10-K405
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ANNUAL REPORT
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________ to _________________________________
Commission file number 1-10093
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RPS REALTY TRUST
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 13-6908486
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
733 Third Avenue, New York, New York 10017
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 212-370-8585
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Shares of Beneficial Interest,
$.10 Par Value Per Share New York Stock Exchange
Share Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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(TITLE OF CLASS)
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
Aggregate Market Value of the voting shares held by non-affiliates of
the Registrant as of March 16, 1995: approximately $111,393,380.
Approximately 28,492,421 Shares of Beneficial Interest of the
Registrant were outstanding as of March 16, 1995.
DOCUMENTS INCORPORATED BY REFERENCE: None
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PART I
Item 1. Business.
General
RPS Realty Trust (the "Trust") is a Massachusetts business
trust organized pursuant to a Declaration of Trust declared and accepted in
Boston, Massachusetts on June 21, 1988, as amended and restated by an Amended
and Restated Declaration of Trust dated October 14, 1988 (as amended, the
"Declaration of Trust"). The principal office of the Trust is located at 733
Third Avenue, New York, New York 10017. As of April 1, 1995, the Trust's
principal office will be located at 747 Third Avenue, New York, New York 10017.
The Trust is the successor entity to Resources Pension Shares
1 ("RPS 1"), Resources Pension Shares 2 ("RPS 2"), and Resources Pension Shares
3 ("RPS 3"), each of which was a Massachusetts business trust (collectively, the
"RPS Trusts"), and Integrated Resources Pension Shares 4, a California limited
partnership ("RPS 4") (the RPS Trusts and RPS 4 are collectively referred to as
the "Predecessor Programs"). On December 28, 1988, the Trust (i) acquired the
assets, subject to the liabilities, of the Predecessor Programs (the "Exchange")
in exchange for issuing an aggregate of 28,576,022 shares of beneficial
interest, $.10 par value per share (the "Shares"), and (ii) acquired all of the
outstanding stock of RPS Advisory Corp., a Delaware corporation (the
"Acquisition"), in consideration for a note (the "Note") in the original
principal amount of $24,250,000. The assets of the Predecessor Programs acquired
in the Exchange consisted primarily of mortgage loan investments. Immediately
prior to the Trust's acquisition of its stock, RPS Advisory Corp. acquired
certain assets (consisting primarily of 10-year employment agreements with
Herbert Liechtung and Joel M. Pashcow, the principal executive officers of the
Trust, and advisory agreements with, and the managing general partner's right to
certain management, mortgage servicing, and incentive fees from, the Predecessor
Programs). The Trust's acquisition of such stock enabled the Trust to
internalize its management.
The Trust was organized for the purposes of qualifying as a
real estate investment trust ("REIT") under Sections 856-860 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Trust, assuming it qualifies
as a REIT, would be entitled to a deduction for federal income tax purposes for
qualifying dividend distributions made to the Trust's shareholders (the
"Shareholders"). Failure to qualify as a REIT would cause the Trust to be taxed
as a corporation, with a corresponding reduction in benefits to its
Shareholders. Under the Code, a REIT must meet certain criteria to maintain its
REIT status, including requirements that a percentage of its income be earned
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from certain specified sources and that it distribute annually to its
Shareholders at least 95% of its real estate investment trust taxable income, as
defined in the Code ("REIT Taxable Income"). The RPS Trusts first elected to
qualify as a REIT for the years ended December 31, 1982, 1983, and 1984,
respectively. The Trust first elected to qualify as a REIT for the year ended
December 31, 1988 and intends to operate so as to continue to qualify as a REIT.
The Trust believes that it may have inadvertently failed to
satisfy certain requirements of the Code necessary for the Trust to maintain its
REIT status; the Trust is currently seeking to enter into a "closing agreement"
with the Internal Revenue Service (the "IRS") pursuant to which the IRS would
agree not to treat the Trust as failing to qualify as a REIT as a result of the
Trust's failure to satisfy such requirements. See "-- Qualification as a REIT."
The Trust is currently engaged in (a) the business of managing
a 11-mortgage loan portfolio (the "Mortgage Assets"), which is comprised
principally of participating mortgage loans which provide for, in addition to
payment of interest, arrangements permitting the Trust to share in increases in
gross revenues from and/or the appreciation of the underlying properties and (b)
through its wholly-owned subsidiaries, owning and operating eight retail
properties, each of which was subject to mortgages held by the Trust, which
properties typically were acquired by the Trust as a result of negotiations with
certain of the Trust's borrowers and/or in connection with (or in lieu of)
foreclosure proceedings.
Recent Developments; Status of Proposed Transaction
In 1991, the Board of Trustees of the Trust (the "RPS Board")
adopted a resolution authorizing the Trust to commence making direct and
indirect investments in real property; this authorization was in response to a
decline in the national real estate market and an increase in the number of
"problem" (i.e., non-performing or under-performing) loans in the Trust's
mortgage portfolio. During 1991 and 1992, as a result of foreclosure proceedings
(or transfers in lieu of such proceedings) with respect to certain of the
properties which were subject to mortgages held by the Trust, as well as
negotiated transactions with borrowers, the Trust, through separately
incorporated, wholly-owned subsidiaries, took title to five real properties.
During this time period, the Trust continued to manage its mortgage loan
portfolio, but its mortgage origination activities declined drastically.
In 1993, the RPS Board determined that shareholder value would
be maximized if the Trust were to transform itself from a REIT principally
engaged in the business of mortgage lending into an equity REIT, primarily
engaged in the operation
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and development of real properties. As a result, the Trust announced its
intention to acquire equity interests in real properties, other than in
connection with foreclosure proceedings or as a result of negotiated
transactions with its borrowers, in an effort to accelerate the transformation
of the Trust portfolio from mortgages and into equity investments.
The Trust engaged in discussions and negotiations with several
parties during 1993 and early 1994 with respect to one or more transactions
which, if consummated, would have resulted in, among other things, a significant
increase in the portion of the Trust's assets invested in real properties. In
addition, in furtherance of the Trust's intent to focus on equity investments,
the Trustees determined to dispose of the Trust's mortgage loans secured by
property located in California. The sale of substantially all of the Trust's
California mortgage loan portfolio was consummated during January 1994. In
addition, during 1994 the Trust, through the exercise of a right of first
refusal and receipt of a deed in lieu of foreclosure, acquired (through two
wholly-owned subsidiaries) title to two shopping center properties which were
previously subject to mortgages held by the Trust; the Trust also received,
during 1994, approximately $30 million from the prepayment of two of its
mortgage loans.
In November 1993, the Trust commenced negotiations with
representatives of Ramco-Gershenson, Inc., a Michigan corporation ("Ramco"). On
July 14, 1994, the Trust entered into a letter of intent (which has been amended
from time to time to, among other things, extend the expiration date thereof)
(as so amended, the "Letter of Intent") with Ramco, pursuant to which the Trust
agreed to proceed with the negotiation, execution and delivery of a definitive
agreement to enter into a transaction with Ramco (the "Proposed Transaction").
In December 1993, the RPS Board authorized the formation of a special committee
of the RPS Board (the "Special Acquisition Committee") to assist management in
the negotiation, structuring and analysis of the Proposed Transaction and
related transactions. The members of the Special Acquisition Committee are
Stephen Blank, Arthur Goldberg and William Rosoff. See Item 11, "Executive
Compensation -- Compensation of Certain Special Acquisition Committee Members"
for information regarding payments made to Messrs. Blank and Goldberg in their
capacities as members of the Special Acquisition Committee.
After execution of the Letter of Intent, the parties undertook
extensive due diligence investigations and commenced negotiations with a view
towards entering into a definitive agreement. Negotiations between the Trust and
Ramco continued through the latter half of 1994 and early 1995 and are currently
continuing; however, there can be no assurance that the transaction contemplated
by the Letter of Intent, or any other transaction with Ramco, will be
consummated. The Letter of Intent, the term of which was extended by the parties
from time to time, expired on March 20, 1995.
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In connection with the Proposed Transaction, the Letter of
Intent contemplated that the Employment Agreements between the Trust and each of
Herbert Liechtung, President of the Trust, and Joel Pashcow, Chairman of the
Board of the Trust would be satisfied by the Trust prior to the consummation of
the Proposed Transaction. Each of such contracts contains a provision which
enables the employee thereunder, upon the occurrence of certain events, to
terminate such contract, and to receive a payment equal to four times such
employee's average annual salary and bonuses for the three years prior to the
occurrence of such events. As a result of negotiations with the Special
Acquisition Committee, the Trust and Mr. Liechtung have entered into a written
agreement (the "Liechtung Termination Agreement") pursuant to which the
Employment Agreement between Mr. Liechtung and the Trust (the "Liechtung
Employment Agreement") will be terminated upon consummation of the Proposed
Transaction (or certain other "Alternative Transactions," as defined in such
agreement). Although the RPS Board has approved the initial terms of a
termination agreement with Mr. Pashcow, no comparable termination agreement has
yet been entered into between the Trust and Mr. Pashcow. In addition, the Trust
has agreed to certain severance and other "bonus" arrangements with certain
other executive officers and other key employees of the Trust, to induce such
individuals to remain in the employ of the Trust at least through the
consummation of the Proposed Transaction, which bonus payments will only be made
if the Proposed Transaction is consummated. See Item 11, "Executive
Compensation" for a discussion of the Employment Agreements, the Liechtung
Termination Agreement, and the severance and other "bonus" arrangements referred
to in this paragraph.
Investments
As of December 31, 1994, the Trust had 13 mortgage loans
outstanding reflecting total funds advanced of $53,549,005 (before deducting
allowance for possible loan losses of $11,657,236). In addition, as of December
31, 1994, the Trust, through its wholly-owned subsidiaries, had become the owner
of eight real properties with a carrying value, net of accumulated depreciation,
of $56,109,381. During the Trust's fiscal year ended December 31, 1994, the
Trust's principal business consisted of managing its mortgage loan portfolio,
and, through its wholly-owned subsidiaries, operating the real properties
described herein.
During the year ended December 31, 1994, the Trust received
aggregate net proceeds of $54,372,492 from the prepayment and/or partial
pay-down of seven mortgage loans. The proceeds consisted, in the aggregate, of
the following amounts: repayment of $44,812,620 of principal; payment of
$159,872 of current interest; payment of $994,187 of accrued interest; and
payment of $8,405,813 of additional contingent interest (equity
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participation) and prepayment premiums (in lieu of equity participation).
In addition to the transactions with Ramco described above,
the Trust entered into the following transactions with respect to its investment
portfolio during 1994:
On January 3, 1994, the Trust sold the following mortgage
loans: (i) its wrap-around mortgage loan secured by the Tampa Plaza shopping
center located in Northridge, California (the "Tampa Loan"); (ii) its
wrap-around mortgage loan secured by the Wellesley Plaza office building located
in Los Angeles, California (the "Wellesley Loan"); and (iii) its first mortgage
loan secured by the Tackett Center mixed-use retail center located in Palm
Springs, California (the "Tackett Loan"). On January 7, 1994, the Trust sold its
first mortgage loan secured by the Janss Mall shopping center located in
Thousand Oaks, California (the "Janss Mall Loan", and together with the
Wellesley Loan, the Tackett Loan and the Tampa Loan, the "California Mortgage
Loans"). The Tampa, Tackett and Janss Mall Loans were sold pursuant to a
competitive offering process, pursuant to which bids for each of the Loans were
solicited; the Wellesley Loan was offered in the competitive offering process,
but was sold in an arms-length negotiation outside of the competitive offering
process. Secured Capital Corp of Los Angeles, California acted as the Trust's
representative with respect to the offering and sale of the California Mortgage
Loans. In the aggregate, the Trust received cash proceeds of approximately
$25,500,000 from the sale of the California Mortgage Loans, before deduction of
costs, fees and expenses relating to such transactions, including the payment of
a fee to Secured Capital Corp.
On January 25, 1994, the Trust restructured its loan in the
original principal amount of $31,000,000, which was secured by a collateral
assignment of mortgages on two properties, an office building located on Rector
Street, New York City, New York (the "Rector Property") and a shopping center
located on Hylan Boulevard, Staten Island, New York (the "Hylan Center").
Pursuant to the restructuring, the Trust received a direct assignment of the
first mortgage with a principal amount of approximately $25,000,000 and accrued
interest of $7,881,250 secured by the Hylan Center and retained the collateral
assignment of the Rector Property mortgage, the principal amount of which was
reduced to $3,000,000. In addition, the holder of the first mortgage secured by
the Rector Property has granted the Trust a pledge of a senior participation
interest in such mortgage. In addition, upon a foreclosure, the Trust will
obtain a direct first mortgage secured by the Rector Property.
On June 30, 1994, Norgate Shops Corp., a wholly owned
subsidiary of the Trust, acquired title to the Norgate Shopping Center property.
The property was acquired subject to a first
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mortgage in the approximate amount of $1,463,830, which the Trust pre-paid at
the time of such acquisition.
On July 12, 1994, Chester Plaza Shops, Inc., a wholly owned
subsidiary of the Trust, acquired title to the Chester Springs Shopping Center,
an approximately 223,000 square foot community-type shopping center located in
Chester, New Jersey. The purchase price for the property was approximately
$18,262,000.
On August 15, 1994, the Trust received proceeds of $18,354,047
from the prepayment of the Meadowlands Industrial Park mortgage loan. The
proceeds consisted of the repayment of the principal loan balance of
$15,350,000, payment of current interest of $104,047 and prepayment premium
income (in lieu of equity participation) of $2,900,000.
On September 28, 1994, the Trust sold the capital stock of The
Saratoga Building, Inc., a wholly owned subsidiary of the Trust, for $12,500.
The Trust had previously provided an allowance for impairment of $1,580,000
against this asset. The sale resulted in an additional loss of approximately
$227,708.
On September 29, 1994, the Trust received proceeds of
$11,805,825 from the prepayment of the Plainview Shopping Center mortgage loan.
The proceeds consisted of the repayment of the principal loan balance of
$5,250,000, payment of accrued interest of $994,187, current interest of $55,825
and additional contingent interest (equity participation) of $5,505,813.
On September 30, 1994, the Trust exercised its right to prepay
the $4,868,046 first mortgage loan relating to the Crofton Plaza Shopping Center
property. The property is owned by a wholly owned subsidiary of the Trust.
In addition, during January 1994, the Trust, pursuant to its
Share repurchase program, purchased 60,500 Shares at an average price of $3.93
per Share.
Subsequent Events. On February 14, 1995, the holder of the
first mortgage loan secured by the Madison Heights Shopping Center, which loan
was superior to the Trust's wraparound mortgage loan with respect to such
property, foreclosed upon such property. The shopping center has been sold at
auction and the interest of the Trust in such center has been thereby
eliminated.
On March 1, 1995, the Trust received proceeds of $3,021,000
from the satisfaction of the Coral Way Shopping Center mortgage loan. The
proceeds consisted of the repayment of the principal loan balance of $3,000,000
and current interest of $21,000.
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As of March 15, 1995, the Trust had four loans (including
loans relating to certain of the properties referred to above) that were in
arrears (three monthly payments or more) or otherwise considered to be "problem
loans" by the Trust. The aggregate principal amounts of these loans (before
deducting loan loss allowances), together with receivables relating to such
loans comprised of accrued interest and payments made on behalf of the borrowers
for mortgage payments relating to such properties, totalled approximately
$40,435,207, representing approximately 22.1% of the Trust's invested assets and
approximately 82.5% of the Trust's funds invested in mortgage loans, before
taking into account allowance for possible loan losses. At March 15, 1995, the
Trust was not accruing current and accrued interest on three of the
above-mentioned loans, in the aggregate approximate principal amount of
$8,700,000; in addition, as of such date, the Trust was not accruing deferred
interest on one of the above-mentioned loans in the aggregate approximate
principal amount of $25,000,000.
The Trust is actively pursuing opportunities to dispose of the
remaining mortgage loans in its investment portfolio, including, without
limitation, by sale of individual mortgage loans to the borrowers thereunder or
to third parties or pursuant to a transaction including several of the mortgage
loans. With regard to the mortgage loans for which interest payments are in
arrears, the Trust is considering several alternatives, including foreclosure,
restructuring, selling such mortgage loans and other arrangements. During the
fourth quarter of 1994, the Trust added an additional $2,500,000 to its
allowance for possible loan losses in connection with certain of such mortgage
loans.
Mortgage Investments
The following tables summarize the mortgage investments of the
Trust as of March 15, 1995:
TYPE OF NUMBER OF FUNDS RANGE OF
PROPERTY MORTGAGE LOANS ADVANCED(1) INTEREST RATES(2)
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Industrial Properties
First Mortgage Loan 1 $1,500,000 12.0%
Office Buildings
Wraparound Mortgage
Loan 1 $ 468,493 10.0%
First Mortgage Loans 2 $5,850,000 5.0 - 8.3%
Loan Secured by First 1 $3,000,000 6.0%
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Lien (3)
Shopping Center/Retail
Wraparound Mortgage
Loans 3 $ 8,280,512 6.5 - 12.7%
First Mortgage Loans 3 $29,900,000 7.5 - 10.5%
TOTAL: 11 $48,999,005
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(1) Before taking into account allowance for possible loan losses of
approximately $9,781,336.
(2) Interest rates presented are the weighted averages of the sum of current
plus accrued interest rates.
(3) The loan is secured by a first lien on a collaterally assigned first
mortgage loan which, in turn, is secured by a fee position subject to a
master lease on an office building in New York City, New York.
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NORTHEAST SOUTHEAST MIDWEST WEST
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Outstanding
Principal Amount
of Loans(1) $41,480,512 $1,500,000 $5,550,000 $468,493
Percentage of
Funds Outstanding 84.7% 3.1% 11.3% 0.9%
Number of Loans 7 1 2 1
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(1) Before taking into account allowance for possible loan losses.
Real Property Investments
The following table summarizes the Trust's equity investments
in real properties, and the carrying value, net of accumulated depreciation, of
such properties, as of December 31, 1994:
PROPERTY LOCATION CARRYING VALUE
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Sunshine Plaza Tamarac, FL $ 9,143,966
Shopping Center
Crofton Shopping Crofton, MD $10,025,960
Center
Trinity Corners Pound Ridge, NY $ 2,916,562
Shopping Center
Commack Property Commack, NY $ 2,811,187
Lantana Plaza Lantana, FL $ 5,495,932
Shopping Center
9 North Wabash Chicago, IN $ 3,263,352
Avenue
Chester Shopping Chester, NJ $18,212,669
Center
Norgate Shopping Indianapolis, IN $ 4,239,753
Center
SUNSHINE PLAZA SHOPPING CENTER. The Sunshine Plaza Shopping Center is a
one-story shopping center located in Tamarac, Florida (Broward County). The
property was acquired on December 19, 1991 by Sunshine Plaza Shops, Inc., a
wholly-owned subsidiary of the Trust. The shopping center contains approximately
241,000 square
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feet of leasable space, approximately 83% of which was leased as of December 31,
1994. Major tenants (i.e., tenants who accounted for 10% or more of the revenues
at such property during 1994) are J. Byrons department store, Publix
supermarket, L. Luria & Sons and Eagle Fashions. These four tenants lease
approximately 50,000, 35,040, 39,195 and 23,124 square feet, respectively, under
leases which expire in November 1996, February 1996, January 1999 and December
2003, respectively. Each of the J. Byrons and Publix leases contains three
5-year tenant renewal options and the Eagle Fashions' lease contains two 5-year
tenant renewal options. Leases for approximately 6,400 square feet are due to
expire on or prior to December 31, 1995. The average base rent per square foot
paid by tenants at such property as of January, 1995, excluding percentage rent
and similar provisions, was $3.63 ($4.44, including percentage rent based on
1994 revenues).
CROFTON PLAZA SHOPPING CENTER. The Crofton Plaza Shopping Center is a one-story
shopping center located in Crofton, Maryland (Anne Arundel County). The property
was acquired on May 1, 1991 by Crofton Plaza, Inc., a wholly-owned subsidiary of
the Trust. The shopping center contains approximately 250,000 square feet of
leasable space, approximately 97% of which was leased as of December 31, 1994.
Major tenants (i.e., tenants who accounted for 10% or more of the revenues at
such property during 1994) are K Mart department store, Drug Emporium and Metro
Food Mart. These three tenants lease approximately 95,810, 30,429 and 54,800
square feet, respectively, under leases which expire in June 2000, September
2000 and August 2005, respectively. The Metro Food Mart lease provides for four
5-year tenant renewal options; the Drug Emporium and K Mart leases each contain
ten 5-year tenant renewal options. Leases for approximately 22,214 feet are due
to expire on or prior to December 31, 1995. The average base rent per square
foot paid by tenants at such property as of January, 1995, excluding percentage
rent and similar provisions, was $5.12 ($5.30, including percentage rent based
on 1994 revenues).
TRINITY CORNERS SHOPPING CENTER. The Trinity Corners Shopping Center is a
one-story shopping center located in Pound Ridge, New York (Westchester County).
The property was acquired pursuant to a bankruptcy court auction sale on
December 30, 1992 by Trinity Shops, Inc., a wholly-owned subsidiary of the
Trust. The shopping center contains approximately 51,000 square feet of leasable
space, approximately 80% of which was leased as of December 31, 1994, and was
modernized during 1994. Major tenants (i.e., tenants who accounted for 10% or
more of the revenues at such property during 1994) are Scotts Corner Market and
Scotts Corner Pharmacy. These tenants lease approximately 28,515 and 4,500
square feet, respectively, under leases which expire in May 2000 and December
2000, respectively. Leases for approximately 1,170 square feet are due to expire
on or prior to December 31,
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1995. The average base rent per square foot paid by tenants at such property as
of January, 1995 was $8.12.
COMMACK PROPERTY. The Commack Property is a one-story free-standing building of
approximately 47,500 square feet of leasable space located in Commack, New York
(Suffolk County). The property was acquired on December 30, 1992, by The Commack
Site, Inc., a wholly-owned subsidiary of the Trust. The entire Commack Property
is leased to Toys R Us pursuant to a lease which expires in January 2002. The
lease provides for four 5-year tenant renewal options.
LANTANA SHOPPING CENTER. The Lantana Shopping Center is a one-story shopping
center located in Lantana, Florida (Palm Beach County). The property was
acquired on March 5, 1993 by Lantana Plaza Shops, Inc., a wholly-owned
subsidiary of the Trust. The shopping center contains approximately 117,000
square feet of leasable space, approximately 91% of which was leased as of
December 31, 1994. Major tenants (i.e., tenants who accounted for 10% or more of
the revenues at such property during 1994) are Publix supermarket, Pet
Supermarket and Beall's Outlet. These three tenants lease approximately 36,800,
11,000 and 11,832 square feet, respectively, under leases which expire in August
1999, June 1999 and April 1998, respectively. The Publix lease contains one
5-year tenant renewal option, the Pet Supermarket lease contains three 5-year
tenant renewal options and the Beall's lease contains four 4-year tenant renewal
options. Leases for approximately 6,325 feet are due to expire on or prior to
December 31, 1995. The average base rent per square foot paid by tenants at such
property as of January, 1995, excluding percentage rent and similar provisions,
was $4.89 ($5.75, including percentage rent based on 1994 revenues).
9 NORTH WABASH AVENUE. The 9 North Wabash property is a six-story building with
approximately 52,000 square feet of leasable space located in Chicago, Illinois.
The property was acquired on July 7, 1993 by 9 North Wabash Corp., a
wholly-owned subsidiary of the Trust. The entire Wabash property is leased to
Lane Bryant pursuant to a lease which expires in June 1995. The lease does not
provide for any tenant renewal options. The Trust has entered into an exclusive
sales and lease arrangement with a local broker to sell or lease this property.
CHESTER SHOPPING CENTER. The Chester Shopping Center is a one-story shopping
center located in Chester, New Jersey (Morris County). The property was acquired
on July 12, 1994 by Chester Plaza Shops, Inc., a wholly-owned subsidiary of the
Trust. The shopping center contains approximately 223,000 square feet of
leasable space, approximately 99% of which was leased as of December 31, 1994.
The major tenant (i.e., tenant who accounted for 10% or more of the revenues at
such property during 1994) is Village Supermarket (Shop Rite). This tenant
leases approximately 45,300 square feet pursuant to an amended lease
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which expires in December 2007. The lease contains two 10-year renewal options.
Leases for approximately 11,213 feet are due to expire on or prior to December
31, 1995. The average base rent per square foot paid by tenants at such property
as of January, 1995, excluding percentage rent and similar provisions, was $9.51
($10.68 including percentage rent based on 1993 revenues).
NORGATE SHOPPING CENTER. The Norgate Shopping Center is a one-story shopping
center located in Indianapolis, Indiana (Marion County). The property was
acquired on June 30, 1994 by Norgate Shops, Corp., a wholly-owned subsidiary of
the Trust. The shopping center contains approximately 208,000 square feet of
leasable space, approximately 79% of which was leased as of December 31, 1994.
Major tenants (i.e., tenants who accounted for 10% or more of the revenues at
such property during 1994) are Kohl's Oakland, Inc. and Consolidated Stores,
Inc. These two tenants lease approximately 65,000 and 37,300 square feet. The
Kohl's Oakland lease expires in January 1999 and the Consolidated Stores lease
is month to month. The Kohl's lease contains three 5-year tenant renewal
options. Leases for approximately 45,642 feet are due to expire on or prior to
December 31, 1995. The average base rent per square foot paid by tenants at such
property as of January 1995 excluding percentage rent and similar provisions was
$3.52 ($3.59 including percentage rent based on 1993 revenues).
As indicated above, certain of the leases at the shopping
centers owned by the Trust's subsidiaries also provide for the payment of
additional "percentage rent," which is calculated as a percentage of a tenant's
gross sales above predetermined thresholds.
Each of the properties owned by the Trust as of March 15, 1995
was subject to a mortgage loan held by the Trust, and each of such loans, other
than with respect to the Lantana Shopping Center property, while consolidated
for accounting purposes, has not been extinguished of record. The properties are
managed by the wholly-owned subsidiaries of the Trust which own such properties
(or, in the cases of the Chester and Norgate shopping centers, by third-party
property managers under supervision of the Trust's subsidiaries). The Trust may,
in its discretion, advance costs and expenses incurred in connection with the
operation of properties owned by its wholly-owned subsidiaries.
Consummation of the Proposed Transaction and the related
transactions would, as contemplated by the Letter of Intent, result in the Trust
having substantially all of its assets invested in real properties, primarily
shopping center properties. In making equity investments, the Trust is subject
to the risks inherent in the ownership of commercial properties, including,
without limitation, fluctuations in occupancy rates and operating expenses,
variations in rental schedules, the
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character of the tenancy and the possible effect on the cash flow from a
property if its tenants incur financial difficulties. Such events may, in turn,
be adversely affected by general and local economic conditions, interest rate
levels, the availability of financing, the supply of and demand for properties
of the types in which the Trust invests, environmental laws and regulations,
zoning laws, federal and local rent controls, other laws and regulations and
real property tax rates. Certain expenditures associated with real estate equity
investments (principally real estate taxes and maintenance costs) are not
necessarily decreased by events adversely affecting the Trust's income from such
investments. Thus, the cost of operating a property may exceed the rental income
earned thereon, and the Trust may have to advance funds in order to protect its
investment or may be required to dispose of the property at a loss. For these
and other reasons, no assurance of profitable operation can be made.
Qualification as a REIT
The Trust first elected to qualify as a REIT for the year
ended December 31, 1988. The Trust's policy is to qualify as a REIT for federal
income tax purposes. If the Trust so qualifies, amounts paid by the Trust as
dividends to its Shareholders will not be subject to corporate income taxes. For
any year in which the Trust does not meet the requirements for electing to be
taxed as a REIT, it will be taxed as a corporation.
The requirements for qualification as a REIT are contained in
sections 856-860 of the Code and the regulations issued thereunder. The
following discussion is a brief summary of some of those requirements. Such
requirements include certain provisions relating to the nature of a REIT's
assets, the sources of its income, the ownership of its stock, and the
distribution of its income. Among other things, at the end of each fiscal
quarter, at least 75% of the value of the total assets of the Trust must consist
of real estate assets (including interests in mortgage loans secured by real
property and interests in other REITs, as well as cash, cash items and
government securities) (the "75% Asset Test"). There are also certain
limitations on the amount of other types of securities which can be held by a
REIT. Additionally, at least 75% of the gross income of the Trust for the
taxable year must be derived from certain sources, which include "rents from
real property," and interest secured by mortgages on real property. An
additional 20% of the gross income of the Trust must be derived from these same
sources or from dividends, interest from any source, or gains from the sale or
other disposition of stock or securities or any combination of the foregoing.
There are also restrictions on the percentage of gross income derived from the
sale or disposition of certain assets within certain time periods.
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16
A REIT is also required to distribute at least 95% of its REIT
Taxable Income (as defined in the Code) to its shareholders. A significant
number of the Trust's mortgage loans do not require the current payment of a
portion of the interest as it accrues. Because, for federal income tax purposes,
the Trust must include such accrued interest in income but will not receive the
corresponding cash at the same time, the Trust may have to obtain funds from
other sources to satisfy the 95% distribution requirement, although depreciation
deductions attributable to the Trust's ownership of real properties held through
its wholly-owned subsidiaries should reduce the amount of such "cashless"
income. To the extent the Trust's accrued interest income is not offset by
depreciation deductions, the Trust expects to obtain deferred interest
financing, if available, which would reduce REIT Taxable Income by the amount of
interest accruing each year on such financing without requiring any cash
payments until maturity. In addition, the Trust may draw upon its cash reserves
or issue equity securities (including those issued pursuant to the Distribution
Reinvestment Plan) in order to satisfy the 95% annual distribution requirement
referred to above. In addition, to the extent that payments made to certain
executive officers under their employment arrangements exceed $1 million in any
year, the excess may not be deductible by the Trust. To the extent that such
payments (or, in certain circumstances, other payments made pursuant to such
employment arrangements) are nondeductible, the Trust may lose all or a portion
of its net operating loss carryover or may need to obtain funds from sources
other than operations in order to satisfy the 95% annual distribution
requirement referred to above. See Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
During early 1995, the Trust's management determined that the
Trust may have inadvertently failed to satisfy the "75% Asset Test" for the
third quarter of 1994, because at the end of such quarter more than 25% of the
Trust's assets were invested in overnight bank repurchase obligations secured by
Treasury Bills. In previously issued Revenue Ruling 77-59, the IRS took the
position that overnight bank repurchase obligations constitute neither
"government securities" nor cash items for purposes of satisfying the 75% Asset
Test. The Trust's management also determined that it may have failed to comply
in previous years with certain shareholder notice requirements of the Code. The
Trust has already filed its 1994 tax return and has requested the IRS to enter
into a closing agreement, pursuant to which the IRS would agree not to treat the
Trust as failing to qualify as a REIT, despite the Trust's inadvertent failure
to satisfy the requirements noted above. Management believes that the IRS
position in Revenue Ruling 77-59 is incorrect and further believes that even if
the IRS position in Revenue Ruling 77-59 were to be upheld, the Trust's
inadvertent failure to satisfy the 75% Asset Test for one quarter was due to
reasonable cause and not to willful neglect and, therefore, the mitigation
provisions
14
17
of Code Section 856(g)(4) should apply to permit the Trust to continue to be
taxed as a REIT.
Should the IRS deny the Trust's request for relief, the Trust
intends to seek a judicial determination that it may continue to qualify as a
REIT. If the Trust does not ultimately prevail in its position, it would be
taxable as a regular "C" corporation for 1994 but, because of the incurrence of
a net operating loss for such year, would have no federal income tax liability
for 1994. However, it is anticipated that the Trust would have a state and local
tax liability of approximately $400,000 for 1994.
If it is finally determined that the Trust cannot continue to
be treated as a REIT, and the Proposed Transaction is not consummated, the RPS
Board may consider pursuing alternative transactions, which would likely be made
more difficult if the Trust lacked REIT status. The RPS Board may also consider
liquidating the Trust's remaining assets and making a liquidating distribution
to its Shareholders. The Trust's management believes that such a liquidation
could be accomplished without a material federal tax liability at the Trust
level.
Competition
The properties which secure the Trust's mortgage loans may
face competition from similar properties in the vicinity. To the extent such
competition reduces the gross revenues from the operation of such properties
and/or decreases any appreciation in the value of such properties, such
competition will reduce any contingent interest or additional contingent
interest otherwise payable to the Trust and may make it more difficult for
borrowers to meet debt service payments on a current basis.
With respect to the Trust's investments in real properties,
the Trust may experience competition from other investors in real estate
equities, including private investors (both domestic and international), as well
as banks, pension funds, insurance companies, real estate investment trusts and
other investors, many of whom have resources greater than that of the Trust. In
addition, in areas where the Trust's subsidiaries own real properties, there may
be comparable properties and/or economic difficulties which would cause
increased competition for tenants, thereby pushing rental rates down, forcing
the Trust's subsidiaries to make greater lease concessions (e.g., to fund
renovations), and/or causing increased vacancies at the Trust's properties.
Employees
As of March 15, 1995, the Trust employed 13 persons. See Item
10, "Directors and Executive Officers of the Trust."
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18
Executive Officers of the Trust
The executive officers of the Trust are as follows:
HAS SERVED AS
NAME OFFICES OFFICER SINCE
-------------------- --------------------- -------------
Joel M. Pashcow Chairman October 1980*
Herbert Liechtung President October 1981*
Stanley Rappoport Executive Vice August 1991
President
Edwin R. Frankel Senior Vice President March 1983*
and Treasurer
John J. Johnston, Jr. Vice President- November 1983*
Real Estate Counsel
and Secretary
---------------------
* Includes periods served in similar capacities for the Predecessor Programs.
Joel M. Pashcow, age 52, has been associated with the Trust
since its inception. He has been a member of the Bar of the State of New York
since 1968. He is a graduate of Cornell University and the Harvard Law School.
Mr. Pashcow has served as a member of the Board of Governors of the Real Estate
Securities and Syndication Institute and has been designated a Specialist in
Real Estate Securities by such Institute. Additionally, he served as a director
and member of the executive committee of the National Realty Committee.
Herbert Liechtung, age 64, has been associated with the Trust
since its inception.
Stanley Rappoport, age 64, has been associated with the Trust
since August 1991. From January 1989 until August 1991 Mr. Rappoport served as
an independent consultant to NPI Management Corp. and was active as a real
estate broker and in the management of real estate investments. Mr. Rappoport is
a licensed real estate broker and insurance broker in the State of New York and
a Certified Review Appraiser. He is a graduate of New York University.
Edwin R. Frankel, age 49, has been associated with the Trust
since its inception.
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19
John J. Johnston, Jr., age 63, has been associated with the
Trust since its inception. Mr. Johnston graduated from Hunter College in 1955
with a degree in economics and from Columbia Law School in 1958. He is a member
of the Bar of the State of New York.
On March 7, 1995, Herbert Liechtung, the President of the
Trust, underwent successful abdominal vascular surgery. Mr. Liechtung is
currently recuperating and is expected to resume his activities as President of
the Trust during or prior to May 1995. During Mr. Liechtung's absence, the other
officers of the Trust, especially Messrs. Pashcow and Rappoport, have taken on
additional duties usually performed by Mr. Liechtung. See Item 11, "Executive
Compensation -- Employment Agreements."
Item 2. Properties.
During 1994, the Trust leased approximately 6,400 square feet
of office space at 733 Third Avenue, New York, New York for an annual rental of
$194,666 (including electricity). This lease expires on March 31, 1995. In
March, 1995, the Trust entered into a lease for approximately 4,863 square feet
of office space at 747 Third Avenue, New York, New York. The term of this lease
commences on April 1, 1995, at an annual base rental of $145,890. This lease
will expire on April 30, 1996, unless extended by the Trust for an additional
one-year term. The lease does not permit the Trust to terminate the lease before
the expiration of its term, to assign the lease or to sub-lease the leased space
without the consent of the landlord.
In addition, the Trust leases office space at 801 Brickell
Avenue, Miami, Florida, for a monthly rental of $1,284. This lease will expire
on July 20, 1995.
Item 3. Legal Proceedings.
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business (including, without
limitation, foreclosure proceedings), against or involving the Trust or its
property.
Item 4. Submission of Matters to a Vote of Security Holders.
The Trust did not submit any matter to a vote of its
Shareholders during the fourth quarter of 1994.
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20
PART II
Item 5. Market for the Trust's Shares of Beneficial
Interest and Related Shareholder Matters.
(a) Market Information
The Shares have been traded on the New York Stock Exchange
since December 28, 1988.
Set forth below is the range of high and low sales prices for
the Shares for each of the quarters during the years ended December 31, 1993 and
December 31, 1994:
HIGH LOW
------ ------
First Quarter 1993 $5-5/8 $4-1/4
Second Quarter 1993 $4-5/8 $3-1/8
Third Quarter 1993 $3-3/4 $3-1/4
Fourth Quarter 1993 $4-1/2 $3-1/2
First Quarter 1994 $4-1/8 $3-3/4
Second Quarter 1994 $4-1/4 $3-1/2
Third Quarter 1994 $4-1/2 $4
Fourth Quarter 1994 $4-3/8 $3-7/8
(b) Approximate Number of Equity Security Holders
APPROXIMATE NUMBER OF
RECORD HOLDERS
TITLE OF CLASS (AS OF MARCH 15, 1995)
-------------- ----------------------
Shares of Beneficial
Interest, $.10 par value 12,308
(c) Dividend Information
Under the Code, a REIT must meet certain qualifications
including a requirement that it distribute annually to its shareholders at least
95% of its REIT Taxable Income. The Trust has continued the cash distribution
policy of the Predecessor Programs by making quarterly distributions to its
Shareholders in amounts such that annual distributions equal 100% of REIT
Taxable Income, thereby complying with the distribution requirements of the
federal income tax laws applicable to REITs. See "Qualification as a REIT" in
Item 1 above.
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21
The Trust declared the following cash dividends to
Shareholders for the year ended December 31, 1993:
PAYMENT
QUARTER DIVIDEND DATE
------------------- -------- --------
First Quarter 1993 $.08 5/18/93
Second Quarter 1993 $.08 8/13/93
Third Quarter 1993 $.08 11/17/93
Fourth Quarter 1993 $.08 1/27/94
The Trust declared the following cash dividends to
Shareholders for the year ended December 31, 1994:
PAYMENT
QUARTER DIVIDEND DATE
------------------- -------- --------
First Quarter 1994 $.08 05/17/94
Second Quarter 1994 $.08 08/17/94
Third Quarter 1994 $.08 11/16/94
Fourth Quarter 1994 $.08 01/27/95
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22
Item 6. Selected Financial Data.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
Revenues $26,406,761 $26,968,505 $29,857,260 $27,936,678 $36,985,405
Net Income(1) $15,641,876 $ 3,051,266 $ 8,838,836 $12,758,266 $23,755,936
Net Income
Per Share(1)(2) $ .55 $ .11 $ .31 $ .45 .82
Cash Dividends
Declared
Per Share $ .32 $ .32 $ .60 $ .70 $ .82
Statement of
Financial
Position DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
at year end 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- --------
Total Assets $186,170,822 $186,419,996 $215,558,387 $241,627,537 $235,565,414
Shareholders'
Equity $182,599,168 $176,312,600 $182,558,951 $191,171,414 $197,802,342
--------------------
(1) Net income for the year ended December 31, 1992 includes extraordinary
items (gains on early extinguishment of debt). See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 6 and 7 to Item 8, "Financial Statements and Supplementary
Data."
(2) Net income per Share for 1994, 1993, 1992, 1991 and 1990 is based on the
weighted number of Shares outstanding of 28,494,379, 28,582,344,
28,599,637, 28,653,103 and 29,079,562, respectively.
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23
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Capital Resources and Liquidity
As of December 31, 1993, the Trust had $100,692,130 invested
in mortgage loans (after deducting allowance for possible loan losses of
$23,724,537), $33,740,702 invested in real properties and $37,747,388 in
short-term investments. During 1994, the Trust, through wholly-owned
subsidiaries, acquired the Norgate Shopping Center property and the Chester
Shopping Center property, sold the Saratoga Office Building and the California
Mortgage Loans and exercised its right to prepay the first mortgage loan secured
by the Crofton Plaza Shopping Center. (See Item 1, "Business -- Investments".)
During 1994 the Trust received aggregate proceeds of $54,372,492 from the
prepayment and/or partial pay-down of seven mortgage loans (including the
California Mortgage Loans). As of December 31, 1994, the Trust had $41,891,769
invested in mortgage loans (after deducting allowance for possible loan losses
of $11,657,236), $56,109,381 invested in real properties and $73,781,582 in
short-term investments.
In April 1990, the Board of Trustees approved a $6,000,000
Share repurchase program which allows the Trust to purchase its Shares at
prevailing market prices. Pursuant to this program, during 1994 the Trust
purchased 60,500 Shares at an average price of $3.93 price per Share.
During 1994, the Trust's cash receipts were derived primarily
from interest income (including additional contingent interest and prepayment
premium income) on its mortgage loan portfolio, and, to a lesser degree, from
rental income from its investments in real properties held through its
wholly-owned subsidiaries and interest from its short-term investments. These
receipts were used to fund operating expenses and pay cash distributions to
Shareholders.
In order to make the necessary distributions to Shareholders
required to allow the Trust to continue to qualify as a REIT, to the extent that
there are not sufficient funds available due to timing differences between the
realization of taxable income and net cash flow, including the portion of
accrued interest on mortgage loans required to be included currently in the
Trust's taxable income, the Trust may require additional cash. Deductions for
depreciation on the Trust's real estate investments reduce REIT Taxable Income
with no corresponding payment of cash. To the extent the Trust's accrued
interest income is not offset by depreciation deductions attributable to its
equity investments in real property, the Trust may draw upon its cash reserves,
if available. To the extent cash reserves are not available, the Trust may need
to obtain financing and/or issue additional Shares (including those
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24
issued Shares to be acquired pursuant to the Trust's Distribution Reinvestment
Plan). During 1994, the Trust's distributions to Shareholders were classified as
return of capital, because the Trust recognized a taxable loss for 1994.
The Trust believes that its working capital will be sufficient
to satisfy its requirements for its operations. However, there can be no
assurances that there will not be unanticipated additional expenses.
As stated above, the Trust's cash receipts are derived
primarily from interest income generated by its mortgage loan portfolio. As a
result, the Trust is dependent upon the ability of the borrowers under such
mortgage loans to make required debt service payments. While the Trust has
addressed certain of these issues by, among other things, selling or foreclosing
upon certain of its mortgage loans, the Trust is aware that certain of its
borrowers are experiencing continuing financial difficulties due to increased
vacancies and lower rental rates. The Trust has established, as of December 31,
1994, an allowance for possible loan losses of $11,657,236 relating to certain
of the mortgage loans held by the Trust. This allowance is indicative of the
overall decline in the value of real estate nationally and of the properties
securing the Trust's mortgage loans. Management's policy is to review each
mortgage loan in the Trust's portfolio on a regular basis (which review includes
a periodic assessment of the value and collectibility of the individual mortgage
loans) for the purpose of determining whether a provision for loan losses need
be established or increased. Subject to the foregoing, the allowance for
possible loan losses is maintained at a level which management believes is
adequate to absorb potential losses on outstanding mortgage loans; however,
ultimate losses may vary from current estimates. The Trust may provide for
additional losses in the future.
Because of a decrease in the Trust's investment in
participating mortgage loans and an increase in lower-yielding short-term
investments, as well as the continuing effect of the "problem loans" referred to
above on the performance of the Trust's investment portfolio, the Trust
anticipates decreased revenues to the Trust during 1995, compared to 1994
results. In addition, as a result of the sale of certain of the Trust's mortgage
assets during 1994 and the corresponding increase in funds invested in
lower-yielding short-term investments, the Trust may not be able to sustain the
current level of distributions to Shareholders.
The Trust is actively pursuing opportunities to dispose of the
remaining mortgage loans in its investment portfolio, including, without
limitation, by the sale of individual mortgage loans to the borrowers thereunder
or to third parties or pursuant to a transaction involving several of such
mortgage loans. Sales of mortgage loans, whether individually or in a "package,"
may
22
25
yield sales proceeds which could be less than the carrying value of such loans.
The Trust may also continue to restructure existing mortgage
loans with the borrowers under such loans; alternatively, the Trust may
foreclose upon certain of the properties securing mortgages held by the Trust,
or negotiate arrangements in lieu of foreclosure which could result in the Trust
becoming the owner, either directly or indirectly, of certain of the properties
currently securing the Trust's mortgage loans.
RESULTS OF OPERATIONS
Calendar Year 1994 Compared to Calendar Year 1993
Total revenues before rental income received during 1994
decreased $3,239,288 or 14.2% from that of the previous year. Interest from
mortgage loans received by the Trust during 1994 decreased $5,393,200 or 38.5%
compared to 1993. The reduction in interest from mortgage loans is attributable
to the reduction in the Trust's mortgage loan portfolio as well as the financial
condition of certain of the Trust's borrowers and the economic condition in
certain areas where the properties securing the Trust's mortgage loans are
located. Current interest income from mortgage loans decreased $4,301,629 or
40.0%, primarily as a result of lower mortgage balances. The Trust in 1994
received $1,696,866 of previously unrecognized deferred interest as compared to
$2,651,098 in 1993, a decrease of $954,232 or 36.0%.
Contingent interest income for 1994 was $440,688 as compared
to $578,027 for 1993. This represents a decrease of $137,339 or 23.8%. During
the year ended December 31, 1994 the Trust received additional contingent
interest and prepayment penalty income (equity participation) totalling
$8,405,813 as compared to $3,433,116 in 1993, an increase of $4,972,697 or
144.8%. Short-term interest income increased $1,499,722 or 135.8% as a result of
higher balances. During 1993 the Trust received $3,942,513 in gains resulting
from the sale of its 270,000 shares of Kimco Realty Corporation common stock, as
well as dividend income of $395,185 from such shares. The Trust held no
marketable securities during 1994.
During the year ended December 31, 1994, expenses (excluding
interest on mortgages, property operating expenses, real estate taxes and
depreciation) decreased $14,029,955 or 67.3% compared to the same period during
1993. This decrease was primarily due to the decrease in the allowance for
possible loan losses expense. During the year ended December 31, 1994, the Trust
made allowances for possible loan losses of $2,500,000 as compared to
$15,000,000 during 1993, representing a decrease of $12,500,000 or 83.3%. During
1994 the Trust did not incur interest on notes payable as compared to $2,019,710
in 1993. On
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26
December 28, 1993 the Trust exercised its option to redeem in full the Note
issued pursuant to the Note Issuance Agreement dated as of December 28, 1988.
The Trust during 1994 recognized a loss of $227,708 as a result of the Trust
selling the Saratoga Office Building. General and administrative expenses and
payroll and related expenses increased $174,090 and $87,957, respectively.
During 1994, the Trust received rental income of $6,764,394 as
compared to $4,086,850 for the 1993 year. This increase of $2,677,544 or 65.5%
is primarily as a result of the Trust owning more properties during 1994 than
during the 1993 period. Interest expense on mortgages payable in 1994 decreased
$176,738 or 29.3% due to the Trust exercising its right to prepay the first
mortgage loan relating to the Crofton Plaza Shopping Center property on
September 30, 1994. Property operating expenses, real estate taxes and
depreciation expense increased during the 1994 year by $323,729, $531,733 and
$198,877, respectively over the 1993 year due to the aforementioned increase in
the number of properties. For the year ended December 31, 1994, the Trust
recognized net income from the investment of real estate of $2,822,884 as
compared to $1,022,941 for 1993.
Net earnings for the year ended December 31, 1994 as compared
to the year ended December 31, 1993 increased by $12,590,610 as a result of the
items discussed above.
Calendar Year 1993 Compared to Calendar Year 1992
Total revenues before rental income decreased $4,395,700 or
16.1% from that of the previous year. Interest from mortgage loans decreased
$6,047,099 or 30.2%. The reduction in interest from mortgage loans continued to
be attributable primarily to the general decline in the commercial real estate
sector of the national economy, the financial condition of certain of the
Trust's borrowers and the economic conditions in certain areas where the
properties securing the Trust's mortgage loans are located. The Trust in 1993
received $2,651,098 of previously unrecognized deferred interest as compared to
$1,673,262 in 1992, an increase of $977,836 or 58.4%. Contingent interest income
for 1993 was $578,027 as compared to $467,080 for 1992. This represents an
increase of $110,947 or 23.8%. Current interest income from mortgage loans
decreased $7,135,882 or 39.9%, primarily as a result of an increase in "problem
loans" and lower mortgage balances. During the year ended December 31, 1993 the
Trust received $3,433,116 of additional contingent interest (equity
participation) as compared to $5,250,000 of additional contingent interest and
prepayment penalty income during 1992, representing a decrease of $1,816,884 or
34.6%. Additionally, in 1993 the Trust received $3,942,513 in gains resulting
from the sale of its 270,000 shares of Kimco Realty Corporation common stock.
During 1992 the Trust recognized
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27
$1,005,073 or $.04 per share from extraordinary tems as compared to none in
1993. Short-term interest income decreased $493,875 r 30.9% as a result of lower
interest rates and lower balances.
During the year ended December 31, 1993, expenses (excluding
interest on mortgages, property operating expenses, real estate taxes and
depreciation) increased $1,032,132 or 5.2% compared to the same period during
1992. This increase was primarily due to the increase in the allowance for
possible loan losses. During the year ended December 31, 1993, the Trust made
allowances for possible loan losses of $15,000,000 as compared to $12,955,100
during 1992 representing an increase of $2,044,900 or 15.8%. Additionally, in
1992 the Trust recognized loan losses of $919,471. Interest expense on the Note
increased $91,257 or 4.7% as a result of the semi-annual compounding. General
and administrative expenses and payroll and related expenses decreased by
$142,149 and $42,405, respectively.
During 1993, the Trust received rental income of $4,086,850 as
compared to $2,579,905 for the same period of 1992. This increase is as a result
of the Trust owning more properties during 1993 than during the 1992 period.
During the year ended December 31, 1993 the Trust incurred interest expense on
mortgages, property operating expenses, real estate taxes and depreciation
expenses totaling $3,063,909 as compared to $2,202,299 during the 1992 year. For
the year ended December 31, 1993 the Trust recognized net income from the
investment of real estate of $1,022,941 as compared to $377,606 for 1992.
Net earnings for the year ended December 31, 1993 as compared
to the year ended December 31, 1992 decreased by $4,782,497 or 61.1% as a result
of the items discussed above.
Item 8. Financial Statements and Supplementary Data.
See pages FS-2 - FS-21, which are included herein.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Trust.
The Declaration of Trust which governs the Trust provides for
not less than three nor more than nine Trustees, a majority of whom must not
perform any services for the Trust, other than as a Trustee, and must not be
directors, officers or employees of Integrated ("Independent Trustees"), except
for a period of 60 days after the death, removal or resignation of an
Independent Trustee. There are currently nine Trustees
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28
(increased from seven in January 1990) of the Trust, six of whom are Independent
Trustees.
The Trustees are divided into three classes. Messrs.
Eisenstat, Blumenfeld and Rosoff are Class I Trustees, for a term to expire in
1995. Messrs. Goldberg, Glickman and Stalford are Class II Trustees, for a term
to expire in 1996. Messrs. Pashcow, Liechtung and Blank are Class III Trustees,
for a term to expire in 1997. Trustees hold office until their successors are
duly elected and qualified.
The Trustees of the Trust are as follows:
OFFICES AND HAS SERVED AS
NAME POSITIONS TRUSTEE SINCE*
------------------- ------------------------- --------------
Joel M. Pashcow Chairman and Member October 1980
of Investment Committee
Herbert Liechtung President and Member October 1981
of Investment Committee
Stephen R. Blank Member of the Compen- January 1990
sation Committee
Edward Blumenfeld Member of Audit and September 1988
Investment Committees
Samuel M. Eisenstat Member of Audit Committee December 1986
and Alternate Member of
Investment Committee
Edwin J. Glickman Member of Investment October 1980
and Compensation
Committees
Arthur H. Goldberg Member of Audit and July 1988
Compensation Committees
William A. Rosoff _________ January 1990
Alfred D. Stalford Member of Compensation April 1983
and Investment
Committees
* Includes periods served in similar capacities for the Predecessor
Programs.
Messrs. Pashcow and Liechtung are described in "Business -
Executive Officers of the Trust" in Item 1 of this report.
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Stephen R. Blank, age 49, has been a Managing Director of
Oppenheimer & Co., Inc. since November 1, 1993. Prior to joining Oppenheimer Mr.
Blank was a Managing Director, Real Estate Corporate Finance, of Cushman &
Wakefield, Inc. for four years. Prior to joining Cushman & Wakefield, Mr. Blank
was associated for ten years with Kidder, Peabody & Co. Incorporated as a
Managing Director of the firm's Real Estate Group. Mr. Blank graduated from
Syracuse University in 1967 and was awarded a Masters Degree in Business
Administration (Finance Concentration) by Adelphi University in 1971. He is a
member of the Urban Land Institute and the American Society of Real Estate
Counselors. He has lectured before the Practicing Law Institute, the New York
University Real Estate Institute, the Urban Land Institute and the International
Council of Shopping Centers. He is a Trustee of the Crohn's & Colitis Foundation
of America, Inc.
Edward Blumenfeld, age 54, has been a principal of Blumenfeld
Development Group, Ltd., a real estate development firm principally engaged in
the development of commercial properties, since 1978.
Samuel M. Eisenstat, age 55, has been engaged in the private
practice of law for more than five years. Mr. Eisenstat serves as a director of
various mutual funds managed by Sun America Asset Management and of UMB Bank &
Trust Co. Mr. Eisenstat received a B.S. degree from New York University School
of Commerce in 1961 and graduated from New York University School of Law.
Edwin J. Glickman, age 62, has been Executive Vice President
of Capital Lease Funding Corp. since January, 1995. Capital Lease makes loans to
owners of properties net leased to investment grade tenants, funding such loans
through securitization. Prior to that, Mr. Glickman was Chairman of the Glickman
Organization, Inc. from April, 1991 to December 1994, and Chairman of the
Executive Committee of Schoenfeld Glickman Maloy Inc. from May 1989. From 1977
to 1993 he was also associated with Sybedon Corporation as Vice Chairman. In
such positions he has been engaged in real estate financial services, including
mortgage brokerage, arranging joint ventures and equity financing. Mr. Glickman
is a graduate of Dartmouth College. He is a guest speaker on real estate-related
subjects at a number of conferences. Mr. Glickman is an Adjunct Assistant
Professor of the Real Estate Institute of New York University.
Arthur H. Goldberg, age 52, has been President of Manhattan
Associates, LLC, a merchant and investment banking firm since February 1994.
Prior to that, Mr. Goldberg was Chairman of Reich & Company, Inc. (formerly,
Vantage Services, Inc.), a securities brokerage and investment brokerage firm
from January 1990 to December 1993. Mr. Goldberg was employed by Integrated
Resources, Inc. from its inception in December 1968, as President and Chief
Operating Officer from May 1973 and as Chief Executive
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Officer from February 1989, until January 1990. On February 13, 1990, Integrated
Resources, Inc. filed a voluntary petition for reorganization under Chapter 11
of the United States Bankruptcy Code. Mr. Goldberg has been a member of the Bar
of the State of New York since 1967. He is a graduate of New York University
School of Commerce and its School of Law.
William A. Rosoff, age 51, has been associated with the law
firm of Wolf, Block, Schorr and Solis-Cohen since 1969, a partner since 1975.
Mr. Rosoff is a past chairman of the firm's Executive Committee and is presently
the firm's Financial Planning Partner, a member of its Executive Committee and
the chairman of its tax department. Mr. Rosoff serves on the Legal Activities
Policy Board of Tax Analysts, the Tax Practice Advisory Board for Little, Brown
& Company, and the Advisory Board for Warren, Gorham and Lamont's Journal of
Partnership Taxation. He is a fellow of the American College of Tax Counsel. Mr.
Rosoff serves as a member of the Board of Directors of the Philadelphia Chapter
of the American Jewish Congress and the Locust Club of Philadelphia, and is a
member of the Board of Regents of the Philadelphia chapter of the American
Society for Technion. Mr. Rosoff earned a B.S. degree with honors from Temple
University in 1964, and earned an LL.B. magna cum laude from the University of
Pennsylvania Law School in 1967.
Alfred D. Stalford, age 72, was previously engaged in the
business of mortgage brokerage and real estate sales, principally involving
commercial properties. He is presently retired from the mortgage brokerage
business. Mr. Stalford has extensive mortgage loan and real estate experience
and has served on a number of government commissions, including the California
Commission of Housing and Community Development, the Board of Directors of the
National Housing Conference, vice chairman of the Special Advisory Committee on
Disposition of certain California surplus land and the Board of Directors of the
California Exposition and Fair Corporation, a nonprofit corporation established
by the State of California (of which he served as Chairman of the Board for a
period of time).
In addition, the RPS Board established the Special Acquisition
Committee, to assist the Trust's management in the negotiation of the Proposed
Transaction and related transactions. Messrs. Blank, Goldberg and Rosoff are the
members of the Special Acquisition Committee. See Item 11, "Executive
Compensation -- Compensation of Trustees" for a discussion of the compensation
of Messrs. Blank and Goldberg for their services as members of the Special
Acquisition Committee.
There are no family relationships between any Trustee or
executive officer and any other Trustee or executive officer of the Trust;
however, Steven Liechtung, the son of Herbert Liechtung, is a Vice President of
the Trust.
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Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Trust's officers and Trustees, and persons who own more
than ten percent of a registered class of the Trust's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission") and the New York Stock Exchange. Officers,
Trustees and greater than ten percent shareholders are required by regulation of
the Commission to furnish the Trust with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Trust believes that, during the
fiscal year ended December 31, 1993, all filing requirements applicable to its
officers, Trustees and greater than ten percent beneficial owners were complied
with.
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32
Item 11. Executive Compensation.
Cash Compensation
The following table sets forth information with respect to the
cash compensation paid by the Company for services rendered during the year
ended December 31, 1994 to Messrs. Liechtung and Pashcow, the Trust's
Co-Principal Executive Officers, and the three other most highly compensated
executive officers, whose total remuneration from the Trust exceeded $100,000
for such period:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
-------------------------------------------------- ----------------------
(a) (b) (c) (d) (e) (g) (i)
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
NAME AND COMPEN- OPTIONS/ COMPEN-
PRINCIPAL SALARY BONUS SATION SARS SATION
POSITION YEAR ($)(1) ($)(2) ($)(3) (#) (4) ($)(5)
--------- ---- ------ ------ ------ ------- ------
Herbert 1994 321,650 38,342 16,054 8,100
Liechtung 1993 312,561 26,903 11,049 12,735
President 1992 300,330 11,022 35,289 15,537
Joel M. 1994 321,650 19,172 97,828 8,100
Pashcow 1993 312,561 13,452 51,358 12,735
Chairman 1992 300,330 5,511 36,096 15,537
Stanley 1994 163,072 -- 1,404 8,100
Rappoport 1993 158,314 -- 1,404 8,625
Executive 1992 150,000 -- 1,404 10,288
Vice
President
Edwin R. 1994 111,514 18,000 3,029 7,535
Frankel 1993 108,262 18,000 348 6,837
Senior Vice 1992 104,500 18,000 348 8,343
President and
Treasurer
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John J. 1994 110,552 17,600 1,404 7,372
Johnston, Jr. 1993 107,330 17,600 1,404 6,822
Vice Presi- 1992 103,600 17,600 1,404 8,333
dent-Real
Estate Counsel
and Secretary
---------------------
(1) Includes car allowances payable to Messrs. Liechtung and Pashcow pursuant
to the terms of their respective employment agreements.
(2) Bonus amounts earned by Messrs. Liechtung and Pashcow for any year
represents Distribution Incentive Bonus and Origination Bonus for that
fiscal year earned pursuant to ten-year employment agreements expiring
December 31, 1998.
(3) Includes perquisites and other personal benefits for such officer,
including certain life insurance premium payments paid on behalf of the
named officers. Of such amount, $76,857 was paid during 1994 for tax and
accounting services performed on behalf of Mr. Pashcow for the years 1992,
1993 and 1994.
(4) Each of the named officers were granted options to purchase Shares on
December 6, 1989, all of which are currently exercisable. The exercise
price of all such options is $5.75 per Share.
(5) Includes discretionary contributions by the Trust to the RPS Realty Trust
Retirement Savings Plan for such named officer's account, including
forfeitures, if any.
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Employment Agreements
Existing Employment Arrangements. Herbert Liechtung and Joel
M. Pashcow, the President and Chairman, respectively, of the Trust, are employed
pursuant to ten-year employment agreements, expiring December 31, 1998, which
were acquired by the Trust in the Acquisition. The employment agreements provide
each of Messrs. Liechtung and Pashcow with a base annual salary, adjusted
annually by a percentage equal to the increase in the Consumer Price Index - All
Items for the New York Metropolitan Area (which increase in any year may not be
less than 3% nor more than 8%). The base annual salary for the year ended
December 31, 1994 was $312,050 for each of Messrs. Liechtung and Pashcow.
Pursuant to the terms of their respective employment
agreements, Mr. Liechtung and Mr. Pashcow are each entitled to receive a
Distribution Incentive Bonus in an amount equal to 3.75% of the amount, if any,
by which the Trust's Qualifying Distributions (as defined below) in any calendar
year exceed the Target Distribution (as defined below) for that year. The Target
Distribution is determined on a cumulative, non-interest bearing basis,
commencing January 1, 1989. "Qualifying Distributions" are defined as all
distributions by the Trust attributable to any taxable year to the extent they
do not exceed 100% of REIT Taxable Income. The "Target Distribution" for each
year is $22,000,000, subject to certain adjustments. Neither Mr. Liechtung nor
Mr. Pashcow received a Distribution Incentive Bonus for 1994.
Messrs. Liechtung and Pashcow are each entitled to receive
100% of the Distribution Incentive Bonus for any period they are employed by the
Trust, through the year 2001. If Mr. Liechtung's or Mr. Pashcow's employment
terminates prior to December 31, 1998, each is entitled to receive a portion of
the Distribution Incentive Bonus payable in the year of such termination, based
upon a vesting schedule set forth in their employment agreements; based upon
such schedule, as of December 31, 1994, Messrs. Liechtung and Pashcow each would
be entitled to receive 100% of any such bonus payable upon termination of their
employment. If the employment of either Mr. Liechtung or Mr. Pashcow is
terminated on or after December 31, 1998, each of Messrs. Liechtung and Pashcow
are entitled to receive the Distribution Incentive Bonus through 2001, based
upon a formula set forth in their employment agreements.
Mr. Liechtung and Mr. Pashcow receive Origination Bonuses
equal to .235% and .1175%, respectively, of the amount of investments for which
a formal commitment is executed by the Trust during the term of their respective
employment agreements and which are subsequently consummated, subject to
reduction for investments of less than three years. Mr. Liechtung and Mr.
Pashcow received Origination Bonuses of $38,342 and $19,172, respectively,
during 1994.
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In the event of death during the term of the employment
agreement, the officer's legal representatives will be entitled to receive his
base salary for an additional period equal to the lesser of (i) the remaining
term of the employment agreement or (ii) 24 months from the date of death, as
well as any Distribution Incentive Bonuses and Origination Bonuses due or to
become payable. In the event an officer is unable to perform his duties on
account of illness, injury or other physical or mental incapacity which
continues for a period of more than six months, the Trust may terminate the
employment agreement. In such event, the officer will be entitled to receive his
base salary for an additional period equal to the lesser of (i) the remaining
term of the employment agreement or (ii) 24 months from the date of termination,
as well as any Distribution Incentive Bonuses and Origination Bonuses due or to
become payable. See Item 1, "Business -- Executive Officers of the Trust" for a
discussion of Mr. Liechtung's recent surgery.
Messrs. Liechtung and Pashcow have agreed during the term of
the employment agreements, and for two years after such time as the officer
voluntarily ceases to be an employee of the Trust prior to the expiration of
such term (except for reasons of material breach by the Trust or the occurrence
of an acquisition event described in the following paragraph), not to engage in
any business ventures which compete with the Trust's mortgage lending business.
In the event of, among other things, a change in the business
carried on by the Trust having the effect that its business ceases to be
primarily the business of mortgage lending (a "Business Change Event"), each of
Messrs. Pashcow and Liechtung, upon the delivery of timely notice to the Trust,
may terminate his employment agreement with the Trust. In such event, the Trust
must pay to the officer a sum calculated by multiplying the average of the
officer's annual compensation for the three calendar years prior to the year in
which the event occurs by: (i) four, if the event occurs in calendar years 1993
through 1995; or (ii) three, if the event occurs in calendar years 1996 through
1998. The Trust and Mr. Liechtung have agreed that the consummation of the
Proposed Transaction would constitute a "Business Change Event" for purposes of
the Liechtung Employment Agreement. See Item 1, "Business -- Recent
Developments; Proposed Transaction."
Liechtung Termination Agreement. Throughout the negotiations
between the Trust and Ramco regarding the Proposed Transaction, Ramco has
insisted that any transaction would be subject to the prior termination of the
Employment Agreements and/or the satisfaction of the Trust's remaining
obligations thereunder. In view of (a) the fact that consummation of the
Proposed Transaction would constitute a "Business Change Event" and (b) the
Trust's desire to pursue a transaction with Ramco, the trustees determined that
it was necessary to agree on means
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36
for terminating the Liechtung Employment Agreement and satisfying the Trust's
obligations thereunder. After a series of meetings with each employee, the RPS
Board approved the Liechtung Termination Agreement.
The Liechtung Termination Agreement provides, among other
things, for (a) payment of the Business Change Event payments due under such
agreement, (b) a payment to be made to Mr. Liechtung upon consummation of the
Proposed Transaction equal to (i) 14 months' salary, (ii) projected origination
bonuses that would have been earned by Mr. Liechtung during such 14-month
period, and (iii) the value of certain perquisites that would have been received
by Mr. Liechtung during such 14-month period; and (c) a one-time bonus payment
to Mr. Liechtung in the amount of $500,000, in payment for Mr. Liechtung's
extraordinary efforts with respect to the Proposed Transaction. These payments
will be payable upon consummation of the Proposed Transaction (or certain types
of "Alternative Transactions," as defined in the Liechtung Termination
Agreement). In addition, pursuant to the Liechtung Termination Agreement, the
Trust intends, in connection with the Proposed Transaction, to propose to its
Shareholders the amendment of certain provisions of the Trust's employee stock
plan. The payments to be made to Mr. Liechtung pursuant to the Liechtung
Termination Agreement, if all of such payments were made (but not including
payments due under the existing Employment Agreement with Mr. Liechtung), would
equal approximately $2,462,000. Pursuant to the terms of the Liechtung
Termination Agreement, Mr. Liechtung has agreed, subject to earlier termination
as set forth in the Liechtung Employment Agreement, to continue in the
employment of the Trust through the date of consummation of the Proposed
Transaction.
The Board has also approved the material terms of a
termination agreement with Mr. Pashcow, but no such agreement has been entered
into.
Severance and Other Arrangements with Executive Officers and Certain Key
Employees
On August 9, 1994, the RPS Board adopted a resolution
authorizing the Trust to adopt a severance policy pursuant to which each
employee (other than Messrs. Liechtung and Pashcow, who are not covered by such
policy) whose employment with the Trust is terminated after such date would be
entitled to receive from the Trust an amount equal to one month's salary for
each year that such employee was employed by the Trust (and/or the Trust's
predecessors, including the Predecessor Programs), up to a maximum of 12 months'
salary. In addition, in connection with the negotiation of the Proposed
Transaction, the RPS Board determined that it was necessary to enter into
arrangements with certain of the executive officers and key employees of the
Trust, to induce such individuals to remain in the employ of the Trust at least
through the consummation of the Proposed Transaction.
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37
Accordingly, on August 9, 1994, the RPS Board authorized the payment to Messrs.
Edwin Frankel, Stanley Rappoport and Steven Liechtung of bonuses (in addition to
the severance arrangements described above) equal to 100% of six months' salary
(with respect to Mr. Frankel) and 25% of six months' salary (with respect to
Messrs. Rappoport and Steven Liechtung), which bonuses would be paid only in the
event that such employee is employed by the Trust upon the consummation of the
Proposed Transaction. On February 8, 1995, in recognition of the fact that the
Proposed Transaction was not expected to be consummated for several more months,
the Compensation Committee of the RPS Board and the members of the Special
Acquisition Committee authorized an increase in Mr. Frankel's bonus to 100% of
seven months' salary; authorized the payment to Mr. Rappoport of severance pay
equal to 100% of six months' base salary (in lieu of the standard severance
arrangements described above), in addition to the bonus payment referred to
above; and authorized an increase in Mr. Steven Liechtung's bonus to 100% of
four months' salary. The payments to be made to each of Messrs. Frankel,
Rappoport and John Johnston, Jr., each of whom are executive officers of the
Trust, pursuant to the severance and/or bonus arrangements described above,
would be in excess of $100,000, assuming that the Proposed Transaction is
ultimately consummated.
Compensation Plans
The Trust maintains a retirement savings plan for all
full-time employees meeting certain criteria as to age and length of employment,
including the Trust's officers. The plan permits eligible employees to provide
for salary reduction contributions in amounts not in excess of the lesser of 20%
of their annual compensation or an amount established annually by the Secretary
of the Treasury, which was $9,240 for the year ended December 31, 1994). The
plan permits the Trust, in its discretion, to make matching contributions for
those employees who provide for salary reduction contributions, in amounts equal
to 25% multiplied by the lesser of (i) the employee's elective salary reduction
or (ii) 9% of the employee's annual compensation. The plan also permits the
Trust, in its discretion, to make an additional contribution in such amount as
it deems appropriate, to be allocated among all eligible employees, whether or
not they have made elective salary reductions. The total of all contributions,
including elective salary reductions, matching contributions, and additional
employer contributions may not exceed 15% of the annual compensation of all
participants.
Participants in the plan are 100% vested in their elective
accounts at all times. Vesting in the matching and additional employer
contributions is 20% after two years of service, and 20% each year thereafter,
with 100% vesting after six years of service. Withdrawals may not be made prior
to attaining the age of 59-1/2 years, except in the event of total
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38
and permanent disability, retirement, termination of employment or proven
hardship.
The Trust adopted and its Shareholders approved the 1989
Employees' Stock Option Plan. The plan provides for the granting to employees of
the Trust of options to purchase up to an aggregate of 1,550,000 Shares. The
plan is administered by the Compensation Committee of the Board of Trustees,
which determines the individuals to whom and the times at which options are
granted and the number of Shares to be subject to each option.
Options granted under the 1989 Employees' Stock Option Plan
become exercisable after one year following the date of grant with respect to
20% of the Shares covered thereby, with additional 20% increments becoming
exercisable cumulatively on the next four succeeding anniversary dates from the
date of grant. Shares subject to options may be purchased for cash and/or by
delivery of Shares having an equivalent fair market value. The exercise price is
100% of the fair market value of the Shares on the date of grant. Unexercised
options expire ten years from their date of grant.
On December 6, 1989, the Trust granted options to purchase an
aggregate of 1,355,000 Shares, at an exercise price of $5.75 per Share, under
the 1989 Employees' Stock Option Plan, of which options to purchase 1,325,000
Shares remain outstanding as of March 15, 1995. The following table sets forth
information as to all options to purchase the Shares which were granted pursuant
to the 1989 Employees' Stock Option Plan to each of the named officers in the
Summary Compensation Table:
NUMBER OF NUMBER OF NUMBER OF
SHARES SUB- SHARES SHARES AC-
NAME OF INDIVIDUAL JECT TO OP- VESTED QUIRED UPON
OR NUMBER IN GROUP TIONS GRANTED AS OF 3/15/95 EXERCISE
--------------------- ------------- ------------- -----------
Herbert Liechtung 600,000 600,000 __
Joel M. Pashcow 600,000 600,000 __
Edwin R. Frankel 50,000 50,000 __
John J. Johnston, Jr. 50,000 50,000 __
Stanley Rappoport __ __
As of March 15, 1995, to the best of the Trust's knowledge, no
options issued pursuant to the 1989 Employees' Stock Option Plan had been
exercised.
Compensation Committee Report
The Compensation Committee of the RPS Board (the "Compensation
Committee") is responsible for administering the Trust's senior management
compensation program. The Compensation Committee is composed entirely of
independent Trustees who are
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39
not employees of the Trust; the individual members are listed below. None of
these individuals has any interlocking or other relationships with the Trust
that would call into question their independence as Compensation Committee
members.
Except as otherwise described below, the Compensation
Committee has general review authority over compensation levels of, and sets the
compensation of, all corporate officers and key management personnel of the
Trust. The Compensation Committee also administers employee benefit and
incentive compensation programs, and considers and recommends to the Board new
benefit programs.
Pursuant to recently adopted rules designed to enhance
disclosure of companies' policies toward executive compensation, set forth below
is a report of the Compensation Committee addressing the Trust's compensation
policies for 1994 as they affected the Trust's two principal executive officers,
Herbert Liechtung, the President of the Trust, and Joel M. Pashcow, the Chairman
of the Trust, and its three other most highly paid executives, Stanley
Rappoport, John J. Johnston, Jr. and Edwin R. Frankel, the Executive Vice
President, Vice President-Real Estate Counsel and Secretary and Senior Vice
President and Treasurer, respectively, of the Trust.
The compensation of each of Messrs. Liechtung and Pashcow is
set pursuant to a ten-year employment agreement between such individual and the
Trust, the terms of which are described above under the heading "Employment
Agreements." As described in such section, these employment agreements contain
provisions for, among other things, calculating the base salary paid to each of
Messrs. Liechtung and Pashcow, as well as the formulae used to determine bonus
payments to such individuals.
Base salary for each of Mr. Liechtung and Mr. Pashcow is
adjusted annually to reflect cost-of-living increases, subject to certain
limitations. The bonus payments payable to Messrs. Liechtung and Pashcow
pursuant to their respective employment contracts relates directly to the
Trust's performance and the individual performance of such officers; the
Distribution Incentive Bonus is payable only to the extent that distributions to
the Trust's Shareholders during a fiscal year exceed a specified amount, and the
Origination Bonus is paid only to the extent that the Trust succeeds in making
certain long-term investments. As described above, Messrs. Liechtung and Pashcow
did not receive a Distribution Incentive Bonus for 1994, and Origination Bonuses
paid during 1994 equalled $38,342 for Mr. Liechtung and $19,172 for Mr. Pashcow.
The Trust also provided certain other benefits to Messrs. Liechtung and Pashcow
during 1994 pursuant to such employment agreements in the form of non-cash
compensation, for items such as professional fees and insurance. In addition, as
described above under the heading "Compensation Plans," in 1989 the Trust issued
to each of
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Messrs. Liechtung and Pashcow, pursuant to the provisions of the Trust's 1989
Employees' Stock Option Plan, options to purchase up to 600,000 of the Trust's
Shares. Messrs. Liechtung and Pashcow also participate in medical, retirement
and other benefit plans available to other officers and employees of the Trust.
Messrs. Liechtung and Pashcow have participated in the deliberations of the
Committee, but did not vote, with respect to the compensation of the other
members of the Trust's senior management.
The Compensation Committee did not negotiate or separately
pass upon the payments to be made to Mr. Liechtung pursuant to the Liechtung
Termination Agreement. As described above, the terms of the Liechtung
Termination Agreement were negotiated by the Special Acquisition Committee, and
were unanimously approved by the members of the RPS Board (other than Messrs.
Liechtung and Pashcow).
The compensation package offered by the Trust to its senior
executives is intended to enable the Trust to attract, motivate and retain
qualified senior management, taking into account both annual and long-term
performance goals of the Trust and recognizing individual initiative and
achievements. Executive compensation generally consists of base salary and
annual bonus, as well as a combination of benefit programs. Annual bonus
payments for such officers were generally set at a minimum level and are viewed
by the Compensation Committee and such officers as a component of base
compensation. Bonus payments in excess of such minimum amount may be paid by the
Trust, upon the recommendation of the Compensation Committee after taking into
account the views of Messrs. Liechtung and Pashcow, to reward superior
individual performance and improvement in the performance of the Trust. Mr.
Rappoport receives no annual bonus payment; his entire compensation package is
comprised of base salary plus participation in the Trust's benefit programs.
In view of the recent adverse economic climate and its effect
on the real estate industry generally and the Trust's performance specifically,
compensation increases for Messrs. Rappoport, Johnston and Frankel were limited
this past year to cost-of-living adjustments to base salary. In addition,
Messrs. Johnston and Frankel received bonus payments equal to the bonus payments
paid to such officers for 1993. As stated above, these bonuses constitute a
component of such officers' base compensation; the Compensation Committee
believes that failure to pay such bonuses could adversely affect morale and put
the Trust at a competitive disadvantage in its ability to attract and retain
qualified individuals. The aggregate compensation paid to Messrs. Rappoport,
Johnston and Frankel for 1994 is less than that paid in 1993, after taking into
account the impact of inflation. In addition to the compensation described
above, Messrs. Johnston and Frankel each received, in 1989, options to
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purchase the Trust's Shares pursuant to the Trust's 1989 Employees' Stock Option
Plan.
In addition, as described above under "Severance and Other
Arrangements with Executive Officers and Certain Key Employees", the
Compensation Committee reviewed the additional bonuses and other payments to be
paid to Messrs. Frankel and Rappoport which were authorized by the RPS Board in
order to induce such individuals to remain in the employment of the Trust
through the consummation of the Proposed Transaction. (The Compensation
Committee did not separately approve the severance and other arrangements
approved by the RPS Board in August, 1994.) As described above, the Compensation
Committee, after taking into account the extended time period during which the
Proposed Transaction was expected to be consummated, determined to increase such
payments (as described above). The Compensation Committee determined that the
services provided by Messrs. Frankel and Rappoport were essential to the Trust's
well-being, and that failure to retain the services of such individuals, at a
time when the Proposed Transaction is still being negotiated, could have an
adverse effect on the Trust. Accordingly, the Compensation Committee, together
with the Special Acquisition Committee, authorized the special bonus and other
payments to Messrs. Frankel and Rappoport which are described above.
The Compensation Committee has reviewed the Trust's
compensation policies in light of the addition of Section 162(m) to the Code,
which generally limits deductions for compensation paid to certain executive
officers to $1,000,000 per annum (certain performance based compensation is not
subject to that limit), and has determined that the compensation levels of the
Trust's executive officers (other than Messrs. Liechtung and Pashcow, whose
compensation is not determined by the Compensation Committee) are not at a level
which would be affected by such amendments. The Compensation Committee intends
to continue to review the application of Section 162(m) to the Trust with
respect to any future compensation programs which are considered by the Trust.
MEMBERS OF THE COMPENSATION COMMITTEE:
STEPHEN R. BLANK ARTHUR H. GOLDBERG
EDWIN J. GLICKMAN ALFRED D. STALFORD
Compensation of Trustees
The Independent Trustees each received $20,000 in compensation
for serving as a Trustee in 1994, plus reimbursement of travel expenses and
other out-of-pocket disbursements incurred in connection with attending any
meetings. Trustees do not receive any additional compensation for attending
meetings or for serving on any committees of the Board. Messrs. Pashcow,
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Liechtung and Rosoff do not receive any compensation for their services as
Trustees.
In April 1989, the Board of Trustees adopted the 1989
Trustees' Stock Option Plan, which plan was subsequently approved by the its
Shareholders. Pursuant to the plan, each Trustee who is not an officer or
employee of the Trust automatically received, on the later of the date of
approval of the plan or the initial date of election as a Trustee, and every two
years thereafter if he continued as a Trustee, an option to purchase the number
of Shares equal to 0.1% of the aggregate number of shares then outstanding. In
October 1991, the Board of Trustees modified and amended the 1989 Trustees'
Stock Option Plan to provide that the remaining options due to be issued after
October 8, 1991 be issued pro rata to each of the seven eligible Trustees,
notwithstanding the date on which such Trustees became eligible to receive such
options. All options available for grant under the plan have been granted.
Options granted under the 1989 Trustees' Stock Option Plan
became exercisable after one year following the date of grant with respect to
50% of the Shares covered thereby, with the remaining 50% became exercisable on
the next succeeding anniversary date from the date of grant. Shares subject to
the options may be purchased for cash and/or by delivery of Shares having an
equivalent fair market value. The exercise price is 100% of the fair market
value of the Shares on the date of grant. Unexercised options expire ten years
from their date of grant.
On November 28, 1989 and November 28, 1991, each of Messrs.
Blumenfeld, Eisenstat, Glickman, Goldberg and Stalford were granted options to
purchase 29,622 Shares at an exercise price of $5.375 per Share and 20,378
Shares at an exercise price of $5.25 per Share, respectively. On January 29,
1990 and January 29, 1992, each of Messrs. Rosoff and Blank were granted options
to purchase 29,622 Shares at an exercise price of $5.75 per Share and 20,378
shares at an exercise price of $5.375 per Share, respectively. All options
granted under the 1989 Trustees' Stock Option Plan are currently exercisable. To
the best of the Trust's knowledge, as of March 15, 1995 no options issued
pursuant to the 1989 Trustees' Stock Option Plan had been exercised.
Compensation of Certain Special Acquisition Committee Members
On April 17, 1994, the RPS Board authorized the payment of
$75,000 to be paid to each of Messrs. Blank and Goldberg in their capacities as
members of the Special Acquisition Committee. On October 11, 1994, in
recognition of the expectation that the Proposed Transaction would not be
consummated for several more months, the RPS Board authorized the payments to
each of Messrs. Blank and Goldberg of an additional $50,000 in their capacities
40
43
as members of the Special Acquisition Committee. Mr. Rosoff does not receive any
compensation for his service on such committee.
41
44
Performance Graph
100
Equity REIT Index Mortgage REIT Index S&P 500 RPS RPS Stock
Dec-89 100.00 100.00 100.00 100.00 $5.625
95.85 101.08 93.29 108.71 5.875
95.18 91.69 94.49 108.71 5.875
96.13 90.12 96.98 106.40 5.750
Apr-90 94.46 89.77 94.58 106.40 5.750
94.38 90.25 103.81 114.72 6.000
86.01 89.27 103.08 112.33 5.875
95.14 87.09 102.75 109.94 5.750
Aug-90 88.29 84.79 93.47 113.77 5.750
82.04 78.64 88.87 108.82 5.500
79.28 75.94 88.54 91.51 4.625
84.90 81.12 94.25 102.89 5.000
Dec-90 84.65 81.63 98.83 110.60 5.375
93.91 88.01 101.11 115.13 5.375
95.61 94.64 108.35 123.16 5.750
103.90 100.63 110.93 131.19 6.125
Apr-91 106.53 102.80 111.24 123.16 5.750
107.71 107.54 116.00 135.48 6.125
104.71 105.08 110.70 138.24 6.250
106.82 106.32 115.88 135.48 6.125
Aug-91 106.39 106.82 118.60 131.61 5.750
108.99 109.94 116.65 131.61 5.750
107.79 111.73 118.22 117.30 5.125
107.19 111.70 113.44 123.60 5.250
Dec-91 114.88 107.62 126.41 114.77 4.875
120.46 115.15 124.06 127.13 5.250
117.58 113.52 125.64 133.18 5.500
115.63 112.83 123.18 124.10 5.125
Apr-92 115.21 114.47 126.77 118.05 4.875
120.25 114.48 127.45 130.76 5.250
118.68 112.87 125.60 133.87 5.375
123.83 113.24 130.66 140.10 5.625
Aug-92 124.21 106.40 128.03 140.72 5.500
126.77 109.55 129.50 140.72 5.500
126.61 108.04 129.96 137.53 5.375
129.29 109.10 134.34 141.36 5.375
Dec-92 131.62 109.68 136.10 131.50 5.000
140.07 117.61 137.10 138.73 5.125
147.60 119.38 138.95 142.12 5.250
160.11 121.73 141.94 115.05 4.250
Apr-93 153.05 114.17 138.46 104.90 3.875
150.63 114.67 142.20 107.06 3.875
155.51 116.50 142.67 96.70 3.500
158.23 118.83 141.99 96.70 3.500
Aug-93 162.13 120.39 147.40 102.36 3.625
170.05 125.40 146.31 102.36 3.625
186.81 126.82 149.28 116.48 4.125
157.76 124.70 147.88 108.15 3.750
Dec-93 157.49 125.64 149.70 111.76 3.875
162.08 131.18 154.71 114.07 3.875
169.12 126.50 150.54 117.75 4.000
162.85 116.67 143.99 114.07 3.875
Apr-94 165.62 116.93 145.86 103.03 3.500
169.31 115.55 148.24 123.78 4.125
165.85 112.15 144.58 127.53 4.250
165.04 114.67 149.36 131.28 4.375
Aug-94 165.53 117.57 155.44 133.68 4.375
162.46 111.57 151.70 133.68 4.375
158.82 105.57 155.17 126.04 4.125
151.43 99.40 149.47 128.49 4.125
Dec-94 162.49 95.11 151.66 136.27 4.375
Shares
Purchased
With
Dividend Shares Total Dividend Value of Index
Payments Owned Dividends Reinvestment Holdings Value
Dec-89 1.000 $0.0000 0.00000 $5.625 100.00
$0.24 1.041 0.2400 0.0409 $6.115 108.71
1.041 0.0000 $6.115 108.71
1.041 0.0000 $5.985 106.40
Apr-90 1.041 0.0000 $5.985 106.40
0.20 1.076 0.2082 0.0347 $6.453 114.72
1.076 0.0000 $6.319 112.33
1.076 0.0000 $6.184 109.94
Aug-90 0.20 1.113 0.2151 0.0374 $6.399 113.77
1.113 0.0000 $6.121 108.82
1.113 0.0000 $5.147 91.51
0.20 1.157 0.2226 0.0445 $5.787 102.89
Dec-90 1.157 0.0000 $6.221 110.60
0.22 1.205 0.2546 0.0474 $6.476 115.13
1.205 0.0000 $6.928 123.16
1.205 0.0000 $7.380 131.19
Apr-91 1.205 0.0000 $6.928 123.16
0.20 1.244 0.2410 0.0393 $7.621 135.48
1.244 0.0000 $7.776 138.24
1.244 0.0000 $7.621 135.48
Aug-91 0.20 1.287 0.2488 0.0433 $7.403 131.61
1.287 0.0000 $7.403 131.61
1.287 0.0000 $6.598 117.30
0.15 1.324 0.1931 0.0368 $6.952 123.60
Dec-91 1.324 0.0000 $6.456 114.77
0.15 1.362 0.1986 0.0378 $7.151 127.13
1.362 0.0000 $7.491 133.18
1.362 0.0000 $6.981 124.10
Apr-92 1.362 0.0000 $6.640 118.05
0.15 1.401 0.2043 0.0389 $7.355 130.76
1.401 0.0000 $7.530 133.87
1.401 0.0000 $7.881 140.10
Aug-92 0.15 1.439 0.2102 0.0382 $7.916 140.72
1.439 0.0000 $7.916 140.72
1.439 0.0000 $7.736 137.53
0.15 1.479 0.2159 0.0402 $7.952 141.36
Dec-92 1.479 0.0000 $7.397 131.50
0.15 1.523 0.2219 0.0433 $7.804 138.73
1.523 0.0000 $7.994 142.12
1.523 0.0000 $6.471 115.05
Apr-93 1.523 0.0000 $5.900 104.90
0.08 1.554 0.1218 0.0314 $6.022 107.06
1.554 0.0000 $5.439 96.70
1.554 0.0000 $5.439 96.70
Aug-93 0.08 1.588 0.1243 0.0343 $5.758 102.36
1.588 0.0000 $5.758 102.36
1.588 0.0000 $6.552 116.48
0.08 1.622 0.1271 0.0339 $6.084 108.15
Dec-93 1.622 0.0000 $6.286 111.76
0.08 1.656 0.1298 0.0335 $6.416 114.07
1.656 0.0000 $6.623 117.75
1.656 0.0000 $6.416 114.07
Apr-94 1.656 0.0000 $5.795 103.03
0.08 1.688 0.1325 0.0321 $6.963 123.78
1.688 0.0000 $7.174 127.53
1.688 0.0000 $7.385 131.28
Aug-94 0.08 1.719 0.1350 0.0309 $7.520 133.68
1.719 0.0000 $7.520 133.68
1.719 0.0000 $7.090 126.04
0.08 1.752 0.1375 0.0333 $7.227 128.49
Dec-94 1.752 0.0000 $7.665 136.27
42
45
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
As of March 15, 1995, the following person was known by the
Trust to be the beneficial owner of more than five percent of the Shares of the
Trust (based solely upon a Schedule 13D filed with the Securities and Exchange
Commission in December 1989):
AMOUNT AND
NAME AND NATURE OF PERCENT
ADDRESS OF BENEFICIAL OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
-------------- -------------------------- ---------- -------
Shares of Poff & Co. (Trustee for 1,724,595 6.1%
beneficial Policemen and Firemen Shares
interest, Retirement System of owned
$.10 par value the City of Detroit) directly
c/o Manufacturers National
Bank of Detroit
P.O. Box 1319
Detroit, Michigan 48231
The following table sets forth as of March 15, 1995
information as to security ownership of each Trustee and of all Trustees and
executive officers as a group, of the Shares:
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1)(9) OF CLASS(9)
------------------------ --------------- -----------
Joel M. Pashcow (2) 1,345,234 4.7%
Herbert Liechtung (3) 978,243 3.4%
Arthur H. Goldberg (4) 245,900 *
Alfred D. Stalford (5) 54,000 *
Stephen R. Blank (6) 57,850 *
Samuel M. Eisenstat (7) 51,000 *
Edward Blumenfeld 51,000 *
William A. Rosoff (8) 69,200 *
Edwin J. Glickman 50,000 *
All Trustees and executive
officers as a group
(12 persons) 3,031,077 10.6%
-------------------------
* Less than 1% of class.
(1) All amounts are owned directly unless stated otherwise.
43
46
(2) Includes 207,127 Shares held in an IRA account for the benefit of Mr.
Pashcow, a retirement savings plan and a pension and profit sharing
account, 381,300 Shares owned by an irrevocable trust of which Mr. Pashcow
is a trustee, an irrevocable trust for his daughter and a foundation of
which Mr. Pashcow is trustee (for all of which trusts Mr. Pashcow has
shared voting and investment powers) and 600,000 Shares which Mr. Pashcow
has a currently exercisable option to purchase. Joel Pashcow disclaims
beneficial ownership of the Shares owned by the foundation and each of the
trusts.
(3) Includes 170,058 Shares owned by Mr. Liechtung's wife, 208,184 Shares held
in an IRA account for the benefit of Mr. Liechtung and a retirement
savings plan and 600,000 Shares which Mr. Liechtung has a currently
exercisable option to purchase. Mr. Liechtung disclaims beneficial
ownership of the Shares owned by his wife.
(4) Includes 156,500 Shares owned by Mr. Goldberg's wife, 15,000 Shares owned
by trusts for his daughters, 24,400 Shares owned by a pension trust and
50,000 Shares which Mr. Goldberg has a currently exercisable option to
purchase. Mr. Goldberg disclaims beneficial ownership of the Shares owned
by his wife and the trusts for his daughters.
(5) Includes 3,000 Shares held in a Keogh plan for which Mr. Stalford has sole
voting and investment power and 50,000 Shares which Mr. Stalford has a
currently exercisable option to purchase.
(6) Includes 5,650 Shares owned by trusts for Mr. Blank's daughters, 2,200
Shares held in an IRA account for the benefit of Mr. Blank, and 50,000
Shares which Mr. Blank has a currently exercisable option to purchase. Mr.
Blank disclaims beneficial ownership of the Shares owned by the trusts for
his daughters.
(7) Includes 1,000 Shares held in an IRA account for which Mr. Eisenstat has
sole voting and investment power and 50,000 Shares which Mr. Eisenstat has
a currently exercisable option to purchase.
(8) Includes 18,200 Shares held by Mr. Rosoff as trustee for his sister,
Barbara Rosoff, pursuant to a trust indenture dated December 30, 1991, and
50,000 Shares which Mr. Rosoff has a currently exercisable option to
purchase.
(9) Includes Shares subject to stock options granted by the Trust which are
currently exercisable or which will become exercisable within sixty days.
See "Executive Compensation."
44
47
Item 13. Certain Relationships and Related Transactions.
Steven Liechtung, the son of Herbert Liechtung, is a Vice
President of the Trust. Steven Liechtung received compensation aggregating
$125,614 for services rendered in all capacities to the Trust during the year
ended December 31, 1994. In addition, on December 6, 1989, Steven Liechtung was
granted options to purchase 20,000 Shares, at an exercise price of $5.75 per
share, pursuant to the 1989 Employees' Stock Option Plan. The options are
currently exercisable with respect to 100% of the Shares covered thereby. In
addition, Steven Liechtung is eligible to receive certain severance and other
payments described in Item 11, "Executive Compensation -- Severance and Other
Arrangements with Executive Officers and Certain Key Employees," which payments
would exceed $100,000, assuming that the Proposed Transaction is ultimately
consummated.
The Trust paid legal fees during 1994 of approximately $18,775
to Wolf, Block, Schorr and Solis-Cohen. In addition, in January 1995, the Trust
paid approximately $491,750 to such firm, substantially all of which related to
legal fees and disbursements incurred in connection with the Proposed
Transaction. William Rosoff, a Trustee of the Trust, is a partner in Wolf,
Block, Schorr and Solis-Cohen.
Messrs. Blank and Goldberg each received $125,000 during 1994
as compensation for their services as members of the Special Acquisition
Committee. See Item 11, "Executive Compensation -- Compensation of Certain
Members of the Special Acquisition Committee."
45
48
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.
Financial Statements, Schedules and Exhibits
(a)(1) Financial Statements
See pages FS-2 through FS-21, which are included herein.
(a)(2) Financial Statement Schedules
All schedules have been omitted because they are inapplicable,
not required, or the information is included in the financial
statements or notes thereto.
(a)(3) EXHIBITS SEQUENTIAL
PAGE NO.
----------
3.1 Amended and Restated
Declaration of Trust of the
Trust, dated October 14, 1988,
incorporated by reference to
Exhibit 3, 4(a) to the Trust's
Registration Statement on Form
S-4, File No. 33-25272.
3.2 By-Laws of the Trust adopted
December 6, 1989, incorporated
by reference to Exhibit 4.2 to
the Trust's Current Report on
Form 8-K, dated December 6,
1989.
4. Rights Agreement dated as of
December 6, 1989 between the
Trust and American Stock
Transfer & Trust Company,
incorporated by reference to
Exhibit 1 to the Trust's
Registration Statement on Form
8-A, File No. 1-10093, for the
registration of Share Purchase
Rights.
10.1 Exchange Agreement, dated as of
November 1, 1988 between the
Trust and RPS 1, incorporated
by reference to Exhibit 2A to
the Trust's Current Report on
Form 8-K, dated December 28,
1988.
46
49
10.2 Exchange Agreement dated as of
November 1, 1988 between the
Trust and RPS 2, incorporated
by reference to Exhibit 2B to
the Trust's Current Report on
Form 8-K, dated December 28,
1988.
10.3 Exchange Agreement, dated as of
November 1, 1988 between the
Trust and RPS 3, incorporated
by reference to Exhibit 2C to
the Trust's Current Report on
Form 8-K, dated December 28,
1988.
10.4 Exchange Agreement, dated as of
November 1, 1988 between the
Trust and RPS 4, incorporated
by reference to Exhibit 2D to
the Trust's Current Report on
Form 8-K, dated December 28,
1988.
10.5 Asset and Stock Purchase
Agreement dated as of November
1, 1988 among Integrated, RPS
Advisory Corp., Resources
Pension Advisory Corp. and the
Trust, including as exhibits:
(i) Note Issuance Agreement,
dated as of December 28, 1988,
by and between Integrated,
Resources Pension Advisory
Corp., and the Trust; and (ii)
Note of the Trust dated
December 28, 1988, incorporated
by reference to Exhibit 2E to
the Trust's Current Report on
Form 8-K, dated December 28,
1988.
10.6 Employment Agreement, dated
October 24, 1988, between
Resources Pension Advisory
Corp. and Joel Pashcow,
incorporated by reference to
Exhibit 10.6 to the Trust's
Annual Report on Form 10-K for
the year ended December 31,
1988.
47
50
10.7 Employment Agreement, dated
October 24, 1988, between
Resources Pension Advisory
Corp. and Herbert Liechtung,
incorporated by reference to
Exhibit 10.7 to the Trust's
Annual Report on Form 10-K for
the year ended December 31,
1988.
10.8 1989 Trustees' Stock Option
Plan, incorporated by reference
to Exhibit A to the Trust's
Proxy Statement dated October
18, 1989.
10.9 1989 Employees' Stock Option
Plan, incorporated by reference
to Exhibit B to the Trust's
Proxy Statement dated October
18, 1989.
10.10 Retirement Savings Plan of the
Trust dated September 13, 1989
incorporated by reference to
the Trust's Annual Report on
Form 10-K for the year ended
December 31, 1989.
10.11 Secured Promissory Note, dated
February 23, 1990, executed by
Rector Hylan Corporation,
incorporated by reference to
Exhibit 10.1 to the Trust's
Current Report on Form 8-K
dated February 23, 1990.
10.12 Collateral Assignment of
Mortgage and Security
Agreement, dated February 23,
1990, between Rector Hylan
Corporation and the Trust,
incorporated by reference to
Exhibit 10.2 to the Trust's
Current Report on Form 8-K
dated February 23, 1990.
48
51
10.13 Note Purchase Agreement, dated
December 27, 1991, between the
Trust and The Capitol Life
Insurance Company, incorporated
by reference to Exhibit 10.13
to the Trust's Annual Report on
Form 10-K for the year ended
December 31, 1991.
10.14 Reissued Note Number 5, dated
December 28, 1992, executed by
the Trust in favor of Anchor
National Life Insurance
Company, incorporated by
reference to Exhibit 10.14 to
the Trust's Annual Report on
Form 10-K for the year ended
December 31, 1993.
10.15 Loan Purchase Agreement dated
December 3, 1993 between the
Trust and Merged Centers,
incorporated by reference to
Exhibit 10.15 to the Trust's
Annual Report on Form 10-K for
the year ended December 31,
1993.
10.16 Agreement dated as of January
25, 1994, among the Trust,
Rector Hylan Corporation,
Rector Acquisition Corp. and
Shalva Company, Inc.,
incorporated by reference to
Exhibit 10.16 to the Trust's
Annual Report on Form 10-K for
the year ended December 31,
1993.
10.17 Assignment of Mortgages dated
January 25, 1994 between Rector
Hylan Corporation and the
Trust.
10.18 Certificate of Reduction of
Debt dated January 25, 1995,
executed by the Trust.
10.19 Agreement of Sale dated May 20,
1993 between Morristown-Chester
Plaza Associates, L.P. and
Chester Plaza Shops, Inc., as
contemplated by an amendment
thereto dated July 11, 1994.
10.20 Bargain and Sale Deed dated
July 11, 1994 between
Morristown-
49
52
Chester Plaza
Associates, L.P. and Chester
Plaza Shops, Inc.
10.21 Settlement Agreement dated as
of June, 1994 between the Trust
and Norgate Plaza Limited
Partnership.
10.22 Addendum to Settlement
Agreement dated June, 1994
between the Trust and Norgate
Plaza Limited Partnership.
10.23 Purchase Agreement dated June,
1994 between Norgate Plaza
Limited Partnership and Norgate
Shops Corp.
10.24 Addendum to Purchase Agreement
dated June, 1994 between
Norgate Shops Corp. and
Norgatge Plaza Limited
Partnership.
10.25 Quitclaim Deed dated June 13,
1994 between Norgate Plaza
Limited Partnership and Norgate
Shops Corp.
10.26 Letter of Intent dated July 14,
1994 between the Trust and
Ramco-Gershenson, Inc.
(incorporated by reference to
Exhibit 99 to the Trust's
Current Report on Form 8-K
dated July 28, 1994).
10.27 Letter Agreement dated as of
June 8, 1994 between the Trust
and Dean Witter Reynolds, Inc.
23.1 Consent of Independent Auditors
with respect to the Trust's
Registration Statement on Form
S-3, filed with the Commission
on April 25, 1989.
23.2 Consent of Independent Auditors
with respect to the Trust's
Registration Statement on Form
S-8, filed with the Commission
on November 22, 1990.
27 Financial Data Schedule
50
53
28.1 Distribution Reinvestment and
Trust Agreement, including
Distribution Reinvestment Plan,
made as of January 1, 1991
between the Trust and American
Stock Transfer and Trust
Company, incorporated by
reference to Exhibit 28.1 to
the Trust's Annual Report on
Form 10-K for the year ended
December 31, 1990.
28.2 Description of Rector Hylan
loan, incorporated by reference
into Item 1. of this Report,
from the Trust's Current Report
on Form 8-K dated February 23,
1990.
(b) Reports on Form 8-k filed during the last quarter of
the fiscal year: None.
51
54
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
RPS REALTY TRUST
Dated: March 30, 1995 By: /s/ Joel M. Pashcow
-------------------------------
Joel M. Pashcow,
Chairman
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
registrant and in the capacities and on the dates indicated.
Dated: March 30, 1995 By: /s/ Joel M. Pashcow
-------------------------------
Joel M. Pashcow,
Trustee and Chairman
(Principal Executive Officer)
Dated: March 30, 1995 By: /s/ Herbert Liechtung
-------------------------------
Herbert Liechtung,
Trustee and President
(Principal Executive Officer)
Dated: March 30, 1995 By: /s/ Stephen R. Blank
-------------------------------
Stephen R. Blank,
Trustee
Dated: March 30, 1995 By: /s/ Edward Blumenfeld
-------------------------------
Edward Blumenfeld,
Trustee
Dated: March 30, 1995 By: /s/ Samuel M. Eisenstat
-------------------------------
Samuel M. Eisenstat,
Trustee
Dated: March 30, 1995 By: Edwin J. Glickman
-------------------------------
Edwin J. Glickman,
Trustee
S-1
55
Dated: March 30, 1995 By: /s/ Arthur H. Goldberg
-------------------------------
Arthur H. Goldberg,
Trustee
Dated: March 30, 1995 By: /s/ William A. Rosoff
-------------------------------
William A. Rosoff,
Trustee
Dated: March 30, 1995 By: /s/ Alfred D. Stalford
-------------------------------
Alfred D. Stalford,
Trustee
Dated: March 30, 1995 By: /s/ Edwin R. Frankel
-------------------------------
Edwin R. Frankel,
Senior Vice President,
Treasurer
(Principal Financial and
Accounting Officer)
S-2
56
RPS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992, AND
INDEPENDENT AUDITORS' REPORT
57
RPS REALTY TRUST AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT FS-2
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1994, 1993 AND 1992:
Consolidated Balance Sheets FS-3
Consolidated Statements of Income FS-4
Consolidated Statements of Shareholders' Equity FS-5
Consolidated Statements of Cash Flows FS-6
Notes to Consolidated Financial Statements FS-7
58
[DELOITTE & TOUCHE LLP LETTERHEAD]
Two World Financial Center Telephone:(212)436-2000
New York, New York 10281-1414 Facsimile:(212)436-5000
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
RPS Realty Trust:
We have audited the accompanying consolidated balance sheets of RPS Realty Trust
and subsidiaries (the "Trust") as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1994. These consolidated
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of RPS Realty Trust and subsidiaries
as of December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
-------------------------
February 27, 1995
FS-2
59
RPS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993
MORTGAGE LOANS RECEIVABLE - Net of allowance
for possible loan losses of $11,657,236 in 1994
and $23,724,537 in 1993 $ 41,891,769 $100,692,130
INVESTMENT IN REAL ESTATE - Net 56,109,381 33,740,202
SHORT-TERM INVESTMENTS 73,781,582 37,747,388
INTEREST AND ACCOUNTS RECEIVABLE 8,607,992 9,977,893
CASH 802,384 1,053,375
DEFERRED ACQUISITION EXPENSES - Net of accumulated
amortization of $1,319,706 in 1994 and $1,121,842 in 1993 2,352,107 2,549,971
OTHER ASSETS 2,625,607 659,037
------------ ------------
TOTAL ASSETS $186,170,822 $186,419,996
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Distributions payable $ 2,279,394 $ 2,285,058
Deposits on sale of loans -- 1,365,042
Accounts payable and accrued expenses 1,292,260 1,430,273
Mortgages payable -- 5,027,023
------------ ------------
Total liabilities 3,571,654 10,107,396
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 182,599,168 176,312,600
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $186,170,822 $186,419,996
============ ============
See notes to consolidated financial statements.
FS-3
60
RPS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
REVENUES:
Interest income:
Mortgage loans $ 8,597,619 $13,990,819 $20,037,918
Short-term investments 2,604,284 1,104,562 1,598,437
Additional contingent interest and prepayment
premium income 8,405,813 3,433,116 5,250,000
Rental income 6,764,394 4,086,850 2,579,905
Gain on sale of marketable securities -- 3,942,513 --
Dividend income -- 395,185 351,000
Other 34,651 15,460 40,000
----------- ----------- -----------
26,406,761 26,968,505 29,857,260
----------- ----------- -----------
EXPENSES:
Losses on disposition of real estate/loans 227,708 -- 919,471
Allowance for possible loan losses 2,500,000 15,000,000 12,955,100
Interest on note payable -- 2,019,710 1,928,453
Interest on mortgages payable 426,414 603,152 721,031
General and administrative 2,086,318 1,912,228 2,054,377
Payroll and related 1,811,485 1,723,528 1,765,933
Property operating 1,529,731 1,206,002 725,786
Real estate tax 1,235,961 704,228 396,015
Depreciation 749,404 550,527 359,467
Amortization of deferred acquisition expense 197,864 197,864 197,864
----------- ----------- -----------
10,764,885 23,917,239 22,023,497
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEMS 15,641,876 3,051,266 7,833,763
----------- ----------- -----------
EXTRAORDINARY ITEMS -- -- 1,005,073
----------- ----------- -----------
NET INCOME $15,641,876 $ 3,051,266 $ 8,838,836
=========== =========== ===========
Per share:
Income before extraordinary items $ .55 $ .11 $ .27
Extraordinary items -- -- .04
----------- ----------- -----------
Net income $ .55 $ .11 $ .31
=========== =========== ===========
See notes to consolidated financial statements.
FS-4
61
RPS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
ADDITIONAL TOTAL
NUMBER OF PAID-IN CUMULATIVE CUMULATIVE SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS DISTRIBUTIONS EQUITY
BALANCE, JANUARY 1, 1992 28,653,021 $2,865,302 $195,591,125 $60,209,549 $ (67,494,562) $191,171,414
Shares repurchased and retired (56,700) (5,670) (287,461) - - (293,131)
Net income - - - 8,838,836 - 8,838,836
Cash distributions declared - - - - (17,158,168) (17,158,168)
Reversal of reserve for estimated
merger costs
---------- ---------- ------------ ----------- ------------- ------------
BALANCE, DECEMBER 31, 1992 28,596,321 2,859,632 195,303,664 69,048,385 (84,652,730) 182,558,951
Shares repurchased and retired (43,400) (4,340) (147,750) - - (152,090)
Net income - - - 3,051,266 - 3,051,266
Cash distributions declared - - - - (9,145,527) (9,145,527)
---------- ---------- ------------ ----------- ------------- ------------
BALANCE, DECEMBER 31, 1993 28,552,921 2,855,292 195,155,914 72,099,651 (93,798,257) 176,312,600
Shares repurchased and retired (60,500) (6,050) (231,683) (237,733)
Net income 15,641,876 15,641,876
Cash distributions declared (9,117,575) (9,117,575)
---------- ---------- ------------ ----------- ------------- ------------
BALANCE, DECEMBER 31, 1994 28,492,421 $2,849,242 $194,924,231 $87,741,527 $(102,915,832) $182,599,168
========== ========== ============ =========== ============= ============
See notes to consolidated financial statements.
FS-5
62
RPS REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,641,876 $ 3,051,266 $ 8,838,836
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 2,500,000 15,000,000 12,955,100
Loss on disposition of real estate 227,708 -- --
Amortization of deferred acquisition expense 197,864 197,864 197,864
Depreciation 749,404 550,527 359,467
Gain on sale of marketable securities -- (3,942,513) --
Extraordinary items -- -- (1,005,073)
Changes in operating assets and liabilities:
Interest and accounts receivable (391,122) 444,197 (3,766,367)
Other assets (2,131,770) (166,789) 67,752
Interest on note payable -- (6,532,559) (504,047)
Deposits on sale of loans -- 1,365,042 --
Accounts payable and accrued expenses (2,342,457) (32,985) 44,875
------------ ------------ ------------
Net cash provided by operating activities 14,451,503 9,934,050 17,188,407
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Satisfaction of mortgage loans receivable 45,903,575 16,902,474 10,675,000
Investment in mortgage loans receivable -- (3,064,000) (7,937,641)
Investment in real estate (8,832,548) (1,426,743) (115,000)
Proceeds from sale of marketable securities -- 9,294,453 --
Sale of real estate 112,500 -- --
Return on marketable securities -- -- 48,060
------------ ------------ ------------
Net cash provided by investing activities 37,183,527 21,706,184 2,670,419
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends declared and paid (9,123,239) (11,149,917) (17,166,673)
Shares repurchased (237,734) (152,090) (293,131)
Repayment of note payable -- (14,482,500) (9,767,500)
Repayment of mortgages payable (6,490,854) (4,703,555) (6,218,437)
------------ ------------ ------------
Net cash used in financing activities (15,851,827) (30,488,062) (33,445,741)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 35,783,203 1,152,172 (13,586,915)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 38,800,763 37,648,591 51,235,506
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 74,583,966 $ 38,800,763 $ 37,648,591
============ ============ ============
CASH AND CASH EQUIVALENTS, END OF YEAR:
Cash $ 802,384 $ 1,053,375 $ 1,068,367
Short-term investments 73,781,582 37,747,388 36,580,224
------------ ------------ ------------
$ 74,583,966 $ 38,800,763 $ 37,648,591
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ 426,414 $ 9,155,421 $ 3,153,531
============ ============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Investment in real estate $ 14,626,242 $ 8,490,000 $ 7,400,000
Investment in limited partnership -- 460,000 --
Mortgages payable assumed (1,463,831) (3,498,907) (984,019)
Interest and accounts receivable (1,761,023) (2,806,571) (515,599)
Use of allowance for possible loan losses 14,567,301 6,155,478 300,382
Gross mortgages receivable exchanged for real estate (9,500,000) (8,800,000) (5,600,000)
Mortgage receivable exchanged (3,000,000) -- --
Net mortgages receivable sold (13,829,129) -- --
Accounts payable (839,402) -- --
Deposit on sale of loans 1,365,042 -- --
Other assets (165,200) -- --
See notes to consolidated financial statements.
FS-6
63
RPS REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
RPS Realty Trust (the "Trust"), a Massachusetts business trust, was
formed on June 21, 1988 to be a diversified, growth-oriented real estate
investment trust.
a. Income Tax Status - The Trust conducts its operations with the
intent of meeting the requirements applicable to a real estate
investment trust ("REIT") under Section 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"). For the
year ended December 31, 1994, the Trust intends to distribute all
of its taxable income prior to filing its tax return. See Note 15
for current year developments.
b. Principles of Consolidation - The consolidated financial statements
include the accounts of the Trust and all majority owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
c. Cash Equivalents - Short-term investments are considered cash
equivalents for purposes of the statement of cash flows and consist
primarily of highly liquid investments at December 3l, 1994 having
original maturities of less than three months.
d. Investment in Real Estate - Investment in real estate is stated at
the lower of cost or market less accumulated depreciation and is
depreciated using the straight-line method over the estimated
useful life of the property. Additions and improvements which
extend the estimated useful life of the property are capitalized.
Repairs and maintenance are expensed.
e. Income Recognition - Current interest income on mortgage loans is
recognized on the accrual method during the periods in which the
mortgage loans are outstanding. Deferred interest, due at the
maturity of the mortgage loan, is recognized as income based on the
interest method using the implicit rate of interest on the mortgage
loan. Contingent and additional contingent income and prepayment
premium income are recognized as cash is received.
f. Deferred Acquisition Expenses - Deferred acquisition expenses are
being amortized over a period from one to 20 years, representing
the expected period over which such fees would have been paid.
g. Transaction Costs - Costs associated with the proposed Ramco
Transaction have been capitalized and are included in other assets.
Depending upon the outcome of the transaction these costs will
either be amortized over 20 years or expensed in their entirety.
FS-7
64
h. Income Per Share - The weighted average number of shares
outstanding used in computing income per share for the years ended
December 31, 1994, 1993 and 1992 were 28,494,379, 28,582,344 and
28,599,637, respectively. The stock options outstanding at December
31, 1994, 1993 and 1992 were not considered in computing income per
share since there was no dilutive effect for the years then ended.
i. Reclassifications - Certain reclassifications have been made to
prior year financial statements to conform with current year's
presentation.
2. MORTGAGE LOANS RECEIVABLE
The principal amounts of the Trust's mortgage loans receivable at
December 31, 1994 and 1993 are summarized below:
INTEREST RATE(B)
CURRENT
RATE AT AMOUNT ADVANCED
DECEMBER 31, AVERAGE MATURITY DECEMBER 31,
DESCRIPTION AVERAGE 1994 ACCRUED DATE 1994 1993 (A)(C)(H)
Shopping centers/retail:
Coral Way 9.00% 9.00% -- 3/95 $ 3,000,000 $ 3,000,000
Holiday Park 8.25 9.50 -- 12/95 1,916,564 1,916,564
Branhaven Plaza 11.19 10.50 2.25 8/99 2,800,000 2,800,000
Plainview Shopping Center 12.50 12.50 2.00 1/99 -- 5,250,000
Janss Mall 12.20 11.75 3.00 11/99 -- 21,090,000
Norgate Plaza 12.60 12.50 2.00 11/99 -- 2,500,000
Madison Heights 9.30 9.50 2.70 9/94 1,550,000 1,550,000
The Tackett Center 11.33 11.00 2.00 11/00 -- 3,400,000
Chester Springs 11.92 11.25 3.50 12/00 -- 7,000,000
1733 Massachusetts
Avenue 8.58 8.00 1.42 6/99 2,200,000 2,200,000
Tampa Plaza 10.52 9.00 2.00 5/01 -- 8,000,000
Mt. Morris Commons 11.20 10.50 2.00 7/01 2,700,000 2,700,000
Copps Hill Plaza 6.00 6.00 0.50 7/96 3,563,948 3,641,610
Hylan Center (e) 12.00 7.50 4.50 1/01 25,000,000 --
Office buildings:
NCR Building (d) 10.00 10.00 -- 7/94 468,493 468,493
New England Telephone
Co 6.92 8.27 3.58 12/99 3,000,000 3,000,000
Wellesley Plaza 10.67 10.00 1.13 7/00 -- 5,200,000
1-5 Wabash Avenue 5.00 5.00 -- 3/96 2,850,000 2,850,000
FS-8
65
INTEREST RATE (B)
CURRENT
RATE AT AMOUNT ADVANCED
DECEMBER 31, AVERAGE MATURITY DECEMBER 31,
DESCRIPTION AVERAGE 1994 ACCRUED DATE 1994 1993 (A)(C)(H)
Industrial/commercial:
Meadowlands Industrial
Park II 17.43% 17.43% - 1/99 $ - $ 15,350,000
Simmons Mfg. Warehouse 10.00 10.00 2.00% 8/01 1,500,000 1,500,000
Loan secured by first lien:
Rector (e) 6.00 6.00 - 4/04 3,000,000 31,000,000
----------- ------------
53,549,005 124,416,667
Less:
Allowance for possible
loan losses (f) (g) 11,657,236 23,724,537
----------- ------------
$41,891,769 $100,692,130
=========== ============
(a) Of the 13 loans outstanding, 5 are wraparound mortgage loans and 8 are
first mortgage loans. The wraparound mortgage loans are subordinate to
prior liens held by others with no recourse to the Trust. Such prior liens
are not liabilities of the Trust and, therefore, are not reflected in the
accompanying financial statements.
(b) In addition to fixed interest, the Trust is entitled, on certain loans, to
contingent interest in an amount equal to a percentage of the gross rent
received by the borrower from the property securing the mortgage above a
base amount, payable annually, and additional contingent interest based on
a predetermined multiple of the contingent interest or a percentage of the
net value of the property at such date, payable at maturity (equity
participation). Contingent interest in the amount of $440,688, $578,027
and $467,080 was received for the years ended December 31, 1994, 1993 and
1992, respectively. Additional contingent interest of $5,505,813,
$3,433,116 and $3,250,000 was received in the years ended December 3l,
1994, 1993 and 1992, respectively. Additionally, the Trust received
prepayment premium income (in lieu of equity participations) of $2,900,000
and $2,000,000 for the years ended December 31, 1994 and 1992,
respectively.
(c) The aggregate cost for Federal income tax purposes approximates that used
for financial reporting.
(d) The NCR mortgage loan represented a transaction in which, for accounting
purposes, the Trust was considered to have substantially the same risks
and potential rewards as the borrower and, accordingly, was accounted for
as an investment in real estate rather than a loan. Although the
transaction was structured as a loan due to the terms of the zero coupon
mortgage, it was not readily determinable at inception that the borrower
would continue to maintain a minimum investment in the property.
Therefore, under the method of accounting applicable to this loan, the
Trust recognized as revenue the lesser of the amount of interest as
contractually provided for in the mortgage, or the actual operations of
the underlying property inclusive of depreciation expense and interest
expense on any senior indebtedness. Under the terms of the loan agreement,
the Trust was entitled to accrued interest of $498,896 for the year ended
December 31, 1992, which was not recognized as a result of the accounting
policy described above (Note 3e).
FS-9
66
(e) The interest income from this loan represented more than 10 percent of the
Trust's total revenue for the years ended December 31, 1992. The mortgage
receivable balance also represents more than 10 percent of the Trust's
total assets at December 31, 1994 and 1993.
(f) As of December 31, 1994 and 1993, the Trust had five and ten,
respectively, loans that were in arrears (three monthly payments or more)
or otherwise considered to be "problem loans" by the Trust. The aggregate
gross principal amounts of these loans, together with receivables relating
to such loans comprised of accrued interest and payments made on behalf of
the borrowers for mortgage payments relating to such properties, total
$42,311,106 and $93,609,900, representing 23.0% and 47.2% of the Trust's
invested assets at December 31, 1994 and 1993, respectively. At December
31, 1994 and 1993, the Trust was not accruing current and deferred
interest on four and eight of the above-mentioned loans, in the aggregate
approximate principal amounts of $10,250,000 and $56,940,000,
respectively. In addition, as of such dates, the Trust was not accruing
deferred interest on one and one additional loan, respectively, in the
aggregate approximate principal amount of $25,000,000 and $3,000,000,
respectively. The Trust has an allowance for possible loan losses of
$11,657,236 and $23,724,537 at December 31, 1994 and 1993, and recognized
a loan loss of $919,471 during the year ended December 31, 1992.
(g) An allowance for possible loan losses is established based upon a review
of each of the properties in the Trust's portfolio. In performing the
review, management considers the estimated net realizable value of the
property or collateral as well as other factors, such as the current
occupancy, the amount and status of senior debt, if any, the prospects for
the property, the credit worthiness and current financial position of the
borrower and the economic situation in the region where the property is
located. Because this determination of net realizable value is based upon
future economic events, the amounts ultimately realized at disposition may
differ materially from the carrying value as of December 31, 1994.
The allowance is indicative of the continued and protracted declines in
values of commercial real estate throughout the country resulting in part
from the general economic decline and the lack of available credit sources
for real estate. The allowance is inherently subjective and is based on
management's best estimates of current conditions and assumptions about
expected future conditions.
(h) A summary of mortgage receivable loan activity for the years ended
December 31, 1994 and 1993 is as follows:
DECEMBER 31,
1994 1993
Balance, beginning of year $ 100,692,130 $ 130,595,126
Mortgage loans issued -- 3,064,000
Mortgage loan satisfaction (56,300,361) (19,546,996)
Provision for possible loan losses (2,500,000) (15,000,000)
Transfer of allowance for possible loan losses
to investment in real estate -- 1,580,000
------------- -------------
Balance, end of year $ 41,891,769 $ 100,692,130
============= =============
(i) Impairment of Loans - In May 1993, the Financial Accounting Standards
Board issued Statement No. 114, "Accounting by Creditors for Impairment of
a Loan," which requires creditors to account for loans at the present
value of their future cash flows or at the fair value of the collateral,
if the loan is collateral dependent. The adoption of the statement is
required for years beginning after December 15,
FS-10
67
1994. The Trust has not adopted the provisions of this statement and does
not expect the adoption of this statement to have a significant impact on
the carrying value of the loans.
3. PREPAYMENTS AND OTHER ACTIVITY
a. On January 3, 1994, the Trust sold the following mortgage loans: (i)
its wrap-around mortgage loan secured by the Tampa Plaza shopping
center located in Northridge, California (the "Tampa Loan"); (ii) its
wrap-around mortgage loan secured by the Wellesley Plaza office
building located in Los Angeles, California (the "Wellesley Loan");
and (iii) its first mortgage loan secured by the Tackett Center
mixed-use retail center located in Palm Springs, California (the
"Tackett Loan"). On January 7, 1994, the Trust sold its first
mortgage loan secured by the Janss Mall shopping center located in
Thousand Oaks, California (the "Janss Mall Loan", and collectively,
the "California Mortgage Loans"). The California Mortgage Loans at
closing had an approximate aggregate outstanding balance of
$39,698,000 before taking into consideration allowance for possible
losses of approximately $14,567,000. The Tampa, Tackett and Janss
Mall Loans were sold pursuant to a competitive offering process,
pursuant to which bids for each of the Loans were solicited; the
Wellesley Loan was offered in the competitive offering process, but
was sold in an arms-length negotiation outside of the competitive
offering process. Secured Capital Corp. of Los Angeles, California
acted as the Trust's representative with respect to the offering and
sale of the California Mortgage Loans. In the aggregate, the Trust
received cash proceeds of $25,500,000 from the sale of the California
Mortgage Loans, before deduction of costs, fees and expenses relating
to such transactions, including the payment of a fee to Secured
Capital Corp.
b. On January 25, 1994, the Trust restructured its mortgage loan in the
original principal amount of $31,000,000 which was secured by a
collateral assignment of mortgages on two properties, an office
building located on Rector Street, New York City (the "Rector
Property") and a shopping center located on Hylan Boulevard, Staten
Island, New York (the "Hylan Center"). Pursuant to the restructuring,
the Trust received a direct assignment of the first mortgage with a
principal amount of $25,000,000 and accrued interest of $7,881,250
secured by the Hylan Center and retained the collateral assignment of
the Rector Property mortgage, the principal amount of which was
reduced to $3,000,000. The holder of the first mortgage secured by
the Rector Property has granted the Trust a pledge of a senior
participation interest in such mortgage. In addition, upon a
foreclosure, the Trust will obtain a direct first mortgage secured by
the Rector Property. The restructuring was completed in October 1994.
c. On June 30, 1994, Norgate Shops, Corp., a wholly-owned subsidiary of
the Trust, acquired title to the Norgate Shopping Center property.
The property was subject to a first mortgage in the approximate
amount of $1,463,830, which the Trust pre-paid at the time of such
acquisition.
d. On July 12, 1994, Chester Plaza Shops, Inc., a wholly-owned
subsidiary of the Trust acquired title to the Chester Springs
Shopping Center, an approximately 216,000 square foot community-type
shopping center located in Chester, New Jersey. The purchase price
for the property was approximately $18,262,000.
e. On August 15, 1994 the Trust received proceeds of $18,354,047 from
the prepayment of the Meadowlands Industrial Park mortgage loan. The
proceeds consisted of the repayment of the principal loan balance of
$15,350,000, payment of current interest of $104,047 and prepayment
premium income (in lieu of equity participation) of $2,900,000.
FS-11
68
f. On September 29, 1994, the Trust received proceeds of $11,805,825
from the prepayment of the Plainview Shopping Center mortgage loan.
The proceeds consisted of the repayment of the principal loan balance
of $5,250,000, payment of accrued interest of $994,187, current
interest of $55,825 and additional contingent interest (equity
participation) of $5,505,813.
g. On March 5, 1993, Lantana Plaza Shops, Inc., a wholly-owned
subsidiary of the Trust, acquired title to the Lantana Shopping
Center property. The property was subject to a first mortgage in the
amount of $3,464,246. The Trust exercised its right to prepay the
mortgage on May 24, 1993.
h. On March 15, 1993, the Trust funded a $3,000,000 first mortgage loan
secured by the Coral Way Plaza Shopping Center. The loan bears
current interest at 9 percent and matures in March 1995.
i. The Trust entered into a Settlement Agreement (the "Agreement") as of
April 30, 1993 with respect to the note it held secured by a mortgage
on 5 and 9 North Wabash Avenue, Chicago, Illinois. Pursuant to the
Agreement, (a) a subsidiary of the Trust received title by deed in
lieu of foreclosure to the property at 9 North Wabash Avenue, b) the
Trust received $1,350,000 and c) another subsidiary of the Trust
received a 20% limited partnership interest in a newly organized
limited partnership which owns 5 North Wabash Avenue. The Trust will
continue to hold a note secured by a first mortgage on 5 North Wabash
Avenue in the reduced amount of $3,450,000. The note bears interest
at 5% per annum, matures on March 31, 1996 and is non-amortizing,
except for a $600,000 principal reduction payment made on December
20, 1993. The maturity date of the note may be extended to March 31,
1997 at the option of the borrower under the note, provided, among
other things, that the principal amount of the note is reduced by an
additional $600,000 payment prior to its initial maturity. Interest
during the extension period shall be at 7% per annum. As to the
limited partnership interest to be held by a subsidiary of the Trust,
no distributions shall be made with respect thereto until the
maturity or earlier repayment of the mortgage loan held by the Trust.
Thereafter, other than distributions of net operating income, the
Trust will not receive cash distributions from refinancing or a sale
of the property on account of its limited partnership interest until
the general and initial limited partner of the limited partnership
have received $1,550,000 and any payments reducing the Trust loan
balance below $3,450,000 in aggregate distributions from such
sources. The transaction closed on July 7, 1993 and resulted in a
taxable loss approximating $4,500,000, which amount was previously
recognized for accounting purposes in 1992.
j. On May 20, 1993, the Trust executed a contract to purchase the
Chester Springs Shopping Center, an approximately 216,000 square foot
community-type shopping center located in Chester, New Jersey. The
Trust exercised its right of first refusal contained in its mortgage
documents relating to the property. The purchase price for the
property is $19,300,000. The contract contains due diligence and
other standard conditions to closing, which is expected to occur in
the second quarter of 1994; however, there can be no assurance that
this transaction will occur.
k. On July 2, 1993, the Trust received proceeds of $3,506,713 from the
partial prepayment of the NCR mortgage loan. The original principal
balance of $2,300,000 was reduced to $468,493. The remaining
principal amount matures on July 2, 1994 and bears current interest
of 10% payable quarterly. Also included in the proceeds was
approximately $1,675,000 of deferred interest.
l. On August 23, 1993, the Trust exercised its right to receive rental
payments pursuant to an Assignment of Rents for its approximately
$2,500,000 mortgage loan secured by the Norgate
FS-12
69
Plaza Shopping Center property. On September 21, 1993, a foreclosure
action was commenced by the Trust, and on motion by the Trust a
Receiver was appointed. On February 8, 1994, the first mortgagee
joined the action in order to foreclose its mortgage, and the Trust
currently is proceeding with its foreclosure action.
m. On December 30, 1993, the Trust received proceeds of $18,028,776 from
the prepayment of the Sayre Woods mortgage loan. The proceeds
consisted of the repayment of the principal loan balance of
$13,080,000, payment of accrued interest of $1,183,990, current
interest of $118,354, contingent interest of $213,316 and additional
contingent interest (equity participation) of $3,433,116.
n. On January 31, 1992, the Trust increased its existing $7,500,000
wraparound mortgage loan by $2,000,000 to the borrower on the
Tel-Twelve Mall at a current interest rate of 12 percent. In
addition, the borrower was given the right to prepay the entire loan
together with the payment of $3,250,000 in additional contingent
interest on or before December 31, 1992. In consideration for this
right the Trust received $2,000,000 in additional contingent interest
(equity participation). On May 19, 1992, the Trust received proceeds
of $15,181,346 from the prepayment of the mortgage loan. The proceeds
consisted of accrued interest of $2,092,500, current interest of
$144,480, contingent interest of $194,366 and additional contingent
interest (equity participation) of $3,250,000 and repayment of the
principal loan balance of $9,500,000.
o. On May 11, 1992, the Trust funded an additional $4,690,000 on the
$16,500,000 Janss Mall wraparound mortgage loan which enabled the
owners of the Janss Mall property to repay in full the outstanding
first mortgage secured by such property and allowed in the Trust to
acquire a consolidated first mortgage loan position of $21,190,000.
The additional funding carries a current interest rate of 1 percent
above the prime rate of a major banking institution with a minimum
rate of 9 percent and a maximum rate of 12 percent.
p. On June 1, 1992, the Saratoga Building Inc., a subsidiary of the
Trust, acquired the deed to the 222 East Saratoga Street property
("the Saratoga Property") in lieu of payment of the mortgage loan
that the Trust held on the property. The mortgage indebtedness owed
to the Trust by the prior owner amounted to $2,850,154.
q. On June 12, 1992, the Trust exercised its right to receive rental
payments pursuant to an Assignment of Rents under its approximately
$3,000,000 first mortgage loan secured by the Trinity Corners
property. On July 1, 1992, the borrower under such loan filed for
protection under the bankruptcy code.
On December 30, 1992, Trinity Shops, Inc., a wholly owned subsidiary
of the Trust, acquired the deed to Trinity Corners Shopping Center
(the "Trinity Property"), pursuant to a bankruptcy court action sale.
Pursuant to the terms of such acquisition, the mortgage indebtedness
of $3,209,317 (including accrued interest) owed to the Trust by the
prior owner of the Trinity Property was credited against the purchase
price of the Trinity Property.
r. On September 21, 1992, the Trust restructured the loan secured by the
Copps Hill Plaza property. Total mortgage indebtedness owed to the
Trust comprised of accrued interest and payments made on behalf of
the borrower, relating to such property totaled $3,981,077. On
September 30, 1992 and December 20, 1992, the Trust received
principal payments of $200,000 and $175,000, respectively, from the
borrower pursuant to the terms of such restructured loan. The current
loan balance of $3,606,077, as restructured now, bears interest at
the rate of 6 percent per annum and matures July 1996.
FS-13
70
s. On December 30, 1992, the Commack Site, Inc., a wholly owned
subsidiary of the Trust, acquired certain real property located in
Commack, New York (the "Commack Property") for a purchase price of
approximately $2,900,000, including the existing mortgage
indebtedness secured by the Commack Property. In connection with the
acquisition of the Commack Property, the Trust assigned the Church
Street Judgment to the seller's designee (Note 8).
t. On December 31, 1992, the Trust restructured wrap-around the loan
secured by the Holiday Park property. Total mortgage indebtedness
including accrued interest and payments made on behalf of the
borrower relating to such property totaled $2,716,564. Also on such
date the Trust received an $800,000 principal payment. The current
loan balance of $1,916,564, as restructured, now bears interest at a
minimum rate of 7 percent and matures on December 31, 1993.
FS-14
71
4. INVESTMENT IN REAL ESTATE
INITIAL COST TO
COMPANY CAPITAL GROSS ACCUMULATED DATE PREDICTABLE
DESCRIPTION LAND BUILDING IMPROVEMENTS AMOUNT(1) DEPRECIATION ACQUIRED LIFE
Sunshine Plaza $ 1,748,000 $ 7,452,000 $ 522,781 $ 9,722,781 $ 578,815 12/19/91 40
Shopping Center
Tamarack, Florida
Crofton Plaza 3,201,000 6,499,000 945,119 10,645,119 619,159 5/01/91 40
Shopping Center
Crofton, Maryland
Commack Shopping Center 1,160,000 1,740,000 - 2,900,000 88,813 12/30/92 40
Commack, New York
Trinity Shopping Center 1,250,000 1,250,000 499,318 2,999,318 82,756 12/30/92 40
Pound Ridge, New York
Lantana Shopping Center 2,589,810 2,600,190 436,077 5,626,077 130,145 3/01/93 39
Lantana Florida
9 North Wabash 2,319,900 980,100 - 3,300,000 36,648 7/01/93 39
Chicago, Illinois
Norgate Shopping Center 1,260,000 2,940,000 77,528 4,277,528 37,775 6/01/94 39
Indianapolis, Indiana
Chester Shopping Center
Chester, New Jersey 4,930,740 13,331,260 107,711 18,369,711 157,042 7/15/94 39
----------- ------------ --------- ------------ ---------
Totals $18,459,450 $36,792,550 $2,588,534 $57,840,534 $1,731,153
=========== =========== ========== =========== ==========
1994 1993 1992
REAL ESTATE OWNED:
Balance at beginning of year: $34,751,743 $26,415,000 $18,900,000
Acquired Properties 22,462,000 8,490,000 7,400,000
Capital Improvements 996,791 1,426,743 115,000
Disposition of Saratoga (3) (370,000) - -
------------ ------------ ------------
57,840,534 36,331,743 26,415,000
Allowance for Impairment (4) - (1,580,000) -
------------- ------------ -----------
Balance at end of year $57,840,534 $34,751,743 $26,415,000
=========== =========== ===========
ACCUMULATED DEPRECIATION:
Balance at beginning of year: $ 1,011,541 $ 461,014 $ 101,547
Depreciation Expense (2) 749,404 550,527 359,467
Disposition of Saratoga (3) (29,792) - -
---------- ----------- ------------
Balance at end of year $ 1,731,153 $ 1,011,541 $ 461,014
=========== =========== ===========
(1) Aggregate cost for Federal income tax purposes approximates $57,840,534.
(2) Properties are depreciated over an estimated life of 39 or 40 years using
the straight-line method.
(3) On September 28, 1994 the Trust sold the capital stock of The Saratoga
Building, Inc., a wholly owned subsidiary of the Trust for $12,500. The
Trust had previously provided an allowance for impairment of $1,580,000
against this asset. The sale resulted in an additional loss of approximately
$227,708.
FS-15
72
RENTALS UNDER OPERATING LEASES
The following is a schedule by years of minimum future rentals on
noncancelable operating leases at December 31, 1994:
YEAR ENDING
DECEMBER 31, AMOUNT
1995 $ 5,468,129
1996 4,827,161
1997 4,320,375
1998 3,763,684
1999 2,975,203
Later Years 9,015,510
-----------
$30,370,062
===========
5. MARKETABLE SECURITIES
During the period May 21, 1993 through December 31, 1993, the Trust
received cumulative proceeds of $9,294,453 representing the sale of all
270,000 of its shares of common stock at an average price of $34.42 per
share. The Trust realized a gain from these sales of $3,942,513.
6. NOTE PAYABLE
On December 28, 1993 (the "Repurchase Date"), the first date on which the
Trust was permitted to do so, the Trust exercised its option to redeem in
full Reissued Note Number 5 ("the Note") issued pursuant to the Note
Issuance Agreement dated as of December 28, 1988 among Integrated
Resources, Inc., Resources Pension Advisory Corp. and the Trust, made to
the order of Anchor National Life Insurance Company ("Anchor"). The Note,
which was scheduled to mature in December 2001, accrued simple interest at
an interest rate that increased semi-annually, so as to be the equivalent
of 9.5% per annum, compounded semi-annually. On the Repurchase Date, the
Trust paid to Anchor $23,034,769, representing the outstanding principal
amount on the Note and accrued interest to the Repurchase Date.
7. MORTGAGE PAYABLE
Mortgages payable consists of the following:
DECEMBER 31,
1994 1993
Crofton, 8.78 percent, maturing March 1, 2006 $ - $5,027,023
---- ----------
$ - $5,027,023
==== ==========
On September 30, 1994, the Trust exercised its right to prepay the
$4,868,046 first mortgage loan relating to the Crofton Plaza Shopping
Center property. The property is owned by a wholly-owned subsidiary of the
Trust.
On January 26, 1993, the Trust exercised its right to prepay the $984,019
first mortgage loan relating to the Commack Property, which property is
owned by a wholly-owned Subsidiary of the Trust.
FS-16
73
On April 29, 1992, the Trust exercised its option to purchase the first
mortgage loan relating to the Sunshine Plaza Shopping Center, which
property is owned by a wholly-owned subsidiary of the Trust. The purchase
price of $7,000,000 represented a $222,500 discount from the principal and
interest accrued totaling $7,222,500. Such discount was recorded as an
extraordinary item.
8. SHARE PURCHASE RIGHTS
On December 6, 1989, the Trust's Board of Trustees (the "Board") declared
a dividend distribution of one share purchase right for each outstanding
share of beneficial interest, $.10 par value per share, to shareholders of
record at the close of business on December 18, 1989. These rights may be
exercised to purchase one share of beneficial interest at a price of $20
per share, subject to adjustment, under certain specified conditions at
the Board's option. These rights are not exercisable or transferable apart
from the shares of beneficial interest until the distribution date, which
is the earlier of (i) 10 days following a public announcement that any
person or group has acquired beneficial ownership of 20 percent or more of
the outstanding shares (the "Share Acquisition Date"), (ii) 10 days
following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 20 percent or more of the
outstanding shares or (iii) the day the Board determines that any person
or group has become the beneficial owner of an amount of shares the Board
determines to be substantial (which amount shall in no event be less than
10 percent of the shares outstanding) and the Board shall determine that
such beneficial ownership is intended to cause the Trust to repurchase the
shares owned by such person or group or is reasonably likely to cause a
material adverse impact on the Trust's business. The rights, which do not
have voting rights, expire on December 6, 1999 and may be redeemed by the
Trust at a price of $.01 per right at any time until rights expire or, if
earlier, 10 days following the Share Acquisition Date.
Upon the occurrence of certain events following the distribution date, the
holder of each right will have the right to receive, upon exercise, shares
(or, in certain circumstances, cash, property or other securities of the
Trust) having a value equal to two times the exercise price of the right.
In certain events in which the Trust is not a surviving entity or has
transferred 50 percent or more of its assets or earnings power, the rights
will entitle the holder, upon exercise, to receive equity securities of
the acquiring company having a value equal to two times the exercise price
of the right.
9. STOCK OPTION PLANS
a. 1989 Trustees' Stock Option Plan - On April 4, 1989, the Board
approved the establishment of the 1989 Trustees' Stock Option Plan
(the "Plan") which permits the Trust to grant options to purchase up
to 350,000 shares of beneficial interest in the Trust at the fair
market value at the date of the grant. Each member of the Board who is
not an officer or employee of the Trust is eligible to participate in
the Plan. Each participant is granted an option to purchase that
number of shares equal to 0.1 percent of the shares then outstanding
on each of (a) the later of (i) November 28, 1989 or (ii) the date on
which the participant first becomes a member of the Board and (b) the
second anniversary of the date of the preceding grant. In October
1991, the Board modified and amended the Plan to provide that the
remaining options due to be issued after October 8, 1991 be issued pro
rata to each of the eligible Trustees. Options granted under the Plan
become exercisable, with respect to 50 percent of the shares covered
thereby, on the first anniversary of the date of grant and on a
cumulative basis with respect to the remaining shares on the second
anniversary of the date of grant. Options granted under this plan
expire ten years from the date of grant.
FS-17
74
The Trust has 350,000 options outstanding under the Plan at December
31, 1994. The fair market value of the shares and exercise price of
such options at the dates of grant ranged from $5.25 to $5.75.
b. 1989 Employee's Stock Option Plan - On June 21, 1989, the Board
approved the establishment of the 1989 Employee Stock Option Plan
which permits the Trust to grant options to purchase up to 1,550,000
shares of beneficial interest in the Trust at the fair market value at
the date of grant. The options are exercisable each year starting one
year from the date of grant, on a cumulative basis, at the annual rate
of 20 percent of the total number of shares covered by the option.
Options granted under the plan expire 10 years from the date of grant.
On December 6, 1989, 1,355,000 options were granted. At December 31,
1994 and 1993, 1,325,000 and 1,355,000 options were outstanding under
such plan. The fair market value of the shares and exercise price of
these options at the date of the grant was $5.75.
At December 31, 1994, there were 1,325,000 shares of common stock
reserved for exercise of stock options.
10. COMMITMENTS
a. The Trust's lease for office space terminates on April 30, 1995.
Annual rental payment, including electricity, was $194,666.
Additionally, the Trust has a second lease on a month to month basis.
Current monthly rental payments under such lease are $1,284.
In March 1995 the Trust entered into a lease for approximately 4,863
sq. ft. of office space at 747 3rd Ave. New York, New York. The term
of the lease commences on April 1, 1995, at an annual base rental of
$145,890. The lease will expire on April 30, 1996, unless extended by
the Trust for an additional one-year term.
b. The President and Chairman of the Trust have entered into long-term
employment agreements effective December 28, 1988. Each of the
employment agreements is for a term of 10 years, unless terminated
earlier by reason of death or disability of the officer or for cause
by the Trust. They are entitled to receive their base salary,
distribution incentive bonus and origination bonuses. Additionally, in
accordance with the terms of their respective agreements, the
occurrence of certain events, including the sale of substantially all
of the Trust's assets, a significant change in the Trust's ownership
or a change in the Trust's operations such that it is no longer
primarily in the business of mortgage lending will result in
additional compensation to be paid.
c. On April 4, 1989, the Board approved the establishment of a 401(k)
employee savings plan and a discretionary profit-sharing retirement
plan for employees meeting certain service requirements.
FS-18
75
11. DIVIDENDS/DISTRIBUTIONS TO SHAREHOLDERS
Under the Internal Revenue Code, a REIT must meet certain qualifications,
including a requirement that it distribute annually to its shareholders at
least 95 percent of its taxable income. The Trust's policy is to
distribute to shareholders all taxable income. Dividend distributions for
the years ended December 31, 1994 and 1993 are summarized as follows:
DIVIDEND
RECORD DATE DISTRIBUTIONS PAYMENT DATE
April 28, 1994 .08 May 17, 1994
July 28, 1994 .08 August 17, 1994
October 27, 1994 .08 November 16, 1994
December 28, 1994 .08 January 27, 1995
April 27, 1993 .08 May 18, 1993
July 23, 1993 .08 August 13, 1993
October 26, 1993 .08 November 17, 1993
December 30, 1993 .08 January 27, 1994
The difference, if any, between dividends declared and net income result
from timing differences related to the recognition of income and expenses
between financial reporting and income tax purposes.
12. DIVIDEND REINVESTMENT PLAN
The Trust has a dividend reinvestment plan that allows for participating
shareholders to have their dividend distributions automatically invested
in additional shares of beneficial interest in the Trust based on the
average price of the shares acquired for the distribution.
13. SHARE REPURCHASES
In April 1990, the Board of Trustees approved a $6,000,000 share
repurchase program for the purchase of the Trust's shares at prevailing
market prices. Pursuant to this program, during 1992, the Trust purchased
56,700 shares at prices ranging from $4.92 to $5.29 per share. The Trust
purchased 43,400 shares at prices ranging from $3.42 to $3.79 per share
during 1993. The Trust purchased 60,500 shares at prices ranging from
$3.79 to $4.04 during 1994.
14. FINANCIAL INSTRUMENTS
The estimated market value of the Trust's mortgage loans and receivables
relating to such loans as of December 31, 1994 and 1993 is estimated to be
approximately $47,000,000 and $117,000,000, respectively. The estimated
market value has been determined by the Trust, using available market
information, methodologies deemed reasonable by the Trust and the present
value of estimated future cash flows using a discount rate commensurate
with the risks involved. Estimated market values represent management's
estimate as of the date of the valuation and are based on facts and
conditions existing on the date of the valuation and on a number of
assumptions concerning future circumstances, which assumptions may or may
not prove to be accurate. The Trust believes that the estimated market
value as stated is not necessarily indicative of the price the Trust could
realize if it were actively attempting to sell the mortgages in its
portfolio.
FS-19
76
15. INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued
Statement No. 109, "Accounting for Income Taxes" ("SFAS 109"). The
adoption of the statement is required for years beginning after December
15, 1992. The Trust is a public enterprise and is not subject to income
taxes, as discussed under Income Tax Status above (Note 1). In accordance
with SFAS 109, the net differences between the Trust's assets and
liabilities for tax purposes and financial reporting purposes are as
follows:
1994 1993
Net assets, financial statements $ 182,599,168 $ 176,312,600
Interest 5,100,000 6,000,000
Allowance for loan losses 6,700,000 24,100,000
Deferred interest (8,800,000) (8,700,000)
Amortization of organization expenses (3,200,000) (2,700,000)
Other 1,600,000 1,600,000
-------------- --------------
Net assets, tax reporting $ 183,999,168 $ 196,612,600
============== ==============
During the third quarter of 1994, RPS may have inadvertently violated the
"75% Asset Test" contained in Internal Revenue Code Section 856 (c)(5)(A)
because the Company held more than 25% of the value of its gross assets in
overnight Treasury Bill repurchase transactions. In Revenue Ruling 77-59,
the IRS ruled that Treasury Bill repurchase transactions are neither
government securities nor cash items and therefore do not qualify for the
75% Asset Test. Management believes that the IRS position in Revenue
Ruling 77-59 is incorrect. Management further believes that even if the
IRS position in Revenue Ruling 77-59 were to be upheld, RPS' inadvertent
failure to satisfy the 75% Asset Test for one quarter was due to
reasonable cause and not to willfull neglect and, therefore, the
mitigation provisions of Internal Revenue Code Section 856 (g)(4) should
apply to permit RPS to continue to be taxed as a REIT. RPS has already
filed its 1994 tax return and has requested the IRS to enter into a
closing agreement to the effect that it may continue to be taxed as a
REIT, notwithstanding the holding in Revenue Ruling 77-59.
Should the IRS deny RPS' request for relief, the Company intends to seek a
judicial determination that it may continue to qualify as a REIT. If RPS
does not ultimately prevail in its position, it would be taxable as a
regular "C" corporation for 1994 but, because of the incurrence of a net
operating loss for such year, would have no federal income tax liability
for 1994. In addition, if deemed a regular "C" corporation, the Company
would have a deferred tax asset of approximately $1.2 million which would
be offset by a valuation allowance of approximately $1.2 million. However,
it is anticipated that RPS would have a state and local tax liability of
approximately $400,000 for 1994.
16. RAMCO TRANSACTION
In November 1993, the Trust commenced negotiations with representatives of
Ramco-Gershenson, Inc., a Michigan corporation ("Ramco"). On July 14,
1994, the Trust entered into a letter of intent (which has been amended
from time to time to, among other things, extend the expiration date
thereof) (as so amended, the "Letter of Intent") with Ramco, pursuant to
which the Trust agreed to proceed with the negotiation, execution and
delivery of a definitive agreement to enter into a transaction with Ramco.
FS-20
77
After execution of the Letter of Intent, the parties undertook extensive
due diligence investigations and commenced negotiations with a view
towards entering into a definitive agreement. Negotiations between the
Trust and Ramco continued through the latter half of 1994 and early 1995
and are currently continuing; however, there can be no assurance that the
transaction contemplated by the Letter of Intent, or any other transaction
with Ramco, will be consummated. The Letter of Intent, the term of which
was extended by the parties from time to time, expired on March 20, 1995.
17. SUBSEQUENT EVENTS
On March 1, 1995, the Trust received proceeds of $3,021,000 from the
prepayment of the Coral Way Shopping Center Mortgage loan. The proceeds
consisted of the repayment of the principal loan balance of $3,000,000 and
current interest of $21,000.
On February 14, 1995, the holder of the first mortgage loan secured by the
Madison Heights Shopping Center, whose loan was superior to the Trust's
wraparound mortgage loan with respect to such property, foreclosed upon
such property. The shopping center has been sold at auction and the
interest of the Trust has been thereby eliminated.
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED
---------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1994 1993 1994 1993 1994 1993 1994 1993
Revenues $4,041,221 $4,292,708 $3,596,750 $4,755,592 $15,217,749 $ 7,535,090 $ 3,551,041 $10,385,115
---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Net income(loss)(1) $2,298,555 $2,213,210 $1,943,874 $2,278,216 $12,695,481 $(9,811,447) $(1,296,034) $ 8,371,287
========== ========== ========== ========== =========== =========== =========== ===========
Per share:
Net income(loss) $ .08 $ .08 $ .07 $ .08 $ .44 $ (.35) $ (.04) $ .30
========== ========== ========== ========== =========== =========== =========== ===========
Notes: (1) During the third quarter of 1993 and the fourth quarter of 1994, the
Trust recorded a provision for possible loan losses of $15,000,000
and $2,500,000, respectively.
FS-21
78
EXHIBIT INDEX
SEQUENTIAL
NUMBER EXHIBIT PAGE NO.
------ ----------------------------------------------------- ----------
3.1 Amended and Restated Declaration of Trust of the
Trust, dated October 14, 1988, incorporated by
reference to Exhibit 3, 4(a) to the Trust's
Registration Statement on Form S-4, File No.
33-25272.
3.2 By-Laws of the Trust adopted December 6, 1989,
incorporated by reference to Exhibit 4.2 to the
Trust's Current Report on Form 8-K, dated December 6,
1989.
4. Rights Agreement dated as of December 6, 1989 between
the Trust and American Stock Transfer & Trust
Company, incorporated by reference to Exhibit 1 to
the Trust's Registration Statement on Form 8-A, File
No. 1-10093, for the registration of Share Purchase
Rights.
10.1 Exchange Agreement, dated as of November 1, 1988
between the Trust and RPS 1, incorporated by
reference to Exhibit 2A to the Trust's Current Report
on Form 8-K, dated December 28, 1988.
10.2 Exchange Agreement dated as of November 1, 1988
between the Trust and RPS 2, incorporated by
reference to Exhibit 2B to the Trust's Current Report
on Form 8-K, dated December 28, 1988.
10.3 Exchange Agreement, dated as of November 1, 1988
between the Trust and RPS 3, incorporated by
reference to Exhibit 2C to the Trust's
79
SEQUENTIAL
NUMBER EXHIBIT PAGE NO.
------ ----------------------------------------------------- ----------
Current Report on Form 8-K, dated December 28, 1988.
10.4 Exchange Agreement, dated as of November 1, 1988
between the Trust and RPS 4, incorporated by
reference to Exhibit 2D to the Trust's Current Report
on Form 8-K, dated December 28, 1988.
10.5 Asset and Stock Purchase Agreement dated as of
November 1, 1988 among Integrated, RPS Advisory
Corp., Resources Pension Advisory Corp. and the
Trust, including as exhibits: (i) Note Issuance
Agreement, dated as of December 28, 1988, by and
between Integrated, Resources Pension Advisory Corp.,
and the Trust; and (ii) Note of the Trust dated
December 28, 1988, incorporated by reference to
Exhibit 2E to the Trust's Current Report on Form 8-K,
dated December 28, 1988.
10.6 Employment Agreement, dated October 24, 1988, between
Resources Pension Advisory Corp. and Joel Pashcow,
incorporated by reference to Exhibit 10.6 to the
Trust's Annual Report on Form 10-K for the year ended
December 31, 1988.
10.7 Employment Agreement, dated October 24, 1988, between
Resources Pension Advisory Corp. and Herbert
Liechtung, incorporated by reference to Exhibit 10.7
to the Trust's Annual Report on Form 10-K for the
year ended December 31, 1988.
80
SEQUENTIAL
NUMBER EXHIBIT PAGE NO.
------ ----------------------------------------------------- ----------
10.8 1989 Trustees' Stock Option Plan, incorporated by
reference to Exhibit A to the Trust's Proxy Statement
dated October 18, 1989.
10.9 1989 Employees' Stock Option Plan, incorporated by
reference to Exhibit B to the Trust's Proxy Statement
dated October 18, 1989.
10.10 Retirement Savings Plan of the Trust dated September
13, 1989 incorporated by reference to the Trust's
Annual Report on Form 10-K for the year ended
December 31, 1989.
10.11 Secured Promissory Note, dated February 23, 1990,
executed by Rector Hylan Corporation, incorporated by
reference to Exhibit 10.1 to the Trust's Current
Report on Form 8-K dated February 23, 1990.
10.12 Collateral Assignment of Mortgage and Security
Agreement, dated February 23, 1990, between Rector
Hylan Corporation and the Trust, incorporated by
reference to Exhibit 10.2 to the Trust's Current
Report on Form 8-K dated February 23, 1990.
10.13 Note Purchase Agreement, dated December 27, 1991,
between the Trust and The Capitol Life Insurance
Company, incorporated by reference to Exhibit 10.13
to the Trust's Annual Report on Form 10-K for the
year ended December 31, 1991.
10.14 Reissued Note Number 5, dated December 28, 1992,
executed by the Trust in favor of Anchor
81
SEQUENTIAL
NUMBER EXHIBIT PAGE NO.
------ ----------------------------------------------------- ----------
National Life Insurance Company, incorporated by
reference to Exhibit 10.14 to the Trust's Annual
Report on Form 10-K for the year ended December 31,
1993.
10.15 Loan Purchase Agreement dated December 3, 1993
between the Trust and Merged Centers, incorporated by
reference to Exhibit 10.15 to the Trust's Annual
Report on Form 10-K for the year ended December 31,
1993.
10.16 Agreement dated as of January 25, 1994, among the
Trust, Rector Hylan Corporation, Rector Acquisition
Corp. and Shalva Company, Inc., incorporated by
reference to Exhibit 10.16 to the Trust's Annual
Report on Form 10-K for the year ended December 31,
1993.
10.17 Assignment of Mortgages dated January 25, 1994
between Rector Hylan Corporation and the Trust.
10.18 Certificate of Reduction of Debt dated January 25,
1995, executed by the Trust.
10.19 Agreement of Sale dated May 20, 1993 between
Morristown-Chester Plaza Associates, L.P. and Chester
Plaza Shops, Inc., as amended by an amendment thereto
dated July 11, 1994.
10.20 Bargain and Sale Deed dated July 11, 1994 between
Morristown-Chester Plaza Associates, L.P. and Chester
Plaza Shops, Inc.
10.21 Settlement Agreement dated as
82
SEQUENTIAL
NUMBER EXHIBIT PAGE NO.
------ ----------------------------------------------------- ----------
of June, 1994 between the Trust and Norgate Plaza
Limited Partnership.
10.22 Addendum to Settlement Agreement dated June, 1994
between the Trust and Norgate Plaza Limited
Partnership.
10.23 Purchase Agreement dated June, 1994 between Norgate
Plaza Limited Partnership and Norgate Shops Corp.
10.24 Addendum to Purchase Agreement dated June, 1994
between Norgate Shops Corp. and Norgatge Plaza
Limited Partnership.
10.25 Quitclaim Deed dated June 13, 1994 between Norgate
Plaza Limited Partnership and Norgate Shops Corp.
10.26 Letter of Intent dated July 14, 1994 between the
Trust and Ramco-Gershenson, Inc. (incorporated by
reference to Exhibit 99 to the Trust's Current Report
on Form 8-K dated July 28, 1994).
10.27 Letter Agreement dated as of June 8, 1994 between the
Trust and Dean Witter Reynolds, Inc.
23.1 Consent of Independent Auditors with respect to the
Trust's Registration Statement on Form S-3, filed
with the Commission on April 25, 1989.
23.2 Consent of Independent Auditors with respect to the
Trust's Registration Statement on Form S-8, filed
with the Commission on November 22, 1990.
27 Financial Data Schedule
83
28.1 Distribution Reinvestment and
Trust Agreement, including
Distribution Reinvestment Plan,
made as of January 1, 1991
between the Trust and American
Stock Transfer and Trust
Company, incorporated by
reference to Exhibit 28.1 to
the Trust's Annual Report on
Form 10-K for the year ended
December 31, 1990.
28.2 Description of Rector Hylan
loan, incorporated by reference
into Item 1. of this Report,
from the Trust's Current Report
on Form 8-K dated February 23,
1990.
EX-10.17
2
ASSIGNMENT
1
Exhibit 10.17
ASSIGNMENT OF MORTGAGES
KNOW THAT RECTOR HYLAN CORPORATION ("Assignor"), a New York
corporation, assignor, in consideration of TEN DOLLARS ($10.00) and other good
and valuable consideration paid by RPS REALTY TRUST, a Massachusetts business
trust, assignee, receipt of which is hereby acknowledged hereby assigns unto
the assignee, those certain mortgages (collectively, the "Hylan Mortgage") more
particularly described on Exhibit A attached hereto and made a part hereof
covering premises commonly known as Hylan Shopping Plaza, Staten Island, New
York.
TOGETHER with the notes described in said Hylan Mortgage, and
the moneys due and to grow due thereon with the interest; provided, however,
that Assignor shall retain all rights with respect to all amounts owed to
Assignor by Berley Realty Corp. on account of legal fees and costs incurred by
Assignor on or prior to the date hereof (collectively, the "Legal Fees and
Costs") and that the Legal Fees and Costs are not assigned hereunder,
TO HAVE AND TO HOLD the same unto the assignee and to the
successors, legal representatives and assigns of the assignee forever,
AND the assignor covenants that as of January 1, 1994 there
was owing upon said Mortgage, without offset or defense of any kind, the
principal sum of twenty-five million dollars ($25,000,000), and accrued and
unpaid interest in the aggregate amount of seven million eight hundred
eighty-one thousand two hundred and fifty dollars ($7,881,250).
The word "assignor" or "assignee" shall be construed as it
read "assignors" or "assignees" whenever the sense of this instrument so
requires.
IN WITNESS WHEREOF, the assignor has duly executed this
assignment the _______ day of January, 1994.
RECTOR HYLAN CORPORATION
By:
---------------------------
Name:
Title:
2
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the ____ day of January, 1994, before me personally came
______________________, to me know, who, being by me duly sworn, did depose and
say that he resides at No. _______________
____________________________________________; that he is the
__________________________ of Rector Hylan Corporation, the corporation
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of directors of
said corporation, and that he signed his name thereto by like order.
-------------------------------
Notary Public
2
EX-10.18
3
CERTIFICATE OF REDUCTION OF DEBT
1
Exhibit 10.18
CERTIFICATE OF REDUCTION OF DEBT
THE UNDERSIGNED, the owner and holder of (a) a certain note
(the "Note") in the original principal amount of $31,000,000 dated February 23,
1990 made by Rector Hylan Corporation, a New York corporation, in favor of RPS
Realty Trust, a Massachusetts business trust, and (b) a certain Collateral
Assignment of Mortgage and Security Agreement (the "Collateral Assignment")
dated February 23, 1990 between Rector Hylan Corporation, as assignor, and RPS
Realty Trust, as assignee, for good and valuable consideration, the receipt of
which is hereby acknowledged, DOES HEREBY CERTIFY AND AGREE that as of the date
hereof, the total of all principal, interest and all other amounts owing or
outstanding under the Note, the Collateral Assignment, the loan evidenced
thereby, and all other documents and instruments relating to or securing such
loan is hereby reduced to Three Million Dollars ($3,000,000.00).
DATED, the 25th day of January 1994
RPS REALTY TRUST
By:
------------------------------
Name: Herbert Leichtung
Title: President
By:
-----------------------------
Name: John J. Johnston, Jr.
Title: Vice President - Real
Estate Counsel and
Secretary
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STATE OF FLORIDA )
: ss.:
COUNTY OF DADE )
On the 25th day of January 1994, before me personally came
Herbert Leichtung, to me known, who, being by me duly sworn did depose and say
that he resides at , that he is
President of RPS Realty Trust, the Massachusetts business trust described in
and which executed the above instrument; and that he signed his name thereto by
order of the board of trustees of such trust.
------------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 25th day of January 1994, before me personally came
John J. Johnston, Jr., to me known, who, being by me duly sworn did depose and
say that he resides at , that
he is Vice President - Real Estate Counsel and Secretary of RPS Realty Trust,
the Massachusetts business trust described in and which executed the above
instrument; and that he signed his name thereto by order of the board of
trustees of such trust.
------------------------------
Notary Public
EX-10.19
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AGREEMENT OF SALE
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Exhibit 10.19
AGREEMENT OF SALE
This is an Agreement of Sale dated as of this 20th day of May, 1993.
It is made between:
MORRISTOWN-CHESTER PLAZA ASSOCIATES, L.P.,
A NEW JERSEY LIMITED PARTNERSHIP,
HAVING AN ADDRESS C/O MR. MICHAEL MILLER,
J.D. BRANMAUR, INC.
1776 BROADWAY
NEW YORK, NEW YORK 10019
("SELLER")
and
CHESTER PLAZA SHOPS, INC.,
A DELAWARE CORPORATION,
HAVING AN ADDRESS AT
733 THIRD AVENUE
NEW YORK, NEW YORK 10017
("BUYER")
WITNESSETH:
RECITALS:
A. Seller is the owner of the lands and improvements located on
the east side of New Jersey State Route 206, one block south of its
intersection with New Jersey State Route 24, Chester, New Jersey commonly known
as the Chester Springs Shopping Center (the "SHOPPING CENTER"). The Shopping
Center consists of approximately 18 acres of land and approximately 213,000
rentable square feet of store space. Seller is also the owner of an unimproved
parcel of land of approximately one (1) acre adjacent to the Shopping Center
and bordering on Maple Avenue (the "PROPOSED OFFICE SITE"). A metes and bounds
description of the lands constituting both the Shopping Center and the Proposed
Office Site is annexed hereto as Schedule "A".
B. Seller desires to sell the Shopping Center and the Proposed
Office Site and Buyer desires to purchase it. However, this Agreement contains
provisions for an "INSPECTION PERIOD" (as hereinafter defined) during which
Buyer may investigate the "PROPERTY" (as hereinafter defined) and make a
determination whether it desires to proceed with the purchase.
C. This Agreement contains provisions with respect to the
Seller's obtaining the approval hereof from at least fifty one (51%) percent in
interest of its limited partners (the "LIMITED PARTNERS' APPROVAL").
NOW THEREFORE, in consideration of the respective promises of the
parties contained herein, it is agreed as follows:
1. Sale and Purchase of Property
Seller agrees to sell, and Buyer agrees to buy, subject to the
terms and conditions in this Agreement, the following real and personal
property (hereinafter collectively referred to as the "PROPERTY").
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(a) All those certain lots, tracts or parcels of land and
premises described in Schedule "A" annexed hereto, together with all of the
buildings and improvements thereon, and together with (i) all right, title,
estate and interest of Seller, if any, in and to strips, gores, easements,
rights of way, privileges, appurtenances, and rights to the same belonging to
and inuring to the benefit of the Property and (ii) all right, title and
interest, if any, of Seller in and to (A) any land lying in the bed of any
street, road or avenue opened or proposed in front of or adjoining the
Property, (B) any award or payment made, or to be made, (x) for any taking in
condemnation, eminent domain or agreement in lieu thereof of land adjoining the
Property, (y) for damage to the Property or any part thereof by reason of
change of grade or closing of any such interest, road, highway or avenue, and
(z) for any taking in condemnation or eminent domain of any part of the
Property, and (C) to the extent assignable without consent or costs, all
licenses, franchises, permits and contracts relating to the Property.
(b) All furniture, fixtures, equipment and other items of
personal property owned by Seller, if any, which are (i) located on the
Property as of the date hereof and used in connection with the operation
thereof, including, without limitation, carpeting, plumbing, air-conditioning
and heating fixtures and units of every kind and description, machinery,
meters, dynamos, boilers, repair parts, maintenance equipment, and landscaping
equipment, tools, vehicles, and tractors and expendable supplies, drawings,
surveys, books, papers and records relating to the Property, or (ii) attached
to or appurtenant to the Property or used in connection with the operation of
the Property and all supplies, fixtures and personal property purchased by
Seller for the Property between the date hereof and the Closing Date
(collectively, the "PERSONAL PROPERTY").
(c) All of Seller's right, title and interest, if any, as
Landlord with respect to the leases of space in the Property existing as of the
Closing Date (the "LEASES").
(d) All of Seller's right, title and interest, if any, in
and to (A) the trade name "CHESTER SPRINGS SHOPPING CENTER" as well as any
other trade name used in connection with the Property and any derivation
thereof, (B) all "SERVICE AGREEMENTS" (as hereinafter defined), (C) all
assignable warranties, guaranties, licenses, franchise permits and contracts,
(D) all certificates of occupancy and other licenses and permits regarding the
use, occupancy and/or development of the Property and (E) all claims and/or
causes of action relating to the enforcement of any warranties and guaranties
in connection with the Property, all without representation or warranty, except
as otherwise set forth in this Agreement.
2. Buyer's Inspection Period
2.1 The Inspection Period and Buyer's Activities
(a) Buyer shall have a period of time (the
"INSPECTION PERIOD") in which to do the acts listed below. The Inspection
Period shall commence on the "EFFECTIVE DATE" (as such term is defined in
paragraph 3.3 hereof) and shall continue for sixty (60) days thereafter,
provided however, that Buyer shall have the right, in its sole discretion upon
notice to Seller, to extend the Inspection Period for two (2) additional
periods of thirty (30) days each.
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(b) During the Inspection Period the Buyer, and
its authorized agents, shall have the right to do the following, all at the
Buyer's sole cost and expense:
(i) examine and copy (at Buyer's
expense) the books, records and accounts of Seller for the purposes of
verifying the income and expenses of the Property and information about the
Leases and the tenants, provided however, that Buyer agrees to keep such
information confidential except as may be required by law;
(ii) make such physical examinations and
inspections of the Property and all permits and approvals affecting the
Property, including environmental investigations, as Buyer may desire;
provided, however, that Buyer agrees not to unreasonably interfere with the
operations on the Property as a result of its inspections, except with the
consent of Seller (which shall not be unreasonably withheld) and to indemnify
and hold harmless the Seller from any claims or damages resulting from Buyer's
inspections or entry upon the Property, which undertakings by Buyer shall
survive (i) the termination or cancellation of this Agreement or (ii) the
Closing; and
(iii) perform such other investigations as
Buyer may desire.
(c) The Inspection Period shall expire at 11:59
p.m. at the prevailing time in New Jersey on the last day of the Inspection
Period. Buyer shall have the right to terminate this Agreement by the giving
of written notice (a "TERMINATION NOTICE") to Seller at any time prior to the
expiration of the Inspection Period, stating that Buyer, in its sole and
absolute discretion, is not satisfied as to the results of its investigations
and desires to terminate this Agreement. In case of such termination, neither
party shall have any further liability to the other, except as expressly set
forth herein, and except that Seller shall reimburse Buyer for the legal fees
incurred by Buyer in connection with the preparation and negotiation of this
Agreement as well as during the Inspection Period up to a maximum amount of
$20,000.00 (the "REIMBURSEMENT AMOUNT"). If Buyer should terminate this
Agreement in accordance with the provisions of this paragraph 2.1, Buyer shall,
upon request by Seller and at Seller's cost, provide Seller with copies of any
reports prepared for Buyer by independent third parties.
2.2 Access for Buyer
(a) In conjunction therewith, throughout the Inspection
Period, upon at least 24 hours' prior notice, Seller shall give Buyer and its
employees, agents, engineers, architects and other representatives, as well as
any governmental officials requested by Buyer, on business days, full access to
the accounts, records and documents of the Seller relating to the Property
described in Paragraph 2.2(b) hereof and to the Property during normal business
hours, and in the case of access to space leased to any tenant, subject to the
rights of such tenant under its lease and to such tenant's requirements that
the notice be greater than 24 hours. Access to governmental officials shall
not include access to Seller's books, records, documents and accounts.
Furthermore, Buyer and/or its representatives shall, if requested by Seller, be
accompanied by a representative of Seller upon all physical, structural,
mechanical, electrical and environmental investigations and inspections and
Buyer and/or its representatives shall promptly upon completion of any
inspection repair any damage caused by such inspection at Buyer's expense in a
timely manner. The obligations of Buyer to so repair any damage shall survive
the termination of this Agreement.
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(b) Seller shall make available to Buyer at the office of
Seller or at the office of its managing agent on the Property (provided such
information described hereinafter shall be assembled in only one of the two
places for Buyer's examination and/or copying at Buyer's cost) all information
including but not limited to all correspondence, permits, approvals, all
reports of any governmental agency and all reports of any consultants
concerning the Property and/or the operation thereof which Buyer reasonably
requests and is in the possession or custody of Seller, its agents or its
managing agent. In addition to the foregoing, if requested by Buyer, Seller
shall provide Buyer with true copies of operating statements for the Property
for the last three years and any and all correspondence, governmental orders,
notices and/or violation reports, consultant reports, plans and specifications
regarding the sewage treatment plant at the Property and the "EXPANSION" (as
such term is hereinafter defined) which is in the possession or custody of
Seller, its agents or its managing agent. With respect to items in the
possession of Seller's agents (but for this purpose not including the managing
agent), Seller shall only be required to use all reasonable efforts to cause
such agents to provide the requested items.
2.3 Liability of Seller in Certain Instances for Buyer's Third
Party Expenses
To the extent that Buyer incurs third party costs and
expenses, such as engineering fees, title insurance charges, attorneys' fee
(including attorneys' fees in the negotiation and execution of this Agreement),
and the like (as distinguished from internal costs, expenses and overhead of
Buyer or any related entity) in conducting studies and investigations during
the Investigation Period, Seller shall pay and reimburse Buyer for such costs
and expenses up to the Reimbursement Amount in case of willful default by
Seller.
2.4 Seller's Furnishing of Materials to Buyer During the
Inspection Period; Return Thereof After
Seller agrees to deliver to Buyer, at Buyer's
cost, immediately after the Effective Date, copies of all
architectural and engineering studies, surveys, soil borings and other
data concerning the Property in Seller's possession or custody or that
of its managing agent; and, if Buyer shall serve a Termination Notice,
Buyer shall return the same to Seller, provided Seller reimburses
Buyer for any amounts paid by Seller for copying.
3. Limited Partners' Approval Contingency; Effective Date of this
Contract
3.1 The Approvals from Limited Partners
Forthwith after the date of this Contract, Seller
shall send to each of its Limited Partners a written request for a written
approval of the transactions contemplated hereby.
3.2 The Approvals Period: Consequences of
Failure to Obtain the Approvals
(a) Seller hereby covenants and agrees to use all
reasonable efforts in good faith effort to obtain the Limited Partners'
Approval as soon as possible.
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(b) If by the expiration of ten (10) business
days from the date hereof (the "APPROVAL PERIOD"), Seller has not given Buyer a
written notice (an "APPROVAL NOTICE") advising Buyer that Seller has received
written Limited Partners' Approvals from the holders of at least fifty one
(51%) percent in interest of the Limited Partners, then this Agreement shall
automatically terminate unless the parties enter into a written extension of
the Approval Period.
(c) If Seller shall have complied with the
provisions of paragraph 3.2(a) above but the Limited Partners' Approval is not
obtained, neither party shall have any further liability to the other, except
as expressly set forth herein, and except that Seller shall reimburse Buyer
the Reimbursement Amount.
3.3 Effective Date of the Contract
The "EFFECTIVE DATE" of this Contract shall be the
date Buyer actually receives the Approval Notice.
4. Closing
4.1 The Closing; Closing Date and Place of Closing
(a) Subject to satisfaction and fulfillment of
conditions precedent provided for herein, closing of title (the "CLOSING")
shall take place after the Buyer has allowed the Inspection Period to elapse
without serving a Termination Notice. The Closing shall take place on the date
(the "CLOSING DATE") which is the later of (i) thirty (30) days after the
expiration of the Inspection Period (as the same may be extended by agreement
of the parties) or (ii) thirty (30) days after the date on which Seller has
obtained the "LETTER OF NON-APPLICABILITY" or the De Minimus Quantity
Exception(as such terms are described in paragraph 27.1 hereof), subject to the
provisions of the last sentence of paragraph 27.2(a) hereof. If prior to the
expiration of the Inspection Period, Buyer shall send to Seller written notice
that Buyer waives the right to send a Termination Notice, then the date of such
written notice shall be deemed to be the last day of the Inspection Period for
the purpose of this subparagraph 4.1(a).
(b) Closing shall take place on the Closing Date
and shall be held at the offices of Buyer's attorneys, Dreyer and Traub, in New
York, New York, or such other location as the parties may agree upon.
4.2 Entry and Possession, etc.
Upon the Closing, Buyer may enter upon the Property
and from thence take to itself the rents, issues and profits, subject to the
provisions of this Agreement dealing with apportionments and adjustments.
5. Purchase Price; Allocation of Purchase Price
and Manner of Payment
5.1 Purchase Price
The total purchase price to be paid by Buyer shall be
$19,300,000.00 payable as more particularly set forth herein.
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5.2 Deposit
(a) Unless this Contract has been terminated
pursuant to the terms and conditions herein, Buyer shall make a deposit (the
"DEPOSIT") of Nineteen Thousand Three Hundred ($19,300.00) Dollars within seven
(7) days after the expiration of the Inspection Period.
(b) The Deposit shall be held in escrow by the
Escrow Agent in accordance with the further provisions of this Agreement until
this Agreement is closed or is terminated in accordance with its terms.
(c) Failure by Buyer to make the required
Deposit, or the nonpayment in due course of any check tendered as the Deposit,
shall be a default, entitling Seller to cancel this Agreement.
5.3 Payment of Deposits and Balance of
the Purchase Price at Closing
At the Closing, the Deposit shall be released to
Seller and Buyer shall, subject to the provisions of this Agreement dealing
with apportionments and adjustments, pay to Seller, or order, the sum of
Nineteen Million Two Hundred Eighty Thousand Seven Hundred ($19,280,700)
Dollars, by wire transfer of federal funds or by bank and/or certified check,
except to the extent that Seller agrees to another mode of payment.
6. Tenancies, Present and Arising Before Closing
6.1 Vacant Space and Present Tenancies, Etc.
Seller makes the following warranties and
representations as of the date hereof:
(a) Schedule "C" annexed hereto (the "CURRENT
RENT ROLL") lists all vacant space and all Leases and amendments thereto
affecting the Property (the "LEASES") and accurately sets forth for each
tenant:
(i) the name of the tenant;
(ii) designation of the demised premises;
(iii) expiration date of the current term;
(iv) fixed rent applicable to current
term;
(v) date of increases in fixed rent and
amount thereof;
(vi) security deposit actually held by
landlord;
(vii) Monthly amounts currently billed by
Seller on account of tenant's
"proportionate share" of taxes,
common area operating expenses,
etc.; and
(viii) arrearages in rent and/or other
charges.
(b) Upon execution of this Agreement by Buyer and
Seller, Seller agrees to provide Buyer with copies of all Leases and access to
the original Lease Documents in the possession or custody of Seller or its
managing agent for inspection by Buyer and/or its agents, attorney's or
representatives.
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(c) Except as set forth in an addendum to
Schedule "C" annexed hereto, to the best of Seller's knowledge, all of the
tenants under the Leases are in occupancy of the space set forth opposite their
respective names, and no tenant has, to Seller's best knowledge, subleased any
of its space or assigned its Lease.
(d) All of the Leases are in full force and
effect; and, except as may be provided by law, no Lease or other instrument in
writing signed by Seller gives any tenant the right to renew or extend the
existing Lease, except as may be indicated in such Lease.
(e) There are no brokerage or other leasing
commissions payable either before or after the Closing with respect to any
existing Leases or renewals of same or increases or other changes in space.
During Seller's ownership of the Property, Seller utilized the services of only
the following leasing brokers and none other: Hamil Realty (collectively, the
"LEASING BROKERS").
(f) Except as may be set forth on Schedule "E"
annexed hereto, no tenant has asserted any claim of which Seller has written
notice which would adversely affect the right of the landlord to collect rent
from such tenant; and no written notice of default or breach on the part of
landlord under any of the tenant leases has been received by Seller from the
tenant thereunder.
(g) Except as set forth on Schedule "E" annexed
hereto, Seller has no written notice of (i) the intention of any present tenant
of the Property to vacate its space in the Shopping Center prior to the
expiration of the current term of its Lease; (ii) any right of offset against
rent claimed by any tenant; or (iii) any assertion by any tenant of rights to
improvements not made or options not disclosed in any schedule to this
Agreement.
(h) To the best of Seller's actual knowledge, the
Seller has not acted, or failed to act, in such a manner so as to void or
materially violate its Lease with any tenant.
(i) To the best of Seller's actual knowledge,
Seller has not modified, amended or supplemented any Lease so as to relieve any
guarantor or surety from the obligations or responsibilities of such person or
entity as guarantor of, or surety with respect to, the obligations of the
tenant under the Lease.
(j) Except as set forth on Schedule "B" annexed
hereto, there exists no agreement or understanding under which the Seller or
any affiliated party has assumed any of a tenant's responsibility or obligation
under a Lease; and Seller has made no arrangements with any tenant covering
free rent, partial rent, rebate of rent or other type of rental concession with
respect to the Property.
(k) Seller has not, directly or indirectly, made
any loans to any tenant or guaranteed any loans to any tenant.
(l) Except as set forth on Schedule "E" annexed
hereto, neither the Seller (nor any affiliate or agent) has received written
notice that any tenant disputes the computation of any rents, additional rents,
occupancy costs or other sums payable pursuant to its Lease or claims a breach
of any covenant, representation or warranty made by the Seller (or any
affiliate or agent) in such tenant's Lease.
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(m) The amendment to lease with respect to
Shop-Rite, a true, correct and complete copy of which is annexed hereto as
Schedule "I" has been fully executed and delivered, is in full force and effect
and Seller has not received any written notice from Shop-Rite asserting
otherwise.
6.2 Leasing Between Contract and Closing.
Between the date hereof and Closing, Seller shall not
rent any now vacant space or extend the term or any existing Lease without the
prior written consent of Buyer, which shall not be unreasonably withheld or
delayed. Nothing in this paragraph shall be deemed to modify, amend or
abrogate the terms and provisions of the "WRAP MORTGAGE" (as such term is
defined in paragraph 28 hereof) or any rights of the holder the Wrap Mortgage.
6.3 Conditions Precedent Concerning Tenancies; Buyer's
Obligation To Close
(a) The Buyer's obligation to close and take
title to the Property is subject to the satisfaction and fulfillment of the
following conditions precedent with respect to tenancies at the Property as of
the Closing Date:
(1) Shop-Rite, Channel, R.J. Mars, Burger King
and Super X Drugs (the "MAJOR TENANTS") are observing or performing all of the
material obligations of their respective Leases; including, but not limited to,
the obligations to pay base rent, percentage rent, additional rent and common
area operating, maintenance or similar charges as required by the terms of
their respective Leases; and,
(2) All Major Tenants remain in occupancy at
their demised premises and are continuing to operate their respective business
in the ordinary course of business; and,
(3) None of the Major Tenants is the subject of
any pending or imminent bankruptcy proceeding; and,
(4) Tenants at the Property in occupancy as of
the date hereof other than the Major Tenants (the "SATELLITE TENANTS"),
accounting for gross operating income to Seller equal to, or greater than,
ninety percent (90%) of the total gross operating income of the Property
(including base rent, percentage rent, additional rent and common area
operating, maintenance or similar charges) received or derived by Seller from
the Leases with such Satellite Tenants as of the date of this Agreement (the
"TOTAL GROSS SATELLITE OPERATING INCOME"): (A) are observing or performing all
of the material obligations under their respective Leases including, but not
limited to, the obligations to pay base rent, percentage rent, additional rent
and common area operating, maintenance and/or similar charges as required by
their respective Leases; and/or (B) have not vacated their respective demised
premises (the "SATELLITE TENANCY INCOME TEST") provided, however, that for
purposes of this subparagraph (4) any income received or derived by Seller from
(a) the lease of space to Linens N' Things, (b) the lease of space to the
cinema at the Property and (c) any space at the Property which is vacant as of
the date hereof shall not be included in the calculation of Total Gross
Satellite Operating Income or towards the satisfaction and fulfillment of the
Satellite Tenancy Income Test.
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6.4 Acceptance of Title Subject to Tenant Defaults
Subject to the provisions of Paragraph 6.3, Buyer
shall take title subject to any default by the tenants under the Leases now
existing or arising or accruing after the date hereof.
7. Certain Warranties and Representations of Seller
Seller makes the following covenants, warranties, and
representations, which are true and correct as of the date of this Agreement,
and which shall survive the Closing as set forth in Paragraph 21 hereof. It is
a condition precedent of Buyer's obligation to close the within purchase that
all of the Seller's warranties and representations made in this paragraph 7 and
elsewhere in this Agreement remain true in all material respects as of the
Closing Date and that Seller has in all material respects duly performed or
complied with all of Seller's obligations to be performed or complied with
under this Agreement:
7.1 Ownership and Authority
(a) Seller is the legal and equitable owner of
the Property. The general partners of Seller are Michael Miller and Real
Estate Equities Corp., a New York corporation.
(b) There are no existing contracts of sale,
options to purchase, or rights of first refusal to purchase with respect to all
or any portion of the Property therein made by Seller; and Seller shall not
hereafter grant any such rights in and to the Property.
(c) The consent of at least the holders of a
majority of Seller's Limited Partner interests is required to approve the
transactions contemplated by this Agreement.
7.2 No Litigation, Claims, Etc.
Except as may be set forth on Schedule "F" annexed
hereto, to the best of Seller's actual knowledge there are no pending, or
threatened (as evidenced by written demand or notice), litigations, claims,
condemnations or sales in lieu thereof, with respect to the Property. Pending
or threatened litigation or claims covered by insurance are so designated on
Schedule "F".
7.3 Supplying of Services to Tenants
Seller has received no written notice from a tenant
of any failure of Seller to supply any service required to be supplied to any
of the tenants.
7.4 Real Estate Tax Appeals
There are no pending proceedings appealing the real
estate taxes on the Property.
7.5 Service, Maintenance or Supply Agreements
(a) There are no service, equipment, supply
security, maintenance, concession or other agreements with respect to or
affecting the Property, except the agreements listed in Schedule "G" annexed
hereto (all such agreements herein collectively called "SERVICE AGREEMENTS").
(b) To the best of Seller's actual knowledge,
neither Seller nor the other party to any of the Service Agreements is in
material default thereunder; and,
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no event or omission has occurred which with the giving of notice or lapse of
time, or both, would constitute a material default or breach under the Service
Agreements.
(c) Except as to Service Agreements which cannot
be terminated prior to the Closing Date or as to a Service Agreement which is
assignable and which Buyer desires to have assigned to it, Service Agreements
shall be terminated one day prior to the Closing Date, unless Buyer gives
Seller a written instruction to the contrary.
(d) Annexed hereto as Schedule "G" are copies of
the written Service Agreements; and, as to oral agreements, Schedule "G"
contains the material terms thereof.
7.6 Environmental Matters
(a) The term "HAZARDOUS MATERIALS" as used herein
includes, without limitation, gasoline, petroleum products, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or
toxic substances, polychlorinated biphenyls or related or similar materials,
asbestos or any material containing asbestos, or any other substance or
material as may be defined as a hazardous or toxic substance by any Federal,
state or local environmental law, ordinance, rule or regulation, including
without limitation, the New Jersey Spill Compensation and Control Act (N.J.S.A.
58:10 - 23.11 et seq.), the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.); the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et
seq); the Resource Conservation Act, as amended (42 U.S.C. Sections 1251 et
seq.); the Clean Air Act (42 U.S.C. Sections 7401, et seq.) and in the
regulations adopted and publications promulgated pursuant thereto.
(b) To the best of Seller's knowledge and belief,
(i) the Property is not now, and has never been used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce, process or
in any manner deal with, Hazardous Materials in violation of any Environmental
Law, except for the operation of the sewage treatment plan; (ii) Seller has no
knowledge that Hazardous Materials have ever been installed, placed or in any
manner dealt with on the Property in violation of any Environmental Law except
for the operation of the sewage treatment plan; and (iii) no owner of the
Property or any tenant, subtenant, occupant, prior tenant, prior subtenant,
prior occupant or person (collectively, "OCCUPANT") has received any notice or
advice from any governmental agency or any Occupant with regard to Hazardous
Materials on, from or affecting the Property. Buyer understands and
acknowledges that Seller has not performed any independent investigation with
regard to the matters set forth in this subparagraph 7.6(b) to the extent the
same relates to parties other than Seller.
(c) To the best of Seller's actual knowledge,
there are no "wetlands" affecting the Shopping Center. To the best of its
knowledge, Seller has received a so-called "letter of interpretation" from the
NJDEPE or other applicable governmental authority with regard to the Proposed
Office Site, but has not received a similar letter with regard to any other
portion of the Property. If the same has been issued, Seller shall provide
Buyer with a copy of such "letter of interpretation" promptly following the
date hereof.
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7.7 Violations
(a) Except (i) as set forth on Schedule "D"
annexed hereto (the "EXISTING VIOLATION") and (ii) with respect to the "ACO"
(as such term is hereinafter defined), Seller has not received any written
notice of any alleged violation of any fire, zoning, building or health laws,
regulations or rulings, whether federal, state or local, or any other alleged
violations of law which affect the Property and which violations have not been
corrected, cured or remedied by Seller to the satisfaction of the applicable
governmental authority. Seller shall pay the amount of the Existing Violation
and cause the same to be discharged prior to Closing. All notes or notices of
violations of law or governmental ordinances, orders or requirements about
which Seller receives written notice subsequent to the date of this Agreement
but prior to the Closing Date from any governmental authority having
jurisdiction as to conditions affecting the Property (the foregoing being
together called "VIOLATIONS"), shall be obligations of the Seller to comply
with, discharge, remove or cause to be removed, subject to the further
provisions of this paragraph. Seller shall have no obligation to cure any
Violations if the amount required to be spent to comply with, discharge or
remove Violations which Seller may be otherwise required to remove hereunder
shall exceed, in the aggregate, the amount (such amount being called the "CURE
AMOUNT") of $50,000.00. If the amount required to be spent to comply with,
discharge or remove Violations which Seller is required to remove hereunder
shall exceed $50,000.00 in the aggregate, then the Seller shall elect by notice
to Buyer either (i) to cure and remove such Violations in accordance with this
Agreement, if the same can reasonably be cured on or prior to the Closing Date
(the "CURE OPTION") or (ii) to terminate this Agreement (the "CANCELLATION
OPTION"). If Seller elects the Cancellation Option, then this Agreement shall
be terminated and Buyer shall receive (i) a return of the Deposit plus interest
and (ii) the Reimbursement Amount, unless the Buyer, within 10 days after the
giving of notice of the exercise of the Cancellation Option from the Seller,
elects by notice to the Seller to accept title to the Property subject to such
Violations, in which event Buyer shall be entitled to a credit in an amount
equal to the Cure Amount (less any amount theretofore expended by Seller
attempting to cure Violations) against the balance of the purchase price.
Notwithstanding anything to the contrary, costs of compliance by Seller with
the ACO shall not be subject to the Cure Amount and Seller shall be required to
comply with the requirements required by the terms of the ACO to be complied
with the prior to the Closing Date, regardless of the cost of compliance.
(b) Annexed hereto as Schedule "M" is a true and
correct copy of all certificates of occupancy, building permits, certificates
of environmental impact approval, underwriters certificates relating to
electrical work, all zoning, building, housing, safety, fire and health
approvals and all other approvals, permits and licenses presently in the
possession or custody of Seller, its agents or its managing agent relating to
the Property (collectively, the "ATTACHED PERMITS").
7.8 Agreement with National Westminster
Bank, N.J.
Seller represents and warrants to Buyer as follows:
(i) Annexed hereto as Schedule "Q" is a true,
correct and complete copy of a Deed dated December 27, 1977 from Chester
Springs Associates (predecessor-in-
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interest to Seller) and Roxbury State Bank (predecessor-in-interest to National
Westminster Bank, N.J. ("NAT WEST")), as amended by an Agreement Amending Deed
dated January 23, 1992 between Seller and Nat West (the Deed, as so amended, is
herein collectively called the "NAT WEST AGREEMENT");
(ii) The Nat West Agreement is in full force and
effect and has not been further modified and/or amended in any respect;
(iii) Seller is in compliance with all of its
material obligations pursuant to the Nat West Agreement, including, without
limitation, providing to Nat West the requisite sewer and water service and
insurance coverage. Subsequent to January 23, 1992, Seller has not received
written notice from Nat West of (a) any default pursuant to the terms of the
Nat West Agreement or (b) any claim of offset against the sums due Seller
pursuant to the Nat West Agreement. To the best of Seller's knowledge, Nat
West is in compliance with the terms and provisions of the Nat West Agreement,
including without limitation, providing to Seller the requisite insurance
coverage. Subsequent to January 23, 1992, Seller has not notified Nat West of
any default by Nat West pursuant to the terms of the Nat West Agreement.
7.9 Deleted Prior to Execution
7.10 Geologic and Soil Conditions
Seller has received no written notice of any adverse
geological or soil condition affecting the Property.
7.11 No Underground Storage Tanks
To the best of Seller's knowledge, no underground
storage tanks exist at the Property and Seller has never installed any
underground storage tanks on the Property.
7.12 No Commitments for Money; Off-Site
Improvements, etc.
No written commitments have been or will be made by
or on behalf of Seller to any governmental authority, utility company, school
board, church or other religious body, or any homeowner or homeowners'
association or to any other party in connection with any rezoning proceeding or
other matters relating to the Property which would impose any obligation on the
Buyer, or its successors or assigns, to make any contribution or dedication of
money or land, or to construct or maintain any improvements of a public or
private nature on or off the Property unless such commitments have been
approved and accepted in writing by Buyer.
7.13 Merchants' Association
There is no merchants' association or promotional
fund at the Shopping Center.
7.14 Employees
(a) Annexed hereto as Schedule "H" is a true,
correct and complete list of employees presently employed by Seller in the
operation and maintenance of the Property and the wages or other benefits
presently paid to such employees, none of whom is a member of any trade union.
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(b) There are no collective bargaining
agreements, employee work manuals or other contracts covering such employees or
any agreements giving them the right to continued employment; and their
employment may be terminated on such prior written notice as is provided by
law.
(c) Seller is unaware of any union-organizing
activities respecting the employees or the Property.
(d) Seller shall terminate, prior to Closing, all
employees Buyer does not elect to retain (by written notice to Seller at least
thirty (30) days prior to Closing). By taking title to the Property, Buyer is
not to be deemed in any manner to be a successor employer.
7.15 Deleted Prior to Execution
7.16 Utilities
To the best of Seller's knowledge, there has been no
unusual amount of interruption or rationing of electrical, water or other
necessary utility services at the Property within the four years previous to
this Agreement, other than occasional rationing of water supplies and/or usage
for non-consumption purposes such as lawn sprinkling.
7.17 Deleted Prior to Execution
7.18 Deleted Prior to Execution
7.19 Insurance Now Maintained by the Seller
Annexed hereto as Schedule "J" is a true and complete list of
all of the present insurance now maintained by the Seller, listing the
companies, the coverages, the policy periods and the premiums.
7.20 Status of Development of Vacant Land
Annexed hereto as Schedule "L" is a true, correct and complete
description of the present status of the existing approvals for a parcel of
land of approximately one (1) acre adjacent to the Shopping Center, which
parcel is owned by Seller, is included within the legal description set forth
in Schedule "A" hereto and will be conveyed to Buyer in accordance with the
terms and provisions of this Agreement.
7.21 Deleted Prior to Execution
7.22 Knowledge of Zoning, Etc.
The Seller has received no written notice of (i) any pending
or contemplated annexation or condemnation proceedings, or private purchase in
lieu thereof, affecting the Property, or any part thereof, (ii) any proposed or
pending proceeding to change or redefine the zoning classification of all or
any part of the Property, (iii) any proposed or pending special assessments
affecting the Property or any portion thereof, and (iv) any proposed change(s)
in any road patterns or grades with respect to the roads providing a means of
ingress and egress to the Property. Seller agrees to furnish Buyer with a copy
of any such notice received within two (2) days after receipt.
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7.A Certain Representations and Warranties of Buyer
Buyer makes the following covenants, warranties and
representations, which are true and correct as of the date of this Agreement
and which shall be true and correct in all material respects as of the Closing
Date.
7.A.1 Organization and Authority
(a) Buyer is a corporation, duly organized and
validity existing under the laws of the State of Delaware, and Buyer has all
requisite power and authority to execute and deliver this Agreement and
consummate the transactions contemplated herein.
(b) This Agreement has been duly and validly
authorized, executed and delivered by Buyer and constitutes the valid and
binding obligation of Buyer.
(c) No approval, consent, order or authorization
of, or designation, registration or declaration with, (i) any shareholders or
members of Buyer, or (ii) any governmental authority is required in connection
with the valid execution and delivery of, and compliance with, this Agreement
by Buyer.
(d) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will
constitute a violation or breach by Buyer of (i) any certificate or agreement
of organization of Buyer, (ii) any provision of any agreement or other
instrument to which Buyer is a party or to which Buyer may be subject, or (iii)
any judgment, order, writ, statute, rule, regulation, injunction or decree of
any court or governmental authority.
8. Title to be Delivered
8.1 Title; Title Insurance; Permitted Encumbrances
(a) The title to the Property to be
delivered to Buyer at Closing shall be insurable in accordance with the terms
of this Agreement in the name of Buyer by a title company satisfactory to Buyer
licensed to do business in the state in which the Property is located. The
insurance shall be at ordinary premium rates pursuant to Standard Stipulations
and Conditions of an ALTA Policy of Title Insurance (1970-Form B) or, at
Buyer's sole election, any other form of title insurance issued in the State of
New Jersey, in either case in the full amount of the Purchase Price and shall
be (i) free and clear of all liens, judgments, mortgages, real estate taxes and
assessments which can be satisfied upon the payment of a sum of money and (ii)
free and clear of any other title exceptions other than other title matters
(the "PERMITTED ENCUMBRANCES") specified as exceptions listed in Schedule "K"
annexed hereto. Title insurance and related charges shall be at Buyer's sole
cost and expense.
(b) Buyer shall with reasonable
promptness send or cause the title company to send Seller's counsel copies of
the title report and all updates Buyer receives (including all schedules and
exhibits).
(c) Buyer agrees, promptly after receipt
of any additional information relevant to title to the Property furnished to
Buyer by the title company, to notify Seller's counsel, in writing and in
reasonable
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detail, of any respects in which title to the Property is other than as set
forth herein or in what respect it appears from record title that Seller is
unable to comply with the provisions of this Agreement.
8.2 Non-Permitted Encumbrances; Cure
(a) Seller shall, at its sole cost and expense
and regardless of the cost thereof, be obligated to fully cure and either (i)
remove from record prior to or on the Closing Date or (ii) if and only if
Buyer's title Company will at Closing omit the same from the title policy to be
issued to Buyer, deliver to Buyer's title company on the Closing Date for
recordation (together with the appropriate recordation fees therefor) any and
all documents necessary in order to remove from record any and all mortgages,
judgments, liens, and unpaid real estate taxes and/or assessments which can be
satisfied upon the payment of a sum of money affecting all or any portion of
the Premises (the "REQUIRED CURE ITEMS").
(b) As to any matter relating to title which is
neither a Permitted Encumbrance nor a Required Cure Item (each , a
"NON-PERMITTED ENCUMBRANCE"), Seller shall take all reasonable actions to
eliminate the Non-Permitted Encumbrance provided, however, that Seller shall
not be required to spend more than $25,000.00 in the aggregate to remove
Non-Permitted Encumbrances.
(c) As to a Non-Permitted Encumbrance which can
only be cured by the bringing of an action for specific performance or to quiet
title, Seller shall not be required to bring any such action, except if such
Non-Permitted Encumbrance was caused by a willful act or omission of Seller.
(d) Notwithstanding the foregoing, if there are
any Non-Permitted Encumbrances existing at Closing, then the Buyer may, at its
sole election, elect to close title subject to such Non Permitted Encumbrances
and receive a credit, if applicable, equal to $25,000.00 minus the amount of
any sums theretofore expended by Seller in curing Non-Permitted Encumbrances.
(e) Notwithstanding anything herein to the
contrary, it is understood and agreed that with respect to the third mortgage
(the "THIRD MORTGAGE") presently encumbering the Property now held, according
to Seller, by BM Equities, Ltd. and collaterally assigned to The First New York
Bank for Business (which institution has been taken over by the FDIC), if and
only if the following procedures are fully complied with on the Closing Date,
Seller shall not be required to satisfy and discharge the Third Mortgage on or
prior to Closing Date:
(i) Buyer's title company omits any
exception for the Third Mortgage
from the title policy to be issued
to Buyer, without additional
premium;
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(ii) Seller delivers an estoppel letter
from both BM Equities Ltd. and the
FDIC and/or other evidence
satisfactory in all respects to
Buyer and Buyer's title company with
respect to the amounts due and owing
pursuant to the terms of the Third
Mortgage as of the Closing Date (the
"CLOSING DATE PAY-OFF AMOUNT");
(iii) Seller deposits with Buyer's title
company pursuant to the terms of an
agreement satisfactory to Buyer's
title company and reasonably
satisfactory to Buyer (a) an amount
(the "THIRD MORTGAGE DEPOSIT
AMOUNT") required by Buyer's title
company to assure the satisfaction
and discharge of record of the Third
Mortgage, which Third Mortgage
Deposit Amount shall be not less
than (X) the sum of (I) the Closing
Date Pay-Off Amount and (II) Buyer's
title company's estimation of the
anticipated amounts which will
accrue on the Third Mortgage for the
one (1) year period following the
Closing Date (which estimation may
utilize the default interest rate
set forth in the Third Mortgage) or
(Y) such other sum as required by
Buyer's title company and (b) a
satisfaction of the Third Mortgage
executed by BM Equities Ltd. in
recordable form and otherwise in
form satisfactory to Buyer's title
company, together with a proper
assignment in recordable form and in
form otherwise acceptable to Buyer's
title company of the Third Mortgage
in favor of BM Equities Ltd.
(collectively, the "BM
SATISFACTION"); and
(iv) The agreement contemplated under
subparagraph (iii) above shall
provide, inter alia, that, if Seller
has not fully satisfied and
discharged the Third Mortgage of
record on or before the date which
is one (1) year from the Closing
Date, then Buyer's title company
shall (i) immediately use the Third
Mortgage Deposit Amount to fully
satisfy and discharge the Third
Mortgage, (ii) immediately record
the BM Satisfaction and (iii)
immediately proceed to obtain from
the FDIC (or other holder thereof)
and record a
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discharge of the collateral
assignment of the Third Mortgage
and (iv) when all actions with
respect to the satisfaction and
discharge of record have been
performed to the satisfaction of
Buyer's title company, return to
Seller any of the Third Mortgage
Deposit Amount remaining, if any.
(f) Notwithstanding anything herein to
the contrary, at Buyer's sole option and if and only if Buyer so requests prior
to the Closing, (i) in lieu of Seller causing Morgan Guaranty Trust Company of
New York ("Morgan"), the holder of the first mortgage on the Property, to
deliver a satisfaction of mortgage at closing upon payment of all sums due
Morgan, Seller shall request that Morgan, upon payment of all sums due Morgan,
assign such first mortgage to an entity designated by Buyer and use reasonable
efforts to cause Morgan to so assign the first mortgage, provided however, that
if as a result of such assignment, Morgan charges fees in excess of the fees
that would have been charged for a delivery of a satisfaction, Buyer shall pay
such fees and/or (ii) all sums due and owing pursuant to the Wrap Mortgage as
of the Closing Date (excluding any sums due Morgan) shall be credited in favor
of Buyer against the purchase price and Buyer shall take title subject to the
Wrap Mortgage.
Buyer agrees not to impede Seller's efforts to obtain the approval of
Buyer's title company to the provisions of this subparagraph 8.2(e).
9. Default by Buyer; Seller's Remedies
If Buyer defaults in failing to close as required hereunder, then
Seller's sole and exclusive remedy shall be to retain or receive, as the case
may be, the Deposit, plus interest earned thereon as "LIQUIDATED DAMAGES" and
not as a penalty, it being agreed that upon a default by Buyer, Seller's
damages would be difficult, if not impossible, to ascertain.
10. Default by Seller-Buyer's Remedies
10.1 Default
If the sale of the Property is not consummated by
reason of a default of Seller, the Buyer shall have the right to enforce the
Seller's obligations hereunder by way of suit for a judgment, decree or order
for specific performance (and ancillary injunctive relief) or to terminate this
Agreement, with a return of the Deposit, plus interest earned thereon, and
payment by Seller to Buyer of the Reimbursement Amount.
10.2 Certain Remedies
In the event Seller is unable to deliver title to the
Property as specified in this Agreement, Buyer shall be entitled to (a) take
such title to the Property as Seller can deliver, without reduction in the
Purchase Price, except as is otherwise expressly set forth herein or (b) to
terminate this Agreement and to receive the Deposit, and interest earned
thereon, and payment by Seller to Buyer of the Reimbursement Amount.
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11. Taxes and Assessments
11.1 General Provisions re: Taxes
Seller shall pay or credit against the purchase price
all delinquent real estate taxes, together with penalties and interest thereon,
all assessments which are a lien against the Property as of the Closing Date
and for which the work has been completed prior to the Closing Date, both
current and reassessed and whether due and not yet payable, all use recoupment
taxes (agricultural or otherwise) for years through the year of Closing, if
any, and all real estate taxes for years prior to the Closing, through the
Closing Date. Seller represents and warrants that to its best knowledge, there
are no assessments against all or any portion of the Property as of the date
hereof.
11.2 Calculation of Pro-rations re: Taxes
(a) The proration of undetermined taxes shall be
based on a 365-day year and on the last available tax rate and valuations,
giving effect to applicable exemptions, recently voted millage, change in tax
rate or valuation, etc., only if officially certified. It is the intention of
the parties in making this tax proration, if the same shall be in favor of
Buyer, to give Buyer a credit as close in the amount as possible to the amount
which Buyer will be required to remit to the appropriate collector of real
property taxes for the period of time preceding the Closing Date.
(b) Upon making the proration provided for
herein, Seller and Buyer agree that the amount so computed shall be subject to
later adjustment should the amount credited at Closing be incorrect based upon
actual tax bills received by Buyer after Closing or upon subsequent adjustment
of the tax liability or real estate values for the year of sale.
11.3 Real Estate Tax Appeals
(a) If on the Effective Date of this Agreement
there are any pending proceedings appealing the real estate taxes on the
Property, or if such appeal proceedings are filed between the Effective Date of
this Contract and the Closing Date, Seller shall not withdraw, settle or
otherwise compromise the proceedings for any fiscal period in which the Closing
is to occur or any subsequent fiscal period without the prior written consent
of Buyer, which shall not be unreasonably withheld or delayed.
(b) Real estate tax refunds and credits received
after the Closing which are attributable to the fiscal tax year during which
the Closing occurs shall be apportioned between Seller and Buyer. The expenses
of collection thereof, including attorney and expert witness fees, shall
likewise be apportioned.
11.4 Assessments for Improvements
Seller warrants that all assessments now a lien are
shown on the public records of the collector of real property taxes; that no
improvements have been installed by public authority or Seller, the costs of
which are to be assessed against the Property in the future; and that Seller
has not been notified, in writing, of possible future improvements by public
authority, any part of the cost of which would or might be assessed against the
Property.
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12. Apportionments, Adjustments and Incidental Costs
12.1 General Provisions
The following shall be adjusted and apportioned
pro-rata between Seller and Buyer, as of 11:59 p.m. of the day preceding the
Closing Date:
(a) Real estate taxes and assessments, as set
forth in Paragraph 11.
(b) Rents including without limitation, fixed
rents, percentage rents, and all items of "ADDITIONAL RENT" (e.g.,
proportionate share of common area operating expenses, real estate taxes,
etc.);
(c) Amounts due under any maintenance or service
contract which Buyer elects to have assigned to it pursuant to this Agreement;
(d) Wages and payroll expenses, including
vacation and sick pay;
(e) The amounts of any escrows or deposits with
utility companies, provided the same are and can be assigned to Buyer;
(f) All other properly allocable items and/or
current charges affecting the Property.
12.2 Current Fixed Rents and Arrearages of Fixed Rent
For the purposes of this Paragraph 12.2:
(a) Unpaid rents for the month in which the
Closing takes place are "CLOSING MONTH RENTS"; unpaid rents for months prior to
the month in which the Closing takes place are "RENT ARREARAGES"; and rents for
the months following the month in which the Closing takes place are "CURRENT
RENTS".
(b) As to any tenant who at the Closing Date owes
Closing Month Rent and/or Rent Arrearages, the first monies received from such
tenant after the Closing Date shall be applied to one (1) month of Rent
Arrearages, if applicable, or, if not applicable, to Closing Month Rent (to be
apportioned between Seller and Buyer); the next monies to Closing Month Rent
(to be apportioned between Seller and Buyer); then to Current Rents which are
due and payable through the date of receipt by Buyer of the applicable payment;
and only when the tenant is fully current and makes additional payments shall
the additional payments be turned over to Seller to reimburse it for Rent
Arrearages.
(c) As to any dispossess actions pending at
Closing, Buyer may, in Buyer's sole discretion, diligently prosecute the same
to conclusion in a good faith attempt to obtain possession of the premises
demised to such tenants. As to any suits for rent against tenants who are
still in possession at Closing and against whom dispossess actions have been
commenced prior to Closing, Buyer may, at its sole election, elect to prosecute
same and in the event Buyer actually collects any Rent Arrearages as a result
thereby, Buyer agrees to remit the same to Seller. For purposes of the
preceding sentence, Buyer shall be entitled to first deduct from the sums
received from such tenant any sums owed Buyer for periods after the Closing and
any and all costs
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and expenses of Buyer in connection with prosecuting the respective action. As
to any tenant who is not completely current at the time of the Closing, Buyer
shall be free to institute suit to dispossess immediately.
(d) Buyer shall reasonably cooperate with Seller,
if required, at Seller's expense and in Seller's name, to enforce collection of
Rent Arrearages.
12.3 Security Deposits
At the Closing, there shall be paid or credited to
the Buyer the amount of all security deposits from tenants of the Property
(together with all interest required to be paid thereon whether by contract or
law), such amount to be determined for each tenant as the security deposit set
forth in such tenant's Lease which has not been properly applied in accordance
with the terms of such tenant's lease. Seller agrees not to apply any such
security deposits to unpaid rent after the date hereof.
12.4 Additional Rent
(a) To the extent that the items of additional
rent or percentage rent cannot be determined at Closing, the amount thereof for
the period ending on the Closing Date and an accounting showing a calculation
thereof, shall be paid and furnished to Seller by Buyer, if, as and when
received by Buyer after the Closing; and Buyer shall use its reasonable efforts
to collect additional rent and/or percentage rent.
(b) The apportionment shall be made on a calendar
year basis so that Seller shall receive a share thereof based upon the fraction
of which the numerator is the number of days in the year elapsing to the
Closing Date and the denominator is 365; and the Buyer shall retain the
balance. However, as to any Lease which has a "LEASE YEAR" which is not
calendar year, the apportionment shall be made on the basis of the "LEASE
YEAR".
12.5 Overpayment by Tenants of Estimated Items of
Additional Rent
If, after the Closing, it is discovered by Buyer that
Seller collected from any tenant estimated payment for such tenant's
proportionate share of items of additional rent payable under its Lease in
excess of the actual obligation owed by such tenant, Buyer shall give notice to
the Seller of this fact, setting forth the computations. Within ten (10)
business days after receiving such notice, Seller shall reimburse Buyer for the
amount of such excess, but only if Buyer's notice is given to Seller within
twelve (12) months of the Closing. The provisions of the paragraph shall
survive the Closing.
12.6 Utilities
Seller shall use reasonable efforts to obtain
readings of the water and electric meters on the Property to a date which is no
sooner than ten (10) days prior to the Closing Date. At or prior to the
Closing, Seller shall pay all charges based upon such meter readings. However,
if after reasonable efforts Seller is unable to obtain readings of any meters
prior to Closing, the Closing shall be completed without such readings; and,
upon the obtaining thereof after the Closing, Seller shall pay the charges
incurred prior to the Closing Date based upon such readings. The provisions of
the paragraph shall survive the Closing.
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To the extent any portions of the Property are separately metered and are
payable directly by a tenant of the Property and such tenant's lease so
provides, Seller shall not be required to obtain any such readings or pay the
same.
12.7 Real Estate Commissions As to Leases
(a) Seller represents and warrants to Buyer that
(i) there are no real estate commissions presently due and owing with respect
to the tenancy of any tenant at the Property, whether on account of past,
present or future leasing arrangements, including, without limitation,
exercises of renewal terms and (ii) there shall be no such commissions due and
payable at the time of Closing and Buyer will not be liable for any such
commissions after Closing, whether on account of past, present or future
leasing arrangements, including, without limitation, exercises of renewal
terms.
(b) Indemnity
Seller agrees to indemnify, defend and save
harmless Buyer from and against all damages, losses, claims, suits,
liabilities, judgments, costs or expenses, including, without limitation,
reasonable attorney fees and costs, arising out of any claim for a commission
of the nature described in subparagraph 12.7(a) above. The aforesaid indemnity
shall survive the Closing in perpetuity.
13. Title Conveyance and Possession
13.1 Deed to the Property
At the Closing, title to the Property shall be
conveyed by Seller to Buyer by a Bargain and Sale Deed, Covenants Against
Grantor's Acts in proper statutory form for recordation (the "DEED").
13.2 Bill of Sale
Title to the Personal Property shall be conveyed by
Seller to Buyer at Closing by a bill of sale (the "BILL OF SALE"), duly
acknowledged and in form and content sufficient to convey to Buyer the Personal
Property, free of all claims, liens and encumbrances, to be certified as such
by Seller and confirmed as such through a Uniform Commercial Code financing
statement search to be obtained through Buyer's title insurance company, at
Buyer's expense. No part of the purchase price is or shall be deemed allocated
to the Personal Property.
13.3 Assignment of Leases, Etc.
Seller's interest in all Leases (together with
security deposits and interest thereon) shall be conveyed to Buyer by
Assignment, Acceptance and Indemnification Agreement Re: Leases and Security
Deposits in the form of Exhibit "3" annexed hereto (the "LEASE ASSIGNMENT"),
duly executed by Seller and Buyer which contains mutual indemnifications and
hold harmless agreements with regard to matters prior to and after Closing.
13.4 Delivery of Possession
Actual possession of the Property shall be delivered
to Buyer on the Closing Date, free and clear of all rights or claims of any
parties in possession, excepting only tenants under the then applicable Leases
as set forth on a Closing Date Rent Roll and as set forth elsewhere in this
Agreement, if any, and the rights, if any, of any party
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listed in Schedule "G" (List of Service, Maintenance or Supply Agreements)
whose rights are not to be terminated in accordance with the terms and
provisions of this Agreement.
14. Condition of Property; No Warranties or Representations
Outside the Contract, Etc.
Buyer acknowledges that neither Seller nor any agent,
attorney, employee or representative of the Seller, nor any broker, has made
any representation or warranty whatsoever regarding the subject matter of this
sale or any part thereof, except as expressly set forth in this Agreement.
Except as otherwise stated in this Agreement, the Buyer in executing,
delivering and performing this Agreement, does not rely upon any statement
and/or information to whomsoever made or given, directly or indirectly,
verbally or in writing, by any individual, firm or corporation. Except as
otherwise set forth in this Agreement, the Buyer is buying the Property and the
Personal Property on an "as is", "where is" basis as of the date hereof,
reasonable wear and tear excepted.
15. Operation of Property Prior to Closing
Seller covenants and agrees that between the date hereof and
the Closing Date it shall perform or observe the following with respect to the
Property:
(a) If pursuant to the terms of any Lease (i) any
decorating, repairs or alterations are required to be made by Seller in any
space prior to the Closing Date, (ii) any equipment is required to be furnished
to any tenant by Seller prior to the Closing Date, or (iii) landlord has any
other obligations required to be performed for any tenant prior to the Closing
Date, the same will be performed by Seller at its own cost and expense prior to
the Closing Date.
(b) If prior to the Closing Date Seller shall have
received any written notice from any insurance company which issued a policy
with respect to the Property or any board of fire underwriters or other body
exercising similar functions requiring any repair work to be done in the
Property in order to maintain such policy, Seller will do the same
expeditiously and diligently at its own cost and expense prior to the Closing
Date.
(c) Seller will maintain the Property and the Personal
Property in its present state of repair, subject to reasonable wear and tear
between the date hereof and the Closing Date.
(d) Seller will not (i) rent any space at the Property
except in accordance with the provisions of subparagraph 6.2 hereof and/or
modify, renew or extend any Lease, (ii) enter in any agreement to do work for
any tenant extending beyond the Closing Date, without first obtaining the
written consent of Buyer, and/or (iii) accept the surrender of or otherwise
compromise its rights pursuant to any Service Agreement or Lease or grant any
concession, rebate, allowance or free rent.
(e) Between the date hereof and the Closing Date, Seller
will not renew, extend or modify any of the Service Agreements without the
written consent of the Buyer in each instance first had and obtained, which
consent Buyer agrees shall not be unreasonably withheld or delayed. If there
are any pending negotiations with any Service Agreement holder
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which may involve retroactive increases in pay or rates or union benefits,
Seller agrees to reimburse the Buyer for the amount thereof with respect to any
period through the Closing Date.
(f) Seller shall not remove any Personal Property,
fixtures or equipment located in or on the Property, except as may be required
for repair and replacement. All replacements shall be free and clear of liens
and encumbrances as of the Closing Date and shall be of quality at least equal
to the replaced items and shall be deemed included in this sale, without cost
or expense to Buyer.
(g) Seller shall satisfy all mortgages in full on or
before the Closing Date, and shall be responsible for all costs and expenses in
connection therewith, including any prepayment penalties, legal fees, recording
fees and all other charges and costs whatsoever. Seller agrees that Schedule
"O" annexed hereto sets forth the manner in which Seller will direct the
purchase price be paid by Buyer on the Closing Date.
(h) Seller shall carry on the management and operation of
the Property between the date hereof and the Closing Date in the same manner as
it has been managed and operated by Seller prior to the date hereof.
16. Risk of Loss
16.1 Notification; General Rule
If the Property is damaged by fire or other casualty
prior to the Closing Date, Seller shall so notify Buyer within five (5)
business days after the casualty; and, with the consequences provided for by
Paragraph 16.2 and subject to the provisions thereof, risk of loss shall be on
Seller.
16.2 Damage in Less than the Material Damage
Amount
If the damage sustained is less than Five Hundred
Thousand ($500,000) Dollars (the "MATERIAL DAMAGE AMOUNT") and is covered by
insurance, the Closing Date shall not be postponed; the insurance claim (except
for business interruption or rent insurance relating to the period prior to the
Closing Date) shall be assigned to Buyer; and there shall be no abatement of
the purchase price, except as to any deductible amount or other amount not
recoverable under the policy.
16.3 Damage Exceeding the Material Damage Amount
If the damage sustained equals or is greater than the
Material Damage Amount, either party shall have the right to elect to terminate
this Contract, provided, however, that if Seller elects to terminate this
Contract for the reason specified in this paragraph 16.3, Seller shall be
required to give written notice of its election to Buyer within fifteen (15)
days from the date of the event or occurrence causing the damage and
thereafter, Buyer, by written notice to Seller given within fifteen (15) days
of Buyer's receipt of the Seller's notice, may elect to override the Seller's
election and close title, subject to the assignment provided for in Paragraph
16.4 hereof.
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16.4 Assignment of Insurance Claims
If Buyer elects to close title, the insurance claim
(except for business interruption of rent insurance relating to the period
prior to the Closing Date) shall be assigned to Buyer; and there shall be no
abatement of the Purchase Price, except as to any deductible amount not
recoverable under the policy.
16.5 Consequences of Termination
If Buyer elects to terminate, the Deposit, plus
interest thereon, shall be returned to Buyer and Seller shall have no further
liability to Buyer.
16.6 Waiver of Applicable Laws Governing Occurrence of
Casualty
Seller and Buyer each hereby waive the provisions of
all applicable laws relating to the occurrence of a casualty between the date
hereof and the Closing, and agree that the provisions of this Paragraph 16
shall govern.
16.7 Maintenance of Existing Insurance Until Closing
Seller shall maintain until the Closing all existing
insurance or substantially similar policies affecting the Property. Seller
represents that it has property insurance for rent loss for not less than one
year.
17. Condemnation
17.1 Effect of Condemnation
In the event that, prior to the Closing Date,
condemnation or eminent domain proceedings shall have been commenced against
all or any portion of the Property or in the event that Seller shall have
received written notice that such proceedings are being contemplated, Seller
shall give notice thereof to Buyer within five (5) business days thereafter,
whereupon Buyer shall have the option to:
(a) Terminate this Contract, in which event the
Deposit, together with all interest earned thereon, shall be returned Buyer;
and Seller shall have no further liability to Buyer; or
(b) Proceed to Closing in accordance with the
terms and provisions of this Contract, in which event any award to which Seller
shall be entitled shall be paid (if previously received by Seller) or assigned
by Seller to Buyer at Closing, provided that Buyer shall be solely responsible
for its costs and expenses in obtaining any such award.
17.2 Election of Buyer
Buyer may make such election within thirty (30) days
after receiving written notice from Seller of any such condemnation
proceedings. If, within said period, Buyer has not delivered to Seller a
written notice of Buyer's election, Buyer shall be deemed to have elected to
close pursuant to subparagraph 17.1 (b).
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17.3 Waiver of Applicable Laws Governing Occurrence of
Condemnation
Seller and Buyer each hereby waive the provisions of
all applicable laws relating to the occurrence of a condemnation between the
date hereof and the Closing, and agree that the provisions of this Paragraph 17
shall govern.
18. Closing Costs, Etc.
18.1 General Provisions
Except as herein provided and as may elsewhere be provided in
this Agreement, Buyer will pay any recording fees, title insurance premiums, if
any, the fees and expenses of Buyer's own counsel, and any other closing
expenses customarily paid by a purchaser. Seller and Buyer shall each pay
their own attorneys' fees and disbursement expenses and other closing expenses
customarily paid by a seller or buyer, as the case may be.
18.2 Transfer Taxes, etc.
Any county, state or local realty transfer tax or the
like shall be borne by the Seller.
19. Closing Agenda
At the Closing, Seller shall deliver, or cause to be
delivered, to Buyer the following:
(a) The Deed;
(b) The Bill of Sale;
(c) The Lease Assignment, together with the original
Leases and tenant files;
(d) General Releases from the Leasing Brokers in favor of
Buyer with respect to commissions on account of any and all leasing activities
at the Property prior to the Closing, whether on account of past, present or
future leasing arrangements, including without limitation, exercises of renewal
terms;
(e) Affidavit of Title in the customary form. Annexed to
Seller's Affidavit of Title shall be a copy of Seller's Limited Partnership
Agreement and all amendments thereto; and such other documents as Buyer's title
insurance company may reasonably require;
(f) Letters to all tenants advising of the change of
ownership and the manner of payment of rent;
(g) A certificate in the form annexed hereto as Exhibit
"10" (a "CLOSING DATE CERTIFICATE") signed by Seller dated as of the Closing
Date and certifying that (1) attached thereto is a true, correct and complete
update of the Current Rent Roll as of the Closing Date and (2) the
representations and warranties of Seller in this Agreement and the Schedules
hereto and other documents to be delivered by Seller at Closing are true and
correct in all material respects on the Closing Date (except for changes
specifically identified on the certificate) as though such representations and
warranties are made on the Closing Date. Annexed to the Closing Date
Certificate shall be the then current Rent Roll, a list of rent arrearages and
a list of pending dispossess actions and any litigation, claim, etc. of the
type described in paragraph 7.2;
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(h) An Assignment of utility deposits and escrows (if
assignable) for which a credit is given Seller;
(i) An assignment in the form annexed as Exhibit "8" (the
"OMNIBUS ASSIGNMENT") of (a) the Service Agreements to be taken subject to by
Buyer, (b) the items encompassed by paragraph 1(a) hereof which are not
conveyed to Buyer pursuant to the Deed, (c) the items encompassed by paragraph
1(d) hereof and (d) all other rights and/or items which are to be assigned to
Buyer pursuant to the provisions of this Agreement;
(j) Proof of termination of the existing property
management agreement;
(k) A management agreement for the Property between Buyer
and an entity controlled by Arthur Greer, as manager, as described on Exhibit
"9" annexed hereto the "MANAGEMENT AGREEMENT");
(l) Any and all other documents or items set forth in
this Agreement to be delivered by Seller including, without limitation, any of
the following in Seller's possession or control: building plans,
specifications, surveys, architectural drawings, engineering reports,
management reports for the last two years, and current tenants' Lease files
including original signed leases and all correspondence relating to operation
of the Property;
(m) Necessary documentation to establish that Seller is
not subject to the withholding requirements of Section 1445 of the Internal
Revenue Code of 1986, as amended (the CODE") relating to the transfer of U.S.
real property interests by foreign persons. If Seller fails to deliver such
documentation at or prior to the Closing, or if the Buyer is not entitled to
rely on a Seller's "Non-foreign Affidavit" because of actual knowledge or
notice that such Affidavit is false, then Buyer may withhold at the closing the
payment of up to ten (10%) percent of the purchase price as required by the
provisions of Section 1445 of the Code;
(n) If applicable, Seller shall cause to have filed an
IRS Form 1099 or then applicable form;
(o) all Attached Permits;
(p) Deleted prior to execution;
(q) a letter to Buyer directing that Buyer pay the
balance of the purchase price in the manner as described in paragraph 15(g)
hereof;
(r) the current year's tax bill(s) for all of the
Property; and
(s) each other document, instrument and/or agreement
required to be delivered by Seller pursuant to this Agreement.
19.2 By the Buyer
At the Closing, the Buyer shall deliver, or cause to
be delivered, to Seller the following:
(a) the balance of the purchase price;
(b) the Lease Assignment;
(c) the Omnibus Assignment;
(d) the Management Agreement;
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(e) a written statement directing the Escrow
Agent to release the Deposit to Seller; and
(f) each other document, instrument and agreement
required to be delivered by Buyer pursuant to this Agreement.
20. Brokerage
20.1 Warranties and Representations by the Parties
Each party warrants and represents to the other that
no real estate broker took part in or procured the Buyer in connection with the
transaction contemplated by this Agreement.
20.2 Indemnification by the Parties
Each party (the "INDEMNIFYING PARTY") hereby agrees
to indemnify and hold the other (the "INDEMNIFIED PARTY") harmless from and
against any loss, cost, claim, demand or expense (including attorneys' fees)
which may be incurred or sustained by the Indemnified Party after the Closing
Date by virtue of any misrepresentation contained in Paragraph 20.1.
20.3 Survival of Provisions as to Brokers
The provisions of this Paragraph 20 shall survive the
Closing and the delivery of the Deed or any termination of this Agreement.
21. Survival of Warranties and Representations
21.1 General Rule of Survival
The warranties and representations of Seller in
Paragraphs 6.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10, 7.11, 7.12, 7.13,
7.14, 7.16, 7.19, 7.20, 7.22, 12.7, 30 and 32 of this Agreement and in any
affidavits or certificates to be delivered at Closing shall survive the
Closing.
21.2 Contractual Period of Limitations
(a) Except as provided in subparagraph 21.2(b) or
elsewhere in this Agreement, any claims against Seller for breach of warranty
or representation must be made within eight (8) months of the Closing Date.
(b) The time limit of subparagraph 21.2(a) shall
not apply to claims by any party pursuant to Paragraph 20 (Brokerage) or to
claims by Buyer for damages relating to the rents and Leases.
22. Notices
All notices to be given by any party to the other, unless
otherwise directed, shall be in writing, shall be served upon the other party
in person or by depositing such notice in the United States mails, properly
addressed and
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directed to the party to receive the same, by certified or registered mail,
return receipt requested, or by courier service with receipt, as follows:
As to Seller:
At its address first above written.
With a copy to:
Bondy & Schloss
6 East 43rd Street
New York, New York 10017
Attention: Gerald Sobol, Esq.
As to Buyer:
At its address first above written
Attention: Herbert Liechtung
With a copy to:
Dreyer and Traub
101 Park Avenue
New York, New York 10178
Attention: Howard A. Kalka, Esq.
As to Escrow Agent:
Bondy & Schloss
6 East 43rd Street
New York, New York 10017
Attention: Gerald Sobol, Esq.
23. Escrow Provision
The Deposit shall be held by Escrow Agent, in trust, in
accordance with the terms and conditions hereinafter set forth:
23.1 Escrow Agent shall deposit the Deposit in an interest
bearing escrow account. The Deposit and any interest accrued thereon shall be
paid over to the party entitled to receive the Deposit in accordance with
paragraph 23.2 hereof.
23.2 Escrow Agent will deliver the Deposit to Buyer or
Seller, as the case may be, upon the following conditions:
(a) To Seller, upon the consummation of the
Closing contemplated herein.
(b) To Seller, upon receipt of a written notice
from Seller stating that Seller is entitled under this Agreement to the Deposit
and demanding payment of the same.
(c) To Buyer, upon receipt of a written notice
from Buyer stating that Buyer is entitled under this Agreement to the return of
the Deposit and demanding return of the same.
(d) Any written notice requesting disbursement of
the Deposit served upon the Escrow Agent by Seller or Buyer, as the case may
be, pursuant to subparagraph (b) and (c) above, shall be deemed to be
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effective only if: (i) a copy of the written notice has been served upon the
other party and its counsel in accordance with the provisions of Paragraph 22
hereof, and (ii) such other party, within seven (7) days from the date of
receipt of the written notice, has not served upon the Escrow Agent and the
party requesting disbursement of the Deposit, a written notice objecting to the
disbursement of the Deposit and specifying the reasons or grounds for such
objections.
23.3 Any notice to Escrow Agent shall be sufficient only
if received by Escrow Agent within the applicable time periods set forth
herein. All mailings and notices to/from Escrow Agent shall be sent in a
manner permitted by Paragraph 22 of this Agreement and addressed to the party
to receive such notice at the address set forth in Paragraph 22 of this
Agreement.
23.4 If any disagreement or dispute shall arise between or
among any of the parties hereto and/or any other persons resulting in adverse
claims and demands being made for the Deposit whether or not litigation has
been instituted, then Escrow Agent shall continue to hold the Deposit subject
to such adverse claims and Escrow Agent shall not be or become liable in any
way or to any person for its refusal to comply with such claims or demand, and
(a) in the event of any joint direction from Seller and Buyer, Escrow Agent
shall then disburse the Deposit in accordance with said direction, (b) in the
event Escrow Agent shall receive written notice advising that a litigation over
entitlement to the Deposit has been commenced, Escrow Agent may deposit the
Deposit with the Clerk of the Court in which said litigation is pending or (c)
Escrow Agent may (but shall not be required to) take such affirmative steps as
it may, at its option, elect in order to substitute another impartial party to
hold the Deposit subject to such adverse claims including the commencement of
an action for interpleader in a court of competent jurisdiction in the State of
New Jersey, the cost thereof to be borne by whichever the Seller and Buyer is
the losing party, and thereupon Escrow Agent shall be released from all
liability hereunder. Nothing herein, however, shall affect the liability of a
defaulting party to another party for reimbursement of any amount paid to
Escrow Agent under this subparagraph 23.4.
23.5 It is expressly understood that Escrow Agent acts
hereunder as an accommodation to Seller and Buyer and as a depository only and
is not responsible or liable in any manner whatever for the sufficiency,
correctness, genuineness or validity of any instrument deposited with it, or
for the form or execution of such instruments and for the identity, authority
or right of any person executing or depositing the same, or for the terms and
conditions of any instrument pursuant to which Escrow Agent or the parties may
act.
23.6 Escrow Agent shall not have any duties or
responsibilities except those set forth in this Article and shall not incur any
liability in acting upon any signature, notice, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be genuine, and
Escrow Agent may assume that any person purporting to give it any notice on
behalf of any party in accordance with the provisions hereof has been duly
authorized to do so.
23.7 Escrow Agent may act or refrain from acting in
respect of any matter referred to herein in full reliance upon and by and with
the advise of counsel which may be selected by it any shall be fully protected
in so acting or refraining from acting upon the advise of such counsel.
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23.8 Escrow Agent shall not be responsible for any act or
failure to act on its part except in the case of its own willful default or
gross negligence. Escrow Agent shall be automatically released from all
responsibility and liability under this Agreement upon Escrow Agent's delivery
or deposit of the Deposit in accordance with the provisions of this Article.
23.9 Seller and Buyer agree that if either shall, pursuant
to subparagraph (b) and subparagraph (c) of paragraph 23.2 above, deliver to
Escrow Agent a written demand for the Deposit the party making such demand
shall, concurrently with delivering such demand to Escrow Agent, deliver a copy
of such demand to the other party, together with a statement of the facts and
circumstances underlying the demand; provided, however, that nothing in this
part shall have any effect whatsoever upon Escrow Agent's rights, duties and
obligations under the preceding parts of this paragraph.
23.10 Escrow Agent shall not be disqualified from
representing Seller in any dispute with Buyer because of having served as
Escrow Agent.
23.11 Except as provided for herein, the Escrow Agent shall
serve without fee or other compensation for its services.
24. Interest On Monies Due to Either Party Post Closing;
Attorney's Fees, etc. in Case of Suit to Enforce this Contract
Subsequent to Closing
24.1 Interest
If monies owed by either party to the other
subsequent to the Closing are not paid to the party entitled to receive it
within ten (10) business days from the date it was entitled to receive such
monies (the "DUE DATE"), then from and after the Due Date such monies shall,
until paid, bear interest at the rate of twelve (12%) percent per annum.
25. Miscellaneous
25.1 Non-Liability
The officers, Trustees and shareholders of Buyer
shall have no personal liability with respect to this Agreement. Seller agrees
that any claims it has against Buyer shall be satisfied solely out of the
assets of Buyer.
25.2 Entire Agreement
This Agreement (including the Schedules and Exhibits
annexed hereto) contains the entire agreement between the parties with respect
to the transaction contemplated hereby, and all understandings and agreements
heretofore had between the parties hereto are merged into this Agreement.
25.3 Counterparts
This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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25.4 Modification
No change, alteration, amendment, modification or
waiver of any of the terms or provisions hereof shall be valid and/or binding
upon the parties hereto unless the same shall be in writing and signed by each
of the parties hereto.
25.5 Governing Law
This Agreement and the transactions contemplated
hereby shall be interpreted, governed and enforced in accordance with the laws
of the State of New Jersey.
25.6 Binding Effect; Assignment
(a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
administrators, executors, personal representatives, successors and permitted
assigns.
(b) This Agreement may be assigned by Buyer,
without Seller's prior written consent, but only to an affiliate of Buyer or to
a partnership, joint venture, corporation or other entity in which Buyer has an
interest, provided, however, no such assignment shall release Buyer from
Buyer's obligations hereunder.
(c) If an assignment of Buyer's interest in this
Agreement is made, the same shall not be valid or binding unless the assignee
shall execute and deliver to Seller an agreement in from reasonably
satisfactory to Seller wherein such assignee assumes and agrees to perform all
obligations of Buyer under this Agreement both before and after Closing and
duplicate originals of such assignment and assumption are delivered to Seller
promptly after the execution and delivery thereof.
(d) Without limiting any of the provisions of
this Agreement, no assignment of any rights hereunder shall be effective unless
Buyer and each assignee comply timely with any requirements of any law or
regulation applicable to the assignment transaction and unless Buyer or each
assignee delivers to Seller at or before the Closing all applicable and
necessary items as may be required in connection with the Closing or as a
prerequisite to recording the Deed. In no event shall Buyer be entitled to any
delay of the Closing Date by reason of Buyer's obligation to comply timely with
the requirements of this Paragraph in the event of any such assignment.
25.7 No Third Party Beneficiaries
This Agreement does not create and is not intended to
create any rights in third parties, except for permitted assigns.
25.8 Deleted Prior to Execution
25.9 Acknowledgments By Buyer
(a) Buyer acknowledges that it or its
representatives will have examined copies of all of the Lease Documents and
contracts affecting the Property, as provided to Buyer by Seller, prior to the
Closing. To the extent that there are any variations between the information
set forth in this Agreement (and any Schedule annexed hereto) and such
documents, the documents themselves shall control and Buyer agrees to accept
the Property and to cause the Closing to occur, subject to all such variations,
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without any claim on the part of Buyer or reduction or limitation of Buyer
under this Agreement, provided however, that nothing herein is intended to
limit Buyer's remedies in the event of fraud and/or intentional, material
misrepresentation on the part of the Seller.
(b) Buyer further acknowledges that it or its
representatives have inspected the Property and, except as herein specifically
provided, will accept the Property in its "as is" condition, as of the date
hereof, reasonable wear and tear between the date hereof and the Closing
excepted, it being understood that, except as specifically provided herein,
Seller shall have no liability with respect to the physical condition of the
Property at the Closing.
25.10 Inspection of Books and Records After
Closing
After the Closing, Buyer shall give Seller and its
representatives access, during normal business hours, and upon reasonable prior
notice, to all of the Seller's books, accounts and records relating to the
Property retained by Buyer (including the right, at Seller's expense, to make
photostatic copies thereof) if necessary for Seller to develop information or
obtain documents so as to comply with any order or directive of a governmental
agency.
25.11 Adjustment of Claims Against Tenants
Buyer agrees that it will not, without the prior
written consent of Seller, which consent shall not be unreasonably withheld or
delayed, withdraw, settle or otherwise compromise, any claim by or against any
tenants in which Seller may have an interest or which withdrawal, settlement or
compromise may affect the rights of Seller.
26. Estoppel Certificates; Development Approvals; Status
of Permits and Licenses at Closing.
(a) Seller shall expeditiously request and use
all reasonable efforts in good faith to obtain and deliver to Buyer on or prior
to the Closing Date Estoppel Certificates (the "ESTOPPEL CERTIFICATES"), in the
form annexed hereto as Exhibit "4", from (i) the Major Tenants and other
tenants occupying in excess of 2500 square feet and (ii) from at least seventy
five percent (75%) of the tenants occupying less than 2500 square feet dated
not more than (a) forty-five (45) days before the Closing with respect to the
Major Tenants and (b) with regard to the Satellite Tenants, thirty (30) days
before the Closing. Seller shall not be required to obtain "fresh" Estoppel
Certificates if the Closing is delayed due to Buyer's action, or if the tenant
executes a written statement dated less than thirty (30) days before the
Closing confirming that there has been no change from the facts set forth in
such Estoppel Certificate. The failure to furnish the aforesaid Estoppel
Certificates shall excuse Buyer's obligation to close, provided, however, that,
in the event Buyer elects to close despite such non-compliance, Seller shall
furnish the Buyer an affidavit, in the form annexed as Exhibit "5" (the
"SELLER'S ESTOPPEL AFFIDAVIT"), with respect to the tenants from which an
Estoppel Certificate has not been obtained, all representations and warranties
contained in such Seller's Estoppel Affidavit to survive the Closing and
conveyance of title to Buyer for a period of one (1) year, provided, however,
that Seller in no event shall be required to provide a Seller's Estoppel
Affidavit for any Major Tenant or any number of tenants in excess of what is
required to be delivered in subparagraphs 26(a)(i) and (ii).
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(b) It is a condition to Buyer's obligations to
close title pursuant to this Agreement that Seller shall have obtained prior to
Closing, at Seller's sole cost and expense, all required approvals and permits,
all of which shall be final and non-appealable, i.e., the appeal period having
run without objection (other than the building permits) from federal, state,
county, municipal and regional agencies, bodies or officials (collectively, the
"DEVELOPMENT APPROVALS") authorizing the construction of the approximately
21,000 square feet of additional space and related improvements (the
"EXPANSION") as described on Exhibit "P" annexed hereto, such that, upon only
the payment of the requisite fee, a building permit for the Expansion will
issue without condition (other than, if applicable, any pre-building approval
required of the plans and specifications for the building by the Chester
building department). Seller covenants and agrees to diligently and in good
faith pursue the obtaining of the Development Approvals at Seller's sole cost
and expense. The Development Approvals shall be fully assignable by Seller to
Buyer without cost and shall be so assigned and delivered by Seller to Buyer at
Closing, together with (i) any and all site plans, blueprints, maps, sketches,
drawings, soil reports and all other engineering data related to the Expansion
that Seller has in its custody, possession or control and (ii) letters from the
professionals involved in the development of the Expansion that all such
documentation is assignable to Buyer, can be utilized by Buyer as if Buyer had
directly engaged such professional and has been fully paid for. If, despite
its diligent, good faith efforts as aforesaid, Seller shall not have obtained
the Development Approvals on or before the Closing Date, then Buyer may, at its
sole option, terminate this Agreement and thereafter the parties shall have no
further liability to the other, except as expressly set forth herein, and
except that Seller shall return the Deposit plus interest and reimburse Buyer
the Reimbursement Amount. To the extent that any performance bond is required
to be posted in connection with the Expansion prior to the Closing Date, Buyer
shall use all reasonable efforts to obtain the same at Seller's cost, provided
however, that upon the Closing, Buyer shall reimburse Seller for such costs.
If the Closing does not occur in accordance with the terms of this Agreement,
Seller shall be responsible at its sole cost and for expense for replacing any
such bond.
(c) In no way limiting the provisions of
subparagraph 26(b) above and notwithstanding anything to the contrary, it is a
further condition to Buyer's obligation to close title pursuant to this
Agreement that, (i) as of the Closing Date, all permits, licenses and/or
approvals which are in Buyer's good faith opinion necessary for the continued
operation of the Property as a Shopping Center and its attendant use shall be
in full force and effect and not subject to any pending revocation proceeding
or a revocation proceeding threatened in writing and (ii) the Property is fully
assessed and none of the Property is assessed as farmland as of the Closing
Date.
27. Letter of Non-Applicability of ECRA
27.1 Application to the NJDEPE for the Letter
Promptly after the execution of this
Agreement Seller shall, at its sole cost and expense, apply to the NJDEPE for a
Letter of Non-Applicability or De Minimus Quantity Exception with respect to
the within sale with respect to the Environmental Clean-Up Responsibility Act
("ECRA") or any successor legislation and Seller shall diligently pursue the
obtaining of the same. Buyer shall cooperate in the Application, if necessary,
provided Buyer
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shall bear no expense and have no liability therefor. If Seller shall obtain
such Letter of Non-Applicability or De Minimus Quantity Exception, Seller shall
deliver the original to Buyer at Closing and a copy thereof to Buyer upon
receipt by Seller. Seller shall, concurrently with its submission to the
NJDEPE, provide Buyer with a copy of the submission to the NJDEPE and any
affidavit offered in support thereof.
27.2 Consequences of Failure of Seller to
Obtain the Letter
If the Seller fails to obtain the Letter of
Non-Applicability or the De Minimus Quantity Exception within sixty (60) days
from the date hereof, the Buyer may terminate this Agreement, except, that if
Seller is continuing to diligently pursue the same at the expiration of said
period, Seller shall be entitled to a reasonable extension of time, not to
exceed fifteen (15) days. Seller shall not be required to alter any tenancies
at the Property or spend any money other than for filing fees and legal fees in
order to obtain the Letter of Non-Applicability or the De Minimus Quantity
Exception. Should Seller fail to obtain the Letter of Non-Applicability or the
De Minimus Quantity Exception prior to the expiration of such extension period,
then Buyer shall have the right to terminate this Agreement and receive a
return of the Deposit, together with payment of the Reimbursement Amount.
28. No Impact on Mortgage
The parties hereto (i) acknowledge that the Buyer is
an affiliate, subsidiary or is otherwise related to the holder of the existing
wraparound mortgage on the Property in the original principal amount of
$13,000,000.00 (the "WRAP MORTGAGE"), which Wrap Mortgage shall be satisfied in
full by Seller concurrently with the Closing hereunder, (ii) agree and confirm
that nothing contained in this Agreement shall modify, amend or otherwise alter
and/or in any manner be deemed to modify, amend or otherwise alter any of the
terms and/or provisions of the Wrap Mortgage, including, without limitation,
any right of first refusal in favor of the holder of the Wrap Mortgage, and/or
the rights and power of the holder of the Wrap Mortgage, it being specifically
agreed and understood that, until the Wrap Mortgage is satisfied in full in
accordance with its terms, the holder thereof shall be entitled to exercise all
rights and powers set forth therein and (iii) agree that no knowledge with
respect to the Property shall be deemed imputed to Buyer as a result of the
Wrap Mortgage.
29. Continued Certificate of Occupancy
If the Borough of Chester requires a so-called "Continued
Certificate of Occupancy" or similar certificate upon the transfer of title
contemplated herein, then the Seller shall, at its sole cost and expense, (but
in no event in excess of the Cure Amount), obtain the same and deliver the same
to Buyer at or prior to Closing. Seller shall be obligated, at its sole cost
and expense, to make any and all repairs/replacements necessary in order to
obtain such Continued Certificate of Occupancy. Notwithstanding the above, to
the extent that any repairs/replacements are required in order for Seller to
obtain the Continued Certificate of Occupancy, the same shall, for purposes of
this Agreement, be treated as "VIOLATIONS" as described in paragraph 7.7(a) of
this Agreement.
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30. Roof Repairs
Seller represents and warrants to Buyer that, prior to the
Closing Date, Seller shall, at its sole cost and expense, have completed and
paid for in full certain roof repair work (the "ROOF WORK") as more
particularly described on Schedule "N" annexed hereto. The Roof Work shall be
or has been done by North West Roofing, Inc. (the "ROOF CONTRACTOR"). At or
prior to Closing, Seller shall deliver to Buyer copies of (i) the invoices of
the Roof Contractor, together with evidence of payment of the same in full and
(ii) either (a) waivers and/or releases of liens from the Roof Contractor
and/or any subcontractors who may have performed the Roof Work or portions
thereof or (b) an indemnity agreement from Seller with respect to any possible
liens which may arise with respect to the performance of the Roof Work. In
addition, it shall be a condition to Buyer's obligation to close title in
accordance with the terms of this Agreement that, at Closing, Seller shall
deliver to Buyer (i) the existing warranty with respect to the Roof Work and
(ii) a written acknowledgment from the company who issued such warranty that
the warranty has been properly authorized for assignment to Buyer and upon such
assignment, Buyer may look directly to such company with respect to the
warranty.
31. Nat West Agreement
Seller shall cooperate with Buyer in all respects in order to
provide Nat West with all of the financial and other information required to be
provided to Nat West in accordance with the terms of the Nat West Agreement
with respect to any calendar year (or portion thereof) in which Seller owned
the Property. This obligation of Seller pursuant to this subparagraph shall
survive the Closing in perpetuity.
32. Administrative Consent Order; Transfer of NJPDES Permit
(a) Seller warrants and represents that:
(i) annexed hereto as Schedule "R" is a true,
correct and complete copy of an
administrative consent order (the "ACO")
entered into between Seller and NJDEPE with
respect to the sewage treatment plant at the
Property;
(ii) Seller has not (A) entered into any amendment
or modification of the ACO and/or (B) posted
any bonds and/or other financial assurances
with
35
36
respect to the ACO and, to the best of its
knowledge, has not been advised that any
financial assurances are required now or in
the future;
(iii) to the best of Seller's knowledge, other than
the Existing Violation, Seller has in all
respects complied with all of its obligations
to be performed prior to the date hereof
pursuant to the terms of the ACO;
(iv) other than the Existing Violation, Seller has
not received notice from NJDEPE that Seller
is in default under the terms of the ACO or
that any other violation has occurred (other
than the Existing Violation); and
(v) between the date hereof and Closing, Seller
shall timely comply with all applicable
provisions of the ACO.
(b) It shall be a condition to Buyer's obligation to
close title pursuant to this Agreement that:
(i) At closing, Seller shall deliver to Buyer
either (a) a letter from the NJDEPE advising
Buyer that, as of the Closing Date, (i) all
of the terms and provisions of the ACO
required to have been complied with as of
such date have been satisfactorily complied
with, (ii) there are no outstanding defaults
by Seller under the ACO and/or outstanding
penalties and (iii) the ACO remains
unmodified and in full force and effect or
(b) an indemnity agreement from Seller
pursuant to which Seller agrees to indemnify,
defend and hold Buyer, its successors and/or
assigns, harmless from and against any and
all loss, cost, liability and/or expense,
including, without limitation, attorneys fees
and costs, arising out of or relating to the
performance of obligations under the ACO
and/or violations under the ACO for periods
prior to the Closing Date. Specifically
excluded from this indemnity shall be (a) all
costs and expenses for any bi-monthly
progress report to be submitted pursuant to
the terms of the ACO after the Closing Date
even though the period covered by such report
may include a period prior to the Closing
Date and (b) any violation of an interim
enforcement effluent limitation provided the
date of the monthly testing occurs subsequent
to the Closing Date; and
(ii) Prior to the closing date, Seller shall,
submit to Buyer proof reasonably satisfactory
to Buyer that all required permits,
authorizations and the like have been
obtained from the NJDEPE with respect to the
"NJPDES Permit Transfer" (as such term is
hereinafter defined) and that the NJDPES
Permit remains in full force and effect.
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37
(iii) At closing, Seller shall deliver to Buyer (i)
any and all documents, reports and all other
engineering information related to the ACO
and/or the NJPDES Permit and/or the NJPDES
Permit Transfer that Seller has in its
custody, possession or control or that of its
agents and/or managing agent and (ii) letters
from the professionals involved in the ACO
and/or the NJPDES Permit and/or the NJPDES
Permit Transfer that all such documentation
is assignable to Buyer, can be utilized by
Buyer as if Buyer had directly engaged such
professional and has been fully paid for.
(c) Seller shall from the date hereof through the Closing
Date promptly provide Buyer with copies of any and all submissions from Seller
to the NJDEPE and/or correspondence between Seller and the NJDEPE with respect
to the ACO and/or the NJPDES Permit Transfer.
(d) Buyer shall reasonably cooperate in order to provide
Seller with all information required to gain NJDEPE's approval to transfer the
NJDPES Permit to Buyer (the "NJPDES PERMIT TRANSFER"). This information shall
include, but in no way be limited to, the following:
i. Names and addresses of new principal persons to be
responsible for the operation of the NJPDES Permit
and the sewage treatment plant;
ii. Names of persons upon whom legal service can be
served;
iii. Anticipated date for transfer of NJPDES Permit
responsibility;
iv. A notarized statement signed by the Buyer's principal
officer stating that he/she has read the NJPDES
Permit and certifies to abide by the conditions of
the NJPDES Permit after Closing.
The above information shall be provided to Seller within
fifteen (15) days of the date hereof in order for Seller to make a timely
application to NJDEPE for the NJPDES Permit Transfer. The parties shall
reasonably cooperate to provide all necessary and required information with
respect to the NJPDES Permit Transfer.
(e) All transfers pursuant to this paragraph 32 shall be
done at the sole cost and expense of Seller.
(f) Not less fifteen (15) days prior to closing, Seller
shall deliver to Buyer, (i) Seller's notice to Buyer advising Buyer of the ACO
and attaching a copy of the same and (ii) Seller's letter to NJDEPE (together
with evidence
37
38
of receipt of same by NJDEPE), sent by certified mail, return receipt
requested, advising NJDEPE that notice of the ACO was forwarded to Buyer and
attaching a copy of the same.
IN WITNESS WHEREOF, the Buyer and Seller have executed and delivered
this Agreement of Sale as of the date first above written.
SELLER:
MORRISTOWN-CHESTER PLAZA
ASSOCIATES, L.P.
BY:
----------------------
BUYER:
CHESTER PLAZA SHOPS, INC.
BY:
----------------------
The undersigned hereby executes this Agreement of Sale for the sole
purpose of agreeing to act as "ESCROW AGENT" in accordance with the terms and
provisions of this Agreement.
BONDY & SCHLOSS
BY:
----------------------
38
39
AMENDMENT TO AGREEMENT OF SALE
THIS AMENDMENT TO AGREEMENT OF SALE (this "AMENDMENT") dated as of
this 11th day of July, 1994 by and between MORRISTOWN-CHESTER PLAZA ASSOCIATES,
L.P., a New Jersey limited partnership, having an address c/o J.D. Branmaur,
Inc., 1776 Broadway, New York, New York 10019 ("SELLER") and CHESTER PLAZA
SHOPS, INC., a Delaware corporation, having an address at c/o RPS Realty Trust,
733 Third Avenue, New York, New York 10017 ("BUYER").
WITNESSETH:
WHEREAS, Seller and Buyer are parties to a certain Agreement of Sale
(the "AGREEMENT") dated as of May 20, 1993 with respect to, inter alia, the
sale of certain premises commonly known as Chester Springs Shopping Center,
Chester, New Jersey; and
WHEREAS, Seller and Buyer mutually desire to amend the Agreement as
more particularly set forth in this Amendment;
AMENDMENT:
NOW, THEREFORE, in consideration of the premises and the sum of Ten
($10.00) Dollars, Seller and Buyer hereby agree as follows:
(1) The sum of "$19,300,000" set forth in paragraph 5.1 of the
Agreement is deleted and the sum of "$18,095,624" is hereby
inserted therefor.
(2) The phrase "the sum of Nineteen Million Two Hundred Eighty
Thousand Seven Hundred ($19,280,700) Dollars" appearing in
paragraph 5.3 of the Agreement is deleted and the phrase
"Eighteen Million Seventy Six Thousand Three Hundred Twenty
Four ($18,076,324) Dollars" is inserted therefor.
(3) Schedule "O" to the Agreement is deleted in its entirety and
is replaced by Schedule "O" annexed hereto and made a part
hereof.
(4) Except as expressly amended by this Amendment, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, the Buyer and Seller have executed and delivered
this Amendment as of the date first above written.
MORRISTOWN-CHESTER PLAZA ASSOCIATES, L.P.
BY:
-------------------------
MICHAEL MILLER,
GENERAL PARTNER
CHESTER PLAZA SHOPS, INC.
BY:
-------------------------
1
40
SCHEDULE "O"
The Purchase Price of $18,095,624.00 is to be applied as follows:
1. Morgan Guaranty $5,906,617.84
(Per diem after 7/1/94 of
$1,968.873)
2. Morgan Guaranty Prepayment
Penalty (1% of outstanding
principal) $59,066.18
3. RPS Realty Trust Principal
Amount $7,000,000
4. RPS Realty Trust Accrued
Interest $1,973,000
5. RPS Realty Trust-All other
accrued and unpaid amounts
due under Wrap Mortgage as
of Closing Date $1,402,061.00 approximate
6. To satisfy Third Mortgage $456,393.08 (to be
re-verified)
7. Balance, if any, to or at
the direction of Seller
2
EX-10.20
5
BARGAIN AND SALE DEED
1
Exhibit 10.20
DEED
This Deed is made on July 11, 1994
BETWEEN
Morristown-Chester Plaza Associates, L.P., a New Jersey
Limited Partnership having an address c/o Michael Miller, J.D. Branmaur, Inc.
16 East 52nd Street, New York, NY 10011
referred to as the grantor,
AND
Chester Plaza Shops, Inc., a Delaware corporation having an
address c/o RPS Realty Trust at 733 Third Avenue, New York, New York 10017
referred to as the Grantee.
The words "Grantor" and "Grantee" shall mean all Grantors and all Grantees
listed above.
TRANSFER OF OWNERSHIP. The Grantor grants and conveys (transfers
ownership of) the property described below to the Grantee. This transfer is
made for the sum of Eighteen Million Ninety Five thousand six Hundred twenty
Four ($18,095,624.00)
The grantor acknowledges receipt of this money.
TAX MAP REFERENCE. (N.J.S.A. 46:15-2.1) Borough of Chester*
/ / No property tax identification number is available on the date of this
deed. (Check box if applicable.)
PROPERTY. The property consists of the land and all the
buildings and structures on the land in the Borough of Chester County of Morris
and State of new Jersey. the legal description is: as set forth on Schedule A
annexed hereto and made a part hereof.
* Block No. 7, Lot. No. 13-1;
Block No. 7, Lot No. 13 (excepting out Block No. 25, Lot No. 6 on Tax
Map of the Township of Chester);
Block 7, Lot No. 14.02
2
PROMISES BY GRANTOR. The Grantor promises that the Grantor has done
no act to encumber the property. This promise is called a "covenant as to
grantor's acts" (N.J.S.A. 46:4-6). This promise means that the Grantor has not
allowed anyone else to obtain any legal rights which affect the property (such
as by making a mortgage or allowing a judgment to be entered against the
Grantor).
SIGNATURES. The Grantor signs this Deed as of the date at the top of
the fist page.
MORRISTOWN-CHESTER PLAZA ASSOCIATES, L.P.
By: (Seal)
-------------------------------
Michael Miller, General Partner
(Seal)
-------------------------------
Witnessed by:
---------------------------
STATE OF NEW YORK, COUNTY OF NEW YORK S.S.:
I CERTIFY that on July 11, 1994
Michael Miller, General Partner of Morristown-Chester Plaza
Associates, L.P. personally came before me and acknowledged under oath, to my
satisfaction, that this person (or if more than one, each person):
(a) personally signed this Deed on behalf of the partnership named
as Grantor in this Deed;
(b) signed, sealed and delivered this Deed as the act and deed of
said partnership; and
(c) made this Deed on behalf of said partnership for $19,300,000
as the full and actual consideration paid or to be paid for
the transfer of title. (Such consideration is defined in
N.J.S.A. 46:15-5).
By:
-----------------------------
(Print name and title below signature)
JOSEPH GREENE
NOTARY PUBLIC, STATE OF NEW YORK
NO. 31-4522135
QUALIFIED IN NEW YORK COUNTY
MY COMMISSION EXPIRES AUGUST 31, 1994
2
3
=============================================================================================================
DEED Dated: July 11, 1994
MORRISTOWN-CHESTER PLAZA ASSOCIATES, L.P.
============================================
Grantor. Record and return to:
TO Richard Sussman, Esq.
Dreyer and Traub
101 Park Avenue
CHESTER PLAZA SHOPS, INC. New York, NY 10178
Grantee.
=============================================================================================================
4
SCHEDULE A
DESCRIPTION
TRACT I:
Beginning at a point in the southwesterly side line of Seminary Avenue, said
point of beginning being distant 806.50 feet, as measured in southeasterly
direction, along said side line, from its point of intersection with the
southeasterly side line of Maple Avenue, and running thence
(1) Still along said side line and along lands of Robert D. Barbara
Martin, and also lands of William F. and Frieda Mangels, south 36
degree 39 minutes 06 seconds east 401.90 feet to a point 1.85 feet
from an old iron pin which lies at the extension of the line herein
described; thence
(2) Along the southeasterly line of the whole tract of which this parcel
is a part, south 57 degrees 06 minutes 29 seconds west, 200.24 feet to
a point; thence
(3) Along an easterly line of lands described in Deed Book 2083, Page 147
north 36 degrees 39 minutes 06 seconds west 391.94 feet to a corner
therein; thence
(4) Along another line of lands described in Deed Book 2083, Page 147
north 54 degrees 15 minutes east 200.00 feet to the place of
beginning.
Being known and designated as Lot 13-1 in Block 7 on the Tax Map of the Borough
of Chester, Morris County, New Jersey.
TRACT II:
Beginning at a point which is the intersection of the southeasterly side line
of Maple Avenue and the southwesterly side line of Seminary Avenue in the
Borough of Chester, and running thence
(1) Along the southwesterly side line of Seminary Avenue, south 36 degrees
39 minutes 06 seconds east 806.50 feet to a point; thence
(2) Along the northwesterly line of lands described in Deed Book D-72 Page
545, south 54 degrees 15 minutes west 200.00 feet to a point; thence
(3) Along the southwesterly line of lands described in Deed Book D-72 Page
545, south 36 degrees 39 minutes 06 seconds east 391.94 feet to a
point in the southeasterly line of the whole tract of which this
parcel is a part; thence
5
SCHEDULE A
DESCRIPTION (CONTINUED)
(4) Along said land south 57 degrees 06 minutes 29 seconds west 834.78
feet to a point in the northeasterly side line of Route 206; thence
(5) Along said side line north 25 degrees 20 minutes 50 seconds west
661.75 feet to a point of curvature therein; thence
(6) Still along said side line in a northwesterly direction, along a curve
curving to the right having a radius of 1870.08 feet, a central angle
of 3 degrees 34 minutes 14 seconds and an arc length of 116.54 feet to
an iron pipe found for a corner; thence
(7) Along other lands of William F. and Frieda Mangels, north 49 degrees
29 minutes 40 seconds east 346.26 feet to an iron pin found for a
corner; thence
(8) Still along said lands, north 15 degrees 37 minutes 19 seconds west
349.50 feet to an iron pipe found for a corner in the southeasterly
side line of Maple Avenue; thence
(9) Along said side line north 49 degrees 18 minutes 43 seconds East
406.80 feet to the place of Beginning. Being known as lot 13 in Block
7 as shown on the Tax Map of the Borough of Chester.
Excepting out the following parcel (From Deed Book 2440, Page 954).
Beginning at a concrete monument in the northeasterly side line of New Jersey
State Highway Route 206 marking the fifth corner of tract of 19.7396 acres
conveyed to Chester Springs Associates by Jerry J. Grogan, et al, by deed dated
May 24, 1974 and recorded in the Morris County Clerk's Office in Deed Book 2298
of Deeds on Pages 959, etc., and from said point of beginning running; thence
(1) Along the fifth line of the said Chester Springs Associates tract,
being along the northeasterly side line of Route 206, north 25 degrees
20 minutes 50 seconds west 140.37 feet to a point in the boundary line
between Chester Township and Chester Borough; thence
(2) Along the said Chester Township boundary line north 69 degrees 29
minutes 03 seconds east 649.28 feet to a point in the fourth line of
the said Chester Springs Associates tract; thence
2
6
SCHEDULE A
DESCRIPTION (CONTINUED)
(3) Along the fourth line of the said Chester Springs Associates tract
south 57 degrees 06 minutes 29 seconds west 652.62 feet to the point
and place of beginning.
Note: The subject premises are designated on the Tax Map of the Township of
Chester as Lot 6, Block 25.
Together with a non-exclusive perpetual easement for purposes of vehicular and
pedestrian ingress and egress over and through, and parking at, places
designated and used as and for such purposes on the premises contiguous to the
above described premises and known as Chester Springs Shopping Center as same
is shown on a site plan "Chester Springs Shopping Center" dated June 11, 1974
and as said shopping center may change from time to time.
Being further described as follows:
Beginning at a point, said point being the intersection of the southwesterly
side line of side line of Seminary Avenue with the southeasterly side line of
Maple Avenue, and running; thence
(1) along said southwesterly side line of Seminary Avenue and along said
side line and along lands now or formerly of Robert D. and Barbara
Martin and also lands of William F. and Frieda Mangels, South 36
degrees 39 minutes 06 seconds East 1208.40 feet to a point; thence
(2) south 57 degrees 06 minutes 29 seconds West 382.40 feet to a point.
said point being on the division line of the Borough and Township of
Chester; thence
(3) south 69 degrees 29 minutes 03 seconds West 649.28 feet to a point in
the northeasterly side line of Route 206; thence
(4) along same northeasterly side line of Route 206 north 25 degrees 20
minutes 50 seconds West, 521.38 feet to a point of curvature; thence
(5) still along said side line in a northwesterly direction, along a curve
curving to the right, having a radius of 1870.08 feet, a central angle
of 3 degrees 34 minutes 14 seconds and an arc length of 116.54 feet,
to an iron pipe found for a corner; thence
(6) north 49 degrees 29 minutes 40 seconds East, 346.26 feet to a point;
thence
3
7
SCHEDULE A
DESCRIPTION (CONTINUED)
(7) north 15 degrees 37 minutes 19 seconds West 349.50 feet to a point in
the southeasterly side line of Maple Avenue; thence
(8) along same southeasterly side line of Maple Avenue, north 49 degrees
18 minutes 43 seconds East, 406.80 feet to the point and place of
beginning.
Being in accordance with a survey made by Robert C. Edwards Associates, Inc. by
John D. Harris, L.S., dated October 8, 1985.
Note: Being known and designated as Lots 13 and 13.01 in Block 7 on the Tax
Map of the Borough of Chester, Morris County, New Jersey.
TRACT III:
Beginning at a point in the southerly side line of Maple Avenue said point also
being the northeasterly corner of Lot 14-1, Block 7, as shown on said Tax Map.
Thence (1) North 49 degrees 53 minutes east along the said southerly side line
of Maple Avenue a distance of 200.0 feet to a point and corner. Said point
also being a northwesterly corner of Lot 13, Block 7 as shown on said Tax Map.
Thence (2) South 15 degrees 52 minutes east along the westerly property line of
said Lot 13 a distance of 349.50 feet to a point and corner in the same.
Thence (3) South 49 degrees 53 minutes west continuing along the said westerly
property line of said Lot 13 a distance of 97.36 feet to a point and corner in
the same,
Thence (4) North 15 degrees 51 minutes 00 seconds along the easterly property
line of Lot 14, Block 7 as shown on said Tax Map a distance of 153.26 feet to a
point and corner.
Thence (5) South 76 degrees 33 minutes 00 seconds west along the northerly
property line of said Lot 14 a distance of 100.00 feet to a point corner in the
same. Said point also being the southeasterly corner of Lot 14-1, Block 7 as
shown on said Tax Map.
Thence (6) North 13 degrees 27 minutes west along the easterly property line of
said Lot 14-1 a distance of 150.00 feet to the point and place of beginning.
4
8
SCHEDULE A
DESCRIPTION (CONTINUED)
Subject to a drainage easement running along the easterly and southerly
property line of these premises and being twenty-five (25) feet wide and twenty
(20) feet wide respectively. Said easement and rights to same being a portion
of an easement granted by Deed dated April 12, 1977 from Somerset Tire Service
Incorporated to the Borough of Chester and the center line of said easement
being further described as follows:
Beginning at a point in the southerly side line of Maple Avenue said point
lying in the first course as described above and being distant 13.71 feet from
the terminus of same, thence leaving said southerly side line of Maple Avenue
the following two (2) courses of the said center line of this easement;
Thence (1) South 15 degrees 52 minutes 00 seconds east running parallel to and
12.50 feet distant there from the second course described above, a distance of
338.53 feet to an angle point;
Thence (2) South 49 degrees 53 minutes 00 seconds west running parallel to and
10.00 feet distant there from course number three (3) as described above, a
distance of 83.65 feet the terminus of said easement center line in the
easterly property line of said Lot 14, Block 7. Said easement extends 12.50
feet on either side of the first course and extends 10.00 feet of either side
of the second course of above described easement center line.
Being further described as follows:
Beginning at a point in the southerly sideline of Maple Avenue said point also
being the northeasterly corner of Lot 14-1, Block 7, as shown on said Tax Map,
Thence (1) North 50 degrees 02 minutes 04 seconds east along the said southerly
side line of Maple Avenue a distance of 199.32 feet to a point and corner.
Said point also being northwesterly corner of Lot 13, Block 7 as shown on said
Tax Map.
Thence (2) South 15 degrees 51 minutes 40 seconds East along the westerly
property of said lot 13 a distance of 349.50 feet to a point and corner in the
same.
Thence (3) South 49 degrees 15 minutes 19 seconds West continuing along the
said westerly property line of said Lot 13 a distance of 97.36 feet to a point
and corner in the same.
Thence (4) North 15 degrees 52 minutes 00 seconds west along the easterly
property line of Lot 14, Block 7 as shown on said Tax Map a distance of 154.99
feet to a point and corner.
5
9
SCHEDULE A
DESCRIPTION (CONTINUED)
Thence (5) South 76 degrees 33 minutes 00 seconds West along the northerly
property line of Lot 14 a distance of 100.00 feet to a point corner in the
same. Said point also being the southeasterly corner of Lot 14-1, Block 7 as
shown on said Tax Map.
Thence (6) North 13 degrees 27 minutes 00 seconds West along the easterly
property line of Lot 14-1 a distance of 150.00 feet to the point and place of
beginning.
This description for Lot 14.02 in Block 7 on Tax Map is prepared in accordance
with a survey made by Associated Consultants, Land Surveyors, dated 11/15/85
and revised to 7/17/86.
6
EX-10.21
6
SETTLEMENT AGREEMENT
1
EXHIBIT 10.21
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") made as of this 1st
day of June, 1994 by and between RPS REALTY TRUST, a Massachusetts business
trust ("Lender") and NORGATE PLAZA LIMITED PARTNERSHIP, an Indiana limited
partnership ("Norgate").
RECITALS:
A. Lender is the holder of a $4,559,571.83 participating
loan (the "Loan") to Norgate, evidenced by a Wraparound Mortgage from Norgate
in the original principal sum of $4,559,571.83, dated November 29, 1984
("Note"). The Note is secured by a Wraparound Mortgage dated November 29, 1984
("Mortgage"), an Assignment of Landlord's Interest in Rents and Leases ("Rent
Assignment"), and various other loan and/or security documents dated November
29, 1984 (the Note, Mortgage, Rent Assignment, and other loan documents are
herein collectively referred to as the "Loan Documents"). The Mortgage is a
lien on the real estate, improvements, fixtures and personal property described
therein which are commonly known as the Norgate Plaza Shopping Center, Keystone
Avenue, Marion County, Indiana (the "Property"). The real estate is described
by metes and bounds on Exhibit "A" hereto.
B. Norgate is in default under the Loan Documents, which
default remains uncured after the expiration of any applicable notice or grace
periods, and constitutes an "Event of Default," as defined in the Loan
Documents. Lender gave notice of default, accelerated the indebtedness and,
pursuant to its rights under the Rent Assignment, Lender has exercised its
rights, by written notice to the tenants of the Property, to require that all
rents and other income from the Property be paid by the tenants to the Lender.
On September 21, 1993, Lender commenced foreclosure proceedings in the Marion
Superior Court under Cause No. 49D0- 79309-CP-0994 (the "Foreclosure Lawsuit").
All obligations of Norgate to Lender are now immediately due and payable.
C. On October 28, 1994, the Marion Superior Court
appointed a receiver over the Property who remains in possession thereof.
D. On June l, 1994, Norgate entered into a Purchase
Agreement for the sale of the Property to NORGATE SHOPS CORP. (the "Purchase
Agreement").
E. The parties hereto desire to settle their differences
and release each other from all claims on the terms and conditions set forth in
this Agreement.
2
NOW, THEREFORE, in consideration of the mutual promises set
forth herein and for other good and valuable consideration, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. The above Recitals are incorporated by reference as
if set forth at length herein and are contractual and not mere recitals.
2. The parties hereto acknowledge that: (i) as of the
date hereof the balance due on the debt evidenced by the Loan Documents is
$5,165,502.29, which includes the debt evidenced by the Underlying Mortgage (as
defined in the Loan Documents), and (ii) the debt evidenced by the Loan
Documents is not being discharged by the Lender. Nothing in this Agreement
(including Paragraph 4 hereof) shall be construed to prohibit Lender from
exercising its rights and remedies pursuant to the Mortgage or other Loan
Documents in order to execute upon the Property and to cause the Property to be
sold at public or private foreclosure sale pursuant to the Mortgage. However,
no such exercise by Lender of any remedy under the Loan Documents may be
pursued which is inconsistent with the provisions of Paragraph 4 hereof
limiting the personal liability of Borrower. Further, in the event the Lender
elects to pursue the pending foreclosure proceeding, Norgate agrees not to take
any action that is inconsistent with the terms of this Settlement Agreement.
3. Norgate agrees that neither it nor any of its general
partners, will raise any claim, take any action, commence any proceeding or
otherwise participate in, assist, cause to be taken, or in any way challenge
the conveyance of the Property to Norgate Shops Corp. as provided for in the
Purchase Agreement hereinafter described, or otherwise in any way challenge the
validity of the Deed and other instruments of transfer or assignment to be
executed and/or delivered by Norgate pursuant to said Purchase Agreement, the
transfer of the Property to Norgate Shops Corp., or the adequacy or sufficiency
of the consideration for such transfer, nor will Norgate or such parties oppose
or challenge the validity of any future foreclosure proceeding or other
exercise of rights under the Mortgage, Underlying Mortgage or the other Loan
Documents or any Sheriff's Deed to the Property.
4. Provided that, and for so long as, Norgate or any
general partner of Norgate has not breached this Agreement: (a) Lender does
hereby remise, release, quitclaim and forever discharge, for itself, its
successors and assigns, Norgate, its partners, employees, agents, attorneys,
directors and officers, and each of the respective heirs, administrators,
executors, personal representatives, successors and assigns and their
affiliates (collectively, "Borrower"), from and against any and all personal
liability arising out of or related to any act or
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failure to perform any obligations, express or implied, of Borrower relating to
the Loan or the Loan Documents or the Property, or matters relating thereto
from the beginning of the world to the date of these presents ("Borrower's
Obligations"), it being expressly understood and agreed that, except as set
forth herein, Lender's recourse concerning any liability of Borrower in
connection with Borrower's Obligations shall be limited to the Property and (b)
Lender agrees not to bring any action or proceeding against the general partner
of Norgate, under any agreement or document heretofore executed by Norgate or
on account of Borrower's Obligations and (c) Lender releases Norgate, its
partners, employees, agents, attorneys, directors and officers and each of
their respective heirs, administrators, executors, personal representatives,
successors and assigns and their affiliates from any and all actions, causes of
action, proceedings, claims, demands, damages, costs, liabilities, agreements
and obligations of any nature whatsoever, whether contingent or matured, known
or unknown, in law or in equity, asserted or which might have been asserted
directly or indirectly or otherwise arising out of or in any way related to the
Loan, the Loan Documents or the Property, or matters related thereto from the
beginning of the world to the date of these presents, including, by way of
example and not limitation any claims for rents and profits received by Norgate
prior to the date hereof. The foregoing shall not prevent Lender from joining
Borrower in any lawsuits or proceedings if such joinder is necessary as a
matter of law or practice for Lender to foreclose the Mortgage or perfect
title, so long as the parties comprising Borrower shall have no personal
liability by reason of such joinder. However, it is expressly understood and
agreed that nothing contained in this Agreement shall, in any way, release
Borrower from any obligation or duty set forth in this Agreement or arising
pursuant to this Agreement or any documents or agreements executed
contemporaneously herewith or hereafter.
5. Provided that, and for so long as, Lender has not
breached this Agreement, Norgate, including itself and its respective partners,
heirs, administrators, executors, personal representatives, successors and
assigns, and its affiliates does hereby remise, release and forever discharge
Lender, and each of its trustees, shareholders, employees, agents, attorneys,
directors and officers, and each of their respective heirs, administrators,
executors, personal representatives, successors and assigns, and their
affiliates of and from any and all actions, causes of action, proceedings,
claims demands, damages, costs, liabilities, agreements and obligations of any
nature whatsoever, whether contingent or matured, known or unknown, in law or
in equity, asserted or which might have been asserted, directly or indirectly
or otherwise arising out of or in any way related to the Loan or the Loan
Documents, or the Property, or matters relating thereto from the beginning of
the world to the date of these presents. Nothing contained herein shall, in any
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4
way, release Lender from any obligation or duty arising pursuant to any
documents or agreements executed contemporaneously herewith or hereafter.
6. Norgate and Lender agree to execute and file any and
all pleadings necessary to dismiss without prejudice the Foreclosure Lawsuit
and to terminate the pending receivership; said documents to include, but not
be limited to, the Joint Motion to Terminate Receivership, Discharge Receiver
and Close Receivership in a form substantially similar to the one attached
hereto as Exhibit "B" and the Joint Motion to Dismiss Without Prejudice in a
form substantially similar to the one attached hereto as Exhibit "C." Norgate
hereby assigns and transfers to RPS any and all right, title and interest it
may have to the funds held by the Receiver in the Foreclosure Lawsuit and
agrees that the Receiver may immediately pay said funds over to RPS.
7. This Agreement is conditioned upon and subject to (1)
the consummation of the sale of the Property as set forth in the Purchase
Agreement dated June 1, 1994 between Norgate and Norgate Shops Corp. (the
"Purchase Agreement"), and (ii) the assignment of the note and mortgage on the
Property in favor of Purdue Research Foundation to Lender, simultaneously with
the execution hereof, for an amount equal to the unpaid principal amount due
plus accrued interest through June 1, 1994 at the non-default contract rate
plus attorneys fees.
8. Norgate hereby warrants and represents to Lender as
follows:
(a) Norgate has the power and authority under
its partnership agreement and any amendments thereto to enter into and perform
its obligations under this Agreement and all other documents referred to
herein; and all actions necessary or appropriate for Norgate's execution and
performance of this Agreement and all other such documents have been taken; and
upon their execution, this Agreement and the other such documents will
constitute legal, valid and binding obligations of Norgate, enforceable against
Norgate in accordance with their respective terms. The making and performance
of this Agreement and of the other documents required of Norgate hereunder will
not violate any provisions of Norgate's partnership agreement or other
organizational documents, or result in any breach or violation of, or
constitute a default under, any decree, agreement, note or other instrument
applicable to or binding upon Norgate or any affiliate of Norgate, or, to the
best of Norgate's knowledge, without independent investigation or inquiry,
violate the provision of any federal or state law or regulation.
(b) Norgate's entry into this Agreement and its
delivery of the other documents pursuant hereto are wholly voluntary and for
good and valuable consideration. Norgate has
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been represented by competent counsel of Norgate's own choice throughout the
negotiations of this Agreement.
9. (a) This Agreement shall be governed and
construed under the laws of the State of Indiana, without reference to conflict
of laws Principles.
(b) This Agreement may be executed in several
counterparts and by the parties hereto, each of which is an original but all of
which together shall constitute one document.
(c) This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and each of their respective heirs,
administrators, executors, successors and assigns. Any nominee or designee of
Lender and its successors and assigns, shall be third party beneficiary of this
Agreement.
(d) This Agreement represents the entire
agreement between Norgate and Lender respecting the subject matter hereof and
shall not be amended except by written amendment signed by Norgate and Lender.
(e) The relationship between Norgate and Lender
is solely that of a debtor and creditor, and nothing contained in this
Agreement or in any of the documents executed by Norgate or Lender or its
nominee or designee pursuant to the terms hereof shall in any manner be
construed as making Norgate and Lender or its nominee or designee, partners,
joint venturers or any other relationship other than debtor and creditor.
(f) Nothing in this Agreement shall be deemed to
constitute an assumption by Lender of any obligations or liabilities of
Norgate.
10. Lender is a real estate investment trust, and this
Agreement and any documents executed and/or delivered pursuant hereto do not
constitute personal obligations of the trustees, officers, shareholders,
directors, employees or agents of Lender. Norgate, for itself, Borrower, and
all persons or entities claiming by or under Norgate, agree not to seek
recourse against any trustees, officers, shareholders, directors, or employees
of Lender for the satisfaction of any liability or obligation of Lender with
respect to this Agreement or such other documents, or any of their personal
assets.
11. "Affiliate", as used herein with respect to any
person or entity, shall mean (i) if such person is a corporation, any officer
or director thereof and any person which is, directly or indirectly, the
beneficial owner of more than 10% of any class of any equity security (except
that every right to subscribe for or to purchase and every option for the
purchase of, any equity security of such person, and every security convertible
into or
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exchangeable for any equity security of such person, shall not be deemed a
separate class of equity security, but shall be included within the class of
equity security for which it is such a right or option, or for which it may be
exchanged or into which it may be converted, as the case may be), thereof, and,
if such beneficial owner is a partnership, any partner thereof, or, if such
beneficial owner is a corporation, any person controlling, controlled by or
under common control with such beneficial owner or of any corporation occupying
any such control relationship, (ii) if such person is a partnership, any
partner thereof, and (iii) any other person which, directly or indirectly,
controls or is controlled by or is under common control with such person. For
the purposes of this definition, "control" (including the correlative meanings
of the terms "controlling", "controlled by" and "under common control with"),
with respect to any person, shall mean 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 or by contract
or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
RPS REALTY TRUST
By:
--------------------------------
NORGATE PLAZA LIMITED PARTNERSHIP
an Indiana limited partnership
By, Norgate Plaza, Inc., Its
General Partner
By:
----------------------------------
Richard J. Langlais, Its President
6
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EXHIBIT "A"
Part of the East Half of the Southwest Quarter of Section 30, Township 17
North, Range 4 East in Marion County, Indiana, more particularly described as
follows:
Beginning at the West line of said half Quarter Section, North 00 degrees 01
minutes 15 seconds East 907.00 feet from the Southwest corner of said Half
Quarter Section; thence North 82 degrees 06 minutes 15 seconds East along the
North line of Highland Creek Boulevard, North Drive, as dedicated in the plat
of Highland Creek Boulevard Addition recorded in Plat Book 22, page 168, in the
Office of the Recorder of Marion County, 1130.78 feet; thence North 00 degrees
01 minutes 15 seconds East parallel with the West line of said Half Quarter
Section 1205 feet; thence North 89 degrees 58 minutes 45 seconds West 106.29
feet to a point of a curve; thence Westerly along the arc of a curve to the
left having a radius of 649.72 feet and a central angle of 26 degrees 294.83
feet to a point; thence South 64 degrees 01 minutes 15 seconds West 132.39 feet
to a point of curve; thence Southwesterly along the arc of a curve to the left
having a radius of 257.23 feet and a central angle of 22 degrees 98.77 feet to
a point; thence South 42 degrees 01 minutes 15 seconds West 266.27 feet to a
point of curve; thence Southwesterly along the arc of a curve to the right of
having a radius of 195.80 feet and a central angle of 49 degrees 22 minutes 15
seconds 168.72 feet to a point; thence North 88 degrees 36 minutes 30 seconds
West 189.81 feet to the West line of said Half Quarter Section; thence South 00
degrees 01 minutes 15 seconds West along said West line 904.94 feet to the
Place of Beginning.
7
8
STATE OF INDIANA ) IN THE MARION SUPERIOR COURT
) ss:
COUNTY OF MARION ) CAUSE NO. 49D07-9309-CP-0994
RPS REALTY TRUST, a Massachusetts )
business trust, )
)
Plaintiff, )
)
vs. )
)
NORGATE PLAZA LIMITED )
PARTNERSHIP, an Indiana Limited )
Partnership, PATRICIAN EQUITIES )
CORPORATION, a Florida )
Corporation, BELL ATLANTIC )
TRICON LEASING CORPORATION, a )
Delaware Corporation, )
)
Defendants. )
JOINT MOTION TO TERMINATE RECEIVERSHIP,
DISCHARGE RECEIVER AND, CLOSE RECEIVERSHIP
Comes now Edward T. Treacy, the court-appointed Receiver for
Norgate Plaza Shopping Center, by counsel, RPS Realty Trust, by counsel,
Norgate Plaza Limited Partnership, by counsel and Purdue Research Foundation,
by counsel and respectfully request that this Court terminate the receivership,
discharge the Receiver, and close the receivership estate. In support of this
request, the parties state as follows:
1. The necessity of a court appointed Receiver for the
Norgate Plaza Shopping Center no longer exists as the responsibility for the
day-to-day operations thereof will immediately be assumed by RPS Realty Trust
or its nominee.
2. The receivership has not incurred any debt other than
normal trade debt for the day-to-day operation of the
Exhibit "B"
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9
Norgate Plaza Shopping Center, expenses associated with extensive roof repairs
previously approved by this Court, and management fees due Eaton & Lauth, all
of which RPS or its nominee agrees to assume and pay.
3. The Receiver and its court appointed counsel will
immediately file the appropriate applications with the Court for the approval
of their final fees.
4. Upon the termination of the Receivership by the
Court, the Receiver shall file, within ten (10) days his final report with the
Court detailing all of the income received and expenses paid since his last
report together with a disclosure of the remaining cash on hand.
5. The Receiver, upon termination of the Receivership,
shall immediately pay over to RPS or its nominee all cash on hand and funds on
deposit less an amount for the final fees and expenses of the Receiver and his
attorney as approved by the Court.
WHEREFORE, the parties request that the Court terminate the
receivership; discharge the receiver; allow the Receiver ten (10) days from the
date of its order to prepare and file the final accounting of the receivership
estate; allow the Receiver and his attorney to take their final fees and
expenses as approved by the Court from the cash on deposit; order the Receiver
to turn over to RPS or its nominee all receivership funds after expenses and
fees allowed by the Court and that the parties be granted all other just and
proper relief.
Exhibit "B"
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Respectfully submitted,
STUART & BRANIGIN
By
-------------------------------
Kevin D. Nicoson
P.O. Box 1010
Lafayette, Indiana 47902-1010
WOODEN MCLAUGHLIN & STERNER
By
-------------------------------
Thomas Dinwiddie
201 N. Illinois Street, #1000
Capital Center South
Indianapolis, IN 46204
ANCEL & DUNLAP
By
-------------------------------
Timothy L. Black, #2760-45
1770 Market Square Center
151 N. Delaware Street
Indianapolis, Indiana 46204
MITCHELL HURST JACOBS & DICK
By
-------------------------------
Seven K. Huffer, Esq.
152 East Washington Street
Indianapolis, Indiana 46204
Exhibit "B"
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STATE OF INDIANA ) IN THE MARION SUPERIOR COURT
) SS.
COUNTY OF MARION ) CAUSE NO. 49D07-9309-CP-0994
RPS REALTY TRUST, a Massachusetts )
business trust, )
)
Plaintiff, )
)
vs. )
)
NORGATE PLAZA LIMITED )
PARTNERSHIP, an Indiana Limited )
Partnership, PATRICIAN EQUITIES )
CORPORATION, a Florida )
Corporation, BELL ATLANTIC )
TRICON LEASING CORPORATION, a )
Delaware Corporation, )
)
Defendants. )
JOINT MOTION TO DISMISS
WITHOUT PREJUDICE
Comes now the Plaintiff, RPS Realty Trust, by counsel and the
Defendant, Norgate Plaza Limited Partnership, by counsel and the
Defendant-Counterclaimant, Purdue Research Foundation, by counsel and jointly
move the Court to dismiss this cause without prejudice for the reason that the
parties have reached a settlement of the issues raised in the various pleadings
filed herein and such issues are now moot.
Respectfully submitted,
STUART & BRANIGIN
By
-----------------------------
Kevin D. Nicoson
P.O. Box 1010
Lafayette, Indiana 47902-1010
Attorneys For Purdue Research
Foundation
Exhibit "C"
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WOODEN MCLAUGHLIN & STERNER
By
-----------------------------
Thomas Dinwiddie
201 N. Illinois Street, #1000
Capital Center South
Indianapolis, IN 46204
Attorneys For Norgate Plaza
Limited Partnership
ANCEL & DUNLAP
By
-----------------------------
Timothy L. Black, #2760-45
1770 Market Square Center
151 N. Delaware Street
Indianapolis, Indiana 46204
Attorneys For RPS Realty Trust
Exhibit "C"
2
EX-10.22
7
ADDENDUM TO SETTLEMENT AGREEMENT
1
EXHIBIT 10.22
ADDENDUM TO SETTLEMENT AGREEMENT
This ADDENDUM TO SETTLEMENT AGREEMENT (the "Addendum"), made as of
this ____ day of June, 1994, by and between RPS REALTY TRUST, a Massachusetts
business trust ("Lender") and NORGATE PLAZA LIMITED PARTNERSHIP, an Indiana
limited partnership ("Norgate"),
W I T N E S S E T H T H A T:
WHEREAS, Lender and Norgate entered into a certain Settlement
Agreement of even date herewith (the "Settlement Agreement"); and
WHEREAS, Lender and Norgate desire to modify certain terms and
conditions of the Settlement Agreement as set forth in this Addendum.
NOW, WHEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the receipt and legal
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. The first three lines of paragraph 4 of the Settlement
Agreement are hereby deleted and replaced with the following language:
"Provided that, and for so long as, Norgate or any general
partner of Norgate, or any entity controlled by a shareholder,
director or officer of the general partner of Norgate, has not
breached this agreement;"
2. This Addendum shall be construed as supplementary to the
Settlement Agreement. Except to the extent expressly modified herein, the
terms, conditions and provisions of the Settlement Agreement remained
unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
RPS REALTY TRUST
By:
----------------------------------
Printed:
-----------------------------
Title:
-------------------------------
2
NORGATE PLAZA LIMITED PARTNERSHIP, an
Indiana limited partnership
By:
----------------------------------
Norgate Plaza, Inc.,
Its General Partner
By:
----------------------------------
Richard J. Langlais, President
2
EX-10.23
8
PURCHASE AGREEMENT
1
EXHIBIT 10.23
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") made as of this 1st day
of June, 1994 by and between NORGATE PLAZA LIMITED PARTNERSHIP, an Indiana
limited partnership ("Seller") and NORGATE SHOPS CORP. ("Purchaser").
1. Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, the real estate and improvements
located in Marion County, Indiana which is commonly known as the Norgate Plaza
Shopping Center and more particularly described on Exhibit "A" attached hereto
(the "Property").
2. The total purchase price for the Property is Five
Million One Hundred Eighty-Five Thousand Five Hundred Two and 29/100 Dollars
($5,185,502.29) (the "Purchase Price") payable as follows:
(a) the sum of $20,000 cash at Closing payable, at Seller's
option, by cashiers check, wire transfer, or other means
reasonably acceptable to Purchaser and
(b) the Property being conveyed to Purchaser subject to (i)
an existing mortgage on the Property payable to RPS Realty
Trust ("RPS") having an unpaid balance due including all
accrued interest and other charges, of $3,721,259.95 as of the
Closing and (ii) an existing mortgage on the Property payable
to the Purdue Research Foundation ("Purdue") having an unpaid
balance due, including all accrued interest and other charges,
of $1,444,242.34 as of the Closing.
It is the intent of the parties that the mortgage liens of RPS and Purdue shall
survive the Closing and the transfer of title to the Property.
3. On the date hereof (the "Closing") and upon payment
of the Purchase Price, Seller shall convey the Property to Purchaser by
executing, acknowledging (where appropriate) and delivering to Purchaser the
following documents:
(a) A Quitclaim Deed for the Property (the "Deed"),
(b) A Vendor's affidavit, in a form substantially the
same as Exhibit "B" attached hereto, required by and satisfactory to the title
company to insure Purchaser's title to the Property subject only to the
Permitted Exceptions as described in Paragraph 4 below.
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(c) A copy of Seller's partnership agreement and all
amendments, and evidence of the due authorization by Seller of the execution of
this Agreement and the documents to be delivered pursuant hereto.
(d) An affidavit in accordance with Section 1445 of the
Internal Revenue Code certifying that Seller is not a foreign entity.
(e) An executed Assignment (the "Lease Assignment")
assigning all of Seller's right, title and interest in and to the Tenant Leases
(as defined in subparagraph 7(f) below).
(f) A satisfaction and release of the outstanding
Mortgage encumbering the Property in favor of Patrician Equities Corporation
and its assignee CEP Partnership.
(g) A certified copy of the Final Judgment and Order
filed in the U.S. District Court, Southern District of New York on May 24, 1993
in the action entitled Dante A. Ramos and Sheldon Rabin v. Patrician Equities
Corporation. et al., Civil Action No. 89 Civ. 5370.
(h) Any other documents or items reasonably required to
be delivered by Seller pursuant to any provision of this Agreement or necessary
to effectuate its terms and provisions.
4. (a) As a condition of Purchaser's obligation to
complete Closing hereunder, title to the Property shall be subject only to the
Permitted Encumbrances (as hereinafter defined). The term "Permitted
Encumbrances" shall mean Tenant Leases and the items set forth on Exhibit "C"
hereto. Purchaser may obtain an Owner's Title Insurance Policy at its sole
cost. Title to all personal property shall be good and marketable and free and
clear of all liens, security interests and other encumbrances, other than the
Permitted Encumbrances.
(b) Seller shall surrender to Purchaser, on the
day of closing, whatever rights it may have to possession of the Property.
5. At Closing Purchaser shall pay the Purchase Price or
as provided herein and deliver a certain Settlement Agreement to be entered
into by and between RPS and Seller of even date herewith (the "Settlement
Agreement").
6. Seller acknowledges that the conveyance of the
Property shall be irrevocable, that upon the delivery of the Deed, Seller will
have no further interest in the Property, and that upon delivery of the Deed to
Purchaser, Purchaser shall be entitled to receive and retain all (a) income and
revenue (including all insurance proceeds payable by any insurer of the
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Property) from the Property paid after the date hereof and (b) Seller's
interest in any funds held by the Court appointed receiver.
7. Seller hereby warrants and represents to Purchaser as
follows:
(a) Seller has the power and authority under its
partnership agreement and any amendments thereto to enter into and perform its
obligations under this Agreement and all other documents referred to herein;
and all actions necessary or appropriate for Seller's execution and performance
of this Agreement and all other such documents have been taken; and upon their
execution, this Agreement and the other such documents will constitute legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms. The making and performance of this
Agreement and of the other documents required of Seller hereunder will not
violate any provisions of Seller's partnership agreement with other
organizational documents, or result in any breach or violation of, or
constitute a default under, any decree, agreement, note or other instrument
applicable to or binding upon Seller or any affiliate of Seller other than a
breach of the terms, conditions and provisions of the existing mortgage to
Purdue, or, to the best of Seller's knowledge, without independent
investigation or inquiry, violate the provision of any federal or state law or
regulation. Seller has not entered into any letter of intent, agreement of
sale, option, agreement or any other instrument regarding the Property which
provides for options to purchase, rights of first refusal and other similar
provisions.
(b) Seller's entry into this Agreement and its
delivery of the Deed and other documents pursuant hereto are wholly voluntary,
for good and valuable consideration. Seller has been represented by competent
counsel of Seller's own choice throughout the negotiations of this Agreement.
(c) Seller is not presently the subject of any
insolvency, bankruptcy or other similar proceeding.
(d) There are no actions, suits, proceedings or
claims which are pending or, to the best of Seller's knowledge or information,
threatened against Seller and affecting the Property other than the pending
foreclosure proceeding filed in the Marion Superior Court by RPS and Purdue,
and a lawsuit which has been threatened by an operator of a health club
previously conducting business at the Property.
(e) Except for the indebtedness due RPS and
Purdue and obligations incurred by the Court appointed Receiver subsequent to
October 28, 1993, Seller, has no actual knowledge of any unpaid creditors that
could assert a claim against the
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Property, or arising from the use or operation of the Property, except as
listed on Exhibit "D".
(f) From and after June 11, 1992, the general
partner of Seller has received no notice from any governmental authorities
claims that there is present in any medium at the Property, in quantities
requiring remediation, or in violation of applicable law, (A) any hazardous
substances, pollutants or contaminants, as those terms are defined pursuant to
the Comprehensive Environmental Response, Compensation and liability Act, 42
U.S.C. Section Section 9601-9657, as amended by the Superfund Amendment and
Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (October 17,
1986), or (B) any petroleum or petroleum products, as defined in Title I to the
Resource Conservation and Recovery Act, 42 U.S.C. Section Section 6991-6991(i)
or (C) any toxic or hazardous wastes or substances subject to the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 6901 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Clean Air
Act, 33 U.S.C. Sections 7401 et seq., the Toxic Substances Control Act, 15
U.S.C. Sections 2601-2629, the Safe Drinking Water Act, 42 U.S.C. Sections
300f-300j, the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
Sections 1101 et seq., and any so-called "Super Fund" or "Super Lien" law,
environmental laws administered by the Environmental Protection Agency, any
similar state and local laws and regulations, all amendments thereto and all
regulations, orders, decisions, and decrees now or hereafter promulgated
thereunder.
Seller covenants and agrees to execute such documentation reasonably requested
by Purchaser from time to time after Closing in order to effect the
transactions contemplated hereby, but Seller shall not be required to take any
other action or incur any costs in connection therewith.
8. The sale contemplated by this Agreement is
conditioned upon and subject to (i) the execution of that certain Settlement
Agreement dated June 1, 1994 by and between Seller and RPS and (ii) the
assignment from Purdue to RPS of its Note and Mortgage simultaneously with the
execution hereof, for a sum equal to the unpaid principal amount due plus
accrued interest through June 1, 1994 at the non-default contract rate plus
attorneys fees.
9. All representations and warranties of the Seller
contained in this Agreement shall survive delivery of the Deed to Purchaser
without limitation as to time (other than as provided by applicable law) and
shall not merge therein.
10. (a) This Agreement shall be governed and
construed under the laws of the State of Indiana, without reference to conflict
of laws principles.
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(b) This Agreement may be executed in several
counterparts and by the parties hereto, each of which is an original but all of
which together shall constitute one document.
(c) This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and each of their respective heirs,
administrators, executors, successors and assigns.
(d) This Agreement represents the entire
agreement between the parties respecting the subject matter hereof and shall
not be amended except by written amendment signed by both parties.
(e) Nothing in this Agreement shall be deemed to
constitute an assumption by Purchaser of any obligations or liabilities of
Seller other than those obligations of performance, if any, expressly assumed
by Purchaser in the documents executed in connection herewith.
11. Purchaser acknowledges that Purchaser has had the
opportunity to inspect the Property and that except to the extent Seller has
expressed warranties or representations otherwise in this Agreement, Purchaser
is acquiring the property on an "as-is" basis without representation or
warranty, expressed or implied, of any kind whatsoever by Seller or by any
person or entity on behalf of the Seller regarding the physical condition of
the property, the zoning of the Property, the income producing value of the
Property, the marketability of the Property, its status as a shopping center in
the State of Indiana, or regarding any other matter relating to the condition
or value of the Property or its fitness for a particular use.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
NORGATE PLAZA LIMITED PARTNERSHIP
an Indiana limited partnership
By, Norgate Plaza, Inc.,
Its General Partner
By:
-----------------------------
Richard J. Langlais
Its President
NORGATE SHOPS CORP.
By:
-----------------------------
5
6
VENDOR'S AFFIDAVIT
STATE OF MINNESOTA )
) SS.:
COUNTY OF DAKOTA )
Norgate Plaza Limited Partnership (hereinafter referred to,
jointly and severally, as "Vendor") is this day conveying to NORGATE SHOPS
CORP. (hereinafter referred to as "Purchaser"), by quitclaim deed the following
described Real Estate located in Marion County, Indiana:
See Exhibit "A" attached hereto
and commonly known as the Norgate Plaza Shopping Center (hereinafter referred
to as the "Real Estate").
In connection with the sale of the Real Estate, Purchaser has
obtained a commitment for an owner's policy of title insurance for the Real
Estate under date of February 23, 1994, issued by Chicago Title Insurance
Company as number 225-272CE.
Vendor has not executed, or permitted anyone in Vendor's
behalf to execute, any conveyance, mortgage, lien, lease, security agreement,
financing statement or encumbrance of or upon the Real Estate or any fixtures
attached thereto, except as states above, which is now outstanding or
enforceable against the Real Estate. Vendor has made no contract to sell all
or part of the Real Estate to any person other than the Purchaser, and
7
Vendor has not given to any person an option to purchase all or part of the
Real Estate, which is enforceable or exercisable now or at any time in the
future.
There is no judgment of any court of the State of Indiana or
of any court of the United States that is or may become a lien on the Real
Estate. No petition for bankruptcy has been filed by or against Vendor within
the last six months, nor is any petition now pending with respect to Vendor for
bankruptcy, insolvency or incompetency. Vendor is neither principal nor surety
on any bond payable to the State of Indiana.
Vendor is not acting directly or indirectly, in any capacity
whatsoever for any foreign country or national thereof, and Vendor is a
partnership duly organized under the laws of the State of Indiana and the
persons or entity executing this affidavit and the deed on behalf of Vendor
have been fully empowered pursuant to the provisions of the Vendor's
partnership agreement to execute and deliver this affidavit and the deed; and
Vendor has full partnership capacity to convey the Real Estate described herein
and all necessary partnership action for the making of such conveyance has been
taken and done.
Vendor intends that each of the statements made herein shall
be construed as a representation; each of the representations is made for the
purpose of inducing Purchaser to purchase the Real Estate; and each of the
representations, whether construed jointly or severally, is true. Vendor
expressly authorizes Purchaser and all of the persons to rely on
2
8
such representations, but, notwithstanding anything contained herein to the
contrary, such representations are made only to the extent of the actual
knowledge of Richard J. Langlais without independent investigation or inquiry
and is further limited to matters which occurred during the period of time from
and after June 11, 1992 up to and including October 29, 1993.
NORGATE PLAZA LIMITED PARTNERSHIP
By, Norgate Plaza, Inc.,
Its General Partner
-----------------------------------
Signature Richard J. Langlais,
Its President
-----------------------------------
Printed
Subscribed and sworn to before me a Notary Public with and for said
County and State, this ____ day of ___________, 1994.
------------------------------
My Commission Expires: , Notary Public
---------------
Resident of County
------------------------ -----------
This instrument was prepared by ANCEL & DUNLAP, Timothy L. Black, Attorney at
Law, 151 North Delaware, 1770 Market Square Center, Indianapolis, Indiana
46204.
3
9
PERMITTED EXCEPTIONS
General Exceptions:
1. Rights or Claims of parties in possession not shown by the public
records.
2. Encroachments, overlaps, boundary line disputes, or other matters
which could be disclosed by an accurate survey or inspection of the
premises.
3. Easements or claims of easements, not shown by the public records.
4. Any lien, or right to a line, for services, labor, or material
heretofore or hereafter furnished, imposed by law and not shown by the
public records.
5. Taxes or special assessments which are not shown as existing liens by
the public records.
Special Exceptions:
1. Taxes for the year 1993 each half for $92,257.67 are assessed in the
name of Norgate Plaza Limited Partnership due and payable in May and
November 1994. May installment unpaid; November installment unpaid.
Washington Township-Outside: Parcel #800-8249850. Assessed value:
Land $701,770; Improvements $ 53770; Exemptions None.
NOTE: Future assessments for solid waste collection.
NOTE: Taxes for the year 1992 due and payable in 1993 are delinquent in the
amount of $89,225.00, plus penalties and interest.
2. Taxes for the year 1994 due and payable in 1995 are a lien not yet due
and payable.
3. Note for information Only: Information relative to current sewer use
charges can be obtained from the Department of Public Works.
(E33-2432)
4. Delinquent sewer use charges in the sum of $32.79 certified to the
Marion County Auditor under No. S394402494 as reflected in the Records
of Marion County Treasurer.
5. Rights of the public, the State of Indiana and the municipality in and
to that part of the premises taken or used for that purpose.
10
6. Electric Line Easement granted to Indianapolis Power and Light Company
by Instrument dated July 25, 1969 and recorded September 5, 1965 as
instrument S65-46647, over the South portion of the premises.
7. Public Street Dedication recorded December 3, 1969, as Instrument
#65-02852 for Ruth Road.
8. Easement granted to Indiana Bell Telephone Company, Incorporated by
Instrument dated October 24, 1985 and recorded April 22, 1986 as
instrument #66-22726, over the North portion of the premises.
9. Rights of Lower Norgate Cinemas, Inc., lessee for part of the premises
for a term of 25 years with four five-year renewal options pursuant to
a certain lease dated January 25, 1970 and recorded May 26, 1970 as
instrument #70-22582 as modified by instrument #77-58277, and as
assigned by instrument #77-58276.
10. Rights of Kohl's Oakland, Inc., lessee for part of the premises for a
term beginning March 1, 1983 and ending January 31, 1995, with three
five-year renewal options pursuant to a certain lease dated September
21, 1994 as set out in a Memorandum of Lease recorded October 16,
1994, as instrument #84-80559.
11. The interest of Frank's Nursery & Crafts, Inc., & Michigan
Corporation, lessee for part of the premises for a term of twenty-five
years with four five year renewal options pursuant to a certain lease
dated December 2, 1985 as set out in a memorandum of lease recorded
June 5, 1986 as Instrument 86-49226.
12. The interest of McDonald's Corporation, a Delaware corporation, lessee
for part of the premises for a term of twenty years beginning on May
23, 1988, together with the option to extend for successive periods
aggregating twenty years as set out in a memorandum of lease recorded
September 15, 1988 as Instrument 88-95295 and an agreement recorded
April 4, 1990 as Instrument #90-32257.
13. The interest of Hook & Superx, Inc., a Delaware corporation, lessee
for part of the premises for a term of five years commencing May 1,
1990 and ending April 30, 1995 together with the option to extend for
a period ending April 30, 2000 as set out in a memorandum of lease
recorded February 23, 1990 as Instrument #90-17527.
14. The lien and provisions of a Mortgage dated February 19, 1970 and
recorded February 25, 1970 as Instrument #70-7522, in the original
principal sum of $2,400,000.00 by Norgate
2
11
Associates, an Indiana limited partnership to Purdue Research
Foundation.
15. Collateral Assignment of Rents dated February 19, 1970 and recorded
March 5, 1970 as Instrument #70-5232, as collateral security for a
loan in the original principal sum of $2,400,000.00 by Norgate
Associates, an Indiana limited partnership, to Purdue Foundation.
16. The lien and provisions of a Mortgage dated November 29, 1984 and
recorded December 3, 1984 as Instrument #84-94351, in the original
principal sum of $4,555,572.83 by Norgate Plaza Limited Partnership,
an Indiana limited partnership to Resources Pension Shares 2, a
Massachusetts business trust. Assigned to RPS Realty Trust by
Assignment dated December 28, 1988 and recorded September 1, 1989 as
Instrument #89-86455.
17. Assignment of Landlord's Interests in Real Estate and Leases dated
November 29, 1984 and recorded December 3, 1984 as Instrument
#84-94352 as collateral security for a certain loan in the original
principal sum of $4,555,572.83 by Norgate Plaza Limited Partnership,
an Indiana limited partnership to Resources Pension Shares I, a
Massachusetts Business Trust.
18. Proceedings pending on a Complaint to Foreclose a wraparound mortgage
filed September 21, 1993 as Cause No. 49007-9309-07- 0994 by RPS
Realty Trust, plaintiff against Norgate Plaza Limited Partnership, et.
al and Complaint to Foreclose Mortgage filed February 7, 1994 as Cause
No. 49007-9309-07-0994 by Purdue Research Foundation,
Counter-claimant.
19. Any special tax which may be assessed in the future in the event the
pending reassessment appeal is denied.
3
12
EXHIBIT "A"
Part of the East Half of the Southwest Quarter of Section 30, Township 17
North, Range 4 East in Marion County, Indiana, more particularly described as
follows:
Beginning at the West line of said Half Quarter Section, North 00 degrees 01
minutes 15 seconds East 907.00 feet from the Southwest corner of said Half
Quarter Section; thence North 82 degrees 06 minutes 15 seconds East along the
North line of Highland Creek Boulevard, North Drive, as dedicated in the plat
of Highland Creek Boulevard Addition recorded in Plat Book 22, page 168, in the
Office of the Recorder of Marion County, 1130.78 feet; thence North 00 degrees
01 minutes 15 seconds East parallel with the West line of said Half Quarter
Section 1205 feet; thence North 89 degrees 58 minutes 45 seconds West 106.29
feet to a point of a curve; thence Westerly along the arc of a curve to the
left having a radius of 649.72 feet and a central angle of 26 degrees 294.83
feet to a point; thence South 64 degrees 01 minutes 15 seconds West 132.39 feet
to a point of curve; thence Southwesterly along the arc of a curve to the left
having a radius of 257.23 feet and a central angle of 22 degrees 98.77 feet to
a point; thence South 42 degrees 01 minutes 15 seconds West 266.27 feet to a
point of curve; thence Southwesterly along the arc of a curve to the right of
having a radius of 195.80 feet and a central angle of 49 degrees 22 minutes 15
seconds 168.72 feet to a point; thence North 88 degrees 36 minutes 30 seconds
West 189.81 feet to the West line of said Half Quarter Section; thence South 00
degrees 01 minutes 15 seconds West along said West line 904.94 feet to the
Place of Beginning.
13
Exhibit "D"
Schedule of Claims
1. Unpaid real estate taxes due and payable November 10,
1993 and any penalty associated therewith.
2. Unpaid commissions and management fees payable to
Trammell Crow Company, their agent or assigns.
3. Unpaid work performed by Colgate Asphalt Maintenance,
Inc.
4. Unpaid legal fees to Christopher D. Seigel.
EX-10.24
9
ADDENDUM TO PURCHASE AGREEMENT
1
EXHIBIT 10.24
ADDENDUM TO PURCHASE AGREEMENT
This ADDENDUM TO PURCHASE AGREEMENT (the "Addendum") made as of this
____ day of June, 1994, by and between NORGATE SHOPS CORP. ("Purchaser") and
NORGATE PLAZA LIMITED PARTNERSHIP, an Indiana limited partnership ("Seller"),
WITNESSETH THAT:
WHEREAS, Purchaser and Seller entered into a certain Purchase
Agreement of even date herewith (the "Purchase Agreement") for certain property
located at 7435 North Keystone Avenue, Indianapolis, Indiana (the "Property");
and
WHEREAS, the parties hereto desire to include certain additional terms
and conditions in the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and for other good and valuable consideration, the receipt and legal
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. All personal property, if any, owned by Seller and used in
connection with the operation of the Property shall be included in the sale of
the Property.
2. Seller agrees to provide, at the request of Purchaser, a
notice letter to each of the tenants identified in Exhibit A attached hereto
and by reference made a part hereof, which letter shall indicate that: (a) the
Property has been sold to Purchaser, and (b) that all leases have been assigned
to Purchaser as of the date of closing.
3. Seller agrees to cooperate with Purchaser in obtaining any
books, records, operating reports, plans and specifications, engineering
studies or reports relating to the Property so long as any request for such
cooperation does not result in any expense to Seller.
4. Seller and Purchaser acknowledge that a certain lease by and
between Seller, as lessor, and Young Pyo Choi and R.D. Management, as lessee,
dated December 3, 1992 provides that a security deposit in the amount of One
Thousand Five Hundred Sixty-two and 50/100 Dollars ($1,562.50) was to be paid
to Seller upon execution of such lease. Seller and Purchaser agree that within
five (5) business days of the closing of the transaction contemplated by the
Purchase Agreement, Seller shall deposit the sum of One Thousand Five Hundred
Sixty-Two Dollars and 50/100 ($1,562.50) (the "Escrow Deposit") with Wooden
McLaughlin & Sterner, to be held in trust and disbursed in accordance with the
terms of this paragraph 4. In the event that at any time prior to the date that
is sixty (60) days after the date of closing,
2
Purchaser provides a copy of a cancelled check evidencing the security deposit
was paid to and negotiated by R.D. Management, Seller or Trammell Crow, the
Escrow Deposit shall be disbursed to RPS. In the event that RPS has not
provided such evidence to Seller within sixty (60) days of the closing date,
the Escrow Deposit shall be returned to Seller.
5. Seller shall deliver to Purchaser within five (5) business
days of execution of this Addendum (i) an executed Vendor's Affidavit in the
form attached hereto as Exhibit "B" (which form shall be substituted for the
form of Vendor's Affidavit attached to the Purchase Agreement as Exhibit "B")
and (ii) an executed Assignment of Lessor's Interest in Leases in the form
attached hereto as Exhibit "C".
6. Upon receipt of the documents described in paragraph 6 hereof
and the documents required under the Purchase Agreement to be delivered
simultaneously therewith, Purchaser shall deliver the Purchase Price to Seller.
7. This Addendum is to be construed as supplementary to the
Purchase Agreement. Except to the extent expressly modified herein, the terms,
conditions and provisions of the Purchase Agreement remain in full force and
effect.
NORGATE SHOPS CORP.
By:
-------------------------
NORGATE PLAZA LIMITED
PARTNERSHIP, an Indiana
limited partnership
By:
-------------------------
Norgate Plaza, Inc.
Its General Partner
By:
----------------------
Richard J. Langlais,
President
2
3
[NORGATE PLAZA LIMITED PARTNERSHIP LETTERHEAD]
, 1994
-------------
---------------------------
---------------------------
---------------------------
---------------------------
Re: Norgate Plaza Shopping Center (the "Property")
Sir or Madam:
You are hereby notified that the Property has been sold to Norgate
Shops Corp. effective immediately. All of the undersigned's interest as
"Lessor" under your lease has been assigned to Norgate Shops Corp.
Very truly yours,
NORGATE PLAZA LIMITED PARTNERSHIP,
an Indiana limited partnership
By:
-------------------------------
Norgate Plaza, Inc.
Its General Partner
3
4
EXHIBIT "A" TO ASSIGNMENT OF
LESSOR'S INTEREST IN LEASES
1. Lease dated September 18, 1987 between Norgate Plaza
Limited Partnership, as Lessor, and Giovanni Grillo, as Lessee.
2. Lease dated February 9, 1990 between Norgate Plaza
Limited Partnership, as Lessor, and Hook-SuperX, Inc. as Lessee.
3. Lease dated October 1, 1985 between Patrician Equities
Corp., as Lessor, and J&J, Inc. d/b/a United Consumers Club of
Indianapolis, as Lessee.
4. Lease dated June 1, 1990 between Norgate Plaza Limited
Partnership, as Lessor, and Bangkok Grocery and Restaurant, Inc.,
as Lessee.
5. Lease dated December 3, 1992 between Norgate Plaza Limited
Partnership, as Lessor, and RD Management Corp. and Young Pyo Choi, as Lessee.
6. Lease dated January 29, 1970 between Norgate Associates, as
Lessor, and Loew's Theatre & Realty Corporation, as Lessee.
7. Lease dated December 2, 1985 between Patrician Equities Corp.,
as Lessor, and Frank's Nursery & Crafts, Inc., as Lessee.
8. Lease dated September 21, 1984 between Norgate
Associates, as Lessor, and Kohl's Oakland, Inc., as Lessee.
9. Lease dated August 24, 1983 between Norgate Associates, as
Lessor, and K-Mart Corporation, as Lessee, which lease was subsequently
assigned by K-Mart Corporation to Consolidated Stores Corp. d/b/a Odd-Lots by
Assignment dated October 21, 1986.
5
10. Lease dated May 13, 1988 between Patrician Equities, Corp., as
Lessor, and McDonalds Corporation, as Lessee.
2
6
VENDOR'S AFFIDAVIT
STATE OF MINNESOTA )
) SS:
COUNTY OF DAKOTA )
Richard J. Langlais, as President of Norgate Plaza, Inc., the General
Partner of Norgate Plaza Limited Partnership, being first duly sworn, states
that Norgate Plaza Limited Partnership (hereinafter referred to, jointly and
severally, as "Vendor") is this day conveying to NORGATE SHOPS CORP.
(hereinafter referred to as "Purchaser"), by quitclaim deed the following
described Real Estate located in Marion County, Indiana:
See Exhibit "A" attached hereto
and commonly known as the Norgate Plaza Shopping Center (hereinafter referred
to as the "Real Estate").
In connection with the sale of the Real Estate, Purchaser has obtained
a commitment for an owner's policy of title insurance for the Real Estate under
date of February 23, 1994, issued by Chicago Title Insurance Company as number
225-272CE.
Vendor has not executed, or permitted anyone in Vendor's behalf to
execute, any conveyance, mortgage, lien, lease, security agreement, financing
statement or encumbrance of or upon the Real Estate or any fixtures attached
thereto, except as states above, which is now outstanding or enforceable
against the Real Estate. Vendor has made no contract to sell all or part of the
Real Estate to any person other than the Purchaser, and
Exhibit B
B-1
7
Vendor has not given to any person an option to purchase all or part of the
Real Estate, which is enforceable or exercisable now or at any time in the
future.
There is no judgment of any court of the State of Indiana or of any
court of the United States that is or may become a lien on the Real Estate. No
petition for bankruptcy has been filed by or against Vendor within the last six
months, nor is any petition now pending with respect to Vendor for bankruptcy,
insolvency or incompetency. Vendor is neither principal nor surety on any bond
payable to the State of Indiana.
Vendor is not acting directly or indirectly, in any capacity
whatsoever for any foreign country or national thereof, and Vendor is a
partnership duly organized under the laws of the State of Indiana and the
persons or entity executing this affidavit and the deed on behalf of Vendor
have been fully empowered pursuant to the provisions of the Vendor's
partnership agreement to execute and deliver this affidavit and the deed; and
Vendor has full partnership capacity to convey the Real Estate described herein
and all necessary partnership action for the making of such conveyance has been
taken and done.
Vendor intends that each of the statements made herein shall be
construed as a representation; each of the representations is made for the
purpose of inducing Purchaser to purchase the Real Estate; and each of the
representations, whether construed jointly or severally, is true. Vendor
expressly authorizes
Exhibit B
B-2
8
Purchaser and all of the persons to rely on such representations, but,
notwithstanding anything contained herein to the contrary, such representations
are made only to the extent of the actual knowledge of Richard J. Langlais
without independent investigation or inquiry and without personal liability
therefor and is further limited to matters which occurred during the period of
time from and after June 11, 1992 up to and including October 29, 1993.
NORGATE PLAZA LIMITED PARTNERSHIP
By Norgate Plaza, Inc.,
Its General Partner
----------------------------------
Signature
Richard J. Langlais, Its President
----------------------------------
Printed
Subscribed and sworn to before me a Notary Public within and
for said County and State, this _____ day of _____________, 1994.
--------------------------------
My Commission Expires: , Notary Public
-----------------
Resident of County
---------------------- ----------
This instrument was prepared by ANCEL & DUNLAP, Timothy L. Black, Attorney at
Law, 151 North Delaware, 1770 Market Square Center, Indianapolis, Indiana
46204.
Exhibit B
B-3
9
ASSIGNMENT OF LESSOR'S
INTEREST IN LEASES
FOR VALUE RECEIVED, NORGATE PLAZA LIMITED PARTNERSHIP, an Indiana
limited partnership ("Assignor"), hereby assigns to Norgate Shops Corp.
("Assignee"), all of its right, title and interest in, to and under the Leases
listed in Exhibit "A" attached hereto and by reference made a part hereof
("Leases").
Assignor hereby represents and warrants that it has made no conveyance
or encumbrances of any of its right, title or interest as Landlord in, to or
under the Leases during the period of June 11, 1992 to present.
IN WITNESS WHEREOF, Assignor has executed this Assignment of Lessor's
Interest in Leases this ____ day of ____________, 1994.
NORGATE PLAZA LIMITED
PARTNERSHIP, an Indiana Limited
Partnership
By, Norgate Plaza, Inc.,
Its General Partner
By
------------------------------
Richard J. Langlais,
Its President
STATE OF MINNESOTA )
: SS
COUNTY OF DAKOTA )
Before me a notary public in and for the State of Minnesota, and a
resident of Dakota County, Minnesota, personally appeared Richard J. Langlais,
the President of Norgate Plaza, Inc., the general partner of Norgate Plaza
Limited Partnership, an Indiana Limited Partnership, who acknowledged the
execution of the foregoing Assignment of Lessor's Interest in Leases as the
Exhibit C
C-1
10
President of the General Partner of the Partnership for and on behalf of the
general partner of the Partnership.
Witness my hand and notarial seal this ___ day of June, 1994.
---------------------
Notary Public
Commission Expires:
----------
Exhibit C
C-2
EX-10.25
10
QUITCLAIM DEED
1
EXHIBIT 10.25
QUITCLAIM DEED
This Indenture Witnesseth That:
Norgate Plaza Limited Partnership, an Indiana limited
partnership, hereinafter referred to as Grantor, conveys to Norgate Shops
Corp., hereinafter referred to as Grantee, for and in consideration of Ten
Dollars ($10.00) and other good and valuable consideration receipt of which is
hereby acknowledged, the following described real estate located in Marion
County, Indiana, to-wit:
Part of the East Half of the Southwest Quarter of Section 30,
Township 17 North, Range 4 East in Marion County, Indiana,
more particularly described as follows:
Beginning at the West line of said Half Quarter Section, North
00 degrees 01 minute 15 seconds East 907.00 feet from the
Southwest corner of said Half Quarter Section; thence North 82
degrees 06 minutes 15 seconds East along the North line of
Highland Creek Boulevard, North Drive, as dedicated in the
plat of Highland Creek Boulevard Addition recorded in Plat
Book 22, Page 168, in the Office of the Recorder of Marion
County, 1130.78 feet; thence north 00 degrees 01 minute 15
seconds East parallel with the West line of said Half Quarter
Section 1205 feet; then North 89 degrees 58 minutes 45 seconds
West 106.29 feet to a point of a curve; thence Westerly along
the arc of a curve to the left having a radius of 649.72 feet
and a central angle of 26 degrees 294.83 feet to a point;
thence South 64 degrees 01 minute 15 seconds West 132.39 feet
to a point of a curve; thence Southwesterly along the arc of a
curve to the left having a radius of 257.23 feet and a central
angle of 22 degrees 98.77 feet to a point; thence South 42
degrees 01 minute 15 seconds West 286.27 feet to a point of
curve; thence Southwesterly along the arc of a curve to the
right having a radius of 195.80 feet and a central angle of 49
degrees 22 minutes 15 seconds 168.72 feet to a point; thence
North 88 degrees 36 minutes 30 seconds West 189.81 feet to the
West line of Half Quarter Section; then South 00 degrees 01
minute 15 seconds West along said West line 904.94 feet to the
place of beginning.
Subject to:
a) All covenants, conditions restrictions, and easements
of record;
2
b) All real estate taxes and assessments due and payable
thereon;
c) The Mortgage between Norgate Associates, as
Mortgagor, and Purdue Research Foundation, as Mortgagee, dated
February 19, 1970 and recorded February 25, 1970 as Instrument
#70-7922 in the Office of the Recorder of Marion County,
Indiana;
d) The Collateral Assignment of Rents between Norgate
Associates, as Assignor, and Purdue Research Foundation, as
Assignee, dated February 19, 1970 and recorded March 5, 1970
as Instrument #70-9232 in the Office of the Recorder of Marion
County, Indiana;
e) The Mortgage between Norgate Plaza Limited
Partnership, as Mortgagor, and Resources Pension Shares 2, as
Mortgagee, dated November 29, 1984 and recorded December 3,
1991 as Instrument #84-94391 in the Office of the Recorder of
Marion County, Indiana and assigned to RPS Realty Trust by
Assignment dated December 28, 1988 and recorded September 1,
1989 as Instrument #89-86455.
f) The Assignment of Landlord's Interest in Real Estate
and Leases between Norgate Plaza Limited Partnership, as
Assignor, and Resources Pension Shares 2 as Assignee, dated
November 29, 1984 and recorded December 3, 1994 as Instrument
#84-94392 in the Office of the Recorder of Marion County,
Indiana; and
g) The rights of any and all tenants in possession of
the real estate.
Dated this ____ day of ______________, 1994.
NORGATE PLAZA LIMITED PARTNERSHIP
By, Norgate Plaza, Inc., Its
General Partner
By
----------------------------------
Richard J. Langlais, Its President
2
3
Subscribed and sworn to before me a Notary Public within and
for said County and State, this ___ day of __________, 1994.
My commission expires:
----------------------------------
, Notary Public
-------------------
Resident of County
---------------------- ---------------
This instrument was prepared by Timothy L. Black, Attorney at Law, Ancel &
Dunlap, 1770 Market Square Center, Indianapolis, Indiana 46204.
3
4
STATE OF MINNESOTA )
: ss
COUNTY OF DAKOTA )
Before me a notary public in and for the State of Minnesota,
and a resident of Dakota County, Minnesota, personally appeared Richard J.
Langlais, the President of Norgate Plaza, Inc., the general partner of Norgate
Plaza Limited Partnership, an Indiana Limited Partnership, who acknowledged the
execution of the foregoing Quit Claim Deed as the President of the General
Partner of the Partnership for and on behalf of the general partner of the
Partnership.
Witness my hand and notarial seal this ___ day of __________,
1994.
------------------------------
Notary Public
Commission Expires:
-----------
EX-10.27
11
LETTER AGREEMENT
1
EXHIBIT 10.27
DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, New York 10048
(212) 392-2222
As of June 8, 1994
CONFIDENTIAL
------------
RPS Realty Trust
733 Third Avenue
New York, NY 10017
Gentlemen:
1. Appointment. This letter (the "Agreement") confirms
that RPS Realty Trust (the "Company") has retained Dean Witter Reynolds Inc.
("Dean Witter") on the terms and conditions set forth herein, to act as
exclusive financial advisor to the Company and its affiliates with respect to
any Transaction (as hereinafter defined) involving Ramco-Gershenson, Inc.
and/or its affiliates ("Gershenson"), as well as any assets of Gershenson, or
any other person or entity. As used herein, the term "Transaction" means a
transaction or a series of transactions (including, without limitation, private
purchases, tender offer, exchange offer, merger, consolidation, partnership or
other business combination) whereby, directly or indirectly, (x) control of or
a material interest in the securities, assets or business of Gershenson is
acquired by or combined with the Company or any of its affiliates or (y)
control of or a material interest in the securities, assets or business of the
Company is acquired by or combined with any unaffiliated third party. A
Transaction shall also include any acquisition of an interest in or assets of
Gershenson from any person acquiring such interest or assets from Gershenson.
(The Transaction referred to in clause (y) is sometimes referred to as a "Sale
Transaction".) Notwithstanding the foregoing, in no event shall the following
transactions be deemed as a Transaction or Sale Transaction for purposes of
this Agreement: (i) the sale or disposition of all or substantially all the
assets of the Company pursuant to a plan of liquidation, (ii) the transfer or
disposition of the Company's mortgage loan assets or business to its
shareholders by means of a spin-off transaction, or (iii) the prepayment of one
or more of the Company's mortgage loans or sale of one or more of the Company's
mortgage loans to the existing borrowers under such loans or to any third
party, except for in connection with a sale of the Company or all or
substantially all of its assets or business.
2
Dean Witter accepts such engagement and, in that connection,
will (i) consult with the Board of Trustees and senior management regarding the
financial aspects of the Transaction proposals, (ii) upon the request of the
Board of Trustees and senior management, assist with negotiations regarding the
Transaction proposals, (iii) upon the request of the Board of Trustees, render
its opinion (the "Opinion") to the Board of Trustees of the Company as to the
fairness, from a financial point of view, to (x) the Company of the
consideration to be paid to Gershenson in the Transaction or (y) to the
shareholders of the Company of the consideration to be paid in any Sale
Transaction and (iv) use commercially reasonable efforts to provide such other
customary and appropriate services relating to the Transaction that are
reasonably requested by the Company, including, without limitation, performing
research (and, in connection therewith, issuing initial and follow-up research
reports in form and frequency consistent with those research reports
customarily issued by Dean Witter for real estate investment trusts for which
Dean Witter acted as managing underwriter or co-manager in connection with
firmly underwritten public offerings of equity securities during the 12 months
preceding the date of this Agreement) and assisting the Company in preparing
for road shows in connection with the Transaction. Dean Witter will conduct
such financial review of the Company, Gershenson and any party to any Sale
Transaction and their respective businesses and operations as Dean Witter deems
necessary and feasible for purposes of advising the Board of Trustees and
senior management and rendering its Opinion. Such review will be based upon an
analysis of publicly available information and such other information as shall
be supplied to Dean Witter by the Company, all of which Dean Witter shall be
entitled to rely on as being accurate and complete. Dean Witter will make no
independent verification of the accuracy or completeness of any information
provided to it in connection with this engagement and will make no independent
appraisal of the assets or liabilities of the Company or any other party to a
Transaction. The Company will cooperate fully with Dean Witter in connection
with its financial review and analysis. Dean Witter is not being engaged to
solicit interest in a Sale Transaction.
2. Compensation. (a) For Dean Witter's services, the
Company will pay Dean Witter a retainer fee of $150,000 on signing this
Agreement. The Company will pay Dean Witter an additional fee of $150,000
payable on the date the Company or any of its affiliates initiates a proxy
solicitation with the goal of effecting a Transaction.
(b) If a Transaction (other than a Sale Transaction) is
consummated, the Company will pay Dean Witter a fee (the "Transaction Fee") of
$750,000.
2
3
(c) In connection with its Opinion, the Company will pay
Dean Witter a fee (the "Fairness Opinion Fee") of $500,000 which shall be paid
at the time Dean Witter renders its Opinion. A Fairness Opinion Fee of
$500,000 shall be paid by the Company to Dean Witter for each subsequent
opinion, if any, rendered by Dean Witter, payable each time Dean Witter renders
any such Opinion.
(d) If a Sale Transaction is consummated, the Company
will pay Dean Witter a fee (the "Sale Transaction Fee") equal to 1% of the
aggregate Value (as defined) of the Sale Transaction.
(e) The Transaction Fee or the Sale Transaction Fee, as
applicable, shall be payable in full, in cash, upon the closing of the
Transaction; provided, however, that if the Value of the Sale Transaction
includes consideration the receipt of which is contingent upon the passage of
time or the occurrence of some future event or circumstance, the portion of the
Sale Transaction Fee attributable to such Value shall be paid to Dean Witter at
the earlier of (x) the receipt of such consideration or (y) the time that such
Value can be determined. The Company may credit once the fees paid to Dean
Witter pursuant to paragraph (a) above against the Transaction Fee or the Sale
Transaction Fee payable to Dean Witter. The Company may credit once up to
$250,000 of any Fairness Opinion Fee paid to Dean Witter pursuant to paragraph
(c) above against the Sale Transaction Fee, if any, pursuant to Dean Witter.
(f) For the purpose on this paragraph 2, "Value" means
the sum of (without duplication) (i) the aggregate amount of cash paid or
payable for the securities, assets or business transferred in the Transaction,
(ii) the fair market value of any securities, assets or other property
transferred or transferable (except that promissory notes will be valued at the
face amount thereof) for the securities, assets or business transferred in the
Transaction, (iii) the fair market value of any unusual dividends or
distributions paid by the Company in anticipation of a Transaction and (iv) the
amount of any Company debt assumed in the Transaction (valued at face amount)
or repaid in connection with the Transaction. The fair market value of
securities for which there is a recognized trading market shall be the average
of the closing prices (or the average of the last bid and asked price if a
closing price is not available) of the securities on the ten trading days
preceding the day on which such securities are received in payment and shall be
computed without giving effect to any restrictions on transfer. The fair
market value of any assets, securities or property (other than marketable
securities and promissory notes) shall be mutually agreed in good faith by Dean
Witter and the Company.
3. Expenses. In addition to any fees that may be
payable by the Company under this letter and whether or not a
3
4
Transaction is proposed or is consummated, the Company shall reimburse Dean
Witter from time to time upon its request, for reasonable out-of-pocket
expenses incurred in connection with its activities under this Agreement,
including the reasonable fees and disbursements of its legal counsel up to a
maximum aggregate amount of $35,000, provided that this limitation on the
reasonable fees and disbursements of Dean Witter's legal counsel shall not
apply if additional services are requested of Dean Witter by the Company.
4. Confidentiality. Dean Witter will consent to a
description of its Opinion and advice rendered in connection with its
activities under this Agreement, to inclusion of the Opinion, and to references
to, Dean Witter in any filing to be made by the Company with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934 in connection with any Transaction, and in materials
delivered to the Company's shareholders which are part of such filings,
provided that any such description of or references to the Opinion of Dean
Witter or its advice or analysis are reasonably acceptable to Dean Witter.
Except as otherwise provided above, any advice rendered by Dean Witter and
pursuant to this Agreement is solely for the use and benefit of the Board of
Trustees and senior management and shall not be disclosed (in whole or in part,
in any manner) publicly or made available to third parties, other than
Gershenson and representatives and agents of the Board of Trustees and senior
management who also shall not disclose such information, in each case, without
the prior approval of Dean Witter and, unless based on the advice of
independent counsel and after consultation with Dean Witter, such disclosure is
required by law.
5. Indemnification. (a) The Company shall indemnify
and hold harmless Dean Witter, its affiliates, directors, officers, agents and
employees, and each other person controlling Dean Witter or any of its
affiliates and any persons retained in connection with the performance of the
services described herein (individually referred to as an "Indemnified
Person"), from and against any and all claims, damages, losses, liabilities,
costs and expenses (including, without limitation, any and all reasonable fees
and disbursements of counsel and other reasonable expenses and disbursements
incurred in connection with investigating, preparing to defend or defending any
action, suit or proceeding (including any investigation) commenced or
threatened, or in appearing or preparing for appearance as a witness), as the
same are incurred, to which, jointly or severally, any Indemnified Person may
become subject, directly or indirectly, arising out of, in connection with or
based upon this engagement, the transactions contemplated hereby, any Opinion
or other advice or any Indemnified Person's role in connection with any of the
foregoing. Notwithstanding the foregoing, the Company shall not be liable in
respect of any claim, damage, loss,
4
5
liability, cost or expense in respect of any Indemnified Person to the extent
the same is finally judicially determined by a court of competent jurisdiction,
to have resulted from the gross negligence or willful misconduct of such
Indemnified Person in rendering services hereunder.
(b) If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold an Indemnified
Person harmless, then the Company shall contribute to the amount paid or
payable by the Indemnified Person as a result of claim, damage, loss,
liability, cost or expense in such proportion as is appropriate to reflect the
relative benefits received (or anticipated to be received), by the Company and
its stockholders, on the one hand, and Dean Witter, on the other than, and also
the relative fault of the Company and its affiliates, on the one hand, and Dean
Witter, on the other hand, as well as other relevant equitable considerations;
provided, however, that the provisions of this paragraph 5 notwithstanding, the
aggregate contribution of all Indemnified Persons for all claims, losses,
damages, liabilities, costs and expenses shall not exceed the amount of fees
actually received by Dean Witter pursuant to paragraph 2 of this Agreement.
The Company further agrees, upon request by any Indemnified Person at any time,
from time to time, promptly to reimburse such Indemnified Person for costs and
expenses as to which the Company has agreed to indemnify or provide
contribution or which are incurred by such Indemnified Person in enforcing
paragraph 5. The indemnity, contribution and expense reimbursement obligations
of the Company hereunder are in addition to any rights which any Indemnified
Person may otherwise have.
(c) Except in circumstances in which Dan Witter is not
entitled to be indemnified under this Agreement, the Company agrees that it
will not, without the prior written consent of Dean Witter, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not Dean
Witter is an actual or potential party to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of Dean
Witter from all liability arising out of such claim, action, suit or
proceeding.
6. Termination. (a) This Agreement may be terminated
by either the Company or Dean Witter at any time upon receipt of written notice
of termination by either party.
(b) Notwithstanding the foregoing, it is understood that
the provisions of paragraphs 1 (to the extent a Transaction is completed and
the Company requests that Dean Witter provide the services specified in clause
(iv)), 2 (to the extent fees are payable before termination), 3 (to the extent
expenses are
5
6
incurred before termination), 4, 5, 6, 7, 8 and 9 of this Agreement will, with
respect to paragraph 1, survive any termination of this Agreement for a period
of 12 months and, with respect to paragraphs 2, 3, 4, 5, 6, 7, 8 and 9, survive
any termination of this Agreement indefinitely. Notwithstanding the foregoing,
if within 12 months following the termination of this Agreement, any
Transaction is consummated or the Company or any affiliate enters into an
agreement regarding a Transaction which at any time thereafter results in a
Transaction, the Company will pay Dean Witter the Transaction Fee or the Sale
Transaction Fee, as applicable, as provided in paragraph 2 and, upon the
request of the Board of Trustees, Dean Witter shall be entitled to render its
Opinion and be paid the Fairness Opinion Fee as provided in paragraph 2(c).
7. Due Authorization. The Company represents that this
Agreement has been duly authorized, executed and delivered by the Company.
8. Miscellaneous. This Agreement shall be governed by
New York law applicable to contracts executed and to be performed in New York.
This Agreement contains the entire agreement between us in respect of its
subject matter and no provision hereof may be amended, modified or waived
except by a writing executed by the parties hereto. The Company hereby
consents to personal jurisdiction, service and venue in any court in which any
claim which is subject to the provisions of paragraph 5 is brought against Dean
Witter. Any right to trial by jury with respect to any claim or action arising
out of this Agreement is waived. The Company recognizes that Dean Witter has
been retained by the Company for the Board of Trustees and senior management,
and that no one other than the Board of Trustees and senior management is
authorized to rely upon this engagement of Dean Witter or any statements
conducted by it.
9. Additional Parties. In the event the Company
completes a Transaction which involves the transfer of a material portion of
its assets to one or more subsidiaries or controlled affiliates or the
acquisition of a material amount of assets by one or more subsidiaries or
controlled affiliates, Company will cause each such subsidiary or affiliate,
except for subsidiaries or other affiliates succeeding to ownership of the
Company's mortgage loan assets through a spin-off transaction or third parties
purchasing one or more of the Company's mortgage loan assets, to assume on a
joint and several basis with the Company and each other all obligations of the
Company hereunder including the indemnification, contribution and expense
reimbursement obligations in paragraph 5.
10. Exclusivity. The Company agrees that if a
Transaction (other than a Sale Transaction) is consummated, it will offer Dean
Witter the exclusive opportunity to act as (i)
6
7
managing underwriter with respect to any firmly underwritten public offering of
debt or equity securities, (ii) financial advisor with respect to any mergers
or consolidations which, if consummated, would result in a change in control of
the Company, and (iii) advisor or broker with respect to the sale of all or
substantially all the assets of the Company for 12 months from the date of the
closing of the Transaction and such additional period of time as may be
necessary to complete any projects already then commenced by Dean Witter. If
Dean Witter elects to provide such services for a particular transaction (which
Dean Witter may do in its sole discretion), Dean Witter shall provide such
services for fees, and on terms, which are mutually acceptable to the Company
and Dean Witter. In the event Dean Witter and the Company cannot mutually
agree on the fees and terms for such services, the Company shall have the right
to obtain such services from any other source without regard to the
restrictions set forth in this paragraph 10, provided that the fees and terms
for such services are not less favorable to the Company than the terms offered
by Dean Witter.
Please confirm that the foregoing is in accordance with your
understanding and agreement by signing and returning to Dean Witter the
duplicate of this letter which is attached herewith, which shall thereupon
constitute a binding agreement.
Very truly yours,
DEAN WITTER REYNOLDS INC.
By:
--------------------------------------
Yie-Hsin Hung
Title: Managing Director
Accepted and agreed to as
of the date hereof:
RPS REALTY TRUST
By:
---------------------
Title: President
7
EX-23.1
12
AUDITOR'S CONSENT WITH RESPECT TO S-3
1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-37925 of RPS Realty Trust on Form S-3 of our report dated February 27, 1995,
appearing in this Annual Report on Form 10-K of RPS Realty Trust for the year
ended December 31, 1994.
/s/ Deloitte & Touche LLP
-------------------------
New York, New York
March 29, 1995
EX-23.2
13
AUDITOR'S CONSENT WITH RESPECT TO S-3
1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-37925 of RPS Realty Trust on Form S-8 of our report dated February 27, 1995,
appearing in this Annual Report on Form 10-K of RPS Realty Trust for the year
ended December 31, 1994.
/s/ Deloitte & Touche LLP
-------------------------
New York, New York
March 29, 1995
EX-27
14
FINANCIAL DATA SCHEDULE
5
12-MOS
DEC-31-1994
JAN-1-1994
DEC-31-1994
74,583,966
0
8,607,992
11,657,236
0
116,367,253
0
1,731,153
186,170,822
3,571,654
0
2,849,242
0
0
179,749,926
186,170,822
0
26,406,761
0
0
7,838,468
2,500,000
426,417
15,641,876
0
15,641,876
0
0
0
15,641,876
.55
.55