Exhibit 10.2
December 30, 2002
Xxxxx & Steers Capital Advisors, LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Placement of Securities of Kramont Realty Trust
Dear Sirs:
This letter (the "Agreement") confirms our agreement to retain Xxxxx &
Steers Capital Advisors, LLC (the "Placement Agent") as our exclusive agent for
a period commencing on the date of this letter and terminating on January 15,
2003, unless extended by the parties, to introduce Kramont Realty Trust, a
Maryland real estate investment trust (the "Company"), to certain investors as
prospective purchasers (the "Offer") of up to 2,090,000 common shares of
beneficial interest of the Company, par value $0.01 per share (the "Securities")
(assuming the maximum number of common shares is issued and sold). The
engagement described herein (i) may be terminated by the Company at any time
prior to the Initial Closing Date (as defined below) and (ii) shall be in
accordance with applicable laws and pursuant to the following procedures and
terms and conditions:
1. The Company will:
(a) Cause the Company's independent public accountants to address
and deliver to the Company, the Placement Agent and the Purchasers (as
such term is defined in the Purchase Agreement dated the date hereof
between the Company and the purchasers party thereto (the "Purchase
Agreement")) (i) a letter or letters (which letters are frequently
referred to as "comfort letters") dated the date hereof, and (ii) if so
requested by any Purchaser, a "bring-down" letter, one delivered on and
dated each date on which the sale of all or a portion of the Securities is
consummated pursuant to the Purchase Agreement (as defined below) (each
such date, a "Closing Date" and the time of such consummation on any such
Closing Date, a "Closing," the first such Closing Date, the "Initial
Closing Date" and the Closing on the Initial Closing Date, the "Initial
Closing," and the final such Closing Date, the "Final Closing Date" and
the Closing on the Final Closing Date, the "Final Closing"), which, with
respect to the letter referred to in clause (i) above, will be
substantially in the form attached hereto as Annex I, and with respect to
the letter or letters referred to in clause (ii) above, will be in form
and substance reasonably satisfactory to the Placement Agent.
(b) On the Initial Closing Date, cause outside counsel to the
Company to deliver opinions to the Placement Agent and the Purchasers
substantially in the form of Xxxxx XX and Xxxxx XXX hereto and cause the
general counsel of the Company to deliver opinions to the Placement Agent
and the Purchasers substantially in the form of Annex IV hereto.
(c) As soon as practicable, apply for listing the Securities for
trading on the New York Stock Exchange, Inc. ("NYSE") and will use its
best efforts to obtain approval from the NYSE with respect to such listing
on or prior to the Initial Closing Date.
(d) Prior to Final Closing, the Company shall not sell or approve
the solicitation of offers for the purchase of additional Securities in
excess of the amount which shall be authorized by the Company or in excess
of the aggregate offering price of the Securities registered pursuant to
the Registration Statement (as defined below).
2. The Company authorizes the Placement Agent to use the Prospectus
(as defined below) in connection with the Offer for such period of time as any
such materials are required by law to be delivered in connection therewith and
the Placement Agent agrees to do so.
3. (a) The Placement Agent will use reasonable efforts on behalf of
the Company in connection with the Placement Agent's services hereunder. No
offers or sales of Securities shall be made to any person without the prior
approval of such person by the Company, such approval to be at the reasonable
discretion of the Company. The Placement Agent's aggregate fee for its services
hereunder will be $300,000. Such fee shall be payable by the Company at and
subject to the consummation of the Initial Closing. The Company, upon
consultation with the Placement Agent, may establish in the Company's reasonable
discretion a minimum amount of Securities to be sold in the offering
contemplated hereby, which minimum amount shall be reflected in the Prospectus.
The Placement Agent will not enter into any agreement or arrangement with any
broker, dealer or other person in connection with the placement of Securities
(collectively, "participating person(s)") which will obligate the Company to pay
additional fees or expenses to or on behalf of a participating person without
the prior written consent of the Company, it being understood that Xxxxxxxx &
Company will be acting as settlement agent ("Settlement Agent") in connection
with the Offer and the Company will pay the fees and expenses of the Settlement
Agent in connection therewith.
(b) The Company agrees that it will pay the costs and expenses
incident to the performance of the obligations hereunder whether or not any
Securities are offered or sold pursuant to the Offer, including, without
limitation (i) all reasonable and customary mailing and handling costs and
expenses incurred by dealers and brokers (including your counsel) (subject to
the last sentence of paragraph 3(a)), commercial banks, trust companies and
xxxx-
xxxx incurred in forwarding the Prospectus to their customers, (ii) the filing
fees and expenses, if any, incurred with respect to any filing with the NYSE,
(iii) all costs and expenses incident to the preparation, issuance, execution
and delivery of the Securities, (iv) all costs and expenses (including filing
fees) incident to the preparation, printing and filing under the Securities Act
of 1933, as amended (the "Act"), of the Registration Statement and the
Prospectus, including, without limitation, in each case, all exhibits,
amendments and supplements thereto, (v) all costs and expenses incurred in
connection with the required registration or qualification of the Securities
issuable under the laws of such jurisdictions as the Placement Agent may
designate, if any (including, without limitation, reasonable fees of counsel for
the Placement Agent and its reasonable disbursements), (vi) all costs and
expenses incurred by the Company in connection with the printing (including word
processing and duplication costs) and delivery of the Prospectus and
Registration Statement (including, without limitation, any preliminary and
supplemental blue sky memoranda) including, without limitation, mailing and
shipping, (vii) all fees and expenses incurred in marketing the Offer, and
(viii) the fees and disbursements of Proskauer Rose LLP, counsel to the Company,
and any other counsel to the Company, and BDO Xxxxxxx, LLP, auditors to the
Company. In addition, the Company agrees to reimburse the Placement Agent for
all out-of-pocket expenses of the Placement Agent in connection with the Offer,
including, without limitation, the reasonable legal fees, expenses and
disbursements of the Placement Agent's counsel in connection with the Offer;
provided, however, that the Company shall not be obligated to reimburse the
Placement Agent or pay the Placement Agent's counsel for any legal fees,
expenses and disbursements incurred in connection with the Offer in excess of
$75,000.
4. The Company and the Placement Agent hereby agree as follows:
(a) The Company will indemnify and hold harmless the Placement
Agent and each of its respective partners, directors, officers,
associates, affiliates, subsidiaries, employees, consultants, attorneys
and agents, and each person, if any, controlling the Placement Agent or
any of its affiliates within the meaning of either Section 15 of the Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities or costs (and any reasonable legal or other expenses incurred
by such Placement Agent in investigating or defending the same or in
giving testimony or furnishing documents in response to a request of any
government agency or to a subpoena) in any way relating to, arising out of
or caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or in the Prospectus
or in any way relating to, arising out of or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such indemnity
agreement shall not, however, apply to any such loss, claim, damage,
liability, cost or expense (i) if such statement or omission was made in
reliance upon or in conformity with information furnished in writing to
the Company by the Placement Agent or its affiliates expressly for use in
the Prospectus Supplement, or (ii) which is held in a final judgment of a
court of competent jurisdiction (not subject to further appeal) to have
arisen out of the gross negligence or willful misconduct of the Placement
Agent or any indemnitee described in this paragraph 4(a).
(b) The Placement Agent will indemnify and hold harmless the
Company and each of its directors, officers, associates, affiliates,
subsidiaries, employees, consultants, attorneys, agents, and each person
controlling the Company or any of its affiliates within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities, costs or
expenses (and any reasonable legal or other expenses incurred by such
indemnitee in investigating or defending the same or in giving testimony
or furnishing documents in response to a request of any government agency
or to a subpoena) (i) which are held in a final judgment of a court of
competent jurisdiction (not subject to further appeal) to have arisen out
of the gross negligence or willful misconduct of such Placement Agent or
any of its respective partners, directors, officers, associates,
affiliates, subsidiaries, employees, consultants, attorneys and agents,
and each person, if any, controlling the Placement Agent or any of its
affiliates within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act or (ii) relating to, arising out of or caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Prospectus Supplement or in any way relating to, arising out of or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, if such statement or omission was made in reliance upon or in
conformity with information furnished in writing to the Company by the
Placement Agent or its affiliates expressly for use in the Prospectus
Supplement, or (iii) which result from violations by the Placement Agent
of law or of requirements, rules or regulations of federal or state
securities regulators, self-regulatory associations or organizations in
the securities industry, stock exchanges or organizations with similar
functions or responsibilities with respect to securities brokers or
dealers, as determined by a court of competent jurisdiction or applicable
federal or state securities regulators, self-regulatory associations or
organizations in the securities industry or stock exchanges or
organizations, as applicable.
(c) If any action, proceeding or investigation is commenced as to
which any indemnified party hereunder proposes to demand indemnification
under this letter agreement, such indemnified party will notify the
indemnifying party with reasonable promptness. The indemnifying party
shall have the right to retain counsel of its own
choice (which counsel shall be reasonably satisfactory to the indemnified
party) to represent it and such counsel shall, to the extent consistent
with its professional responsibilities, cooperate with the indemnified
party and any counsel designated by the indemnified party. The
indemnifying party will not be liable under this letter agreement for any
settlement of any claim against the indemnified party made without the
indemnifying party's written consent.
In order to provide for just and equitable contribution, if a claim
for indemnification pursuant to this paragraph 4 is made but it is found in a
final judgment by a court of competent jurisdiction (not subject to further
appeal) that such indemnification may not be enforced in such case, even though
the express provisions hereof provided for indemnification in such case, then
the Company, on the one hand, and the Placement Agent, on the other hand, shall
contribute to the losses, claims, damages, liabilities or costs to which the
indemnified persons may be subject in accordance with the relative benefits
received from the offering and sale of the Securities by the Company, on the one
hand, and the Placement Agent, on the other hand (it being understood that, with
respect to the Placement Agent, such benefits received are limited to fees
actually paid by the Company and received by the Placement Agent pursuant to
this Agreement), and also the relative fault of the Company, on the one hand,
and the Placement Agent, on the other hand, in connection with the statements,
acts or omissions which resulted in such losses, claims, damages, liabilities or
costs, and the relevant equitable considerations shall also be considered. No
person found liable for a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
is not also found liable for such fraudulent misrepresentation. Notwithstanding
the foregoing, the Placement Agent shall not be obligated to contribute any
amount hereunder that exceeds the fees received by the Placement Agent in
respect to the offering and sale of the Securities.
5. The Company represents and warrants to the Placement Agent as of
the date hereof and as of each Closing Date as follows:
(a) The Company meets the requirements for use of Form S-3 under
the Act. The Company's Registration Statement (as defined below) was
declared effective by the SEC (as defined below) and the Company has filed
such post-effective amendments thereto as may be required prior to the
execution of this Agreement and each such post-effective amendment became
effective. The SEC has not issued, and to the Company's knowledge, the SEC
does not intend nor has it threatened to issue, a stop order with respect
to the Registration Statement, nor has it otherwise suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or
permanently, nor, to the Company's knowledge, does it intend or has it
threatened to do so. On the effective date, (i) the Registration Statement
complied in all material respects with the requirements of the Act and the
rules and regulations promulgated under the Act (the "Regulations"); at
the effective date the Basic Prospectus (as defined below) complied, and
at each Closing the Prospectus will comply, in all material
respects with the requirements of the Act and the Regulations; and (ii)
the Registration Statement at the effective date and as amended or
supplemented on the date hereof and on each Closing Date did not, does not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and the Prospectus as of any such
time, did not, does not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company
in writing by (i) the Placement Agent or its affiliates or (ii) by any of
the Purchasers or any of their respective affiliates, in each case,
expressly for use therein. As used in this Agreement, the term
"Registration Statement" means the "shelf" registration statement on Form
S-3 (File No. 333-85424) as declared effective by the Securities and
Exchange Commission (the "SEC"), including exhibits, financial statements,
schedules and documents incorporated by reference therein. The term "Basic
Prospectus" means the prospectus included in the Registration Statement.
The term "Prospectus Supplement" means the prospectus supplement
specifically relating to the Securities as shall be filed with the SEC
pursuant to Rule 424 under the Act in connection with the sale of the
Securities. The term "Prospectus" means the Basic Prospectus and the
Prospectus Supplement. Any reference in this Agreement to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein as of the date hereof or the
date of the Prospectus, as the case may be, and any reference herein to
any amendment or supplement to the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents filed
after such date and through the date of such amendment or supplement under
the Exchange Act and so incorporated by reference.
(b) Since the date as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and the subsidiaries of the Company, if
any (the "Subsidiaries") considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by the
Company or any of its Subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and its
Subsidiaries considered as one enterprise, and (C) other than regular
quarterly dividends, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(c) The Company has been duly organized as a real estate
investment trust and is validly existing in good standing under the laws
of the State of Maryland. Each of the Subsidiaries of the Company has been
duly organized and is validly existing in good standing under the laws of
its jurisdiction of organization. Each of the Company and its Subsidiaries
has the requisite power and authority to own and lease its properties and
to conduct its business as described in the Prospectus; and each of the
Company and its Subsidiaries is duly qualified to transact business in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its Subsidiaries
considered as one enterprise.
(d) As of the date hereof, the authorized capital stock of the
Company consisted of 96,683,845 common shares and 3,316,155 preferred
shares of beneficial interest, par value $.01 per share, of which
21,265,985 common shares, 1,183,240 9.75% Series B-1 Cumulative
Convertible Preferred Shares and 1,653,200 Series D Cumulative Redeemable
Preferred Shares, are issued and outstanding as of such date. The issued
and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and non-assessable; the
Securities have been duly authorized, and when issued and delivered as
contemplated hereby, will be validly issued, fully paid and non-assessable
and will be listed, subject to notice of issuance, on the NYSE, effective
as of the Initial Closing Date; the Securities and the shares of capital
stock of the Company conform to all statements relating thereto contained
in the Prospectus; and the issuance of the Securities is not subject to
preemptive or other similar rights.
(e) Neither the Company nor any of its Subsidiaries is in
violation of its organizational documents or in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument or agreement to which the Company or any of its
Subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of its
Subsidiaries is subject where such violation or default would have a
material adverse effect on
the condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its Subsidiaries considered as
one enterprise; and, the execution, delivery and performance of this
Agreement, and the issuance and delivery of the Securities and the
consummation of the transactions contemplated herein have been duly
authorized by all necessary action and will not conflict with or
constitute a material breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument or agreement to which the Company or any of its Subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its Subsidiaries is subject,
nor will any such action result in any violation of the provisions of the
Amended and Restated Declaration of Trust, by-laws or other organizational
documents of the Company or any of its Subsidiaries or any applicable law,
administrative regulation or administrative or court decree.
(f) The Company is organized in conformity with the requirements for
qualification and, as of the date hereof and as of each Closing Date,
operates in a manner that qualifies it as a "real estate investment trust"
under the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder and will be so qualified after giving effect to the
sale of the Securities.
(g) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(h) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened or contemplated, against or affecting
the Company or any of its Subsidiaries, which is required to be disclosed
in the Prospectus (other than as disclosed therein), or which might result
in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company
and its Subsidiaries considered as one enterprise, or which might
materially and adversely affect their respective property or assets or
which might materially and adversely affect the consummation of this
Agreement; all pending legal or governmental proceedings to which the
Company or any of its Subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in
the Prospectus, including ordinary routine litigation incidental to its
business, are, considered in the aggregate, not material to the business
of the Company and its Subsidiaries considered as one enterprise.
(i) No authorization, approval or consent of any court or United
States federal or state governmental authority or agency is necessary in
connection with the sale of the Securities hereunder, except such as may
be required under the Act or the Regulations or state securities laws or
real estate syndication laws.
(j) The Company and its Subsidiaries possess such material
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now conducted by them, and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise, nor, to the knowledge of the Company, are any such proceedings
threatened or contemplated.
(k) The Company has full power and authority to enter into this
Agreement, and this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
agreement of Seller, enforceable against Seller in accordance with its
terms except as may be limited by (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting the rights or remedies of creditors or (ii) the effect of
general principles of equity, whether enforcement is considered in a
proceeding in equity or at law and the discretion of the court before
which any proceeding therefor may be brought.
(l) The Company has good and marketable title to all of the
properties and assets reflected in the audited financial statements
contained in the Prospectus, subject to no lien, mortgage, pledge or
encumbrance of any kind except those reflected in such financial
statements (or as otherwise described in the Prospectus) or which are not
material or which constitute customary provisions of mortgage loans
secured by the Company's properties creating obligations of the Company
with respect to proceeds of the properties, environmental liabilities and
other customary protections for the mortgagees.
(m) Any certificate signed by any officer of the Company and
delivered to the Placement Agent or to counsel for the Placement Agent
shall be deemed a representation and warranty by the Company to the
Placement Agent as to the matters covered thereby.
6. The Placement Agent represents and warrants to the Company
that, (i) it is registered as a broker-dealer under the Exchange Act and
licensed or otherwise qualified to do business as a broker-dealer in all states
in which it will offer any Securities pursuant to this Agreement, (ii) assuming
compliance by the Company with all relevant provisions of the Act in connection
with the Prospectus, the Placement Agent will conduct all offers and sales of
the Securities in compliance with the relevant provisions of the Act and the
Regulations and various state securities laws and regulations and (iii) the
Placement Agent will only act as agent in those jurisdictions in which it is
authorized to do so.
7. This Agreement shall be governed by the laws of the State
of New York governing contracts made and to be performed in such State without
giving effect to principles of conflicts of law.
8. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be the same Agreement.
If the foregoing is in accord with your understanding of our
agreement, please sign in the space provided below and return a signed copy of
this letter to the Company.
Sincerely,
KRAMONT REALTY TRUST
By: /s/ Xxxxx X. Xxxxxx, Xx.
--------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: President, Chief Executive Officer
and Trustee
Accepted by:
XXXXX & STEERS CAPITAL
ADVISORS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
