UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1997
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-13432
The Price REIT, Inc.
(Exact name of registrant as specified in its charter)
Maryland 52-1746059
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
7979 Ivanhoe Avenue, Suite 524, La Jolla, California 92037
(Address of principal executive offices) (Zip Code)
619-551-2320
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value New York Stock Exchange
(Title of each class) (Name of each exchange
on which registered)
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. [ ]
At February 27, 1998, the aggregate market value of the Common Stock of
The Price REIT, Inc. held by non-affiliates was $482,987,933 based upon the
closing price of the stock on the NYSE.
Class Outstanding at February 27, 1998
----- --------------------------------
Common Stock 11,701,654
The Price REIT, Inc.
1997 Annual Report on Form 10-K
Table of Contents
Part I
Item 1 Business 3
Item 2 Properties 14
Item 3 Legal Proceedings 14
Item 4 Submission of Matters to a Vote of Security
Holders 14
Part II
Item 5 Market for Registrant's Common Stock and Related
Stockholder Matters 17
Item 6 Selected Financial Data 18
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
Item 8 Financial Statements and Supplementary Data 32
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 32
Part III
Item 10 Directors and Executive Officers of the
Registrant 32
Item 11 Executive Compensation 34
Item 12 Security Ownership of Certain Beneficial
Owners and Management 40
Item 13 Certain Relationships and Related Transactions 42
Part IV
Item 14 Exhibits, Financial Statement Schedule,
and Reports on Form 8-K 43
The Price REIT, Inc.
Part I
Item 1. Business
General
The Price REIT, Inc. (the "Company") is a self-administered and self-managed
equity real estate investment trust ("REIT") which is focused on the
acquisition, development, management and redevelopment of destination retail
shopping center properties (also known as "power centers") and community
shopping centers. The Company was incorporated in 1991 as a Maryland
corporation.
On January 13, 1998, the Company entered into an Agreement and Plan of Merger
with Kimco Realty Corporation, a Maryland corporation ("Kimco"), and REIT Sub,
Inc., a Maryland corporation and wholly owned subsidiary of Kimco ("REIT Sub"),
pursuant to which the Company will merge ("the Merger") with and into REIT Sub.
Pursuant to the Merger, each share of Common Stock of the Company will be
converted (on a tax-free basis) into the right to receive a combination of
common stock, par value of $.01 per share, of Kimco and depositary shares
("Kimco Class D Depositary Shares"), each representing a one-tenth fractional
interest in a new issue of Kimco 7.5% Class D Cumulative Convertible Preferred
Stock, having an assumed value of not less than $45.00 based upon the Kimco
Average Price (as defined below) and the liquidation preference of the Kimco
Class D Depositary Shares. The Merger which is expected to close in the first
half of 1998, is subject to, among other things, the approval of the
stockholders of each of the Company and Kimco. The "Kimco Average Price" will be
the average of the daily high and low sales prices of the Kimco Common Stock on
the New York Stock Exchange during the 15 randomly selected trading days within
the 30 consecutive trading days ending on and including the seventh trading day
immediately preceding the date of Kimco's 1998 annual meeting of stockholders.
The Company's initial public offering was for 73,000 shares of Series A Common
Stock ("A Shares") at $1,000 per share in December 1991. On May 29, 1992, the
stock was split 40 for 1. After the stock split, the Company had 2,928,000 A
Shares outstanding.
In August 1993, the Company consummated a public offering ("1993 Public
Offering") of 5,200,000 shares of Series B Common Stock ("B Shares") at $32.50
per share (the "1993 Offering"). The net proceeds of the 1993 Offering were
$160,042,000. Concurrent with the 1993 Offering, the Company issued an
additional 15,000 B Shares at $32.50 per share to purchase the assets utilized
in the operations of its property management company.
The A Shares and B Shares had identical voting, dissolution and liquidation
rights. The Company's charter provided that the holders of the B Shares were
entitled to receive an annualized quarterly per share distribution equal to 105%
of the annualized quarterly per share distribution on the A shares. At
the Company's annual stockholders' meeting held on May 25, 1995, the
stockholders approved an amendment to the Company's charter to change the
name of "Series B Common Stock" to "Common Stock" ("Common Stock"). Thereafter,
the holders of the A Shares had the right to convert their shares into Common
Stock on a one-for-one basis until such right was terminated by
the Board of Directors.
At the Company's annual stockholders' meeting held on May 23, 1996, the
stockholders approved an amendment to the Company's charter to (i) provide
that all outstanding shares of Series A Common Stock be changed into shares of
Common Stock; (ii) eliminate the provision which entitled holders of Common
Stock to receive an annualized quarterly per share dividend equal to 105% of the
annualized quarterly per share dividend on the Series A Common Stock;(iii)
change the name of its "Series A Common Stock" to "Common Stock"; and (iv)
change the name of what were formerly referred to as "Common Shares" to
"Common Stock." At such time, there were approximately 38,266 outstanding shares
of Series A Common Stock, which were converted on a one-for-one basis into
shares of Common Stock.
From the 1993 Public Offering through 1996, the Company completed additional
offerings of its public unsecured debt and equity of over $175 million in the
aggregate for the purposes of repaying its indebtedness under its unsecured Line
of Credit ("Line of Credit"), funding property acquisition activity and the
expansion and improvement of its portfolio of properties.
On January 22, 1997, the Company issued and sold 1,600,000 shares of Common
Stock at a price to the public of $37.625 per share pursuant to its $175 million
shelf registration statement ("1996 Shelf Registration Statement"). The Company
used the net proceeds of approximately $57 million for repayment
of indebtedness under the Company's Line of Credit, to fund its property
acquisition activities and for general corporate purposes.
On August 11, 1997, the Company issued and sold 1,000,000 shares of Common Stock
at a price to the public of $37.50 per share pursuant to its 1996 Shelf
Registration Statement. The Company used the proceeds of $37.5 million for
repayment of indebtedness under the Company's Line of Credit, to fund its
property acquisition activities and for general corporate purposes.
In 1997, the Company issued an aggregate of 2,632,000 shares of Common Stock,
including 2,600,000 shares in public offerings, as discussed above, and 32,000
shares under the Company's 1994 dividend reinvestment plan and voluntary stock
purchase plan, raising the number of total shares of Common Stock outstanding at
year end to approximately 11,701,000.
In June 1997, the Company issued $50 million aggregate principal amount of the
Company's 7.125% Senior Notes due June 15, 2004. The Company used the net
proceeds of approximately $49.3 million for repayment of indebtedness under
the Line of Credit.
As of December 31, 1997, the Company's total aggregate indebtedness was $299.6
million, consisting of $58.0 million of outstanding indebtedness under its
Line of Credit, $204.1 million of outstanding indebtedness with respect to its
outstanding Senior Notes and $37.5 million of outstanding mortgage notes that
are secured by three of its Properties.
On September 8, 1997, the Company filed a shelf registration statement on Form
S-3 (File No. 333-35185)(the "1997 Shelf Registration Statement") for up to $400
million of debt securities, preferred stock, common stock and warrants. The 1997
Shelf Registration statement was declared effective by the Securities and
Exchange Commission on September 24, 1997.
As of December 31, 1997, the Company owned or had interests in 37 properties
consisting of 33 power and community centers, one stand alone retail warehouse,
one joint venture shopping center under construction and two vacant land parcels
(the "Properties") located in 15 states containing a total of approximately 7.3
million square feet of gross leasable space with 536 tenants. The overall
occupancy rate of the Properties was 98.4% at December 31, 1997.
Power centers are typically open-air centers ranging in size from 200,000 to
700,000 square feet of gross leasable area, and are usually comprised of one or
more national retail anchor tenants, often in a warehouse format. Community
centers are typically open-air centers ranging in size from 30,000 to 200,000
square feet of gross leasable area and are anchored by one or more national or
regional grocery/drug retail stores. Anchor retail tenants typically occupy
between 60% and 90% of the total square footage in a power or community center.
The tenant mix in a power center is designed to draw consumers from up to a 15-
mile radius, creating a shopping "destination," while the tenant mix of a
community center is designed to serve the everyday needs of a specific
community. The majority of the Company's anchor tenants in its power centers
are retail warehouses, which are consumer-oriented facilities with at least
25,000 to 100,000 square feet of gross leasable area offering a variety of
products for business use, personal use or resale. The retail warehouse format
of merchandise display, direct manufacturer purchasing, low mark-ups and rapid
inventory turnover is designed to provide substantial consumer savings compared
to other sources of similar merchandise.
Each of the Company's power centers is anchored by one or more national retail
tenants such as Home Depot, Costco, HomeBase, The Sports Authority, Burlington
Coat Factory, Target, Staples, T.J. Maxx, Circuit City, Builder's Square, Toys
`R' Us, or Sears Homelife. The Company typically seeks to structure tenant
leases as "triple net" leases, under the terms of which the tenant is
responsible for its pro rata share of costs and expenses associated with the
ongoing operation of the property, including but not limited to real property
taxes and assessments, repairs and maintenance and insurance. The anchor
tenants generally have primary lease terms of ten to twenty years and smaller
tenants typically have primary lease terms of five to ten years. The Company's
leases generally provide for contractual rent increases over the life of the
lease based on a fixed amount or consumer price indices, and, in certain cases,
percentage rent, calculated as a percentage of a tenant's gross sales above a
predetermined threshold.
The Company's strategy is to continue to acquire, develop, own and manage power
centers and large community centers anchored by national retail tenants who
enter into long term triple net leases. The Company's business objective is to
increase its funds from operations through the acquisition and development of
additional properties, contractual rent increases and percentage rent, reletting
of existing space at higher rents and expansion or remodeling of existing
properties.
The Company intends to pursue opportunities for acquisitions with expansion
potential and to develop additional power centers, community centers and stand-
alone retail warehouses. Prior to 1997, the Company conducted its development
activities, including site planning, construction management and leasing,
through its affiliate, K & F Development Company (the "Development Company"), a
property development company which, through its predecessors, had over 20 years
of experience in developing shopping centers and other properties. Effective
January 1, 1997, the Company acquired the assets, assumed the liabilities and
retained the employees of the Development Company ("the Development Company
Acquisition"). The Company acquired the assets pursuant to a distribution to the
Company as owner of 100% of the non-voting preferred stock of the Development
Company.
Properties
As of December 31, 1997, the Company owned or had interests in 37 Properties,
consisting of 33 power and community centers, one stand-alone retail warehouse,
one joint venture shopping center under construction and two vacant land parcels
for future development. At December 31, 1997, the Properties had approximately
7.3 million square feet of gross leasable area with 536 tenants with an overall
occupancy rate of 98.4%. Thirteen of the Properties have a Home Depot or Costco
warehouse or both located on them which warehouses are leased from the Company.
Home Depot and Costco account for 11.2% and 6.9%, respectively, of annualized
contract base rental income as of December 31, 1997. The power and community
centers are typically leased to tenants under noncancelable leases with
remaining terms of one to 25 years and are triple net leases with few
exceptions. Most of the leases also provide for future rent increases by
automatic fixed rate increases or increases based on consumer price indices.
Additionally, certain of the leases contain provisions for percentage
participation in retail sales of the tenant in excess of a minimum amount. For
fiscal year 1997, Home Depot accounts for greater than 10% of the total rents in
eight properties, and Costco accounts for greater than 10% of the total rents in
seven properties.
The power centers were approximately 98.4% leased at December 31, 1997. Although
adverse market conditions impacted the retail industry from 1992 through 1997,
the Company's shopping centers generally contain major national and regional
tenants which feature quality consumer items with value pricing that generally
perform well in most economic environments.
The following schedule lists the real estate investment portfolio of the Company
as of December 31, 1997:
Gross
(1) Land Leasable
Year Area Area (Sq Ft) No. of
Location Completed (Acres) (Thousands) Tenants
- -------- --------- ------- ------------ -------
POWER CENTERS
Alhambra, CA 1988 18.4 201 10
Austin, TX 1997 18.2 183 11
Bellingham, WA 1991 20.0 175 22
Carmichael, CA 1994 18.5 215 12
Chula Vista, CA 1988 31.3 371 23
Commack, NY (4) 1997 32.2 234 9
Copiague, NY (5) 1990 15.4 164 4
Corona, CA 1989 54.4 487 50
Dallas, TX 1995 6.8 84 6
Fairfax, VA 1993 37.0 323 6
Farmington, CT 1995 16.9 185 14
Garland, TX 1991 6.3 62 3
Glendale, AZ 1989 40.5 340 22
Glendale, AZ (3) 1995 7.1 55 16
(Talavi)
Greensboro, NC 1996 4.4 41 6
Houston, TX 1993 40.0 426 17
La Mirada, CA 1993 31.2 289 52
Mesquite, TX 1992 15.0 210 8
Minnetonka, MN 1992 12.1 120 13
North Haven, CT 1988 31.7 332 19
North Phoenix, AZ 1996 17.0 216 9
Oklahoma City, OK 1994 19.8 234 10
Orlando, FL 1990 19.4 271 29
Oxnard, CA 1990 14.4 172 4
Phoenix, AZ 1989 26.6 335 11
Phoenix, AZ (3) (6) 1973 6.7 95 7
(Hayden Plaza North)
Piscataway, NJ 1989 9.6 97 17
Richardson, TX 1994 11.7 116 7
Tempe, AZ (3) 1994 21.1 192 27
White Marsh, MD 1991 25.3 210 8
Wichita, KS 1995 13.5 134 9
Woodbridge, VA 1996 54.0 483 46
Woodridge, IL 1985 13.1 149 28
Stand Alone Retail Warehouse
- ----------------------------
Santa Ana, CA 1995 12.0 134 1
Under Development
- -----------------
Houston(I10/Fry), TX (3) n/a 23.3 n/a n/a
Land for Development
- --------------------
Goodyear, AZ (3) n/a 20.0 n/a n/a
Houston, TX n/a 9.7 n/a n/a
---------------------------------------
Total/Average 774.6 7,335 536
=======================================
Total Properties 37
(2)
Annualized
Percent Base Rent
Location Leased (Thousands) Selected Major tenants
- -------- ------- ----------- ----------------------
POWER CENTERS
Alhambra, CA 100.0% $2,117 Costco
Levitz
Austin, TX 100.0% 2,645 Babies `R' Us
Circuit City
Cost Plus
Designer Shoe Warehouse
Just for Feet
Mikasa
Bellingham, WA 100.0% 2,105 Bon Home
T.J. Maxx
Office Depot
Drug Emporium
Carmichael, CA 94.4% 2,340 Home Depot
Sports Authority
Longs Drug
Chula Vista, CA 99.8% 2,723 Costco
HomeBase
Levitz
Pep Boys
Commack, NY (4) 100.0% 3,921 Babies `R' Us
King Kullen
HomePlace
Sports Authority
Borders Books
Copiague, NY (5) 100.0% 1,648 Home Depot
Jack LaLanne (Bally's)
Red Lobster
Corona, CA 99.1% 5,197 Costco
Home Depot
Office Max
Ross
Levitz
Bally's Total Fitness
Dallas, TX 100.0% 914 Office Max
Ross
Fairfax, VA 100.0% 3,909 Costco
Home Depot
Sports Authority
Farmington, CT 99.0% 2,144 Borders Books
Sports Authority
T.J. Maxx
Linens & Things
Petco
Garland, TX 100.0% 524 Office Depot
Drug Emporium
Blockbuster
Glendale, AZ 100.0% 3,184 Costco
HomeBase
Levitz
Glendale, AZ (3) 97.5% 523 Sears Homelife
(Talavi) Michael's
Greensboro, NC 100.0% 560 Staples
David's Bridal
Houston, TX 100.0% 2,746 Bed, Bath & Beyond
Sears Homelife
Best Buy
Stein Mart
Sony Theaters
Builder's Square
Oshmans Super Sport
La Mirada, CA 97.5% 3,576 Toy's `R' Us/Kids `R' Us
Sav-on Drugs
LA Fitness
Krikorian Theatres
U.S. Post Office
Mesquite, TX 100.0% 1,507 Sears Homelife
General Cinema
Computer City
Best Buy
PETsMART
Minnetonka, MN 100.0% 1,264 Toys `R' Us
OfficeMax
Golfsmith International
North Haven, CT 100.0% 2,846 BJ's (sub-leased from Costco)
Home Depot
T.J. Maxx
Xpect Drug
North Phoenix, AZ 100.0% 1,533 Burlington Coat Factory
Computer City
Staples
Petco
Michael's
Oklahoma City, OK 93.0% 1,786 Home Depot
Best Buy
HomePlace
Orlando, FL 99.7% 3,854 Uptons
Porfolio Furnishings(J.C.Penny)
General Cinema
Michael's
Ross
Oxnard, CA 100.0% 1,082 Target
Ralphs (Food 4 Less)
24 Hour Fitness
Phoenix, AZ 96.9% 2,142 Costco
HomeBase
PETsMART
Phoenix, AZ (3) (6) 69.2% 254 Home Depot
(Hayden Plaza North) Autozone
Piscataway, NJ 100.0% 1,581 ShopRite (Foodarama)
Richardson, TX 100.0% 989 OfficeMax
Bally's Total Fitness
Berean Books
Northern Stores
Tempe, AZ (3) 100.0% 2,136 HomeBase
Sports Authority
L.A. Fitness
PETsMART
Staples
White Marsh, MD 100.0% 1,407 Costco
Sports Authority
Pep Boys
PETsMART
Wichita, KS 100.0% 1,139 Best Buy
T.J. Maxx
Michaels
Woodbridge, VA 95.8% 5,200 Lowes
Shoppers Food
Best Buy
Kids `R' Us
Borders Books
Zany Brainy
PETsMART
Super Trak Auto
Super Crown
Woodridge, IL 90.9% 1,861 Kohl's
General Cinema
The Gap
Stand Alone Retail Warehouse
- ----------------------------
Santa Ana, CA 100.0% 1,765 Home Depot
Under Development
- -----------------
Houston(I10/Fry), TX (3) n/a n/a
Land for Development
- --------------------
Goodyear, AZ (3) n/a n/a
Houston, TX n/a n/a
---------------------
Total/Average 98.4% 73,122
=====================
Footnotes:
(1) Representsthe year in which the property was completed or the year in which
the most significant expansion or renovation was completed, which in certain
instances precedes the date the property was acquired by the Company.
(2) Total annualized contract base rents excluding (i) percentage rents, (ii)
additional rent payable by tenants such as common area maintenance, real
estate taxes and other expense reimbursements, and (iii) future contractual
rent escalations or cost of living increases.
(3) Reflects the Company's 50% ownership interest in the above properties,
except for the number of tenants (if applicable) which is shown at 100%.
(4) Reflects the Company's 90% ownership interest in the above property,
except for the number of tenants (if applicable) which is shown at 100%.
The Center development is substantially complete as of December 31, 1997.
(5) Reflects the sale of a portion of the property (approximately 9.2 acres)
to Target, pursuant to an executed agreement, and the related demolition
of certain buildings on such parcel. Target has advised the Company that it
intends to construct a new store on the parcel.
(6) Certain of the Center's tenants' leases are being terminated in preparation
for major redevelopment.
Twelve of the properties listed above were acquired from The Price Company,
the predecessor to Costco.
The Company conducts a Phase I and, if necessary, a Phase II environmental
report for each property it acquires, with the exception of certain of the 12
properties it acquired The Price Company, which indemnified the Company with
respect to the presence of any hazardous material if such hazardous material was
present on the date of sale. The Company is not aware of any environmental
liability with respect to its properties that the Company's management believes
would have a material adverse effect on the Company's business, assets or
results of operations.
No single property in the Company's portfolio accounted for 10% or more of the
Company's total revenue and/or total assets as of December 31, 1997.
Recent and pending acquisitions
On October 8, 1997, the Company acquired Ridgedale Festival shopping center, a
120,000 square foot shopping center in Minnetonka (Minneapolis), Minnesota.
The purchase price was $11.9 million. The Company financed this acquisition with
the proceeds from the tax-deferred sale of the Cerritos property.
On October 17, 1997, the Company acquired Cordata Centre, a 174,000 square
foot shopping center located in Bellingham, Washington. The purchase price was
$20.25 million. The Company financed the acquisition with borrowings of $18
million under the Line of Credit and the remainder from operating cash.
On October 31, 1997, the Company acquired a 97,000 square foot shopping center
in Piscataway, New Jersey. The purchase price was $15.1 million. The Company
financed this acquisition by the assumption of a $11.4 million non-recourse loan
secured by the property maturing in August 2000, and the remainder with
borrowings under its Line of Credit.
On December 29, 1997, the Company acquired Woodgrove Festival, a 149,000 square
foot shopping center located in Woodridge, Illinois. The purchase price was
$16.5 million. The Company financed the acquisition with borrowings of $16
million under the Line of Credit and the remainder from operating cash.
On March 4, 1998 the Company completed the acquisition of Market Place At
Rivergate in Nashville, Tennessee. Marketplace contains 109,000 rentable square
feet and is anchored by Marshall's, OfficeMax and Old Country Buffet and is 100%
leased and was purchased for $8.1 million. The Company financed this acquisition
entirely with borrowings under its Line of Credit.
On March 11, 1998 the Company completed the acquisitions of Vista Ridge Plaza
and The Shops At Vista Ridge in Lewisville, Texas. Vista Ridge Plaza contains
122,000 rentable square feet and is anchored by Babies "R" Us and HomePlace and
is 100% leased and was purchased for $12.55 million. The Shops At Vista Ridge
contains 75,000 rental square feet and is anchored by Talbots, Bally's and
Southwestern Bell Mobile and is 98% leased and was purchased for $10.95 million.
The Company financed this acquisition entirely with borrowings under its Line of
Credit.
The Company has numerous properties under contract to purchase which are all
subject to completion of due diligence. The Company makes no assurances that
any or all of the acquisitions will be completed.
Property Management
The Company entered into an agreement concurrently with the 1993 Offering to
acquire the property management business of its property manager, K&F Commercial
Properties ("K&F"). In August 1993, the two principals of K&F, Mr. Joseph
Kornwasser and Mr. Jerald Friedman, became executive officers of the Company.
Sol Price, the Company's former Chairman of the Board of Directors, resigned as
President and Chief Executive Officer in August 1993. Mr. Kornwasser became
President, Chief Executive Officer and a Director of the Company, and Mr.
Friedman became Senior Executive Vice President and Chief Operating Officer of
the Company. In March 1994, Mr. Friedman resigned his positions at the Company
and became Chairman of the Board of Directors and Chief Executive Officer of the
Development Company. In connection with the Development Company Acquisition, Mr.
Friedman was reinstated as the Company's Senior Executive Vice President and
Chief Operating Officer, and certain other Development Company officers were
elected to serve as executive officers of the Company.
The Company's property management division conducts all in-house property
management services, including leasing, for the Company's Properties and certain
other properties owned by third parties and joint ventures for a fee.
Operating Strategy
The Company operates in a manner intended to qualify as a REIT under Sections
856-860 of the Internal Revenue Code of 1986, as amended (the "Code").
The Company's strategy is to continue to acquire, develop, own and manage power
centers anchored by national retail warehouse tenants such as Home Depot,
Costco, HomeBase, The Sports Authority or Target. These tenants typically enter
into long-term (ten to twenty years) triple net leases which provide for
contractual rent increases and/or percentage rents. In addition, the Company
seeks, through intensive management of its properties, to continually improve
the mix and quality of smaller tenants which generally enter into shorter-term
(five to ten years) triple net leases which also provide for contractual rent
increases and/or percentage rents. The Company's business objective is to
continue to increase its funds from operations and the value of its properties
through the acquisition of additional properties, contractual rent increases
and/or percentage rents, reletting of existing space at higher rents and
expansion or remodeling of existing properties. The Company generally intends
to hold its properties for long-term investment. However, the Company may
dispose of a property if it deems such disposition to be advantageous.
The Company intends to aggressively pursue opportunities for acquisitions with
expansion potential or develop additional power centers, large community centers
and stand-alone retail warehouses. The Company believes that under current
economic and financial conditions excellent opportunities continue to exist for
buyers and developers of shopping centers who have access to capital. There can
be no assurance, however, that acquisition or development opportunities
consistent with the Company's strategy will be available to the Company, or, if
available, will be available on terms favorable to the Company.
While the Company will continue to focus primarily on acquisitions of developed
properties it may, from time to time, renovate and expand its properties and
pursue selected development opportunities.
The Company's historical geographic focus has been on metropolitan areas in the
southwestern and eastern United States. During 1997, the Company significantly
diversified its geographic concentration by acquiring numerous properties in
metropolitan areas of the Northwest, Midwest, and Southeastern United States. As
the Company seeks acquisition and development opportunities, it will focus on
metropolitan areas throughout the country.
Management and Employees
The Company is self-administered and self-managed real estate investment trust.
The Company's Board of Directors and executive officers are responsible for
providing a continuing investment program. The Company employed 50 people as of
December 31, 1997. In conjunction with the acquisition of the assets of the
Development Company at January 1, 1997, the Company retained 10 former employees
of the Development Company.
Item 2. Properties
Information concerning property owned by the Company may be found under Item 1.
Business.
Item 3. Legal Proceedings
Neither the Company nor any of its Properties was a party to any material legal
proceedings during the period covered by this report.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1997, no matters were submitted for a vote of
stockholders.
Item 4A. Executive Officers of the Company
The following table provides information as of March 27, 1998 regarding the
Company's executive officers and the positions they hold with the Company.
Name Age Position
- ---------------------- ----- -------------------------------------------
Joseph K. Kornwasser 50 President and Chief Executive Officer
Jerald Friedman 53 Senior Executive Vice President and
Chief Operating Officer
George M. Jezek 68 Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
Lawrence M. Kronenberg 41 Executive Vice President, Finance
Daniel Slattery 38 Vice President, Development
Joseph K. Kornwasser has served as President, Chief Executive Officer and a
director of the Company since August 1993. From 1984 until 1994, he was
Managing General Partner of Kornwasser & Friedman Shopping Center Properties, a
commercial real estate development company that acquired, developed or leased
shopping centers and other commercial properties, including most of the
Company's properties. From 1976 until 1993, he was the managing general partner
of K&F Commercial Properties, a property management company that managed
shopping centers and other commercial properties and that was acquired by the
Company. Mr. Kornwasser serves as Chairman of the Board of the National Bank of
California, a federally chartered banking institution ("National Bank of
California"). Mr. Kornwasser has served on the City of Los Angeles Economic
Council and is active in numerous community and charity organizations.
Jerald Friedman has served as Senior Executive Vice President and Chief
Operating Officer of the Company since January 1, 1997. From March 1994 to
December 1996, Mr. Friedman was the Chairman and Chief Executive Officer of K &
F Development Company ("Development Company"), an affiliate of the Company.
Effective January 1, 1997, the Company acquired the assets and assumed the
liabilities of Development Company and elected certain of the officers of
Development Company, including Mr. Friedman, to serve as officers of the
Company. From August 1993 to March 1994 Mr. Friedman was Senior Executive Vice
President of the Company. From 1984 until 1993 he was general partner of
Kornwasser & Friedman Shopping Center Properties and from 1976 until 1993 he was
general partner of K&F Commercial Properties. Mr. Friedman is a director and
serves as secretary of the National Bank of California. Mr. Friedman is active
in numerous community and charitable organizations and has served on the
national board of the Muscular Dystrophy Association.
George M. Jezek has been a director of the Company since 1991. He has
served as Executive Vice President, Chief Financial Officer and Secretary of the
Company since August 1992 and Treasurer since May 1993. From 1974 through 1994,
he was also General Manager and a trustee of Security First Real Estate
Investment Trust. He was affiliated with that trust since its inception in
1969. In addition, Mr. Jezek was previously Secretary and a Director of FedMart
Corporation.
Lawrence M. Kronenberg has served as Executive Vice President, Finance of
the Company since January 1, 1997. From August 1993 to December 1996, Mr.
Kronenberg was the Executive Vice President and Chief Financial Officer of
Development Company. Effective January 1, 1997, the Company acquired the assets
and assumed the liabilities of Development Company and elected certain of the
officers of Development Company, including Mr. Kronenberg, to serve as officers
of the Company. From 1985 until August 1993, Mr. Kronenberg was Chief Financial
Officer of Kornwasser and Friedman Commercial Properties and Kornwasser and
Friedman Shopping Center Properties. Prior to 1985, Mr. Kronenberg's background
includes positions within both public and private industry, including Peat,
Marwick, Mitchell & Company and Kenneth Leventhal & Company.
Daniel Slattery has served as Vice President, Development of the Company
since January 1, 1997. From January 1996 to December 1996, Mr. Slattery was the
Senior Vice President of Development Company. Effective January 1, 1997, the
Company acquired the assets and assumed the liabilities of Development Company
and elected certain of the officers of Development Company, including Mr.
Slattery, to serve as officers of the Company. From April 1990 to December
1995, Mr. Slattery was Director of Development Services for Homart Development
Company responsible for development, construction and leasing for nearly 3
million square feet of retail projects.
Part II
Item 5. Market for the Registrant's Common Stock & Related Stockholder Matters
The Company's shares of Common Stock are currently traded on the New York Stock
Exchange ("NYSE") under the symbol "RET." Information concerning Series A
Common Stock may be found under the "General" section of Item 1. Business. At
February 27, 1998, the Company had approximately 12,000 stockholders of its
Common Stock.
The high and low composite sales prices on the NYSE for the Company's Common
Stock for each full quarterly period from January 1, 1996 through December 31,
1997, and the amount of dividends paid for the Common Stock and Series A Common
Stock are as follows:
Market Quotations Cash
Common Stock Series A Dividends Paid
------------ ------------ --------------
Common Series
Quarter Ended High Low High Low Stock A
----- ----- ----- ----- ----- -----
March 31, 1996 31.13 28.50 * * .7000 .6667
June 30, 1996 32.38 28.75 n/a n/a .7000 n/a
September 30, 1996 32.63 31.00 n/a n/a .7000 n/a
December 31, 1996 38.50 31.63 n/a n/a .7000 n/a
March 31, 1997 38.25 36.13 n/a n/a .7250 n/a
June 30, 1997 38.63 36.50 n/a n/a .7250 n/a
September 30, 1997 40.19 36.75 n/a n/a .7250 n/a
December 31, 1997 42.68 39.00 n/a n/a .7250 n/a
* During these periods, the Series A shares were not traded on any exchange and
had limited trading volume. Consequently, stock price data is difficult to
determine and may not be meaningful.
The Company has paid quarterly dividends since its initial offering in December
1991 and intends to pay regular quarterly dividends in the future. Dividends
will be paid based on the Company's cash flow which, due primarily to
depreciation, exceeds net income.
Under provisions of the Code, the portion of cash dividends that exceeds
earnings and profits is a return of capital. The return of capital is generated
due to the deduction of noncash expenses, primarily depreciation, in the
determination of earnings and profits. The status of the cash dividends
distributed for the years ended December 31, 1997, 1996 and 1995 for tax
purposes is as follows:
1997 1996 1995
------- ------ -------
Taxable portion 80.17% 78.36% 82.00%
Return of capital 19.83% 21.64% 18.00%
------- ------- -------
100.00% 100.00% 100.00%
======= ======= =======
Item 6. Selected Financial Data
The following income and expense items are for the years ended December 31,
1997, 1996, 1995, 1994 and 1993.
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
Rental income 69,335 51,292 40,152 37,599 27,332
Income from rental
operations 40,022 29,507 23,289 21,850 15,886
Net income 26,254 16,919 16,386 16,904 9,128
Total assets 637,503 428,071 382,478 312,419 292,195
Unsecured debt 262,093 173,114 155,082 84,000 65,000
Mortgage debt 37,535 11,794 2,750 2,750 --
Cash dividends paid 32,439 24,336 22,038 20,859 12,128
Cash dividends paid
per share
Common Stock 2.90 2.80 2.67 2.56 0.97
Series A Common Stock n/a 0.67 2.54 2.44 2.38
For more detailed financial information, see part IV Item 14.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's objectives are to own a portfolio of income-producing real estate
properties that will provide cash for quarterly dividends to stockholders while
protecting investor capital and provide potential for long-term appreciation.
To meet these objectives, the Company primarily invests in stabilized retail
properties having strong credit tenants and historical cash flow trends
sufficient to meet the Company's dividend objectives.
The following discussion, which is based on the condensed consolidated financial
statements of the Company, should be read in conjunction with the consolidated
financial statements appearing elsewhere in this report. When used in the
following discussion, the words "believes," "anticipates," "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected, including, but not limited to, the
actual timing of the Company's planned acquisitions and developments and the
strength of the local economies in the sub-markets in which the Company
operates. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any revisions to these forward-
looking statements which may be made to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
General
The results of operations for 1995, 1996 and 1997 were significantly affected by
acquisitions and depositions of properties. During 1996 and 1997, the Company
and its joint ventures acquired a number of properties, developed one property
and sold one property and two land parcels.
In January 1996, the Company purchased a 9.7 acre parcel of undeveloped land
that is adjacent and contiguous to the Houston, Texas Center for $1.25 million.
The Company intends to use such land for expansion of the Center and development
for new tenants. The Company financed this acquisition with operating cash.
In May 1996, the Hayden Plaza North Associates Partnership, in which the Company
owns a 50% interest, acquired a shopping center in Phoenix, Arizona at a cost of
$3,490,000. The Company's 50% share of the acquisition cost was funded by
borrowings of $1 million under the Line of Credit and $750,000 of operating
cash.
In July 1996, the Company acquired a 210,000 square foot shopping center in
Mesquite, Texas (Dallas area) at a cost of approximately $12.7 million. The
Company financed this acquisition entirely with borrowings under its Line of
Credit.
In October 1996, the Company acquired an 80% partnership interest in Smithtown
Venture from the Development Company. In March 1997, the Company acquired an
additional 10% interest from the minority partner. Smithtown Venture is
constructing a 270,000 square foot shopping center in Long Island, New York. As
of December 31, 1997, Smithtown Venture has incurred $20,375,000 of development
costs. The Company's share of construction and development costs have been
funded by borrowings under the Company's Line of Credit and operating funds to
the extent such funds are available.
In November 1996, the Company acquired a 234,000 square foot shopping center in
Oklahoma City, Oklahoma. The purchase price was $16.7 million, of which $11.8
million was evidenced by the assumption of two non-recourse loans (subject to
customary exceptions) secured by the property. The balance of the purchase price
was financed with $4.9 million of operating cash.
In January 1997, the Company acquired Westgate Market, a 134,000 square foot
shopping center in Wichita, Kansas for $9.8 million. The Company financed this
acquisition with borrowings under its Line of Credit.
In February 1997, Price/Baybrook, Ltd. (a wholly-owned subsidiary of the
Company) formed a joint venture with I-10/Fry Road 27, Ltd. and I-10/Park Row
40, Ltd. (the "Outside Partners") to develop an approximately 470,000 square
foot retail power center in Houston, Texas. The joint venture agreement provides
for the Outside Partners to contribute the land with a net fair market value of
$4.225 million and Price/Baybrook, Ltd. to contribute $4.225 million as needed
to fund development costs. After Price/Baybrook, Ltd. has funded its share of
capital, it is anticipated that the joint venture will seek construction
financing to complete the center.
The development will be located on 47 acres of land at the intersection of
Interstate 10 and Fry Road in the western part of Houston. The Company will be
the managing partner with a 50% joint venture interest, and the remaining 50%
will be owned by the Outside Partners.
The new power center will be anchored by Home Depot, which purchased
approximately ten acres from the joint venture for the construction of a 106,000
square foot store and a 30,000 square foot garden center. The sale of land to
Home Depot was completed on July 31, 1997. The joint venture intends to develop
the balance of the 470,000 square foot center, with multiple national value
retailers and an entertainment component. The Home Depot construction was
completed and the store opened in January 1998. It is anticipated that the
balance of the center will be completed in phases over the next two years. There
can be no assurance, however, that construction of the balance of the center
will commence or be completed on schedule. The operations of the joint venture
are accounted for under the equity method of accounting.
In March 1997, the Company acquired Broadmoor Village Shopping Center, a 62,000
square foot shopping center in Garland, Texas for $4.75 million. The Company
financed this acquisition with operating cash.
In March 1997, the Company acquired Richardson Plaza Shopping Center, a 116,000
square foot shopping center in Richardson, Texas for $8.5 million. The Company
financed this acquisition with operating cash.
In March 1997, Centrepoint Associates (the "Joint Venture"), a partnership in
which the Company owns a 50% interest, acquired a parcel of property containing
25,000 rentable square feet of buildings ("Talavi III") within an existing
shopping center in Glendale, Arizona. The Joint Venture currently owns three
additional parcels within this existing shopping center: two parcels containing
85,000 rentable square feet of buildings and a vacant pad parcel for future
development. Talavi III was purchased for $3 million. The Joint Venture financed
this acquisition with borrowings under a $13.5 million line of credit obtained
from Wells Fargo Bank ("Wells Fargo Line"). The Wells Fargo Line is secured by
the new Talavi III acquisition and a 236,000 square foot power center located in
Tempe, Arizona which is owned by the Joint Venture.
In March 1997, the Company acquired City Place Market, an 84,000 square foot
shopping center in Dallas, Texas for $8.75 million. The Company financed this
acquisition with operating cash.
In March 1997, the Company acquired Wendover Ridge Retail Center, a 41,000
square foot shopping center in Greensboro, North Carolina for $4.975 million.
The Company financed this acquisition with operating cash.
In April 1997, the Company acquired Arboretum Crossing, a 187,000 square foot
shopping center in Austin, Texas for $23.4 million. The Company financed this
acquisition with borrowings of $14 million under its Line of Credit and $9.4
million of operating cash.
In May 1997, the Company acquired Smoketown Stations Center, a 483,000 square
foot shopping center in Woodbridge, Virginia for $46.5 million. The Company
financed this acquisition with borrowings under its Line of Credit.
In July 1997, the Company sold its Cerritos, California property for $17.4
million in a transaction designed to enable the sale to qualify as a tax-
deferred exchange under Section 1031 of the Internal Revenue Code (the "Code").
The Company used the sale proceeds to acquire the Farmington, Connecticut
property on August 28, 1997 and the Minnetonka, Minnesota property on October 8,
1997. The Company realized a gain on the sale of the Cerritos shopping center in
the amount of $3,643,000. This gain was partially offset by a loss of $856,000
relating to the sale of property in Copiague, New York which closed on October
22, 1997, as described below.
In August 1997, the Company acquired West Farms Shopping Center, a 185,000
square foot shopping center in Farmington, Connecticut for $20 million. The
acquisition was financed through the assumption of an existing $14.7 million
non-recourse loan secured by the property and $5.3 million of proceeds from the
sale of the Cerritos property.
In August 1997, the Company formed a limited partnership (the "Limited
Partnership") with Altamonte Joint Venture ("Altamonte") to own and operate the
Renaissance Centre, a 271,000 square foot shopping center in Altamonte Springs
(Orlando), Florida. The Company acquired a 99% interest in the Limited
Partnership for $33.5 million. The Company is the managing general partner with
a 99% interest and Altamonte is a limited partner holding the remaining 1%
interest. The Company's share of the acquisition was financed with borrowings of
$13 million under its Line of Credit and $20.5 million of operating cash.
In October 1997, the Company acquired Ridgedale Festival shopping center, a
120,000 square foot shopping center in Minnetonka (Minneapolis), Minnesota. The
purchase price was $11.9 million. The Company financed this acquisition with the
proceeds from the tax-deferred sale of the Cerritos property.
In October 1997, the Company acquired Cordata Centre, a 174,000 square foot
shopping center located in Bellingham, Washington. The purchase price was $20.25
million. The Company financed the acquisition with borrowings of $18 million
under the Line of Credit and the remainder from operating cash.
In October 1997, the Company completed the sale of approximately nine acres of
land in its Copiague, New York shopping center for $10.25 million. The land was
sold to Dayton Hudson Corp. which intends to develop a 133,000 square foot
Target store within the center. The Company used the sale proceeds to repay
borrowings under its Line of Credit.
In October 1997, the Company acquired a 97,000 square foot shopping center in
Piscataway, New Jersey. The purchase price was $15.1 million. The Company
financed this acquisition by the assumption of a $11.4 million non-recourse loan
secured by the property maturing in August 2000, and the remainder with
borrowings under its Line of Credit.
In December 1997, the Company acquired Woodgrove Festival, a 149,000 square foot
shopping center located in Woodridge, Illinois. The purchase price was $16.5
million. The Company financed the acquisition with borrowings of $16 million
under the Line of Credit and the remainder from operating cash.
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 1997 to the year ended December 31,
1996
Rental income increased from $51,292,000 in 1996 to $69,335,000 in 1997.
Approximately $19,597,000 of this increase was attributable to new rental
revenue from properties acquired during 1997. Another $821,000 of the increase
was attributable to rent increases from existing properties and income generated
from the newly developed and opened Smithtown Venture. These increases were
offset by a reduction of $2,375,000 in rental revenue resulting from the sale of
the Cerritos shopping center and the reduction of rents from certain tenant
buildings on the Copiague, New York property which were demolished to facilitate
the land sale to Dayton Hudson.
Management fee income from third party contracts decreased from $1,085,000 in
1996 to $299,000 in 1997 due to the cessation of management services for Price
Enterprises, Inc. shopping centers. Management fee income reflects fees
generated from the Company's management of several shopping centers and
commercial properties owned by third parties and certain joint venture
properties.
On September 1, 1996, the Company ceased management services for four Price
Enterprises, Inc. shopping centers located in California and Arizona. On January
1, 1997, the Company ceased management services for the six remaining Price
Enterprises, Inc. shopping centers located in the northeast United States. The
impact of the foregoing resulted in a reduction in the Company's third party
management fee income. This, however, was partially offset by a reduction in
related operating expenses. The Company does not believe that this reduction in
future third party management fee income will have a material effect on its
future earnings and Funds from Operations. Management believes that the
reduction of third party management services will allow the Company to more
effectively and efficiently manage its present portfolio as well as any future
acquisitions and growth opportunities.
Equity in earnings of joint ventures reflects the Company's share of earnings
from the Centrepoint Associates and Hayden Plaza joint ventures in which it
holds a 50% general partnership interest. The equity in earnings of joint
ventures increased from $1,556,000 in 1996 to $1,733,000 in 1997. The increase
was attributable to higher occupancy rates and new rental revenue from the
Talavi III acquisition as well as the inclusion of a full year of income for
Hayden Plaza versus a short period in 1996.
Interest and other income increased from $392,000 in 1996 to $1,271,000 in 1997.
Most of the increase was attributable to an increase of investment income from
short term investment of the proceeds from the 1997 Stock Offering and proceeds
from the sale of the Cerritos shopping center until such proceeds were utilized
to fund the Company's recent acquisition activities.
During the third quarter of 1997, the Company realized a gain on sale of the
Cerritos shopping center in the amount of $3,643,000. This gain was partially
offset by a loss of $856,000 relating to the sale of property in Copiague, New
York which closed on October 22, 1997.
Rental operating expenses consisting of common area maintenance and real estate
taxes increased from $9,909,000 in 1996 to $13,561,000 in 1997. Approximately
$4,300,000 of this increase was attributable to properties acquired during 1997.
This increase was offset by a reduction in operating expenses attributable to
the sale of Cerritos and Copiague shopping centers as well as slightly lower
operating expenses at its existing properties.
Depreciation expense increased from $11,876,000 in 1996 to $15,752,000 in 1997.
Approximately $3,969,000 of this increase was attributable to the properties
acquired during 1997. This increase was offset by a reduction in depreciation
expense attributable to the sale of Cerritos and Copiague shopping centers.
Interest expense increased from $12,071,000 in 1996 to $15,667,000 in 1997. This
increase was mainly attributable to the Company's average outstanding
indebtedness during 1997 which was approximately $71 million greater than the
average amount of outstanding indebtedness during 1996. During 1997, the Company
increased its outstanding indebtedness by assuming loans totaling $26.1 million
in conjunction with the Farmington, Connecticut and Piscataway, New Jersey
shopping center acquisitions. The Company also increased its outstanding
indebtedness to fund new acquisitions and certain ongoing construction and
development projects. Additionally, the Company capitalized interest of
$1,637,000 arising from construction activities mostly attributable to the
Smithtown Venture during 1997 as compared to $469,000 for the same period in
1996.
Comparison of the year ended December 31, 1996 to the year ended December 31,
1995
Rental revenue increased from $40,152,000 in 1995 to $51,292,000 in 1996. An
increase of $650,000 was attributable to a lease buyout settlement from the
Copiague property in December 1996. An additional increase of $10,268,000 was
attributable to new rental revenue from properties acquired during 1996 and in
the last quarter of 1995. The remaining $222,000 increase was due to additional
rents generated from the expansion of existing properties, higher occupancy
rates in certain properties, contractual base rent increases tied to Consumer
Price Indices ("CPI") and common area maintenance reimbursements for properties
which were owned by the Company during all of 1995 and 1996.
Management fee income from third party contracts increased from $1,042,000 in
1995 to $1,085,000 in 1996. The increase was due to higher fees generated from
the Company's management of other properties owned by third parties.
On September 1, 1996, the Company ceased management services for four Price
Enterprises, Inc. ("Enterprises") shopping centers located in California and
Arizona. On January 1, 1997, the Company ceased management services for the six
remaining Enterprises' shopping centers located in the northeast United States.
This resulted in a significant reduction in the Company's future third party
management fee income.
Equity in earnings of joint ventures for the year ended December 31, 1996
reflects the Company's share of earnings from the Centrepoint Associates and
Hayden Plaza joint ventures in each of which it holds a 50% general partnership
interest. The equity in earnings of joint venture amount increased from
$1,456,000 for the year ended December 31, 1995 to $1,556,000 for the same
period in 1996. An increase of $354,000 was attributable to the newly formed
Hayden Plaza joint venture in 1996 and the Talavi property that Centrepoint
Associates acquired in December 1995. This increase was partially offset by a
decrease in earnings from Centrepoint partnership due to the applicable interest
expense incurred on borrowings used to finance the acquisition, and depreciation
and amortization expense included in the current year as the result of the new
acquisition discussed above.
Rental operating expenses consisting of common area maintenance and real estate
taxes increased from $7,177,000 for the year ended December 31, 1995 to
$9,909,000 for the same period in 1996. Approximately $2,635,000 of this
increase was attributable to properties acquired in the fourth quarter of 1995
and during 1996. The remainder of the increase was attributable to slightly
higher operating costs.
Depreciation expense increased from $9,686,000 for the year ended December 31,
1995 to $11,876,000 for the same period in 1996. Approximately $1,735,000 of the
increase was attributable to the properties acquired in the fourth quarter of
1995 and during 1996. The remainder of the increase was the result of additional
depreciation on new construction on existing properties.
Interest expense increased from $6,939,000 for the year ended December 31, 1995
to $12,071,000 for the same period in 1996. This increase was mainly
attributable to the Company's average outstanding indebtedness during the year
ended December 31, 1996 which was approximately $59 million greater than the
average amount of outstanding indebtedness during the same period in 1995.
During 1996 and the fourth quarter 1995, the Company increased its outstanding
indebtedness in order to finance the majority of the Company's acquisitions and
certain ongoing construction and development projects. Additionally, the
issuance of the $100 million and $55 million Senior Notes due in November 2000
and 2006, respectively, were at a slightly higher fixed rate of interest than
the short term variable rate debt under the Company's Line of Credit. This
significantly reduced the Company's future exposure to rising interest rates.
The remainder of the increased interest expense was attributable to the
amortization of the note discount and other costs of the issuance in November
1995 and November 1996 of the Company's Senior Notes which are reflected as
interest expense.
CAPITAL RESOURCES AND LIQUIDITY
The Company's principal sources of funding for the acquisition, development,
expansion and renovation of properties are its Line of Credit, secured notes,
public equity financing, public unsecured debt financing and cash flow from
operations.
The Company elected to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, commencing with its taxable year
ended December 31, 1991. REITs are subject to a number of organizational and
operational requirements, including a requirement that the Company must
distribute at least 95 percent of its taxable income.
The Company paid dividends in the aggregate amount of $32,438,000 through the
year ended December 31, 1997, of which $923,000 was reinvested into Common Stock
by stockholders pursuant to the Company's dividend reinvestment plan.
The Company typically funds short-term financing for its acquisition and
development activities through the Line of Credit. On January 22, 1997, the
Company used the net proceeds from the sale of Common Stock to repay $19 million
of indebtedness under the Line of Credit. During the second quarter of 1997, the
Company borrowed $60 million to purchase the Austin and Woodbridge properties.
The Company borrowed an additional $11 million to replenish operating funds. On
June 20, 1997, the Company used the net proceeds from the sale of Senior Notes
to repay $50 million of indebtedness outstanding under the Company's Line of
Credit. On August 11, 1997, the Company used the net proceeds from the sale of
common stock to repay $21 million of indebtedness outstanding under the
Company's Line of Credit. On August 28, 1997, the Company borrowed $13 million
to purchase the Renaissance Center. On September 28, 1997, the Company borrowed
an additional $6 million to replenish operating funds. On October 15, 1997, the
Company borrowed $18 million to purchase the Bellingham, Washington property. On
October 23, 1997, the Company used the net proceeds from the land sale in
Copiague to repay $8 million of indebtedness outstanding under the Company's
Line of Credit. On December 29, 1997, the Company borrowed $16 million to
purchase the Woodridge, Illinois property. On December 30, 1997, the Company
borrowed an additional $6 million to replenish operating funds. At December 31,
1997, the outstanding balance of the borrowing under the Line of Credit was $58
million.
The Line of Credit agreement requires the Company to maintain certain minimum
net operating income and net worth levels, as defined in the agreement, and
provides that the Company will not pay dividends in excess of 95% of its annual
net income plus depreciation. The Company does not believe that such
restriction is likely to limit materially the future payment of dividends on the
common stocks. The Company was required to pay a commitment fee ranging from
.25% to .375% per annum of the unused portion of the Line of Credit. Effective
January 1, 1997, the commitment fee was reduced to .25% per annum of the unused
portion of the Line of Credit.
Interest on the outstanding balance is payable periodically, but at least
quarterly. On October 23, 1996 the interest rate margin on the Line of Credit
was reduced from 1.4% to 1.25%. On December 23, 1997, the interest rate margin
on the Line of Credit was reduced from 1.25% to 1.15%. Capitalized interest
costs for the year ended December 31, 1997 were approximately $1,637,000.
On July 1, 1997, the Company amended its $75 million Line of Credit (i) to
modify certain restrictive covenants, including the secured and unsecured debt
incurrence restrictions, (ii) to provide the Company with an option, subject to
consent of its lenders and certain other conditions, to increase the
availability under the Line of Credit to $100 million and (iii) to extend the
maturity to June 30, 2000 with a Company option, subject to consent of its
lenders and certain other conditions, to extend it one additional year to June
30, 2001.
On February 27, 1998, the Company amended its Line of Credit to increase the
availability under the Line of Credit to $100 million.
On January 22, 1997, the Company issued and sold 1,600,000 shares of Common
Stock at a price to the public of $37.625 per share pursuant to the 1996 Shelf
Registration Statement. The Company used the net proceeds of approximately $57
million for repayment of indebtedness under the Company's Line of Credit and for
general corporate purposes.
On June 19, 1997, the Company issued unsecured 7.125% Senior Notes in the
aggregate principal amount of $50 million which are due June 15, 2004 pursuant
to the 1996 Shelf Registration Statement. Interest on the 7.125% Senior Notes is
payable semi-annually in arrears on June 15 and December 15. The notes were
priced at an aggregate amount of $49,778,000 and have an effective interest rate
of 7.21%. The Company used the net proceeds to repay indebtedness under the Line
of Credit.
On August 11, 1997, the Company issued and sold 1,000,000 shares of Common Stock
at a price to the public of $37.50 per share pursuant to the 1996 Shelf
Registration Statement. The Company used the proceeds of $37.5 million for
repayment of indebtedness under the Company's Line of Credit, to fund its
property acquisition activities and for general corporate purposes.
On September 8, 1997, the Company filed a shelf registration statement on Form
S-3 (File No. 333-35185)(the "1997 Shelf Registration Statement") for up to $400
million of debt securities, preferred stock, common stock and warrants. The 1997
Shelf Registration Statement was declared effective by the Securities and
Exchange Commission on September 24, 1997.
In order to continue to expand and develop its portfolio of properties, the
Company may seek to obtain funds through additional equity offerings or debt
financing. The Company anticipates that its liquidity and capital resources will
be adequate to fund its operating and administrative expenses, continuing debt
service obligations and the payment of distributions in accordance with Company
requirements.
In an effort to strengthen its balance sheet to support future growth, the
Company sold an aggregate of 2,600,000 shares of Common Stock in January and
August 1997 and $50 million principal amount of its 7.125% Senior Notes in June
1997. As a result of these issuances, the Company believes that it is well-
positioned for future growth, and that it has minimized its potential exposure
to high levels of variable rate debt and provided a favorable capital structure
for the Company. Because future earnings are subject to many variables beyond
the Company's control, such as the timing of completion of its acquisitions and
development projects, the Company is not able to quantify the effect of such
events on its future results.
The information in the immediately two preceding paragraphs is forward-looking
and involves risks and uncertainties that could significantly impact the
Company's expected liquidity requirements in the short and long term. While it
is impossible to itemize the many factors and specific events that could affect
the Company's outlook for its liquidity requirements, such factors would include
the actual timing of the Company's planned development of new centers, and
expansion of existing centers; the actual costs associated with such
developments; and the strength of the local economies in the sub-markets in
which the Company operates. Higher than expected costs, delays in development of
centers, a downturn in the local economies and/or the lack of growth of such
economies could reduce the Company's revenues and increase its expenses,
resulting in a greater burden on the Company's liquidity than that which the
Company has described above.
FUNDS FROM OPERATIONS
Most industry analysts and equity REITs, including the Company, consider Funds
from Operations ("FFO") an appropriate supplemental measure of operating
performance of an equity REIT. In general, FFO adjusts the net income for non-
cash charges such as depreciation, certain amortization expenses and most non-
recurring gains or losses. However, FFO does not represent cash provided by
operating activities in accordance with generally accepted accounting principles
and should not be considered an alternative to net income as an indication of
the results of the Company's performance or to cash flows as a measure of
liquidity.
In 1995, the National Association of Real Estate Investment Trusts ("NAREIT")
established new guidelines clarifying its definition of Funds from Operations
and recommended that REITs adopt this new definition beginning in 1996.
The Company is including its FFO computation in this report as defined by and in
accordance with the recommendation of NAREIT.
The following table sets forth the Company's calculation of FFO for the three
months and twelve months ended December 31, 1997 based on the new NAREIT
definition. The table also sets forth the calculation of FFO for the same
periods of 1996.
Three months ended Twelve months ended
December 31, December 31,
1997 1996 1997 1996
------- ------- ------- -------
(In Thousands)
Net income $ 6,355 $ 4,623 $26,254 $16,919
Depreciation 4,552 3,053 15,752 11,876
Joint ventures FFO
adjustment 179 169 704 661
Less net Gain on sale of
real estate - - (2,787) -
------- ------- ------- -------
Funds from Operations $11,086 $ 7,845 $39,923 $29,456
======= ======= ======= =======
Weighted average numbers
of shares outstanding 11,693 9,062 10,982 8,560
Prior to the Company's adoption of the new NAREIT definition of FFO, the Company
calculated FFO by adjusting for deferred rent. If such an adjustment had been
made to the calculation of FFO in the above table, FFO would have been reduced
by $867,000 and $534,000 including the deferred rent adjustments to the Joint
Ventures for the three month periods ended December 31, 1997 and 1996,
respectively, and $2,702,000 and $2,370,000, for the twelve month periods ended
December 31, 1997 and 1996, respectively.
Economic Conditions
Many regions of the United States, including regions in which the Company owns
property, have experienced an economic recession in the past several years.
Many areas currently appear to be experiencing a turnaround. However, if
economic recession continues, or further adverse changes in general or local
economic conditions, in certain regions it could result in the inability of some
existing tenants of the Company to meet their lease obligations and could also
adversely affect the Company's ability to attract or retain tenants.
Management believes that inflation generally will beneficially affect the long-
term potential appreciation of the Company's properties. The majority of the
Company's leases contain provisions designed to mitigate the short-term adverse
impact of inflation. Such provisions include clauses enabling the Company to
receive percentage rents, which generally increase as prices rise, and/or
escalation clauses which are typically related to increases in the consumer
price index or similar inflation indices. Most of the Company's leases require
the tenant to pay its pro rata share of costs and expenses associated with the
ongoing operation of the property, including but not limited to, real property
taxes and assessments, repairs and maintenance and insurance, thereby reducing
the Company's exposure to increases in operating costs and expenses resulting
from inflation.
Inflation, however, may adversely affect certain of the Company's other
operating items. Interest and general and administrative expenses may be
adversely affected by inflation as these costs could increase at a rate greater
than the rate of rent increases. Also, with respect to tenant leases with
stated rent increases, such as the leases for the Costco warehouses, inflation
may have a negative effect as the stated rent increases in those leases could be
lower than the increase in inflation.
Impact of Year 2000
Like most corporations, the Company is reliant upon technology to run its
business. Many computer systems process dates using two digits to identify the
year, and some systems are unable to properly process dates beginning with the
year 2000. The Company is currently assessing and addressing this "Year 2000"
issue and does not believe the costs connected with this assessment will have a
material adverse effect on the Company's results of operations.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted in Item 14 of
this report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
PART III
ITEM 10. DIRECTORS OF THE COMPANY
Set forth in the following table is certain information about the directors
of the Company.
Present Position with the Director
Name Age Company Since
- ------------------- ------ ------------------------------------ ------------
Raymond E. Peet 77 Chairman of the Board 1991
Joseph K. Kornwasser 50 President, Chief Executive 1993
Officer, Director
George M. Jezek 68 Executive Vice President, 1991
Chief Financial Officer,
Secretary, Treasurer,
Director
Roy P. Drachman 91 Director 1991
William D. Jones 42 Director 1991
Walter Weisman 62 Director 1995
Keene Wolcott 67 Director 1995
Raymond E. Peet has been Chairman of the Board since May 25, 1995 and has
been a director of the Company since 1991. He retired in 1974 from the United
States Navy with the rank of Vice Admiral. Admiral Peet served as Vice
President, International of Teledyne Ryan Aeronautical from 1974 to 1982 and is
currently a director of Cubic Corporation. He was previously a director of
American Heavy Lift Shipping Co. and Energy Factors, Inc. He is currently a
member of the Board of Consultants to The Comptroller General of the United
States and the Chairman of the San Diego Dialogue and is past President of the
University of California, San Diego Board of Overseers.
Roy P. Drachman has been a director of the Company since 1991. He has been
a co-owner of Roy Drachman Realty Company since 1946. He has also been a co-
developer with Del Webb Company of numerous shopping centers in Arizona and
California and has served on the boards of directors of several real estate
investment trusts, including Brooks Harvey Real Estate Investment Trust (New
York City), Pacific-Southern REIT (San Diego, California) and the Monumental
Properties REIT (Baltimore, Maryland). Mr. Drachman is also past president of
three national real estate organizations - Urban Land Institute, International
Council of Shopping Centers and American Society of Real Estate Counselors.
William D. Jones has been a director of the Company since 1991. Since
October 1993, Mr. Jones has been President/Chief Executive Officer of CityLink
Investment Corporation, a private company that acquires, develops and
rehabilitates real estate properties in economically neglected areas. Prior to
that time, he worked for The Prudential Realty Group as General Manager of a
commercial real estate portfolio in the Northwestern United States from January
1992 and as an Investment Manager from July 1990. He joined The Prudential
Realty Group in Newark, New Jersey, in July 1989 as an Investment Manager and
Assistant to the Chairman. Prior to such time, he served as an elected official
in San Diego, California, from December 1982 to September 1987. Mr. Jones is
presently a trustee of The University of San Diego and a director of the Enova
Corporation, the parent company of the San Diego Gas and Electric Company.
Walter Weisman has been a director of the Company since May 1995. He is a
past Chairman and Chief Executive Officer of American Medical International,
Inc. ("AMI"), an owner and operator of acute care hospitals and related health
care activities in the United States and in foreign countries. He served nearly
20 years with AMI, the last three years of which he was its Chief Executive
Officer. Mr. Weisman is a trustee of the Los Angeles County Museum of Art, the
California Institute of Technology, Harvey Mudd College, the Kress Foundation
and the Sundance Institute. He is also a director of Fresenius Medical Care and
Clinical Micro Sensors, Inc.
Keene Wolcott has been a director of the Company since January 1995. Mr.
Wolcott has served as President of Wolcott Investments, Inc., a private
investment company, since 1975 and is currently a director of Prusser's of the
West Indies Ltd. From 1969 to 1973, Mr. Wolcott served as Chief Executive
Officer of the Colorado Corporation, which managed investor funds in oil and gas
exploration. Prior to 1969 he served as Senior Vice President of Hayden, Stone
and Company, a securities brokerage firm.
See also "Executive Officers of the Company" in Part I, Item 4A of this Form 10-
K for information with respect to Messrs. Kornwasser and Jezek and for certain
information concerning the Company's executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
directors, certain officers of the Company and persons holding more than 10% of
the Company's Common Stock to file reports concerning their ownership of Common
Stock by dates established under the Act and also requires that the Company
disclose any noncompliance with those requirements during fiscal year 1997.
Based solely upon a review of reports delivered to the Company, all
Section 16(a) filing requirements were satisfied, except that Mr. Thomas
Scheers, a Vice President of the Company, filed one late report with respect to
a grant of 4,000 options to purchase Common Stock of the Company.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 1995, 1996
and 1997, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the Chief Executive Officer and
the other four most highly compensated executive officers of the Company
(together, the "Named Executive Officers").
Long-Term
Annual Compensation
Compensation (1) Awards
---------------------- ----------
Securities
Name and Underlying All Other
Principal Position Year Salary($) Bonus($) Options(#) Compensation($)(2)
- ------------------ ---- --------- -------- ---------- ------------------
Joseph K. 1997 $302,033 $226,017 54,500 $13,354
Kornwasser 1996 $274,575 $125,425 0 $12,484
President and 1995 $261,500 $138,500 147,000 $ 7,438
Chief Executive
Officer
Jerald Friedman(3) 1997 $254,552 $134,093 40,500 $16,538(4)
Senior Executive
Vice President and
Chief Operating
Officer
Lawrence M.(3) 1997 $162,800 $ 72,840 35,000 $15,882
Kronenberg
Executive Vice
President, Finance
George M. Jezek 1997 $119,166 $ 35,834 15,000 $ 9,481
Executive Vice 1996 $100,000 $ 21,667 10,000 $ 8,715
President,
Chief Financial
Officer, 1995 $ 85,667 $ 7,000 0 $ 7,365
Treasurer, Secretary
Daniel Slattery(3) 1997 $135,000 $ 20,000 5,000 $ 6,452
Vice President,
Development
(1) Other than salary, bonus and the compensation described in footnote (2),the
Company did not pay any of the Named Executive Officers any compensation,
including incidental personal benefits, in excess of 10 percent of his
salary.
(2) Represents premiums paid by the Company for medical, dental, life and
disability insurance coverage and Company contributions to the Company's
401(k) plan.
(3) The Company consummated the Development Company acquisition as of January 1,
1997, and elected certain of the officers of Development Company, including
Messrs. Friedman, Kronenberg and Slattery, to serve as officers of the
Company. Prior to January 1, 1997, Messrs. Friedman and Kronenberg were
also non-officer employees of the Company.
(4) Does not include a payment of $50,000 paid to Mr. Friedman in consideration
of the recharacterization of certain of Mr. Friedman's stock options to
purchase Common Stock of the Company from incentive stock options granted
under the Company's 1993 Stock Incentive Plan (the "Plan") to non-qualified
stock options granted outside of the Plan.
Option Grants in Last Fiscal Year
The following table contains information concerning the grant of stock options
for fiscal year 1997 to each of the Named Executive Officers. The table also
lists potential realizable values of such options on the basis of assumed annual
compounded stock appreciation rights of 5% and 10% over the life of the options.
Individual Grants Potential
------------------------------------------ Realizable
Percentage Value at Assumed
Number of of Total Annual Rate of
Securities Options Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees or Base Option Term(2)
Granted in Fiscal Price Expiration -----------------
Name and Position (#)(1) Year ($/Sh) Date 5% 10%
- ----------------- ----------- ---------- -------- ---------- -----------------
Joseph K. 54,500 33% $40.625 12/15/07 $110,703 $221,406
Kornwasser
President and
Chief Executive
Officer
Jerald Friedman 40,500 25% $40.625 12/15/07 $ 82,266 $164,531
Senior Executive
Vice President and
Chief Operating
Officer
Lawrence M. 35,000 21% $40.625 12/15/07 $ 71,094 $142,188
Kronenberg
Executive Vice
President, Finance
George M. Jezek 15,000 10% $40.625 12/15/07 $ 30,469 $ 60,938
Executive Vice
President, Chief
Financial Officer,
Treasurer, Secretary
Daniel Slattery 5,000 3% $40.625 12/15/07 $ 10,156 $ 20,313
Vice President,
Development
(1) All options were granted on December 15, 1997 (the "Date of Grant") at an
exercise price per share of $40.625, the closing price of the Common Stock
on the Date of Grant as reported by the NYSE. All options vest 20% upon
grant and 20% on each anniversary of the Date of Grant. Options expire ten
years from the Date of Grant.
(2) The "potential realizable value" shown represents the potential gains based
on annual compound stock price appreciation of 5 percent and 10 percent from
the date of grant through the full 10-year option term, net of exercise
price, but before taxes associated with exercise. The amounts represent
certain assumed rates of appreciation only based on the Securities and
Exchange Commission rules. Actual gains, if any, on stock option exercises
are dependent on the future performance of the Common Stock, overall market
conditions and the option holders' continued employment through the vesting
period. The amounts reflected in this table may not necessarily be achieved
and do not reflect the Company's estimate of future stock price growth.
Aggregated Option Exercises in Last Fiscal Year And Fiscal Year-End Option
Values
The following table provides information with respect to the exercise of stock
options during the fiscal year ended December 31, 1997 by the Named Executive
Officers, and with respect to unexercised "in-the-money" stock options
outstanding as of December 31, 1997. In-the-money stock options are options for
which the exercise price is less than the market price of the underlying stock
at the end of the fiscal year.
Number of Securities Value of
Underlying Unexercised Unexercised In-the-
Shares Options at Fiscal Money Options at
Acquired Value Year End(in shares) Fiscal Year End($)(1)
On Realized Exer- Unexer- Exer- Unexer-
Name Exercise ($) cisable cisable cisable cisable
-------- -------- ------- ------- ------- -------
Joseph K. 0 $0 365,400 102,600 3,337,438 740,063
Kornwasser
Jerald Friedman(2) 0 0 157,500 57,000 1,312,294 217,688
Lawrence M.
Kronenberg(2)(3) 0 0 27,000 38,000 166,938 107,125
George M. Jezek(4) 0 0 47,000 18,000 494,188 72,375
Daniel Slattery(2) 0 0 5,800 11,200 24,013 36,800
(1) Represents the difference between $40.9375, the closing market price of the
Company's Common Stock at December 31, 1997, and the exercise price of the
options.
(2) The Company consummated the acquisition of the Development Company as of
January 1, 1997, and elected certain of the officers of Development Company,
including Messrs. Friedman, Kronenberg and Slattery, to serve as officers of
the Company. Prior to January 1, 1997, Messrs. Friedman, Kronenberg and
Slattery received grants of stock options to purchase Common Stock of the
Company.
(3) Mr. Kronenberg exercised options to purchase 5,000 shares of Common Stock at
an exercise price per share of $33.50 on March 10, 1998.
(4) Mr. Jezek exercised options to purchase 6,000 shares of Common Stock at an
exercise price per share of $29.50 on March 13, 1998.
Compensation of Directors
Directors who are not employees of the Company received an annual director's fee
of $24,000 for services rendered during 1997, except for the Chairman of the
Board, who received $30,000 for such services. In addition, each non-employee
director of the Company received options to purchase 2,500 shares of Common
Stock pursuant to the 1996 Directors' Stock Option Plan. Directors also receive
reimbursement for travel expenses incurred in connection with their duties as
directors.
Employment Contracts
As of January 1, 1998, each of Messrs. Kornwasser, Friedman, Kronenberg and
Jezek entered into an employment agreement with the Company. The employment
agreements have a term of two years (three years in the case of Mr. Kornwasser)
and are subject to automatic one-year extensions following the expiration of the
initial term. The employment agreements provide for annual base compensation
and a bonus, which bonus is budgeted and subject to increase or decrease by the
Compensation Committee and the Board of Directors, payable in the following
amounts to Messrs. Kornwasser; Friedman; Kronenberg and Jezek, respectively:
$380,000 and $160,000; $285,000 and $120,000; $180,000 and $90,000; and $130,000
and $65,000. The employment agreements provide that the executive will be
entitled to receive severance benefits equal to base compensation then in effect
for the greater of the balance of the term of the agreement or one year in the
event of a termination of executive's employment resulting from death or a
disability, by the Company without "cause," by the executive for "good reason"
or by the executive upon a "change in control." "Cause" means (i) gross
negligence or willful misconduct, (ii) an uncured breach of any of the
executive's material duties under the employment agreement, (iii) fraud or other
conduct against the material best interests of the Company or (iv) a conviction
of a felony. "Good reason" means (a) a substantial change in the nature or
scope of the executive's responsibilities and authority under the employment
agreement, (b) a substantial change in the executive's duties such that the new
duties are not ordinarily consistent with the executive's job title and position
and are not acceptable to the executive, (c) a substantial reduction in the
executive's compensation, which reduction is not acceptable to the executive, or
benefits, which reduction in benefits does not similarly affect Company
employees generally, under the employment agreement, (d) a substantial change in
the executive's reporting requirements, which change is not acceptable to the
executive, (e) the relocation of the executive outside of Los Angeles County
(the San Diego metropolitan area in the case of Mr. Jezek) or (f) an uncured
breach by the Company of any of its material obligations under the employment
agreement. "Change in control" means (x) the acquisition of 50% or more of the
combined voting power of the Company's voting securities or (y) stockholder
approval of (1) a merger, consolidation or reorganization involving the Company,
(2) a complete liquidation or dissolution of the Company or (3) an agreement for
the sale or other disposition of all or substantially all of the assets of the
Company; provided, however, that the merger (the "Merger") of the Company with
and into REIT Sub, Inc., a Maryland corporation ("REIT Sub"), pursuant to the
Agreement and Plan of Merger, dated as of January 13, 1998, as amended, among
Kimco Realty Corporation, a Maryland corporation ("Kimco"), REIT Sub and the
Company, shall not constitute a change in control for purposes of the employment
agreements. Upon the consummation of the Merger, Mr. Jezek's employment
agreement shall terminate and Mr. Jezek shall be entitled to receive severance
benefits. Each of Messrs. Kornwasser, Friedman and Kronenberg has entered into
an employment agreement with Kimco which becomes effective upon the consummation
of the Merger.
Such employment agreements with the Company also contain a non-competition
agreement pursuant to which each executive agrees that during the term of the
executive's employment, he will not engage in any activities, directly or
indirectly, in direct competition with the Company and will not make any
investment in respect of power and community centers in competition with the
Company, other than through ownership of not more than 5% of the outstanding
shares of a public company engaged in such activities and through existing
investments.
Compensation Committee Interlocks and Insider Participation
In 1997, the members of the Compensation and Stock Option Committee were Messrs.
Peet, Jones, Weisman and Wolcott. None of such individuals was, or is, an
officer or employee of the Company. No interlocking relationships exist between
any member of the Compensation and Stock Option Committee and any member of the
Board of Directors or compensation committee of any other corporation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the shares of the
Company's Common Stock beneficially owned as of February 28, 1998 by (i) each of
the Company's directors, (ii) each of the Named Executive Officers and (iii) the
Company's executive officers and directors as a group. There are no persons
known by the Company to be the beneficial owner of more than five percent of any
class of the Company's voting securities. There were 11,701,654 shares of
Common Stock outstanding as of February 28, 1998. The business address for each
of the officers and directors listed below is c/o The Price REIT, Inc., 7979
Ivanhoe Avenue, Suite 524, La Jolla, CA 92037.
Number of % of
Shares of Common
Commom Stock
Name Stock Outstanding
- -------------------------------------------- -------------- ---------------
Officers and Directors
Raymond E. Peet 15,212(1) *
Chairman, Director
Joseph Kornwasser 538,568(2) 4.46%
President, Chief Executive Officer,
Director
Jerald Friedman(3) 165,700(4) 1.40%
Senior Executive Vice President, Chief
Operating Officer
George M. Jezek 66,880(5) *
Executive Vice President, Chief Financial
Officer, Treasurer, Secretary, Director
Lawrence M. Kronenberg(3) 34,300(6) *
Executive Vice President, Finance
Daniel Slattery(3) 5,800(7) *
Vice President, Development
Roy P. Drachman 25,435(8) *
Director
William D. Jones 8,000(8) *
Director
Walter Weisman 8,000(8) *
Director
Keene Wolcott 10,500(8) *
Director
Officers and Directors
as a group (10 persons) 878,395(9) 7.11%
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Includes 7,500 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
(2) Includes 365,400 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
(3) The Company consummated the Development Company acquisition as of January 1,
1997, and elected certain of the officers of Development Company, including
Messrs. Friedman, Kronenberg and Slattery, to serve as officers of the
Company. See "Certain Relationships and Related Transactions" under Item 13
of this Annual Report on Form 10-K.
(4) Represents 165,700 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
(5) Includes 15,000 shares held by the Mandell Weiss Charitable Trust, of which
Mr. Jezek is trustee. Mr. Jezek disclaims any beneficial ownership in such
shares. Also includes 49,000 shares that may be purchased upon the exercise
of options that are currently exercisable or that will become exercisable
within 60 days of February 28, 1998. Mr. Jezek exercised options to
purchase 6,000 shares of Common Stock on March 13, 1998.
(6) Includes 33,000 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998. Mr. Kronenberg exercised options to purchase
5,000 shares of Common Stock on March 10, 1998.
(7) Represents 5,800 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
(8) Includes 7,500 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
(9) Includes 645,400 shares that may be purchased upon the exercise of options
that are currently exercisable or that will become exercisable within 60
days of February 28, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with its 1993 offering of Common Stock, the Company acquired the
property management business of its property manager, K&F Commercial Properties
("K&F"). In August 1993, the two principals of K&F became executive officers of
the Company; Joseph Kornwasser became President, Chief Executive Officer and a
Director of the Company and Jerald Friedman became a Senior Executive Vice
President and Chief Operations Officer. Also concurrent with its 1993 offering,
the Company acquired 100% of the non-voting preferred stock of Development
Company. In March 1994, Mr. Friedman resigned his position at the Company and
became Chairman and Chief Executive Officer of the Development Company.
Effective January 1, 1997, the Company acquired the assets and assumed the
liabilities of the Development Company and elected certain of the officers of
the Development Company, including Mr. Friedman, to serve as officers of the
Company. The Company acquired the assets pursuant to a distribution to the
Company as owner of 100% of the non-voting preferred stock of the Development
Company.
Part IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
(a)(1) The following consolidated financial statements of The Price REIT,Inc.
are included as a part of this report:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Income - Years ended December 31, 1997, 1996,
and 1995
Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements - December 31, 1997
(2) The following consolidated financial statement schedule of The Price
REIT, Inc. is included as a part of this report.
Schedule III Real Estate and Accumulated Depreciation
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.
(3) Listing of Exhibits - The response to this portion of Item 14 is
submitted in Item 14(c).
(b) Reports on Form 8-K filed in the fourth quarter of 1997:
Current Reports on Form 8-K and 8-K/A were filed on November 14, 1997 and
December 29, 1997, respectively, reporting under Item 5 the Company's
acquisition of the Ridgedale Festival Shopping Center in Minnetonka,
Minnesota, the Cordata Centre in Bellingham, Washington and the Piscataway
Town Center in Piscataway, New Jersey for a total purchase price of
$45,000,000. The following financial statements were filed with the Form
8K/A: audited statement of revenue over specific operating expense for the
Piscataway Town Center and Cordata Center and unaudited pro forma
condensed financial information.
A current report on Form 8-K/A was filed on November 7, 1997 reporting
under Item 7 the audited financial statements related to the Company's
acquisition of the Renaissance Centre in Orlando, Florida. The following
financial statements were filed with the Form 8-K/A: audited statement
of revenue over specific operating expenses and unaudited pro forma
condensed financial information.
(c) Exhibits Pursuant to Item 601 of Regulation S-K:
3.1 Articles of Incorporation (4) and Articles of
Amendment (12)
3.2 Amended and Restated Bylaws (17)
4.1 Indenture, dated October 27, 1995, between The Price
REIT, Inc. and First Trust of California, National
Association, as Trustee (10)
4.2 7.25% Senior Notes due November 1, 2000 (10)
4.3 7.50% Senior Notes due November 5, 2006
(Incorporated by reference to exhibit 1.1 from the
Company's Current Report on Form 8-K dated October 30,
1996)
4.4 7.25% Senior Notes due June 4, 2004
(Incorporated by reference to exhibit 1.1 from the
Company's Current Report on Form 8-K dated June 13,
1997)
10.1 Agreement and Plan of Merger, dated as of January 13,
1998, among Kimco Realty Corporation, REIT Sub, Inc.
and The Price REIT, Inc. (17)
10.2 First Amendment to Agreement and Plan of Merger, dated
as of March 5, 1998, among Kimco Realty Corporation,
REIT Sub, Inc. and The Price REIT, Inc. (21)
10.3 Form of Indemnification Agreement (3)
10.4 1993 Stock Option Plan (6)
10.5 Stock Option Agreement, dated November 2, 1992,
between The Price REIT, Inc. and George M. Jezek (19)
10.6 First Amendment to Stock Option Agreement, dated
October 29, 1993, between The Price REIT, Inc. and
George M. Jezek (19)
10.7 Second Amendment to Stock Option Agreement, dated as
of December 15, 1997, between The Price REIT, Inc. and
George M. Jezek
10.8 Stock Option Agreement, dated August 12, 1993, between
The Price REIT, Inc. and Joseph K. Kornwasser (6)
10.9 Stock Option Agreement, dated December 11, 1995,
between The Price REIT, Inc. and Joseph K. Kornwasser
(20)
10.10 Stock Option Agreement, dated August 12, 1993, between
The Price REIT, Inc. and Jerald Friedman (6)
10.11 Stock Option Agreement, dated as of January 29, 1996,
between The Price REIT, Inc. and Jerald Friedman
10.12 Incentive Stock Option Agreement, dated as of January
29, 1996, between The Price REIT, Inc. and Jerald
Friedman
10.13 Stock Option Agreement, dated February 14, 1994,
between The Price REIT, Inc. and Lawrence M.
Kronenberg
10.14 Form of Stock Option Agreement (1996)
10.15 Form of Incentive Stock Option Agreement dated
December 15, 1997
10.16 Form of First Amendment dated as of December 15, 1997,
to Incentive Stock Option Agreement
10.17 Form of The Price REIT, Inc. Nonemployee Director
Stock Option Agreement
10.18 Employment Contract by and between The Price REIT,
Inc. and Joseph Kornwasser (6)
10.19 Amendment to Employment Contract by and between The
Price REIT, Inc. and Joseph Kornwasser, dated January
30, 1995 (7)
10.20 Second Amendment to Employment Contract by and between
The Price REIT, Inc. and Joseph Kornwasser, dated
December 11, 1995 (7)
10.21 Form of Employment Agreement dated as of January 1,
1998 (JK, JF, LK)
10.22 Employment Agreement, dated as of January 1, 1998,
between The Price REIT, Inc. and George M. Jezek
10.23 $75 million Revolving Credit Facility dated September
22, 1993 (5)
10.24 Amendment to Revolving Credit Facility Agreement dated
May 9, 1994 (7)
10.25 Second Amendment to Credit Agreement (8)
10.26 First Amendment to Second Amended and Restated Credit
Agreement dated as of July 1, 1997 (14)
10.27 Second Amendment to Second Amended and Restated Credit
Agreement dated as of February 28, 1998
10.28 Amended and Restated Credit Agreement, dated as of
November 1, 1995 by and among The Price REIT, Inc. and
Morgan Guaranty and Trust Company, as Agent, and other
financial institutions party thereto and Revolving
Notes executed therewith (10)
10.29 Amendment, dated December 20, 1995, to Amended and
Restated Credit Agreement dated as of November 1, 1995
(20)
10.30 Loan Agreement between Centrepoint Associates LLP and
Wells Fargo Realty Advisors Funding Incorporated,
dated as of December 27, 1995 (20)
10.31 Promissory Note Secured by Deed of Trust, dated
December 27, 1995 (20)
10.32 Amended and Restated Credit Agreement, dated as of
March 22, 1996, by and among The Price REIT, Inc.,
Morgan Guaranty and Trust Company, as Agent, and other
financial institutions party thereto and Revolving
Notes executed therewith (11)
10.33 Amended and Restated Credit Agreement, dated as of
October 22, 1996 by and among The Price REIT, Inc. and
Morgan Guaranty and Trust Company, as Agent, and other
financial institutions party thereto and Revolving
Notes executed therewith (13)
10.34 Purchase and Sale Agreement, dated March 22, 1996 by
and between The Price REIT, Inc. and Town East Center
Joint Venture (Mesquite, Texas property) (12)
10.35 Purchase and Sale Agreement, dated April 16, 1996 by
and between The Price REIT, Inc. and MGC Joint Venture
(Mesquite, Texas property) (12)
10.36 Purchase and Sale Agreement, dated August 23, 1996 by
and between The Price REIT, Inc. and Centennial Plaza
Limited Partnership (Centennial Plaza, Oklahoma
property) (13)
10.37 Purchase and Sale Agreement and Escrow Instructions
dated November 12, 1996 by and between Ewing
Industries Wichita Westgate Limited Partnership and
The Price REIT, Inc. (Wichita, Kansas property)
(Incorporated by reference to Exhibit 2.1 from the
Company's Current Report on Form 8-K dated April 16,
1997)
10.38 Purchase and Sale Agreement and Escrow Instructions
dated February 5, 1997 by and between MaxVest
Associates, Limited Partnership and The Price REIT,
Inc. (Greensboro, N. Carolina property) (Incorporated
by reference to Exhibit 2.5 from the Company's Current
Report on Form 8-K dated April 16, 1997)
10.39 Purchase and Sale Agreement and Escrow Instructions
dated February 13, 1997 by and between Jagee
Properties, Inc. and The Price REIT, Inc., as amended
by First Amendment to Purchase and Sale Agreement and
Escrow Instructions dated March 18, 1997 (Richardson,
Texas property) (Incorporated by reference to Exhibit
2.3 from the Company's Current Report on Form 8-K
dated April 16, 1997)
10.40 Agreement of Purchase and Sale dated February 20, 1997
by and between Madison Property I, L.P. and
Price/Baybrook, Ltd. (Garland, Texas property)
(Incorporated by reference to Exhibit 2.2 from the
Company's Current Report on Form 8-K dated April 16,
1997)
10.41 Agreement of Purchase and Sale dated February 24, 1997
by and between Oak Creek Partners, Ltd. and
Price/Baybrook, Ltd. (Dallas, Texas property)
(Incorporated by reference to Exhibit 2.4 from the
Company's Current Report on Form 8-K dated April 16,
1997)
10.42 Purchase and Sale Agreement and Joint Escrow
Instructions dated October 10, 1996 by and between The
Price REIT, Inc. and Loop One/183, Ltd. (Arboretum
Crossing) (Incorporated by reference to Exhibit 2.6
from the Company's Current Report on Form 8-K dated
April 16, 1997)
10.43 Purchase and Sale Agreement dated March 25, 1997 by
and between Smoketown Road Associates Limited
Partnership and The Price REIT, Inc. (Woodbridge,
Virginia property) (Incorporated by reference to
Exhibit 2.1 from the Company's Current Report on Form
8-K dated May 28, 1997)
10.44 Purchase and Sale Agreement and Escrow Instructions
dated April 17, 1996 by and among The Price REIT, Inc.
and West Trust Asset Management, Inc. (Cerritos,
California property) (Incorporated by reference to
Exhibit 10.43 from the Company's Form 10-Q dated
August 13, 1997)
10.45 Contribution Agreement, dated as of August 28, 1997,
by and between The Price REIT Renaissance Partnership,
L.P., a California limited partnership, and Altamonte
Joint Venture, a Florida general partnership
(Incorporated by reference to Exhibit 2.1 of the
Company's Current Report on Form 8-K dated September
12, 1997)
10.46 Agreement of Limited Partnership of The Price REIT
Renaissance Partnership, L.P., dated as of August 22,
1997, by and among The Price REIT, Inc. and the
Limited Partners named therein (Incorporated by
reference to Exhibit 2.2 of the Company's Current
Report on Form 8-K dated September 12, 1997)
10.47 Agreement of Purchase and Sale, dated as of June 19,
1997, by and between The Price REIT, Inc. and
Westfarms, L.P., a Connecticut limited partnership, as
amended by First Amendment to Agreement of Purchase
and Sale, dated as of July 29, 1997, and Second
Amendment to Agreement of Purchase and Sale, dated as
of August 21, 1997 (Incorporated by reference to
Exhibit 2.3 of the Company's Current Report on Form 8-
K dated September 12, 1997)
10.48 Acquisition Agreement, dated as of October 3, 1997 by
and between The Price REIT, Inc. and Ridgedale
Festival Joint Venture, a Texas joint venture
(Minnetonka property) (Incorporated by reference to
Exhibit 2.1 of the Company's Current Report on Form 8-
K dated November 14, 1997)
10.49 Deed-In-Lieu Agreement and Escrow Instructions, dated
as of October 17, 1997, by and between Guide Meridian
Retail, Inc., a California corporation, as Borrower,
and The Price REIT, Inc., as Lender (Bellingham
property) (Incorporated by reference to Exhibit 2.2
from the Company's Current Report on Form 8-K dated
November 14, 1997)
10.50 Purchase and Sale Agreement and Escrow Instructions,
dated as of September 23, 1997, by and between K.
Hovnanian Properties of Piscataway, Inc., a New Jersey
corporation, as Seller, and The Price REIT, Inc., a
Maryland corporation, as Buyer, and Eastern Title
Agency, as Escrow Holder (Piscataway property)
(Incorporated by reference to Exhibit 2.3 from the
Company's Current Report on Form 8-K dated November
14, 1997)
10.51 Agreement to purchase shopping center dated as of
November 4, 1997, by and between Woodmark Associates,
Ltd., a California limited partnership, as beneficiary
with sole power of direction in and to LaSalle
National Bank, as Trustee under Trust Agreement dated
October 3, 1983, and known as Trust Number 107105, and
The Price REIT, Inc. (Woodbridge property)
10.52 Real Estate Sale Agreement dated as of December 4,
1997 by and between First Capital Institutional Real
Estate, Ltd.-2, a Florida limited partnership, and The
Price REIT, Inc. (Nashville property)
10.53 Purchase and Sale Agreement and Escrow Instructions
dated as of December 17, 1997 by and between Vista
Ridge Plaza, Ltd., a Texas limited partnership, Vista
Ridge Plaza II, Ltd., a Texas limited partnership and
Vista Ridge Shops, Inc., a Texas corporation, as
Sellers, and The Price/Baybrook, Ltd., a Texas limited
partnership, as Buyer, and Weststar Title Company, as
Escrow Holder (Lewisville property)
12.1 Statement Re: Computation of Ratio Earnings to Fixed
Charges
23.1 Consent of Independent Auditors
27 Financial Data Schedule
Footnotes:
(1) Incorporated herein by reference from the Company's Registration Statement
(No. 33-42064) Amendment No. 1 dated September 25, 1991.
(2) Incorporated herein by reference from the Company's Current Report on Form
8-K dated May 13, 1992.
(3) Incorporated herein by reference from the Company's Annual Report on Form
10-K dated March 15, 1993.
(4) Incorporated herein by reference from the Company's Registration Statement
(No. 33-64344) Amendment No. 2 dated August 3, 1993.
(5) Incorporated herein by reference from the Company's Current Report on Form
8-K dated October 1, 1993.
(6) Incorporated herein by reference from the Company's Annual Report on Form
10-K dated March 15, 1994.
(7) Incorporated herein by reference from the Company's Annual Report on Form
10-K dated March 15, 1995.
(8) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated May 10, 1995.
(9) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated August 11, 1995.
(10) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated November 9, 1995.
(11) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated May 10, 1996.
(12) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated August 14, 1996.
(13) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated November 14, 1996.
(14) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated May 14, 1997.
(15) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated August 13, 1997.
(16) Incorporated herein by reference from the Company's Quarterly Report on
Form 10-Q dated November 14, 1997.
(17) Incorporated herein by reference to Exhibit 3(ii) from the Company's
Current Report on Form 8-K dated January 13, 1998.
(18) Incorporated herein by reference from the Company's Current Report on
Form 8-K, in which the exhibit bore the same number.
(19)Incorporated herein by reference from the Company's Registration Statement
on Form S-8 (No. 33-87812) dated December 23, 1994.
(20)Incorporated herein by reference from the Company's Annual Report on Form
10-K dated March 29, 1996.
(21)Incorporated herein by reference from the Company's Current Report on Form
8-K dated March 5, 1998.
(d) Financial Statement Schedule - The response to this portion
of Item 14 is submitted in Item 14(a)(2).
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.
THE PRICE REIT, INC.
Date : March 27, 1998 By : /Joseph K. Kornwasser/
---------------------------
Joseph K. Kornwasser
President and Chief Executive
Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/JOSEPH K. KORNWASSER/ Chief Executive Officer, March 27, 1998
- ---------------------- President and Director
Joseph K. Kornwasser (Principal Executive Officer)
/RAYMOND E. PEET/ Chairman of the Board March 27, 1998
- ----------------------
Raymond E. Peet
/GEORGE M. JEZEK/ Executive Vice President March 28, 1998
- ---------------------- Chief Financial Officer,
George M. Jezek Treasurer, Secretary and Director
(Principal Accounting Officer)
/ROY P. DRACHMAN/ Director March 27, 1998
- ------------------
Roy P. Drachman
/WILLIAM D. JONES/ Director March 27, 1998
- -------------------
William D. Jones
/WALTER WEISMAN/ Director March 27, 1998
- -------------------
Walter Weisman
/KEENE WOLCOTT/ Director March 27, 1998
- -------------------
Keene Wolcott
Consolidated Financial Statements
The Price REIT, Inc.
December 31, 1997, 1996 and 1995
with Report of Independent Auditors
Report of Independent Auditors
The Board of Directors and Stockholders
The Price REIT, Inc.
We have audited the accompanying consolidated balance sheets of The Price REIT,
Inc. as of December 31, 1997 and 1996, and the related consolidated statements
of income, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1997. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Price REIT, Inc. at December 31, 1997 and 1996, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997, 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.
/Ernst & Young LLP/
San Diego, California
January 16, 1998
except for Note 11, as to which the date is
March 5, 1998
The Price REIT, Inc.
Consolidated Balance Sheets
December 31
1997 1996
---------- ----------
(In Thousands)
Assets
Rental property, net $588,075 $380,482
Investments in joint ventures 22,555 19,202
Cash and cash equivalents 3,474 11,369
Deferred rent receivable 10,298 8,489
Other assets 11,800 7,183
Secured note receivable 1,301 1,346
---------- ----------
Total assets $637,503 $428,071
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities $ 9,212 $ 4,474
Senior Notes payable 204,093 154,114
Unsecured line of credit 58,000 19,000
Secured notes payable 37,535 11,794
---------- ----------
Total liabilities 308,840 189,382
Minority interest 2,417 1,707
Commitments and contingencies - -
Stockholders' Equity:
Preferred stock, $.01 par value;
2,000,000 shares authorized,
no shares issued or outstanding - -
Common stock, $.01 par value;
25,000,000 shares authorized;
11,700,793 and 9,069,249 shares
issued and outstanding 117 91
Additional paid-in capital 354,941 259,518
Accumulated deficit (28,812) (22,627)
---------- ----------
Total stockholders' equity 326,246 236,982
---------- ----------
Total liabilities and stockholders' equity $637,503 $428,071
========== ==========
See accompanying notes.
Consolidated Statements of Income
Year ended December 31
1997 1996 1995
-------- -------- --------
(In Thousands, except
per share data)
Revenue
Rental income $ 69,335 $ 51,292 $ 40,152
Management fees 299 1,085 1,042
Equity in earnings of joint ventures 1,733 1,556 1,456
Interest and other income 1,271 392 873
Net gain on sales of rental property 2,787 - -
-------- -------- --------
75,425 54,325 43,523
-------- -------- --------
Expenses
Rental operations 5,890 4,344 3,266
Real estate taxes 7,671 5,565 3,911
General and administrative 4,191 3,550 3,335
Depreciation 15,752 11,876 9,686
Interest 15,667 12,071 6,939
-------- -------- --------
49,171 37,406 27,137
-------- -------- --------
Net income $ 26,254 $ 16,919 $ 16,386
======== ======== ========
Net income per share:
Basic $ 2.39 $ 1.98 $ 1.98
Diluted $ 2.36 $ 1.98 $ 1.98
Weighted average number of shares
outstanding:
Basic 10,982 8,560 8,259
Diluted 11,113 8,566 8,259
See accompanying notes.
The Price REIT, Inc.
Consolidated Statements of Stockholders' Equity
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ------ --------- --------- ---------
(In Thousands)
Balance at January 1, 1995 8,217 $ 82 $234,076 $ (9,558) $224,600
Issuance of Common Stock
under dividend reinvestment
and share purchase plan 56 1 1,589 - 1,590
Exercise of stock options 28 - 700 - 700
Dividends paid - - - (22,038) (22,038)
Net income - - - 16,386 16,386
------ ------ --------- --------- ---------
Balance at December 31, 1995 8,301 83 236,365 (15,210) 221,238
Issuance of Common Stock
Public offering 690 7 22,159 - 22,166
Offering costs - - (1,389) - (1,389)
Issuance of Common Stock
under dividend reinvestment
and share purchase plan 37 - 1,164 - 1,164
Exercise of stock options 41 1 1,219 - 1,220
Dividends paid - - - (24,336) (24,336)
Net income - - - 16,919 16,919
------- ------ --------- --------- ---------
Balance at December 31, 1996 9,069 91 259,518 (22,627) 236,982
Issuance of Common Stock
Public offerings 2,600 26 97,674 - 97,700
Offering costs - - (3,452) - (3,452)
Issuance of Common Stock
under dividend reinvestment
and share purchase plan 32 - 1,201 - 1,201
Dividends paid - - - (32,439) (32,439)
Net income - - - 26,254 26,254
------- ------ --------- --------- ---------
Balance at December 31, 1997 11,701 $117 $354,941 $(28,812) $326,246
======= ====== ========= ========= =========
See accompanying notes.
The Price REIT, Inc.
Consolidated Statements of Cash Flows
Year ended December 31
1997 1996 1995
--------- --------- ---------
(In Thousands)
Operating activities
Net income $ 26,254 $ 16,919 $ 16,386
Adjustments to reconcile net income to net
cash provided by operating activities:
Net gain on sales of rental property (2,787) - -
Depreciation 15,752 11,876 9,686
Amortization of deferred loan fees 637 543 284
Amortization of debt discount 201 162 32
Equity in earnings of joint ventures (1,733) (1,556) (1,456)
Deferred rent (1,809) (2,269) (1,738)
Changes in operating assets and liabilities:
Rent receivable and other assets (5,591) (1,495) (1,200)
Accounts payable and accrued liabilities 4,738 1,067 2,339
--------- --------- ---------
Net cash provided by operating activities 35,662 25,247 24,333
--------- --------- ---------
Investing activities
Purchases of rental property (195,355) (18,759) (61,831)
Additions to rental property (26,244) (9,845) (12,401)
Gross proceeds from sale of rental property 27,650 - -
Investments in joint ventures (3,959) (2,000) (1,977)
Distributions from joint ventures 2,729 1,867 1,660
Advances on secured note receivable - (1,347) -
--------- --------- ---------
Net cash used in investing activities (195,179) (30,084) (74,549)
--------- --------- ---------
Financing activities
Proceeds from Senior Notes payable 49,779 54,870 99,050
Payment of debt issuance costs (497) (640) (1,938)
Proceeds from unsecured line of credit 137,000 39,000 68,000
Repayment of unsecured line of credit (98,000) (76,000) (96,000)
Repayment of secured notes payable (380) (2,797) -
Minority interest contributions 710 1,707 -
Gross proceeds from issuance of Common Stock 97,977 23,642 919
Issuance costs (3,452) (1,389) -
Dividends paid, net of dividends reinvested (31,515) (23,428) (20,667)
--------- --------- ---------
Net cash provided by financing activities 151,622 14,965 49,364
--------- --------- ---------
(Decrease) increase in cash and cash
equivalents (7,895) 10,128 (852)
Cash and cash equivalents at beginning of
the year 11,369 1,241 2,093
--------- --------- ---------
Cash and cash equivalents at end of year $ 3,474 $ 11,369 $ 1,241
========= ========= =========
Supplemental disclosure of cash flow
information:
Cash paid during the year for interest $ 14,651 $ 11,364 $ 5,759
========= ========= =========
Supplemental disclosure of noncash investing
and financing activities:
In connection with the acquisition of certain
properties, the Company assumed secured notes
payable of $26,100 and $11,841 in 1997 and 1996,
respectively.
See accompanying notes.
Notes to Consolidated Financial Statements
December 31, 1997
1. Organization and Summary of Significant Accounting Policies
Organization
The Price REIT, Inc., a Maryland corporation formed in 1991, is a self-
administered and self-managed real estate investment trust which is focused on
the acquisition, development, redevelopment and management of retail shopping
center properties.
Consolidation
The consolidated financial statements include the accounts of The Price REIT,
Inc.; Price/Texas, Inc., a wholly-owned subsidiary; Price REIT Properties LLC, a
wholly-owned subsidiary; Price/Baybrook, Ltd., a limited partnership between The
Price REIT, Inc. and Price/Texas, Inc.; Smithtown Venture Limited Liability
Company ("Smithtown Venture"), a 90% owned joint venture; and The Price REIT
Renaissance Partnership, L.P., a 99% owned limited partnership (collectively
referred to as the "Company"). All significant intercompany accounts and
transactions have been eliminated.
Use of Estimates
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the financial
statement date and the reported amounts of revenue and expenses during the
reporting period. Due to uncertainties inherent in the estimation process, it
is reasonably possible that actual results could differ from these estimates.
Rental Property and Depreciation
Rental property is recorded at cost. At such times when events or circumstances
indicate that the carrying amount of property may be impaired, the Company makes
an assessment of its recoverability by estimating the future undiscounted cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Company would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Depreciation is provided using the straight-line method over estimated useful
lives as follows:
Furniture and fixtures 7 years
Land improvements 15 years
Buildings 25 years
Investments
The equity method of accounting is used for investments in joint ventures in
which the Company has a financial interest and exercises significant influence.
Under this method, the Company recognizes its share of the net earnings or
losses of the joint ventures as earned or incurred and reduces or increases the
carrying value of the investments by the amount of distributions received or
contributions paid.
Through December 31, 1996, the cost method of accounting was used for the
Company's investment in K&F Development Company ("Development Company"). Under
this method, the Company recognized as income, dividends received that were
distributed from net accumulated earnings of the Development Company. Effective
January 1, 1997, the Company acquired the assets and assumed the liabilities of
the Development Company.
Cash and Cash Equivalents
The Company considers highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents.
The Company has no requirements for compensating balances. The Company maintains
its operating cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company also maintains a money market mutual fund
which invests primarily in U.S. Treasury obligations. The Company has not
experienced any losses in such accounts. The Company believes it is not exposed
to any significant credit risk on cash and cash equivalents.
Deferred Loan Fees
Deferred loan fees are amortized, using the straight-line method, over the term
of the related loan and are reflected as a component of interest expense.
Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires that the Company disclose estimated
fair values for its financial instruments, as well as the methods and
significant assumptions used to estimate fair values. The Company believes that
the carrying values reflected in the balance sheets at December 31, 1997 and
1996 reasonably approximate the fair values for cash and cash equivalents,
receivables and all liabilities. In making such assessments, the Company used
estimates and market rates for similar instruments.
Minority Interest
Minority interest represents the 10% ownership interest of Smithtown Venture and
1% ownership interest in The Price REIT Renaissance, L.P. not owned by the
Company.
Revenue Recognition
Rental income is recorded on a straight-line basis over the term of the leases.
Deferred rent receivable represents the aggregate excess of rental revenue
recognized on a straight-line basis over cash received under the applicable
lease provisions. The Company recognizes profit on the sale of rental property
when title has passed to a buyer who has met down payment and continuing
investment criteria.
Income Taxes
The Company has met all conditions necessary to qualify as a real estate
investment trust under the Internal Revenue Code. To qualify as a real estate
investment trust, the Company is required to pay dividends of at least 95% of
its ordinary taxable income each year and meet certain other criteria. As a
qualifying real estate investment trust, the Company will not be taxed on income
distributed to its shareholders. Since the Company distributed all of its
taxable income to stockholders for the years ended December 31, 1997, 1996 and
1995, the accompanying financial statements contain no provision for income
taxes.
Taxable income differs from net income for financial reporting purposes
principally due to differences in the timing of recognition of depreciation
expense, rental revenue and gain from a tax-deferred exchange.
The reported amounts of the Company's net assets as of December 31, 1997 and
1996 were less than its tax basis for Federal tax purposes by approximately
$1,105,000 and $1,909,000, respectively.
Net Income Per Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share." Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previous fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year
presentation.
2. Rental Property
Rental property as of December 31, 1997, geographically by state, is as follows:
Total California Texas Virginia
---------- ---------- ---------- ----------
(In Thousands)
Land $ 199,002 $ 57,900 $ 27,905 $ 27,608
Land improvements 63,175 16,229 5,464 12,286
Buildings 379,964 106,188 52,979 46,468
---------- ---------- ---------- ----------
642,141 180,317 86,348 86,362
Accumulated depreciation (54,066) (25,172) (2,962) (6,525)
---------- ---------- ---------- ----------
$ 588,075 $ 155,145 $ 83,386 $ 79,837
========== ========== ========== ==========
Net rentable square feet 6,993 1,869 1,081 806
========== ========== ========== ==========
Arizona Connecticut New York Florida
---------- ---------- ---------- ----------
(In Thousands)
Land $ 21,662 $ 14,133 $ 7,652 $ 10,692
Land improvements 6,275 5,546 5,211 2,206
Buildings 32,981 28,596 24,345 20,907
---------- ---------- ---------- ----------
60,918 48,275 37,208 33,805
Accumulated depreciation (7,668) (5,822) (2,214) (328)
---------- ---------- ---------- ----------
$ 53,250 $ 42,453 $ 34,994 $ 33,477
========== =========== ========== ==========
Net rentable square feet 891 517 398 271
========== =========== ========== ==========
Washington Illinois Oklahoma New Jersey
---------- ---------- ---------- ----------
Land $ 6,441 $ 5,235 $ 4,368 $ 4,827
Land improvements 1,325 1,081 1,243 996
Buildings 12,558 10,235 11,322 9,437
---------- ---------- ---------- ----------
20,324 16,551 16,933 15,260
Accumulated depreciation (123) - (590) (73)
---------- ---------- ---------- ----------
$ 20,201 $ 16,551 $ 16,343 $ 15,187
========== ========== ========== ==========
Net rentable square feet 175 149 234 97
========== ========== ========== ==========
North
Minnesota Maryland Kansas Carolina
---------- ---------- ---------- ----------
Land $ 3,798 $ 2,582 $ 2,560 $ 1,639
Land improvements 784 3,482 729 318
Buildings 7,426 6,862 6,598 3,062
---------- ---------- ---------- ----------
12,008 12,926 9,887 5,019
Accumulated depreciation (73) (2,110) (298) (108)
---------- ---------- ---------- ----------
$ 11,935 $ 10,816 $ 9,589 $ 4,911
========== ========== ========== ==========
Net rentable square feet 120 210 134 41
========== ========== ========== ==========
Rental property as of December 31, 1996, geographically by state, is as follows:
Total California Arizona Texas
---------- ---------- ---------- ----------
(In Thousands)
Land $ 136,148 $ 63,754 $ 21,662 $ 13,174
Land improvements 40,907 15,578 6,264 -
Buildings 245,038 111,737 31,543 26,814
---------- ---------- ---------- ----------
422,093 191,069 59,469 39,988
Accumulated depreciation (41,611) (21,612) (5,951) (914)
---------- ---------- ---------- ----------
$ 380,482 $ 169,457 $ 53,518 $ 39,074
========== ========== ========== ==========
Net rentable square feet 4,858 2,022 855 636
========== ========== ========== ==========
Virginia New York Connecticut Oklahoma
---------- ---------- ---------- ----------
Land $ 12,575 $ 10,321 $ 7,713 $ 4,367
Land improvements 9,185 2,270 4,201 -
Buildings 17,063 22,637 15,952 12,434
---------- ---------- ---------- ----------
38,823 35,228 27,866 16,801
Accumulated depreciation (4,366) (2,394) (4,705) (62)
---------- ---------- ---------- ----------
$ 34,457 $ 32,834 $ 23,161 $ 16,739
========== ========== ========== ==========
Net rentable square feet 323 246 332 234
========== ========== ========== ==========
Maryland
----------
Land $ 2,582
Land improvements 3,409
Buildings 6,858
----------
12,849
Accumulated depreciation (1,607)
----------
$ 11,242
==========
Net rentable square feet 210
==========
Rental property owned through the Company's investments in joint ventures is
described in Note 3.
The Company's shopping centers are generally leased under noncancellable
operating leases with remaining terms ranging from one to 25 years. Certain of
the leases contain up to seven five-year renewal options. The leases generally
contain provisions for increases in rents based on the Consumer Price Index, or
a predetermined fixed amount, and require the tenant to reimburse the Company
for substantially all operating expenses of the properties.
Certain of the leases provide for additional rental payments based on gross
tenant revenues in excess of specified amounts. During the years ended December
31, 1997, 1996 and 1995, the Company earned additional rents of approximately
$597,000, $418,000 and $372,000, respectively, relating to these leases.
Future minimum rental income due under the terms of noncancellable operating
leases is as follows (in thousands):
1998 $ 69,239
1999 67,330
2000 64,681
2001 61,639
2002 59,107
Thereafter 440,725
The following tenants accounted for greater than 10% of total revenues:
Year ended December 31
1997 1996 1995
------ ------ ------
(In Thousands)
The Home Depot $8,156 $8,955 $7,401
Costco 5,080 5,029 5,268
Acquisitions of Shopping Centers
In December 1997, the Company acquired a 149,000 square foot shopping center in
Woodridge, Illinois for $16,525,000.
In October 1997, the Company acquired a 97,000 square foot shopping center in
Piscataway, New Jersey for $15,100,000.
In October 1997, the Company acquired a 174,000 square foot shopping center in
Bellingham, Washington for $20,250,000.
In October 1997, the Company acquired a 120,000 square foot shopping center in
Minnetonka, Minnesota for $11,900,000.
In August 1997, the Company acquired a 99% interest in Renaissance Centre, a
271,000 square foot shopping center, in Altamonte Springs (Orlando), Florida for
$33,500,000.
In August 1997, the Company acquired a 185,000 square foot shopping center in
Farmington, Connecticut for $20,000,000.
In May 1997, the Company acquired a 483,000 square foot shopping center in
Woodbridge, Virginia for $46,500,000.
In April 1997, the Company acquired a 187,000 square foot shopping center in
Austin, Texas for $23,400,000.
In March 1997, the Company acquired a 41,000 square foot shopping center in
Greensboro, North Carolina for $4,975,000.
In March 1997, the Company acquired an 84,000 square foot shopping center in
Dallas, Texas for $8,750,000.
In March 1997, the Company acquired a 116,000 square foot shopping center in
Richardson, Texas for $8,500,000.
In March 1997, the Company acquired a 62,000 square foot shopping center in
Garland, Texas for $4,750,000.
In January 1997, the Company acquired a 134,000 square foot shopping center in
Wichita, Kansas for $9,800,000.
In November 1996, the Company acquired a 234,000 square foot shopping center in
Oklahoma City, Oklahoma for $16,700,000.
In October 1996, the Company acquired an 80% partnership interest in Smithtown
Venture from the Development Company. In March 1997, the Company acquired an
additional 10% interest from the minority partner. Smithtown Venture is
constructing a 270,000 square foot shopping center in Long Island, New York. As
of December 31, 1997, Smithtown Venture has incurred $20,375,000 of development
costs.
In July 1996, the Company acquired a 210,000 square foot shopping center in
Mesquite, Texas for $12,650,000.
In January 1996, the Company acquired a 9.7 acre land parcel adjacent to the
Company's shopping center near Houston, Texas for $1,250,000.
Sale of Shopping Centers
In July 1997, the Company sold its Cerritos, California property for $17,400,000
in a transaction designed to enable the sale to qualify as a tax-deferred
transaction under Section 1031 of the Internal Revenue Code. The Company
realized a gain of $3,643,000 on the sale. In October 1997, the Company
completed the sale of approximately nine acres of land in its Copiague, New York
shopping center for $10,250,000. The Company realized a loss of $856,000 on the
sale. The net gain from these sales was $2,787,000.
Smithtown Venture
In connection with the development of a shopping center in Long Island, New
York, which was substantially complete at December 31, 1997, Smithtown Venture
made a loan to the ground lessor for the payoff of an existing mortgage on the
property. The secured note receivable bears interest at a fixed rate of 7.41%
and is due in monthly principal and interest payments through October 2026. At
December 31, 1997, the balance was $1,301,000.
In March 1997, King Kullen, the minority partner, was granted a put option for a
fee of $100,000 to reduce its capital interest in the joint venture from
approximately 20% to 10%. In April 1997, King Kullen elected to exercise its put
option to reduce its equity interest as noted above. The Company currently owns
a 90% interest in Smithtown venture.
In connection with the development of the shopping center, Smithtown Venture
entered into a 49-year ground lease, with four ten-year renewal options, which
provides for monthly payments. While the shopping center was under development,
the lease payments were capitalized to rental property. Future minimum lease
payments, excluding renewal options, are as follows (in thousands):
1998 $ 1,400
1999 1,400
2000 1,400
2001 1,400
2002 1,423
Thereafter 81,230
3. Investment in Joint Ventures
Centrepoint Associates
In April 1994, the Company acquired a 50% general partnership interest in
Centrepoint Associates for $11,388,000. The general partnership interest was
acquired from a partner-ship in which Costco and Messrs. Kornwasser and Friedman
were the general partners. At the time of the acquisition of the partnership
interest, the joint venture owned and operated a 236,000 square foot power
center in Tempe, Arizona, with an additional 149,000 square feet of adjacent
retail space, constructed and completed in 1995.
In December 1995, the joint venture purchased two properties located in the
Phoenix metropolitan area. One of the properties is located in Glendale,
Arizona, which was purchased for $6,724,000, and consisted of an existing 85,000
square foot shopping center with potential to expand by up to approximately
20,000 additional square feet, of which 9,000 square feet was under construction
as of December 31, 1997. The other property is located in Goodyear, Arizona,
which was purchased for $4,232,000, and contains approximately 40 acres of
vacant land for future development. In connection with these purchases, the
joint venture obtained a $10,500,000 loan which was due in December 1997.
In March 1997, the joint venture acquired a parcel of property containing 25,000
rentable square feet of buildings adjacent to its Glendale, Arizona property for
$3,000,000. In connection with this acquisition, the joint venture amended its
loan by increasing the amount to $13,500,000 and extending the maturity to June
1998.
Hayden Plaza North Associates
In April 1996, the Company formed a partnership with Kimco Realty Corporation, a
retail real estate investment trust, to purchase a 191,000 square foot shopping
center in Phoenix, Arizona at a cost of $3,490,000. The Company holds a 50%
general partnership interest. The acquisition was completed in May 1996.
Price/Fry LLC Joint Venture
In February 1997, Price/Baybrook, Ltd. (a wholly-owned subsidiary of The Price
REIT, Inc.) formed a joint venture with I-10/Fry Road 27, Ltd. and I-10/Park Row
40, Ltd. (the "Outside Partners") to develop an approximately 470,000 square
foot retail power center in Houston, Texas. The joint venture agreement provides
for the Outside Partners to contribute the land with a net fair market value of
$4,225,000 and Price/Baybrook, Ltd. to contribute $4,225,000 as needed to fund
development costs. After Price/Baybrook, Ltd. has funded its share of capital,
it is anticipated that the joint venture will seek construction financing to
complete the center.
Condensed combined financial information of the joint ventures is as follows:
December 31
1997 1996
-------- --------
(In Thousands)
Rental property, net $ 56,350 $ 45,648
Other assets 1,815 3,125
-------- --------
$ 58,165 $ 48,773
======== ========
Liabilities $ 14,519 $ 11,701
The Company's capital 21,513 18,596
Other partners' capital 22,133 18,476
-------- --------
$ 58,165 $ 48,773
======== ========
Year ended
December 31
1997 1996
-------- --------
(In Thousands)
Revenue $ 7,280 $ 6,723
Expenses (3,891) (3,538)
-------- --------
Net income $ 3,389 $ 3,185
======== ========
The accounting policies of the joint ventures are substantially the same as the
Company's.
4. Notes Payable
Notes payable consists of the following:
December 31
1997 1996
-------- --------
(In Thousands)
Senior Notes payable due 2000 $ 99,420 $99,242
Senior Notes payable due 2004 49,792 -
Senior Notes payable due 2006 54,881 54,872
-------- --------
204,093 154,114
Unsecured line of credit 58,000 19,000
Secured notes payable 37,535 11,794
-------- --------
$299,628 $184,908
======== ========
Principal maturities of all notes payable as of December 31, 1997 are summarized
as follows (in thousands):
1998 $ 637
1999 699
2000 169,783
2001 700
2002 766
Thereafter 127,880
--------
$300,465
========
The Company incurred $15,667,000, $12,540,000 and $7,354,000 of interest costs
which included amortization of loan discount and fees, of which $1,637,000,
$469,000 and $415,000 were capitalized to rental property for the years ended
December 31, 1997, 1996 and 1995, respectively.
Senior Notes Payable
In June 1997, the Company issued unsecured 7.125% Senior Notes in the aggregate
principal amount of $50,000,000 which are due June 2004. Interest on the 7.125%
Senior Notes is payable semi-annually in arrears on June 15 and December 15. The
notes were priced at an aggregate amount of $49,778,000 and have an effective
interest rate of 7.21%.
In November 1996, the Company issued unsecured 7.50% Senior Notes in the
aggregate principal amount of $55,000,000 which are due November 2006. Interest
on the 7.50% Senior Notes is payable semi-annually in arrears on May 5 and
November 5. The notes were priced at an aggregate amount of $54,870,000 and have
an effective interest rate of 7.53%.
In November 1995, the Company issued unsecured 7.25% Senior Notes in the
aggregate principal amount of $100,000,000 which are due November 2000. Interest
on the 7.25% Senior Notes is payable semi-annually in arrears on May 1 and
November 1. The notes were priced at an aggregate amount of $99,050,000 and have
an effective interest rate of 7.48%.
As of December 31, 1997 and 1996, the unamortized discount of senior notes
payable was $837,000 and $886,000, respectively. Amortization of the discount
during the year ended December 31, 1997 and 1996, in the amount of $201,000 and
$162,000 is reported as a component of interest expense and an increase to
Senior Notes payable.
The Senior Notes payable contain certain restrictive financial covenants
relating to debt-to-asset ratios, cash flow coverage ratio and distribution
limitations.
Unsecured Line of Credit
The Company maintains a revolving credit facility from a group of banks for up
to $100 million in unsecured advances.
In July 1997, the Company amended its line of credit, modifying certain
restrictive covenants, including the secured and unsecured debt incurrence
restrictions as well as other conditions which increased the availability under
the line of credit from $75 million to $100 million and extended the maturity to
June 30, 2000.
Advances under the credit facility, at the Company's option, bear interest at
either LIBOR plus 1.15% or a Base Rate, as defined, plus .50%. The effective
rate of interest as of December 31, 1997 and 1996 was 7.31% and 6.63%,
respectively. During 1997, the Company's LIBOR based borrowings under its
revolving credit facility had a range of interest of approximately 6.7% to 7.0%,
except on December 31, 1997 when the interest rate was 7.31%. Interest on the
out-standing balance is payable no less than quarterly.
The agreement requires the Company to meet various financial covenant ratios,
including minimum net operating income and net worth levels, as defined, and the
Company is precluded from paying dividends in excess of 95% of its annual net
income plus depreciation. The Company is required to pay a commitment fee of
.25% per annum on the unused portion of the unsecured line of credit under its
current borrowings.
Secured Notes Payable
Secured notes payable consist of four loans assumed in connection with the
acquisition of three properties, with interest rates ranging from 8.875% to
10.50% and maturity dates due from August 2000 to December 2014.
5. Stock Offerings
In August 1997, the Company issued and sold 1,000,000 shares of Common Stock at
a price to the public of $37.50 per share. The Company used the net proceeds of
approximately $37,500,000 for repayment of indebtedness under the Company's line
of credit and for general corporate purposes.
In January 1997, the Company issued and sold 1,600,000 shares of Common Stock at
a price to the public of $37.625 per share. The Company used the net proceeds of
approximately $56,800,000 to fund acquisition and development activities and to
repay indebtedness under the line of credit.
In September 1996, the Company issued and sold 690,000 shares of Common Stock at
a price to the public of $32.125 per share. The Company used the net proceeds of
approximately $21,000,000 for repayment of indebtedness under the Company's line
of credit and for general corporate purposes.
6. Dividends
The Company paid quarterly dividends to stockholders as follows:
Year ended December 31
1997 1996 1995
Series A Common Stock -------- -------- --------
First $ N/A $ 0.6667 $ 0.6286
Second N/A N/A 0.6286
Third N/A N/A 0.6381
Fourth N/A N/A 0.6476
-------- -------- --------
Total $ N/A $ 0.6667 $ 2.5429
======== ======== ========
Common Stock
First $ 0.7250 $ 0.7000 $ 0.6600
Second 0.7250 0.7000 0.6600
Third 0.7250 0.7000 0.6700
Fourth 0.7250 0.7000 0.6800
-------- -------- --------
Total $ 2.9000 $ 2.8000 $ 2.6700
======== ======== ========
Taxable portion - ordinary
dividend 80.17% 78.36% 82.00%
Return of capital portion 19.83% 21.64% 18.00%
-------- -------- --------
100.00% 100.00% 100.00%
======== ======== ========
Common Stock
The Company had previously issued two series of common stock equity, Common
Stock and Series A Common Stock. In May 1996, the Company's stockholders
approved an amendment to the Company's charter to provide that all outstanding
shares of Series A Common Stock be converted into shares of Common Stock;
eliminate the provision which entitled holders of Common Stock to receive an
annualized quarterly per share dividend equal to 105% of the annualized
quarterly per share dividend on the Series A Common Stock and changed the name
of the Company's Series A Common Stock to Common Stock. There were 38,266 shares
of Series A Common Stock that were converted into Common Stock.
7. Stock Options/Dividend Reinvestment Plan
In 1991, the Company adopted a stock option plan for certain of its employees.
The options generally vest 20% upon grant and 20% per year over the subsequent
four years. Vested options expire ten years from the date of vesting. Unvested
options expire at termination of employment.
In 1993, the Company adopted an incentive stock option plan for certain of its
officers and other key employees. The options generally vest 20% upon grant and
20% per year over the subsequent four years. The options are exercisable upon
vesting and expire ten years from the date of grant. Unvested options expire at
termination of employment.
In 1996, the Company adopted a stock option plan for non-employee directors of
its Board of Directors. The options are fully vested and exercisable on the date
of grant.
Stock options outstanding are as follows (in thousands, except per share data):
Stock Options
------------------ Price
Non- Total Range
Incentive Incentive Exercise Per
Shares Shares Value Share
------- ------- -------- -------------
Outstanding at January 1, 1995 128 426 $17,548 $25.00-$33.50
Exercised on June 30, 1995 (28) - (700) 25.00
Expired on July 1, 1995 (17) - (506) 29.75
Granted on December 11, 1995 - 148 4,237 28.63
------- ------- --------
Outstanding at December 31, 1995 83 574 20,579 28.63-33.50
Granted on January 29, 1996 31 49 2,360 29.50
Exercised on February 29, 1996 (41) - (1,220) 29.75
Expired on March 31, 1996 (2) - (60) 29.75
Granted on August 1, 1996 12 - 354 29.50
Granted on December 18, 1996 - 34 1,224 36.00
Granted on December 31, 1996 12 - 462 38.50
------- ------- --------
Outstanding at December 31, 1996 95 657 23,699 28.63-38.50
------- ------- --------
Expired on April 8, 1997 - (1) (34) 33.50
Granted on December 15, 1997 - 162 6,602 40.63
Granted on December 31, 1997 13 - 512 40.94
------- ------- --------
Outstanding at December 31, 1997 108 818 $30,779 $28.63-$40.94
======= ======= ========
At December 31, 1997, 1996 and 1995, 665,100, 423,100, and 325,200 stock
options, respectively, were exercisable.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). The new accounting standards prescribed by SFAS
No. 123 are optional, and the Company has elected to account for its stock
option plans under the previous accounting standards as prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Pro
forma information regarding net income is required by SFAS No. 123, and has been
determined as if the Company had accounted for its stock options under the fair
value method prescribed by SFAS No. 123. The fair value of these options was
estimated at the date of grant using the "Black-Scholes" method with the
following weighted average assumptions for 1997, 1996 and 1995: risk-free
interest rate of 5.5%; annual dividend rate of 7.1%, 7.8% and 9.4%,
respectively, volatility factor of the expected market price of the Company's
Common Stock of 10%; and an expected option life of four years.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (in thousands except for earnings per share
information):
Year ended December 31
1997 1996 1995
-------- -------- --------
Pro forma net income $26,145 $16,862 $16,370
Pro forma net income per share:
Basic $ 2.38 $ 1.97 $ 1.98
Diluted $ 2.35 $ 1.97 $ 1.98
In February 1994, the Company adopted a dividend reinvestment and share purchase
plan (the "Plan"). This Plan gives the holders of shares of common stock the
opportunity to purchase additional common stock shares through reinvestment of
distributions or volun-tary cash investments. At the Company's option, the
common stock shares purchased under the Plan can be newly issued or purchased on
the open market. Concurrent with the adoption of this Plan, the Company filed a
Form S-3 Registration Statement with the Securities and Exchange Commission to
register 500,000 common stock shares that are eligible to be issued under this
Plan. During the years ended December 31, 1997 and 1996, 32,000 and 37,000
shares, respectively, were issued under the Plan. Through December 31, 1997, a
total of 199,000 shares have been issued under the Plan.
8. Related Party Transactions
1997
Other income includes $66,000 and $19,000 of development fee income received
from Price/Fry LLC and Centrepoint Associates, respectively.
1996
Management fees revenue includes $817,000 earned from Price Enterprises, Inc.
owned rental properties and $92,000 earned from companies affiliated with
Messrs. Kornwasser and Friedman.
Development fees totaling $142,000 were paid to the Development Company and
capitalized to rental property.
Leasing commissions totaling $250,000 were paid to the Development Company and
capitalized to other assets.
Other income includes $30,000 of consulting fee income received from Price
Enterprises, Inc.
1995
Management fees revenue includes $785,000 earned from Price Enterprises, Inc.
owned rental properties and $128,000 earned from companies affiliated with
Messrs. Kornwasser and Friedman.
General and administrative expense includes $114,000 of rent expense paid to a
partnership affiliated with Messrs. Kornwasser and Friedman.
Development fees totaling $379,000 were paid to the Development Company and
capitalized to rental property.
Leasing commissions totaling $489,000 were paid to the Development Company and
capitalized to other assets.
Other income includes $164,000 of consulting fee income received from Price
Enterprises, Inc. for various consulting services.
9. Commitments and Contingencies
The Company sponsors a 401(k) deferred compensation plan. Employees may
contribute up to 15% of their wages subject to Internal Revenue Code limits. The
plan provides for discretionary matching and profit sharing contributions by the
Company. The Company may match contributions up to 2.5% of an employee's annual
compensation for annual compensation below $50,000 or up to 2.0% for annual
compensation equal to or above $50,000. During the years ended December 31,
1997, 1996 and 1995, the Company contributed $39,000, $23,000 and $23,000,
respectively, to the plan. The plan is fully funded.
Certain of the Company's properties were acquired from The Price Company or its
successor, Costco. The Price Company has indemnified the Company, with the
exception of the Company's 50% interest in the Tempe, Arizona property, with
respect to the presence of any hazardous material (as defined under various
environmental laws) on properties purchased from The Price Company in the event
such hazardous materials were determined to be present on the date of the
purchase. The Company is not aware of any environmental issues with respect to
its properties which would require a material expenditure by the Company,
regardless of whether the Company might ultimately be indemnified by The Price
Company.
10. Quarterly Financial Data (Unaudited)
Summarized quarterly financial data for the years ended December 31, 1997 and
1996 is as follows:
Net Income Per Share
Revenues Net Income Basic Diluted
-------- ---------- ------- -------
(In Thousands, except per share data)
1997
First $15,308 $ 5,446 $0.53 $0.52
Second 17,270 5,674 0.53 0.53
Third 21,250 8,779 0.78 0.77
Fourth 21,597 6,355 0.55 0.54
1996
First $13,430 $ 4,058 $0.49 $ 0.49
Second 12,883 4,135 0.50 0.50
Third 13,362 4,103 0.48 0.48
Fourth 14,650 4,623 0.51 0.51
11. Subsequent Event
On January 13, 1998, the Company entered into an Agreement and Plan of Merger
with Kimco Realty Corporation, a Maryland corporation ("Kimco"), and REIT Sub,
Inc., a Maryland corporation and wholly owned subsidiary of Kimco ("REIT Sub"),
pursuant to which the Company will merge (the "Merger") with and into REIT Sub.
Pursuant to the Merger, each share of Common Stock of the Company will be
converted (on a tax-free basis) into the right to receive a combination of
common stock, par value $.01 per share, of Kimco and depositary shares ("Kimco
Class D Depositary Shares"), each representing a one-tenth fractional interest
in a new issue of Kimco 7.5% Class D Cumulative Convertible Preferred Stock,
having an assumed value of not less than $45.00, based upon the Kimco Average
Price, as defined, and the liquidation preference of the Kimco Class D
Depositary Shares.
The Price REIT, Inc.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1997
(In Thousands)
Costs Capitalized
Initial Cost to the REIT Subsequent to Acquisition
------------------------ -------------------------
Encum- Buildings & Buildings & Carrying
Description brances Land Improvments Improvments Cost
- ----------------- ------- ------------------------ -------------------------
Retail Rental Properties
Alhambra, CA $ - $ 9,949 $ 11,251 $ 284 $ 10
Carmichael, CA - 6,447 13,353 2,601 50
Chula Vista, CA - 11,523 15,377 1,166 42
North Haven, CT - 7,713 19,887 373 8
Phoenix, AZ - 5,581 13,169 407 7
Corona, CA - 6,950 41,234 2,754 122
Cerritos, CA - 5,854 8,672 (14,526) -
Santa Ana, CA - 8,035 6,315 3,552 55
Copiague, NY - 10,321 14,781 (7,137) 59
Fairfax, VA - 12,575 26,092 151 5
Whitemarsh, MD - 2,582 8,700 1,575 72
Glendale, AZ - 13,012 14,385 796 23
N. Phoenix, AZ - 3,069 5,196 5,059 328
Houston, TX - 9,036 16,639 1,654 198
La Mirada, CA - 11,672 14,152 901 20
Oxnard, CA - 3,306 7,026 20 -
Mesquite, TX - 4,088 8,562 89 -
Commack, NY - - - 19,950 1,086
Oklahoma City, OK 11,495 4,340 12,360 236 4
Wichita, KS - 2,560 7,240 87 -
Garland, TX - 1,869 2,881 27 -
Richardson, TX - 3,029 5,477 37 -
Dallas, TX - 2,051 6,699 34 -
Greensboro, NC - 1,639 3,336 43 -
Austin, TX - 7,782 15,412 941 -
Woodbridge, VA - 15,033 31,467 1,043 6
Farmington, CT 14,610 6,420 13,580 302 -
Orlando, FL - 10,692 23,008 106 -
Minnetonka, MN - 3,798 8,102 107 -
Bellingham, WA - 6,441 11,559 2,324 -
Piscataway, NJ 11,360 4,827 10,273 160 -
Woodridge, IL - 5,235 11,065 251 -
------- ------------------------ -------------------------
Total $37,465 $207,429 $407,250 $ 25,367 $ 2,095
======= ======================== =========================
Gross Amount at which Carried at
December 31, 1997
--------------------------
Bldgs & Accum. Date of Date Depr
Description Land Improv. Total Deprec. Construction Acquired Life
- --------------- -------------------------- ------- -------------- -------- ----
Retail Rental Properties
Alhambra, CA $ 9,949 $ 11,545 $ 21,494 $ 3,090 1987,1989 12/03/91 (A)
Carmichael, CA 6,447 16,004 22,451 3,735 1971,1988-94 12/03/91 (A)
Chula Vista, CA 11,523 16,585 28,108 4,241 1981,1986-90 12/03/91 (A)
North Haven, CT 7,713 20,268 27,981 5,625 1987-1988 12/03/91 (A)
Phoenix, AZ 5,581 13,583 19,164 3,519 1970,1989 12/03/91 (A)
Corona, CA 6,950 44,110 51,060 10,617 1988-1989 04/29/92 (A)
Cerritos, CA - - - - 1974,1987 04/29/92 (A)
Santa Ana, CA 8,035 9,922 17,957 1,641 1983,1995 12/17/92 (A)
Copiague, NY 7,652 10,372 18,024 1,998 1990 08/12/93 (A)
Fairfax, Va 12,575 26,248 38,823 5,661 1993 08/12/93 (A)
Whitemarsh, MD 2,582 10,347 12,929 2,110 1991 08/12/93 (A)
Glendale, AZ 13,012 15,204 28,216 3,028 1988-89 10/01/93 (A)
N. Phoenix, AZ 3,069 10,583 13,652 1,121 1970,1995 12/21/94 (A)
Houston, TX 9,059 18,468 27,527 1,445 1985,1993 11/17/95 (A)
La Mirada, CA 11,683 15,062 26,745 1,278 1955,1990-93 12/27/95 (A)
Oxnard, CA 3,313 7,039 10,352 570 1982,1990 12/29/95 (A)
Mesquite, TX 4,115 8,624 12,739 519 1992 07/03/96 (A)
Commack, NY - 21,036 21,036 216 1997 10/02/96 (A)
Oklahoma City,OK 4,368 12,572 16,940 590 1994 11/19/96 (A)
Wichita, KS 2,560 7,327 9,887 298 1995 01/16/97 (A)
Garland, TX 1,869 2,908 4,777 98 1991 03/19/97 (A)
Richardson, TX 3,029 5,514 8,543 176 1994 03/20/97 (A)
Dallas, TX 2,051 6,733 8,784 213 1995 03/28/97 (A)
Greensboro, NC 1,639 3,379 5,018 108 1996 03/31/97 (A)
Austin, TX 7,782 16,353 24,135 510 1997 04/01/97 (A)
Woodbridge, VA 15,033 32,516 47,549 863 1996 05/14/97 (A)
Farmington, CT 6,420 13,882 20,302 197 1995 08/28/97 (A)
Orlando, FL 10,692 23,114 33,806 328 1990 08/29/97 (A)
Minnetonka, MN 3,798 8,209 12,007 73 1992 10/08/97 (A)
Bellingham, WA 6,441 13,883 20,324 123 1991 10/17/97 (A)
Piscataway, NJ 4,827 10,433 15,260 75 1989 10/31/97 (A)
Woodridge, IL 5,235 11,316 16,551 - 1985 12/29/97 (A)
-------- -------- -------- -------
Total $199,002 $443,139 $642,141 $54,066
======== ======== ======== =======
Reconciliation 1997 1996 1995
---- ---- ----
Balance at beginning
of period $422,093 $ 381,648 $307,416
Additions during period:
Acquisitions 221,455 30,600 61,831
Improvements, etc. 26,244 9,845 12,401
------- ------ ------
247,699 40,445 74,232
Deductions during period:
Costs of real estate
sold (27,651) - -
Other - - -
------- ------ ------
(27,651) - -
-------- -------- --------
Balance at close of period: $642,141 $422,093 $381,648
======== ======== ========
Accmulated Depreciation
Beginning Balance 41,611 30,063 20,602
Current Year Depreciation 15,341 11,548 9,461
Current Year Disposition (2,886) - -
-------- ------ ------
54,066 41,611 30,063
======== ====== ======
(A) Buildings 25 years, land improvements 15 years.
The Price REIT, Inc.
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1996
(In Thousands)
Costs Capitalized
Initial Cost to the REIT Subsequent to Acquisition
------------------------ -------------------------
Encum- Buildings & Buildings & Carrying
Description brances Land Improvments Improvments Cost
- ----------------- ------- ------------------------ -------------------------
Retail Rental Properties
Alhambra, CA $ - $ 9,949 $ 11,251 $ 284 $ 10
Carmichael, CA - 6,447 13,353 2,592 50
Chula Vista, CA - 11,523 15,377 476 10
North Haven, CT - 7,713 19,887 262 4
Phoenix, AZ - 5,581 13,169 407 7
Corona, CA - 6,950 41,234 2,603 119
Cerritos, CA - 5,854 8,672 149 15
Santa Ana, CA - 8,035 6,315 3,497 55
Copiague, NY - 10,321 14,781 2,707 59
Fairfax, VA - 12,575 26,092 151 5
Whitemarsh, MD - 2,582 8,700 1,497 70
Glendale, AZ - 13,012 14,385 788 23
N. Phoenix, AZ - 3,069 5,196 3,575 256
Houston, TX - 9,036 16,639 1,480 99
La Mirada, CA - 11,672 14,152 70 4
Oxnard, CA - 3,306 7,026 20 -
Mesquite, TX - 4,088 8,562 84 -
Commack, NY - - - 7,075 285
Oklahoma City, OK 11,794 4,340 12,360 101 -
------- ------------------------ -------------------------
Total $11,794 $136,053 $257,151 $ 27,818 $ 1,071
======= ======================== =========================
Gross Amount at which Carried at
December 31, 1996
--------------------------
Bldgs & Accum. Date of Date Depr
Description Land Improv. Total Deprec. Construction Acquired Life
- --------------- -------------------------- ------- -------------- -------- ----
Retail Rental Properties
Alhambra, CA $ 9,949 $ 11,545 $ 21,494 $ 2,587 1987,1989 12/03/91 (A)
Carmichael, CA 6,447 15,995 22,442 3,083 1971,1988-94 12/03/91 (A)
Chula Vista, CA 11,523 15,863 27,386 3,538 1981,1986-90 12/03/91 (A)
North Haven, CT 7,713 20,153 27,866 4,705 1987-1988 12/03/91 (A)
Phoenix, AZ 5,581 13,583 19,164 2,939 1970,1989 12/03/91 (A)
Corona, CA 6,950 43,956 50,906 8,600 1988-1989 04/29/92 (A)
Cerritos, CA 5,854 8,836 14,690 1,640 1974,1987 04/29/92 (A)
Santa Ana, CA 8,035 9,867 17,902 1,246 1983,1995 12/17/92 (A)
Copiague, NY 10,321 17,547 27,868 2,394 1990 08/12/93 (A)
Fairfax, Va 12,575 26,248 38,823 4,367 1993 08/12/93 (A)
Whitemarsh, MD 2,582 10,267 12,849 1,607 1991 08/12/93 (A)
Glendale, AZ 13,012 15,196 28,208 2,346 1988-89 10/01/93 (A)
N. Phoenix, AZ 3,069 9,027 12,096 666 1970,1995 12/21/94 (A)
Houston, TX 9,059 18,195 27,254 756 1985,1993 11/17/95 (A)
La Mirada, CA 11,683 14,215 25,898 636 1955,1990-93 12/27/95 (A)
Oxnard, CA 3,313 7,039 10,352 281 1982,1990 12/29/95 (A)
Mesquite, TX 4,115 8,619 12,734 158 1992 07/03/96 (A)
Commack, NY - 7,360 7,360 - In Progress(B) 10/02/96 (A)
Oklahoma City,OK 4,367 12,434 16,801 62 1994 11/19/96 (A)
-------- -------- -------- -------
Total $136,148 $285,945 $422,093 $41,611
======== ======== ======== =======
Reconciliation
Balance at beginning
Balance at beginning of period $ 381,648
Additions during period:
Acquisitions 30,600
Improvements, etc. 9,845
---------
40,445
Deductions during period:
Costs of real estate sold -
Other -
---------
-
-----------
Balance at close of period: $ 422,093
===========
(A) Buildings 25 years, land improvements 15 years.
=============================================================================
EXHIBIT 10.7
SECOND AMENDMENT TO STOCK OPTION AGREEMENT
THIS SECOND AMENDMENT TO STOCK OPTION AGREEMENT, dated as of December 15,
1997, is made and entered into between The Price REIT, Inc., a Maryland
corporation (the "Company"), and George M. Jezek ("Mr. Jezek").
Recitals
A.The Company and Mr. Jezek are parties to that certain Stock Option
Agreement, dated as of December 1, 1992, as amended by the First Amendment to
Stock Option Agreement dated as of October 29, 1993 (the "Option Agreement"),
under which the Company granted to Mr. Jezek options to acquire shares of the
Company's Common Stock, par value $.01 per share.
B.The Company and Mr. Jezek desire to amend the provisions of the Option
Agreement as set forth herein.
Terms & Conditions
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Mr. Jezek agree as
follows:
1.Section 2 of the Option Agreement is amended in its entirety to read as
follows:
"2. Termination. Subject to Paragraph 4, in the event of Mr. Jezek's
cessation of employment for any reason and for any cause all Options not
yet exercisable way be exercised in accordance with their terms for a
period of nine (9) months after creation of such employment, but in no
event beyond the Option Period. Notwithstanding the provisions of the
preceding sentence, any exercise of Options after such cessation of
employment may be to the extent of the full number of shares Mr. Jezek was
entitled to purchase under the Options on the date of such cessation of
employment, plus a portion of the additional shares, if any, he would have
been entitled to purchase on the next Vesting Date following such cessation
of employment, such portion to be determined by multiplying such additional
number of shares by a fraction, the numerator of which shall be the number
of days from the Vesting Date preceding such cessation of employment to the
date of such cessation of employment and the denominator of which shall be
365. Such portion shall be rounded, if necessary, to the nearest whole
share."
2.Section 3 of the Option Agreement is amended in its entirety to read as
follows:
"3.Manner of Exercise. The exercise price of each Option to purchase
a share of Common Stock shall be $29.75 per share. The Options shall be
exercised by giving written notice to the Company and
a.Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
b.With the consent of the Board,
(1)shares of the Company's Common Stock, valued on the date of
exercise, owned by Mr. Jezek, duly endorsed for transfer to the
Company; or
(2)an election that the Company withhold, in lieu of payment of
the exercise price in cash or by check, that number of shares of
Common Stock otherwise issuable to Mr. Jezek upon exercise of the
Options equal to the exercise price per share of Common Stock
multiplied by the total number of Options being exercised, divided by
the fair market value per share of the Common Stock on the date of
exercise, with the balance of the shares of Common Stock covered by
the Options exercised issued to Mr. Jezek; or
c.With the consent of the Board, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Internal Revenue Code of 1986, as amended,
or successor provision) and payable upon such terms as may be prescribed by
the Board. The Board may also prescribe the form of such note and the
security to be given for such note. The Option may not be exercised,
however, by delivery of a promissory note or by a loan from the Company
when or where such loan or other extension of credit is prohibited by law;
or
d.With the consent of the Board, any combination of the consideration
provided in the foregoing subparagraphs a., b. and c."
3.Section 4, paragraph d. of the Option Agreement is amended in its
entirety to read as follows:
"d.In the event of a transaction or event described in Paragraph 4.a.
above or any Corporate Transaction (defined below), the Board, in its sole
discretion and on such terms and conditions as it deems appropriate, may
take any one or more of the following actions whenever the Board determines
that such action is appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available with
respect to the Options:
(i)provide for either the purchase of the Options for an amount
of cash equal to the amount that could have been attained upon the
exercise of the Options or realization of Mr. Jezek's rights had the
Options been currently exercisable as the replacement of the Options
or the replacement of the Options with other rights or property
selected by the Board in its sole discretion; or
(ii)provide that upon such a Corporate Transaction, the Options
shall be assumed by the successor or surviving corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar
options covering the stock of the successor or surviving corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kind of shares and prices.
For purposes of this Paragraph 4, a Corporate Transaction is defined as (a) a
merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which
the Company is incorporated, form a holding company or effect a similar
reorganization as to form whereupon this Agreement and all Options are assumed
by the successor entity or (b) the sale, transfer, exchange or other disposition
of all or substantially all of the assets of the Company, in complete
liquidation or dissolution of the Company in a transaction not covered by the
exceptions to the foregoing clause (a)."
4.Section 4, paragraph e. of the Option Agreement is amended in its
entirety to read as follows:
"e.In the event of any Corporate Transaction or the acquisition by
another corporation or person of eighty percent (80%) or more of the
Company's then outstanding voting stock, or the liquidation or dissolution
of the Company, prior to the effective date of such event the Options shall
be exercisable as to all the shares covered hereby, notwithstanding that
the Options may not yet have become fully exercisable under Section 1."
5.Paragraph c. of Section 6 of the Option Agreement is deleted in its
entirety.
6.In all other respects, the terms of the Option Agreement are hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Stock Option Agreement as of the date first written above.
THE PRICE REIT, INC., a Maryland corporation
By: /s/ Joseph K. Kornwasser
Joseph K. Kornwasser
Chief Executive Officer
and President
/s/ George M. Jezek
George M. Jezek
===============================================================================
EXHIBIT 10.11
STOCK OPTION AGREEMENT
This Stock Option Agreement is by and between The Price REIT, Inc., a
Maryland corporation (the "Company"), and Jerald Friedman and is dated as of
January 29, 1996 (the "Date of Grant").
WHEREAS, Mr. Friedman is the Senior Executive Vice President and Chief
Operating Officer of the Company;
WHEREAS, the Board of Directors of the Company has determined it to be in
the best interests of the Company to grant certain stock options to Mr. Friedman
as part of his compensation arrangement with the Company;
NOW, THEREFORE, the parties hereto agree as to the following terms and
conditions:
1.The Company hereby grants to Mr. Friedman options (the "Options") to
purchase 30,500 shares of Common Stock. The Options may be exercised by
Mr. Friedman as to (a) 40% of the shares of Common Stock covered by the Options
on December 15, 1997, and (b) 20% of the shares of the Common Stock covered by
the Options on each of the next three anniversary dates of the Date of Grant
following December 15, 1997 (the date on which such options may be exercised is
referred to as the "Vesting Date"). The options may be exercised by
Mr. Friedman at any time through the period ending on the tenth anniversary of
each Vesting Date (the "Option Period"). The Options shall not be exercisable
with respect to fractional shares.
2.Termination. Subject to Paragraph 4, in the event of Mr. Friedman's
cessation of employment for any reason and for any cause all Options not yet
exercisable may be exercised in accordance with their terms for a period of nine
(9) months after cessation of such employment, but in no event beyond the Option
Period. Notwithstanding the provisions of the preceding sentence, any exercise
of Options after such cessation of employment may be to the extent of the full
number of shares Mr. Friedman was entitled to purchase under the Options on the
date of such cessation of employment, plus a portion of the additional shares,
if any, he would have been entitled to purchase on the next anniversary date of
the Date of Grant of the Options following such cessation of employment, such
portion to be determined by multiplying such additional number of shares by a
fraction, the numerator of which shall be the number of days from the
anniversary date of the Date of Grant preceding such cessation of employment to
the date of such cessation of employment and the denominator of which shall be
365. Such portion shall be rounded, if necessary, to the nearest whole share.
3.Manner of Exercise. The exercise price of each Option to purchase a
share of Common Stock shall be $29.50 per share. The Options shall be exercised
by giving written notice to the Company and
a. Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
b.With the consent of the Board,
(1)shares of the Company's Common Stock, valued on the date of
exercise, owned by Mr. Friedman, duly endorsed for transfer to the Company;
or
(2)an election that the Company withhold, in lieu of payment of the
exercise price in cash or by check, that number of shares of Common Stock
otherwise issuable to Mr. Friedman upon exercise of the Options equal to
the exercise price per share of Common Stock multiplied by the total number
of Options being exercised, divided by the fair market value per share of
the Common Stock on the date of exercise, with the balance of the shares of
Common Stock covered by the Options exercised issued to Mr. Friedman; or
c.With the consent of the Board, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Internal Revenue Code of 1986, as amended, or
successor provision) and payable upon such terms as may be prescribed by the
Board. The Board may also prescribe the form of such note and the security to
be given for such note. The Option may not be exercised, however, by delivery
of a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law; or
d.With the consent of the Board, any combination of the consideration
provided in the foregoing subparagraphs a., b. and c.
4.Adjustments. The number of shares subject to the Options granted
hereunder shall be adjusted as follows:
a.In the event that the Company's outstanding Common Stock is changed
by any stock dividend, stock split or combination of shares, the number of
shares subject to the Options granted hereunder shall be proportionately
adjusted;
b.Except as provided in Paragraph 4.d. below, in the event of any
merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable
basis as determined by the Board, for each share of common stock then
subject to the Options the number and kind of shares of stock or other
securities to which the holders of common stock of the Company shall be
entitled pursuant to the transaction;
c.In the event of any other relevant change in the capitalization of
the Company, the Board shall provide for an equitable adjustment in the
number of shares of common stock then subject to the Options. In the event
of any such adjustment, the exercise price per share shall be
proportionately adjusted;
d.In the event of a transaction or event described in Paragraph 4.a.
above or any Corporate Transaction (defined below), the Board, in its sole
discretion and on such terms and conditions as it deems appropriate, may
take any one or more of the following actions whenever the Board determines
that such action is appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available with
respect to the Options:
(i) provide for either the purchase of the Options for an amount
of cash equal to the amount that could have been attained upon the
exercise of the Options or realization of Mr. Friedman's rights had
the Options been currently exercisable as the replacement of the
Options or the replacement of the Options with other rights or
property selected by the Board in its sole discretion; or
(ii) provide that upon such a Corporate Transaction, the Options
shall be assumed by the successor or surviving corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar
options covering the stock of the successor or surviving corporation,
or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kind of shares and prices.
For purposes of this Paragraph 4, a Corporate Transaction is defined as (a) a
merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which
the Company is incorporated, form a holding company or effect a similar
reorganization as to form whereupon this Agreement and all Options are assumed
by the successor entity or (b) the sale, transfer, exchange or other disposition
of all or substantially all of the assets of the Company, in complete
liquidation or dissolution of the Company in a transaction not covered by the
exceptions to the foregoing clause (a).
e.In the event of any Corporate Transaction or the acquisition by
another corporation or person of eighty percent (80%) or more of the
Company's then outstanding voting stock, or the liquidation or dissolution
of the Company, prior to the effective date of such event the Options shall
be exercisable as to all the shares covered hereby, notwithstanding that
the Options may not yet have become fully exercisable under Section 1.
5.Nontransferability of Options. The Options shall not be transferable
except to the executor or administrator of Mr. Friedman's estate or to
Mr. Friedman's heirs or legatees or to his personal representative if he is
permanently and totally disabled, and shall be exercisable during Mr. Friedman's
lifetime only by Mr. Friedman or his personal representative if he is
permanently and totally disabled. The Options may, however, be surrendered to
the Company for cancellation for such consideration and upon such terms as may
be mutually agreed upon by the Company and the holder of such Options.
6.Other Provisions
a.The holder of the Options shall not be entitled to any rights of a
shareholder of the Company with respect to any shares subject to the option
until such shares have been paid for in full and issued to the holder of the
Options.
b.Nothing in this Agreement shall be deemed to interfere with or limit
in any way the right of the Company to terminate Mr. Friedman's employment at
any time, nor confer upon Mr. Friedman any right to continue in the employ of
the Company.
The Price REIT, Inc.
By: /s/ Joseph K. Kornwasser
Joseph K. Kornwasser
President and Chief Executive Officer
By: /s/ George M. Jezek
George M. Jezek
Secretary
/s/ Jerald Friedman
Jerald Friedman
Dated: December 15, 1997
===============================================================================
EXHIBIT 10.12
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of January 29, 1996 (the "Date of Grant"), is made
by and between The Price REIT, Inc., a Maryland corporation hereinafter referred
to as "Company," and Jerald Friedman, an employee of the Company or a Subsidiary
of the Company, hereinafter referred to as "Employee":
WHEREAS, the Company wishes to afford Employee the opportunity to purchase
shares of its Common Stock, $0.01 par value (the "Common Stock"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Incentive Stock Option provided for herein to the
Employee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue the Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3Committee
"Committee" shall mean the Stock Option Committee of the Board, appointed
as provided in the Plan.
Section 1.4Company
"Company" shall mean The Price REIT, Inc. In addition, "Company" shall
mean any corporation assuming, or issuing a new incentive stock option in
substitution for, the Option in a transaction to which Section 424(a) of the
Code applies.
Section 1.5Director
"Director" shall mean a member of the Board.
Section 1.6Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.7Officer
"Officer" shall mean an officer of the Company as defined in Rule l6a-l(f)
under the Exchange Act, as such Rule may be amended in the future.
Section 1.8Option
"Option" shall mean the incentive stock option to purchase Common Stock of
the Company granted under this Agreement.
Section 1.9Plan
"Plan" shall mean the 1993 Stock Option Plan of The Price REIT, Inc.
Section 1.10Rule 16b-3
"Rule l6b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1.11Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.12Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.13Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.
Section 1.14Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
a termination by resignation, discharge, death or retirement, but excluding any
termination where there is a simultaneous reemployment by the Company or a
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.
ARTICLE II
GRANT OF OPTION
Section 2.1Grant of Option
In consideration of the Employee's agreement to remain in the employ of the
Company or its Subsidiaries and for other good and valuable consideration, the
Company irrevocably grants to the Employee the option to purchase any part or
all of an aggregate of 10,500 shares of its Common Stock upon the terms and
conditions set forth in this Agreement.
Section 2.2Purchase Price
The purchase price of the shares of stock covered by the Option shall be
$29.50 per share without commission or other charge.
Section 2.3Consideration to Company
In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe for so long as Employee remains an employee of the Company or
a Subsidiary of the Company. Nothing in this Agreement or in the Plan shall
confer upon the Employee any right to continue in the employ of the Company or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Employee at any time for any reason whatsoever, with or without cause.
Section 2.4Adjustments in Option
In the event that the outstanding shares of the stock subject to the Option
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Employee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the unexercised portion of the Option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the Option price per share; provided, however, that each such adjustment shall
be made in such manner as not to constitute a "modification" within the meaning
of Section 424(h)(3) of the Code. Any such adjustment made by the Committee
shall be final and binding upon the Employee, the Company and all other
interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1Commencement of Exercisability
(a)The Option shall become exercisable as provided in Schedule "A" attached
to this Agreement and hereby incorporated by reference.
(b)No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 3.2Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3Expiration of Option
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a)The expiration of ten (10) years from the Date of Grant; or
(b)If the Employee owned (within the meaning of Section 424(d) of the
Code), on the Date of Grant, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, any Subsidiary or any
parent corporation, the expiration of five (5) years from the Date of Grant; or
(c)The time of the Employee's Termination of Employment unless such
Termination of Employment results from his death, his retirement, his disability
(within the meaning of Section 22(c)(3) of the Code) or his being discharged not
for good cause; or
(d)The expiration of nine (9) months from the date of the Employee's
Termination of Employment by reason of his retirement or his being discharged
not for good cause, unless the Employee dies within said nine-month period; or
(e)The expiration of one (1) year from the date of the Employee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code); or
(f)The expiration of one (1) year from the date of the Employee's death; or
(g)The effective date of either the merger or consolidation of the Company
with or into another corporation, or the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, unless the Committee waives this provision in
connection with such transaction. At least ten (10) days prior to the effective
date of such merger, consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Employee notice of such event if the Option has then
neither been fully exercised nor become unexercisable under this Section 3.3.
Section 3.4Merger, Consolidation, Acquisition or Dissolution of the Company
(a)In the event of a transaction or event described in Section 2.4 or any
Corporate Transaction (defined below), the Committee, in its sole discretion and
on such terms and conditions as it deems appropriate, may take any one or more
of the following actions by resolution, adopted prior to such event and
incorporated in the notice referred to in Section 3.3(g), whenever the Committee
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
with respect to the Option:
(i)provide for either the purchase of the Option for an amount of cash
equal to the amount that could have been attained upon the exercise of the
Option or realization of Employee's rights had the Option been currently
exercisable as the replacement of the Option or the replacement of the
Option with other rights or property selected by the Committee in its sole
discretion; or
(ii)provide that upon such a Corporate Transaction, the Option shall
be assumed by the successor or surviving corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options covering
the stock of the successor or surviving corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices.
For purposes of this Section 3.4, a Corporate Transaction is defined as (a) a
merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which
the Company is incorporated, form a holding company or effect a similar
reorganization as to form whereupon this Agreement and the Option are assumed by
the successor entity or (b) the sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, in complete liquidation
or dissolution of the Company in a transaction not covered by the exceptions to
the foregoing clause (a).
(b)In the event of any Corporate Transaction or the acquisition by another
corporation or person of eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company,
prior to the effective date of such event this Option shall be exercisable as to
all the shares covered hereby, notwithstanding that this Option may not yet have
become fully exercisable under Section 3.1(a).
Section 3.5Special Tax Consequences
The Employee acknowledges that, to the extent that the aggregate fair
market value of stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code), including the Option, are exercisable for the first time by the
Employee during any calendar year (under the Plan and all other incentive stock
option plans of the Company, any Subsidiary and any parent corporation) exceeds
$100,000, such options shall be treated as not qualifying under Section 422 of
the Code but rather shall be taxed as non-qualified options. The Employee
further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted.
For purposes of these rules, the fair market value of stock shall be determined
as the time the option with respect to such stock is granted.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1Person Eligible to Exercise
During the lifetime of the Employee, only the Employee may exercise the
Option or any portion thereof. After the death of the Employee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the Employee's will or under the then
applicable laws of descent and distribution.
Section 4.2Partial Exercise
Any exercisable Portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than One
Thousand (1,000) shares (or the minimum installment set forth in Section 3.1, if
a smaller number of shares) and shall be for whole shares only.
Section 4.3Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3;
(a)Notice in writing signed by the Employee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee; and
(b)(1) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
(2)With the consent of the Committee, but subject to the timing
requirements of Section 4.4,
(A)shares of the Company's Common Stock, valued on the date of
exercise, owned by the Employee, duly endorsed for transfer to the Company;
or
(B)an election that the Company withhold, in lieu of payment of the
exercise price in cash or by check, that number of shares of Common Stock
otherwise issuable to Employee upon exercise of the Options equal to the
exercise price per share of Common Stock multiplied by the total number of
Options being exercised, divided by the fair market value (as determined
under Section 4.2(b) of the Plan) per share of the Common Stock on the date
of exercise, with the balance of the shares of Common Stock covered by the
Options exercised to be issued to Employee; or
(3)With the consent of the Committee, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable upon
such terms as may be prescribed by the Committee. The Committee may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(4)With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (1), (2) and (3); and
(c)A bona fide written representation and agreement, in a form satisfactory
to the Committee, signed by the Employee or other person then entitled to
exercise such Option or portion, stating that the shares of stock are being
acquired for his own account, for investment and without any present intention
of distributing or reselling said shares or any of them except as may be
permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of shares by such person is contrary to the
representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act and such registration is then
effective in respect of such shares;
(d)Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Committee, but subject to
the timing requirements of Section 4.4, (i) shares of the Company's Common Stock
owned by the Employee duly endorsed for transfer or (ii) shares of the Company's
Common Stock issuable to the Employee upon exercise of the Option, valued in
accordance with Section 4.2(b) of the Plan at the date of Option exercise, may
be used to make all or part of such payment; and
(e)In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4Certain Timing Requirements
Shares of the Company's Common Stock, whether or not issuable to the
Employee upon exercise of the Option, may be used to satisfy the Option price or
the tax withholding consequences of such exercise only (i) during the period
beginning on the third (3rd) business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth (12th) business day following such date or (ii) pursuant
to an irrevocable written election by the Employee to use shares of the
Company's Common Stock to pay all or part of the Option price or the withholding
taxes (subject to the approval of the Committee) made at least six (6) months
prior to the payment of such Option price or withholding taxes.
Section 4.5Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a)The admission of such shares to listing on all stock exchanges on which
such class of stock is there listed; and
(b)The completion of any registration or other qualification of such shares
under any state or federal law or under rulings or regulations of Securities and
Exchange Commission or of any other governmental body, which the Committee
shall, in its absolute discretion, deem necessary or advisable; and
(c)The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d)The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e)The lapse of such reasonable period of time, following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.6No Rights as Shareholder
The holder of the Option shall not be, nor have any of the rights or
privileges of a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. The Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement.
Section 5.2Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Employee or the
Employee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy); and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3Shares to Be Reserved
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Employee shall be addressed to the Employee at the address given
beneath his signature hereto. By a notice given pursuant to this Section 5.4,
either party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Employee shall, if the
Employee is then deceased, be given to the Employee's personal representative if
such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6Notification of Disposition
The Employee shall give prompt notice to the Company of any disposition or
other transfer or any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two (2) years from the date of
granting the Option with respect to such shares or (b) within one (1) year after
the transfer of such shares to him. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in case, other property,
assumption of indebtedness or other consideration, by the Employee in such
disposition or other transfer.
Section 5.7Construction
This Agreement has been negotiated and executed in, and shall be
administered, interpreted and enforced under the laws of the State of
California.
Section 5.8Conformity to Securities Laws
The Employee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule l6b-3. Notwithstanding
anything, herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the 15th day of December, 1997.
THE PRICE REIT, INC.
By /s/ Joseph K. Kornwasser
Joseph K. Kornwasser
President
By /s/ George M. Jezek
George M. Jezek
Secretary
EMPLOYEE
/s/ Jerald Friedman
Jerald Friedman
603 N. Walden Drive
Beverly Hills, California 90210
Address
Employee's Taxpayer
Identification Number:
###-##-####
SCHEDULE "A"
Option Exercisability Schedule
The Option shall be exercisable in installments as follows: 1/5 upon Grant,
and 1/5 beginning on each of the next four succeeding anniversaries of such
Grant date.
===============================================================================
EXHIBIT 10.13
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated February 14, 1994, is made by and between The Price
REIT, Inc., a Maryland corporation hereinafter referred to as "Company," and
Lawrence Kronenberg, an employee of the Company or a Subsidiary of the Company,
hereinafter referred to as "Employee":
WHEREAS, the Company wishes to afford the Employee the opportunity to
purchase shares of its $0.01 par value Series B Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Incentive Stock Option provided for herein to the
Employee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue the Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1 - Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Stock Option Committee of the Board, appointed
as provided in the Plan.
Section 1.4 - Company
"Company" shall mean The Price REIT, Inc. In addition, "Company" shall mean
any corporation assuming, or issuing a new incentive stock option in
substitution for, the Option in a transaction to which Section 424(a) of the
Code applies.
Section 1.5 - Director
"Director" shall mean a member of the Board.
Section 1.6 - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.7 - Officer
"Officer" shall mean an officer of the Company, as defined in Rule 16a-l(f)
under the Exchange Act, as such Rule may be amended in the future.
Section 1.8 - Option
"Option" shall mean the incentive stock option to purchase Series B Common
Stock of the Company granted under this Agreement.
Section 1.9 - Plan
"Plan" shall mean the 1993 Stock Option Plan of The Price REIT, Inc.
Section 1.10 - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1.11 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.12 - Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.13 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.
Section 1.14 - Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
a termination by resignation, discharge, death or retirement, but excluding any
termination where there is a simultaneous reemployment by the Company or a,
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.
ARTICLE H
GRANT OF OPTION
Section 2.1 - Grant of Option
In consideration of the Employee's agreement to remain in the employ of the
Company or its Subsidiaries and for other good and valuable consideration, on
the date hereof the Company irrevocably grants to the Employee the option to
purchase any part or all of an aggregate of 20,000 shares of its $0.01 par value
Series B Common Stock upon the terms and conditions set forth in this Agreement.
Section 2.2 - Purchase Price
The purchase price of the shares of stock covered by the Option shall be $
33.50 per share without commission or other charge.
Section 2.3 - Consideration to Company
In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted. Nothing in this Agreement or in the Plan shall confer upon
the Employee any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Employee at any time for any reason whatsoever, with or without cause.
Section 2.4 - Adjustments in Option
In the event that the outstanding shares of the stock subject to the Option
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Employee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the unexercised portion of the Option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the Option price per share; provided, however, that each such adjustment shall
be made in such manner as not to constitute a "modification" within the meaning
of Section 424(h)(3) of the Code. Any such adjustment made by the Committee
shall be final and binding upon the Employee, the Company and all other
interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
(a) The Option shall become exercisable as provided in Schedule "A"
attached to this Agreement and hereby incorporated by reference.
(b) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 3.2 - Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3. 1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 - Expiration of Option
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of ten (10) years from the date the Option was granted;
or
(b) If the Employee owned (within the meaning of Section 424(d) of the
Code), at the time the Option was granted, more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company, any
Subsidiary or any parent corporation, the expiration of five (5) years from the
date the Option was granted; or
(c) The time of the Employee's Termination of Employment unless such
Termination of Employment results from his death, his retirement, his disability
(within the meaning of Section 22(e)(3) of the Code) or his being discharged not
for good cause; or
(d) The expiration of three (3) months from the date of the Employee's
Termination of Employment by reason of his retirement or his being discharged
not for good cause, unless the Employee dies within said three-month period; or
(e) The expiration of one (1) year from the date of the Employee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code); or
(f) The expiration Of one (1) year from the date of the Employee's death;
or
(g) The effective date of either the merger or consolidation of the Company
with or into another corporation, or the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, unless the Committee waives this provision in
connection with such transaction. At least ten (10) days prior to the effective
date of such merger, consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Employee notice of such event if the Option has then
neither been fully exercised nor become unexercisable under this Section 3.3.
Section 3.4 - Merger, Consolidation, Acquisition or Dissolution of the Company
In the event of the merger or consolidation of the Company with or into
another corporation, or the acquisition by another corporation or person of all
or substantially all of the Company's assets or eighty percent (80%) or more of
the Company's then outstanding voting stock, or the liquidation or dissolution
of the Company, the Committee may, in its absolute discretion and upon such
terms and conditions as it deems appropriate, provide by resolution, adopted
prior to such event and incorporated in the notice referred to in Section
3.3(g), that at some time prior to the effective date of such event this Option
shall be exercisable as to all the shares covered hereby, notwithstanding that
this Option may not yet have become fully exercisable under Section 3. 1 (a).
Section 3.5 - Special Tax Consequences
The Employee acknowledges that, to the extent that the aggregate fair
market value of stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code), including the Option, are exercisable for the first time by the
Employee during any calendar year (under the Plan and all other incentive stock
option plans of the Company, any Subsidiary and any parent corporation) exceeds
$100,000, such options shall be treated as not qualifying under Section 422 of
the Code but rather shall be taxed as non-qualified options. The Employee
further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted.
For purposes of these rules, the fair market value of stock shall be determined
as of the time the option with respect to such stock is granted.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Employee, only he may exercise the Option or any
portion thereof. After the death of the Employee, any exercisable portion of the
Option may, prior to the time when the Option becomes unexercisable under
Section 3.3, be exercised by his personal representative or by any person
empowered to do so under the Employee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than One
Thousand (1,000) shares (or the minimum installment set forth in Section 3. 1,
if a smaller number of shares) and shall be for whole shares only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3:
(a) Notice in writing signed by the Employee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee; and
(b) (1) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
(2) With the consent of the Committee, but subject to the timing
requirements of Section 4.4, (A) shares of the Company's Series B Common Stock
owned by the Employee duly endorsed for transfer to the Company or (B) shares of
the Company's Series B Common Stock issuable to the Employee upon exercise of
the Option, with a fair market value (as determined under Section 4.2(b) of the
Plan) on the date of Option exercise equal to the aggregate Option price of the
shares with respect to which such Option or portion is thereby exercised; or
(3) With the consent of the Committee, a full recourse promissory note
bearing interest (at no less d= such rate as shall then preclude the imputation
of interest under the Code or successor provision) and payable upon such terms
as may be prescribed by the Committee. The Committee may also prescribe the form
of such note and the security to be given for such note. The Option may not be
exercised, however, by delivery of a promissory note or by a loan from the
Company when or where such loan or other extension of credit is prohibited by
law; or
(4) With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (1). (2) and (3); and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares;
(d) Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Committee, but subject to
the timing requirements of Section 4.4, (i) shares of the Company's Series B
Common Stock owned by the Employee duly endorsed for transfer or (ii) shares of
the Company's Series B Common Stock issuable to the Employee upon exercise of
the Option, valued in accordance with Section 4.2(b) of the Plan at the date of
Option exercise, may be used to make all or part of such payment; and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 - Certain Timing Requirements
Shares of the Company's Series B Common Stock, whether or not issuable to the
Employee upon exercise of the Option, may be used to satisfy the Option price or
the tax withholding consequences of such exercis ' e only (i) during the period
beginning on the third (3rd) business day following the date of
release of the quarterly or annual summary statement of sales and earnings of
the Company and ending on the twelfth (12th) business day following such date or
(ii) pursuant to an irrevocable written election by the Employee to use shares
of the Company's Series B Connnon Stock to pay all or part of the Option price
or the withholding taxes (subject to the approval of the Committee) made at
least six (6) months prior to the payment of such Option price or withholding
taxes.
Section 4.5 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.6 - No Rights as Shareholder
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. The Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement.
Section 5.2 - Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Employee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
Shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Employee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Employee shall, if the Employee is
then deceased, be given to the Employee's personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. Any notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6 - Shareholder Approval
The Plan will be submitted for approval by the Company's shareholders
within twelve (12) months after the date the Plan was initially adopted by the
Board. However, this Option shall be exercisable without regard to such
shareholder approval; provided, however, that the Employee acknowledges that, if
such approval is not obtained within twelve (12) months after the date the Plan
was adopted by the Board, this Option shall be taxed as a non-qualified option
and not as an incentive stock option pursuant to Section 422 of the Code.
Section 5.7.- Notification of Disposition
The Employee shall give prompt notice to the Company of any disposition or
other transfer of any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two (2) years from the date of
granting the Option with respect to such shares or (b) within one (1) year after
the transfer of such shares to him. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by the Employee in such
disposition or other transfer.
Section 5.8 - Construction
This Agreement has been negotiated and executed in, and shall be
administered, interpreted and enforced under the laws of, the State of
California.
Section 5.9 - Conformity to Securities Laws
The Employee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the Plan
and this Agreement shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
THE PRICE IT, INC.
By /JOSEPH K. KORNWASSER/
----------------------
President
By /GEORGE M. JEZEK/
-----------------
Secretary
/LAWRENCE M. KRONENBERG/
- ------------------------
Employee
12548 Woodbine Street
Los Angeles, California 90066
- ------------------------------
Address
Employee's Taxpayer
Identification Number:
562-84-22-0
- -------------
SCHEDULE "A"
Option Exercisability Schedule
The Option shall be exercisable in installments as follows:
Subject to Section 5.6 of the Agreement, the Option shall be
exercisable in installments as follows: 1/5 upon grant; and 115 beginning on
each of the next four succeeding anniversaries of such grant date.
===============================================================================
EXHIBIT 10.14
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of January 29, 1996, is made by and between The
Price REIT, Inc., a Maryland corporation hereinafter referred to as "Company,"
and , an employee of the Company or a Subsidiary of the Company,
hereinafter referred to as "Employee":
WHEREAS, the Company wishes to afford the Employee the opportunity to
purchase shares of its Common Stock, $0.01 par value (the "Common Stock"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Incentive Stock Option provided for herein to the
Employee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue the Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1 Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2 Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 Committee
"Committee" shall mean the Stock Option Committee of the Board, appointed
as provided in the Plan.
Section 1.4 Company
"Company" shall mean The Price REIT. Inc. In addition. "Company" shall mean
any corporation assuming, or issuing a new incentive stock option in
substitution for the Option in a transaction to which Section 424(a) of the Code
applies.
Section 1.5 Director
"Director" shall mean a member of the Board.
Section 1.6 Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.7 Officer
"Officer" shall mean an officer of the Company, as defined in Rule 16a-1(f)
under the Exchange Act, as such Rule may be amended in the future.
Section 1.8 Option
"Option" shall mean the incentive stock option to purchase Common Stock of
the Company granted under this Agreement.
Section 1.9 Plan
"Plan" shall mean the 1993 Stock Option Plan of The Price REIT, Inc.
Section 1.10 Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1. 11 Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.12 Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.13 Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of tile total combined voting power of all classes of
stock in one (1) of the other corporations in such chain.
Section 1.14 Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
a termination by resignation, discharge, death or retirement, but excluding any
termination where there is a simultaneous reemployment by the Company or a
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.
ARTICLE 11
GRANT OF OPTION
Section 2.1 Grant of Option
In consideration of the Employee's agreement to remain in the employ of
the Company or its Subsidiaries and for other good and valuable consideration,
on the date hereof the Company irrevocably grants to the Employee the option to
purchase any part or all of an aggregate of shares of its Common
Stock upon the terms and conditions set forth in this Agreement.
Section 2.2 Purchase Price
The purchase price of the shares of stock covered by the Option shall be
$29.50 per share without commission or other charge.
Section 2.3 Consideration to Company
In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted. Nothing in this Agreement or in the Plan shall confer upon
the Employee any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Employee at any time for any reason whatsoever, with or without cause.
Section 2.4 Adjustments in Option
In the event that the outstanding shares of the stock subject to the Option
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Employee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the unexercised portion of the Option
(except for an), change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the Option price per share; provided, however, that each such adjustment shall
be made in such manner as not to constitute a "modification" within the meaning
of Section 424(h)(3)) of the Code. Any such adjustment made by the Committee
shall be final and binding upon the Employee, the Company and all other
interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 Commencement of Exercisability
(a) The Option shall become exercisable as provided in Schedule "A"
attached to this Agreement and hereby incorporated by reference.
(b) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 3.2 Duration of Exercisabilitv
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3 Expiration of Option
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a)The expiration of ten (10) years from the date the Option was granted: or
(b) If the Employee owned (within the meaning of Section 424(d) of the
Code), at the time the Option was granted, more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company. any
Subsidiary or any parent corporation, the expiration of five (5) years from the
date the Option was granted; or
(c) The time of the Employee's Termination of Employment unless such
Termination of Employment results from his death, his retirement, his disability
(within the meaning of Section 22(e)(3) of the Code) or his being discharged not
for good cause; or
(d) The expiration of three (3) months from the date of the Employee's
Termination of Employment by reason of his retirement or his being discharged
not for good cause, unless the Employee dies within said three-month period; or
(e) The expiration of one (1) year from the date of the Employee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code); or
(f) The expiration of one (1) year from the date of the Employee's death;
or
(g) The effective date of either the merger or consolidation of the
Company with or into another corporation, or the acquisition by another
corporation or person of all or substantially all of the Company's assets or
eighty percent (80%) or more of the Company's then outstanding voting stock, or
the liquidation or dissolution of the Company, unless the Committee waives this
provision in connection with such transaction. At least ten (10) days prior to
the effective date of such merger, consolidation, acquisition, liquidation or
dissolution, the Committee shall give the Employee notice of such event if the
Option has then neither been fully exercised nor become unexercisable under this
Section 3.3.
Section 3.4 Merger, Consolidation, Acquisition or Dissolution of the Company
In the event of the merger or consolidation of the Company with or into another
corporation, or the acquisition by another corporation or person of all or
substantially all of the Company's assets or eighty percent (80%) or more of the
Company's then outstanding voting stock, or the liquidation or dissolution of
the Company, the Committee may, in its absolute discretion and upon such terms
and conditions as it deems appropriate, provide by resolution, adopted prior to
such event and incorporated in the notice referred to in Section 3.3 (g), that
at some time prior to the effective date of such event this Option shall be
exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a).
Section 3.5 Special Tax Consequences
The Employee acknowledges that, to the extent that the aggregate fair
market value of stock with respect to which "incentive stock options" (within
the meaning, of Section 422 of the Code, but without regard to Section 422(d) of
the Code), including the Option, are exercisable for the first time by the
Employee during any calendar year (under the Plan and all other incentive stock
option plans of the Company, any Subsidiary and any parent corporation) exceeds
$100,000, such options shall be treated as not qualifying Under Section 422 of
the Code but rather shall be taxed as non-qualified options. The Employee
further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted.
For purposes of these rules, the fair market value of stock shall be determined
as of the time the option with respect to such stock is granted.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 Person Eligible to Exercise
During the lifetime of the Employee. only the Employee may exercise the
Option or any portion thereof. After the death of the Employee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the Employee's will or under the then
applicable laws of descent and distribution.
Section 4.2 Partial Exercise
Any exercisable Portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
provided, however, that each partial exercise shall be for not less than One
Thousand (1,000) shares (or the minimum installment set forth in Section 1. if a
smaller number of shares) and shall be for whole shares only.
Section 4.3 Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised solely bN
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3):
(a) Notice in writing signed by the Employee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised such notice complying with all applicable rules established
by the Committee; and
(b) (1) Full payment (in cash or by check) for the shares with res which
such Option or portion is exercised: or
(2) With the consent of the Committee, but subject to the timing
requirements of Section 4.4. (A) shares of the Company's Common Stock owned by
the Employee duly endorsed for transfer to the Company or (B) shares of the
Company's Common Stock issuable to the Employee upon exercise of the Option,
with a fair market value (as determined under Section 4.2(b) of the Plan) on the
date of Option exercise equal to the aggregate Option price of the shares with
respect such Option or portion is thereby exercised; or
(3) With the consent of the Committee, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable upon
such terms as may be prescribed by the Committee. The Committee may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(4) With the consent of the Committee, any combination of provided in
the foregoing subparagraphs (1), (2) and (3); and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company
IfLam sale or distribution of shares by such person is contrary to the
representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
tile effect that any subsequent transfer of shares acquired on all Option
exercise does not violate the Securities Act, and may issue stop-transfer orders
covering such shares. Share certificates evidencing stock issued on exercise of
this Option shall bear all appropriate legend referring to the provisions of
this subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares;
(d) Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Committee, but subject to
tile timing requirements of Section 4.4, (i) shares of the Company's Common
Stock owned by the Employee duly endorsed for transfer or (ii) shares of the
Company's Common Stock issuable to the Employee upon exercise of the Option,
valued in accordance with Section 4.2(b) of the Plan at the date of Option
exercise, may be used to make all or part of such payment: and
(e) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4 Certain Timing Requirements
Shares of the Company's Common Stock, whether or not issuable to tile
Employee upon exercise of the Option, may be used to satisfy the Option price or
the tax withholding consequences of such exercise only (i) during the period
beginning oil the third (3rd) business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth (12th) business day following such date or (ii) pursuant
to an irrevocable written election by the Employee to use shares of the
Company's Common Stock to pay all or part of the Option price or the withholding
taxes (subject to the approval of the Committee) made at least six (6) months
prior to the payment of such Option price or withholding taxes.
Section 4.5 Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option. or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonasseable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock exchanges oil
which such class of stock is then listed; and
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of
Securities and Exchange Commission or of any other governmental body, which the
Committee shall. in its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
tile Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.6 No Rights as Shareholder
The holder of tile Option shall not be nor have any of the rights or
privileges of a shareholder of the Company in respect of any shares purchasable
upon tile exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1 Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. The Board shall have no right
to exercise any of the rights or duties of the Committee under the Plan and this
Agreement.
Section 5.2 Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Employee or the
Employee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 Shares to Be Reserved
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to tile Employee shall be addressed to the Employee at the address given
beneath his signature hereto. By a notice given pursuant to this Section 5.4.
either party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Employee shall, if the
Employee is then deceased, be given to tile Employee's personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5 Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6 Notification of Disposition
The Employee shall give prompt notice to the Company of any disposition or
other transfer or any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two (2) years from the date of
granting the Option with respect to such shares or (b) within one (1) year after
the transfer of such shares to him. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in case, other property,
assumption of indebtedness or other consideration, by the Employee in such
disposition or other transfer.
Section 5.7 Construction
This Agreement has been negotiated and executed in, and shall be
administered, interpreted and enforced under the laws of, the State of
California.
Section 5.8 Conformity to Securities Laws
The Employee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule l6b-3. Notwithstanding
anything, herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the Plan
and this Agreement shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
THE PRICE REIT, INC.
By ____________________
Joseph K. Kornwasser
President
By ____________________
George M. Jezek
EMPLOYEE
______________________
(Employee)
Address
Employee's Taxpayer
Identification Number:
SCHEDULE TO EXHIBIT 10.14
Optionee Grant Date Options Granted* Exercise Price ($)
- -----------------------------------------------------------------------------
Lawrence M. Kronenberg 1/29/96 10,000 29.50
Daniel Slattery 12/18/96 12,000 36.00
* All options vest 20% upon grant and 20% on each of the four successive
anniversaries of the Grant Date.
===============================================================================
EXHIBIT 10.15
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated December 15, 1997 (the "Date of Grant"), is made by
and between The Price REIT, Inc., a Maryland corporation hereinafter referred to
as "Company," and , an employee of the Company or a Subsidiary
of the Company, hereinafter referred to as "Employee":
WHEREAS, the Company wishes to afford Employee the opportunity to purchase
shares of its $0.01 par value Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which are
hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Incentive Stock Option provided for herein to the
Employee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries and as an incentive for increased efforts during such
service, and has advised the Company thereof and instructed the undersigned
officers to issue the Option;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1Board
"Board" shall mean the Board of Directors of the Company.
Section 1.2Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3Committee
"Committee" shall mean the Stock Option Committee of the Board, appointed
as provided in the Plan.
Section 1.4Company
"Company" shall mean The Price REIT, Inc. In addition, "Company" shall
mean any corporation assuming, or issuing a new incentive stock option in
substitution for, the Option in a transaction to which Section 424(a) of the
Code applies.
Section 1.5Director
"Director" shall mean a member of the Board.
Section 1.6Exchange Act
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.7Officer
"Officer" shall mean an officer of the Company as defined in Rule l6a-l(f)
under the Exchange Act, as such Rule may be amended in the future.
Section 1.8Option
"Option" shall mean the incentive stock option to purchase Common Stock of
the Company granted under this Agreement.
Section 1.9Plan
"Plan" shall mean the 1993 Stock Option Plan of The Price REIT, Inc.
Section 1.10Rule 16b-3
"Rule l6b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as
such Rule may be amended in the future.
Section 1.11Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.12Securities Act
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.13Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.
Section 1.14Termination of Employment
"Termination of Employment" shall mean the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary is terminated
for any reason, with or without cause, including, but not by way of limitation,
a termination by resignation, discharge, death or retirement, but excluding any
termination where there is a simultaneous reemployment by the Company or a
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.
ARTICLE II
GRANT OF OPTION
Section 2.1Grant of Option
In consideration of the Employee's agreement to remain in the employ of the
Company or its Subsidiaries and for other good and valuable consideration, the
Company irrevocably grants to the Employee the option to purchase any part or
all of an aggregate of shares of its $0.01 par value Common Stock
upon the terms and conditions set forth in this Agreement.
Section 2.2Purchase Price
The purchase price of the shares of stock covered by the Option shall be
$40.625 per share without commission or other charge.
Section 2.3Consideration to Company
In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient services to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted. Nothing in this Agreement or in the Plan shall confer upon
the Employee any right to continue in the employ of the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly reserved, to discharge
the Employee at any time for any reason whatsoever, with or without cause.
Section 2.4Adjustments in Option
In the event that the outstanding shares of the stock subject to the Option
are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which the Option, or portions
thereof then unexercised, shall be exercisable, to the end that after such event
the Employee's proportionate interest shall be maintained as before the
occurrence of such event. Such adjustment in the Option shall be made without
change in the total price applicable to the unexercised portion of the Option
(except for any change in the aggregate price resulting from rounding-off of
share quantities or prices) and with any necessary corresponding adjustment in
the Option price per share; provided, however, that each such adjustment shall
be made in such manner as not to constitute a "modification" within the meaning
of Section 424(h)(3) of the Code. Any such adjustment made by the Committee
shall be final and binding upon the Employee, the Company and all other
interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1Commencement of Exercisability
(a)The Option shall become exercisable as provided in Schedule "A" attached
to this Agreement and hereby incorporated by reference.
(b)No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 3.2Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
Section 3.3Expiration of Option
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a)The expiration of ten (10) years from the Date of Grant; or
(b)If the Employee owned (within the meaning of Section 424(d) of the
Code), on the Date of Grant, more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, any Subsidiary or any
parent corporation, the expiration of five (5) years from the Date of Grant; or
(c)The time of the Employee's Termination of Employment unless such
Termination of Employment results from his death, his retirement, his disability
(within the meaning of Section 22(c)(3) of the Code) or his being discharged not
for good cause; or
(d)The expiration of nine (9) months from the date of the Employee's
Termination of Employment by reason of his retirement or his being discharged
not for good cause, unless the Employee dies within said nine-month period; or
(e)The expiration of one (1) year from the date of the Employee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code); or
(f)The expiration of one (1) year from the date of the Employee's death; or
(g)The effective date of either the merger or consolidation of the Company
with or into another corporation, or the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, unless the Committee waives this provision in
connection with such transaction. At least ten (10) days prior to the effective
date of such merger, consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Employee notice of such event if the Option has then
neither been fully exercised nor become unexercisable under this Section 3.3.
Section 3.4Merger, Consolidation, Acquisition or Dissolution of the Company
(a)In the event of a transaction or event described in Section 2.4 or
any Corporate Transaction (defined below), the Committee, in its sole
discretion and on such terms and conditions as it deems appropriate, may
take any one or more of the following actions by resolution, adopted prior
to such event and incorporated in the notice referred to in Section 3.3(g),
whenever the Committee determines that such action is appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available with respect to the Option:
(i)provide for either the purchase of the Option for an amount of cash
equal to the amount that could have been attained upon the exercise of
the Option or realization of Employee's rights had the Option been
currently exercisable as the replacement of the Option or the
replacement of the Option with other rights or property selected by
the Committee in its sole discretion; or
(ii)provide that upon such a Corporate Transaction, the Option shall
be assumed by the successor or surviving corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options
covering the stock of the successor or surviving corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices.
For purposes of this Section 3.4, a Corporate Transaction is defined as (a)
a merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the
state in which the Company is incorporated, form a holding company or
effect a similar reorganization as to form whereupon this Agreement and the
Option are assumed by the successor entity or (b) the sale, transfer,
exchange or other disposition of all or substantially all of the assets of
the Company, in complete liquidation or dissolution of the Company in a
transaction not covered by the exceptions to the foregoing clause (a).
(b)In the event of any Corporate Transaction or the acquisition by
another corporation or person of eighty percent (80%) or more of the
Company's then outstanding voting stock, or the liquidation or dissolution
of the Company, at some time prior to the effective date of such event this
Option shall be exercisable as to all the shares covered hereby,
notwithstanding that this Option may not yet have become fully exercisable
under Section 3.1(a).
Section 3.5Special Tax Consequences
The Employee acknowledges that, to the extent that the aggregate fair
market value of stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to Section 422(d) of
the Code), including the Option, are exercisable for the first time by the
Employee during any calendar year (under the Plan and all other incentive stock
option plans of the Company, any Subsidiary and any parent corporation) exceeds
$100,000, such options shall be treated as not qualifying under Section 422 of
the Code but rather shall be taxed as non-qualified options. The Employee
further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted.
For purposes of these rules, the fair market value of stock shall be determined
as the time the option with respect to such stock is granted.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1Person Eligible to Exercise
During the lifetime of the Employee, only the Employee may exercise the
Option or any portion thereof. After the death of the Employee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the Employee's will or under the then
applicable laws of descent and distribution.
Section 4.2Partial Exercise
Any exercisable Portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.3;
Provided, however, that each partial exercise shall be for not less than
( ) shares (or the minimum installment set forth in
Section 3.1, if a smaller number of shares) and shall be for whole shares only.
Section 4.3Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.3;
(a)Notice in writing signed by the Employee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Committee; and
(b)(1) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
(2)With the consent of the Committee, but subject to the timing
requirements of Section 4.4,
(A)shares of the Company's Common Stock, valued on the date of
exercise, owned by the Employee, duly endorsed for transfer to the Company;
or
(B)an election that the Company withhold, in lieu of payment of the
exercise price in cash or by check, that number of shares of Common Stock
otherwise issuable to Employee upon exercise of the Options equal to the
exercise price per share of Common Stock multiplied by the total number of
Options being exercised, divided by the fair market value (as determined
under Section 4.2(b) of the Plan) per share of the Common Stock on the date
of exercise, with the balance of the shares of Common Stock covered by the
Options exercised to be issued to Employee; or
(3)With the consent of the Committee, a full recourse promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable upon
such terms as may be prescribed by the Committee. The Committee may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law; or
(4)With the consent of the Committee, any combination of the
consideration provided in the foregoing subparagraphs (1), (2) and (3); and
(c)A bona fide written representation and agreement, in a form satisfactory
to the Committee, signed by the Employee or other person then entitled to
exercise such Option or portion, stating that the shares of stock are being
acquired for his own account, for investment and without any present intention
of distributing or reselling said shares or any of them except as may be
permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of shares by such person is contrary to the
representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act and such registration is then
effective in respect of such shares;
(d)Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; with the consent of the Committee, but subject to
the timing requirements of Section 4.4, (i) shares of the Company's Common Stock
owned by the Employee duly endorsed for transfer or (ii) shares of the Company's
Common Stock issuable to the Employee upon exercise of the Option, valued in
accordance with Section 4.2(b) of the Plan at the date of Option exercise, may
be used to make all or part of such payment; and
(e)In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
Section 4.4Certain Timing Requirements
Shares of the Company's Common Stock, whether or not issuable to the
Employee upon exercise of the Option, may be used to satisfy the Option price or
the tax withholding consequences of such exercise only (i) during the period
beginning on the third (3rd) business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth (12th) business day following such date or (ii) pursuant
to an irrevocable written election by the Employee to use shares of the
Company's Common Stock to pay all or part of the Option price or the withholding
taxes (subject to the approval of the Committee) made at least six (6) months
prior to the payment of such Option price or withholding taxes.
Section 4.5Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a)The admission of such shares to listing on all stock exchanges on which
such class of stock is there listed; and
(b)The completion of any registration or other qualification of such shares
under any state or federal law or under rulings or regulations of Securities and
Exchange Commission or of any other governmental body, which the Committee
shall, in its absolute discretion, deem necessary or advisable; and
(c)The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d)The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e)The lapse of such reasonable period of time, following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
Section 4.6No Rights as Shareholder
The holder of the Option shall not be, nor have any of the rights or
privileges of a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
OTHER PROVISIONS
Section 5.1Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Option. The Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement.
Section 5.2Option Not Transferable
Neither the Option nor any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Employee or the
Employee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy); and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3Shares to Be Reserved
The Company shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Employee shall be addressed to the Employee at the address given
beneath his signature hereto. By a notice given pursuant to this Section 5.4,
either party may hereafter designate a different address for notices to be given
to him. Any notice which is required to be given to the Employee shall, if the
Employee is then deceased, be given to the Employee's personal representative if
such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
Section 5.6Shareholder Approval
The Plan will be submitted for approval by the Company's shareholders
within twelve (12) months after the date the Plan was initially adopted by the
Board. However, this Option shall be exercisable without regard to such
shareholder approval; provided, however, that the Employee acknowledges that, if
such approval is not obtained within 12 (twelve) months after the date the Plan
was adopted by the Board, this Option shall be taxed as a non-qualified option
and not as an incentive stock option pursuant to Section 422 of the Code.
Section 5.7Notification of Disposition
The Employee shall give prompt notice to the Company of any disposition or
other transfer or any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two (2) years from the date of
granting the Option with respect to such shares or (b) within one (1) year after
the transfer of such shares to him. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in case, other property,
assumption of indebtedness or other consideration, by the Employee in such
disposition or other transfer.
Section 5.8Construction
This Agreement has been negotiated and executed in, and shall be
administered, interpreted and enforced under the laws of the State of
California.
Section 5.9Conformity to Securities Laws
The Employee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule l6b-3. Notwithstanding
anything, herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
THE PRICE REIT, INC.
By ___________________
President
By ___________________
Secretary
______________________________
Employee
______________________________
______________________________
Address
Employee's Taxpayer
Identification Number:
_______________________________
SCHEDULE "A"
Option Exercisability Schedule
The Option shall be exercisable in installments as follows:
SCHEDULE TO EXHIBIT 10.15
Optionee Options Granted*
------- ----------------
Joseph K. Kornwasser 54,500
Jerald Friedman 40,500
George M. Jezek 15,000
Lawrence M. Kronenberg 35,000
Daniel Slattery 5,000
* All options vest 20% upon grant and 20% on each of the four successive
anniversaries of the Grant Date.
===============================================================================
EXHIBIT 10.16
FIRST AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT TO INCENTIVE STOCK OPTION AGREEMENT, dated
December 15, 1997, is made by and between The Price REIT, Inc., a Maryland
corporation hereinafter referred to as "Company," and "Optionee", hereinafter
referred to as "Employee":
RECITALS
A.The Company and Employee are parties to that certain Incentive Stock
Option Agreement dated as of "DateofAgreement" (the "Option Agreement"), under
which the Company granted to Employee options to acquire shares of the Company's
Series B Common Stock, par value $0.01 per share.
B.The Company amended its Charter on May 31, 1995 to redesignate all shares
of the Company's "Series B Common Stock" to "Common Stock."
C.The Company and Employee desire to amend the provisions of the Option
Agreement as set forth herein.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Employee agree as
follows:
1.All references to "Series B Common Stock" in the Option Agreement are
changed to read "Common Stock."
2.Paragraph (d) of Section 3.3 of the Option Agreement is amended in its
entirety to read as follows:
"(d)The expiration of nine (9) months from the date of the Employee's
Termination of Employment by reason of his retirement or his being
discharged not for good cause, unless the Employee dies within said nine-
month period; or"
3.Section 3.4 of the Option Agreement is amended in its entirety to read as
follows:
"Section 3.4Merger, Consolidation, Acquisition or Dissolution of the
Company
(a)In the event of a transaction or event described in Section 2.4 or any
Corporate Transaction (defined below), the Committee, in its sole
discretion and on such terms and conditions as it deems appropriate, may
take any one or more of the following actions by resolution, adopted prior
to such event and incorporated in the notice referred to in Section 3.3(g),
whenever the Committee determines that such action is appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available with respect to the Option:
(i)provide for either the purchase of the Option for an amount of cash
equal to the amount that could have been attained upon the exercise of
the Option or realization of Employee's rights had the Option been
currently exercisable as the replacement of the Option or the
replacement of the Option with other rights or property selected by
the Committee in its sole discretion; or
(ii)provide that upon such a Corporate Transaction, the Option shall
be assumed by the successor or surviving corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options
covering the stock of the successor or surviving corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices.
For purposes of this Section 3.4, a Corporate Transaction is defined as (a)
a merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the
state in which the Company is incorporated, form a holding company or
effect a similar reorganization as to form whereupon this Agreement and the
Option are assumed by the successor entity or (b) the sale, transfer,
exchange or other disposition of all or substantially all of the assets of
the Company, in complete liquidation or dissolution of the Company in a
transaction not covered by the exceptions to the foregoing clause (a).
(b)In the event of any Corporate Transaction, the acquisition by another
corporation or person of eighty percent (80%) or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company,
prior to the effective date of such event this Option shall be exercisable
as to all the shares covered hereby, notwithstanding that this Option may
not yet have become fully exercisable under Section 3.1(a)."
4.Paragraph (b) of Section 4.3 is amended in its entirety to read as
follows:
"(b)(1) Full payment (in cash or by check) for the shares with respect to
which such Option or portion is exercised; or
(2)With the consent of the Committee, but subject to the timing
requirements of Section 4.4,
(A)shares of the Company's Common Stock, valued on the date of
exercise, owned by the Employee, duly endorsed for transfer to the
Company; or
(B)an election that the Company withhold, in lieu of payment of
the exercise price in cash or by check, that number of shares of
Common Stock otherwise issuable to Employee upon exercise of the
Options equal to the exercise price per share of Common Stock
multiplied by the total number of Options being exercised, divided by
the fair market value (as determined under Section 4.2(b) of the Plan)
per share of the Common Stock on the date of exercise, with the
balance of the shares of Common Stock covered by the Options exercised
to be issued to Employee; or"
IN WITNESS WHEREOF, this First Amendment to Incentive Stock Option
Agreement has been executed and delivered by the parties hereto.
THE PRICE REIT, INC.
By
President
By
Secretary
______________________________
Employee
______________________________
______________________________
Address
Employee's Taxpayer
Identification Number:
SCHEDULE TO EXHIBIT 10.16
Optionee Date of Original Option Agreement
Joseph K. Kornwasser 8/12/93
Joseph K. Kornwasser 12/11/95
Jerald Friedman 8/12/93
George M. Jezek 1/29/96
Lawrence M. Kronenberg 2/14/94
Lawrence M. Kronenberg 1/29/96
Daniel Slattery 12/18/96
===============================================================================
EXHIBIT 10.17
THE PRICE REIT, INC.
NONEMPLOYEE DIRECTOR
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of "DateofAgreement" between The Price REIT,
Inc., a Maryland corporation (the "Company"), and "Optionee" (the
"Optionee").
RECITALS
WHEREAS, the Optionee is a nonemployee director of the Company (a
"Nonemployee Director").
WHEREAS, pursuant to the Company's 1996 Directors' Stock Option Plan (the
"Plan"), the Optionee has been granted, as a matter of separate inducement in
connection with his engagement with the Company, an option (the "Option") to
purchase shares of the Common Stock, par value $0.01 per share, of the Company
(the "Common Stock") on the terms and conditions set forth herein.
WHEREAS, this Option is not intended to qualify as an Incentive Stock
Option under Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code") .
AGREEMENT
In consideration of the foregoing and of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1.Shares Optioned; Option Price. The Optionee may purchase all or any part
of an aggregate of 2,500 shares of Common Stock, at the price of $"OptionPrice"
per share (which shall not be less than 100% of the per-share fair market value
of the Common Stock on the date of the grant of the Option).
2.Option Term; Exercisability. Unless expired earlier pursuant to
Section 3, the Option shall expire on May 23, 2006, the date on which the Plan
terminates (the "Expiration Date"). This Option shall be fully vested and
exercisable on the date of grant of this Option.
3.Termination of Nonemployee Director Status; Effect on Options. In the
event the Optionee shall cease to be a Nonemployee Director for any reason, all
outstanding Options which have been granted to the Optionee shall expire nine
(9) months from the date upon which the Optionee shall cease to be a Nonemployee
Director.
4.Exercise; Payment for And Delivery Of Stock and Payment of Income Taxes.
(a)This Option may be exercised only by the Optionee or his transferees by
will or the laws of descent and distribution.
(b)This Option may be exercised by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased and the
total purchase price.
(c)Payment of the exercise price of this Option shall be made in full in
cash, by Optionee's personal check, a certified check, bank draft or postal or
express money order payable to the order of the Company in lawful money of the
United States concurrently with the exercise of such Option; provided, however,
that the payment of such exercise price may instead be made, in whole or in
part, by any one or more of the following:
(i)with the consent of the Board or the Committee (as defined in
Section 4(c)(iii)), with shares of Common Stock, valued on the date of
exercise, owned by Optionee; or
(ii)with the consent of the Board or the Committee (as defined in
Section 4(c)(iii)), with shares of Common Stock withheld, in lieu of
payment of the exercise price in the manner described in Section 4(c), that
number of shares otherwise deliverable to Optionee upon exercise of the
Option equal to the exercise price per share of Common Stock multiplied by
the total number of Options being exercised, divided by the fair market
value per share of the Common Stock on the date of exercise, with the
balance of shares of Common Stock covered by the Options exercised issued
to Optionee; or
(iii)the delivery on a form prescribed by the Board of Directors of
the Company (the "Board") or a committee to which the Board delegates the
responsibility for administering the Plan (the "Committee") (if the Board
does not delegate administration of the Plan to a committee, each reference
in this Agreement to "the Committee" shall be construed to refer to the
Board) of an irrevocable direction to a securities broker approved by the
Committee to sell shares of Common Stock and deliver all or a portion of
the proceeds to the Company in payment for the Common Stock issuable upon
exercise of the Option.
(d)If the Company becomes obligated to withhold an amount on account of any
federal, state or local income tax imposed as a result of the exercise of an
option granted under this Agreement (such amount shall be referred to herein as
the "Withholding Liability"), the Optionee shall pay the Withholding Liability
to the Company in full in cash on the first date upon which the Company becomes
obligated to pay such amount withheld to the appropriate taxing authority, and
the Company may delay issuing the Common Stock pursuant to such exercise until
it receives the Withholding Liability from the Optionee.
5.Rights in Shares Before Issuance and Delivery. Neither the Optionee nor
his transferees by will or the laws of descent and distribution shall be, or
have any rights or privileges of, a stockholder of the Company with respect to
any shares of Common Stock issuable upon exercise of this Option, unless and
until certificates representing such shares shall have been issued and
delivered.
6.Adjustments in Stock.
(a)If there is any change in the Common Stock subject to the Option,
through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of two percent) or other
change in the capital structure of the Company, appropriate adjustments shall be
made by the Committee in order to preserve but not to increase the benefits to
the Optionee, including adjustments to the number and kind of shares and the
price per share subject to outstanding Options.
(b)In the event of a transaction or event described in Paragraph 6(a) or
any Corporate Transaction (defined below), the Committee, in its sole discretion
and on such terms and conditions as it deems appropriate, may take any one or
more of the following actions by resolution whenever the Committee determines
that such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available with respect to
the Option:
(i)provide for either the purchase of the Option for an amount of cash
equal to the amount that could have been attained upon the exercise of the
Option or realization of Optionee's rights had the Option been currently
exercisable as the replacement of the Option or the replacement of the
Option with other rights or property selected by the Committee in its sole
discretion; or
(ii)provide that upon such a Corporate Transaction, the Option shall
be assumed by the successor or surviving corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options covering
the stock of the successor or surviving corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices.
For purposes of this Paragraph 6, a Corporate Transaction is defined as (a) a
merger or consolidation in which the Company is not the surviving entity, except
for a transaction the principal purpose of which is to change the state in which
the Company is incorporated, form a holding company or effect a similar
reorganization as to form whereupon this Agreement and the Option are assumed by
the successor entity or (b) the sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, in complete liquidation
or dissolution of the Company in a transaction not covered by the exceptions to
the foregoing clause (a).
7.Nontransferability of Option. This Option is not transferable other than
by will or the laws of descent and distribution and shall be exercisable during
the Optionee's lifetime only by the Optionee or the Optionee's guardian or legal
representative. This Option shall not be otherwise transferred, assigned,
pledged, hypothecated or otherwise disposed of in any way, whether by operation
of law or otherwise, and shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer this Option other than by will or
the laws of descent and distribution or to assign, pledge, hypothecate or
otherwise dispose of this Option, or upon the levy of an execution, attachment
or similar process upon this Option, this Option shall immediately terminate and
become null and void.
8.Notices. Any notice to be given to the Company shall be addressed to the
Company in care of its Secretary at its principal office, and any notice to be
given to the Optionee shall be addressed to him at the address given beneath his
signature hereto, or as such other address as the Optionee may hereafter
designate in writing to the Company. Any such notice shall have been deemed
duly given when deposited in a post office or branch post office regularly
maintained by the United States Government.
9.Laws Applicable to Construction. This Agreement has been negotiated and
executed in, and shall be administered, interpreted and enforced under the laws
of, the State of California.
10.Defined Terms. Capitalized terms used herein without definition shall
have the same meaning as in the Plan.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.
THE PRICE REIT, INC.
By
Joseph K. Kornwasser
President
By
George M. Jezek
Secretary
OPTIONEE
______________________________
______________________________
______________________________
Address
Optionee's Social
Security Number:
===============================================================================
EXHIBIT 10.21
Schedule to exhibit 10.21
Executive Title Term Salary Bonus
- --------- ----- ------- -------- --------
Joseph K. Kornwasser President and Chief 3 years $380,000 $160,000
Executive Officer
Jerald Friedman Senior Executive 2 years $285,000 $120,000
Vice President and
Chief Operating Officer
Lawrence M. Kronenberg Executive Vice 2 years $180,000 $90,000
President Finance
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of January 1, 1998
between The Price REIT, Inc., a Maryland corporation (the "Company"), and
(the "Executive").
1.Employment.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed by the Company, on the terms and conditions set forth
herein.
2.Term and Renewal.
2.1.Term. The employment of the Executive by the Company as provided in
Section 1 will commence on the date hereof and will terminate [three/two] years
from the date hereof (the "Expiration Date") unless automatically extended for
an additional 12-month period pursuant to Section 2.2 hereof or sooner
terminated as hereinafter provided (each such period, an "Employment Period").
2.2.Renewal. Following the expiration of the initial Employment Period and
provided that this Agreement has not been terminated by the Executive or the
Company pursuant to Section 5 hereof, and every year thereafter, this Agreement
shall be automatically renewed on the terms set forth herein for an additional
12-month period, effective on each anniversary date of the date hereof.
3.Position and Duties.
3.1.(a)Position. The Executive hereby agrees to serve as
of the Company.
(b)Additional Positions. At the Company's request, the Executive
shall serve the Company and/or its respective subsidiaries and affiliates in
other offices and capacities in addition to that set forth in
Section 3.1(a) hereof. In the event that the Executive, during the term of this
Agreement, serves in any one or more of the capacities set forth in this
Section 3.1(b), the Executive's compensation may not be increased beyond that
specified in Section 4 of this Agreement. In addition, in the event the
Executive's service in one or more of the capacities set forth in this
Section 3.1(b) is terminated, the Executive's compensation, as specified in
Section 4 of this Agreement, shall not be diminished or reduced in any manner as
a result of such termination for so long as the Executive otherwise remains
employed under the terms of this Agreement.
3.2.Duties. The Company agrees that the duties that may be assigned to the
Executive shall be the usual and customary duties of the offices of
and that the Executive shall report to the [Board of
Directors of the Company (the "Board") or a designated representative of the
Board/President and Chief Executive Officer of the Company].
3.3.Devotion of Time and Effort. The Executive shall devote substantially
all of his business time and attention to the performance of services to the
Company in his capacity as an officer thereof and as may reasonably be requested
by the Board.
3.4.Other Activities. Subject to Section 7.2 hereof, the Executive may,
with the prior approval of the Board or a designated representative of the
Board, engage in other activities for the Executive's own account while employed
hereunder, including without limitation charitable, community and other business
activities, provided that such other activities do not materially interfere with
the performance of the Executive's duties hereunder.
4.Compensation and Related Matters.
4.1.Salary. During the Employment Period, the Company shall pay the
Executive (a) an annual salary of $ during the first 12-month
period and (b) such annual salary as determined by the Stock Option and
Compensation Committee of the Board (the "Compensation Committee") during the
second and subsequent 12-month periods of the Executive's employment with the
Company, provided that such annual salary shall not be less than
$ . All salary is to be paid consistent with the standard payroll
practices of the Company (e.g., timing of payments and standard employee
deductions, such as income tax withholdings, social security, etc.). The
Executive's performance and salary shall be subject to review at the end of each
fiscal year and an increase in annual salary, if one is so determined by the
Compensation Committee, shall be made on a basis consistent with the standard
practices of the Company.
4.2.Bonus. The Compensation Committee shall review the Executive's
performance at least annually during each year of the Employment Period and
cause the Company to make available a cash bonus in an amount budgeted at
$ , which amount (a) may be increased or decreased by the
Compensation Committee and the Board, (b) shall be determined in the sole and
absolute discretion of the Compensation Committee and the Board and (c) shall be
dependent on, among other things, the achievement of certain performance levels
by the Company and the Executive's performance during the year. The
Compensation Committee and the Board shall reasonably determine the amount of
such cash bonus as fairly compensating and rewarding the Executive for services
rendered to the Company and/or as an incentive for continued service to the
Company.
4.3.Business Expenses. The Company shall promptly reimburse the Executive
for all reasonable business expenses incurred in accordance with and subject to
the limits set forth in the Company's policies with respect to business
expenses, including, without limitation, business seminar fees, professional
association dues, reasonable entertainment expenses incurred by the Executive in
connection with the business of the Company and/or its respective subsidiaries
and affiliates, and reasonable travel expenses, including all airfare, hotel and
rental car expenses, incurred by the Executive in traveling in connection with
the business of the Company, upon presentation to the Company of written
receipts for such expenses.
4.4.Benefits. The Company shall provide the Executive with medical and
other benefits similar to those provided by the Company from time to time to
other executive-level employees.
5.Termination.
5.1.Death. The Executive's employment hereunder shall terminate upon his
death.
5.2.Disability. The Executive's employment hereunder shall terminate on
the Executive's physical or mental disability or infirmity which, in the opinion
of a competent physician selected by the Board, renders the Executive unable to
perform properly his duties under this Agreement, and as a result, the Executive
is unable to perform such duties for six (6) consecutive calendar months or for
shorter periods aggregating one hundred and eighty (180) business days in any
twelve (12) month period, but only to the extent that such definition does not
violate the Americans with Disabilities Act.
5.3.Termination for Cause. The Company may terminate the Executive for
Cause at any time, upon written notice to Executive. For purposes of this
Agreement, "Cause" shall mean:
(a)gross negligence or willful misconduct in the performance of duties
hereunder;
(b)an uncured breach of any of the Executive's material duties
hereunder;
(c)fraud or other conduct against the material best interests of the
Company; or
(d)a conviction of a felony.
5.4.Termination Without Cause. The Company may terminate this Agreement
without Cause at any time, provided that the Company first delivers to the
Executive the Company's written election to terminate this Agreement at least
thirty (30) days prior to the effective date of termination.
5.5.Executive's Termination for Good Reason. The Executive may terminate
this Agreement for Good Reason upon at least ten (10) days prior written notice
to the Company. For purposes of this Agreement, "Good Reason" shall mean:
(a)a substantial adverse change in the nature or scope of the
Executive's responsibilities and authority hereunder;
(b)a substantial change in the Executive's duties such that the new
duties are not ordinarily consistent with the Executive's job title and
position and are not acceptable to the Executive;
(c)a substantial reduction in the Executive's (i) compensation, which
reduction is not acceptable to the Executive or (ii) benefits hereunder,
which reduction in benefits does not similarly affect Company employees
generally;
(d)a substantial change in the Executive's reporting requirements
pursuant to Section 3.2 hereof, which change is not acceptable to the
Executive;
(e)the relocation of the Executive outside of Los Angeles County; or
(f)an uncured breach by the Company of any of its material obligations
hereunder, which breach the Company has been given a reasonable opportunity
to cure after receipt of notice.
5.6Executive's Termination Upon a Change in Control. The Executive may
terminate this Agreement upon written notice to the Company, within six (6)
months of a Change in Control of the Company. For purposes of this Agreement,
"Change in Control" shall mean:
(a)acquisition of 50% or more of the combined voting power of the
Company's voting securities; or
(b)stockholder approval of (i) a merger, consolidation or
reorganization involving the Company, (ii) a complete liquidation or
dissolution of the Company or (iii) an agreement for the sale or other
disposition of all or substantially all of the assets of the Company;
provided, however, that the Executive agrees that the merger (the "Merger") of
the Company with and into REIT Sub, Inc., a Maryland corporation ("REIT Sub"),
pursuant to that certain Agreement and Plan of Merger, dated as of January 13,
1998, among Kimco Realty Corporation, a Maryland corporation ("Kimco"), REIT Sub
and the Company, shall not constitute a Change in Control for purposes of this
Agreement. Provided that the Executive Employment Agreement, dated as of
January 13, 1998, by and between Kimco and Executive shall have become effective
on the date of consummation of the Merger, the Executive hereby waives any
payment to which he would otherwise be entitled under this Agreement by virtue
of the Merger, except that the Executive shall be entitled to receive from the
Company, immediately prior to the effective time of the Merger, all accrued
compensation and pro-rata bonus, based upon the amount of bonus received by the
Executive during 1997.
5.7.Executive's Voluntary Termination. The Executive may, at any time,
terminate this Agreement without Good Reason, provided that the Executive
delivers written notice to the Company at least thirty (30) days prior to the
effective date of termination.
5.8.Nonrenewal. The Company may terminate this Agreement upon the
expiration of any Employment Period, provided that the Company gives written
notice of such nonrenewal to the Executive at least ninety (90) days prior to
the expiration of such Employment Period.
5.9.Notice. Any termination of the Executive's employment by the Company
or the Executive shall be communicated by written Notice of Termination to the
other party. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
5.10.Date of Termination. The effective date of the Executive's
termination depends on the type of termination applied. "Date of Termination"
shall mean the following:
(a)if the Executive's employment is terminated by his death, the date
of his death;
(b)if the Executive's employment is terminated by reason of his
disability, the date of the opinion of the physician referred to in
Section 5.2 hereof;
(c)if the Executive's employment is terminated by the Company for
Cause (pursuant to Section 5.3 hereof) or without Cause (pursuant to
Section 5.4 hereof), the date specified in the Notice of Termination;
(d)if the Executive terminates his employment for Good Reason
(pursuant to Section 5.5 hereof), upon a Change in Control of the Company
(pursuant to Section 5.6 hereof) or voluntarily (pursuant to Section 5.7
hereof), the date specified in the Notice of Termination; and
(e)if the Executive's employment is terminated pursuant to Section 5.8
hereof, the date this Agreement terminates by its terms.
5.11.Termination Obligations.
(a)The Executive hereby acknowledges and agrees that all Personal
Property and equipment furnished to or prepared by the Executive in the course
of or incident to his employment belongs to the Company and shall be promptly
returned to the Company upon termination of the Employment Period. "Personal
Property" includes, without limitation, all electronic devices of the Company
used by the Executive, including, without limitation, personal computers,
facsimile machines, cellular telephones, pagers and tape recorders and all
books, manuals, records, reports, notes, contracts, lists, blueprints, maps and
other documents or materials, or copies thereof (including computer files), and
all other proprietary information relating to the business of the Company.
Following termination, the Executive will not retain any written or other
tangible material containing any proprietary information of the Company.
(b)Upon termination of the Employment Period, the Executive shall be
deemed to have resigned from all offices and directorships then held with the
Company or any affiliate.
(c)The representations and warranties contained herein and the
Executive's obligations under this Section 5.11 and Sections 7 and 8 hereof
shall survive termination of the Employment Period and the expiration of this
Agreement.
6.Compensation Upon Termination.
6.1.Termination due to Death or Disability, by the Company without Cause or
by the Executive for Good Reason. If the Executive's employment shall be
terminated pursuant to Sections 5.1, 5.2, 5.4 or 5.5 hereof, the Company shall
pay to the Executive or the Executive's estate, as the case may be, (a) all
accrued compensation and pro-rata bonus, based upon the amount of the bonus
received by the Executive during the most recent preceding year (the
"Compensation Payment"), through the Date of Termination and (b) a severance
payment in an amount equal to the Executive's base salary then in effect for the
greater of the balance of the term of this Agreement or one year (the "Severance
Payment" and, together with the Compensation Payment, the "Termination
Payments"). Additionally, each theretofore unvested option to purchase shares
of common stock of the Company granted to the Executive shall become immediately
exercisable ("Vested Option") notwithstanding that such options may not yet have
become fully exercisable under the terms of the applicable stock option
agreements, and, furthermore, such Vested Options shall not expire until one (1)
year from the Date of Termination.
6.2.Termination by the Company for Cause or Voluntary Termination by the
Executive. If the Executive's employment shall be terminated for Cause pursuant
to Section 5.3 hereof or the Executive terminates his employment voluntarily
pursuant to Section 5.7 hereof, the Company shall pay the Executive the
Compensation Payment described in Section 6.1(a).
6.3.Executive's Termination Upon a Change in Control. Subject to Section
5.6, if the Executive terminates his employment with the Company pursuant to
Section 5.6 hereof upon a Change in Control of the Company, the Company or its
successor, as the case may be, shall pay the Executive the Termination Payments
described in Section 6.1(a) and (b).
6.4.Manner of Payment. Any Termination Payments made pursuant to this
Section 6 shall be payable in a one-time payment by the Company which the
Company shall pay in cash to the Executive or his estate, as the case may be,
not later than thirty (30) days after the Date of Termination (the "Payment
Date").
6.5.Limitation. The foregoing notwithstanding, the total of any
Termination Payments, pursuant to Sections 6.1 and 6.3 hereof, shall be reduced
to the extent that the payment of such amount would cause the Executive's total
termination benefits (as determined by the Executive's tax advisor prior to the
Payment Date) to constitute an "excess" parachute payment under
Section 280G ("Section 280G") of the Internal Revenue Code of 1986, as amended
(the "Code"), and by reason of such excess parachute payment, the Executive
would be subject to an excise tax under Section 4999(a) of the Code, but only if
the Executive determines that the after-tax value of the termination benefits
calculated with the foregoing restriction exceeds such value calculated without
the foregoing restriction. For purposes of calculating whether any payment
hereunder is taken into account under Section 280G, the parties elect to use the
applicable Federal rate in effect on the date hereof.
7.Confidentiality, Noncompetition and Nonsolicitation Covenants.
7.1.Confidentiality. In addition to the agreements set forth in
Section 5.11(a) hereof, the Executive hereby agrees that the Executive will not,
during the Employment Period or at any time thereafter directly or indirectly
disclose or make available to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, any Confidential Information
(as defined below). The Executive agrees that, upon termination of his
employment with the Company, all Confidential Information in his possession that
is in written or other tangible form (together with all copies or duplicates
thereof, including computer files) shall be returned to the Company and shall
not be retained by the Executive or furnished to any third party, in any form
except as provided herein; provided, however, that the Executive shall not be
obligated to treat as confidential or return to the Company copies of any
Confidential Information that (a) was publicly known at the time of disclosure
to the Executive, (b) becomes publicly known or available thereafter other than
by any means in violation of this Agreement or any other duty owed to the
Company by the Executive or (c) is lawfully disclosed to the Executive by a
third party. As used in this Agreement, the term "Confidential Information"
means information disclosed to the Executive or known by the Executive as a
consequence of or through his relationship with the Company, about the owners,
tenants, employees, consultants, vendors, business methods, public relations
methods, organization, procedures, property acquisition and development or
finances, including, without limitation, information of or relating to owner or
tenant lists of the Company and its affiliates.
7.2.Noncompetition. During the term of the Executive's employment
hereunder, the Executive shall not engage in any activities, directly or
indirectly, in direct competition with the Company, and will not make any
investment in respect of power and community centers in competition with the
Company, other than through ownership of not more than 5% of the outstanding
shares of a public company engaged in such activities and through investments
existing as of the date of this Agreement listed on Schedule I hereto.
7.3.Nonsolicitation. For a period of two (2) years following the date on
which the Executive's employment hereunder is terminated, the Executive shall
not solicit or induce any of the Company's employees to end their relationship
with the Company, or recruit, hire or otherwise induce any such person to
perform services for the Executive, or any other person, firm or company.
8.General Provisions.
8.1.Injunctive Relief and Enforcement. The Executive acknowledges that the
remedies at law for any breach by him of the provisions of Sections 5.11(a) or 7
hereof may be inadequate and that, therefore, in the event of breach by the
Executive of the terms of Sections 5.11(a) or 7 hereof, the Company shall be
entitled to institute legal proceedings to enforce the specific performance of
this Agreement by the Executive and to enjoin the Executive from any further
violation of Sections 5.11(a) or 7 hereof and to exercise such remedies
cumulatively or in conjunction with all other rights and remedies provided by
law and not otherwise limited by this Agreement.
8.2.Notice. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when addressed as follows and (a) when personally
delivered, (b) when transmitted by facsimile, electronic or digital transmission
with receipt confirmed, (c) one day after delivery to an overnight air courier
guaranteeing next day delivery or (d) upon receipt if sent by certified or
registered mail. In each case notice shall be sent to:
If to the Executive:
If to the Company:
The Price REIT, Inc.
Facsimile:
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8.3.Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. In addition, in the event any provision in this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of extending for too great a period of time or over too great a geographical
area or by reason of being too extensive in any other respect, each such
agreement shall be interpreted to extend over the maximum period of time for
which it may be enforceable and to the maximum extent in all other respects as
to which it may be enforceable, and enforced as so interpreted, all as
determined by such court in such action.
8.4.Assignment. This Agreement may not be assigned by the Executive, but
may be assigned by the Company to any successor to its business and will inure
to the benefit and be binding upon any such successor.
8.5.Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
8.6.Headings. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
8.7.Choice of Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of California without giving
effect to the principles of conflict of laws thereof.
8.8.Indemnification. To the fullest extent permitted under applicable law,
the Company shall indemnify, defend and hold the Executive harmless from and
against any and all causes of action, claims, demands, liabilities, damages,
costs and expenses of any nature whatsoever (collectively, "Damages") directly
or indirectly arising out of or relating to the Executive discharging the
Executive's duties hereunder on behalf of the Company and/or its respective
subsidiaries and affiliates, so long as the Executive acted in good faith within
the course and scope of the Executive's duties with respect to the matter giving
rise to the claim or Damages for which the Executive seeks indemnification.
8.9.LIMITATION ON LIABILITIES. IF EITHER THE EXECUTIVE OR THE COMPANY IS
AWARDED ANY DAMAGES AS COMPENSATION FOR ANY BREACH OR ACTION RELATED TO THIS
AGREEMENT, A BREACH OF ANY COVENANT CONTAINED IN THIS AGREEMENT (WHETHER EXPRESS
OR IMPLIED BY EITHER LAW OR FACT), OR ANY OTHER CAUSE OF ACTION BASED IN WHOLE
OR IN PART ON ANY BREACH OF ANY PROVISION OF THIS AGREEMENT, SUCH DAMAGES SHALL
BE LIMITED TO CONTRACTUAL DAMAGES AND SHALL EXCLUDE (I) PUNITIVE DAMAGES AND
(II) CONSEQUENTIAL AND/OR INCIDENTAL DAMAGES (E.G., LOST PROFITS AND OTHER
INDIRECT OR SPECULATIVE DAMAGES). THE MAXIMUM AMOUNT OF DAMAGES THAT THE
EXECUTIVE MAY RECOVER FOR ANY REASON SHALL BE THE AMOUNT EQUAL TO ALL AMOUNTS
OWED (BUT NOT YET PAID) TO THE EXECUTIVE PURSUANT TO THIS AGREEMENT THROUGH ITS
TERM AND THROUGH ANY APPLICABLE SEVERANCE PERIOD, PLUS INTEREST ON ANY DELAYED
PAYMENT AT THE MAXIMUM RATE PER ANNUM ALLOWABLE BY APPLICABLE LAW FROM AND AFTER
THE DATE(S) THAT SUCH PAYMENTS WERE DUE.
8.10.WAIVER OF JURY TRIAL. TO THE EXTENT APPLICABLE, EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
FOR ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
8.11.Attorneys' Fees. If any legal action, arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any of the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, including
any appeal of such action or proceeding, in addition to any other relief to
which that party may be entitled.
8.12.Entire Agreement. This Agreement contains the entire agreement and
understanding between the Company and the Executive with respect to the
employment of the Executive by the Company as contemplated hereby, and no
representations, promises, agreements or understandings, written or oral, not
herein contained shall be of any force or effect. This Agreement shall not be
changed unless in writing and signed by both the Executive and the Company.
8.13.Executive's Acknowledgment. The Executive acknowledges that (a) he
has had the opportunity to consult with independent counsel of his own choice
concerning this Agreement and (b) he has read and understands the Agreement, is
fully aware of its legal effect and has entered into it freely based on his own
judgment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
THE PRICE REIT, INC.,
a Maryland corporation
By:
EXECUTIVE
SCHEDULE I
[Existing investments]
===============================================================================
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of January 1, 1998
between The Price REIT, Inc., a Maryland corporation (the "Company"), and George
M. Jezek (the "Executive").
1.Employment.
The Company hereby agrees to employ the Executive, and the Executive hereby
agrees to be employed by the Company, on the terms and conditions set forth
herein.
2.Term and Renewal.
2.1.Term. The employment of the Executive by the Company as provided in
Section 1 will commence on the date hereof and will terminate two years from the
date hereof (the "Expiration Date") unless automatically extended for an
additional 12-month period pursuant to Section 2.2 hereof or sooner terminated
as hereinafter provided (each such period, an "Employment Period").
2.2.Renewal. Following the expiration of the initial Employment Period and
provided that this Agreement has not been terminated by the Executive or the
Company pursuant to Section 5 hereof, and every year thereafter, this Agreement
shall be automatically renewed on the terms set forth herein for an additional
12-month period, effective on each anniversary date of the date hereof.
3.Position and Duties.
3.1.(a)Position. The Executive hereby agrees to serve as Executive Vice
President, Chief Financial Officer, Treasurer and Secretary of the Company.
(b)Additional Positions. At the Company's request, the Executive
shall serve the Company and/or its respective subsidiaries and affiliates in
other offices and capacities in addition to that set forth in
Section 3.1(a) hereof. In the event that the Executive, during the term of this
Agreement, serves in any one or more of the capacities set forth in this
Section 3.1(b), the Executive's compensation may not be increased beyond that
specified in Section 4 of this Agreement. In addition, in the event the
Executive's service in one or more of the capacities set forth in this
Section 3.1(b) is terminated, the Executive's compensation, as specified in
Section 4 of this Agreement, shall not be diminished or reduced in any manner as
a result of such termination for so long as the Executive otherwise remains
employed under the terms of this Agreement.
3.2.Duties. The Company agrees that the duties that may be assigned to the
Executive shall be the usual and customary duties of the offices of Executive
Vice President, Chief Financial Officer, Treasurer and Secretary and that the
Executive shall report to the President and Chief Executive Officer of the
Company and the Chairman of the Board of Directors of the Company (the "Board").
3.3.Devotion of Time and Effort. The Executive shall devote substantially
all of his business time and attention to the performance of services to the
Company in his capacity as an officer thereof and as may reasonably be requested
by the Board.
3.4.Other Activities. Subject to Section 7.2 hereof, the Executive may,
with the prior approval of the Board or a designated representative of the
Board, engage in other activities for the Executive's own account while employed
hereunder, including without limitation charitable, community and other business
activities, provided that such other activities do not materially interfere with
the performance of the Executive's duties hereunder.
4.Compensation and Related Matters.
4.1.Salary. During the Employment Period, the Company shall pay the
Executive (a) an annual salary of $130,000 during the first 12-month period and
(b) such annual salary as determined by the Stock Option and Compensation
Committee of the Board (the "Compensation Committee") during the second and
subsequent 12-month periods of the Executive's employment with the Company,
provided that such annual salary shall not be less than $130,000. All salary is
to be paid consistent with the standard payroll practices of the Company (e.g.,
timing of payments and standard employee deductions, such as income tax
withholdings, social security, etc.). The Executive's performance and salary
shall be subject to review at the end of each fiscal year and an increase in
annual salary, if one is so determined by the Compensation Committee, shall be
made on a basis consistent with the standard practices of the Company.
4.2.Bonus. The Compensation Committee shall review the Executive's
performance at least annually during each year of the Employment Period and
cause the Company to make available a cash bonus in an amount budgeted at
$65,000, which amount (a) may be increased or decreased by the Compensation
Committee and the Board, (b) shall be determined in the sole and absolute
discretion of the Compensation Committee and the Board and (c) shall be
dependent on, among other things, the achievement of certain performance levels
by the Company and the Executive's performance during the year. The
Compensation Committee and the Board shall reasonably determine the amount of
such cash bonus as fairly compensating and rewarding the Executive for services
rendered to the Company and/or as an incentive for continued service to the
Company.
4.3.Business Expenses. The Company shall promptly reimburse the Executive
for all reasonable business expenses incurred in accordance with and subject to
the limits set forth in the Company's policies with respect to business
expenses, including, without limitation, business seminar fees, professional
association dues, reasonable entertainment expenses incurred by the Executive in
connection with the business of the Company and/or its respective subsidiaries
and affiliates, and reasonable travel expenses, including all airfare, hotel and
rental car expenses, incurred by the Executive in traveling in connection with
the business of the Company, upon presentation to the Company of written
receipts for such expenses.
4.4.Benefits. The Company shall provide the Executive with medical and
other benefits similar to those provided by the Company from time to time to
other executive-level employees.
5.Termination.
5.1.Death. The Executive's employment hereunder shall terminate upon his
death.
5.2.Disability. The Executive's employment hereunder shall terminate on
the Executive's physical or mental disability or infirmity which, in the opinion
of a competent physician selected by the Board, renders the Executive unable to
perform properly his duties under this Agreement, and as a result, the Executive
is unable to perform such duties for six (6) consecutive calendar months or for
shorter periods aggregating one hundred and eighty (180) business days in any
twelve (12) month period, but only to the extent that such definition does not
violate the Americans with Disabilities Act.
5.3.Termination for Cause. The Company may terminate the Executive for
Cause at any time, upon written notice to Executive. For purposes of this
Agreement, "Cause" shall mean:
(a)gross negligence or willful misconduct in the performance of duties
hereunder;
(b)an uncured breach of any of the Executive's material duties
hereunder;
(c)fraud or other conduct against the material best interests of the
Company; or
(d)a conviction of a felony.
5.4.Termination Without Cause. The Company may terminate this Agreement
without Cause at any time, provided that the Company first delivers to the
Executive the Company's written election to terminate this Agreement at least
thirty (30) days prior to the effective date of termination.
5.5.Executive's Termination for Good Reason. The Executive may terminate
this Agreement for Good Reason upon at least ten (10) days prior written notice
to the Company. For purposes of this Agreement, "Good Reason" shall mean:
(a)a substantial adverse change in the nature or scope of the
Executive's responsibilities and authority hereunder;
(b)a substantial change in the Executive's duties such that the new
duties are not ordinarily consistent with the Executive's job title and
position and are not acceptable to the Executive;
(c)a substantial reduction in the Executive's (i) compensation, which
reduction is not acceptable to the Executive or (ii) benefits hereunder,
which reduction in benefits does not similarly affect Company employees
generally;
(d)a substantial change in the Executive's reporting requirements
pursuant to Section 3.2 hereof, which change is not acceptable to the
Executive;
(e)the relocation of the Executive outside the San Diego metropolitan
area; or
(f)an uncured breach by the Company of any of its material obligations
hereunder, which breach the Company has been given a reasonable opportunity
to cure after receipt of notice.
5.6Executive's Termination Upon a Change in Control. The Executive may
terminate this Agreement upon written notice to the Company, within six (6)
months of a Change in Control of the Company. For purposes of this Agreement,
"Change in Control" shall mean:
(a)acquisition of 50% or more of the combined voting power of the
Company's voting securities; or
(b)stockholder approval of (i) a merger, consolidation or
reorganization involving the Company, (ii) a complete liquidation or
dissolution of the Company or (iii) an agreement for the sale or other
disposition of all or substantially all of the assets of the Company;
provided, however, that the Executive agrees that the merger (the "Kimco
Merger") of the Company with and into REIT Sub, Inc., a Maryland corporation
("REIT Sub"), pursuant to that certain Agreement and Plan of Merger, dated as of
January 13, 1998, as amended (the "Merger Agreement"), among Kimco Realty
Corporation, a Maryland corporation, REIT Sub and the Company, shall not
constitute a Change in Control for purposes of this Section 5.6, but instead
shall be governed by Section 5.8.
5.7.Executive's Voluntary Termination. The Executive may, at any time,
terminate this Agreement without Good Reason, provided that the Executive
delivers written notice to the Company at least thirty (30) days prior to the
effective date of termination.
5.8Termination Upon Kimco Merger. Notwithstanding anything herein to the
contrary, it is understood and agreed that upon the consummation of the Kimco
Merger pursuant to the Merger Agreement, this Agreement shall terminate and the
Company shall pay to Executive the Termination Payments described in Section 6.3
on the day of the consummation of the Merger.
5.9.Nonrenewal. The Company may terminate this Agreement upon the
expiration of any Employment Period, provided that the Company gives written
notice of such nonrenewal to the Executive at least ninety (90) days prior to
the expiration of such Employment Period.
5.10.Notice. Any termination of the Executive's employment by the Company
or the Executive shall be communicated by written Notice of Termination to the
other party. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
5.11.Date of Termination. The effective date of the Executive's
termination depends on the type of termination applied. "Date of Termination"
shall mean the following:
(a)if the Executive's employment is terminated by his death, the date
of his death;
(b)if the Executive's employment is terminated by reason of his
disability, the date of the opinion of the physician referred to in
Section 5.2 hereof;
(c)if the Executive's employment is terminated by the Company for
Cause (pursuant to Section 5.3 hereof) or without Cause (pursuant to
Section 5.4 hereof), the date specified in the Notice of Termination;
(d)if the Executive terminates his employment for Good Reason
(pursuant to Section 5.5 hereof), upon a Change in Control of the Company
(pursuant to Section 5.6 hereof) or voluntarily (pursuant to Section 5.7
hereof), the date specified in the Notice of Termination;
(e)in the event this Agreement is terminated upon the consummation of
the Kimco Merger (pursuant to Section 5.8 hereof), the date of the
consummation of the Merger; and
(f)if the Executive's employment is terminated pursuant to Section 5.9
hereof, the date this Agreement terminates by its terms.
5.12.Termination Obligations.
(a)The Executive hereby acknowledges and agrees that all Personal
Property (as defined below) and equipment furnished to or prepared by the
Executive in the course of or incident to his employment belongs to the Company
and shall be promptly returned to the Company upon termination of the Employment
Period. "Personal Property" includes, without limitation, all electronic
devices belonging to the Company used by the Executive, including, without
limitation, personal computers, facsimile machines, cellular telephones, pagers
and tape recorders and all books, manuals, records, reports, notes, contracts,
lists, blueprints, maps and other documents or materials, or copies thereof
(including computer files), and all other proprietary information relating to
the business of the Company. Following termination, the Executive will not
retain any written or other tangible material containing any proprietary
information of the Company.
(b)Upon termination of the Employment Period, the Executive shall be
deemed to have resigned from all offices and directorships then held with the
Company or any affiliate.
(c)The representations and warranties contained herein and the
Executive's obligations under this Section 5.12 and Sections 7 and 8 hereof
shall survive termination of the Employment Period and the expiration of this
Agreement.
6.Compensation Upon Termination.
6.1.Termination due to Death or Disability, by the Company without Cause or
by the Executive for Good Reason. If the Executive's employment shall be
terminated pursuant to Sections 5.1, 5.2, 5.4 or 5.5 hereof, the Company shall
pay to the Executive or the Executive's estate, as the case may be, (a) all
accrued compensation and pro-rata bonus, based upon the amount of the bonus
received by the Executive during the most recent preceding year (the
"Compensation Payment"), through the Date of Termination and (b) a severance
payment in an amount equal to the Executive's base salary then in effect for the
greater of the balance of the term of this Agreement or one year (the "Severance
Payment" and, together with the Compensation Payment, the "Termination
Payments"). Additionally, each theretofore unvested option to purchase shares
of common stock of the Company granted to the Executive shall become immediately
exercisable ("Vested Options") notwithstanding that such options may not yet
have become fully exercisable under the terms of the applicable stock option
agreements, and furthermore, such Vested Options shall not expire until one (1)
year from the Date of Termination.
6.2.Termination by the Company for Cause or Voluntary Termination by the
Executive. If the Executive's employment shall be terminated for Cause pursuant
to Section 5.3 hereof or the Executive terminates his employment voluntarily
pursuant to Section 5.7 hereof, the Company shall pay the Executive the
Compensation Payment described in Section 6.1(a).
6.3.Executive's Termination Upon a Change in Control or Kimco Merger. If
the Executive terminates his employment with the Company pursuant to Section 5.6
hereof upon a Change in Control of the Company, or if this Agreement is
terminated pursuant to Section 5.8 hereof upon the consummation of the Kimco
Merger, the Company or its successor, as the case may be, shall pay the
Executive the Termination Payments described in Section 6.1.
6.4.Manner of Payment. Any Termination Payments made pursuant to this
Section 6 shall be payable in a one-time payment by the Company which the
Company shall pay in cash to the Executive or his estate, as the case may be,
not later than thirty (30) days after the Date of Termination (the "Payment
Date"), except as provided in Section 5.8 hereof.
7.Confidentiality, Noncompetition and Nonsolicitation Covenants.
7.1.Confidentiality. In addition to the agreements set forth in
Section 5.12(a) hereof, the Executive hereby agrees that the Executive will not,
during the Employment Period or at any time thereafter directly or indirectly
disclose or make available to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, any Confidential Information
(as defined below). The Executive agrees that, upon termination of his
employment with the Company, all Confidential Information in his possession that
is in written or other tangible form (together with all copies or duplicates
thereof, including computer files) shall be returned to the Company and shall
not be retained by the Executive or furnished to any third party, in any form
except as provided herein; provided, however, that the Executive shall not be
obligated to treat as confidential or return to the Company copies of any
Confidential Information that (a) was publicly known at the time of disclosure
to the Executive, (b) becomes publicly known or available thereafter other than
by any means in violation of this Agreement or any other duty owed to the
Company by the Executive or (c) is lawfully disclosed to the Executive by a
third party. As used in this Agreement, the term "Confidential Information"
means information disclosed to the Executive or known by the Executive as a
consequence of or through his relationship with the Company, about the owners,
tenants, employees, consultants, vendors, business methods, public relations
methods, organization, procedures, property acquisition and development or
finances, including, without limitation, information of or relating to owner or
tenant lists of the Company and its affiliates.
7.2.Noncompetition. During the term of the Executive's employment
hereunder, the Executive shall not engage in any activities, directly or
indirectly, in direct competition with the Company, and will not make any
investment in respect of power or community centers in competition with the
Company, other than through ownership of not more than 5% of the outstanding
shares of a public company engaged in such activities and through investments
existing as of the date of this Agreement listed on Schedule I hereto.
7.3.Nonsolicitation. For a period of two (2) years following the date on
which the Executive's employment hereunder is terminated, the Executive shall
not solicit or induce any of the Company's employees, except Dolores K. Juditz,
to end their relationship with the Company, or recruit, hire or otherwise induce
any such person to perform services for the Executive, or any other person, firm
or company.
8.General Provisions.
8.1.Injunctive Relief and Enforcement. The Executive acknowledges that the
remedies at law for any breach by him of the provisions of Sections 5.12(a) or 7
hereof may be inadequate and that, therefore, in the event of breach by the
Executive of the terms of Sections 5.12(a) or 7 hereof, the Company shall be
entitled to institute legal proceedings to enforce the specific performance of
this Agreement by the Executive and to enjoin the Executive from any further
violation of Sections 5.12(a) or 7 hereof and to exercise such remedies
cumulatively or in conjunction with all other rights and remedies provided by
law and not otherwise limited by this Agreement.
8.2.Notice. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when addressed as follows and (a) when personally
delivered, (b) when transmitted by facsimile, electronic or digital transmission
with receipt confirmed, (c) one day after delivery to an overnight air courier
guaranteeing next day delivery or (d) upon receipt if sent by certified or
registered mail. In each case notice shall be sent to:
If to the Executive:
George M. Jezek
6444 Lance Court
San Diego, California 92120
If to the Company:
Joseph K. Kornwasser
President and Chief Executive Officer
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Facsimile: (213) 937-8175
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8.3.Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. In addition, in the event any provision in this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of extending for too great a period of time or over too great a geographical
area or by reason of being too extensive in any other respect, each such
agreement shall be interpreted to extend over the maximum period of time for
which it may be enforceable and to the maximum extent in all other respects as
to which it may be enforceable, and enforced as so interpreted, all as
determined by such court in such action.
8.4.Assignment. This Agreement may not be assigned by the Executive, but
may be assigned by the Company to any successor to its business and will inure
to the benefit and be binding upon any such successor.
8.5.Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
8.6.Headings. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
8.7.Choice of Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of California without giving
effect to the principles of conflict of laws thereof.
8.8.Indemnification. To the fullest extent permitted under applicable law,
the Company shall indemnify, defend and hold the Executive harmless from and
against any and all causes of action, claims, demands, liabilities, damages,
costs and expenses of any nature whatsoever (collectively, "Damages") directly
or indirectly arising out of or relating to the Executive discharging the
Executive's duties hereunder on behalf of the Company and/or its respective
subsidiaries and affiliates, so long as the Executive acted in good faith within
the course and scope of the Executive's duties with respect to the matter giving
rise to the claim or Damages for which the Executive seeks indemnification.
8.9.LIMITATION ON LIABILITIES. IF EITHER THE EXECUTIVE OR THE COMPANY IS
AWARDED ANY DAMAGES AS COMPENSATION FOR ANY BREACH OR ACTION RELATED TO THIS
AGREEMENT, A BREACH OF ANY COVENANT CONTAINED IN THIS AGREEMENT (WHETHER EXPRESS
OR IMPLIED BY EITHER LAW OR FACT), OR ANY OTHER CAUSE OF ACTION BASED IN WHOLE
OR IN PART ON ANY BREACH OF ANY PROVISION OF THIS AGREEMENT, SUCH DAMAGES SHALL
BE LIMITED TO CONTRACTUAL DAMAGES AND SHALL EXCLUDE (I) PUNITIVE DAMAGES AND
(II) CONSEQUENTIAL AND/OR INCIDENTAL DAMAGES (E.G., LOST PROFITS AND OTHER
INDIRECT OR SPECULATIVE DAMAGES). THE MAXIMUM AMOUNT OF DAMAGES THAT THE
EXECUTIVE MAY RECOVER FOR ANY REASON SHALL BE THE AMOUNT EQUAL TO ALL AMOUNTS
OWED (BUT NOT YET PAID) TO THE EXECUTIVE PURSUANT TO THIS AGREEMENT THROUGH ITS
TERM AND THROUGH ANY APPLICABLE SEVERANCE PERIOD, PLUS INTEREST ON ANY DELAYED
PAYMENT AT THE MAXIMUM RATE PER ANNUM ALLOWABLE BY APPLICABLE LAW FROM AND AFTER
THE DATE(S) THAT SUCH PAYMENTS WERE DUE. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IT IS UNDERSTOOD AND AGREED THAT IN THE EVENT THE COMPANY FAILS TO
MAKE TIMELY TERMINATION PAYMENTS TO EXECUTIVE IN CONNECTION WITH THE KIMCO
MERGER PURSUANT TO SECTION 5.8 HEREOF, THIS SECTION 8.9 SHALL NOT APPLY.
8.10.WAIVER OF JURY TRIAL. TO THE EXTENT APPLICABLE, EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
FOR ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED
THAT IN THE EVENT THE COMPANY FAILS TO MAKE TIMELY TERMINATION PAYMENTS TO
EXECUTIVE IN CONNECTION WITH THE KIMCO MERGER PURSUANT TO SECTION 5.8 HEREOF,
THIS SECTION 8.10 SHALL NOT APPLY.
8.11.Attorneys' Fees. If any legal action, arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any of the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, including
any appeal of such action or proceeding, in addition to any other relief to
which that party may be entitled.
8.12.Entire Agreement. This Agreement contains the entire agreement and
understanding between the Company and the Executive with respect to the
employment of the Executive by the Company as contemplated hereby, and no
representations, promises, agreements or understandings, written or oral, not
herein contained shall be of any force or effect. This Agreement shall not be
changed unless in writing and signed by both the Executive and the Company.
8.13.Executive's Acknowledgment. The Executive acknowledges that (a) he
has had the opportunity to consult with independent counsel of his own choice
concerning this Agreement and (b) he has read and understands the Agreement, is
fully aware of its legal effect and has entered into it freely based on his own
judgment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
THE PRICE REIT, INC.,
a Maryland corporation
By: /s/ Raymond E. Peet
Raymond E. Peet
Chairman of the Board
EXECUTIVE
/s/ George M. Jezek
George M. Jezek
SCHEDULE I
None
===============================================================================
EXHIBIT 10.27
SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of February 27, 1998, by and among The Price REIT, Inc.,
a Maryland corporation (the "Company"), Wells Fargo Bank, N.A., CoreStates Bank,
N.A., and Morgan Guaranty Trust Company of New York.
W I T N E S S E T H:
WHEREAS, the Company and the Banks have entered into that certain Second Amended
and Restated Credit Agreement, dated as of July 1, 1997, as amended by that
certain First Amendment to Second Amended and Restated Credit Agreement, dated
as of December 23, 1997 (as so amended, the "Credit Agreement"); and
WHEREAS, the parties desire to modify the Credit Agreement upon the terms and
conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties do hereby agree as follows:
1.Definitions. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Credit Agreement.
2.Co itment Increase.
a.Pursuant to Section 2.1(b) of the Credit Agreement, the Company has
notified the Banks of its request to increase the Aggregate Revolving
Commitment by $25,000,000 (the "Commitment Increase") and each Bank has
agreed, subject to clause (b) below, to increase its Revolving Commitment
by its pro rata share of the Commitment Increase (each, an "Additional
Commitment"), effective as of the Effective Date.
b.The obligation of each Bank to increase its Revolving Commitment as
set forth in this Amendment is subject to the following conditions prece
dent: (i) each Bank shall have received, on or before the Effective Date,
promissory notes, duly and validly executed by the Company, in
substantially the form of Exhibit attached hereto, made payable to the
order of such Bank and in the original principal amount of such Bank's
Additional Commitment, and (ii) the Company shall have paid to the Agent,
for the ratable account of the Banks, an additional commitment fee equal to
one quarter percent (.25%-) of the Commitment Increase.
3.Leverage Ratio. Section 7.21(e) of the Credit Agreement is deleted in its
entirety and the following new Section 7.21(e) is substituted therefor:
(e)Leverage Ratio. Indebtedness of the Company and its Subsidiaries,
together with the Company's allocable share, based on the Company's
percentage ownership interest of such Joint Venture or unconsolidated
subsidiary, of Indebtedness of the Company's unconsolidated subsidiaries
and Joint Ventures, shall at no time exceed 50t of Gross Asset Value.
4.Representations and Warranties. The Company hereby represents and warrants to
the Banks that no Default or Event of Default exists under the Credit
Agreement and that the representations and warranties of the Company set forth
in the Credit Agreement are true and correct on and as of the date hereof,
except to the extent that such representations and warranties expressly
speak only as of a prior date, in which case such representations and warranties
were true and correct on and as of such prior date.
5.Effective Date. This Amendment shall become effective upon receipt by the
Agent of counterparts hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart shall not have been
received, receipt by the Agent in form satisfactory to it of telegraphic, telex
or other written confirmation from such party of execution of a
counterpart hereof by such party) (the date of such receipt being deemed the
"Effective Date").
6.Entire Acrreement. This Amendment constitutes the entire and final agreement
among the parties hereto with respect to the subject matter hereof and
there are no other agreements, understandings, undertakings, representations or
warranties among the parties hereto with respect to the subject matter hereof
except as set forth herein.
7.Governing Law. This Amendment shall be governed by, and construed in
accordance with, the law of the State of New York.
8.Counterparts. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same agreement, and
any of the parties hereto may execute this Amendment by signing any such
counterpart.
9.Headings, Etc. Section or other headings contained in this Amendment are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.
10.No Further Modifications. Except as modified herein, all of the terms and
conditions of the Credit Agreement, as modified hereby shall remain in full
force and effect and, as modified hereby, the Company confirms and ratifies all
of the terms, covenants and conditions of the Credit Agreement in all respects.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.
THE PRICE REIT, INC.
By: /LAWRENCE M. KRONENBERG/
------------------------
Name: Lawrence M. Kronenberg
Title: Executive Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Agent and as a Bank
By: /TIMOTHY V. O' DONOVAN/
-----------------------
Name: Timothy V. O' Donovan
Title: Vice President
WELLS FARGO BANK, N.A. as a Bank
By: /TONYA BROWN/
-------------
Name: Tonya Brown
Title: Vice President
CORESTATES BANK, N.A., as a Bank
By: /MARK A. DUFFY/
---------------
Name: Mark A. Duffy
Title: Vice President
REVOLVING NOTE
$8,333,333.34
February 27, 1998
New York, New York
On the Revolving Termination Date, THE PRICE REIT, INC., a Maryland corporation
(the "Company"), for value received, hereby promises to pay to the order of
MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("Bank") the sum of (i) EIGHT MILLION
THREE HUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE AND 34/100
DOLLARS ($8,333,333.34) or (ii) if less, the total unpaid principal amount of
all Base Rate Loans and LIBOR Rate Loans made by Bank to the Company from the
date of this Note through the Revolving Termination Date pursuant to that
certain Second Amended and Restated Credit Agreement dated as of July 1, 1997,
as amended to date (as so amended, the "Credit Agreement"), among the Company,
Morgan Guaranty Trust Company of New York (as Agent and as a bank), and certain
banks named therein, including Bank.Terms not defined herein have the meanings
as signedto such terms in the Credit Agreement.
Payments under this Note shall be made in lawful money of the United States at
the address for payments provided in the Credit Agreement.
This Note shall bear interest as set forth in the Credit Agreement for Base Rate
Loans and LIBOR Rate Loans. Interest payable under this Note shall be payable
at the times specified in the Credit Agreement. This Note may be declared to be,
or be and become, due prior to its expressed maturity, voluntary prepayments may
be made hereon, and certain prepayments are required to be made hereon, all as
provided in the Credit Agreement.
This Note is being delivered to Bank under Section 2.1(b) of the Credit
Agreement and is subject to the terms of the Credit Agreement, including without
limitation acceleration of maturity.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.
All Base Rate Loans and LIBOR Rate Loans made by Bank to the Company pursuant to
the Credit Agreement and all payments of principal thereof may be indicated by
Bank upon the grid attached hereto which is a part of this Note or by records
maintained by Bank. Such notations or records shall be presumptive as to the
aggregate unpaid principal amount of all Base Rate Loans and LIBOR Rate Loans
made by Bank pursuant to the Credit Agreement.
THE PRICE REIT, INC.
By: /LAWRENCE M. KRONENBERG/
------------------------
Name: Lawrence M. Kronenberg
Title: Executive V.P.-Finance
Base Rate Loans and LIBOR Rate Loans
Payments of Principal
Name of
Amount Interest Amount of Person
& Type Period, Interest Principal Unpaid Making
Date of Loan if any Rate Paid Balance Negotiation
- -------------------------------------------------------------------------
REVOLVING NOTE
$8,333,333.33
February 27, 1998
New York, New York
On the Revolving Termination Date, THE PRICE REIT, INC., a Maryland corporation
(the "Company"), for value received, hereby promises to pay to the order of
CORESTATES BANK, N.A. ("Bank") the sum of (i) EIGHT MILLION THREE HUNDRED
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE AND 33/100 DOLLARS
($8,333,333-33) or (ii) if less, the total unpaid principal amount of all Base
Rate Loans and LIBOR Rate Loans made by Bank to the Company from the date of
this Note through the Revolving Termination Date pursuant to that certain Second
Amended and Restated Credit Agreement dated as of July 1, 1997, as amended to
date (as so amended, the "Credit Agreement"), among the Company, Morgan Guaranty
Trust Company of New York (as Agent and as a bank), and certain banks named
therein, including Bank. Terms not defined herein have the meanings assigned to
such terms in the Credit Agreement.
Payments under this Note shall be made in lawful money of the United States at
the address for payments provided in the Credit Agreement.
This Note shall bear interest as set forth in the Credit Agreement for Base Rate
Loans and LIBOR Rate Loans. Interest payable under this Note shall be payabl
at the times specified in the Credit Agreement. This Note may be declared to be,
or be and become, due prior to its expressed maturity, voluntary prepayments may
be made hereon, and certain prepayments are required to be made hereon, all as
provided in the Credit Agreement.
This Note is being delivered to Bank under Section 2.1(b) of the Credit
Agreement and is subject to the terms of the Credit Agreement, including without
limitation acceleration of maturity.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.
All Base Rate Loans and LIBOR Rate Loans made by Bank to the Company pursuant to
the Credit Agreement and all payments of principal thereof may be indicated by
Bank upon the grid attached hereto which is a part of this Note or by records
maintained by Bank. Such notations or records shall be presumptive as to the
aggregate unpaid principal amount of all Base Rate Loans and LIBOR Rate Loans
made by Bank pursuant to the Credit Agreement.
THE PRICE REIT, INC.
By: /LAWRENCE M. KRONENBERG/
------------------------
Name: Lawrence M. Kronenberg
Title: Executive V.P.-Finance
Base Rate Loans and LIBOR Rate Loans
Payments of Principal
Name of
Amount Interest Amount of Person
& Type Period, Interest Principal Unpaid Making
Date of Loan if any Rate Paid Balance Negotiation
- --------------------------------------------------------------------------
REVOLVING NOTE
$8,333,333.33
February 27, 1998
New York, New York
On the Revolving Termination Date, THE PRICE REIT, INC., a Maryland corporation
(the "Company"), for value received, hereby promises to pay to the order of
WELLS FARGO BANK, N.A. ("Bank") the sum of W EIGHT MILLION THREE HUNDRED
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY THREE AND 33/100 DOLLARS
($8,333,333.33) or (ii) if less, the total unpaid principal amount of all Base
Rate Loans and LIBOR Rate Loans made by Bank to the Company from the date of
this Note through the Revolving Termination Date pursuant to that certain Second
Amended and Restated Credit Agreement dated as of July 1, 1997, as amended to
date (as so amended, the "Credit Agreement"), among the Company, Morgan Guaranty
Trust Company of New York (as Agent and as a bank), and certain banks named
therein, including Bank. Terms not defined herein have the meanings assigned to
such terms in the Credit Agreement.
Payments under this Note shall be made in lawful money of the United States at
the address for payments provided in the Credit Agreement.
This Note shall bear interest as set forth in the Credit Agreement for Base Rate
Loans and LIBOR Rate Loans. Interest payable under this Note shall be payable
at the times specified in the Credit Agreement. This Note may be declared to be,
or be and become, due prior to its expressed maturity, voluntary prepayments may
be made hereon, and certain prepayments are required to be made hereon, all as
provided in the Credit Agreement.
This Note is being delivered to Bank under Section 2.1(b) of the Credit
Agreement and is subject to the terms of the Credit Agreement, including without
limitation acceleration of maturity.
This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.
All Base Rate Loans and LIBOR Rate Loans made by Bank to the Company pursuant to
the Credit Agreement and all payments of principal thereof may be indicated by
Bank upon the grid attached hereto which is a part of this Note or by records
maintained by Bank. Such notations or records shall be presumptive as to the
aggregate unpaid principal amount of all Base Rate Loans and LIBOR Rate Loans
made by Bank pursuant to the Credit Agreement.
THE PRICE REIT, INC.
By: /LAWRENCE M. KRONENBERG/
------------------------
Name: Lawrence M. Kronenberg
Title: Executive V.P.-Finance
Base Rate Loans and LIBOR Rate Loans
Payments of Principal
Name of
Amount Interest Amount of Person
& Type Period, Interest Principal Unpaid Making
Date of Loan if any Rate Paid Balance Negotiation
- -------------------------------------------------------------------------
===============================================================================
EXHIBIT 10.51
AMENDMENT TO AGREEMENT TO PURCHASE SHOPPING CENTER
THIS AMENDMENT TO AGREEMENT TO PURCHASE SHOPPING CENTER ("Amendment") is dated
December 29, 1997, and made by and among Woodmark Associates, Ltd., a California
limited partnership, as Seller, and The Price REIT, Inc., a Maryland
corporation, as Purchaser, and Price REIT Properties, LLC, a Delaware limited
liability company, as the new Purchaser ("New Purchaser").
RECITALS
A.On November 7, 1997, Seller and Purchaser entered into that certain Agreement
to Purchase Shopping Center, (the "Contract") for the purchase and sale of the
shopping center commonly known as Woodgrove Festival, in Woodridge, Illinois
(the "Shopping Center").
B.In consideration of Purchaser's agreement to close the sale of the Shopping
Center following its due diligence review of the physical condition of the
Shopping Center, Purchaser and Seller have agreed to reduce the purchase price
for the Shopping Center as set forth in the Contract.
C.Purchaser desires to substitute the name of the New Purchaser, as the
Purchaser, under the Contract.
D.Purchaser and Seller agree to reconcile certain expenses of the Shopping
Center after the closing, in accordance with the terms and provisions contained
herein.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller, Purchaser, and New Purchaser agree as
follows:
1.All capitalized terms used herein shall have the same meaning ascribed to them
in the Contract, except as expressly otherwise defined herein.
2.The Purchase Price for the Shopping Center shall be reduced to Sixteen
Million, Five Hundred Twenty-Five Thousand and no/100 Dollars ($16,525,000.).
3.Purchaser hereby waives all conditions precedent set forth in Sections 13.1
and 13.2 of the Contract.
4.New Purchaser shall be substituted in place and instead of Purchaser. New
Purchaser hereby agrees to assume and fully perform all obligations,
representations, and covenants of Purchaser under the Contract. Seller hereby
fully releases Purchaser from all obligations, liabilities, representations, and
covenants of Purchaser under the Contract.
5.It is hereby agreed, Section 6.2 Prorations, (d) Common Area Maintenance
Charges, shall be modified to provide as follows:
Regarding Common Area Maintenance Expenses, Advertising, Insurance & Similar
Expenses ("CAM Expenses"), the Tenants' obligations under the terms of the
Leases to pay their proportionate share of such CAM Expenses and the Landlord's
obligations under the terms of the Lease to provide an accounting to each
Tenant,
i) Seller shall be responsible for payment of all CAM Expenses for the period of
January 1, 1997 through December 31, 1997.
ii) Seller shall retain all estimated amounts collected from tenants for CAM
Expenses for the period of January 1, 1997 through December 31, 1997.
iii) Seller shall deliver to New Purchaser, within 45 days after the closing, a
computation showing all CAM Expenses incurred by Seller for the period of
January 1, 1997 through December 31, 1997, the proportionate amount to be
charged to each Tenant, less any estimated amounts previously collected by the
Seller for the same period.
iv) The computation shall be accompanied by a listing of all CAM Expenses, a
copy of each check paid to each vendor and a copy of the vendor's invoice.
v) Within 30 days of receipt of all computations, documents, invoices, checks
and other items described in subparagraphs iii) and iv) of this Section 5, the
New Purchaser shall deliver to the Tenants the same.
vi) In the event the computation referred to in subparagraph iii of this Section
5 reflects a net amount due to the Seller, New Purchaser, upon collection of
such amounts shall forward to Seller same amounts within 30 days. New Purchaser
shall also provide Seller with a monthly statement showing amounts due to
Seller, amounts collected from tenants, and the balance remaining to be
collected. New Purchaser shall use reasonable efforts to collect such amounts on
Seller's behalf but shall not be obligated to pursue and remedy against any
tenant for delinquent amounts. New Purchaser shall receive said amounts in
trust for the mutual benefit of New Purchaser and Seller, which amounts shall be
reprorated to the Closing Date and any and all moneys owed to Seller shall be
paid within 10 days after final determination of the amounts due Seller.
vii) In the event the computation referred to in subparagraph iii of this
Section 5 reflects a net amount due to the tenants, a check in the same amount,
payable by Seller to New Purchaser, shall accompany items iii) and iv). New
Purchaser shall credit the same amount to the tenants within 30 days.
viii) If the computation reflects any amount of CAM Expenses which are not
recoverable from the Tenants, this amount shall be prorated between New
Purchaser and Seller, for the period from the closing date through December 31,
1997 and settled within 30 days.
6.Notwithstanding anything possibly to the contrary contained in the Contract,
the parties agree that the security deposits held by Seller for Grounds for
Thought in the amount of $1700, and for May Hallmark in the amount of $3375
shall be retained by Seller in payment of past due rents.
7.Notwithstanding anything contained in the Contract or in the Assignment
and Assumption of Contracts, Intangible Property, Warranties and Guarantees
delivered from Seller to Purchaser at Closing, the following causes of action
and other items of litigation (the "Litigation") are expressly excluded from
this sale:
Woodgrove Nautilus v. LaSalle National Bank as Trustee under Trust No.
10705, Case No. 97 L 388 pending in DuPage County, Illinois;
LeBeau v. Mid-America Asset Management, et al., Case No. 95 L 293,pending
in Cook County, Illinois
Meyer v. LaSalle National Bank, et al. Case No.97 L 0388 pending in DuPage
County, Illinois.
Seller shall indemnify and hold Purchaser and New Purchaser and their respective
officers, directors, employees, agents and attorneys harmless from any and all
costs, expenses, damages, actions, proceedings, and other claims in connection
with the Litigation, including reasonable attorneys' fees, provided, however,
that Seller shall indemnify with attorneys of its choice, and shall be entitled
to compromise or settle such litigation at its own discretion.
8.Except as expressly modified herein, the terms of the Contract shall
continue in full force and effect.
9. This Agreement and any document or instrument executed pursuant hereto
may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
WOODMARK ASSOCIATES, Ltd.
a California limited partnership
By: Investment Properties II, Inc. a
Delaware corporation, its sole general partner
By: /ROBERT J. HELLMAN/
-------------------
Robert J. Hellman, President
Price REIT Properties, LLC,
a Delaware limited liability company
BY: The Price REIT, Inc., Member
By: /JERALD FRIEDMAN/
-----------------
Its: Senior Executive Vice President
The Price REIT, Inc., a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Its: Senior Executive Vice President
Escrow Trust No. 97082403
Dated: 12-29-97
Escrow Officer: Janet Johnson West
Telephone No.: (312)223-2713
Fax No.: (312)223-5888
ESCROW AGREEMENT FOR KOHL'S CAM AUDIT
This Escrow Agreement is made by and among Chicago Title and Trust Company, as
Escrow Trustee, Woodmark Associates, Ltd., as Seller, and Price REIT Properties,
LLC, as Purchaser, at the closing of the Woodgrove Festival Shopping Center (the
"Property") for the purpose of holding in escrow the Common Area Maintenance
Expense ("CAM Expense") attributable to Kohl's for its owner occupied space.
1.Seller hereby deposits with Escrow Trustee, the sum of $28,700 (referred to
hereafter, together with any interest earned thereon, as the "Deposit'), to be
held by Escrow Trustee for the mutual benefit of Seller and Purchaser.
2.Upon receipt of one of the following:
a.A written demand to pay the Deposit to Seller, accompanied by a written
estoppel certificate or other document signed by Kohl's which states that its
proportionate share for purposes of payment of CAM Expense is 26.57%; or
b.A written demand to pay the Deposit to Seller, accompanied by a written
certification signed by Kohl's certifying that Kohl's did not make a claim for
any amounts due from Seller for overpayment of its CAM Expense during the last 3
years within the time Kohl's had to make such a claim under its lease; or
c.A written demand to pay the Deposit to Seller, accompanied by a written
certification signed by Kohl's certifying that Kohl's made a claim for amounts
due it from Seller for overpayment of its CAM Expense during the last 3 years,
and such a claim was resolved by Kohl's and Seller in favor of Seller; or
d.A joint written direction signed by both Seller and Purchaser directing the
Escrow Trustee to disburse the Deposit;
the Escrow Trustee is authorized and directed to disburse the Deposit in
accordance with such certification or direction, and shall send copies of such
demand and disbursement to both parties.
3.These escrow instructions are governed by and are to be construed under the
laws of the State of Illinois. These escrow trust instructions, amendments or
supplemental instructions hereto, may be executed in counterparts, each of which
shall be deemed an original and all such counterparts together shall constitute
one and the same instrument.
4.All notices and demands required or permitted to be made hereto shall be made
to the Escrow Trustee in writing. All notices required to be served by the
Escrow Trustee pursuant to these instructions shall be in writing and mailed to
the attorneys for the respective parties hereto at the addresses shown herein.
5.Except for deposits of funds for which Escrow Trustee has received express
written direction concerning investment or other handling, the parties hereto
agree that the Escrow Trustee shall be under no duty to invest or reinvest any
deposits at any time held by it hereunder; and, further, that Escrow Trustee may
commingle such deposits with other deposits or with its own funds in the manner
provided for the administration of funds under Section 2-8 of the Corporate
Fiduciary Act of Illinois and may use any part or all such funds for its own
benefit without obligation of any party for interest or earnings derived
thereby, if any. Provided, however, nothing herein shall diminish escrow
trustee's obligation to apply the full amount of the deposits in accordance with
the terms of these escrow trust instructions.
6.These escrow instructions may be amended from time to time by less than
all parties hereto by written amendment deposited with Escrow Trustee, provided
that such amendment shall apply to and affect only the parties signing the
amendment and the Escrow Trustee shall proceed to comply with the terms of these
instructions as unamended with respect to all other parties. All amendments or
supplemental instructions, properly executed, shall be considered the same as
these instructions.
7.For notices, any notice shall be deemed given (i) if and when personally
delivered (ii) upon receipt if sent by a nationally recognized overnight courier
addressed to a party at its address set forth below;
If to Seller:Robert J. Hellman
Investment Properties II Inc.
The World Financial Center
29th Floor
New York, N.Y. 10285
If to Purchase:The Price REIT, Inc.
145 S. Fairfax Ave.
4th Floor
Los Angeles, CA 90036
Attn: Jerald Friedman
WOODMARK ASSOCIATES, LTD., a
California limited partnership,
By: Investment Properties II, Inc.
By: /ROBERT J. HELLMAN/
-------------------
Robert J. Hellman, President
For Purchaser:
PRICE REIT, LLC, a Delaware
limited liability company
By: /DANIEL C. SLATTERY/
--------------------
Its: Vice President-Development
Accepted:Chicago Title and Trust Company, Escrow Trustee:
By: _______________________ Date: December __, 1997
Agreement to Purchase Shopping Center
Table of Contents
Article
1 DEFINITIONS
1.1Definitions
2 PURCHASE AND SALE
2.1Purchase and Sale
3 DEPOSIT AND PURCHASE PRICE
3.1Deposit; Payment of Purchase Price
4 SURVEY
4.1Survey
5TITLE
5.1Title
6 POSSESSION, PRORATIONS AND CLOSING COSTS
6.1Possession
6.2Prorations
6.3Closing Costs
7 ESCROW
7.1Escrow
8 BROKERAGE
8.1Brokerage
9 CASUALTY AND CONDEMNATION
9.1Casualty
9.2Condemnation
10 AFFIRMATIVE COVENANTS
10.1 Affirmative Covenants
11 REPRESENTATIONS OF PURCHASER
11.1Representations of Purchaser
11.2Obligation to Pay Leasing Commissions.
12 REPRESENTATIONS OF SELLER
12.1Representations of Seller
13 CONDITIONS PRECEDENT AND TERMINATION
13.1General Viability
13.2 Approval by Purchaser's Board of Directors
14 CLOSING
14.1Time and Place
14.2Seller's Deliveries
14.3Purchaser's Deliveries
14.4Concurrent Deliveries
14.5Concurrent Transactions
14.6New York Style Closing
15 DEFAULT
15.1Default
16NOTICES
16.1Notices
17 GENERAL
17.1Entire Agreement, Amendments and Waivers
17.2Further Assurances
17.3Survival and Benefit
17.4Interpretation
17.5Consents and Approvals
17.6Tax Appeal Proceedings
17.7Audit Cooperation
17.8Relationship
17.9Successors and Assigns
17.10Attorneys' Fees
Exhibit A: Legal Description
Exhibit B: Permitted Title Exceptions
Exhibit C: Schedule of Leases
Exhibit D: Schedule of Pending Litigation
Exhibit E: Update Certificate
Exhibit F: Bill of Sale.
Exhibit G:Tenant Letters
Exhibit H:Tenant Estoppel Certificates
Exhibit I:Assignment and Assumption of Leases and Rents
Exhibit J:Assignment and Assumption of Contracts, Intangible Property,
Warranties and Guarantees
AGREEMENT TO PURCHASE SHOPPING CENTER
THIS AGREEMENT is made this ____ day of ______________, 19__, by and
between Woodmark Associates, Ltd. a California limited partnership, as
beneficiary with sole power of direction in and to LaSalle National Bank, as
Trustee under Trust Agreement dated October 3, 1983, and known as Trust Number
107105 ("Seller"), and The Price REIT, Inc. a Maryland corporation.,
(Purchaser").
R E C IT A L S:
A. Seller is the fee owner of the Real Property (as hereinafter defined)
commonly referred to as the Woodgrove Festival Shopping Center, Woodridge,
Illinois and the owner of the Intangible Personal Property, the Tangible
Personal Property, the Contracts, the Leases and the Licenses (all as
hereinafter defined and collectively referred to herein as the "Property").
B. Seller desires to sell, and Purchaser desires to purchase, the
Property upon and subject to the terms and conditions hereinafter set forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, agreements, covenants and conditions
herein contained, and other good and valuable consideration, Seller and
Purchaser agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
respective meanings indicated below:
Agreement: This Agreement to Purchase Shopping Center, including the
Exhibits attached hereto which are incorporated herein and made a part hereof by
this reference.
Broker: As defined in Section 8.1.
Closing Date: A date designated by Seller for closing of the transaction
contemplated hereby, which is not more than five (5) days following satisfaction
or waiver of all conditions precedent to Purchaser's obligations hereunder as
set forth in Section 13 hereof.
Contracts: Any and all, written or oral, (i) insurance, service,
maintenance, operating, repair, collective bargaining, employment, employee
benefit, management, leasing, supply, purchase, consulting, professional
service, advertising, promotion, public relations, construction contracts and
commitments, and equipment warranties and all other warranties and guarantees
(excluding the Leases and the recorded documents evidencing the Permitted Title
Exceptions) in any way related to the ownership, operation or functioning of the
Property or any part thereof, or pursuant to which goods, services and supplies
are furnished, or persons are employed on a continuing basis, for the operation
of the Property; (ii) equipment leases and all rights and options of Seller
thereunder, including rights to renew or extend the term or purchase the leased
equipment, relating to equipment leased by or on behalf of Seller, located in or
upon the Real Property or used in connection therewith; and (iii) guaranties,
warranties, permits, contracts, and other rights related to the ownership,
operation or functioning of the Property or any portion thereof.
Deed: That certain recordable Trustee's Deed to be delivered by Seller at
closing on the Closing Date conveying to Purchaser, or Purchaser's designee, fee
simple title to the Real Property subject only to the Permitted Title
Exceptions.
Deposit: The sum of $100,000.00, which shall be deposited by Purchaser with
Escrowee, and held in accordance with Section 7.1 of this Agreement as escrowee,
on the date that is two (2) business days after Purchaser receives written
notification from escrowee of the receipt and deposit into escrow by Escrowee of
two originals of the Agreement executed by Seller and in form and substance
satisfactory to Purchaser, and all interest thereon , to be held as earnest
money subject to the terms of this Agreement.
Documents: As defined in Section 10.1(f).
Environmental Study: As defined in Section 10.1(d).
Escrowee: Chicago Title and Trust Company.
Intangible Personal Property: All of Seller's interest in any intangible
personal property which relates to and is required for the operation and
functioning of the Property, including the trade name "Woodgrove Festival
Shopping Center" and all other logos, designs, trade names, trademarks, service
marks and applicable telephone number or numbers, if transferable and other
intellectual property used by Seller in connection with the ownership and
operation of the Property, together with the goodwill of the business
appurtenant thereto.
Leases: All leases, tenancies, rental, occupancy agreements and other
similar agreements to which Seller is a party or by which it is bound with
respect to space within the Real Property, as described in the Schedule of
Leases attached hereby as Exhibit C, and all modifications, extensions,
amendments and guaranties thereof and all related correspondence, notices and
documentation, any security deposits of tenants or occupants pursuant to such
leases or occupancy agreements to the extent that they have not been applied by
Seller under such leases or occupancy agreements; provided however, that Seller
shall not apply any such security deposits after the date of the execution of
this Agreement and prior to or on the Preliminary Approval Date without written
notice to Purchaser, and Seller shall not apply any such security deposits at
all after the Preliminary Approval Date.
Legal Requirements: All applicable laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments and governmental authorities having jurisdiction of the Property and
the operation thereof (including, for purposes hereof, any local Board of Fire
Underwriters).
Licenses: All licenses, franchises, certifications, authorizations,
certificates of occupancy, notices, approvals and permits issued or approved by
any governmental authority and relating to Seller's (and not any tenant's)
operation, ownership and maintenance of the Real Property or Personal Property
or any part thereof including elevator permits, machinery permits, business
licenses, ingress and egress permits and the like, of which Seller is in
possession.
Permitted Title Exceptions: (i) the matters listed and described in Exhibit
B, (ii) the REA, the standard printed and general exceptions and exclusions
contained in an Owner's Title Insurance Policy, issued by the Title Insurer,
provided that Seller shall provide full extended title insurance coverage over
all such general exceptions at closing, and (iii) those exceptions to title to
the Property approved by Purchaser as provided in Section 5 hereof.
Preliminary Approval Date: the 20th business day following Purchaser's
receipt of the Title commitment or Survey, whichever is later.
Property: Collectively, the Real Property, the Intangible Personal
Property, the Tangible Personal Property, the Contracts, the Leases, Rents, and
the Licenses.
Purchase Price: Sixteen Million Seven Hundred Fifty Thousand and no/100
Dollars ($16,750,000.00), which sum is the consideration payable by Purchaser to
Seller for the Property.
Purchaser: The Price REIT, Inc. a Maryland corporation.
REA: Collectively, (i) that certain Reciprocal Easement Agreement by and
between Seller, and Spoons Restaurant, Inc. recorded as document no. R85-22020;
(ii) that certain Operating Agreement For Woodgrove Festival recorded as
document no. R84-5429; and (iii) that certain Declaration of Easements,
Covenants and Restrictions by LaSalle National Bank, not personally but as
Trustee under Trust Agreement date October 3, 1983 and known as Trust No.
107105, along with all supplemental agreements and amendments and modifications
relating thereto.
Real Property: Approximately 10.5 acres of land located at 75th Street and
Lemont Road in Woodridge, Illinois, on which has been constructed a shopping
center containing approximately 149,310 square feet of net leasable area with
parking, in Woodridge, Illinois, all as legally described in Exhibit A, together
with all improvements thereon or therein (including all replacements or
additions thereto between the date hereof and the Closing Date); all systems,
facilities, fixtures, machinery, equipment and conduits to provide fire
protection, security, heat, exhaust, ventilation, air conditioning, electrical
power, light, plumbing, refrigeration, garbage disposal, utility services,
parking services, gas, sewer and water thereto; all landscaping, shrubs, trees
and plants thereon; all oil, gas, water development, air and mineral rights,
whether or not appurtenant thereto, owned by Seller; all rights, privileges,
easements and appurtenances thereto belonging and all right, title and interest
of the Seller in and to any streets, alleys, parking areas, passages and other
rights-of-way included therein or adjacent thereto (before or after the vacation
thereof).
Rents: All income, receipts, funds and revenues of any kind whatsoever
payable under the Leases or otherwise with respect to all or any portion of the
Property.
Seller: Woodmark Associates, Ltd., a California limited partnership, as
beneficiary with sole power of direction in and to LaSalle National Bank as
Trustee under Trust Agreement dated October 3, 1983, and known as Trust no
107105.
Survey: Survey of the Property dated October 9, 1990, prepared by Webster,
McGrath & Carlson, Ltd., a surveyor licensed by the State of Illinois, to be
certified to Purchaser, the Title Insurer and such other parties as Purchaser
shall designate, prepared in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys adopted by the American Land Title
Association and American Congress on Surveying and Mapping. If the Seller's
existing survey, together with an affidavit of no new improvements, is
insufficient for the Title Insurer to waive any unpermitted exceptions to title
based upon the survey's age or other similar deficiency, Seller shall provide,
at its sole cost and expense, an updated survey dated not more than 2 months
prior to the Closing Date.
Tangible Personal Property: All tools, machinery, equipment, fixtures,
furnishings, advertising materials (including leasing brochures, drawings and
other marketing or promotional materials), letterheads, envelopes, signs,
supplies, and other tangible personal property situated in or upon or used in
connection with the operation or maintenance of the Real Property or any part
thereof, owned by Seller, and all replacements thereto between the date hereof
and the Closing Date.
Title Commitment: A commitment for a standard form Owner's Title Insurance
Policy for the Real Property issued by the Title Insurer insuring the Real
Property for the full amount of the Purchase Price, covering title to the Real
Property on or after the date hereof.
Title Insurer: Chicago Title Insurance Company.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale. Subject to the conditions and on the terms
contained in this Agreement, Purchaser agrees to purchase and acquire from
Seller, and Seller agrees to sell, transfer, and assign to Purchaser, in an "AS
IS, WHERE IS, WITH ALL FAULTS" condition:
(a)The Real Property, subject to the Permitted Title Exceptions,
(b)All of Seller's right, title and interest in the Contracts, Leases, Rents,
Licenses and Intangible Personal Property, and
(c)The Tangible Personal Property, subject to the Permitted Title Exceptions, to
the extent applicable thereto.
Except as specifically provided herein to the contrary, Purchaser shall not
assume, or become obligated with respect to, any obligation of Seller.
ARTICLE 3
DEPOSIT AND PURCHASE PRICE
3.1 Deposit; Payment of Purchase Price. Purchaser agrees to pay to Seller,
and Seller agrees to accept payment of the Purchase Price as follows:
(a)The Deposit (and interest thereon, if any) shall be (i) applied against the
Purchase Price at closing; (ii) refunded or returned to Purchaser in the
event that this Agreement is terminated without a default hereunder by
Purchaser, or (iii) forfeited to Seller in the event of Purchaser's default
hereunder.
(b)At closing, Purchaser shall pay to Seller the balance of the Purchase Price
(after deduction of any cash Deposit, including interest thereon, applied
against the Purchase Price as above provided), minus prorations as
hereinafter provided, in cash or by certified or cashier's check or by wire
transfer of collected federal funds.
ARTICLE 4
SURVEY
4.1 Survey. Within 10 days after opening of the escrow, or as soon
thereafter as the Survey is available, Seller shall deliver the Survey to
Purchaser, at Seller's sole cost and expense. If the Survey discloses any
encroachments onto the Real Property from any adjacent property, encroachments
by or from the Real Property onto any adjacent property, violations of or
encroachments upon any recorded building lines, restrictions or easements
affecting the Real Property or exceptions to title other than the Permitted
Title Exceptions or matters indicating possible rights of third parties to which
Purchaser objects, Purchaser shall give Seller notice of such objection within
twenty (20) business days following Purchaser's receipt of the Survey, and
Seller shall have ten (10) business days from the date of such notice to have
such encroachments, violations, unpermitted exceptions or other matters so
objected to by Purchaser removed or, with the consent of Purchaser, insured over
by the Title Insurer and provide evidence thereof to Purchaser, and if Seller
fails to have the same removed or, with the consent of Purchaser, insured over,
Purchaser may elect, after the expiration of such 10 business day period, to (i)
terminate this Agreement (in which event the Deposit together with interest
thereon, if any, shall be returned to Purchaser within two (2) business days
after Purchaser's delivery to Seller of the Documents; and all obligations of
the parties hereunder shall cease and this Agreement shall have no further force
or effect) except for any provisions of the Agreement that expressly survive the
termination of this Agreement in accordance with the terms of this Agreement; or
(ii) accept the Property subject to such encroachments, violations or
unpermitted exceptions.
ARTICLE 5
TITLE
5.1 Title. Within 10 days after opening of the escrow, or as soon
thereafter as the Title Commitment is available, Seller shall, at Seller's sole
cost and expense, deliver the Title Commitment to Purchaser. If Purchaser
objects to any exceptions to title shown in the Title Commitment, Purchaser
shall give Seller notice of such objection within twenty (20) business days
following Purchaser's receipt of the Title Commitment. Any exceptions to title
shown on the Title Commitment to which Purchaser does not so object shall be
included in the definition of "Permitted Title Exceptions" for purposes of this
Agreement. If the Title Commitment discloses exceptions to title other than
Permitted Title Exceptions and liens securing indebtedness which may be released
for an amount less than the Purchase Price and which are to be paid and
discharged on or before the Closing Date by Seller, Seller shall have ten (10)
business days from the date of Purchaser's notice of objection to have such
exceptions removed from the Title Commitment or to have the Title Insurer commit
to insure
for the full amount of said policy against loss or damage that may be occasioned
by such unpermitted exceptions and provide evidence thereof to Purchaser, and,
if Seller fails to have such exceptions removed (or with the consent of
Purchaser insured over), Purchaser may elect, on or before the Closing Date, (i)
to terminate this Agreement (in which event the Deposit together with interest
thereon, if any, shall, within two (2) business days after Purchaser's delivery
to Seller of the Documents, be returned to Purchaser and all obligations of the
parties hereunder shall cease and this Agreement shall have no further force or
effect, except for any provisions of this Agreement that expressly survive the
termination of this Agreement in accordance with the terms of this Agreement;
or (ii) to accept title subject to such unpermitted exceptions. On the Closing
Date, Seller shall, at Seller's sole cost and expense, cause the Title Insurer
to issue an owner's title insurance policy or prepaid commitment therefor,
pursuant to and in accordance with the Title Commitment, insuring fee simple
title in Purchaser as of the Closing Date, subject only to real estate taxes not
yet due or payable, standard and Permitted Title Exceptions and such other title
exceptions as Purchaser may reasonably approve. Purchaser shall have the right
to obtain A.L.T.A. extended coverage title insurance, together with any
endorsements thereto as determined by Purchaser to be necessary or desirable.
Purchaser will pay all costs of the extended coverage and all premium charges
for such endorsement.
ARTICLE 6
POSSESSION, PRORATIONS AND CLOSING COSTS
6.1 Possession. Possession of the Property shall be delivered to Purchaser
on the Closing Date, subject to the rights of tenants in possession under the
Leases and the rights of Spoons Restaurant, Inc. and any other parties under the
REA.
6.2 Prorations.
(a)Taxes. On or before the Closing Date, Seller shall pay or prepay in full all
special assessments (including all installments due thereof after the
Closing Date) levied, assessed and confirmed with respect to the Property
or any part thereof. General real estate taxes and other state or city
taxes, fees, charges and assessments (except special assessments) affecting
the Property for those tenants who do not pay their proportionate share of
real estate taxes as part of their rent under the Leases shall be prorated
as of the Closing Date on the basis of the most recent ascertainable
amounts of each such item, the net credit to Purchaser shall be applied
against the Purchase Price on the Closing Date, and Seller shall credit
Purchaser at closing in the amount of any and all tax escrows held by
Seller for payment of real estate taxes.
(b)Fixed, Minimum and Base Rents. Seller shall be entitled to all fixed, minimum
and base rents and all income produced from the operation of the Property
which is allocable to the period prior to the Closing Date, prorated to
the Closing Date.
(c)Overage Rents. Overage rents to be prorated hereunder shall include, but not
be limited to, percentage rents, consumer price index escalation payments
and other similar rental payments in excess of fixed, minimum and base
rents under the Leases, whether finally determined before or after the
expiration of the fiscal years under various Leases. Overage rents shall be
separately prorated by Purchaser under each Lease with respect to the lease
year thereunder in which the Closing Date occurs on a per diem basis as and
when collected by Purchaser. Any percentage rent collected by Purchaser
including any percentage rent which is delinquent and pertaining to (i) an
entire lease year or accounting period of a tenant under a Lease which ends
on a date prior to the Closing Date, and (ii) that portion of a lease year
or accounting period of such tenant covering a period prior to the Closing
Date and ends thereafter shall in both cases be collected by Purchaser in
trust for Seller and shall be paid to Seller within thirty (30) days of
receipt by Purchaser. Purchaser shall not be required to institute any
action or proceeding to collect any delinquent percentage rent but shall
use reasonable efforts to do so.
(d)Common Area Maintenance Charges, Taxes and Similar Expenses. To the extent
tenants under Leases pay monthly estimates of common area maintenance
charges, taxes and similar expenses (collectively, "Charges") with an
adjustment at the end of each fiscal year applicable to Charges, they shall
be prorated in accordance with this Section 6.2(d). Within 3 days prior to
closing, Seller shall deliver to Purchaser, with regard to each tenant
required to pay Charges, a verified computation showing all expenses
incurred by Seller for the period from the beginning of each such tenant's
billing period for Charges through the Closing Date, any monthly estimates
or Charges theretofore collected by Seller relating to such tenant, and a
bill for the tenant's prorata share of Charges (ie., for Charges through
the Closing Date net of any estimated amounts received), together will all
invoices and other evidence documenting such charges in detail required by
such tenant's lease. Purchaser shall do one of the following, at its
option:
(i) elect to send any such bills to tenants promptly following
Closing, in which event such tenant shall pay any amount shown due
directly to Seller, and Purchaser shall have no responsibility to
collect same; or
(ii) elect to incorporate any bills prepared by Seller into a single
post-closing (as and when appropriate for annual reconciliation or
other billing of Charges for any tenant bill for Charges to such
tenant, in which event such single bill, as and when paid, shall be
apportioned between Seller and Purchaser based on the ratio of pre-and
post-Closing Charges (taking into account any Charge estimates
retained by Seller at Closing); or
(iii) elect, post-Closing (as and when appropriate for annual
reconciliation or other billing of charges for any tenant) to send two
bills to such tenant (i.e., one for pre-closings charges as prepared
by Seller and one for post-Closing Charges) with such tenant to pay
Seller directly for unpaid pre-Closing Charges, if any.
(e)Prepaid Rents and Security Deposits. All prepaid Rents and security and other
deposits of all tenants under Leases not theretofore applied, with interest
thereon to the extent any interest is required to be paid to such tenants,
shall be delivered by Seller to Purchaser on the Closing Date, or Seller
may elect to give Purchaser a credit against the Purchase Price in the
amount of such prepaid Rent or deposits. All rents and other receipts
payable for the month in which the Closing occurs shall be prorated as of
the Closing. If any tenant under a Lease is delinquent in such month,
Seller shall pay to Purchaser a pro-rated amount of the scheduled monthly
rent under such Lease. Seller shall not apply any security deposits after
the date of the execution of this Agreement without Purchaser's prior
consent, which shall not be unreasonably withheld, delayed, or conditioned.
(f)Contracts. Purchaser shall be entitled to a credit against the Purchase Price
for sums that are due (or accrued) and unpaid as of the Closing Date under
any Contracts, and Seller shall be entitled to a credit to the extent that
sums have been paid under any Contracts for services to be performed or
goods to be delivered after the Closing Date.
(g)Other Items of Expense or Receipt. All other customarily prorated items of
expense or receipt shall be prorated between the parties hereto as of the
Closing Date. Except with respect to items prorated at closing, Seller
shall be responsible for payment of any and all bills or charges incurred
on or prior to the Closing Date for work, services, supplies or materials,
and Purchaser shall be responsible for payment of any and all bills or
charges incurred after the Closing Date for work, services, supplies or
materials.
(h)Adjustments. Prorations shall be accomplished by an adjustment in the
Purchase Price due Seller on the Closing Date, subject to readjustment by
the parties on or before April 30, 1998.
(i)Collections and Application of Payments after Closing. Purchaser shall use
reasonable efforts after the Closing to collect delinquent Rents for the
period up to the Closing; provided, however, that all collections shall be
applied first to periods commencing after the Closing, and then to periods
prior to the closing. Percentage Rents (if any) shall be prorated by
Purchaser when received by Purchaser, based on twelve thirty (30) day
months. After the Closing Date, Purchaser shall send to tenants all
financial statements and data required by Leases, and Seller shall
cooperate and assist Purchaser in preparing same as may be reasonably
required and requested by Purchaser. Purchaser may not waive any delinquent
amounts nor modify a Lease so as to reduce amounts or charges owed under
Leases for any period in which Seller is entitled to receive a share of
charges or amounts, without first obtaining Seller's written consent, which
consent shall not be unreasonably withheld, delayed, or conditioned. During
the first twelve (12) months after the Closing Date, Seller shall have and
reserves the right to pursue any remedy against any tenant owing delinquent
amounts. Purchaser shall not be required to institute any litigation to
collect any delinquent Overage Rents or Charges, but shall use reasonable
efforts to do so. Purchaser shall receive said amounts in trust for the
mutual benefit of Purchaser and Seller, which amounts shall be reprorated
to the Closing Date and any and all moneys owed to Seller shall be paid
within 10 days after final determination of the amounts due Seller.
6.3 Closing Costs. Seller shall pay title charges and premiums for the
standard title policy, survey charges, transfer stamps, all fees and other
charges imposed by any existing mortgagee in connection with the transaction
contemplated hereby, one-half of Escrowee's fees and charges and other charges
customarily attributable to sellers. Purchaser shall pay recordation, one-half
of Escrowee's fees and charges, and other charges customarily attributable to
purchasers. The parties shall each be solely responsible for the fees and
disbursements of their respective counsel and other professional advisers.
ARTICLE 7
ESCROW
7.1 Escrow. Within five (5) business days following execution of two (2)
originals of this Agreement, the parties, through their respective attorneys,
shall deliver the fully executed originals of the Agreement to Escrowee, and
establish an escrow with the Escrowee through which the transaction contemplated
hereby shall be closed. Upon opening of said escrow, Purchaser shall cause the
Deposit to be deposited in said escrow in accordance with this Section 7.1.
Escrowee shall place the Deposit in an interest-bearing account with a bank or
savings association, the deposits of which are federally insured, as Purchaser
may select. All interest on the Deposit shall accrue for the benefit of
Purchaser until the Closing, if Closing occurs. Otherwise, all interest on the
Deposit shall be payable in the same manner as the Deposit. The escrow
instructions shall be in the form customarily used by the Escrowee with such
special provisions added thereto as may be required to conform to the provisions
of this Agreement. Said escrow shall be auxiliary to this Agreement, and this
Agreement shall not be merged into nor in any manner superseded by said escrow.
The escrow costs and fees shall be equally divided between Purchaser and Seller.
ARTICLE 8
BROKERAGE
8.1 Brokerage. Seller hereby represents and warrants to Purchaser that
Seller has not dealt with any broker or finder in respect to the transaction
contemplated hereby except for Mid-America Real Estate Corporation (the
"Broker"), whose commissions shall be paid by Seller; and Seller hereby agrees
to indemnify (including reasonable attorneys' and paralegals' fees and costs)
Purchaser for any claim for brokerage commission or finder's fee asserted by a
person, firm or corporation (including the Broker) claiming to have been engaged
by Seller. Purchaser hereby represents and warrants to Seller that Purchaser has
not dealt with any broker or finder in respect to the transaction contemplated
hereby except for the Broker, and Purchaser hereby agrees to indemnify
(including reasonable attorneys' and paralegals' fees and costs) Seller for any
claim for brokerage commission or finder's fee asserted by a person, firm or
corporation other than the Broker claiming to have been engaged by Purchaser.
The provisions of this Section 8.1 shall survive the Closing or earlier
termination of this Agreement.
ARTICLE 9
CASUALTY AND CONDEMNATION
9.1 Casualty. If, prior to the Closing Date, the Real Property and the
improvements thereon shall be destroyed or damaged in an amount in excess of the
Material Damage Amount (as hereinbelow defined), by fire or other casualty, or
if the premises of any tenant are damaged as a result of fire or other casualty
to such extent that the operations of such tenant are materially impaired,
Purchaser shall have the option (to be exercised in the manner hereinafter
provided) to terminate this Agreement, in which event all documents shall be
returned to the respective parties, and the Deposit shall be promptly returned
to Purchaser, and thereupon, this Agreement shall become null and void, and
neither party shall have any further rights or obligations hereunder, except for
any provisions of this Agreement that expressly survive the termination of this
Agreement in accordance with the terms of this Agreement. Seller agrees to give
Purchaser notice of any fire or other casualty within seventy-two (72) hours
after any such event, and Purchaser may exercise such option by delivering
written notice to Seller within ten (10) days following the receipt of such
notice. In the event of (a) fire or other casualty causing damage in an amount
less than the Material Damage Amount, or (b) more than the Material Damage
Amount or materially impairing the operation of a tenant's or more than one
tenant's premises, but with respect to which Purchaser does not elect to
terminate this Agreement as aforesaid, then Purchaser shall have the right after
the Preliminary Approval Date and prior to the Closing Date, to control the
adjustment and settlement of any insurance claim relating to said damage, and
upon the Closing Date Seller shall assign to Purchaser the interest of Seller in
and to any insurance proceeds with respect to said damage. In such event, Seller
will also credit against the Purchase Price the amount of any deductible on
Seller's casualty and insurance policies covering said damage. For the purposes
hereof, the term "Material Damage Amount" shall mean damage reasonably
determined by Purchaser to be in excess of $500,000.00. In the event the parties
hereto are unable to agree upon the dollar amount of the aforesaid damages
within ten (10) days after the date of such fire, vandalism or other casualty,
then the determination of said amount by Seller's property manager, Insignia
Financial Group, shall be binding upon the parties hereto. If the Closing Date
is less than twenty (20) days following the last day on which Purchaser is
entitled to elect to terminate this Agreement, then closing shall be delayed
until Purchaser makes such election.
9.2 Condemnation. If, prior to the Closing Date, any judicial,
administrative or other proceeding relating to the proposed taking of any
portion of the Real Property by condemnation or eminent domain or any act in the
nature of eminent domain is instituted or threatened, Seller hereby agrees to
furnish Purchaser written notification with respect to any such proceeding or
threatened proceeding within seventy-two (72) hours of Seller's learning of
same, and Purchaser shall have the option, if such proceeding or threatened
proceeding relates to a Substantial Portion (as hereinafter defined) of the Real
Property or will enable any tenant under its Lease to terminate its Lease, to
terminate this Agreement by giving Seller written notice of such termination
within ten (10) days after receipt of written notification of any such
proceeding or threatened proceeding. Purchaser's failure to give such notice in
such time shall be conclusive evidence that Purchaser has waived such option to
terminate and, in such event, Purchaser shall be credited (against the Purchase
Price) or assigned, at closing, all Seller's rights to any proceeds or award for
such taking; provided, however, that subsequent to the Preliminary Approval
Date, Seller may not settle any such proceeding without Purchaser's prior
written consent, which consent shall not be unreasonably withheld, delayed, or
conditioned. Should Purchaser elect to terminate this Agreement due to the
institution of such proceeding, the Deposit shall immediately be returned to
Purchaser, and thereupon, this Agreement shall become null and void, and neither
party shall have any further rights or obligations hereunder except for any
provisions of this Agreement that expressly survive the termination of this
Agreement in accordance with the terms of this Agreement. If the proceeding does
not involve a Substantial Portion of the Real Property and does not enable any
tenant to terminate its Lease, Purchaser shall not have the right to terminate
this Agreement but shall be credited (against the Purchase Price) or assigned,
at closing, all of Seller's rights to the proceeds or award relating thereto.
For the purposes of this paragraph, the proceeding shall be deemed to involve a
"Substantial Portion" of the Real Property if the proceeding (i) affects more
than the equivalent of $500,000.00 in value, as reasonably determined by
Purchaser; (ii) causes a material deprivation of access to the Real Property,
(iii) involves a taking of parking areas located on the Real Property such that
subsequent to such taking, the Property will be in violation of municipal zoning
codes and ordinances, or in violation of parking requirements contained in any
of the Leases or the REA, or (iv) involves the relocation of utility facilities
serving the Real Property (provided this latter condition shall be deemed
deleted if Seller shall agree to pay the cost of relocation of the same, and
Seller may use such part of the proceeds of the award allocable thereto for such
purpose).
ARTICLE 10
AFFIRMATIVE COVENANTS
10.1 Affirmative Covenants .
(a) Maintenance of Property. Prior to the Closing Date or termination of this
Agreement, Seller shall comply with all of its obligations under the
Leases, Contracts, and the REA. Seller shall operate the shopping center
in a manner consistent with good practice and in accordance with its
insurance company's requirements and applicable Legal Requirements. Seller
shall maintain the Real Property and the Tangible Personal Property in the
same condition as on the date of execution of this Agreement, reasonable
wear and tear excepted.
(b)Insurance. From the date hereof to the Closing Date, Seller shall maintain or
cause to be maintained liability, casualty and other insurance upon and in
respect to the Property against such hazards and in accordance with the
coverage maintained by Seller for the 12 month period preceding the
execution of this Agreement.
(c)Inspections. From the date hereof to the Closing Date, Seller shall permit
representatives, agents, employees, contractors, appraisers, architects and
engineers designated by Purchaser access to and entry upon the Real
Property, to examine, inspect, measure and test the Property and to examine
and inspect the documents described in Section 10.1(f), wherever they may
be located. Purchaser shall indemnify and hold Seller harmless from any and
all claims, losses, charges, and damages, including reasonable attorneys'
fees, caused by Purchaser's access to and entry upon the Real Property.
(d)Environmental Study. Prior to the Preliminary Approval Date, Purchaser may
order an environmental report to be conducted by an environmental
engineering firm selected by Purchaser (the "Environmental Study").
Purchaser shall pay all costs of the Environmental Study, if any, and
Seller shall cooperate with Purchaser, or its agents, in arranging and
conducting the Environmental Study. Upon receipt of the Environmental
Study, Purchaser shall deliver a complete copy of same to Seller.
(e)Operation and Management. From the date hereof to the Closing Date or earlier
termination of this Agreement, Seller shall operate and manage the Property
in the same manner as it has been operated and managed heretofore, provided
that during said period, except as indicated below, without the prior
written consent of Purchaser (which consent shall not be unreasonably
withheld, delayed, or conditioned), Seller shall not:
(i) Enter into any transaction with respect to or affecting the Property out
of the ordinary course of business;
(ii) Sell, encumber or grant any interest in the Property or any part thereof;
(iii) Enter into, amend, waive any material rights under,
terminate or extend any Lease without Purchaser's prior written consent thereto,
provided that Seller shall be permitted to negotiate new leases as long as
copies of any and all documents evidencing such negotiations have been delivered
to Purchaser;
or
(iv) Remove from the Real Property any of the fixtures thereon or any of the
Tangible Personal Property, except in the ordinary course of business.
(f)Documents. Within five (5) business days after the opening of the escrow,
Seller shall make the documents described below, to the extent the
documents are in Seller's possession or are reasonably available to Seller
(the "Documents'), available for Purchaser's inspection and copying. In the
event this Agreement is terminated, Purchaser shall return to Seller all
Documents in Purchaser's possession within three (3) business days after
the date of termination.
(i) The Environmental Study;
(ii) The Survey;
(iii) A copy of all soils and hazardous materials reports, termite reports,
engineering studies, topographical maps, appraisals and other reports,
studies, maps, and analyses done for Seller,
(iv) Satisfactory evidence from appropriate governmental authorities
confirming the zoning, building and platting status of the Real
Property;
(v) A description of existing and proposed local improvements affecting the
Property, including assessment levels;
(vi) A copy of all relevant correspondence with all governmental entities
with respect to the Real Property;
(vii) A copy of all property tax statements and assessed value
notices, current insurance policies pertaining to the Property, all
approvals, permits and licenses from each governmental authority
having jurisdiction over the Real Property as are necessary to permit
full construction, use, and occupancy of the Real Property;
(viii) A copy of all available plans and construction drawings
for all buildings constructed on the Real Property;
(ix) A copy of all Leases and proposed Leases;
(x) All books and records and property reports pertaining to the
management and operation of the Real Property;
(xi) Copies of all Contracts, permits, and licenses relating to
the operation or management of the Property;
(xii) Certificates of Insurance maintained by the Seller with
respect to the Property for the past 3 years; and
(xiii) Such other documents as Buyer may deem necessary and
reasonable for its evaluation.
ARTICLE 11
REPRESENTATIONS OF PURCHASER
11.1 Representations of Purchaser. Purchaser hereby warrants and represents
to Seller that Purchaser has the full right, power, and authority to purchase
the Property as provided herein and to execute, deliver, and carry out all of
the provisions of this Agreement. The execution and delivery of this Agreement
and any other documents required of Purchaser hereunder and the performance and
observance of all of its terms, conditions, and obligations, have been or will
be duly authorized by all necessary action of Purchaser.
11.2 Obligation to Pay Leasing Commissions. Purchaser shall pay any
leasing or brokerage commissions or other compensation due or accrued subsequent
to the date of this Agreement with respect to leases executed by Seller after
the date of this Agreement provided that Purchaser shall have approved such new
lease and the amount of such commission or other compensation and Purchaser
shall indemnify Seller with respect to such agreed-upon commission or other
compensation.
ARTICLE 12
REPRESENTATIONS OF SELLER
12.1 Representations of Seller. As an inducement to Purchaser to enter into
this Agreement and the consummation of the transactions contemplated hereby,
Seller hereby represents and warrants to and agrees with Purchaser both as of
the date hereof and again as of the Closing Date, and as of all dates and times
in between (except as specifically provided to the contrary herein), as set
forth below. As used herein and elsewhere in this Agreement, the term "Seller's
actual knowledge" shall mean the actual knowledge of Robert J. Hellman, without
any duty of investigation of any kind. Seller represents and warrants that the
foregoing persons are the persons employed by Seller or its manager with day-to-
day managerial or supervisorial authority over the Property. Seller hereby
represents to Purchaser to its best knowledge that:
(a)Due Organization, etc. Seller has full right, power and authority to sell,
convey, transfer, and assign the Property to Purchaser as provided herein
and to execute, deliver, and carry out all of the provisions of this
Agreement. The execution and delivery by Seller of this Agreement and any
other documents required of Seller hereunder and the performance and
observance of all of its terms, conditions, and obligations, have been or
prior to the Closing Date will be duly authorized by all necessary actions
of Seller. Seller is a limited partnership validly formed and duly
organized and existing in good standing under the laws of California. The
Agreement, and all other agreements contemplated hereby, are and will be
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy or similar laws relating to the enforcement of
creditors' rights.
(b)Leases. The Leases delivered to Purchaser prior to the Closing Date are all
of the Leases affecting the Real Property as of the date hereof, and,
except as set forth in Exhibit C: (1) no rent has been paid more than one
month in advance by any tenant; (2) all Leases are in good standing , are
in full force and effect and constitute the valid and binding legal
obligation of Seller and the respective tenant, enforceable against each of
them in accordance with its terms; (3) no tenant is entitled to any
defense, credit, allowance or offset against rental except as otherwise
provided in the applicable lease; and (4) there are no understandings, oral
or written, between the parties to the Leases which in any manner vary the
obligations or rights of either party; and (5) except as indicated on the
rent roll, there is no default by Seller under the Lease and to Seller's
knowledge, by the tenant under the Lease.
(c)Litigation. There are no claims, causes of action or other litigation or
proceedings pending or threatened with respect to the ownership or
operation of the Property or any part thereof (including disputes with
tenants, mortgagees, governmental authorities, utilities, contractors,
adjoining landowners and suppliers of goods or services) except as set
forth in Exhibit D hereto.
(d)Condemnation, Taxes, Assessments. Seller has received no notice of any
existing, pending, contemplated, threatened or anticipated (i) condemnation
of any part of the Real Property; (ii) widening, change of grade or
limitation on use of streets abutting the Real Property; (iii) special tax
or assessment to be levied against the Real Property; (iv) change in the
zoning classification of the Real Property; or (v) change in the tax
assessment of the Real Property which has not been disclosed to Purchaser.
All real property taxes, and all Seller's personal property taxes, relating
to the Property, excepting those for the current tax year which are not yet
overdue (i.e., which are still payable without interest or penalty), have
been paid in full. To Seller's actual knowledge, Seller has received no
notice of any existing or proposed assessment that has or may become a line
on the Property.
(e)Leasing Commissions. Except as set forth in Exhibit C, with respect to the
Leases affecting the Property, Seller shall pay all leasing commissions due
as of the date of final execution of this Agreement and Purchaser shall
have no liability for any leasing commissions except as otherwise provided
in Section 11.2 herein.
(f)Compliance with Laws. To Seller's actual knowledge, Seller has received no
notice of any violations of any Legal Requirements, ordinance, rules and
regulations (including without limitation those relating to zoning and the
Americans With Disabilities Act) applicable to the ownership or operation
of the Property. Seller has not received from any insurance company or
Board of Fire Underwriters any notice, which remains uncured, of any defect
or inadequacy in connection with the Property or its operation.
(g)No Defaults in Other Agreements. To Seller's actual knowledge, Seller is not
in material default under any Contract affecting the Property, and no event
exists which, with the passage of time or the giving of notice or both,
will become a material default thereunder on the part of the Seller. Seller
has received no notice of any violations of its obligations under the terms
and provisions of the covenants, conditions, restrictions, rights-of-way or
easements affecting the Property.
(h)Employees. Seller has no employees.
(i)Operating Statements. To Seller's actual knowledge, the financial statements
delivered by Seller to Purchaser are true and correct.
(j)Licenses, Permits, CO's, Zoning, etc. To Seller's actual knowledge, Seller
has received no notices of any violations of any licenses, permits,
certificates of occupancy, or zoning ordinances in connection with the use
or occupancy of the Property.
(k)Environmental Conditions. To Seller's actual knowledge, Seller has received
no notices of any violations of any Environmental Requirements applicable
to the Property. "Environmental Requirements" shall mean all applicable
present statutes, regulations, rules, ordinance, codes, licenses, permits,
orders, approvals, plans, authorizations, concessions, franchises and
similar items, of all governmental agencies, departments, commissions,
boards, bureaus or instrumentalities of the United States, states and
political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment, including without
limitations: all requirements, including but not limited to those
pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened releases of
"Hazardous Materials", chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land or
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances,
pollutants, contaminants or hazardous or toxic substances, materials, or
wastes, whether solid, liquid or gaseous in nature. "Hazardous Materials"
shall mean (i) any flammable, explosive or radioactive materials, hazardous
wastes, toxic substances or related materials including, without
limitation, substances defined as "hazardous substances," "hazardous
materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
42 U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act,
49, U.S.C. Section 1801, et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Resource conservation and Recovery Act of
1976, 42 U.S.C. Section 6901 et seq.; and in the regulations adopted and
publications promulgated pursuant to said laws; (ii) those substances
listed in the United States Department of Transportation Table (49 C.F.R.
172.101 and amendments thereto) or by the Environmental Protection Agency
(or any successor agency) as hazardous substances (40 C.F.R. Part 302 and
amendments thereto); (iii) those substances defined as "hazardous wastes,"
"hazardous substances" or "toxic substances" in any similar federal, state
or local laws or in the regulations adopted and publications promulgated
pursuant to any of the foregoing laws or which otherwise are regulated by
any governmental authority, agency, department, commission, board or
instrumentality of the United States of America, the State of Illinois or
any political subdivision thereof, (iv) any pollutant or contaminant or
hazardous, dangerous or toxic chemicals, materials, or substances within
the meaning of any other applicable federal, state, or local law,
regulations, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of
conduct concerning any hazardous, toxic or dangerous waste, substance or
material, all as amended: (v) petroleum or any by-products thereof; (vi)
any radioactive material, including any source, special nuclear or by-
product material as defined at 42 U.S.C. sections 2011 et seq., as amended,
and in the regulations adopted and publications promulgated pursuant to
said law; (vii) asbestos in any form or condition, and (viii)
polychlorinated biphenyls.
(l)Seller has consulted Insignia/FC&S Commercial Group, the Property
Manager, which has day to day managerial authority over the Property,
regarding the Seller's representations and warranties made in Article 12 of
this Agreement. Based upon this discussion, Seller has no knowledge of any
additional facts or circumstances surrounding the representations and
warranties contained in Article 12 that are not set forth herein.
ARTICLE 13
CONDITIONS PRECEDENT AND TERMINATION
13.1 General Viability. The obligation of Purchaser to close the
transaction contemplated hereby is subject to Purchaser's review and approval,
in its sole and absolute discretion, by the Preliminary Approval Date, of the
following:
(i) Matters related to the legal and economic viability of the purchase;
(ii) Inspection of the Property; and
(iii) The Documents.
If Purchaser is not satisfied with any of the foregoing on or before the
Preliminary Approval Date, then Purchaser may, at its option, upon giving Seller
written notice thereof at any time on or before the Preliminary Approval Date,
elect to terminate this Agreement, in which event the Deposit shall forthwith be
returned to Purchaser, and thereupon, this Agreement shall become null and void
and, except for Purchaser's obligation to deliver the Documents to Seller,
neither party shall have any further rights and obligations hereunder, except as
expressly provided for herein. Purchaser's failure to give Seller such notice of
termination on or before the Preliminary Approval Date shall be deemed to be
Purchaser's waiver of the conditions precedent set forth in this Section 13.1.
13.2 Approval by Purchaser's Board of Directors. The obligation of
Purchaser to close the transaction contemplated hereby is further subject to the
approval of the transaction contemplated herein by Purchaser's Board of
Directors, within fifteen (15) business days after the opening of the escrow
described in Article 7.
ARTICLE 14
CLOSING
14.1 Time and Place. The transaction contemplated hereby shall close at
9:00 A.M. on the Closing Date at the offices of the Title Insurer or on such
other date, time and place as the parties may mutually agree.
14.2 Seller's Deliveries. On the Closing Date, Seller shall deliver the
following closing documents and other items:
(a)The Deed;
(b)Seller's Update Certificate in the same form and substance as attached hereto
as Exhibit E;
(c)Seller's bill of sale (in the same form and substance as the bill of sale
attached hereto as Exhibit F);
(d)Original executed counterparts or duplicate originals of all Contracts,
Leases and Licenses;
(e)Letters to tenants under the Leases (in the same form and substance as the
letter attached hereto as Exhibit G) advising that the Property has been
sold to Purchaser (or as Purchaser may otherwise designate), directing
payment of rental in accordance with the directions of Purchaser; and
directing tenants to deliver to Purchaser within a reasonable period after
the Closing Date, endorsements of any insurance policies required under the
tenant's Lease, deleting the interests of Seller with regard to occurrences
thereafter arising and adding the interest of Purchaser as landlord;
(f)An estoppel letter addressed to Purchaser (in the same form and substance as
the letter attached hereto as Exhibit H) dated no more than 45 days prior
to the Closing Date from (i) tenants occupying at least 80% of the total
square footage of the Shopping Center; and (ii) each tenant of the Property
occupying over 5000 square feet of space as shown in Exhibit C. Seller
shall deliver a certificate to Purchaser five (5) business days before the
Closing Date confirming all matters set forth in this Section with respect
to all tenants from whom such estoppel letters are not required and from
any tenant otherwise required to deliver an estoppel letter which Seller
has not been able to obtain. If Seller is unable to deliver the signed
estoppel letters described in subparagraphs (i) and (ii) above, Purchaser
shall have the option of extending the Closing Date until such estoppel
letters are received .
(g)All keys to the Real Property and the Tangible Personal Property;
(h)The updated Title Commitment or Owner's Policy;
(i)ALTA Statement, in duplicate;
(j)Any required documentary or transfer stamp declaration;
(k)(i) an executed FIRPTA Affidavit; or (ii) a qualifying statement from the
U.S. Treasury Department that the transaction is exempt from the
withholding tax requirement imposed by Section 1445A of the Internal
Revenue Code and the rules and regulations promulgated thereunder ("Section
1445A").; and
(l)A computer disk containing the final version of this Agreement, and such
other documents, instruments, certifications and confirmations as may be
reasonably required and designated by Purchaser to fully effect and
consummate the transactions contemplated hereby.
14.3 Purchaser's Deliveries. On the Closing Date, Purchaser shall deliver
the following documents:
(a)The balance of the Purchase Price;
(b)ALTA Statement, in duplicate, and
(c)Any required documentary or transfer stamp declaration.
14.4 Concurrent Deliveries. Seller and Purchaser shall jointly deposit in
the Escrow or deliver to each other at closing the following documents:
(a) an agreed proration statement duly executed by the respective
parties;
(b) the Assignment and Assumption of Leases and Rents in the same
form and substance as attached hereto as Exhibit I; and
( c) the Assignment and Assumption of Contracts, Intangible Property,
Warranties and Guarantees in the same form and substance as attached hereto as
Exhibit J .
14.5 Concurrent Transactions. All documents or other deliveries required to
be made by Purchaser or Seller at closing, and all transactions required to be
consummated concurrently with closing, shall be deemed to have been delivered
and to have been consummated simultaneously with all other transactions and all
other deliveries, and no delivery shall be deemed to have been made, and no
transaction shall be deemed to have been consummated, until all deliveries
required by Purchaser and Seller shall have been made, and all concurrent or
other transactions shall have been consummated.
14.6 New York Style Closing. At the request of either party, the
transaction shall be closed by means of a so-called New York Style Closing, with
the concurrent delivery of the documents of title, transfer of interests,
delivery of the title policy described in Section 5.1(e) and the payment of the
Purchase Price. Seller shall provide any undertaking (the "Gap Undertaking") to
the Title Company necessary to the New York Style Closing. Seller and Purchaser
shall each pay 50% of the charges of the Title Company for such New York Style
Closing.
ARTICLE 15
DEFAULT
15.1 Default. If this Agreement is terminated by a default of Seller, the
Deposit, and all interest earned thereon, shall be promptly returned to
Purchaser. In the event of any breach or default in or of this Agreement or any
of the warranties, terms or provisions hereof by Seller, Purchaser shall have
the right to either: (a) demand specific performance of this Agreement; or (b)
demand return of the Deposit plus its reasonable, actual out of pocket expenses
incurred in connection with its determination of general viability as described
in Article 13 herein, as Purchaser's sole and exclusive remedy for such default,
provided that Purchaser and Seller hereby agree that in the event Seller has
breached this Agreement by fraud or by willful breach of a covenant contained
herein, Purchaser shall also have the right to seek monetary damages, which
shall be limited to Purchaser's actual out-of-pocket costs up to Fifty Thousand
Dollars ($50,000) exclusive of attorneys fees and costs incurred in any action
to enforce Purchaser's rights under this Agreement. In the event this Agreement
is terminated by a default of Purchaser, Seller, as Seller's sole and exclusive
remedy for such default, shall receive and retain the entire Deposit as full and
complete liquidated damages (and not as a penalty or forfeiture). Neither Seller
nor Purchaser shall avail itself of any remedy granted to it hereunder based
upon an alleged default of the other party, unless and until written notice of
the alleged default, in reasonable detail, has been delivered to the defaulting
party by the non-defaulting party and the alleged default has not been cured on
or before 5:00 P.M., Chicago time, on the third (3rd) business day next
following delivery of said notice of default.
ARTICLE 16
NOTICES
16.1 Notices. Any notice, demand or other communication which any party may
desire or may be required to give to any other party shall be in writing and
shall be deemed given (i) if and when personally delivered, (ii) upon receipt if
sent by a nationally recognized overnight courier addressed to a party at its
address set forth below, or (iii) on the third (3rd) Business Day after being
deposited in United States registered or certified mail, postage prepaid,
addressed to a party at its address set forth below, or to such other address as
the party to receive such notice may have designated to all other parties by
notice in accordance herewith:
If to Seller, to: Robert J. Hellman
Investment Properties II, Inc.
Three World Financial Center - 29th Floor
New York, N.Y. 10285
With copies to: Mary Ellen Rosemeyer, Esq.
Ferraro & Rosemeyer, Ltd.
1616 N. Damen Ave. Suite 100
Chicago, IL 60647
If to Purchaser, to: The Price REIT, Inc.
4745 North Main Street Suite 207
Lisle, IL 60532
Attn: Daniel C. Slattery
With copies to: The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, CA 90036
Attn: Jerald Friedman
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, CA 90071
Attn: William R. Lindsay, Esq.
ARTICLE 17
GENERAL
17.1 Entire Agreement, Amendments and Waivers. This Agreement contains the
entire agreement and understanding of the parties in respect to the subject
matter hereof, and the same may not be amended, modified or discharged nor may
any of its terms be waived, except by an instrument in writing signed by the
party to be bound thereby. The waiver of any term or provision of this Agreement
shall not constitute a waiver of any other term or provision of this Agreement,
nor shall the right to require any enforcement of any term or provision of this
Agreement be permanently waived, if a continuing breach of any such term or
provision arises.
17.2 Further Assurances. The parties each agree to do, execute, acknowledge
and deliver all such further acts, instruments and assurances and to take all
such further action before or after the closing as shall be necessary or
desirable to perform this Agreement and consummate and effect the transactions
contemplated hereby.
17.3 Survival and Benefit. Except for the representations and warranties
contained in Sections 12.1(b) and (e), which shall survive the closing until
April 30, 1998, no representations, warranties, agreements, obligations or
indemnities of the parties shall survive the closing, notwithstanding any
investigation made by any party hereto. In the event Purchaser makes a written
claim against Seller with respect to any representation contained in Section
12.2 (b) or (e) prior to April 30 , 1998, such representation or warranty shall
survive without limitation as to the date of such written claim.
17.4 Interpretation.
(a)The headings and captions herein are inserted for convenient reference only,
and the same shall not limit or construe the paragraphs or sections to
which they apply or otherwise affect the interpretation hereof.
(b)The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar
terms shall refer to this Agreement, and the term "hereafter" shall mean
after, and the term "heretofore" shall mean before, the date of this
Agreement.
(c)Words of the masculine, feminine or neuter gender shall mean and include the
correlative words of other genders, and words importing the singular number
shall mean and include the plural number and vice versa.
(d)Words importing persons shall include firms, associations, partnerships
(including limited partnerships), trusts, corporations and other legal
entities, including public bodies, as well as natural persons.
(e)The terms "include," "including" and similar terms shall be construed as if
followed by the phrase "without being limited to."
(f)This Agreement and any document or instrument executed pursuant hereto may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(g)Whenever under the terms of this Agreement the time for performance of a
covenant or condition falls upon a Saturday, Sunday or holiday, such time
for performance shall be extended to the next business day. Otherwise, all
references herein to "days" shall mean calendar days.
(h)This Agreement shall be governed by and construed in accordance with the laws
of the State of Illinois.
(i)Time is of the essence of this Agreement.
(j)If any provision hereof or the application of any such provision to any
particular person or circumstance is held to be invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof or the application of such
provision to different person(s) or circumstance(s), as the case may be.
17.5 Consents and Approvals. Whenever consents or approvals are required
under the terms of this Agreement, said consents or approvals shall be in
writing, and, except as otherwise expressly provided, shall not be unreasonably
withheld, delayed, or conditioned.
17.6 Tax Appeal Proceedings To the Extent Not Payable to Tenants under the
Leases or Other Third Parties. Seller shall be entitled to receive and retain
the proceeds from any tax appeals or protests for tax fiscal years prior to the
tax fiscal year in which the Closing Date occurs. In the event an application to
reduce real estate taxes is filed for the period during which Seller was the
owner of the Property, Seller shall be entitled to a reproration of real estate
taxes upon receipt of and based upon the reduction. Purchaser shall pay its pro
rata share of the attorneys' fees directly related to the reduction as and when
due. Seller shall continue to process any pending appeals or protests with
respect to the tax fiscal year in which the Closing Date occurs, and the net
Proceeds from any such proceedings, after payment of attorneys' fees, will be
prorated between the parties, when received, as of the Closing Date, except for
any amounts due to tenants of the Property.
17.7 Audit Cooperation. Seller hereby agrees to cooperate with Purchaser
in producing audited financial statements for the Property, at Purchaser's sole
expense, for such periods as ma be reasonably requested by Purchaser. Such
cooperation shall include, without limitation, the execution and delivery by
Seller to Purchaser's auditors of such confirmations and letter s as such
auditors may reasonably require.
17.8 Relationship. It is not intended by this Agreement to, and nothing
contained in this Agreement shall, create any partnership, joint venture,
financing arrangement or other agreement between Purchaser and Seller. No term
or provision of this Agreement is intended to be, or shall be, for the benefit
of any person, firm, organization or corporation not a party hereto, and no such
other person, firm, organization or corporation shall have any right or cause of
action hereunder.
17.9 Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns, except that neither party's interest under this Agreement may be
assigned, encumbered or otherwise transferred whether voluntarily,
involuntarily, by operation of law or otherwise, without the prior written
consent of the other, which consent shall not be unreasonably withheld, delayed,
or conditioned.
17.11 Attorneys' Fees. In the event of any action or proceeding at
law or in equity between Purchaser and Seller to enforce or interpret any
provision of this Agreement or to protect or establish any right or remedy of
either purchaser or Seller hereunder, the unsuccessful party to such action or
proceeding shall pay to the other prevailing party all costs and expenses,
including without limitation reasonable attorneys' and paralegals' fees and
expenses (including without limitation, fees, costs and expenses of experts and
consultants), incurred in such action or proceeding and in any appeal in
connection therewith by such prevailing party, together with all costs of
enforcement and/or collection of any judgment or other relief. If such
prevailing party shall recover judgment in any such action, proceeding or
appeal, such costs, expenses and reasonable attorneys' and paralegals' and
other's fees shall be included in and as a part of such judgment.
17.12 Contract Construction. This Agreement shall not be
construed more strictly against one party than against the other merely by
virtue of the fact that it may have been prepared primarily by counsel for one
of the parties, it being recognized that both Purchaser and Seller have
contributed substantially and materially to the preparation of this Agreement
and the language used herein.
IN WITNESS WHERE OF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER: WOODMARK ASSOCIATES, PURCHASER: THE PRICE REIT,
INC., a California limited INC., a Maryland corporation,
partnership
By: Investment Properties II, By: /JERALD FRIEDMAN/
Inc., a Delaware corporation, -----------------
its sole general partner Its: Senior Vice President
By: /ROBERT J. HELLMAN/
-------------------
Robert J. Hellman, President
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
PERMITTED TITLE EXCEPTIONS
1. General real estate taxes for 1997 and subsequent years;
2. Operating Agreement dated January 17, 1984 and recorded January 17, 1984 as
document R84-0055429, made by Festival and Federated Department Stores, Inc., as
amended by documents R84-043645, R85-104311 and R94-2229784;
3. Assignment and Assumption of Operating Agreement dated November 22, 1985 and
recorded November 27, 11985 as document R85-104315, to Woodmark Associates, and
as amended by document R90-149737;
4. Recorded leases, assignment of leases, and rights of tenants under
unrecorded leases;
5. Building lines, public utility easements, and other matters as disclosed by
title or survey;
6. Reciprocal easement agreement dated February 26, 1985 and recorded March 28,
1985 as document R85-0220220, made by LaSalle National Bank, as Trustee under
trust agreement dated October 3, 1983 and known as trust number 107105 and
Spoons Restaurants, Inc.;
7. Terms and provisions contained in and rights and obligations created by
Declaration of Easements, Covenants and Restrictions (but omitting any such
covenant or restriction based on race, color, religion, sex, handicap, familial
status or national origin unless and only to the extent that said covenant (a)
is exempt under Chapter 42, Section 3607 of the United States code or (b)
relates to handicap but does not discriminate against handicapped persons),
dated October 24, 1985 and recorded October 30, 1985 as document R85-094609,
made by LaSalle National Ban, as Trustee under Trust Agreement dated October 3,
1983 and known as Trust Number 107105, amended by documents R85-104312 and R86-
034793;
8. Terms, provisions and conditions relating to the easements described in
Parcels 2, 3 and 4 of the legal description set forth in Exhibit A of this
Agreement, and rights of the adjoining owner or owners to the concurrent use of
the easements described therein;
9. Acts suffered or committed by The Price REIT, Inc.
EXHIBIT C
SCHEDULE OF LEASES
EXHIBIT D
PENDING LITIGATION
Woodgrove Nautilus v. LaSalle National Bank as Trustee under Trust No.
10705, Case No. 97 L 388 pending in DuPage County, Illinois;
LeBeau v. Mid-America Asset Management, et al., Case No. 95 L 293,pending
in Cook County, Illinois
Meyer v. LaSalle National Bank, et al. Case No.97 L 0388 pending in DuPage
County, Illinois.
EXHIBIT E
UPDATE CERTIFICATE
EXHIBIT F
BILL OF SALE
EXHIBIT G
TENANT LETTERS
EXHIBIT H
TENANT ESTOPPEL CERTIFICATE
EXHIBIT I
ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
EXHIBIT J
ASSIGNMENT AND ASSUMPTION OF CONTRACTS, INTANGIBLE
PERSONAL PROPERTY, WARRANTIES AND GUARANTEES
===============================================================================
EXHIBIT 10.52
FIFTH AMENDMENT TO REAL ESTATE SALE AGREEMENT
THIS FIFTH AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Amendment") is dated as of
this 3rd day of March, 1998, in order to modify that certain Real Estate Sale
Agreement dated as of December 4, 1997, as amended by that certain First
Amendment to Real Estate Sale Agreement dated as of December 30, 1997, that
certain Second Amendment to Real Estate Sale Agreement dated as of January 20,
1998, that certain Third Amendment to Real Estate Sale Agreement dated as of
January 27, 1998 and that certain Fourth Amendment to Real Estate Sale Agreement
dated as of February 6, 1998 (collectively, the "Agreement"), each by and
between FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. -2, a Florida limited
partnership, ("Seller") and THE PRICE REIT, INC., a Maryland corporation
("Buyer").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1.Notwithstanding Section 4(C)(i)(a) and 4(C)(i)(e) of the Agreement, only with
respect to 1998 common area maintenance and real estate tax pass-throughs to the
tenants of the Property, the prorations made and agreed to on the Closing
Statement shall be final. In the event any amounts become due and payable to
tenants with respect to such 1998 common area maintenance and real estate tax
pass-throughs after Closing, Buyer hereby agrees to pay such amounts directly to
such tenants and Buyer shall indemnify, defend and hold Seller, its
beneficiaries and their partners, and their respective directors, officers,
employees and agents, and each of them, harmless from and against any losses,
claims, damages and liabilities (including without limitation, reasonable
attorneys' fees and expenses incurred in connection therewith) arising out of or
resulting from Buyer's failure to remit such amounts to such tenants in
accordance with this Amendment. The parties hereto agree that the provisions of
this Paragraph 1 shall survive the Closing.
2.Buyer hereby designates Price Tennessee Properties, L.P., a Tennessee limited
partnership ("Price Tennessee"), as its nominee and directs that Seller name
Price Tennessee as the grantee in all conveyance and other Closing documents to
be delivered by Seller to Buyer at Closing. Buyer hereby acknowledges that
delivery of the Property to Price Tennessee will satisfy the delivery
requirements of Seller under the Agreement.
3.This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.
4.Except as expressly amended herein, the Agreement is in full force and
affect.
IN WITNESS WHEREOF, Buyer and Seller have entered into this Amendment as of the
day and year first written above.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2,
a Florida limited partnership
By: First Capital Financial Corporation,
a Florida corporation,
its sole general partner
By: /NORMAN FIELD/
--------------
Name: Norman Field
Its: Vice President
THE PRICE REIT, INC., a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Name: Jerald Friedman
Its: Senior Executive Vice President
FOURTH AMENDMENT TO REAL ESTATE SALE AGREEMENT
THIS FOURTH AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Amendment") is dated as of
this 6th day of February, 1998, in order to modify that certain Real Estate Sale
Agreement dated as of December 4, 1997, as amended by that certain First
Amendment to Real Estate Sale Agreement dated as of December 30, 1997, that
certain Second Amendment to Real Estate Sale Agreement dated as of January 20,
1998 and that certain Third Amendment to Real Estate Agreement dated as of
January 27, 1998 (collectively, the "Agreement"), each by and between FIRST
CAPITAL INSTITUTIONAL REAL ESTATE, LTD. -2, a Florida limited partnership,
("Seller") and THE PRICE REIT, INC., a Maryland corporation ("Buyer").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1.Section 2 of the Agreement shall be revised to delete "Eight Million Two
Hundred Fifty Thousand Dollars ($8,250,000.00)" and to insert in lieu thereof
"Eigh t Million One Hundred Twenty-Eight Thousand Dollars ($8,128,000.00)". In
the event that the Closing does not occur on or before February 11, 1998, the
Purchase Price shall increase by an amount equal to $1,113.42 per day for each
day from February 12, 1998 through the Closing Date.
2.Sections 2.C, 4.B.(i)(d) and 4.B.(ii) (b), Exhibit C-3 and Schedule 1 of the
Agreement are all hereby deleted in their entirety.
3.The Closing contemplated by Section 4.A. of the Agreement shall occur on or
before March 17, 1998.
4.Seller shall prepare (coordinating with Escrowee as necessary) a proforma
closing statement contemplating a Closing of February 18, 1998. Seller shall
deliver a copy of same to Buyer on or before February 10, 1998 together with a
certified copy of a current rent roll for the Property. Seller and Buyer shall
coordinate to approve such proforma closing statement, as it may thereafter be
adjusted, on or before the Closing Date.
5.Seller acknowledges that certain tenant(s) are owed reimbursement of certain
common area maintenance overpayments made by such tenant(s) over the last three
(3) years. Seller agrees to cause such overpayments to be remitted to such
tenant(s) on or before June 30, 1998 and to concurrently provide Buyer with a
copy of such remittance and the related correspondence. Seller agrees that it
shall not dissolve prior to the date on which the disbursement required by this
Section 5 shall have been made.
6.Seller represents and warrants to Buyer that the leasing commissions payable
with respect to the Mariner Lease do not exceed Nine Thousand Seven Hundred
Forty-Five and 60/100 Dollars ($9,745.60). Buyer hereby agrees to pay for such
leasing commissions and the cost of the HVAC installation contemplated by the
Mariner Lease. In the event Seller pays any such costs or commissions prior to
Closing, Seller shall receive a credit from Buyer for such amounts at Closing to
be reflected on the closing statement. Buyer acknowledges that the tenant under
the Mariner Lease may be entitled to reduce certain amounts owing under the
Mariner Lease as "Minimum Rent" and "Tenant's Proportionate Share of Landlord's
Operating Costs" (as such terms are defined therein) pursuant to Section 9.7
thereof, and in the event any such reductions apply to the period of time prior
to Closing, then Seller shall receive a credit from Buyer for such amounts at
Closing (on a pro rata basis, if necessary) to be reflected on the closing
statement.
7.On or before February 10, 1998, Buyer agrees to deposit with Escrowee an
additional amount of Two Hundred and Fifty Thousand Dollars ($250,000.00). Such
sum shall be deemed to be Earnest Money held by the Escrowee pursuant to Section
2.A of the Agreement. In the event that Buyer fails to make such deposit, such
amount shall nonetheless be deemed to be Earnest Money and shall be recoverable
from Buyer in accordance with Section 7 of the Agreement.
8.If the Closing has not occurred on or before February 27, 1998, Buyer agrees
to deposit with Escrowee an additional amount of Five Hundred Thousand Dollars
($500,000.00) on February 27, 1998. Such sum shall be deemed to be Earnest
Money held by the Escrowee pursuant to Section 2.A of the Agreement. In the
event that Buyer fails to make such deposit, such amount shall nonetheless be
deemed to be Earnest Money and shall be recoverable from Buyer in accordance
with Section 7 of the Agreement. Notwithstanding anything in this Section 8 to
the contrary, in the event Buyer delivers written notice to Seller prior to
February 27, 1998 that it cannot close on or before February 27, 1998 ("Buyer's
Notice"), then (i) Seller shall be entitled to the full amount of the Earnest
Money held by Escrowee (plus any undeposited amount required pursuant to Section
7 of this Amendment), (ii) in such case Buyer and Seller agree that a copy of
this Amendment and the Buyer's Notice shall serve as the only written notice
necessary for Escrowee to release such funds to Seller and (iii) the Agreement
shall be terminated without any additional action required by Seller and Buyer
and unless expressly provided in the Agreement to the contrary, neither of the
parties hereto shall have any further obligations pursuant to the Agreement.
9.Buyer and Seller agree and acknowledge that the deposits set forth in Section
7 and, provided no Buyer's Notice has been delivered to Seller pursuant to
Section 8, in Section 8 of this Amendment are covenants which must be performed
by Buyer and if such covenants are not performed as set forth herein, such
nonperformance shall be a default under the Agreement and shall entitle Seller
to immediately terminate the Agreement and receive and retain the Earnest Money
then held by Escrowee and to recover any unpaid balance(s) not so deposited,
provided Seller does not refuse to consummate the sale of the Property as
provided in the Agreement.
10.In the first sentence of Section 8.B. of the Agreement, "sixty-four (64)"
shall be deleted and replaced by "one hundred and three (103)".
11.Buyer and Seller acknowledge that the Review Period as defined in Section 8A
of the Agreement expired on February 6, 1998. Buyer hereby waives any current
objection to title and/or survey. If any additional exceptions to title arise
before Closing, Buyer and Seller agree to proceed pursuant to Section 3.C of the
Agreement.
12.This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.
13.Except as expressly amended herein, the Agreement is in full force and
affect.
IN WITNESS WHEREOF, Buyer and Seller have entered into this Amendment as of the
day and year first written above.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2,
a Florida limited partnership
By: First Capital Financial Corporation,
a Florida corporation,
its sole general partner
By: /NORMAN FIELD/
--------------
Name: Norman Field
Its: Vice President
THE PRICE REIT, INC., a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Name: Jerald Friedman
Its: Senior Executive Vice President
THIRD AMENDMENT TO REAL ESTATE SALE AGREEMENT
THIS THIRD AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Amendment") is dated as of
this 27th day of January, 1998, in order to modify that certain Real Estate Sale
Agreement dated as of December 4, 1997, as amended by that certain First
Amendment to Real Estate Sale Agreement dated as of December 30, 1997 and that
certain Second Amendment to Real Estate Sale Agreement dated as of January 20,
1998 (collectively, the "Agreement"), each by and between FIRST CAPITAL
INSTITUTIONAL REAL ESTATE, LTD. -2, a Florida limited partnership, ("Seller")
and THE PRICE REIT, INC., a Maryland corporation ("Buyer").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1.The "Review Period" as defined in Section 8A of the Agreement is hereby
extended and shall now expire at 5:00 p.m. Los Angeles time on February 6, 1998.
2.In the first sentence of Section 8.B of the Agreement, "fifty-four (54)" shall
be deleted and replaced by "sixty-four (64)".
3.This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.
4.Except as expressly amended herein, the Agreement is in full force and
affect.
IN WITNESS WHEREOF, Buyer and Seller have entered into this Amendment as of the
day and year first written above.
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2,
a Florida limited partnership
By: First Capital Financial Corporation,
a Florida corporation,
its sole general partner
By: /IRA CHAPLIK/
-------------
Name: Ira Chaplik
Its: Authorized Representative/Agent
THE PRICE REIT, INC., a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Name: Jerald Friedman
Its: Senior Executive V.P.
SECOND AMENDMENT TO REAL ESTATE SALE AGREEMENT
THIS SECOND AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Amendment") is dated as of
this 20th day of January, 1998, in order to modify that certain Real Estate Sale
Agreement dated as of December 4, 1997, as amended by that certain First
Amendment to Real Estate Sale Agreement dated as of December 30, 1997
(collectively, the "Agreement"), each by and between FIRST CAPITAL INSTITUTIONAL
REAL ESTATE, LTD. -2, a Florida limited partnership, ("Seller") and THE PRICE
REIT, INC., a Maryland corporation ("Buyer").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1.The "Review Period" as defined in Section 8A of the Agreement is hereby
extended and shall now expire at 5:00 p.m. Los Angeles time on January 27, 1998.
2.In the first sentence of Section 8.B of the Agreement, "forty-seven (47)"
shall be deleted and replaced by "fifty-four (54)".
3.This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.
4.Except as expressly amended herein, the Agreement is in full force and
affect.
IN WITNESS WHEREOF, Buyer and Seller have entered into this Amendment as of the
day and year first written above.
"SELLER"
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2,
a Florida limited partnership
By: First Capital Financial Corporation,
a Florida corporation,
its sole general partner
By: /NORMAN FIELD/
--------------
Name: Norman Field
Its: Vice President
"BUYER"
THE PRICE REIT, INC., a Maryland corporation
By: /DANIEL C. SLATTERY/
--------------------
Name: Daniel C. Slattery
Its: Vice President - Development
FIRST AMENDMENT TO REAL ESTATE SALE AGREEMENT
THIS FIRST AMENDMENT TO REAL ESTATE SALE AGREEMENT ("Amendment") is dated as of
this 30th day of December, 1997, in order to modify that certain Real Estate
Sale Agreement ("Agreement") dated as of December 4, 1997, by and between FIRST
CAPITAL INSTITUTIONAL REAL ESTATE, LTD. -2, a Florida limited partnership,
("Seller") and THE PRICE REIT, INC., a Maryland corporation ("Buyer").
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1.The "Review Period" as defined in Section 8A of the Agreement is hereby
extended and shall now expire at 5:00 p.m. Los Angeles time on January 20, 1998.
2.In the first sentence of Section 8.B of the Agreement, "thirty (30)" shall be
deleted and replaced by "forty-seven (47)".
3.This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.
4.Except as expressly amended herein, the Agreement is in full force and
affect.
IN WITNESS WHEREOF, Buyer and Seller have entered into this Amendment as of the
day and year first written above.
"SELLER"
FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2,
a Florida limited partnership
By: First Capital Financial Corporation,
a Florida corporation,
its sole general partner
By: /MICHAEL GAST/
--------------
Name: Michael Gast
Its: AVP
"BUYER"
THE PRICE REIT, INC., a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Name: Jerald Friedman
Its: Senior Executive V.P.
REAL ESTATE SALE AGREEMENT
THIS REAL ESTATE SALE AGREEMENT (this "Agreement") is made as of the 4th day of
December, 1997, by and between FIRST CAPITAL INSTITUTIONAL REAL ESTATE, LTD. - 2
("Seller"), a Florida limited partnership, with an office at Two North Riverside
Plaza, Suite 600, Chicago, Illinois 60606, and THE PRICE REIT, INC.
("Purchaser"), a Maryland corporation, with an office at 145 South Fairfax
Avenue, Fourth Floor, Los Angeles, California 90036.
RECITALS
A. Seller is the owner of a certain parcel of real estate (the "Real Property")
in the City of Nashville, County of Davidson, State of Tennessee, which parcel
is more particularly described in attached Exhibit A, and upon which is located
a shopping center commonly known as "Marketplace at Rivergate".
B.Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, the Property (as such term is hereinafter defined), each in accordance
with and subject to the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the above Recitals, the mutual covenants and
agreements herein set forth and the benefits to be derived therefrom, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Seller agree as follows:
1.PURCHASE AND SALE
Subject to and in accordance with the terms and conditions set forth in this
Agreement, Purchaser shall purchase from Seller and Seller shall sell to
Purchaser the Real Property, together with:
(i)all buildings and improvements owned by Seller and any and all of Seller's
rights, easements, licenses and privileges presently thereon or
appertaining thereto;
(ii)Seller's right, title and interest in and to the leases (the "Leases")
affecting the Property or any part thereof;
(iii)the furniture, furnishings, fixtures, equipment, maintenance vehicles,
tools and other tangible personalty set forth on Exhibit I attached
hereto (collectively, the "Tangible Personal Property");
(iv)all right, title and interest of Seller under any and all of the
maintenance, service, advertising and other like contracts and
agreements with respect to the ownership and operation of the Property
(the "Service Contracts");
(v)all right, title and interest of Seller, if any, and to the extent assignable
and in Seller's possession, under any architectural and engineering
drawings, renderings, and specifications pertaining to the Real Estate
and the buildings and improvements currently located thereon; and
(vi)all right, title and interest of Seller, if any, and to the extent
assignable, in any license, permits, warranties pertaining exclusively
to the Real Estate and the buildings and improvements currently
located thereon;
all to the extent applicable to the period from and after the Closing (as such
term is hereinafter defined). Items (i) through (vi) above, together with the
Real Property, are collectively referred to in this Agreement as the "Property".
All of the foregoing expressly excludes (1) all property owned by tenants or
other users or occupants of the Property, and (2) all rights with respect to any
refund of taxes applicable to any period prior to the "Closing Date" (as defined
herein).
2.PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Property is Eight
Million Two Hundred Fifty Thousand Dollars ($8,250,000.00) (the "Purchase
Price"). The Purchase Price shall be paid as follows:
A.Earnest Money.
(i)Upon execution of this Agreement by Purchaser, Purchaser shall deliver to
Chicago Title and Trust Company ("Escrowee"), 414 Union Street, Suite 1800,
Nashville, Tennessee (Attention: Joe Pitt), initial earnest money (the "Initial
Earnest Money") in the sum of One Hundred Thousand Dollars ($100,000.00). The
Initial Earnest Money, together with any interest earned thereon, net of
investment costs, is referred to in this Agreement as the "Earnest Money". The
Earnest Money shall be invested in a federally-insured, interest bearing
account, as Purchaser so directs. Any and all interest earned on the Earnest
Money shall be reported to Purchaser's federal tax identification number.
(ii)If the transaction closes in accordance with the terms of this Agreement, at
Closing, the Earnest Money shall be delivered by Escrowee to Seller as partial
payment of the Purchase Price. If the transaction fails to close due to a
default on the part of Purchaser, the Earnest Money shall be delivered by
Escrowee to Seller, such delivery to constitute liquidated damages to Seller,
and, except for Seller's indemnification rights set forth in Sections 6 and 8(A)
below, to preclude the exercise of any other rights and remedies of Seller due
to such a default whether pursuant to this Agreement or at law or in equity. If
the transaction fails to close due to a default on the part of Seller, the
Earnest Money shall be delivered by Escrowee to Purchaser, and Purchaser shall
have the remedy provided for in Section 7(A) below.
B.Cash at Closing. At Closing, Purchaser shall pay to Seller, by wire
transferred current federal funds, an amount equal to the Purchase Price, minus
the sum of the Earnest Money which Seller receives at Closing from the Escrowee,
and plus or minus, as the case may require, the closing prorations and
adjustments to be made pursuant to Section 4(C) below.
C.Sprint / Mariner Health Lease.Notwithstanding anything to the contrary
contained in this Agreement, if within four (4) months after the Closing,
Purchaser, as landlord thereunder, enters into a lease for the approximately
2,960 square feet of vacant space at the Property (the "Vacant Space") with
either Sprint Spectrum L.P. ("Sprint") or Mariner Health ("MH") (either such
lease being referred to as the "Sprint/MH Lease"), on terms and conditions no
less favorable than as set forth on Schedule 1 attached hereto and in accordance
with item 1 on Exhibit "C-3" attached hereto, then Purchaser shall pay to Seller
an additional amount (the "Incremental Purchase Price") equal to (i) Fifty
Thousand Dollars ($50,000.00) if the term of the Sprint/MH Lease is at least
three (3) years, (ii) One Hundred Thousand Dollars ($100,000.00) if the term of
the Sprint/MH Lease is at least four (4) years, and (iii) One Hundred Fifty
Thousand Dollars ($150,000.00) if the term of the Sprint/MH Lease is at least
five (5) years. The term of the Sprint/MH Lease, for purposes of determining
the amount of Incremental Purchase Price, shall be deemed to commence on the
rent commencement date and terminate on the termination date set forth in the
Sprint/MH Lease without respect to any option periods. The Incremental Purchase
Price shall be paid to Seller, by wire transferred current federal funds, no
later than ten (10) business days following the later of (i) Purchaser's
execution of the Sprint/MH Lease, or (ii) the execution of the Sprint/MH Lease
by Sprint or MH, as the case may be. It is expressly understood and agreed that
Seller shall not be obligated to obtain the agreement of Sprint, MH or any other
party to lease and/or sublease the Vacant Space prior to or after Closing and if
Seller enters into negotiations with Sprint, MH and/or any other party with
respect to the Vacant Space, Seller may terminate any such negotiations at any
time, without notice or liability to Purchaser.
3.EVIDENCE OF TITLE
A.Title Commitment.Seller shall, within twenty (20) days after the
date of this Agreement, obtain and cause to be delivered to Purchaser a current
(that is, effective within thirty (30) days prior to the date of this Agreement)
commitment for an ALTA Owner's Title Insurance Policy (the "Title Commitment"),
in the amount of the Purchase Price, issued by Chicago Title Insurance Company
(the "Title Insurer"). At Closing, the conveyance of the Property to Purchaser
shall be made subject only to those exceptions to title which are more fully
described on attached Exhibit B and exceptions to title which become Permitted
Exceptions pursuant to this Section 3 (collectively, the "Permitted
Exceptions").
B.Survey.Seller shall, within twenty (20) days after the date of this Agreement,
deliver to Purchaser a survey (the "Survey") of the Real Property certified to
the Title Insurer and Purchaser, and prepared by a surveyor licensed in the
State of Tennessee in accordance with the Minimum Standard Requirements for Land
Title Surveys (as jointly established and adopted in 1992 by the American Land
Title Association and American Congress on Surveying and Mapping) for an "Urban
ALTA/ACSM Land Title Survey" (as defined therein), and certified as being
prepared after the date hereof. Seller shall also request the surveyor to
provide a copy of the Survey on a "CADD disk" to be delivered to Purchaser at
Closing.
C.Review of Title Commitment and Survey.If the Title Commitment or Survey
disclose exceptions to title other than those Permitted Exceptions which are
noted on attached Exhibit B, then Purchaser shall have until the expiration of
the "Review Period" (as defined in Section 8(A) below) within which to notify
Seller of any such exceptions to title to which Purchaser objects. If any
additional exceptions to title arise between the date of the Title Commitment,
the Survey and the Closing, Purchaser shall have five (5) days after its receipt
of notice of same within which to notify Seller of any such exceptions to title
to which Purchaser objects. Any such exceptions to title not objected to by
Purchaser as aforesaid shall become Permitted Exceptions. If Purchaser objects
to any such exceptions to title, Seller shall have until Closing (but in any
event at least fifteen [15] days after it receives notice of Purchaser's
objection(s)) to remove such exceptions to title by waiver or endorsement by the
Title Insurer. If Seller fails to remove any such exceptions to title as
aforesaid, Purchaser may, as its sole and exclusive remedy, terminate this
Agreement and obtain a return of the Earnest Money. If Purchaser does not elect
to terminate this Agreement, Purchaser shall consummate the Closing and accept
title to the Property subject to all such exceptions to title (in which event,
all such exceptions to title shall be deemed "Permitted Exceptions").
4.CLOSING
A.Closing Date. The "Closing" of the transaction contemplated by this Agreement
(that is, the payment of the Purchase Price, the transfer of title to the
Property, and the satisfaction of all other terms and conditions of this
Agreement) shall occur at 10:00 a.m. on the fifth (5th) day following the
expiration of the Review Period, at the Nashville, Tennessee, office of the
Title Insurer, or at such other time and place as Seller and Purchaser shall
agree in writing. The "Closing Date" shall be the date of Closing. If the date
for Closing above provided for falls on a Saturday, Sunday or legal holiday,
then the Closing Date shall be the next business day.
B.Closing Documents.
(i)Seller. At Closing, Seller shall execute and deliver to Purchaser the
following:
(a)a special warranty deed (the "Deed"), subject to Permitted Exceptions, and in
form acceptable to the Title Insurer;
(b)a "special" or "limited" warranty bill of sale sufficient to transfer to
Purchaser title to the Tangible Personal Property and expressly
disclaiming any warranties other than as to title as aforesaid;
(c)a letter advising each tenant under the Leases, and each provider of services
under the Service Contracts, of the change in ownership of the
Property in the forms attached hereto as Exhibit "C-1" and Exhibit "C-
2", respectively;
(d)a counterpart of the master lease agreement (the "Master Lease
Agreement"), in the form prescribed in Exhibit "C-3" attached hereto;
(e)a counterpart of the Assignment and Assumption of Leases, Service Contracts,
Security Deposits and Intangibles, in the form attached hereto as
Exhibit "C-4";
(f)an affidavit stating, under penalty of perjury, Seller's U.S. taxpayer
identification number and that Seller is not a foreign person within
the meaning of Section 1445 of the Internal Revenue Code;
(g)evidence of the termination of Seller's management contract for the
Property with The Rubin Organization, Inc. ("Manager"), effective as
of the Closing; and
(h)a counterpart of the closing statement ("Closing Statement") setting forth
the prorations and adjustments to the Purchase Price as required by
Section 4(C) below.
(ii)Purchaser. At Closing, Purchaser shall execute and deliver or cause to
be delivered to Seller:
(a)the funds required pursuant to Section 2(B) above;
(b)a counterpart of the Master Lease Agreement, in the form prescribed
in Exhibit "C-3"; and
(c)a counterpart of the Assignment and Assumption of Leases, Service Contracts,
Security Deposits and Intangibles, in the form attached hereto as
Exhibit "C-4"; and
(d)a counterpart of the Closing Statement.
C.Closing Prorations and Adjustments.
(i)The following items are to be prorated or adjusted (as appropriate) as of the
close of business on the day before the Closing Date, it being understood that
for purposes of prorations and adjustments, Purchaser shall be deemed the owner
of the Property as of the Closing Date. Notwithstanding the foregoing, if, due
to late deposit of funds by or on behalf of Purchaser, Seller does not receive
the net sale proceeds in time to invest such proceeds on the Closing Date, then
Purchaser shall pay to Seller interest on the net sales proceeds for such day at
a per annum rate equal to six percent (6%).
(a)real estate and personal property taxes and assessments (on the basis of the
most recent ascertainable tax bill if the current bill is not then
available);
(b)the "minimum" or "base" rent payable by tenants under the Leases; provided,
however, that rent and all other sums which are due and payable to
Seller by any tenant but uncollected as of the Closing shall not be
adjusted, but Purchaser shall cause the rent and other sums for the
period prior to Closing to be remitted to Seller if, as and when
collected. At Closing, Seller shall deliver to Purchaser a schedule
of all such past due but uncollected rent and other sums owed by
tenants. Purchaser shall include the amount of such rent and other
sums in the first bills thereafter submitted to the tenants in
question after the Closing, and shall continue to do so for twelve
(12) months thereafter. Purchaser shall promptly deliver to Seller a
copy of each such bill submitted to tenants. Purchaser shall promptly
remit to Seller any such rent or other sums paid by scheduled tenants,
but only if a deficiency in the then current rent is not thereby
created. With respect to percentage or overage rent (to the extent
not set forth on said schedule of past due amounts), Purchaser shall
furnish to Seller promptly upon receipt copies of all sales reports
received from tenants relative thereto, including, without limitation,
(i) all sales reports with respect to any tenants whose lease years
have expired as of the Closing but whose sales reports were not
available on Closing, and (ii) sales reports of any tenants whose
lease year expires after the Closing. The proration for percentage or
overage rent to be made by any tenant shall be made in accordance with
such tenant's Lease existing as of the Closing and Purchaser shall
promptly pay to Seller a prorata portion of such rents, based upon
apportionment being made as of the Closing Date, promptly after the
date when such rents are received from the applicable tenant;
(c)[Intentionally Deleted.]
(d)the amount of security deposits paid under the Leases;
(e)water, electric, telephone and all other utility and fuel charges, fuel on
hand (at cost plus sales tax), and any deposits with utility companies
(to the extent possible, utility prorations will be handled by meter
readings on the day immediately preceding the Closing Date);
(f)amounts due and prepayments under the Service Contracts;
(g)assignable license and permit fees; and
(h)other similar items of income and expenses of operation.
(ii)Notwithstanding the foregoing, Seller shall in all events be entitled to
retain amounts paid by tenants (referred to herein as "Tenant Reimbursements")
for real estate taxes and assessments, merchant association dues, insurance,
utilities, water and sewer charges and other common area and operating expenses
(collectively, "Tenant Reimbursable Expenses") as of the Closing to the extent
not in excess of the actual amount of such Tenant Reimbursable Expenses paid by
Seller for the period prior to the Closing Date, and following the Closing and
upon Purchaser's completion of the reconciliation of such amounts with tenants
for 1997, then:
(x)in the event that the amount of Tenant Reimbursements
collected by Seller for 1997 is less than the amount of Tenant
Reimbursable Expenses paid by Seller with respect to 1997 and for
which Seller is entitled to recover under the terms of the Leases,
Purchaser shall (1) to the extent such amounts have already been
collected by Purchaser from the tenants, promptly remit such amounts
to Seller but only if the applicable tenant is otherwise current in
the payment of all obligations due for the period following Closing,
and (2) to the extent such amounts have not yet been collected from
tenants, Purchaser shall promptly bill the tenants for such amounts
and continue to bill such tenants for such amounts each month for six
(6) months thereafter, and, promptly upon receipt thereof, pay such
amounts to Seller;
(y)in the event that the amount of Tenant Reimbursements
collected by Seller for 1997 exceeds the amount of Tenant Reimbursable
Expenses paid by Seller with respect to 1997 and for which Seller is
entitled to recover under the terms of the Leases, Seller shall remit
such excess amounts directly to the particular tenants entitled
thereto on or before ninety (90) days after Closing, with copies of
all correspondence to tenants with respect to such remittances
submitted concurrently to Purchaser; provided, that, to the extent
that any such excess amounts are otherwise payable by tenants owing
past due rents payable to Seller, Seller may offset the amounts due
such tenants against past due rents owing to Seller and remitting the
remaining amounts to such tenants; and
(z)this Section 4(C)(ii) shall survive the Closing contemplated
hereby.
(iii)Notwithstanding anything to the contrary contained in this Section 4,
Seller reserves the right (i) to meet with governmental officials and to contest
any reassessment governing or affecting Seller's obligations under Section
4(C)(i) above and (ii) to contest any assessment of the Property or any portion
thereof and to attempt to obtain a refund for any taxes previously paid. Seller
shall retain all rights with respect to any refund of taxes applicable to any
period prior to the Closing Date, provided that Purchaser shall disburse to any
tenant not in default under its Lease a portion of such refund as may be due
that tenant under its Lease. The remainder of the refund, if any, shall be
prorated between Purchaser and Seller as of the proration date provided in
Section 4(C) after deducting therefrom the cost and expenses reasonably incurred
in pursuing the appeal and not charged to tenants.
(iv)[Intentionally Deleted.]
(v)For purposes of this Section 4(C), the amount of any expense credited by one
party to the other shall be deemed an expense paid by that party. If any item
of income or expense set forth in this Section 4(C) is subject to final
adjustment after Closing, then Seller and Purchaser shall make, and each shall
be entitled to, an appropriate reproration to each such item promptly when
accurate information becomes available. Any such reproration shall be paid
promptly in cash to the party entitled thereto, but in no event shall it be paid
later than fifteen (15) months after the Closing Date. The terms of this
Section 4(C), to the extent they call for adjustments, prorations or payments
after Closing, shall survive the Closing.
D.Transaction Costs.
Seller and Purchaser shall each pay one-half (1/2) of the cost of: (1) the
Survey, (2) the base premium for the owner's title insurance policy (but
excluding endorsements), (3) all transfer taxes and documentary stamps owed in
connection with the delivery and recordation of the Deed, and (4) the escrow
charges, if any. Seller shall pay for the cost of recording the release(s) of
Seller's existing mortgage financing. Purchaser shall pay the cost of any
endorsements to the owner's title insurance policy and any lender's title
insurance policy and the cost of recording the deed. Seller and Purchaser shall
each, however, be responsible for the fees of their respective attorneys.
E.Possession.
Upon Closing, Seller shall deliver to Purchaser possession of the Property,
subject to Permitted Exceptions and such other matters as are permitted by or
pursuant to this Agreement.
5.CASUALTY LOSS AND CONDEMNATION
If, prior to Closing, the Property or any part thereof shall be condemned or
destroyed or damaged by fire or other casualty, Seller shall promptly so notify
Purchaser. If the reasonably estimated cost to repair or restore the Property as
a result of such condemnation or casualty exceeds Two Hundred Fifty Thousand
Dollars ($250,000.00) (a "Material Loss"), Purchaser shall have the option to
terminate this Agreement by giving notice to Seller within fifteen (15) days of
Seller's request that the option be exercised. If the condemnation, destruction
or damage does not result in a Material Loss, or if Purchaser fails to terminate
this Agreement following a Material Loss as provided herein, then Seller and
Purchaser shall consummate the transaction contemplated by this Agreement
notwithstanding such condemnation, destruction or damage. If the transaction
contemplated by this Agreement is consummated, Purchaser shall be entitled to
receive the condemnation proceeds or settle the loss under all policies of
insurance applicable to the destruction or damage and receive the proceeds of
insurance applicable thereto, and Seller shall, at Closing, allow Purchaser a
credit against the Purchase Price in an amount equal to any applicable
deductibles and shall also execute and deliver to Purchaser all customary proofs
of loss, assignments of claims and other similar items. If Purchaser elects to
terminate this Agreement as a result of a Material Loss, the Earnest Money shall
be returned to Purchaser by the Escrowee, in which event this Agreement shall,
without further action of the parties, become null and void and neither party
shall have any further rights or obligations under this Agreement except as
otherwise provided for in Section 6 and 8(A) below.
6.BROKERAGE
Seller agrees to pay upon Closing (but not otherwise) the brokerage commission
due to Ben Carter & Associates (the "Broker") for services rendered in
connection with the sale and purchase of the Property, such commission to be
calculated pursuant to the terms of a separate agreement between Seller and
Broker. Seller and Purchaser shall each indemnify and hold the other harmless
from and against any and all claims of all other brokers and finders claiming
by, through or under the indemnifying party and in any way related to the sale
and purchase of the Property, this Agreement or otherwise, including, without
limitation, attorneys' fees and expenses incurred by the indemnified party in
connection with such claim. The obligations of Purchaser and Seller shall
survive the Closing or other termination of this Agreement.
7.DEFAULT AND REMEDIES
A.Seller's Failure.
(i)Notwithstanding anything to the contrary contained in this Agreement, if
Seller fails to perform in accordance with the terms of this Agreement and such
failure is not as a result of a failure of Purchaser hereunder, then, as
Purchaser's sole and exclusive remedy hereunder and at Purchaser's option,
either (1) the Earnest Money shall be returned to Purchaser, in which event
this Agreement shall be null and void, and neither party shall have any rights
or obligations under this Agreement except as provided in Section 6 above and
Section 7(A)(ii) below, or (2) upon notice to Seller not less than ten (10) days
after Purchaser becomes aware of such failure, and provided an action is filed
within thirty (30) days thereafter, Purchaser may seek specific performance of
Seller's obligation to execute and deliver the conveyance documents required of
it under this Agreement, but not damages. Purchaser's failure to seek specific
performance as aforesaid shall constitute its election to proceed under clause
(1) above.
(ii)In the event that Seller's failure to perform as provided in Section 7(A)(i)
above is the result of an intentional, willful and bad faith breach of this
Agreement by Seller and Purchaser elects to proceed under clause (1) of Section
7(A)(i) above, then, in addition to the return of the Earnest Money, Seller
shall remit to Purchaser the actual, out of pocket costs and expenses incurred
by Purchaser to negotiate this Agreement, and to investigate and evaluate the
Property in accordance with Section 8(A) above, provided that any such
reimbursement shall not in the aggregate exceed Thirty Two Thousand Five Hundred
Dollars ($32,500.00) (such reimbursement being referred to herein as the "Cost
Reimbursement"). In the event Seller is obligated to pay Purchaser the Cost
Reimbursement, then such amount shall be remitted by Seller to Purchaser within
ten (10) business days following Purchaser's request for the Cost Reimbursement,
provided that such request is accompanied by appropriate documentation of
Purchaser's eligible costs and expenses.
B.If Purchaser fails to perform in accordance with the terms of this Agreement,
the Earnest Money may be retained by Seller as liquidated damages and as
Seller's sole and exclusive remedy, other than the indemnification rights of
Seller that survive as provided in Sections 6 and 8(A). Purchaser and Seller
acknowledge and agree that (1) the Earnest Money is a reasonable estimate of and
bears a reasonable relationship to the damages that would be suffered and costs
incurred by Seller as a result of having withdrawn the Property from sale and
the failure of Closing to occur due to a default of Purchaser under this
Agreement; (2) the actual damages suffered and costs incurred by Seller as a
result of such withdrawal and failure to close due to a default of Purchaser
under this Agreement would be extremely difficult and impractical to determine;
(3) Purchaser seeks to limit its liability under this Agreement to the amount of
the Earnest Money in the event this Agreement is terminated and the transaction
contemplated by this Agreement does not close due to a default of Purchaser
under this Agreement; and (4) the Earnest Money shall be and constitute valid
liquidated damages.
C.After Closing, Seller and Purchaser shall, subject to the terms and conditions
of this Agreement, have such rights and remedies as are available at law or in
equity, except that neither Seller nor Purchaser shall be entitled to recover
from the other consequential, exemplary, punitive or special damages.
8.CONDITION PRECEDENT
A.Inspection Period.Subject to the indemnification obligations set forth in the
following paragraph, Purchaser shall have until 5:00 p.m. (Los Angeles,
California time) on the thirtieth (30th) day after the date hereof within which
to inspect the Property (the "Review Period"). During the Review Period,
Purchaser shall be entitled to review copies of (i) the Leases, (ii) the most
recent real estate tax statements with respect to the Property, (iii) the most
recent sewer and water bills with respect to the Property, (iv) the Service
Contracts, (v) bills for electricity and for fuel used to operate the heating
and air conditioning systems controlled by Seller at the Property covering the
previous twelve (12) months, (vi) correspondence between tenants and Seller (as
landlord), (vii) billings to tenants for Tenant Reimbursables and invoices for
Tenant Reimbursable Expenses, (viii) any plans for the buildings located on the
Property, (ix) any licenses or permits issued to Seller in connection with the
ownership and operation of the Property, and (x) any other information relating
exclusively to the Property or the tenants reasonably requested by Purchaser,
all to the extent in Seller's possession or control. If Purchaser determines
that the Property is unsuitable for its purposes and notifies Seller of such
decision within the Review Period, the Earnest Money shall be immediately
returned to Purchaser, at which time this Agreement shall be null and void and
neither party shall have any further rights or obligations under this Agreement,
except for the indemnity obligations set forth in Sections 6 and 8(A) hereof
which shall survive termination. Purchaser's failure to object within the
Review Period shall be deemed a waiver by Purchaser of the condition contained
in this Section 8(A).
Purchaser's right of inspection pursuant to this Section 8(A) shall be subject
to the rights of tenants under the Leases and other occupants and users of the
Property. No inspection shall be undertaken without reasonable prior notice to
Seller. Seller shall have the right to be present at any or all inspections.
Neither Purchaser nor its agents or representatives shall contact any tenants
without the prior consent of Seller, which will not be unreasonably withheld or
delayed, provided that Seller shall have the right to be present for all such
tenant interviews. No inspection shall involve the taking of samples or other
physically invasive procedures without the prior consent of Seller, which shall
not be unreasonably withheld or delayed. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser shall restore the Property to
its condition existing prior to its entry thereon, and shall indemnify, defend
and hold Seller and its employees and agents, and each of them, harmless from
and against any and all losses, claims, damages and liabilities (including,
without limitation, attorneys' fees incurred in connection therewith) arising
out of or resulting from Purchaser's exercise of its rights under this
Agreement, including, without limitation, its right of inspection as provided
for in this Section 8(A). The terms of this Section 8(A) shall survive the
termination of this Agreement and the Closing for a period of nine (9) months.
B.Estoppel Certificates. As a condition of Closing, Purchaser shall have
received estoppel certificates ("Estoppel Certificates"), dated no more than
thirty (30) days prior to Closing, from (i) each tenant occupying more than
10,000 rentable square feet of the Property, and (ii) other tenants occupying
not less than seventy percent (70%) of the remaining rentable space leased as of
the date of Closing pursuant to valid and existing Leases, and in the form and
content as set forth herein (the aforesaid acceptable Estoppel Certificates to
be delivered are collectively referred to as the "Required Estoppel
Certificates"). The Estoppel Certificates shall be in the form of Exhibit "D"
attached hereto (the "Form Tenant Estoppel Certificate"), provided that an
Estoppel Certificate shall be deemed an acceptable Estoppel Certificate for
purposes of this Section 8(B) if (i) the Estoppel Certificate contains the
qualification by the tenant of any statement as being subject to materiality or
to the best of its knowledge, or as being subject to any similar qualification,
(ii) the Estoppel Certificate is otherwise in a form permitted under the
applicable Lease, (iii) any tenant with national operations delivers an Estoppel
Certificate in the standard form typically issued by such tenant, and (iv) the
Estoppel Certificate contains any allegations by the tenant under the Lease as a
result of physical deficiencies at the Property which have been identified in
the due diligence reports which have been submitted to Seller by Purchaser prior
to the date of this Agreement with respect to roof and structural deficiencies
of the Property (all such modifications being referred to as "Permitted Estoppel
Modifications").
In addition to the foregoing, for any tenant that has not returned an Estoppel
Certificate or has returned an Estoppel Certificate that does not contain all of
the information set forth in the Form Tenant Estoppel Certificate, Seller shall
be obligated at Closing to deliver to Purchaser a "Landlord Certificate" for any
such tenant in the form of Exhibit "J" attached hereto or, with respect to a
tenant whose Estoppel Certificate did not contain all of the information set
forth in the Form Tenant Estoppel Certificate, a "Landlord Certificate" in the
form of Exhibit "J" attached hereto containing statements from Seller only as to
those items not included in the Estoppel Certificate delivered by the tenant.
Notwithstanding the foregoing, Seller shall not be required to deliver a portion
of a Landlord Certificate to the extent that any information set forth in such
Landlord Certificate contradicts any statement made by a tenant in an Estoppel
Certificate. Seller's liability under any Landlord Certificate shall terminate
upon the sooner of: (i) the termination or amendment of the applicable Lease
(provided such termination is not the direct result of a default or alleged
default of the Lease pursuant to a landlord-tenant controversy), (ii) when
Purchaser subsequently obtains an Estoppel Certificate for the applicable tenant
in the form required hereunder and/or setting forth the information missing from
the original Estoppel Certificate delivered by such tenant, or (iii) the nine
(9) month anniversary of the Closing. If after Closing, Purchaser discovers
that any statement contained in any Landlord Certificate is materially
incorrect, Purchaser's sole and exclusive remedy against Seller shall be actual,
compensatory damages with respect to all such inaccuracies contained in any
Landlord Certificates subject, however, to the limitations of Section 10(M)
below. The Tenant Certificates and Landlord Certificates shall confirm, subject
to the terms of the Leases, that the tenancies of the applicable tenants are in
substantial conformity with the terms of their Leases, and that, to tenant's
knowledge or to "Seller's Actual Knowledge" (as hereinafter defined), as the
case may be, no event of default exists which would entitle tenant to terminate
its Lease.
In the event that (i) Seller is unable to provide to Purchaser the Required
Estoppel Certificates on or before Closing, or (ii) if any Estoppel Certificate
or Landlord Estoppel Certificate is not in conformity with Exhibits "D" and "J"
hereof (subject to Permitted Estoppel Modification) in any material respect any
such Estoppel Certificate being referred to as a "Deficient Estoppel"), then
Purchaser shall elect on or before the Closing:
(a)not to purchase the Property, in which event the Earnest Money
shall be returned to Purchaser, at which time this Agreement shall be null
and void and neither party shall have any further rights or obligations
under this Agreement, except for the indemnity obligations set forth in
Sections 6 and 8(A) hereof which shall survive termination, or
(b)elect to purchase the Property notwithstanding Seller's inability
to provide the Required Estoppel Certificates, in which event Purchaser
shall be deemed to have waived the condition contained in this Section
8(B), and Seller's representations and warranties in Section 9 below shall
be deemed to be modified by any information or disclosures contained in
such Estoppel Certificate.
C.Accuracy of Seller's Representations and Warranties. As a condition to
Purchaser's obligation to close hereunder, each of Seller's representations and
warranties set forth in Section 9 below shall be true and correct as of the date
hereof and as of Closing, as modified by any "Pre-Closing Disclosures" (as
defined in Section 9(B) below). Notwithstanding the foregoing, if Seller makes
any Pre-Closing Disclosure to Purchaser, Purchaser shall have the right to
terminate this Agreement and receive the return of the Earnest Money by
delivering written notice thereof to Seller on or before the earlier of (i) the
Closing, or (ii) the fifth (5th) business day after Purchaser receives written
notice of such Pre-Closing Disclosure. If Purchaser does not terminate this
Agreement pursuant to its rights under this Section 8(C), then such
representations and warranties shall be deemed modified to conform them to the
Pre-Closing Disclosure.
9.SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
A.Subject to Section 9(C) below, Seller represents and warrants to Purchaser
that, as of the date of this Agreement:
(i)Authorization to Own and Convey Property.Seller is authorized to own and
convey title to land in the State in which the Property is located.
(ii)Organization and Authority.Seller is a limited partnership duly organized
and in good standing under the laws of the State of Florida. Seller has the
power and authority under (i) Seller's Agreement of Limited Partnership, and
(ii) the Articles of Incorporation and Bylaws of Seller's sole general partner
(the instruments described in (i) and (ii) above being referred to as "Seller's
Organizational Documents"), to sell, transfer, convey and deliver the Property
to be sold and purchased hereunder, and all action and approvals required
thereunder have been duly taken and obtained. Upon the assumption that this
Agreement constitutes a legal, valid and binding obligation of Purchaser, this
Agreement constitutes a legal, valid and binding obligation of Seller. Seller is
not a "foreign person" as defined in the Federal Foreign Investment in Real
Property Tax Act of 1980 and the 1984 Tax Reform Act, as amended.
(iii)No Breach. The execution and delivery of this Agreement, the consummation
of the transactions provided for herein and the fulfillment of the terms hereof
will not (i) result in a breach of any of the terms or provisions of, or
constitute a default under, any provision of Seller's Organizational Documents,
or any other agreements to which Seller is bound, except for any consents which
may be required in connection with the assignment and assumption of the Service
Contracts (which consents Seller shall not be obligated to obtain), or (ii) to
"Seller's Actual Knowledge" (as hereinafter defined), violate or conflict with
any law or governmental regulation or permit applicable to Seller or the
Property.
(iv)Service Contracts.There are no service, maintenance or supply contracts
affecting the Property except as listed in Exhibit "E" attached to this
Agreement and except for any Permitted Exceptions that constitute or might be
deemed to constitute Service Contracts. Seller has paid all amounts currently
due and payable under the Service Contracts. Except as set forth in Exhibit
"E", each of the Service Contracts is valid and binding and Seller has not
received nor issued any written notice which remains outstanding as of the date
hereof regarding the material breach of or material default under any such
Service Contract by Seller or any other party thereto.
(v)Leases. Attached hereto as Exhibit "F" is a rent roll for the Property
setting forth name of each tenant under each of the Leases affecting the
Property as of the date hereof, the space occupied by each tenant, the monthly
base rent and additional rent payable pursuant to each tenant's Lease, and the
approximate square footage demised under the particular Lease. No security
deposits have been paid to Seller by or on behalf of any of the tenants except
as set forth in Exhibit "F".
(vi)Notices. Except as listed on Exhibit "G" attached to this Agreement, Seller
has not received from any governmental authority written notice of any material
violation of any municipal, state or federal law, rule or regulation (including
those pertaining to environmental matters), or the lack of any required permit
or license (or violation thereunder), which notice has not been cured or is
still outstanding.
(vii)Condemnation. Seller has not received from any governmental authority any
written notice of any pending action or action to be filed to take or condemn
the Property or any part thereof, and to "Seller's Actual Knowledge" (as
hereinafter defined), no such condemnation action is pending or has been filed.
(viii)Litigation. Except as set forth on Exhibit "H" attached hereto, Seller
has not been served with any litigation which is still pending with respect to
its ownership or operation of the Property, and to "Seller's Actual Knowledge"
(as hereinafter defined), no such litigation is pending against Seller with
respect to its ownership or operation of the Property.
(ix)Tangible Personal Property. Seller owns all of the Tangible Personal
Property free and clear of any conditional bills of sale, chattel mortgages,
leases, security agreements or financing statements or other liens or security
interests of any kind (collectively "Liens"), except for Liens which will be
released as of the Closing.
(x)Taxes.All real property taxes assessed against the Property, and all personal
property taxes assessed against the Tangible Personal Property, have been paid
in full, except for those taxes accrued for the current tax year which are not
yet due and payable without interest or penalty.
(xi)Employees.Seller has no employees who are employed at the Property.
(xii)Leasing Commissions. Except as set forth in the Leases, the landlord under
the Leases shall not be obligated to pay, after Closing, any fee or commission
to any broker or finder with respect to any previously exercised or unexercised
renewal, expansion or termination right under the Leases.
(xiii)Notices of Default under Leases. Except as set forth on Exhibit "K"
attached hereto, Seller has not received any written notice from any tenant
under the Leases of a material default of Seller under the Leases that has not
been cured prior to the date of this Agreement.
(xiv)Environmental Violations. To "Seller's Actual Knowledge", there have been
no releases of hazardous materials at the Property which would result in any
liability pursuant to any federal, state, or local environmental or health and
safety law or regulation, including the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and regulations promulgated
thereunder.
As used herein, the term "Seller's Actual Knowledge" shall mean and be limited
to the actual (and not constructive) current knowledge of Andrew Levin and
George Touras, Assistant Vice President and Executive Vice President,
respectively, of Equity Properties and Development Limited Partnership. It is
expressly understood and agreed that neither Andrew Levin nor George Touras
shall have any personal liability or obligation whatsoever with respect to this
Agreement and/or the representations and warranties set forth herein.
B.As of Closing, Seller shall be deemed to remake and restate the
representations set forth in Section 9(A)(ii) through Section 9(A)(iv), and
Section 9(A)(vi) through Sections 9(A)(xiv) above, except that the
representations shall be updated to reflect the provisions of any Estoppel
Certificates and Landlord Certificates and shall be updated by delivering
written notice to Purchaser in order to reflect any other fact, matter or
circumstance which Seller's representatives become aware of that would make any
of Seller's representations or warranties contained herein untrue or incorrect
in any material respect (any such disclosure being referred to as a "Pre-Closing
Disclosure"). Notwithstanding the foregoing, the obligation to update the
representations and warranties as provided herein shall not relieve Seller from
liability (if any) under any other provision of this Agreement. Purchaser shall
have two (2) business days following receipt of any Pre-Closing Disclosure to
elect to terminate this Agreement or proceed to Closing. If Purchaser elects to
terminate this Agreement, then the Escrowee shall promptly return the Earnest
Money to Purchaser and this Agreement shall terminate, except as provided in
Sections 6 and 8(A) above.
C.The representations and warranties set forth in Section 9(A)(i) and Section
9(A)(v) shall not survive the Closing. The remaining representations and
warranties set forth in Section 9(A), subject to modifications thereto as a
result of any Pre-Closing Disclosure, and the covenants of Seller set forth in
Section 9(D) below, shall survive the Closing, but only for a period of nine (9)
months thereafter, and not otherwise. Notwithstanding the foregoing, if prior
to the expiration of such nine (9) month period, (i) Seller shall have received
written notification from Purchaser of a claim of a breach of a representation
or warranty hereunder specifying in reasonable detail the basis of any such
claim, (ii) Purchaser shall have filed a suit against Seller in a court of
competent jurisdiction for a claim to enforce Purchaser's rights under this
Agreement with respect to such breach, and (iii) such claim shall not have been
finally resolved or disposed of within such nine (9) month period, such claim
shall continue as a basis for indemnity until it is finally resolved or disposed
of, subject to applicable statutes of limitation. Except as provided for in
Sections 4(C)(iv), 6, 8(A), and this Section 9(C), the obligations of the
parties under this Agreement shall not survive the Closing or any termination of
this Agreement.
D.Between the date of this Agreement and Closing (or earlier termination of this
Agreement), Seller hereby covenants and agrees with Purchaser that:
(i)Seller shall not remove any item of Tangible Personal Property except as may
be required for repair or replacement or to retire and replace obsolete
property.
(ii)Seller shall keep all existing insurance for the Property (or coverage
substantially equivalent thereto) in full force and effect.
(iii)From and after the date hereof, Seller shall only enter into a New
Lease (as defined in Section 4(C)(i)(c) above) or new Service Contract, or any
modification, amendment, restatement or renewal of any existing Service
Contracts (collectively, "New Agreements") with Purchaser's consent, which may
be consent withheld at Purchaser's sole discretion.
(iv)Seller shall use commercially reasonable efforts to operate and maintain the
Property in a manner generally consistent with the manner in which Seller has
operated and maintained the Property prior to the date hereof, but in no event
shall Seller be obligated to make any capital repairs, replacements or
improvements.
10.MISCELLANEOUS
A.All understandings and agreements heretofore had between Seller and Purchaser
with respect to the Property are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties. Purchaser acknowledges that
it has inspected or will inspect the Property and that it accepts same in its
"as is" condition subject to use, ordinary wear and tear and natural
deterioration. Purchaser further acknowledges that, except as expressly
provided in this Agreement, neither Seller nor any agent or representative of
Seller has made, and Seller is not liable for or bound in any manner by, any
express or implied warranties, guaranties, promises, statements, inducements,
representations or information pertaining to the Property.
B.Neither this Agreement nor any interest hereunder shall be assigned or
transferred by Purchaser, except to an entity which is owned and controlled by
Purchaser (a "Purchaser Permitted Assignee"). Seller may assign or otherwise
transfer its interest under this Agreement to any affiliated or related entity
which acquires the Property (a "Seller Permitted Assignee"). As used in this
Agreement, the term "Seller" and "Purchaser" shall be deemed to include any
Seller Permitted Assignee or Purchaser Permitted Assignee, as the case may be.
Upon any such transfer by Seller to a Seller Permitted Transferree, or by
Purchaser to a Purchaser Permitted Transferree, such original Seller or
Purchaser, as the case may be, shall remain liable for (and shall not be
released from) the obligations and liabilities of Seller or Purchaser, as the
case may be, under this Agreement. Subject to the foregoing, this Agreement
shall inure to the benefit of and shall be binding upon Seller and Purchaser and
their respective successors and assigns.
C.This Agreement shall not be modified or amended except in a written document
signed by Seller and Purchaser.
D.Time is of the essence of this Agreement.
E.This Agreement shall be governed and interpreted in accordance with the laws
of the State of Tennessee.
F.All notices, requests, demands or other communications required or permitted
under this Agreement shall be in writing and delivered personally, by certified
mail, return receipt requested, postage prepaid, by overnight courier (such as
Federal Express), or by facsimile transmission (with a copy to follow by either
overnight courier or certified mail, return receipt requested, postage prepaid),
addressed as follows:
1.If to Seller:
c/o Equity Properties and Development Limited Partnership
Two North Riverside Plaza
Suite 1000
Chicago, Illinois 60606
Attention: Andrew Levin
With a copy to:
Rosenberg & Liebentritt, P.C.
Suite 1600
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Ira Chaplik
2.If to Purchaser:
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Attention: Jerald Friedman
and
The Price REIT, Inc.
4745 North Main Street
Suite 207
Lisle, Illinois 60532
Attention: Daniel C. Slattery
With a copy to:
Gibson, Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: William R. Lindsay, Esq.
All notices given in accordance with the terms hereof shall be deemed received
forty-eight (48) hours after posting, or when delivered personally or otherwise
received. Either party hereto may change the address for receiving notices,
requests, demands or other communication by notice sent in accordance with the
terms of this Section 10(F).
G.EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED
THAT NEITHER SELLER NOR ANY OF SELLER'S PARTNERS, SHAREHOLDERS, BENEFICIARIES,
AFFILIATES, ADVISORS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ACCOUNTANTS,
MANAGERS, BROKERS, ATTORNEYS, OR ASSIGNS (SUCH PARTIES BEING REFERRED TO AS
"SELLER'S AFFILIATES") IS MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR
REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO
THE PROPERTY, INCLUDING BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS
TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE,
ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION,
UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS,
THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR
COMPLETENESS OF THE PROPERTY INFORMATION OR ANY OTHER INFORMATION PROVIDED BY OR
ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE
PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL
AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE
IS, WITH ALL FAULTS". EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS
AGREEMENT, PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND NEITHER SELLER NOR
ANY OF SELLER'S AFFILIATES IS LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER OR SELLER'S AFFILIATES, TO WHOMEVER MADE OR GIVEN, DIRECTLY
OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS
AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER
DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE
EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY
HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER
OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS
AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT.
I.In any lawsuit or other proceeding initiated by Purchaser under or with
respect to this Agreement, Purchaser waives any right it may have to trial by
jury.
J.Except as may be required by law, and without the prior written consent of the
other party hereto, unless the Closing occurs, neither Seller nor Purchaser
shall disclose to any third party (including, but not limited to, any press
release, publicity, or advertising promotion) the existence of this Agreement or
any term or condition thereof or the results of any inspections or studies
undertaken in connection herewith, except for any disclosures required to be
made by law.
K.If for any reason Purchaser does not consummate the Closing, then Purchaser
shall, upon Seller's request, (i) return to Seller all information and materials
provided by Seller to Purchaser relating to the Property, and (ii) deliver to
Seller a copy of any and all studies, reports, surveys and other information,
data and/or documents relating to the Property or any part thereof prepared by
or at the request of Purchaser, its employees and agents, provided that
Purchaser makes no representation or warranty with regard to materials so
delivered. Notwithstanding any other provision contained herein, compliance with
the provisions of this Section 10(K) shall constitute a condition to return of
the Earnest Money to Purchaser.
L.Seller and Purchaser hereby designate Escrowee to act as and perform the
duties and obligations of the "reporting person" with respect to the transaction
contemplated by this Agreement for purposes of 26 C.F.R. Section 1.6045-4(e)(5)
relating to the requirements for information reporting on real estate
transaction closed on or after January 1, 1991. In this regard, Seller and
Purchaser each agree to execute at Closing, and to cause the Escrowee to execute
at Closing, a Designation Agreement, designating Escrowee as the reporting
person with respect to the transaction contemplated by this Agreement.
M.After Closing, Seller shall not be liable to Purchaser in respect of
obligations under this Agreement, or under any agreement or instrument delivered
by Seller pursuant to this Agreement, which survive Closing for any amounts in
excess of Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate,
Purchaser hereby waiving any and all claims it may have to such recoveries in
excess of the foregoing amounts. The foregoing limitations shall not apply to
reprorations made pursuant to Section 4(C)(ii) above.
N.[Intentionally Deleted.]
O.This Agreement may be executed in any number of counterparts, any or all of
which may contain the signatures of less than all of the parties, and all of
which shall be construed together as a single instrument.
P.Neither party shall record this Agreement or a memorandum thereof.
Q. Seller hereby agrees to reasonably cooperate with Purchaser, at Purchaser's
sole cost and expense, in producing audited financial statements for the
Property for such periods as may be requested by Purchaser. Such cooperation
shall include the delivery by Seller to Purchaser's auditors of such financial
information relating exclusively to the to Property as may exist in Seller's
possession as such auditors may reasonably require, provided that Seller makes
no representation or warranty as to the accuracy or completeness of any such
information. This provision shall survive the Closing contemplated hereby.
R.Except as specifically provided for in this Agreement, the rights,
obligations, representations, warranties, covenants and agreements of the
parties set forth in this Agreement shall not survive the Closing or any
termination of this Agreement.
S.Except as specifically provided herein, no third parties shall have the
benefit of any of the provisions of this Agreement, nor is this Agreement made
with the intent that any person or entity other than Seller and Purchaser shall
rely hereon.
T.Should Purchaser elect to acquire the Property pursuant to a Section 1031 or
other qualified exchange, Seller hereby agrees to cooperate with Purchaser with
respect to such exchange, provided that Seller shall not be required to incur
additional expense or liability with respect thereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the date first above written.
SELLER:PURCHASER:
FIRST CAPITAL INSTITUTIONAL THE PRICE REIT, INC., a
REAL ESTATE, LTD. - 2, Maryland corporation
a Florida limited partnership
By: /JOSEPH K. KORNWASSER/
By: First Capital Financial ----------------------
Corporation, a Florida corporation, Name: Joseph K. Kornwasser
its sole general partner Its: President/CEO
By: /NORMAN FIELD/
--------------
Its: Vice President - Finance
EXHIBITS
A Legal Description
B Permitted Exceptions
C-1Notice to Tenants
C-2Notice to Providers under Service Contracts
C-3Master Lease Agreement
C-4Assignment and Assumption of Leases, Service Contracts and Security Deposits
DForm Tenant Estoppel Certificate
EService Contracts
FRent Roll
GNotices of Violations
HLitigation
ITangible Personal Property
JForm Seller Estoppel Certificate
KNotices from Tenant of Landlord Defaults
SCHEDULES
1 Terms of Sprint/MH Lease
EXHIBIT A
LEGAL DESCRIPTION
A tract of land in the Tenth Civil District of Davidson County, Tennessee, and
being more particularly described as follows:
BEGINNING at an iron pin in the southeasterly right-of-way line of Gallatin Road
(U.S. 31-E) (being a 148.70' right-of-way), said point being a distance of
411.80 feet northeasterly of the northeast right-of-way line of Twin Hill Drive
(formerly Liberty Lane) extended (being a 50' right-of-way); thence, along said
southeasterly right-of-way line of Gallatin Road North 47 degree 45' 30" East, a
distance of 728.35 feet to an iron pin at the northwesterly corner of the W. D.
Tidwell et ux property, as of record in Deed Book 3308, page 336, Register's
Office of Davidson County, Tennessee; thence, along the westerly line of said
Tidwell property South 39 degree 46' 51" East, a distance of 620.54 feet to an
iron pin; thence, South 47 degree 45' 30" West, a distance of 1014.31 feet to a
point set in bluff; thence, North 42 degree 14' 30" West, a distance of 619.97
feet to the POINT OF BEGINNING, containing an area of 10.177 acres, more or
less.
Being part of the same property conveyed to Nashville Marketplace Co., a
Tennessee general partnership, of record in Book 6219, Page 162, Register's
Office of Davidson County, Tennessee, and being the property described as Lot
No. 2 on the revised plan of Rivergate Marketplace Shopping Complex, as of
record in Plat Book 6250, Page 104, in said Register's Office.
TOGETHER WITH, (a) all easements and rights benefiting the foregoing property as
shown on plats recorded in Plat Book 6520, Pages 48, 102, and 514, Register's
Office of Davidson County, and (b) all right, title and interest of the owner of
the foregoing property in and to certain contiguous property, as created by that
certain Reciprocal Easement and Development Agreement recorded in Book 6344,
Page 518, in said Register's Office, as revised by that certain Revised
Reciprocal Easement and Development Agreement recorded in Book 6713, Page 520,
in said Register's Office, with all of said right, title and interest being in,
over and across Tract 2 (Easement Parcel) as described herein.
TRACT 2 (EASEMENT PARCEL)
Land in Davidson County, Tennessee, being Tract No. 1 on the Plan of Rivergate
Marketplace Shopping Complex of record in Book 6250, page 48, Register's Office
for Davidson County, Tennessee.
Being the same property conveyed to Homeowners Warehouse, Inc., a Florida
Corporation, of record in Book 6344, page 515, Register's Office of Davidson
County, Tennessee.
EXHIBIT B
PERMITTED EXCEPTIONS
1.Acts of Purchaser, and those claiming by, through and under Purchaser.
2.General and special taxes and assessments not yet delinquent.
3.Rights of tenants under the Leases, and those claiming by, through and under
said tenants.
4.Zoning, building and other governmental and quasi-governmental laws, codes and
regulations.
5.Any adverse claim to any portion of the Property which has been created by
artificial means or has accreted to any such portion so created and
riparian rights, if any.
6.Encroachments, overlaps, boundary line disputes, or other matters which would
be disclosed by an accurate survey or inspection of the Property.
7.A Reciprocal Easement and Development Agreement of record in Book 6344, Page
518, said Register's Office. Revised Reciprocal Easement and Development
Agreement of record in Book 6713, page 520, said Register's Office of
Davidson County, Tennessee.
8.Easements, building setback lines, utilities and restrictions shown on plat
recorded in Plat Book 6250 Page 514, said Register's Office.
9.Easement, dated August 27, 1985, by and between Nashville Marketplace Co., and
Homeowners Warehouse, Inc., filed for record May 29, 1986, and recorded at
Deed Book 6870, pages 812 through 820, Davidson County, Tennessee records.
10.Easements, building setback lines, utilities and restrictions shown on plat
recorded in Plat Book 6250, Page 104, said Register's office.
11.Sanitary sewer and storm drainage easement recorded in Book 6360, Page 182,
said Register's office.
EXHIBIT C-1
NOTICE TO TENANTS
___________, 1997
Re:Sale of ___________________ Shopping Center
_________, _____________ (the "Property")
Dear Tenant:
This is to notify you that the Property has been sold to
_________________________
and that ____________________________ has been retained by the new owner as
managing agent of the building.
Any security or other deposits and any prepaid rents under your lease have been
transferred to the new owner.
Effective immediately, all rental payments, notices to the Landlord, and
correspondence pursuant to your lease should be mailed to the following address:
_______________________________________________________________.
Very truly yours,
____________________________
as agent for Seller
By:______________________________
Its:______________________________
EXHIBIT C-2
NOTICE TO PARTIES TO SERVICE CONTRACTS
______________, 1997
Re:Sale of ___________________ Shopping Center
_________, _____________ (the "Property")
Dear Service Provider:
This is to notify you that the Property has been sold to _______________________
("Purchaser"). Purchaser has assumed all of the obligations of the undersigned
under the service contracts accruing after the date hereof. All notices to
Purchaser should be sent to Purchaser at the office of the building, and should
be sent or delivered to such address in the manner provided in the service
contract.
Very truly yours,
__________________________
as agent for Seller
By:____________________________
It:_____________________________
EXHIBIT C-3
MASTER LEASE AGREEMENT
The Master Lease Agreement, to be prepared during the period between execution
of this Agreement and Closing, shall provide that Seller will lease the Vacant
Space for a period of two (2) years following the Closing, on the following
terms and conditions:
Approximate Square Footage:2,960
Base Rent:$11.00 per square foot
CAM / Taxes:$1.75 per square foot
Holdback:A portion of the Purchase Price, equal to Seventy Five Thousand Four
Hundred Eighty Dollars ($75,480.00), shall be withheld
from the Purchase Price and deposited into escrow with
the Escrowee, to be disbursed monthly to Purchaser to
pay Base Rent and CAM/Taxes under the Master Lease
Agreement, subject to return of all or a portion of the
Holdback to Seller as provided below.
1.If within four (4) months after Closing, Seller obtains the agreement of
Sprint or MH to a lease on terms and conditions no less favorable to Seller
than as set forth on Schedule 1 of the Agreement, then (i) Purchaser shall
be obligated to enter into a lease with Sprint or MH on such terms and
conditions, (ii) the Master Lease shall terminate as of the date of such
new lease with Sprint or MH, as the case may be, (iii) Purchaser shall pay
to Seller the applicable Incremental Purchase Price set forth in Section 2
of the Agreement, and (iv) the remainder of the Holdback shall be returned
to Seller after adjusting the same so that Seller pays the Base Rent and
CAM/Taxes due under the Master Lease for the period prior to the first
payment of such Base Rent and CAM/Taxes by Sprint or MH, as the case may
be, under the Sprint/MH Lease.
2.Additionally, if at any time during the term of the Master Lease, Seller
obtains the agreement of Sprint, MH or another tenant reasonably acceptable
to Purchaser to lease the Vacant Space on terms and conditions no less
favorable to Purchaser than as follows, then (i) Purchaser shall be
obligated to enter into a lease with Sprint, MH or such other tenant on
such terms and conditions, (ii) the Master Lease shall terminate as of the
date of such new lease with Sprint, MH or such other tenant, and (iii) the
remainder of the Holdback shall be returned to Seller after adjusting the
same so that Seller pays the Base Rent and CAM/Taxes due under the Master
Lease for the period prior to the first payment of such Base Rent and
CAM/Taxes by Sprin, MH, or such other tenant, as the case may be, under the
Sprint/MH Lease:
:
Approximate Square Footage:2,960
Base Rent:$11.00 per square foot (provided, however, that if the Base Rent
payable under the lease is between $10.00 and
$11.00 per square foot, Purchaser shall be
obligated to enter into such lease and a portion
of the Holdback equal to the difference between
the Base Rent payable under the new lease and
$11.00 per square foot shall be paid to Purchaser
for the entire two year term)
CAM / Taxes:$1.75 per square foot
Term:Remainder of term of Master Lease Agreement
Lease Commissions:not more than $0 payable by The Price REIT, Inc.
Tenant Improvement Allowance:not more than $0 payable by The Price REIT, Inc.
Other Terms and Conditions:The new lease shall be either (i) in the form of
Purchaser's existing lease with Sprint at Commack,
New York, if the tenant is Sprint, or (ii) in form
acceptable to Purchaser, which approval will not
be unreasonably withheld or delayed by Purchaser.
3.If the term of the proposed new lease shall exceed the remainder of the term
of the Master Lease Agreement, Purchaser shall have the right to approve of
such new lease in its sole discretion.
EXHIBIT C-4
ASSIGNMENT AND ASSUMPTION OF LEASES, SERVICES CONTRACTS,
SECURITY DEPOSITS AND INTANGIBLES
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ____________________________ ("Assignor") hereby assigns to
____________________________ ("Assignee") with an office and place of business
at ______________________________, all of Assignor's right, title and interest
as of the date hereof in and to (1) the leases ("Leases") and security deposits
("Security Deposits") described in Exhibit B attached hereto relating to certain
real property known as ________________________ located in ___________,
______________ and more particularly described in Exhibit A attached hereto (the
"Land"); (2) the service contracts set forth on Exhibit C attached hereto
("Service Contracts"), (3) any license, permits, warranties pertaining
exclusively to the Land and the buildings and improvements currently located
thereon.
Assignee hereby accepts such assignment and hereby assumes and agree to be bound
by and to perform, as of the date hereof, the Assignor's obligations, covenants
and agreements under each of the Leases and Service Contracts arising on or
after the date hereof, and Assignee further assumes all liability of Assignor
for the proper refund or return of the Security Deposits if, when, and as
required by the terms of the Leases or otherwise by law.
This Assignment and Assumption may be executed and delivered in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and
Assumption effective as of this ____ day of ____________, 1997.
ASSIGNOR:
__________________________________
By:_______________________
Its:____________________
ASSIGNEE:
__________________________________
By:_______________________
Its:____________________
EXHIBIT D
FORM TENANT ESTOPPEL CERTIFICATE
____________________________
c/o Equity Properties and Development Limited Partnership
Two North Riverside Plaza
Suite 1000
Chicago, Illinois 60606
Attn: Andrew Levin
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Attention: Jerald Friedman
Re: _______________________("Tenant")
Ladies and Gentlemen:
At the request of _______________________________, a __________________
("Landlord"), made in connection with the proposed sale of the
__________________ Shopping Center, ________________________________ (the
"Property") and Landlord's interest in the "Lease" (as hereinafter defined) to
_______________________________ ("Purchaser"), Tenant hereby certifies to
Landlord and Purchaser as follows:
1.Tenant is the lessee under a lease with Landlord, dated __________, 19___, [as
amended by _________________, dated __________, 19___ (collectively, the
"Lease")][(the "Lease")] for suite(s) _______ on the ________ floor(s) at
the Property (the "Premises").
2.The Lease is attached hereto as Exhibit "A" hereto, and sets forth the entire
agreement between Landlord and Tenant with respect to the Premises, is in
full force and effect and has not been amended, modified or extended.
3.The monthly [base][minimum] rent of $________ due under the Lease has been
paid through _______, 199_ and all additional rent (consisting of
$_________ per month for estimated operating expenses and estimated real
estate taxes) due under the Lease has been paid through ______________,
199_.
4.Landlord is not in default under the Lease.
5.The expiration date of the Lease is ____________________, 19___.
6.The amount of the security deposit currently held by Landlord under the Lease
is $ _______________.
7.There is no prepaid rent, except $ _____________, which represents rent
payable through ___________, 199_.
8.Tenant has not assigned any of its interest in the Lease or subleased all or
any portion of the Premises, except as follows:
_____________________________.
9.The undersigned has no defenses, counterclaims, set-offs or concessions
against rent or charges due or to become due under the Lease.
10.Tenant has accepted the Premises and [has commenced payment of full rent]
[or] [is entitled to _____ month's abatement of base rent, as of the date
hereof] under the Lease and is the owner and holder of the entire lessee's
interest in the Lease.
11.All work required to be performed by Landlord as of the date hereof with
respect to the Lease and in connection with the Premises has been completed
by Landlord.
12.Tenant has no right of first refusal or option pursuant to the Lease or
otherwise to purchase all or any part of the Premises or the Property, to
expand the Premises or to renew the Lease, except:
_____________________________. [describe any unexercised or previously
exercised expansion or renewal options, or rights of first refusal or state
"none", if none exist]
13.This Tenant Estoppel Certificate (this "Certificate") shall inure to the
benefit of Landlord, Purchaser and their successors and assigns.
14.The individual executing this Certificate on behalf of Tenant is duly
authorized to execute this Certificate.
Very truly yours,
______________________, Tenant
By:_____________________________________
___________________, Title
Date: ____________________, 1997
EXHIBIT E
SERVICE CONTRACTS
Contract Contract
Vendor Service Begin Termination
- -----------------------------------------------------------------
Superior Lawn Landscaping 1/1/97 12/31/97
Service
Superior Lawn Janitorial 1/1/97 12/31/97
Service
Light Incorporated parking light 10/14/89 10/13/98
maintenance.
ADT Security Fire alarm 10/24/91 9/30/98
System monitoring
Vendor Monthly feesTermination
- -----------------------------
Superior Lawn $ 453.17 30 day permissible
Service
Superior Lawn $1,048.33 30 day permissible
Service
Light Incorporated $ 244.40 50% of remaining
payments if terminated
ADT Security $ 146.67 40% of remaining
Payments if terminated
EXHIBIT F
RENT ROLL
EXHIBIT G
NOTICES OF VIOLATIONS
NONE.
EXHIBIT H
LITIGATION
NONE.
EXHIBIT I
TANGIBLE PERSONAL PROPERTY
NONE.
EXHIBIT J
FORM SELLER ESTOPPEL CERTIFICATE
The Price REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Attention: Jerald Friedman
Re: _______________________("Tenant")
Ladies and Gentlemen:
Reference is herein made to that certain Real Estate Sale Agreement (the
"Agreement") dated ______________, 1997 by and between First Capital
Institutional Real Estate, Ltd. - 2, a Florida limited partnership ("Seller"),
as seller, and The Price REIT, Inc., a Maryland corporation, as purchaser
("Purchaser"), for the purchase and sale of the property known as Marketplace at
Rivergate, in Nashville, Tennessee, as more particularly described in the
Agreement (the "Property"). All capitalized terms used herein but not defined
herein shall have the meanings ascribed to them in the Agreement. Pursuant to
Section 8(B) of the Agreement, Seller hereby represents and warrants to
Purchaser, to "Seller's Actual Knowledge" (as defined in the Agreement) as
follows:
1.Tenant is the lessee under a lease with Seller, as landlord, dated __________,
19___, [as amended by _________________, dated __________, 19___
(collectively, the "Lease")][(the "Lease")] for suite(s) _______ on the
________ floor(s) at the Property (the "Premises").
2.The Lease is attached hereto as Exhibit "A" hereto, and sets forth the entire
agreement between Seller, as Landlord, and Tenant with respect to the
Premises, is in full force and effect and has not been amended, modified or
extended.
3.The monthly [base][minimum] rent of $________ due under the Lease has been
paid through _______, 199_ and all additional rent (consisting of
$_________ per month for estimated operating expenses and estimated real
estate taxes) due under the Lease has been paid through ______________,
199_.
4.Except as provided in Section ___ of the Agreement or in Schedule I attached
hereto, Seller has not received written notice from the Tenant of any
material default by Seller under the Lease which has not been cured as of
the date of this certificate ("Certificate").
5.The expiration date of the Lease is ____________________, 19___.
6.The amount of the security deposit currently held by Seller, as Landlord under
the Lease, is $ _______________.
7.There is no prepaid rent, except $ _____________, which represents rent
payable through ___________, 199_.
8.Tenant has not assigned any of its interest in the Lease or subleased all or
any portion of the Premises, except as follows:
_____________________________.
9.The Tenant has no defenses, counterclaims, set-offs or concessions against
rent or charges due or to become due under the Lease.
10.Tenant has accepted the Premises and [has commenced payment of full rent]
[or] [is entitled to _____ month's abatement of base rent, as of the date
hereof] under the Lease and is the owner and holder of the entire lessee's
interest in the Lease.
11.All work required to be performed by Seller, as landlord under the Lease, as
of the date hereof with respect to the Lease and in connection with the
Premises has been completed by Seller, as landlord thereunder.
12.Tenant has no right of first refusal or option pursuant to the Lease or
otherwise to purchase all or any part of the Premises or the Property, to
expand the Premises or to renew the Lease, except:
_____________________________. [describe unexercised or previously
exercised expansion or renewal options or rights of first refusal, or state
"none", if none exist]
13.Seller, as landlord under the Lease, is not in default of its obligations
under the Lease.
14.This Certificate is executed by Seller solely for the benefit of Purchaser
and no third party (other than a "Purchaser Permitted Assignee" [as defined
in the Agreement] provided that such Purchaser Permitted Assignee shall
have executed and delivered to Seller at or prior to Closing an agreement
assuming all of the obligations of Purchaser under the Agreement in
accordance with Section 10(B) of the Agreement) shall have the benefit of
any of the provisions of this Certificate, nor is this Certificate made
with the intent that any person other than Purchaser (and such Purchaser
Permitted Assignee) rely thereon.
This Certificate is delivered to Purchaser in connection with and subject to the
terms, provisions and limitations of the Agreement, including, without
limitation, Sections 9(C) and 10(M) thereof.
IN WITNESS WHEREOF, Seller has executed this Certificate as of this ____ day of
____________, 1997.
EXHIBIT K
NOTICES FROM TENANT OF LANDLORD DEFAULTS
NONE.
SCHEDULE 1
Terms of Sprint/MH Lease
Tenant:Either Sprint Spectrum L.P. or Mariner Health
Approximate Square Footage:2,960
Base Rent:$11.00 per square foot
CAM / Taxes:$1.75 per square foot
Lease Commissions:not more than $0 to The Price REIT, Inc.
Tenant Improvement Allowance:not more than $0 to The Price REIT, Inc.
Other Terms and Conditions:There shall be no offset or termination rights. The
remaining terms and conditions shall be subject to
Purchaser's approval, which will not be unreasonably
withheld.
===============================================================================
EXHIBIT 10.53
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of the day
of March, 1998, by and among Vista Ridge Plaza, Ltd., a Texas limited
partnership ("Seller"), Price/Baybrook, Ltd., a Texas limited partnership
("Buyer"), and Weststar Title Company ("Agent").
W I T N E S S E T H:
WHEREAS, Seller and Buyer entered into that Purchase and Sale Agreement and
Escrow Instructions dated as of December 17, 1997, as amended by that certain
First Amendment to Purchase and Sale Agreement and Escrow Instructions dated as
of January 30, 1998, (the "First Amendment") as further amended by that certain
Second Amendment to Purchase and Sale Agreement and Escrow Instructions (the
"Second Amendment") dated as of the 16th day of February, 1998, and as further
amended by that certain Third Amendment to Purchase and Sale Agreement and
Escrow Instructions dated as of the 27th day of February 1998 (the "Third
Amendment") (collectively, as amended, the "Contract") with respect to certain
properties located in Lewisville, Texas more particularly described in said
Contract;
WHEREAS, pursuant to a lease dated March 12, 1996, as amended (the "HomePlace
Lease") between HomePlace Stores, Inc. ("HomePlace") and Vista Ridge Plaza,
Ltd., HomePlace has leased approximately 53,895 square feet of space (the
"HomePlace Space") in Vista I;
WHEREAS, on January 5, 1998, HomePlace filed for relief under Chapter 11 of
Title 11 of the United States Code, 11 U.S.C. Section 101, et. seq. (the "Code")
in the United States Bankruptcy Court for the District of Delaware, Case No.
98-8; and
WHEREAS, in connection with such bankruptcy filing and pursuant to the terms of
the Third Amendment, a portion of the sales price of the Property is being
withheld and is to be held and disbursed by Agent in accordance with the
provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Agent, Buyer, and Seller covenant and agree as follows:
ARTICLE I.
1.1.Establishment of Escrow. Pursuant to the terms of the Contract, Buyer and
Seller hereby deposit the sum of $1,800,000.00 (the "Escrowed Funds") in escrow
with Agent to be held and disbursed in accordance with the terms of this
Agreement.
1.2.Receipt of Escrowed Funds. Agent hereby acknowledges receipt of the
Escrowed Funds and agrees to hold and disburse the same in strict accordance
with the provisions of this Agreement.
1.3.Interest. The Escrowed Funds shall be held by Agent in an interest bearing
account with NationsBank of Texas, N.A. Agent shall use its reasonable efforts
to obtain the maximum lawful rate of interest from time to time available for
funds of a similar nature held by Agent. After Closing and prior to any
Rejection (as hereinafter defined), any interest earned on the Escrowed Funds
shall be remitted monthly to Seller. After any Rejection, interest will remain
part of the Escrowed Funds to be disbursed in accordance with Section 2.3 below.
1.4Defined Terms. "Rejection" means a rejection of the HomePlace Lease pursuant
to ?365 of the Code, as evidenced by an order of the court approving such
rejection entered on the docket. "Assumption" means an assumption of the
HomePlace Lease pursuant to 365 of the Code, as evidenced by an order of the
court approving such assumption entered on the docket.
ARTICLE II
Agent agrees to disburse the Escrowed Funds and any accrued interest thereon, as
follows:
2.1.Disbursements Prior to Assumption or Rejection of HomePlace Lease. In the
event that before the Assumption or Rejection, HomePlace fails to pay when due
any rent under the HomePlace Lease after the Vista I Property Closing, Buyer
shall have the right to draw upon the Escrowed Funds for such unpaid rent in
accordance with Section 2.4 of this Agreement. In the event any such previously
unpaid rent (for which Buyer has obtained a draw out of the Escrowed Funds) is
subsequently paid by HomePlace, such amount shall then be promptly remitted to
Agent and shall become part of the Escrowed Funds.
2II.2.Disbursements Upon Assumption of HomePlace Lease. In the event of an
Assumption, then portions of the Escrowed Funds shall be released by Agent as
follows:
(i)If HomePlace assumes the HomePlace Lease without any reduction in the rental
or the primary term set forth in the HomePlace Lease, then the entire remaining
balance of the Escrowed Funds plus any interest balance will be remitted to
Seller in accordance with Section 2.4 of this Agreement.
(ii)If HomePlace assumes the HomePlace Lease, but HomePlace obtains an amendment
to the HomePlace Lease which provides for a reduction in rental from that rental
amount stated in the HomePlace Lease and such reduction continues for a period
in excess of five (5) years, then Seller shall be entitled to an amount equal
to: (i) the then remaining balance of Escrowed Funds, minus (ii) an amount equal
to (1) the average annual reduction in rental under the HomePlace Lease divided
by (2) .105, which amount shall be disbursed in accordance with Section 2.4 of
this Agreement. The balance of the Escrowed Funds shall then be released to
Buyer.
(iii)If HomePlace assumes the HomePlace Lease but has obtained an amendment to
the HomePlace Lease which provides for a reduction in rental which only occurs
during the first five (5) years after the Assumption, then Seller shall be
entitled to an amount equal to: (1) the then remaining balance of Escrowed
Funds, minus (2) the aggregate rental reduction over the first five (5) years
after the Assumption of the HomePlace Lease, minus (3) any other monetary
concessions granted to HomePlace pursuant to the amendment to the HomePlace
Lease in connection with such Assumption, which amount shall be disbursed in
accordance with Section 2.4 of this Agreement. The balance of the Escrowed
Funds shall then be released to Buyer.
2.3.Disbursements Upon Rejection of HomePlace Lease; Re-Lease of HomePlace
Space. In the event of a Rejection, then Buyer may re-lease the HomePlace Space
pursuant to the terms of the Third Amendment. In the event of such re-leasing,
the following provisions shall be applicable to the Escrowed Funds:
(i)Disbursements Pending Re-Lease of HomePlace Space. Until the HomePlace space
is re-leased, Buyer shall have the right to withdraw, on a monthly basis, in
accordance with Section 2.4 of this Agreement, a portion of the Escrowed Funds
equal to the rent which would have been paid by HomePlace pursuant to the terms
of the HomePlace Lease had it not been rejected. Agent shall continue to
disburse to Seller accrued interest, on a monthly basis on the 5th day of each
month, out of the Escrowed Funds.
(ii)Re-Leasing at Same or Increased Aggregate Annual Rent. If, on or prior to
the date that is 18 months after Rejection, Seller is able to re-lease the
HomePlace Space at or above the average aggregate annual rental which would have
been paid under the HomePlace Lease and if such lease or leases meet the Leasing
Guidelines described in the Third Amendment, then Seller shall have the right to
receive:
(y) the then remaining Escrowed Funds (after any reimbursement pursuant to
Section 2.3(iv) below) within ten (10) days after such new tenant has
taken occupancy and commenced paying rent, plus
(z) from Buyer (and not from the Escrowed Funds) if, and only if the average
annual rental under such new lease or leases is greater than the
average annual rental under the HomePlace Lease (for the primary term)
a cash amount from Buyer equal to the lesser of:
(a) the costs of tenant improvements, commissions, and legal fees and other
costs of re-leasing the HomePlace Space, as reasonably approved
by Buyer, or
(b) an amount equal to (1) the difference between the average annual rental
provided for under the HomePlace Lease (for the primary term) and
the average annual rental under such new lease or leases, divided
by (2) .105.
Any disbursement from the Escrowed Funds to be made pursuant to this Section
2.3(ii) shall be made in accordance with Section 2.4 of this Agreement.
(iii)Re-leasing at Lower Aggregate Annual Rent. If, on or prior to the date
that is 18 months after Rejection, Seller is unable to re-lease the HomePlace
Space (with leases meeting the Leasing Guidelines described in the Third
Amendment) at an average rental equal to or above the average aggregate rental
which would have been paid under the HomePlace Lease, then Seller shall have the
right to receive an amount equal to:
(1) the then remaining Escrowed Funds, minus
(2) an amount equal to (x) the difference between (I) the average annual rental
under all new leases of the HomePlace Space meeting the Leasing
Guidelines described in the Third Amendment, and (II) the average
annual rental provided for under the HomePlace Lease for the
first ten (10) years from the commencement date in such lease
divided by (y) .105.
Buyer shall have the right to receive out of the Escrowed Funds the amount
calculated pursuant to item (2) in the preceding sentence in addition to any
sums received in accordance with Section 2.3(i) above. Seller shall be entitled
to receive reimbursement under Section 2.3(iv) below only to the extent there
would be Escrowed Funds remaining after deducting item (2) above from item (1),
calculated as if no further leases were executed with respect to the HomePlace
Space. Any disbursement from the Escrowed Funds to be made pursuant to this
Section 2.3(iii) shall be made in accordance with Section 2.4 of this Agreement.
(iv) Payment and Recovery of Certain Tenant Improvement Costs. During the
eighteen (18) month period following Rejection, Seller shall be responsible for,
and shall pay, all tenant improvements, commissions, legal fees and other costs
of re-leasing the HomePlace Space incurred by Seller with respect to leases
actually executed pursuant to the Leasing Guidelines. Seller may recover such
tenant improvements, commissions, legal fees and other costs of re-leasing as
they are incurred by Seller pursuant to the approved Leasing Guidelines, but
only in the circumstances and manner described in this Section 2.3(iv). Because
the applicability of Section 2.3(iii) cannot be determined until the date (the
"Determination Date") that is earlier to occur of (x) the expiration of 18
months after Rejection, and (y) the satisfaction of the condition precedent to
the operation of Section 2.3(iii), Buyer and Seller agree that Seller shall be
entitled to reimbursement from the Escrowed Funds under this Section 2.3(iv)
prior to the Determination Date only for the costs of tenant improvements, which
reimbursements shall be limited to the lesser of (1) $10.00 per rentable square
foot leased, or (2) fifty percent (50%) of the amount otherwise payable to
Seller under Section 2.3(iii) (assuming no further leases were thereafter
executed with respect to the HomePlace Space prior to 18 months after
Rejection). Upon the Determination Date:
(1) if Section 2.3(ii) is applicable, then Seller shall be entitled to
reimbursement from the Escrowed Funds (without duplication of any amounts
theretofore disbursed pursuant to this Section 2.3(iv)) for all tenant
improvements, commissions, legal fees and other costs of re-leasing the
HomePlace Space incurred by Seller with respect to leases actually executed
pursuant to the Leasing Guidelines, and
(2) if Section 2.3(iii) is applicable, then Seller shall be entitled to
reimbursement from the Escrowed Funds (without duplication of any amounts
theretofore disbursed pursuant to this Section 2.3(iv)) for all tenant
improvements, commissions, legal fees and other costs of re-leasing the
HomePlace Space incurred by Seller with respect to leases actually executed
pursuant to the Leasing Guidelines, subject to the limitation on such
reimbursement set forth in Section 2.3(iii).
(v)No Re-Lease of HomePlace Space. In the event that the HomePlace Space is not
re-leased within eighteen (18) months after Rejection, then the then existing
balance of the Escrowed Funds shall be remitted to Buyer in accordance with
Section 2.4 of this Agreement, and Seller shall have no further claims with
respect to the HomePlace Lease or this Agreement.
(vi)Rent Paid by HomePlace. In connection with a Rejection, any sums paid by
HomePlace with respect to rents accruing prior to Closing shall be promptly
remitted to Seller, and any sums paid by HomePlace with respect to rents
accruing after Closing for which Buyer has obtained a draw out of the Escrowed
Funds shall be promptly remitted to Agent and shall become a part of the
Escrowed Funds.
(vii)"Average aggregate annual rent", or similar terms as used in this Section
2.3 shall be calculated in the following manner: base rents shall be averaged
over the first five (5) years of the primary term of the HomePlace Lease and
shall be calculated without any additions thereto for escalation clauses or
percentage rents. Any expense item which is payable by a new tenant but not
payable by HomePlace under the HomePlace Lease shall be added to base rent in an
equitable manner to be agreed to by Buyer and Seller in good faith. Any expense
item which is payable by HomePlace under the HomePlace Lease and which is not
payable by a new tenant shall be deducted from base rent in an equitable manner
to be agreed to by Buyer and Seller in good faith.
2.4.Disbursement from Escrowed Funds. Each request for a disbursement from the
Escrowed Funds shall be evidenced by a written request (a "Disbursement
Request") from Buyer to Seller or Seller to Buyer, as the case may be, with a
copy to Agent, specifying the amount of the requested disbursement, calculated
as provided in the applicable sections of this Agreement (Sections 2.1, 2.2, and
2.3), as well as the following information:
(a)pursuant to Section 2.1 hereof, a certificate executed by the requesting
party stating that rent has not been paid in accordance with the
provisions of the HomePlace Lease, including a statement of the amount
of the unpaid rent;
(b)pursuant to Section 2.2(i) hereof, evidence of the Assumption in the form of
an order (the "Order") from the bankruptcy court, and a certificate
executed by the requesting party stating that the rental owed under
the HomePlace Lease has not been reduced;
(c) pursuant to Section 2.2(ii) or (iii) hereof, a copy of the Order evidencing
the Assumption, and a copy of the amendment to the HomePlace lease
setting forth the amount and the effective dates of the rental
reduction;
(d)pursuant to Section 2.3(i) hereof, a copy of the Order evidencing the
Rejection, and a certificate executed by the requesting party stating
the amount of rent which would have otherwise been due the requesting
party had the HomePlace lease not been rejected;
(e)pursuant to Section 2.3(ii) hereof, a copy of the Order evidencing the
Rejection, a copy of the new lease or leases of the HomePlace Space,
and invoices or other evidence of payment of any tenant improvements,
commissions, legal fees, and other costs incurred in connection with
the releasing of the HomePlace Space -- if the Disbursement Request is
for the remaining Escrowed Funds pursuant to Section 2.3(ii)(y), the
requesting party shall also provide evidence that the new tenant or
tenants in the HomePlace Space has occupied all or a portion of the
HomePlace Space and has commenced paying rent;
(f)pursuant to Section 2.3(iii) hereof, a copy of the Order evidencing the
Rejection, a copy of the new lease or leases of the HomePlace Space,
and invoices or other evidence of payment of any tenant improvements,
commissions, legal fees, and other costs incurred in connection with
the releasing of the HomePlace Space;
(g)pursuant to Section 2.3(v) hereof, a copy of the Order evidencing the
Rejection, and a certificate executed by the requesting party that the
no portion of the HomePlace Space has been released within 18 months
following the Rejection.
Upon receipt of a Disbursement Request, the recipient of the Disbursement
Request shall promptly review same, and, upon confirmation that the information
contained in the Disbursement Request is accurate, shall provide to Agent, with
a copy to the sender of the Disbursement Request, a certificate authorizing
Agent to pay the requested disbursement amount out of the Escrowed Fund (the
"Disbursement Approval Certificate"). If, within five (5) business days after
receipt of a Disbursement Request, either party fails to either (i) disapprove,
in a writing delivered to the requesting party, with a copy to Agent, such
Disbursement Request (which disapproval notice shall set forth the reasons
therefor), or (ii) approve (which approval shall not be unreasonably withheld)
such Disbursement Request by delivering to Agent (with a copy to the other
party) the Disbursement Approval Certificate, then such Disbursement Request
shall be deemed to be approved. Agent shall disburse to Buyer or Seller, as the
case may be, the amounts requested by the Disbursement Request within five (5)
days following receipt of either (i) the Disbursement Approval Certificate, or
(ii) a sworn certificate executed by a duly authorized officer of Buyer or
Seller, with a copy to the other party, stating that such party has failed to
either approve or disapprove the subject Disbursement Request, as required by
this Section 2.4 of this Agreement, within five (5) business days following
receipt of such Disbursement Request (the "Disbursement Deemed Approval
Certificate"), except that Agent shall not make such disbursement if Agent has
previously received a copy of a notice, in compliance with this Section 2.4, by
which Buyer or Seller, as the case may be, has previously disapproved the
subject Disbursement Request. Agent's sole responsibility in connection with
the disbursement of the Escrowed Funds pursuant to this Section 2.4 is to
disburse the amounts shown on the Disbursement Request in compliance with the
immediately preceding sentence, and it is expressly agreed that Agent shall have
no responsibility whatever to determine the accuracy of the Disbursement
Request, the Disbursement Approval Certificate, the Disbursement Deemed Approval
Certificate or any disapproval notice.
2.5.Final Disbursement. This Agreement shall terminate on the earlier to occur
of (i) date the Escrowed Funds are reduced to zero, or (ii) twenty-four (24)
months following the Rejection. Agent shall have no responsibility for making
any determination as to what portion of the Escrowed Funds should be released
but shall be entitled to rely solely upon the written notices furnished to
Agent.
2.6.Agent's Fees and Expenses. In consideration of the services to be performed
by Agent hereunder, Agent shall be paid a fee of Five Hundred and No/100 Dollars
($500.00), which fee shall be payable one-half (?) by Seller and one-half (?) by
Buyer upon the execution hereof. In no event shall Agent's fee be paid out of
the Escrowed Funds.
2.7.Liabilities of Agent. Agent shall be liable only to hold the Escrowed Funds
received herewith and to deliver same to persons or entities named herein in
accordance with the provisions of this Agreement and any amendments hereto, it
being expressly understood that by acceptance hereof Agent is acting in the
capacity of a depository only and shall not be liable or responsible to anyone
for any damages, losses, or expenses, unless same shall be caused by its gross
negligence or willful malfeasance. Agent shall not be bound, except as provided
herein, in any way by any other contract or agreement between Buyer and Seller
whether it has knowledge of any such contract or agreement or of its terms or
conditions.
2.8.Modification and Termination. This Agreement shall not be modified,
revoked, released, or terminated, except in a writing executed by Buyer and
Seller, and delivered to Agent.
2.9.Resignation of Agent. Should, at any time, any attempt be made to
materially modify this Agreement in a manner that would increase the duties and
responsibilities of Agent, Agent may resign by notifying the parties hereto in
writing, by certified mail to their respective addresses set forth below which
resignation shall be effective upon the earlier of (a) the acceptance by a
successor Agent as escrow agent as shall be appointed by such parties, or (b)
thirty (30) days following the date upon which notice was mailed.
2.10.Disagreement. Should any controversy arise between the parties with
respect to this Agreement or with respect to the right to receive any portion of
the Escrowed Funds, Agent shall have the right to institute a bill of
interpleader in any court of competent jurisdiction to determine the rights of
the parties, or Agent may, in either of such events, refuse to take any action
to deliver or dispose of the Escrowed Funds until it has been served with a
judgment properly instructing Agent as to the disposition of such Escrowed
Funds. Agent may act upon and dispose of the Escrowed Funds, as provided in any
such judgment, even though it is a party to the suit. Should a bill of
interpleader be instituted and Agent becomes involved in litigation in any
manner whatsoever on account of this Agreement, the parties hereto agree that
the non-prevailing party (either Buyer or Seller, as determined by the court)
shall pay Agent's reasonable attorneys' fees incurred and any other reasonable
disbursements, expenses, losses, costs, and damages in connection with or
arising from such litigation. Agent shall have no obligation to take any legal
action in connection with this Agreement or towards its enforcement, or to
appear in, prosecute, or defend any action or legal proceeding which would or
might involve it in any cost, expense, loss, or liability, unless security and
indemnity shall be furnished.
ARTICLE III
3.1Binding Effect. This Agreement contains the entire understanding between and
among the parties hereto, and shall be binding upon and inure to the benefit of
such parties, and subject to its terms, their respective successors, heirs,
assigns, and legal representatives.
3.2GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED IN AND SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.
3.3Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and personally delivered or sent by United States mail,
registered or certified mail, postage prepaid, return receipt requested, or by
electronic facsimile transmission (followed by a copy mailed or delivered as
otherwise provided herein), or sent by Federal Express or similar nationally
recognized overnight courier service, and addressed as follows, and shall be
deemed to have been given upon the date of such delivery (or refusal to accept
delivery) at the address specified below as indicated on the return receipt or
air bill, or on the date of facsimile transmission if delivered in such manner:
If to Buyer:Price/Baybrook, Ltd.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, California 90036
Attention: Joseph Kornwasser
Fax: (213) 937-8175
With a copy to:Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: William R. Lindsay, Esq.
Fax: (213) 229-7520
If to Seller:c/o DalMac Investments
111 W. Spring Valley Road
Richardson, Texas 75083-0160
Attention: Brad McJunkin
Fax: (972) 235-3060
with a copy to:Donohoe, Jameson & Carroll, P.C.
1201 Elm Street
3400 Renaissance Tower
Dallas, Texas 75270
Attention: Mark D. Van Kirk, Esq.
Fax: (214) 744-0231
If to Agent:Weststar Title Company
17736 Preston Road
Suite 200
Dallas, Texas 75252
Attention: Lorri Henson
Fax: (972) 931-7446
or such other address as any party may from time to time specify in writing to
the others in the manner aforesaid.
3.4Entirety and Amendments. This Agreement embodies the entire agreement among
the parties and supersedes all prior agreements and understandings, if any,
specifically relating to the subject matter hereof and may be amended or
supplemented only by an instrument in writing executed by all of the parties
hereto.
3.5Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts. If so executed, each of the counterparts shall be
deemed to be an original for all purposes, and all the counterparts shall,
collectively, constitute but one agreement. In making proof of this Agreement
it shall not be necessary to produce or account for more than one counterpart.
3.6Time of the Essence. Time is of the essence with respect to this Agreement;
provided, however, in the event the date for performance of an obligation or
delivery of any notice hereunder falls on a Saturday, Sunday or a federal
holiday, the date for such performance or delivery of such notice shall be
postponed until the next ensuing business day.
3.7Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained
herein.
3.8Attorneys Fees. If any dispute between Buyer and Seller, relating to the
transactions contemplated by this Agreement, should result in litigation, the
prevailing party shall be reimbursed for all reasonable costs incurred in
connection therewith, including, without limitation, reasonable attorneys' fees
and court costs.
3.9Terminology. The captions beside the section numbers of this Agreement are
for reference only and shall not modify or affect this Agreement in any manner
whatsoever. Wherever required by the context, any gender shall include any
other gender, the singular shall include the plural, and the plural shall
include the singular.
3.10Defined Terms.All capitalized terms herein which are not defined in this
Amendment shall have the meaning ascribed to them in the Contract.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the date first set forth above.
SELLER:
VISTA RIDGE PLAZA, LTD.,
a Texas limited partnership
BY:DALMAC PLAZA, INC.
a Texas corporation,
its general partner
By: /RANDALL HEARNE/
Name: Randall Hearne
Title:Secretary/Treasurer
BUYER:
PRICE/BAYBROOK, LTD.
a Texas limited partnership
BY:PRICE/TEXAS, INC.,
its general partner
By: /JERALD FRIEDMAN/
Name: Jerald Friedman
Title: Vice President
AGENT:
WESTSTAR TITLE COMPANY
By:
Name:
Title:
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Third Amendment to Purchase and Sale Agreement and Escrow Instructions (the
"Amendment") is entered into this 27th day of February, 1998 by and between
Vista Ridge Plaza, Ltd., a Texas limited partnership, Vista Ridge Plaza II,
Ltd., a Texas limited partnership, and Vista Ridge Shops, Inc. a Texas
corporation (collectively, "Sellers") and Price/Baybrook, Ltd., a Texas limited
partnership ("Buyer").
WHEREAS, Sellers and Buyer entered into that Purchase and Sale Agreement and
Escrow Instructions dated December 17, 1997 (as amended, the "Contract") with
respect to certain properties located in Lewisville, Texas more particularly
described in said Contract;
WHEREAS, Buyer and Sellers amended the Contract pursuant to that certain First
Amendment to Contract of Sale dated January 30, 1998 and that certain Second
Amendment to Contract of Sale dated February 16, 1998;
WHEREAS, pursuant to a lease dated March 12, 1996, as amended (the "HomePlace
Lease") between Homeplace Stores, Inc. ("HomePlace") and Vista Ridge Plaza,
Ltd., HomePlace has leased approximately 53,895 square feet of space (the
"HomePlace Space") in Vista I;
WHEREAS, Homeplace filed on January 5, 1998 for relief under Chapter 11 of Title
11 of the United States Code, 11 U.S.C. Section 101, et. seq. (the "Code") in
the United States Bankruptcy Court for the District of Delaware, Case No. 98-8.
WHEREAS, Buyer and Sellers desire to further amend the Contract as hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth,
Buyer and Sellers hereby amend the Contract as follows:
1.Escrow with Respect to Vista I and Homeplace Space. At the Closing of the
sale of Vista I, $1,800,000.00 (the "Escrowed Funds") out of the $12,550,000.00
Vista I Purchase Price shall be placed in escrow in an interest bearing account
with Title Company pursuant to the terms of the "Escrow Agreement" reasonably
approved by Buyer and Sellers prior to Closing. As more particularly described
in the Escrow Agreement, after Closing and prior to any rejection of the
HomePlace Lease pursuant to Section 365 of the Code, any interest earned on the
Escrowed Funds shall be remitted monthly to Sellers. After any rejection of the
HomePlace Lease pursuant to Section 365 of the Code, interest will remain part
of the Escrowed Funds to be disbursed in accordance with Paragraph 4 below. In
addition, in the event that, after Closing but before the assumption or
rejection of the HomePlace Lease pursuant to Section 365 of the Code, HomePlace
fails to pay when due any rent under the HomePlace Lease after Closing, Buyer
shall have the right, pursuant to the Escrow Agreement, to draw upon the
Escrowed Funds for such unpaid rent. In the event any such previously unpaid
rent (for which Buyer has obtained a draw out of the Escrowed Funds) is
subsequently paid by HomePlace, such amount shall then be promptly remitted to
the escrow and shall become a part of the Escrowed Funds.
2.Sellers' and Buyer's Rights with respect to Changes to HomePlace Lease.
Sellers shall have the right to negotiate and enter into an agreement with
HomePlace over the terms of its assumption or rejection of the HomePlace Lease,
so long as the .50? or .75? per square foot increases currently in the HomePlace
Lease (effective commencing lease years 6 and 11) are not altered. Sellers
shall also have the right to reject any offers by HomePlace with respect to
concessions on the HomePlace Lease, even if the HomePlace Lease is ultimately
rejected. In connection with any such rejection, any sums paid by HomePlace
with respect to rents accruing prior to Closing shall be promptly remitted to
Seller and any sums paid by HomePlace with respect to rents accruing after
Closing for which Buyer has obtained a draw out of the Escrowed Funds, shall be
promptly remitted to the escrow and shall become a part of the Escrowed Funds.
If the HomePlace Lease is rejected by HomePlace, the provisions of Paragraph 4
below will apply. If the HomePlace Lease is assumed, the provisions of
Paragraph 3 below will apply. Notwithstanding the foregoing, if Buyer agrees to
release the entire remaining Escrowed Funds to Seller, Buyer shall have the
right to negotiate and enter into an agreement with HomePlace over terms of the
assumption or rejection of the HomePlace Lease in its sole and absolute
discretion and Seller will have no further liability to Buyer or HomePlace
concerning the HomePlace Lease. Each party agrees to cooperate with the other
and execute such consents or other documents as is necessary to effect the terms
of this paragraph 2.
3.Assumption of HomePlace Lease.If HomePlace assumes the HomePlace Lease
pursuant to Section 365 of the Code, then, pursuant to the terms of the Escrow
Agreement portions of the Escrowed Funds shall be released as follows:
(i)If HomePlace assumes the HomePlace Lease without any reduction in rental or
the primary lease term, then within ten (10) days after such assumption of
lease, the entire remaining balance of the Escrowed Funds plus any interest
balance will be remitted to Sellers.
(ii)If HomePlace assumes the HomePlace Lease, but HomePlace obtains an amendment
to the HomePlace Lease which provides for a reduction in rental from that stated
in the lease and such reduction continues for a period in excess of five (5)
years, then, within ten (10) days after such assumption of lease, Sellers shall
be entitled to an amount equal to: (i) the then remaining Escrowed Funds, minus
(ii) an amount equal to (1) the average annual reduction in rental under the
HomePlace Lease divided by (2) .105. The balance of the Escrowed Funds shall
then be released to Buyer.
(iii)If HomePlace assumes the HomePlace Lease but has obtained an amendment to
the HomePlace Lease which provides for a reduction in rental which only occurs
during the first five (5) years after the assumption, then, within ten (10) days
after such assumption of lease, Sellers shall be entitled to an amount equal to:
(1) the then remaining balance of Escrowed Funds, minus (2) the aggregate rental
reduction over the first five (5) years after the assumption of the Lease, minus
(3) any other monetary concessions granted to HomePlace pursuant to the
amendment to the HomePlace Lease in connection with such assumption. The
balance of the Escrowed Funds shall then be released to Buyer.
4.Rejection of HomePlace Lease; Re-Lease of HomePlace Space. In the event that
HomePlace rejects the HomePlace Lease pursuant to Section 365 of the Code, then
during the eighteen (18) month period after the date of such rejection, Sellers
shall have the right, at its expense, to re-lease the HomePlace Space on Buyer's
behalf, subject, however, to Buyer's approval, which approval will not be
unreasonably withheld if the lease or leases meet the "Leasing Guidelines"
attached hereto as Exhibit "A". In the event of such re-leasing, the following
provisions shall be applicable to the Escrowed Funds:
(i)Until the HomePlace space is re-leased, Buyer shall have the right to
withdraw, on a monthly basis, a portion of the Escrowed Funds equal to the rent
which would have been paid by HomePlace pursuant to the terms of the HomePlace
Lease had it not been rejected.
(ii)If Sellers are able to re-lease the HomePlace Space at or above the average
aggregate annual rental which would have been paid under the HomePlace Lease and
such lease meets the Leasing Guidelines, then Sellers shall have the right to
receive (i) the remaining Escrowed Funds (after any reimbursement pursuant to
subsection 4 (iv) below) within ten (10) days after such new tenant has taken
occupancy and commenced paying rent, plus (ii) from Buyer (and not from the
escrow) and if, and only if the average annual rental under such new lease or
leases is greater than the average annual rental under the HomePlace Lease (for
the primary term) a cash amount from Buyer equal to the lesser of (a) the costs
of tenant improvements, commissions, and legal fees and other costs of re-
leasing the HomePlace Space, as reasonably approved by Buyer, or (b) an amount
equal to (1) the difference between the average annual rental provided for under
the HomePlace Lease (for the primary term) and the average annual rental under
such new lease or leases, divided by (2) .105.
(iii)If Sellers are able to re-lease the HomePlace Space at an average
aggregate annual rental below the average rental which would have been paid
under the HomePlace Lease, then Sellers shall have the right to receive (1) the
remaining Escrowed Funds, minus (2) an amount equal to the difference between
the average annual rental under such new lease or leases and the average annual
rental provided for under the HomePlace Lease for the first ten (10) years
divided by .105. Buyer shall have the right to receive out of the Escrowed
Funds the amount calculated pursuant to Item (2) in the preceding sentence in
addition to any sums received in accordance with Subsection 4 (i) above.
Sellers shall be entitled to receive reimbursement under subsection 4 (iv) below
only to the extent there are Escrowed Funds remaining after deducting Item 2
above.
(iv) During the eighteen (18) month period following any rejection of the
HomePlace Lease as described in Section 4 of this Amendment, Seller shall be
responsible for all tenant improvements, commissions, legal fees and other costs
of releasing the HomePlace Space incurred by Seller with respect to Leases made
pursuant to the Leasing Guidelines. Seller may recover such tenant
improvements, commissions, legal fees and other costs of re-leasing as they are
incurred by Seller pursuant to the approved Leasing Guidelines, but only in the
circumstances and manner described in, and only in accordance with, Section
4.(ii) or (iii) of this Amendment. Upon satisfaction of all of the foregoing
terms, and only in accordance with Section 4.(ii) or (iii) of this Amendment and
pursuant to the terms of the Escrow Agreement, such releasing costs will be paid
within ten (10) days after demand therefor is made out of the Escrowed Funds.
Notwithstanding the foregoing, reimbursement under this subsection 4 (iv) for
tenant improvements, commissions, and legal fees for leases made under
subsection 4 (iii) shall be limited to costs of tenant improvements only and
shall be limited to the lesser of (1) $10.00 per rentable square feet leased, or
(2) fifty percent (50%) of the amount otherwise payable to Seller under
subsection 4 (iii).
(v)In the event that the HomePlace Space is not re-leased within eighteen (18)
months after HomePlace's rejection of the HomePlace Lease, then the then
existing balance of the Escrowed Funds shall be remitted to Buyer, and Seller
shall have no further claims with respect to the HomePlace Lease or this
Amendment.
5.Waiver of Conditions to Closing.Notwithstanding anything in the Contract to
the contrary, neither the fact that HomePlace has filed a bankruptcy petition,
nor the financial condition of HomePlace, nor the default of HomePlace under the
HomePlace Lease, shall be deemed to be (1) a breach of any representation or
warranty under the Contract, or (2) the failure any condition to Closing. In
addition, Buyer hereby waives any right in the Contract to require an estoppel
certificate or a subordination and non-disturbance agreement from HomePlace as a
condition to Closing. By depositing the Escrowed Funds, Seller has satisfied
all of its obligations under the Contract with respect to the HomePlace Lease.
6.Rental Support Contingency. Buyer and Sellers agree that Section 10.17 of the
Contract is not applicable to the HomePlace Space.
7.Suite No. 124 at The Shops. On or before Closing, or as soon as possible
thereafter, Seller, at its expense, agrees to finish out Suite No. 124 at The
Shops (formerly the Sterling Weight Loss space) to a "white box" condition.
White box condition shall include those items listed on Exhibit "B" attached
hereto and shall exclude those items listed as "not included" on Exhibit "B"
attached hereto.
8. Defined Terms. All capitalized terms herein which are not defined in this
Amendment shall have the meaning ascribed to them in the Contract.
9.Full Force and Effect. Except as amended hereby, the Contract remains in full
force and affect.
EXECUTED this 27th day of February, 1998.
SELLERS:
VISTA RIDGE PLAZA, LTD.,
a Texas limited partnership
By:DalMac Plaza, Inc.,
its General Partner
By: /RANDALL HEARNE/
Title: Treasurer
VISTA RIDGE PLAZA II, LTD.
a Texas limited partnership
By:DalMac Plaza, II, Inc.
its General Partner
By: /RANDALL HEARNE/
Title: Treasure
VISTA RIDGE SHOPS, INC.,
a Texas corporation
By: /RANDALL HEARNE/
Title: Treasurer
BUYER:
PRICE/BAYBROOK, LTD.,
a Texas limited partnership
By: Price/Texas, Inc.,
its General Partner
By: /JERALD FRIEDMAN/
Title: Vice President
EXHIBIT "A"
Leasing Guidelines
1.The lease must be for a minimum term of at least ten (10 years);
2.The average annual rental under the lease must not be less than $8.00 per
square foot per annum;
3.The space leased under the lease must be equal to or greater than 25,000
square feet;
4.The rental under the lease must increase in lease year six (6) and, if
applicable, lease year eleven (11) by at least .50? per square foot per
annum and .75? respectively;
5.The prospective tenant must have a credit-worthiness comparable to or greater
than the credit-worthiness of HomePlace at the time that the HomePlace
Lease was entered into; and
6.The other terms and conditions of the lease must not be materially less
favorable than the terms and conditions of the HomePlace Lease.
7.The location, configuration, and frontage of the leased space must be
acceptable to Buyer its reasonable discretion.
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Second Amendment to Purchase and Sale Agreement and Escrow Instructions
(this "Amendment") is entered into as of the 16th day of February, 1998, by and
between VISTA RIDGE PLAZA, LTD., VISTA RIDGE PLAZA II, LTD., and VISTA RIDGE
SHOPS, INC. (collectively hereinafter referred to as "Seller") and
PRICE/BAYBROOK, LTD. ("Buyer").
RECITALS
WHEREAS, Buyer and Seller entered into that certain Purchase and Sale Agreement
and Escrow Instructions dated effective as of the 17th day of December, 1997, as
amended by that certain First Amendment to Purchase and Sale Agreement and
Escrow Instructions, dated as of January 30, 1998, by and between Buyer and
Seller (as the same may be amended from time to time, the "Contract"); and
WHEREAS, Buyer and Seller desire to amend the Contract as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises hereinafter set forth
and for ten dollars ($10.00) and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
hereby agree as follows:
1.Defined Terms. All capitalized terms used herein and not expressly defined
shall have meaning given to such terms in the Contract.
2.Expiration of Review Period. Buyer and Seller hereby agree that the Review
Period (as such term is defined in Section 4.10 of the Contract) is hereby
extended such that the Review Period shall expire on the earlier of: (i) the
date that both Seller and Buyer (each acting in its sole discretion) execute a
proposed Third Amendment to the Contract relating to the Home Place lease in
Plaza I, or (ii) 5:00 p.m. (Central Standard Time) on February 27, 1998.
3.Counterparts. This Amendment may be executed in a number of identical
counterparts. If so executed, each of such counterparts is to be deemed an
original for all purposes, and all such counterparts shall, collectively,
constitute one Amendment.
4.Except as amended hereby, the Contract is in full force and effect.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above.
SELLER:
VISTA RIDGE PLAZA, LTD.
a Texas limited partnership
BY:DALMAC PLAZA, INC.
a Texas corporation,
its general partner
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
VISTA RIDGE PLAZA II, LTD.,
a Texas limited partnership
BY:DALMAC PLAZA II, INC.
a Texas corporation,
its general partner
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
VISTA RIDGE SHOPS, INC.,
a Texas corporation
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
BUYER:
PRICE/BAYBROOK, LTD.
a Texas limited partnership
BY:PRICE/TEXAS, INC.,
its general partner
By: /JOSEPH K. KORNWASSER/
Name: Joseph K. Kornwasser
Title: President/CEO
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This First Amendment to Purchase and Sale Agreement and Escrow Instructions
(this "Amendment") is entered into as of the 30th day of January, 1998, by and
between VISTA RIDGE PLAZA, LTD., VISTA RIDGE PLAZA II, LTD., and VISTA RIDGE
SHOPS, INC. (collectively hereinafter referred to as "Seller") and
PRICE/BAYBROOK, LTD. ("Buyer").
RECITALS
WHEREAS, Buyer and Seller entered into that certain Purchase and Sale Agreement
and Escrow Instructions dated effective as of the 17th day of December, 1997,
(as the same may be amended from time to time, the "Contract"); and
WHEREAS, Buyer and Seller desire to amend the Contract as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual premises hereinafter set forth
and for ten dollars ($10.00) and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
hereby agree as follows:
1.Defined Terms. All capitalized terms used herein and not expressly defined
shall have meaning given to such terms in the Contract.
2.Expiration of Review Period. Buyer and Seller hereby agree that the Review
Period (as such term is defined in Section 4.10 of the Contract) is hereby
extended such that the Review Period shall expire at 5:00 p.m. (central standard
time) on February 16, 1998.
3.Counterparts. This Amendment may be executed in a number of identical
counterparts. If so executed, each of such counterparts is to be deemed an
original for all purposes, and all such counterparts shall, collectively,
constitute one Amendment.
4.Except as amended hereby, the Contract is in full force and effect.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above.
SELLER:
VISTA RIDGE PLAZA, LTD.
a Texas limited partnership
BY:DALMAC PLAZA, INC.
a Texas corporation,
its general partner
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
VISTA RIDGE PLAZA II, LTD.,
a Texas limited partnership
BY:DALMAC PLAZA II, INC.
a Texas corporation,
its general partner
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
VISTA RIDGE SHOPS, INC.,
a Texas corporation
By: /RANDALL HEARNE/
Name:Randall Hearne
Title: Secretary/Treasurer
BUYER:
PRICE/BAYBROOK, LTD.
a Texas limited partnership
BY:PRICE/TEXAS, INC.,
its general partner
By: /JERALD FRIEDMAN/
Name: Jerald Friedman
Title: Vice President
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
By and Between
VISTA RIDGE PLAZA, LTD., a Texas Limited Partnership, VISTA RIDGE PLAZA II,
LTD., a Texas Limited Partnership, and VISTA RIDGE SHOPS, INC., a Texas
corporation,
as Sellers
PRICE/BAYBROOK, LTD.
a Texas limited partnership,
as Buyer
and
Weststar Title Company, as Escrow Holder
December ___, 1997
NOTE: To ensure proper page numbering, temporarily turn off Hidden Text before
updating this TOC.
TABLE OF CONTENTS
Page
ARTICLE I THE PROPERTY 3
1.1.Land 3
1.2.Appurtenances 3
1.3.Improvements 4
1.4.Leases and Rents 4
1.5.Personal Property 4
1.6.Intangible Property 4
ARTICLE II PURCHASE PRICE 5
2.1.Purchase Price 5
2.2.Payment of Purchase Price 8
2.3.Earnest Money Deposit 8
2.4.Investment of Deposit 8
2.5.Deposit As Liquidated Damages 8
ARTICLE III TITLE TO PROPERTY 10
3.1.Title 10
3.2.Other Conveyance Documents 10
ARTICLE IV CONDITIONS TO CLOSING 10
A.Buyer's Conditions to Closing 10
4.1.Non-Foreign Status of Seller 10
4.2.Review and Approval of Title and Survey 11
4.3.Review and Approval of Other Matters 11
4.4.Service and Other Contracts 12
4.5.Physical Characteristics of the Property 13
4.6.Governmental Permits, Approvals and Regulations 13
4.7.Representations and Warranties 13
4.8.Impairment of Property 14
4.9.Approval of Buyer's Board of Directors 14
4.10. Objections to Property or Other Matters14
4.11. Tenant Matters14
4.12. Delivery of Documents15
B.Seller's Conditions to Closing 15
4.13. Delivery of Documents and Purchase Price15
ARTICLE V CLOSING, RECORDING AND TERMINATION 15
5.1.Deposit with Escrow Holder and Escrow Instructions 15
5.2.Closing 15
5.3.Delivery by Sellers 16
5.4.Delivery By Buyer 17
5.5.Other Instruments 17
5.6.Prorations 17
5.7.Costs and Expenses 19
5.8.Closing and Recordation 19
5.9.Termination of Agreement 19
5.10. Security Deposits20
5.11Memorandum of Agreement 20
ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS20
6.1.Authority 21
6.2.Title 21
6.3.The Leases 21
6.4.No Litigation or Adverse Events 21
6.5.Compliance with Laws 21
6.6.No Defaults in Other Agreements 22
6.7.Eminent Domain 22
6.8.Permits, CO's, Zoning, etc 22
6.9.Taxes and Assessments 22
6.10. Environment22
6.11. Physical Condition24
6.12. Employees24
6.13. Mechanic's Liens24
6.14. Operating Statements24
6.15. Reciprocal Easement Agreements24
6.16. No Leases of Property or Assets24
6.17. Property Being Sold "AS-IS"24
6.18. Disclosure25
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER 25
7.1.Representations and Warranties of Buyer 26
ARTICLE VIII POSSESSION, DESTRUCTION AND CONDEMNATION 26
8.1.Possession 26
8.2.Loss, Destruction and Condemnation 26
ARTICLE IX MAINTENANCE AND OPERATION OF THE PROPERTY; COVENANTS28
9.1.Maintenance 28
9.2.Leases and Other Agreements 28
9.3.Encumbrances 29
9.4.Consents and Notices 29
9.5.Audit Cooperation 29
ARTICLE X MISCELLANEOUS 29
10.1. Notices29
10.2. Brokers and Finders30
10.3. Successors and Assigns30
10.4. Amendments31
10.5.Continuation and Survival of Indemnities, Representations,
Warranties and Post-Closing Obligations 31
10.6. Interpretation31
10.7. Governing Law31
10.8. Merger of Prior Agreements31
10.9. Attorneys' Fees31
10.10. Notice of Termination32
10.11. Remedies; Specific Performance; Damages32
10.12. Relationship33
10.13. Counterparts34
10.14. Time of the Essence34
10.15. No Waiver34
10.16. Saturdays, Sundays, Legal Holidays34
10.17. Rent Support Contingency34
10.18. Confidentiality34
10.19. Force Majuere34
10.20. Buyer Acknowledgement of Broker Advisement34
10.21. Severability35
10.22. Further Assurances35
INDEX TO SCHEDULES
Schedule A-1Legal Description of the Land (Vista I)
Schedule A-2Legal Description of the Land (Vista II)
Schedule A-3Legal Description of the Land (Vista Shops)
Schedule BForm of Deed
Schedule CForm of Assignment and Assumption of Leases and Rents
Schedule DForm of Bill of Sale
Schedule EForm of Assignment of Contracts, Intangible Property, Warranties and
Guarantees
Schedule FForm of Non-Foreign Certificate
Schedule GForm of Tenant Estoppel Certificate
Schedule H-1Rent Roll (Vista I)
Schedule H-2Rent Roll (Vista II)
Schedule H-3Rent Roll (Vista Shops)
Schedule INon-Credit Tenants
Schedule JAnchor Lessees
Schedule KVista II Purchase Calculation Example
Schedule LLeasing Guidelines
DEFINITIONS
The following is a list of defined terms used herein and the sections in
which such terms are defined.
Term Section
Agreement Introduction
Approved Contracts 4.4
Appurtenances 1.2
Assignment of Intangible Property,
Warranties and Guarantees 1.6
Assignment of Leases and Rents 1.4
Bill of Sale 1.5
Buyer Introduction
Buyer Approval 4.9
Closing 5.2
Closing Date 5.2
Code 4.1
Contracts 4.4
Deed 1.1
Earnest Money Deposit 2.3
Escrow Holder Introduction
Improvements 1.3
Intangible Property 1.6
Land 1.1
Leases 1.4
Major Lease 4.8
Non-Foreign Certificate 4.1
Outside Closing Date 5.2
Personal Property 1.5
Permitted Exceptions 4.2
Phase I Report 4.5
Property 1.6
Purchase Price 2.1
Real Property 1.6
Rent Roll 6.3
Rents 1.4
Review Period 4.10
Seller Introduction
Survey 4.2
Title Company 3.1
Title Policy 3.1
Title Report 4.2
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement") is
made and entered into as of December ___, 1997, by and between VISTA RIDGE
PLAZA, LTD., a Texas Limited Partnership ("Vista I"), VISTA RIDGE PLAZA II,
LTD., a Texas Limited Partnership ("Vista II"), and VISTA RIDGE SHOPS, INC., a
Texas corporation ("Vista Shops"), (collectively, "Sellers" and, as the context
may require, each is sometimes referred to in this Agreement as a "Seller"),
PRICE/BAYBROOK, LTD., a Texas limited partnership ("Buyer"), and Weststar Title
Company ("Escrow Holder"), with reference to the following facts:
A.Sellers are the owners of the Properties, as hereinafter defined.
B.Buyer desires to purchase from Sellers and Sellers desire to sell to
Buyer the Properties, all on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual agreements
herein set forth, and other valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Sellers and Buyer, and where appropriate Escrow
Holder, agree as follows:
ARTICLE I
THE PROPERTY
Sellers hereby agree to sell and convey to Buyer, and Buyer hereby agrees
to purchase from Sellers, subject to the terms and conditions set forth herein,
the following:
1.1Land. With respect to Vista I, that certain real property described in
Schedule A-1 hereto, with respect to Vista II, that certain real property
described in Schedule A-2 hereto (exclusive of the pad sites identified on the
site plan attached as Exhibit A to Schedule A-2), and with respect to Vista
Shops, that certain real property described in Schedule A-3 hereto
(collectively, all of the real property described on Schedules A-1, A-2 and A-3
are referred to herein as the "Land"; provided that, if the context so requires,
a reference to "Land" shall mean only that particular Seller's real property),
each of which shall be conveyed to Buyer by the respective Sellers pursuant to a
deed in the form of Schedule B hereto (each a "Deed" and collectively, the
"Deeds")
1.2 Appurtenances. With respect to each Seller as applicable, all rights,
privileges and easements appurtenant to and for the benefit of the Land,
including, without limitation, all of Seller's right, title, and interest in all
minerals, oil, gas and other hydrocarbon substances on and under the Land, as
well as all development rights, air rights, water, water rights and water stock
relating to the Land and any other easements, rights-of-way or appurtenances
owned by each
Seller and used in connection with the beneficial operation, use and
enjoyment of the Land, the Leases, Rents, Improvements, Intangible Property (all
as hereinafter defined), or any other appurtenance, together with all rights of
Sellers in and to public and private streets, roads, avenues, alleys and
passageways, sidewalks, driveways, parking areas (open or proposed, in front of
or abutting the Land), and all rights of each Seller in all strips or gores of
land adjoining the Land, and any awards made or to be made and any unpaid award
for damage to the Land by reason of any change of grade of any such street,
road, avenue, alley or passageway (all of which, are collectively referred to as
the "Appurtenances"; provided that, if the context so requires, a reference to
"Appurtenances" shall mean only those Appurtenances with respect to a particular
Seller's Land);
1.3Improvements. With respect to each Seller as applicable, all
improvements and fixtures owned by Seller located or to be located on the Land,
including, without limitation, all buildings and structures presently located on
the Land or to be located thereon on the Closing Date, all apparatus, equipment
and appliances owned by each Seller and presently located on the Land and used
in connection with the operation or occupancy thereof, such as heating and air
conditioning systems and facilities used to provide any utility services,
parking services, refrigeration, ventilation, garbage disposal, recreation or
other services thereto, and all landscaping and leasehold improvements which are
the property of the owner of the Land, if any (all of which are collectively
referred to as the "Improvements"; provided that, if the context so requires, a
reference to "Improvements" shall mean only those Improvements with respect to a
particular Seller's Land);
1.4Leases and Rents. With respect to each Seller as applicable, all
leases, occupancy agreements and other similar agreements to which Seller is a
party or by which it is bound, together with all modifications, extensions and
renewals thereof, and any guarantees of any of the foregoing with respect to or
demising any part of the Land, Appurtenances or Improvements (collectively, the
"Leases"; provided that, if the context so requires, a reference to "Leases"
shall mean only those Leases with respect to a particular Seller's Land,
Appurtenances or Improvements), all income, receipts, funds and revenues of any
kind whatsoever payable under the Leases or otherwise with respect to all or any
portion of the Land, Appurtenances or Improvements (collectively, the "Rents";
provided that, if the context so requires, a reference to "Rents" shall mean
only those Rents with respect to a particular Seller's Land, Appurtenances or
Improvements), all of which Leases and Rents shall be transferred and assigned
to Buyer by the respective Sellers pursuant to instruments in the form of
Schedule C hereto (each an "Assignment and Assumption of Leases and Rents");
1.5Personal Property. With respect to each Seller as applicable, all
tangible personal property owned by Seller and located or to be located on, or
situated or to be situated in and used in connection with, the Land and/or
Improvements (collectively, "Personal Property"; provided that, if the context
so requires, a reference to "Personal Property" shall mean only that Personal
Property with respect to a particular Seller's Land and/or Improvements), and
all of which Personal Property shall be transferred and assigned to Buyer by the
respective Sellers pursuant to instruments in the form of Schedule D hereto
(each a "Bill of Sale"); and
1.6Intangible Property. With respect to each Seller as applicable, all of
the interest of Seller in (i) any intangible personal property which relates to
and is reasonably required for the operation and functioning of the Land,
Improvements or Personal Property generally, and (ii) any and all warranties,
guarantees, permits, contracts and other rights owned by Seller relating to the
ownership, operation or functioning of all or any part of Seller's Property, as
defined below (including without limitation all third party guarantees and
warranties, express or implied, in connection with the construction of the
Improvements) (all of which are collectively referred to as the "Intangible
Property"; provided that, if the context so requires, a reference to "Intangible
Property" shall mean only that Intangible Property with respect to a particular
Seller's Land, Improvements or Personal Property), and all of which, with
respect to each Seller, to the extent assignable, shall be assigned to Buyer
pursuant to one or more (as determined by Buyer) assignments in the form of
Schedule E hereto (each an "Assignment of Contracts, Intangible Property,
Warranties and Guarantees").
All of the items described in Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 1.6
above are hereinafter collectively referred to as the "Properties." With
respect to each Seller, as the context so requires, all of the items described
in Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 1.6 above are sometimes hereinafter
collectively referred to as a "Property," which shall be a reference only to
that particular Seller's Property. With respect to each Seller, the items
described in Sections 1.1, 1.2, and 1.3 above are hereinafter referred to
collectively as the "Real Property."
ARTICLE II
PURCHASE PRICE
2.1Purchase Price. The purchase price for each Seller's Property shall be
as follows:
(a)Vista I. With respect to Vista I, the purchase price for the
Property shall be Twelve Million Five Hundred Fifty Thousand Dollars
($12,550,000.00) (the "Vista I Purchase Price"). The Vista I Purchase
Price shall be allocated among the Land, Improvements and Personal Property
as Buyer shall reasonably determine.
(b)Vista II. With respect to Vista II, the purchase price for the
Property shall be the quotient obtained when "Annual NOI" is divided by
.1050 ("Cap Rate").
As used herein:"Annual NOI" shall mean, as of the Closing Date, (x)
the annual minimum basic rent required to be paid by the tenants under the
Qualifying Leases for the twelve (12) month period commencing on the month
next following the Closing Date, (y) minus "Expense Adjustments" as of the
Closing Date.
"Expense Adjustments" shall mean the sum of:
(i)a management fee of three percent (3%) of the annual aggregate
basic minimum rent for all Leases then executed with respect to all or
any portion of the Property;
(ii)a structural reserve equal to ten cents ($.10) per rentable square
foot of the Property;
(iii)an amount equal to five percent (5%) of the annual aggregate
basic minimum rent for the tenants of the Property which are "Non-
Credit Tenants"; and
(iv)an amount equal to Four Dollars ($4.00) per square foot,
multiplied by that number of rentable square feet which is equal to
five percent (5%) of the rentable square feet leased to Non-Credit
Tenants at the Property.
As used in this Agreement,
"Qualifying Leases" means (i) leases to the Anchor Lessees, and (ii)
all other leases under which the lessee has opened for business to the
general public and is paying annual minimum basic rent.
"Additional Qualifying Leases" means Qualifying Leases that meet the
Leasing Guidelines (as defined in Section 9.2 hereof) entered into for any
of the space at the Vista II Property which is not leased on the Closing
Date of the Vista II Property.
"Non-Credit Tenants" shall mean all tenants set forth on the list
attached hereto as Schedule I, which list shall be updated and amended from
time to time during the period following the date of this Agreement through
the Closing Date subject to the reasonable approval of Buyer and Seller.
"Anchor Lessees" shall mean all tenants set forth on the list attached
hereto as Schedule J.
Schedule K attached hereto sets forth a numeric example of calculation
of the Purchase Price in accordance with this Section 2.1(b).
(c)If on the Closing Date for the Vista II Property, the Vista II Property
is not fully leased with Qualifying Leases, then Seller shall elect one of the
following options in its sole and absolute discretion:
(i)Close the Vista II Property transaction utilizing the Cap Rate in
accordance with Section 2.1(b) hereof to calculate the Vista II
Purchase Price, based on actual occupancy on the Closing Date by
Tenants under Qualifying Leases but subject to a stipulated minimum
purchase price of $10,900,000 (the "Vista II Minimum Purchase Price");
provided, however, that if on the Closing Date the actual amount of
the purchase price (calculated using the Cap Rate in accordance with
Section 2.1(b) hereof) would be less than the Vista II Minimum
Purchase Price (i.e., if the amount of Annual NOI is insufficient to
achieve the Vista II Minimum Purchase Price), then the Closing of the
Vista II transaction shall be extended for a period of up to 180 days
(the "First Closing Extension Period") and at the conclusion of the
First Closing Extension Period the amount of the Vista II Purchase
Price to be paid to the Seller at Closing shall be calculated using
the Cap Rate in accordance with Section 2.1(b) hereof based on actual
occupancy but subject to a stipulated minimum purchase price equal to
the Vista II Minimum Purchase Price; provided, further; that if at the
conclusion of the First Closing Extension Period the amount of the
purchase price (calculated using the Cap Rate in accordance with
Section 2.1(b) hereof) would be less than the Vista II Minimum
Purchase Price (i.e., if the amount of Annual NOI is insufficient to
achieve the Vista II Minimum Purchase Price), then Buyer may, in
Buyer's sole and absolute discretion, elect to (1) close the Vista II
Property transaction utilizing the Cap Rate in accordance with Section
2.1(b) hereof to calculate the Vista II Purchase Price based on actual
occupancy on the Closing Date by Tenants under Qualifying Leases but
subject to a stipulated minimum purchase price equal to the Vista II
Minimum Purchase Price, (2) extend the Closing of the Vista II
transaction for a period of up to 180 days (the "Second Closing
Extension Period"), or (3) terminate this Agreement with respect to
the closing of the Vista II transaction contemplated hereby, in which
case neither party shall have any further obligation to the other
(other than any obligations which, by their express terms, survive any
termination of this Agreement). At the conclusion of, or upon
agreement of the parties, during, the Second Closing Extension Period,
Buyer shall close the Vista II Property transaction utilizing the Cap
Rate in accordance with Section 2.1(b) hereof to calculate the
Vista II Purchase Price based on actual occupancy on the Closing Date
by Tenants under Qualifying Leases but subject to a stipulated minimum
purchase price equal to the Vista II Minimum Purchase Price.
(ii)Close the Vista II Property transaction utilizing the Cap Rate in
accordance with Section 2.1(b) hereof to calculate the Vista II
Purchase Price to be paid at Closing, which purchase price shall be
based on actual occupancy on the Closing Date by Tenants under
Qualifying Leases; provided, however, that (x) as to any unleased
space in Vista II, Buyer shall pay to Seller any Additional
Consideration (as defined below) within fifteen (15) business days
after the applicable Additional Payment Date (as defined below) and
(y) Buyer shall grant to Seller a performance lien encumbering the
Vista II Property to secure the Buyer's obligations to pay any
Additional Consideration that is due to Seller under the terms of this
Agreement. Buyer's obligation to pay Seller any Additional
Consideration shall terminate on the date that is one calendar year
after the Closing Date and Seller shall promptly thereafter cause the
termination of any performance lien filed under this subsection
2.1(c)(ii).
"Additional Consideration" shall mean the amount of the payment to be made
by Buyer to Seller with respect to each Additional Qualifying Lease.
The amount of such Additional Consideration shall be the quotient
obtained when Annual NOI (as defined in Section 2.1(b) hereof) under
an Additional Qualifying Lease as of the applicable Additional Payment
Date is divided by .1050 (calculated as to minimum basic rent actually
being made as of the applicable Additional Payment Date). Each
proposed Additional Qualifying Lease shall be submitted to Buyer in
final form, executed by the tenant but with the effectiveness thereof
conditioned upon and subject to execution by Buyer, along with
financial information regarding the proposed tenant (with credit
reports) and copies of all brokerage agreements with respect to such
proposed Additional Qualifying Leases. Buyer shall have ten (10) days
after receiving such leases to execute or, in Buyer's reasonable
judgment, disapprove such Additional Qualifying Lease. In the event
Buyer disapproves of any Additional Qualifying Lease delivered to
Buyer for its review, Buyer shall specify in reasonable detail its
reasons for such dispproval. Seller shall have the option of (x)
revising such proposed Additional Qualifying Lease so that it
satisfies Buyer's objections or (y) entering into a new proposed
Additional Qualifying Lease and resubmitting either of such proposed
Additional Qualifying Lease to Buyer for Buyer's approval in a manner
consistent with the procedures set forth above. Seller shall pay the
cost of all tenant improvements and leasing commissions, brokerage
fees and similar amounts or reimbursements for any of the foregoing
costs or reimbursements in connection with any Additional Qualifying
Lease.
"Additional Payment Date" shall mean the earliest date on which Buyer has
received written notice containing sufficient evidence that an
Additional Qualifying Lease is in full force and effect and that the
tenant under such Additional Qualifying Lease is making payments of
rent in accordance with such Additional Qualifying Lease; provided,
however, that notwithstanding any other provision of this Agreement,
Buyer shall not be obligated to make any payments of Additional
Consideration if a material default under such Additional Qualifying
Lease has occurred and is continuing.
(d)Vista Shops. With respect to Vista Shops, the purchase price for
the Property shall be Ten Million Nine Hundred Fifty-Thousand Dollars
($10,950,000.00) (the "Vista Shops Purchase Price"). The Vista Shops
Purchase Price shall be allocated among the Land, Improvements and Personal
Property as Buyer shall reasonably determine.
2.2Payment of Purchase Price. The Vista I Purchase Price, the Vista II
Purchase Price and the Vista Shops Purchase Price shall be paid by Buyer into
the escrow for this Agreement to be maintained by Escrow Holder ("Escrow") at
the Closing (with respect to each particular Seller and each Seller's Property)
by wire transfer of immediately available funds in accordance with wiring
instructions to be provided by Escrow Holder; provided, however, that Buyer
shall adjust the funds to be wired pursuant to this Section 2.2 for the
following: (i) the amount of credits due to Buyer, or debits due from Buyer (as
the case may be) for prorations hereunder, and (ii) with respect to the Vista II
Purchase Price only, the amount of the Earnest Money Deposit (hereinafter
defined) plus earnings thereon.
2.3Earnest Money Deposit. Concurrently with the delivery of one (1) fully
executed copy of this Agreement to Escrow Holder, Buyer shall deposit with
Escrow Holder the sum of One Hundred Thousand Dollars ($100,000.00) (the
"Earnest Money Deposit") in the form of a check or wire transfer. The Earnest
Money Deposit shall become nonrefundable after the end of the Review Period,
unless this Agreement terminates other than due to a default of Buyer hereunder.
2.4Investment of Deposit. Escrow Holder shall place the Earnest Money
Deposit in an interest-bearing account with a bank or savings association, the
deposits of which are federally insured, as Buyer may select. All interest on
the Earnest Money Deposit shall accrue for the benefit of Buyer until the
Closing. Notwithstanding the foregoing, however, in the event of any default by
Buyer hereunder, all interest earned on such account shall accrue to the benefit
of Seller. Seller shall not be responsible for, nor bear the risk of loss of,
the Earnest Money Deposit, and shall not be responsible for the rate of return
thereon.
2.5Deposit As Liquidated Damages. SUBJECT TO THE TERMS AND CONDITIONS OF
SECTION 10.11 HEREOF, IF THE SALE OF A PROPERTY AS CONTEMPLATED HEREUNDER IS NOT
CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF
BUYER, ESCROW HOLDER SHALL PROMPTLY PAY OVER TO SELLER THE EARNEST MONEY
DEPOSIT, IF ANY, TOGETHER WITH THE INTEREST EARNED THEREON, THEN BEING HELD BY
ESCROW HOLDER, AND SELLER SHALL BE ENTITLED TO RETAIN THE EARNEST MONEY DEPOSIT
AS LIQUIDATED DAMAGES. SUBJECT TO THE TERMS AND CONDITIONS OF SECTION 10.11
HEREOF, THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF A
DEFAULT BY BUYER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.
THEREFORE, BY PLACING THEIR SIGNATURES BELOW, THE PARTIES EXPRESSLY AGREE AND
ACKNOWLEDGE THAT, SUBJECT TO THE TERMS AND CONDITIONS OF SECTION 10.11, THE
EARNEST MONEY DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES. THEREFORE, IF, AFTER SATISFACTION OR
WAIVER OF ALL CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS UNDER THIS AGREEMENT,
BUYER BREACHES THIS AGREEMENT AND FAILS TO COMPLETE THE PURCHASE OF ANY OF THE
PROPERTIES AS PROVIDED HEREIN, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN
THE AMOUNT OF THE EARNEST MONEY DEPOSIT TOGETHER WITH THE INTEREST EARNED
THEREON AS ITS SOLE AND EXCLUSIVE REMEDY UNDER SECTION 10.11(C) HEREOF AND,
SUBJECT TO SELLER'S ELECTION OF REMEDIES, ONE OF SELLER'S SOLE AND EXCLUSIVE
REMEDIES UNDER SECTION 10.11(D) HEREOF. ON RECEIPT AND RETENTION BY SELLER OF
THE EARNEST MONEY DEPOSIT TOGETHER WITH THE INTEREST EARNED THEREON UNDER EITHER
SECTION 10.11(C) OR 10.11(D) HEREOF, THIS AGREEMENT SHALL TERMINATE AND BUYER
SHALL HAVE NO FURTHER OBLIGATIONS OR LIABILITY HEREUNDER, EXCEPT WITH REGARD TO
ANY OTHER OBLIGATIONS HEREUNDER THAT EXPRESSLY SURVIVE THE TERMINATION HEREOF.
THE PARTIES FURTHER ACKNOWLEDGE THAT THE EARNEST MONEY DEPOSIT TOGETHER WITH THE
INTEREST EARNED THEREON HAS BEEN AGREED UPON AS SELLER'S EXCLUSIVE REMEDY UNDER
SECTION 10.11(B) HEREOF AND, SUBJECT TO SELLER'S ELECTION OF REMEDIES UNDER
SECTION 10.11(D), HEREOF, ONE OF SELLER'S SOLE AND EXCLUSIVE REMEDIES AGAINST
BUYER IN THE EVENT OF A DEFAULT ON THE PART OF BUYER IN THE CIRCUMSTANCES
DESCRIBED IN SECTION 10.11(D) HEREOF.
Dated: 12-17-97
Sellers
VISTA RIDGE PLAZA, LTD., a Texas
Limited Partnership
By: DalMac Plaza, Inc.,
its general partner
By: /RANDALL HEARNE/
Its: Secretary/Treasurer
Dated: 12-17-97
VISTA RIDGE PLAZA II, LTD., a Texas
Limited Partnership
By: DalMac Plaza II, Inc.,
its general partner
By: /RANDALL HEARNE/
Its: Secretary/Treasurer
Dated: 12-17-97
VISTA RIDGE SHOPS, INC.
By: /RANDALL HEARNE/
----------------
Its: Secretary/Treasurer
Dated: 12-18-97
PRICE/BAYBROOK, LTD., a Texas
limited partnership
By: PRICE/TEXAS, INC., its general
partner
By: /JERALD FRIEDMAN/
-----------------
Its: Vice President
ARTICLE III
TITLE TO PROPERTY
3.1Title. At the Closing (with respect to each particular Seller and each
Seller's Property), Sellers shall convey to Buyer indefeasible fee simple title
to the Properties pursuant to the Deeds. In furtherance thereof, Sellers shall
cause Weststar Title Company, as agent for Chicago Title Insurance Company (the
"Title Company") to issue a TLTA extended coverage Owner's Policy of Title
Insurance, (the "Title Policy"), together with such endorsements thereto as
Buyer may request, in the full amount of the Purchase Price, insuring fee simple
title to the Real Property in Buyer, subject only to (i) the Permitted
Exceptions, and (ii) the standard exceptions contained in Schedule B of Texas
State Board of Insurance Form T-1, (a) with the standard exception as to
restrictive covenants endorsed to include only those restrictions which are
Permitted Exceptions, (b) with the standard exception as to taxes limited to
taxes for the current and subsequent years, and subsequent assessments for prior
years due to change in land usage or ownership, and (c) with any exception as to
rights of parties in possession endorsed to except only to rights of tenants in
possession under the Leases.
3.2Other Conveyance Documents. At the Closing, each Seller with respect to
each Property shall (i) assign the Leases and Rents to Buyer pursuant to the
Assignment and Assumption of Leases and Rents; (ii) transfer title to the
Personal Property to Buyer pursuant to the Bill of Sale, and (iii) transfer and
assign to Buyer all of Seller's rights in and to the Intangible Property
pursuant to the Assignment of Contracts, Intangible Property, Warranties and
Guarantees; such title and rights to be free of any liens, encumbrances or
interests of third parties other than the Permitted Exceptions.
ARTICLE IV
CONDITIONS TO CLOSING
A.Buyer's Conditions to Closing.
With respect to each Property and each Seller, the complete satisfaction as
of the expiration of the Review Period (or such other date as may be specified
herein) with respect to those matters described in Sections 4.2, 4.3, 4.4, 4.5,
4.6, 4.9 and 4.10 hereof, and as of the Closing Date with respect to the balance
of the following conditions, is a condition precedent to Buyer's obligation to
purchase each Property:
4.1Non-Foreign Status of Seller. Seller's execution and delivery to Buyer,
on the Closing Date, of Seller's certificate in the form attached hereto as
Schedule F, (the "Non-Foreign Certificate") stating, under penalty of perjury,
that (a) Seller is not a "foreign person" for the purposes of Section 1445 of
the Internal Revenue Code of 1986, as amended (the "Code"), and that withholding
of tax will not be required thereunder, and (b) withholding is not required
under the provisions of any state laws in connection with the contemplated
transfer of the Property by Seller to Buyer (or, if such withholding is
required, authorizing such withholding).
4.2Review and Approval of Title and Survey. In connection with Buyer's
review of title and related matters, Seller shall, at its sole cost and expense
and as soon as practicable, but in no event later than ten (10) days after the
date of this Agreement, deliver to Buyer or cause Escrow Holder to deliver to
Buyer a current TLTA commitment for title insurance for the Property issued by
the Title Company (the "Title Report"), accompanied by legible record copies of
all of the documents referred to in the Title Report, together with all
restrictions, agreements or other documents which affect title to the Property
and which are not disclosed by the Title Report for the Property, if any, but
which are actually known to Seller. Seller shall arrange, at its sole cost and
expense, for the preparation of a current ALTA survey of the Property, certified
to Buyer in a form reasonably required by Buyer (the "Survey"). Buyer shall
have fifteen (15) business days from the later to occur of (i) delivery of the
Title Report and (ii) delivery of the Survey, to notify Escrow Holder and Seller
in writing of Buyer's disapproval of the condition of title. Buyer shall give
Seller and Escrow Holder written notice outlining in detail any title items
objected to and specifying Buyer's desired cure. Seller shall have ten (10)
days after receipt of Buyer's notice to advise Buyer and Escrow Holder, in
writing, as to whether Seller shall cure said objections prior to the Closing
(and should Seller fail to advise Buyer of Seller's objection within such ten
(10) day period, Seller shall be deemed to have elected to refuse to cure said
objections). In the event that Seller elects not to cure such objections, or
elects to cure such objections and fails or refuses to cure said objections,
Buyer shall have the option, as its exclusive remedies for such failure by
Seller, which must be exercised in writing within 10 days of Buyer's receipt of
Seller's response or deemed response, or Closing (whichever is earlier), (a) to
waive Buyer's objections and purchase the Property as otherwise contemplated in
this Agreement, notwithstanding such objections, in which event the subject
matter of such waived objections shall be included within Permitted Exceptions,
and Seller shall convey the Property to Buyer, subject to the Permitted
Exceptions, without any reduction in Purchase Price (unless otherwise agreed to
in writing by Buyer and Seller), or (b) to terminate this Agreement by written
notice to Seller and Escrow Holder, whereupon any and all right and obligations
of Buyer and Seller hereunder shall terminate (other than any such obligations
which, by their express terms, survive any termination of this Agreement) and
within five (5) days after Buyer has provided notice to Escrow Holder, Escrow
Holder shall deliver to Buyer the Earnest Money Deposit, together with interest
thereon. All exceptions to title to, and/or encumbrances against, the Property
shown on the Title Report or Survey or otherwise provided to Buyer by Seller as
hereinabove described but not objected to by Buyer within the time period
provided herein, and those items referred to in items (i) and (ii) of the second
sentence of Section 3.1 hereof, shall be deemed "Permitted Exceptions";
provided, however, that Seller covenants to satisfy all of the conditions
imposed on Seller and cause the removal of all the exceptions to title set forth
on Schedule C of the Title Report.
4.3Review and Approval of Other Matters. In connection with Buyer's review
of other matters, Seller shall deliver or otherwise make available to Buyer
prior to or on the date of this Agreement, true, complete and correct copies of
the following items, to the extent in Seller's or Seller's manager's possession:
(a)Copies of all soils and hazardous materials reports, termite
reports, engineering studies, topographical maps, appraisals and other
reports, studies, and maps with respect to the Property (other than
materials related to matters among the partners in Seller);
(b)Copies of subdivision maps relating to the Land;
(c)Copies of all approvals and permits relating to Seller's
development and ownership of the Real Property and copies of all
governmental approvals and permits otherwise respecting the Real Property;
(d)Copies of documents and certificates from appropriate governmental
authorities relating to the zoning, building and platting status of the
Real Property;
(e)Copies of all service contracts relating to the Property;
(f)Copies of the real property and personal property tax bills for the
Property for the period of Seller's ownership;
(g)Copies of all tenant leases;
(h)Architectural drawings and plans and specifications for the
buildings constructed or to be constructed on the Property shall be made
available during the Review Period for inspection by Buyer at Seller's
offices and shall be delivered to Buyer at the Closing of each respective
Property; and
(i)To the extent not previously delivered to Buyer and to the extent
such items are in Seller's possession or control, copies or originals of
such other documents, certificates, instruments, authorizations, consents
or approvals reasonably required and designated by Buyer to close the
transactions contemplated by this Agreement.
Buyer agrees to keep all information relating to the Property provided to
it by Seller or obtained by Buyer in the course of its review and inspection of
the Property pursuant to this Agreement confidential until Closing has occurred,
subject to Section 10.18 hereof; provided, however, that such information may be
disclosed as required by law, or to Buyer's agents, attorneys, employees or
consultants who are assisting Buyer with its inspection and evaluation of the
Property, to Buyer's existing or prospective lenders or joint venture partners,
and to the extent required by any subpoena issued by any court of competent
jurisdiction or by governmental or administrative body. In the event any of the
Closings contemplated by this Agreement fail to take place for any reason, all
materials delivered to Purchaser pursuant to this Section 4.3 shall promptly be
returned to Seller. This provision shall expressly survive the termination of
this Agreement.
4.4Service and Other Contracts. Buyer's review and approval, in its sole
and absolute discretion, of all utility contracts, water and sewer service
contracts, service contracts, warranties, permits, soils reports, and other
contracts or documents of any nature relating to the Property or any portion
thereof (the "Contracts"; those Contracts which Buyer does not disapprove in
writing prior to the end of the Review Period (and prior to the Closing Date in
the case of contracts not entered into or delivered to the Buyer until after the
expiration of the Review Period) shall be referred to as the "Approved
Contracts"). Buyer's remedy if it disapproves any Contract(s) shall be (i) to
the extent such disapproved Contract(s) may be terminated without penalty, to
compel the Seller to terminate such disapproved Contract(s) on or prior to the
Closing by advising Seller of such requests at the time Buyer disapproves of any
such Contract, which Seller hereby agrees to do at its sole cost and expense if
so requested by Buyer, or (ii) to the extent Seller cannot terminate such
disapproved Contract(s), Buyer shall have the option, which must be exercised in
writing within ten (10) days of Buyer's receipt of Seller's notice to Buyer that
Seller may not terminate such disapproved Contract(s), or Closing (whichever is
earlier), (a) to waive Buyer's disapproval of the Contract(s) and purchase the
Property as otherwise contemplated in this Agreement without any reduction in
Purchase Price (unless otherwise agreed to in writing by Buyer and Seller), and
Seller shall convey the Property to Buyer, or (b) to terminate this Agreement by
written notice to Seller and Escrow Holder, whereupon any and all right and
obligations of Buyer and Seller hereunder shall terminate (other than such
obligations which, by their express terms, survive any termination of this
Agreement) and within five (5) days after Buyer has provided notice to Escrow
Holder, Escrow Holder shall deliver to Buyer the Earnest Money Deposit, together
with interest thereon.
4.5Physical Characteristics of the Property. Buyer's review and approval,
in its sole and absolute discretion, of (a) an environmental assessment (which
shall, without limiting the scope of the report, contain an assessment of
asbestos and radon affecting the Property) by an environmental consultant of
Buyer's choice and at Buyer's cost (the "Phase I Report"), and (b) the results
of Buyer's physical inspection and testing of the Property, or any portion
thereof (which testing shall be conducted at Buyer's expense, and may include,
but shall not be limited to, testing for the presence of asbestos, PCBs, as
defined below, and other Hazardous Materials, as defined below, including the
performance of such tests and sampling as are reasonably required by Buyer to
satisfy its physical inspection of the Property), of the structural, mechanical,
electrical and other physical or environmental characteristics of the Property,
including any tenant improvements or other construction installed or to be
installed as of the Closing Date. To the extent not prohibited by the Leases,
Seller shall allow Buyer reasonable access to the Property to perform any
physical inspection thereof which Buyer reasonably deems appropriate. Buyer
shall notify Seller in advance and coordinate the timing of any visits to the
Property with Seller so as to minimize disruption of the on-going operation of
the Property. Buyer shall pay all costs incurred in making any tests, surveys,
analyses, and investigations of the Property and shall indemnify and hold Seller
harmless from and against any and all liens which may arise as a result of the
activities of Buyer or its agents, representatives, or designees on the
Property, and against any and all claims for death or injury to persons or for
physical damage to the Real Property arising out of or as a result of Buyer or
its agents, representatives or designees going upon the Property pursuant to the
provisions of this Section or otherwise.
4.6Governmental Permits, Approvals and Regulations. Buyer shall have
confirmed that all governmental permits and approvals with respect to the
Property relating to the zoning, entitlements, construction, operation, use or
occupancy of the Property or any portion thereof, are in full force and effect.
4.7Representations and Warranties. All of each Seller's representations
and warranties contained in Article VI or made in writing by each Seller shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date, as though made at,
and as of, the Closing Date, and Seller shall have executed and delivered all
documents and complied with all of Seller's covenants and agreements contained
in or made pursuant to this Agreement.
4.8Impairment of Property. As of the Closing no part of the Property, or
any interest of Seller therein, shall be encumbered by any lien, pledge,
security interest, financing or due and unpaid charge, tax or other imposition
(other than Permitted Exceptions and items which will be removed on or prior to
the Closing Date), or materially damaged as described in Section 8.2 and not
repaired to Buyer's satisfaction or taken in any material respect in
condemnation or other like proceeding and no such proceeding shall be pending or
threatened, except as otherwise provided in Section 8.2 hereof. There shall be
no material default, or event that with the giving of notice or the passage of
time or both would constitute a material default, under any Major Lease or any
event that with the giving of notice or the passage of time or both would allow
any party to any Major Lease to terminate such Lease, with or without notice. A
"Major Lease" refers to any of the Leases demising 5,000 square feet or more of
the Improvements.
4.9Approval of Buyer's Board of Directors. This Agreement and the
transactions contemplated hereby shall have been approved by the board of
directors of The Price REIT, Inc., a Maryland corporation (the "Buyer
Approval"), on or before the date that is thirty (30) business days after the
date hereof. If Buyer fails to notify Seller in writing of the failure of this
condition within thirty (30) business days after the date hereof, then this
condition shall be deemed to be waived for all purposes.
4.10Objections to Property or Other Matters. To the extent there is a
change in any of the matters described in this Article IV.A, or any such matters
first become available or are supplemented after the date hereof, Seller shall
promptly inform Buyer of such change in circumstances upon actually becoming
aware thereof and deliver any such new or supplemental information to Buyer.
Buyer shall have until the date that is thirty (30) business days after the date
of the full execution and delivery of this Agreement (the "Review Period"), to
notify Seller of any objections Buyer has to the physical or financial state of
the Property, to the Phase I environmental report, to any contracts or leases
relating to the Property, to any item delivered (or not delivered) by Seller to
Buyer, or to any other matter covered by this Article IV.A other than Title or
Survey; provided that Buyer shall have until the Closing Date to approve the
items specified in Sections 4.1, 4.8 and 4.11 hereof. If Buyer shall object as
provided herein, then this Agreement shall terminate and any and all right and
obligations of Buyer and Seller hereunder shall terminate (other than any
obligations which, by their express terms, survive any termination of this
Agreement), and within five (5) days after Buyer provides notice of such
termination to Escrow Holder, Escrow Holder shall pay to Buyer the Earnest Money
Deposit, together with interest thereon. If Buyer does not give notice to
Seller of its objections prior to the end of the Review Period, Buyer shall be
conclusively deemed to have waived any right to object to such matters and to
terminate this Agreement due to Buyer's disapproval thereof.
4.11Tenant Matters. Buyer shall have received and approved written
estoppel statements, in substantially the form as that attached hereto as
Schedule G, or in substantially the form required or permitted by such tenant's
lease, from each of the tenants under the Major Leases, and tenants holding
leases upon not less than eighty-five percent (85%) of the remaining gross
leasable area in the Real Property owned by Vista I and Vista Shops respectively
with respect to the Vista I and Vista Shops Closing, and from each of the
tenants under the Major Leases, and tenants holding leases upon not less than
eighty-five percent (85%) of the remaining gross leasable area in the Real
Property owned by Vista II, with respect to the Vista II Closing. Each such
estoppel statement shall be in form and substance reasonably acceptable to
Buyer. Buyer shall have 5 days after the date of Buyer's receipt of each
estoppel to notify Seller of any objection Buyer may have regarding such
estoppel, and in the event Buyer fails to so notify Seller, Buyer shall be
deemed to have approved such estoppel.
4.12Delivery of Documents. The due and timely delivery by Seller of
executed documents required by this Agreement, including without limitation all
of the documents and items specified in Section 5.3 below.
Sellers are jointly and severally obligated under the foregoing conditions
contained in this Article IV.A and the failure by any Seller to perform any of
the foregoing conditions contained in this Article IV.A shall be deemed a
failure by all Sellers, or any other Seller, at Buyer's option. The foregoing
conditions contained in this Article IV.A (except to the extent otherwise
provided in Article IV.B hereof) are intended solely for the benefit of, and may
be waived by, Buyer.
B.Seller's Conditions to Closing.
The following conditions are conditions precedent to Seller's obligation to
sell the Property:
4.13 Delivery of Documents and Purchase Price. Buyer's due and timely
execution and delivery of all documents and items to be executed and delivered
by Buyer (including without limitation the Purchase Price) pursuant to this
Agreement, including without limitation all of the documents and items specified
in Section 5.4 below.
The foregoing conditions contained in this Article IV.B are intended solely
for the benefit of Seller (except to the extent otherwise provided in
Article IV.A hereof).
ARTICLE V
CLOSING, RECORDING AND TERMINATION
5.1Deposit with Escrow Holder and Escrow Instructions. Promptly after
execution of this Agreement, the parties hereto shall deliver one (1) fully
executed copy of this Agreement to the Escrow Holder and this instrument shall
serve as the escrow instructions to the Escrow Holder for consummation of the
purchase and sale contemplated hereby. Seller and Buyer agree to execute such
additional and supplementary escrow instructions as may be appropriate to enable
the Escrow Holder to comply with the terms of this Agreement; provided, however,
that in the event of any conflict between the provisions of this Agreement and
any supplementary escrow instructions, the terms of this Agreement shall
control.
5.2Closing.
(a)With respect to Vista I and Vista Shops, the Closing Date shall
occur no later than the date (the "Outside Closing Date") which is fifteen
(15) days after the conclusion of the Review Period. With respect to
Vista II only, the Outside Closing Date shall mean that date that is no
later than fifteen (15) days after the first date that all of the following
events have occurred: (i) the completion of all Improvements in
conformance with all applicable plans, permits, ordinances, zoning
requirements and other applicable laws, regulations or legal requirements
relating to the Property, (ii) the execution and delivery of leases by all
tenants of the Property, each in form and substance satisfactory to Buyer
and with respect to which no default has occurred and is continuing,
(iii) the payment by all tenants of at least one month's basic rent under
the leases, (iv) fifteen days shall have passed after the Closing Date for
the Vista I Property and Vista Shops Property, and (v) if Seller has
elected to proceed under Section 2.1(c)(i)(2), the Second Closing Extension
Period shall have concluded. The Closing and the Closing Date shall not
have occurred until the Purchase Price shall have been paid by Buyer to
Escrow Holder as provided herein. The "Closing" shall be deemed to have
occurred on the date that all of the events specified in Section 5.8 of
this Agreement shall have occurred, except as provided in this Section 5.2.
The "Closing Date" shall be the date on which the Closing occurs with
respect to each Seller and each Seller's Property.
(b)In the event any Closing does not occur on or before the Outside
Closing Date, subject to any extension to the Outside Closing Date
contemplated by Article VIII hereof, the Escrow Holder shall, unless it is
notified by Buyer to the contrary within five (5) days after such date,
return to the depositor thereof all items which may have been deposited
with Escrow Holder hereunder (not including the Earnest Money Deposit, if
Seller has prior to such date alleged in writing to Buyer and Escrow Holder
that Seller is entitled to the Earnest Money Deposit pursuant to the terms
hereof and Seller specifies in such writing the basis for Seller's claim to
the Earnest Money Deposit). Any such return shall not, however, relieve
either party hereto of any liability it may have for its wrongful failure
to close. Buyer shall, within five (5) days after the termination of this
Agreement in accordance with the terms hereof, return to Seller all
documents and materials delivered to Buyer hereunder by or on behalf of
Seller.
5.3Delivery by Sellers. At the Closing, with respect to each Seller and
each Property, Sellers shall deposit with the Escrow Holder, for the benefit of
Buyer, or deliver directly to Buyer the following, each being executed and
delivered by the relevant Seller:
(a)The Deeds and the Assignment and Assumption of Leases and Rents,
each duly executed and acknowledged by Seller, in recordable form, and
ready for recordation in the official records of the jurisdiction in which
the Land is located (the "Official Records");
(b)The Bill of Sale duly executed by Seller;
(c)A certificate from the office of the county clerk of the county in
which the Land is located and of the county in which Seller's principal
office is located, a certificate from the Office of the Secretary of State
of the State of Texas, or other appropriate evidence of all filings against
Seller under the Commercial Code of Texas which would be a lien on any of
the Personal Property, any such evidence being dated within ten (10) days
prior to the Closing Date, together with fully executed termination
statements with respect to such filings;
(d)originals or copies of any warranties and guaranties received by
Seller and to be assigned to Buyer, from any contractors, subcontractors,
suppliers or materialmen in connection with any construction, repairs or
alterations of the Improvements or any tenant improvements;
(e)The Assignment of Contracts, Intangible Property, Warranties and
Guarantees, duly executed by Seller and acknowledged, assigning all of
Seller's interest in the Intangible Property, together with written
terminations of any Contracts which are not Approved Contracts;
(f)Originals or copies of all certificates of occupancy and permits
for the Improvements;
(g)All existing "record" plans and specifications for the Improvements
in the possession of Seller or its manager;
(h)A closing statement prepared by Escrow Holder in form and content
consistent with this Agreement and otherwise reasonably satisfactory to
Buyer and Seller;
(i)The Non-Foreign Certificate, duly executed by Seller;
(j)Complete originals of the Leases with respect to the Property and
all correspondence with tenants pursuant to the terms of or otherwise
relating to the Leases, and copies of all records, books of account,
ledgers, and statements and other business records relating to the
ownership and operation of the Property and/or the administration of the
Leases, in whatever mode maintained, including information contained on
computer disks; and
(k)A letter to each tenant, in form and substance acceptable to Buyer,
advising such tenant that the Property has been sold to Buyer.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
5.4Delivery By Buyer. Buyer shall execute and deliver to Escrow Holder,
for the benefit of the relevant Seller, or directly to the relevant Seller the
Assignment and Assumption of Leases and Rents, a closing statement, and such
other documents and instruments as may be required to the close the transactions
contemplated hereby, which documents and instruments shall be in form and
substance reasonably acceptable to Buyer and Seller. On the Closing Date, after
Buyer's or Escrow Holder's receipt of all of the items specified in Section 5.3
hereof, after the complete satisfaction of all of the conditions precedent to
Buyer's obligations hereunder, and after the expiration of the Review Period,
Buyer shall deliver the Purchase Price with respect to each Seller to Escrow
Holder as provided in Section 2.2 above.
5.5Other Instruments. Seller and Buyer shall each deposit such other
instruments as are reasonably required by Escrow Holder or otherwise required to
close the escrow and consummate the purchase of the Property in accordance with
the terms hereof.
5.6Prorations. At Closing, the parties shall prorate (with Buyer being
deemed to be the owner of the Property for the date of the Closing) as of the
date on which the Closing occurs, based on the actual number of days elapsed in
the calendar month in which the Closing Date occurs, the following with respect
to each Property:
(a)Taxes. Ad valorem and similar taxes and assessments relating to
the Property for the calendar year in which the Closing Date occurs shall
be prorated between Seller and Buyer as of the Closing Date, based upon the
best available estimates of the amount of taxes that will be due and
payable on Property during the calendar year in which the Closing Date
occurs, and Seller shall pay to Buyer in cash at such Closing the Seller's
pro rata portion of such taxes and assessments (less, however, any tax
reimbursements for such year which have accrued for such period but which
are not yet due under any Lease). As soon as the amount of taxes and
assessments on the Property for such year is known, Seller and Buyer shall
readjust the amount of taxes and assessments to be paid by each party with
the result that Seller shall pay for those taxes and assessments
attributable to the period of time prior to the Closing Date (less,
however, any tax reimbursements for such year which are collected for such
period under any Lease).
(b)Rents. Rents paid for the then current month shall be prorated
effective as of the Closing Date, and Seller shall credit to Buyer at such
Closing the amount of any rents received by Seller for the current month by
tenants under the Leases for periods on and including the Closing Date and
subsequent thereto. Buyer shall make a reasonable attempt to collect rents
delinquent as of the Closing Date in the usual course of Buyer's operation
of the Property following the Closing, and out of such collections shall
first apply the rent towards accrued but unpaid rental applicable on and
after the Closing Date and then shall reimburse Seller for Seller's pro
rata portion of such delinquent rents, including percentage rents, if any,
owing for the period prior to the Closing Date.
(c)Security Deposits. Seller shall pay to Buyer in cash the amount of
any and all cash security deposits paid to Seller by tenants under the
Tenant Leases.
(d)Other Income and Operating Expenses. All other income and
operating expenses, including without limitation, public utility charges,
maintenance, management, and other service charges, and all other normal
operating charges with respect to the Property shall be prorated effective
as of the Closing Date, and appropriate cash adjustments shall be made by
Buyer and Seller pursuant to a proration letter in form and substance
reasonably satisfactory to Buyer and Seller.
(e)Service Contracts. Amounts payable under Approved Contracts shall
be prorated on an accrual basis. Seller shall pay, prior to the Closing
Date, all such amounts for which a bill has been received or for which
payment is otherwise due prior to the Closing Date, and Buyer shall be
credited, and Seller shall be debited, with an amount equal to all amounts
accrued under the Approved Contracts from the date covered by such bills
until the Closing Date. Seller shall deliver to Escrow, for the benefit of
Buyer, evidence of the cancellation or termination of all Contracts other
than Approved Contracts, and Seller shall be responsible for all such
cancellation costs.
(f)Improvement Lien Assessments. All improvement lien assessments
(other than the assessments of the Denton County Road Utility District
No. 1, which shall be prorated in accordance with this Section 5.6, shall
be paid in full by Seller at Closing.
(g)Other Items. All other proratable items, including without
limitation other income from, and expenses associated with, the Property
shall be prorated between Buyer and Seller as of the Closing.
In the event accurate prorations and other adjustments cannot be made at Closing
because current bills or statements or other information is not obtainable, the
parties shall prorate on the best available information, subject to adjustment
as soon after the Closing as the actual amounts to be prorated are determined.
Buyer and Seller's obligation to prorate shall survive the Closing for a period
of one (1) year (unless within such time Buyer or Seller makes a claim against
the other party to this Agreement with respect to such obligation to prorate, in
which case such obligation shall survive without limitation), and Buyer and
Seller shall use good faith efforts to conclude prorations with respect to
percentage Rent, taxes, and common area maintenance charges as soon as
practicable after the determination of the amounts thereof. From and after
Closing, each party shall afford to the other reasonable access to any
information in its possession concerning the operations of the Property
(including the right to copy the same at the expense of the party desiring the
copy) for the purposes of ascertaining post-closing adjustments, tax
examinations or audits, or other similar purposes.
5.7Costs and Expenses. Seller and Buyer shall each bear and pay one-half
(1/2) of the fees of Escrow Holder. Seller shall pay all premiums for the Title
Policy (not including the costs of any special endorsements thereto requested by
Buyer), the cost of the Survey, all legal fees and costs incurred by Seller, the
cost of any recordation fees and documentary or other transfer taxes applicable
with respect to the sale of the Real Property, all sales tax, if any, applicable
with respect to the sale of the Personal Property and/or the Intangible
Property, and other fees and charges which are typically borne by sellers in
Lewisville, Texas. Buyer shall pay for the Phase I Report, its out-of-pocket
expenses, all due diligence, all legal fees and costs incurred by Buyer in
connection herewith, the cost of any endorsements to the Title Policy requested
by Buyer, and other fees and charges which are typically borne by buyers in
Lewisville, Texas.
5.8Closing and Recordation. Provided that Escrow Holder has received all
of the items required to be delivered pursuant to this Article V (or a waiver
from the party for whose benefit such item is being delivered) and that it has
not received prior written notice from Buyer that Buyer has elected to terminate
its rights and obligations hereunder pursuant to Article IV, Article VIII
and/or Section 5.9, and provided that Buyer has received either the Title Policy
or the irrevocable commitment of Title Company to provide it with the Title
Policy after recordation of the Deed, Escrow Holder is authorized and instructed
(a) with respect to the Property, to record the documents delivered to the
Escrow Holder in accordance with recording instructions set forth in a letter to
be delivered to Escrow Holder and Title Company by Buyer (or if no such letter
is received prior to the Closing, in accordance with customary practice), (b) to
deliver those other documents and instruments delivered into Escrow to the party
for whose benefit such documents or instruments were made and (c) to deliver the
Purchase Price as adjusted in accordance with Sections 2.2 and 5.6 hereof.
5.9Termination of Agreement.
(a)Failure of Buyer's Conditions. If any one or more of the
conditions to Buyer's obligations, as set forth in Article IV.A,
Section 5.3 or elsewhere in this Agreement, is not either fully performed,
satisfied or waived in writing (or deemed waived as provided herein) on or
before the Closing Date or such earlier date as provided elsewhere herein,
then Buyer may elect, as its sole and exclusive remedy, by written notice
as provided in Section 10.10 hereof to (i) terminate this Agreement with
respect to the closing of any or all of the Vista I, Vista II or Vista
Shops purchases contemplated hereby, in which case neither party shall have
any further obligation to the other (other than any obligations which, by
their express terms, survive any termination of this Agreement) or
(ii) seek specific performance of Seller's obligations under this Agreement
with respect to any or all of the Vista I, Vista II or Vista Shops
purchases contemplated hereby. Upon termination of this Agreement by Buyer
pursuant to any provision providing Buyer a right of termination, Buyer
shall return to Seller all materials previously provided by Seller to
Buyer.
(b)Failure of Seller's Conditions. If any one or more of the
conditions to Seller's obligations, as set forth in Article IV.B,
Section 5.4 or elsewhere in this Agreement, is not either fully performed,
satisfied or waived in writing (or deemed waived as provided herein) on or
before the Closing Date or such earlier date as provided elsewhere herein,
then Seller may elect, by written notice as provided in Section 10.10
hereof, as Seller's sole and exclusive remedies, to either terminate this
Agreement and neither party shall have any further obligation to the other
(other than any obligations which, by their express terms, survive any
termination of this Agreement) or (ii) if Closing has occurred with respect
to the Property owned by Vista Shops and Vista I, seek specific performance
of Buyer's obligations under this Agreement with respect to the sale of the
Property owned by Vista II.
5.10Security Deposits. Seller shall pay over to Buyer at Closing or grant
to Buyer a credit against the Purchase Price in an amount equal to the aggregate
of the tenants' security and other deposits and prepaid rents under the Leases,
including all accrued interest thereon to the extent that the tenants may be
entitled to receive such amounts in connection with the refund of any such
deposit or prepaid rent. Buyer shall indemnify Seller for any claim by any
tenant under a lease to the extent, and solely to the extent, that such claim
relates to Buyer's wrongful failure to refund a security deposit to such tenant,
which security deposit was delivered by Seller to Buyer or credited to Buyer
pursuant hereto.
5.11Memorandum of Agreement.Buyer may, in Buyer's sole and absolute
discretion, record a memorandum of this Agreement upon the Closing of the Vista
I and Vista Shops transactions in the county land records office in the
jurisdiction where the Properties are located.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
As an inducement to Buyer to enter into this Agreement and the consummation
of the transaction contemplated hereby, each Seller hereby represents and
warrants to and agrees with Buyer with respect to each such Seller and each such
Seller's Property, both as of the date hereof and again as of the Closing Date,
and as of all dates and times in between (except as specifically provided to the
contrary herein), as set forth below. As used herein and elsewhere in this
Agreement, the term "Seller's actual knowledge" shall mean:
(a)in the case of Vista I, the actual knowledge of Travis Parker ;
(b)in the case of Vista II, the actual knowledge of Travis Parker; and
(c)in the case of Vista Shops, the actual knowledge of Travis Parker.
"Seller's actual knowledge" as used in this Agreement means the actual knowledge
of Travis Parker on or before the date of this Agreement and does not include
imputed knowledge or knowledge such person does not have but could have obtained
through further investigation or inquiry. Seller represents and warrants that
the foregoing person is employed by Seller or its manager with day-to-day
managerial or supervisorial authority over the Property.
Each Seller hereby represents and warrants that the foregoing persons are
the persons employed by such Seller or Seller's manager with executive,
managerial or daily supervisory responsibility with respect to the Property.
6.1Authority. Seller is duly organized and validly existing under the laws
of the jurisdiction of its organization, is duly qualified to conduct business
and own real property in the State of Texas, and has all requisite power to own
all of its properties and assets and to carry on its business as presently
conducted. The execution, delivery and performance of this Agreement and all
other agreements contemplated hereby has been duly and validly authorized by all
necessary action of Seller and the Agreement and all other agreements
contemplated thereby are and will be valid and binding obligations of Seller.
6.2Title. Seller holds fee simple title to the Property, and to Seller's
actual knowledge, such fee simple title is free and clear of all liens,
encumbrances, security interests, charges, adverse claims and other exceptions
to title, except for the Leases, Contracts, matters of record, matters that
would be disclosed by a current and accurate survey, and the Permitted
Exceptions.
6.3The Leases. A list of the current Leases is set forth in the rent roll
attached hereto as Schedule H-1, H-2 and H-3, as applicable, (the "Rent Roll").
The Rent Roll is true, complete and correct in all material respects as of the
date thereof and except for the Leases set forth in the Rent Roll, there are no
other leases, licenses or other agreements granting any party any right of
occupancy of the Property. With respect to each Lease: (i) the Lease is in
full force and effect, and constitutes the valid and binding legal obligation of
Seller; (ii) there are no understandings, oral or written, between the parties
to the Lease which in any manner vary the obligations or rights of either party
except as set forth in the copies of such Lease and related written materials
provided by Seller to Buyer pursuant to this Agreement; (iii) except as
indicated on the Rent Roll, to Seller's actual knowledge, there is no default by
Seller under the Lease and to Seller's actual knowledge, by the tenant under the
Lease; and (iv) no rent or additional rent under the Lease has been paid for
more than thirty (30) days in advance of its due date.
6.4No Litigation or Adverse Events. Seller has received no written notice
of, and to Seller's actual knowledge, there are no, pending investigations,
actions, suits, proceedings or claims against or specific to Seller, the
Property, or relating to the zoning or environmental condition of the Property,
at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, agency, or instrumentality, domestic
or foreign.
6.5Compliance with Laws. Seller has not received any written notice or
claim of any violations of applicable laws, ordinances, rules and regulations
(including without limitation those relating to zoning and the Americans With
Disabilities Act) applicable to the ownership or operation of the Property.
Seller has not received from any insurance company or Board of Fire Underwriters
any written notice, which remains uncured, of any defect or inadequacy in
connection with the Property or its operation.
6.6No Defaults in Other Agreements. To Seller's actual knowledge, neither
Seller nor any other party is in material default under any Contract affecting
the Property, and no event exists which, with the passage of time or the giving
of notice or both, will become a material default thereunder on the part of the
Seller or any other party thereto. To Seller's actual knowledge, Seller is in
compliance in all material respects with the terms and provisions of the
covenants, conditions, restrictions, rights-of-way or easements affecting the
Property.
6.7Eminent Domain. To Seller's actual knowledge, there is no existing or
proposed eminent domain or similar proceeding, or private purchase in lieu of
such a proceeding which would affect the Property in any material way.
6.8Permits, CO's, Zoning, etc. To Seller's actual knowledge, all permits,
certificates of occupancy, and all other notices, permits, certificates and
authority required as of the date hereof in connection with Seller's ownership
and operation of the Property or the use or occupancy thereof have been obtained
and are in full force and effect and in good standing.
6.9Taxes and Assessments. To Seller's actual knowledge, all real property
taxes, and all Seller's personal property taxes, relating to the Property,
excepting those for the current tax year which are not yet overdue (i.e., which
are still payable without interest or penalty), have been paid in full. To
Seller's actual knowledge, except for the assessment set forth in the following
sentence, there is no existing or proposed assessment that has or may become a
lien on the Property. Buyer is hereby notified that the Land lies within the
special assessment district known as Denton County Road Utility District Number
1.
6.10Environment. (i) Seller has not engaged in any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Property, or transported any Hazardous
Materials to, from or across the Property, except in all cases in material
compliance with Environmental Requirements and only in the course of legitimate
business operations at the Property (which shall not include any business
primarily or substantially devoted to the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
Hazardous Materials); (ii) to Seller's actual knowledge, no tenant, occupant or
user of the Property, nor any other person, has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any material way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or
illegal, accidental or intentional) on, under, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Requirements and only in the
course of legitimate business operations at the Property (which shall not
include any business primarily or substantially devoted to the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of Hazardous Materials); and (iii) to Seller's actual
knowledge, no Hazardous Materials are presently constructed, deposited, stored,
or otherwise located on, under, in or about the Property except in all cases in
material compliance with Environmental Requirements and only in the course of
legitimate business operations at the Property (which shall not include any
business primarily or substantially devoted to the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of Hazardous Materials). Seller has no actual knowledge of any change
in the Property relative to Environmental Requirements from the status set forth
in the environmental reports in Seller's possession and furnished to Buyer
pursuant to this Agreement.
As used herein:
"Environmental Requirements" shall mean all applicable present statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items, of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of "Hazardous Materials," chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
"Hazardous Materials" shall mean (i) any flammable, explosive or
radioactive materials, hazardous wastes, toxic substances or materials
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C., Section 2601
et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq.; and in the regulations adopted and publications promulgated
pursuant to said laws; (ii) those substances listed in the United States
Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) those substances
defined as "hazardous wastes," "hazardous substances" or "toxic substances" in
any similar federal, state or local laws or in the regulations adopted and
publications promulgated pursuant to any of the foregoing laws or which
otherwise are regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the State
of Texas or any political subdivision thereof, (iv) any pollutant or contaminant
or hazardous, dangerous or toxic chemicals, materials, or substances within the
meaning of any other applicable federal, state, or local law, regulation,
ordinance, or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as amended;
(v) petroleum or any by-products thereof; (vi) any radioactive material,
including any source, special nuclear or by-product material as defined at 42
U.S.C. Sections 2011 et seq., as amended, and in the regulations adopted and
publications promulgated pursuant to said law; (vii) asbestos in any form or
condition; and (viii) polychlorinated biphenyls.
6.11Physical Condition. To Seller's actual knowledge: (i) there are no
material structural defects in the Improvements located on or at the Property;
and (ii) the Improvements and Personal Property (including without limitation
plumbing equipment, HVAC, electric wiring and fixtures, gas distribution system,
water and sewage systems, and security systems) are in good working order and
condition, except for defects or required repairs that are not material.
6.12Employees. Seller has no employees.
6.13Mechanic's Liens. To Seller's actual knowledge, all bills and claims
for labor performed and materials furnished to or for the benefit of the
Property currently due and contracted for by Seller or its manager have been
paid in full, and there are no mechanic's or materialmen's liens (whether or not
perfected) on or affecting the Property as a result of labor performed or
materials furnished and contracted for by the Seller or its manager and if such
liens arise prior to Closing, Seller shall cause such liens to be released or
bonded around to Buyer's reasonable satisfaction.
6.14Operating Statements. The financial statements delivered by Seller to
Buyer fairly present the profit or loss from the management and operation of the
Property for the periods covered thereby and, in all material respects,
accurately reflect all rents and other gross receipts, and all amounts paid by
Seller for electricity, water, sewer, other utility services, insurance, fuel,
maintenance and repairs (whether capitalized or expensed), real estate taxes,
payroll and payroll taxes and all other operating and other expenses associated
with the Property.
6.15Reciprocal Easement Agreements. To Seller's actual knowledge, neither
Seller nor any other party is in material default under any reciprocal easement
agreement affecting the Property ("REA") and no event exists which, with the
passage of time or the giving of notice or both, will become a material default
thereunder on the part of the Seller or any other party thereto. To Seller's
actual knowledge, Seller and any party to any REA are in compliance in all
material respects with the terms, conditions and requirements of any REA. To
Seller's actual knowledge, there are no claims by any party to any REA that any
of the improvements located on the Property have been constructed in
noncompliance with any of the terms, conditions and requirements of any REA.
6.16No Leases of Property or Assets. No material portion of the Personal
Property or fixtures with respect to the Property (other than fixtures owned or
installed by tenants) is leased by the Seller as lessee.
6.17Property Being Sold "AS-IS". (a)Buyer hereby acknowledges and affirms
that, except as expressly set forth in this Agreement, the Property is being
sold "As Is", and Seller has made to Buyer no warranties or representations
concerning the Property or any future improvements, or the Property's operation
, suitability, or structural soundness, whether express or implied (unless
expressly provided herein, including, without limitation, the representations
and warranties set forth in Article VI). Buyer acknowledges that Buyer has or
will examine the physical condition and the books and records of the Property to
the extent Buyer deems appropriate and to the extent such physical inspection is
permitted under this Agreement and such books and records are delivered to Buyer
by Seller in accordance with this Agreement; that Buyer is a sophisticated real
estate investor, well versed in all aspects of real estate of this nature, has
made or will make prior to the end of the Review Period, its own independent
evaluations regarding all matters relative to acquiring the Property, including
but not limited to, market survey, physical inspection, review of all operating
expenses, utilities, taxes, insurance, personnel requirements, potential market
changes, leases, plans, but only to the extent that such evaluations are
reasonably feasible considering the accuracy of the documents and materials made
available to Buyer under this Agreement and the nature of the physical
inspections permitted under this Agreement, and Buyer herein assures Seller that
Buyer is in no way relying on any other representations (unless expressly
provided herein, including, without limitation, the representations and
warranties set forth in Article VI), whether in writing or as may have been
discussed orally with Seller or Seller's personnel, in connection with its
decision to purchase the Property.
(b)Seller shall promptly notify Buyer, in writing, of any event or
condition known to Seller which occurs prior to Closing and which causes a
material change in the facts relating to, or the truth of, the above
representations and warranties. At the Closing, Seller shall reaffirm and
restate such representations and warranties, subject to disclosure of any
changes in facts or circumstances which may have occurred since the date hereof.
The representations and warranties set forth in this Article VI (and in any
certificate delivered by Seller at Closing) shall survive the execution and
delivery of this Agreement, the delivery of the Deed and transfer of title to
the Property, until the date that is one (1) year after the Closing Date for
each respective Property; provided however, that in the event Buyer makes a
particularized written claim against Seller with respect to any representation
or warranty prior to the date which is one (1) year after the Closing Date for
each respective Property, then such representation or warranty shall survive
without limitation as to such written claim for the applicable statutory period
of limitations. To the extent that, at any time prior to Closing, Seller
becomes aware of any matter which is the subject of this Agreement that would
make any representation or warranty given inaccurate or incomplete in any
material respect, Seller shall promptly notify Buyer of the existence of the
fact or condition which would cause the representation or warranty in question
to require modification. At such time, Buyer shall elect to either (i) accept
such modified representation or warranty as Seller may then give, and close
hereunder without any reduction in Purchase Price (unless otherwise agreed to in
writing by Buyer and Seller, or (ii) to the extent that the matter or matters in
question constitute a material change to the representations or warranties being
sought to be modified or deleted, exercise its rights to terminate this
Agreement in accordance with the terms and provisions of this Agreement but
without any liability to Seller for damages.
6.18Disclosure. To Seller's actual knowledge, the information contained in
the representations and warranties contained herein, and the information set
forth in the documents and materials provided to Buyer pursuant to
Section 4.3(a), do not contain any untrue statement of a material fact and do
not contain any statement that make such representations or warranties or such
information materially misleading in light of the circumstances in which they
were made. Seller has delivered or made available to Buyer complete copies of
all written materials described in Sections 4.3(b)-(i) which are in Seller's or
its manager's possession or control.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
7.1Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows: Buyer is duly organized and validly existing
under the laws of the State of Texas; subject to receipt of the Buyer Approval,
this Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are and as of the Closing Date will be duly authorized,
executed and delivered by Buyer, and are and as of the Closing Date will be
legal, valid and binding obligations of Buyer, and do not and as of the Closing
Date will not violate any provisions of any agreement or judicial order to which
Buyer is a party or to which it is subject.
ARTICLE VIII
POSSESSION, DESTRUCTION AND CONDEMNATION
8.1Possession. Possession of the Property shall be delivered to Buyer on
the Closing Date, subject to the Leases described on the Rent Roll or otherwise
approved by Seller. Without limiting any other provisions of this Agreement,
Seller shall afford authorized representatives of Buyer reasonable access to the
Property for the purposes of determining Seller's compliance herewith (provided
that Seller or Seller's agent shall be allowed to accompany Buyer in any visit
to the Property Buyer may make for the purposes of determining such compliance);
however, in no event shall such right give rise to any obligation of Buyer to
determine compliance or noncompliance.
8.2Loss, Destruction and Condemnation.
(a)Definition of Material Damage. For the purposes of this
Section 8.2, damage to the Property is material if (i) the actual cost of
repairing or replacing the damaged portions of the Improvements on the
Property exceeds $100,000.00, or (ii) if it would take longer than 90 days
to perform such repair or replacement using reasonably diligent efforts, or
(iii) if any lessee has the right to abate any rent under its lease as a
result of such damage and there is not full rental interruption coverage
with respect thereto available to Buyer through and after the Closing Date
until the date that is ninety (90) days beyond the estimated date of
reconstruction, or (iv) if any lessee has a right to terminate its lease as
a result of such damage.
(b)Effect of Non-Material Damage to Improvements. If prior to the
Closing the Improvements on the Property are damaged by casualty and such
damage is not material, (i) this Agreement may not be terminated by reason
of such casualty (provided that this does not waive Buyer's other
termination rights under this Agreement) and (ii) Seller will, at Buyer's
option, either (a) cause the damaged portion of the Improvements to be
repaired at Seller's sole cost and expense within sixty (60) days after the
date of such damage or (b) pay to Buyer all insurance proceeds (and the
amount of any applicable deductible) theretofore actually received by
Seller and, in addition, assign, transfer and set over to Buyer all of
Seller's right, title and interest in and to any insurance claims or
insurance proceeds that may thereafter be made for any such damage or
destruction, except that any loss of rent insurance shall be prorated as of
the date of Closing. Seller will notify Buyer within three (3) days (but
in any event prior to the Closing Date) of Seller's receipt of knowledge of
any casualty which occurs after the date of this Agreement and on or prior
to the Closing Date.
(c)Effect of Material Damage to Improvements. If prior to the Closing
the Improvements are damaged by casualty and such damage is material,
Seller shall notify Buyer in writing of such casualty as soon as
practicable. Within 30 days after the occurrence of such casualty, Seller
will, as soon as is practicable, provided insurance proceeds are available
to perform such restoration, commence restoration of the damaged
Improvements, and shall complete such restoration in compliance with all
laws and the representations and warranties set forth herein and shall
restore such Improvements their condition prior to the occurrence of the
casualty promptly (but in no event more than ninety (90) days thereafter),
and the Closing Date shall be extended (but in no event by more than ninety
(90) days) until such damaged Improvements are complete. If Seller does
not commence or complete such restoration within such time period, then
Buyer may elect pursuant to a writing delivered to Seller and Escrow Holder
within fifteen (15) days after such failure by Seller to commence or
complete such restoration, to (i) continue this Agreement, provided,
however, that Seller shall assign to Buyer at the Closing any insurance
proceeds to which Seller is entitled with respect to such damage except
that any loss of rent proceeds shall be prorated as of the date of Closing
(in which event the Purchase Price shall be reduced by the amount of any
deductible with respect thereto); (ii) terminate this Agreement, in which
case Buyer shall have no further rights and obligations to the Seller under
this Agreement (except for such rights and obligations that, by the express
terms hereof, survive any termination of this Agreement) (but Buyer shall
retain its rights and remedies against Seller) and Escrow Holder shall
immediately return the Earnest Money Deposit (with interest thereon) to
Buyer. Buyer's failure to have elected any of these options within the
time allotted therefor shall be deemed to be an election of option (ii).
(d)Definition of Material Taking. For the purposes of this
Section 8.2, a taking or threatened taking by eminent domain or similar
proceedings shall be deemed material if (i) the value of that portion of
the Property to be so taken exceeds $200,000, (ii) the portion of the
Property taken materially impairs access to the Property or materially and
adversely affects the parking area; (iii) any lessee has the right to abate
any rent under its lease as a result of such taking or threatened taking,
or (iv) any lessee has the right to terminate its lease as a result of such
taking or threatened taking.
(e)Effect of Non-Material Taking. If prior to the Closing there is a
taking or threatened taking of a portion of the Property which is not
material, (i) this Agreement may not be terminated and (ii) Seller will
assign to Buyer at the Closing all of Seller's rights in and to any
condemnation award with respect to such non-material taking, and there will
be no reduction in the Purchase Price. Seller will deliver written notice
to Escrow Holder and Buyer within 3 business days after Seller receives
notice of or otherwise becomes aware of any taking or threatened taking
affecting the Property.
(f)Effect of Material Taking. If prior to the Closing there is a
taking or threatened taking of a material portion of the Property or all of
it, Seller shall notify Buyer in writing of such taking or threatened
taking, and within ten (10) days after Buyer's receipt of such notice,
Seller and Buyer shall endeavor to agree upon whether the Property shall be
purchased by Buyer, and any reduction in the Purchase Price, and any
assignment of any condemnation award with respect to such taking. If
within such ten (10) day period Buyer and Seller have not reached a
mutually acceptable agreement as to those matters, Buyer within ten (10)
days thereafter may elect in writing to (i) continue this Agreement subject
to the taking or threatened taking with an assignment at Closing of all of
Seller's rights to condemnation awards, severance damages, payments-in-lieu
thereof or the like; or (ii) terminate this Agreement, in which case Buyer
and Seller shall have no further rights or obligations to one another under
this Agreement (except for such rights and obligations that, by the express
terms hereof, survive any termination of this Agreement), and Escrow Holder
shall immediately return the Earnest Money Deposit (with interest thereon)
to Buyer. Buyer's failure to have elected any of these options within the
time period allotted therefor shall be deemed to be an election of option
(ii).
(g)Extension of Outside Closing Date. Upon the occurrence of any
damage to the Property which Seller is obligated to repair and restore in
accordance with the terms of this Agreement, the Outside Closing Date shall
be extended to the date upon which Seller is required hereunder to have
such damage repaired, but in no event shall any such extension extend the
Outside Closing Date to a date which is more than ninety (90) days after
the date of such damage to the Property.
ARTICLE IX
MAINTENANCE AND OPERATION OF THE PROPERTY; COVENANTS
9.1Maintenance. In addition to Seller's other obligations hereunder,
Seller shall, upon and after the date of this Agreement and to and including the
Closing Date, at Seller's sole cost and expense, maintain the Property in the
ordinary course of business consistent with past practice, pay all taxes,
assessments, fines, penalties, charges and other operating expenses, and shall
make all repairs, maintenance and replacements of the Improvements and any
Personal Property and otherwise operate the Property in its ordinary and
customary manner, and otherwise in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property. Seller shall
not make any alterations to the Property without first receiving Buyer's prior
written consent thereto, except to the extent required by applicable
governmental laws, ordinances or regulations.
9.2Leases and Other Agreements. From the date of this Agreement until ten
(10) days prior to the expiration of the Review Period, Seller may lease space
within the Improvements without Buyer's consent provided that (i) all such
leases fall within the parameters of the leasing guidelines attached hereto as
Exhibit L (the "Leasing Guidelines"), and (ii) the credit of any such new
tenant is comparable to the credit of existing tenants. Copies of all such
proposed leases which Seller intends to enter into during such time period,
financial information regarding the proposed tenant (with credit reports) and
copies of all brokerage agreements with respect to such proposed leases shall be
delivered to Buyer. Buyer shall have ten (10) days after receiving such
executed leases to approve or disapprove such leases. In the event Buyer
disapproves of any lease delivered to Buyer for its review, Buyer shall have the
right to terminate this Agreement by delivering written notice of such
termination within ten (10) days after receiving such lease. In the event Buyer
fails to terminate this Agreement within such 10-day period, Buyer shall be
deemed to have approved such lease. After the expiration of the Review Period
and until the Closing Date, Seller may not execute any leases of space in the
Improvements without obtaining Buyer's prior written consent to such lease,
which consent shall not be unreasonably withheld, conditioned or delayed. All
such leases entered into after the date hereof in accordance with this
Section 9.2 are collectively hereinafter referred to as the "Approved Leases".
9.3Encumbrances. Except for Seller's right to enter into Leases in
accordance with the provisions of Section 9.2 above, Seller shall not, after the
date of this Agreement and prior to the Closing Date, mortgage, encumber or
suffer to be encumbered all or any portion of the Property, which encumbrances
would survive the Closing Date, without the prior written consent of Buyer in
Buyer's sole absolute discretion.
9.4Consents and Notices. Seller and Buyer shall cooperate with each other
and exercise commercially reasonable efforts to obtain as of the Closing Date,
all consents from, and provide all notices to, any third party and any
governmental or regulatory authority which are required pursuant to any Contract
or any applicable laws as a condition to or in connection with the execution,
delivery or performance of this Agreement or other documents and instruments
contemplated thereby.
9.5Audit Cooperation. Until the date that is one (1) year after the
Closing Date, Seller hereby agrees to cooperate with Buyer at Buyer's expense in
producing Buyer's audited financial statements for the Property for such periods
as may be requested by Buyer. Such cooperation shall include, without
limitation, the execution and delivery by Seller to Buyer's auditors of such
confirmations and letters as such auditors may reasonably require.
ARTICLE X
MISCELLANEOUS
10.1Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested,
or by electronic facsimile transmission (followed by a copy mailed or delivered
as otherwise provided herein), or sent by Federal Express or similar nationally
recognized overnight courier service, and addressed as follows, and shall be
deemed to have been given upon the date of delivery (or refusal to accept
delivery) at the address specified below as indicated on the return receipt or
air bill, or on the date of facsimile transmission if delivered in such manner:
If to Sellers: Vista Ridge Plaza, Ltd.
c/o Dal Mac Investments
111 W. Spring Valley Road
Richardson, TX 75083
Attention: Brad McJunkin
Fax No.: 972-235-3060
Vista Ridge Plaza II, Ltd.
c/o Dal Mac Investments
111 W. Spring Valley Road
Richardson, TX 75083
Attention: Brad McJunkin
Fax No.: 972-235-3060
Vista Ridge Shops, Inc.
c/o Dal Mac Investments
111 W. Spring Valley Road
Richardson, TX 75083
Attention: Brad McJunkin
Fax No.: 972-235-3060
with a copy to:Donohoe, Jameson & Carroll
1201 Elm Street
34th Floor
Dallas, Texas
Attention: Mark Van Kirk, Esq.
Fax No.: (214) 744-0231
If to Buyer: PRICE/BAYBROOK, LTD.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, CA 90036
Attn.: Joseph Kornwasser
Fax No.: (213) 937-8175
with a copy to:Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attn: William R. Lindsay, Esq.
Fax No.: (213) 229-7520
If to Escrow Holder:
Weststar Title Company
17736 Preston Road
Suite 200
Dallas, TX 75252
Attn: Nancy Goodstein
Fax No.: 972-931-7446
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.
10.2Brokers and Finders. Buyer and Seller each hereby represents and
warrants that no broker was involved in this Agreement or the transactions
contemplated hereby except for Gilmore-Davis Companies, whose commissions are to
be paid by Seller pursuant to a separate agreement between Seller and said
broker. All such commissions shall be due and payable if, as, and when each
Closing occurs. In the event of a claim for a broker's fee, finder's fee,
commission or other similar compensation in connection herewith other than as
set forth above, (i) Buyer, if such claim is based upon any agreement alleged to
have been made by Buyer, hereby agrees to reimburse Seller for any liability,
loss, cost, damage or expense (including reasonable attorneys' and paralegals'
fees and costs) which Seller may sustain or incur by reason of such claim and
(ii) Seller, if such claim is based upon any agreement alleged to have been made
by Seller, hereby agrees to indemnify, defend, protect and hold Buyer harmless
against any and all liability, loss, cost, damage or expense (including
reasonable attorneys' and paralegals' fees and costs) which Buyer may sustain or
incur by reason of such claim. The provisions of this Section 10.2 shall
survive the Closing or earlier termination of this Agreement.
10.3Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns, except that neither Seller's nor Buyer's interest under this Agreement
may be assigned, encumbered or otherwise transferred whether voluntarily,
involuntarily, by operation of law or otherwise, without the prior written
consent of the other, which consent will not be unreasonably withheld,
conditioned or delayed; provided, however, that Buyer may assign, encumber or
otherwise transfer Buyer's interest under this Agreement, without the prior
written consent of the Seller to any "affiliate" of Buyer. Nothwithstanding any
such assignment by Buyer to an affiliate of Buyer, such assignment shall not
release Buyer from its obligations under this Agreement. There shall be no
third party beneficiaries to this Agreement. For purposes of this Section 10.3,
"affiliate" of the Buyer shall mean an entity in which the Buyer owns directly
or indirectly more than 50 percent (50%) of any interest in such entity, or an
entity which owns directly or indirectly more than 50 percent (50%) of any
interest in Buyer, or any entity controlling, controlled by or under common
control with Buyer.
10.4Amendments. This Agreement may be amended or modified only by a
written instrument executed by the party asserted to be bound thereby.
10.5Continuation and Survival of Indemnities, Representations, Warranties
and Post-Closing Obligations. Except as provided in Section 5.6 hereof or in
Article VI of this Agreement, all indemnities, representations and warranties
by, and all of the post-closing obligations, if any, of, the respective parties
contained herein or made in writing pursuant to this Agreement or any other
instrument delivered by Seller pursuant hereto are intended to and shall survive
the execution and delivery of this Agreement, the delivery of the Deed and
transfer of title for a period of one year from the date of each Closing. Buyer
acknowledges and agrees that in the event that following a Closing, it believes
that any representation or warranty under this Agreement has been breached, or
that Seller is obligated to indemnify Buyer, that it must assert in writing any
such claim relating to any of the foregoing within one (1) year of the date of
such Closing as provided in Section 6.17 hereof.
10.6Interpretation. Whenever used herein, the term "including" shall be
deemed to be followed by the words "without limitation." Unless otherwise set
forth or defined herein, words used in the singular number shall include the
plural, and vice-versa, and any gender shall be deemed to include each other
gender. The captions and headings of the Articles and Sections of this
Agreement are for convenience of reference only, and shall not be deemed to
define or limit the provisions hereof.
10.7Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
10.8Merger of Prior Agreements. This Agreement (including the exhibits
hereto) constitutes the entire agreement between the parties with respect to the
purchase and sale of the Properties specifically described herein and supersedes
all prior and contemporaneous (whether oral or written) agreements and
understandings between the parties hereto relating to the specific subject
matter hereof.
10.9Attorneys' Fees. In the event of any action or proceeding at law or in
equity between Buyer and Seller (including an action or proceeding between Buyer
and the trustee or debtor in possession while Seller is a debtor in a proceeding
under the Bankruptcy Code (Title 11 of the United States Code) or any successor
statute to such Code) to enforce or interpret any provision of this Agreement or
to protect or establish any right or remedy of either Buyer or Seller hereunder,
the unsuccessful party to such action or proceeding shall pay to the prevailing
party all costs and expenses, including without limitation reasonable attorneys'
and paralegals' fees and expenses (including without limitation fees, costs and
expenses of experts and consultants), incurred in such action or proceeding and
in any appeal in connection therewith by such prevailing party, together with
all costs of enforcement and/or collection of any judgment or other relief. If
such prevailing party shall recover judgment in any such action, proceeding or
appeal, such costs, expenses and attorneys' and paralegals' and others' fees
shall be included in and as a part of such judgment.
10.10Notice of Termination. Subject to Section 10.11 hereof, if either
Buyer or Seller elects to terminate this Agreement, it will submit to Escrow
Holder and the other party hereto a notice of termination ("Termination Notice")
in duplicate. If Escrow Holder receives a notice of termination, it is
instructed to deliver by Federal Express or similar nationally recognized
overnight courier service and fax one copy to the other such party and such
other party's representatives, as designated in Section 10.1 above, within one
(1) business day. Subject to Section 10.11 hereof, if Escrow Holder has not
received a written objection from the other party within five (5) business days
after delivering and faxing the copy, Escrow Holder is to (i) comply with the
instructions contained in the notice of termination, (ii) pay cancellation
charges out of any funds on deposit in this Escrow and (iii) cancel this
Agreement.
10.11Remedies; Specific Performance; Damages.
(A)Seller's Defaults/Buyer's Remedies Prior to Vista I and Vista
Shops Closing. If, on or prior to the Closing Date for Vista I and Vista
Shops, Seller is in default hereunder and such default is not cured within
ten (10) days after Seller receives written notice of such default, Buyer
may, at Buyer's sole option, do any of the following for such default:
(i)Terminate this Agreement by written notice delivered to Seller on
or before the Closing Date for Vista I and Vista Shops whereupon
(1) the Escrow Holder shall return the Earnest Money Deposit and
all interest earned thereon to Buyer and (2) Seller shall pay to
Buyer all of Buyer's reasonable fees and costs of its diligence
incurred prior to the effective date of Buyer's Termination
Notice, including without limitation the reasonable fees and
costs of Buyer's attorneys and paralegals; or
(ii)Enforce specific performance of this Agreement against Seller; or
(iii)only if specific performance would not be an adequate remedy
solely by reason of Seller's conveying all or any part of the
Property subsequent to the date of this Agreement, terminate this
Agreement by giving written notice of such termination to Seller,
receive the Earnest Money Deposit and all interest earned
thereon, and seek actual damages (but not consequential, indirect
or punitive damages, or damages for Buyer's loss of the benefit
of the bargain) for breach of this Agreement by Seller up to a
maximum amount of $100,000.
(B)Seller's Defaults/Buyer's Remedies After Vista I and Vista Shops
Closing. If, after the Closing of Vista I and Vista Shops, Seller is in
default hereunder and such default is not cured within ten (10) days after
Seller receives written notice of such default, Buyer may, as Buyer's sole
option, elect one (1) of the following as its sole and exclusive remedy for
such default:
(i)Terminate this Agreement as to Vista II by written notice delivered
to Seller on or before the Closing Date for Vista I, whereupon
(1) Escrow Holder shall return the Earnest Money Deposit and all
interest earned thereon to Buyer and (2) Seller shall pay to
Buyer all of Buyer's reasonable fees and costs of its diligence
incurred prior to the effective date of Buyer's Termination
Notice, including without limitation the reasonable fees and
costs of Buyer's attorneys and paralegals; or
(ii)Enforce specific performance of this Agreement against Seller; or
(iii)only if specific performance would not be an adequate remedy,
terminate this Agreement by giving written notice of such
termination to Seller, receive the Earnest Money Deposit
including all interest earned thereon, and seek only actual
damages (and not, without limitation, consequential, indirect or
punitive damages, or damages for Buyer's loss of the benefit of
the bargain), including Buyer's actual attorney fees and costs,
for breach of this Agreement by Seller.
(C)Buyer's Default/Seller's Remedies Prior to Vista I and Vista Shops
Closing. If, on or prior to the Closing for Vista I and Vista Shops, Buyer
is in default hereunder, and such default is not cured within ten (10) days
after Buyer receives written notice of such default, Seller, as Seller's
sole and exclusive remedy for such default, shall be entitled to terminate
this Agreement by giving written notice of such termination to Buyer,
whereupon Escrow Holder shall deliver the Earnest Money Deposit and all
interest earned thereon to Seller in accordance with the provisions of
Section 2.5 of this Agreement.
(D)Buyer's Default/Seller's Remedies After Conveyance of Vista I and
Vista Shops. If, after the Closing of Vista I and Vista Shops, Buyer is in
default hereunder and such default is not cured within ten (10) days after
Buyer receives written notice of such default, Seller may, as Seller's sole
option, elect one (1) of the following as its sole and exclusive remedy for
such default:
(i)Terminate this Agreement as to Vista II by written notice delivered
to Buyer on or before the Closing Date for Vista II, whereupon
(1) Escrow Holder shall deliver the Earnest Money Deposit and all
interest earned thereon to Seller in accordance with Section 2.5
of this Agreement; or
(ii)Enforce specific performance of this Agreement against Buyer; or
(iii)only if specific performance would not be an adequate remedy,
terminate this Agreement by giving written notice of such
termination to Seller and seek only actual damages (and not,
without limitation, consequential, indirect or punitive damages,
or damages for Buyer's loss of the benefit of the bargain),
including Seller's actual attorney fees and costs, for breach of
this Agreement by Buyer.
10.12Relationship. It is not intended by this Agreement to, and nothing
contained in this Agreement shall, create any partnership, joint venture,
financing arrangement or other agreement between Buyer and Seller. No term or
provision of this Agreement is intended to be, or shall be, for the benefit of
any person, firm, organization or corporation not a party hereto, and no such
other person, firm, organization or corporation shall have any right or cause of
action hereunder.
10.13Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
10.14Time of the Essence. Time is of the essence in this Agreement and
with respect to all of its terms.
10.15No Waiver. No failure of either party to exercise any power given
either party hereunder or to insist upon strict compliance by the other party
with its obligations hereunder, and no custom or practice of the parties at
variance with the terms hereof shall constitute a waiver of either party's
rights to demand exact compliance with the terms hereof.
10.16Saturdays, Sundays, Legal Holidays. If the time period by which any
right, option, or election provided under this Agreement must be exercised or by
which any acts or payments required hereunder must be performed or' paid, or by
which the Closing must be held, expires on a Saturday, Sunday, legal or bank
holiday, then such time period shall be automatically extended to the close of
business on the next regularly scheduled business day.
10.17Rent Support Contingency. Vista I hereby agrees that, in the event
any vacancies exist on the Closing Date with respect to Vista I's Property,
Vista I shall lease on a triple net basis such vacant space for a period of up
to twelve months at the rate of $18.00 per square foot per year. Vista I shall
enter into the lease with Buyer effective on the Closing Date on the Seller's
standard lease, the form and substance of which shall be reasonably acceptable
to Buyer, with Seller retaining the right to lease such vacant space on Buyer's
behalf, subject to Buyer's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Upon leasing all of such vacant
space to unaffiliated third parties, Seller's obligations under the lease
between Seller and Buyer with respect to such vacant space shall automatically
cease.
10.18Confidentiality. The parties hereto acknowledge and agree that Buyer
is a publicly traded entity and subject to certain disclosure obligations under
federal and state securities laws. Therefore, notwithstanding anything herein
to the contrary, express or implied, Buyer may elect, in its reasonable
discretion, to disclose publicly, by press release or by filings with federal or
state authorities or otherwise, such matters relating to this Agreement, the
transactions contemplated hereby or the Property as Buyer may deem necessary or
desirable under federal or state securities laws or the requirements or
guidelines of any national securities exchange upon which Seller's securities
are listed.
10.19Force Majuere. Whenever a period of time is herein prescribed for
action to be taken by Buyer or Seller (exclusive of any monetary obligations),
such party shall not be liable or responsible for, and there shall be excluded
from the computation of any such period of time, any delays due to strikes,
riots acts of God, inclement weather, shortages of labor or materials, war,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the reasonable control of the party so obligated to
act.
10.20Buyer Acknowledgement of Broker Advisement. At the time of the
execution of this Agreement, Buyer acknowledges that the Brokers have advised
and hereby advise Buyer, by this writing, that Buyer should have the abstract
covering the Property examined by an attorney of Buyer's own selection or that
Buyer should be furnished with a policy of title insurance.
10.21Severability.Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement, including without limitation any
provisions that expressly describe the remedies of Buyer or Seller relating to
any of the Properties.
10.22Further Assurances.At any time and from time to time after the Closing
Date, each party shall execute and deliver such additional documents or
instruments and take such additional actions as shall be reasonably necessary to
effect the intents and purposes of this Agreement, including without limitation
such additional documentation and additional actions as may be necessary to
promptly terminate the performance lien, if any such lien is recorded, referred
to in Section 2.1(c)(ii) hereof upon the satisfaction or termination of Buyer's
obligations related thereto and secured thereby, provided that no such documents
or actions shall alter any of the substantive terms and conditions of this
Agreement.
IN WITNESS WHEREOF, Sellers, Buyer, and Escrow Holder have executed this
Agreement as of the date first above written.
SELLERS:
VISTA RIDGE PLAZA, LTD.
By: DalMac Plaza, Inc.,
its general partner
By: /RANDALL HEARNE/
----------------
Its: Secretary/Treasurer
VISTA RIDGE PLAZA II, LTD
By: DalMac Plaza II, Inc.,
its general partner
By: /RANDALL HEARNE/
-----------------
Its: Secretary/Treasurer
VISTA RIDGE SHOPS, INC.
By: /RANDALL HEARNE/
----------------
Its:Secretary/Treasurer
BUYER:
PRICE/BAYBROOK, LTD.
By: PRICE/TEXAS, INC., its general partner
By: /JERALD FRIEDMAN/
-----------------
Its: Vice President
CONSENT OF ESCROW COMPANY
The undersigned Escrow Company agrees to (i) accept the foregoing
Agreement, (ii) be Escrow Holder under the Agreement, and (iii) be bound by the
Agreement in the performance of its duties as Escrow Holder; however, the
undersigned will have no obligations, liability or responsibility under (a) this
consent or otherwise, unless and until the Agreement, fully signed by the
parties, has been delivered to the undersigned, or (b) any amendment to the
Agreement unless and until the amendment is accepted by the undersigned in
writing.
Dated: ___________________ WESTSTAR TITLE COMPANY
By:_________________________
Its:__________________________
SCHEDULE A-1
LEGAL DESCRIPTION OF THE LAND
[VISTA I]
SCHEDULE A-2
LEGAL DESCRIPTION OF THE LAND
[VISTA II]
SCHEDULE A-3
LEGAL DESCRIPTION OF THE LAND
[VISTA SHOPS]
SCHEDULE B
TEXAS SPECIAL WARRANTY DEED
[TO BE REVIEWED BY LOCAL COUNSEL]
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: William R. Lindsay
===============================================================================
TEXAS SPECIAL WARRANTY DEED
THIS INDENTURE is made this ____ day of _____________, 1997, by
______________________________________, a Texas Limited Partnership ("Grantor")
in favor of PRICE/BAYBROOK, LTD., a Texas limited partnership ("Grantee").
Mailing address of Grantee is 145 South Fairfax Avenue, Fourth Floor, Los
Angeles, California 90036.
WITNESSETH, that Grantor, in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration to Grantor duly paid, the
receipt and sufficiency of which are hereby acknowledged, does by these presents
SELL and CONVEY unto Grantee and Grantee's successors and assigns, the following
described property (the "Property"):
(A)That certain real property described in Exhibit A hereto (the "Land");
(B)All rights, privileges and easements appurtenant to and for the benefit
of the Land, including, without limitation, all of Grantor's right, title and
interest in (i) all minerals, oil, gas and other hydrocarbon substances on and
under the Land, (ii) all development rights, air rights, water, water rights and
water stock relating to the Land, and (iii) any other easements, rights-of-way
or appurtenances owned by Grantor and used in connection with the beneficial
operation, use and enjoyment of the Land or the Improvements or any other
appurtenance, together with all rights of Grantor in and to public and private
streets, roads, avenues, alleys and passageways, sidewalks, driveways, parking
areas and areas adjacent thereto or used in connection therewith (open or
proposed, in front of or abutting the Land), and all rights of Grantor in any
land lying in the bed of any existing or proposed street adjacent to the Land,
all strips or gores of land adjoining the Land, and any awards made or to be
made and any unpaid award for damage to the Land by reason of any change of
grade of any such street, road, avenue, alley or passageway;
(C)All improvements and fixtures located or to be located on the Land,
including, without limitation, all buildings and structures presently located on
the Land, all apparatus, equipment and appliances owned by Grantor presently
located on the Land and used in connection with the operation or occupancy
thereof, such as heating and air conditioning systems and facilities used to
provide any utility services, parking services, refrigeration, ventilation,
garbage disposal, recreation or other services thereto, and all landscaping and
leasehold improvements which are the property of Grantor (the "Improvements");
SUBJECT TO only such matters as may be set forth in any title insurance
policy received by Buyer concurrently herewith (the "Permitted Exceptions") and
by this reference made a part hereof.
TO HAVE AND TO HOLD the Property with all and singular the tenements,
hereditaments and appurtenances thereto belonging or in any wise appertaining,
unto Grantee and Grantee's successors and assigns, forever, subject only to the
Permitted Exceptions, Grantor hereby covenanting that the Property is free and
clear from any encumbrance done or suffered by Grantor except as set forth
above, and that Grantor will warrant and defend title to the Property unto
Grantee and Grantee's successors and assigns forever against the claims and
demands of persons claiming or to claim the same by, through or under Grantor,
subject only to the Permitted Exceptions.
IN WITNESS WHEREOF, the Grantor has caused this Deed to be executed and
delivered as of the date first above written.
VISTA RIDGE PLAZA, LTD.
By:, its general partner
By:_________________________
Its:_________________________
STATE OF TEXAS
COUNTY OF DENTON
This instrument was acknowledged before me on ________________________ by
______________________________________, ______________________________, a
____________________________________ authorized to do business in the State of
Texas under the name _________________________________ on behalf of
___________________________.
[Seal]
______________________________________
Notary Public, State of Texas
My commission expires on ________________________
EXHIBIT "A" TO TEXAS SPECIAL WARRANTY DEED
LEGAL DESCRIPTION
EXHIBIT "B" TO TEXAS SPECIAL WARRANTY DEED
INSERT "PERMITTED EXCEPTIONS"
SCHEDULE C
ASSIGNMENT AND ASSUMPTION OF LEASE AND RENTS
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Attention: William R. Lindsay
===============================================================================
ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, VISTA RIDGE PLAZA, LTD., a Texas limited partnership ("Assignor"),
hereby assigns, sets over, transfers and delegates to PRICE/BAYBROOK, LTD., a
Texas limited partnership ("Assignee"), without recourse, except as expressly
set forth herein or in that certain Purchase and Sale Agreement and Escrow
Instructions by and between Vista Ridge Plaza, Ltd., a Texas Limited
Partnership, Vista Ridge Plaza II, Ltd., a Texas Limited Partnership, and Vista
Ridge Shops, Inc., a Texas Corporation, as Sellers, and Price/Baybrook, Ltd., a
Texas Limited Partnership, as Buyer, dated as of December __, 1997 (the
"Agreement"), all of the landlord's right, title, interest, claim and estate in
and to all leases, occupancy agreements and similar agreements, together with
all modifications, extensions and renewals thereof, all security therefor, and
all guaranties of any of the foregoing (collectively, the "Leases") which demise
all or any part of, or interest in, the real property more particularly
described on Exhibit A attached hereto and incorporated herein (the "Land"),
together with all income, receipts, fund and revenues of any kind whatsoever
payable under the Leases or otherwise with respect to the Land, whether
heretofore accrued or hereafter arising (the "Rents"). No provision of this
Assignment shall in any way limit or impair any term, condition, representation
or warranty included in the Agreement.
Assignee hereby assumes all of Assignor's obligations under or with respect
to the Leases described on Exhibit B attached hereto, which obligations arise
out of and relate to the period commencing on the date hereof, and agrees to
indemnify, defend, protect, and hold Assignor harmless from and against any and
all loss, claim, obligation, cost or expense (including without limitation
reasonable attorneys fees) relating to or in connection with any such
obligations of the landlord under the Leases arising out of and relating to the
period commencing on the date hereof. Assignor hereby agrees to indemnify,
defend, protect and hold Assignee harmless from and against any and all loss,
claim, obligation, cost or expense (including without limitation reasonable
attorneys fees) relating to or in connection with any obligations of the
landlord under the Leases, which obligations arise out of or relate to the
period prior to the date hereof.
If any litigation between Assignor and Assignee arises out of the
obligations of the parties under this Assignment or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including, without
limitation, reasonable attorneys' fees. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor under
this Assignment shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Assignment and to
survive and not be merged into any such judgment.
This Assignment may be executed and delivered in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement
effective as of this ______ day of _______________, 1997.
ASSIGNOR:
VISTA RIDGE PLAZA, LTD.
By:, its general partner
By: __________________________
Its:___________________________
ASSIGNEE:
PRICE/BAYBROOK, LTD.
By:PRICE/TEXAS, INC., its general partner
By:______________________________
Its:______________________________
EXHIBIT "A" TO ASSIGNMENT AND ASSUMPTION OF LEASES
AND RENTS
LEGAL DESCRIPTION OF PROPERTY
EXHIBIT "B" TO ASSIGNMENT AND ASSUMPTION OF LEASES
AND RENTS
ASSUMED LEASES
SCHEDULE D
BILL OF SALE
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, VISTA RIDGE PLAZA, LTD., a Texas limited partnership ("Seller"),
hereby transfers, conveys and assigns to PRICE/BAYBROOK, LTD., a Texas limited
partnership ("Buyer"), and its successors and assigns without recourse forever,
any and all tangible personal property owned by Seller and located on or about
and used in connection with the real property more particularly described on
Exhibit A attached hereto and made a part hereof (the "Property") or any
improvements thereon, including but not limited to fixtures, furnishings,
furniture, tools machinery and/or equipment, operational instructions and/or
specifications, surveys, drawings, business records owned by Seller and the
personal property listed on any schedule attached hereto.
If any litigation between Seller and Buyer arises out of the obligations of
the parties under this Bill of Sale or concerning the meaning or interpretation
of any provision contained herein, the losing party shall pay the prevailing
party's costs and expenses of such litigation including, without limitation,
reasonable attorneys, fees. Any such attorneys' fees and other expenses
incurred by either party in enforcing a judgment in its favor under this Bill of
Sale shall be recoverable separately from and in addition to any other amount
included in such judgment, and such attorneys' fees obligation is intended to be
severable from the other provisions of this Bill of Sale and to survive and not
be merged into any such judgment.
IN WITNESS WHEREOF, Seller has caused this instrument to be executed and
delivered as of this ______ day of __________, 1997.
VISTA RIDGE PLAZA, LTD.
By: __________________, its general partner
By: ______________________________
Its:_______________________________
EXHIBIT "A" TO BILL OF SALE
DESCRIPTION OF PROPERTY
SCHEDULE E
ASSIGNMENT OF CONTRACTS, INTANGIBLE PROPERTY,
WARRANTIES AND GUARANTEES
THIS ASSIGNMENT OF CONTRACTS, INTANGIBLE PROPERTY, WARRANTIES AND
GUARANTIES (this "Assignment") is made as of the ___ day of ____________, 1997,
by VISTA RIDGE PLAZA, LTD., LIMITED PARTNERSHIP, a Texas limited partnership
("Assignor"), in favor of PRICE/BAYBROOK, LTD., a Texas limited partnership
("Assignee").
RECITALS:
Pursuant to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of December ____, 1997 by and between Assignor, Assignee
and ____________________ Title Insurance Company (the "Agreement"), Assignee has
this day acquired from Assignor certain interests in land, buildings and
improvements more particularly described on Exhibit A attached hereto and made a
part hereof (the "Property"). Capitalized terms not otherwise defined herein
shall have the meanings given them in the Agreement.
In consideration of the acquisition of the Property by Assignee and other
good and valuable consideration, the mutual receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Assignor hereby assigns, transfers and delegates to Assignee all of
Assignor's right, title and interest in and to the following (collectively, the
"Assigned Property"): (i) any intangible personal property which relates to and
is reasonably required for the operation and functioning of the Land,
Improvements or Personal Property, including without limitation all transferable
licenses and governmental approvals and permits of any nature relating to the
Property or the Improvements or any repairs or renovations to such Improvements,
and (ii) any and all transferable warranties, guaranties, contracts and other
rights owned by Assignor relating to the ownership, operation or functioning of
all or any part of the Property (including without limitation all third party
guarantees and warranties, express or implied, in connection with the
construction of the Improvements and any deposits given by Assignor in
connection with the installation or provision of utility services, to the extent
such deposits have not been returned to Assignor as of the date hereof).
If any litigation between Assignor and Assignee arises out of the
obligations of the parties under this Assignment or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including, without
limitation, reasonable attorneys, fees. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor under
this Assignment shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Assignment and to
survive and not be merged into any such judgment.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
effective as of the date set forth below.
Executed as of the date first above written.
ASSIGNOR:
VISTA RIDGE PLAZA, LTD.
By: ______________, its general partner
By:_______________________________
Its:_______________________________
EXHIBIT "A" TO ASSIGNMENT OF CONTRACTS, INTANGIBLE PROPERTY, WARRANTIES AND
GUARANTEES
LEGAL DESCRIPTION OF PROPERTY
SCHEDULE F
CERTIFICATION OF NON-FOREIGN STATUS
(Foreign Investment in Real Property Tax Act)
Internal Revenue Code Section 1445 provides that a transferee of a United
States real property interest must withhold tax if the transferor is a foreign
person. To inform PRICE/BAYBROOK, LTD., a Texas limited partnership
("Transferee") that withholding of tax is not required upon the disposition of a
United States real property interest by the undersigned ("Transferor"),
Transferor hereby certifies and declares as follows:
1.Transferor's U.S. tax identification/social security number is:
_________________;
2.Transferor's principal office address is c/o Dal Mac Investments, 111 W.
Spring Valley Road, Richardson, Texas, 75083; and
3.Transferor is not a foreign person (foreign corporation, foreign
partnership, foreign trust, foreign estate or non-resident alien), as defined in
the Internal Revenue Code and Income Tax Regulations.
Transferor acknowledges that this certification may be disclosed by
Transferee to the Internal Revenue Service and that any false statement
contained in this certification may be punished by fine or imprisonment or both.
Transferor understands that Transferee is relying on this certification to
determine whether withholding is required by Transferee pursuant to Internal
Revenue Code Section 1445.
Under penalties of perjury, the undersigned signatory declares that: I
have examined this certification, to the best of my knowledge and belief it is
true and complete, and I am duly authorized to execute this certification on
behalf of Transferor.
Dated: _______________, 1997
VISTA RIDGE PLAZA, LTD.
By:_________________., its general partner
By: ________________________
Its:_________________________
SCHEDULE G
TENANT ESTOPPEL CERTIFICATE
THIS TENANT ESTOPPEL CERTIFICATE ("Certificate"), dated as of
_____________, 1997, is executed by ________________________ ("Tenant") in favor
of PRICE/BAYBROOK, LTD., a Texas limited partnership ("Buyer").
R E C I T A L S
A.Buyer and VISTA RIDGE PLAZA, LTD. ("Landlord"), have entered into that
certain Purchase and Sale Agreement and Escrow Instructions, dated as of
December ___, 1997 (the "Purchase Agreement"), whereby Buyer has agreed to
purchase, among other things, the improved real property located in the City of
Lewisville, County of Denton, State of Texas, more particularly described on
Schedule "A-1" attached to the Purchase Agreement (the "Property").
B.Tenant and Landlord have entered into that certain Lease Agreement, dated
as of _________________________________________________ (together with all
amendments, modifications, supplements, guarantees and restatements thereof, the
"Lease"), for a portion of the Property.
C.Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.
D.In connection with the Purchase Agreement, Landlord has requested that
Tenant execute this Certificate.
NOW, THEREFORE, Tenant certifies, warrants, and represents to Buyer as
follows:
AGREEMENT
Section 1.Lease.
Attached hereto as Exhibit "A" is a true, correct, and complete copy of the
Lease, including the following amendments, modifications, supplements,
guarantees and restatements thereof, which together represent all of the
amendments, modifications, supplements. guarantees and restatements thereof:
(If none, please state "None.")
Section 2.Leased Premises.
Pursuant to the Lease, Tenant leases those certain Premises (the "Leased
Premises") consisting of approximately ______________________ (______________)
rentable square feet within the Property, as more particularly described in the
Lease. In addition, pursuant to the terms of the Lease, Tenant has the
[non-exclusive] right to use [___________ parking spaces/the parking area]
located on the Property during the term of the Lease. [Cross-out the preceding
sentence or portions thereof if inapplicable.]
Section 3.Full Force of Lease.
The Lease is in full force and effect, has not been terminated, and is
enforceable in accordance with its terms.
Section 4.Complete Agreement
The Lease constitutes the complete agreement between Landlord and Tenant
for the Leased Premises and the Property.
Section 5.Acceptance of Leased Premises.
Tenant has accepted and is currently occupying the Leased Premises.
Section 6.Lease Term.
The term of the Lease commenced on _____________________ and ends on
_______________________, subject to the following options to extend:
(If none, please state "None.")
Section 7.Purchase Rights.
Tenant has no option, right of first refusal, right of first offer, or other
right to purchase all or any portion of the Leased Premises or all or any
portion of the Property.
Section 8.Rights of Tenant.
Except as expressly stated in this Certificate, Tenant:
(a)has no right to renew or extend the term of the Lease;
(b)has no option or other right to purchase all or any part of the Leased
Premises or all or any part of the Property;
(c)has no right, title, or interest in the Leased Premises, other than as
Tenant under the Lease.
Section 9.Rent.
(a)The rent under the Lease is current, and Tenant is not in default in the
performance of any of its obligations under the Lease.
(b)Tenant is currently paying base rent under the Lease in the amount of
___________________________________________ Dollars ($_____________________) per
month. Tenant has not received and is not, presently, entitled to any
abatement, refunds, rebates, concessions or forgiveness of rent or other
charges, free rent, partial rent, or credits, offsets or reductions in rent,
except as follows:
(If none, please state "None.")
(c)Tenant's estimated share of operating expenses, common area charges,
insurance, real estate taxes and administrative and over-head expenses is
_______________ percent (___%) and is currently being paid at the rate of
_______________________________________ Dollars ($_______________) per month,
payable to _________________________________________.
(d)There are no existing defenses or offsets against rent due or to become
due under the terms of the Lease, and there presently is no default or other
wrongful act or omission by Landlord under the Lease or otherwise in connection
with Tenant's occupancy of the Leased Premises, except as
follows:______________________________________________________
(If none, please state "None.")
Section 10.Security Deposit.
The amount of Tenant's security deposit held by Landlord under the Lease is
_________________________________ Dollars ($_____________).
Section 11.Prepaid Rent.
The amount of prepaid rent, separate from the security deposit, is
__________________________________ Dollars ($_____________), covering the period
from ________ to ________.
Section 12.Insurance.
All insurance, if any, required to be maintained by Tenant under the Lease
is presently in effect.
Section 13.Pending Actions.
There are no actions, whether voluntary or otherwise, to declare the Tenant
(or any guarantor of the Tenant's obligations under the Lease) bankrupt or
insolvent pursuant to the bankruptcy or insolvency laws of the United States or
any state thereof.
Section 14.Landlord's Obligations
As of the date of this Certificate, Landlord has performed all obligations
required of Landlord pursuant to the Lease and no offsets. counterclaims, or
defenses of Tenant under the Lease exist against Landlord. As of the date of
this Certificate, no events have occurred that, with the passage of time or the
giving of notice, would constitute a basis for offsets, counterclaims, or
defenses against the Landlord, except as follows:
(If none, please state "None.")
(If none, please state "None.")
Section 15.Assignments by Landlord.
Tenant has received no notice of any assignment, hypothecation or pledge of
the Lease or rentals under the Lease by Landlord.
Section 16.Assignments by Tenant.
Tenant has not sublet or assigned the Leased Premises or the Lease or any
portion thereof to any sublessee or assignee. No one except Tenant and its
employees will occupy the Leased Premises except as permitted under the Lease.
The address for notices to be sent to Tenant is as set forth in the Lease.
Section 17.Environmental Matters.
The operation and use of the Leased Premises does not involve the
generation, treatment, storage, disposal or release into the environment of any
hazardous materials, regulated materials and/or solid waste, except those used
in the ordinary course of operating a retail store or restaurant (if so
permitted by the Lease) or otherwise used in accordance with all applicable
laws.
Section 18.Notification by Tenant.
From the date of this Certificate and continuing the earlier to occur of
(i) _______________________, 1997 and (ii) Buyer's acquisition of title to the
Property, Tenant agrees to immediately notify Buyer, in writing, at the
following address, on the occurrence of any event or the discovery of any fact
that would make any representation contained in this Certificate inaccurate:
The PRICE REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, CA 90036
Attn.: Joseph Kornwasser
Fax No.: (213) 937-8175
Tenant makes this Certificate with the knowledge that it will be relied
upon by Buyer in agreeing to purchase the Property. In the event that Buyer
acquires the Property, nothing in this Section 18 shall limit Tenant's
obligations under the Lease. Without in any way limiting the effect of the
foregoing sentence, Buyer acknowledges that by accepting this Estoppel
Certificate Buyer agrees that Tenant has no liability for incidental,
consequential or punitive damages as a result of the recipient's reliance
hereon.
Tenant his executed this Certificate as of the date first written above by
the person named below, who is duly authorized to do so.
TENANT
____________________________________
By:_________________________________
Name:
Its:
SCHEDULE H-1
RENT ROLL
(Vista I)SCHEDULE H-2
RENT ROLL
(Vista II)SCHEDULE H-3
RENT ROLL
(Vista Shops)SCHEDULE I
NON-CREDIT TENANTS
SCHEDULE J
ANCHOR LESSEES
SCHEDULE K
For purposes of determining the price to be paid to Seller, upon the acquisition
of the Property by Price/Baybrook, Ltd., the following formula shall be used for
illustrative purposes only and does not necessarily reflect the actual numbers
associated with this particular transaction.
Gross Income (1): $02,500,000
Management Fee (2): $0 0,75,000
Structural Reserve (3): $00,013,800
Vacancy Factor (4): $00,020,000
Vacancy CAM Charges (5): $00,004,000
Net Operating Income: $02,387,200
Capitalization rate: 10.5%
PURCHASE PRICE $22,735,238
(1).Assumes 100% occupancy of the Shopping Center upon the Closing Date.
(2).The parties hereto agree that Price/Baybrook, Ltd. ("Buyer") shall be
entitled to deduct a Three Percent (3%) Management Fee based upon the Gross
Income (projected Gross Income if the Shopping Center is not 100% leased as
of the Closing Date).
(3).The parties hereto agree that Buyer shall be entitled to deduct Ten Cents
(.10) per square foot of Gross Leasable Area of the Shopping Center as a
Structural Reserve.
(4).The Vacancy Factor shall be determined by taking the aggregate Minimum Basic
Rent payable per annum (commencing on the first month following the Closing
Date) of all those tenants deemed to be "Non-Credit Tenants" (as listed in
Exhibit "I") as of the Closing Date and multiplying that number by Five
Percent (5%).
(5).The Vacancy CAM Charges shall be determined by taking the aggregate square
feet of all premises leased to "Non-Credit Tenants" (as listed in
Exhibit "I"), multiplying that number by Five Percent (5%) and then
multiplying that number by Four Dollars ($4.00).
SCHEDULE L
LEASING GUIDELINES
===============================================================================
EXHIBIT 12.1 - STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES
Year ended December 31,
1997 1996 1995 1994 1993
----------------------------------------------------
Net Income $26,254 $16,919 $16,386 $16,904 $ 9,128
Interest 16,667 11,826 7,070 4,319 4,287
Less interest capitalized
during the period (1,637) (469) (415) (234) (30)
Amortization of deferred
loan fees and discount 637 714 284 152 99
----------------------------------------------------
Earnings $41,921 $28,990 $23,325 $21,141 $13,484
====================================================
Interest $16,667 $11,826 $ 7,070 $ 4,319 $ 4,287
Amortization of deferred
loan fees and discount 637 714 284 152 99
----------------------------------------------------
Fixed Charges $17,304 $12,540 $ 7,354 $ 4,471 $ 4,386
====================================================
Ratio of Earnings to
Fixed Charges 2.42 2.31 3.17 4.73 3.07
====================================================
===============================================================================
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-3 No. 33-75547; Form S-8 No. 33-87812; Form S-3 No. 333-35185 and
related Prospectus) of The Price REIT, Inc. for the registration of 500,000
shares of its common stock; 600,000 shares of its common stock; and an aggregate
maximum total of $400,000,000 of debt securities, preferred stock, common stock,
and warrants for the purchase of its preferred stock or common stock,
respectively, of our report dated January 16, 1998 (except Note 11, as to which
the date is March 5,1998), which repsect to the consolidated financial
statements and schedule of The Price REIT, Inc. included in this Annual Report
(Form 10-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
San Diego, Californi
March 26, 1998
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,474
<SECURITIES> 0
<RECEIVABLES> 5,521
<ALLOWANCES> 636
<INVENTORY> 0
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<PP&E> 642,033
<DEPRECIATION> 54,372
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<BONDS> 299,628
0
0
<COMMON> 117
<OTHER-SE> 326,129
<TOTAL-LIABILITY-AND-EQUITY> 637,503
<SALES> 0
<TOTAL-REVENUES> 75,425
<CGS> 0
<TOTAL-COSTS> 49,171
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<LOSS-PROVISION> 230
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