covenants, agreements, terms or conditions
contained in the Mortgage and/or this Lease, or any sublease,
license or concession agreement on its part to be performed or
complied with;
(f) this Lease; any tax attributable to the execution,
delivery or recording of this Lease;
(g) any contest permitted pursuant to the provisions of
Article 4 hereof.
<PAGE>
Section 17.2 Landlord agrees to indemnify and hold Tenant harmless from
any Liabilities resulting from any of the Activities which arose or accrued
prior to the Commencement Date hereof.
The provisions of this Article and the provisions of all other
indemnity provisions elsewhere contained in this Lease shall survive the
expiration or earlier termination of this Lease.
ARTICLE 18
Landlord's Right of Inspection
ARTICLE 18 Landlord's Right of Inspection
Section 18.1. Tenant shall permit Landlord and its agents or
representatives to enter the Demised Premises at all reasonable times for the
purpose of (i) inspecting the same and (ii) making any necessary repairs thereto
and performing any work therein that may be necessary by reason of Tenant's
failure to make any such repairs or perform any such work provided, however,
that except in cases of emergency Landlord shall give Tenant at least fifteen
(15) days' written notice of the necessity of making repairs.
Section 18.2. Nothing in this Article or elsewhere in this Lease shall
imply any duty upon the part of Landlord to do any such work; and performance
thereof by Landlord shall not constitute a waiver of Tenant's default in failing
to perform the same.
Section 18.3. Landlord shall have the right to enter the Demised
Premises at any reasonable times during usual business hours for the purpose of
showing it to agents and representatives of the holder of the Mortgage in order
to comply with the terms of the Mortgage.
ARTICLE 19
Landlord's Rights to Perform Tenant's Covenants
ARTICLE 19 Landlord's Rights to Perform Tenant's Covenants
Section 19.1. If Tenant shall at any time fail to pay any Imposition in
accordance with the provisions hereof, or to take out, pay for, maintain or
deliver any of the insurance policies provided for herein, or shall fail to make
any other payment or perform any other act on its part to be made or performed,
then Landlord, after thirty (30) days' notice to Tenant (or without notice in
case of an emergency) and without waiving or releasing Tenant from any
obligation of Tenant contained in this Lease, may (but shall be under no
obligation to):
(a) pay any Imposition payable by Tenant pursuant to the
provisions hereof, or
(b) take out, pay for and maintain any of the insurance
policies provided for herein, or
(c) make any other payment or perform any other act on
Tenant's part to be made or performed as in this Lease provided,
and may enter upon the Demised Premises for the purpose and take all such action
thereon as may be necessary therefor.
<PAGE>
Section 19.2. All reasonable sums so paid by Landlord and all
reasonable costs and expenses incurred by Landlord in connection with the
performance of any such act, together with interest thereon at the rate of 10%
per annum from the respective dates of Landlord's making of each such payment or
incurring of each such cost and expense shall be paid by Tenant to Landlord upon
demand. Any payment or performance by Landlord pursuant to the foregoing
provisions of this Article shall not be nor be deemed to be a waiver or release
of the breach or default of Tenant with respect thereto or of the right of
Landlord to terminate this Lease, institute summary proceedings and/or take such
other action as may be permissible hereunder in the event of breach or default
by Tenant. It is agreed that Tenant's liability hereunder shall be limited to
its interest in the Property.
ARTICLE 20
Permitted Use; No Unlawful Occupancy
ARTICLE 20 Permitted Use; No Unlawful Occupancy
Section 20.1. Tenant may use the entire Demised Premises for any lawful
purpose. Tenant shall not use or occupy, nor permit or suffer, the Demised
Premises or any part thereof to be used or occupied for any unlawful or illegal
business, use or purpose, nor for any business, use or purpose deemed
disreputable or extra hazardous, nor in such manner as to constitute a nuisance
of any kind, nor for any purpose or in any way in violation of the certificate
of occupancy or of any present or future governmental laws, ordinances,
requirements, orders, directions, rules or regulations affecting the Demised
Premises. Tenant shall immediately upon the discovery of any such unlawful,
illegal, disreputable or extra hazardous use take all necessary steps, legal and
equitable, to compel the discontinuance of such use and to oust and remove any
subtenants, occupants or other persons guilty of such unlawful, illegal,
disreputable or extra hazardous use.
Section 20.2. Tenant will not suffer any act to be done or any
condition to exist on the Demised Premises or any portion of either, or any
article to be brought thereon, which may be dangerous, unless safeguarded as
required by law, or which does, in law, constitute a nuisance, public or
private, or which does make void or voidable any insurance then in force on the
Demised Premises.
Section 20.3. Tenant shall not suffer or permit the Demised Premises or
any portion thereof to be used by the public, as such, without restriction or in
such manner as might reasonably tend to impair Landlord's title to the Demised
Premises or any portion thereof, or in such manner as might reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Demised Premises or any portion
thereof.
ARTICLE 21
Defaults, Conditional Limitation, Remedies, Etc.
ARTICLE 21 Defaults, Conditional Limitation, Remedies, Etc.
Section 21.1. Each of the following events shall be an "Event of
Default" hereunder:
(a) If Tenant fails to pay any installment of Base Rent or
Impositions or other payments or charges required to be paid by
Tenant under this Lease or any monies advanced by Landlord and
collectible as Additional Rent within ten (10) days after written
notice;
(b) If Tenant fails to make any deposit for Impositions or
insurance, if required hereunder, as and when the same shall
become due and payable, and shall not make such deposit within
ten (10) days after written notice; and
<PAGE>
(c) If Tenant breaches or fails to perform any of the other
agreements, terms, covenants or conditions hereof on Tenant's
part to be performed and such breach or failure shall continue
for the period within which performance is required to be made by
specific provision of this Lease, or, if no such period is so
provided, for thirty (30) days after written notice, or, if such
performance cannot be reasonably had within such thirty (30) day
period, Tenant shall not in good faith have commenced such
performance within such thirty (30) day period and shall not
diligently proceed therewith to completion within ninety (90)
days after such notice.
Section 21.2. Limitation of Liability. Notwithstanding any provision of
the law or in equity to the contrary, the following provisions provide for the
sole rights and remedies available to the Landlord should an Event of Default
occur: Tenant agrees to indemnify and hold Landlord, its partners, officers,
directors, shareholders, agents and representatives, or any other person
relating thereto (the "Landlord Group"), harmless from and against any
liabilities, suits, obligations, fines, damages, penalties, claims, costs,
charges and expenses asserted by the Mortgagee in its pursuit of claims for
recovery under the following Loan Documents against any of the members of the
Landlord Group which is caused by the acts of Tenant, or its employees or
agents: (i) Guaranty of Recourse Obligations of Borrower dated December 24,
1997, executed by Eric Brauss: (ii) Guaranty of Payment executed by Landlord and
Today Richwood, L.P., dated December 24, 1997; and (iii) Environmental Indemnity
Agreement executed by Landlord and Eric Brauss, dated December 24, 1997. Tenant
shall not be liable under the aforesaid indemnity for any acts of members of the
Landlord Group arising under the Loan, including without limitation any claims
for damages asserted by Lender arising out of the existence of Hazardous
Materials in the area referred to in the Second Amendment as the Contaminated
Area of the Property. In this regard, Landlord agrees and understands that it
has no right to terminate the Lease solely by reason of the occurrence of any
Event of Default related to such Hazardous Materials or otherwise assert or
pursue any other claim for damages under this Lease. The term "Loan Documents"
means the documents evidencing and securing the Secured Note executed by the
Landlord and/or the members of the Landlord Group..
ARTICLE 22
Notices
ARTICLE 22 Notices
Section 22.1. Whenever it is provided herein that notice, demand,
request or other communication shall or may be given to or served upon either of
the parties by the other, and whenever either of the parties shall desire to
give or serve upon the other any notice, demand, request or other communication
with respect hereto or the Demised Premises, each such notice, demand, request
or other communication shall be in writing and, any law or statute to the
contrary notwithstanding, shall be effective for any purpose if given or served
as follows or at such other address as Landlord or Tenant may from time to time
designate by notice given to the other party by facsimile transmission,
registered or certified mail:
If to Landlord: ......... Today Parkwood, L.P.
c/o Today Realty Advisors, Inc.
17400 Dallas Parkway, Suite 216
Dallas, Texas 75287
Attention: Sue Shelton
Telephone: (972) 407-9067
Telecopy: (972) 407-9068
With Copy to: ......... Fishman, Jones, Walsh & Gray, P.C.
8117 Preston Road, Suite 440
Dallas, Texas 75225
Attention: Edward M. Fishman, Esq.
Telephone: (214) 265-2200
Telecopy: (214) 265-2204
<PAGE>
If to Tenant: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall D. Keith
Vice-President and Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to:
United Investors Realty Trust
8080 North Central Expressway
Suite 500
Dallas, Texas 75206
Lewis H. Sandler
President and Chief Executive Officer
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
ARTICLE 23
Condemnation
ARTICLE 23 Condemnation
Section 23.1. If at any time during the term of this Lease, the whole
or materially all of the Property shall be taken for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement between Landlord, Tenant and
those authorized to exercise such right, this Lease and the Term hereby granted
shall terminate and expire on the date of such taking and the Base Rent,
Additional Rent and other sums and other charges provided to be paid by the
Tenant shall be apportioned and paid to the date of such taking (the "Taking
Date").
The term "materially all of the Property" means the portion of the
Property, as when so taken, would leave remaining the balance of the Property
which, due either to the area so taken or the location of the part so taken in
relation to the part not so taken, would not under economic conditions, zoning
laws or building regulations then existing or prevailing, readily accommodate a
new building or buildings of a nature similar to the Buildings at the date of
such taking and of floor area sufficient, together with the portion of the
Buildings not taken in the condemnation, to produce a fair and reasonable
return, after payment of (i) all operating expenses thereof, (ii) the net rental
as same may be reduced as a result of such taking, (iii) additional rent and
other sum or sums of money and other charges herein reserved and after
performance of all covenants, agreements, terms and provisions herein and by law
provided to be preformed and paid by Tenant.
<PAGE>
The term "Taking Date" means the date the Demised Premises or a part
thereof, as the case may be, shall be deemed to have been taken or condemned on
the date on which actual possession of the Demised Premises or a part thereof,
as the case may be, is acquired by any lawful power or authority on the date on
which title vests therein, whichever is earlier.
Section 23.2. If less than materially all of the Demised Premises be so
taken or condemned, this Lease and the Term thereof shall continue, and the Base
Rent due and payable shall continue
In the event of any taking or condemnation as provided in this Section
23.2, the entire award or the aggregate of the separate awards (the
"Condemnation Award") to Landlord and Tenant, as the case may be, shall belong
to and be the sole property of Tenant without any claim on the part of Landlord,
(Landlord hereby waiving all claims for any value for its leasehold or its
interest in this Lease or otherwise), but subject to the terms of the Mortgage.
Section 23.3. If the temporary use of the whole or any part of the Demised
Premises shall be taken at any time during the Term for any public or
quasi-public purpose by any lawful power or authority, by the exercise of the
right of condemnation or eminent domain, the Term of this Lease shall not be
reduced or affected in any way and Tenant shall continue to pay in full the Base
Rent, Additional Rent and other sums provided to be paid by Tenant. If the
Condemnation Award is in the form of rent recoverable in respect of such taking
and shall be payable in quarterly or more frequent installments, Tenant shall be
entitled to make claim to and retain such award or awards in the form of rent so
payable, provided this Lease is then in force and effect and so long as Tenant
is otherwise if full compliance with the terms and conditions hereof, but
subject to the terms of the Mortgage. Section 23.4. In case of any governmental
action, not resulting in the taking or condemnation of any portion of the
Demised Premises but creating a right to compensation therefor, such as, without
limitation (except as otherwise provided in this Article 23), the changing of
the grade of any street upon which the Demised Premises abut, this Lease shall
continue in full force and effect without reduction or abatement of Base Rent,
Impositions, or any other payment of Tenant to be made hereunder, and Tenant
shall be entitled to the payment of the entirety of such proceeds, but subject
to the terms of the Mortgage.
ARTICLE 24
Miscellaneous
ARTICLE 24 Miscellaneous
Section 24.1. No Oral Agreements. This Lease contains all the promises,
agreements, conditions, inducements and understandings between Landlord and
Tenant relative to the Demised Premises and there are no promises, agreements,
conditions, understandings, inducements, warranties or representations, oral or
written, expressed or implied, between them other than as herein set forth.
Section 24.2. Invalidity of Certain Provisions. If any term or
provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term or provision to persons or
circumstances other than as to which it is held invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Lease shall be
valid and be enforced to the fullest extent permitted by law.
<PAGE>
Section 24.3. Compliance with Mortgage. Notwithstanding anything to the
contrary contained herein, Tenant covenants and agrees that after the
Commencement Date (i) it will not create or permit to be created any condition
or do or permit to be done any act or thing which may be prohibited by the terms
of the Mortgage, (ii) it will execute and deliver any documents, papers or other
instruments which may be necessary or required to permit the due performance and
compliance with all of the terms, covenants and agreements of the Mortgage by
the party responsible thereunder for such performance, and (iii) it will comply
with all of the terms, covenants and conditions contained in the Mortgage other
than any payments of principal and interest due and owing under the Secured
Note, tax and insurance payments due under the Mortgage. Tenant agrees to
indemnify Landlord for any loss it may suffer or incur arising under Tenant's
breach of the provisions of this Section. The terms hereof shall survive any
termination of this Lease.
Section 24.4. Recording of Memorandum. Landlord and Tenant will, upon
the written request of the other, join in the execution of a memorandum of lease
in proper form for recordation in the appropriate office or offices wherein the
Demised Premises are situated, setting forth the existence and terms of this
Lease, and Landlord and Tenant will each take further action as may be necessary
to effect such recordation. No memorandum shall be recorded without the prior
written consent of both parties hereto.
Section 24.5. This Lease cannot be changed or terminated orally, but
only by an instrument in writing executed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
Section 24.6. This Lease shall be governed by and construed in
accordance with the laws of the State of Texas.
Section 24.7. The agreements, terms, covenants and conditions herein
shall bind and inure to the benefit of Landlord and Tenant and each of its
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement in multiple original counterparts, the day, month and year first above
written.
LANDLORD: TODAY PARKWOOD, L.P., a Texas limited partnership
By: Today Parkwood GP, Inc., its General Partner
By:________________________________________
Name:______________________________________
Title:_____________________________________
TENANT: UNITED INVESTORS REALTY TRUST, a Texas
real estate investment trust
By:_________________________________
Lewis H. Sandler, its President
<PAGE>
SCHEDULE I
BASE RENT
Tenant shall pay as Base Rent prior to the maturity date of the Secured
Note, an amount equal to the amount per month due pursuant to the
Secured Note. Payments of Base Rent commence as of the Commencement
Date with subsequent installments due and payable on the same day
installments of principal and interest are due under the Secured Note
and continue on the same day during the Term hereof. Tenant agrees to
pay on or before its due date, each installment of Base Rent plus any
tax and insurance escrow and other escrow amounts directly to
Mortgagee, provided it contemporaneously with such payment furnishes to
Landlord a copy of its check or other form of payment.
During the one year period following the maturity date of the Secured
Note, the Base Rent equals the sum of $1.00, the receipt of payment and
the sufficiency of consideration of which the Landlord hereby
acknowledges.
<PAGE>
SCHEDULE II
PERMITTED EXCEPTIONS
<PAGE>
EXHIBIT "A"
DESCRIPTION OF LAND
<PAGE>
Exhibit 10.5
Richwood Master Lease
LEASE AGREEMENT
BY AND BETWEEN
TODAY RICHWOOD, L.P.
AS LANDLORD
AND
UNITED INVESTORS REALTY TRUST
AS TENANT
Pertaining To
Richwood Shopping Center
Richardson, Dallas County, Texas
Dated December 31, 1998
<PAGE>
334006.1
Richwood Master Lease
- 9 -
LEASE AGREEMENT
Table of Contents
Page
ARTICLE 1 Definitions.................................................1
ARTICLE 2 Premises and Term of Lease..................................3
ARTICLE 3 Rent........................................................3
ARTICLE 4 Taxes and Other Charges.....................................4
ARTICLE 6 Use of Fire Insurance Proceeds..............................8
ARTICLE 7 Damage and Destruction-No Effect on Lease...................8
ARTICLE 9 This Article intentionally omitted..........................9
ARTICLE 10 Repairs.....................................................9
ARTICLE 11 Changes and Alterations....................................10
ARTICLE 12 Requirement of Public Authorities..........................10
ARTICLE 13 Fixtures and Articles of Personal Property.................11
ARTICLE 14 Discharge of Liens.........................................11
ARTICLE 15 Environmental Responsibilities.............................12
ARTICLE 16 Landlord Not Liable for Injury or Damage...................13
ARTICLE 17 Indemnification............................................13
ARTICLE 18 Landlord's Right of Inspection.............................14
ARTICLE 19 Landlord's Rights to Perform Tenant's Covenants............14
ARTICLE 20 Permitted Use; No Unlawful Occupancy.......................15
ARTICLE 21 Defaults, Conditional Limitation, Remedies, Etc............15
ARTICLE 22 Notices....................................................16
ARTICLE 23 Condemnation...............................................17
ARTICLE 24 Miscellaneous..............................................18
Exhibit "A" Description of the Land
Schedule "I" Base Rent
Schedule "II" Permitted Exceptions
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT, is made to be effective as of December 31, 1998,
between TODAY RICHWOOD, L.P., a Texas limited partnership having its principal
office at c/o Today Realty Advisors, Inc., 17400 Dallas Parkway, Suite 216,
Dallas, Texas 75287 (the "Landlord"), and UNITED INVESTORS REALTY TRUST, a Texas
real estate investment trust having its principal office at 5847 San Felipe,
Suite 850, Houston, Texas 77057 (the "Tenant").
ARTICLE 1
Definitions
Section 1.1. The terms defined in this Article, for all purposes of
this Lease and all agreements supplemental hereto, have the meanings herein
specified unless the context otherwise requires.
(a) "Acquisition Agreement" means that certain Acquisition Agreement
between Landlord as one of several parties named as seller therein, and
Tenant's assignee, Centennial Acquisition Corp. as buyer therein, dated
October 16, 1998, as amended, pertaining to the sale of the Property and
other properties. Reference in this Lease to the "Second Amendment" means
the Second Amendment to the Acquisition Agreement, dated as of December 31,
1998.
(b) "Buildings" means and includes buildings, improvements and
structures now or hereafter erected (when permitted by Landlord) upon the
Demised Premises, the Equipment and the Furniture and Fixtures, including
all fixtures and appurtenances therein and thereto and all personal
property of every kind and description, affixed or attached to, or placed
in or upon or used for or adapted to in any way the use, enjoyment,
occupancy and operation of the said buildings, improvements and structures
(other than the property which may be removed by Tenant as specifically
permitted by the provisions of this Lease) and any and all replacements
thereof, additions thereto and substitutes therefor.
(c) "Commencement Date" means the date of this Lease.
(d) "Demised Premises" means the Land and Buildings.
(e) "Equipment" means to include, but is not be limited to, all
machinery, engines, dynamos, boilers, elevators, air conditioning
compressors, ducts, units and equipment, heating and hot water systems,
pipes, plumbing, wiring, and gas, steam, water and electrical fittings,
used in connection with the operation of the Buildings.
(f) "Furniture and Fixtures" means and includes all fixtures,
appurtenances, furniture, furnishings, decorations and other personal
property of every kind and description now or hereafter affixed or attached
to or placed in or upon and used for or adapted in any way to the use,
enjoyment, occupancy and operation of the Buildings or any part thereof and
all replacements and renewals thereof and all additions thereto and an
substitutes therefor.
<PAGE>
(g) "Hazardous Materials" means any pollutant, toxic substance,
regulated substance, hazardous waste, hazardous material, hazardous
substance, oil, hydrocarbon, asbestos or similar item as defined in or
pursuant to the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, the Federal Clean Water Act, as amended, the Safe Drinking Water
Act, as amended, the Federal Water Pollution Control Act, as amended, the
Texas Water Code, as amended, the Texas Solid Waste Disposal Act, as
amended, or any other federal, State of Texas, or local environmental or
health and safety related, constitutional provisions, law, regulation,
ordinance, rule, or bylaw, whether existing as of the date hereof,
previously enforced or subsequently enacted (collectively the
"Environmental Laws")
(h) "Impositions" means all taxes, assessments, water rates, rents and
charges, sewer rates, rents and charges for all steam, heat, gas, water,
electricity, light, power and all other utilities and other services
furnished to the Demised Premises or to the Buildings or to the occupants
of either, excises, levies, duties, licenses and permit fees and all other
payments and charges of every kind and nature whatsoever, private and
public, ordinary and extraordinary, general or special, foreseen and
unforeseen of any kind and nature whatsoever which at any time during the
term of this Lease may be assessed, levied, charged upon, imposed upon or
become due or payable out of, or become a lien on the Demised Premises, or
the rent and income received by Tenant from subtenants, concessionaires or
licensees of the Demised Premises, it being the intention of the parties
that the rents reserved herein shall be received and enjoyed by Landlord as
a net sum free from all such taxes, payments, charges and such other items
provided, notwithstanding anything to the contrary hereinabove contained.
(i) "Land" means that certain tract of land situated in Dallas County,
Texas, being described on Exhibit "A" annexed hereto and made a part hereof
for all purposes, which forms a part of the Demised Premises.
(j) "Mortgagee" means the holder of the Mortgage.
(k) "Mortgage" means that certain Deed of Trust and Security Agreement
dated December 24, 1997, executed by Landlord as trustor to William
Campbell as Trustee, securing the Secured Note, and filed for record in
Volume 97250, Page 1290, Deed of Trust Records of Dallas County, Texas.
(l) "Option to Require Repurchase" means the right granted to Tenant
to require the repurchase of the Project, which option is set forth in
Section 4 (e) of the Second Amendment.
(m) "Secured Note" means that one certain promissory note in the
original principal sum of $3,400,000.00, dated December 24, 1997, executed
by Landlord, made payable to the order of Lehman Brothers, Inc. d/b/a
Lehman Capital, a division of Lehman Brothers Holdings, Inc., and any
renewals extensions, consolidations or replacements thereof.
(n) "Property" means the Demised Premises.
(o) "Tenant" means the Tenant named herein and any successor or assign
permitted hereunder.
(p) "Tenant's Option" means the right granted to the Tenant to
purchase all or part of the Property, which option is set forth in Section
4(b) of the Second Amendment.
<PAGE>
(q) "Term" means the term of this Lease as set forth in Section 2.2
hereof.
ARTICLE 2
Premises and Term of Lease
Section 2.1. Leasehold. Landlord does hereby demise and lease to
Tenant, and Tenant does hereby hire and take from Landlord, the Demised
Premises, subject to the interests, liens, charges, encumbrances and matters set
forth on Schedule II annexed hereto and made a part hereof (the "Permitted
Exceptions").
TO HAVE AND TO HOLD unto Tenant, its successors and assigns, for the
term described herein, unless such term shall be sooner terminated as
hereinafter provided.
Section 2.2. Term. The term of this Lease (the "Term") commences as of
the date hereof (the "Commencement Date") and terminates on the first annual
anniversary date of the maturity date of the Secured Note, unless sooner
terminated upon the occurrence of the earliest of the following events, or
extended as provided in Section 2.3 hereof:
(a) Transfer of title to the Property unto Tenant under the terms of
the Acquisition Agreement or the Tenant's Option; or
(b) Exercise by Tenant of the Option to Require Repurchase under the
terms of the Acquisition Agreement.
Section 2.3. Quiet Enjoyment. Landlord covenants that, if and so long
as Tenant faithfully performs the agreements, terms, covenants and conditions
hereof, Tenant shall and may peaceably and quietly have, hold and enjoy the
Demised Premises for the Term hereby granted, without molestation or disturbance
by or from Landlord and free of any encumbrance created or suffered by Landlord,
except those to the Permitted Exceptions.
ARTICLE 3
Rent
Section 3.1. Payment. Tenant shall pay to Landlord (or as otherwise
provided in Schedule I annexed hereto) at such address as Landlord may designate
in writing, a monthly rental equal to the sums set forth on Schedule I annexed
hereto (the "Base Rent"). The Base Rent shall be payable by wire transfer of
funds in equal monthly installments in advance on the first day of each calendar
month during the term of this Lease beginning on the on the first payment date
set forth under the terms of the Secured Note. The rent shall be in addition to
and over and above all other payments to be made by Tenant as herein provided.
Rent for partial months, if any, shall be apportioned. The rent shall be paid to
Landlord without notice or demand and, except as otherwise expressly provided
herein, without abatement, deduction, counterclaim or setoff. Tenant shall also
pay without notice or demand except as may be specifically required by this
Lease, and without abatement, deduction, counterclaim or setoff, all other
costs, charges, deposits and expenses prescribed herein ("Additional Rent").
<PAGE>
Section 3.2 Late Charge. If payment of any Base Rent becomes overdue
under the terms of the Secured Note, and the holder of the Secured Note assesses
a late charge or default rate, penalties, fees, etc., for such past due
installment, such late charge also becomes due and payable to Landlord as
liquidated damages for Tenant's failure to make prompt payment and said late
charges shall be immediately due and payable by Tenant.
Section 3.3. Net Lease. It is the purpose and intent of Landlord and
Tenant that the net rent shall be absolutely net to Landlord so that this Lease
shall yield net to Landlord, the net rent specified above in this Article 3 and
that all costs and expenses and obligations of every kind and nature whatsoever
whether now existing or hereafter arising or whether beyond the contemplation of
the parties, shall be timely paid by Tenant. Except as otherwise specifically
provided in this Lease, there shall be no abatement, diminution or reduction of
rent, charges or other compensation claimed by or allowed to Tenant, or any
person claiming under it, nor shall there be abatement or diminution or
reduction of the performance of the other obligations by Tenant hereunder under
any circumstances.
ARTICLE 4
Taxes and Other Charges
Section 4.1.
(a) Tenant covenants and agrees to pay to Landlord or on behalf of
Landlord all paving assessments, ad valorem taxes, real estate taxes
(including, but not limited to, those imposed by independent school
districts, municipal governments, County of Dallas, State of Texas, and any
other governmental authority imposing taxes upon the owner of real and
personal property related to the value thereof) and all other governmental
charges, general and special, ordinary and extraordinary, foreseen as well
as unforeseen, of any kind and nature whatsoever, including further, but
not limited to, assessments for pubic improvements or benefits (all of
which taxes, levies and other governmental charges are included in the term
"Impositions" as used herein) which are assessed, levied, confirmed,
imposed or become a lien upon the Demised Premises, or any part thereof, to
the extent that the same relate to any period of time during the Term
hereof, provided however, that, if, by law, any such Imposition is payable,
or may, at the option of the taxpayer, be payable in installments (whether
or not interest is accrued on the unpaid balance of such Imposition), the
Tenant may pay the Landlord as and for the same (and any interest accruing
on the unpaid balance of such Imposition) in installments as the same
respectively become due and before any fine, penalty, interest or cost may
be added thereto for the non-payment of such installment and interest.
Landlord covenants and agrees to cooperate with Tenant so that Tenant is
granted access to and is otherwise permitted to use any funds deposited in
escrow with the Mortgagee.
<PAGE>
(b) If, during the Term, under the laws of the State of Texas or other
taxing authority, a tax or excise on rents or other tax is levied or
assessed by the State of Texas or other taxing authority against the
Landlord or the rental expressly reserved hereunder as a clearly
ascertainable substitute, in whole or in part, for taxes assessed or
imposed by said state or authority on Land and Buildings, or on personal
property, the Tenant covenants to pay and discharge such tax or excise on
rents or other tax but only to the extent of the amount thereof lawfully
assessed or imposed upon the Landlord and lawfully so assessed or imposed
as a direct result of the ownership by the Landlord of the Demised
Premises, or any part thereof, or of this Lease, or of the rentals accruing
under this Lease, it being the intention of the parties hereto that the
rent to be paid hereunder shall be paid to the Landlord absolutely net
without deduction of any nature whatsoever, except that Landlord shall pay
all mortgages as provided herein. The payment to be made by the Tenant
pursuant to this paragraph shall be made before any fine, penalty, interest
or cost may be added thereto for the non-payment thereof.
Section 4.2. Tenant agrees that Tenant will make payment to the
Mortgagee on behalf of Landlord for any Imposition and other items of tax
referred to herein no later than ten (10) days prior to the date such tax or
other Imposition is due and payable to the taxing authority. Landlord agrees to
furnish to Tenant a statement of the amount of tax or Imposition due and a copy
of the statement of the taxing authority levying such Imposition, and, in all
events, Tenant agrees to make such payment before the payment of such Imposition
and tax to the taxing authority becomes delinquent. Notwithstanding the
foregoing, Tenant agrees that, if the Landlord is required to escrow tax
payments with the Mortgagee, Tenant will make monthly payments to the Mortgagee
on behalf of Landlord, in advance, on the first day of each month by wire
transfer of funds, each of such payments to be in the same amount paid or to be
paid by Landlord to the Mortgagee. If such monthly payments are insufficient in
amount to pay the aggregate of such Imposition and tax before the same become
delinquent, or the Mortgagee requires a different amount, such deficiency shall
be made good by Tenant promptly upon receipt of Landlord's statement with
respect to the same or a copy of the Mortgagee's statement, and in the event
such monthly payments shall exceed the amount of the aggregate of such
Imposition and taxes when the aggregate amount thereof is actually determined
(unless same is retained by the Mortgagee), such excess shall be credited upon
subsequent payments with respect thereto required of the Tenant.
Section 4.3. Tenant shall have the right at its own expense to contest
the amount or validity, in whole or in part, of any Imposition by appropriate
proceedings diligently conducted in good faith but only after payment of such
Imposition unless such payment would operate as a bar to such contest or
interfere materially with the prosecution thereof, in which event,
notwithstanding the provisions of subparagraph (a) hereof, payment of such
Imposition shall be postponed if and only so long as:
(a) neither the Demised Premises nor any part thereof would by reason
of such postponement, or deferment be, in the reasonable judgment of the
Landlord, in danger of being forfeited or lost, and
(b) the Mortgage will be complied with and would not be, by reason of
such postponement or deferment, in the reasonable judgment of Landlord, in
danger of being foreclosed.
Upon the termination of any such proceedings, it shall be the
obligation of Tenant to pay the amount of such Imposition or part thereof as
finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any costs,
fees, interests, penalties, or other liabilities in connection therewith.
Section 4.4. Tenant shall have a right to seek a reduction in the
valuation of the Demised Premises assessed for tax purposes and to prosecute any
action or proceeding in connection therewith. Tenant may, if it so desires, but
at its own expense attempt to obtain a lowering of the assessed valuation upon
the Demised Premises or any part thereof for the purpose of reducing taxes
thereon, and in such event, Landlord, at no cost or expense to Landlord, agrees
to cooperate in effecting such a reduction.
<PAGE>
Section 4.5. Landlord shall not be required to join in any proceedings
referred to in Section 4.3 hereof unless the provisions of any law, rule or
regulation at the time in effect shall require that such proceedings be brought
by and/or in the name of Landlord or any owner of the Demised Premises, in which
event Landlord shall join in such proceedings or permit the same to be brought
in its name. Landlord shall not ultimately be subject to any liability for the
payment of any costs or expenses in connection with any such proceedings, and
Tenant will indemnify and save harmless Landlord from any such costs and
expenses. Landlord may require any such proceedings be brought in its name but
in any such event the proceedings shall be for the sole benefit of Tenant.
Section 4.6 Tenant shall be entitled to the benefit of the reduction in
any Impositions during the Term hereof and Landlord agrees to join in any
consent or endorse any payment to which Tenant may be entitled resulting from
such reduction in Impositions.
ARTICLE 5
Insurance
Section 5.1. At all times during the term of this Lease, Tenant at its
own cost and expense shall:
(a) Keep the Buildings insured against loss or damage by fire and all
other hazards covered by the usual all risk endorsement, in an amount
sufficient to prevent Landlord and Tenant from becoming coinsurers under
provisions of applicable policies of insurance, but in any event in an
amount not less than eighty (80%) percent of the full insurable value
thereof (replacement value less physical depreciation) excluding the cost
of excavations and of foundation below the level of the lowest basement
floor, but in any event in such amounts in order to comply with the
requirements of the Mortgage.
(b) Provide and keep in force, insurance against liability for bodily
injury and death and property damage and boiler and machinery insurance
(provided the Buildings contain equipment ordinarily covered by such a
policy), all such insurance to be in such amounts and in such forms of
policies as may from time to time be reasonably required by Landlord and in
compliance with the Mortgage. Such liability insurance shall be
comprehensive general public liability insurance and shall include
specifically the Buildings, the Demised Premises and all garages, streets
and sidewalks and all areas in the Buildings. In any event:
(i)......the insurance against liability for personal
injury and death and property damage shall be not less than
One Million and No/100 ($1,000,000.00) Dollars for any
occurrence on a single limit "at risk" basis;
(ii).....boiler and machinery insurance shall be in
an amount and in such form as Landlord may reasonably
required.
(c) If a sprinkler system is contained within the Buildings, provide
and keep in force sprinkler leakage insurance in amounts and forms
reasonably satisfactory to Landlord and in compliance with the Mortgage.
(d) Provide and keep in force plate glass insurance which may be
included in the policy provided for in subparagraph (b) above.
<PAGE>
(e) Provide and keep in force such other insurance and in such amounts
as may from time to time be required by Landlord and in compliance with the
Mortgage against such other insurable hazards as at the time are commonly
insured against in the case of premises similarly situated due regard being
given to the type of the Buildings, their construction and their use and
occupancy.
Section 5.2.
(a) All insurance provided by Tenant, as required by this Article,
shall be carried in favor of Landlord and Tenant, as their respective
interests may appear, and, in the case of insurance against damage to the
Buildings by fire or other risk, shall also include the interest of the
holder of the Mortgage. All insurance shall be in such form and shall be
taken in such responsible companies as are reasonably acceptable to
Landlord and acceptable to the holder of the Mortgage. Tenant shall have
the privilege of procuring all such insurance through its own sources and
as a part of any blanket policies maintained by Tenant.
(b) Tenant shall procure policies for all such insurance for periods
of not less than one (1) year and shall deliver to Landlord such
certificates confirming the effectiveness of such policies with evidence of
the payment of premiums thereon in the event blanket policies have been
issued and shall procure renewals thereof from time to time at least thirty
(30) days before the expiration thereof. Tenant and Landlord shall
cooperate in connection with the collection of any insurance monies that
may be due in the event of loss and shall execute and deliver such proofs
of loss and other instruments which may be required for the purpose of
obtaining the recovery of any such insurance monies.
Section 5.3.
(a) Notwithstanding the foregoing, Tenant agrees that if Landlord is
required to escrow insurance premiums with the holder of the Mortgage,
Tenant agrees to make monthly payments to the Mortgagee on behalf of
Landlord, in advance, on the first day of each month by wire transfer of
funds, each of such payments to be in the same amount paid or to be paid by
the Landlord to the Mortgagee.
(b) All fire insurance policies provided for herein shall provide for
payment of loss to Tenant and the holder of the Mortgage, as their
respective interests may appear,
(c) Tenant shall not violate or permit to be violated any of the
conditions or provisions of any such policy, and Tenant shall so perform
and satisfy the requirements of the companies writing such policies that at
all times companies of good standing satisfactory to Landlord as herein
above provided shall be willing to write and/or continue such insurance.
(d) Each policy of insurance required to be obtained by Tenant as
herein provided and each certificate therefor issued by the insurer shall
contain an agreement by the insurer that such policy shall not be canceled
without at least thirty (30) days' prior written notice to Landlord, and to
any mortgagee to whom a loss thereunder may be payable. All such policies
shall also cover any increased risks as a result of construction, repairs,
alterations and additions to the Buildings and shall provide that any loss
shall be payable to Landlord notwithstanding any act of negligence of
Tenant which might otherwise result in forfeiture of said insurance. All
other terms of the Mortgage related to the terms hereof shall be complied
with by Tenant.
<PAGE>
Section 5.4. Landlord and Tenant hereby release the other from any and
all liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any of the extended coverage or supplementary contract
casualties, even if such fire or other casualty is caused in whole or in part by
the other party, or anyone for whom such party may be responsible, provided,
however, that this release shall be applicable and in force and effect only with
respect to loss or damage occurring during such time as the releasor's policies
shall contain a clause or endorsement to the effect that any such release shall
not adversely affect or impair said policies or prejudice the right of the
releasor to recover thereunder. Landlord and Tenant each agrees that it will
request its insurance carriers to include in its policies such a clause or
endorsement. If extra cost shall be charged therefor, each party shall advise
the other thereof and of the amount of the extra cost, and the other party, at
its election, may pay the same, but shall not be obligated to do so.
ARTICLE 6
Use of Fire Insurance Proceeds
Section 6.1. If the Buildings or any part thereof shall be destroyed or
damaged in whole or in part by fire or other casualty (including any casualty
for which insurance was not obtained or obtainable) or any kind or nature,
ordinary or extraordinary, foreseen or unforeseen, Tenant shall give to Landlord
immediate notice thereof, and Tenant, to the extent insurance proceeds are
available for the purpose, shall promptly repair, alter, restore, replace and
rebuild the same, at least to the extent of the value and as nearly as possible
to the character of the Buildings existing immediately prior to such occurrence;
and Landlord shall in no event be called upon to repair, alter, replace, restore
or rebuild the Buildings nor to pay any of the costs or expenses thereof. All
work shall be done in accordance with the provisions of Article 11 hereof and no
work shall be commenced until all the conditions precedent to the commencement
of changes and alterations as stipulated in Article 11 shall have been
satisfied.
Section 6.2. Landlord agrees to promptly pay over to Tenant, from time
to time, upon the following terms, any monies which may be received by Landlord,
from such insurance provided by Tenant. Landlord shall pay to Tenant, as
hereinafter provided, the entirety of the aforesaid insurance proceeds, for the
purpose of repairs or restoration to be made by Tenant to restore the Buildings
to a value which shall be not less than their value prior to such fire or other
casualty. If any mechanic's lien is filed against the Property, Tenant agrees to
satisfy or otherwise discharge such lien or a bond is posted in accordance with
applicable state law, if any, subject to approval by Landlord as to form, amount
and surety. The terms hereof are subject to the terms of the Mortgage.
ARTICLE 7
Damage and Destruction-No Effect on Lease
Section 7.1. This Lease shall not terminate or be forfeited or be
affected in any manner by reason of damage to or total, substantial or partial
destruction of the Demised Premises or any part thereof or the Buildings or any
part thereof or by reason of the untenantability of the same or any part
thereof, for or due to any reason or cause whatsoever and Tenant notwithstanding
any law or statute, present or future, waives any and all rights to quit or
surrender the Demised Premises or any part thereof, and Tenant expressly agrees
that its obligations hereunder, including the payment of net rent, Impositions,
and other sum or sums of money and other charges hereunder, shall continue the
same as though said Demised Premises or Buildings or any part thereof had not
been destroyed or injured, and without abatement, suspension, diminution or
reduction of any kind.
<PAGE>
ARTICLE 8
Assignment, Subleasing
Section 8.1. Tenant may not, without Landlord's prior written consent,
assign the entirety of the Lease or sublet the Demised Premises as a whole.
Section 8.2. Tenant may sublet or grant licenses or concessions with
respect to portions of the Demised Premises or the Buildings without Landlord's
prior written consent, provided that each sublease or license or concession
shall be subject and subordinate to this Lease and to the rights of Landlord
hereunder and subject to the terms of the Mortgage. Tenant shall and does hereby
indemnify and agree to hold Landlord harmless from any and all liabilities,
claims and causes of action arising or accruing from and after the Commencement
Date under any terms and conditions of every sublease, license or concession
agreement. Likewise, Landlord shall and does hereby indemnify and agree to hold
Tenant harmless from any and all liabilities, claims and causes of action
arising or accruing prior to the Commencement Date under any terms and
conditions of every sublease, license or concession agreement.
Section 8.3. The fact that a violation or breach of any of the terms,
provisions or conditions of this Lease, results from or is caused by an act or
omission accruing on or after the Commencement Date by any subtenant, licensee
or concessionaire shall not relieve Tenant of Tenant's obligation to cure the
same.
ARTICLE 9 This Article intentionally omitted.
ARTICLE 10
Repairs
Section 10.1. During the Term of this Lease, Tenant, at its sole cost
and expense, agrees to take good care of the Demised Premises, including the
Buildings, all sidewalks, grounds, areas, vaults, chutes, sidewalk hoists,
railings, gutters, alleys and curbs in front of or adjacent to the Demised
Premises and will put, keep and maintain the same in good and safe order and
condition, and make all repairs therein and thereon, interior and exterior,
structural and non-structural, ordinary and extraordinary, and unforeseen and
foreseen, necessary to keep the same in good and safe order and condition
howsoever the necessity or desirability therefore may occur, and whether or not
necessitated by wear, tear, obsolescence or defects, latent or otherwise. Tenant
shall not commit or suffer and shall use reasonable precaution to prevent waste,
damage or injury to all of the same. When used in this Article, the term
"repairs" shall include all necessary replacements, renewals, alterations and
additions. All repairs made by Tenant shall be equal in quality and class to the
original work.
Section 10.2 Landlord shall not be required to furnish any services
whatsoever or facilities whatsoever to the Demised Premises including, but not
limited to, water, steam, heat, gas, electricity, light and power. Landlord
shall have no duty or obligation to make any alteration, addition, change,
improvement, replacement or repair to, or to demolish, the Demised Premises,
except in respect to Seller's Remediation Work of the areas designated as the
Contamination Areas in the Second Amendment. Tenant assumes the full and sole
responsibility for the condition, operation, repair, alteration, improvement,
replacement, maintenance and management of the Demised Premises, except in
respect to the aforesaid Seller's Remediation Work.
<PAGE>
Richwood Master Lease
- 17 -
ARTICLE 11
Changes and Alterations
Section 11.1. Tenant shall have the right, at any time and from time to
time, during the term of this Lease, to make at its sole cost and expense,
changes and alterations in or of the Buildings, subject, however, to compliance
with the following conditions and the terms of the Mortgage, it being understood
that repairs, restoration and other work done pursuant to the provisions of
Articles 6 and 10 hereof shall be deemed to be changes and alterations:
(a) No change or alteration, involving an estimated cost of more than
$500,000.00, including any restoration, repair, replacement or rebuilding
required by Article 6 hereof, shall be made without the prior written
consent of Landlord, which consent may not be unreasonably withheld or
delayed.
(b) No change or alteration involving an estimated cost of more than
$500,000.00 shall be made except in accordance with plans and
specifications and cost estimates prepared and approved in writing by
Landlord, which may not unreasonably withhold or delay such consent.
(c) Any change or alteration shall be made promptly and in a good and
workmanlike manner and in compliance with all applicable permits and
authorizations and building and zoning laws and with all other laws,
ordinances, orders, rules, regulations and requirements of all federal,
state and municipal governments.
(d) Tenant shall, at its own cost and expense, comply in all respects
with the applicable state mechanic's and materialman's lien laws as same
are now and may from time to time be amended, to the end that no lien
thereunder shall in any way affect the Property.
ARTICLE 12
Requirement of Public Authorities
Section 12.1. Tenant shall at its own cost and expense, during the Term
promptly execute and comply with any and all present and future laws, rules,
orders, ordinances, regulations, statutes and requirements (the "Requirements")
with respect to the removal of any encroachment or the condition, equipment,
maintenance, use or occupation of the Property, whether or not the same involve
or require any structural change or the making of any alterations or additions
in or to any structure upon or appurtenant to the Property; and Tenant, at its
own cost and expense, during the Term shall and will also execute and comply
with any and all provisions and requirements of any fire, liability or other
insurance policy required to be carried by Tenant under the provisions of this
Lease. Notwithstanding the foregoing, Landlord covenants and agrees to discharge
any mechanic's, laborer's or materialman's liens which may arise in connection
with Seller's Remediation Work. Tenant shall give Landlord prompt notice of any
notice of violation of any such Requirement received by Tenant.
Section 12.2. At its own expense, Tenant shall have the right to
contest the validity of any such Requirement or the application thereof.
<PAGE>
ARTICLE 13
Fixtures and Articles of Personal Property
Section 13.1. Tenant shall keep the Demised Premises fully and
adequately furnished and equipped with all Equipment, Fixtures, and Personalty
necessary for the operation of the Property.
Section 13.2. Tenant shall not have the right, power or authority to
and will not remove from the Demised Premises except for repairs, replacement,
cleaning, other servicing, or compliance with Requirements or in connection with
alterations permitted hereunder, any Equipment, Fixtures or Articles of
Personalty without the prior written consent of Landlord, which consent may not
be unreasonably withheld or delayed.
Section 13.3. Tenant shall keep all Equipment and Fixtures and Articles
of Personalty in good order and repair and shall replace the same when necessary
by items of like quality and value.
Section 13.4. All Equipment and all Fixtures and Personalty shall be
fully paid for by Tenant in cash and Tenant shall not purchase any equipment or
fixtures or articles on conditional bills of sale or chattel mortgages or other
financing or security arrangements or agreements, or other title retention
agreements or arrangements.
ARTICLE 14
Discharge of Liens
Section 14.1. Tenant will not create or permit to be created or to
remain, and will discharge, any lien, encumbrance or charge (levied on account
of any Imposition or any mechanic's, laborer's or materialman's lien,
conditional sale, title retention agreement or chattel mortgage, or otherwise)
which might be or become a lien, encumbrance or charge upon the Property or any
part thereof or the income therefrom, and Tenant will not suffer any other
matter or thing whereby the estate, rights and interest of Landlord in the
Property or any part thereof might be impaired, except as specifically permitted
by this Lease. Likewise, Landlord covenants and agrees to discharge any
mechanic's, laborer's or materialman's liens which may arise in connection with
Seller's Remediation Work.
Section 14.2. If any mechanic's, laborer's or materialman's lien shall
at any time be filed against the Property or any part thereof, Tenant, within
thirty (30) days after notice of the filing thereof, or such shorter period as
may be required by the holder of the Mortgage, will cause the same to be
discharged of record or will post a bond in accordance with applicable state
law, if any. If Tenant fails to cause such lien to be discharged within the
aforesaid 30 day period, then, in addition to any other right or remedy,
Landlord may, but shall not be obligated to, discharge the same either by paying
the amount claimed to be due or by procuring the discharge of such lien by
deposit or by bonding proceedings, and in any such event Landlord shall be
entitled, if Landlord so elects, to compel the prosecution of an action for the
foreclosure of such lien by the lienor and to pay the amount of the judgment in
favor of the lienor with interest, costs and allowances. Any amount so paid by
Landlord and all costs and expenses incurred by Landlord in connection
therewith, together with interest thereon at the maximum rate permitted by law
from the respective dates of Landlord's making of the payment or incurring of
the cost and expense shall constitute additional rent payable by Tenant under
this Lease and shall be paid by Tenant to Landlord on demand.
<PAGE>
Section 14.3. Nothing in this Lease contained shall be deemed or
construed in any way as constituting the consent or request of Landlord, express
or implied by inference or otherwise, to any contractor, subcontractor, laborer
or materialman for the performance of any labor or the furnishing of any
materials for any specific improvement, alteration to or repair of the Demised
Premises or any part thereof, nor as giving Tenant any right, power or authority
to contract for or permit the rendering of any services or the furnishing of any
materials that would give rise to the filing of any lien against the Demised
Premises or any part thereof. Notice is hereby given that Landlord shall not be
liable for any work performed or to be performed or any materials furnished or
to be furnished at the Demised Premises for Tenant or any subtenant, and that no
mechanic's or other lien for such work or materials shall attach to or affect
the estate or interest of Landlord in and to the Property.
Section 14.4. Tenant shall have no power to do any act or make any
contract which may create or be the reason for any lien, mortgage or other
encumbrance upon the estate or interest of Landlord in the Demised Premises.
Within five (5) days after the service on Tenant of a claim or lien or a summons
and complaint in an action or proceeding for the enforcement thereof, Tenant
shall provide Landlord with a true copy thereof.
ARTICLE 15
Environmental Responsibilities
Section 15.1. Tenant shall not cause or permit any Hazardous Material
to be brought upon, kept or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees, unless such Hazardous Material is necessary
or useful to Tenant's business and will be used, kept and stored in a manner
that complies with the Mortgage and all laws regulating any such Hazardous
Material so brought upon or used or kept in or about the Premises. If any
Hazardous Material is stored or used on the Premises as specified above, Tenant
shall remove all such Hazardous Material upon the expiration or termination of
this Lease and restore the Premises to a condition satisfactory to Landlord. The
provisions of this Article 15 shall survive the expiration or termination of the
Lease.
Section 15.2 Tenant shall immediately advise Landlord in writing of (i)
any governmental or regulatory actions instituted or threatened under any
Environmental Law affecting the Tenant or the Premises, (ii) all claims made or
threatened by any third party against Tenant or the Premises relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials, (iii) the discovery of any occurrence or condition on any
real property adjoining or in the vicinity of the Premises that could cause the
Premises to be classified in a manner which may support a claim under any
Environmental Law, and (iv) the discovery of any occurrence or condition on the
Demised Premises or any real property adjoining or in the vicinity of the
Premises which could subject Tenant or the Premises to any restrictions in
ownership, occupancy, transferability or use of the Demised Premises under any
Environmental Law. Landlord may elect to join and participate in any
settlements, remedial actions, legal proceedings or other actions initiated in
connection with any claims under any Environmental Law and to have its
reasonable attorney's fees paid by Tenant. At its sole cost and expense, Tenant
agrees when applicable or upon request of Landlord to promptly and completely
cure and remedy every violation of an Environmental Law except in respect to any
such violation which relates to the condition which Seller's Remediation Work is
intended to cure, as described in the Second Amendment, and such Seller's
Remediation Work.
Section 15.3 Landlord covenants and agrees to Landlord undertake and
complete Seller's Remediation Work in accordance with the terms of the Second
Amendment.
<PAGE>
ARTICLE 16
Landlord Not Liable for Injury or Damage
Section 16.1. Except for events occurring or accruing prior to the
Commencement Date, Landlord shall not in any event whatsoever be liable for any
injury or damage to any property or to any person happening on, in or about the
Demised Premises and its appurtenances, nor for any injury or damage to the
Property, nor to any property, whether belonging to Tenant or any other person,
caused by any fire, breakage, leakage, defect or bad condition in any part or
portion of the Property, or from water, rain or snow that may leak into, issue
or flow from any part of the Demised Premises from the drains, pipes, or
plumbing work of the same, or from any place or quarter, or due to the use,
misuse or abuse of an or any of the elevators, hatches, openings, installations,
stairways or hallways of any kind whatsoever which may exist or hereafter be
erected or constructed on the Property, or from any kind of injury which may
arise from any other cause whatsoever on the Property.
ARTICLE 17
Indemnification
Section 17.1. In addition to any other indemnities to Landlord
specifically provided in this Lease, Tenant will indemnify and save harmless
Landlord against and from all liabilities, suits, obligations, fines, damages,
penalties, claims, costs, charges and expenses, including, without limitation,
reasonable architects' and attorneys' fees by or on behalf of any person, which
may be imposed upon or incurred by or asserted (the "Liabilities") against
Landlord by reason of any of the following occurring during the term of this
Lease (the "Activities"), save and except any such liabilities, etc. arising
from or in consequence of any of Seller's Remediation Work required of Landlord
in the Second Amendment:
(a) any work or thing done in, on or about the Demised Premises or any
part thereof;
(b) any use, nonuse, possession, occupation, alteration, repair,
condition, operation, maintenance or management of the Demised Premises or
any part thereof or of any street, alley, sidewalk, curb, vault, passageway
or space adjacent thereto;
(c) any negligence on the part of Tenant or any subtenant or any of
its or their agents, contractors, servants, employees, licensees or
invitees;
(d) any accident, injury (including death) or damage to any person or
property occurring in, on or about the Demised Premises or any part thereof
or in, on or about any street, alley, sidewalk, curb, vault, passageway or
space adjacent thereto;
(e) any failure on the part of Tenant to perform or comply with any of
the covenants, agreements, terms or conditions contained in the Mortgage
and/or this Lease, or any sublease, license or concession agreement on its
part to be performed or complied with;
(f) this Lease; any tax attributable to the execution, delivery or
recording of this Lease;
(g) any contest permitted pursuant to the provisions of Article 4
hereof.
<PAGE>
Section 17.2 Landlord agrees to indemnify and hold Tenant harmless from
any Liabilities resulting from any of the Activities which arose or accrued
prior to the Commencement Date hereof.
The provisions of this Article and the provisions of all other
indemnity provisions elsewhere contained in this Lease shall survive the
expiration or earlier termination of this Lease.
ARTICLE 18
Landlord's Right of Inspection
Section 18.1. Tenant shall permit Landlord and its agents or
representatives to enter the Demised Premises at all reasonable times for the
purpose of (i) inspecting the same and (ii) making any necessary repairs thereto
and performing any work therein that may be necessary by reason of Tenant's
failure to make any such repairs or perform any such work provided, however,
that except in cases of emergency Landlord shall give Tenant at least fifteen
(15) days' written notice of the necessity of making repairs.
Section 18.2. Nothing in this Article or elsewhere in this Lease shall
imply any duty upon the part of Landlord to do any such work; and performance
thereof by Landlord shall not constitute a waiver of Tenant's default in failing
to perform the same.
Section 18.3. Landlord shall have the right to enter the Demised
Premises at any reasonable times during usual business hours for the purpose of
showing it to agents and representatives of the holder of the Mortgage in order
to comply with the terms of the Mortgage.
ARTICLE 19
Landlord's Rights to Perform Tenant's Covenants
Section 19.1. If Tenant shall at any time fail to pay any Imposition in
accordance with the provisions hereof, or to take out, pay for, maintain or
deliver any of the insurance policies provided for herein, or shall fail to make
any other payment or perform any other act on its part to be made or performed,
then Landlord, after thirty (30) days' notice to Tenant (or without notice in
case of an emergency) and without waiving or releasing Tenant from any
obligation of Tenant contained in this Lease, may (but shall be under no
obligation to):
(a) pay any Imposition payable by Tenant pursuant to the provisions
hereof, or
(b) take out, pay for and maintain any of the insurance policies
provided for herein, or
(c) make any other payment or perform any other act on Tenant's part
to be made or performed as in this Lease provided,
and may enter upon the Demised Premises for the purpose and take all such action
thereon as may be necessary therefor.
<PAGE>
Section 19.2. All reasonable sums so paid by Landlord and all
reasonable costs and expenses incurred by Landlord in connection with the
performance of any such act, together with interest thereon at the rate of 10%
per annum from the respective dates of Landlord's making of each such payment or
incurring of each such cost and expense shall be paid by Tenant to Landlord upon
demand. Any payment or performance by Landlord pursuant to the foregoing
provisions of this Article shall not be nor be deemed to be a waiver or release
of the breach or default of Tenant with respect thereto or of the right of
Landlord to terminate this Lease, institute summary proceedings and/or take such
other action as may be permissible hereunder in the event of breach or default
by Tenant. It is agreed that Tenant's liability hereunder shall be limited to
its interest in the Property.
ARTICLE 20
Permitted Use; No Unlawful Occupancy
Section 20.1. Tenant may use the entire Demised Premises for any lawful
purpose. Tenant shall not use or occupy, nor permit or suffer, the Demised
Premises or any part thereof to be used or occupied for any unlawful or illegal
business, use or purpose, nor for any business, use or purpose deemed
disreputable or extra hazardous, nor in such manner as to constitute a nuisance
of any kind, nor for any purpose or in any way in violation of the certificate
of occupancy or of any present or future governmental laws, ordinances,
requirements, orders, directions, rules or regulations affecting the Demised
Premises. Tenant shall immediately upon the discovery of any such unlawful,
illegal, disreputable or extra hazardous use take all necessary steps, legal and
equitable, to compel the discontinuance of such use and to oust and remove any
subtenants, occupants or other persons guilty of such unlawful, illegal,
disreputable or extra hazardous use.
Section 20.2. Tenant will not suffer any act to be done or any
condition to exist on the Demised Premises or any portion of either, or any
article to be brought thereon, which may be dangerous, unless safeguarded as
required by law, or which does, in law, constitute a nuisance, public or
private, or which does make void or voidable any insurance then in force on the
Demised Premises.
Section 20.3. Tenant shall not suffer or permit the Demised Premises or
any portion thereof to be used by the public, as such, without restriction or in
such manner as might reasonably tend to impair Landlord's title to the Demised
Premises or any portion thereof, or in such manner as might reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or of implied dedication of the Demised Premises or any portion
thereof.
ARTICLE 21
Defaults, Conditional Limitation, Remedies, Etc.
Section 21.1. Each of the following events shall be an "Event of
Default" hereunder:
(a) If Tenant fails to pay any installment of Base Rent or Impositions
or other payments or charges required to be paid by Tenant under this Lease
or any monies advanced by Landlord and collectible as Additional Rent
within ten (10) days after written notice;
(b) If Tenant fails to make any deposit for Impositions or insurance,
if required hereunder, as and when the same shall become due and payable,
and shall not make such deposit within ten (10) days after written notice;
and
<PAGE>
(c) If Tenant breaches or fails to perform any of the other
agreements, terms, covenants or conditions hereof on Tenant's part to be
performed and such breach or failure shall continue for the period within
which performance is required to be made by specific provision of this
Lease, or, if no such period is so provided, for thirty (30) days after
written notice, or, if such performance cannot be reasonably had within
such thirty (30) day period, Tenant shall not in good faith have commenced
such performance within such thirty (30) day period and shall not
diligently proceed therewith to completion within ninety (90) days after
such notice.
Section 21.2. Limitation of Liability. Notwithstanding any provision of
the law or in equity to the contrary, the following provisions provide for the
sole rights and remedies available to the Landlord should an Event of Default
occur: Tenant agrees to indemnify and hold Landlord, its partners, officers,
directors, shareholders, agents and representatives, or any other person
relating thereto (the "Landlord Group"), harmless from and against any
liabilities, suits, obligations, fines, damages, penalties, claims, costs,
charges and expenses asserted by the Mortgagee in its pursuit of claims for
recovery under the following Loan Documents against any of the members of the
Landlord Group which is caused by the acts of Tenant, or its employees or
agents: (i) Guaranty of Recourse Obligations of Borrower dated December 24,
1997, executed by Eric Brauss: (ii) Guaranty of Payment executed by Landlord and
Today Richwood, L.P., dated December 24, 1997; and (iii) Environmental Indemnity
Agreement executed by Landlord and Eric Brauss, dated December 24, 1997. Tenant
shall not be liable under the aforesaid indemnity for any acts of members of the
Landlord Group arising under the Loan, including without limitation any claims
for damages asserted by Lender arising out of the existence of Hazardous
Materials in the area referred to in the Second Amendment as the Contaminated
Area of the Property. In this regard, Landlord agrees and understands that it
has no right to terminate the Lease solely by reason of the occurrence of any
Event of Default related to such Hazardous Materials or otherwise assert or
pursue any other claim for damages under this Lease. The term "Loan Documents"
means the documents evidencing and securing the Secured Note executed by the
Landlord and/or the members of the Landlord Group..
ARTICLE 22
Notices
Section 22.1. Whenever it is provided herein that notice, demand,
request or other communication shall or may be given to or served upon either of
the parties by the other, and whenever either of the parties shall desire to
give or serve upon the other any notice, demand, request or other communication
with respect hereto or the Demised Premises, each such notice, demand, request
or other communication shall be in writing and, any law or statute to the
contrary notwithstanding, shall be effective for any purpose if given or served
as follows or at such other address as Landlord or Tenant may from time to time
designate by notice given to the other party by facsimile transmission,
registered or certified mail:
If to Landlord: ......... Today Richwood, L.P.
c/o Today Realty Advisors, Inc.
17400 Dallas Parkway, Suite 216
Dallas, Texas 75287
Attention: Sue Shelton
Telephone: (972) 407-9067
Telecopy: (972) 407-9068
With Copy to: ......... Fishman, Jones, Walsh & Gray, P.C.
8117 Preston Road, Suite 440
Dallas, Texas 75225
Attention: Edward M. Fishman, Esq.
Telephone: (214) 265-2200
Telecopy: (214) 265-2204
<PAGE>
If to Tenant: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall D. Keith
Vice-President and Chief
Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to:
United Investors Realty Trust
8080 North Central Expressway
Suite 500
Dallas, Texas 75206
Lewis H. Sandler
President and Chief Executive
Officer
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
ARTICLE 23
Condemnation
Section 23.1. If at any time during the term of this Lease, the whole
or materially all of the Property shall be taken for any public or quasi-public
purpose by any lawful power or authority by the exercise of the right of
condemnation or eminent domain or by agreement between Landlord, Tenant and
those authorized to exercise such right, this Lease and the Term hereby granted
shall terminate and expire on the date of such taking and the Base Rent,
Additional Rent and other sums and other charges provided to be paid by the
Tenant shall be apportioned and paid to the date of such taking (the "Taking
Date").
The term "materially all of the Property" means the portion of the
Property, as when so taken, would leave remaining the balance of the Property
which, due either to the area so taken or the location of the part so taken in
relation to the part not so taken, would not under economic conditions, zoning
laws or building regulations then existing or prevailing, readily accommodate a
new building or buildings of a nature similar to the Buildings at the date of
such taking and of floor area sufficient, together with the portion of the
Buildings not taken in the condemnation, to produce a fair and reasonable
return, after payment of (i) all operating expenses thereof, (ii) the net rental
as same may be reduced as a result of such taking, (iii) additional rent and
other sum or sums of money and other charges herein reserved and after
performance of all covenants, agreements, terms and provisions herein and by law
provided to be preformed and paid by Tenant.
<PAGE>
The term "Taking Date" means the date the Demised Premises or a part
thereof, as the case may be, shall be deemed to have been taken or condemned on
the date on which actual possession of the Demised Premises or a part thereof,
as the case may be, is acquired by any lawful power or authority on the date on
which title vests therein, whichever is earlier.
Section 23.2. If less than materially all of the Demised Premises be so
taken or condemned, this Lease and the Term thereof shall continue, and the Base
Rent due and payable shall continue
In the event of any taking or condemnation as provided in this Section
23.2, the entire award or the aggregate of the separate awards (the
"Condemnation Award") to Landlord and Tenant, as the case may be, shall belong
to and be the sole property of Tenant without any claim on the part of Landlord,
(Landlord hereby waiving all claims for any value for its leasehold or its
interest in this Lease or otherwise), but subject to the terms of the Mortgage.
Section 23.3. If the temporary use of the whole or any part of the
Demised Premises shall be taken at any time during the Term for any
public or quasi-public purpose by any lawful power or authority, by the
exercise of the right of condemnation or eminent domain, the Term of
this Lease shall not be reduced or affected in any way and Tenant shall
continue to pay in full the Base Rent, Additional Rent and other sums
provided to be paid by Tenant. If the Condemnation Award is in the form
of rent recoverable in respect of such taking and shall be payable in
quarterly or more frequent installments, Tenant shall be entitled to
make claim to and retain such award or awards in the form of rent so
payable, provided this Lease is then in force and effect and so long as
Tenant is otherwise if full compliance with the terms and conditions
hereof, but subject to the terms of the Mortgage. Section 23.4. In case
of any governmental action, not resulting in the taking or condemnation
of any
portion of the Demised Premises but creating a right to compensation therefor,
such as, without limitation (except as otherwise provided in this Article 23),
the changing of the grade of any street upon which the Demised Premises abut,
this Lease shall continue in full force and effect without reduction or
abatement of Base Rent, Impositions, or any other payment of Tenant to be made
hereunder, and Tenant shall be entitled to the payment of the entirety of such
proceeds, but subject to the terms of the Mortgage.
ARTICLE 24
Miscellaneous
Section 24.1. No Oral Agreements. This Lease contains all the promises,
agreements, conditions, inducements and understandings between Landlord and
Tenant relative to the Demised Premises and there are no promises, agreements,
conditions, understandings, inducements, warranties or representations, oral or
written, expressed or implied, between them other than as herein set forth.
Section 24.2. Invalidity of Certain Provisions. If any term or
provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term or provision to persons or
circumstances other than as to which it is held invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Lease shall be
valid and be enforced to the fullest extent permitted by law.
<PAGE>
Section 24.3. Compliance with Mortgage. Notwithstanding anything to the
contrary contained herein, Tenant covenants and agrees that after the
Commencement Date (i) it will not create or permit to be created any condition
or do or permit to be done any act or thing which may be prohibited by the terms
of the Mortgage, (ii) it will execute and deliver any documents, papers or other
instruments which may be necessary or required to permit the due performance and
compliance with all of the terms, covenants and agreements of the Mortgage by
the party responsible thereunder for such performance, and (iii) it will comply
with all of the terms, covenants and conditions contained in the Mortgage other
than any payments of principal and interest due and owing under the Secured
Note, tax and insurance payments due under the Mortgage. Tenant agrees to
indemnify Landlord for any loss it may suffer or incur arising under Tenant's
breach of the provisions of this Section. The terms hereof shall survive any
termination of this Lease.
Section 24.4. Recording of Memorandum. Landlord and Tenant will, upon
the written request of the other, join in the execution of a memorandum of lease
in proper form for recordation in the appropriate office or offices wherein the
Demised Premises are situated, setting forth the existence and terms of this
Lease, and Landlord and Tenant will each take further action as may be necessary
to effect such recordation. No memorandum shall be recorded without the prior
written consent of both parties hereto.
Section 24.5. This Lease cannot be changed or terminated orally, but
only by an instrument in writing executed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
Section 24.6. This Lease shall be governed by and construed in
accordance with the laws of the State of Texas.
Section 24.7. The agreements, terms, covenants and conditions herein
shall bind and inure to the benefit of Landlord and Tenant and each of its
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement in multiple original counterparts, the day, month and year first above
written.
LANDLORD: TODAY RICHWOOD, L.P., a Texas limited partnership
By: Today Richwood GP, Inc., its General
Partner
By:__________________________
Name:________________________
Title:_______________________
TENANT: UNITED INVESTORS REALTY TRUST, a Texas real
estate investment trust
By:
Lewis H. Sandler, its President
<PAGE>
SCHEDULE I
BASE RENT
Tenant shall pay as Base Rent prior to the maturity date of the Secured
Note, an amount equal to the amount per month due pursuant to the
Secured Note. Payments of Base Rent commence as of the Commencement
Date with subsequent installments due and payable on the same day
installments of principal and interest are due under the Secured Note
and continue on the same day during the Term hereof. Tenant agrees to
pay on or before its due date, each installment of Base Rent plus any
tax and insurance escrow and other escrow amounts directly to
Mortgagee, provided it contemporaneously with such payment furnishes to
Landlord a copy of its check or other form of payment.
During the one year period following the maturity date of the Secured
Note, the Base Rent equals the sum of $1.00, the receipt of payment and
the sufficiency of consideration of which the Landlord hereby
acknowledges.
<PAGE>
SCHEDULE II
PERMITTED EXCEPTIONS
<PAGE>
EXHIBIT "A"
DESCRIPTION OF LAND
<PAGE>
10.6 exhibit
DECLARATION OF TRUST
DECLARATION OF TRUST made this 31st day of December, 1998, by TODAY
GREEN OAKS GP, INC. , a Texas corporation ("Trustee") for and on behalf of
UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust ("Owner").
(1) Declaration of Trust. The Trustee hereby declares that it has set
aside and now holds in trust the following described interests (the "Trust
Property"), under the terms and conditions hereinafter stated:
The 1% general partnership interest in Today Green Oaks, L.P., a Texas
limited partnership (the "Limited Partnership"), subject to the terms
of the Limited Partnership Agreement of the Limited Partnership dated
as of August 31, 1995 (the "Partnership Agreement").
(2) Beneficial Interest. The Trustee holds the Trust Property for the
sole benefit of Owner.
(3) Trustee's Powers. The Trustee shall not without the prior written
consent of Owner undertake any activity which may adversely affect the rights,
privileges, duties, obligations and liabilities of Owner under the Partnership
Agreement, or with respect to the assets owned by the Partnership, or otherwise.
(4) Limitation on Powers. No powers herein enumerated or accorded to
trustees generally by law shall be construed to enable the Trustee as grantor,
trustee or otherwise, or any other person, to purchase, exchange, or otherwise
deal with or dispose of the corpus or income of this Trust without the prior
written consent of Owner.
(5) Compensation. The Trustee shall receive no commission or other
compensation for its services hereunder except as may be approved by Owner.
(6) Successor Trustee. If any one of the following events occur, the
Owner may appoint a successor Trustee, with or without the consent of the
Trustee, and the written resignation thereof, and appoint a successor Trustee to
act hereunder without the further act or deed of the Trustee named herein:
(i) The failure or refusal of the Trustee to act after written notice
is delivered by the Owner, and such failure and refusal continues for a
period of seven days after delivery of said written notice;
(ii) The Trustee named herein files for protection or seeks
reorganization or relief from creditors, in any bankruptcy, or under
the federal bankruptcy laws or in any other similar proceedings; or
(iii) A petition is filed against it in any bankruptcy, reorganization,
insolvency or similar proceedings and such proceedings is not dismissed
within 60 days of such filing. (7) Bond. The undersigned shall not be
required to furnish
any bond or other security for the faithful performance of its
duties hereunder.
(8) Governing Law. This Trust shall be construed and governed by
the laws of the State of Texas.
(9) Benefit. This Agreement is binding upon the Trustee and the Owner,
their or a petition is filed against it respective successors and assigns, and
shall inure to the benefit of the parties hereto, their successors and assigns;
provided, however, Trustee may not assign its interest herein without the prior
written consent of the Owner.
(10) Notice. Whenever notice or other communication may be given to or
served upon either of the parties by the other, and whenever either of the
parties shall desire to give or serve upon the other any notice, demand, request
or other communication, each such notice, demand, request or other communication
shall be in writing and shall be effective for any purpose if given or served as
follows or at such other address as the parties may from time to time designate
by notice given to the other party by facsimile transmission, registered or
certified mail:
If to Trustee: Green Oaks GP, Inc.
c/o Today Realty Advisors, Inc.
17400 Dallas Parkway, Suite 216
Dallas, Texas 75287
Attention: Sue Shelton
Telephone: (972) 407-9067
Telecopy: (972) 407-9068
With Copy to: Fishman, Jones, Walsh & Gray, P.C.
8117 Preston Road, Suite 440
Dallas, Texas 75225
Attention: Edward M. Fishman, Esq.
Telephone: (214) 265-2200
Telecopy: (214) 265-2204
If to Owner: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall D. Keith
Vice-President and
Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to: United Investors Realty Trust
8080 North Central Expressway
Suite 500
Dallas, Texas 75206
Lewis H. Sandler
President and Chief Executive Officer
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
IN WITNESS WHEREOF, the undersigned has executed and acknowledged this
Declaration of Trust, on the day and year first above written.
TRUSTEE: GREEN OAKS GP, INC.
By:_____________________________
Name:____________________________
Title:____________________________
OWNER: UNITED
INVESTORS REALTY TRUST
By:
Lewis H. Sandler, its President
STATE OF TEXAS
COUNTY OF DALLAS
The foregoing was acknowledged before me by , _________________________________
of Today Green Oaks GP, Inc., a Texas corporation, on this 31st day of December,
1998.
Notary Public
My commission Expires:__________________
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December 31, 1998, by
Lewis H. Sandler, President of United Investors Realty Trust, a Texas real
estate investment trust, on behalf of said trust.
Notary Public in
and for the
State of Texas
My commission
expires: _____________
<PAGE>
Exhibit 10.7
PROMISSORY NOTE
$5,620,000.00 ("Effective Date"92th day of December, 1998
UIRT - LAKE ST. CHARLES, L.L.C., a limited liability company
27001 U.S. 19 North, Suite 2095
Clearwater, Florida 34621
(Hereinafter referred to as the "Borrower")
FIRST UNION NATIONAL BANK 100 South Ashley Drive, Suite 910 Tampa, Florida 33602
(Hereinafter referred to as the "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of FIVE MILLION SIX HUNDRED TWENTY THOUSAND AND NOIIOO DOLLARS
($5,620,000.00) or such sum as may be advanced and outstanding from time to time
with interest on the unpaid principal balance at the rate and on the terms
provided in this Promissory Note (including all renewals, extensions or
modifications hereof, this "Note").
SECURITY. Borrower has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, real property
collateral described in that certain Mortgage, an Assignment of Lessor's
Interest in Leases, of even date herewith, and an unconditional, irrevocable
demand only Letter of Credit.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the LIBOR Market Index Rate plus 1.75% as that rate
may change from day to day in accordance with changes in the LIBOR Market Index
Rate ("Interest Rate"). "LIBOR Market Index Rate", for any day, is the rate for
1 month U.S. dollar deposits as reported on Telerate page 3750 as of 11:00 a.m.,
London time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or if not so reported, then as
determined by Bank from another recognized source or interbank quotation).
STATE DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $19,670.00 HAVE BEEN PAID AND
REFLECTED ON THE MORTGAGE SECURING THIS NOTE.
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<PAGE>
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION. (Actual/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective rate exceeding that of
the nominal rate.
REPAYMENT TERMS. Accrued interest shall be due and payable commencing on the
15th day of January, 1999 and on the 15th day of each consecutive month
thereafter through the Maturity Date. All remaining principal and interest shall
be due and payable on June 15, 2000. ("Maturity Date").
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shO be applied to accrued interest and then to
principal. If a Default occurs, monies may be applied to the Obligations in any
manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. Loan Documents. The term "Loan Documents" used in this Note and
other Loan Documents refers to all documents executed in connection with the
loan evidenced by this Note and any prior notes which evidence all or any
portion of the loan evidenced by this Note, and may include, without limitation,
a commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. ss. 101). Obligations. The term "Obligations" used in this Note refers to
any and 0 indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements as defined in 11 U.S.C. ss. 101 between Borrower and Bank whenever
executed. Certain Other Terins. All terms that are used but not and Bank
whenever
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<PAGE>
executed. Certain Other Terms. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions provided in the Uniform
Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations,
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
CURE PERIOD. Except as provided below, a monetary Default may be cured within
ten days. ("Cure Period"). A non-monetary default may be cured within thirty
(30) days of Bank mailing written notice to Borrower ("Right to Notice and Cure
Period"). During the applicable Cure Period Bank shall not exercise its remedies
to collect the Obligations except as the Bank reasonably deems necessary to
protect its interest in collateral securing the Obligations. The Right to Notice
and Cure Period is applicable only to curable Defaults and only to one
occurrence of Default during any one year period. This Right to Notice and Cure
Period shall have no effect with respect to subsequent Defaults within such one
year period and shall not be applicable to False Warranty, Cessation or
Bankruptcy Defaults.
DEFAULT. If any of the following occurs and is not cured within the applicable
Cure Period, a default ("Default") under this Note shall exist: Nonpayment;
Nonperformance. The failure of timely payment or performance of the Obligations
or Default under this Note or any other Loan Documents. False Warranty. A
warranty or representation made or deemed made in the Loan Documents or
furnished Bank in connection with the loan evidenced by this Note proves
materially false, or if of a continuing nature, becomes materially false. Cross
Default. At Bank's option, any default in payment or performance of any
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<PAGE>
obligation under any other loans, contracts or agreements of Borrower, any
Subsidiary or Affiliate of Borrower, any general partner of or the holder(s) of
the majority ownership interests of Borrower with Bank or its affiliates
("Affiliate" shall have the meaning as defined in 11 U.S.C. ss. 101, except that
the term "debtor" therein shall be substituted by the term "Borrower" herein;
"Subsidiary" shall mean any business in which Borrower holds, directly or
indirectly, a controlling interest). Cessation; Bankruptcy. The death of,
appointment of guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against the Borrower, its Subsidiaries or Affiliates, if any,
or any general partner of or the holder(s) of the majority ownership interests
of Borrower, or any party to the Loan Documents. Material Capital Structure or
Business Alteration. Without prior written consent of Bank, (i) a material
alteration in the kind or type of Borrower's business or that of Borrower's
Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the
business or assets of Borrower, any of Borrower's Subsidiaries or Affiliates or
guarantor or a material portion (10% or more) of such business or assets if such
a sale is outside the ordinary course of business of Borrower, or any of
Borrower's Subsidiaries or Affiliates or any guarantor or more than 50% of the
outstanding stock or voting power of or in any such entity in a single
transaction or a series of transactions; (iii) the acquisition of substantially
all of the business or assets or more than 50% of the outstanding stock or
voting power of any other entity; or (iv) should any Borrower, or any of
Borrower's Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower's accounts
without notice. Acceleration Upon Default. Accelerate the maturity of this Note
and all other Obligations, and all of the Obligations shall be immediately due
and payable. Cumulative. Exercise any rights and remedies as provided under the
Note and other Loan Documents, or as provided by law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to ensure that
Borrower's computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of Bank,
Borrower
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<PAGE>
shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.
WAIVERS AND AMENDAIENTS. No waivers, amendments or modifications of this Note
and other Loan Documents shall be valid unless in writing and signed by an
officer of Bank. No waiver by Bank of any Default shall operate as a waiver of
any other Default or the same Default on a future occasion. Neither the failure
nor any delay on the part of Bank in exercising any right, power, or remedy
under this Note and other Loan Documents shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. Each
Borrower or any person liable under this Nbte waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or other Loan Documents and without affecting the liability of Borrower or any
person who may be liable under this Note or other Loan Documents.
MISCELLANEOUS PROVISIONS. Assignment. This Note and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Note and other Loan Documents are freely assignable, in whole
or in part, by Bank. In addition, nothing in this Note or any of the Loan
Documents shall prohibit Bank from pledging or assigning this Note or any of the
Loan Documents or any interest therein to any Federal Reserve Bank. Borrower
shall not assign its rights and interest hereunder without the prior written
consent of Bank, and any attempt by Borrower to assign without Bank's prior
written consent is null and void. Any assignment shall not release Borrower from
the Obligations. Applicable law; Conflict Between Documents. This Note and other
Loan Documents shall be governed by and construed under the laws of the state
named in Bank's address shown above without regard to that state's conflict of
laws principles. If the terms of this Note should conflict with the terms of the
loan agreement or any commitment letter that survives closing, the terms of this
Note shall control. Bormwer's Accounts. Except as prohibited by law, Borrower
grants Bank a security interest in all of Borrower's accounts with Bank and any
of its affiliates. Jurisdiction. Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank's address
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<PAGE>
shown above. Severability. If any provision of this Note or of the other Loan
Documents shall be prohibited or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note or other such document. Notices. Any notices to Borrower shall be
sufficiently given, if in writing and mailed or delivered to the Borrower's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Bank's office address shown above or such
other address as Bank may specify in writing from time to time. In the event
that Borrower changes Borrower's address at any time prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. Plural; Captions. AU references in the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and the term
"person" shall mean any individual, person or entity. The captions contained in
the Loan Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. Binding Contract. Borrower by
execution of and Bank by acceptance of this Note agree that each party is bound
to all terms and provisions of this Note. Advances. Bank in its sole discretion
may make other Advances under this Note pursuant hereto. Posting of Payments.
All payments received during normal banking hours after 2:00 p.m. local time at
the office of Bank first shown above shall be deemed received at the opening of
the next banking day. Joint and Several Obligations. Each Borrower is jointly
and severally obligated under this Note. Fees and Taxes. Borrower shall promptly
pay all documentary, intangible recordation and/or similar taxes on this
transaction whether assessed at closing or arising from time to time.
ABBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. Special Rules. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not
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licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA. The parties do not waive applicable Federal or state
substantive law except as provided herein. Preservation and Limitation of
Remedies. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents,
set-off, and peaceful possession of personal property; (iii) obtaining
provisional or ancillary remedies including injunctive relief, sequestration,
garnishment, attachment, appointment of receiver and filing an involuntary
bankruptcy proceeding-, and (iv) when applicable, a judgment by confession of
judgment. Any claim or controversy with regard to any party's entitlement to
such remedies is a Dispute. Waiver of Exemplary Damages. The parties agree that
they shall not have a remedy of punitive or exemplary damages against other
parties in any Dispute and hereby waive any right or claim to punitive or
exemplary damages they have now or which may arise in the future in connection
with any Dispute whether the Dispute is resolved by arbitration or judicially.
Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING
ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL
WITH REGARD TO A DISPUTE.
IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
UIRT - LAKE ST. CHARLES, L.L.C.
a limited liability company
____________________________ By Its Member:
Print Name: ________________ The Stuart S. Golding Company
Signing only as witness a Florida corporation
____________________________ BY:________________________________
Print Name:_________________ Loren M. Pollack
Signing only as witness As its President
(Corporate Seal)
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STATE OF _______________________
COUNTY OF FLORIDA_______________
Acknowledged before me this ____ day of December, 1998, by Loren M.
Pollack, the President of The Stuart S. Golding Company, a Florida corporation,
a Member of UIRT-LAKE ST. CHARLES, L.L.C., a limited liability company, on
behalf of said corporation and limited liability company. Such person is
personally known to me or has produced ____________ identification.
---------------------------------
Print Name:______________________
Notary Public
Commission No.
Serial Number, if any:___________
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Exhibit 10.8
CONSTRUCTION LOAN AGREEMENT
BANK: FIRST UNION NATIONAL BANK
BORROWER: UIRT - LAKE ST. CHARLES L.L.C., a limited liability company
DATE OF CLOSING: _ day of 1998 ("Effective Date")
TABLE OF CONTENTS
Paragraph Page
1. REPRESENTATIONS ............................................... 1
2. AFFIRMATIVE COVENANTS .......................................... 3
3. NEGATIVE COVENANTS ............................................. 5
4. FINANCIAL AND OTHER INFORMATION ............................... 5
5. CONDITIONS PRECEDENT ........................................... 6
6. CONSTRUCTION LOAN .............................................. 6
7. CONSTRUCTION REPRESENTATIONS ................................... 6
8. CONSTRUCTION COVENANTS ......................................... 7
9. CONSTRUCTION LOAN ADMINISTRATION AND DISBURSEMENT .............. 9
10. INTEREST RESERVE ............................................. 12
11. PARTIAL RELEASE ............................................... 12
12. DESCRIPTIVE HEADINGS .......................................... 13
13. COUNTERPARTS .................................................. 13
<PAGE>
CONSTRUCTION LOAN AGREEMENT
FIRSTUNION NATIONAL BANK 100 South Ashley Drive, Suite 910 Tampa, Florida 33602
(Hereinafter referrd to as the "Bank") UIRT - LAKE ST. CHARLES, L.L.C., a
Unlimited liability company 27001 U.S. 19 North, Suite 2095 Clearwater, Florida
34621 (Hereinafter referred to as "Borrower")THIS CONSTRUCTION LOAN AGREEMENT
("Agreement") entered into as of the ___ day of December, 1998, by and between
Bank and Borrower.
Borrower has applied to Bank for a term loan (the "Loan") in the amount of
FIVE MILLION SIX HUNDRED TWENTY THOUSAND AND N0/100 DOLLARS ($5,620,000.00)
which is evidenced a Promissory Note of even date herewith in the amount of FIVE
MILLION SIX HUNDRED TWENTY THOUSAND AND NO/IOO DOLLARS ($5,620,000.00) (the
"Note"). The Loan proceeds are to be used by Borrower to finance the
construction of a 57,096 square foot neighborhood shopping center which is 81%
pre-leased (46,296 square feet) to Kash n' Karry Food Stores, Inc., a Delaware
corporation, and a .67 acre outpareel ("North Outparcel") and a 1.18 acre
outparcel ("South Outparcel") and appurtenances.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this Agreement as to Borrower, "Subsidiary" shall mean any corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. sec. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties
contained in this Agreement, Bank is willing to extend credit to Borrower upon
the terms and subject to the conditions set forth herein, and Bank and Borrower
agree as follows:
1. REPRESENTATIONS: Borrower represents that from the date of this
Agreement and until final payment in full of the Obligations:
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a. Accurate Information. All information now and hereafter furnished
to Bank is and will be true, correct and complete. Any such information
relating to Borrower's financial condition will accurately reflect
Borrower's financial condition as of the date(s) thereof, (including all
contingent liabilities of every type), and Borrower further represents that
its financial condition has not changed materially or adversely since the
date(s) of such documents.
b. Authorization; Non-Contravention. The execution, delivery and
performance by Borrower and any guarantor, as applicable, of this Agreement
and other Loan Documents to which it is a party are within its power, have
been duly authorized by all necessary action taken by the duly authorized
officers of Borrower and any guarantors and, if necessary, by making
appropriate filings with any governmental agency or unit and are the legal,
binding, valid and enforceable obligations of Borrower and any guarantors;
and do not (i) contravene, or constitute (with or without the giving of
notice or lapse of time or both) a violation of any provision of applicable
law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order,
decree or other instrument binding upon or affecting Borrower or any
guarantor, (ii) result in the creation or imposition of any lien (other
than the lien(s) created by the Loan Documents) on any of Borrower's or
guarantor's assets, or (iii) give cause for the acceleration of any
obligations of Borrower or any guarantor to any other creditor.
c. Asset Ownership. Borrower has good and marketable title to all of
the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets
are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by
Borrower in writing ("Permitted Liens"). To Borrower's knowledge, no
default has occurred under any Permitted Liens and no claims or interests
adverse to Borrower's present rights in its properties and assets have
arisen.
d. Discharge of Liens and Taxes. Borrower has duly filed, paid and/or
discharged all taxes or other claims which may become a lien on any of its
property or assets, except to the extent that such items are being
appropriately contested in good faith and an adequate reserve for the
payment thereof is being maintained.
e. Sufficiency of Capital. Borrower is not, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and
liens created by Borrower in connection with the Loan, will not be,
insolvent within the meaning of 11 U.S.C. sec. 101(32).
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f. Compliance with Laws. Borrower is in compliance in all respects
with all federal, state and local laws, rules and regulations applicable to
its properties, operations, business, and finances, including, without
limitation, any federal or state laws relating to liquor (including 18
U.S.C. sec. 3617, et seq.) or narcotics (including 21 U.S.C. sec.801, et
seq. and/or any commercial crimes; all applicable federal, state and local
laws and regulations intended to protect the environment; and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), if
applicable.
g. Organization and Authority. Each corporate or limited liability
company Borrower and any guarantor, as applicable, is duly created, validly
existing and in good standing under the laws of the state of its
organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted.
Each corporate or limited liability company Borrower and any guarantor, if
any, is duly qualified, licensed and in good standing in each jurisdiction
where qualification or licensing is required by the nature of its business
or the character and location of its property, business or customers, and
in which the failure to so qualify or be licensed, as the case may be, in
the aggregate, could have a material adverse effect on the business,
financial position, results of operations, properties or prospects of
Borrower or any such guarantor.
h. No Litigation. To the best of Borrower's knowledge, there are no
pending or threatened suits,claims or demands against Borrower or any
guarantor that have not been disclosed to Bank by Borrower in writing.
2. AFFIRMATIVE COVENANTS: Borrower agrees that from the date of this
Agreement and until final payment in full of the Obligations, unless Bank
shall otherwise consent in writing, Borrower will:
a. Business Continuity. Conduct its business in substantially the same
manner and locations as such business is now and has previously been
conducted.
b. Maintain Properties. Maintain, preserve and keep its property in
good repair, working order and condition, making all needed replacements,
additions and improvements thereto, to the extent allowed by this
Agreement.
c. Access to Books & Records. Allow Bank, or its agents, during normal
business hours, access to the books, records and such other documents of
Borrower as Bank shall reasonably require, and allow Bank to make copies
thereof at Bank's expense.
d. Insurance. Maintain adequate insurance coverage with respect to its
pr operties and business against loss or damage of the kinds and in the
amounts customarily insured against by companies of established reputation
engaged in the same or similar businesses including,
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without limitation, commercial general liability insurance, workers
compensation insurance, and business interruption insurance; all acquired
in such amounts and from such companies as Bank may reasonably require.
e. Notice of Default and Other Notices. (a) Notice of Default. Furnish
to Bank immediately upon becoming aware of the existence of any condition
or event which constitutes a Default (as defined in the Loan Documents) or
any event which, upon the giving of notice or lapse of time or both, may
become a Default, written notice specifying the nature and period of
existence thereof and the action which Borrower is taking or proposes to
take with respect thereto. (b) Other Notices. Promptly notify Bank in
writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or
other instrument to which it is a party or by which any of its properties
are bound, or any acceleration of the maturity of any indebtedness owing by
Borrower; (iii) any material adverse claim against or affecting Borrower or
any part of its properties; (iv) the commencement of, and any material
determination in, any litigation with any third party or any proceeding
before any governmental agency or unit affecting Borrower; and (v) at least
30 days prior thereto, any change in Borrower's name or address as shown
above, and/or any change in Borrower's structure.
f. Compliance with Other Agreements. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and
swap agreements, if applicable, as defined in the Note.
g. Payment of Debts. Pay and discharge when due, and before subject to
penalty or further charge, and otherwise satisfy before maturity or
delinquency, all obligations, debts, taxes, and liabilities of whatever
nature or amount, except those which Borrower in good faith disputes.
h. Reports and Proxies. Deliver to Bank, promptly, a copy of all
financial statements, reports, notices, and proxy statements, sent by
Borrower to stockholders, and all regular or periodic reports required to
be filed by Borrower with any governmental agency or authority.
i. Other Financial Information. Deliver promptly such other
information regarding the operation, business affairs, and financial
condition of Borrower which Bank may reasonably request.
j. Non-Default Certificate From Borrower. Deliver to Bank, with the
Financial Statements required herein, a certificate signed by Borrower, if
Borrower is an individual, or by a principal financial officer of Borrower
warranting that no "Default" as specified in the Loan Documents nor any
event which, upon the giving of notice or lapse of time or both, would
constitute such a Default, has occurred.
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k. Estoppel Certificate. Furnish, within 15 days after request by
Bank, a written statement duly acknowledged of the amount due under the
Loan and whether offsets or defenses exist against the Obligations.
3. NEGATIVE COVENANTS: Borrower agrees that from the date of this
Agreement and until final payment in full of the Obligations, unless Bank
shall otherwise consent in writing, Borrower will not:
a. Default on Other Contracts or Obligations. Default on any material
contract with or obligation when due to a third party or default in the
performance of any obligation to a third party incurred for money borrowed.
b. Judgment Entered. Permit the entry of any monetary judgment or the
assessment against, the filing of any tax lien against, or the issuance of
any writ of garnishment or attachment against any property of or debts due
Borrower which shall not have been transferred to bond or released within
ten (10) days after the date Borrower receives notice thereof.
c. Government Intervention. Permit the assertion or making of any
seizure, vesting or intervention by or under authority of any government by
which the management of Borrower or any guarantor is displaced of its
authority in the conduct of its respective business or such business is
curtailed or materially impaired.
d. Prepayment of Other Debt. Retire any long-term debt entered into
prior to the date of this Agreement at a date in advance of its legal
obligation to do so.
e. Retire or Repurchase Capital Stock. Retire or otherwise acquire any
of its capital stock.
4. FINANCIAL AND OTHER INFORMATION: Borrower will annually provide
unaudited management-prepared financial statements reflecting its
operations, including, without limitation, a balance sheet, profit and loss
statement and statement of cash flows, with supporting schedules, within 90
days of the fiscal year end. Borrower will semi-annually provide unaudited
management-prepared project operating statements and rent rolls. Borrower
shall deliver to Bank such information as Bank may reasonably request from
time to time, including without limitation, financial statements and
information pertaining to Borrower's financial condition. Such information
shall be true, complete, and accurate.
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5. CONDITIONS PRECEDENT: The obligations of Bank to make the Loan and
any advances pursuant to this Agreement are subject to receipt by Bank of
such additional supporting documents as Bank or its counsel may reasonably
request.
6. CONSTRUCTION LOAN: The following REPRESENTATIONS, COVENANTS and
LOAN ADMINISTRATION AND DISBURSEMENT provisions apply to the Loan made for
construction of improvements (the "Improvements") upon and to the land (the
"Land") described in Exhibit "A" attached, which is a portion of the land
described in and constituting a part of the Property as defined in the
Mortgage (the "Security Instrument")securing the Loan.
7. CONSTRUCTION REPRESENTATIONS: Borrower represents that from the
date of this Agreement and until final payment in full of the Obligations:
a. Access and Utilities. (i) The Property has, and the Improvements
will have, adequate legal vehicular and pedestrian access to public roads;
(ii) sewer, water and all other appropriate utilities are available at
ordinary costs at the Land boundaries through public or unencumbered
private easements, and in sufficient quantities to serve the intended use
of the Land and Improvements; (iii) if applicable, required written
approvals of septic tanks or wells have been issued by all appropriate
governmental authorities.
b. Laws, Zoning and Approvals. (i) The plans and specifications for
the Improvements and the anticipated use of the Land and Improvements shall
comply with all applicable restrictive covenants, zoning ordinances,
building laws and codes, and other applicable laws, regulations and
requirements (including without limitation, the Americans with Disabilities
Act, as amended); (ii) the current zoning classification of the Land and
any covenants and restrictions affecting the Land permit the construction
and intended use of the Improvements; (iii) Borrower will obtain all
permits and approvals of any type required to commence construction of the
Improvements within the time period set forth in the Loan Closing
Memorandum executed of even date herewith.
c. Construction Criteria. (i) Borrower has or will furnish to Bank
full and complete copies of all construction contracts, plans and
specifications, drawings, budgets, bonds and other agreements pertaining to
construction of the Improvements (the "Construction Documents"), all
engineering, soil and other reports and studies and all surveys pertaining
thereto; there are no other oral or written agreements pertaining to
construction of the Improvements; (ii) the Improvements shall be
constructed in a good and workmanlike manner, in accordance with the
Construction Documents submitted to Bank, and in compliance with the
budget(s) approved by Bank ("Approved Budget"); (iii) no amendment or
change, nor deviation in the construction from, the Construction Documents,
in excess of $10,000.00 shall be made without Bank's prior
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written consent, and Borrower shall promptly submit to Bank for approval a
written change order describing any such change or deviation; (iv) the
Improvements shall be constructed entirely on the Land and will not
encroach upon or overhang any easement, right of way, or any other land,
and shall be constructed wholly within applicable building restriction
lines; (v) the Improvements and construction thereof shall comply with all
applicable statutes, ordinances, codes, regulations and restrictions.
d. Use of Proceeds. Borrower will use Loan proceeds solely for the
purpose of financing the property upon which Improvements are to be built
and for paying the cost of construction of the Improvements in accordance
with the Loan Documents and Construction Documents (including without
limitation, the Approved Budget) and for such other purposes associated
therewith as Bank shall have specifically approved in writing, and shall
not use or divert Loan proceeds for any other purpose.
e. Notice of Commencement. (i) No notice of commencement under Section
713.13 of the Florida Statutes shall be filed before recording of the
Security Instrument; (ii) after filing of the Security Instrument and
before construction begins Borrower shall properly-record and post under
Section 713.13 of the Florida Statutes a notice of commencement and shall
name the Bank in the notice of commencement as a person or entity upon whom
any notices under the Statute shall be served.
8. CONSTRUCTION COVENANTS: Commencement and Completion. Construction
of the Improvements, including delivery of materials or performance of
lienable work, shall not commence before recording of the Security
Instrument. Unless otherwise agreed in writing by Bank, construction of the
Improvements shall commence within sixty (60) days from the date of this
Agreement and be carried on diligently and without delay or interruption
for more than 15 days, except in the event of force majeure (Borrower is
delayed in the construction of the Improvements under this Agreement by
reason of strikes or other labor troubles, unavailability of materials,
national emergency, any rule, order or regulation of any Governmental
Authority, adverse weather conditions or other cause not within Borrower's
control), and completion (hereafter defined) must occur no later than
October 1, 1999 ("Completion Date"). "Completion" means (i) the
Improvements are fully constructed and completed in a good and workmanlike
manner in accordance with the Construction Documents and all applicable
statutes, ordinances, codes, regulations and restrictions, (ii) completion
of the Improvements has been certified by the construction architect and/or
engineer, and the final loan disbursement request has been approved by
Bank's construction disbursement inspector, (iii) a certificate of
occupancy or comparable written approval, if applicable, has been issued by
appropriate governmental authorities, (iv) the Improvements are ready for
use and occupancy, and have been accepted by Borrower and all applicable
tenants.
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a. Title Insurance. Prior to the first loan disbursement or advance
Borrower shall furnish to Bank, at Borrower's expense, a standard
non-expiring ALTA mortgagee policy of title insurance, with premium paid,
issued by a title insurer satisfactory to Bank. The title policy shall (i)
show Borrower to be vested with valid marketable fee simple title to the
Land, free and clear of all defects, liens, encumbrances or exceptions,
except for ad valorem taxes for the current year and such other matters as
may be acceptable to Bank, (ii) insure the Security Instrument to be a
valid first lien on the fee simple title to the Land in the full amount of
the loan, (iii) contain no exception for mechanic's and materialmen's
liens,survey matters or any other matters not acceptable to Bank; (iv)
include such endorsements and provide such coverages as Bank may require,
including without limitation, coverage for future advances prior to the
Completion Date under a pending disbursements clause acceptable to Bank,
and (v) insure all access and other easements necessary for the use of the
Land and Improvements.
b. Survey. Prior to the first loan disbursement, Borrower shall
furnish to Bank, at Borrower's expense, a current survey showing the Land
to be free from encroachments and encumbrances, and showing whether or not
the Land is located in a federally designated Special Flood Hazard Area.
Prior to the first construction disbursement, or at such other time as
required by Bank, Borrower shall furnish a foundation survey certified to
Bank and in form and scope satisfactory to Bank, showing and locating all
dimensions, setback lines, utility and other easements, and any
encroachments. In the event any encroachments are evidenced, Bank may
discontinue making loan disbursements until such encroachments have been
remedied to Bank's satisfaction. Borrower shall furnish such supplemental
surveys as Bank may require, including without limitation, a final "as
built" survey locating the Improvements upon the Land.
c. Insurance. Until Completion of the Improvements, the Borrower shall
purchase and maintain insurance as follows: Prior to any loan disbursement,
Borrower shall furnish (or cause the general contractor to furnish)
insurance coverage, with premiums paid, (i) insuring the Land and
Improvements against all hazards and risks required by Bank, including
without limitation, builder's risk (both completed value and extended
coverage) and flood (if applicable), naming Bank as insured mortgagee
(standard non-contributing mortgagee clause) and containing standard waiver
of subrogation clauses, and (ii) providing liability coverage in such
amount as Bank may require but in no event less than $1,000,000.00 combined
single limit, naming Bank as an additional insured; Borrower shall provide
such other insurance as Bank may require from time to time. All such
insurance policies shall be from insurers and in form and amount
satisfactory to Bank, and must provide for no less than 30 days prior
notice of cancellation or non-renewal to Bank. All contractors,
subcontractors, mechanics or laborers and other persons providing labor or
material in construction of the Improvements shall have or be covered by
worker's compensation insurance, if required by applicable law.
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After Completion and the final construction disbursement, the insurance
requirements in the Security Instrument shall apply to the Land and
Improvements.
d. Lions and Lien Waivers. Borrower shall take all action necessary to
have any mechanic's and materialmen's liens, judgment liens or other liens
or encumbrances filed against the Property released or transferred to bond
within 10 days of the date Borrower receives notice of the filing of such
liens or encumbrances. If any such lien or encumbrance is filed, no loan
disbursements will be made until it is removed and a copy of the recorded
release thereof is received by Bank and accepted by the title insurance
company. Bank shall not be obligated to disburse any funds to Borrower
if,in the opinion of Bank, any loan disbursement, the Property, or any
other collateral for the loan would be subject to a mechanic's or
materialmen's lien or any other lien or encumbrance. Borrower shall be
fully and solely responsible for compliance in all respects whatsoever with
the applicable mechanic's and materialmen's lien laws. Borrower shall (i)
notify Bank of any and all Notices to Owner and Claims of Lien under
Chapter 713, Florida Statutes, within 5 days of receipt thereof, and (ii)
comply with all provisions of the Florida Mechanic's Lien Law, including
but not limited to payment and notice provisions. Borrower authorizes Bank
to demand on Borrower's behalf the statement of account referred to in
Section 713.16(2) of the Florida Statutes of any person or entity filing a
Notice to Owner. Bank's rights to request such statements of account will
not impose any obligation on Bank to use such authority, and the exercise
of such authority shall not create or imply any obligation to exercise such
authority on subsequent occasions.
e. Permanent Loan Commitment. Borrower will comply with the terms of,
and take all such action as may be necessary to satisfy the terms,
conditions, and closing and funding requirements of any loan commitment
hereafter obtained - approved by Bank for a loan to be secured by the Land
and Improvements.
f. Subordination of Claims of Contractor/Architect/ Engineer. Upon the
written request of Bank, Borrower shall require and shall use its best
efforts to obtain from the general contractor and any architect or engineer
that furnishes labor or services in connection with construction of the
Improvements to execute and deliver a Subordination, Assignment and Consent
in form fully acceptable to Bank.
g. Time is of the Essence. In all matters pertaining to this
Agreement, time is of the essence.
9. CONSTRUCTION LOAN ADMINISTRATION AND DISBURSEMENT:
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a. Loan Disbursements. Bank shall disburse loan proceeds, and Borrower
will accept such disbursements, in accordance with the Approved Budget, and
the Bank approved disbursement schedule, forms and procedures. Borrower
shall submit to Bank or its designated agent a completed written
disbursement request in such form and detail as required by Bank. All such
requests shall be submitted at least 10 days prior to the requested date of
loan disbursement, and supported by such receipts, invoices, waivers of
mechanic's and materialmen's liens and other supporting documentation as
may be required by Bank. Unless otherwise agreed by Bank disbursements
shall be made no more often than monthly, and shall be based on work and
materials in place and satisfactorily completed as determined by
disbursement inspections performed by or on behalf of Bank at Borrower's
expense. Bank's determination of work and materials in place and
satisfactorily completed shall be binding on Borrower. Bank may reject, but
is not obligated to reject, any material or work which does not conform to
the Loan Documents and Construction Documents, and may require Borrower to
replace or reperform such nonconforming material or work. At its option,
Bank may make loan disbursements directly into a separate construction
disbursement account or other Borrower account with Bank, to Borrower
directly, through a title insurance company or other third party, or
directly to the general contractor, subcontractors, materialmen or other
suppliers providing labor, services or materials in connection with the
Improvements. Bank shall have no obligation after making loan disbursements
in a particular manner to continue to make loan disbursements in that
manner. Bank shall have no obligation regarding the proper application of
loan proceeds after disbursement. Loan disbursements for individual items
shall not exceed the amounts specified in the Approved Budget. Bank may
deduct from any disbursement the amount of any retainages, deposits,
expenses, or costs due Bank under the Loan Documents. Bank shall be under
no obligation to make, and may withhold, any loan disbursement if there is
a Default under any of the Loan Documents, or any condition precedent
thereto has not been complied with to Bank's satisfaction. Bank shall have
no obligation to make any loan disbursement for materials stored on site or
off site. If Bank elects to make a disbursment for stored materials, Bank
may impose such conditions and requirements as it deems appropriate in its
sole discretion.
b. Retention of Loan Proceeds. Disbursements (prior to the final loan
disbursement) for payment on account of construction work and materials
shall not exceed an amount equal to 90% of the total cost of work and
materials in place and satisfactorily completed, less the sum of all
disbursements previously made against construction work and materials.
Amounts held by Bank as retainage will be disbursed following Completion in
the final disbursement.
c. Inspections. All inspections by or on behalf of Bank (whether or
not paid for by Borrower) shall be solely for the benefit of Bank. Borrower
shall have no right to claim any loss or damage against Bank or its
representatives arising from any alleged (i) negligence in or -10-
<PAGE>
failure to perform inspections, (ii) failure to monitor loan disbursements
or the progress or quality of construction, or (iii) failure to otherwise
properly administer the Loan.
d. Borrower's Equity. Prior to any loan disbursement for construction,
Borrower shall submit evidence satisfactory to Bank that an amount equal to
the difference between the amount in the Approved Budget for construction
of the Improvements and the estimated actual cost to complete construction
of the Improvements (the "Equity") has been expended from Borrower's own
funds for construction of the Improvements. The Equity shall remain
invested in the Land and Improvements and Borrower agrees that no Equity
will be reimbursed directly or indirectly without Bank's prior written
consent.
e. Claims of Lien. Borrower shall promptly notify Bank of any amount
owed to a supplier, contractor or subcontractor which has been outstanding
for more than thirty (30) days, and of any written claim (other than a
normal invoice) received by it or contractor for an amount asserted to be
owed to any supplier, contractor or subcontractor.
f. Deficiency in Loan Amount (Equity Call). If at any time it
reasonably appears the cost to complete construction of the Improvements
will exceed undisbursed funds available under the loan for that purpose,
Bank may require Borrower to deposit with Bank (and Borrower shall deposit
within 7 days after by written notice from Bank) funds sufficient, when
added to such available undisbursed loan funds, to pay all costs to
complete construction of the Improvements in accordance with the
Construction Documents and Loan Documents. Bank's determination as to any
such deficiency and requirement of such deposit shall be final and
conclusive. At Bank's option, no loan disbursements shall be made until
Borrower has fully complied with this requirement. All such deposited funds
shall be additional security for the Obligations. Bank may, at its option,
use such deposited funds to pay costs to complete construction of the
Improvements before any further loan disbursements.
g. Final Disbursement. Prior to the final disbursement of loan
proceeds, the following conditions must be satisfied (in addition to any
others set forth elsewhere in the Loan Documents) and Bank must have
received: (i) evidence satisfactory to Bank that Completion has occurred;
(ii) final lien waivers and notarized final owner's and contractors'
affidavits, in form and content acceptable to both Bank and the title
insurance company, (iii) well and septic approvals, if applicable; (iv) two
(2) prints of the final certified "as built" survey satisfactory to Bank
showing the Land and completed Improvements and any flood hazard area; (v)
an agreement by the title company to issue an endorsement to the mortgagee
title insurance policy updating or eliminating any survey exception and
eliminating the pending disbursements clause; (vi) evidence of paid fire
and extended coverage hazard insurance satisfactory to Bank.
-11-
<PAGE>
Evidence satisfactory to Bank that reserves for e.g. repairing structure
have been established and funded in an amount reasonably acceptable to
Bank; and final soil treatment certificate. Bank may holdback any loan
funds it deems necessary, or fund loan proceeds into a reserve account, for
completion or correction of any work (including without limitation,
landscaping or tenant upfit) on such terms and under such written
agreements as Bank may deem appropriate. Bank's determination with respect
to the foregoing shall be conclusive.
h. No Warranty by Bank. Indemnification. Nothing contained in any of
the Loan Documents shall constitute or create any duty on or warranty by
Bank regarding (i) the suitability of the Land or Improvements for their
intended use, (ii) the suitability or quality of the Construction Documents
or methods and materials used in construction of the Improvements, (iii)
the quality or condition of the Improvements, or (iv) the competence or
qualifications of the general contractor or any other party furnishing
labor or materials in connection with construction of the Improvements.
Borrower (a) acknowledges that Borrower has not relied and will not rely
upon any experience, awareness or expertise of Bank regarding such matters,
and (b) shall indemnify, hold harmless, and'defend Bank from any costs,
expenses, damages, judgments, or liabilities, including without limitation,
attorneys' fees, arbitration fees, and expert witness fees, arising from or
connected with (i) such matters, (ii) payment or non-payment for labor or
materials furnished for construction of the Improvements, (iii) any claims
of mechanics or materialmen, or (iv) any action or inaction by Borrower
with respect to the foregoing.
10. INTEREST RESERVE: It is agreed that there shall be established an
interest reserve of which shall be called "Interest Reserve".
a. The Interest Reserve shall be in the sum of One Hundred Ninety One
Thousand Two Hundred Sixty Nine and No/100 DOLLARS ($191,269.00).
b. Bank shall pay interest on the unpaid balance of this Loan from
time to time from the Interest Reserve as long as the same exists.
c. After the Interest Reserve has been expended, then the Borrower
shall make the interest payments from its own funds.
11. PARTIAL RELEASE: So long as there is no Default under the Loan
Documents, Borrower shall be entitled to obtain the release of the South
Outparcal of the Property securing the loan by meeting the following
conditions: (A) Payment of a minimum amount of one hundred percent (100%)
of the net proceeds from the sale of the South Outparcel or $320,000.00,
whichever is greater. (B) All unreleased land shO be contiguous to a public
right-of-way or shall have adequate ingress and egress consistent with the
highest and best use of such land secured by easements running with such
land, and access
-12-
<PAGE>
to all necessary utilities, such as water, sewer, gas and electricity. (C)
Borrower shall furnish, at Borrower's cost, an instrument acceptable to
First Union to effect the requested release and a survey, acceptable to
First Union and certfied by the surveyor, of the land to be released,
containing a legal description and the area of the land to be released.
12. DESCRIPTIVE HEADINGS: The descriptive headings used herein are for
convenience in reference only and they are not intended to have any effect
whatsoever in determining the rights or obligations of the Borrower or
Bank.
13. COUNTERPARTS: This instrument may be executed in multiple
counterparts, and all signatures need not appear on each counterpart and
taken together all counterparts shall be deemed to be one and the same
instrument. [GRAPHIC OMITTED][GRAPHIC OMITTED]
IN WITNESS WHEREOF, the said Borrower and Bank have made,
executed, sealed and delivered this Loan Agreement on the day an year first
above written.
UIRT - LAKE ST. CHARLES, L.L.C,
a limited liability company
_________________________ By Its Member:
Print Name:______________ The Stuart S. Golding Company
Signing only as a witness a Florida corporation
_________________________ BY:_________________________________
Print Name:______________ Loren M. Pollack
Signing only as a witness As its President
(Corporate Seal)
STATE OF ________________
COUNTY OF________________
Acknowledged before me this ___ day of December, 1998, by Loren M. Pollack,
the President of The Stuart S. Golding Company, a Florida corporation, a Member
LAkE ST. CHARLES, L.L.C., a limited liability company, on behalf corporation and
limited liability company. Such person is personally known to me or has produced
_______________ identification.
--------------------------
Print Name:_______________
Notary Public
Commission No.
Serial Number, if any:_________
-13-
<PAGE>
FIRST UNION NATIONAL BANK
______________________ BY:___________________________
Print Name:___________ Valerie A. Girrens
Signing only as a witness Assistant Vice President
- ---------------------
Print Name:___________
Signing only as a witness
STATE OF FLORIDA
COUNTY OF ______________
Acknowledged before me this___day of December, 1998, by Valerie A. Girrens,
the Assistant Vice President of FIRST UNION NATIONAL BANK, behalf of the bank
and limited liability company. Such person is personally known to me or has
produced _______________ identification.
--------------------------
Print Name:_______________
Notary Public
Commission No.
Serial Number, if any:_________
-14-
<PAGE>
Exhibit 10.9 PROMISSORY NOTE FOR NORTHWEST CROSSING
PROMISSORY NOTE
Dated as of October 16, 1995
$1,925,000.00
FOR VALUE RECEIVED, the undersigned, Today Northwest Crossing, L.P., a
Texas limited partnership ("Maker"), promises to pay to the order of FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association ("Payee") , at
the office of Payee at One First Union Center TW-8, Charlotte, North Carolina
28288, or at such other place as Payee may designate to Maker in writing from
time to time, the principal sum of ONE MILLION NINE HUNDRED TWENTY FIVE THOUSAND
AND NO/1OO DOLLARS ($1,925,000.00), together with interest on so much thereof as
is outstanding and unpaid, from the date of the advance of the principal
evidenced hereby, at the rate of Eight and Three-Eighths percent (8. 375%) per
annum (the "Note Rate"), in lawful money of the United States of America, which
shall at the time of payment be legal tender in payment of all debts and dues,
public and private.
ARTICLE I - SECURED NOTE
The indebtedness evidenced by this Promissory Note (the Note) and the
obligations created hereby are secured by that certain mortgage or deed of trust
and security agreement (the "Security Instrument") from Maker for the benefit of
Payee, dated of even date herewith, concerning property located in Dallas
County, Texas. The Security Instrument together with this Note and all other
documents to or of which Payee is a party or beneficiary now or hereafter
evidencing, securing, guarantying, modifying or otherwise relating to the
indebtedness evidenced hereby, are herein referred to collectively as the "Loan
Documents". All of the terms and provisions of the Loan Documents are
incorporated herein by reference. Some of the Loan Documents are to be filed for
record on or about the date hereof in the appropriate public records.
ARTICLE II - TERMS AND CONDITIONS
2. 1 Computation of Interest. Interest shall be computed hereunder based on
a 360-day year and based on twelve (12) 30-day months for each full calendar
month and on the actual number of days elapsed for any partial month in which
interest is being calculated. In computing the number of days during which
interest accrues, the day on which funds are initially advanced shall be
included regardless of the time of day such advance is made, and the day on
which funds are repaid shall be included unless repayment Is credited prior to
close of business.
2.2 Payment of Princinal and Interest. Payments in federal funds
immediately available in the place designated for payment received by Payee
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Payee, not be
credited until immediately available to Payee in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment on
a day an which Payee is open for business. Such principal and interest shall be
payable in equal consecutive monthly installments of $15,338.80 each, beginning
on the first day of the second full calendar month following the date of this
Note (or on the first day of the first full calendar month following the date
hereof, in the event the advance of the principal amount evidenced by this Note
is the first day of a calendar month), and continuing on the first day of each
and every month thereafter through and including October 1, 2005. On November 1,
2005 (the "Maturity Date") the entire outstanding principal balance hereof,
together with all accrued but unpaid interest thereon, shall be due and payable
in full.
2.3 Application of Payments. Each such monthly installment shall be applied
first to the payment of accrued interest and then to reduction of principal.
2.4 Payment of "Short Interest". If the advance of the principal amount
evidenced by this Note is made on a date other than the first day of a calendar
month, then Maker shall pay to Payee contemporaneously with the execution hereof
interest at the Note Rate for a period from the date hereof through and
including the last day of this calendar month.
2. 5 Prepayment. (a) This Note may be prepaid in whole but not in part
(except as otherwise specifically provided herein) at any time after the fourth
(4th) anniversary of this Note provided (i) written notice of such prepayment is
received by Payee not more than ninety (90) days and not less than thirty (30)
days prior to the date of such prepayment, (ii) such prepayment is accompanied
by all interest accrued hereunder and all other sums then payable and due
hereunder or under the other Loan Documents, and (iii) if such prepayment occurs
after the fourth (4th) anniversary of this Note but before the date that is nine
(9) years and six (6) months after the date of this Note Payee is paid a
prepayment fee in an amount equal to the greater of (A) one percent (1.0%) of
the principal amount being prepaid, and (B) the positive excess of (1) the
present value ("PV") of all future installments of principal and interest due
under this Note absent any such prepayment including the principal amount due at
2
<PAGE>
maturity (collectively, "All Future Payments"), discounted at an interest rate
per annum equal to the sum of (a) the Treasury Constant Maturity Yield Index
published during the second full week preceding the date on which such premium
is payable for instruments having a maturity coterminous with the remaining term
of this Note, and (b) fifty (50) basis points, over (2) the then outstanding
principal balance hereof immediately before such prepayment ((PV of All Future
Payments) - (principal balance at time of prepayment) - prepayment fee].
"Treasury Constant Maturity Yield Index" shall mean the average yield for "This
Week" as reported by the Federal Reserve Board in Federal Reserve Statistical
Release H.15(519). If there is no Treasury Constant Maturity Yield Index for
instruments having a maturity coterminous with the remaining term of this Note,
then the index shall be equal to the weighted average yield to maturity of the
Treasury Constant Maturity Yield Indices with maturities next longer and shorter
than such remaining average life to maturity, calculated by averaging (and
rounding upward to the nearest whole multiple of 1/100 of 1% per annum, if the
average is not such a multiple) the yields of the relevant Treasury Constant
Maturity Yield Indices (rounded, if necessary, to the nearest 1/100 of 1% with
any figure of 1/200 of 1% or above rounded upward). In the event that any
prepayment fee is due hereunder, Payee shall deliver to Maker a statement
setting forth the amount and determination of the prepayment fee, and, provided
that Payee shall have in good faith applied the formula described above, Maker
shall not have the right to challenge the calculation or the method of
calculation set forth in any such statement in the absence of manifest error,
which calculation may be made by Payee on any day during the fifteen (15) day
period preceding the date of such prepayment. Payee shall not be obligated or
required to have actually reinvested the prepaid principal balance at the
Treasury Constant Maturity Yield Index or otherwise as a condition to receiving
the prepayment fee. No prepayment fee or premium shall be due or payable in
connection with any prepayment of the indebtedness evidenced by this Note made
on or after the date that is nine (9) years and six (6) months after the date of
this Note. In addition to the aforesaid prepayment fee if, upon any such
prepayment (whether prior to or after the date that is nine (9) years and six
(6) months after the date of this Note) , the aforesaid prior written notice has
not been received by Payee, the prepayment fee shall be increased by an amount
equal to the lesser of (1) thirty (30) days' unearned interest computed an the
outstanding principal balance of this Note so prepaid and (ii) unearned interest
computed on the outstanding principal balance of this Note so prepaid for the
period from, and including, the date of prepayment through the otherwise stated
maturity date of this Note.
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<PAGE>
(b) Partial prepayments of this Note shall not be permitted.
(c) The prepayment fees provided above shall be due, to the extent
permitted by applicable law, under any and all circumstances where all or any
portion of this Note is paid prior to the Maturity Date, whether such prepayment
is voluntary or involuntary (other than due to application of casualty or
condemnation proceeds under the Security Instrument), even if such prepayment
results from Payee's exercise of its rights upon Maker's default and
acceleration of the maturity date of this Note (irrespective of whether
foreclosure proceedings have been commenced), and shall be in addition to any
other sums due hereunder or under any of the other Loan Documents (as
hereinafter defined). No tender of a prepayment of this Note with respect to
which a prepayment fee is due shall be effective unless such prepayment is
accompanied by the prepayment fee. If the indebtedness of this Note shall have
been declared due and payable by Payee pursuant to Article III hereof, due to a
default by Maker, then any tender of payment of such indebtedness made prior to
the first anniversary date hereof must include a prepayment fee computed as
provided in this article II plus an additional prepayment fee of three percent
(3%) of the principal balance of this Note.
ARTICLE III - DEFAULT
3.1 Events of Default. It is hereby expressly agreed that should any
default occur in the payment of principal or interest as stipulated above and
such payment is not made within five (5) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, then a default shall exist hereunder, and in such event the indebtedness
evidenced hereby, including all sums advanced or accrued hereunder or under any
other Loan Document, and all unpaid interest accrued thereon, shall, at the
option of Payee and without notice to Maker, at once become due and payable and
may be collected forthwith, whether or not there has been a prior demand for
payment and regardless of the stipulated date of maturity.
3.2 Late Charges. In the event that any payment is not received by Payee
on the date when due (subject to the applicable grace period), then in addition
to any default interest payments due hereunder, Maker shall also pay to Payee a
late charge in an amount equal to five percent (5%) of the amount of such
overdue payment.
4
<PAGE>
3.3 Default Interest Rate. So long as any default exists hereunder,
regardless of whether or not there has been an acceleration of the indebtedness
evidenced hereby, and at all times after maturity of the indebtedness evidenced
hereby (whether by acceleration or otherwise), interest shall accrue on the
outstanding principal balance of this Note at a rate per annum equal to three
percent (3%) in excess of the Note Rate, or if such increased rate of interest
may not be collected under applicable law, then at the maximum rate of interest,
if any, which may be collected from Maker under applicable law (the "Default
Interest Rate"), and such default interest shall be immediately due and payable.
3.4 Maker's Agreement. Maker acknowledges that it would be extremely
difficult or impracticable to determine Payee's actual damages resulting from
any late payment or default, and such late charges and default interest are
reasonable estimates of those damages and do not constitute a penalty. The
remedies of Payee in this Note or in the Loan Documents, or at law or in equity,
shall be cumulative and concurrent, and may be pursued singly, successively or
together, in Payee's discretion.
3.5 Maker to Pay Costs. In the event this Note, or any part hereof, is
collected by or through an attorney-at-law, Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees.
3.6 Exculpation. Notwithstanding anything in the Loan Documents to the
contrary, but subject to the qualif ications hereinbelow set forth, Payee agrees
that:
(a) Maker shall be liable upon the indebtedness evidenced hereby and for
the other obligations arising under the Loan Documents to the full extent (but
only to the extent) of the security therefor, the same being all properties
(whether real or personal) , rights, estates and interests now or at any time
hereafter securing the payment of this Note and/or the other obligations of
Maker under the Loan Documents (collectively, the "Trust Property");
(b) if a default occurs in the timely, and proper payment of all or any
part of such indebtedness evidenced hereby or in the timely and proper
performance of the other obligations of Maker under the Loan Documents, any
judicial proceedings brought by Payee against Maker shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the liens,
security titles, estates, assignments, rights and security interests now or at
any time hereafter securing the payment of this Note and/or the other
obligations of Maker under the Loan Documents, and no attachment, execution or
other writ of process shall be sought, issued or levied upon any assets,
properties or funds of Maker other than theTrust Property, except with respect
<PAGE>
to the liability described below in this section; and
(c) in the event of a foreclosure of such liens, security titles, estates,
assignments, rights or security interests securing the payment of this Note
and/or the other obligations of Maker under the Loan Documents, no judgment for
any deficiency upon the indebtedness evidenced hereby shall be sought or
obtained by Payee against Maker, except with respect to the liability described
below in this section; provided, however, that, notwithstanding the foregoing
provisions of this section, Maker shall be fully and personally liable and
subject to legal action (i) for proceeds paid under any insurance policies (or
paid as a result of any other claim or cause of action against any person or
entity) by reason of damage, loss or destruction to all or any portion of the
Trust Property, to the full extent of such proceeds not previously delivered to
Payee, but which, under the terms of the Loan Documents, should have been
delivered to Payee, (ii) for proceeds or awards resulting from the condemnation
or other taking in lieu of condemnation of all or any portion of the Trust
Property, or any of them, to the full extent of such proceeds or awards not
previously delivered to Payee, but which, under the terms of the Loan Documents,
should have been delivered to Payee, (iii) for all tenant security deposits or
other refundable deposits paid to or held by Maker or any other person or entity
in connection with leases of all or any portion of the Trust Property which are
not applied in accordance with the terms of the applicable lease or other
agreement, (iv) for rent and other payments received from tenants under leases
of all or any portion of the Trust Property paid more than one month in advance,
(v) for rents, issues, profits and revenues of all or any portion of the Trust
Property received or applicable to a period after any notice of default from
Payee hereunder or under the Loan Documents in the event of any default by Maker
hereunder or thereunder which are not either applied to the ordinary and
necessary expenses of owning and operating the Trust Property or paid to Payee,
(vi) for waste committed on the Trust Property, damage to the Trust Property as
a result of the intentional misconduct or gross negligence of Maker or any of
its principals, officers or general partners, or any agent or employee of any
such persons, or any removal of the Trust Property in violation of the terms of
the Loan Documents, to the full extent of the losses or damages incurred by
Payee on account of such failure, (vii) for failure to pay any valid taxes,
assessments, mechanic's liens, materialmen's liens or other liens which could
create liens on any portion of the Trust Property which would be superior to the
lien or security title of the Security Instrument or the other Loan Documents'
to the full extent of the amount claimed by any such lien claimant, (viii) for
all obligations and Indemnities of Maker under the Loan Documents relating to
hazardous or toxic substances or compliance with environmental laws and
regulations to the full extent of any losses or damages (including those
resulting from diminution in value of any Trust Property) incurred by Payee as a
6
<PAGE>
result of the existence of such hazardous or toxic substances or failure to
comply with environmental ]laws or regulations, and (ix) for fraud or material
misrepresentation by Maker or any of its principals, officers, or general
partners, any guarantor, any indemnitor or any agent, employee or other person
authorized or apparently authorized to make statements or representations an
behalf of Maker, any principal, officer or partner of Maker, any guarantor or
any lndemnitor, to the full extent of any losses, damages and expenses of Payee
on account thereof. References herein to particular sections of the Loan
Documents shall be deemed references to such sections as affected by other
provisions of the Loan Documents relating thereto. Nothing contained in this
section shall (1) be deemed to be a release or impairment of the indebtedness
evidenced by this Note or the other obligations of Maker under the Loan
Documents or the lien of the Loan Documents upon the Trust Property, or (2)
preclude Payee from foreclosing the Loan Documents in case of any default or
from enforcing any of the other rights of Payee except as stated in this
section, or (3) limit or impair in any way whatsoever the Indemnity and Guaranty
Agreement (the "Indemnity Agreement") of even date executed and delivered In
connection with the indebtedness evidenced by this Note or release, relieve,
reduce, waive or impair in any way whatsoever, any obligation of any party to
the Indemnity Agreement.
ARTICLE IV - GENERAL CONDITIONS
4.1 No Waiver; Amendment. No failure to accelerate the debt evidenced
hereby by reason of default hereunder, acceptance of a partial or past due
payment, or indulgences granted from time to time shall be construed (i) as a
novation of this Note or as a reinstatement of the indebtedness evidenced hereby
or as a waiver of such right of acceleration or of the right of Payee thereafter
to insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by any applicable laws; and Maker hereby expressly waives 'the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of the time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the original liability of Maker under this Note, either in
whole or in part unless Payee agrees otherwise in writing. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
4 .2 Waivers. Presentment for payment, demand, protest and notice of
demand, protest and nonpayment and all other notices are hereby waived by Maker.
Maker hereby further waives and renounces, to the fullest extent permitted by
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<PAGE>
law, all rights to the benefits of any moratorium, reinstatement, marshalling,
forbearance, valuation, stay, extension, redemption, appraisement, exemption and
homestead now or hereafter provided by the Constitution and laws of the United
States of America and of each state thereof, both as to itself and in and to all
of its property, real and personal, against the enforcement and collection of
the obligations evidenced by this Note or the other Loan Documents.
4.3 Limit of Validity. The provisions of this Note and of all agreements
between Maker and Payee, whether now existing or hereafter arising and whether
written or oral, including, but not limited to, the Loan Documents, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount contracted for, charged, taken, reserved, paid or agreed to be
paid ("Interest") to Payee for the use, forbearance or detention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Maker and Payee shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
Interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit, and if, from any circumstance
whatsoever, Payee shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Payee be paid over to Maker, and not to the payment of
Interest. All Interest (including any amounts or payments judicially or
otherwise under the law deemed to be Interest) contracted for, charged, taken,
reserved, paid or agreed to be paid to Payee shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of this Note, including any extensions and renewals hereof until payment in
full of the principal balance of this Note so that the Interest thereon for such
full term will not exceed at any time the maximum amount permitted by applicable
law. To the extent United States federal law permits a greater amount of
interest than is permitted under the law of the State in which the Trust
Property is located, Payee will rely on United Stated federal law for the
purpose of determining the maximum amount permitted by applicable law.
Additionally, to the extent permitted by applicable law now or hereafter in
effect, Payee may, at its option and from time to time, implement any other
method of computing the maximum lawful rate under the law of the State in which
the Trust Property is located or under other applicable law by giving notice, if
required, to Maker as provided by applicable law now or hereafter
8
<PAGE>
in effect. This Section 4.l will control all agreements between Maker and Payee.
4.4 Use of funds. Maker hereby warrants, represents and covenants that no
funds disbursed hereunder shall be used for personal, family or household
purposes.
4.5 Unconditional payment. Maker is and shall be obligated to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement, postponement, diminution or deduction and without any reduction for
counterclaim or setoff. In the event that at any time any payment received by
Payee hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Maker and shall not be discharged or satisfied with any prior payment thereof or
cancellation of this Note, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.
4.6 Governing Law. THIS NOTE SHALL BE INTERPRETED, CONSTRUED AND ENFORCED
ACCORDING TO THE LAWS OF THE STATE IN WHICH THE TRUST PROPERTY IS LOCATED.
ARTICLE V - MISCELLANEOUS PROVISIONS
The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective heirs, executors, legal
representatives, successors, successors-in-title and assigns, whether by
voluntary action of the parties or by operation of law. As used herein, the
terms "Maker" and "Payee" shall be deemed to include their respective heirs,
executors, legal representatives, successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law. If Maker
consists of more than one person or entity, each shall be jointly and severally
liable to perform the obligations of Maker under this Note. All personal
pronouns used herein, whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the, plural and vice
versa. Titles of articles and sections are for convenience only and in no way
define, limit, amplify or describe the scope or intent of any provisions hereof.
Time is of the essence with respect to all provisions of this Note. This Note
and the other Loan Documents contain the entire agreements between the parties
hereto relating to the subject matter hereof and thereof and all prior
agreements relative hereto and thereto which are not contained herein or therein
are terminated.
9
<PAGE>
IN WITNESS WNEREOF, Maker has executed this Note as of the date first
written above.
MAKER:
Today Northwest Crossing, L.P., a
Texas limited partnership
By: Today Northwest Crossing GP,
Inc., a Texas corporation, its
general partner
By:________________________________
Name: Eric Brauss
Title: President
<PAGE>
Exhibit 10.10
PROMISSORY NOTE
Dated as of October 16, 1995
$2,023,000.00
FOR VALUE RECEIVED, the undersigned, Today Melbourne Plaza, L.P., a Texas
limited partnership ("Maker"), promises to pay to the order of FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association ("Payee") , at
the office of Payee at One First Union Center TW-8, Charlotte, North Carolina
28288, or at such other place as Payee may designate to Maker in writing from
time to time, the principal sum of TWO MILLION TWENTY THREE THOUSAND AND No/100
DOLLARS ($2,023,000.00), together with interest on so much thereof as is
outstanding and unpaid, from the date of the advance of the principal evidenced
hereby, at the rate of Eight and Three- eighths percent (8.375%) per annum (the
"Note Rate"), in lawful money of the United States of America, which shall at
the time of payment be legal tender in payment of all debts and dues, public and
private.
ARTICLE I - SECURED NOTE
The indebtedness evidenced by this Promissory Note (the "Note") and the
obligations created hereby are secured by that certain mortgage or deed of trust
and security agreement (the "Security Instrument") from Maker for the benefit
of Payee, dated of even date herewith, concerning property located in Tarrant
County, Texas. The Security Instrument together with this Note and all other
documents to or of which Payee is a party or beneficiary now or hereafter
evidencing, securing, guarantying, modifying or otherwise relating to the
indebtedness evidenced hereby, are herein referred to collectively as the "Loan
Documents". All of the terms and provisions of the Loan Documents are
incorporated herein by reference. Some of the Loan Documents are to be filed for
record on or about the date hereof in the appropriate public records.
ARTICLE II - TERMS AND CONDITIONS
2.1 Computation of Interest. Interest shall be computed hereunder based on
a 360-day year and based on twelve (12) 30-day months for each full calendar
month and on the actual number of days elapsed for any partial month in which
interest is being calculated. In computing the number of days during which
interest accrues, the day on which funds are initially advanced shall be
<PAGE>
included regardless of the time of day such advance is made, and the day on
which funds are repaid shall be included unless repayment is credited prior to
close of business.
2.2 Payment of Principal and Interest. Payments in federal funds
immediately available in the place designated for payment received by Payee
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Payee, not be
credited until immediately available to Payee in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment on
a day on which Payee is open for business. Such principal and interest shall be
payable in equal consecutive monthly installments of $16,119.69 each, beginning
on the first day of the second full calendar month following the date of this
Note (or on the first day of the first full calendar month following the date
hereof, in the event the advance of the principal amount evidenced by this Note
is the first day of a calendar month), and continuing on the first day of each
and every month thereafter through and including October 1, 2005. On November 1,
2005 (the "Maturity Date") the entire outstanding principal balance hereof,
together with all accrued but unpaid interest thereon, shall be due and payable
in full.
2.3 Application of Payments. Each such monthly installment shall be applied
first to the payment of accrued interest and then to reduction of principal.
2.4 Payment of "Short Interest". If the advance of the principal amount
evidenced by this Note is made on a date other than the first day of a calendar
month, then Maker shall pay to Payee contemporaneously with the execution hereof
interest at the Note Rate for a period from the date hereof through and
including the last day of this calendar month.
2. 5 Prepayment.
(a) This Note may be prepaid in whole but not in part (except as otherwise
specifically provided herein) at any time after the fourth (4th) anniversary of
this Note provided (i) written notice of such prepayment is received by Payee
not more than ninety (90) days and not less than thirty (30) days prior to the
date of such prepayment, (ii) such prepayment is accompanied by all interest
accrued hereunder and all other sums then payable and due hereunder or under the
other Loan Documents, and (iii) if such prepayment occurs after the fourth (4th)
anniversary of this Note but before the date that is nine (9) years and six (6)
months after the date of this Note Payee is paid a prepayment fee in an amount
equal to the greater of (A) one percent (1.0%) of the principal amount being
prepaid, and (B) the positive excess of (1) the present value ("PV") of all
future installments of principal and interest due under this Note absent any
such prepayment including the principal amount due at maturity
2
<PAGE>
(collectively, "All Future Payments"), discounted at an interest rate per annum
equal to the sum of (a) the Treasury Constant Maturity Yield Index.published
during the second full week preceding the date on which such premium is payable
for instruments having a maturity cotermincus with the remaining term of this
Note, and (b) fifty (50) basis points, over (2) the then outstanding principal
balance hereof immediately before such prepayment [(PV of All Future Payments)
(principal balance at time of prepayment) = prepayment fee] "Treasury Constant
Maturity Yield index" shall mean the average yield for "This Week" as reported
by the Federal Reserve Board in Federal Reserve Statistical Release H.15(519).
If there is no Treasury Constant Maturity Yield Index for instruments having a
maturity coterminous with the remaining term of this Note, then the index shall
be equal to the weighted average yield to maturity of the Treasury Constant
Maturity Yield Indices with maturities next longer and shorter than such
remaining average life to maturity, calculated by averaging (and rounding upward
to the nearest whole multiple of 1/100 of 1% per annum, if the average is not
such a multiple) the yields of the relevant Treasury Constant Maturity Yield
Indices (rounded, if necessary, to the nearest 1/100 of 1% with any figure of
1/200 of 1% or above rounded upward). In the event that any prepayment fee is
due hereunder, Payee shall deliver to Maker a statement setting forth the amount
and determination of the prepayment fee, and, provided that Payee shall have in
good faith applied the formula described above, Maker shall not have the right
to challenge the calculation or the method of calculation set forth in any such
statement in the absence of manifest error, which calculation may be made by
Payee on any day during the fifteen (15) day period preceding the date of such
prepayment. Payee shall not be obligated or required to have actually reinvested
the prepaid principal balance at the Treasury Constant Maturity Yield Index or
otherwise as a condition to receiving the prepayment fee. No prepayment fee or
premium shall be due or payable in connection with any prepayment of the
indebtedness evidenced by this Note made on or after the date that is nine (9)
years and six (6) months after the date of this Note. In addition to the
aforesaid prepayment fee if, upon any such prepayment (whether prior to or after
the date that is nine (9) years and six (6) months after the date of this Note),
the aforesaid prior written notice has not been received by Payee, the
prepayment fee shall be increased by an amount equal to the lesser of (i) thirty
(30) days' unearned interest computed on the outstanding principal balance of
this Note so prepaid and (ii) unearned interest computed on the outstanding
principal balance of this Note so prepaid for the period from, and including,
the date of prepayment through the otherwise stated maturity date of this Note.
3
<PAGE>
(b) Partial permitted prepayments of this Note shall not be permitted.
(c) The prepayment fees provided above shall be due, to the extent
permitted by applicable law, under any and all circumstances where all or any
portion of this Note is paid prior to the Maturity Date, whether such prepayment
is voluntary or involuntary (other than due to application of casualty or
condemnation proceeds under the Security Instrument) , even if such prepayment
results from Payee's exercise of its rights upon Maker's default and
acceleration of the maturity date of this Note (irrespective of whether
foreclosure proceedings have been commenced), and shall be in addition to any
other sums due hereunder or under any of the other Loan Documents (as
hereinafter defined). No tender of a prepayment of this Note with respect to
which a prepayment fee is due shall be effective unless such prepayment is
accompanied by the prepayment fee. If the indebtedness of this Note shall have
been declared due and payable by Payee pursuant to Article III hereof, due to a
default by Maker, then any tender of payment of such indebtedness made prior to
the first anniversary date hereof must include a prepayment fee computed as
provided in this Article II plus an additional prepayment fee of three percent
(3%,) of the principal balance of this Note.
ARTICLE III - DEFAULT
3.1 Events of Default. It is hereby expressly agreed that should any
default occur in the payment of principal or interest as stipulated above and
such payment is not made within five (5) days of the date such payment is due
(provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents which is not cured within any applicable grace or cure
period, then a default shall exist hereunder, and in such event the indebtedness
evidenced hereby, including all sums advanced or accrued hereunder or under any
other Loan Document, and all unpaid interest accrued thereon, shall, at the
option of Payee and without notice to Maker, at once become due and payable and
may be collected forthwith, whether or not there has been a prior demand for
payment and regardless of the stipulated date of maturity.
3.2 Late Charges. In the event that any payment is not received by Payee on
the date when due (subject to the applicable grace period), then in addition to
any default interest payments due hereunder, Maker shall also pay to Payee a
late charge in an amount equal to five percent (5%,) of the amount of such
overdue payment.
4
<PAGE>
3.3 Default Interest Rate. So long as any default exists hereunder,
regardless of whether or not there has been an acceleration of the indebtedness
evidenced hereby, and at all times after maturity of the indebtedness evidenced
hereby (whether by acceleration or otherwise), interest shall accrue on the
outstanding principal balance of this Note at a rate per annum equal to three
percent (3%) in excess of the Note Rate, or if such increased rate of interest
may not be collected under applicable law, then at the maximum rate of interest,
if any, which may be collected from Maker under applicable law (the "Default
interest Rate"), and such default interest shall be immediately due and payable.
3.4 Maker's Agreements. Maker acknowledges that it would be extremely
difficult or impracticable to determine Payee's actual damages resulting from
any late payment or default, and such late charges and default interest are
reasonable estimates of those damages and do not constitute a penalty. The
remedies of Payee in this Note or in the Loan Documents, or at law or in equity,
shall be cumulative and concurrent, and may be pursued singly, successively or
together, in Payee's discretion.
3.5 Maker to Pay Costs. In the event this Note, or any part hereof, is
collected by or through an attorney-at-law, Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees.
3.6 Exculpation. Notwithstanding Documents to the contrary, but subject
hereinbelow set forth, Payee agrees that: anything to the in the Loan
qualifications
(a) Maker shall be liable upon the indebtedness evidenced hereby and for
the other obligations arising under the Loan Documents to the full extent (but
only to the extent) of the security therefor, the same being all properties
(whether real or personal), rights, estates and interests now or at any time
hereafter securing the payment of this Note and/or the other obligations of
Maker under the Loan Documents (collectively, the "Trust Proiperty");
(b) if a default occurs in the timely and proper payment of all or any part
of such indebtedness evidenced hereby or in the timely and proper performance of
the other obligations of Maker under the Loan Documents, any judicial
proceedings brought by Payee against Maker shall be limited to the preservation,
enforcement and foreclosure, or any thereof, of the liens, security titles,
estates, assignments, rights and security interests now or at any time hereafter
securing the payment of this Note and/or the other obligations of Maker under
the Loan Documents, and no attachment, execution or other writ of process shall
be sought, issued or levied upon any assets, properties or funds of Maker other
5
<PAGE>
Trust Property, except with respect below in this section; and to the liability
described
(c) in the event of a foreclosure of such liens, security titles, estates,
assignments, rights or security interests securing the payment of this Note
and/or the other obligations of Maker under the Loan Documents, no judgment for
any deficiency upon the indebtedness evidenced hereby shall be sought or
obtained by Payee against Maker, except with respect to the liability described
below in this section, provided, however, that, notwithstanding the foregoing
provisions of this section, Maker shall be fully and personally liable and
subject to legal action (i) for proceeds paid under any insurance policies (or
paid as a result of any other claim or cause of action against any person or
entity) by reason of damage, loss or destruction to all or any portion of the
Trust Property, to the full extent of such proceeds not previously delivered to
Payee, but which, under the terms of the Loan Documents, should have been
delivered to Payee, (ii) for proceeds or awards resulting from the condemnation
or other taking in lieu of condemnation of all or any portion of the Trust
Property, or any of them, to the full extent of such proceeds or awards not
previously delivered to Payee, but which, under the terms of the Loan Documents,
should have been delivered to Payee, (iii) for all tenant security deposits or
other refundable deposits paid to or held by Maker or any other person or entity
in connection with leases of all or any portion of the Trust Property which are
not applied in accordance with the terms of the applicable lease or other
agreement, (iv) for rent and other payments received from tenants under leases
of all or any portion of the Trust Property paid more than one month in advance,
(v) for rents, issues, profits and revenues of all or any portion of the Trust
Property received or applicable to a period after any notice of default from
Payee hereunder or under the Loan Documents in the event of any default by Maker
hereunder or thereunder which are not either applied to the ordinary and
necessary expenses of owning and operating the Trust Property or paid to Payee,
(vi) for waste committed on the Trust Property, damage to the Trust Property as
a result of the intentional misconduct or gross negligence of Maker or any of
its principals, officers or general partners, or any agent or employee of any
such persons, or any removal of the Trust Property in violation of the terms of
the Loan Documents, to the full extent Of the losses or damages incurred by
Payee on account of such failure, (vii) for failure to pay any valid taxes,'
assessments, mechanic's liens, materialmen's liens or other liens which could
create liens on any portion of the Trust Property which would be superior to the
lien or security title of the Security Instrument or the other Loan Documents,
to the full extent of the amount claimed by any such lien claimant, (viii) for
all obligations and indemnities of Maker under the Loan Documents relating to
hazardous or toxic substances or compliance with environmental laws and
regulations to the full extent of any losses or damages (including those
resulting from diminution in value of any Trust Property) incurred by Payee as a
6
<PAGE>
result of the existence of such hazardous or toxic substances or failure to
comply with environmental laws or regulations, and (ix) for fraud or material
misrepresentation by maker or any of its principals, officers, or general
partners, any guarantor, any indemnitor or any agent, employee or other person
authorized or apparently authorized to make statements or representations on
behalf of Maker, any principal, officer or partner of Maker, any guarantor or
any indemnitor, to the full extent of any losses, damages and expenses of Payee
on account thereof. References herein to particular sections of the Loan
Documents shall be deemed references to such sections as affected by other
provisions of the Loan Documents relating thereto. Nothing contained in this
section shall (1) be deemed to be a release or impairment of the indebtedness
evidenced by this Note or the other obligations of Maker under the Loan
Documents or the lien of the Loan Documents upon the Trust Property, or (2)
preclude Payee from foreclosing the Loan Documents in case of any default or
from enforcing any of the other rights of Payee except as stated in this
section, or (3) limit or impair in any way whatsoever the Indemnity and Guaranty
Agreement (the "Indemnity Agreement") of even date executed and delivered in
connection with the indebtedness evidenced by this Note or release, relieve,
reduce, waive or impair in any way whatsoever, any obligation of any party to
the Indemnity Agreement.
ARTICLE IV - GENERAL CONDITIONS
4.1 No Waiver; Amendment. No failure to accelerate the debt evidenced
hereby by reason of default hereunder, acceptance of a partial or past due
payment, or indulgences granted from time to time shall be construed (i) as a
novation of this Note or as a reinstatement of the indebtedness evidenced hereby
or as a waiver of such right of acceleration or of the right of Payee thereafter
to insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by any applicable laws; and Maker hereby expressly waives the benefit of any
statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing. No extension of the time for the payment of this Note or any
installment due hereunder, made by agreement with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge, modify,
change or affect the original liability of Maker under this Note, either in
whole or in part unless Payee agrees otherwise in writing. This Note may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.
4.2 Waivers. Presentment for payment, demand, protest and notice of demand,
protest and nonpayment and all other notices are hereby waived by Maker. Maker
hereby further waives and renounces,
7
<PAGE>
to the fullest extent permitted by law, all rights to the benefits of any
moratorium, to the fullest extent permitted by law, all rights to the benefits
of any moratorium, reinstatement, marshalling, forbearance, valuation, stay,
extension, redemption, appraisement, exemption and homestead now or hereafter
provided by the Constitution and laws of the United States of America and of
each state thereof, both as to itself and in and to all of its property, real
and personal, against the enforcement and collection of the obligations
evidenced by this Note or the other Loan Documents.
4.3 Limit of Validity. The provisions of this Note and of all agreements
between Maker and Payee, whether now existing or hereafter arising and whether
written or oral, including, but not limited to, the Loan Documents, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand or acceleration of the maturity of this Note or otherwise,
shall the amount contracted for, charged, taken, reserved, paid or agreed to be
paid ("Interest") to Payee for the use, forbearance or detention of the money
loaned under this Note exceed the maximum amount permissible under applicable
law. If, from any circumstance whatsoever, performance or fulfillment of any
provision hereof or of any agreement between Maker and Payee shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then idso facto the obligation to be performed or
fulfilled shall be reduced to such limit, and if, from any circumstance
whatsoever, Payee shall ever receive anything of value deemed Interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive Interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Payee be paid over to Maker, and not to the payment of
Interest. All Interest (including any amounts or payments judicially or
otherwise under the law deemed to be Interest) contracted for, charged, taken,
reserved, paid or agreed to be paid to Payee shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of this Note, including any extensions and renewals hereof until payment in
full of the principal balance of this Note so that the Interest thereon for such
full term will not exceed at any time the maximum amount permitted by applicable
law. To the extent United States federal law permits a greater amount of
interest than is permitted under the law of the State in which the Trust
Property is located, Payee will rely on United Stated federal law for the
purpose of determining the maximum amount permitted by applicable law.
Additionally, to the extent permitted by applicable law now or hereafter in
effect, Payee may, at its option and from time to time, implement any other
method of computing the maximum lawful rate under the law of the State in which
the Trust Property is located or under other applicable law by giving notice, if
required, to Maker as provided by applicable law now or hereafter
8
<PAGE>
in effect. This Section 4.3 will c6ntrol all agreements between Maker and Payee.
4.4 Use of Funds. Maker hereby warrants, represents covenant that no funds
disbursed hereunder shall be used personal, family or household purposes.
4.5 Unconditional Payment. Maker is and shall be obligated to pay
principal, interest and any and all other amounts which become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without any
abatement, postponement, diminution or deduction and without any reduction for
counterclaim or setoff. In the event that at any time any payment received by
Payee hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof to
Maker and shall not be discharged or satisfied with any prior payment thereof or
cancellation of this Note, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof, and such payment
shall be immediately due and payable upon demand.
4.6 Governinci La . THIS NOTE SHALL BE INTERPRETED, CONSTRUED AND ENFORCED
ACCORDING TO THE LAWS OF THE STATE IN WHICH THE TRUST PROPERTY IS LOCATED.
ARTICLE V - MISCELLANEOUS PROVISIONS
The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective heirs, executors, legal
representatives, successors, successors-in-title and assigns, whether by
voluntary action of the parties or by operation of law. As used herein, the
terms "Maker" and "Payee" shall be deemed to include their respective heirs,
executors, legal representatives, successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law. If Maker
consists of more than one person or entity, each shall be jointly and severally
liable to perform the obligations of Maker under this Note. All personal
pronouns used herein, whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the plural and vice
versa. Titles of articles and sections are for convenience only and in no way
define, limit, amplify or describe the scope or intent of any provisions hereof.
Time is of the essence with respect to all provisions of this Note. This Note
and the other Loan Documents contain the entire agreements between the parties
hereto relating to the subject matter hereof and thereof and all prior
agreements relative hereto and thereto which are not contained herein or therein
are terminated.
9
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
written above.
MAKER:
Today Melbourne Plaza, L.P.,a
Texas limited partnership
By: Today Melbourne Plaza GP,
Inc., a Texas corporation, its
general partner
By:__________________________________
Name: Eric Brauss
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000868196
<NAME> United Investors Realty Trust
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Dec-31-1998
<EXCHANGE-RATE> 1.00
<CASH> 5,486,095
<SECURITIES> 0
<RECEIVABLES> 2,733,070
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,728,936
<PP&E> 160,329,516
<DEPRECIATION> (7,434,343)
<TOTAL-ASSETS> 164,624,109
<CURRENT-LIABILITIES> 7,045,622
<BONDS> 0
0
0
<COMMON> 86,571,108
<OTHER-SE> (5,701,789)
<TOTAL-LIABILITY-AND-EQUITY> 164,624,109
<SALES> 0
<TOTAL-REVENUES> 17,750,170
<CGS> 0
<TOTAL-COSTS> 3,924,363
<OTHER-EXPENSES> 5,442,208
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,079,889
<INCOME-PRETAX> 2,177,599
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,177,599
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<CHANGES> 0
<NET-INCOME> 1,945,067
<EPS-PRIMARY> 0.25
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