<PAGE>
As filed with the Securities and Exchange Commission on April 29, 1999
Registration No. 333-77383
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
KIMCO REALTY CORPORATION
(Exact name of registrant as specified in its charter)
------------------------
Maryland 13-2744380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
(516) 869-9000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
BRUCE KAUDERER, ESQ.
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
(516) 869-9000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
RAYMOND Y. LIN, ESQ.
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
(212) 906-1200
------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Amount to be aggregate price per aggregate offering Amount of
Title of shares to be registered registered share(1) price(2) registration fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock, par value $0.01 per
share and related rights............
===================================================================================================================
</TABLE>
(1) Based upon the average of the high and low prices of the shares of common
stock reported on the New York Stock Exchange on April 27, 1999, pursuant
to Rule 457(c) of the Securities Act of 1933.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933.
------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. KIMCO
REALTY CORPORATION MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 29, 1999
PROSPECTUS
Kimco Realty Corporation
170,000 Shares
Common Stock
-----------
This prospectus relates to our potential issuance of up to 170,000 shares of our
common stock from time to time to the entities identified in this prospectus.
We will not receive any proceeds from the issuance of the shares of our common
stock but we will acquire limited partnership units related to a Florida limited
partnership that owns a shopping center in Bradenton, Florida tendered in
exchange for shares of our common stock.
Our shares of common stock are traded on the New York Stock Exchange under the
symbol "KIM."
-----------
You should consider the risks discussed in "Risk Factors" beginning on page 3 of
this prospectus before you invest in our common stock.
-----------
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. It is illegal to tell you otherwise.
-----------
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
Page
RISK FACTORS...................................................................3
WHERE YOU CAN FIND MORE INFORMATION............................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................4
FORWARD-LOOKING STATEMENTS.....................................................5
THE COMPANY....................................................................5
RECENT DEVELOPMENTS............................................................6
THE OFFERING...................................................................6
USE OF PROCEEDS................................................................6
DESCRIPTION OF CAPITAL STOCK...................................................6
EXCHANGE OF LIMITED PARTNERSHIP UNITS.........................................10
COMPARISON OF BAY-GARD AND OUR COMPANY........................................13
FEDERAL INCOME TAX CONSIDERATIONS.............................................18
SELLING HOLDERS...............................................................32
PLAN OF DISTRIBUTION..........................................................33
LEGAL MATTERS.................................................................34
EXPERTS.......................................................................34
2
<PAGE>
Unless otherwise indicated or unless the context otherwise requires, all
references in this prospectus to "we," "us," "our" or "Kimco" means Kimco Realty
Corporation and its subsidiaries.
RISK FACTORS
An investment in the common stock of Kimco involves risk, and you may lose
money. Kimco's financial success depends upon many factors including:
o general economic and local real estate conditions could change (for
example, our tenants' businesses may change if the economy changes, which
might affect the amount of rent they pay us or their ability to pay rent to
us);
o changes in the retail industry, such as a move to internet shopping, could
increase the costs of or otherwise affect the operations of Kimco's
tenants, which might affect the amount of rent our tenants pay us or their
ability to pay rent to us;
o the laws and regulations that apply to us could change (for example, a
change in the tax laws that apply to real estate investment trusts could
result in unfavorable tax treatment for us);
o capital availability could change (for example, financing opportunities may
not be available to us, or may not be available to us on favorable terms,
which could slow our growth);
o suitable acquisition opportunities may not be available to us or may not be
available to us on favorable terms, which could slow our growth;
o our operating costs may increase because of inflation or other reasons that
we might not be able to fully pass on to our tenants, which could reduce
our profitability;
o the general uncertainty inherent with the issue of whether computers
properly process dates in the Year 2000 could adversely affect us and
could result in Kimco being unable to timely and cost-effectively avert
or resolve problems associated with the Year 2000 issue. Such problems
could include Kimco being unable to process tenant payments efficiently,
and tenants payments being delayed. In addition, our tenants' and
vendors' businesses may be damaged by problems associated with the Year
2000 issue, which might affect their ability to pay us rent or deliver
needed products and services to us.
You should read this prospectus and the documents referenced in this prospectus
carefully before investing.
WHERE YOU CAN FIND MORE INFORMATION
Kimco Realty Corporation files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
material that Kimco has filed with the SEC at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Kimco files information electronically with the SEC. The SEC maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. The address
of the SEC's Internet site is http://www.sec.gov. You also may inspect copies of
these materials and other information about us at The New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
3
<PAGE>
This prospectus is part of a registration statement Kimco filed with the SEC.
The prospectus does not contain all of the information included in the
registration statement. Kimco has omitted parts of the registration statement as
permitted under the rules and regulations of the SEC. For further information,
Kimco refers you to the registration statement, including its exhibits and
schedules. Statements contained in this prospectus about the provisions or
contents of any contract, agreement or any other document referred to are not
necessarily complete. For each of these contracts, agreements or documents filed
as an exhibit to the registration statement, Kimco refers you to the actual
exhibit for a more complete description of the matters involved. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of those documents.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allow us to "incorporate by reference" the information Kimco files with
them, which means that Kimco can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that Kimco files later
with the SEC will automatically update and supersede this information. Kimco
incorporates by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), before the termination of
the offering of the shares made under this prospectus:
1. Annual Report on Form 10-K for the fiscal year ending December 31, 1998
(File No. 1-10899);
2. Proxy statement dated April 12, 1999 (File No. 1-10899);
3. Current Report on Form 8-K dated January 29, 1999 (File No. 1-10899);
4. The description of the capital stock contained in our registration
statements on Form S-3, dated August 31, 1998 (File No. 333-61303) and
our registration statement on Form S-4, dated May 14, 1998 (File No.
333-52667), including amendment dated May 15, 1998.
Upon request, we will provide to you without charge a copy of any of the
documents incorporated by reference in this prospectus, except the exhibits to
those documents (unless the exhibits are specifically incorporated by reference
in the documents). You may ask for these copies from:
Bruce Kauderer, Esq.
General Counsel
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
(516) 869-9000
4
<PAGE>
FORWARD-LOOKING STATEMENTS
Statements in this prospectus and the information incorporated by reference that
are not historical factual statements are "forward-looking statements" within
the meaning of section 27A of the Securities Act of 1933 (the "Securities Act")
and section 21E of the Exchange Act. Kimco intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and
is including this section for purposes of complying with these safe harbor
provisions.
Our forward-looking statements include, among other things, statements regarding
the intent, belief or expectations of Kimco and its officers and can be
identified by the use of terminology such as "may," "will," "expect," "believe,"
"intend," "plan," "estimate," "should" and other comparable terms or the
negative thereof. In addition, Kimco, through its senior management,
occasionally makes forward-looking oral and written public statements concerning
Kimco's expected future operations and other developments. Shareholders and
investors are cautioned that, although forward-looking statements reflect
Kimco's good faith beliefs and best judgment based upon current information,
they are not guarantees of future performance and are subject to known and
unknown risks and uncertainties. Actual results may differ materially from the
expectations contained in the forward-looking statements as a result of various
factors, including the factors previously discussed in this prospectus under the
heading "Risk Factors".
THE COMPANY
Kimco Realty Corporation is one of the nation's largest owners and operators of
neighborhood and community shopping centers. As of March 1, 1999, Kimco's
portfolio was comprised of 440 property interests including:
o 368 neighborhood and community shopping center properties;
o two regional malls;
o 60 retail store leases;
o three parcels of undeveloped land;
o one distribution center;
o one stand-alone retail warehouse; and
o five projects under development.
These properties comprise a total of approximately 57.2 million square feet of
leasable space located in 40 states. Kimco believes its portfolio of
neighborhood and community shopping center properties is the largest (measured
by gross leasable area) currently held by any publicly-traded real estate
investment trust ("REIT"). Kimco is a self-administered REIT and manages its
properties through its management, which has owned and operated neighborhood and
community shopping centers for more than 30 years. Kimco has not engaged, nor
does it expect to retain, any REIT advisors in connection with the operation of
its properties.
5
<PAGE>
Our executive offices are located at 3333 New Hyde Park Road, New Hyde Park, New
York 11042-0020 and our telephone number is (516) 869-9000.
RECENT DEVELOPMENTS
On April 27, 1999, the Comptroller of the State of New York, as trustee for the
Common Retirement Fund, entered into a subscription agreement to purchase up to
$117 million of limited partnership interests in Kimco Income Operating
Partnership. The Common Retirement Fund initially purchased approximately $70
million of limited partnership interests, with the remainder of its investment
to be made as Kimco Income Operating Partnership acquires additional properties.
Kimco Income Operating Partnership currently owes 23 shopping centers, with a
gross asset value of approximately $430 million encumbered by approximately $250
million of mortgage debt. The partnership expects to incur approximately $50
million of additional indebtedness on its properties. As a result of the
investment by the New York Common Retirement Fund and related transactions, we
no longer have a controlling interest in these properties.
THE OFFERING
This prospectus relates to Kimco's potential issuance of up to 170,000 shares of
our common stock from time to time to holders of limited partnership interests
limited in Bay-Gard Ltd., a Florida limited partnership to the extent the
limited partners tender their limited partnership units in the Bay-Gard
partnership and receive shares of our common stock in exchange. This prospectus
also relates to the possible offer and sale of those shares from time to time by
those limited partners that exchange their units for our common stock. This
registration does not necessarily mean that Kimco will issue any shares of our
common stock or that the limited partners that exchange their limited
partnership units for our common stock subsequently will offer or sell any of
the shares of our common stock.
The limited partnership units were issued to the limited partners in connection
with the formation of the Bay-Gard partnership. Pursuant to the Bay-Gard
partnership agreement, beginning on May 15, 1999, the limited partners have the
right to exchange their units held for, at Kimco's option, our common stock or
cash.
The number of shares of Kimco common stock or cash a limited partner will be
entitled to receive upon tendering units will depend upon the market price of
Kimco stock in the weeks before the exchange as well as the amount of preferred
return on the units that is accrued and unpaid at the time of the exchange.
Instead of issuing common stock upon the exchange of limited partnership units,
we may, at our option, deliver cash in an amount equal to the value of the
number of shares of our common stock the tendering limited partner would have
otherwise received. Kimco anticipates, however, that it will elect to issue
common stock rather than pay cash in exchange for any and all limited
partnership units tendered for exchange.
The terms and conditions associated with the exchange of units are more fully
described later in this prospectus under the heading "Exchange of Limited
Partnership Units."
USE OF PROCEEDS
Kimco will not receive any proceeds from the issuance of the shares of our
common stock to limited partners that tender their units or from any subsequent
sales of the shares of our common stock by tendering limited partners of the
Bay-Gard partnership. Kimco, however, has agreed to pay the registration
expenses of the limited partners that tender their units, but it will not pay
their brokerage and sales commissions nor the cost of their counsel. Kimco will
acquire limited partnership units in exchange for any shares of common stock
that Kimco may issue to the limited partners pursuant to this prospectus.
DESCRIPTION OF CAPITAL STOCK
General
The following description is a summary of the material provisions of Kimco's:
o Articles of Amendment and Restatement and Articles Supplementary (our
"charter"), copies of which were filed as exhibits to our Annual Reports
on Form 10-K for the fiscal years ended December 31, 1994, December 31,
1995, December 31, 1996, and December 31, 1997.
6
<PAGE>
o Amended and restated by laws (our "bylaws"), a copy of which was filed as
an exhibit to our Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
This description does not restate these agreements in their entirety. We urge
you to read these agreements because they, and not this description, define your
rights as holders of our securities. We have filed copies of these agreements as
exhibits to or incorporated them by reference into the registration statement
that includes this prospectus.
Our charter currently authorizes the issuance of up to 158,070,000 shares,
including 100,000,000 shares of our common stock.
As more fully described in the Proxy Statement and registration statements on
Form S-3 incorporated by reference into this prospectus, Kimco also has
authorized preferred stock and excess stock. As of April 6, 1999, the
outstanding shares of stock of Kimco were as follows:
o 60,181,610 shares of Common Stock;
o no shares of Excess Stock;
o no shares of Preferred Stock;
o 300,000 shares of Class A Preferred Stock; no shares of Class A Excess
Preferred Stock;
o 200,000 shares of Class B Preferred Stock; no shares of Class B Excess
Preferred Stock;
o 400,000 shares of Class C Preferred Stock; no shares of Class C Excess
Preferred Stock;
o 429,159 shares of Class D Preferred Stock; no shares of Class D Excess
Preferred Stock;
o no shares of Class E Preferred Stock; and no shares of Class E Excess
Preferred Stock.
In addition, as of that date, approximately 2,297,485 shares of our common stock
have been reserved for issuance under Kimco's Equity Participation Plan.
The authorized shares of our common stock and preferred stock in excess of those
presently outstanding are available for issuance at such times and for such
purposes as our board of directors may deem advisable without further action by
our stockholders, except as may be required by applicable laws or regulations,
including stock exchange rules. These purposes may include stock dividends,
stock splits, retirement of indebtedness, employee benefit programs, corporate
business combinations, acquisitions of property or other corporate purposes. The
authorized shares of our excess stock are available for issuance pursuant to our
charter and as may be necessary to preserve Kimco's qualification as a REIT
under applicable tax laws. Our board of directors does not intend to issue any
stock except for reasons and on terms that they deem to be in Kimco's best
interests. Because the holders of our common stock do not have preemptive
rights, the issuance of common stock, other than on a pro rata basis to all
current stockholders, would reduce the current stockholders' proportionate
interests. In any such event, however, stockholders wishing to maintain their
interests may be able to do so through normal market purchases. Any future
issuance of Kimco common stock will be subject to the rights of holders of
outstanding shares of the existing Class A Preferred Stock, Class B Preferred
Stock, Class C Preferred Stock and Class D Preferred Stock and of any shares of
preferred stock we may issue in the future.
7
<PAGE>
Common Stock
As of April 6, 1999, there were 60,181,610 shares of Kimco's common stock
outstanding. All shares of common stock have equal right to dividends payable to
common stockholders as declared by our board of directors and in net assets
available for distribution to common stockholders on liquidation, dissolution,
or winding up of Kimco. Each outstanding share of common stock entitles the
holder to one vote on all matters submitted to a vote of the stockholders.
Holders of common stock do not have cumulative voting rights in the election of
directors. All issued and outstanding shares of common stock are, and the common
stock offered under this prospectus will be upon issuance, validly issued, fully
paid and nonassessable. As a holder of the common stock you do not have
preference, conversion, exchange or preemptive rights. The common stock is
listed on the New York Stock Exchange under the ticker symbol "KIM."
Under Maryland law a distribution to our common stockholders, whether by
dividend, redemption or other acquisition of shares, may be made only if, after
giving effect to the distribution, Kimco's total assets are greater than its
total liabilities plus the amount necessary to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights on dissolution are
superior to common stockholders. Kimco has complied with this requirement in all
of its prior distributions to holders of common stock.
For a description of the capital structure of Kimco, including the preferred
stock, depositary shares, debt securities and warrants, see our registration
statements on Form S-3, dated August 31, 1998, October 6, 1997 and May 30, 1996,
as each may be amended and may be amended further, and the Proxy Statement, each
of which is incorporated by reference into this prospectus.
Transfer Agent
The transfer agent and registrar for our common stock is Bank Boston, N.A. c/o
Boston EquiServe, L.P.
8
<PAGE>
Transfer Restrictions, Restrictions on Ownership
Because Kimco's board of directors believes it is essential for Kimco to
continue to qualify as a REIT, our charter and bylaws contain restrictions on
the ownership and transfer of our capital stock, which are intended to assist
Kimco in complying with these requirements.
For Kimco to qualify as a REIT under the Internal Revenue Code of 1986, as
amended (the "Code"), not more than 50% in value of its outstanding stock may be
owned, actually or constructively, by five or fewer individuals (as defined in
the Code to include certain entities) during the last half of a taxable year,
and its stock must be beneficially owned by 100 or more persons during at least
335 days of a taxable year of 12 months or during a proportionate part of a
shorter taxable year. In addition, rent from Related Party Tenants (as defined
below) is not qualifying income for purposes of the income tests under the Code.
Subject to certain exceptions specified in the our charter, no holder may own,
or be deemed to own by virtue of the constructive ownership provisions of the
Code, more than 2% (the "Ownership Limit") in value of the outstanding shares of
Kimco's common stock. The constructive ownership rules are complex and may cause
common stock owned actually or constructively by a group of related individuals
and/or entities to be deemed constructively owned by one individual or entity.
As a result, the acquisition of less than 2% in value of the common stock (or
the acquisition of an interest in an entity which owns common stock) by an
individual or entity could cause that individual or entity (or another
individual or entity) to own constructively in excess of 2% in value of the
common stock, and thus subject such common stock to the Ownership Limit.
Existing stockholders who exceeded the Ownership Limit immediately after the
completion of Kimco's initial public offering of its common stock (the "IPO") in
November 1991, may continue to do so and may acquire additional shares through
the stock option plan, or from other existing stockholders who exceed the
Ownership Limit, but may not acquire additional shares from such sources such
that the five largest beneficial owners of common stock could own, actually or
constructively, more than 49.6% of the outstanding common stock, and in any
event may not acquire additional shares from any other sources. In addition,
because rent from Related Party Tenants (generally, a tenant owned, actually or
constructively, 10% or more by a REIT, or a 10% owner of a REIT) is not
qualifying rent for purposes of the gross income tests under the Code, our
charter provides that no individual or entity may own, or be deemed to own by
virtue of the attribution provisions of the Code (which differ from the
attribution provisions applied to the Ownership Limit), in excess of 9.8% in
value of the outstanding common stock (the "Related Party Limit"). The board of
directors may waive the Ownership Limit and the Related Party Limit with respect
to a particular stockholder (such Related Party Limit has been waived with
respect to the existing stockholders who exceeded the Related Party Limit
immediately after the IPO) if evidence satisfactory to the board of directors
and Kimco's tax counsel is presented that such ownership will not then or in the
future jeopardize our status as a REIT. As a condition of such waiver, the board
of directors may require opinions of counsel satisfactory to it and/or an
undertaking from the applicant with respect to preserving the REIT status of
Kimco. The foregoing restrictions on transferability and ownership will not
apply if the board of directors determines that it is no longer in Kimco's best
interests to attempt to qualify, or to continue to qualify, as a REIT. If shares
of common stock in excess of the Ownership Limit or the Related Party Limit, or
shares which would cause the REIT to be beneficially owned by less than 100
persons or which would cause Kimco to be "closely held" within the
9
<PAGE>
meaning of the Code or would otherwise result in failure to qualify as a REIT,
are issued or transferred to any person, such issuance or transfer shall be null
and void to the intended transferee, and the intended transferee would acquire
no rights to the stock. Shares transferred in excess of the Ownership Limit or
the Related Party Limit, or shares which would otherwise cause Kimco to be
"closely held" within the meaning of the Code or would otherwise result in
failure to qualify as a REIT, will automatically be exchanged for shares of a
separate class of stock ("Excess Stock") that will be transferred by operation
of law to Kimco as trustee for the exclusive benefit of the person or persons to
whom the shares are ultimately transferred, until such time as the intended
transferee retransfers the shares. While these shares are held in trust, they
will not be entitled to vote or to share in any dividends or other
distributions, except upon liquidation. The shares may be retransferred by the
intended transferee to any person who may hold such shares at a price not to
exceed (1) the price paid by the intended transferee, or (2) if the intended
transferee did not give value for such shares, a price per share equal to the
market value of the shares on the date of the purported transfer to the intended
transferee, at which point the shares will automatically be exchanged for
ordinary common stock. In addition, such shares of Excess Stock held in trust
are purchasable by Kimco for a 90-day period at a price equal to the lesser of
the price paid for the stock by the intended transferee and the market price for
the stock on the date Kimco determines to purchase the stock. This period
commences on the date of the violative transfer if the intended transferee gives
notice to Kimco of the transfer, or the date the board of directors determines
that a violative transfer has occurred if no notice is provided.
All certificates representing shares of common stock will bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of the
Code, more than a specified percentage of the outstanding shares of common stock
must file an affidavit with Kimco containing the information specified in our
charter within 30 days after January 1 of each year. In addition, each common
stockholder shall upon demand be required to disclose to Kimco in writing such
information with respect to the actual and constructive ownership of shares as
the board of directors deems necessary to comply with the provisions of the Code
applicable to a REIT or to comply with the requirements of any taxing authority
or governmental agency.
Qualification as a REIT. Kimco has elected, commencing with its taxable year
which began January 1, 1992, to qualify as a REIT under Sections 856 through 860
of the Code. If, as Kimco believes, it is organized and operates in such a
manner so as to qualify and remain qualified as a REIT under the Code, Kimco
generally will not be subject to Federal income tax, provided that distributions
to its stockholders equal at least the amount of its REIT taxable income as
defined under the Code.
EXCHANGE OF LIMITED PARTNERSHIP UNITS
The following description of the exchange rights of limited partners is a
summary of the material provisions of the Amended and Restated Partnership
Agreement of Bay-Gard dated May 15, 1998. This description does not restate the
Bay-Gard partnership agreement in its entirety. We urge you to read the Bay-Gard
partnership agreement because it, and not this description, defines the rights
of Bay-Gard's limited partners. We have filed a copy of Bay-Gard's partnership
agreement as an exhibit to the registration statement that includes this
prospectus.
Terms of Exchange
Exchange Rights. Beginning on May 15, 1999, each limited partner has the right,
upon providing a notice of exchange, to require Kimco to acquire all or a
portion of the Bay-Gard limited partnership units it holds in exchange for, at
our election, cash or shares of our common stock. A limited partner that
exchanges limited partnership units is not entitled to tender less than
1,000,000 units for exchange at any one time unless such lesser amount is all of
the limited units the limited partner owns. As of , 1999, the date of
10
<PAGE>
this prospectus, the limited partners own an aggregate of 4,973,196 limited
partnership units. Upon exchange, a tendering limited partner will receive
at Kimco's election, either (1) that number of shares of our common stock
determined by multiplying the number of limited partnership units tendered by an
exchange factor or (2) an amount of cash equal to the value of such shares of
our common stock, such value to be determined as provided in the Bay-Gard
partnership agreement. The calculation of the exchange factor is complex and
is governed by the Bay-Gard partnership agreement and the Contribution Agreement
dated April 6, 1998, as amended. In general, the exchange factor is equal to the
sum of (1) $1 plus (2) any preferred returns accrued on limited partner units,
but not yet paid, such sum divided by the averaged trading price for shares of
Kimco common stock as calculated over the ten consecutive trading days
immediately prior to receipt of a notice requesting the exchange. Additional
factors may affect the exchange factor and we urge you to read the Bay-Gard
partnership agreement and contribution agreement because they, and not this
summary, define the limited partners' rights, and govern the terms of the
exchange. We have filed copies of these agreements as exhibits to our
registration statement that includes this prospectus. If Kimco elects to
deliver cash in lieu of all or any portion of our common stock, the market
value of those shares will be equal to the average of the closing trading price
of our common stock for the ten trading days ending on the trading day
immediately prior to the day on which the limited partner notifies us of an
intention to effect an exchange. Limited partnership units that are acquired by
Kimco in exchange for limited partnership units will be held by us with the same
rights and preferences of limited partnership units held by the other limited
partners of Bay-Gard with the exception that Kimco can not exchange such units
for Kimco common stock.
Our acquisition of the limited partnership units, whether they are acquired for
shares of common stock or cash, will be treated as a sale of the limited
partnership units to us for federal income tax purposes. See "Federal Income
Tax Considerations--Tax Consequences of Exchange of Units."
A limited partner effecting an exchange of all or a portion of their limited
partnership units must deliver to Kimco a "Notice of Exchange", substantially in
the form of Exhibit B to the Bay-Gard partnership agreement. A limited partner
shall have the right to receive the number of shares of our common stock or, at
our election, cash, each in an amount determined as described in the Bay-Gard
partnership agreement and as summarized above. Common stock received in an
exchange shall be delivered on the terms provided in the Bay-Gard partnership
agreement and as duly authorized, validly issued, fully paid and nonassessable
shares, free of any pledge, lien, encumbrance or restriction, other than those
provided in Kimco's charter and bylaws, the Securities Act, relevant state
securities or blue sky laws and any applicable registration rights agreement
with respect to such shares into which the limited partner has entered.
We will not be obligated to effect an exchange of tendered limited partnership
units if the issuance of our common stock to the tendering limited partner is
prohibited under the provisions of our charter and bylaws, particularly those
that are intended to protect our qualification as a REIT.
Comparison of Ownership of Limited Partnership Units and Common Stock
Generally, the nature of an investment in our common stock is similar in several
respects to an investment in limited partnership units. Nevertheless, there are
also differences between ownership of limited partnership units and ownership of
our common stock, some of which may be material to investors.
11
<PAGE>
The information below highlights a number of the significant differences between
Bay-Gard and Kimco, relating to, among other things, form of organization,
management control, voting rights, compensation and fees, investor rights,
liquidity and federal income tax considerations. These comparisons are intended
to assist Bay-Gard's limited partners in understanding how their investment will
be changed if they exchange their units and receive shares of our common stock.
This discussion is summary in nature and is not a complete discussion of these
matters. You should carefully review the balance of this prospectus and the
registration statement (of which this prospectus is a part) for additional
important information about us.
12
<PAGE>
COMPARISON OF BAY-GARD AND OUR COMPANY
<TABLE>
<CAPTION>
Form of Organization and Assets Form of Organization and Assets
Owned--Bay-Gard Owned--Kimco
<S> <C>
Bay-Gard is a Florida limited partnership. As of Kimco is a Maryland corporation. Kimco has elected to be
December 31, 1998, Bay-Gard owned a shopping center, taxed as a REIT under the Internal Revenue Code and we
commonly known as Bayshore Gardens Shopping Center, in intend to maintain our qualification as a REIT. As of
Bradenton, Florida. March 1, 1999, Kimco's portfolio of properties consisted
of:
o 368 neighborhood and community shopping center
properties;
o two regional malls;
o 60 retail store leases;
o three parcels of undeveloped land;
o one distribution center;
o one stand-alone retail warehouse; and
o five projects under development;
comprising a total of approximately 57.2 million square
feet of leasable space located in 40 states.
Purpose-- Bay-Gard Purpose-- Kimco
Bay-Gard's purpose is to conduct any business that may Under our charter and bylaws, Kimco may engage in any
lawfully be conducted by a limited partnership, provided lawful act or activity for which corporations may be
that Bay-Gard's business permits Kimco to be classified organized under the general laws of the State of Maryland.
as a REIT for federal income tax purposes.
Additional Equity-- Bay-Gard Additional Equity-- Kimco
Bay-Gard is authorized to issue limited partnership units Subject to applicable NYSE rules and regulations, our
in exchange for additional capital contributions, as board of directors may issue, in its discretion,
determined by its general partner. In exchange for such additional shares of capital stock; provided, that the
capital contributions, Bay-Gard may issue units to its total number of shares issued does not exceed the
general partner, to existing partners, and to third authorized number of shares of capital stock in our
parties. The consent of a majority in interest of the charter (currently, 158,070,000 shares, including
limited partners is required to admit additional limited 100,000,000 shares of common stock).
partners.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
See "Description of Capital Stock" and our Proxy Statement
that is incorporated by reference into this prospectus.
Management Control-- Bay-Gard Management Control-- Kimco
All management powers over the business and affairs of Kimco's board of directors has exclusive control over our
Bay-Gard is vested in its general partner. No limited business affairs subject only to the applicable
partner has any right to participate in or exercise provisions of Maryland law and Kimco's charter and bylaws.
control or management power over the business and affairs
of Bay-Gard, except for certain actions that require the
consent of the limited partners. Kimco Bradenton 698,
Inc. may not be removed as general partner, with or
without cause, except with Kimco Bradenton 698, Inc.'s
consent.
Fiduciary Duties-- Bay-Gard Fiduciary Duties-- Kimco
Under Florida law, the general partner is accountable to Under Maryland law, members of our board of directors
Bay-Gard as a fiduciary and, consequently is required to must perform their duties in good faith, in a manner that
exercise good faith and integrity in all of its dealings they reasonably believe to be in the best interests of
with respect to Bay-Gard's affairs. The Bay-Gard partnership Kimco and with the care of an ordinarily prudent person
agreement generally provides that neither the general in a like position. Directors of Kimco who act in such a
partner, nor any of its directors or officers will incur manner generally will not be liable to us for monetary
any liability to Bay-Gard or any limited partner for damages by reason of being a member of the board of
losses sustained, liabilities incurred, or benefits not directors.
obtained as a result of errors in judgment or for any act
or omission or any mistake of law or fact if the general
partner or such officer or director acted in good faith.
In addition, the general partner is not responsible for
any misconduct or negligence by the general partner's
employees or other agents, provided the general partner
appointed such agents in good faith. The general partner
may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other
consultants and advisors, and any action the general
partner takes or omits to take in reliance upon their
opinion, as to matters which the general partner
reasonably believes to be within their professional or
expert competence, shall be conclusively presumed to have
been done or omitted in good faith and in accordance with
their opinion.
Management Liability and Management Liability and
Indemnification-- Bay-Gard Indemnification-- Kimco
Bay-Gard has agreed to indemnify the general partner and Our charter and bylaws provide that the liability of our
any director or officer of the general partner from and directors and officers to us and our stockholders for
against all losses, claims, damages, liabilities, joint money damages is limited to the fullest extent permitted
or several, expenses (including legal under Maryland law. Maryland permits
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
fees and expenses), judgments, fines, settlements and other the liability of directors and officers to a corporation, or
amounts incurred in connection with any actions relating to to its shareholders, for money damages to be limited, except
the operations of Bay-Gard in which the general partner, or (1) to the extent that it is proved that the director or
the general partner's directors, officers or agents, are officer actually received an improper benefit or profit,
involved, unless (1) the act taken by the general partner, or or (2) if the judgment or other final adjudication is
such directors, officers or agents, was in bad faith or was entered in a proceeding based on a finding that the
the result of active and deliberate dishonesty and was director's or officer's action, or failure to act, was a
material to the action, (2) the general partner, or such result of active or deliberate dishonesty and was
directors, officers or agents, received an improper material to the cause of action adjudicated in the
personal benefit, or (3) in the case of any criminal proceeding.
proceeding, the general partner, or such directors,
officers or agents, had reasonable cause to believe the Section 14 of our bylaws provides that Kimco shall
act was unlawful. Bay-Gard may reimburse the reasonable indemnify and hold harmless, in the manner and to the
expenses incurred by the general partner, or such fullest extent permitted by Maryland law, without
directors, officers or agents, in advance of the final requiring a preliminary determination of the ultimate
disposition of the proceeding if either the general entitlement to indemnification, any person who (1) is or
partner, or the directors, officers or agents, provide was a director or officer of Kimco, or (2) as a director
Bay-Gard with an affirmation of our or their good faith or officer of Kimco, is or was serving at the request of
belief that the standard of conduct necessary for Kimco as a director, officer, trustee, partner, member,
indemnification has been met and an undertaking to repay agent or employee of another corporation, partnership,
the amount of the reimbursed expenses if it is determined limited liability company, association, joint venture,
that such standard was not met. No partner of Bay-Gard, trust, benefit plan or other enterprise and is made a
including the general partner, is obligated to make party to a proceeding by reason service in such capacity.
capital contributions to enable Bay-Gard to fund these
indemnification obligations. Kimco may, with approval of its board of directors,
provide such indemnification to a person who served a
predecessor of Kimco in such capacity described above and
to any employee or agent of Kimco or a predecessor of
Kimco.
Anti-takeover Provisions-- Bay-Gard Anti-takeover Provisions-- Kimco
Except in limited circumstances (See "--Voting Rights-- Our charter and bylaws contain provisions that may have
Bay-Gard" below), the general partner has exclusive the effect of delaying or discouraging a proposal for the
management power over the business and affairs of Bay-Gard. acquisition of Kimco or the removal of incumbent
Accordingly, the general partner may hinder the ability management. These provisions include, among others,
of Bay-Gard to engage in a merger transaction or other provisions designed to avoid concentration of share
business combination. The general partner may not be ownership in a manner that would jeopardize our status as
removed as general partner by the other partners, with or a REIT under the Code. See "Description of Capital
without cause, unless the general partner consents to Stock."
such removal. Under the Bay-Gard partnership agreement,
the general partner may generally enter into a merger, or
similar transaction without the consent of the limited
partners. Nonetheless, the consent of the limited
partners is required for certain sales of real property,
which may hinder the ability of Bay-Gard to enter into
business combinations. A limited partner may generally
transfer all or any portion of its partnership interest in
Bay-Gard only with the
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
consent of the general partner, such consent not to be
unreasonably withheld. Limited partners may transfer their
interest in Bay-Gard in limited circumstances, including
transfers to certain family members, as a gift, to other
limited partners and, if the limited partner is not a
natural person, to its stockholders, partners or owners.
The transfer restrictions of Bay-Gard limited partnership
interests are complex and the Bay-Gard partnership agreement
should be reviewed in its entirety by a qualified advisor
prior to the taking of an investment decision.
Voting Rights-- Bay-Gard Voting Rights-- Kimco
Under the Bay-Gard partnership agreement, limited Kimco's directors are elected at the annual meeting of
partners have voting rights only as to specified matters stockholders and serve one year terms with the exception
including, (1) amending the Bay-Gard partnership agreement, that vacancies on the board are filled by a majority vote
except in limited circumstances, (2) confessing a judgment of Kimco's directors, and directors so appointed serve
against Bay-Gard, (3) instituting proceedings in until the next annual meeting of stockholders.
bankruptcy on behalf of Bay-Gard, making an assignment
for the benefit of creditors, or appointing or Maryland law requires that certain major corporate
acquiescing to the appointment of any receiver, transactions, including most amendments to Kimco's
transferor, assignor, liquidation, or other similar charter, may not be consummated without the approval of
official for the assets of Bay-Gard, (4) approving the stockholders. All shares of common stock have one vote
transfer of the general partner's interest to any person per share. See "Description of Capital Stock."
or entity other than Bay-Gard, (5) admitting any
additional or substitute general partners, and (6)
admitting any additional partners.
<CAPTION>
The following is a comparison of the voting rights of the Bay-Gard limited
partners and Kimco stockholders as they relate to certain major transactions:
Amendment of the Partnership
Agreement-- Bay-Gard Amendment of the Charter-- Kimco
<S> <C>
Bay-Gard's partnership agreement may be amended with the Under Maryland law, amendments to Kimco's charter must
consent of a majority in interests of the limited be approved by the board of directors and by the vote of
partners. The general partner may amend the partnership at least two-thirds of the votes entitled to be cast at
agreement without the consent of the limited partners if a meeting of stockholders. See "Description of Capital
the purpose or the effect of such amendment is to make Stock."
inconsequential changes, add to the obligations of the
general partner or surrender any right or power granted to
the general partner for the benefit of the limited
partners, to reflect the admission, substitution,
termination or withdrawal of partners, to cure any
ambiguity, correct or supplement the partnership
agreement, to satisfy condition or guidelines of orders,
directives, opinions, rulings or regulations of a federal
or state
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
agency or contained in federal or state law,
comply with any federal or state agency rulings,
guidelines or directives, or as are necessary for Kimco to
maintain its status as a REIT.
Vote Required to Dissolve; Vote Required to Vote Required to Dissolve; Vote Required to
Sell Assets or Merge-- Bay-Gard Sell Assets or Merge-- Kimco
The general partner is not permitted to dissolve Bay-Gard Under Maryland law, our board of directors must obtain
or, except in connection with a tax-free exchange, sell, approval of holders of at least two-thirds of the
dispose of, exchange or transfer all or substantially all outstanding common stock to dissolve Kimco.
of the properties owned by Bay-Gard prior to May 15, 2003,
as long as the limited partners who acquired their limited
partnership units in exchange for the contribution of
properties to Bay-Gard own at least 15% of the aggregate
limited partnership units.
Compensation, Fees and Distributions-- Compensation, Fees and Distributions--
Bay-Gard Kimco
Kimco does not receive directly any compensation from Our officers and outside directors receive compensation
Bay-Gard. Bay-Gard's general partner, a wholly owned for their services as more fully described in the Proxy
subsidiary of Kimco, receives allocations and Statement incorporated by reference into this prospectus.
distributions in amounts that are dependent upon the
financial performance of Bay-Gard.
Liability of Investors-- Bay-Gard Liability of Investors-- Kimco
Under the Bay-Gard partnership agreement and Florida law, Under Maryland law, our stockholders generally are not
the liability of the limited partners for the debts and personally liable for Kimco's debts or obligations.
obligations of Bay-Gard is generally limited to the amount
of their investment in Bay-Gard, together with their
interest in any undistributed income.
Liquidity-- Bay-Gard Liquidity-- Kimco
Limited partners may generally transfer their limited Shares of our common stock issued pursuant to this
partnership units only with the consent of the general prospectus will be freely transferable, subject to
partner, which consent shall not be unreasonably prospectus delivery and other requirements of the
withheld. Also see "--Anti-takeover Provisions-- Bay-Gard" Securities Act.
above. The general partner has the right to receive an
opinion of counsel in connection with the transfer of a Our common stock is listed on the NYSE. The breadth and
partnership interest to the effect that the transfer may strength of this secondary market will depend, among
be effected without registration under the Securities Act other things, upon the number of shares outstanding, our
and will not otherwise violate any applicable federal or financial results and prospects, the general interest in
state securities law. our and other real estate investments, and our dividend
yield compared
</TABLE>
17
<PAGE>
<TABLE>
<S> <C>
to that of other debt and equity securities.
Taxes-- Bay-Gard Taxes-- Kimco
Bay-Gard itself is not subject to federal income taxes. Distributions made by us to our taxable domestic
Instead, each holder of limited partnership units includes stockholders out of current or accumulated earnings and
its allocable share of Bay-Gard's taxable income or loss profits will be taken into account by them as ordinary
in determining its individual federal income tax income. Distributions that are designated as capital
liability. Cash distributions from Bay-Gard are not gain dividends generally will be taxed as gains from the
taxable to a holder of limited partnership units except to sale or disposition of a capital asset at a rate of 20%
the extent they exceed such holder's basis in its interest or 25%. Distributions in excess of current or
in Bay-Gard, which will include such holder's allocable accumulated earnings and profits will be treated as a
share of Bay-Gard's non-recourse debt. non-taxable return of basis to the extent of a
stockholder's adjusted basis in its common stock, with
Depending on facts that are particular to each limited the excess taxed as capital gain. See "Federal Income
partner, a limited partner's allocable share of income or Tax Considerations."
loss from Bay-Gard may be subject to "passive activity"
limitations. Under the "passive activity" rules, a Dividends paid by us will be treated as "portfolio"
limited partner's allocable share of income and loss from income and cannot be offset with losses from "passive
Bay-Gard that is considered "passive" generally can be activities."
offset against a limited partner's income and loss from
other investments that constitute "passive activities." Stockholders who are individuals generally will not be
required to file state income tax returns and/or pay
Limited partners are required, in some cases, to file state income taxes outside of their state of residence
state income tax returns and/or pay state income taxes in with respect to our operations and distributions. Kimco
the states in which Bay-Gard owns property, even if they may be required to pay state income taxes in certain
are not residents of those states. states.
</TABLE>
FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material Federal income tax considerations regarding us
and the common stock we are registering is based on current law, is for general
information only and is not tax advice. The tax treatment to holders of common
stock will vary depending on a holder's particular situation and this discussion
does not purport to deal with all aspects of taxation that may be relevant to a
holder of limited partnership units or common stock in light of his or her
personal investments or tax circumstances, or to certain types of holders
subject to special treatment under the Federal income tax laws, except to the
extent discussed under the headings "--Taxation of Tax-Exempt Stockholders" and
"--Taxation of Non-U.S. Stockholders" below. Holders of limited partnership
units or common stock subject to special treatment include, without limitation,
insurance companies, financial institutions or broker-dealers, tax-exempt
organizations, stockholders holding securities as part of a conversion
transaction, or a hedge or hedging transaction or as a position in a straddle
for tax purposes, foreign corporations or partnerships and persons who are not
citizens or residents of the United States. In addition, the summary below does
not consider the effect of any foreign, state, local or other tax laws that may
be applicable to holders of limited partnership units or common stock.
The information in this section is based on the Code, current, temporary and
proposed Treasury Regulations promulgated under the Code, the legislative
history of the Code, current administrative interpretations and practices of the
Internal Revenue Service (the "IRS") (including its practices and
18
<PAGE>
policies as expressed in certain private letter rulings which are not binding on
the IRS except with respect to the particular taxpayers who requested and
received such rulings), and court decisions, all as of the date of this
prospectus. Future legislation, Treasury Regulations, administrative
interpretations and practices and/or court decisions may adversely affect,
perhaps retroactively, the tax considerations described herein. We have not
requested, and do not plan to request, any rulings from the IRS concerning our
tax treatment and the statements in this prospectus are not binding on the IRS
or a court. Thus, we can provide no assurance that these statements will not be
challenged by the IRS or sustained by a court if challenged by the IRS.
You are advised to consult your tax advisor regarding the specific tax
consequences to you of the disposition of limited partnership units and the
acquisition, ownership and sale of our common stock, including the federal,
state, local, foreign and other tax consequences of such disposition,
acquisition, ownership and sale and of potential changes in applicable tax laws.
Tax Consequences of Exchange of Units
If you exchange your units for cash or shares of our common stock, you will
recognize gain or loss because the exchange is a taxable transaction.
Depending upon your particular situation, it is possible that the amount of gain
you recognize or even your tax liability resulting from the gain could exceed
the amount of cash and the value of shares of common stock you receive upon the
exchange. You are advised to consult your own tax advisors regarding the
specific tax consequences of the exchange of limited partnership units including
the federal, state, local, foreign or other tax consequences of this
transaction.
Taxation of Kimco Realty Corporation as a REIT
General. We elected to be taxed as a REIT under Sections 856 through 860 of the
Code, commencing with our taxable year that began January 1, 1992. We believe we
have been organized and have operated in a manner that allows us to qualify for
taxation as a REIT under the Code commencing with our taxable year that began
January 1, 1992. We intend to continue to operate in this manner. Nonetheless,
our qualification and taxation as a REIT depends upon our ability to meet
(through actual annual operating results, asset diversification, distribution
levels and diversity of stock ownership) the various qualification tests imposed
under the Code. Accordingly, there is no assurance that we have operated or will
continue to operate in a manner so as to qualify or remain qualified as a REIT.
See "--Failure to Qualify."
The sections of the Code that relate to the qualification and operation as a
REIT are highly technical and complex. The following sets forth the material
aspects of the sections of the Code that govern the Federal income tax treatment
of a REIT and its stockholders. This summary is qualified in its entirety by the
applicable Code provisions, relevant rules and regulations promulgated under the
Code, and administrative and judicial interpretations of the Code.
If we qualify for taxation as a REIT, we generally will not be subject to
federal corporate income taxes on our net income that is currently distributed
to our stockholders. This treatment substantially eliminates the "double
taxation" (once at the corporate level when earned and once again at the
stockholder level when distributed) that generally results from investment in a
corporation. We will, however, be subject to Federal income tax as follows:
First, we will be taxed at regular corporate rates on any undistributed REIT
taxable income, including undistributed net capital gains.
19
<PAGE>
Second, we may be subject to the "alternative minimum tax" on our items of tax
preference under some circumstances.
Third, if we have (a) net income from the sale or other disposition of
"foreclosure property" (defined generally as property we acquired through
foreclosure or after a default on a loan secured by the property or a lease of
the property) that is held primarily for sale to customers in the ordinary
course of business or (b) other nonqualifying income from foreclosure property,
we will be subject to tax at the highest corporate rate on this income.
Fourth, we will be subject to a 100% tax on any net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business
other than foreclosure property).
Fifth, we will be subject to a 100% tax on an amount equal to (a) the gross
income attributable to the greater of the amount by which we fail the 75% or 95%
test multiplied by (b) a fraction intended to reflect our profitability, if we
fail to satisfy the 75% gross income test or the 95% gross income test (as
discussed below), but have maintained our qualification as a REIT because we
satisfied certain other requirements.
Sixth, we would be subject to a 4% excise tax on the excess of the required
distribution over the amounts actually distributed if we fail to distribute
during each calendar year at least the sum of (1) 85% of our REIT ordinary
income for the year, (2) 95% of our REIT capital gain net income for the year,
and (3) any undistributed taxable income from prior periods.
Seventh, if we acquire any asset (a "Built-In Gain Asset") from a corporation
that is or has been a C corporation (i.e., generally a corporation subject to
full corporate-level tax) in a transaction in which the basis of the Built-In
Gain Asset in our hands is determined by reference to the basis of the asset in
the hands of the C corporation, and we subsequently recognize gain on the
disposition of the asset during the ten-year period (the "Recognition Period")
beginning on the date on which we acquired the asset, then we will be subject to
tax at the highest regular corporate tax rate on this gain to the extent of the
Built-In Gain (i.e., the excess of (a) the fair market value of the asset over
(b) our adjusted basis in the asset, determined as of the beginning of the
Recognition Period). The results described in this paragraph with respect to the
recognition of Built-In Gain assume that we will make an election pursuant to
IRS Notice 88-19 and that the availability or nature of such election is not
modified as proposed in the Clinton Administration's fiscal year 2000 budget
proposal.
Requirements for Qualification as a REIT. The Code defines a REIT as a
corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to evidence
its beneficial ownership;
(3) that would be taxable as a domestic corporation, but for Sections 856
through 860 of the Code;
(4) that is not a financial institution or an insurance company within the
meaning of certain provisions of the Code;
(5) that is beneficially owned by 100 or more persons;
20
<PAGE>
(6) of which during the last half of each taxable year not more than 50% in
value of its outstanding stock is owned, actually or constructively, by
five or fewer individuals, as defined in the Code to include the entities
set forth in Code section 542(a)(2).
(7) that meets certain other tests, described below, regarding the nature of
its income and assets and the amount of its distributions.
The Code provides that conditions (1) to (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335 days
of a taxable year of twelve months, or during a proportionate part of a taxable
year of less than twelve months. Conditions (5) and (6) do not apply until after
the first taxable year for which an election is made to be taxed as a REIT. For
purposes of condition (6), pension funds and some other tax-exempt entities are
treated as individuals, subject to a "look-through" exception in the case of
pension funds.
We believe that we have satisfied each of these conditions. In addition, our
charter provides for restrictions regarding transfer and, in certain cases,
ownership of shares. These restrictions are intended to assist us in continuing
to satisfy the share ownership requirement described in (5) and (6) above. These
ownership and transfer restrictions are described above under the heading
"Description of Capital Stock--Transfer Restrictions, Redemption and Business
Combination Provisions." These restrictions, however, may not ensure that we
will, in all cases, be able to satisfy the share ownership requirements
described in (5) and (6) above. If we fail to satisfy these share ownership
requirements, our status as a REIT will terminate. If, however, we comply with
the rules contained in applicable Treasury Regulations that require us to
ascertain the actual ownership of our shares and we do not know, or would not
have known through the exercise of reasonable diligence, that we failed to meet
the requirement described in condition (6) above, we will be treated as having
met this requirement. See "--Failure to Qualify" below.
In addition, a corporation may not elect to become a REIT unless its taxable
year is the calendar year. We have and intend to continue to have a calendar
taxable year.
We own, directly or indirectly, interests in various partnerships and limited
liability companies (the "Partnerships"). In the case of a REIT that is a
partner in a partnership or member of a limited liability company that is
taxable as a partnership for Federal income tax purposes, IRS regulations
provide that the REIT will be deemed to own its proportionate share of the
assets of the partnership or limited liability company (as the case may be), and
the REIT will be deemed to be entitled to the income of the partnership or
limited liability company (as the case may be) attributable to such share. The
character of the assets and gross income of the partnership or limited liability
company (as the case may be) retains the same character in the hands of the REIT
for purposes of Section 856 of the Code, including satisfying the gross income
tests and the asset tests. Thus, our proportionate share of the assets,
liabilities and items of income of the Partnerships is treated as our assets,
liabilities and items of income for purposes of applying the requirements
described in this prospectus (including the income and asset tests described
below).
We own a number of properties through subsidiaries. Code Section 856(i) provides
that a corporation that is a "qualified REIT subsidiary" shall not be treated as
a separate corporation, and all assets, liabilities, and items of income,
deduction and credit of a "qualified REIT subsidiary" shall be treated as
assets, liabilities and such items (as the case may be) of the REIT. Thus, in
applying the requirements described herein, our "qualified REIT subsidiaries"
will be ignored, and all assets, liabilities and items of income, deduction and
credit of such subsidiaries will be treated as our assets, liabilities and such
items. A qualified REIT subsidiary will not be subject to Federal income tax,
and our ownership of the voting stock of a qualified REIT subsidiary will not
violate the restrictions against ownership of securities of
21
<PAGE>
any one issuer which constitutes more than 10% of such issuer's voting
securities or more than 5% of the value of our total assets. We have received a
ruling from the IRS to the effect that all subsidiaries that were held by us
prior to January 1, 1992, the effective date of our election to be taxed as a
REIT will be qualified REIT subsidiaries upon such effective date of our REIT
election. Moreover, with respect to each of our wholly-owned subsidiaries formed
subsequent to January 1, 1992, we have owned 100% of the stock of such
subsidiary at all times during the period such subsidiary has been in existence.
Therefore, all of our wholly-owned subsidiaries are "qualified REIT
subsidiaries." For tax years beginning or after January 1, 1998, any corporation
wholly-owned by a REIT is permitted to be treated as a "qualified REIT
subsidiary" regardless of whether such subsidiary has always been owned by a
REIT.
Income Tests. We must satisfy two gross income requirements annually to maintain
our qualification as a REIT. First, each taxable year we must derive directly or
indirectly at least 75% of our gross income (excluding gross income from
prohibited transactions) from investments relating to real property or mortgages
on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
each taxable year we must derive at least 95% of our gross income (excluding
gross income from prohibited transactions) from these real property investments,
dividends, interest and gain from the sale or disposition of stock or securities
(or from any combination of the foregoing). The term "interest" generally does
not include any amount received or accrued (directly or indirectly) if the
determination of the amount depends in whole or in part on the income or profits
of any person. Nevertheless, an amount received or accrued generally will not be
excluded from the term "interest" solely by reason of being based on a fixed
percentage or percentages of receipts or sales.
Rents we receive will qualify as "rents from real property" in satisfying the
gross income requirements for a REIT described above only if the following
conditions are met:
o the amount of rent must not be based in whole or in part on the income or
profits of any person. However, an amount received or accrued generally
will not be excluded from the term "rents from real property" solely by
reason of being based on a fixed percentage or percentages of receipts or
sales;
o the Code provides that rents received from a tenant will not qualify as
"rents from real property" in satisfying the gross income tests if the
REIT, or an actual or constructive owner of 10% or more of the REIT,
actually or constructively owns 10% or more of the interests in such tenant
(a "Related Party Tenant");
o if rent attributable to personal property, leased in connection with a
lease of real property, is greater than 15% of the total rent received
under the lease, then the portion of rent attributable to personal property
will not qualify as "rents from real property"; and
o for rents received to qualify as "rents from real property," the REIT
generally must not operate or manage the property or furnish or render
services to the tenants of the property (subject to a 1% de minimis
exception), other than through an independent contractor from whom the REIT
derives no revenue. The REIT may, however, directly perform certain
services that are "usually or customarily rendered" in connection with the
rental of space for occupancy only and are not otherwise considered
"rendered to the occupant" of the property.
We generally do not and will not:
o charge rent for any property that is based in whole or in part on the
income or profits of any person (except by reason of being based on a
percentage of receipts or sales, as described above);
22
<PAGE>
o rent any property to a Related Party Tenant;
o derive rental income attributable to personal property (other than personal
property leased in connection with the lease of real property, the amount
of which is less than 15% of the total rent received under the lease); or
We directly perform services under some of our leases. We received a ruling from
the IRS providing that the performance of the types of services provided by us
will not cause the rents received with respect to such leases to fail to qualify
as "rents from real property".
Notwithstanding the foregoing, we may have taken and may continue to take
certain of the actions set forth above to the extent these actions will not,
based on the advice of our tax counsel, jeopardize our status as a REIT.
If we fail to satisfy one or both of the 75% or 95% gross income tests for any
taxable year, we may nevertheless qualify as a REIT for the year if we are
entitled to relief under specific provisions of the Code. Generally, we may
avail ourselves of the relief provisions if:
o our failure to meet these tests was due to reasonable cause and not due to
willful neglect;
o we attach a schedule of the sources of our income to our Federal income tax
return; and
o any incorrect information on the schedule was not due to fraud with intent
to evade tax.
It is not possible, however, to state whether in all circumstances we would be
entitled to the benefit of these relief provisions. For example, if we fail to
satisfy the gross income tests because nonqualifying income that we
intentionally incur exceeds the limits on nonqualifying income, the IRS could
conclude that our failure to satisfy the tests was not due to reasonable cause.
If these relief provisions do not apply to a particular set of circumstances, we
will not qualify as a REIT. As discussed above in "Taxation of Kimco Realty
Corporation--General," even if these relief provisions apply, and we retain our
status as a REIT, a tax would be imposed with respect to our excess net income.
We may not always be able to maintain compliance with the gross income tests for
REIT qualification despite our periodic monitoring of our income.
Prohibited Transaction Income. Any gain realized by us on the sale of any
property held as inventory or other property held primarily for sale to
customers in the ordinary course of business (including our share of any such
gain realized by any of the Partnerships) will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax. This prohibited
transaction income may also adversely affect our ability to satisfy the income
tests for qualification as a REIT. Under existing law, whether property is held
as inventory or primarily for sale to customers in the ordinary course of a
trade or business is a question of fact that depends on all the facts and
circumstances surrounding the particular transaction. We intend to hold our
properties for investment with a view to long-term appreciation, to engage in
the business of acquiring, developing and owning our properties (and other
properties) and to make occasional sales of our properties as are consistent
with our investment objectives. The IRS, however, may contend that that one or
more of these sales is subject to the 100% penalty tax.
Asset Tests. At the close of each quarter of our taxable year, we also must
satisfy three tests relating to the nature and diversification of our assets.
First, at least 75% of the value of our total assets (including assets held by
our qualified REIT subsidiaries and our allocable share of the assets held by
the Partnerships) must be represented by real estate assets, cash, cash items
held for one year or less and government securities. For purposes of this test,
real estate assets include stock or debt instruments that
23
<PAGE>
are purchased with the proceeds of a stock offering or a long-term (at least
five years) public debt offering. Second, not more than 25% of our total assets
may be represented by securities, other than those securities includable in the
75% asset test. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities may not exceed 5% of the value of our total
assets and we may not own more than 10% of any one issuer's outstanding voting
securities.
We own 100% of the nonvoting preferred stock of Kimco Realty Services, Inc. (the
"Management Company"). We do not and will not own any of the voting securities
of the Management Company, and therefore we will not be considered to own more
than 10% of the voting securities of the Management Company. In addition, we
believed that the value of the securities of the Management Company to be held
by us did not exceed at any time up to and including the date of this Prospectus
5% of the total value of our assets and will not exceed such amount in the
future. No independent appraisals, however, will be obtained to support this
conclusion. As such, there can be no assurance that the IRS will not contend
that the value of the securities of the Management Company held by us exceeds
the 5% value limitation.
After initially meeting the asset tests at the close of any quarter, we will not
lose our status as a REIT for failure to satisfy the asset tests at the end of a
later quarter solely by reason of changes in asset values. If we fail to satisfy
the asset tests because we acquire securities or other property during a quarter
(including as a result of our increasing our interest in one or more of the
Partnerships if the applicable Partnership owns non-qualifying assets), we can
cure this failure by disposing of sufficient nonqualifying assets within 30 days
after the close of that quarter. We believe we have maintained and intend to
continue to maintain adequate records of the value of our assets to ensure
compliance with the asset tests and to take such other actions within the 30
days after the close of any quarter as may be required to cure any
noncompliance. If we fail to cure noncompliance with the asset tests within this
time period, we would cease to qualify as a REIT.
Annual Distribution Requirements. To maintain our qualification as a REIT, we
are required to distribute dividends (other than capital gain dividends) to our
stockholders in an amount at least equal to the sum of 95% of our "REIT taxable
income" (computed without regard to the dividends paid deduction and our net
capital gain) and 95% of our net income (after tax), if any, from foreclosure
property, minus the excess of the sum of particular items of our noncash income
(i.e., income attributable to leveled stepped rents, original issue discount on
purchase money debt, or a like-kind exchange that is later determined to be
taxable) over 5% of our "REIT taxable income" as described above. In addition,
if we dispose of any Built-In Gain Asset during its Recognition Period, we would
be required, pursuant to Treasury Regulations which have not yet been
promulgated, to distribute at least 95% of the Built-In Gain (after tax), if
any, recognized on the disposition of such asset.
These distributions must be paid in the taxable year to which they relate, or in
the following taxable year if they are declared before we timely file our tax
return for such year and if paid on or before the first regular dividend payment
after such declaration. These distributions are taxable to holders of our
capital stock (other than tax-exempt entities, as discussed below) in the year
in which paid. This is so even though these distributions relate to the prior
year for purposes of our 95% distribution requirement. The amount distributed
must not be preferential--e.g., every shareholder of the class of stock to which
a distribution is made must be treated the same as every other shareholder of
that class, and no class of stock may be treated otherwise than in accordance
with its dividend rights as a class. To the extent that we do not distribute all
of our net capital gain or distribute at least 95%, but less than 100%, of our
"REIT taxable income," as adjusted, we will be subject to tax thereon at regular
ordinary and capital gain
24
<PAGE>
corporate tax rates. We believe we have made and intend to continue to make
timely distributions sufficient to satisfy these annual distribution
requirements.
It is possible that from time to time we may not have sufficient cash or other
liquid assets to meet these distribution requirements due to timing differences
between the actual receipt of income and actual payment of deductible expenses,
and the inclusion of income and deduction of expenses in arriving at our taxable
income. If these timing differences occur, to meet the distribution requirements
we may need to arrange for short-term, or possibly long-term, borrowings or need
to pay dividends in the form of taxable stock dividends.
We may be able to rectify a failure to meet the distribution requirement for a
year by paying "deficiency dividends" to stockholders in a later year, which may
be included in our deduction for dividends paid for the earlier year. Thus, we
may be able to avoid being taxed on amounts distributed as deficiency dividends.
Nonetheless, we will be required to pay interest based upon the amount of any
deduction taken for deficiency dividends.
Furthermore, we would be subject to a 4% excise tax on the excess of the
required distribution over the amounts actually distributed if we should fail to
distribute during each calendar year (or in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January immediately following such year) at least the sum of
85% of our REIT ordinary income for such year, 95% of our REIT capital gain
income for the year and any undistributed taxable income from prior periods. Any
REIT taxable income and net capital gain on which this excise tax is imposed for
any year is treated as an amount distributed during that year for purposes of
calculating such tax.
Failure to Qualify
If we fail to qualify for taxation as a REIT in any taxable year, and the relief
provisions do not apply, we will be subject to tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate rates.
Distributions to stockholders in any year in which we fail to qualify will not
be deductible by us and we will not be required to distribute any amounts to our
stockholders. As a result, our failure to qualify as a REIT would reduce the
cash available for distribution by us to our stockholders. In addition, if we
fail to qualify as a REIT, all distributions to stockholders will be taxable as
ordinary income to the extent of our current and accumulated earnings and
profits, and subject to limitations of the Code, corporate distributees may be
eligible for the dividends received deduction. Unless entitled to relief under
specific statutory provisions, we will also be disqualified from taxation as a
REIT for the four taxable years following the year during which we lost our
qualification. It is not possible to state whether in all circumstances we would
be entitled to this statutory relief. In addition, the Clinton Administration's
fiscal year 2000 budget proposal contains a provision which, if enacted in its
present form, would result in immediate taxation of all gain inherent in a C
corporation's assets upon an election by the corporation to become a REIT in
taxable years beginning after January 1, 2000. If enacted, this provision could
effectively preclude us from re-electing to be taxed as a REIT following a loss
of our status as a REIT.
Proposed Legislation
The Clinton Administration's fiscal year 2000 budget proposal, announced
February 1, 1999, includes a proposal that would limit a REITs ability to own
more than 10% by vote or value of the stock of another corporation. As discussed
above under the heading "Taxation of Kimco Realty Corporation -- Asset Tests," a
REIT cannot currently own more than 10% of the outstanding voting securities of
any one issuer. The budget proposal would allow a REIT to own all or a portion
of the voting stock and value of
25
<PAGE>
a "taxable REIT subsidiary" provided all of a REIT's taxable subsidiaries do not
represent more than 15% of the REIT's total assets. In addition under the budget
proposal, a "taxable REIT subsidiary" would not be entitled to deduct any
interest on debt funded directly or indirectly by the REIT. The budget proposal,
if enacted in its current form, may require that we restructure our interest in
the Management Company because we currently own more than 10% of the value of
the Management Company and because we have loaned funds to the Management
Company. The budget proposal, if enacted in its current form, would be effective
after the date of its enactment and would provide transition rules to allow
corporations, like the Management Company to convert into "taxable REIT
subsidiaries" tax-free. It is presently uncertain whether any proposal regarding
REIT subsidiaries, including the budget proposal, will be enacted, or if
enacted, what the terms of such proposal, including its effective date, will be.
Taxation of Taxable U.S. Stockholders
As used below, the term "U.S. Stockholder" means a holder of shares of common
stock who (for United States Federal income tax purposes):
o is a citizen or resident of the United States;
o is a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of any state thereof or in the
District of Columbia, unless, in the case of a partnership, Treasury
Regulations provide otherwise;
o is an estate the income of which is subject to United States Federal income
taxation regardless of its source; or
o is a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
Regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to this date that elect to continue to be treated as
United States persons, shall also be considered U.S. Stockholders.
Distributions Generally. As long as we qualify as a REIT, distributions out of
our current or accumulated earnings and profits, other than capital gain
dividends discussed below, will constitute dividends taxable to our taxable U.S.
Stockholders as ordinary income. These distributions will not be eligible for
the dividends-received deduction in the case of U.S. Stockholders that are
corporations.
To the extent that we make distributions, other than capital gain dividends
discussed below, in excess of our current and accumulated earnings and profits,
these distributions will be treated first as a tax-free return of capital to
each U.S. Stockholder. This treatment will reduce the adjusted basis which each
U.S. Stockholder has in his shares of stock for tax purposes by the amount of
the distribution (but not below zero). Distributions in excess of a U.S.
Stockholder's adjusted basis in his shares will be taxable as capital gains
(provided that the shares have been held as a capital asset) and will be taxable
as long-term capital gain if the shares have been held for more than one year.
Dividends we declare in October, November, or December of any year and payable
to a stockholder of record on a specified date in any of these months shall be
treated as both paid by us and received by the stockholder on December 31 of
that year, provided we actually pay the dividend on or before January 31 of the
following calendar year.
26
<PAGE>
Stockholders may not include in their own income tax returns any of our net
operating losses or capital losses.
Capital Gain Distributions. Distributions that we properly designate as capital
gain dividends will be taxable to taxable U.S. Stockholders as gains (to the
extent that they do not exceed our actual net capital gain for the taxable year)
from the sale or disposition of a capital asset. Depending on the character of
the assets which produced these gains, and on designations, if any, which we
may make, these gains may be taxable to non-corporate U.S. stockholders at a 20%
or 25% rate. U.S. Stockholders that are corporations may, however, be required
to treat up to 20% of some capital gain dividends as ordinary income.
Passive Activity Losses and Investment Interest Limitations. Distributions we
make and gain arising from the sale or exchange by a U.S. Stockholder of our
shares will not be treated as passive activity income. As a result, U.S.
Stockholders generally will not be able to apply any "passive losses" against
this income or gain. Distributions we make (to the extent they do not constitute
a return of capital) generally will be treated as investment income for purposes
of computing the investment interest limitation. Gain arising from the sale or
other disposition of our shares, however, will not be treated as investment
income in some circumstances.
Retention of Net Long-Term Capital Gains. We may elect to retain, rather than
distribute as a capital gain dividend, our net long-term capital gains. If we
make this election, we would pay tax on our retained net long-term capital
gains. In addition, to the extent we designate, a U.S. Stockholder generally
would:
o include its proportionate share of our undistributed long-term capital
gains in computing its long-term capital gains in its return for its
taxable year in which the last day of our taxable year falls (subject to
certain limitations as to the amount that is includable);
o be deemed to have paid the capital gains tax imposed on us on the
designated amounts included in the U.S. Stockholder's long-term capital
gains;
o receive a credit or refund for the amount of tax deemed paid by it;
o increase the adjusted basis of its common stock by the difference between
the amount of includable gains and the tax deemed to have been paid by it;
and
o in the case of a U.S. Stockholder that is a corporation, appropriately
adjust its earnings and profits for the retained capital gains in
accordance with Treasury Regulations to be prescribed by the IRS.
Dispositions of Common Stock
If you are a U.S. Stockholder and you sell or dispose of your shares of common
stock, you will recognize gain or loss for Federal income tax purposes in an
amount equal to the difference between the amount of cash and the fair market
value of any property you receive on the sale or other disposition and your
adjusted basis in the shares for tax purposes. This gain or loss will be capital
if you have held the common stock as a capital asset and will be long-term
capital gain or loss if you have held the common stock for more than one year.
In general, if you are a U.S. Stockholder and you recognize loss upon the sale
or other disposition of common stock that you have held for six months or less
(after applying holding period rules set forth in the Code), the loss you
recognize will be treated as a long-term capital
27
<PAGE>
loss, to the extent you received distributions from us which were required to be
treated as long-term capital gains.
Backup Withholding
We report to our U.S. Stockholders and the IRS the amount of dividends paid
during each calendar year, and the amount of any tax withheld. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless the holder is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A U.S. Stockholder that does not
provide us with his correct taxpayer identification number may also be subject
to penalties imposed by the IRS. Backup withholding is not an additional tax.
Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, we may be required to withhold
a portion of capital gain distributions to any stockholders who fail to certify
their non-foreign status. See "--Taxation of Non-U.S. Stockholders."
Taxation of Tax-Exempt Stockholders
The IRS has ruled that amounts distributed as dividends by a qualified REIT do
not constitute unrelated business taxable income ("UBTI") when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt shareholder
(except tax-exempt shareholders described below) has not held its shares as
"debt financed property" within the meaning of the Code (generally, shares of
common stock, the acquisition of which was financed through a borrowing by the
tax exempt stockholder) and the shares are not otherwise used in a trade or
business, dividend income from us will not be UBTI to a tax-exempt shareholder.
Similarly, income from the sale of shares will not constitute UBTI unless a
tax-exempt shareholder has held its shares as "debt financed property" within
the meaning of the Code or has used the shares in its trade or business.
For tax-exempt shareholders which are social clubs, voluntary employee benefit
associations, supplemental unemployment benefit trusts, and qualified group
legal services plans exempt from Federal income taxation under Code Section
501(c)(7), (c)(9), (c)(17) and (c)(20), respectively, income from an investment
in our shares will constitute UBTI unless the organization is able to properly
deduct amounts set aside or placed in reserve for certain purposes so as to
offset the income generated by its investment in our shares. These prospective
investors should consult their own tax advisors concerning these "set aside" and
reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by a
"pension held REIT" shall be treated as UBTI as to any trust which:
o is described in Section 401(a) of the Code;
o is tax-exempt under Section 501(a) of the Code; and
o holds more than 10% (by value) of the interests in the REIT.
Tax-exempt pension funds that are described in Section 401(a) of the Code are
referred to below as "qualified trusts."
A REIT is a "pension held REIT" if:
28
<PAGE>
o it would not have qualified as a REIT but for the fact that Section
856(h)(3) of the Code provides that stock owned by qualified trusts shall
be treated, for purposes of the "not closely held" requirement, as owned by
the beneficiaries of the trust (rather than by the trust itself); and
o either at least one such qualified trust holds more than 25% (by value) of
the interests in the REIT, or one or more such qualified trusts, each of
which owns more than 10% (by value) of the interests in the REIT, holds in
the aggregate more than 50% (by value) of the interests in the REIT.
The percentage of any REIT dividend treated as UBTI is equal to the ratio of:
o the UBTI earned by the REIT (treating the REIT as if it were a qualified
trust and therefore subject to tax on UBTI) to
o the total gross income of the REIT.
A de minimis exception applies where the percentage is less than 5% for any
year. The provisions requiring qualified trusts to treat a portion of REIT
distributions as UBTI will not apply if the REIT is able to satisfy the "not
closely held" requirement without relying upon the "look-through" exception with
respect to qualified trusts.
Taxation of Non-U.S. Stockholders
When we use the term "Non-U.S. Stockholder," we mean a holder of shares of
common stock who (for United States Federal income tax purposes):
o is a nonresident alien individual; or
o is a foreign corporation, foreign partnership or trust.
The rules governing United States Federal income taxation of Non-U.S.
Stockholders are complex, and we are providing only a brief summary of these
rules. This summary does not address all aspects of United States Federal income
tax and does not address state, local or foreign tax consequences that may be
relevant to a Non-U.S. Stockholder in light of its particular circumstances. In
addition, this discussion is based on current law, which is subject to change,
and assumes that we qualify for taxation as a REIT. If you are a prospective
Non-U.S. Stockholder, you should consult with your own tax advisers to determine
the impact of Federal, state, local and foreign income tax laws on an investment
in our common stock, including any reporting requirements.
Distributions. A distribution to a Non-U.S. Stockholder will be treated as a
dividend of ordinary income to the extent the distribution is made out of our
current or accumulated earnings and profits as long as the following are true:
o the distribution is not attributable to gain from the sale or exchange of
United States real property interests; and
o we have not designated the distribution as a capital gains dividend.
Distributions treated as a dividend of ordinary income will generally be subject
to withholding of United States federal income tax on a gross income basis (that
is, without allowance of deductions) at a 30% rate unless an applicable tax
treaty reduces that rate. However, distributions treated as a dividend of
ordinary income will be subject to a federal income tax on a net basis (that is,
after allowance of deductions) when
29
<PAGE>
the dividend is treated as effectively connected with the Non-U.S. Stockholder's
conduct of a United States trade or business or, if an income tax treaty
applies, as attributable to a United States permanent establishment of the
Non-U.S. Stockholder. In this event, as long as certain certification and
disclosure requirements are met, the dividend will be taxed at graduated rates,
in the same manner as U.S. Stockholders are taxed with respect to such dividends
and will generally not be subject to withholding. Any such dividends received by
a Non-U.S. Stockholder that is a corporation may also be subject to an
additional branch profits tax at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty (the "Branch Profits Tax").
Under current Treasury regulations, dividends paid to an address in a country
outside the United States are generally presumed to be paid to a resident of the
country for purposes of determining the applicability of withholding discussed
above and the applicability of a tax treaty rate. Under new Treasury regulations
generally effective for distributions paid after December 31, 1999, a Non-U.S.
Stockholder who wished to claim the benefit of an applicable treaty rate would
be required to satisfy certain certification and other requirements. We describe
these Treasury regulations in greater detail below under the heading "--New
Withholding Regulations." Under certain treaties, lower withholding rates
generally applicable to dividends do not apply to dividends from a REIT.
If we make a distribution in excess of our current or accumulated earnings and
profits, the distribution will not be taxable to a Non-U.S. Stockholder to the
extent it does not exceed the adjusted basis of the stockholder's stock.
Instead, the distribution will reduce the adjusted basis of the stockholder's
stock. If the distribution does exceed the adjusted basis of a Non-U.S.
Stockholder's stock, the distribution will result in gain from the sale or
exchange of the Non-U.S Stockholder's stock. We discuss the tax treatment of
this gain in further detail below. For withholding purposes, we are required to
treat all distributions as if made out of our current or accumulated earnings
and profits. However, the IRS will generally refund amounts that are withheld if
it is determined that the distribution was, in fact, in excess of our current or
accumulated earnings and profits.
Distributions to a Non-U.S. Stockholder that we properly designate as a capital
gains dividend at the time of distribution that does not arise from our
disposition of a United States real property interest generally will not be
subject to United States federal income taxation unless any of the following are
true:
o investment in the stock is effectively connected with the Non-U.S.
Stockholders United States trade or business, in which case the Non-U.S.
Stockholder will be taxed on the gain at the same rates as U.S.
Stockholders (except that a stockholder that is a foreign corporation may
also be subject to the 30% Branch Profits Tax, as discussed above); or
o the Non-U.S. Stockholder is a nonresident alien individual who is present
in the United States for 183 days or more during the taxable year and has a
"tax home" in the United States, in which case the non-resident alien
individual will be taxed at a rate equal to 30% of the individual's capital
gains.
Distributions to a Non-U.S. Stockholder that are attributable to gain from our
sale or exchange of United States real property interests will cause the
Non-U.S. Stockholder to be treated as recognizing this gain as income
effectively connected with a United States trade or business. Non-U.S.
Stockholders would generally be taxed at the same rates as U.S. Stockholders
(subject to a special alternative minimum tax in the case of nonresident alien
individuals) on these distributions. Also, a Non-U.S. Stockholder that is a
corporation may be subject to a 30% Branch Profits Tax on this distribution as
discussed above. We are required to withhold 35% of any such distribution. This
amount is creditable against the Non-U.S. Stockholder's United States Federal
income tax liability.
30
<PAGE>
We or any nominee (e.g., a broker holding shares in street name) may rely on a
certificate of non-foreign status on Form W-8 or Form W-9 to determine whether
withholding is required on gains realized from the disposition of United States
real property interests. A domestic person who holds shares of common stock on
behalf of a Non-U.S. Stockholder will bear the burden of withholding, provided
that we have properly designated the appropriate portion of a distribution as a
capital gain dividend.
Sale of Stock. Unless our common stock constitutes a "United States real
property interest" within the meaning of FIRPTA, a sale or exchange of common
stock by a Non-U.S. Stockholder generally will not be subject to United States
Federal income taxation. Our stock will not constitute a "United States real
property interest" if we are a "domestically controlled REIT." A "domestically
controlled REIT" is a REIT in which at all times during a specified testing
period Non-U.S. Stockholders held, directly or indirectly, less than 50% in
value of the REIT's shares.
If we are not or cease to be a "domestically-controlled REIT," a Non-U.S.
Stockholder's sale or exchange of shares of common stock would be subject to
United States taxation under FIRPTA as a sale of a "United States real property
interest," assuming our common stock is regularly traded (as defined by
applicable Treasury Regulations) on an established securities market (e.g., the
New York Stock Exchange), only if the seller owned (actually or constructively)
more than 5% of our common stock during the applicable testing period. If gain
on the sale or exchange of shares of stock were subject to taxation under
FIRPTA, the Non-U.S. Stockholder would be subject to the same United States
Federal income tax treatment with respect to the gain as a U.S. Stockholder
(subject to any applicable alternative minimum tax, a special alternate minimum
tax, in the case of nonresident alien individuals and the possible application
of the 30% Branch Profits Tax in the case of foreign corporations), and the
purchaser of the stock would be required to withhold and remit to the IRS 10% of
the purchase price.
Notwithstanding the foregoing, if you are a Non-U.S. Stockholder and you
recognize gain from the sale or exchange of shares of our common stock and the
gain is not subject to FIRPTA, the gain will be subject to United States
taxation if:
o your investment in the stock is effectively connected with a United States
trade or business (or, if an income treaty applies, is attributable to a
United States permanent establishment); or
o you are a nonresident alien individual who is present in the United States
for 183 days or more during the taxable year and you have a "tax home" in
the United States. In this case, you will be subject to a 30% United States
withholding tax on the amount of your gain.
Backup Withholding Tax and Information Reporting. Backup withholding tax
generally is a withholding tax imposed at the rate of 31% on certain payments to
persons that fail to furnish certain information under the United States
information reporting requirements. Non-U.S. Stockholders will not be subject to
backup withholding tax and information reporting for distributions they receive
that are treated as:
o dividends subject to the 30% (or lower treaty rate) withholding tax
discussed above;
o capital gains dividends; or
distributions attributable to gain from our sale or exchange of United States
real property interests.
As a general matter, backup withholding and information reporting will not apply
to a payment of the proceeds of a sale of stock by or through a foreign office
of a foreign broker. Information reporting (but not backup withholding) will
apply, however, to a payment of the proceeds of a sale of stock by a foreign
office of a broker that:
31
<PAGE>
o is a United States person;
o derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States; or
o is a "controlled foreign corporation" (generally, a foreign corporation
controlled by United States stockholders) for United States tax purposes.
Information reporting will not apply if the broker has documentary evidence in
its records that the holder is a Non-U.S. Stockholder and certain other
conditions are met, or the stockholder otherwise establishes an exemption.
Payment to or through a United States office of a broker of the proceeds of a
sale of stock is subject to both backup withholding and information reporting
unless the stockholder certifies under penalties of perjury that the stockholder
is a Non-U.S. Stockholder, or otherwise establishes an exemption. A Non-U.S.
Stockholder may obtain a refund of any amounts withheld under the backup
withholding rules by filing the appropriate claim for refund with the IRS.
New Withholding Regulations. You should be aware that regulations dealing with
withholding tax on income paid to foreign persons and related matters were
recently promulgated. In general, the new withholding regulations do not
significantly change the substantive withholding and information reporting
requirements, but unify current certification procedures and forms and clarify
reliance standards. For example, the new withholding regulations adopt a
certification rule under which a foreign stockholder who wishes to claim the
benefit of an applicable treaty rate with respect to dividends received from a
United States corporation will be required to satisfy certain certification and
other requirements. In addition, the new withholding regulations require a
corporation that is a REIT to treat as a dividend the portion of a distribution
that is not designated as a capital gain dividend or return of basis and apply
the 30% withholding tax (subject to any applicable deduction or exemption) to
such portion, and to apply the FIRPTA withholding rules (discussed above) with
respect to the portion of the distribution designated by the REIT as capital
gain dividend. The new withholding regulations will generally be effective for
payments made after December 31, 1999, subject to certain transition rules. You
should be aware that the discussion under "taxation of non-U.S. Stockholders"
does not give effect to these new withholding regulations. We strongly urge
prospective non-U.S. Stockholders to consult their own tax advisors for
information on these new withholding regulations.
Other Tax Consequences
We may be subject to state or local taxation in various state or local
jurisdictions, including those in which we transact business and our
stockholders may be subject to state or location taxation in various state or
local jurisdictions, including those in which they reside. Our state and local
tax treatment may not conform to the Federal income tax consequences discussed
above. In addition, your state and locate tax treatment may not conform to the
Federal income tax consequences discussed above. Consequently, you should
consult your tax advisors regarding the effect of state and local tax laws on a
disposition of limited partnership units or an investment in our shares.
SELLING HOLDERS
As of April 1, 1999 the only holders of limited partnership units are Midway
Holdings, Inc., Milner Investment Corp., Fargo Investments, Palmetto Holdings I,
Inc. and J.B. Baldwin Land Co., whose only material relationship with Kimco has
been the formation of Bay-Gard and the ownership of the limited partnership
units. As of April 1, 1999, the only securities of Kimco beneficially owned by
these
32
<PAGE>
holders are 4,973,196 limited partnership units. The limited partnership
units may be exchanged for shares of our common stock or cash. Each limited
partner shall receive the number of shares of our common stock that is equal to
the number of units tendered times an exchange factor, or, in lieu of issuing
common stock upon the tendering of the limited partnership units, Kimco may, at
its option, issue cash in an amount equal to the value of an equivalent number
of shares of our common stock. See "Exchange of Limited Partnership Units--Terms
of Exchange"
Because the limited partners that receive our common stock may subsequently sell
all, some or none of their common stock shares (such holders being "selling
holders") and because we may elect to pay cash or common stock in exchange for
tendered limited partnership units, no estimate can be made of the aggregate
number of shares that will be owned by each tendering limited partner upon
completion of the offering to which this prospectus relates or that are
subsequently to be offered by such tendering holders hereby.
Pursuant to the Bay-Gard partnership agreement, the limited partners may
transfer limited partnership units under certain circumstances. Such transferees
of the limited partners may also be selling holders under this prospectus. One
or more supplemental prospectuses may be filed pursuant to Rule 424 under the
Securities Act to set forth the required information regarding any additional
selling holders of our common stock.
PLAN OF DISTRIBUTION
This prospectus relates to:
(1) the possible issuance by Kimco of the shares of our common stock if,
and to the extent that, holders of limited partnership units tender
their units for exchange; and
(2) the offer and sale from time to time of any shares that may be issued
to such limited partners.
We have registered the shares for sale to provide the holders thereof with
freely tradable securities, but registration of such shares does not necessarily
mean that any of such shares will be offered or sold by the holders.
We will not receive any proceeds from the issuance of shares of our common stock
in exchange for Bay-Gard limited partnership units or from the subsequent
offering of such shares by their holders. Shares of our common stock may be sold
from time to time directly by any of the shareholders. Alternatively, common
stockholders may from time to time offer the shares through dealers or agents,
who may receive compensation in the form of commissions from the selling holders
and/or the purchasers of shares for whom they may act as agent. The sale of the
shares by their holders may be effected from time to time in one or more
negotiated transactions at negotiated prices or in transactions on any exchange
or automated quotation system on which the securities may be listed or quoted.
The selling holders and any dealers or agents that participate in the
distribution of shares of our common stock may be deemed to be underwriters
within the meaning of the Securities Act and any profit on the sale of shares of
our common stock by them and any commissions received by any such dealers or
agents might be deemed to be underwriting commissions under the Securities Act.
To comply with state securities laws, the shares of our common stock will not be
sold in a particular state unless the shares have been registered or qualified
for sale in such state or an exemption from registration or qualification is
available and is complied with.
33
<PAGE>
One or more supplemental prospectuses will be filed pursuant to Rule 424 under
the Securities Act to describe any material arrangements for the distribution of
the shares when such arrangements are entered into by the selling holders and
any broker-dealers that participate in the distribution of shares of our common
stock.
LEGAL MATTERS
The legality of the issuance of the shares of our common stock has been passed
upon for Kimco by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
Tax matters described under "Certain Federal Income Tax Considerations" has been
passed upon for Kimco by Latham & Watkins, New York, New York.
EXPERTS
The consolidated financial statements of Kimco Realty Corporation as of December
31, 1998 and 1997, and for the three years in the period ended December 31,
1998, from the Company's Annual Report on Form 10-K for the year ended December
31, 1998, have been incorporated by reference in the registration statement in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
as experts in accounting and auditing.
34
<PAGE>
KIMCO REALTY CORPORATION
170,000 Shares
Common Stock
PROSPECTUS
You should rely only on the information contained in this document or in
documents that Kimco has referred you to. Kimco has not authorized anyone to
provide you with information that is different.
This prospectus is not an offer to sell or a solicitation of an offer to buy any
security other than the shares of common stock offered. This prospectus is not
an offer to sell or a solicitation of an offer to buy securities to any person
in any jurisdiction in which it is unlawful to make such an offer or
solicitation. You should not assume that the information contained in this
prospectus is correct on any date after the date on the prospectus, even though
this prospectus is delivered or shares are sold pursuant to this prospectus on a
later date.
April 29, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.
The estimated expenses, in connection with this offering are estimated as
follows:
SEC Registration Fee............................................ $ 1,827
Printing and shipping expenses.................................. $ 5,000
Legal fees and expenses......................................... $15,000
Accounting fees and expenses.................................... $ 2,500
Miscellaneous................................................... $ 500
--------
Total...................................................... $24,827
Item 15. Indemnifications of Directors and Officers.
The Maryland General Corporation Law (the "MGCL") permits a Maryland corporation
to include in its charter a provision limiting the liability of its directors
and officers to the corporation and its stockholders for money damages except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action.
Kimco's Charter contains such a provision, which eliminates such liability to
the maximum extent permitted by Maryland law.
Kimco's charter authorizes it, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer or (b) any individual who, while a director of Kimco
and at the request of Kimco, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise. Kimco's bylaws
obligate it, to the maximum extent permitted by Maryland law, to indemnify and
to pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any present or former director or officer who is made a party
to the proceeding by reason of his service in that capacity or (b) any
individual who, while a director of Kimco and at the request of Kimco, serves or
has served another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise as a director, officer, partner or trustee
of such corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise and who is made a party to the proceeding by reason of his
service in that capacity. The charter and bylaws also permit Kimco to indemnify
and advance expenses to any person who served a predecessor of Kimco in any of
the capacities described above and to any employee or agent of Kimco or a
predecessor of Kimco.
The MGCL requires a corporation (unless its charter provides otherwise,
which Kimco's charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against
II-1
<PAGE>
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities unless it is
established that (a) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (i) was committed in bad faith
or (ii) was the result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director or officer
had reasonable cause to believe that the act or omission was unlawful. However,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation. In addition, the MGCL requires Kimco, as a
condition to advancing expenses, to obtain (a) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by Kimco as authorized by the bylaws and
(b) a written statement by or on his behalf to repay the amount paid or
reimbursed by Kimco if it shall ultimately be determined that the standard of
conduct was not met.
Item 16. Exhibits.
3.1 -- Articles of restatement of Kimco Realty Corporation (incorporated
herein by reference to exhibit 3.1 to our annual report on form 10-K
for the year ending December 31, 1994).
3.2 -- Amended and restated bylaws of Kimco Realty Corporation (incorporated
herein by reference to exhibit 3.2 to our annual report on form 10-K
for the year ended December 31, 1994).
3.3 -- Articles Supplementary relating to the 8 1/2% Class B Cumulative
Redeemable Preferred Stock, par value $1.00 per share, of the
Company, dated July 25, 1995 (incorporated by reference to
Exhibit 3.3 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
3.4 -- Articles Supplementary relating to the 8 3/8% Class C Cumulcative
Redeemable Preferred Stock, par value $1.00 per share, of the
Company, dated April 9, 1996 (incorporated by reference to
Exhibit 3.4 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996).
3.5 -- Articles Supplementary relating to the 7 1/2% Class D Cumulative
Convertible Preferred Stock, par value $1.00 per share, of the
Company, dated May 14, 1998 (incorporated by reference to the
Company's and The Price REIT, Inc.'s Joint Proxy/Prospectus on
Form S-4 No. 333-52667).
4(a) -- Form of Common Stock Certificate (filed as Exhibit 4(h) to
Registrant's Registration Statement on Form S-3, dated May 30, 1996,
File No. 333-4833).
5 -- Opinion of Ballard Spahr Andrews & Ingersoll, LLP.*
8 -- Opinion of Latham & Watkins regarding tax matters.*
10(a) -- Amended and restated limited partnership agreement of Bay-Gard, Ltd.,
dated May 15, 1998.*
10(b) -- Contribution Agreement, dated April 6, 1998, as amended.*
10(c) -- Registration Right Agreement, dated May 15, 1998.*
23(a) -- Consent of PricewaterhouseCoopers LLP.*
(b) -- Consent of Latham & Watkins (included in Exhibit 8).
(c) -- Consent of Ballard Spahr Andrews and Ingersol, LLP (included in
Exhibit 5).
24 -- Power of Attorney included on signature page in Part II of the initial
Registration Statement.
- -------------------
* Filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(A) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act"):
(B) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information in the
II-2
<PAGE>
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Securities and Exchange
Commission (the "SEC") pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set
for the in the "Calculation of Registration Fee" table in the
effective registration statement.
(C) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement; provided, however, that the
information required to be included in a post-effective amendment
by paragraphs (a)(1)(A) and (a)(1)(B) above may be contained in
periodic reports filed by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of New Hyde
Park, State of New York, on this 29 day of April, 1999.
KIMCO REALTY CORPORATION
By: /s/ Milton Cooper
--------------------------------------
Milton Cooper
Chairman of the Board of Directors
and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Milton Cooper and
Michael V. Pappagallo, and both or either of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this registration
statement and any subsequent registration statement thereto pursuant to Rule
462(b) of the Securities Act, and to file the same, with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them or
their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Martin S. Kimmel Martin S. Kimmel, Director April 29, 1999
- ------------------------------------
Milton Cooper, Chairman of the Board April 29, 1999
/s/ Milton Cooper and Chief Executive Officer
- ------------------------------------
Michael J. Flynn, Vice Chairman of the April 29, 1999
Board of Directors, President and Chief
/s/ Michael J. Flynn Operating Officer
- ------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Michael V. Pappagallo, Vice President April 29, 1999
/s/ Michael V. Pappagallo and Chief Financial Officer
- ------------------------------------
/s/ Richard G. Dooley Director April 29, 1999
- ------------------------------------
Richard G. Dooley
/s/ Joe Grills Director April 29, 1999
- ------------------------------------
Joe Grills
/s/ Frank Lourenso Director April 29, 1999
- ------------------------------------
Frank Lourenso
/s/ Joseph K. Kornwasser Director April 29, 1999
- ------------------------------------
Joseph K. Kornwasser
</TABLE>
<PAGE>
April 30, 1999
Kimco Realty Corporation
3333 New Hyde Park Road
New Hyde Park, New York 11042
Re: Registration Statement on Form S-3:
170,000 Shares of Common Stock
Ladies and Gentlemen:
We have served as Maryland counsel Kimco Realty Corporation, a Maryland
corporation (the "Company"), in connection with certain matters of Maryland law
arising out of the registration of 170,000 shares (the "Shares") of Common
Stock, $.01 par value per share, of the Company ("Common Stock") covered by the
above-referenced Registration Statement (the "Registration Statement"), under
the Securities Act of 1933, as amended (the "1933 Act"). The Shares may be
issued by the Company from time to time to holders of limited partnership
interests in Bay-Gard Ltd., a Florida limited partnership ("Bay-Gard").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Registration Statement.
In connection with our representation of the Company, and as a basis
for the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (hereinafter collectively referred to as the "Documents"):
1. The Registration Statement, filed with the Securities and Exchange
Commission (the "Commission"), pursuant to the Securities Act of 1933, as
amended (the "1933 Act"), and the related form of prospectus contained therein;
2. The charter of the Company (the "Charter"), certified as of a recent
date by the State Department of Assessments and Taxation of Maryland (the
"SDAT");
3. The Bylaws of the Company, certified as of a recent date by its
Secretary;
<PAGE>
4. Resolutions adopted by the Board of Directors of the Company
relating to the issuance and registration of the Shares (the "Resolutions"),
certified as of a recent date by the Secretary of the Company;
5. A specimen of the certificate representing a share of Common Stock,
certified as of a recent date by the Secretary of the Company;
6. A certificate of the SDAT as to the good standing of the Company,
dated as of a recent date;
7. A certificate executed by the Secretary of the Company, dated the
date hereof; and
8. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent with, the following:
1. Each individual executing any of the Documents, whether on behalf of
such individual or another person, is legally competent to do so.
2. Each individual executing any of the Documents on behalf of a party
(other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of the
Documents has duly and validly executed and delivered each of the Documents to
which such party is a signatory, and such party's obligations set forth therein
are legal, valid and binding and are enforceable in accordance with all stated
terms.
4. All Documents submitted to us as originals are authentic. All
Documents submitted to us as certified or photostatic copies conform to the
original documents. All signatures on all such Documents are genuine. All public
records reviewed or relied upon by us or on our behalf are true and complete.
All statements and information contained in the Documents are true and complete.
There has been no oral or written modification or amendment to the Documents, or
waiver of any of the provision of any of the Documents, by action or omission of
the parties or otherwise.
<PAGE>
5. The Shares will not be issued in violation of any restriction or
limitation contained in Article VII of the Charter.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
Based upon the foregoing, and subject to the assumptions, limitations
and qualifications stated herein, it is our opinion that:
1. The Company is a corporation duly incorporated and existing under
and by virtue of the laws of the State of Maryland and is in good standing with
the SDAT.
2. The Shares have been duly authorized for issuance and, when and if
issued and delivered against payment therefor and otherwise in accordance with
the Resolutions and the Registration Statement, will be (assuming that upon any
such issuance the total number of shares of Common Stock issued and outstanding
will not exceed the total number of shares of Common Stock that the Company is
then authorized to issue under the Charter) validly issued, fully paid and
nonassessable.
The foregoing opinion is limited to the substantive laws of the State
of Maryland and we do not express any opinion herein concerning any other law.
We express no opinion as to compliance with the securities (or "blue sky") laws
or the real estate syndication laws of the State of Maryland.
We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Securities
and Exchange Commission as an exhibit to the Registration Statement and,
accordingly, may not be relied upon by, quoted in any manner to, or delivered to
any other person or entity without, in each instance, our prior written consent.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein. In giving
this consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the 1933 Act.
Very truly yours,
/s/Ballard Spahr Andrews
& Ingersoll, LLP
<PAGE>
[Letterhead of LATHAM & WATKINS]
April 29, 1999
Kimco Realty Corporation
3333 New Hyde Park Road
New Hyde Park, New York 11042
Re: Federal Income Tax Consequences
Ladies and Gentlemen:
We have acted as tax counsel to Kimco Realty Corporation, a
Maryland corporation (the "Company") in connection with its sale of up to
170,000 shares of common stock of the Company pursuant to a registration
statement on Form S-3 under the Securities Act of 1933, as amended, filed with
the Securities and Exchange Commission on April 30, 1999 (and as so amended as
of the time it becomes effective) (the "Registration Statement").
You have requested our opinion concerning the statements in
the Registration Statement under the caption "Federal Income Tax
Considerations." This opinion is based on various facts and assumptions, and is
conditioned upon certain representations made by the Company as to factual
matters through a certificate of an officer of the Company (the "Officer's
Certificate"). In addition, this opinion is based upon the factual
representations of the Company concerning its business, properties and governing
documents as set forth in the Registration Statement.
In our capacity as counsel to the Company, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and other instruments as we have deemed
necessary or appropriate for purposes of this opinion. In our examination, we
have
<PAGE>
LATHAM & WATKINS
Kimco Realty Corporation
Page 2
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures thereon, the legal capacity of natural persons
executing such documents and the conformity to authentic original documents of
all documents submitted to us as copies. For the purposes of our opinion, we
have not made an independent investigation, or audit of the fact set forth in
the above referenced documents or in the Officer's Certificate.
We are opining herein as to the effect on the subject
transaction only of the federal income tax laws of the United States and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of other federal laws, the laws of any state or any other jurisdiction
or as to any matters of municipal law or the laws of any other local agencies
within any state.
Based on such facts, assumptions and representations it is our
opinion that the statements in the Registration Statement set forth under the
caption "Federal Income Tax Considerations" to the extent such statements
constitute matters of law, summaries of legal matters, or legal conclusions,
have been reviewed by us and are accurate in all material respects.
No opinion is expressed as to any matter not discussed herein.
This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion subsequent to the date
hereof. This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the representations described
above, including in the Registration Statement or the Officer's Certificate may
affect the conclusions stated herein. Moreover, the Company's qualification and
taxation as a real estate investment trust depends upon the Company's ability to
meet, through actual annual operating results, distribution levels and diversity
of stock ownership, the various qualification tests imposed under the Code, the
results of which have not been and will not be reviewed by Latham & Watkins.
Accordingly, no assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such requirements.
<PAGE>
LATHAM & WATKINS
Kimco Realty Corporation
Page 3
This opinion is furnished to you, and is for your use in
connection with the transactions set forth in the Registration Statement. This
opinion may not be relied upon by you for any other purpose, or furnished to,
quoted to, or relied upon by any other person, firm or corporation, for any
purpose, without our prior written consent. We hereby consent to the filing of
this opinion as an exhibit to the Registration Statement and to the use of our
name under the caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Latham & Watkins
<PAGE>
================================================================================
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
BAY-GARD, LTD.
a Florida limited partnership
Dated as of May 15, 1998
================================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINED TERMS......................................................................................... 2
ARTICLE 2. ORGANIZATIONAL MATTERS................................................................................14
Section 2.1. Formation.........................................................................14
Section 2.2. Name..............................................................................14
Section 2.3. Registered Office and Agent; Principal Place of Business;
Other Places of Business......................................................15
Section 2.4. Power of Attorney.................................................................15
Section 2.5. Term..............................................................................16
Section 2.6. Effective Time....................................................................16
ARTICLE 3. PURPOSE...............................................................................................16
Section 3.1. Purpose and Business..............................................................16
Section 3.2. Powers............................................................................17
Section 3.3. Specified Purposes................................................................17
Section 3.4. Representations and Warranties by the Partners....................................17
ARTICLE 4. CAPITAL CONTRIBUTIONS.................................................................................19
Section 4.1. Capital Contributions of the Initial Partners.....................................19
Section 4.2. Additional Partners...............................................................19
Section 4.3. Loans by Third Parties............................................................19
Section 4.4. Additional Funding and Capital Contributions......................................20
Section 4.5. No Interest; No Return............................................................21
ARTICLE 5. DISTRIBUTIONS.........................................................................................21
Section 5.1. Requirement and Characterization of Distributions.................................21
Section 5.2. Distributions in Kind.............................................................21
Section 5.3. Amounts Withheld..................................................................22
Section 5.4. Distributions Upon Liquidation....................................................22
Section 5.5. Restricted Distributions..........................................................22
ARTICLE 6. ALLOCATIONS...........................................................................................22
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss.......................22
Section 6.2. General Allocations...............................................................23
Section 6.3. Additional Allocation Provisions..................................................24
Section 6.4. Tax Allocations...................................................................26
Section 6.5. Other Provisions..................................................................26
Section 6.6. Amendments to Allocation to Reflect Issuance of Additional
Partnership Interests.........................................................27
i
<PAGE>
<S> <C>
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS.................................................................27
Section 7.1. Management........................................................................27
Section 7.2. Certificate of Formation..........................................................31
Section 7.3. Restrictions on General Partner's Authority.......................................31
Section 7.4. Reimbursement of the General Partner..............................................33
Section 7.5. Other Business of General Partner.................................................34
Section 7.6. Contracts with Affiliates.........................................................34
Section 7.7. Indemnification...................................................................35
Section 7.8. Liability of the General Partner..................................................37
Section 7.9. Other Matters Concerning the General Partner......................................37
Section 7.10. Title to Partnership Assets......................................................38
Section 7.11. Reliance by Third Parties........................................................38
ARTICLE 8. RIGHTS AND OBLIGATIONS OF PARTNERS....................................................................39
Section 8.1. Limitation of Liability...........................................................39
Section 8.2. Managing of Business..............................................................39
Section 8.3. Outside Activities of Partners....................................................39
Section 8.4. Return of Capital.................................................................39
Section 8.5. Rights of Limited Partners Relating to the Partnership............................40
Section 8.6. Exchange Rights...................................................................40
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................................42
Section 9.1. Records and Accounting............................................................42
Section 9.2. Fiscal Year.......................................................................43
Section 9.3. Reports...........................................................................43
ARTICLE 10. TAX MATTERS..........................................................................................43
Section 10.1. Preparation of Tax Returns.......................................................43
Section 10.2. Tax Elections....................................................................43
Section 10.3. Tax Matters Partner..............................................................44
Section 10.4. Organizational Expenses..........................................................44
ARTICLE 11. TRANSFERS AND WITHDRAWALS............................................................................44
Section 11.1. Transfer.........................................................................44
Section 11.2. Transfer of General Partner's Partnership Interest...............................44
Section 11.3. Limited Partners' Rights to Transfer.............................................45
Section 11.4. Substituted Partners.............................................................46
Section 11.5. Assignees........................................................................47
Section 11.6. General Provisions...............................................................47
ARTICLE 12. ADMISSION OF PARTNERS................................................................................48
Section 12.1. Admission of Successor General Partner...........................................48
Section 12.2. Admission of Additional Partners.................................................49
Section 12.3. Amendment of Agreement and Certificate of Partnership............................49
ARTICLE 13. DISSOLUTION, LIQUIDATION AND TERMINATION.............................................................49
Section 13.1. Dissolution......................................................................49
ii
<PAGE>
<S> <C>
Section 13.2. Winding Up.......................................................................50
Section 13.3. Deemed Distribution and Recontribution...........................................52
Section 13.4. Rights of Partners...............................................................52
Section 13.5. Notice of Dissolution............................................................52
Section 13.6. Cancellation of Certificate of Limited Partnership...............................52
Section 13.7. Reasonable Time for Winding-Up...................................................52
Section 13.8. Liability of Liquidator..........................................................52
ARTICLE 14. GENERAL PROVISIONS...................................................................................53
Section 14.1. Addresses and Notice.............................................................53
Section 14.2. Titles and Captions..............................................................53
Section 14.3. Pronouns and Plurals.............................................................53
Section 14.4. Further Action...................................................................53
Section 14.5. Binding Effect...................................................................53
Section 14.6. Creditors........................................................................53
Section 14.7. Waiver...........................................................................54
Section 14.8. Counterparts.....................................................................54
Section 14.9. Applicable Law...................................................................54
Section 14.10. Entire Agreement................................................................54
Section 14.11. Invalidity of Provisions........................................................54
Section 14.12. Limitation to Preserve REIT Status..............................................54
Section 14.13. No Partition....................................................................55
Exhibit A Partner Information...........................................................................A-1
Exhibit B Notice of Exchange............................................................................B-1
iii
<PAGE>
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
BAY-GARD, LTD.
THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this
"Agreement") of BAY-GARD, LTD., a Florida limited partnership (the
"Partnership"), dated as of May 15, 1998, is entered into by and among KIMCO
BRADENTON 698, INC., a Florida corporation (the "General Partner"), and the
Persons whose names are set forth on Exhibit A as attached hereto (the "Limited
Partners," and together with the General Partner, the "Partners"), together with
any other Persons who become Partners in the limited partnership as provided
herein.
WHEREAS, the Partnership was formed as a limited partnership
under the laws of the State of Florida pursuant to the Limited Partnership
Agreement dated March 7, 1996; and
WHEREAS, the Partners of the Partnership wish to amend and
restate their original limited partnership agreement (the "Original Partnership
Agreement") to provide that KIMCO BRADENTON 698, INC. become the General Partner
of the Partnership and Midway Holdings, Inc., Palmetto Holdings I, Inc. and J.B.
Baldwin Land Company, Inc. become Limited Partners of the Partnership and cease
to be the General Partners; and
WHEREAS, this Amended and Restated Limited Partnership
Agreement will be binding as of the Effective Time (defined herein) and the
Original Partnership Agreement will cease to be in effect as of the Effective
Time; and
WHEREAS, the General Partner, the Partnership and the parties
set forth on Exhibit A hereto have entered into that certain Contribution
Agreement dated as of April 6, 1998 (the "Contribution Agreement"), providing
for the contribution of a sum certain to, and the acquisition of certain
interests in, the Partnership; and
WHEREAS, the Partnership Interest of Charles W. Wafer in its
entirety, and a portion of the other Pre Closing Partner's Partnership
Interests, as set forth in Exhibit A attached hereto, is being acquired by KIMCO
BRADENTON 698, INC., at the Effective Time the Capital Account of KIMCO
BRADENTON 698, INC., shall be as set forth on Exhibit A and Charles W. Wafer
shall withdraw from the Partnership and thereupon cease to be a Partner in the
Partnership; and
WHEREAS, it is a condition to the closing of the transactions
contemplated by the Contribution Agreement that the parties hereto enter this
Agreement;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby, as of the date hereof, amend and restate the Original
Partnership Agreement to read in full, and hereby agree, as follows:
<PAGE>
ARTICLE 1.
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Florida Uniform Limited Partnership Law, as it
may be amended from time to time, and any successor to such statute.
"Actions" has the meaning set forth in Section 7.7 hereof.
"Additional Funds" has the meaning set forth in Section 4.4.A
hereof.
"Additional Partner" means a Person admitted to the
Partnership as a Partner pursuant to Section 4.2 or Section 4.4.D and Section
12.2 hereof and who is shown as such on the books and records of the Partner.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) decrease such deficit by any amounts that such Partner is
obligated to restore pursuant to this Agreement or by operation of law
upon liquidation of such Partner's Partnership Interest or is deemed to
be obligated to restore pursuant to Regulation Section
1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling or controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Amended and Restated Limited
Partnership Agreement of BAY-GARD, LTD., as it may be amended, supplemented or
restated from time to time.
"Appraisal" means, with respect to any assets, the written
opinion of an independent third party experienced in the valuation of similar
assets, selected by the General Partner in good faith. Such opinion may be in
the form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial point
of view, to the Partnership.
"Appraised Value" means, with respect to any asset, including
any Contributed Property, the value of such asset as determined by Appraisal.
2
<PAGE>
"Assignee" means a Person to whom one or more Partnership
Units have been Transferred in a manner permitted under this Agreement, but who
has not become a Substituted Partner, and who has the rights set forth in
Section 11.5 hereof.
"Available Cash" means, with respect to any period for which
such calculation is being made,
(a) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss (as the
case may be) for such period,
(2) Depreciation and all other noncash charges to the
extent deducted in determining Net Income or Net Loss for such period,
(3) the amount of any reduction in reserves of the
Partnership referred to in clause (b)(6) below (including, without
limitation, reductions resulting because the General Partner determines
such amounts are no longer necessary),
(4) the excess, if any, of the net cash proceeds from
the sale, exchange, disposition, financing or refinancing of
Partnership property for such period over the gain (or loss, as the
case may be) recognized from such sale, exchange, disposition,
financing or refinancing during such period, and
(5) all other cash received (excluding security
deposits) (including amounts previously accrued as Net Income and
amounts of deferred income) or any net amounts borrowed by the
Partnership for such period that was not included in determining Net
Income or Net Loss for such period;
(b) less the sum, without duplication, of:
(1) all principal debt payments made during such
period by the Partnership,
(2) capital expenditures made by the Partnership
during such period,
(3) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clause (b)(1) or clause (b)(2) above,
(4) all other expenditures and payments not deducted
in determining Net Income or Net Loss for such period (including
amounts paid in respect of expenses previously accrued),
(5) any amount included in determining Net Income or
Net Loss for such period that was not received by the Partnership
during such period, and
(6) the amount of any increase in reserves
(including, without limitation, working capital reserves) established
during such period that the General Partner determines are necessary or
appropriate in its sole and absolute discretion.
3
<PAGE>
Notwithstanding the foregoing, Available Cash shall not include (i) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (ii) any Capital Contributions,
whenever received.
"Bankruptcy Law" means Title II, U.S. Code or any similar
federal or state law for the relief of debtors.
"Beneficial Ownership" means ownership of REIT Shares by a
Person who is or would be treated as an owner of such REIT Shares either
actually or constructively through the application of Section 544 of the Code,
as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficially Own,"
"Beneficially Owned," "Beneficially Owns" and "Beneficial Owner" shall have the
correlative meanings.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner on the Partnership's books and
records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added
such Partner's Capital Contributions, such Partner's allocable share of
Net Income and any items of income or gain specially allocated pursuant
to Article 6 hereof, and the principal amount of any Partnership
liabilities assumed by such Partner or that are secured by any property
distributed to such Partner.
(b) From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
(other than cash) distributed to such Partner pursuant to any provision
of this Agreement, such Partner's allocable share of Net Losses and any
items of loss or deductions specially allocated pursuant to Article 6
hereof, and the principal amount of any liabilities of such Partner
assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership.
(c) In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent that it relates to the Transferred interest.
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into
account Code Section 752(c) and any other applicable provisions of the
Code and Regulations.
(e) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied
in a manner consistent with such Regulations. If the General Partner
shall determine that it is prudent to modify the manner in which the
Capital Accounts are maintained in order to comply with such
Regulations, the General Partner may make such modification provided
that such modification is not likely to have a material effect on the
amounts distributable to any Partner without such Partner's Consent.
The General Partner also shall (i) make any adjustments that are
necessary or
4
<PAGE>
appropriate to maintain equality between the Capital Accounts of the
Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make
any appropriate modifications in the event that unanticipated events
might otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1,
Section 4.2 or Section 4.4 hereof.
"Cash Amount Per Unit" means an amount of cash equal to the
sum of (1) $1.00 and (2) the Preferred Return Shortfall with respect to the
Tendered Unit (if any) at the Specified Exchange Date and (3) a pro rata amount
per unit calculated to achieve the agreed upon rate of return (8% annual) for
the last short period, if any, before the Specified Exchange Date.
"Certificate" means the Certificate of Formation of the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Charter" means the Articles of Incorporation of the General
Partner, as amended, supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consent of the Limited Partner" means the Consent of a
Majority in Interest of the Limited Partners, which Consent shall be obtained
prior to the taking of any action for which it is required by this Agreement
and, except as otherwise provided in this Agreement, may be given or withheld by
a Majority in Interest of the Limited Partners, in their reasonable discretion.
"Constructive Ownership" means ownership of REIT Shares, or
any other interest in an entity by a Person who is or would be treated as an
owner thereof either actually or constructively through the application of
Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructively Own," "Constructively Owned," "Constructively Owns" and
"Constructive Owner" shall have the correlative meanings.
"Contributed Property" means each Property or other asset, in
such form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership.
"Contribution Agreement" means the Contribution Agreement
dated as of March __, 1998 by and between the Contributors (as defined therein),
and the Partnership.
"Custodian" means any receiver, trustee, assignee, liquidator
or other similar official under any Bankruptcy Law.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all
5
<PAGE>
amounts owed by such Person to banks or other Persons in respect of
reimbursement obligations under letters of credit, surety bonds and other
similar instruments guaranteeing payment or other performance of obligations by
such Person; (iii) all indebtedness for borrowed money or for the deferred
purchase price of property or services secured by any lien on any property owned
by such Person, to the extent attributable to such Person's interest in such
property, even though such Person has not assumed or become liable for the
payment thereof; and (iv) lease obligations of such Person that, in accordance
with generally accepted accounting principles, should be capitalized.
"Depreciation" means, for each Fiscal Year or other applicable
period, an amount equal to the federal income tax depreciation, amortization or
other cost recovery deduction allowable with respect to an asset for such year
or other period, except that, if the Gross Asset Value of an asset differs from
its adjusted basis for federal income tax purposes at the beginning of such year
or period, Depreciation shall be in an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"Effective Time" means the time and date set forth in Section
2.6.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excepted Property" has the meaning set forth in Section
7.3.D(2) hereof.
"Excess Partnership Units" means any Partnership Units held by
a Limited Partner to the extent that, if such Partnership Units were exchanged
for the REIT Shares Amount pursuant to Section 8.6 hereof, such Limited Partner
would either Beneficially Own or Constructively Own REIT Shares in excess of the
Ownership Limit.
"Exchange" has the meaning set forth in Section 8.6.A hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Family Members" means, as to a Person that is an individual,
(a) such Person's spouse, (b) such Person's ancestors, (c) such Person's
descendants (whether by blood or by adoption), (d) such Person's brothers and
sisters, (e) inter vivos or testamentary trusts of which only such Person or his
spouse, ancestors, descendants (whether by blood or by adoption), brothers or
sisters are beneficiaries and (f) any partnership or limited liability company
all of whose partners or members consist of such Person or his spouse,
ancestors, descendants (whether by blood or by adoption), brothers or sisters or
inter vivos or testamentary trusts of which only such Person or his spouse,
ancestors, descendants (whether by blood or by adoption), brothers or sisters
are beneficiaries.
"Fiscal Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Funding Debt" means any Debt incurred by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.
"Funding Notice" has the meaning set forth in Section 4.4.B
hereof.
6
<PAGE>
"General Partner" means KIMCO BRADENTON 698, INC., a Florida
corporation, in its capacity as a Partner, or any successor General Partner
designated pursuant to the terms of this Agreement.
"General Partner Loan" has the meaning set forth in Section
4.4.C hereof.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be its fair market value, as agreed
to by such Partner and the General Partner, and set forth on Exhibit A
with respect to that Partner.
(b) The Gross Asset Values of all Partnership assets
immediately prior to the occurrence of any event described in clause
(1), clause (2), clause (3), or clause (4) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the
General Partner using such reasonable method of valuation as it may
adopt, as of the following times:
(1) the acquisition of an additional interest in the
Partnership (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions pursuant to
Section 4.4 hereof or contributions or deemed contributions by the
General Partner pursuant to Section 4.4 hereof) by a new or existing
General Partner in exchange for more than a de minimis Capital
Contribution, if the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(2) the distribution by the Partnership to a Partner
of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership, if the General
Partner reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Partner
in the Partnership;
(3) the liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and
(4) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed
to a Partner shall be the gross fair market value of such asset on the
date of distribution as determined by the distributee and the General
Partner, provided that, if the distributee is the General Partner or if
the distributee and the General Partner cannot agree on such a
determination, such gross fair market value shall be determined by
Appraisal.
(d) At the election of the General Partner, the Gross Asset
Values of Partner assets shall be increased (or decreased) to reflect
any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts
7
<PAGE>
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the General Partner reasonably
determines that an adjustment pursuant to subsection (b) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partner asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such
asset for purposes of computing Net Income and Net Loss.
"Incapacity" or "Incapacitated" means, (i) as to any Partner
who is an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation or
limited liability company, the filing of a certificate of dissolution, or its
equivalent, for the corporation or limited liability company or the revocation
of its charter; (iii) as to any Partner that is a partnership, the dissolution
and commencement of winding up of the partnership; (iv) as to any Partner that
is an estate, the distribution by the fiduciary of the estate's entire interest
in the Partnership; (v) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief of or against such Partner under any bankruptcy, insolvency or other
similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt
or insolvent, or a final and non-appealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within 120 days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee, receiver
or liquidator has not been vacated or stayed within 90 days of such appointment,
or (h) an appointment referred to in clause (g) above is not vacated within 90
days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of its status as (A) the General Partner or (B) a director of the
General Partner or an officer or employee of the Partnership or the General
Partner and (ii) such other Persons (including Affiliates of the General Partner
or the Partnership) as the General Partner may designate from time to time
(whether before or after the event giving rise to potential liability), in its
sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Kimco Realty Corporation" means Kimco Realty Corporation, a
Maryland corporation.
"Limited Partner" means any Partner other than the General
Partner.
8
<PAGE>
"Limited Partnership Record Date" means the record date
established by the General Partner for the distribution of Available Cash
pursuant to Section 5.1 hereof, which record date shall be the same as the
record date established by the Kimco Realty Corporation for a dividend to
holders of REIT Shares.
"Liquidating Event" has the meaning set forth in Section 13.1
hereof.
"Liquidator" has the meaning set forth in Section 13.2.A
hereof.
"Majority in Interest of the Limited Partners" means those
Limited Partners holding in the aggregate more than 50% of the aggregate
outstanding Partnership Units of all the Limited Partners.
"Majority of Remaining Partners" means Limited Partners owning
(a) a majority of the profits interests in the Limited Partnership held by all
Limited Partners, determined and allocated based on any reasonable estimate of
profits from the relevant date to the projected termination of the Limited
Partnership and taking into account present and future allocations of profits
under the Agreement as it is in effect on the relevant date, and (b) a majority
of the capital interests in the Partnership, determined as of the relevant date
under the Agreement, owned by all Limited Partners.
"Manual" has the meaning set forth in Section 8.6.B hereof.
"Net Income" or "Net Loss" means, for each Fiscal Year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income
(or Net Loss) pursuant to this definition of "Net Income" or "Net Loss"
shall be added to (or subtracted from, as the case may be) such taxable
income (or loss);
(b) Any expenditure of the Partnership described in Code
Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B)
expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
not otherwise taken into account in computing Net Income (or Net Loss)
pursuant to this definition of "Net Income" or "Net Loss," shall be
subtracted from (or added to, as the case may be) such taxable income
(or loss);
(c) In the event that the Gross Asset Value of any Partnership
asset is adjusted pursuant to subsection (b) or subsection (c) of the
definition of "Gross Asset Value," the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such
asset for purposes of computing Net Income or Net Loss;
(d) In lieu of the depreciation, amortization and other cost
recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into
account Depreciation for such Fiscal Year;
(e) To the extent that an adjustment to the adjusted tax basis
of any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required
9
<PAGE>
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner's interest in the
Partnership, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes
of computing Net Income or Net Loss; and
(f) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item allocated pursuant to Section
6.3.A hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss or
deduction available to be allocated pursuant to Section 6.3.A hereof
shall be determined by applying rules analogous to those set forth in
this definition of "Net Income" or "Net Loss."
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Fiscal Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Sections 1.752-1(a)(2) and 1.704-2(b)(3).
"Notice of Exchange" means the Notice of Exchange
substantially in the form of Exhibit B attached to this Agreement.
"No Transfer Partners" means the Partners (or successors in
interest thereof) who acquired their Partnership Units in exchange for Real
Properties on the Effective Date.
"No Transfer Period" means (i) a period of five (5) years from
the Effective Date.
"Ownership Limit" means with respect to Beneficial Ownership,
2.0%, and with respect to Constructive Ownership, 2.0% of the number of shares
or value (whichever is more restrictive) of the outstanding REIT Shares.
"Parent" means any entity that, with respect to another
entity, directly or indirectly owns more than 10% of the voting stock of the
other entity.
"Partners" means the Persons owning Partnership Interests,
including the General Partner and any Additional and Substitute Partners, named
as Partners in Exhibit A attached hereto, which Exhibit A may be amended from
time to time.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i) with respect to
"partner nonrecourse debt minimum gain."
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
10
<PAGE>
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by a Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2) for the phrase "partnership minimum gain," and
the amount of Partnership Minimum Gain, as well as any net increase or decrease
in Partnership Minimum Gain, for a Fiscal Year shall be determined in accordance
with the rules of Regulations Section 1.704-2(d).
"Partnership Nonrecourse Deductions" has the meaning set forth
in Regulations Section 1.704-2(i)(2) for the phrase "partner nonrecourse
deductions," and the amount of Partner Nonrecourse Deductions with respect to a
Partner Nonrecourse Debt for a Fiscal Year shall be determined in accordance
with the rules of Regulations Section 1.704-2(i)(2).
"Partnership Unit" means a fractional share of the Partnership
Interests of all Partners issued pursuant to Section 4.1, Section 4.2 or Section
4.4 hereof, as the same may be modified from time to time as provided in this
Agreement. The ownership of Partnership Units may (but need not, in the sole and
absolute discretion of the General Partner) be evidenced in the form of a
certificate for Partnership Units.
"Percentage Interest" means as to a Partner holding a class of
Partnership Units, its interest in the Partnership as determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such Exhibit may be amended from time to time.
"Permitted Transfer" has the meaning set forth in Section
11.3.A hereof.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association, limited liability company or
other entity.
"Pre Closing Partners" means the Partners of the Operating
Partnership immediately prior to the Closing.
"Preferred Return Per Unit" means with respect to a
Partnership Unit outstanding on a Limited Partnership Record Date (other than
those Partnership Units held by the General Partner) an amount initially equal
to zero, and increased cumulatively on each Limited Partnership Record Date by
an amount equal to $.02 per unit (8% annual), less any amount required to be
withheld from time to time as required by the Contribution Agreement. With
respect to the first such Limited Partnership Record Date the amount will be a
pro-rata amount to achieve the agreed upon rate of return for the first short
period.
"Preferred Return Shortfall" means, for any holder of
Partnership Units (other than the General Partner), the excess (if any) of (i)
the Preferred Return Per Unit with respect to all Partnership Units held by such
holder over (ii) the aggregate amount previously distributed with respect to
such Limited Partner Units pursuant to Section 5.1 hereof (and Section 8.6
hereof, to the extent attributed to Preferred Return Shortfall), such amount not
to include any distribution amount paid to the General Partner according to the
terms and provisions of the Contribution Agreement.
11
<PAGE>
"Properties" means any assets and property of the Partnership
such as, but not limited to, interests in real property (including the Real
Properties) and personal property, including, without limitation, fee interests,
interests in ground leases, interests in limited liability companies, joint
ventures or partnerships, interests in mortgages, and Debt instruments as the
Partnership may hold from time to time.
"Qualified Transferee" means an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.
"Real Properties" has the meaning set forth in Section
7.3.D(2) hereof
"Regulations" means the applicable income tax regulations
under the Code, whether such regulations are in proposed, temporary or final
form, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
6.3.A(7) hereof.
"REIT" means a real estate investment trust qualifying under
Code Section 856, et seq.
"REIT Payment" has the meaning set forth in Section 14.12
hereof.
"REIT Requirements" has the meaning set forth in Section 5.1
hereof.
"REIT Share" means a share of Kimco Realty Corporation's
Common Stock, par value $.01 per share.
"REIT Shares Amount" means a number of REIT Shares equal to
the product of (a) the number of Tendered Units times (b) the Cash Amount Per
Unit divided by (c) the Value of a REIT Share; provided, however, that, in the
event that the General Partner or its Parent issues to all holders of REIT
Shares as of a certain record date rights, options, warrants or convertible or
exchangeable securities entitling the General Partner's or its Parent's
shareholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the "Rights"), with the record date for such Rights
issuance falling within the period starting on the date of the Notice of
Exchange and ending on the day immediately preceding the Specified Exchange
Date, which Rights will not be distributed before the relevant Specified
Exchange Date, then the REIT Shares Amount shall also include such Rights that a
holder of that number of REIT Shares would be entitled to receive, expressed,
where relevant hereunder, in a number of REIT Shares determined by the General
Partner in good faith.
"Related Party" means, with respect to any Person, any other
Person whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)) or Code Section 318 (as modified by Code Section
856(d)(5).
"Rights" has the meaning set forth in the definition of "REIT
Shares Amount."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
12
<PAGE>
"Shortfall Amount" has the meaning set forth in Section 6.2.A
hereof.
"Specified Exchange Date" means the 30th calendar day (or, if
such day is not a Business Day, the next following Business Day) after the
receipt by the General Partner of a Notice of Exchange; provided, however, that
no Specified Exchange Date shall occur prior to the first anniversary of the
Effective Date; provided, further, that the Specified Exchange Date, as well as
the closing of an Exchange on any Specified Exchange Date, may be deferred, in
the General Partner's sole and absolute discretion, for such time (but in any
event not more than 30 days in the aggregate) as may reasonably be required to
effect compliance with the Securities Act or other laws.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person; provided, however, that, with respect to
the Partnership, "Subsidiary" means solely a partnership or limited partnership
(taxed, for federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation) of which
the Partnership is a partner unless the General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a ruling
from the IRS, that the ownership of shares of stock of a corporation or other
entity will not jeopardize the General Partner's status as a REIT, in which
event the term "Subsidiary" shall include the corporation or other entity which
is the subject of such opinion or ruling.
"Substituted Partner" means an Assignee who is admitted as a
Partner to the Partnership pursuant to Section 11.4 hereof. The term
"Substituted Partner" shall not include any Additional Partner.
"Tax Items" has the meaning set forth in Section 6.4.A hereof.
"Tendered Units" has the meaning set forth in Section 8.6.A
hereof.
"Tendering Party" has the meaning set forth in Section 8.6.A
hereof.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Transfer," when used with respect to an Partnership Unit or
all or any portion of a Partnership Interest, means any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law. The terms
"Transferred" and "Transferring" have correlative meanings.
"Valuation Date" means (a) in the case of a tender of
Partnership Units for Exchange, the date of receipt by the General Partner of a
Notice of Exchange or, if such date is not a Business Day, the immediately
preceding Business Day or (b) in any other case, the date specified in this
Agreement.
"Value" means, on any Valuation Date with respect to a REIT
Share, the average of the daily market prices for a REIT Share over the ten (10)
consecutive trading days immediately preceding the Valuation Date. The market
price for any such trading day shall be:
13
<PAGE>
(1) if the REIT Shares are listed or admitted to trading on
any securities exchange or the Nasdaq Stock Market's National Market
System, the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal
consolidated transaction reporting system,
(2) if the REIT Shares are not listed or admitted to trading
on any securities exchange or the Nasdaq Stock Market's National Market
System, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated by the
General Partner, or
(3) if the REIT Shares are not listed or admitted to trading
on any securities exchange or the Nasdaq Stock Market's National Market
System and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so
reported; provided, however, that, if there are no bid and asked prices
reported during the ten (10) days prior to the date in question, the
market price of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
In the event that the REIT Shares Amount includes Rights that
a holder of REIT Shares would be entitled to receive, then the Value of such
Rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1. Formation
The Partnership is a limited partnership formed pursuant to
the provisions of the Act for the purposes and upon the terms and subject to the
conditions set forth in this Agreement. Except as expressly provided herein, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act.
Section 2.2. Name
The name of the Partnership is BAY-GARD, LTD. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The General Partner in its sole and absolute discretion
may change the name of the Partnership at any time and from time to time in
accordance with applicable law and shall notify the Partners of such change in
the next regular communication to the Partners.
14
<PAGE>
Section 2.3. Registered Office and Agent; Principal
Place of Business; Other Places of
Business
The principal office of the Partnership is located at 6100
Glades Road, Suite 300, Boca Raton, Florida, 33434, or such other place as the
General Partner may from time to time designate by notice to the Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Florida as the General Partner deems advisable.
Section 2.4. Power of Attorney
A. Each Partner (other than the General Partner) and each
Assignee hereby irrevocably constitutes and appoints the General Partner, any
Liquidator, and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates,
documents and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or restatements
thereof) that the General Partner or any Liquidator deems appropriate
or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership in the State
of Delaware and in all other jurisdictions in which the Partnership may
conduct business or own property; (b) all instruments that the General
Partner or any Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments or
documents that the General Partner or any Liquidator deems appropriate
or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (d) all instruments relating
to the admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Articles 11, 12 or 13 hereof
or the Capital Contribution of any Partner; and (e) all certificates,
documents and other instruments relating to the determination of the
rights, preferences and privileges of Partner Interests; and
(2) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and absolute
discretion of the General Partner or any Liquidator, to make, evidence,
give, confirm or ratify any vote, consent, approval, agreement or other
action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Partners and Assignees will be relying upon the power of
the General Partner to act as contemplated by this Agreement, and it shall
survive and not be affected by the subsequent Incapacity of any Partner or
Assignee and the Transfer of all or any portion of such Partner's or Assignee's
Limited Partners Units or Partnership Interest and shall extend to such
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Partner or Assignee hereby agrees to be bound by any representation
made by the General Partner or any Liquidator, acting in good faith pursuant to
such power of attorney; and each
15
<PAGE>
such Partner or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner or
any Liquidator, taken in good faith under such power of attorney. Each Partner
or Assignee shall execute and deliver to the General Partner or any Liquidator,
within 15 days after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
Section 2.5. Term
The term of the Partnership commenced on March 13, 1996, the
date that the original Certificate was filed in the office of the Secretary of
State of Florida in accordance with the Act, and shall continue until March 31,
2026 unless extended by mutual agreement of the Partners or earlier terminated
pursuant the provisions of Section 13 hereof or as otherwise provided by law.
Section 2.6. Effective Time
Upon the closing of the transactions set forth in Section 13
of the Contribution Agreement (the time and date of such closing, the "Effective
Time"), Midway Holdings, Inc., Palmetto Holdings I, Inc. and J.B. Baldwin Land
Company, Inc. shall become Limited Partners and Kimco Bradenton 698, Inc. shall
become the sole General Partner of the Partnership, each with the Capital
Account equal to $1.00 times the number of Partnership Units set forth on
Exhibit A hereto, and Mr. Charles W. Wafer shall withdraw completely from the
Partnership. Each of the Limited Partners shall have, at the Effective Time, the
stated value of Partnership Units set forth on Exhibit A hereto. At the
Effective Time there shall be no other Partners of the Partnership except those
set forth on Exhibit A.
ARTICLE 3.
PURPOSE
Section 3.1. Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner's Parent at all times to be classified as a REIT for federal
income tax purposes, unless the General Partner's Parent ceases to qualify as a
REIT for reasons other than the conduct of the business of the Partnership, (ii)
to enter into any partnership, joint venture, limited liability company or other
similar arrangement to engage in any business described in the foregoing clause
(i) or to own interests in any entity engaged, directly or indirectly, in any
such business and (iii) to do anything necessary or incidental to the foregoing.
In connection with the foregoing, and without limiting the General Partner's
Parent's right in its sole discretion to cease qualifying as a REIT, the
Partners acknowledge that the General Partner's Parent's current status as a
REIT inures to the benefit of all the Partners and not solely the General
Partner or its Affiliates.
Section 3.2. Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership including, without limitation,
full power and authority, directly or through its ownership interest in other
entities, to enter into, perform and carry out contracts of any kind, borrow
money and issue evidences of indebtedness,
16
<PAGE>
whether or not secured by mortgage, deed of trust, pledge or other lien,
acquire, own, manage, improve and develop real property, and lease, sell,
transfer and dispose of real property; provided, however, that notwithstanding
any other provision in this Agreement, the General Partner may cause the
Partnership not to take, or to refrain from taking, any action that, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, (ii) could subject the Parent of the Parent of the General Partner to any
additional taxes under Code Section 857 or Code Section 4981 or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner, its securities or the Partnership, unless
such action (or inaction) under clause (i), clause (ii) or clause (iii) above
shall have been specifically consented to by the General Partner in writing.
Section 3.3. Specified Purposes
The Partnership shall be a limited partnership only for the
purposes specified in Section 3.1 hereof, and this Agreement shall not be deemed
to create a company, venture or partnership between or among the Partners with
respect to any activities whatsoever other than the activities within the
purposes of the Partnership as specified in Section 3.1 hereof. Except as
otherwise provided in this Agreement, no Partner shall have any authority to act
for, bind, commit or assume any obligation or responsibility on behalf of the
Partnership, its properties or any other Partner. No Partner, in its capacity as
a Partner under this Agreement, shall be responsible or liable for any
indebtedness or obligation of another Partner, nor shall the Partnership be
responsible or liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of this Agreement by
such Partner, except as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of this Agreement
and the Act.
Section 3.4. Representations and Warranties by the
Partners
A. Each Partner that is an individual (including, without
limitation, each Additional Partner or Substituted Partner as a condition to
becoming an Additional Partner or a Substituted Partner) represents and warrants
to the Partnership, the General Partner and each other Partner that (i) such
Partner has the legal capacity to enter into this Agreement and perform such
Partner's obligations hereunder, (ii) the consummation of the transactions
contemplated by this Agreement to be performed by such Partner will not result
in a breach or violation of, or a default under, any material agreement by which
such Partner or any of such Partner's property is bound, or any statute,
regulation, order or other law to which such Partner is subject, (iii) such
Partner is neither a "foreign person" within the meaning of Code Section 1445(f)
nor a "foreign partner" within the meaning of Code Section 1446(e), (iv) such
Partner (other than the General Partner) either (A) does not own, directly or
indirectly or by attribution under Code Section 318 (as modified by Code Section
856(d)(5)), more than 25% of the interests in capital or profits of the
Partnership or (B) does not own, directly or indirectly or by attribution under
Code Section 318 (as modified by Code Section 856(d)(5)) any interest in any
entity that is a tenant of the General Partner, the Parent of the General
Partner, the Partnership or any partnership, venture or limited liability
company of which the General Partner, its Parent, or any of its or its Parent's
Subsidiaries or the Partnership is a partner, and (vi) this Agreement is binding
upon, and enforceable against, such Partner in accordance with its terms.
B. Each Partner that is not an individual (including, without
limitation, each Additional Partner or Substituted Partner as a condition to
becoming an Additional Partner or a Substituted Partner) represents and warrants
to the Partnership, the General Partner and each other Partner that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s) (or, if there
17
<PAGE>
is no general partner, a majority in interest of all Partners), committee(s),
trustee(s), general partner(s), beneficiaries, directors and shareholder(s), as
the case may be, as required, (ii) the consummation of such transactions will
not result in a breach or violation of, or a default under, its partnership or
operating agreement, trust agreement, charter or bylaws, as the case may be, any
material agreement by which such Partner or any of such Partner's properties or
any of its partners, beneficiaries, trustees or shareholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of its partners, trustees, beneficiaries or shareholders, as
the case may be, is or are subject, (iii) such Partner is neither a "foreign
person" within the meaning of Code Section 1445(f) nor a "foreign partner"
within the meaning of Code Section 1446(e), (iv) such Partner (other than the
General Partner), except as disclosed in writing to the General Partner, (A)
does not own, directly or indirectly or by attribution under Code Section 318
(as modified by Code Section 856(d)(5)) any shares of stock of the General
Partner, and (B) does not own, directly or indirectly or by attribution under
Code Section 318 (as modified by Code Section 856(d)(5)), any interest in any
entity that is a tenant of either the General Partner, the Partnership or any
partnership venture or limited liability company of which the General Partner or
any of its Subsidiaries or the Partnership is a partner, (v) if the
representation hereunder is being made subsequent to December 31, 1997, such
Partner (other than the General Partner) either (A) does not own, directly or
indirectly or by attribution under Code Section 318 (as modified by Code Section
856(d)(5)), more than 25% of the interests in capital of profits of the
Partnership or (B) does not own, directly or indirectly or by attribution under
Code Section 318 (as modified by Code Section 856(d)(5)) any interest in any
entity that is a tenant of the General Partner, the Parent of the General
Partner, the Partnership or any partnership, venture or limited liability
company of which the General Partner, its Parent, or any of its or its Parent's
Subsidiaries or the Partnership is a partner, (vi) this Agreement is binding
upon, and enforceable against, such Partner in accordance with its terms.
C. Each Partner (including, without limitation, each
Substituted Partner as a condition to becoming a Substituted Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment only and not for
the purpose of, or with a view toward, the resale or distribution of all or any
part thereof, nor with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any predetermined
circumstances. Each Partner further represents and warrants that it is an
"accredited investor" as defined in Rule 501 promulgated under the Securities
Act and is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.
D. The representations and warranties contained in Sections
3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery of this
Agreement by each Partner (and, in the case of an Additional Partners or a
Substituted Partner, the admission of such Additional Partner or Substituted
Partner as a Partner in the Partnership) and the dissolution, liquidation and
termination of the Partnership. The General Partner may, in its sole and
absolute discretion on behalf of the Partnership and its Partners, grant waivers
and exceptions to the representations and warranties contained in Sections
3.4.A, 3.4.B and 3.4.C hereof, but any such waiver or exception must be in
writing, must refer to this Section 3.4.D and must describe with particularity
the representation or warranty as to which such waiver or exception shall apply.
E. Each Partner (including, without limitation, each
Substituted Partner as a condition to becoming a Substituted Partner) hereby
represents that it has consulted and been advised by its legal counsel and tax
advisor in connection with, and acknowledges that no representations as to
potential profit, tax consequences of any sort (including, without limitation,
the tax consequences
18
<PAGE>
resulting from forming the Partnership, executing this Agreement, consummating
the transaction provided for in or contemplated by the Contribution Agreement,
making a Capital Contribution, being admitted to the Partnership or being
allocated Tax Items), cash flows, funds from operations or yield, if any, in
respect of the Partnership or the General Partner have been made by any Partner
or any employee or representative or Affiliate of any Partner, and that
projections and any other information, including, without limitation, financial
and descriptive information and documentation, that may have been in any manner
submitted to such Partner shall not constitute any representation or warranty of
any kind or nature, express or implied.
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions of the Initial
Partners
At the Effective Time, Kimco Bradenton 698, Inc. shall make a
Capital Contribution as set forth in Exhibit A to this Agreement. As of the
Effective Time, the Pre Closing Partners shall acknowledge receipt of the
Capital Contribution from which those amounts, as required to be paid out by the
Contribution Agreement, shall immediately be paid out. The Partners shall own
Partnership Units the value of which shall be the amounts set forth in Exhibit
A. Except as required by law or as otherwise provided in Sections 4.3 and 4.4,
no Partner shall be required or permitted to make any additional Capital
Contributions or loans to the Partnership.
Section 4.2. Additional Partners
The General Partner, with the Consent of the Limited Partners,
is authorized to admit one or more Additional Partners to the Partnership from
time to time, on terms and conditions and for such Capital Contributions as may
be established by the General Partner, with the Consent of the Limited Partners.
As a condition to being admitted to the Partnership, each Additional Partner
shall execute an agreement to be bound by the terms and conditions of this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, the Partnership shall not at any time have more than 100 partners
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, S corporation or
grantor trust (such entity, a "flow through entity"), but only if substantially
all of the value of such person's interest in the flow through entity is
attributable to the flow through entity's interest (direct or indirect) in the
Partnership).
Section 4.3. Loans by Third Parties
Subject to the provisions of Section 4.4 and Section 7.3
hereof, the Partnership may incur or assume Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements, for any purpose
(including, without limitation, in connection with any further acquisition of
Properties from any Person), upon such terms as the General Partner determines
appropriate; provided, however, that the Partnership shall not incur or assume
any Debt under which a breach, violation or default would be deemed to occur by
virtue of the Transfer of any Partnership Interest; provided, further, that any
Debt shall be nonrecourse to the General Partner unless the General Partner
otherwise agrees.
Section 4.4. Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition or development of additional Properties or for such
purposes as the General Partner may determine.
19
<PAGE>
Additional Funds may be raised by the Partnership, at the election of the
General Partner, in any manner provided in, and in accordance with, the terms of
this Section 4.4 or, alternatively, the terms of Section 4.3 hereof. No Person,
including, without limitation, any Partner or Assignee, shall have any
preemptive, preferential, participation or similar right or rights to subscribe
for or acquire any Partnership Interest.
B. Notice of Additional Funds Requirement. The General Partner
may, but shall not be required to, give written notice (the "Funding Notice") to
the Partners of the need for Additional Funds and the anticipated source(s)
thereof.
C. General Partner Loans. Whether or not a Funding Notice is
given to the Partners , the General Partner may enter into a Funding Debt and
lend the Additional Funds to the Partnership (a "General Partner Loan");
provided, however, that the General Partner shall not be obligated to lend the
net proceeds of any Funding Debt to the Partnership in a manner that would be
inconsistent with the General Partner's Parent's ability to remain qualified as
a REIT. If the General Partner enters into such a Funding Debt, the General
Partner Loan will consist of the net proceeds from such Funding Debt and, to the
extent permitted by law, will be on the same terms and conditions, including
interest rate and repayment schedule, and providing for the reimbursement of
costs and expenses, as shall be applicable with respect to or incurred in
connection with such Funding Debt. All General Partner Loans made pursuant to
this Section 4.4 shall be on terms and conditions generally available to the
Partnership from commercial lending institutions at the time such General
Partner Loan is made.
D. Additional General Partner Contributions; Additional
Partners. Whether or not a Funding Notice is given to the Partners, the General
Partner on behalf of the Partnership, with the Consent of the Limited Partners
may raise all or any portion of the Additional Funds by making additional
Capital Contributions or accepting additional Capital Contributions from any
other Partners or third parties and either (a) in the case of Partners
(including the General Partner), increasing that Partner's Partnership Units or
(b) in the case of a third party, admitting that third party as an Additional
Partner as contemplated by Section 4.2 of this Agreement. Subject to the terms
of this Section 4.4 and to the definition of "Gross Asset Value," the General
Partner shall determine in good faith the amount, terms and conditions of such
additional Capital Contributions; provided, however, that, in the case of an
additional Capital Contribution by the General Partner, the Partnership shall
issue to the General Partner the number of Partnership Units equal to the amount
of the additional Capital Contribution (net of any liabilities assumed or taken
subject to by the Partnership) rounded to the nearest whole unit.
E. Timing of Additional Capital Contributions. If additional
Capital Contributions are made by Partners on any day other than the first day
of a Fiscal Year, then Net Income, Net Loss, each item thereof and all other
items of income, gain, loss, deduction and credit allocable among Partners and
Assignees for such Fiscal Year shall be allocated among such Partners and
Assignees by taking into account their varying interests during the Fiscal Year
in accordance with Code Section 706(d), using the "interim closing of the books"
or "daily proration" method or another permissible method selected by the
General Partner.
Section 4.5. No Interest; No Return
No Partner shall be entitled to interest on its Capital
Contribution or on such Partner's Capital Account. Except as provided herein or
by law, no Partner shall have any right to demand or receive the return of its
Capital Contribution from the Partnership.
20
<PAGE>
ARTICLE 5.
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of
Distributions
Subject to the terms and provisions of the Contribution
Agreement dated on the date herein, the General Partner shall cause the
Partnership to distribute quarterly, on each day that Kimco Realty Corporation
has scheduled for payment of its regular quarterly dividend on its Common Stock
(provided that, if no dividend is paid for such quarter such date shall be the
corresponding dividend date of the last previous year when a dividend was paid)
all (or with respect to amounts distributed pursuant to the following clause
(2), such portion as the General Partner may in its discretion determine) of
Available Cash generated by the Partnership during such quarter to the Partners
on the Partnership Record Date with respect to such quarter (1) first, to the
Limited Partners, in accordance with their relative Preferred Return Shortfall,
until the cumulative amount distributed to the Limited Partners for the current
and all prior fiscal quarters equals the Preferred Return Per Unit with respect
to all outstanding Partnership Units (other than those held by the General
Partner); and (2) thereafter, to the General Partner. The General Partner shall
take such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with its Parent's qualification as a REIT, to cause
the Partnership to distribute sufficient amounts to enable the General Partner's
Parent to pay stockholder dividends that will (a) satisfy the requirements for
qualifying as a REIT under the Code and Regulations ("REIT Requirements"), and
(b) avoid any federal income or excise tax liability of the General Partner or
its Parent.
Section 5.2. Distributions in Kind
No right is given to any Partner to demand and receive
property other than cash. The General Partner may determine, in its sole and
absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5 and 6 hereof.
Section 5.3. Amounts Withheld
Each Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Partner any amount of federal,
state, local or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445
or Code Section 1446. Any amount paid on behalf of or with respect to a Partner
shall constitute a loan by the Partnership to such Partner, which loan shall be
repaid by such Partner within 15 days after notice from the General Partner that
such payment must be made unless (i) the Partnership withholds such payment from
a distribution that would otherwise be made to the Partner or (ii) the General
Partner determines, in its sole and absolute discretion, that such payment may
be satisfied out of the Available Cash of the Partnership that would, but for
such payment, be distributed to the Partner. Any amounts withheld pursuant to
the foregoing clauses (i) or (ii) shall be treated as having been distributed to
such Partner. Each Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Partner's Partnership Interest to secure
such Partner's obligation to pay to the Partnership any amounts required to be
paid pursuant to this Section 5.3. In the event that a Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 5.3 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Partner, and in such
event shall be deemed to have loaned such amount to such defaulting Partner and
21
<PAGE>
shall succeed to all rights and remedies of the Partnership as against such
defaulting Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Partner hereunder shall bear interest
at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four (4) percentage points (but not higher than the maximum lawful rate)
from the date such amount is due (i.e., 15 days after demand) until such amount
is paid in full. Each Partner shall take such actions as the Partnership or the
General Partner shall request in order to perfect or enforce the security
interest created hereunder.
Section 5.4. Distributions Upon Liquidation
Notwithstanding the other provisions of this Article 5, net
proceeds from a Terminating Capital Transaction and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section 13.2
hereof.
Section 5.5. Restricted Distributions
Notwithstanding any provision to the contrary contained in
this Agreement, neither the Partnership nor the General Partner, on behalf of
the Partnership, shall make a distribution to any Partner on account of its
Partnership Interest or interest in Partnership Units if such distribution would
violate Section 18-607 of the Act or other applicable law.
ARTICLE 6.
ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net
Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined
and allocated with respect to each Fiscal Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, an allocation
to a Partner of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2. General Allocations Except as otherwise
provided in this Article 6:
A. Net Income. Net Income for any Fiscal Year shall be
allocated, for purposes of adjusting the Capital Accounts of the Partners, in
accordance with the following order of priority:
(1) first, to the General Partner, until the
cumulative amount of Net Income allocated to the General Partner for
the current and all prior periods pursuant to this Section 6.2.A(1) is
equal to the cumulative amount of Net Loss allocated to the General
Partner pursuant to Section 6.2.B(3) for all prior periods;
(2) second, to the Limited Partners, pro rata to each
Limited Partner in accordance with the relative amount of Net Loss
previously allocated to the Limited Partners pursuant to Section
6.2.B(2), until the cumulative amount of Net Income allocated to each
Limited Partner for the current and all prior periods pursuant to this
Section 6.2.A(2) is equal to the cumulative amount of Net Loss
allocated to the Limited Partners pursuant to Section 6.2.B(2) for all
prior periods;
22
<PAGE>
(3) third, to the General Partner, until the
cumulative amount of Net Income allocated to the General Partner for
the current and all prior periods pursuant to this Section 6.2.A(3) is
equal to the cumulative amount of Net Loss allocated to the General
Partner pursuant to Section 6.2.B(1) for all prior periods;
(4) fourth, to the Limited Partners, pro rata in
accordance with their relative Shortfall Amounts, until the cumulative
amount of Net Income allocated to each such Limited Partner pursuant to
this Section 6.2.A(4) for the current and all prior Fiscal Years is
equal to the cumulative amount distributed to each such Limited Partner
pursuant to Section 5.1 for the current and all prior Fiscal Years.
"Shortfall Amount" shall mean, with respect to each Partner, the excess
if any of the cumulative amount distributed to such Limited Partner
pursuant to Section 5.1 for the current and all prior Fiscal Years over
(ii) the cumulative amount of Net Income previously allocated to such
Limited Partner pursuant to this Section 6.2.A(4), and
(5) thereafter, to the General Partner.
B. Net Loss. Net Loss for any Fiscal Year shall be allocated,
for purposes of adjusting the Capital Accounts of the Partners in accordance
with the following order of priority:
(1) first, to the General Partner, until the Capital Account
balance of the General Partner (calculated for this purpose by adding
to the General Partner's Capital Account such Partner's share of
Partnership Minimum Gain and Partner Minimum Gain) is equal to zero;
(2) second, to the Limited Partners, pro rata to each Limited
Partner in accordance with their relative positive Capital Account
balances (calculated for this purpose by adding to each Limited
Partner's Capital Account such Partner's share of Partnership Minimum
Gain and Partner Minimum Gain), until the balance of each Limited
Partner's Capital Account (calculated for this purpose by adding to
each Limited Partner's Capital Account such Partner's share of
Partnership Minimum Gain and Partner Minimum Gain) is equal to zero;
and
(3) thereafter, to the General Partner.
C. Special Allocation in Year of Liquidation. Notwithstanding
Section 6.2.A and Section 6.2.B (but subject to Section 6.3) Net Income, Net
Loss and, if necessary, items of gross income, gain, loss, and deduction arising
in the year of liquidation of the Partnership (or if earlier, the year in which
all or substantially all of the assets of the Partnership are sold) shall be
allocated in a manner so that, to the extent possible, upon liquidation of the
Partnership, liquidating distributions pursuant to Section 13.2.A(4) will be
made as follows:
(1) first, to the Limited Partners, pro rata in accordance
with the relative amounts distributable to each such Partner pursuant to this
clause (1), until each Limited Partner has received an amount equal to the sum
of (a) the product of (i) $1.00 and (ii) the number of Partnership Units held by
such Partner and (b) such Partner's Preferred Return Shortfall (if any); and
(2) thereafter, to the General Partner.
Section 6.3. Additional Allocation Provisions
A. Regulatory Allocations
23
<PAGE>
(1) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2
hereof, or any other provision of this Article 6, if there is a net decrease in
Partnership Minimum Gain during any Fiscal Year, each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the net decrease
in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.B(1) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
(2) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.A(1) hereof, if
there is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any Fiscal Year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5), shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the net decrease
in Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A(2) is intended to qualify as
a "chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulations Section 1.704-2(i) and shall be interpreted consistently therewith.
(3) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Partner(s)
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable, in accordance
with Regulations Section 1.704-2(i).
(4) Qualified Income Offset. If any Partner unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to such Partner in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible, provided that an
allocation pursuant to this Section 6.3.A(4) shall be made if and only to the
extent that such Partner would have an Adjusted Capital Account Deficit after
all other allocations provided in this Article 6 have been tentatively made as
if this Section 6.3.A(4) were not in the Agreement. It is intended that this
Section 6.3.A(4) qualify and be construed as a "qualified income offset" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(5) Limitation on Allocation of Net Loss. To the extent that
any allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Partner, such allocation of Net Loss shall be reallocated
among the other Partners in accordance with their respective Partnership Units,
subject to the limitations of this Section 6.3.A(5).
(6) Section 754 Adjustment. To the extent that an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is
24
<PAGE>
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
its interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Partners in accordance with
their Partnership Units in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such distribution
was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(7) Curative Allocations. The allocations set forth in
Sections 6.3.A(1) through (6) hereof (the "Regulatory Allocations") are intended
to comply with certain regulatory requirements, including the requirements of
Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of
Section 6.1 hereof, the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the Partners so
that, to the extent possible without violating the requirements giving rise to
the Regulatory Allocations, the net amount of such allocations of other items
and the Regulatory Allocations to each Partner shall be equal to the net amount
that would have been allocated to each such Partner if the Regulatory
Allocations had not occurred.
B. Allocation of Excess Nonrecourse Liabilities. For purposes
of determining a Partner's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), each Partner's interest in Partnership profits shall be its
Percentage Interest.
Section 6.4. Tax Allocations
A. In General. Except as otherwise provided in this Section
6.4, for income tax purposes under the Code and the Regulations each Partnership
item of income, gain, loss and deduction (collectively, "Tax Items") shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 6.2 and
6.3 hereof.
B. Allocations Respecting Section 704(c) Reevaluations.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner immediately preceding the date of
contribution shall be allocated among the Partners for income tax purposes
pursuant to the "traditional method" as described in Regulations Section
1.704-3(b). In the event that the Gross Asset Value of any Partnership asset is
adjusted pursuant to subsection (b) of the definition of "Gross Asset Value"
(provided in Article 1 hereof), subsequent allocations of Tax Items with respect
to such asset shall take account of the variation, if any, between the adjusted
basis of such asset and its Gross Asset Value in the same manner as under Code
Section 704(c) and the applicable Regulations and this Section 6.4.B.
Section 6.5. Other Provisions
A. Other Allocations. In the event that (i) any modifications
are made to the Code or any Regulations, (ii) any changes occur in any case law
applying or interpreting the Code or any Regulations, (iii) the IRS changes or
clarifies the manner in which it applies or interprets the Code or any
Regulations or any case law applying or interpreting the Code or any Regulations
or (iv) the IRS adjusts the reporting of any of the transactions contemplated by
this Agreement which, in each case, either (a) requires allocations of items of
income, gain, loss, deduction or credit or (b) requires reporting of any
25
<PAGE>
of the transactions contemplated by this Agreement in a manner different from
that set forth in this Article 6, the General Partner is hereby authorized to
make new allocations or report any such transactions (as the case may be) in
reliance of the foregoing, and such new allocations and reporting shall be
deemed to be made pursuant to the fiduciary duty of the General Partner to the
Partnership and the other Partners, and no such new allocation or reporting
shall give rise to any claim or cause of action by any Partner.
B. Consistent Tax Reporting. The Partners acknowledge and are
aware of the income tax consequences of the allocations made by this Article 6
and hereby agree to be bound by the provisions of this Article 6 in reporting
their shares of Net Income, Net Loss and other items of income, gain, loss,
deduction and credit for federal, state and local income tax purposes.
Section 6.6. Amendments to Allocation to Reflect
Issuance of Additional Partnership
Interests
In the event that the Partnership issues additional
Partnership Interests to the General or any Additional Partner pursuant to
Article 4 hereof, the General Partner shall make such revisions to this Article
6 as it determines are necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
certain classes of Partnership Interests.
ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management
A........Except as otherwise expressly provided in this
Agreement, the General Partner, in its capacity as a Partner of the Partnership
under the Act, shall have sole and complete charge and management over the
business and affairs of the Partnership, in all respects and in all matters. The
General Partner shall be an agent of the Partnership's business, and the actions
of the General Partner taken in such capacity and in accordance with this
Agreement shall bind the Partnership. The General Partner shall at all times be
a Partner of the Partnership. Except as otherwise expressly provided in this
Agreement or required by any non-waivable provisions of applicable law, the
Limited Partners shall not participate in the control of the Partnership, shall
have no right, power or authority to act for or on behalf of, or otherwise bind,
the Partnership and shall have no right to vote on or consent to any other
matter, act, decision or document involving the Partnership or its business. The
General Partner may not be removed by the Partners with or without cause, except
with the consent of the General Partner. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including
the limitations on the authority of the General Partner set forth in Section
7.3, shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation, making prepayments
on loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit the
General Partner and its Parent (so long as the General Partner's Parent
qualifies as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Code Section
4981) and to make distributions to its
26
<PAGE>
shareholders sufficient to permit the General Partner's Parent to
maintain REIT status or otherwise to satisfy the REIT Requirements),
the assumption or guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidences of indebtedness
(including the securing of same by deed to secure debt, mortgage, deed
of trust or other lien or encumbrance on the Partnership's assets) and
the incurring of any obligations that it deems necessary for the
conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(3) except as restricted pursuant to Section 7.3.D(2)
hereof, the acquisition, sale, transfer, exchange or other disposition
of any assets of the Partnership (including, but not limited to, the
exercise or grant of any conversion, option, privilege or subscription
right or any other right available in connection with any assets at any
time held by the Partnership) or the merger, consolidation,
reorganization or other combination of the Partnership with or into
another entity;
(4) the mortgage, pledge, encumbrance or
hypothecation of any assets of the Partnership (including, without
limitation, any Contributed Property), the use of the assets of the
Partnership (including, without limitation, cash on hand) for any
purpose consistent with the terms of this Agreement which the General
Partner believes will directly benefit the Partnership and on any terms
that the General Partner sees fit, including, without limitation, the
financing of the conduct or the operations of the General Partner or
the Partnership, the lending of funds to other Persons (including,
without limitation, the General Partner (if necessary to permit the
financing or capitalization of a subsidiary of the General Partner or
the Partnership) and the repayment of obligations of the Partnership,
any of its Subsidiaries and any other Person in which it has an equity
investment;
(5) the management, operation, leasing (including the
amendment and/or termination of any lease), landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other asset
of the Partnership or any Subsidiary;
(6) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments that the General
Partner considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General Partner's
powers under this Agreement, including contracting with property
managers (including, without limitation, as to any Contributed Property
or other Property, contracting with the contributing or any other
Partner or its Affiliates for property management services),
contractors, developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement, the holding,
management, investment and reinvestment of cash and other assets of the
Partnership, and the collection and receipt of revenues, rents and
income of the Partnership;
27
<PAGE>
(8) the selection and dismissal of employees of the
Partnership or the General Partner (including, without limitation,
employees having titles or offices such as "president," "vice
president," "secretary" and "treasurer"), and agents, outside
attorneys, accountants, consultants and contractors of the Partnership
or the General Partner and the determination of their compensation and
other terms of employment or hiring;
(9) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems necessary or
appropriate including casualty, liability and other insurance on the
Properties of the Partnership;
(10) the formation of, or acquisition of an interest
in, and the contribution of property to, any corporation, limited or
general partnerships, joint ventures, limited liability companies or
other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of
property to any Subsidiary and any other Person in which it has an
equity investment from time to time); provided that, as long as the
General Partner's Parent has determined to continue to qualify as a
REIT, the Partnership may not engage in any such formation, acquisition
or contribution that would cause the General Partner's Parent to fail
to qualify as a REIT;
(11) the control of any matters affecting the rights
and obligations of the Partnership, including the settlement,
compromise, submission to arbitration or any other form of dispute
resolution, or abandonment, of any claim, cause of action, liability,
debt or damages, due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings, administrative
proceedings, arbitration's or other forms of dispute resolution, and
the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of
dispute resolution, the incurring of legal expense, and the
indemnification of any Person against liabilities and contingencies to
the extent permitted by law;
(12) the undertaking of any action in connection with
the Partnership's direct or indirect investment in its Subsidiaries or
any other Person (including, without limitation, contributing or
loaning Partnership funds to, incurring indebtedness on behalf of, or
guaranteeing the obligations of any such Persons);
(13) the determination of the fair market value of
any Partnership property distributed in kind using such reasonable
method of valuation as it may adopt; provided that such methods are
otherwise consistent with the requirements of this Agreement;
(14) the enforcement of any rights against any
Partner pursuant to representations, warranties, covenants and
indemnities relating to such Partner's contribution of property or
assets to the Partnership;
(15) holding, managing, investing and reinvesting
cash and other assets of the Partnership;
(16) the collection and receipt of revenues and
income of the Partnership;
28
<PAGE>
(17) the exercise, directly or indirectly, through
any attorney-in-fact acting under a general or limited power of
attorney, of any right, including the right to vote, appurtenant to any
asset or investment held by the Partnership;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which the
Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(19) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any Person in which
the Partnership does not have an interest pursuant to contractual or
other arrangements with such Person;
(20) the maintenance of working capital and other
reserves in such amounts as the General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to
time;
(21) the making, execution and delivery of any and
all deeds, leases, notes, deeds to secure debt, mortgages, deeds of
trust, security agreements, conveyances, contracts, guarantees,
warranties, indemnities, waivers, releases or legal instruments or
agreements in writing necessary or appropriate in the judgment of the
General Partner for the accomplishment of any of the powers of the
General Partner enumerated in this Agreement;
(22) the distribution of cash to acquire Partnership
Units held by a Partner in connection with a Partner's exercise of its
Exchange Right under Section 8.6 hereof; and
(23) the amendment and restatement of Exhibit A
hereto to reflect accurately at all times the Capital Accounts,
Partnership Units, and Percentage Interests of the Partners as the same
are adjusted from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of Partnership Units,
the admission of any Additional Partners or any Substituted Partner or
otherwise, as long as the matter or event being reflected in Exhibit A
hereto otherwise is authorized by this Agreement.
B. Each of the Limited Partner agrees that, except as provided
in Section 7.3 hereof, the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Limited Partners,
notwithstanding any other provision of this Agreement (except as provided in
Section 4.2 and Section 7.3 hereof), the Act or any applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
29
<PAGE>
D. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital
reserves in such amounts as the General Partner, in it sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner (including the General Partner) of any action
taken by it. The General Partner and the Partnership shall not have liability to
a Partner under any circumstances as a result of an income tax liability
incurred by such Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement so long as the action or
inaction is taken in good faith.
Section 7.2. Certificate of Formation
To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership under the laws of the State of
Florida and each other state, the District of Columbia or any other jurisdiction
in which the Partnership may elect to do business or own property. Subject to
the terms of Section 8.5.A(4) hereof, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited liability company in the State of
Delaware and any other state, or the District of Columbia or other jurisdiction
in which the Partnership may elect to do business or own property.
Section 7.3. Restrictions on General Partner's Authority
A. The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement,
including, without limitation:
(1) take any action that would make it impossible to
carry on the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(2) possess Partnership property, or assign any
rights in specific Partnership property, for other than a Partnership
purpose except as otherwise provided in this Agreement;
(3) perform any act that would subject a Partner to
liability as a General Partner in any jurisdiction or any other
liability except as provided herein or under the Act; or
(4) enter into any contract, mortgage, loan or other
agreement that expressly prohibits or restricts, or has the effect of
prohibiting or restricting, the ability of (a) the General Partner or
the Partnership from satisfying its obligations under Section 8.6
hereof in full or (b) a Partner from exercising its rights to an
Exchange in full, except, in either case, with the written consent of
such Partner affected by the prohibition.
B. The General Partner shall not, without the prior Consent of
the Limited Partners undertake or have the authority to do or undertake, on
behalf of the Partnership, any of the following actions or enter into any
transaction which would have the effect of such transactions:
30
<PAGE>
(1) except as provided in Section 7.3.C, amend,
modify or terminate this Agreement other than to reflect the admission,
substitution, termination or withdrawal of Partners pursuant to Article
4, Article 11 or Article 12 hereof;
(2) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of a custodian,
receiver or trustee for all or any part of the assets of the
Partnership;
(3) institute any proceeding for bankruptcy on behalf
of the Partnership;
(4) confess a judgment against the Partnership;
(5) approve or acquiesce to the Transfer of the
Partnership Interest of the General Partner to any Person other than
the Partnership;
(6) admit into the Partnership any Additional or
Substitute General Partner;
(7) admit into the Partnership any Additional Limited
Partners;
C. Notwithstanding Section 7.3.B, the General Partner shall
have the exclusive right and power to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner
or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this
Agreement and to amend Exhibit A in connection with such admission,
substitution or withdrawal;
(3) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited Partners in any
material respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with other
provisions, or make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with the
provisions of this Agreement;
(4) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in federal or
state law;
(5) to reflect such changes as are reasonably
necessary for the General Partner's Parent to maintain its status as a
REIT or to satisfy the REIT Requirements; and
(6) to modify, as set forth in the definition of
"Capital Account," the manner in which Capital Accounts are computed.
31
<PAGE>
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
D. So long as the Limited Partners own at least 15% of the
aggregate Partnership Interests of the Partnership, the General Partner shall
not, on behalf of the Partnership, take any of the following actions without the
prior Consent of the Limited Partners who contributed the Real Properties (as
defined below) that would be affected by any proposed transaction described
below:
(1) dissolve the Partnership, other than incident to
a sale, disposition, conveyance or other transfer of all or
substantially all of the assets of the Partnership, in one or a series
of related transactions (an "Asset Sale") after the expiration of the
No Transfer Period; or
(2) except in connection with a tax-free transaction
or a loan secured by any real property of the Partnership, sell,
dispose, convey or otherwise transfer any of the real properties the
Partnership acquired in connection with the transactions consummated
pursuant to the Contribution Agreement (collectively, the "Real
Properties") for a period of five (5) years from the Effective Date.
Section 7.4. Reimbursement of the General Partner
A. Except as set forth below, the General Partner shall not be
compensated for its services as the manager of the Partnership. Distributions,
payments and allocations to which the General Partner may be entitled in its
capacity as the General Partner shall not constitute compensation for services
rendered by the General Partner as provided in this Agreement (including the
provisions of Articles 5 and 6 hereof).
B. Subject to Sections 7.4.C and 14.12 hereof, the Partnership
shall be liable, and shall reimburse the General Partner on a monthly basis (or
such other basis as the General Partner may determine in its sole and absolute
discretion), for all sums expended in connection with the Partnership's
business. Any such reimbursements shall be in addition to any reimbursement of
the General Partner as a result of indemnification pursuant to Section 7.7
hereof.
C. To the extent practicable, Partnership expenses shall be
billed directly to and paid by the Partnership. Subject to Sections 7.1.C and
14.12 hereof, reimbursements to the General Partner or any of its Affiliates by
the Partnership shall be allowed, however, for the actual cost to the General
Partner or any of its Affiliates of operating and other expenses of the
Partnership, including, without limitation, the actual cost of goods, materials
and administrative services related to (i) Partnership operations, (ii)
Partnership accounting, (iii) communications with Partners, (iv) legal services,
(v) tax services, (vi) computer services, (vii) risk management, (viii) mileage
and travel expenses and (ix) such other related operational and administrative
expenses as are necessary for the prudent organization and operation of the
Partnership. "Actual cost of goods and materials" means the actual cost to the
General Partner or any of its Affiliates of goods and materials used for or by
the Partnership obtained from entities not affiliated with the General Partner,
and "actual cost of administrative services" means the pro rata cost of
personnel (as if such persons were employees of the Partnership) providing
administrative services to the Partnership. The cost for such services to be
reimbursed to the General Partner or any Affiliate thereof shall be the lesser
of the General Partner's or Affiliate's actual cost, or the amount the
Partnership would be required to pay to independent parties for comparable
administrative services in the same geographic location. In addition to the
foregoing, the General Partner may also provide the following services to the
Partnership at reasonable market rates
32
<PAGE>
generally in effect at the time such services are provided: (i) legal services
(by the general Partner's in-house counsel and their assistants), (ii) leasing
brokerage services, (iii) property management services, (iv) construction
services and (v) any other service the Partnership requires which the General
Partner, in its sole and absolute discretion, has the expertise to provide.
D. The General Partner shall also be reimbursed for all
expenses it incurs relating to any issuance of additional Partnership Interests,
Debt of the Partnership, or rights, options, warrants or convertible or
exchangeable securities of the Partnership pursuant to Article IV hereof
(including, without limitation, all costs, expenses, damages and other payments
resulting from or arising in connection with litigation related to any of the
foregoing), all of which expenses are considered by the Partners to constitute
expenses of, and for the benefit of, the Partnership.
To the extent that reimbursements to the General Partner or
any of its Affiliates by the Partnership pursuant to this Section 7.4 would
constitute gross income to the General Partner for purposes of Code Section
856(c)(2) or 856(c)(3), then such amounts shall be treated as "guaranteed
payments" within the meaning of Code Section 707(c).
Section 7.5. Other Business of General Partner
The General Partner shall devote to the Partnership such time
as may be necessary for the performance of its duties as General Partner, but
the General Partner is not required, and is not expected, to devote its full
time to the performance of such duties The General Partner may engage
independently or with others in other business ventures of every nature and
description, including, without limitation, the ownership of other properties
(including properties which may directly compete with properties owned by the
Partnership) and the making or management of other investments (including
investments which directly compete with investments owned by the Partnership).
Nothing in this Agreement shall be deemed to prohibit the General Partner or any
Affiliate of the General Partner from dealing, or otherwise engaging in business
with, Persons transacting business with the Partnership, or from providing
services related to the purchase, sale, financing, management, development or
operation of real or personal property and receiving compensation therefor, not
involving any rebate or reciprocal arrangement that would have the effect of
circumventing any restriction set forth herein upon dealings with the General
Partner or any Affiliate of the General Partner. Neither the Partnership nor any
Partner shall have any right by virtue of this Agreement or the relationship
created hereby in or to such other ventures or activities or to the income or
proceeds derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper.
Section 7.6. Contracts with Affiliates
A. Subject to Section 7.6.B below, the Partnership may lend or
contribute to Persons in which it has an equity investment, and such Persons may
borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Person.
B. Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates, directly or indirectly, shall
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, the Partnership or engage in any other
transaction with the Partnership, except upon terms determined by the General
Partner in good faith to be fair and reasonable and comparable to terms that
could be obtained from an unaffiliated party in an arm's length transaction.
33
<PAGE>
C. The Partnership may transfer assets to joint ventures,
limited liability companies, partnerships, corporations, business trusts or
other business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes to be advisable.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
the Partnership and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
Section 7.7. Indemnification
A. To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership ("Actions") as set forth in
this Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. Without limitation the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A. The termination of any proceeding by conviction or upon a plea of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A with respect to the subject
matter of such proceeding. Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, and any insurance
proceeds from the liability policy covering the General Partner and any
Indemnitees, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership or otherwise
provide funds to enable the Partnership to fund its obligations under this
Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding or otherwise subject to or the focus of or is involved in
any Action shall be paid or reimbursed by the Partnership as incurred by the
Indemnitee in advance of the final disposition of the Action upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's
good faith belief that the standard of conduct necessary for indemnification by
the Partnership as authorized in Section 7.7.A has been met, and (ii) a written
undertaking by or on behalf of the Indemnitee to repay the amount if it shall
ultimately be determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to
34
<PAGE>
any vote of the Partners, as a matter of law or otherwise, and shall continue as
to an Indemnitee who has ceased to serve in such capacity unless otherwise
provided in a written agreement with such Indemnitee or in the writing pursuant
to which such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of any of the Indemnitees and such
other Persons as the General Partner shall determine, against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
E. For purposes of this Section 7.7, (i) the Partnership shall
be deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of this Section 7.7 and (iii) actions
taken or omitted by the Indemnitee with respect to an employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in
the interest of the participants and beneficiaries of the plan shall be deemed
to be for a purpose which is not opposed to the best interests of the
Partnership.
F. In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
G. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. If and to the extent any reimbursements to the General
Partner pursuant to this Section 7.7 constitute gross income to the General
Partner (as opposed to the repayment of advances made by the General Partner on
behalf of the Partnership) such amounts shall constitute guaranteed payments
within the meaning of Code Section 707(c), shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
Section 7.8. Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.
35
<PAGE>
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Partners and the
General Partner's shareholders collectively, that the General Partner is under
no obligation to give priority to the separate interests of the Partners or the
General Partner's shareholders (including, without limitation, the tax
consequences to Partners, Assignees or the General Partner's shareholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions and that the General Partner shall not be liable to the Partnership or
to any Partner for monetary damages for losses sustained, liabilities incurred,
or benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Subject to its obligations and duties as General Partner
set forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its employees or agents. The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's, and its officers' and
directors', liability to the Partnership and the Limited Partners under this
Section 7.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
Section 7.9. Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, surveyors, environmental consultants and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters that the General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
C. The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty that is permitted or required to be done by the General Partner
hereunder.
D. Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner's Parent to continue to qualify as a REIT, (ii) for the General
Partner's Parent otherwise to satisfy the REIT Requirements or (iii) to allow
the General Partner or its Parent to avoid incurring any liability for taxes
under Section 857 or Section 4981 of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.
36
<PAGE>
Section 7.10. Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively with
other Partners or Persons, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership assets may
be held in the name of the Partnership, the General Partner or one or more
nominees, as the General Partner may determine, including Affiliates of the
General Partner. The General Partner hereby declares and warrants that any
Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by the
General Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the General Partner
shall use its best efforts to cause beneficial and record title to such assets
to be vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section 7.11. Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without the consent or approval of
any other Partner or Person, to encumber, sell or otherwise use in any manner
any and all assets of the Partnership and to enter into any contracts on behalf
of the Partnership, and take any and all actions on behalf of the Partnership,
and such Person shall be entitled to deal with the General Partner as if it were
the Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expediency of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF PARTNERS
Section 8.1. Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or under the Act.
Section 8.2. Managing of Business
No Limited Partners or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, partner,
agent or trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such) shall take part in the operations,
management or control (within
37
<PAGE>
the meaning of the Act) of the Partnership's business, transact any business in
the Partnership's name or have the power to sign documents for, or otherwise
bind the Partnership. The transaction of any such business by the General
Partner, any of its Affiliates or any officer, director, employee, partner,
agent or trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such, shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners or Assignees under this
Agreement.
Section 8.3. Outside Activities of Partners
Subject to any agreements entered into pursuant to Section
7.6. hereof and any other agreements entered into by a Partner or its Affiliates
with the General Partner, the Partnership or a Subsidiary (including, without
limitation, any employment agreement), any Partner and any Assignee, officer,
director, employee, agent, trustee, Affiliate or shareholder of any Partner
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities that are in direct or indirect competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither
the Partnership nor any Partner shall have any rights by virtue of this
Agreement in any business ventures of any Partner or Assignee. Subject to such
agreements, none of the Partners nor any other Person shall have any rights by
virtue of this Agreement or the relationship established hereby in any business
ventures of any other Person (other than the General Partner, to the extent
expressly provided herein), and such Person shall have no obligation pursuant to
this Agreement, subject to Section 7.6. hereof and any other agreements entered
into by a Partner or its Affiliates with the General Partner, the Partnership or
a Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Partner or any such other Person, even if such opportunity is
of a character that, if presented to the Partnership, any Partner or such other
Person, could be taken by such Person.
Section 8.4. Return of Capital
Except pursuant to the rights of Exchange set forth in Section
8.6 hereof, no Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
to the extent expressly provided in this Agreement, no Partner or Assignee shall
have priority over any other Partner or Assignee either as to the return of
Capital Contributions or as to profits, losses, distributions or credits.
Section 8.5. Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this Agreement or
by the Act, and except as limited by Section 8.5.C hereof, each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
Partnership Interest in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's own expense:
(1) to obtain a copy of (i) the most recent annual
and quarterly reports filed with the SEC by the General Partner or the
Parent of the General Partner pursuant to the Exchange Act and (ii)
each report or other written communication sent to the shareholders of
the General Partner;
(2) to obtain a copy of the Partnership's federal,
state and local income tax returns for each Fiscal Year;
38
<PAGE>
(3) to obtain a current list of the name and last
known business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with executed copies
of all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any other property or
services contributed by each Partner and that each Partner has agreed
to contribute in the future, and the date on which each became a
Partner.
B. On written request, the Partnership shall notify any
Limited Partner of the then current Adjustment Factor or any change made to the
Adjustment Factor or to the REIT Shares Amount.
C. Notwithstanding any other provision of this Section 8.5,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or could damage the Partnership or its
business or (ii) the Partnership or the General Partner is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6. Exchange Rights
A. On or after the date one year after the Effective Date,
each Limited Partner shall have the right (subject to the terms and conditions
set forth herein) to require the General Partner to acquire all or a portion of
the Partnership Units held by such Limited Partner (such Partnership Units being
hereafter called "Tendered Units") in exchange (an "Exchange") for, at the
election of and in the sole and absolute discretion of the General Partner,
either the Cash Amount Per Unit times the number of Tendered Units or a number
of REIT Shares equal to the REIT Shares Amount payable on the Specified Exchange
Date. Any Exchange shall be exercised pursuant to a Notice of Exchange delivered
to the General Partner by the Limited Partner exercising the Exchange right (the
"Tendering Party"). On the Specified Exchange Date, the Tendering Party shall
sell the Tendered Units to the General Partner in exchange for, at the election
of in the sole and absolute discretion of the General Partner, either the Cash
Amount Per Unit times the number of Tendered Units or a number of REIT Shares
equal to the REIT Shares Amount. The Tendering Party shall submit (i) such
information, certification or affidavit as the General Partner may reasonably
require in connection with the application of the Ownership Limit and the
application of any restrictions and limitations of the Charter to any such
Exchange and (ii) such written representations, investment letters, legal
opinions or other instruments necessary, in the General Partner's view, to
effect compliance with the Securities Act. If applicable, the cash shall be
delivered as a certified check payable to the Tendering Party or, in the General
Partner's sole discretion, in immediately available funds. If applicable, the
REIT Shares Amount shall be delivered by the General Partner's Parent as duly
authorized, validly issued, fully paid and nonassessable REIT Shares and, if
applicable, Rights, free of any pledge, lien, encumbrance or restriction, other
than the Ownership Limit and other restrictions provided in the Charter, the
Bylaws of the General Partner's Parent, the Securities Act and relevant state
securities or "blue sky" laws. Neither any Tendering Party whose Tendered Units
are acquired by the General Partner pursuant to this Section 8.6.A, any other
Partner, any Assignee nor any other interested Person shall have any right to
require or cause the General Partner's Parent to
39
<PAGE>
register, qualify or list any REIT Shares owned or held by such Person, whether
or not such REIT Shares are issued pursuant to this Section 8.6.A, with the SEC,
with any state securities commissioner, department or agency, under the
Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any registration or
similar rights granted pursuant to any other written agreement between the
General Partner's Parent and any such Person. Notwithstanding any delay in such
delivery, the Tendering Party shall be deemed the owner of such REIT Shares and
Rights for all purposes, including, without limitation, rights to vote or
consent, receive dividends, and exercise rights, as of the Specified Exchange
Date. REIT Shares issued upon an acquisition of the Tendered Units by the
General Partner's Parent pursuant to this Section 8.6.A may contain such legends
regarding restrictions under the Securities Act and applicable state securities
laws as the General Partner's Parent in good faith determines to be necessary or
advisable in order to ensure compliance with such laws.
B. Notwithstanding the provisions of Section 8.6.A hereof, no
Limited Partner shall have any right to tender for Exchange (whether for the
REIT Shares Amount or for cash) any Excess Partnership Units held by such
Limited Partner. The General Partner's Parent shall have no obligation to
acquire Excess Partnership Units, whether for the REIT Shares Amount or cash.
C. Notwithstanding anything herein to the contrary, with
respect to any Exchange pursuant to this Section 8.6:
(1) Without the Consent of the General Partner, no
Limited Partner may effect an Exchange for less than 1,000,000
Partnership Units or, if the Limited Partner holds less than 1,000,000
Partnership Units, less than all of the Partnership Units held by such
Limited Partner.
(2) The consummation of any Exchange shall be subject
to the expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, if such Act is determined to be applicable to any such
Exchange.
(3) Each Tendering Party shall continue to own all
Partnership Units subject to any Exchange, and be treated as a Partner
with respect to such Partnership Units for all purposes of this
Agreement, until such Partnership Units are transferred to the General
Partner and paid for or exchanged on the Specified Exchange Date. Until
a Specified Exchange Date and an acquisition of the Tendered Units by
the General Partner pursuant to Section 8.6.A hereof, the Tendering
Party shall have no rights as a shareholder of the General Partner's
Parent with respect to the REIT Shares issuable in connection with such
acquisition.
D. In connection with an exercise of Exchange rights pursuant
to this Section 8.6, the Tendering Party shall submit the following to the
General Partner's Parent, in addition to the Notice of Exchange:
(1) A written affidavit, dated the same date as, and
accompanying, the Notice of Exchange, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code Sections
856(a)(6), 856(h), 856(d)(2)(B) and 856(d)(5), of REIT Shares by (i)
such Tendering Party and (ii) any Related Party and (b) representing
that, after giving effect to the Exchange, neither the Tendering Party
nor any Related Party will own REIT Shares in excess of the Ownership
Limit;
40
<PAGE>
(2) A written representation that neither the
Tendering Party nor any Related Party has any intention to acquire any
additional REIT Shares prior to the closing of the Exchange on the
Specified Exchange Date; and
(3) An undertaking to certify, at and as a condition
to the closing of the Exchange that either (a) the actual and
constructive ownership of REIT Shares by the Tendering Party and any
Related Party remain unchanged from that disclosed in the affidavit
required by Section 8.6.E(1) or (2) after giving effect to the
Exchange, neither the Tendering Party nor any Related Party shall own
REIT Shares in violation of the Ownership Limit.
E. The General Partner may require that every Limited Partner
Exchange all of the Partnership Units of the Limited Partners in connection with
the sale or disposition by the Partnership of all or substantially all of the
real properties of the Partnership, other than to an Affiliate of the General
Partner, subject to compliance with Section 7.3.D(2). In such event, the
Exchange shall occur and be effective immediately prior to the date of such sale
or disposition and the General Partner shall be deemed to have acquired all of
the Partnership Units (and all capital accounts) prior to any Liquidating Event
of the Partnership. In addition, if the General Partner requests that every
Limited Partner Exchange, pursuant to this Section 8.6.E., at the election of
any Limited Partner the General Partner shall Exchange the Units for cash in
lieu of REIT Shares.
ARTICLE 9.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. Records and Accounting
A. The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Partners any
information, lists and copies of documents required to be provided pursuant to
Section 9.3 hereof. Any records maintained by or on behalf of the Partnership in
the regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time.
B. The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or on such other basis as the General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles.
Section 9.2. Fiscal Year
The Fiscal Year of the Partnership shall be the calendar year.
Section 9.3. Reports
A. As soon as practicable, but in no event later than 90 days
after the close of each Fiscal Year, the General Partner shall cause to be
mailed to each Partner, of record as of the close of the
41
<PAGE>
Fiscal Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, for such Fiscal Year, presented
in accordance with generally accepted accounting principles, such statements to
be audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
B. As soon as practicable, but in no event later than 90 days
after the close of each calendar quarter (except the last calendar quarter of
each year), the General Partner shall cause to be mailed to each Partner, of
record as of the last day of the calendar quarter, a report containing unaudited
financial statements of the Partnership, or of the General Partner, if such
statements are prepared solely on a consolidated basis with the General Partner,
and such other information as may be required by applicable law or regulation or
as the General Partner determines to be appropriate.
ARTICLE 10.
TAX MATTERS
Section 10.1. Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns with respect to Partnership income, gains,
deductions, losses and other items required of the Partnership for federal and
state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year, the tax information reasonably
required by Partners for federal and state income tax reporting purposes.
Section 10.2. Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code, including, without limitation, the
election under Section 754 of the Code. The General Partner shall have the right
to seek to revoke any such election (including, without limitation, any election
under Code Sections 754) upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3. Tax Matters Partner
A. The General Partner shall be designated and shall operate
as "Tax Matters Partner" (as defined in Code Section 6231), to oversee or handle
matters relating to the taxation of the Partnership.
B. The Partner designated as "Tax Matters Partner" may make
all elections for federal income and all other tax purposes (including, without
limitation, pursuant to Code Section 754).
C. Income tax returns of the Partnership shall be prepared by
such certified public accountant(s) as the General Partner shall retain at the
expense of the Partnership.
Section 10.4. Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a 60-month period as
provided in Code Section 709.
42
<PAGE>
ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
A. The term "transfer," when used in this Article 11 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its Partnership
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Partnership Interest to another Person, and includes a sale,
assignment, gift (outright or in trust), pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise. The term
"transfer" when used in this Article 11 does not include any Exchange pursuant
to Section 8.6. No part of the interest of a Partner shall be subject to the
claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
B. No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
Section 11.2. Transfer of General Partner's Partnership
Interest
The General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
without the Consent of all of the Limited Partners, which may be given or
withheld by each Limited Partner in its sole and absolute discretion, except
that the General Partner may transfer all of its interests to an Affiliate of
the General Partner without any consent required from the Limited Partners. Upon
any transfer of the Partnership Interest of the General Partner in accordance
with the provisions of this Section 11.2, the transferee shall become a
Substitute General Partner for all purposes herein, and shall be vested with the
powers and rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Interest
so acquired. It is a condition to any transfer otherwise permitted hereunder
that the transferee assumes, by operation of law or express agreement, all of
the obligations of the transferor General Partner under this Agreement with
respect to such transferred Partnership Interest, and such transfer shall
relieve the transferor General Partner of its obligations under this Agreement
accruing subsequent to the date of such transfer. In the event the General
Partner withdraws from the Partnership, in violation of this Agreement or
otherwise, or otherwise dissolves or terminates, or upon the Incapacity of the
General Partner, all of the remaining Partners may elect to continue the
Partnership business by selecting a Substitute General Partner in accordance
with the Act.
Section 11.3. Limited Partners' Rights to Transfer
A. General. No Limited Partner shall Transfer all or any
portion of its Partnership Interest, or any of such Limited Partners economic
rights as a Limited Partner, to any transferee without the consent of the
General Partner, which consent shall not be unreasonably withheld, provided,
however, that any Limited Partner may, at any time, without the consent of the
General Partner, Transfer all or part of its Partnership Interest (i) in the
case of a Partner which is an individual, to any Family Member, any trust
(whether or not revocable) of which such Limited Partner or such Limited
Partner's Family Members are the sole beneficiaries, (ii) in the case of a
Partner which is not an individual, to the persons who were partners,
stockholders or owners of the Partner as of the Effective Date, (iii) pursuant
to a gift
43
<PAGE>
or other transfer without consideration, (iv) pursuant to the applicable laws of
descent or distribution, (v) to another Partner, (vi) subject to the provisions
of Section 11.6, pursuant to a grant of a security interest, pledge or other
encumbrance effected in a bona fide transaction or as a result of the exercise
of remedies related to the security interest, pledge or other encumbrance (other
than, in each case, to a lender to the Partnership or a Person who is related to
a lender to the Partnership) or (vii) to any Affiliate, provided that the
transferee is, in any such case, a Qualified Transferee. Any Transfer permitted
by this proviso is referred to as a "Permitted Transfer." It is a condition to
any Transfer otherwise permitted hereunder that the transferee assume by
operation of law or express agreement all of the obligations of the transferor
Partner under this Agreement with respect to such Transferred Partnership
Interest. Notwithstanding the foregoing, any transferee of any Transferred
Partnership Interest shall be subject to the Ownership Limits and any and all
ownership limitations contained in the Charter. Any transferee, whether or not
admitted as a Substituted Partner, shall take subject to the obligations of the
transferor hereunder. Unless admitted as a Substituted Partner, no transferee,
whether by a voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as provided in
Section 11.5 hereof.
B. Incapacity. If a Limited Partner is subject to Incapacity,
the executor, administrator, trustee, committee, guardian, conservator or
receiver of such Limited Partner's estate shall have all the rights of a Limited
Partner, but not more rights than those enjoyed by other Limited Partners, for
the purpose of settling or managing the estate, and such power as the
Incapacitated Limited Partner possessed to Transfer all or any part of its
interest in the Partnership. The Incapacity of a Limited Partner, in and of
itself, shall not dissolve or terminate the Partnership.
C. Opinion of Counsel. In connection with any Transfer of a
Partnership Interest, the General Partner shall have the right to receive an
opinion of counsel reasonably satisfactory to it to the effect that the proposed
Transfer may be effected without registration under the Securities Act and will
not otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interests Transferred. If, in
the opinion of such counsel, such Transfer would require the filing of a
registration statement under the Securities Act or would otherwise violate any
federal or state securities laws or regulations applicable to the Partnership or
the Partnership Units, the General Partner may prohibit any Transfer by a
Partner of Partnership Interests otherwise permitted under this Section 11.3.
D. Adverse Tax Consequences. No Transfer by a Partner of its
Partnership Interests (including any Exchange pursuant to Section 8.6) may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation for federal income tax purposes, (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner or any Parent of General Partner to continue to qualify as a
REIT or would subject the General Partner or its Parent to any additional taxes
under Code Section 857 or Code Section 4981 (provided, that this requirement may
be waived by the General Partner in its sole and absolute discretion) or (iii)
such Transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Code Section 7704.
E. Transfers to Lenders. No transfer of any Partnership Units
may be made to a lender to the Partnership or any Person who is related (within
the meaning of Section 1.752-4(b) of the Regulations) to any lender to the
Partnership whose loan constitutes a Nonrecourse Liability, without the consent
of the General Partner, which consent shall not be unreasonably withheld;
provided that, as a condition to such consent, the lender will be required to
enter into an arrangement with the Partnership and the General Partner to redeem
or exchange for the REIT Shares Amount any Partnership Units in
44
<PAGE>
which a security interest is held simultaneously with the time at which such
lender would be deemed to be a Partner in the Partnership for purposes of
allocating liabilities to such lender under Code Section 752.
Section 11.4. Substituted Partners
A. Notwithstanding anything in this agreement to the contrary,
no Partner shall have the right to substitute a transferee as a Partner in its
place, including, without limitation, a transferee pursuant to any Permitted
Transfer. The General Partner shall, however, have the right to consent to the
admission of a transferee of the interest of a Partner pursuant to this Section
11.4 as a Substituted Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Partner shall not give rise to any cause of action against the
Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Partner
in accordance with this Section 11.4 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Partner under this
Agreement. The admission of any transferee as a Substituted Partner shall be
subject to the transferee executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement (including
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission).
C. Upon the admission of a Substituted Partner, the General
Partner shall amend Exhibit A to reflect the name, address, Capital Account,
number of Partnership Units of such Substituted Partner and to eliminate or
adjust, if necessary, the name, address, Capital Account, number of Partnership
Units of the predecessor of such Substituted Partner (and any other Partner, as
necessary).
Section 11.5. Assignees
Unless and until a Partnership Interest transferee (including,
without limitation, a transferee meeting the requirements provided for in
Section 11.3) is admitted to the Partnership as a Substituted Limited Partner
pursuant to Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be entitled to all the rights of
an assignee of a limited partnership interest under the Act, including the right
to receive distributions from the Partnership and the share of Net Income, Net
Losses and other items of income, gain, loss, deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
the rights to Transfer the Partnership Units provided in this Article 11, and
the right of Exchange provided in Section 8.6, but shall not be deemed to be a
Partner of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to effect a Consent or vote with respect to such
Partnership Units on any matter presented to the Partners for approval (such
right to Consent or vote, to the extent provided in this Agreement or under the
Act, fully remaining with the transferor Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article 11 to the
same extent and in the same manner as any Partners desiring to make an
assignment of Partnership Units. The General Partner shall have no liability
under any circumstance with respect to any Assignee as to which it does not have
notice.
Section 11.6. General Provisions
A. No General Partner may withdraw from the Partnership other
than as a result of (i) a permitted Transfer of all of such General Partner's
Partnership Units in accordance with this Article 11, and the transferee of such
Partnership Units being admitting to the Partnership as a Substituted
45
<PAGE>
Partner, or (ii) pursuant to an Exchange by the General Partner of all of its
Partnership Units under Section 8.6 hereof.
B. Any Partner who shall Transfer all of its Partnership Units
in a Transfer (i) permitted pursuant to this Article 11 where such transferee
was admitted as a Substituted Partner or (ii) pursuant to the exercise of its
rights to effect an Exchange of all of its Partnership Units under Section 8.6
hereof, shall cease to be a Partner.
C. Transfers pursuant to this Article 11 may only be made on
the first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
D. All distributions of Available Cash attributable to an
Partnership Unit with respect to which the Partnership Record Date is before the
date of a Transfer or an Exchange of the Partnership Unit shall be made to the
transferor Partner or the exchanging Partner, as the case may be, and, in the
case of a Transfer other than an Exchange, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.
E. In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership Interest
by any Partner (including any Exchange or any other acquisition of Partnership
Units by the Partnership) be made:
(a) to any person or entity who lacks the legal
right, power or capacity to own a Partnership Interest;
(b) in violation of applicable law;
(c) if such Transfer would, in the opinion of counsel
to the Partnership or the General Partner, cause an increased tax
liability to any other Partner or Assignee as a result of the
termination of the Partnership, in either case for federal or state
income or franchise tax purposes (except as a result of the Exchange of
all Partnership Units held by all Partners);
(d) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause the Partnership or its Parent either
(i) to cease to be classified as a partnership or (ii) to be classified
as a publicly traded partnership treated as a corporation, in either
case for federal or state income tax purposes (except as a result of an
the Exchange of all Partnership Units held by all Partners);
(e) if such Transfer would cause the Partnership or
its Parent to become, with respect to any employee benefit plan subject
to Title I of ERISA, a "party-in-interest" (as defined in ERISA Section
3(14)) or a "disqualified person" (as defined in Code Section 4975(c));
(f) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause any portion of the assets of the
Partnership or its Parent to constitute assets of any employee benefit
plan pursuant to Department of Labor Regulations Section 2510.2-101;
(g) if such Transfer causes the Partnership or its
Parent (as opposed to the General Partner) to become a reporting
company under the Exchange Act; or
46
<PAGE>
(h) if such Transfer subjects the Partnership or its
Parent to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner
A successor to all of the General Partner's Partnership
Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately upon such Transfer. Any such successor shall
carry on the business of the Partnership without dissolution. In each case, the
admission shall be subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms, conditions and
applicable obligations of this Agreement and such other documents or instruments
as may be required to effect the admission.
Section 12.2. Admission of Additional Partners
A. Subject to Section 7.3.(B), a Person (other than an
existing Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Partner only upon furnishing to the General Partner (i) evidence of
acceptance, in form and substance satisfactory to the General Partner, of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 2.4 hereof and the consent required under
Section 4.2, and (ii) such other documents or instruments as may be required in
the sole and absolute discretion of the General Partner in order to effect such
Person's admission as an Additional Partner.
B. Notwithstanding anything to the contrary in this Section
12.2, and subject to Section 7.3(B) and Section 11.3 as to a Permitted Transfer,
no Person shall be admitted as an Additional Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner's
sole and absolute discretion. The admission of any Person as an Additional
Partner shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
C. If any Additional Partner is admitted to the Partnership on
any day other than the first day of a Fiscal Year, then Net Income, Net Loss,
each item thereof and all other items of income, gain, loss, deduction and
credit allocable among Partners and Assignees for such Fiscal Year shall be
allocated among such Additional Partner and all other Partners and Assignees by
taking into account their varying interests during the Fiscal Year in accordance
with Code Section 706(d), using the "interim closing of the books" method or
another permissible method selected by the General Partner. Solely for purposes
of making such allocations, each of such items for the calendar month in which
an admission of any Additional Partner occurs shall be allocated among all the
Partners and Assignees including such Additional Partner, in accordance with the
principles described in Section 11.6.C hereof. All distributions of Available
Cash with respect to which the Partnership Record Date is before the date of
such admission shall be made solely to Partners and Assignees other than the
Additional Partner, and all distributions of Available Cash thereafter shall be
made to all the Partners and Assignees including such Additional Partner.
47
<PAGE>
Section 12.3. Amendment of Agreement and Certificate of
Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
ARTICLE 13.
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1. Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Partners or Additional Partners or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the
withdrawal of the General Partner, any successor General Partner shall continue
the business of the Partnership without dissolution. However, the Partnership
shall dissolve, and its affairs shall be wound up, upon the first to occur of
any of the following (each a "Liquidating Event"):
A. the expiration of its term as provided in Section 2.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy and other than the cessation of
the functioning of Midway Holdings, Inc., Palmetto Holdings I, Inc. and J.B.
Baldwin Land Holdings Co., Inc. as General Partners of the Partnership), unless,
within 90 days after the withdrawal of a General Partner, the remaining Partners
unanimously agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of withdrawal, of a substitute General
Partner;
C. an election to dissolve the Partnership after the No
Transfer Period expires made by the General Partner, in its sole and absolute
discretion;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership for cash or marketable securities;
F. a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or within ninety days after the entry of such order or
judgment a Majority of Remaining Partners Consent in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such order or judgment, of a substitute General Partner;
G. the Incapacity of the General Partner other than an event
covered under B above, unless a Majority of Remaining Partners agree in writing
to continue the business of the Partnership and to the appointment, effective as
of a date prior to the date of such Incapacity, of a substitute General Partner;
or
48
<PAGE>
H. the Exchange of all Partnership Units (other than those of
the General Partner).
Section 13.2. Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets and satisfying the claims of its creditors and
Partners. After the occurrence of a Liquidating Event, no Partner shall take any
action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The General Partner (or,
in the event that there is no remaining General Partner, any Person elected by a
Majority in Interest of the Limited Partners (the General Partner or such other
Person being referred to herein as the "Liquidator")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property, and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of stock in the General
Partner) shall be applied and distributed in the following order:
(1) First, to the satisfaction of all of the
Partnership's debts and liabilities to creditors other than the
Partners and their Assignees (whether by payment or the making of
reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the
Partnership's debts and liabilities to the Limited Partners and any
Assignees (whether by payment or the making of reasonable provision for
payment thereof);
(3) Third, to the satisfaction of all of the
Partnership's debts and liabilities to the General Partner (whether by
payment or the making of reasonable provision for payment thereof),
including, but not limited to, amounts due as reimbursements under
Section 7.4 hereof; and
(4) The balance, if any, to the Partners and any
Assignees in accordance with and proportion to their positive Capital
Account balances, after giving effect to all contributions,
distributions and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof
that require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part of all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time.
49
<PAGE>
The Liquidator shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
C. In the event that the Partnership is "liquidated" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be
made pursuant to this Article 13 to the Partners and Assignees that have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, their positive
Capital Account balances. If any Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the sole and absolute discretion of the General Partner or the
Liquidator, a pro rata portion of the distributions that would otherwise be made
to the Partners pursuant to this Article 13 may be withheld or escrowed to
provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment obligations
owed to the Partnership, provided that such withheld or escrowed amounts shall
be distributed to the Partners in the manner and order of priority set forth in
Section 13.2.A hereof as soon as practicable.
Section 13.3. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the
event that the Partnership is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership's Property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be wound
up. Instead, for federal and state income tax purposes, the Partnership shall be
deemed to have distributed its assets in kind to the Partners, who shall be
deemed to have assumed and taken such assets subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the Partners shall be deemed to have recontributed the
Partnership assets in kind to the Partnership, which shall be deemed to have
assumed and taken such assets subject to all such liabilities.
Section 13.4. Rights of Partners
Except as otherwise provided in this Agreement, (a) each
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contribution, (b) no Partner shall have the right or power to demand or
receive property other than cash from the Partnership and (c) no Partner shall
have priority over any other Partner as to the return of its Capital
Contributions, distributions or allocations.
Section 13.5. Notice of Dissolution
In the event that a Liquidating Event occurs or an event
occurs that would, but for an election or objection by one or more Partners
pursuant to Section 13.1 hereof, result in a dissolution of the Partnership, the
General Partner shall, within 30 days thereafter, provide written notice thereof
to each of the Partners and, in the General Partner's sole and absolute
discretion or as required by the Act, to all other parties with whom the
Partnership regularly conducts business (as determined in the sole and absolute
discretion of the General Partner), and the General Partner may, or, if required
by the Act, shall, publish notice thereof in a newspaper of general circulation
in each place in which the Partnership regularly conduct business (as determined
in the sole and absolute discretion of the General Partner).
50
<PAGE>
Section 13.6. Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2 hereof, the Partnership shall be
terminated and the Certificate and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of Florida
shall be canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.7. Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.8. Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, liabilities, costs, damages,
and causes of action of any nature whatsoever arising out of or incidental to
the Liquidator's taking of any action authorized under or within the scope of
this Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of (i) a matter
entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement or (ii) the proven willful misconduct or gross
negligence of the Liquidator.
ARTICLE 14.
GENERAL PROVISIONS
Section 14.1. Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication
(including by telecopy, facsimile, or commercial courier service) (i) in the
case of a Partner, to that Partner at the address set forth on the signature
pages attached hereto, or such other address of which the Partner shall notify
the General Partner in writing and (ii) in the case of an Assignee, to the
address of which such Assignee shall notify the General Partner in writing.
Section 14.2. Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" or
"Sections" are to Articles and Sections of this Agreement.
Section 14.3. Pronouns and Plurals
Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
51
<PAGE>
Section 14.4. Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 14.5. Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 14.6. Creditors
Other than as expressly set forth herein with respect to
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 14.7. Waiver
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 14.8. Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
Section 14.9. Applicable Law
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Florida, without regard to the
principles of conflicts of law. In the event of a conflict between any provision
of this Agreement and any non-mandatory provision of the Act, the provisions of
this Agreement shall control and take precedence.
Section 14.10. Entire Agreement
This Agreement contains all of the understandings and
agreements between and among the Partners with respect to the subject matter of
this Agreement and the rights, interests and obligations of the Partners with
respect to the Partnership.
Section 14.11. Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 14.12. Limitation to Preserve REIT Status
Notwithstanding anything else in this Agreement, to the extent
that the amount paid, credited, distributed or reimbursed by the Partnership to,
for or with respect to the General Partner or its
52
<PAGE>
officers, directors, employees or agents, whether as a reimbursement, fee,
expense or indemnity (a "REIT Payment"), would constitute gross income to the
General Partner or its Parent for purposes of Code Section 856(c)(2) or Code
Section 856(c)(3), then, notwithstanding any other provision of this Agreement,
the amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Fiscal Year so that the REIT
Payments, as so reduced, to, for or with respect to the General Partner shall
not exceed the lesser of:
(a) an amount equal to the excess, if any, of (i)
four and nine-tenths percent (4.9%) of the General Partner's Parent's
total gross income (but excluding the amount of any REIT Payments) for
the Fiscal Year that is described in subsections (A) through (H) of
Code Section 856(c)(2) over (ii) the amount of gross income (within the
meaning of Code Section 856(c)(2)) derived by the General Partner's
Parent from sources other than those described in subsections (A)
through (H) of Code Section 856(c)(2) (but not including the amount of
any REIT Payments); or
(b) an amount equal to the excess, if any, of (i) 24%
of the General Partner's Parent's total gross income (but excluding the
amount of any REIT Payments) for the Fiscal Year that is described in
subsections (A) through (I) of Code Section 856(c)(3) over (ii) the
amount of gross income (within the meaning of Code Section 856(c)(3))
derived by the General Partner's Parent from sources other than those
described in subsections (A) through (I) of Code Section 856(c)(3) (but
not including the amount of any REIT Payments);
provided, however, that REIT Payments in excess of the amounts set forth in
clauses (a) and (b) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the General Partner's Parent's ability to
qualify as a REIT. To the extent that REIT Payments may not be made in a Fiscal
Year as a consequence of the limitations set forth in this Section 14.12, such
REIT Payments shall carry over and shall be treated as arising in the following
Fiscal Year. The purpose of the limitations contained in this Section 14.12 is
to prevent General Partner's Parent from failing to qualify as a REIT under the
Code by reason of the Parent's allocable share of the General Partner's share of
items, including distributions, reimbursements, fees, expenses or indemnities,
receivable directly or indirectly from the Partnership, and this Section 14.12
shall be interpreted and applied to effectuate such purpose.
Section 14.13. No Partition
No Partner nor any successor-in-interest to a Partner shall
have the right while this Agreement remains in effect to have any property of
the Partnership partitioned, or to file a complaint or institute to any
proceeding at law or in equity to have such property of the Partnership
partitioned, and each Partner, on behalf of itself and its successors and
assigns hereby waives any such right. It is the intention of the Partners that
the rights of the parties hereto and their successors-in-interest to Partnership
property, as among themselves, shall be governed by the terms of this Agreement,
and that the rights of the Partners and their successors-in-interest shall be
subject to the limitations and restrictions as set forth in this Agreement.
53
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first written above.
GENERAL PARTNER:
KIMCO BRADENTON 698, INC.,
a Florida corporation
By: /s/ Bruce M. Kauderer
-------------------------------
Name: Bruce M. Kauderer
-----------------------------
Title: V.P.
----------------------------
Address:
c/o Kimco Realty Corporation
3333 New Hyde Park Road, Suite 100
New Hyde Park, NY 11042-0020
/s/ Charles W. Wafer
-----------------------------------
Charles W. Wafer, Withdrawing Partner from
the Operating Partnership
LIMITED PARTNERS:
----------------
MILNER INVESTMENT CORPORATION
By: /s/ Reese L. Milner II
-------------------------------
Name:
-----------------------------
Title: President
----------------------------
Address:
Milner Investment Corporation
Reese L. Milner, II
439 North Bedford Drive
Beverly Hills, CA 90210
54
<PAGE>
FARGO INVESTMENTS
By: /s/ B. Freeman
-------------------------------
Name: B. Freeman
-----------------------------
Title: G.P.
----------------------------
Address:
Fargo Investments
Freeman Spogli & Co.
11100 Santa Monica Blvd., Suite 1900
Los Angeles, CA 90025
PALMETTO HOLDINGS I, INC.
By: /s/ John Jamerson
-------------------------------
Name: John E. Jamerson
-----------------------------
Title: President
----------------------------
Palmetto Holdings I, Inc.
Mr. John E. Jamerson
6234 East Mercer Way
Mercer Island, WA 98040
MIDWAY HOLDINGS, INC.
By: /s/ Eric Doy Howell
-------------------------------
Name: Eric Doy Howell
-----------------------------
Title: President
----------------------------
Address:
Midway Holdings, Inc.
Eric D. Howell
5306 Cortez Road West, Suite 4
Bradenton, FL 34210
55
<PAGE>
J.B. BALDWIN LAND COMPANY, INC.
By: /s/ J. B. Baldwin
-------------------------------
Name: J. B. Baldwin
-----------------------------
Title: Pres.
----------------------------
Address:
J.B. Baldwin Land Company
Parsley-Baldwin Realty
P.O. Box 605
Boca Grande, FL 33921
56
<PAGE>
Kimco Realty Corporation, a Maryland corporation, hereby executed this
agreement solely for the purpose of acknowledging its agreement to make REIT
shares available to the General Partner in the event of an exchange pursuant to
Section 8.6 and not as a partner of the Partnership.
By: KIMCO REALTY CORPORATION
a Maryland corporation
By: /s/ Bruce M. Kauderer
-----------------------------------
Name: Bruce M. Kauderer
---------------------------------
Title: Vice President
--------------------------------
<PAGE>
EXHIBIT A
PARTNER'S PARTNERSHIP UNITS
Value of Partnership
Name of Partner Units
- --------------------------------------------------------
General Partner:
Kimco Bradenton 698 Inc. 9,299,788
Limited Partners:
Midway Holdings, Inc. 1,300,000
Milner Investment Corp. 345,532
Fargo Investments 1,727,664
Palmetto Holdings I, Inc. 500,000
J.B. Baldwin Land Co. 1,100,000
A-1
<PAGE>
EXHIBIT B
NOTICE OF EXCHANGE
To: Kimco Bradenton 698, Inc.
3333 New Hyde Park Road
Suite 100
P.O. Box 5020
New Hyde Park, NY 11042-0020
The undersigned Partner or Assignee hereby irrevocably tenders for
Exchange __________ Partnership Units in BAY-GARD, LTD., in accordance with the
terms of the Amended and Restated Limited Partnership Agreement of BAY-GARD,
LTD., dated as of _________ ___, 1998 (the "Agreement"), and the Exchange rights
referred to therein. The undersigned Partner or Assignee:
(a) undertakes (i) to surrender such Partnership
Units and any certificate therefor at the closing of the Exchange and
(ii) to furnish to the General Partner, prior to the Specified Exchange
Date, the documentation, instruments and information required under
Section 8.6.D of the Agreement;
(b) directs that, at the sole discretion of the
General Partner, either (i) a certified check representing the Cash
Amount deliverable upon closing of the Exchange be delivered to the
address specified below or (ii) a certificate(s) representing the REIT
Shares deliverable upon the closing of such Exchange be delivered to
the address specified below;
(c) represents, warrants, certifies and agrees that:
(1) the undersigned Partner or Assignee has, and at the closing of the
Exchange will have, good, marketable and unencumbered title to such
Partnership Units, free and clear of the rights or interests of any
other person or entity, (2) the undersigned Partner or Assignee has,
and at the closing of the Exchange will have, the full right, power and
authority to tender and surrender such Partnership Units as provided
herein, and (3) the undersigned Partner or Assignee has obtained the
consent or approval of all persons and entities, if any, having the
right to consent to or approve such tender and surrender; and
(d) acknowledges that it will continue to own such
Partnership Units until and unless such Exchange transaction closes.
B-1
<PAGE>
All capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to them respectively in the Agreement.
Dated:
-----------------------
Name of Partner or Assignee:
----------------------------------------
----------------------------------------
(Signature of Partner or Assignee)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip)
Signature Guaranteed by:
----------------------------------------
Issue REIT Shares in the name of:
----------------------------------
Please insert social security or
identifying number: ----------------------------------
B-2
</TABLE>
<PAGE>
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (hereinafter referred to as the
"Contribution Agreement") is made and entered into as of April 6, 1998 by and
between Kimco Bradenton 698, Inc., a Florida corporation (the "Contributor"),
and Bay-Gard, Ltd., a Florida limited partnership (the "Operating Partnership")
and between Charles W. Wafer (the "Withdrawing Partner"); Milner Investment
Corporation; Fargo Investments; Palmetto Holdings I, Inc.; Midway Holdings,
Inc.; and J.B. Baldwin Land Company, Inc. (collectively, the "Limited Partners).
RECITALS
A. As of the Effective Time of the Amended and Restated Limited Partnership
Agreement, Kimco Bradenton 698, Inc., will become the General Partner of the
Operating Partnership in accordance with the terms and conditions set forth
herein and Midway Holdings, Inc., Palmetto Holdings I, Inc. and J.B. Baldwin
Land Company, Inc., will become a Limited Partner of the Operating Partnership
in accordance with the terms and conditions set forth herein.
B. The Operating Partnership represents that it owns the shopping center
commonly known as BAYSHORE GARDENS SHOPPING CENTER located in Bradenton,
Florida, as shown on the Plan (the "Shopping Center"); and
C. Pursuant to the terms of this Contribution Agreement, the Contributor will
contribute cash to the Operating Partnership in exchange for OP Units in the
Operating Partnership (the "OP Units"), on the terms and subject to the
conditions set forth herein and in the Amended and Restated Limited Partnership
Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises, and
the mutual undertakings set forth below, the parties hereto agree as follows:
1. DEFINITIONS. For this Agreement, the following expressions shall have
the meanings hereinafter set forth.
"Adjusted Purchase Amount" means the Unadjusted Purchase Amount minus
the Adjustment Amount. In the event that the value of the Adjustment Amount
exceeds the value of the Unadjusted Purchase Amount, the Adjusted Purchase
Amount will be equal to zero.
"Adjustment Amount" means the net amount of all adjustments (as set
forth in Section 5 or elsewhere in this Agreement) to the value of the
Partnership Interests being purchased. The Adjustment Amount will begin at zero
and decrease with amounts owed to Pre Closing Partners and increase with amounts
owed to Post Closing Partners, as set forth herein.
"Agreed Upon Value" means $14,405,000.00.
"Effective Time" means the date and time when the Contribution Amount
and Adjusted Purchase Amount are paid by the Contributor, and the Contributor
receives the evidence of ownership of its OP Units.
1
<PAGE>
"Contribution Amount" means the amount of cash to be contributed to the
Operating Partnership, which does not include the Adjusted Purchase Amount,
pursuant to this Contribution Agreement as defined in Section 2.1.
"Escrow Agent" means Chicago Title Insurance Company.
"Excess Adjustment Amount" means the Adjustment Amount minus the
Unadjusted Purchase Amount, however, if the Adjustment Amount is not greater
than the Unadjusted Purchase Amount then the Excess Adjustment Amount will equal
zero and will not be relevant.
"Deposit" means a deposit in the amount of Two Hundred Thousand Dollars
($200,000.00) (plus any interest earned thereon).
"General Partner" means Kimco Bradenton 698, Inc., a Florida
corporation, the post Closing General Partner of the Operating Partnership.
"Inspection Period" means a period of time commencing on the date
Contributor receives a fully signed counterpart of this Contribution Agreement,
and expiring at midnight on the thirtieth (30th) calendar day (or the first
business day after such thirtieth 30th day if such thirtieth (30th) day is not a
business day) thereafter.
"Permitted Exceptions" means those certain title exceptions set forth in
the first preliminary title commitment to be received by Contributor, which
Contributor, in Contributor's sole and exclusive judgment shall have approved
pursuant to Section 6.
"Personal Property" means any furniture, furnishings, tools, equipment,
supplies (consumable and otherwise) and any other movable property (if any)
located at and used in connection with the operation of the Shopping Center
which are now or at Closing owned by the Operating Partnership; the files which
are in the possession of the Operating Partnership and are required for the
efficient operation of the Shopping Center, including sepias, drawings, surveys,
plans and specifications; and all licenses, permits, certificates of occupancy
(or local equivalent) in the possession of or available to the Operating
Partnership. A list of the Personal Property is attached hereto as Exhibit 4.
"Plan" means the drawing attached as Exhibit 1.
"Pre Closing" means before Closing.
"Pre Closing Partners" means the Partners of the Operating Partnership
immediately prior to the Closing.
"Post Closing Partners" means the Partners of the Operating Partnership
immediately after the Closing, as listed in Schedule 1 hereto.
"Post Closing" means after Closing.
2
<PAGE>
"Property" means collectively all of the Operating Partnership's rights
and interest in the Real Estate, the Personal Property, the Space Leases and all
the other assets described in Section 2.
"Real Estate" means the land described on Exhibit 2 and all of the
buildings, building and other fixtures (including permanent shopping center
signs), and other improvements constructed thereon.
"REAs" mean, collectively: (i) that certain Operation and Easement
Agreement dated March 27, 1991 between Dayton Hudson Corporation and Bayshore
Gardens Venture, recorded at O.R. 1330, Page 1271 (the "OEA"), (ii) that certain
Management Agreement of even date therewith among such parties and Beztak
Management Company (the "Management Agreement"), and (iii) that certain
Declaration of Easements, Restrictions and Reservations by Bay Gard Inc. dated
August 23, 1996 (the "Taco Bell REA").
"Service Contracts" means all written or oral agreements (including
purchase orders) pursuant to which goods, services, supplies or other items
whatever are furnished on a continuing basis for the operation of the Real
Estate. A list of such existing Service Contracts as of the date hereof is
attached hereto as Exhibit 5.
"Space Lease(s)" means all tenant space lease(s), license(s),
concessions or other occupancy or use agreements, including all modifications,
addenda and supplements thereto and guarantees thereof, applicable to any part
of the Real Estate. All existing Space Leases as of the date hereof are listed
on Exhibit 3.
"Unadjusted Purchase Amount" means the Agreed Upon Value less the
Contribution Amount less $5 million dollars.
2. CONTRIBUTIONS
2.1 Contribution Amount.
Subject to the terms and conditions of this Agreement, at the Closing,
Contributor shall contribute to the Operating Partnership the Contribution
Amount which shall be calculated as follows:
A sum equal to the outstanding amounts (i.e., principal, all accrued
interest, and any other amounts then due at Closing) under any existing mortgage
or deed of trust (the "Mortgage") encumbering the Property (the "Contribution
Amount"). The Contribution Amount shall be applied at Closing to pay in full the
Mortgage and any other lien as specified in ss.6.3. The amount of the Deposit
shall be applied to pay the Mortgage and shall be a credit to the Contribution
Amount.
2.2 Adjusted Purchase Amount.
Immediately following the Closing, and subject to the terms and
conditions hereof, Contributor shall purchase from each of the Pre Closing
Partners, a portion (or in the case of Mr. Charles W. Wafer and any Disqualified
Partner as defined in Section 13.3.3, all) of such Pre Closing Partner's
partnership interest for the amount equal to the Adjusted Purchase Amount as
defined herein, which
3
<PAGE>
shall be allocated amongst the Pre Closing Partners as set forth in Schedule 1
attached hereto.
2.3 Allocation of Partnership OP Units Following Purchase.
Immediately following the purchase of the partnership interests by the
Contributor under this Section 2.3, the Amended and Restated Limited Partnership
Agreement shall become effective, and each of the Post Closing Partners shall be
allocated OP Units as follows:
(a) The Contributor shall be allocated a number of OP Units equal to the
Contribution Amount plus the Adjusted Purchase Amount (rounded up to the nearest
whole Unit); and
(b) The other Post Closing Partners shall be allocated a number of OP
Units equal to $5 million dollars minus the Excess Adjustment Amount, if any,
(rounded up in each case to the nearest whole Unit) with each individual Partner
allocated a portion of such number of OP Units, pro rata in accordance with the
figures set forth in Schedule 1 hereto.
2.4 Allocation of Income and Loss.
Income and loss shall be allocated to the Pre Closing Partners and to
the Post Closing Partners in respect of the matters prorated hereof in
accordance with the proration allocations.
2.5 Section 754 Election.
The Operating Partnership shall make an election pursuant to Section 754
of the Internal Revenue Code of 1986, as amended, effective for the taxable
period that includes the purchase described in Section 2.2.
2.6 Legal Opinion.
In recognition of the fact that the Contributor will incur substantial
due diligence expenses in connection with the transactions discussed in this
Contribution Agreement, Midway Holdings, Inc., the General Partner of the Pre
Closing Partners, hereby agrees to furnish the Contributor with a legal opinion
from Robert Greene, Esq., or from other counsel reasonably satisfactory to the
Contributor, to the effect that all necessary consents from all of the partners
of the Operating Partnership to effect the transactions discussed herein have
been obtained prior to the date hereof. Such legal opinion shall be delivered to
the Contributor concurrently with the execution of this Contribution Agreement.
2.7 Deposit.
Within two (2) business days after Contributor receives a fully-executed
copy of this Agreement, Contributor shall place the Deposit in escrow with
Escrow Agent. In the event Contributor elects to cancel and terminate this
Agreement pursuant to Section 6.4 or any other provision of this Agreement, the
Deposit shall be promptly returned to Contributor by Escrow Agent. Escrow Agent
shall hold the Deposit in accordance with Section 3 below. If Closing occurs,
then the amount of the Deposit,
4
<PAGE>
including all interest earned thereon, shall at Closing be paid to the Operating
Partnership and said amount shall constitute a decrease to Contributor's
Contribution Amount.
2.8 New Tenants; Credits and Obligations.
2.8.1 The Unadjusted Purchase Amount is based on all of the tenants set
forth in Exhibit 14 (hereinafter collectively referred to as the "New Tenants"
and individually as a "New Tenant") being in place (with no cost to Contributor
or to the Operating Partnership or to any Partner, following Closing, except as
specifically set forth in this Section 2.8) and paying full rent on the Closing
Date under leases which provide for full pro-rata reimbursement for real estate
taxes, CAM and insurance (hereinafter collectively "Escalation Charges"), and
are otherwise in form acceptable to Contributor. Such leases for New Tenants are
hereinafter collectively referred to as the "New Leases" and individually as a
"New Lease."
2.8.2 The Pre Closing Partners, jointly and severally, hereby represent,
warrant, covenant and agree as follows with regard to the New Leases and New
Tenants:
(a) Frayne Fashions, Hallmark, Post Net, Jo-Ann Fabrics, Coast
Dental and M & M Cafe are now, or as of Closing Time will be, open and paying
full base rent and Escalation Charges (without any credits or offsets), and all
brokerage commissions, landlord work, and/or tenant reimbursement or allowances
(hereinafter collectively referred to as "Landlord Expenses") for or in
connection with such New Leases have been paid in full.
(b) Futon will commence full payment of base rent and Escalation
Charges (without any credits or offsets) on or before May 1, 1998. All Landlord
Expenses for or in connection with such New Lease have been paid in full.
(c) GTE Phonemart will commence full payment of base rent and
Escalation Charges (without any credits or offsets) on or before June 1, 1998.
With regard to GTE Phonemart, except for a tenant build-out allowance of up to
Eight Thousand Three Hundred Dollars ($8,300.00) and a brokerage commission to
Cushman & Wakefield of up to Seven Thousand Nine Hundred Seventy-Seven Dollars
($7,977.00) (both of which Contributor agrees it will cause the Partnership to
pay as and when due following Closing), all Landlord Expenses for or in
connection with such New Lease have been paid in full. If the Operating
Partnership pays these two amounts prior to the Closing Time, there will be a
corresponding decrease to the Adjustment Amount.
2.8.3 All of the provisions of Section 2.8.2 shall survive Closing. If
following Closing any representation, warranty or covenant of the Pre Closing
Partners and/or of the Operating Partnership in this Agreement should be
breached and in connection with such breach the Contributor or the Operating
Partnership incurs any loss or expense or is required to pay out any money
(including without limitation non-receipt of any base rent or Escalation Charges
after the date above set forth, or payment of any Landlord Expenses not
specifically permitted and provided for above), then in such event,
notwithstanding anything to the contrary in the Partnership Agreement, any
distributions next coming due under the Partnership Agreement to the Pre Closing
Partners shall be reduced (pro rata among all such partners in proportion to
their respective OP Units) by the aggregate amount of any such losses expenses
or payouts (collectively referred to as "Claims"), and the amount of any such
5
<PAGE>
Claims shall instead be distributed to Contributor (who will be "General
Partner" post Closing) as defined in the Amended and Restated Limited
Partnership Agreement. All such amounts shall be treated as having been
distributed by the Operating Partnership to the Pre Closing Partners and then
paid to the Contributor as compensation for damages.
3. DEPOSIT.
3.1 The Deposit shall be invested in escrow in a sound financial
institution's money market fund or account, which pays interest or dividends, in
Escrow Agent's name separate from its personal and business accounts. All
investment decisions shall be made by Contributor. The Operating Partnership
shall have no control over such investment decisions. If no Closing occurs, all
interest or dividends earned shall be paid to the party entitled to the escrowed
proceeds, which party shall pay any income taxes thereon. The parties shall
furnish the Escrow Agent with their respective tax identification numbers. At
the Closing all interest or dividends earned on the Deposit shall be applied to
the Contribution Amount and shall reduce it accordingly. All escrow fees, if
any, charged by Escrow Agent shall be equally shared by the Operating
Partnership and Contributor.
3.2 Prior to Closing, Escrow Agent shall hold the Deposit as set forth
in Section 3.1 unless (i) Escrow Agent receives notice from Contributor
terminating this Agreement pursuant to Section 6.4, in which event Escrow Agent
shall forthwith return the Deposit to Contributor without requirement of
notifying the Operating Partnership as provided in (ii) below, and without
regard to any objection of the Operating Partnership; or (ii) with regard to all
situations other than in (i) above, unless either the Operating Partnership or
Contributor makes a written demand upon Escrow Agent for the Deposit accompanied
by an affidavit signed by the party making the demand stating sufficient facts
to show that said party is entitled to receive the Deposit pursuant to the terms
of this Agreement. Upon receipt of such demand, Escrow Agent shall give ten (10)
days written notice to the other party of such demand and of Escrow Agent's
intention to remit the Deposit to the party making the demand on the stated
date, together with a copy of the affidavit. If Escrow Agent does not receive a
written objection before the proposed date for remitting the Deposit, Escrow
Agent is hereby authorized to so remit. If, however, Escrow Agent actually
receives written objection from the other party before the proposed date on
which the Deposit is to be remitted, Escrow Agent shall continue to hold the
Deposit until otherwise directed by joint written instructions from Contributor
and the or until a final judgment of an appropriate court. In the event of such
dispute, Escrow Agent may deposit the Deposit with an appropriate court and,
after giving written notice of such action to the parties, Escrow Agent shall
have no further obligations with respect to the Deposit.
3.3 The parties acknowledge that Escrow Agent is acting as a stakeholder
at their request and for their convenience, that Escrow Agent shall not be
deemed to be the agent of either of the parties, and the Escrow Agent shall not
be liable to either of the parties for any act or omission on its part unless
taken or suffered in bad faith or in willful or negligent disregard of this
Agreement. Contributor and the Operating Partnership shall jointly and severally
indemnify and hold Escrow Agent harmless from and against all costs, claims and
expenses, including reasonable attorneys' fees, incurred in connection with the
faithful performance of Escrow Agent's duties hereunder.
3.4 Escrow Agent acknowledges agreement to the provisions of this
Agreement applicable to it by signing on the signature page of this Agreement.
6
<PAGE>
3.5 If Closing does not take place because of Contributor's default
under this Agreement, the Deposit shall be given and/or paid to the Operating
Partnership as liquidated damages. The receipt of these damages shall be the
Operating Partnership's sole and exclusive remedy and satisfaction for such
default or any other default; and upon such receipt, this Agreement shall be
null and void and of no further force or effect whatsoever.
THE CONTRIBUTOR RECOGNIZES THAT, IF THE CONTRIBUTOR FAILS TO PERFORM ITS
OBLIGATIONS HEREUNDER, THE OPERATING PARTNERSHIP SHALL BE ENTITLED TO
COMPENSATION FOR THE DETRIMENT CAUSED THEREBY. HOWEVER, BOTH PARTIES AGREE THAT
IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE EXTENT OF THE
DETRIMENT AND, TO AVOID SUCH DIFFICULTIES, THE PARTIES AGREE THAT, IF THE
CONTRIBUTOR FAILS ITS OBLIGATIONS HEREUNDER, THE OPERATING PARTNERSHIP SHALL BE
ENTITLED TO RETAIN THE ESCROW DEPOSIT MADE PURSUANT TO THIS AGREEMENT AS
LIQUIDATED DAMAGES. BOTH PARTIES AGREE THAT SUCH AMOUNT STATED AS LIQUIDATED
DAMAGES SHALL BE IN LIEU OF ANY OTHER RELIEF TO WHICH THE OPERATING PARTNERSHIP
MIGHT OTHERWISE BE ENTITLED BY VIRTUE OF THIS AGREEMENT OR BY OPERATION OF LAW.
/s/ JSS [Operating Partnership's Initials] _______________________________
[Contributor's Initials] /s/ BK.
If Closing shall occur, the Deposit and all interest earned thereon
shall be applied to the Contribution Amount. In all other events (including
without limitation a cancellation of this Agreement pursuant to a right granted
Contributor in this Contribution Agreement), the Deposit shall be returned to
Contributor. If the Operating Partnership is in default with respect to the
performance of any of its obligations hereunder or if all closing conditions to
the Operating Partnership's obligations to consummate the Closing have been
satisfied and if the Operating Partnership shall fail or refuse to consummate
the Closing, then the Contributor, at its election and as its sole and exclusive
remedy, may either (i) waive such objections, defects or imperfections of the
Operating Partnership's performance and consummate the Closing with respect
thereto; (ii) elect to seek specific performance of this Contribution Agreement
in addition to all remedies of law and in equity that Contributor may have; or
(iii) terminate this Agreement, whereupon the Operating Partnership shall not
have any further liability of any kind to the Contributor. Notwithstanding the
foregoing, in the event Contributor sues for damages in lieu of specific
performance, the Operating Partnership's liability for damages shall not in such
event exceed the sum of Two Hundred Thousand Dollars ($200,000.00).
4. MANAGEMENT AND CONDITIONS PRIOR TO CLOSING.
4.1 Until Closing, the Operating Partnership shall at its own expense,
comply with all its obligations under all Space Leases and Service Contracts and
the REAs. The Operating Partnership shall operate the Shopping Center in a
manner consistent with good practice and in accordance with its insurance
company's requirements and applicable federal, state and local laws, ordinances
and requirements and the Operating Partnership shall maintain the Real Estate
and the Personal Property in the same condition as on the date hereof,
reasonable wear and tear excepted, and shall keep the same fully insured against
fire and extended coverage.
7
<PAGE>
4.1.1 The Operating Partnership also covenants and agrees that,
following a date which is five (5) business days prior to the end of the
Inspection Period (the "Cutoff Date") and prior to Closing, it shall not take
any of the following actions without the prior written consent of Contributor:
(a) effect or permit any change in any of the Space Leases or Service Contracts
or the REA; (b) renew or extend the term of any Service Contract or Space Lease;
(c) enter into any new Space Lease or Service Contract or cancel or terminate
any REA or any Space Lease or Service Contract; (d) enter into, extend or modify
any other agreement affecting the Property the term of which would extend beyond
the Closing Date. Prior to the Cutoff Date, the Operating Partnership may take
any of the foregoing actions without Contributor's consent, provided that (i)
such actions are bona fide, taken in good faith in the exercise of the Operating
Partnership's reasonable judgment, and (ii) Contributor is furnished with a true
and complete copy of any such new, modified or terminated lease or other
instrument within two (2) business days after execution of same.
4.1.2 In the event that prior to Closing, the Operating
Partnership executes any new lease that is not a New Lease, as defined in
Section 2.8.1 (or approved replacement thereof) and has been consented to in
writing by Contributor ("Additional Lease"), at Closing all reasonable, bona
fide third-party out-of-pocket expenses as to such Additional Lease, including
but not limited to brokerage commissions, permit fees, architect and engineer
fees, tenant improvement costs and landlord work shall be, if paid Pre Closing,
a decrease in the Adjustment Amount. If such expenses have not been paid Pre
Closing, they will be assumed as obligations of the Post Closing Operating
Partnership.
4.2 Except as otherwise stated to the contrary in this Agreement,
Contributor shall Close with the Property in AS IS physical condition as it
exists on the date hereof, subject to reasonable wear and tear between now and
Closing but subject also to the provisions of Section 5.1 and Section 6.4.
4.3 The Operating Partnership agrees that: (a) on and after the date
hereof, Contributor and its designated representatives shall have access to the
Property for the purpose of making engineering, survey or other inspections and
independent investigations; and (b) the Operating Partnership will provide
Contributor promptly and without charge with other relevant or necessary
information within its possession or control with respect to the Property,
including (without limitation) full and accurate copies of Space Leases, Service
Contracts, title information or instruments, and books and operating records of
the Shopping Center. Contributor agrees to hold the Operating Partnership
harmless from any personal injury or property damage caused by Contributor or
its designated representatives on the Property in doing any testing, inspections
or surveys.
4.4 Contributor shall have the Inspection Period within which to inspect
and examine the Real Estate and Personal Property, and within which to review
and examine the Space Leases and Service Contracts and Landlord's correspondence
files regarding such Space Leases and Service Contracts.
4.4.1 In the event that during the Inspection Period,
Contributor, in its sole and exclusive judgment, determines not to close the
transactions provided for herein, for any reason or for no reason, or if
Contributor is not satisfied with the condition of the Real Estate or Personal
Property or Space Leases or Service Contracts then, on or prior to the last day
of the Inspection Period, Contributor shall have the right to cancel and
terminate this Agreement without liability to Contributor by so sending notice
to the Operating Partnership with a copy to Escrow Agent on or prior to such
day.
8
<PAGE>
4.4.2 In the event Contributor does not cancel and terminate this
Agreement prior to the end of the period set forth in Section 6.4, this
Agreement shall remain in full force and effect.
4.4.3 If Contributor cancels and terminates this Agreement
pursuant to this Section 4, all non-public information obtained by Contributor
from the Operating Partnership during either the Inspection Period or Review
Period shall be kept confidential, except to the extent disclosure is required
pursuant to applicable law, regulation or court proceeding.
4.4.4 Contributor shall not conduct any test which requires
physical invasion of any of the Property without first obtaining the Operating
Partnership's written approval for the specific test to be performed, which
approval may be withheld or conditioned in the Operating Partnership's
reasonable discretion. All such inspections, investigations and examinations
shall be undertaken at Contributor's sole cost and expense. In no event shall
Contributor disturb or interfere with the rights of any tenant of the Property.
All site inspections and tests shall be scheduled so that a representative of
the Operating Partnership shall have the opportunity to be present. Contributor
agrees to give the Operating Partnership at least forty-eight (48) hours
telephonic notice before making any on-site visit with a Space Tenant occupying
less than thirteen thousand (13,000) square feet. Upon any termination of this
Agreement: (i) Contributor shall promptly following request deliver to the
Operating Partnership copies of all Contributor's inspection reports; and (ii)
Contributor shall restore and repair any damage caused by Contributor's
inspections. Notwithstanding any contrary provision of this Agreement,
Contributor's performance of its obligations under the preceding sentence (the
"Contributor's Termination Obligations") shall survive any termination of this
Agreement. Contributor (and by execution of this Agreement, Kimco Realty
Corporation) agrees to indemnify the Operating Partnership and hold the
Operating Partnership harmless from and against any and all damages, claims,
liabilities, expenses and other losses which may be claimed against or be
incurred by the Operating Partnership as a result of Contributor's physical
testing on the Property or breach of any of Contributor's obligations above. The
foregoing indemnification and hold harmless shall include reasonable attorneys'
fees and other reasonable costs and expenses. This provision shall survive
Closing and termination of this Agreement.
5. ADJUSTMENTS AND PRORATIONS.
5.1 The Pre Closing Partners shall be entitled to an adjustment of the
Unadjusted Purchase Amount based upon revenues and expenses allocable to the
period prior to Closing from the operation of the Property which are received or
paid post Closing, and a similar adjustment for revenues and expenses allocable
to the period post Closing that are received and paid pre Closing as provided
herein. The Pre Closing Partners shall be entitled to all revenue, and
responsible for all expenses, allocable to the period ending at 12:00 A.M. on
the day Closing occurs. At the Closing all items of revenue and expense with
respect to the Partnership assets listed below shall be prorated in accordance
with the foregoing principles or in accordance with the rules for specific items
set forth hereafter:
5.1.1 The Operating Partnership shall arrange for a billing under
all those Service Contracts for which fees based on usage and with utility
companies for a billing for utilities, to include all utilities or service used
up to the day Closing occurs, and any unpaid Pre Closing expenses shall increase
the Adjustment Amount. In the event any of the Service Contracts set forth in
Exhibit 5 cover
9
<PAGE>
periods beyond the Closing the same shall be prorated on a per diem basis and
any amount owed Post Closing that is a Pre Closing expense shall be an increase
in that amount of the Adjustment Amount; any amount prepaid that is a Post
Closing expense shall be a decrease in the Adjustment Amount. All Pre Closing
expenses shall be allocated to the Pre Closing Partners in accordance with the
terms of the Partnership Agreement in effect prior to the Closing. All utility
deposits of Operating Partnership on the Closing Date shall either be withdrawn
and paid to Pre Closing Partners or the amount of such deposits shall be a
decrease in the Adjustment Amount.
5.1.2 Real estate taxes and personal property taxes on the
Property shall be prorated based upon the period (i.e., calendar or other tax
fiscal year) to which same are attributable, regardless of whether or not any
such taxes are then due and payable or are a lien. Tax prorations shall be based
on gross taxes less maximum available discount (4%). As set forth in 5.1.1
above, expenses properly allocated to the period Post Closing and prepaid shall
decrease the Adjustment Amount accordingly, and expenses properly allocated to
the period Pre Closing that are owed shall increase the Adjustment Amount
accordingly. In the event that as of the date Closing occurs the actual tax
bills for the tax year or years in question are not available and the amount of
taxes to be prorated as aforesaid cannot be ascertained, then rates, mileage's
and assessed valuation of the previous year, with known changes, shall be used;
and after the Closing occurs and when the actual amount of taxes for the year or
years in question shall be determinable, such taxes will be re-prorated between
the time periods before and after Closing to reflect the actual amount of such
taxes. Notwithstanding the preceding provisions, Section 8.7 shall govern with
respect to all general, special and/or betterment assessments on the Property at
the date of Closing. Notwithstanding the foregoing, there shall be no proration
of real estate taxes to the extent that same are payable by Morrison. In
addition, annual tax reimbursement from Tenants (Publix & T.J. Maxx) will be
prorated when collected and amounts due Pre Closing Partners will be distributed
in cash within 30 days of receipt.
5.1.3 Percentage rent (i.e., that portion of the rent payable to
the landlord by the tenant under a Space Lease which is a percentage of the
amount of sales or of the dollar amount of sales), if any, payable under each
Space Lease shall be prorated with respect to the lease year thereunder in which
the Closing occurs on a per diem basis as and when collected. Any percentage
rent collected by the Operating Partnership including any percentage rent which
is delinquent and pertaining to (i) an entire lease year or accounting period of
a tenant under a Space Lease which ends on a date prior to the date of Closing,
and (ii) that portion of a lease year or accounting period of such tenant
covering a period prior to the date of Closing where such lease year or
accounting period begins prior to the date of Closing and ends thereafter shall
in both cases (subject to Section 5.3.1) be distributed in cash to the Pre
Closing Partners within 30 days of receipt.
5.1.4 Gas, water, electricity, heat, fuel, sewer and other
utilities charges for which no billing based upon actual usage can be obtained
with due diligence, and the governmental licenses, permits and inspection fees
and operating expenses relating to the Shopping Center, shall be prorated on a
per diem basis and on appropriate adjustment to the Adjustment Amount shall be
made as set forth in 5.1.1.
5.1.5 Common area maintenance expenses and charges, including all
expenses and charges payable by or to the Operating Partnership under or in
connection with the REAs, shall be prorated. All common area expense payments
made by each tenant and such charges paid under its
10
<PAGE>
Space Lease for the entire lease year during which the Closing occurs, and all
common area maintenance payments to the Operating Partnership by other parties
under the REA, including in each case end-of-year adjustments, if any, shall be
prorated in the following manner: Not later than three (3) days prior to
Closing, Pre Closing Partners shall deliver to Contributor a detailed
reconciliation showing common area charges ("CAM Charges") billed to Shopping
Center tenants (or each other party to a REA, hereafter a "REA Party") required
to pay CAM Charges for 1997 and through the Closing Date and showing all CAM
Charges incurred by the Operating Partnership for such period prior to Closing.
In addition, Pre Closing Partners shall provide to Contributor invoices and
other evidence documenting CAM Charges as may reasonably be requested by
Contributor. Any excess CAM Charges (or estimates for same) received by the
Operating Partnership prior to Closing over the amount of the Pre Closing CAM
Charges payable by such tenants, as evidenced by the bills and computations
delivery by the Operating Partnership at Closing, increase the Adjustment
Amount. Any additional CAM Charges due from tenants for periods Pre Closing
shall be billed to tenants (or a REA Party) as and when appropriate for annual
reconciliation, and shall be distributed to the Pre Closing Partners pro rata
within thirty (30) days if , as and when received by the Operating Partnership
after the Closing. The Operating Partnership shall not be required to institute
any action or proceeding to collect any pre Closing CAM charges.
5.1.6 All brokerage and leasing commissions or other compensation
due or accrued prior or subsequent to the date of Closing to any broker, agent,
or other person in connection with the Property for brokerage or other services
rendered to the Operating Partnership, or to any Pre Closing Partner or Post
Closing Limited Partner of the Operating Partnership, in connection with the
management and/or leasing of the Property prior to Closing shall increase the
Adjustment Amount to the extent not paid by the Operating Partnership prior to
Closing (it being agreed that payment of all of the foregoing shall be the sole
responsibility of Pre Closing Partners). The foregoing shall not apply to bona
fide third-party out-of-pocket expenses regarding Additional Leases as set forth
in Section 4.1.2, or to those commission expenses set forth in Section 2.8 which
shall be paid Post Closing by the Operating Partnership and shall not cause an
increase or a decrease in the Adjustment Amount.
5.1.7 All prepaid rentals, other prepaid payments, security
deposits, electric, gas, sewer and water deposits deposited with the Operating
Partnership by tenants, (including all accrued interest on all of the foregoing,
unless the Operating Partnership is entitled to retain same and evidence that
same has been retained in cash by the Operating Partnership is presented at
Closing) under any Space Leases, license agreements or concession agreements
relating to the Property, shall be set forth in Exhibit 17 to this Agreement and
shall be an increase to the Adjustment Amount.
11
<PAGE>
5.1.8 Pre Closing Partners shall be responsible for any charges,
salaries, vacation pay or fringe benefits of employees of any Pre Closing
Partners prior to or following the Closing and none of the foregoing shall be
prorated.
5.2 All prorations (and the resultant increase or decrease to the
Adjustment Amount) to be made under the foregoing provisions shall be made on
the basis of a written statement or statements delivered to Contributor by Pre
Closing Partners and approved by Contributor. In the event any prorations,
apportionments or computation shall prove to be incorrect for any reason, then
either Contributor or Pre Closing Partners shall be entitled to an adjustment to
correct same, provided that a written demand to such adjustment is made within
six (6) months after the erroneous payment or computation was made. Any
adjustment that results in the Pre Closing Partners being required to return
cash shall be made by withholding of distributions as provided in Section 2.8.3
and any adjustment that requires Contributor to pay an additional amount to Pre
Closing Partners shall be paid by Contributor within thirty (30) days after said
demand.
5.3 All accounts receivable flowing from the Property shall be disposed
of as follows:
5.3.1 Contributor and Pre Closing Partners agree to treat all
base or minimum rental payments received from a tenant as first applicable to
base or minimum rent which was owed by that tenant, if any, for the month in
which Closing occurs until the base or minimum rental amount due for such period
has been collected. In the event that there remains any unpaid base or minimum
rent for a period prior to the month of Closing, all payments of base or minimum
rent received from such tenant shall be applied to sums owed subsequent to
Closing before any part thereof shall be treated as belonging to the Pre Closing
Partners. In the event that there remains any unpaid tenant receivable other
than base or minimum rent (including without limitation any tax, CAM, insurance
or percentage rent payments) for any period prior to the Closing, all payments
received from any tenant in arrears shall be applied to any sums owed by such
tenant subsequent to Closing (whether base or minimum rent or any other amount)
before any part thereof shall be treated as belonging to the Pre Closing
Partners. Any sums belonging to the Pre Closing Partners in accordance with this
Section 5.3.1 shall be paid to the Pre Closing Partners pro rata, the amounts to
be derived with the Percentage for Adjustments set forth in Schedule 1 attached
hereto.
5.3.2 In the event that any tenant of the Operating Partnership
shall hereafter apply or shall have heretofore applied for relief under the
provisions of any bankruptcy or similar laws for the protection of debtors, the
provisions of Section 5.3.1 shall not apply, and the Prior and Post Closing
Partners shall have the right to seek collection of their respective accounts,
their entitlements being determined by the Closing and the other provisions of
this Agreement.
5.3.3 Neither the Contributor nor Pre Closing Partners shall have
the right to enter into any transactions that purport to compromise claims
belonging to the other, without the other party's prior written consent.
5.3.4 If at the time of Closing, any tenants (or REA Parties) owe
the Operating Partnership any money, the Operating Partnership shall have the
right, subsequent to the Closing, to collect such sums directly from the tenants
including bringing lawsuits against the tenants (or REA Parties) for such
collection provided that expenses incurred will be equitably apportioned between
Pre and Post
12
<PAGE>
Closing Partners based upon amounts owed to the Pre and Post Closing Partners,
if any; provided, however, Pre Closing Partners agree that any such legal action
or collection shall not include any disturbance of the possession, use or
occupancy of the tenants or any right to evict the tenants, whether pursuant to
the lease provisions or otherwise, and the Operating Partnership shall not be
obligated to join in any lawsuit or in any other way to participate or cooperate
with Pre Closing Partners in those collection attempts, unless required to by
law for Pre Closing Partners or for the Operating Partnership to maintain its
action, and in such event, Operating Partnership will join in such a lawsuit or
action only if the same does not include or require disturbance of the
possession of any tenants, as aforesaid.
5.4 At or prior to the time of Closing, the Operating Partnership shall
distribute all cash in hand or in bank accounts, other than tenant security
deposits, to the Pre Closing Partners.
5.5 Operating Partnership is entitled to certain credits against impact
fees charged by Manatee County (the "Credits"), which credits, Pre Closing
Partners warrant, are applicable solely to the undeveloped property. All such
Credits shall be transferred by the Operating Partnership at Closing or
thereafter as directed by Pre Closing Partners to the Pre Closing Partners or
their designee. The Operating Partnership and Contributor shall cooperate
(without any obligations to incur any expense) with Pre Closing Partners and/or
their designee as to any transfer of such Credits.
6. TITLE AND SURVEY.
At Closing, as a condition to Contributor's obligations hereunder, the
Partnership (with Contributor as a new general partner) shall have valid,
marketable and insurable fee title to the Real Estate subject only to the Space
Leases and the Permitted Exceptions and same shall be available for
Contributor's inspection.
6.1 Promptly following the execution of this Agreement, the Operating
Partnership shall obtain and deliver to Contributor any survey of the Real
Estate in the Operating Partnership's possession or control (the "Survey"); it
being understood that Contributor may at its option obtain a new or updated
survey; and Contributor shall apply to Chicago Title Insurance Company (the
"Title Company") for a binding, irrevocable commitment for an ALTA Form B Fee
Title Insurance Policy to be issued to Contributor (the "Title Commitment") in
the amount of FOURTEEN MILLION FOUR HUNDRED FIVE THOUSAND DOLLARS
($14,405,000.00) effective as of the date of Closing, evidencing that the
Operating Partnership owns and could, if it so desired, convey valid and
marketable fee title to the Real Estate, free and clear of all encumbrances
except the Space Leases and Permitted Exceptions.
6.2 Within ten (10) days after Contributor's receipt of both the Title
Commitment and Survey (if obtained), but in no event later than the end of the
Inspection Period, Contributor shall furnish the Operating Partnership with a
schedule of (i) any liens, encumbrances or other title exceptions or state of
facts shown on the Title Commitment or Survey, which Contributor, in its sole
and exclusive judgment, does not approve, finds unsatisfactory and (ii) any
title company requirements which Contributor, in its sole and exclusive
judgment, contends the Operating Partnership must satisfy for Contributor to
become General Partner. In addition, if Contributor has requested endorsements
providing coverage for (a) a perimeter metes and bounds description and
contiguity between the
13
<PAGE>
parcels which comprise the Real Estate (if comprised of separate parcels) and
between the Real Estate and public streets or (b) access from the Real Estate to
a public street, or (c) a survey endorsement, or (d) "Fairway" endorsement, or
(e) any other endorsements available in Florida, and the title company has
refused to grant such coverages, Contributor shall so inform the Operating
Partnership.
6.3 The Operating Partnership shall have a period of fifteen (15) days
following receipt of said schedule to remove, correct, cure or satisfy to
Contributor's satisfaction, any survey or title exceptions or Title Company
requirements set forth on said schedule and to obtain from the Title Company the
endorsements set forth on said schedule. The Operating Partnership shall not be
required to remove any title objections, provided that, notwithstanding the
foregoing, if any objection consists of a lien in a specified or readily
ascertainable dollar amount, including the Mortgage, the Operating Partnership
shall pay that amount as specified in Section 2.1, and the Operating Partnership
shall be required to remove same, at or prior to Closing, by payment, by bonding
or by causing the Title Company to insure, or to commit to insure, over the same
or otherwise. If the Operating Partnership fails to remove, at or prior to
Closing, any such lien, Contributor may, but shall not be obligated to, increase
the Contribution Amount, up to the Agreed Upon Value, in the amount required to
remove same. If such increase of the Contribution Amount results in a negative
amount for the Unadjusted Purchase Amount, such negative amount shall constitute
an addition to the Excess Adjustment Amount. For purposes of this Section 6, a
deed of trust or similar instrument shall be deemed to be a mortgage.
6.4 In the event that the Operating Partnership is unable or (subject to
its obligations above set forth) elects not, within said fifteen (15) day
period, to remove, correct, cure or obtain endorsements as aforesaid
(hereinafter called "title correction"), Contributor shall have the right at its
sole option either (a) to terminate this Agreement, in which event the Deposit
shall be returned to Contributor and neither party shall, thereafter, have any
further liability hereunder, or (b) to accept such stated facts and such title
as is disclosed by the Survey and Title Commitment without title corrections
thereby waiving any rights against Operating Partnership and the Pre Closing
Partners with respect thereto. There shall be a corresponding increase in the
Contribution Amount for unremoved mortgages or other liens as above set forth.
Said election shall be made by Contributor within ten (10) days following
Contributor's receipt of written notification by the Operating Partnership that
the Operating Partnership has not been able to or will not obtain title
correction.
6.5 In the event that the Operating Partnership shall undertake title
correction as aforesaid, and shall be successful, this Agreement shall continue
in full force and effect and Contributor shall close the transaction
contemplated hereby in accordance with the terms hereof. In the event that the
Operating Partnership shall only be partially successful in obtaining title
correction, Contributor shall have the same alternative rights as Contributor
would have in the event the Operating Partnership had declined to seek title
correction (as set forth in the preceding paragraph of this Section).
Contributor shall make its election within ten (10) days after Contributor's
receipt of written notice from the Operating Partnership to Contributor of the
extent to which title has been corrected.
7. HAZARDOUS WASTES.
The Operating Partnership and the Pre Closing Partners, jointly and
severally, represent and warrant (and it shall be a condition precedent to
Contributor's obligations at Closing) that to the Operating Partnership's best
knowledge the Property is in compliance with and does not violate any
14
<PAGE>
provisions of the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (as the same may be amended from time to time) and/or of
any other environmental or other statute relating to "hazardous" or "toxic"
substances or any similar statute or statutes enacted in the State in which the
Property is located; and that the Operating Partnership has never used the
Property for the dumping or storage of any hazardous or toxic substances or
wastes and knows of no such use by any other party. The provisions of this
Section 7 shall survive the Closing for a period of nine (9) months.
Notwithstanding any provision contained in this Agreement to the contrary, in
the event that any environmental inspection, study, report or test results
disclose facts or circumstances which cause the basis for Contributor to
reasonably believe that additional testing, study or investigation is required,
Contributor may extend the Inspection Period for a reasonable amount of time not
to exceed an additional thirty (30) days.
8. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE PRE
CLOSING PARTNERS.
The Operating Partnership and the Pre Closing Partners, jointly and
severally, covenant, represent and warrant to Contributor the following, all of
which shall be required to be true and correct in all material respects on and
as of the Closing Date as a condition precedent to Contributor's obligations
hereunder, and all of which shall survive the Closing:
8.1 Organization; Authority. The Operating Partnership has been duly
formed and is validly existing limited partnership in the state of Florida, in
good standing, and with requisite power to enter this Contribution Agreement and
all agreements contemplated hereby. The persons and entities executing this
Contribution Agreement and all agreements contemplated hereby on behalf of the
Operating Partnership have the power and authority to enter into this
Contribution Agreement and such other contemplated agreements and are the
persons listed in Schedule 1 there being no other partners to the Operating
Partnership; and
8.2 The Operating Partnership has obtained all consents required to
permit all of the transactions contemplated by this Agreement (including but not
limited to the admission of Contributor as the sole general partner of the
Partnership) and required under any partnership agreement, shareholder
agreement, limited liability company agreement, covenant, charter, declaration
of trust, or other agreement concerning it or to which it is a party or which is
binding upon it or by any law or regulations or any judgment, order or decree of
any governmental body, agency or court having jurisdiction, over the Operating
Partnership, and this Agreement does not require (i) the consent or approval of
any public or private authority which has not already been obtained by the
Operating Partnership, or (ii) a subdivision in order to comply with the
subdivision regulations of the authorities having jurisdiction; or if required
it will be obtained by the Operating Partnership prior to the Closing.
8.3 The Operating Partnership and the Pre Closing Partners, jointly and
severally, makes the representations and warranties to the Contributor as
provided in Exhibit 12 attached hereto.
8.4 The Operating Partnership has not received notice from any
governmental authority, mortgagee, tenant, insurer or other party (i) that
either the Real Estate or the use or operation of the Shopping Center is
currently in violation of any zoning, environmental or other land use
regulations, and to the Operating Partnership's knowledge no such notice has
been issued; (ii) that the Operating
15
<PAGE>
Partnership is currently in violation or with the passage of time will be in
violation of the requirements of any ordinance, law or regulation or order of
any government or any agency, body or subdivision thereof (including, without
limitation, the local building department) or the recommendations of any
insurance carrier or Board of Fire Underwriters affecting the Shopping Center,
or that any investigation has been commenced, or is contemplated, regarding any
such possible violation; or (iii) asserting that the Operating Partnership is
required to perform work at the Shopping Center and to the Operating
Partnership's knowledge no such notice has been issued. If the Operating
Partnership receives such a notice or a violation is issued or filed prior to
Closing, the Operating Partnership shall promptly notify Contributor and shall
promptly cure any violation, and in the event that such cure would require an
alteration of or addition to the Real Estate or Personal Property or otherwise
require an expenditure to cure the violation, the cost of which would exceed
$50,000.00, then the Operating Partnership and Contributor shall have the
benefit of the provisions contained in Section 9.2. Notwithstanding the
foregoing, the Operating Partnership shall have the right to contest any
violation if the same does not delay the Closing and if the violation is cured
or removed prior to the Closing.
8.5 There is no pending litigation brought by or against the Operating
Partnership or affecting the Property (including, without limitation, the Real
Estate and the Space Leases) or the operation of the Shopping Center (including
without limitation any bankruptcy proceedings of existing Space Lease tenants)
except as set forth on Exhibit 6. The Operating Partnership has no knowledge of
any other such threatened litigation which might result in a judicial or
equitable mortgage against the Real Estate, or gives rise to a set-off or
defense to any tenant under the Space Leases, or prevents the transactions
provided for herein, or which might result in a consummation of judgment against
the Operating Partnership. If the Operating Partnership is served with process
or receives notice that litigation may be commenced against it, the Operating
Partnership shall promptly notify Contributor.
8.6 The Space Leases described in Exhibit 3 comprise all the Space
Leases presently existing and each is in full force and effect; no Space Lease
has been modified or supplemented except (if at all) as set forth on Exhibit 3;
no rent has been paid more than one month in advance by any tenant, and no
tenant is entitled to any "free rent" period, defense, credit, allowance or
offset against rental; to the Operating Partnership's knowledge, the information
set forth in Exhibit 3 is true, correct and complete. Although summaries of
Space Leases have been provided by the Operating Partnership, Contributor
assumes responsibility to review all Space Leases provided to Contributor and
verify that the information set forth in the summaries does not conflict with
the terms of the Space Leases. To the Operating Partnership's knowledge, there
is no default of either landlord or tenant under any of the Space Leases, and no
state of facts which with notice and/or the passage of time would ripen into a
default, except as set forth on Exhibit 3. There are no persons or entities
entitled to possession of the Property other than those listed on Exhibit 3. No
work or installations is required of the Operating Partnership except as
specified (if at all) in the Space Leases or in Section 2.8, and in any case,
except as set forth in Section 2.8. The Operating Partnership has fully
completed all tenant improvements specified in any Space Lease to be the
responsibility of the landlord and has paid all tenant construction allowances.
No leasing commissions will become due in connection with any Space Lease or the
renewal thereof following the Closing, and no understanding or agreement exists
in regard to payment of any leasing commissions or fees for future Space Leases
(except for commissions for New Leases which Contributor has knowledge of and
are expressly set forth in Section 2.8.2). There is no Shopping Center
merchant's association.
16
<PAGE>
8.7 The Operating Partnership will pay all general, special and
betterment assessments on the Property which are due and payable prior to the
date of Closing and same shall be expenses allocated to Pre Closing Partners;
and if on the date of Closing the Property shall be affected by an assessment or
assessments, which is (or are) or may become payable in annual installments, of
which the first installment is then a charge or lien, or has been paid, then for
the purposes of this Agreement all the unpaid installments of any such
assessment, including those which are to become due and payable after the date
of Closing, shall be deemed to be due and payable and to be liens upon the
Property affected thereby and shall be paid and discharged by the Operating
Partnership at Closing and same shall be expenses allocated to Pre Closing
Partners.
8.8 There are not now and will not be on the date of Closing any
agreements or understandings relating to the Property that will be binding after
Closing, except for the REAs, Permitted Exceptions, Space Leases and Service
Contracts; and no alterations, amendments or waivers pertaining to the foregoing
will be made by the Operating Partnership except with Contributor's written
approval prior to the date of Closing.
8.9 The list of and information with respect to Service Contracts in
Exhibit 5 is true and complete. To the Operating Partnership's knowledge, there
is no material default, or event that with notice or lapse of time or both would
constitute a material default, by any party to any Service Contract. The
Operating Partnership has received no notice that any party to any Service
Contract intends to cancel or terminate such agreement.
8.10 All permits and authorizations with respect to the Shopping Center
now in effect will be in full force and effect as of and will be made available
for inspection to Contributor on the date of Closing. Pending applications, if
any, will not be withdrawn or permitted to lapse without Contributor's consent,
and the Operating Partnership shall promptly notify Contributor of all pending
applications.
8.11 True and complete copies of the most recent real property tax
bill(s) for the Real Estate (which include bill[s] for all real estate taxes
from all municipal authorities assessing same) are annexed as Exhibit 8. No tax
reduction proceedings are pending or outstanding. The foregoing are all the
taxes on the Shopping Center or the income therefrom other than Federal and
state income taxes on net taxable income for the periods covered in such bills,
other than sales taxes due to the State of Florida. There are no special
assessments or betterment assessments (whether payable in installments or
otherwise) applicable to the Real Estate and no tenant is entitled to any refund
of any tax or other payment by reason of tax reduction proceedings affecting
current or prior years. Subject to the provisions of Section 5.1.2, all taxes
and tax refunds charged or collected with respect to the Property shall be
allocated to the Pre and Post Closing Partners in accordance with their
respective periods of the Operating Partnership interests.
8.12 The Operating Partnership, at the time of Closing, will have no
material liability (whether direct or indirect, matured or contingent) which
reduces the value (directly or indirectly) of the Contributor's partnership
interest by an amount that is greater than any such reduction in value, if any,
due to such liability that the Contributor would have had, if the Property had
been conveyed to a newly formed partnership with no other liabilities with the
same partners as the Operating Partnership immediately after the Closing.
17
<PAGE>
8.13 No property other than the Real Estate is included in the tax
assessment of the Real Estate, and there are no unpaid assessments for utility
installations. In amplification and not in limitation of the foregoing, there
are separate tax lots and assessments for each of Lots 1 through 6 in the Plat
of Bayshore Gardens Shopping Center recorded at Plat Book 30, Page 92, Manatee
County Records.
8.14 The Operating Partnership has no employees or hired persons. The
Operating Partnership shall have no obligation, liability or responsibility with
respect to charges, salaries, vacation pay, fringe benefits or like items of
on-site employees or hired persons subsequent to Closing, nor with respect to
any management or employment agreements with respect to the Property.
8.15 The persons or parties signing this Agreement on behalf of the
Operating Partnership have the power and authority to enter into this Agreement,
to bind the Operating Partnership to the provisions hereof and to comply with
the obligations hereunder.
8.16 Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated will conflict with, result
in a breach of or constitute (with or without the giving of notice or the
passing of time, or both) a default under, or otherwise adversely affect any
Space Lease, any REA (subject to obtaining consent of Target as set forth in
Section 13.3.11), or any other contract, agreement, instrument, license or
undertaking to which the Operating Partnership or any of its affiliates is a
party or by which any of them or any of their respective properties or assets is
or may be bound or that relates to the Property in any respect.
8.17 The Operating Partnership has made all required filings and paid
all franchise and other taxes.
8.18 No tenant under a Space Lease (or REA Party) or other person has
any option, right of first refusal or other right to purchase the Property or
any part thereof or interest therein in the event of a change in the Operating
Partnership, its structure or its General Partner, or in the event of sale. In
the event any such option, right of first refusal or other right to purchase
does exist on the date hereof, the Operating Partnership shall at Closing
deliver to Contributor a written and recordable instrument, signed by the holder
thereof, irrevocably and unconditionally waiving, canceling, terminating and
annulling any such option, right of first refusal or other right.
8.19 Intentionally omitted.
8.20 The Operating Partnership has not received any actual notice
claiming that any construction and/or maintenance work required by the terms of
any or any REA or other Permitted Exceptions, or by any building, zoning or
other law, ordinance or regulation affecting the Property, including without
limitation any roadway and utility line construction on the Shopping Center
and/or adjacent property has not been satisfactorily completed. The Operating
Partnership has no actual notice of any charges, liens or assessments against
the Property or against the Operating Partnership for any of same.
8.21 With respect to the REAs:
(a) To the knowledge of the Pre Closing Partners, each REA is in
full force and effect and has not been modified or supplemented except as set
forth in a recorded instrument.
18
<PAGE>
(b) To the knowledge of the Pre Closing Partners, there is no
default under any REA of either the Operating Partnership or any REA Parties,
and no state of facts which with notice and/or the passage of time would ripen
into a default.
(c) To the knowledge of the Pre Closing Partners, no unperformed
work or installations or unpaid amounts is required of or due from the Operating
Partnership under any REA; and, with regard to the OEA and Management Agreement,
there exists no unresolved dispute (including without limitation any audit
claim) with Target concerning past or current amounts due the Operating
Partnership or any predecessor in interest.
(d) To the knowledge of the Pre Closing Partners, the Operating
Partnership is currently (i) the "Approving Party" for the Developer Tract under
the OEA, (ii) successor-in-interest to all rights of Developer under the OEA,
and an affiliate of the Operating Partnership is the Operator under the
Management Agreement; and the Operating Partnership has full right, power and
authority to assign all of such positions, interests and titles, if it would
choose to do so, without the requirement of consent from any other REA Party or
any other party (except that Target must grant approval for any other entity to
become the Operator).
(e) Said Operator, is currently performing all common area
maintenance and carrying all common area liability insurance required by or
under the OEA or Management Agreement for the Developer Tract and the Target
Tract.
(f) There have been no Common Area Rules adopted under Section
6.24 of the OEA.
(g) Circumstances have not arisen that would permit an exercise
by Developer of any Repurchase Option set forth in OEA Section 6.28; and the
Repurchase Option right in said Section 6.28(B) remains in full force and
effect.
(h) All obligations of Developer under that certain Site
Development Agreement of even date with the OEA, and between the same parties
thereto, have been fully performed and such agreement has terminated.
(i) Attached as Exhibit 7 is a true copy of the most current
Budget under the Management Agreement, and same has been approved by Target.
At Closing, the Operating Partnership shall deliver to Contributor a certificate
reconfirming all the foregoing representations as true, correct and complete in
all material respects as of the date of Closing.
Whenever any representation or warranty of the Operating Partnership is
stated in this Agreement to be "to the knowledge of the Operating Partnership,"
such words shall mean and be strictly limited and confined to the actual
knowledge of Eric Doy Howell (the "Pre Closing Partner's Representative"). The
Operating Partnership represents that the Pre Closing Partner's Representative
is the only partner or principal of the Operating Partnership responsible for
operation of the Property and who has any material knowledge concerning same.
Whenever it is stated in this Agreement that the Operating Partnership has
received no notice of a particular matter, it is intended to mean only that Pre
Closing Partners' Representative has received no written notice of such matter.
Information
19
<PAGE>
actually known to the Operating Partnership or to the Pre Closing Partners'
Representative excludes information of which the Operating Partnership, Pre
Closing Partners' Representative or any other party has constructive or implied
knowledge or notice.
Notwithstanding anything contained in this Agreement to the contrary,
all of the representations, warranties and certifications (the
"Representations") which are made by the Operating Partnership or by the Pre
Closing Partners, jointly and severally, and set forth in this Section 8 or in
Section 7, shall be subject to the following conditions and limitations: (i) the
Representations shall survive the Closing (ii) there shall be no liability on
the part of the Operating Partnership or on the part of the Pre Closing
Partners, after the Closing, for breaches of Representations of which
Contributor had actual knowledge prior to the Closing; and (iii) in the event
that, after the date hereof and prior to the time of Closing, during the course
of Contributor's inspections, studies, tests and investigations conducted by
Contributor, or through other sources, Contributor gains knowledge of a fact or
circumstance which conclusively shows that a Representation was or has become
untrue or inaccurate in any material respect, and such fact or circumstance was
not intentionally withheld from Contributor by Pre Closing Partners'
Representative, then Contributor shall notify the Operating Partnership of such
fact or circumstance, and if the Operating Partnership shall fail to
substantially eliminate or otherwise cure any materially adverse effect on the
Property which results from the material untruth or inaccuracy of the applicable
Representation, within ten (10) days after receiving such notice, then
Contributor, if it does not wish to waive such breach and proceed to Closing,
shall have the right (as its sole remedy) to declare this Agreement terminated,
in which event the Deposit and all interest thereon shall be returned to
Contributor.
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE OPERATING
PARTNERSHIP AND PRE CLOSING PARTNERS CONTAINED IN THIS AGREEMENT, AND EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE OPERATING PARTNERSHIP AND
PRE CLOSING PARTNERS MAKE NO REPRESENTATION, CERTIFICATION OR WARRANTY OF ANY
KIND, INCLUDING ANY REPRESENTATION, CERTIFICATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE CONDITIONS OR STATE OF REPAIR OF THE PROPERTY, OR ANY PORTION
THEREOF, OR OF VISIBLE OR HIDDEN DEFECTS IN MATERIAL, WORKMANSHIP OR CAPACITY OF
THE PROPERTY, OR ANY PORTION THEREOF, AND THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO THE PROPERTY, OR ANY
PORTION THEREOF, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT. EXCEPT AS
EXPRESSLY STATED IN THIS AGREEMENT, THE OPERATING PARTNERSHIP HAS DISCLAIMED ANY
EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THE MERCHANTABILITY, PHYSICAL
CONDITION OR FITNESS FOR PARTICULAR USE OR PURPOSE OF THE PROPERTY OR ANY
PORTION THEREOF.
9. DAMAGE, DESTRUCTION OR REQUIRED ALTERATION OR ADDITION.
9.1 Prior to Closing, in the event of any damage to or destruction of
all or part of the Real Estate (notice of which shall be given to Contributor by
the Operating Partnership as soon as practicable following its occurrence), then
the Operating Partnership shall promptly repair or replace such damage or
destruction, and Closing shall not occur until completion except that if the
cost of such repair or replacement exceeds the sum of Two Hundred Fifty Thousand
Dollars ($250,000.00), or the
20
<PAGE>
damage would take more than sixty (60) days to repair or rebuild, then in any
such case (i) Contributor shall have the right to terminate this Agreement by
giving the Operating Partnership written notice of its intention to do so, such
notice by Contributor to the Operating Partnership to be given not later than
five (5) days after Contributor shall have received the notice from the
Operating Partnership of such aforesaid occurrence, (in which event the Deposit
shall forthwith be returned to Contributor, whereupon the Agreement shall be
null and void and of no further force or effect whatsoever); or (ii) if
Contributor elects not to terminate this Agreement, this Agreement shall
continue in full force and effect and any insurance proceeds received by the
Operating Partnership shall be used to repair the property, provided that, if
insurance proceeds are insufficient to pay for such repair in full, then such
deficiency will be withheld from future distributions due to the Pre Closing
Partners who continued to be Partners Post Closing, pro rata in accordance with
their respective OP Units.
9.2 In the event that any governmental authority having jurisdiction of
all or part of the Real Estate notifies the Operating Partnership before the
Closing that some alteration of, or addition to, the Real Estate is required to
be made by law, rule or regulation (notice of which shall be given to
Contributor by the Operating Partnership as soon as practicable after its
receipt) or otherwise requires a cure of a violation, then the Operating
Partnership shall promptly undertake such alteration or addition or cure and
shall accomplish the same before the date of Closing; provided, however, that if
the cost of such alteration or addition or cure shall exceed the sum of Fifty
Thousand Dollars ($50,000.00) , then in such event the Operating Partnership may
either elect to pay the entire cost and cure the same before the Closing or may
decline to undertake the same, in which event Contributor shall have the option,
exercisable within fifteen (15) days following notice from the Operating
Partnership of the requirement and the Operating Partnership's refusal to comply
therewith, (i) to terminate this Agreement by giving the Operating Partnership
notice thereof (in which event the Deposit shall forthwith be returned to
Contributor, whereupon the Agreement shall be null and void and of no further
force or effect whatsoever); or (ii) to proceed with the Closing, in which event
the Adjustment Amount shall be increased by the actual amount necessary to cure
up to the maximum sum of Fifty Thousand Dollars ($50,000.00) . If such notice is
not timely given by Contributor, Contributor will be deemed to have elected
option (ii).
10. EMINENT DOMAIN.
The Operating Partnership represents it knows of no eminent domain
proceedings affecting or threatened against the Property. In the event that any
eminent domain proceedings affecting the Property shall be threatened,
contemplated, commenced or consummated prior to the Closing (notice of which
shall be given to Contributor by the Operating Partnership as soon as
practicable after receipt by the Operating Partnership), Contributor shall have
the right to terminate this Agreement, by written notice given to the Operating
Partnership within fifteen (15) days after the Operating Partnership has given
Contributor the aforesaid notice, (in which event the Deposit shall forthwith be
returned to Contributor, whereupon the Agreement shall be null and void and of
no further force or effect whatsoever). If this Agreement is not so terminated,
Pre Closing Partners at Closing shall assign to Contributor their entire right,
title and interest in and to any award.
11. CONTRIBUTOR'S CONDITIONS TO CLOSING.
21
<PAGE>
Contributor's obligation at Closing to consummate the transactions
herein contemplated is expressly conditioned upon the following (unless waived
in writing and signed by Contributor), and if all these conditions are not
satisfied at the Closing, Contributor may terminate this Agreement in which
event the Deposit shall forthwith be returned to Contributor, whereupon this
Agreement shall be null and void and of no further force or effect whatsoever.
The following conditions may be waived by the Contributor in its sole and
absolute discretion.
11.1 The Operating Partnership's warranties and representations, and the
Pre Closing Partner's warranties and representations, set forth herein shall be
true and correct in all material respects as of the date of Closing and the
Operating Partnership and the Pre Closing Partners shall have performed each and
all of their respective covenants and agreements hereunder within the time
provided.
11.2 At Closing, the Pre Closing Partners, shall deliver estoppel
certificates in the form and substance of Exhibit 9, dated not more than thirty
(30) days prior to the Closing Date, from all Space Tenants occupying five
thousand (5,000) square feet or more and from not less than seventy-five (75%)
percent of Space Tenants occupying less than five thousand (5,000) square feet.
The estoppel certificates shall confirm the information set forth in Exhibit 3
and the other matters contained in said form. In the event the Pre Closing
Partners fail to comply with the preceding provisions of this Section 11.2, and
delivers less than one hundred (100%) percent of estoppels from Space Tenants
occupying more than five thousand (5,000) square feet, then Contributor shall
have the right to terminate this Agreement and obtain the return of the Deposit;
however, if Contributor elects not to terminate (or, in any event, with regard
to any such Space Tenant estoppel not delivered even if Contributor would not
have a right to terminate), the Pre Closing Partners, jointly and severally,
shall, at Closing, furnish estoppel certificate(s) in lieu of any missing tenant
estoppel certificates. The estoppel certificate(s) furnished by the Pre Closing
Partners, jointly and severally, (which shall survive Closing) shall also be in
form and substance of Exhibit 9. Notwithstanding the foregoing, the Pre Closing
Partners shall not be required to deliver an estoppel containing an assertion
that the Pre Closing Partners, in good faith believe to be untrue. If any such
estoppel from the Pre Closing Partners is not in the form or substance of
Exhibit 9, Contributor shall have the right, at its option, to accept such
varied estoppel from the Pre Closing Partners, or to terminate this Agreement
and obtain the return of the Deposit.
11.3 There shall have been no breach on the part of the Operating
Partnership or any Pre Closing Partner of any covenants set forth in Section 4.
11.4 No Space Leases over five thousand (5,000) square feet shall have
been terminated or canceled or the premises demised thereby surrendered; nor
shall any tenant(s) over five thousand (5,000) square feet have ceased operating
business at the Shopping Center or given the Operating Partnership a notice of
its intent to cease operating; nor shall any tenant(s) have filed for protection
under the United States Bankruptcy Act.
11.5 Concurrently with the Closing, the Operating Partnership and/or the
Pre Closing Partners and/or Midway Holdings, Inc., shall have executed and
delivered to the Contributor the documents required to be delivered pursuant to
Section 13 hereof;
22
<PAGE>
11.6 The Operating Partnership shall have obtained all necessary
consents or approvals of governmental authorities or third parties to the
consummation of the transactions contemplated hereby;
11.7 The Operating Partnership shall not have breached any of its
covenants contained herein in any material respect;
11.8 No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered, promulgated
or enforced by any court of competent jurisdiction or governmental or regulatory
authority or instrumentality that prohibits the consummation of the transactions
contemplated hereby, and no litigation or governmental proceeding seeking such
an order shall be pending or threatened; and
11.9 Subject only to payment of its premium for same, the Title Company
shall be prepared to issue at Closing (or prepared to unconditionally commit to
issue at Closing, with no "gap"), its title policy in favor of the Partnership
(with Contributor as new, sole general partner), in the required form (including
all endorsements) set forth in Section 6, subject only to the Permitted
Exceptions.
12. ASSIGNMENT; DESIGNATION OF GRANTEES.
12.1 Contributor shall have the right to assign this Agreement and all
of its rights under this Agreement on or prior to the Closing Date to any
affiliate of Kimco Realty Corporation, provided that upon such assignment any
such assignee shall, in writing, affirmatively assume all obligations of
Contributor hereunder.
12.2 Neither the Contributor nor any of the Pre Closing Partners shall
assign its rights or its interest in and to this Agreement, or any of its rights
or interests in the Operating Partnership; nor shall the Operating Partnership
be deemed to be discharged of any of its duties hereunder as a result of any
assignment or of any delegation by Contributor of any such duties.
13. THE CLOSING.
13.1 The Closing shall be held no later than ten (10) days after the end
of the Inspection Period (as defined herein, and as such period may be extended
pursuant to the terms hereof) at the offices of Contributor's attorneys, 3333
New Hyde Park Road, Suite 100, New Hyde Park, NY 11042, at 10:00 A.M. on the
Closing Date [or at such other time and place as the parties hereto may agree]
(the "Closing " and the "Closing Date"). Upon request of the Operating
Partnership at least five (5) business days prior to Closing, Closing shall be
effectuated through escrow arrangements with the Title Company.
13.2 At Closing, Contributor shall contribute the Contribution Amount
and pay the Adjusted Purchase Amount, and Contributor shall execute and deliver
such instruments as the Operating Partnership may reasonably desire in
connection with or to consummate the transactions contemplated by this
Agreement, including the Amended and Restated Limited Partnership Agreement
attached hereto as Exhibit 15. In addition, Contributor shall cause Kimco Realty
Corporation to execute and deliver the Registration Rights Agreement attached
hereto as Exhibit 16.
23
<PAGE>
13.3 At Closing, the Operating Partnership, and/or the Pre Closing
Partners, shall execute and/or deliver to Contributor the following:
13.3.1 Intentionally Omitted.
13.3.2 Evidence satisfactory to the Contributor that all actions
taken by the Operating Partnership pursuant to this Contribution Agreement have
been approved pursuant to the requirements of the organizational documents of
the Operating Partnership; and
13.3.3 "Accredited Investor" questionnaires in the form of
Exhibit 11 attached hereto ("Questionnaires") and made a part hereof from the
Operating Partnership and each of the partners of the Operating Partnership who
own or will own OP Units; provided, however, if a partner of the Operating
Partnership is unable to deliver a Questionnaire (a "Disqualified Partner"),
such Disqualified Partner hereby agrees to sell to Contributor at Closing all of
its remaining interests in the Operating Partnership for an amount equal to the
value of the OP Units such Partner would have been allocated as calculated in
Section 2.3(b).
13.3.4 The certificate provided in Exhibit 12 attached hereto
reconfirming the representations provided for in Section 8.
13.3.5 Such affidavits; "mechanic's lien", "gap", "parties in
possession" or other the Operating Partnership indemnities; evidence of
authority; releases of liens; or other instruments as the Title Company may
reasonably request to issue, or commit to issue, a title policy satisfactory to
Contributor in accordance with Section 6;
13.3.6 Such other instruments as Contributor may reasonably
desire in connection with or to consummate the transactions contemplated by this
Agreement; including without limitation an indemnity in a form satisfactory to
Contributor, to Contributor and/or the Title Company against any loss by reason
of title claims or defects known to any partner of the Operating Partnership but
not disclosed to Contributor and Title Company prior to Closing.
13.3.7 All estoppel certificates referred to in Section 11.2 in
the forms required and permitted in said Section.
13.3.8 A FIRPTA affidavit from each Pre Closing Limited Partner
in form reasonably satisfactory to Contributor to the effect that none of the
Pre Closing Partners is a "foreign person." If any of the Pre Closing Partners
is a "foreign person" (as defined in IRC Section 1445(f)(3) and the regulations
issued thereunder), or if any of the Pre Closing Partners fails or refuses to
deliver the non-foreign affidavit required by this paragraph, or if Contributor
receives notice that any such affidavit is false, or Contributor has actual
knowledge that any such affidavit is false, Contributor shall increase the
Adjustment Amount in an amount equal to a tax of ten (10%) percent of that Pre
Closing Partner's pro rata share (according to the percentages set forth in
Schedule 1 attached hereto) of the Adjusted Purchase Amount, as required by IRC
Section 1445. If any such withholding is made by Contributor, the Pre Closing
Partners' obligation to deliver title hereunder shall not be excused or
otherwise affected. Contributor shall remit such withheld amount to the IRS and
file the required form with the IRS, and if any of the Pre Closing Partners
claims that the amount so withheld by Contributor and
24
<PAGE>
remitted by Contributor to the IRS exceeds the amount required to be withheld
under the IRC for any reason whatsoever, that Pre Closing Partner's remedy with
respect to such claim shall be limited solely to an action against the IRS for
refund, and each of the Pre Closing Partners hereby waives any right of action
against Contributor on account of such withholding. The provisions of this
Section 14.3.12 shall survive the Closing hereunder.
13.3.9 An estoppel certificate from Target substantially in the
form of Exhibit 13, and an estoppel certificate from the owner of Lot 3 in the
form required by Section 6 of the Taco Bell REA (confirming no amendments and no
defaults); in each case dated not more than thirty (30) days prior to Closing.
13.3.10 Such notice to the other REA Parties respecting the
change in General Partner as may be required by the REA or as Contributor may
otherwise request.
13.3.11 Such other documents as may be required or as Contributor
may request to assign to the Operating Partnership the entire right, title and
interest as "Developer", "Approving Party", and "Operator" under the REAs,
including without limitation a resignation of the current Operator and written
consent of Target to the Operating Partnership, with its new General Partner, or
at Contributor's option to Kimco Realty Corporation or any subsidiary thereof,
as Operator.
13.3.12 The 1997 Statement and supporting documentation
required by Section 7 of the Management Agreement.
13.3.13 Notwithstanding anything to the contrary set forth in
this Agreement, at or prior to Closing, the Operating Partnership shall have the
right, at its sole cost and expense, to convey Lots 2 and 6 to all or any of the
Pre Closing Partners or to any third party. In such event, however, at the time
the Operating Partnership conveys such Lots 2 and 6, i.e., either at or prior to
Closing, the Operating Partnership shall cause to be executed, delivered and
recorded (at the sole expense of the Operating Partnership), a Declaration of
Restrictions for Lots 2 and 6, in form reasonably acceptable to Contributor and
the Pre Closing Partners, which shall:
(i) restrict height of buildings to be constructed on
such Lots to one story and no more than twenty-two (22') feet;
(ii) restrict size of buildings that may be constructed
thereon to no more than five thousand (5,000) square feet for Lot 2 and no more
than five thousand (5,000) square feet for Lot 6;
(iii) restrict areas for placement of buildings and signs
to designated areas, which are to be subject to Contributor's reasonable
approval;
(iv) provide that plans for construction of any
improvements (including without limitation parking areas and driveways) are to
be subject to Contributor's prior written approval, not to be unreasonably
withheld;
(v) provide that each such Lot shall be required to have
(on a self-contained basis without taking into account parking spaces on other
portions of the Shopping Center) not less than (1)
25
<PAGE>
five (5) parking spaces for each one thousand (1,000) square feet of building
area, or (2) such greater parking ratio as may be required by law or the OEA;
(vi) contain provisions for a right of first refusal for
Contributor on any bona fide offers to purchase either Lot 2 and/or Lot 6; to
the effect that if the owner of either Lot 2 and/or Lot 6 (hereinafter referred
to as the "Lot Owner") receives a bona fide, executed contract of sale from a
prospective buyer that the Lot Owner desires to enter into, before the Lot Owner
executes same, it will present same to Contributor, who shall have a period of
ten (10) days to exercise, by giving notice to , a right to buy the property for
the price therein set forth, closing within thirty (30) days, title subject only
to matters which are Permitted Exceptions under this Agreement, possession to be
vacant and free of any leases or service contracts; and otherwise upon material
terms substantially similar to this Agreement (except there shall be no due
diligence period).
(vii) prohibit uses that would conflict with or violate
the OEA, Taco Bell REA, or any other existing lease (i.e., exclusive or
restrictive provisions thereof) on the Closing Date or other agreement of or
affecting the Shopping Center on the Closing Date; and
(viii) contain such other provisions, including
cross-access rights and cross-parking as may be reasonably typical, appropriate,
and acceptable to the parties.
13.3.14 An assignment to Contributor by the Pre Closing Partners
of (1) all of Charles W. Wafer's partnership interests, and (2) that portion of
partnership interests as are being purchased by Contributor at Closing in a form
reasonably acceptable to Contributor.
13.4 At Closing, Contributor shall pay the cost of a title policy to be
issued in the amount of the Agreed Upon Value of the Property in the form
referred to in Sections 6.1 and 6.2, and all costs of any new or updated Survey
that Contributor orders.
14. BROKERS.
Contributor, the Operating Partnership, and Pre Closing Partners each
represent and warrant that they dealt with no broker or finder in connection
with this transaction other than Oakmont Capital Resources (the "Broker"), whose
commission is to be paid by Contributor pursuant to separate agreement (but only
if, as and when earned in accordance with such agreement); and each agrees to
defend, indemnify and hold the other harmless from and against any and all loss,
liability and expense, including reasonable attorney's fees, the indemnified
party may incur arising by reason of the above representations being false. The
provisions of this Section 14 shall survive Closing.
15. NOTICES.
All notices, demands, requests, consents, approvals or other
communications (for the purpose of this Section collectively called "Notices")
required or permitted to be given hereunder or which are given with respect to
this Agreement shall be valid only if in writing and sent by registered or
certified United States mail, return receipt requested, postage prepaid, or
delivered by Federal Express or UPS courier service, addressed as follows:
To Contributor: Kimco Bradenton 698, Inc.
26
<PAGE>
c/o Kimco Realty Corporation
3333 New Hyde Park Road, Suite 100
New Hyde Park, NY 11042-0020
Attention: Mr. Michael V. Pappagallo
Chief Financial Officer
Fax: (516) 869-9001
with a copy to:
Bruce M. Kauderer, Esq.
Vice President, Legal
3333 New Hyde Park Road, Suite 100
New Hyde Park, NY 11042-0020
Fax: (516) 869-7199
27
<PAGE>
and to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
Attention: Raymond Lin, Esq.
Fax: (212) 751-4864
To The Operating Partnership, and to each Pre Closing Partner c/o:
Bay-Gard, Ltd.
5306 Cortez Road West, Suite Four
Bradenton, FL 34210
Attention: Eric Doy Howell
Fax: 941-795-0919
and to:
Greene Donnelly & Schermer
1301 Sixth Ave. W., Suite 400
Bradenton, FL 34205
Attention: Robert F. Greene, Esq.
Fax: 941-747-6937
To the Escrow Agent: Chicago Title Insurance Company
1211 Avenue of the Americas, 28th Floor
New York, NY 10035
Att: Kenneth C. Cohen, Esq.
or such other address as such party shall hereafter have specified by Notice
given by the same means. Any Notice shall be deemed given when delivered to the
carrier delivering same, delivery charges prepaid, and properly sealed and
addressed. Any Notice may also be given by telecopier to the following numbers:
Operating Partnership 941-795-0919, Contributor 516-869-7199, and Escrow Agent
212-840-8694 Att: Kenneth C. Cohen, Esq., provided that a "hard copy" of such
notice is sent within one (1) business day after such telecopier transmission in
the manner above set forth; and in the case of notice by telecopier (with
confirmation sent as aforesaid), notice shall be deemed given upon electronic
confirmation of receipt.
16. GOVERNING LAW.
This Agreement shall be governed by, interpreted under, and construed
and enforced in accordance with, the laws of the State of Florida.
28
<PAGE>
17. ENTIRE AGREEMENT.
This Contribution Agreement, together with the Schedules and Exhibits
hereto and thereto, represents the entire understanding and agreement between
the Operating Partnership and the Contributor with respect to the subject matter
hereof and supersedes all prior negotiations, representations and agreements
made by and between such parties (other than written agreements and other
documents entered into or delivered pursuant hereto or in connection herewith).
This Contribution Agreement may be amended, supplemented or changed, and any
provision hereof may be waived, only by a written instrument making specific
reference to this Contribution Agreement signed by the Operating Partnership and
the Contributor. Waiver by the Operating Partnership and/or the Contributor, as
the case may be, of any breach or default hereunder by any other party shall not
operate as a waiver of any other breach or default, whether similar to or
different from the breach or default waived. The parties do not intend to confer
any benefit hereunder on any person, firm or corporation other than the parties
hereto and their respective successors or assigns.
18. SURVIVAL.
The several representations and warranties of the parties contained
herein, and the indemnities relating to breaches thereof, shall survive the
Closing; provided, however, that with respect to the representations and
warranties made in Exhibit 12, Items I through P, and any claims made with
respect thereto shall survive until ninety (90) days after the expiration of the
applicable statute of limitations (with extensions).
19. TITLES AND HEADINGS.
Titles and headings of Articles and Sections of this Agreement are for
convenience of reference only and shall not affect the construction of any
provision of this Agreement.
20. ATTACHMENTS.
Each of the Exhibits and Schedules referred to herein and attached
hereto is an integral part of this Agreement and is hereby incorporated in this
Agreement by this reference.
21. FURTHER ASSURANCES.
The Operating Partnership and the Contributor, at the request of the
other party, at or after the Closing, will promptly obtain, execute and deliver,
or cause to be obtained, executed and delivered, to the other party such
assignments, endorsements, and other such instruments or documents to be
executed by the Operating Partnership and the Contributor, as the case may be,
in addition to those otherwise required by this Contribution Agreement, in form
and substance reasonably satisfactory to the other party, as such other party
may reasonably deem necessary or desirable so as to carry out or implement any
provision of this Contribution Agreement.
22. MISCELLANEOUS.
This Agreement shall extend to and be binding upon the legal
representatives, heirs, executors, administrators and, subject to the provisions
of this Agreement, the permitted assigns of the parties
29
<PAGE>
hereto. All references to "Sections" and "Articles" shall be deemed to be
references to Sections and Articles of this Agreement unless otherwise indicated
or unless the context otherwise requires.
23. AUTHORITY.
Each party warrants authority and due execution of this Agreement.
24. PRESS RELEASES.
No press releases or other public announcements regarding the Amended
and Restated Limited Partnership Agreement or this Contribution Agreement shall
be issued by the Operating Partnership or the Contributor without the mutual
prior consent of both parties, except that in the event that the parties are
unable to agree on a press release and legal counsel for one party is of the
opinion that such press release is required by law, then such party may issue
the legally required press release.
25. RULES OF CONSTRUCTION.
The provisions of this Agreement shall be construed, in all respects,
without reference to any rule or canon requiring or permitting the construction
of provisions of documents against the interest of the party responsible for the
drafting of the same, it being the intention and agreement of the parties that
this Agreement be conclusively deemed to be the joint product of both parties
and their counsel.
26. EXPENSES.
Except as otherwise provided in this Contribution Agreement, all legal
and other costs and expenses incurred in connection with this Contribution
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
27. OPERATING PARTNERSHIP'S CONDITIONS TO CLOSING.
Operating Partnership's obligations at Closing are expressly conditioned
upon the following (unless waived in writing signed by the Operating
Partnership), and if all these conditions are not satisfied at Closing, the
Operating Partnership may terminate this Agreement, in which event the Deposit
shall forthwith be returned to Contributor, whereupon this Agreement shall be
null and void and of no further force and effect:
Contributor's warranties and representations set forth herein shall be
true and correct in all material respects as of the date of Closing and
Contributor shall have performed each and all of its covenants and agreements
hereunder within the time provided.
28. ATTORNEYS FEES AND COSTS.
In the event of litigation between the parties arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
from the non-prevailing party, all reasonable attorneys' fees and costs incurred
by the prevailing party as to such litigation.
29. COUNTERPART PROVISION.
30
<PAGE>
This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
instrument. In addition, this agreement may contain more than one counterpart of
the signature page and this agreement may be executed by the affixing of the
signatures of each of the Partners to one of such counterpart signature pages;
all of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
[REST OF PAGE LEFT INTENTIONALLY BLANK]
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Contribution
Agreement as of the date first written above.
"CONTRIBUTOR"
KIMCO BRADENTON 698, INC.,
a Florida corporation
By: /s/ Bruce M. Kauderer
---------------------------------
Name: Bruce M. Kauderer
-------------------------------
Title: VP
------------------------------
"OPERATING PARTNERSHIP"
BAY-GARD, LTD.
By: MIDWAY HOLDINGS, INC.,
a Florida Corporation,
a Pre Closing general partner
By: /s/ Eric Doy Howell
---------------------------------
Name: Eric Doy Howell
-------------------------------
Title: President
------------------------------
By: PALMETTO HOLDINGS I, INC.
a Pre Closing General Partner
By: /s/ John Jamerson
---------------------------------
Name: John E. Jamerson
-------------------------------
Title: President
------------------------------
By: J.B. BALDWIN LAND COMPANY,
INC.
a Pre Closing General Partner
By: /s/ J. B. Baldwin
---------------------------------
Name: J. B. Baldwin
-------------------------------
Title: Pres.
-------------------------------
32
<PAGE>
/s/ Charles W. Wafer
----------------------------------------
Charles W. Wafer, Partner Withdrawing from
Operating Partnership
MILNER INVESTMENT CORPORATION
By: /s/ Reese L. Milner
---------------------------------
Name:
-------------------------------
Title: President
------------------------------
FARGO INVESTMENTS
By: /s/ B. Freeman
---------------------------------
Name: B. Freeman
-------------------------------
Title: GP
------------------------------
PALMETTO HOLDINGS I, INC.
By: /s/ John E. Jamerson
---------------------------------
Name: John E. Jamerson
-------------------------------
Title: President
------------------------------
MIDWAY HOLDINGS, INC.
By: /s/ Eric Doy Howell
---------------------------------
Name: Eric Doy Howell
-------------------------------
Title: President
------------------------------
J.B. BALDWIN LAND CO.
By: /s/ J.B. Baldwin
---------------------------------
Name: J.B. Baldwin
-------------------------------
Title: Pres.
------------------------------
33
<PAGE>
The undersigned here Named executes this Agreement for the sole purpose
of agreeing to be bound by the indemnification provisions in favor of the
Operating Partnership set forth in Section 4.4.4, including without limitation
the survival provisions of the last sentence thereof.
KIMCO REALTY CORPORATION,
a Maryland Corporation,
By: /s/ Bruce M. Kauderer
---------------------------------
Name: Bruce M. Kauderer
-------------------------------
Title: VP
------------------------------
WITNESSES: /s/ Susan L. Masone
----------------------------
WITNESSES: /s/ Illegible
----------------------------
34
<PAGE>
SCHEDULE 1
- --------------------------------------------------------------------------------
Unadjusted Purchase Percentage for Value of OP
Pre Closing Partner Amount* Adjustments* Units*
- --------------------------------------------------------------------------------
Charles W. Wafer 548,363** 7.142857% 0
Milner Investment
Corporation 167,655** 7.142857% 380,708
Fargo Investments 838,273** 35.714286% 1,903,541
Palmetto Holdings I, Inc. 156,041** 10.000000% 500,000
Midway Holdings, Inc. 328,542** 20.000000% 1,221,277
J.B. Baldwin Land
Company, Inc. 251,225** 20.000000% 994,474
-------
Totals 2,290,099** 100.000000% 5,000,000
---------
The Adjusted Purchase Amount shall be allocated to the Pre Closing Partners as
follows:
**These numbers are derived based upon the assumption that the Contribution
Agreement will equal $7,114,901. However, the Parties to this Agreement
anticipate the possibility that the actual Contribution Amount at Closing will
vary, due to additional lien(s) and/or amortization. All changes to the
Unadjusted Purchase Amounts will be distributed amongst the Pre Closing Partners
according to the Percentage for Adjustments listed above.
*This schedule of Unadjusted Purchase Amount, and/or Percentage for Adjustments,
and/or Value of OP Units can be changed at closing, provided that the total
value of OP Units is not less than $4 million minus the Excess Adjustment
Amount, if any, and further provided that all Pre Closing Partners unanimously
consent in writing to the new percentages and/or values.
35
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit 1 Plan
Exhibit 2 Description of Real Estate
Exhibit 3 Schedule of Space Leases
Exhibit 4 Schedule of Personal Property
Exhibit 5 Schedule of Service Contracts
Exhibit 6 Litigation
Exhibit 7 Current Budget under Management Agreement
Exhibit 8 Tax Bills
Exhibit 9 Tenant Estoppel Certificate
Exhibit 10 Intentionally Omitted
Exhibit 11 Accredited Investor Questionnaire
Exhibit 12 Representations and Warranties
Exhibit 13 Form of REA Estoppel
Exhibit 14 New Tenants
Exhibit 15 Amended and Restated Limited Partnership Agreement
of Bay-Gard, Ltd.
Exhibit 16 Registration Rights Agreement
36
<PAGE>
EXHIBIT 12
REPRESENTATIONS AND WARRANTIES
Representations and Warranties for Benefit of the Contributor.
The Operating Partnership and each Pre Closing Partner hereby warrants and
represents to the Contributor that each of the following statements is true and
correct as of the date of this Contribution Agreement and shall be true and
correct on the Closing Date:
A. The representations, warranties and covenants
made by the Operating Partnership herein are true and accurate in all material
respects.
B. The Operating Partnership has full power and
authority to enter into and perform this Contribution Agreement in accordance
with its terms and this Contribution Agreement has been duly executed by the
Operating Partnership and is enforceable against the Operating Partnership in
accordance with its terms, and the documents delivered to the Contributor at the
Closing will be duly executed by the Operating Partnership and enforceable
against the Operating Partnership in accordance with their terms. Neither the
execution and delivery of this Contribution Agreement nor the performance hereof
will (i) be in violation of the organizational documents of the Operating
Partnership, (ii) conflict with any law, decree, judgment, regulation or decree
of any court or governmental agency, or (iii) conflict with any agreement or
instrument to which the Operating Partnership or Pre Closing Partners or the
Property are or may be bound.
C. The information to be furnished by the Operating
Partnership on which the computation of prorations is based is (or will be as of
the Closing Date) true, correct and complete in all material respects.
D. The Post Closing Partners other than Contributor
(the "Other Post Closing Partners") are acquiring the OP Units for their own
account, as principal, for investment, and not with a view toward resale or
distribution thereof (other than assignment to an affiliate of Kimco realty
Corporation in accordance with Section 5.8 herein.
E. The Other Post Closing Partners shall be
receiving certificates for their post-Closing partnership interests and each one
represents and warrants that it is an "Accredited Investor" as that term is
defined under Regulation D under the Securities Act of 1933, as amended (the
"1933 Act") by reason of the fact that it is an entity all of whose equity
owners are Accredited Investors.
F. The Other Post Closing Partners understand that
the OP Units have not been registered under the 1933 Act or the securities laws
of any state and, as a result thereof, are subject to substantial restrictions
on transfer.
G. The Other Post Closing Partners understand that
(i) the Operating Partnership has no obligation or intention to register the OP
Units for resale under any federal or state securities laws except as provided
for in the Registration Rights Agreement, or to take any action (including the
filing of reports or the publication of information required by Rule 144 under
the 1933 Act) which would make available any exemption from the registration
requirements of such laws, and (ii) therefore, the Other Post Closing Partners
may be precluded from selling or otherwise transferring or disposing (other than
pursuant to the terms and provisions of the Amended and Restated Limited
53
<PAGE>
Partnership Agreement) of any OP Units or any portion thereof and may have to
bear the economic risk of investment in the OP Units for an indefinite period.
H. The Other Post Closing Partners shall accept the
certificates with the following legend appearing thereon:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE "ACT") AND,
THEREFORE, CANNOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE ACT. IN ADDITION THE SECURITIES
REPRESENTED HEREBY CANNOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.
I. The Operating Partnership and each Pre Closing
Partner has timely filed with the appropriate taxing authorities all returns
(including, without limitation, information returns and other material
information) in respect of Taxes required to be filed through the date hereof
and will timely file any such returns required to be filed on or prior to the
Closing Date. The returns and other information filed (or to be filed) are
complete and accurate in all material respects. Neither the Operating
Partnership nor any Pre Closing Partner has requested any extension of time
within which to file returns (including, without limitation, information
returns) in respect of any Taxes that have not been filed.
J. All Taxes of the Operating Partnership, in
respect of periods beginning before the Closing Date, have been timely paid, or
will be timely paid, prior to the Closing Date, and the Operating Partnership
has no material liability for Taxes in excess of the amounts so paid. All Taxes
that the Operating Partnership has been required to collect or withhold have
been duly collected or withheld and, to the extent required when due, have been
or will be (prior to the Closing Date) duly paid to the proper taxing authority.
K. The federal income tax returns of the Operating
Partnership have not been examined by the Internal Revenue Service, and no
material deficiencies for Taxes of the Operating Partnership have been claimed,
proposed or assessed by any taxing or other governmental authority against the
Operating Partnership. There are no pending or, to the best knowledge of the
Operating Partnership, threatened audits, investigations or claims for or
relating to any material additional liability to the Operating Partnership in
respect of Taxes, and there are no matters under discussion with any
governmental authorities with respect to Taxes that in the reasonable judgment
of the Operating Partnership, or its counsel, is likely to result in a material
additional liability to the Operating Partnership for Taxes. No audits of the
Operating Partnership's federal, state, and local returns for Taxes by the
relevant taxing authorities have occurred. The Operating Partnership has not
been notified that any taxing authority intends to audit a return for any
period. No extension of a statute of limitations relating to Taxes is in effect
with respect to the Operating Partnership.
L. There are no liens for Taxes (other than for
current Taxes not yet due and payable) on the Property.
54
<PAGE>
M. The Property does not, directly or indirectly,
secure any debt the interest on which is tax-exempt under Section 103(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
N. The Property is not required to be treated as
being owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f)(8) of the Code.
O. The Property is not "tax exempt use property"
within the meaning of Section 168(h) of the Code.
P. The tax basis of the Personal Property owned by
the Operating Partnership is less than fifteen percent (15%) of the tax basis of
the Property.
For purposes of paragraphs I through P inclusive above,
"Tax" or "Taxes" means any federal, state, local or foreign net
or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax, governmental fee
or like assessment or charge of any kind whatsoever, together with any interest
and penalties, whether as a primary obligor or as a result of being a
"transferor" (within the meaning of Section 6901 of the Code and any
corresponding state and local law) of another person.
55
<PAGE>
EXHIBIT 13
FORM OF REA ESTOPPEL
[Letterhead of Target]
Bay Gard, Ltd./Kimco Bradenton 698, Inc.
c/o Kimco Realty Corporation
3333 New Hyde Park Rd., Suite 100
New Hyde Park, NY 11042-0020
Re: Operation and Easement Agreement dated March 27, 1991 between Dayton
Hudson Corporation and Bayshore Gardens Venture, recorded at O.R. 1330,
Page 1271 (the "OEA"), and Management Agreement of even date therewith
(the "Management Agreement"); said OEA and Management Agreement, which
cover the Shopping Center located in Bradenton, Florida, commonly known
as Bayshore Gardens (the "Shopping Center"), being collectively referred
to as the "REA"
Ladies and Gentlemen:
We understand that Kimco Bradenton 698, Inc. ("Kimco") an
affiliate of Kimco Realty Corporation has agreed to become a contributor and
General Partner of Bay-Gard, Ltd. ("Operating Partnership"), the owner of the
"Developer Tract" of the Shopping Center with the exception of certain
outparcels thereof that were previously sold. In response to your request for
certain information and confirmation from us before consummating such purchase,
we (being sometimes referred to as "Target") hereby certify to and agree with
you as follows:
1. The REA is in full force and effect and has not been assigned,
modified or amended. There are no outstanding uncured notices of
default from the Target to the Operating Partnership or any other
party under the REA. Target has not received any outstanding
uncured notices of default from the Operating Partnership or any
other party claiming a default under the REA. Neither Developer
nor Target has any liens against the parcel of the other party
arising from nonpayment or nonperformance under the REA.
2. To the best of our knowledge, no default by the Operating
Partnership exists in the performance of any obligation required
by it under the REA, and to our best knowledge, no event has
occurred which, with the passage of time or the giving of notice,
would constitute a default by the Operating Partnership under the
REA.
3. To our best knowledge, no unperformed work or installations or
unpaid amounts is required of or due from the Operating
Partnership under the REA, and there exists no unresolved dispute
(including without limitation any audit claim) with us concerning
past or current amounts due the Operating Partnership or any
predecessor in interest.
56
<PAGE>
4. An affiliate of the Operating Partnership, as Operator, is
currently performing all common area maintenance and carrying all
common area liability insurance required by or under the REA for
the Developer Tract and the Target Tract.
5. There have been no Common Area Rules adopted under Section 6.24
of the OEA.
6. Circumstances have not arisen that would permit an exercise by
Developer of any Repurchase Option set forth in OEA Section 6.28;
and the Repurchase Option right in said Section 6.28(B) remains
in full force and effect.
7. All obligations of Developer under that certain Site Development
Agreement of even date with the REA, and between the same parties
thereto, have been fully performed and such agreement has
terminated.
8. Attached as Exhibit 7 is the most recent Budget under the
Management Agreement, and same has been approved by us.
The provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns as owners of the
parcels covered by the REA.
Very truly yours,
--------------------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
57
<PAGE>
EXHIBIT 14
NEW TENANTS
-----------------------------------------------
Coast Dental
-----------------------------------------------
Frayne Fashion
-----------------------------------------------
GTE Phonemart
-----------------------------------------------
Hallmark
-----------------------------------------------
Jo Ann Fabrics
-----------------------------------------------
Post Net Mail Center
-----------------------------------------------
M & M Cafe
-----------------------------------------------
Futon
-----------------------------------------------
A-58
<PAGE>
AMENDMENT
TO
CONTRIBUTION AGREEMENT
THIS AGREEMENT, made as of this 5th day of May, 1998 between BAYGARD, LTD.,
a Florida Limited partnership (the "Operating Partnership"), and KIMCO
BRANDENTON 698, INC., a Florida corporation (the "Contributor").
W I T N E S S E T H :
WHEREAS, Contributor, the Operating Partnership, and the partners of the
Operating Partnership (collectively, the "Partners") entered into a certain
Contribution Agreement dated as of April 6, 1998 (the "Contribution Agreement");
and
WHEREAS, Contributor and the Operating Partnership wish to amend the
Contribution Agreement so as to extend the Inspection Period.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, it is agreed as
follows:
1. The definition of "Inspection Period" on page 2 of the Contribution
Agreement is hereby amended to provide that the Inspection Period shall expire
at 7:00 PM on May 6, 1998.
2. Except as expressly amended hereby, the parties acknowledge that the
Contribution Agreement is and remains in full force and effect and has not been
further modified or amended.
3. To induce Contributor to enter into this Amendment, Operating
Partnership hereby warrants that is has full power and authority to bind all
Partners by entering into this instrument.
4. This instrument may be executed and delivered via facsimile
transmission.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date above set forth.
BAY-GARD, LTD.
By: Midway Holdings, Inc.
General Partner
By: /s/ Eric Doy Howell
---------------------------
Name: Eric Doy Howell
-------------------------
Title: President
------------------------
KIMCO BRADENTON 698, INC.
By: /s/ Bruce M. Kauderer
--------------------------------
Bruce M. Kauderer
Vice President
<PAGE>
AMENDMENT NO. 2 TO CONTRIBUTION AGREEMENT
This Amendment No. 2 to Contribution Agreement, made as of this 6th day of
May, 1998, between BAYGARD, LTD. a Florida Limited Partnership (the "Operating
Partnership"), and Kimco Bradenton 698, Inc., a Florida corporation (the
"Contributor").
WITNESSETH
WHEREAS, Contributor, the Operating Partnership and the partners of the
Operating Partnership (collectively, the "Partners") entered into that certain
Contribution Agreement dated as of April 6, 1998, as amended on May 5, 1998
(the "Contribution Agreement"); and
WHEREAS, Contributor and the Operating Partnership wish to amend the
Contribution Agreement so as to amend the form of Partnership Agreement for the
Operating Partnership.
NOW THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the receipt
and sufficiency of which is hereby mutually acknowledged, it is agreed as
follows:
1. Exhibit 15 of the Contribution Agreement (the Amended and Restated
Limited Partnership Agreement of Bay-Gard, Ltd.) is amended as follows:
(a) Section 7.1.A(4) is amended by deleting the words "except as
restricted pursuant to Section 7.1.C hereof".
(b) Section 8.6 is amended by adding the following to the end of the
section:
"E. The General Partner may require that every Limited Partner
Exchange all of the Partnership Units of the Limited Partners in connection
with the sale or disposition by the Partnership of all or substantially
all of the real properties of the Partnership to other than an Affiliate of the
General Partner, subject to compliance with Section 7.2.D(2). In such event,
the Exchange shall occur and be effective immediately prior to the date of such
sale or disposition and the General Partner shall be deemed to have acquired all
of the Partnership Units (and all capital accounts) prior to any Liquidating
Event of the Partnership."
(c) Section 7.2.D(2) is amended by inserting the words "or a loan secured
by any real property of the Partnership" after the words "tax-free transaction"
in the first line thereof and clause (ii) thereof shall be deleted.
2. Except as expressly amended hereby, the parties acknowledge that the
Contribution Agreement is and remains in full force and effect and has not been
further modified or amended.
3. To induce Contributor to enter into this Agreement, Operating
Partnership hereby warrants that it has full power and authority to bind all
Partners by entering into this instrument.
4. This instrument may be executed and delivered in counterparts via
facismile transmission.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date above set forth.
BAY-GARD, LTD.
By: Midway Holdings, Inc.
General Partner
By: /s/ Eric Doy Howell
---------------------------
Name: Eric Doy Howell
-------------------------
Title: President
------------------------
KIMCO BRADENTON 698, INC.
By: /s/ Bruce M. Kauderer
--------------------------------
Bruce M. Kauderer
Vice President
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May 15, 1998,
is entered into by and between Kimco Realty Corporation, a Maryland corporation
(the "Company"), and the Post Closing Partners of Bay-Gard, Ltd., a Florida
limited partnership (the "Unitholders").
RECITALS
WHEREAS, the Kimco Bradenton 698, Inc., a Florida Corporation,
the Unitholders and Bay-Gard, Ltd., a Florida limited partnership (the
"Operating Partnership") have entered into that certain Contribution Agreement
dated as of April 6, 1998 (the "Contribution Agreement") providing, among other
things, for the contribution of a sum certain by Kimco Bradenton 698, Inc., to
the Operating Partnership in exchange for Operating Partnership Units ("OP
Units"), and the purchase by Kimco Bradenton 698, Inc. of certain partnership
interests from Pre Closing Partners of Bay-Gard, Ltd.; and
WHEREAS, it is a condition to the closing of the transactions
contemplated by the Contribution Agreement that the parties hereto enter into
this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
The following capitalized terms, as used in this Agreement,
have the following meanings:
"Agreement" means this Registration Rights Agreement, as it
may be amended, supplemented or restated from time to time.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized by law
to close.
"Closing Price" means (i) the closing price of a share of
stock on the principal exchange on which shares of stock are then trading, if
any, or (ii) if the Common Stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price (if the Common
Stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked prices
<PAGE>
(in all other cases) for the Common Stock as reported by NASDAQ or such
successor quotation system or (iii) if the Common Stock is not publicly traded
on an exchange and not quoted on NASDAQ or a successor quotation system, the
mean between the closing bid and asked prices for the Common Stock.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means Kimco Realty Corporation's Common Stock,
par value $.01 per share.
"Contribution Agreement" has the meaning set forth in the
recitals to this Agreement.
"Demand Registration" has the meaning set forth in
Section 3.1 (a) hereof.
"Demand Registration Statement" has the meaning set forth in
Section 3.1 (a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchangeable Partnership Units" means Partnership Units which
may be exchanged for Common Stock pursuant to the Amended and Restated
Partnership Agreement.
"Filing Date" has the meaning set forth in Section 2.1 hereof.
"Full Conversion Date" has the meaning set forth in
Section 2.1 hereof.
"Holder" means any Person (including any Unitholder) who is
the record or beneficial owner of any Registrable Security or any assignee or
transferee of such Registrable Security (including assignments or transfers of
Registrable Securities to such assignees or transferees as a result of the
foreclosure on any loans secured by such Registrable Securities) unless such
Registrable Security is acquired in a sale pursuant to a registration statement
under the Securities Act or pursuant to a transaction exempt from registration
under the Securities Act, in each such case where the security sold in such
transaction may be resold without subsequent registration under the Securities
Act.
"Issuance Registration Statement" has the meaning set forth
in Section 2.1.
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of the Operating Partnership dated as of the date of this
Agreement, as the same may be amended, modified or restated from time to time.
"Partnership Units" has the meaning set forth in the
Partnership Agreement.
2
<PAGE>
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pre Closing Partners" means the Partners of Bay-Gard, Ltd.
before the Closing of the transactions contemplated in the Contribution
Agreement between Kimco Bradenton 698, Inc., and Bay-Gard, Ltd.
"Post Closing Partners" means the Partners of Bay-Gard, Ltd.
after the Closing of the transactions contemplated in the Contribution Agreement
between Kimco Bradenton 698, Inc., and Bay-Gard, Ltd.
"Registrable Securities" means shares of Common Stock of the
Company issued upon exchange of Exchangeable Partnership Units pursuant to the
terms of the Partnership Agreement at any time owned, either of record or
beneficially, by any Holder unless and until the earlier of (i) a registration
statement covering such shares has been declared effective by the Commission and
the shares have been issued by the Company to Holder upon exchange of
Exchangeable Partnership Units pursuant to the effective registration statement
or have been sold or transferred by Holder to another Person pursuant to the
effective registration statement, (ii) such shares are sold pursuant to the
provisions of Rule 144 under the Securities Act (or any similar provisions then
in force) ("Rule 144"), (iii) such shares are held by a Holder who is not an
affiliate of the Company within the meaning of Rule 144 (a "Rule 144 Affiliate")
and may be sold pursuant to Rule 144(k) under the Securities Act, (iv) such
shares are held by a Holder who is a Rule 144 Affiliate and all such shares may
be sold pursuant to Rule 144 within a period of three months in accordance with
the volume limitations set forth in Rule 144(e)(1), and (iv) such shares have
been otherwise transferred in a transaction that would constitute a sale under
the Securities Act and such shares may be resold without subsequent registration
under the Securities Act.
"Resale Prospectus" has the meaning set forth in Section 3.5.
"Resale Registration Statement" has the meaning set forth in
Section 3.5.
"Reinstatement Period" has the meaning set forth in
Section 3.1.
"S-3 Expiration Date" means the date on which Form S-3 (or a
similar successor form of registration statement) is not available to the
Company for the registration of Registrable Securities pursuant to the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a Demand Registration Statement.
3
<PAGE>
ARTICLE II
REGISTRATION
SECTION 2.1. Registration Statement Covering Issuance of
Common Stock.
Subject to the provisions of Article III hereof, the Company
will file with the Commission a registration statement on Form S-3 (the
"Issuance Registration Statement") under Rule 415 under the Securities Act
covering the issuance to Holders of shares of Common Stock in exchange for
Exchangeable Partnership Units, such filing to be made within the two (2) week
period following the date (the "Filing Date") which is the later of (i) a date
which is thirty (30) days prior to the first date on which the Exchangeable
Partnership Units issued pursuant to the Contribution Agreement may be exchanged
for shares of Common Stock pursuant to the provisions of the Partnership
Agreement or (ii) such other date as may be required by the Commission pursuant
to its interpretation of applicable federal securities laws and the rules and
regulations promulgated thereunder. The Company shall use its reasonable efforts
to cause the Issuance Registration Statement filed with the Commission to be
declared effective by the first anniversary of the date of this Agreement. In
the event the Company is unable to cause the Issuance Registration Statement to
be declared effective by the Commission by the first anniversary of the date of
this Agreement, then the rights of the Holders set forth in Section 3.1 hereof
shall apply to Common Stock received by Holders upon exchange of the
Exchangeable Partnership Units for shares of Common Stock. Notwithstanding the
availability of rights under Section 3.1 hereof, the Company shall continue to
use its reasonable efforts to cause the Issuance Registration Statement to be
declared effective by the Commission and if it shall be declared effective by
the Commission, the obligations of the Company under Section 3.1 hereof shall
cease, except to the extent expressly provided in the first sentence of this
Section 2.1. The Company agrees to use its reasonable efforts to keep the
Issuance Registration Statement continuously effective (a) until the earlier of
(i) the S-3 Expiration Date, (ii) the first date (the "Full Conversion Date") on
which no Exchangeable Partnership Units (other than those held by the Company)
remain outstanding, or (iii) there are no more Registrable Securities
outstanding, and (b) during any Reinstatement Period.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1. Registration Rights if Form S-3 is Not Available.
The following provisions shall apply with respect to
Registrable Securities during the period, if any, beginning on the S-3
Expiration Date (or, if the S-3 Expiration Date shall occur before the first
date on which the Exchangeable Partnership Units issued pursuant to the
Contribution Agreement may be exchanged for shares of Common Stock, beginning on
such first date) and ending on the date when the Company would no longer be
obligated to maintain the applicable registration statement in effect pursuant
to the terms of Section 2.1 if the S-3 Expiration Date had not occurred (the
"Supplemental Rights Period"), provided, however, that the Supplemental Rights
Period shall not include any period following the S-3 Expiration Date
4
<PAGE>
and prior to the Full Conversion Date if during that period (the "Reinstatement
Period") the Company shall again be entitled to use Form S-3 or a similar
successor form of registration statement) for registration of the Registrable
Securities. During the Supplemental Rights Period, the Holders shall have the
following rights:
(a) Demand Right. Each Holder may make a written
demand for registration under the Securities Act of all or part of the
Registrable Securities (a "Demand Registration") and upon such demand the
Company shall be obligated to register such Registrable Securities under the
Securities Act in accordance with the provisions of this Agreement; provided,
however, that (i) the Company shall not be obligated to effect more than one
Demand Registration for each Holder, and (ii) the number of Registrable
Securities proposed to be sold by each Holder making such written request either
(x) shall be all the Registrable Securities owned by that Holder of Registrable
Securities, or (y) shall have an estimated market value at the time of such
request (based upon the then market price of a share of Common Stock) of at
least $1,000,000. The Company shall file any registration statement required by
this Section 3.1(a) (a "Demand Registration Statement") with the SEC within
thirty (30) days of receipt of the requisite Holder demand and shall use its
reasonable efforts to cause the Demand Registration Statement to be declared
effective by the SEC as soon as practicable thereafter. The Company shall use
its reasonable efforts to keep each such Demand Registration Statement
continuously effective for a period of ninety (90) days, unless the offering
pursuant to the Demand Registration Statement is an underwritten offering and
the managing underwriter requires that the Demand Registration Statement be kept
effective for a longer period of time, in which event the Company shall maintain
the effectiveness of the Demand Registration Statement for such longer period up
to one hundred twenty (120) days (such period, in each case, to be extended by
the number of days, if any, during which Holders were not permitted to make
offers or sales under the Demand Registration Statement by reason of Section 3.3
hereof). The Company may elect to include in any Demand Registration Statement
additional shares of Common Stock to be issued by the Company, subject, in the
case of an underwritten secondary Demand Registration, to cutback by the
managing underwriters. A registration shall not constitute a Demand Registration
under this Section 3.1(a) until the Demand Registration Statement has been
declared effective.
(b) Company Repurchase. Upon receipt by the
Company of a registration request pursuant to this Section 3.1, the Company may,
but will not be obligated to, purchase for cash from any Holder so requesting
registration all, but not less than all, of the Registrable Securities which are
the subject of the request at a price per share equal to the average of the
Closing Prices of a share of Common Stock for the ten (10) trading days
immediately preceding the date of receipt by the Company of the registration
request. In the event the Company elects to purchase the
5
<PAGE>
Registrable Securities which are the subject of a registration request, the
Company shall notify the Holder within five Business Days of the date of receipt
of the request by the Company, which notice shall indicate (i) that the Company
will purchase for cash the Registrable Securities held by the Holder which are
the subject of the request, (ii) the price per share, calculated in accordance
with the preceding sentence, which the Company will pay the Holder and (iii) the
date upon which the Company shall purchase the Registrable Securities, which
date shall not be later than the tenth business day after receipt of the
registration request. If the Company so elects to purchase the Registrable
Securities which are the subject of a registration request, then upon such
purchase the Company shall be relieved of its obligations under this Section
with respect to such Registrable Securities. Notwithstanding the foregoing,
Company shall be obligated to purchase such Registrable Securities for cash on
the terms stated above, and if for any reason Company is unable to register the
Registrable Securities or if Company elects to delay registration as provided in
Sections 3.3(a) or 3.10, provided such Registrable securities are not Excess
Partnership Units (as defined in the Amended and Restated Limited Partnership
Agreement).
SECTION 3.2. Additional Registration Procedures.
In connection with any registration statement covering
Registrable Securities filed by the Company pursuant to Section 2.1 or 3.1
hereof:
(a) Each Holder agrees to provide in a timely
manner information requested by the Company regarding the proposed distribution
by that Holder of the Registrable Securities and all other information
reasonably requested by the Company in connection with the preparation of the
registration statement covering the Registrable Securities.
(b) In connection with any Demand Registration
Statement, the Company will furnish to each Selling Holder of Registrable
Securities that number of copies of the registration statement or prospectus in
conformity with the requirements of the Securities Act and such other documents
as the Selling Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by the Selling Holder.
(c) After the filing of the registration
statement, the Company will promptly notify each Selling Holder of Registrable
Securities covered by the registration statement of any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(d) In connection with any Demand Registration
Statement the Company will use reasonable efforts to register or qualify the
Registrable Securities under such securities or blue sky laws of those
jurisdictions in the United States (where an exemption is not available) as any
Selling Holder or managing underwriter or underwriters, if any, reasonably (in
light of the Selling Holder's intended plan of distribution) requests, provided,
however, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction.
(e) In connection with any Demand Registration
Statement, the Company will enter into customary agreements (including an
underwriting agreement, if any, in customary form) as are reasonably required in
order to expedite or facilitate the disposition of Registrable Securities
pursuant to the Demand Registration Statement. Each Selling Holder participating
in an underwritten offering shall also enter into and perform its or his
obligations
6
<PAGE>
under the underwriting agreement, and shall be responsible for its pro rata
share of underwriting expense, in addition to legal fees of counsel representing
that Holder and customary brokerage fees for sale of its registered securities.
(f) The Company will use its reasonable efforts to cause all
such Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
SECTION 3.3. Material Developments; Suspension of Offering.
(a) Notwithstanding the provisions of
Sections 2.1 or 3.1 hereof or any other provisions of this Agreement to the
contrary, the Company shall not be required to file a registration statement or
to keep any registration statement effective if the negotiation or consummation
of a transaction by the Company or any of its subsidiaries is pending or an
event has occurred, which negotiation, consummation or event would require
additional disclosure by the Company in the registration statement of material
information which the Company (in the judgment of management of the Company) has
a bona fide business purpose for keeping confidential and the nondisclosure of
which in the registration statement might cause the registration statement to
fail to comply with applicable disclosure requirements; provided, however, that
the Company (i) will promptly notify the Holders of Registrable Securities
otherwise entitled to registration of the foregoing and (ii) may not delay,
suspend or withdraw the registration statement for such reason more than twice
in any twelve (12) month period or three times in any twenty-four (24) month
period or for more than ninety (90) days at any time. Upon receipt of any notice
from the Company of the happening of any event during the period the
registration statement is effective which is of a type specified in the
preceding sentence or as a result of which the registration statement or related
prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which they were made, not
misleading, Holders agree that they will immediately discontinue offers and
sales of the Registrable Securities under the registration statement (until they
receive copies of a supplemental or amended prospectus that corrects the
misstatements or omissions and receive notice that any post-effective amendment
has become effective). If so directed by the Company, Holders will deliver to
the Company any copies of the prospectus covering the Registrable Securities in
their possession at the time of receipt of such notice. In the event the Company
shall give notice of the happening of an event of the kind described in this
Section 3.3(a), the Company shall extend the period during which the affected
registration statement is required to be maintained pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of notice pursuant to this Section 3.3(a) to the date when the Company
shall make available a prospectus supplemented or amended to conform with the
requirements of the Securities Act.
(b) If all reports required to be filed by the
Company pursuant to the Exchange Act have not been filed by the required date
without regard to any extension, or if the consummation of any business
combination by the Company has occurred or is probable for purposes of Rule 3-05
or Article 11 of Regulation S-X under the Securities Act, upon written
7
<PAGE>
notice thereof by the Company to the Holders, the rights of the Holders to
acquire Registrable Securities pursuant to the Issuance Registration Statement
or to offer, sell or distribute any Registrable Securities pursuant to any
Demand Registration Statement or to require the Company to take action with
respect to the registration of any Registrable Securities pursuant to this
Agreement shall be suspended until the date on which the Company has filed such
reports or obtained and filed the financial information required by Rule 3-05 or
Article 11 of Regulation S-X to be included or incorporated by reference, as
applicable, in the Issuance Registration Statement, the Demand Registration
Statement and the Company shall notify the Holders as promptly as practicable
when such suspension is no longer required.
SECTION 3.4. Registration Expenses.
In connection with any registration statement required to be
filed hereunder, the Company shall pay the following registration expenses
incurred in connection with the registration (the "Registration Expenses"): (i)
all registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws, (iii) printing expenses, (iv) internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities on each
securities exchange on which similar securities issued by the Company are then
listed, (vi) fees and disbursements of counsel for the Company and the
independent public accountants of the Company, (vii) the fees and expenses of
any experts retained by the Company in connection with such registration, and
(viii) any and all other registration expenses not described as the
responsibility of Holders below. The Holders shall be responsible for the
payment of the following expenses incurred by them in connection with the sale
of Registrable Securities: brokerage and sales commissions attributable to the
Registrable Securities; fees and disbursements of counsel representing the
Holder; the Holder's pro rata share of the underwriting expense, in the event
the Holder chooses to incur such expense to expedite or facilitate the
disposition of Registrable Securities pursuant to the Demand Registration
Statement, provided, that any underwriter then a party to an underwriting
agreement with Kimco Realty Corporation, or its affiliate, consents; and any
transfer taxes relating to the sale or disposition of the Registrable
Securities.
SECTION 3.5. Indemnification by the Company.
The Company agrees to indemnify and hold harmless each Selling
Holder, its officers, directors and agents, and each Person, if any, who
controls such Selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any Demand Registration Statement
(individually, a "Resale Registration Statement") or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any prospectus
contained in a Resale Registration Statement at the time it became effective (a
"Resale Prospectus"), or the
8
<PAGE>
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
Company by such Selling Holder or on such Selling Holder's behalf expressly for
inclusion therein; provided, however, that the Company will not be liable in any
case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based upon any untrue statement or omission contained in a
Resale Prospectus which was corrected in a supplement or amendment thereto if
such claim is brought by a purchaser of Registrable Securities from the Selling
Holder and the Selling Holder failed to deliver to such purchaser the supplement
or amendment to the Resale Prospectus in a timely manner.
SECTION 3.6. Indemnification by Holders of Registrable
Securities.
Each Selling Holder of Resale Registrable Securities covered
by a Registration Statement agrees to indemnify and hold harmless the Company,
its officers, directors and agents and each Person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the indemnity set forth in Section
3.5 from the Company to Selling Holders, but only with respect to information
relating to such Selling Holder furnished in writing by such Selling Holder or
on such Selling Holder's behalf expressly for use in any Resale Registration
Statement or Resale Prospectus or any amendment or supplement thereto. Each
Holder also agrees to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act on substantially the same basis as that of
the indemnification of the Company provided in this Section 3.6.
SECTION 3.7. Conduct of Indemnification Proceedings.
Each indemnified party shall give reasonably prompt notice to
each indemnifying party of any action or proceeding commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify the
indemnifying party (i) shall not relieve it from any liability which it may have
under the indemnity agreement provided in Section 3.5 or 3.6 above, unless and
to the extent it did not otherwise learn of such action and the lack of notice
by the indemnified party results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to the indemnified party other than the
indemnification obligation provided under Section 3.5 or 3.6 above. If the
indemnifying party so elects within a reasonable time after receipt of notice,
the indemnifying party may assume the defense of the action or proceeding at the
indemnifying party's own expense with counsel chosen by the indemnifying party
and approved by the indemnified party, which approval shall not be unreasonably
withheld; provided, however, that if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying party and the
indemnified party reasonably determines based upon advice of legal counsel
experienced in such matters, that there may be legal defenses available to it
which are
9
<PAGE>
different from or in addition to those available to the indemnifying party, then
the indemnified party shall be entitled to separate counsel at the indemnifying
party's expense, which counsel shall be chosen by the indemnified party and
approved by the indemnifying party, which approval shall not be unreasonably
withheld; provided further, that it is understood that the indemnifying party;
shall not be liable for the fees, charges and disbursements of more than one
separate firm. If the indemnifying party does not assume the defense, after
having received the notice referred to in the first sentence of this Section,
the indemnifying party will pay the reasonable fees and expenses of counsel for
the indemnified party; in that event, however, the indemnifying party will not
be liable for any settlement effected without the written consent of the
indemnifying party. If an indemnifying party assumes the defense of an action or
proceeding in accordance with this Section, the indemnifying party shall not be
liable for any fees and expenses of counsel for the indemnified party incurred
thereafter in connection with that action or proceeding except as set forth in
the proviso in the second sentence of this Section 3.7. Unless and until a final
judgment is rendered that an indemnified party is not entitled to the costs of
defense under the provisions of this Section, the indemnifying party shall
reimburse, promptly as they are incurred, the indemnified party's costs of
defense.
SECTION 3.8. Contribution.
(a) If the indemnification provided for in Section 3.5 or 3.6
hereof is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by indemnified party as a result of
such losses, claims, damages or liabilities as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or such Selling Holder, and the Company's and the
Selling Holder's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(b) The Company and the Selling Holders agree that it would
not be just and equitable if contribution pursuant to this Section 3.8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in Section
3.8(a). The amount paid or payable by an indemnifying party as a result of the
losses, claims, damages or liabilities referred to in Sections 3.5 and 3.6
hereof shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by the indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.8, no Selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities of such Selling Holder were offered to the public
exceeds the amount of any
10
<PAGE>
damages which such Selling Holder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
SECTION 3.9. Participation in Underwritten Registrations.
No Holder may participate in any underwritten registration
hereunder unless the Holder (a) agrees to sell his or its Registrable Securities
on the basis provided in the applicable underwriting arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents in customary form as reasonably
required under the terms of such underwriting arrangements.
SECTION 3.10. Holdback Agreements.
Each Holder whose securities are included in a Demand
Registration Statement agrees not to effect any sale or distribution of the
securities registered or any similar security of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to,
and during the 60-day period beginning on, the effective date of such
registration statement (except as part of such registration), if and to the
extent requested in writing by the Company in the case of a non-underwritten
public offering or if and to the extent requested in writing by the managing
underwriter or underwriters in the case of an underwritten public offering.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Specific Performance.
The parties hereto acknowledge that there would be no adequate
remedy at law if any party fails to perform any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligation of any other party under this Agreement in
accordance with the terms and conditions of this Agreement in any court of the
United States or any State thereof having jurisdiction,
SECTION 4.2. Amendments and Waivers.
The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given without the
prior written consent of the Company and the Holders holding at least two-thirds
(2/3) of the then outstanding Registrable Securities and Exchangeable
Partnership Units (other than Exchangeable Partnership Units held by the
Company). No failure or delay by any party to insist upon the strict performance
of any
11
<PAGE>
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon any breach thereof shall constitute a waiver of
any such breach or any other covenant, duty, agreement or condition.
SECTION 4.3. Notices.
Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given (a) when
delivered by hand or upon transmission by telecopier or similar facsimile
transmission device, (b) on the date delivered by a courier service, or (c) on
the third Business Day after mailing by registered or certified mail, postage
prepaid, return receipt requested, in any case addressed as follows:
(1) if to any Holder, to such Holder at the address set forth
below such Holder's signature or to such other address and to such other Persons
as the Holders may hereafter notify the Company in writing; and
(2) if to the Company, to Kimco Realty Corporation, 3333 New
Hyde Park Road, P.O. Box 5020, New Hyde Park, New York, 11042-0020, or to such
other address as the Company may hereafter specify in writing.
SECTION 4.4. Successors and Assigns.
The rights and obligations of the Holders under this Agreement
shall not be assignable by any Holder to any Person that is not a Holder. This
Agreement shall be binding upon the parties hereto, the Holders and their
respective successors and assigns.
SECTION 4.5. Counterparts.
This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
SECTION 4.6. Governing Law.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of law provisions thereof.
SECTION 4.7. Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
SECTION 4.8. Entire Agreement.
12
<PAGE>
This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter of this Agreement.
SECTION 4.9. Headings.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Agreement.
SECTION 4.10. Selling Holders Become Party to this Agreement.
By asserting or participating in the benefits of registration
of Registrable Securities pursuant to this Agreement, each Holder agrees that it
or he will be deemed a party to this Agreement and be bound by each of its
terms.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
KIMCO REALTY CORPORATION
a Maryland corporation
By: /s/ Bruce M. Kauderer
--------------------------------------
Name: Bruce M. Kauderer
------------------------------------
Title: V.P.
-----------------------------------
POST CLOSING LIMITED PARTNERS:
MILNER INVESTMENT CORPORATION
By: /s/ Reese L. Milner II
--------------------------------------
Name:
------------------------------------
Title: President
-----------------------------------
Address:
Reese L. Milner, II
Milner Investment Corporation
439 North Bedford Drive
Beverly Hills, CA 90210
FARGO INVESTMENTS
By: /s/ B. Freeman
--------------------------------------
Name: B. Freeman
------------------------------------
Title: GP
-----------------------------------
Address:
Fargo Investments
Freeman Spogli & Co.
11100 Santa Monica Blvd., Suite 1900
Los Angeles, CA 90025
14
<PAGE>
PALMETTO HOLDINGS I, INC.
By: /s/ John Jamerson
--------------------------------------
Name: John E. Jamerson
------------------------------------
Title: President
-----------------------------------
Palmetto Holdings I, Inc.
Mr. John E. Jamerson
6234 East Mercer Way
Mercer Island, WA 98040
MIDWAY HOLDINGS, INC.
By: /s/ Eric Doy Howell
--------------------------------------
Name: Eric Doy Howell
------------------------------------
Title: President
-----------------------------------
Address:
Midway Holdings, Inc.
Eric D. Howell
5306 Cortez Road West, Suite 4
Bradenton, FL 34210
J.B. BALDWIN LAND COMPANY, INC.
By: /s/ J. B. Baldwin
--------------------------------------
Name: J. B. Baldwin
------------------------------------
Title: Pres.
-----------------------------------
Address:
J.B. Baldwin Land Company
Parsley-Baldwin Realty
P.O. Box 605
Boca Grande, FL 33921
15
<PAGE>
CONSENT OF INDEPENDENT ACCOUTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 (File No. 333-77383) of (i) our report dated February 26, 1999, on our
audits of the financial statements and financial statement schedules of Kimco
Realty Corporation as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 and (ii) our report dated January
26, 1999, on our audit of the combined historical summary of revenues and
certain operating expenses of certain acquired properties (the "fourth 1998 and
1999 Acquired Properties") for the year ended December 31, 1997. We also consent
to the references to our firm under the caption "Experts".
PricewaterhouseCoopers LLP
New York, New York
April 29, 1999
