AMENDED AND RESTATED
MASTER AGREEMENT
This AMENDED AND RESTATED MASTER AGREEMENT (this "Agreement") is made as of
the June 30, 1998, by and among FAC REALTY TRUST, INC., a Maryland corporation
(sometimes referred to as "FAC" or the "Company"); FAC PROPERTIES, L.P., a
Delaware limited partnership (the "Operating Partnership"); KONOVER MANAGEMENT
SOUTH CORP. ("Konover Management South"), a Florida corporation; and the other
signatories to this Agreement hereinafter contained (each a "Contributor" and
collectively the "Contributors").
WHEREAS, FAC, the Operating Partnership, Konover Management South, and the
Contributors are parties to that certain Master Agreement dated as of February
24, 1998 (the "Original Master Agreement"); and
WHEREAS, the parties desire to amend certain provisions of the Original
Master Agreement and to restate the Original Master Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree that the Original Master Agreement
is hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
The following capitalized terms shall have the following meanings for all
purposes of this Agreement and such meanings are equally applicable to the
singular and plural forms of the terms defined. The terms "hereof", "hereto",
"herein", "hereunder" and comparable terms refer to the entire agreement with
respect to which such terms are used and not to any particular section,
subsection, paragraph or other subdivision thereof.
"Acquired Partnerships" means, collectively, the corporations, trusts,
partnerships and/or limited liability companies listed in the Acquisition
Schedule.
"Acquisition Schedule" means the schedule of Acquired Partnerships and
Properties attached hereto as Schedule 1 and incorporated herein by
reference.
"Affiliate" means, as to any Person (as defined below), each of the Persons
(i) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with such Person;
or (ii) which beneficially owns or holds 10% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of such Person; or (iii)
10% or more of any class of the outstanding voting stock (or in the case of
a Person which is not a corporation,
10% or more of the equity interest) of which is beneficially owned or held
by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether by ownership of voting stock, by
contract, by close family relationships (i.e., parent, spouse, child or
sibling) or otherwise.
"Agreement" means this Amended and Restated Master Agreement.
"Allocated Property Value" means as defined in Section 3.1(a).
"Apportionment Date" means April 1, 1998.
"Average Share Price" means, with reference to any day, the average of the
last reported sales price (or, if there is no such price, the average of
the last reported "bid" and "ask" prices) for Shares for the thirty (30)
consecutive business days through and including the last business day prior
to such day.
"Award Date" means as defined in Section 3.4.
"Board" means the Board of Directors of FAC.
"Bringdown Certificate" means, as applicable, a certificate executed by FAC
and the Operating Partnership as to the continuing truth and accuracy in
all material respects as of the Closing Date of each and all of the
respective representations and warranties by such parties, or a Certificate
executed by the applicable Contributors and Constituent Partnerships owning
a Property as to the continuing truth and accuracy in all material respects
as of the Closing Date of each and all of the representations and
warranties of such Contributors and Constituent Partnerships under this
Agreement with respect to themselves or such Property.
"Closing" means, with respect to any Property or Properties, the closing
and consummation of the transactions contemplated by this Agreement
relating to such Property or Properties.
"Closing Date" means, with respect to any Property or Properties, the date
upon which the Closing occurs, upon not less than ten (10) days notice from
the Operating Partnership to the Contributors of the Property or Properties
to which the Closing relates, but in no event later than the Outside
Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Constituent Financial Statements" means the periodic income statement and
balance sheets provided to the Operating Partnership (including the
schedules attached thereto) for the Properties and, as applicable, the
Contributors or Constituent Partnerships (i.e. whichever is the direct
contributor of each Property), covering the three (3) most recent completed
fiscal years of the applicable Constituent Party plus any more recent
financial statements which may exist. The parties acknowledge that the
Constituent Financial Statements for the
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Contributor of the Property known as South Xxxx Festival Centre are limited
to such Property and do not relate to the other assets of such Contributor.
"Constituent Parties" means collectively the Contributors and the
Constituent Partnerships, without duplication.
"Constituent Partnerships" means, as to those Properties, if any, which are
owned (legally or beneficially) or leased by corporations, trusts,
partnerships, limited liability companies or other entities which are in
turn owned by certain of the Contributors, such corporations, trusts,
partnerships, limited liability companies or other entities which may be so
owned by certain of the Contributors.
"Contribution Price" means the consideration to be paid by the Operating
Partnership to the Contributors for their Interests in the Properties as
set forth in Section 3.1.
"Contributor Counsel" means Xxxxxxx & Xxxxxxx, LLP, located at the address
provided in the Section of this Agreement entitled "Notices," counsel to
the Constituent Parties.
"Environmental Law" means any and all federal, state and local laws,
regulations, ordinances and other requirements relating to pollution or
protection of the environment, including, without limitation, laws,
regulations and requirements relating to the ownership, possession, storage
and control of the Properties (as defined below) and to emissions,
discharges, releases or threatened releases of storm water, pollutants,
contaminants, toxic or hazardous substances, or solid or hazardous wastes
into the environment (including without limitation ambient air, surface
water, groundwater or land), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, toxic or hazardous substances, or
solid or hazardous wastes. The Environmental Laws include, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means Generally Accepted Accounting Principles, consistently
applied.
"Improvements" means all buildings, structures, streets, furnishings,
parking lots, landscaping, walls, ponds, culverts, fixtures, utilities,
fences, driveways, loading docks, security systems and other physical
features constructed or assembled on, at, upon or beneath any of the
Properties (whether finished or unfinished).
"Indebtedness" means, without duplication, any obligations for borrowed
money, whether heretofore, now or hereafter owing, arising, due or payable
to any person and howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise
and whether matured or unmatured. Without in any way limiting the
generality of the foregoing, Indebtedness specifically includes the
following: (a) all obligations or liabilities of any person that are
secured by any lien, claim, encumbrance or security interest upon property;
(b) all obligations or liabilities created or arising under any
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capital lease of real or personal property, or conditional sale or other
title retention agreement with respect to property, even though the rights
and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; (c) in the context of an acquisition
hereunder of Interests in a Constituent Partnership, all obligations to
trade creditors and all unfunded pension fund, employee medical or welfare
obligations and liabilities; (d) deferred taxes; and (e) all obligations
under any indemnification agreements, guaranty agreements, letters of
credit or other documents creating such contingent liabilities.
"Independent Director" shall have the meaning set forth in the charter of
FAC, as it may be amended from time to time.
"Interests" shall mean, collectively, all direct or indirect equity
interests owned by any Contributor and set forth in the Acquisition
Schedule and any other direct or indirect equity interests such Contributor
may have, whether now owned or hereinafter acquired, in the Acquired
Partnerships or the Properties listed in the Acquisition Schedule.
"Lazard Stock Purchase Agreement" shall mean that certain Amended and
Restated Stock Purchase Agreement dated as of March 23, 1998 by and between
FAC and Prometheus Southeast Retail LLC with respect to the Lazard
Transaction.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but
not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease consignment or bailment for security purposes. The term Lien
shall include reservations, exceptions, defects of any kind or nature,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property.
"Material Adverse Effect" shall mean a material adverse effect on the
financial condition, results of operations, businesses or prospects of the
Property in question or the Person in question and its Subsidiaries (to the
extent of the interests of the company in question therein) taken as a
whole.
"Net Operating Income" shall mean, for any period, all Operating Income
during such period minus all Operating Expenses during such period,
determined in accordance with GAAP provided that, in determining Net
Operating Income, (i) Operating Expenses shall be adjusted (A) to reflect a
normalized allowance for lease rollovers based on the rent roll for each
Property and then current market conditions, including downtime, tenant
improvement costs and leasing commissions, (B) a reserve for capital
expenditures equal to $0.10 per square foot of rentable space per annum and
(C) a vacancy allowance at the actual vacancy rate (but not less than 5%),
and (ii) Operating Income shall be adjusted (A) to exclude rents from
temporary or month-to-month tenants or tenants operating under bankruptcy
protection, (B) to include the annualized base rent for executed leases
with tenants in occupancy which are open for business and actually paying
rent for at least three months, and (C) to give effect
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to any mandatory and liquidated rent adjustments or any cancellation
options in any leases which, in each case, relate to the twelve (12) months
following the expiration of such period;
"NYSE" means the New York Stock Exchange, Inc.
"Operating Expenses" shall mean, for any period, all expenditures for a
Property as and to the extent required to be expensed or allowed to be
expensed and in fact expensed under GAAP during such period in connection
with the ownership, operation, maintenance, repair or leasing of each
Property, including (i) management fees, calculated at not less than five
percent (5%) of gross rental income, insurance premiums, bank charges,
expenses for accounting, advertising, marketing, architectural services,
utilities, extermination, cleaning, trash removal, window washing,
landscaping and security; and reasonable and necessary legal expenses
incurred in connection with the operation of each Property; (ii) taxes
(other than income taxes); and (iii) the cost of interior and exterior
maintenance, repairs and minor alterations; provided that Operating
Expenses will not include non-cash items such as depreciation and
amortization or any non-recurring expenditures or any extraordinary
expenditures not considered operating expenses under GAAP.
"Operating Income" for any period, all regular on-going revenues actually
received from the operation of each Property during such period, including
(i) rents and (ii) all other amounts received which in accordance with GAAP
are required to be or are included in annual financial statements as
operating income of each Property; provided, that Operating Income will not
include (1) income from non-recurring income sources, (2) advance rents or
other payments relating to portions of the term of the lease other than the
period in question, (3) deposits or escrows, (4) any income otherwise
includable in Operating Income but paid to a person other than the owner of
the Property, (5) proceeds of casualty insurance or condemnation awards or
(6) income from a sale, financing or other capital transaction.
"Outside Closing Date" means December 31, 1998.
"Operating Partnership Agreement" means the Agreement of Limited
Partnership of FAC Properties, L.P., as amended through the date hereof,
including the amendment to admit the Contributors as limited partners
therein.
"Outstanding Debt Financing" means the secured mortgage Indebtedness of the
Properties described as such on Schedule 6.1A.9 attached hereto including
any indemnifications and guarantees related thereto.
"Permitted Liens" means (i) liens for ad valorem taxes not yet due and
payable; (ii) lease memoranda or notices, restrictions, easements,
covenants, reservations and rights of way of record as do not detract from
the value or interfere with the present use of a parcel of property; (iii)
zoning ordinances, restrictions and other requirements imposed by
governmental authority as do not interfere with the present use of a parcel
of property; and (iv) such imperfections of title, liens and encumbrances,
if any, as do not detract from the
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value or interfere with the present use of a parcel of property and which
do not secure obligations for borrowed money or the deferred purchase price
of property.
"Person" means any individual, joint venture, corporation, limited
liability company, trust, company, voluntary association, partnership,
trust, joint stock company, unincorporated organization, association,
government, or any agency, instrumentality, or political subdivision
thereof, or any other form of entity.
"Property" or "Properties" shall mean, individually, the real property
together with any Improvements thereon and all tangible and intangible
personal property and rights, privileges, easements, licenses, leases,
lettings and interests appurtenant thereto and all of the ownership
interests therein owned by a Contributor or by a Constituent Partnership
or, collectively, by all of the Constituent Partnerships, which real
property is listed as a "Property" on the Acquisition Schedule.
"Redemption Shares" means the Shares of FAC into which Units received by
the Contributors in connection with the transactions contemplated hereby
are convertible into under certain circumstances at the election of FAC
upon their tender for redemption as provided in the Operating Partnership
Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement in the form attached hereto as Schedule 4.6 (iv).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Laws" means the Securities Act, the Exchange Act and the rules
and regulations promulgated thereunder.
"Shares" means the duly authorized common stock of FAC.
"Subsidiaries" shall mean with respect to any Person, any corporation,
partnership, limited liability company, joint venture, business trust or
other entity, of which such Person, directly or indirectly, owns or
controls 50% or more of the securities or other interests entitled to vote
in the election of directors or others performing similar functions with
respect to such corporation or other organization, or to otherwise control
such corporation, partnership, limited liability company, joint venture,
business trust or other entity.
"Transactions" means the transactions contemplated under this Agreement.
"Unit" or "Partnership Unit" means an undivided limited partnership
interest of the Operating Partnership, which is exchangeable by the Unit
holder for either cash or Shares, whichever may be elected by FAC, after
one year from the Closing Date in accordance with the Operating Partnership
Agreement.
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"Warrants" means the Warrants to be issued by FAC to Xxxxx Xxxxxxx or
permitted members of his immediate family and which contain the material
terms provided in Section 5.17 and are otherwise mutually satisfactory to
FAC and Xxxxx Xxxxxxx.
ARTICLE II
THE TRANSACTIONS
2.1 General. Subject to the terms, conditions, provisions and limitations
in this Agreement, on the Closing Date, each Contributor does hereby agree to
contribute to the Operating Partnership the Properties described in the
Acquisition Schedule and the Operating Partnership does hereby agree to accept
such Properties and issue to each Contributor, in exchange for such
contribution, the Units and/or cash as provided in Section 2 hereof and the
Acquisition Schedule, subject to adjustment in accordance with Section 3.1(a)
hereof. Notwithstanding anything to the contrary in this Agreement, the
Operating Partnership shall acquire and the Contributors of all of the Interests
in each Property shall convey to the Operating Partnership title to the
Property, by deed, ground leasehold assignment or other applicable instrument of
conveyance of the assets comprising the Property rather than by transfer of
ownership interests in any Contributor or Constituent Partnership.
2.2 Tender of Consideration. The Operating Partnership shall tender the
consideration to the applicable Contributor as provided in Article III hereof in
respect of the Closings of the Properties under this Agreement such that each
Closing occurs under the terms thereof.
2.3 Lake Point. The parties agree that with respect to the conveyance and
acquisition of the Property known as Xxxx Xxxxx Xxxxxx xx Xxxx Xxxx Xxxxx, XX
(the "Lake Point Property"), the representations and warranties set forth in
paragraph 20(b) of Schedule 6.1A are hereby amended by deleting exceptions (a)
and (b) relating to the Lake Point Property as shown on Schedule 6.1A.20(b) and
substituting the following in lieu thereof:
As to that portion of the Lake Point Property where (a) tenant improvement
construction is to be performed by tenants under the provisions of leases
approved in accordance with the provision of this Agreement and has not
been completed as of the date hereof, or (b) tenant improvement
construction for Karin's, Bay E-2, under a Standard Form of Agreement
between Owner and Contractor with Konover Construction Corporation South,
as amended by change order, has not been completed as of the date hereof
but shall be completed by the applicable Closing Date, or (c) tenant space
is vacant and no lease has been executed nor has any tenant improvement
work commenced (collectively, the "Excluded Property"), the Contributors
and the Constituent Parties cannot represent as of this date:
(i) all certificates, permits or licenses that are currently required
from any governmental authority which are necessary to permit the
lawful use, occupancy or operation of the applicable tenant space have
been obtained; or
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(ii) that such tenant space is in good operating condition and repair,
and no material alterations are required.
The Contributor of the Lake Point Property hereby represents and warrants
to the knowledge of Contributor that (A) as of the date hereof, with the
exception of tenant improvements for the Excluded Property, construction of
the Property is completed and in full compliance with the representations
and warranties contained in paragraph 20(b) of Schedule 6.1A, (B) that as
of the Closing Date, at least 85.8% of the rentable square footage of the
Property (representing the entire Property other than the Excluded
Property) shall be in compliance with such representations and warranties,
and (C) the Contributor of the Lake Point Property has no knowledge of any
conditions requiring repair or defects at or in the Property (other that a
warranty repair claim of Xxxx-Xxxxx relating to a chair rail in the
vestibule, and repairs to the landscaping, irrigation system, and
fountains, all of which the Contributor agrees to repair or resolve prior
to the applicable Closing). The representations and warranties contained in
this Section 2.3 shall be updated as of the Closing Date in a manner
reasonably satisfactory to the Operating Partnership.
ARTICLE III
CONSIDERATION
3.1 Contribution Price.
(a) Units Issued. The consideration for each Contributor's Interests
shall be the number of Units and the amount of cash as set forth in the
Acquisition Schedule, subject to the provisions of Section 3.4 below, and
subject to any reallocation as between cash and Units by individual
Contributors. The Units and cash are allocated among the Properties to
derive a value for each Property, based upon a Unit value of $9.50, as
shown in Schedule B (the "Allocated Property Value"). The number of such
Units and the amount of cash are subject to adjustment at Closing due to
prorations and post-closing adjustments as provided herein.
(b) Proposed Distributions. For the first fiscal year (or other period
over which distributions are paid) of the Operating Partnership ending
after the date of Closing, partnership distributions, if any, attributable
to such year (or other period) payable by the Operating Partnership to
Contributor pursuant to Paragraph 5.1 of the Operating Partnership
Agreement shall be prorated to take into account the period of time during
such year (or other period) that the Contributor or its successors in
interest to the Units is a limited partner in the Operating Partnership.
The Contributor shall receive, contemporaneously with receipt by the other
limited partners in the Operating Partnership of their respective
distributions for such year (or other period), that portion of a full
distribution otherwise attributable to its Units determined by multiplying
the amount of such full distribution by a fraction the numerator of which
is the number of days during such year (or other period) that the
Contributor is a limited partner in the Operating Partnership and the
denominator of which is the number of days in such year (or other period).
In the event that the Contributor
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receives a full cash distribution for such period, it shall reimburse the
Operating Partnership the prorated portion of such distribution within five
(5) days of receipt.
(c) The Lock-Up. Each Contributor hereby agrees that without the prior
written consent of FAC, it will not, directly or indirectly, sell, offer or
contract to sell, grant any option for the sale of, seek redemption of or
otherwise dispose of or transfer (collectively, "dispose of"), any
Partnership Units received hereby except as set forth in Schedule 3.1(c)
hereof.
(d) Conflict with Operating Partnership Agreement; Redemption Right.
The parties hereby agree that in the event of direct conflict between the
express terms of this Agreement and the express terms of the Operating
Partnership Agreement, the express terms of this Master Agreement shall
prevail. In addition, the parties agree that, notwithstanding anything to
the contrary in the Operating Partnership Agreement, if upon exercise of
any Redemption Right under and as defined in the Operating Partnership
Agreement by any Contributor, FAC is unable to issue Shares under its
Charter, then FAC shall either cause the Operating Partnership to redeem
the Contributor's Units for the "Cash Amount," as such term is defined in
the Operating Partnership Agreement, or to purchase such Contributor's
Units for the "Cash Amount."
3.2 Terms of Payment.
(a) Generally. At the Closing, each Contributor shall receive the
number of Units and the amount of cash allocated to such Contributor under
the Acquisition Schedule in respect of the Properties to be acquired as
adjusted pursuant to Section 3.1(a) above.
(b) Pro Rata Expenses. The Contributors shall be responsible for the
aggregate amount of, and each Contributor shall be responsible for payment
of its pro rata portion of, the Constituent Parties' legal fees associated
with this transaction, any contract termination fees with respect to the
Properties or the Constituent Partnerships, all assumption and other fees
and costs associated with the Outstanding Debt Financing in connection with
the Lake Point Property (with the exception that document, transfer or
intangible taxes relating to the assumption shall be shared equally by the
Contributor of the Lake Point Property and the Operating Partnership), and
any prorations chargeable to the Contributors under Section 3.3 hereof. The
legal fees of FAC and the Operating Partnership, and all assumption and
other fees and costs associated with the Outstanding Debt Financing (other
than debt associated with Lake Point Centre) shall be expenses of the
Operating Partnership and paid from resources of the Operating Partnership
existing prior to Closing at the time such fees and costs are incurred.
(c) Transfer Taxes. All transfer and documentary stamp and other
similar taxes and fees for the conveyance of the Properties or Interests in
Constituent Partnerships shall be the responsibility of and paid from
resources of the Operating Partnership existing prior to Closing.
Contributors will cooperate with the Operating Partnership, at no cost or
liability to them, in Operating Partnership's reasonable efforts to
conserve the payment of such taxes and fees, including by distributing
certain of the Properties to a limited liability company or
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other entity to be formed which is wholly owned by the Contributors
currently owning such Property and conveying the membership interests in
such limited liability company to the Operating Partnership in lieu of a
deed transfer. All transfer taxes incurred in connection with the Lake
Point Property shall be borne by the Contributor of the Lake Point
Property; title insurance premiums and recording fees relating to the Lake
Point Property shall be shared equally by the Contributor of the Lake Point
Property and the Operating Partnership.
3.3 Additional Closing Adjustments. Notwithstanding the date on which the
Closing occurs for each of the Properties, the parties intend that, from a
financial perspective, the transfer of the Properties shall be effective as of
the Apportionment Date. Accordingly, at the Closing:
(a) Generally. All real estate taxes, charges and assessments
affecting a Property, all charges for water, sewer, electricity, gas and
all other utilities and operating expenses with respect to a Property, to
the extent not paid or payable by tenants, shall be apportioned on a per
diem basis as of midnight on the date immediately preceding the
Apportionment Date. All such expenses for the period preceding the
Apportionment Date shall be deemed expenses of the applicable Contributors
and all such expenses commencing as of the Apportionment Date with respect
to such Property shall be deemed to be expenses of the Operating
Partnership and apportioned on a cash basis at the relevant Closing. All
accounts receivable accruing from and after the Apportionment Date which
are not collected as of the relevant Closing shall be credited to the
Contributor at Closing; all accounts payable accruing from and after the
Apportionment Date which are not paid as of the relevant Closing shall be
credited to the Operating Partnership at Closing. Amounts owed under this
Section shall be paid to the party to whom they are owed in cash at the
Closing or in the Post-Closing Adjustment Period (as defined below) in the
same manner as if the underlying real property were being sold. If any real
estate taxes, charges or assessments have not been finally assessed as of
the Closing Date for a Property for the then current calendar tax year,
they shall be adjusted at the Closing based upon the greater of (i) the
most recently issued bills therefor or (ii) the best reasonable estimate
therefor after consultations with the appropriate taxing officials.
(b) Rent. All collected rent under leases and other income
attributable to a Property shall be apportioned on a per diem basis as of
midnight on the date immediately preceding the Apportionment Date. All such
rent and other income for the period preceding the Apportionment Date shall
be deemed to be property of the applicable Contributors, and subject to the
provisions of subparagraph (a), above, all rent and other income for any
period commencing as of the Apportionment Date and thereafter shall be the
property of the Operating Partnership for the purpose of making the
adjustments set forth herein. Amounts owed under this Section shall be paid
to the party to whom they are owed in cash at the Closing or during the
Post-Closing Adjustment Period (as defined below). Except as provided on
Schedule 3.3(b)(i) attached hereto, delinquent rent, accounts and notes
receivable and other outstanding amounts shall not be prorated, but are
hereby assigned to and shall be deemed the property of the Operating
Partnership. Any amounts received by Contributors on account of rent or
other income after the Apportionment Date with respect to the Property and
the related personal property shall be allocated to the Operating
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Partnership at Closing or turned over to the Operating Partnership for
application in accordance with the terms of this Section, as applicable.
At the respective Closings, the Operating Partnership agrees to assume
responsibility for repayment of these security deposits set forth in
Schedule 3.3(b)(ii) attached hereto, which the Contributors represent
hereby represent and warrant that such schedule includes a true and
complete list of all obligations of the landlord under leases affecting the
Properties with regard to security, cleaning or similar tenant deposits
which could become the obligation of the Operating Partnership following
the Closing.
(c) Debt Service. All amounts due and owing under the Outstanding Debt
Financing (other than the outstanding principal balance thereof which is
not then due and payable), including by way of example accrued and unpaid
interest, amortization payments preceding the Apportionment Date, late
charges and default interest shall be apportioned on a per diem basis as of
midnight on the date immediately preceding the Apportionment Date. Reserves
by the holders of Outstanding Debt Financing for TI Obligations shall be
returned to or credited to the Contributors except to the extent such TI
Obligations are the responsibility of the Contributors pursuant to Section
3.3(f) hereof. Any amortization payments made by the Contributors preceding
the Apportionment Date shall be taken into account in determining the Units
and/or cash due to the Contributors as of the Apportionment Date on account
of the Purchase Price. Any amortization payments made by the Contributors
following the Apportionment Date shall be reimbursed to the Contributors at
Closing.
(d) Leasing Commissions. Except as provided in the next sentence
hereof, Contributors shall be responsible for all outstanding leasing
commissions under leases existing as of February 24, 1998 and for all
commissions pursuant to leases entered into between February 24, 1998 and
Closing without the approval of FAC and the Operating Partnership. After
Closing, the Operating Partnership shall be responsible for all leasing
commissions due pursuant to leases entered into after February 24, 1998
with the prior written approval of FAC and the Operating Partnership and on
any renewal terms under existing leases provided that such renewal terms
commence after the Closing Date and such commission obligations are listed
on Schedule 6.1A.20(f), exclusive of obligations for leasing commissions
due for leases entered into for the premises affected by the Lease Guaranty
(as defined in Section 4.5 (xxviii)), which shall remain the responsibility
of the Contributor in accordance with the provisions of the Lease Guaranty.
(e) Service Contracts. The Operating Partnership will assume the
obligations arising after Closing under such service contracts affecting
the Properties in existence on February 24, 1998 as (i) were disclosed to
FAC and the Operating Partnership in writing by the Contributors prior to
February 24, 1998 and (ii) the Operating Partnership has not directed the
Contributors to terminate, which termination shall be at the sole cost of
the applicable Contributors or Constituent Partnerships. In addition, the
Operating Partnership will assume the obligations arising after Closing
under service contracts entered into between February 24, 1998 and Closing
if such service contracts shall have been approved by FAC and the Operating
Partnership.
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(f) Tenant Improvements and Allowances. Except as provided in the next
following sentence hereof, the Contributors or Constituent Partnerships, as
applicable, shall be responsible for all landlord tenant improvement
obligations and expenses, tenant allowances or rent abatements ("TI
Obligations") under leases in existence on February 24, 1998. After
Closing, the Operating Partnership shall be responsible for TI Obligations
under leases executed after February 24, 1998 with the prior written
approval of FAC and the Operating Partnership and for all TI Obligations
relating to the period from and after the Apportionment Date under the
contracts listed on Schedule 6.1A.8, exclusive of TI obligations relating
to the Lake Point Property, which shall remain the responsibility of the
Contributor. At Closing, the Contributors or Constituent Partnerships, as
applicable, shall assign to the Operating Partnership and the Operating
Partnership shall assume all obligations under such contracts for TI
Obligations listed on Schedule 6.1A.8, provided that (i) all necessary
written consents and acknowledgments of third parties shall have been
obtained by Contributors or the Constituent Partnerships, as applicable,
and (ii) the Contributors shall, on or before the Closing Date, pay any and
all amounts due on account of each of the construction agreements described
in Section 2.3, above.
(g) Preclosing Expenses and Liabilities. The parties acknowledge that
not all invoices for expenses incurred with respect to the Properties prior
to the Apportionment Date will be received by the Closing and that a
mechanism needs to be in place so that such invoices can be paid as
received. All of the prorations referred to above will be done on an
interim basis at the Closing and will be subject to final adjustment in
accordance with the provisions hereof within 90 days or such other agreed
upon period of time following the Closing (the "Post-Closing Adjustment
Period"). Upon receipt by the Operating Partnership after Closing of an
invoice for a Property's expenses which are attributable in whole or in
part to a period prior to the Apportionment Date and which were not
apportioned at Closing, the Operating Partnership shall submit for the
applicable Contributors a copy of such invoice with such additional
supporting information as Contributors shall reasonably request. Within 10
days after receipt of such copy, each of the applicable Contributors shall
pay to the Operating Partnership their pro rata share of an amount equal to
the portion of such invoice attributable to the period ending as of
midnight on the date immediately preceding the Apportionment Date
apportioned on a per diem basis.
(h) Security Deposits/Tenant Inducements. With respect to the Property
or Properties to be acquired at any Closing, the Constituent Parties shall
pay to the Operating Partnership in cash at such Closing an amount equal to
the sum of (i) the security deposits, if any, required to be held by the
landlord pursuant to the Leases, and (ii) any other deposits or advances
received by the Constituent Parties relating to services yet to be provided
by the Constituent Parties.
(i) Return of Equity. With respect to the Property or Properties to be
acquired at any Closing, the Operating Partnership shall pay to the
Constituent Parties in cash at such Closing an amount equal to the product
of (A) .085, (B) the number of days from the Apportionment Date through the
Closing Date, divided by 365, and (C) the Constituent
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Parties' Net Equity (as hereinafter defined) in the subject Property or
Properties. For purposes of this paragraph, "Net Equity" shall mean the
difference between (i) the Allocated Property Value for the Property, and
(ii) the principal amount of any Outstanding Debt Financing relating to
such Property on the Apportionment Date.
(j) Apportionment Date. The parties acknowledge that the Apportionment
Date shall be a day of income and expense for the Operating Partnership.
3.4 Deliberately Omitted.
ARTICLE IV
CLOSING
4.1 Closing; Condition to Obligations. Closing of the transactions
contemplated hereby shall take place as to all Properties as soon as practicable
on or after July 1, 1998, but in any event on or before the Outside Closing Date
or, upon not less than ten (10) days prior written notice, and subject to the
Conditions to Closing set forth in Article VIII below. Accordingly, the parties
hereby acknowledge and agree that there may be one or more Closings, and that
all references to the "Closing" or the "Closing Date" under this Agreement with
respect to a Property or the Contributors thereof shall mean the Closing and the
Closing Date for such Property, irrespective of the Closing or Closing Dates of
any other Property. It shall not be a condition to the Closing of any Property
that the Closing of any other Property have taken place, and the failure of any
subsequent Closing to take place with respect to any Property shall have no
bearing or effect on a Closing which shall have already occurred. At or before
the Closing with respect to a Property or Properties, the Operating Partnership
and the applicable Contributors will execute all closing documents (the "Closing
Documents") required to be delivered at Closing in accordance with this
Agreement and deposit the same in escrow with FAC or other escrow agent mutually
acceptable to FAC and the Contributors (the "Closing Agent").
4.2 Exchange of Documents, Units. If the Closing occurs:
(i) With respect to each Constituent Partnership or Property (or
portion thereof) acquired, the Operating Partnership shall cause to be
delivered to the Closing Agent for the benefit of each Contributor the
number of Units and amount of cash set forth on the Acquisition Schedule,
as adjusted pursuant to the terms hereof;
(ii) Upon receipt of the consideration set forth in clause (i) above,
and provided that the Closing Agent shall have received telephonic
authorization from counsel for FAC and the Operating Partnership and from
Contributor Counsel, the Closing Agent will (A) release the Closing
Documents as provided in this Agreement to the Operating Partnership, to
the Contributors or for recordation, as appropriate and (B) release the
evidence of the Units and cash to the applicable Contributors; and
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(iii) The transactions described or otherwise contemplated herein or
in the Closing Documents with respect to the applicable Property or
Properties will thereupon be deemed to have been consummated.
4.3 Deliberately Omitted.
4.4 Deliberately Omitted.
4.5 Documents to be Delivered at Closing. At or prior to the Closing, each
Contributor and/or Constituent Partnership, as applicable, shall execute,
acknowledge where deemed desirable or necessary by the Operating Partnership,
and deliver to the Closing Agent, in addition to any other documents mentioned
elsewhere herein, the following:
(i) Deliberately Omitted.
(ii) A special warranty (or equivalent) deed (or assignment of ground
leasehold interests, as applicable), xxxx of sale and assignments of
leases, contracts and intangibles.
(iii) Any other documents reasonably necessary to assign, transfer and
convey such Contributor's Interests and effectuate the transactions
contemplated hereby, including any customary affidavits or indemnities
required by the title insurers insuring the Operating Partnership's
title to a Property or the Interests.
(iv) Original counterparts of the Registration Rights Agreement,
executed by all parties thereto other than FAC.
(v) Deliberately Omitted.
(vi) Assignments and/or terminations of all Management and Leasing
Agreements (as defined in Section 8.1(k), below), as provided in
Section 12.1 hereof.
(vii) Mortgage releases or assumption agreements or consents of the
holders of the Outstanding Debt Financing, as applicable, reasonably
satisfactory in form and substance to the Operating Partnership and
satisfactory to the applicable mortgagees in their sole discretion, to
Operating Partnership's acquisition and ownership of its Interests in
such Constituent Partnership or Property, without personal liability
of the Operating Partnership or FAC.
(viii) A settlement statement with respect to the Closing, duly
executed by such Contributor.
(ix) Any customary affidavit required by the title company to remove
the standard printed exceptions from the Owner's title policy and for
any applicable endorsement to the loan policy. Additionally,
Constituent Parties shall discharge in
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full any and all indebtedness underlying such exceptions (exclusive of
the Outstanding Debt Financing) at or before the Closing.
(x) Letters addressed to the tenants and signed by the Contributors
or, if applicable, the Constituent Partnerships, advising the tenants
of the Closing of the Transactions and the Operating Partnership's
right to receive the rents under their respective Leases.
(xi) All original leases and ground leases and all other documents
pertaining thereto, or certified copies of such leases or other
documents where the Contributors, using due diligence, are unable to
deliver originals of same.
(xii) All original service contracts, licenses and permits, and all
books and records relating to the Property or the applicable
Contributor or Constituent Partnership ("Books and Records"), or
certified copies of same where the Contributors, using due diligence,
are unable to deliver originals.
(xiii) Deliberately Omitted.
(xiv) Affidavits and other instruments, including but not limited to
good standing certificates of each Constituent Party, reasonably
requested by the Operating Partnership or the title company evidencing
the power and authority of the Contributors to enter into this
Agreement and any documents to be delivered hereunder, and the
enforceability of same.
(xv) The original tenant estoppel certificates required to be obtained
pursuant to Section 8.1(e) as a condition of Closing thereunder. as it
relates to the Property which is the subject of the Closing.
(xvi) A list of all cash security deposits and all non-cash security
deposits (including letters of credit) delivered by tenants of the
Property, together with other instruments of assignment, transfer or
consent as may be necessary to permit the Operating Partnership to
realize upon same.
(xvii) The Bringdown Certificate.
(xviii) A rent roll for each Property current as of the Closing Date,
certified by the Contributors or Constituent Partnership as
applicable, as being true and correct in all material respects.
(xix) All proper instruments as shall be reasonably required for the
conveyance to the Operating Partnership of all right, title and
interest, if any, of the Constituent Parties in and to any award or
payment made, or to be made, (i) for any taking in condemnation,
eminent domain or agreement in lieu thereof of land adjoining all or
any part of the Property, (ii) for damage to the Property, or ground
leases or any part
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thereof by reason of change of grade or closing of any such street,
road, highway or avenue, and (z) for any taking in condemnation or
eminent domain of any part of the Property or ground leases.
(xx) In order to avoid the imposition of the withholding tax payment
pursuant to Section 1445 of the Code, a certificate signed by an
officer of the Constituent Partnership to the effect that the
Constituent Partnership is not a "foreign person" as that term is
defined in Section 1445(f)(3) of the Code.
(xxi) All such transfer and other tax declarations and returns and
information returns, duly executed and sworn to by the Constituent
Partnership as may be required of the Constituent Partnership by law
in connection with the conveyance of the Property to the Operating
Partnership, including but not limited to, Internal Revenue Service
forms.
(xxii) Deliberately Omitted.
(xxiii) A tradenames assignment agreement in the form to be agreed
upon by the parties.
(xxiv) Duly executed and acknowledged assignment and assumption of all
ground leases substantially in the form previously agreed to by the
parties.
(xxv) Such documents as may be reasonably required by the mortgagees
providing for the restructure or modification of the Outstanding Debt
Financing as provided herein.
(xxvi) Estoppel letters addressed to the respective Constituent
Parties, their successors and assigns from the lessors under the
ground leases in form and substance reasonably acceptable to the
Operating Partnership.
(xxvii) Waivers of rights of first refusal, or evidence of the lapse
of said rights, in form reasonable satisfactory to the Operating
Partnership, with respect to any of the Properties which are subject
to said rights.
(xxviii) A lease guaranty agreement (the "Lease Guaranty"), in the
form of Schedule 4.5(xxviii) hereto, relating to the Lake Point
Property.
(xxix) a mutual indemnification agreement (the "Mutual Indemnification
Agreement") satisfactory in form and substance to Contributors and FAC
and the Operating Partnership pursuant to which each Contributor shall
indemnify FAC and the Operating Partnership against third party
claims, lawsuits and actions deriving from matters or circumstances
arising prior to the Closing with respect to its Property and FAC and
the Operating Partnership shall indemnify each Contributor against
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third party claims, lawsuits and actions arising from matters or
circumstances arising after the Closing with respect to such
Contributor's respective Property.
(xxx) Any legally required disclosure under Florida law, or the law of
any other jurisdiction with respect to environmental matters,
including radon.
(xxxi) As to Georgia Properties, evidence that the applicable
Contributor or Constituent Partnership is a Georgia resident for
purposes of O.C.G.A. ss.47-7-28 or that it is otherwise exempt from
the withholding requirements thereunder. Absent evidence of exemption,
the Operating Partnership will withhold as required by Georgia law.
(xxxii) Such other documents as may be reasonably required or
appropriate to effectuate the consummation of the transactions
contemplated by this Agreement.
(xxxiii) A duly executed and acknowledged consent of Xxxxxx Xxxxxxxxx
and Xxxxxxx Xxxxxxxxx, in form and substance reasonably acceptable to
the Operating Partnership, evidencing their consent to the execution
and delivery of this Agreement by Lake Point Centre Associates, Ltd.
and the consummation of the transactions contemplated hereby which
relate to the Lake Point Property.
(xxxiv) All final certificates of completion and occupancy required by
applicable law, or other evidence satisfactory to FAC and the
Operating Partnership that all construction work at the Lake Point
Property (including work described in Section 2.3 above) shall have
been completed as of the Closing Date, and that such work is
acceptable to all appropriate governmental authorities having
jurisdiction thereover and the party for whom the work is being so
performed, with the exception of tenant improvement construction (A)
to be performed by tenants under the provisions of leases approved in
accordance with the provisions of this Agreement, or (B) for tenant
space which is vacant and no lease has been executed.
(xxxv) Evidence reasonably satisfactory to FAC, the Operating
Partnership and the Title Company that all conditions of the Ordinance
issued by the City of West Palm Beach and relating to the development
of the Lake Point Property have been satisfied.
4.6 Documents Required to be Delivered by the Operating Partnership and FAC
at Closing. the Operating Partnership and FAC shall deliver to the Contributors
at the Closing, the following:
(i) A copy of the Operating Partnership Agreement.
(ii) The amendment to the Operating Partnership Agreement (the
"Amendment"), in form and substance reasonably satisfactory to
Contributor Counsel, duly executed by FAC and all other necessary
parties, to evidence admission of the Contributors to the Operating
Partnership as limited partners.
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(iii) A settlement statement with respect to the Closing, duly
executed by the Operating Partnership.
(iv) Original counterpart of the Registration Rights Agreement,
executed by FAC.
(v) Opinion of counsel to FAC and the Operating Partnership, including
a REIT qualification opinion similar to the REIT qualification opinion
for FAC in the Lazard Transaction, and reasonably satisfactory to
Contributor Counsel and to counsel for FAC and the Operating
Partnership in form and substance.
(vi) The Warrants.
(vii) Employment agreement for Xxxx Xxxxxxxxx which is mutually
acceptable to FAC and Xxxx Xxxxxxxxx.
(viii) The Bringdown Certificate.
(ix) The Mutual Indemnification Agreement.
(x) Such other documents and instruments as may be reasonably
necessary to consummate the transactions with the Contributors under
this Agreement.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Operation of Business. Between the date hereof and the Closing Date,
each Contributor shall, and shall cause each Constituent Partnership to,
maintain and operate the Properties in a manner consistent with current
practices and use reasonable efforts to preserve for the Operating Partnership
relationships with tenants, suppliers and others having ongoing relationships
with the Properties. Contributors will continue any capital expenditure program
currently in place and will not defer taking any actions or spending of funds,
or otherwise manage the Properties differently, due to the transaction
contemplated by this Agreement; provided that, without the consent of FAC and
the Operating Partnership, they shall not enter into, or cause or permit any
Constituent Partnership to enter into, any contracts or other such arrangements
that would be binding upon the Operating Partnership or the Properties after the
Closing Date, unless such contract is terminable without payment of any
termination fee or other penalty on thirty (30) days' notice or less. Between
the date hereof and the Closing Date, neither any Contributor nor any
Constituent Partnership shall consent to any zoning changes or enter into any
covenants or other agreements that would be binding on the Operating Partnership
or the Properties, including without limitation leases or tenant improvement
contracts. Between the date hereof and the Closing Date, the Contributors will
advise the Operating Partnership of any written notice received by Constituent
Parties from any governmental authority relating to the violation of any law or
ordinance regulating the condition or use of the Properties and the Contributors
shall notify the Operating Partnership of any violation of any such law or
ordinance of which the Contributors become aware.
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5.2 No Brokers. Each of the Contributors, on one hand, and the Operating
Partnership, on the other hand, covenants, represents and warrants to the other
that, other than Xxxxxxx Partners, no broker or finder or agent has been
involved or engaged by it in connection with the transactions contemplated
hereby and, each hereby agrees to indemnify and hold harmless the other from and
against any and all broker's or finder's fees, commissions or similar charges
incurred or alleged to have been incurred by it in connection with the
transactions contemplated hereby, other than Xxxxxxx Partners, and any and all
loss, liability, cost or expense (including without limitation reasonable fees
of counsel) arising out of any claim that the indemnifying party incurred any
such fees, commissions or charges. Xxxxxxx Partners shall be paid by FAC and the
Operating Partnership pursuant to a separate agreement between them.
5.3 Contributions of Assets. All personal property owned by the
Contributors or Constituent Partnerships and used in the operation and
management of the Properties will be transferred to the Operating Partnership in
conjunction with the Closing and as partial consideration for the transactions
otherwise contemplated by this Agreement.
5.4 Assignment of Warranties. Contributors agree, and shall cause the
Constituent Partnerships, to assign, to the extent assignable, all warranties
with respect to the Properties to the Operating Partnership and will use
commercially reasonable efforts to cause the maker of such warranties to consent
to such assignment if necessary for such assignment to be valid.
5.5 Operation of FAC and Operating Partnership. Between the date hereof and
the date Xxxxx Xxxxxxx becomes Chairman of the Board, or the Outside Closing
Date, whichever first occurs, except as otherwise consented to by Xxxxx Xxxxxxx
in writing (or, in the event of Xxxxx Xxxxxxx'x death or incapacity, by Xxxx
Xxxxxxxxx), each of FAC and the Operating Partnership shall conduct their
respective businesses (x) in the ordinary course of business and consistent with
past practices and (y) in a manner which is not in violation of Section 5.3 of
the Lazard Stock Purchase Agreement.
5.6 Tenant Improvements; Rent Concessions. None of the Contributors nor any
of the Constituent Partnerships shall, between the date hereof and the Closing
Date, terminate, cancel or accept the surrender of any lease, or grant any
concession, rebate, allowance or free rent.
5.7 Security Deposits. No Contributor or Constituent Partnership shall,
between the date hereof and the Closing Date, apply any security deposits with
respect to any tenant in occupancy on the Closing Date, except in the ordinary
course of business.
5.8 Outstanding Debt Financing. Between the date hereof and the Closing
Date, the Contributors and the Constituent Partnerships will make all required
payments as and when required under any Outstanding Debt Financing.
5.9 Deliberately Omitted.
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5.10 Insurance. The Contributors and the Constituent Partnerships agree to
maintain and keep in full force and effect through the Closing Date the hazard,
liability and casualty insurance policies currently maintained on the
Properties.
5.11 Books and Records. The Contributors and the Constituent Partnerships
shall permit FAC and the Operating Partnership and its authorized
representatives to inspect the Books and Records of its operations during normal
business hours upon reasonable notice. For a period of five (5) years after
Closing, the Operating Partnership shall, with respect to Books and Records
delivered to it by the Constituent Parties, and the Constituent Parties shall,
with respect to all Books and Records not delivered to the Operating Partnership
hereunder, maintain such Books and Records, for inspection by the other at the
address for notices to such party as set forth below.
5.12 Governmental Violations. Prior to Closing with respect to any
Property, the Constituent Parties shall have fully remediated or restored, and
paid any penalties or other fees or charges associated with, the governmental
violations and uninsured physical damage as to such Property listed on Schedule
6.1A.20(b).
5.13 Completion of On-Going Work. The Contributors and the Constituent
Partnerships, as applicable, at their sole cost and expense, shall proceed
toward completion, consistent with the requirements of Section 5.1 above, of all
work under construction at the Properties and complete all tenant improvement
work and capital expenditure programs which have been commenced by the
Contributors and the Constituent Partnerships, as applicable, as of the date
hereof, related to all leasing activity and otherwise in accordance with the
obligation giving rise to such work having to be performed, and shall obtain and
deliver to FAC and the Operating Partnership, as soon as practical, all final
certificates of completion and occupancy required by applicable law, or other
documentation reasonably satisfactory to FAC and the Operating Partnership,
evidencing the acceptance of said work by all appropriate governmental
authorities having jurisdiction thereover and the party for whom the work is
being so performed; said obligations shall survive Closing.
5.14 Consents and Approvals. Each of FAC, the Operating Partnership, the
Contributors and the Constituent Partnerships shall take all commercially
reasonable action to obtain the requisite consents and approvals from all third
parties, including mortgagees, required to consummate the transactions
contemplated by this Agreement.
5.15 Listings and Other Offers. From and after the date hereof, until the
Closing Date or termination of this Agreement, the Contributors and the
Constituent Partnerships will not solicit or make or accept any offers to sell
any of the Properties, engage in any discussions or negotiations with any third
party with respect to the sale or other disposition of any the Properties, or
enter into any contracts or agreements (whether binding or not) regarding any
disposition of any of the Properties.
5.16 Reports and Filings. The Constituent Parties and each Contributor will
cooperate with the Operating Partnership before and after Closing in providing
such information as the Operating Partnership may reasonably require to prepare
its proxy material and Form 8-K filings and such other reports and filings as
may be required by any governmental authority, NYSE or applicable exchange.
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5.17 Konover Name; Change in Management.
(a) Name Change. As soon as practical following the Closing (or, if
there may be more than one, the first Closing), the Operating Partnership
shall, at its own expense, effect a change of its name to "KPT Properties,
L.P." and prior to Closing, FAC shall, at its own expense, make such
filings and proxy solicitations as are necessary to change its name to
"Konover Property Trust, Inc." effective as of the FAC shareholder meeting
next following the Closing (or, if there may be more than one, the first
Closing), subject to shareholder approval; provided, in each case, that
such name change is not in violation of any federal, state or local laws,
regulations, ordinances, rules or restrictions, or of any trademark or
other exclusive license, xxxx, intellectual property agreement or rights.
If FAC shareholders do not approve of the FAC name change described herein,
FAC shall operate as a "d/b/a" under a name substantially similar to
"Konover/FAC" or "KPT". FAC shall, subject to availability, trade under the
New York Stock Exchange symbol "KPT". Contributors, individually and on
behalf of the Constituent Partnerships and any Affiliates, each and all
hereby convey any and all right, title and interest they, or any of them,
may have in and to the names, marks or identities to which FAC and the
Operating Partnership are renamed pursuant to this Section, and covenant
and agree not to adopt or use any name, xxxx or identity which includes the
words "Konover Property Trust," or "Konover Realty Trust". All derivatives
of the "Konover" name other than those utilizing such words are reserved.
FAC shall not employ the "Konover" name for itself or in the names of its
Affiliates or Subsidiaries except as includes the words "Konover Property
Trust" or "Konover Realty Trust".
(b) Trademark Reassignment Right. Notwithstanding the foregoing, for a
period of five (5) years after the first Closing to take place hereunder,
in the event of (i) the liquidation of all of the assets of FAC, or (ii) a
proposed merger, combination or consolidation of FAC with any other
company, or (iii) the acquisition of more than one half of the assets of
FAC (on a rentable square footage basis) by another company, or (iv) if the
report of independent auditors for any audited annual financial statements
for FAC issued during such period contains a "going concern" qualification,
Xxxxx Xxxxxxx shall have the right, exercisable by written notice to FAC
within thirty (30) days of Xxxxx Xxxxxxx'x having received written notice
of such liquidation or of the issuance of such report of independent
auditors or of the identity of the parties and the material terms of such
proposed merger, combination, consolidation or asset transaction, to
require that FAC and the Operating Partnership quitclaim to the assignor
under the Trade name assignment agreement all of their interests in the
Trade names assigned thereunder, effective upon the effective date of such
merger, combination, consolidation or asset combination (the "Trade name
Reassignment Right"). Failure to exercise the Trade name Reassignment Right
within such thirty (30) day period shall conclusively waive such right with
respect to the proposed transaction. The Trade name Reassignment Right is
personal to Xxxxx Xxxxxxx and cannot be assigned, conveyed, succeeded to or
transferred, except that in the event of Xxxxx Xxxxxxx'x death or
incapacity, and receipt by FAC of written notice thereof, Xxxxxxx
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Konover shall succeed to the Trade name Reassignment Right and shall be
entitled to all of the rights and responsibilities hereunder with respect
thereto.
(c) Board of Directors. Because FAC and the Operating Partnership
place significant value on the Konover name and the services and
contributions of Xxxxx Xxxxxxx to FAC, the parties hereto have agreed as
follows:
(i) At the final Closing to take place hereunder (i.e. after
which, as to all Properties hereunder this Agreement shall have been
terminated or Closing shall have taken place as to all other
Properties), but not later than the Outside Closing Date, as such date
may be extended, Xxxxx Xxxxxxx'x election to the Board shall become
effective and he shall be named Chairman, and if the Board has
converted to staggered terms, FAC shall nominate and promote and
support him for election to the longest term established for Board
members. In addition, at the first meeting of the Board to occur
following the shareholder's meeting scheduled for August 5, 1998, FAC
shall request that Xxxxxx X. Xxxxx agree to resign from the Board, and
shall nominate, promote and support Xxxxx Xxxxxxx to become a member
of the Board and to be named Chairman as of that date, rather than
waiting until the final Closing. Following his election to the Board,
Xxxxx Xxxxxxx shall be paid compensation equal to $10,000 per month
(prorated for any partial months) that he serves as a member of the
Board, whether or not he is chairman, and such compensation shall
continue (whether or not he is then a member of the Board) for a
minimum of three (3) years following the Management Closing Date,
except that such compensation shall terminate in the event that Xxxxx
Xxxxxxx (A) chooses not to be a member of the Board, (B) is compelled
to resign (or is removed) from the Board for cause, or (C) dies or is
incapacitated. In addition, from the date of the first Closing
hereunder until the earlier to occur of the date Xxxxx Xxxxxxx becomes
a member of the Board or the Outside Closing Date (as it may be
extended), FAC shall pay Xxxxx Xxxxxxx a consulting fee equal to
$10,000 per month (prorated for any partial months).
(ii) As of the Closing (or if there may be more than one, the
first Closing), Xxxx Xxxxxxxxx shall be appointed an Executive Vice
President of FAC and shall execute an employment agreement on terms
mutually acceptable to him and to FAC, and shall be a member of the
FAC Management Committee.
(d) Warrants. On the Closing Date (or if there may be more than one,
the first Closing):
(i) FAC shall issue to Xxxxx Xxxxxxx or members of his immediate
family (or wholly owned entities) who are "accredited investors"
warrants (the "Warrants") to purchase 100,000 Shares at an exercise
price of $9.50 per Share, provided that (A) one-fifth (20%) of such
Warrants shall vest on the first anniversary of the first Closing Date
and one-fifth (20%) shall vest on each of the next four succeeding
anniversary dates thereof (each a "Vesting Date"), except that if at
any time Xxxxx Xxxxxxx (or Xxxxxxx Xxxxxxx, as his successor)
exercises his Trade
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name Reassignment Right, any Warrants which shall not theretofore have
vested shall automatically be canceled and shall never vest and shall
under no circumstances be exercisable; and (B) such Warrants as have
not been canceled and have vested shall be exercisable on or prior to
February 24, 2008.
(ii) In addition, FAC shall issue to Xxxxx Xxxxxxx or members of
his immediate family (or wholly owned entities) who are "accredited
investors" Warrants to purchase 100,000 Shares at an exercise price of
$12.50 per Share pursuant to the Warrant Agreement; provided that, as
with the Warrants described in subdivision (d) (i) above, one-fifth
(20%) of such Warrants shall vest on the first Vesting Date and
one-fifth (20%) shall vest on each of the next four succeeding Vesting
Dates and in all other respects (aside from the exercise price), such
Warrants shall be identical to and subject to the same terms and
conditions as set forth in subdivision (d)(i), above.
Each party to whom Warrants are to be issued shall, prior to issuance,
provide customary forms of investor questionnaires and other evidence
reasonably satisfactory to FAC that such party is an "accredited investor".
5.18 Title Matters. At or prior to Closing of the relevant Properties, the
applicable Contributor shall:
(a) Execute, acknowledge and record a Declaration of Agreement and
Easements in the form attached hereto as Schedule 5.18 relating to the
Property known as "Oakland Park Festival Centre" in Oakland Park, FL.
(b) Provide evidence that a document reasonably satisfactory to the
Operating Partnership and the Title Company has been recorded which (A)
demonstrates that the encroachments onto the general utility easement
described on Schedule 6.1A.20(d) as affecting the Lake Point Centre, no
longer exists, in that the easements has been abandoned as to the affected
area, or (B) constitutes a consent to the encroachment.
5.19 Oral Leasing Agreements. All oral leasing agreements relating to goods
or services provided to the Lake Point Property, including those oral agreements
for leasing commission shown as items f and g on Schedule 6.1.A.8, shall be paid
in full prior to Closing, and such agreements shall be terminated prior to
Closing if such agreements would otherwise remain in effect following the
Closing.
5.20 Liabilities; Indebtedness. With respect to matters shown on Schedules
6.1A.1, 6.1A.9 and 6.1A.20(g) of this Agreement, it is acknowledged that prior
to the Closing, the Contributor of the Lake Point Property has consummated a
refinancing transaction whereby the existing construction loan mortgage held by
BankAtlantic with an approximate outstanding principal balance of $7,978,905.50
as of January 1, 1998 (the "BankAtlantic Mortgage") has been replaced by a
renewal mortgage in favor of Teachers Insurance and Annuity Association of
America (the "TIAA Mortgage") in the original principal amount of
$11,175,000.00. Notwithstanding anything to the contrary contained in this
Agreement, so long as the assumption agreement required to be
23
executed in order to assume the TIAA Mortgage is reasonably satisfactory in form
and substance to the Operating Partnership, the TIAA will be assumed at Closing
and any assumption fees and other charges due in connection therewith (not to
exceed $1,000.00) shall be paid in accordance with the provisions of Section 3.2
hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
6.1 Representations and Warranties. To induce the Operating Partnership and
FAC to enter into this Agreement and the transactions contemplated hereby,
subject to Section 6.2 below, (i) each of the Contributors and Constituent
Partnerships, as applicable, hereby makes the representations and warranties set
forth in Schedule 6.1A hereto and (ii) Konover Management South hereby makes the
representations and warranties set forth in Schedule 6.1B hereto; and to induce
the Contributors to enter into this Agreement and the transactions contemplated
hereby, FAC and the Operating Partnership, jointly and severally, hereby make
the representations and warranties set forth in Schedule 6.1C hereto. Anything
to the contrary in this Agreement notwithstanding, the parties hereby agree that
each and every representation and warranty contained in Schedule 6.1A and
Schedule 6.1B shall be deemed to be qualified to the knowledge of the applicable
Person making such representation or warranty, whether or not such qualification
is expressly contained in such representation and warranty in said Schedule. The
phrase "to the knowledge of" of a Constituent Party or of Konover Management
South shall be limited to the actual knowledge, without inquiry, of Xxxxx
Xxxxxxx, Xxxx Xxxxxxxxx, Xxxxx X. Xxxxxxxxxxx and Xxxxxxx Xxxxx (collectively,
"Constituent Knowledge Parties"); provided that no Constituent Knowledge Parties
shall be liable under this Agreement by virtue of their status as Constituent
Knowledge Parties or their possessing actual knowledge of any facts, it being
the intent of the parties that such liability shall be recourse only to the
assets of the applicable Constituent Parties.
6.2 Joint and Several Liability. In each instance in this Agreement in
which a representation, warranty or covenant is made by the "Contributors" or
the "Constituent Parties" or "Constituent Partnerships" as to any or all of such
Persons or as to the Properties, the liability of the party or parties making
such representation, warranty or covenant shall be joint and several among the
Constituent Parties owning interests in the Property or Person as to which such
representation, warranty or covenant is made (subject to the limitation of
liability for Loss and Expense contained in this Agreement), but shall be
several as between such Constituent Parties, on the one hand, and all other
Constituent Parties, on the other hand (i.e., such other Constituent Parties
shall have no liability for such representations, warranties and covenants).
6.3 Survival of Constituent Parties' Representations. Other than the
representations contained in Section (n) on Schedule 6.1A.20 (which shall
survive until the sixth anniversary of the date of the Closing to which they
relate), all representations, warranties and (except as provided by the last
sentence of this Section 6.3) covenants and agreements of any of the Constituent
Parties contained herein, including indemnity or indemnification agreements
contained herein, or in any Schedule, or any certificate, document or other
instrument delivered in connection herewith shall survive the Closing to which
they relate until the earlier to occur of (i) the three year anniversary of
24
the Closing to which they relate, or (ii) thirteen (13) months after last date
upon which a Subsequent Closing under and as defined in the Lazard Stock
Purchase Agreement may take place; provided, however, that there shall be no
termination with respect to any representation and warranty as to which either
(a) a bona fide claim has been asserted prior to such date or (b) the applicable
Constituent Party had actual knowledge of any breach thereof prior to such
Closing. No action or proceeding may be brought with respect to any of the
representations and warranties, or any of the covenants or agreements which
survives Closing, unless written notice thereof, setting forth in reasonable
detail the claimed misrepresentation or breach of warranty or breach of covenant
or agreement, shall have been delivered to the party alleged to have breached
such representation or warranty or such covenant or agreement prior to the
expiration thereof. Those covenants or agreements that contemplate or may
involve actions to be taken or obligations in effect after the Closing shall
survive Closing unless otherwise provided therein.
6.4 Survival of Company and Operating Partnership Representations. All
representations, warranties, and (except as provided in the last sentence of
this Section 6.4) covenants and agreements of the Company or Operating
Partnership contained herein, including indemnity or indemnification agreements
contained herein, or in any Schedule, or any certificate document or other
instrument delivered in connection herewith shall survive the Closing until the
earlier to occur of (i) the three year anniversary of the Closing to which they
relate, or (ii) thirteen (13) months after last date upon which a Subsequent
Closing under and as defined in the Lazard Stock Purchase Agreement may take
place; provided, however, that there shall be no termination with respect to any
representation and warranty as to which either (a) a bona fide claim has been
asserted prior to such date or (b) FAC and the Operating Partnership had actual
knowledge of any breach thereof prior to such Closing. No action or proceeding
may be brought with respect to any of the representations and warranties, or any
of the covenants or agreements which survive Closing, unless written notice
thereof, setting forth in reasonable detail the claimed misrepresentation or
breach of warranty or breach of covenant or agreement, shall have been delivered
to the party alleged to have breached such representation or warranty or such
covenant or agreement prior to the expiration thereof. Those covenants,
agreements or restrictions (such as those contained in Article X) that
contemplate or may involve actions to be taken or obligations in effect after
the Closing shall survive Closing for a period of thirteen (13) months following
the specified period during which such covenants, agreements or restrictions
apply unless otherwise provided therein.
6.5 Indemnification by Contributors or the Company.
(a) Subject to Section 6.3, from and after the Closing, each Constituent
Party shall indemnify and hold harmless the Company, its Affiliates and its
Subsidiaries and its and their respective directors, officers, employees,
stockholders, partners, members and representatives, and their respective
successors and assigns, from and against any and all damages, claims, losses,
expenses, costs, obligations, and liabilities, including liabilities for all
reasonable attorneys' fees and expenses (including attorney and expert fees and
expenses incurred to enforce the terms of this Agreement) (collectively, "Loss
and Expense") suffered, directly or indirectly, by the Company by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by such Constituent Party in or
pursuant to this Agreement, or (ii) any failure by such Constituent Party to
perform or fulfill any of its covenants or agreements
25
set forth herein. Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Loss and Expense include a party's incidental or
consequential damages.
(b) Subject to Section 6.4 from and after the Closing, the Company and the
Operating Partnership, jointly and severally, shall indemnify and hold harmless
each Constituent Party and its respective directors, officers, employees,
stockholders, partners, members and representatives, and their respective
successors and assigns, from and against any and all Loss and Expenses,
suffered, directly or indirectly, by such Constituent Party by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by the Company or the Operating
Partnership, as applicable, in or pursuant to this Agreement and any statements
made in any certificate delivered pursuant to this Agreement, or (ii) any
failure by the Company or the Operating Partnership, as applicable, to perform
or fulfill any of its covenants or agreements set forth therein. Notwithstanding
any other provision of this Agreement to the contrary, in no event shall Loss
and Expense include a party's incidental or consequential damages.
(c) Notwithstanding the foregoing, (i) neither any Constituent Party nor
the Company or the Operating Partnership shall be responsible for any Loss and
Expense as provided by paragraphs (a) and (b), respectively, of this Section 6.5
until the cumulative aggregate amount of such Loss and Expense suffered by the
aggrieved party exceeds $500,000 in which case the party(ies) responsible for
such Loss and Expense shall be liable for all such Loss and Expense, and (ii)
the cumulative aggregate indemnity obligation of the Company and the Operating
Partnership, on the one hand, and the Constituent Parties, on the other hand,
shall not exceed $3,000,000. Except with respect to third-party claims being
defended in good faith or claims for indemnification with respect to which there
exists a good faith dispute, the indemnifying party shall satisfy its
obligations hereunder within 30 days of receipt of a notice of claim under this
Section.
6.6 Third-Party Claims. If a claim by a third party is made against an
indemnified party and if such party intends to seek indemnity with respect
thereto under this, such indemnified party shall promptly notify the
indemnifying party in writing of such claims setting forth such claims in
reasonable detail; provided, however, the foregoing notwithstanding, the failure
of any indemnified party to give any notice required to be given hereunder shall
not affect such party's right to indemnification hereunder except to the extent
the indemnifying party from whom such indemnity is sought shall have been
prejudiced in its ability to defend the claim or action for which such
indemnification is sought by reason of such failure. The indemnifying party
shall have 20 days after receipt of such notice to undertake, through counsel of
its own choosing and at its own expense, the settlement or defense thereof, and
the indemnified party shall cooperate with it in connection therewith; provided,
however, that the indemnified party may participate in such settlement or
defense through counsel chosen by such indemnified party, provided that the fees
and expenses of such counsel shall be borne by such indemnified party. The
indemnified party shall not pay or settle any claim which the indemnifying party
is contesting. Notwithstanding the foregoing, the indemnified party shall have
the right to pay or settle any such claim, provided that in such event it shall
waive any right to indemnify therefor by the indemnifying party. If the
indemnifying party does not notify the indemnified party within 20 days after
the receipt of the indemnified party's notice of claim of indemnity hereunder
that it elects to undertake the defense thereof, the indemnified party
26
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefore pursuant to this Agreement.
ARTICLE VII
INVESTMENT REPRESENTATIONS AND WARRANTIES
Representations and Warranties of Contributors. Each Contributor who is to
receive Units as to his or its Interests represents and warrants to the
Operating Partnership as follows:
7.1 Acquisition for own Account. Such Contributor will be acquiring the
Units to be received by him for his own account and not with the view to the
sale or distribution of the same or any part thereof in violation of the
Securities Act.
7.2 Reliance by FAC and the Operating Partnership. Such Contributor
understands that the Units (or Shares issued upon exchange of the Units) to be
issued to the Contributor will not be registered under the Securities Act, or
the securities laws of any state ("Blue Sky Laws") by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable Blue Sky Laws and that FAC's and the Operating Partnership's reliance
on such exemptions is predicated in part on the accuracy and completeness of the
representations and warranties of Contributors.
7.3 No Transfer. Such Contributor understands that the Units (or Shares
issued upon exchange of the Units) may not be offered, sold, transferred,
pledged, or otherwise disposed of by Contributor except (i) pursuant to an
effective registration statement under the Securities Act and any applicable
Blue Sky Laws, (ii) pursuant to a no-action letter issued by the SEC to the
effect that a proposed transfer of the Units (or Shares issued upon exchange of
the Units) may be made without registration under the Securities Act, together
with either registration or an exemption under applicable Blue Sky Laws, or
(iii) upon the Operating Partnership or FAC, as the case may be, receiving an
opinion of counsel knowledgeable in securities law matters and reasonably
acceptable to the Operating Partnership or FAC, as the case may be, to the
effect that the proposed transfer is exempt from the registration requirements
of the Act, and that, accordingly, Contributor must bear the economic risk of an
investment in the Units (and the Shares issued upon exchange of the Units) for
an indefinite period of time.
7.4 Accredited Investor. Such Contributor is an "accredited investor"
within the meaning of Rule 501(a) promulgated under the Securities Act (the
standards for being "Accredited Investor" will vary depending upon the legal
form of the Contributor, but Accredited Investor includes, for individuals, any
natural person whose individual net worth, or joint net worth with that person's
spouse, at the time of the purchase exceeds $1,000,000 or who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year).
7.5 Substantial Risk. Such Contributor understands that an investment in
the Operating Partnership and FAC involves substantial risks; and such
Contributor has had the opportunity to
27
review all documents and information which it has requested concerning its
investment in the Operating Partnership and FAC and has had the opportunity to
ask questions of the management of the Operating Partnership and FAC, which
questions, if any, were answered to its satisfaction.
7.6 Legend. Such Contributor understands that any document that evidences
the Units (and any unregistered Shares issued upon exchange of the Units) will
bear a legend substantially to the effect of the following:
The securities represented by this document have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or the securities laws of any state. The securities may
not be offered, sold, transferred, pledged or otherwise disposed
of without an effective registration statement under the Act and
under any applicable state securities laws, receipt of a
no-action letter issued by the Securities and Exchange Commission
(together with either registration or an exemption under
applicable state securities laws) or an opinion of counsel
acceptable to FAC Properties, L.P. that the proposed transaction
will be exempt from registration under the Act and applicable
state securities laws.
and that the Operating Partnership or FAC, as the case may be, reserves the
right to place a stop order against the transfer of the Units (and any
unregistered Shares issued upon exchange of the Units), and to refuse to effect
any transfers thereof, in the absence of satisfying the conditions contained in
the foregoing legend.
7.7 Foreign Person. Each Contributor represents individually and on behalf
of all Constituent Partnerships in which it owns interests that he is not a
"foreign person" within the meaning of Section 1445 of the Code.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to FAC's and the Operating Partnership's Obligations to
Close. In addition to the other conditions to Closing detailed elsewhere in this
Agreement, each of the following shall be a condition to the obligation of FAC
and the Operating Partnership to close the transactions contemplated hereby with
respect to the Properties:
28
(a) FAC Shareholder Approval. If it is determined by FAC, based upon
facts or circumstances arising from or after the date hereof, that the
completion of the transactions contemplated hereby requires the approval of
FAC's shareholders, then (i) such approval shall be a condition to close
the transactions contemplated hereby and (ii) FAC agrees that it shall in
good faith promptly begin the process of preparing and filing with the SEC
any necessary proxy material and will call for and hold a shareholder
meeting as soon as is reasonably practicable to vote on such matter. If
such approval is required and the shareholders of FAC do not approve the
transactions contemplated hereby, this Agreement shall be terminated.
(b) Refinancing of Loans. The Operating Partnership and FAC shall have
no obligation to close the transactions contemplated hereby with respect to
any Property (and the number of Units to be issued shall be adjusted
accordingly) if the Operating Partnership determines that it is unable to
obtain the consent of the holders of the Outstanding Debt Financing for
such property to the assignment of the Interests in or sale of such
Property on terms reasonably acceptable to the Board of Directors of FAC,
including non-recourse provisions satisfactory to FAC in FAC's sole
discretion.
(c) Management Rights. The Operating Partnership and FAC shall have no
obligation to close the transactions contemplated hereby with respect to
any Property (and the number of Units to be issued shall be adjusted
accordingly) if the Operating Partnership does not have the unconditional
right, as of the Management Closing Date (as hereinafter defined), to the
management and leasing of all of the properties managed or leased by
Konover Management South, including (without limitation) Port St. Lucie,
FL, Liberty, NY, Monticello, NY and Montague (Tri-State), NJ, but excluding
those leasing obligations described in Schedule 12.1 attached hereto.
(d) Representations and Warranties. The Operating Partnership and FAC
shall have no obligation to close the transactions contemplated hereby with
respect to any Constituent Partnership or Property if any of the
representations and warranties of the Contributors hereto with respect to
such Constituent Partnership or Property shall not be true and correct in
all material respects as of February 24, 1998 and the Closing Date, as
reflected in the Bringdown Certificate in respect thereof, or if such
Bringdown Certificate shall not have been delivered.
(e) Tenant Estoppels. The Operating Partnership and FAC shall have no
obligation to close the transactions contemplated hereby if the Operating
Partnership and FAC shall not have received original executed tenant
estoppel certificates in the form provided by FAC to the Contributors,
without material deviation, from (i) all tenants of the Properties leasing
at least 25,000 square feet of rentable space, (ii) ninety percent (90%) of
the number of tenants of the Properties leasing more than 10,000 and less
than 25,000 square feet of rentable space and (iii) such tenants, and
covering such space, as represent at least seventy percent (70%) of the
aggregate base rent payable by all of the tenants of the Properties.
29
(f) Deliberately Omitted.
(g) Delivery of Documents. The Operating Partnership and FAC shall
have no obligation to close the transactions contemplated hereby unless the
Contributors and the Constituent Partnerships shall have executed and
delivered to FAC and the Operating Partnership all of the documents
provided herein for said delivery, and shall have performed all covenants
and obligations undertaken by the Contributor and the Constituent
Partnerships herein in all material respects and complied in all material
respects with all conditions required by this Agreement to be performed or
complied with by them on or before the Closing Date.
(h) No Pending Actions. The Operating Partnership and FAC shall have
no obligation to close the transactions contemplated hereby with respect to
any Property if there shall exist any pending action, suit or proceeding
with respect to such Property or the Contributors of or Constituent
Partnerships owning such Property, or with respect to this Agreement,
before or by any court or administrative agency which seeks to enjoin,
restrain or prohibit this Agreement or the consummation of the transactions
contemplated hereby with respect to such Property.
(i) Material Adverse Change. The Operating Partnership and FAC shall
have no obligation to close the transactions contemplated hereby with
respect to any Property if there exists any material adverse change in the
financial condition, results of operations, business or operations of the
Property in question since February 24, 1998.
(j) Consents and Approvals. The Operating Partnership and FAC shall
have no obligation to close the transactions contemplated hereby with
respect to any Property unless all applicable consents and approvals from
third parties required to consummate the transactions contemplated by this
Agreement shall have been obtained with respect to such Property.
(k) Management Agreements. The Operating Partnership and FAC shall
have no obligation to close the transactions contemplated hereby unless the
conditions to the Management Closing set forth in Article XII shall have
been fulfilled with respect to all management and leasing and similar
agreements under which Konover Management South is the manager or leasing
agent ("Management and Leasing Agreements").
8.2 Conditions to the Contributor's and the Constituent Partnerships'
Obligations to Close. In addition to the other conditions of the Constituent
Parties' obligations to close detailed elsewhere in this Agreement, each of the
following shall be a condition as described to the obligation of the Constituent
Parties to close the transactions contemplated hereby with respect to the
Properties:
(a) Representations and Warranties. The Constituent Parties shall have
no obligation to close the transactions contemplated hereby with respect to
any Constituent Partnership or Property if any of the representations and
warranties of FAC and the Operating
30
Partnership with respect to such Constituent Partnership or Property shall
not be true and correct in all material respects as of the date hereof and
the Closing Date, as reflected in the Bringdown Certificate in respect
thereof, or if such Bringdown Certificate shall not have been delivered.
(b) Delivery of Documents. The Contributors of any Property hereunder
shall have no obligation to close the transactions contemplated hereby with
respect to such Property unless the Operating Partnership and FAC shall
have executed and delivered to the Contributors and the Constituent
Partnerships all of the documents provided herein for said delivery, and
shall have performed all covenants and obligations undertaken by the
Operating Partnership and FAC herein in all material respects and complied
in all material respects with all conditions required by this Agreement to
be performed or complied with by them on or before the Closing Date.
(c) REIT Status. FAC shall not have revoked its prior election
pursuant to Section 856(c) (1) of the Code to be taxed as a REIT, and shall
be in compliance with all applicable federal income tax laws, rules and
regulations, including the Code, necessary to permit it to be taxed as a
REIT. FAC shall not have taken any action or have failed to take any action
which would reasonably be expected to, alone or in conjunction with any
other factors, result in the loss of its status as a REIT for federal
income tax purposes.
(d) No Pending Actions. The Constituent Parties contributing a
Property shall have no obligation to close the transactions contemplated
hereby with respect to such Property if there shall exist any pending
action, suit or proceeding with respect to FAC or the Operating Partnership
before or by any court or administrative agency which seeks to enjoin,
restrain or prohibit, or to obtain damages or a discovery order with
respect to, such Property, to this Agreement or the consummation of the
transactions contemplated hereby.
(e) Deliberately Omitted.
(f) Consents and Approvals. The Contributors of any Property hereunder
shall have no obligation to close the transactions contemplated hereby with
respect to such Property unless all of the consents and approvals listed in
Schedule 6.1A.1 shall have been obtained, except that none of the consents
of any owners of Interests in any Constituent Partnership or Contributor
(other than the consent of the Greenbergs described in Section 4.5 (xxxiii)
hereof) shall constitute a condition of any Constituent Party's obligation
to close the transactions hereunder, irrespective of whether such consent
may be listed in Schedule 6.1A.1. In that connection, the Contributor of
the Property commonly known as "Mobile Festival Centre" in Mobile, AL,
hereby agrees to use good faith efforts to redeem the Interests in such
Property owned by SREIT (Subrealco) Ltd. ("SREIT") at a price of
$5,300,000, and the Operating Partnership makes a monetary contribution by
the Operating Partnership of $226,154 (based on a contribution by such
Contributor of at least $180,000) toward the acquisition by such
Contributor of such Interests. The Operating Partnership shall advance when
required the sum of $50,000 on account of a non-refundable deposit required
in connection with the agreement to redeem SREIT's interests, so long as
(i) the agreement
31
is in form and content reasonably acceptable to the Operating Partnership,
(ii) the Operating Partnership shall be afforded a reasonable opportunity
to acquire SREIT's interest substantially on the terms provided in the
redemption agreement (as a purchase rather than a redemption) in the event
of any Contributor default, and (iii) the Contributor assigns its interests
under the redemption agreement to the Operating Partnership as security for
any default by the Contributor under the redemption agreement or this
Agreement. In the event such Contributor is unable to purchase the
Interests of SREIT, upon the request of Xxxxx Xxxxxxx made by written
notice to FAC and the Operating Partnership, the principals of the
Contributor of Mobile Festival Centre (other than SREIT) may elect to
transfer to the Operating Partnership their Interests in Konover Mobile
Centre Festival Limited Partnership ("KMFCLP"), rather than the Property,
provided that (i) FAC and the Operating Partnership have consented thereto,
which consent shall be conditioned upon the agreement of such Contributors
of the Interests in KMFCLP (other than SREIT) jointly and severally to hold
harmless the Operating Partnership and FAC from any and all cost, expenses
and liability (including tax liability) occasioned by the fact that the
transfer consists of Interests in KMFCLP rather than of title to the
Property, including any additional representations, warranties, covenants
and Closing deliveries reasonably requested by FAC and the Operating
Partnership in connection therewith, (ii) the Allocated Property Value and
related amounts of cash and units paid, issued and withheld are adjusted
proportionately and Closing prorations are appropriately adjusted and (iii)
each Contributor of Interests in KMFCLP shall be required to (A) make
customary representations and warranties as to such Constituent Partnership
and (B) provide at the Contributors' sole expense financial statements for
KMFCLP audited by a certified public accountant and reasonably satisfactory
to FAC and the Operating Partnership covering fiscal years 1995, 1996 and
1997. In the event of such transfer of Interests in KMFCLP, the principals
of KMFCLP contributing their Interests in KMFCLP shall be Contributors
hereunder and KMFCLP shall be a Constituent Partnership.
ARTICLE IX
ARBITRATION
9.1 Arbitration. Any dispute, claim or controversy between FAC and/or the
Operating Partnership, on one hand, and any Contributor, on the other, shall be
settled by arbitration in accordance with this Section. Each of the Operating
Partnership and the Contributors (by a vote of majority thereof) shall appoint
an arbitrator, and the two arbitrators so appointed shall promptly select a
third arbitrator. Within thirty (30) days of the completion of such
appointments, the parties shall submit to arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The place
of arbitration shall be Washington, D.C. Notwithstanding anything to the
contrary herein, the arbitrators are not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any right to
recover such damages with respect to any dispute or controversy resolved by
arbitration under this Section. Judgment on the award rendered by the
arbitrators may be entered in any court of competent jurisdiction and shall be
binding upon the parties.
32
ARTICLE X
RESTRICTIONS ON SALE OF THE PROPERTIES
10.1 Restricted Period. A. The Operating Partnership may not sell, assign,
exchange, distribute or otherwise dispose of any of the Properties listed on
Schedule 10.1 (the "Restricted Properties") within the periods (the "Restricted
Period") set forth on Schedule 10.1 with respect to each Restricted Property
without the express written consent of Xxxxx Xxxxxxx (or if he shall not be
alive or shall be incapacitated, Xxxxxxx Xxxxxxx, or if he shall not be alive or
shall be incapacitated, his successor designated by written notice to FAC and
the Operating Partnership) except (i) in connection with a tax-free transaction
which does not result in recognition of Built-in-Gain (as defined below) by any
holders of such Units and which satisfies the requirement of Section 10.1.B;
(ii) in connection with a taxable sale or disposition of any of the Restricted
Property which does not result in recognition of Built-in-Gain; or (iii) if the
Operating Partnership promptly pays to the holders of the Units received in
respect of the Contribution of such Restricted Property (the "Related
Unitholders") an amount equal to the sum of (A) the federal, state, and local
income taxes payable by such Related Unitholders resulting from the recognition
of the Built-in-Gain triggered by such sale or disposition and (B) an additional
payment in an amount equal to the amount such that after payment by the holders
of such Units of all taxes (including interest or penalties) on amounts received
under Section 10.1.A(iii)(A) and this Section 10.1.A(iii)(B) the holders of such
Units relating to such Restricted Property retain an amount equal to the amount
described in Section 10.1.A(iii)(A). For purposes of calculating the amounts
payable pursuant to clause (iii) of the preceding sentence, the amount of taxes
payable by a Related Unitholder shall be calculated by assuming a tax rate equal
to the highest combined marginal rate of federal, state and local tax applicable
to an individual in the jurisdiction in which such Related Unitholder is a
taxpayer (and if such taxpayer, either directly or indirectly, is subject to tax
in more than one state or local jurisdiction, the state or local tax rate to be
used in the foregoing combined marginal rate shall be the highest rate of tax in
any such jurisdiction) and by assuming that such individual has no tax
attributes that would otherwise reduce such tax payments. For purposes of this
Agreement, the term "Built-in-Gain" for any Restricted Property shall mean the
excess, if any, of the fair market value of such Restricted Property on the date
of contribution thereof over such Restricted Property's adjusted tax basis for
federal income tax purposes immediately prior to the contribution thereof.
Contributors agree to cooperate with FAC and the Operating Partnership regarding
the calculation of the amount of actual Built-in-Gain attributable to any
Restricted Property recognized upon any transfer. The provisions of this Section
10.1 shall survive the Closing.
B. A sale or other disposition shall satisfy the requirements of this
Section 10.1.B if (i) such transaction qualifies as a like-kind exchange under
Section 1031 of the Code or an involuntary conversion under Section 1033 of the
Code in which no gain is recognized by the Operating Partnership or the Related
Unitholders as long as the following conditions are satisfied: (x) in the case
of a Section 1031 like-kind exchange, such exchange is not with a "related
party' within the meaning of Section 1031(f)(3) of the Code; (y) the property
received in exchange for the Restricted Property (referred to as the
"Replacement Property") is acquired in the same taxable year of the Operating
Partnership in which the disposition of the Restricted Property occurs and
secures nonrecourse indebtedness (which is not Partner Nonrecourse Debt, as
defined in the Partnership Agreement) in an amount not less than the outstanding
principal amount of the nonrecourse indebtedness secured by the Restricted
Property at the time of the exchange, with a maturity not
33
earlier than and a principal amortization rate not more rapid than, the maturity
and principal amortization rate of such indebtedness secured by the Restricted
Property, and (z) the Replacement Property is thereafter treated for all
purposes of the restrictions in Sections 10.1 and 10.3 as the Restricted
Property and the indebtedness secured by such Replacement Property is subject to
the same restrictions and agreements as apply with respect to the indebtedness
secured by the Restricted Property; or (ii) such transaction is one in which no
gain is recognized with respect to the Restricted Property by the Operating
Partnership or the Related Unitholders in connection with the transfer of the
Restricted Property to another entity; provided that (w) the amount of
indebtedness secured by the Restricted Property is not decreased as a result of
the transaction and the amount of indebtedness secured by the Restricted
Property that is a Nonrecourse Liability (as defined in the Partnership
Agreement) is not reduced, except as permitted by the relevant provisions
Section 10.3, (x) the indebtedness secured by the Restricted Property continues
to be taken into account in determining the partners' basis in their Units under
rules similar to those provided in Section 752 of the Code to the same extent as
was the case prior to such transfer, (y) any property the Operating Partnership
receives in connection which such transfer, the tax basis in which is determined
in whole or in part by reference to the tax basis in the Restricted Property, is
thereafter treated for all purposes of Sections 10.1 and 10.3 as the Restricted
Property; and (z) the entity to which such Restricted Property is transferred
(thereafter, being "Transferred Property") agrees, for the benefit of the
Related Unitholders, that all of the restrictions of Sections 10.1 and 10.3
shall apply to the Transferred Property, and the indebtedness outstanding with
respect thereto in the same manner and to the extent set forth in Sections 10.1
and 10.3 and such agreement is reflected in the partnership agreement (or other
comparable governing instrument) of the entity to which the Transferred Property
is transferred.
10.2 Limited Exceptions to Restrictions. During the Restricted Period, the
Operating Partnership and their subsidiaries (including, without limitation, any
Permitted Assignee), may, subject to the provisos contained in this sentence,
sell any of the Restricted Property at any time in connection with (i) the sale
or other disposition of all or substantially all of the properties owned by the
Operating Partnership under such terms and conditions which the Board, in its
sole judgment, determines to be in the best interests of FAC and its public
stockholders, or (ii) a sale or other disposition (including without limitation
a transfer to a secured lender in lieu of foreclosure) which the Board, in its
sole judgment, determines is reasonably necessary (1) to satisfy any material
monetary default on any unsecured debt, judgment or liability of FAC, the
Operating Partnership or any subsidiary when it becomes due (at maturity or
otherwise) or (2) to cure or satisfy any material monetary default on any
mortgage, secured by the Restricted Property; provided, however, that no such
sales or other disposition will be made under clause (ii) unless the Operating
Partnership is unable to settle or refinance any such debts, judgments or
liabilities, or cure or satisfy any such defaults, after making commercially
reasonable efforts to do so under then prevailing market conditions; provided
that no sale or other disposition shall be made under clause (i) or (ii) above
unless (i) the amount of federal, state and local income tax payable as a result
of the recognition thereby of Built-in-Gain by the Related Unitholders, when
combined with the taxes on Built-in-Gain arising from other sales or
dispositions under this Section 10.2 or loan repayments under Section 10.3, is
less than one hundred thousand dollars ($100,000) in the aggregate, excluding
any taxes on Built-in-Gain attributable to the prepayment at Closing of the
Outstanding Debt Financing relating
34
to the Property known as "Food Lion Plaza" in Petersburg, VA (the "Petersburg
Property") or (ii) Xxxxx Xxxxxxx (or, if he shall not be alive or if he is
incapacitated, Xxxxxxx Xxxxxxx, or if he shall not be alive or if he is
incapacitated, his successor designated by written notice to FAC and the
Operating Partnership) shall have consented or been deemed to consent after
notice and in the manner for his consent provided in Section 10.3 below. In the
event the Operating Partnership, after having made the commercially reasonable
efforts described in the preceding sentence, in its sole judgment, determines
that it is reasonably necessary to dispose of any of the Restricted Property to
satisfy a material monetary default on any unsecured debt, judgment or liability
of the Operating Partnership when it becomes due (at maturity or otherwise), the
Operating Partnership covenants and agrees that it shall treat all of its
properties proportionately, including the Restricted Property, in its
determination of what properties to dispose of to satisfy such material debt,
judgment or liability and shall use commercially reasonable efforts to minimize
any adverse tax consequences to such holders of the Units. In the case of any
disposition of any of the Restricted Property pursuant to this Section 10.2,
holders of the Units relating to such Restricted Property may attempt to obtain
title to the Restricted Property in question so long as any equity in the
Restricted Property which the Operating Partnership may otherwise be seeking to
preserve is not lost or jeopardized. Moreover, in the event of an anticipated
transfer of any of the Restricted Property to a secured lender in lieu of
foreclosure or foreclosure, the Operating Partnership shall use commercially
reasonable efforts to provide the Related Unitholders the right to (a) cure the
default including the right to lend the Operating Partnership the funds
necessary to cure the default on an unsecured basis, as well as the right to
lend such funds to the Operating Partnership and to receive security for any
such loan from the Operating Partnership (or its appropriate Affiliate) in the
form of a subordinate mortgage secured solely by such Restricted Property (but
only if the lender or lenders holding any prior mortgage or mortgages on the
relevant Restricted Property expressly consent in writing to the grant of the
subordinate mortgage, provided that neither such loan, whether secured or
unsecured by the holders of the Units nor the granting of any such subordinate
mortgage to such holders violates any covenant in any loan agreement of the
Operating Partnership or any of its affiliates); (b) acquire, for one Unit (if
the value of a Unit at the time of such acquisition is not more than
one-thousand ($1,000.00) dollars or, if so, then for a fraction of a Unit, such
fraction's value being equal to one-thousand ($1,000.00) dollars, such
Restricted Property from the Operating Partnership subject to the debt or
liability; or (c) permit the Related Unitholders to exercise the Operating
Partnership's right of redemption with respect to such Restricted Property;
PROVIDED, HOWEVER, that the Operating Partnership shall not have any obligation
to grant holders of such Units the rights described in this sentence until
holders of the Units (whose financial position and resources as determined by
the Operating Partnership using commercially reasonable standards to be
satisfactory for the purpose of acting as indemnitors pursuant to this proviso)
have agreed with the Operating Partnership in writing to indemnify and hold
harmless the Operating Partnership, FAC and their affiliates from and against
all costs (including reasonable attorneys fees), expenses, taxes (including
without limitation any deed, mortgage or real estate transfer taxes), claims,
judgments, liabilities or damages incurred or arising from or in connection with
or attributable to or resulting from the grant or exercise of such rights, or
the acquisition of such Restricted Property by holders of the Units, but only to
the extent such costs would not have been incurred otherwise. Notwithstanding
anything to the contrary contained in this Agreement, the parties agree that
based on current tax laws and regulations, the maximum amount of federal, state
and local income tax payable by the Related Unitholders as a result of
Built-
35
in-Gain in the event of a sale described in this Section 10.2 would not exceed
the amounts set forth with respect to each Property on Schedule 10.2 hereof.
10.3 Refinancing During the Restricted Period. During the Restricted
Period, FAC the Operating Partnership, and their Subsidiaries and affiliates
shall not, without the express written consent of Xxxxx Xxxxxxx (or, if he shall
not be alive or if he is incapacitated, Xxxxxxx Xxxxxxx, or if he shall not be
alive or if he is incapacitated, his successor designated by written notice to
FAC and the Operating Partnership), repay, earlier than one month prior to its
stated maturity, any indebtedness secured by the Restricted Property unless (i)
the amount of federal, state and local income tax payable as a result of such
repayment by the Related Unitholders, when combined with the taxes on
Built-in-Gain arising from other loan repayments under this Section 10.3 or
sales or dispositions under Section 10.2, is less than one hundred thousand
dollars ($100,000) in the aggregate, excluding any taxes on Built-in-Gain
attributable to the prepayment at Closing of the Outstanding Debt Financing
relating to the Petersburg Property, or (ii) such repayment (a) is made in
connection with the refinancing (on a basis that the new debt would be
considered a Nonrecourse Liability as defined in the Operating Partnership
Agreement) of such indebtedness for an amount not less than the principal amount
of such indebtedness on the date of such refinancing, with such refinancing
indebtedness providing for the least amount of principal amortization as is
available on commercially reasonable terms, or (b) is made in connection with an
involuntary sale pursuant to foreclosure of the mortgage secured by the
Restricted Property or otherwise, including pursuant to a deed in lieu of
foreclosure (provided that FAC, the Operating Partnership and their Subsidiaries
and affiliates may not execute any deed in lieu of foreclosure unless the
maturity of the indebtedness secured by the Restricted Property has been
accelerated) or a proceeding in connection with a Bankruptcy of the Operating
Partnership, the fee-owning entity or any intermediate Person between them. For
purposes of this Article X, if (i) Xxxxx Xxxxxxx or his designated successor
shall fail to respond within thirty (30) days of a written request for consent
to a proposed transaction for which his consent is required as provided above,
his consent shall be deemed granted, or (ii) Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx
shall die and no successor to his rights under this Section shall have been
designated within fifteen (15) days after request by FAC for such designation
which was delivered to Xxxxxxx Xxxxxxx at his most recent address known to FAC,
such consent rights shall terminate. Notwithstanding anything to the contrary
contained in this Agreement, the parties agree that based on current tax laws
and regulations, the maximum amount of federal, state and local income tax
payable by the Related Unitholders as a result of Built-in-Gain in the event of
a prepayment of debt described in this Section 10.3 would not exceed the amounts
set forth with respect to each Property on Schedule 10.2 hereof.
10.4 Post Restricted Period Transactions. After the expiration of the
Restricted Period, the Operating Partnership may sell or dispose of any of the
Restricted Property at any time in its sole discretion, without regard to the
tax consequences to the Contributors thereof.
10.5 Traditional Method. Anything to the contrary in the Operating
Partnership Agreement to the contrary notwithstanding, until such time as all of
the Units issued to Related Unitholders with respect to a Property (or
Constituent Partnership) have been exchanged for Shares, the Operating
Partnership hereby agrees to use (and cause any transferee of such Property to
agree to use, for such period, as a condition of such transfer) the "traditional
method" set forth in Treasury Regulation
36
ss.1.704-3(b) (i.e. without "curative allocations") with respect to such
Property (or Constituent Partnership).
10.6 Payment of Outstanding Debt Financing: Terms and Conditions.
Notwithstanding anything to the contrary contained in this Agreement, Xxxxx
Xxxxxxx and the Constituent Parties hereby consent to the prepayment of the
Outstanding Debt Financing relating to the Properties listed on Schedule 10.6
attached hereto contemporaneously with the applicable Closings.
ARTICLE XI
Deliberately Omitted
ARTICLE XII
MANAGEMENT OF THE PROPERTIES
12.1 Assignment of Management Agreements. Subject to the terms and
conditions hereinafter set forth, Konover Management South desires to assign to
the Operating Partnership all of Konover Management South's right, title and
interest, as manager or leasing agent, in and to the Management and Leasing
Agreements, and the Operating Partnership desires to assume the rights,
privileges and responsibilities arising after the first Closing hereunder of
Konover Management South under the Management and Leasing Agreements, as more
particularly described in this Article XII, with the exception of those leasing
obligations described in Schedule 12.1 hereto (the "Excluded Leasing
Obligations"). To effect such assignment and assumption of the Management and
Leasing Agreements, Konover Management South and the Operating Partnership agree
to execute, effective July 1, 1998 (the "Management Closing," upon the
"Management Closing Date"), an assignment and assumption of agreement mutually
satisfactory to the Operating Partnership and Konover Management South in form
and substance which shall include a provision pursuant to which the Management
fees thereunder shall be prorated as of the Management Closing Date. Konover
Management South shall retain all commissions and other amounts payable on
account of the Excluded Leasing Obligations, so long as Konover Management South
pays any commissions, bonuses or other compensation due employees (as
hereinafter defined) on account of leasing activities in connection with
Excluded Leasing Obligations.
12.2 Consideration. In consideration of the assignment of the Management
and Leasing Agreements, the Operating Partnership agrees to pay to Konover
Management South on January 1, 1999 the amount of $1,135,625 [i.e., $1,000,000
plus ($3,500,000)(.03875)]. In addition, the Operating Partnership shall pay
Konover Management South $1,443,750 on January 1, 2000 [i.e., $1,250,000 plus
($2,500,000) (.0775)], and shall pay to Konover Management South an additional
$1,346,875 on January 1, 2001 [i.e., ($1,250,000) (1.0775)]. Amounts to be paid
under this Section 12.2 shall not be subject to setoff. Interest shall accrue on
any such amounts not paid when due at the rate of nine and three quarters
percent (9.75%) per annum and shall be payable upon demand.
12.3 Assignment of Office Lease. Provided that the Management Closing
occurs, Konover Management South shall assign or cause to be assigned and the
Operating Partnership shall
37
assume all of the named tenant's right, title and interest, as tenant, in and to
that certain office lease (the "Office Lease") for Xxxxx 000, 0000 Xxxx Xxxxxxxx
Xxxx Road, Boca Raton, Florida (the "Premises"). To effect such assignment and
assumption of the Office Lease, Konover Management South and the Operating
Partnership agree to execute an assignment and assumption of the Office Lease in
a form and substance mutually satisfactory to the Operating Partnership and
Konover Management South and appropriate ancillary documentation to convey all
of Konover Management South's interests in and to all furniture, fixtures and
equipment located at or used in connection with the Premises. Konover Management
South agrees to deliver to the Operating Partnership all books, records, files,
keys and other documents related to the properties it manages, the Premises or
the Management and Leasing Agreements, but only to the extent such items are in
Konover Management South's possession or control.
12.4 Conditions to Closing. The Management Closing is conditioned upon
satisfaction of the following:
(i) Konover Management South shall have obtained and delivered to the
Operating Partnership all necessary third party consents to the assignment
of the Management and Leasing Agreements and the Office Lease.
(ii) All of the Management and Leasing Agreements and the Office Lease
shall be in full force and effect and shall not have been amended modified,
supplemented, renewed, except as provided in Section 12.5 hereof.
(iii) Konover Management South shall not have entered into any new
management and leasing agreements except as provided in Section 12.5
hereof.
(iv) All of Konover Management South's representations and warranties
shall be true and correct in all material respects as of the date hereof
and the Management Closing Date, as reflected in the Bringdown Certificate.
12.5 Covenants. Konover Management South covenants and agrees that from and
after the date hereof until the Management Closing Date, Konover Management
South (i) shall not amend, modify, supplement, assign, renew or terminate any of
the Management and Leasing Agreements, or enter any new management and leasing
agreements, without the Operating Partnership's prior written consent, which
shall not be unreasonably withheld and which shall be deemed granted if no
response is given within ten (10) business days of written request for consent,
(ii) shall continue to perform its obligations under the Management and Leasing
Agreements and the Office Lease, and (iii) will promptly provide the Operating
Partnership with any notices of default given or received by it under the
Management and Leasing Agreements or the Office Lease.
38
12.6 Konover Management Employees.
(a) As of the Management Closing Date, Konover Management South shall
cause the termination of all its personnel (both full-time and part-time)
(the "Employees"); provided, however, that (i) the Operating Partnership
shall pay Employee salaries from July 1, 1998 through July 15, 1998, and
thereafter, and (ii) at Closing, the Operating Partnership shall reimburse
Konover Management South the sum of $2,322.32 as partial reimbursement of
the cost of benefits paid to employees for the period commencing with and
following the Management Closing Date.
(b) Konover Management South shall be liable for and shall indemnify,
defend and hold the Operating Partnership harmless against all Employees
salaries, accrued and unused vacation benefits, and other compensation
(including severance compensation and any liabilities resulting from such
termination) through the Management Closing Date. Konover Management South
shall settle any and all claims for wages or other compensation, which may
be due and owing to any employee as of the Management Closing Date.
(c) The Operating Partnership hereby agrees with Konover Management
South that the Operating Partnership shall offer employment on an "at will"
basis to each and all of the Employees at wages not less than those
currently paid by Konover Management South, in accordance with the Schedule
thereof provided by Konover Management South, exclusive of benefits and any
other non-salary compensation. Employees accepting such offer will receive
FAC's standard benefits package. The Operating Partnership does not agree
to relocate or pay for the relocation of any Employees who are hired by the
Operating Partnership. During the first year after Management Closing, FAC
will not terminate any of the Employees without cause unless it shall have
obtained the prior written consent of Xxxxx Xxxxxxx (or, if he shall not be
alive, his successor designated by written notice to FAC and the Operating
Partnership); provided that no Employee or other Person shall be a third
party beneficiary of the agreements in this Section 12.6 or elsewhere in
this Agreement. The agreements in this Section 12.6(c) are subject to each
and all of the covenants of Konover Management South having been full
performed and its representations and warranties hereunder being true and
correct.
(d) From and after the Management Closing Date, Konover Management
South shall have no authority, control or influence regarding the Operating
Partnership's relationship with the Employees. The Operating Partnership
hereby indemnifies and holds Konover Management South harmless against and
from any and all claims, loss, suits, actions, demands, judgments, liens or
damage (including attorneys' fees) of any nature whatsoever, suffered or
incurred by Konover Management South with respect to the Operating
Partnership's employment of the Employees from and after the Management
Closing Date.
(e) Konover Management South hereby indemnifies and holds the
Operating Partnership harmless against and from any and all claims, loss,
suits, actions, demands, judgments, liens or change (including attorneys'
fees) of any nature whatsoever, suffered or
39
incurred by the Operating Partnership with respect to Konover Management
South's employment of the Employees.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. All notices and demands which either party is required or
desires to give to the other shall be given in writing by personal delivery,
express courier service, certified mail, return receipt requested, or by
telecopy to the address or telecopy number set forth below for the respective
parties. If notice is by deposit or with an express courier service, it shall be
effective on the next business day following such deposit or, if notice is sent
by certified mail, return receipt requested, it shall be effective upon receipt.
Contributors and c/o Konover & Associates South, Inc.
Konover Management South: 0000 Xxxx Xxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Telecopy No: (000) 000-0000
With Copy to: Xxxxxxx & Xxxxxxx, LLP
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxxxx
Telecopy No: (000) 000-0000
The Operating Partnership: FAC Properties, L.P.
00000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx, X.X. 00000
Attn: X. Xxxxxxx Xxxxxx
Telecopy No: (000) 000-0000
With Copy to: Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxx
Telecopy No: (000) 000-0000
FAC: FAC Realty Trust, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxx, X.X. 00000
Attn: X. Xxxxxxx Xxxxxx
Telecopy No: (000) 000-0000
40
13.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.3 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision on any
other jurisdiction.
13.4 Assigns. This Agreement may not be amended at any time except by a
writing executed by the Operating Partnership and FAC and any other party or
parties to be charged. No Contributor may assign this Agreement or any interest
herein without the prior written approval of the Operating Partnership and FAC.
This Agreement may not be assigned by FAC or the Operating Partnership except to
a directly or indirectly wholly-owned subsidiary or subsidiaries of FAC or the
Operating Partnership (any such entity, a "Permitted Assignee"), provided that
no such assignment to a Permitted Assignee shall relieve FAC or the Operating
Partnership of its obligations hereunder. Any prohibited assignment or attempted
assignment by any party shall constitute a default by such party hereunder and
shall be deemed null and void and of no force and effect. Notwithstanding
anything to the contrary contained herein, the Operating Partnership may assign
the right to purchase individual Properties to various entities provided that
each of such entities is a Permitted Assignee. A copy of any assignment
permitted hereunder, together with an agreement of the assignee assuming all of
the terms and conditions of this Agreement to be performed by the assignee, in
form reasonably satisfactory to counsel for the non-assigning parties, shall be
delivered to the attorneys for the non-assigning parties prior to the Closing,
and in any event no such assignment shall relieve the assignor from its
obligations under this Agreement. This Agreement shall be binding upon and inure
to the benefit of any and all of the respective permitted successors, assigns or
other successors in interest of the parties. This Agreement shall not confer any
rights or remedies upon any person or entity other than the Operating
Partnership, FAC, the Contributors and their respective successors and permitted
assigns.
13.5 Public Announcement. Except as otherwise required by law, the
Constituent Parties shall not make public announcements with respect to the
transactions contemplated by this Agreement without the approval of FAC and the
Operating Partnership, which approval shall not be unreasonably withheld. FAC
and the Operating Partnership will provide to and solicit comments from Xxxxx
Xxxxxxx and Xxxx Xxxxxxxxx all written public announcements with respect to the
transactions contemplated by this Agreement prior to making such announcements
public.
13.6 Confidentiality. Each party hereto shall ensure that all confidential
information which such party or any of its respective officers, directors,
employees, counsel, agents or accountants may now possess or may hereafter
create or obtain relating to the financial condition, results of operations,
business, properties, assets, liabilities or future prospects of the other
party, any Affiliate or subsidiary of the other party or any tenant, customer or
supplier of such other party, or any such Affiliate or subsidiary, shall not be
published, disclosed or made accessible by any of them
41
to any other person or entity at any time or used by any of them, in each case
without the prior written consent of the other party; provided, however, that
the restrictions of this sentence shall not apply: (i) to the extent that
disclosure may otherwise be required by law; (ii) to the extent such information
shall have otherwise become publicly available; or (iii) to disclosure by or on
its behalf to its lender(s) for the purpose of obtaining financing in connection
with the acquisition of the Properties. In the event this Agreement is
terminated, each party promptly will deliver or certify destruction to the other
party all documents, work papers and other material (and any reproductions
thereof) obtained by each party or on its behalf from such other party or its
Affiliates or subsidiaries in connection with the subject transaction, whether
so obtained before or after the execution hereof, and will itself not use any
information so obtained and will use its good faith and diligent efforts to have
any information so obtained kept confidential and not used in any way
detrimental to such other party, subject to the limitations set forth in this
Section above.
13.7 Remedies. In the event that any party defaults or fails to perform any
of the covenants and agreements required to be performed by such party under
this Agreement, any other party shall be entitled to exercise any and all rights
and remedies available to it by or pursuant to this Agreement, documents or
instruments contemplated hereby or at law (statutory or common) or in equity
subject to the limitation on liability set forth herein; provided, however, that
in the event of a Closing of the transactions contemplated by this Agreement,
the rights and remedies of each party shall be limited to the rights contained
in Article VIII of this Agreement.
13.8 Construction. The provisions of this Agreement shall be construed as
to their fair meaning, and not for or against any party based upon any
attribution to such party as the source of the language in question. Headings
used in this Agreement are for convenience of reference only and shall not be
used in construing this Agreement.
13.9 Exhibits and Schedules. All exhibits and schedules referred to in this
Agreement and attached hereto shall be deemed and construed as part of this
Agreement and for all purposes all such exhibits and schedules are hereby
specifically incorporated herein by reference.
13.10 Merger Clause. This Agreement contain the final, complete and
exclusive statement of the agreement among the parties with respect to the
transactions contemplated herein and therein, and all prior or contemporaneous
oral and all prior written agreements with respect to the subject matter hereof
are merged herein.
13.11 Waiver. No failure of any party to enforce any provisions hereof or
to resort to any remedy or to exercise any one or more of alternate remedies and
no delay in enforcing, resorting to or exercising any remedy shall constitute a
waiver by that party of its right subsequently to enforce the same or any other
provision hereof or to resort to any one or more of such rights or remedies on
account of any such ground then existing or which may subsequently occur.
13.12 Relationship of Parties. The parties agree nothing contained herein
shall constitute either party the agent or legal representative of the other for
any purpose whatsoever, nor shall this Agreement be deemed to create any form of
business organization between the parties hereto, nor
42
is either party granted any right or authority to assume or create any
obligations or responsibility on behalf of the other party, nor shall either
party be in any way liable for any debt of the other.
13.13 Deliberately Omitted.
13.14 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware and of the United
States of America.
13.15 Directors' Liability. The obligations of FAC and the Operating
Partnership hereunder are intended to be binding are binding only on the assets
of FAC and the Operating Partnership, respectively, and no Contributor or
Constituent Partnership nor anyone claiming by or through or under such
Contributor or Constituent Partnership shall be entitled to obtain any judgment
creating personal liability on the part of any directors, shareholders, the
officers or partners in or of FAC or the Operating Partnership from time to
time.
13.16 Constituent Parties' Director Liability. The obligations of the
Constituent Parties hereunder are intended to be binding on the assets of the
Constituent Parties only, and neither FAC nor the Operating Partnership nor
anyone claiming by or through or under FAC or the Operating Partnership shall be
entitled to obtain any judgment creating personal liability on the part of any
directors, shareholders, or officers in or at Konover Management South or any of
the Constituent Parties in their capacities as such directors, shareholders, or
officers. However, nothing in this Section shall affect the liability of any
Person in its capacity as a Contributor or Constituent Partnership.
43
[PAGE INTENTIONALLY OMITTED]
44
IN WITNESS WHEREOF, the parties have duly executed this Agreement by their
hands and under seal affixed hereto as of the date and year first above written.
FAC REALTY TRUST, INC.
By:
-------------------------------------
X. Xxxxxxx Xxxxxx
President
FAC PROPERTIES, L.P.
By: FAC Realty Trust, Inc.,
General Partner
By:
------------------------------
X. Xxxxxxx Xxxxxx
President
KONOVER MANAGEMENT SOUTH CORP.
By:
-------------------------------------
Name:
Title:
45
MASTER AGREEMENT SIGNATURE PAGE
Durham, NC
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
KONOVER DURHAM FESTIVAL
CENTRE LIMITED PARTNERSHIP [SEAL]
By: KONOVER MOBILE, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
46
MASTER AGREEMENT SIGNATURE PAGE
Hollywood, FL
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
HOLLYWOOD FESTIVAL CENTRE LIMITED
PARTNERSHIP [SEAL]
By: KONOVER MOBILE, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
47
MASTER AGREEMENT SIGNATURE PAGE
Xxxxxx Beach, FL
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
SQUARE ONE STUART ASSOCIATES LIMITED
PARTNERSHIP [SEAL]
By: SQUARE ONE STUART, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
ATTEST: XXXXXX REALTY, INC. AS TRUSTEE
By:
-------------------------- --------------------------------
Xxxxxxx Xxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
48
MASTER AGREEMENT SIGNATURE PAGE
Lenoir, NC
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
LENOIR REALTY ASSOCIATES LIMITED
PARTNERSHIP [SEAL]
By: THREE L COMMERCIAL ASSOCIATES
Its General Partner
By: KONOVER MANAGEMENT [SEAL]
CORPORATION, Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
49
MASTER AGREEMENT SIGNATURE PAGE
Mobile, AL
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
KONOVER MOBILE FESTIVAL CENTRE
LIMITED PARTNERSHIP [SEAL]
By: KR MOBILE, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
50
MASTER AGREEMENT SIGNATURE PAGE
Oakland Park, FL
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
OAKLAND PARK FESTIVAL CENTRE
LIMITED PARTNERSHIP [SEAL]
By: KONOVER MOBILE, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
51
MASTER AGREEMENT SIGNATURE PAGE
Petersburg, VA
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
PETERSBURG COMMERCIAL ASSOCIATES [SEAL]
By: PETERSBURG COMMERCIAL ASSOCIATES
LIMITED PARTNERSHIP, [SEAL]
Its Partner
By: KONOVER MANAGEMENT
CORPORATION [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
AND
ATTEST: By: KONOVER MANAGEMENT
CORPORATION, Its Partner [SEAL]
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
52
MASTER AGREEMENT SIGNATURE PAGE
Smyrna, GA
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
KONOVER & XXXXX, a general partnership
By: KR COMMERCIAL ASSOCIATES
LIMITED PARTNERSHIP, general partner [SEAL]
By: KONOVER MANAGEMENT
CORPORATION [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
53
MASTER AGREEMENT SIGNATURE PAGE
Tampa, FL
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of the Master Agreement and
shall be effective as of the date of the Master Agreement.
TAMPA FESTIVAL CENTRE LIMITED
PARTNERSHIP [SEAL]
By: KONOVER MOBILE, INC. [SEAL]
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
54
MASTER AGREEMENT SIGNATURE PAGE
Lake Point Centre
The undersigned, as a Contributor to that certain Amended and Restated
Master Agreement (the "Master Agreement") by and among FAC Realty Trust, Inc.,
FAC Properties, L.P., the undersigned and other Contributors and parties dated
as of June 30, 1998, hereby becomes a party to such Master Agreement subject to
all of the terms and conditions thereof. The undersigned agrees that this
signature page may be attached to any counterpart of said Master Agreement and
shall be effective as of the date of the Master Agreement.
LAKE POINT CENTRE ASSOCIATES, LTD.
By: K. SOUTH, INC.
Its General Partner
ATTEST:
By:
-------------------------- --------------------------------
Xxxx X. Xxxxxxxxx
Its President
Duly Authorized
--------------------------
(Corporate Seal)
55
