1
EXHIBIT 10.18
UNITED INVESTORS REALTY TRUST
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
November 25, 1997
By Fax (000) 000-0000
Town 'N Country Plaza of Tampa, Limited
&
Trustee Xxxxx X. Xxxxxxxx
on behalf of Landowner
c/o Xxxxxx X. Xxxxxxx Company
00000 XX Xxxxxxx 00 Xxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Re: Town 'N Country Shopping Center (the "Property")
Gentlemen:
While reviewing our October 15, 1997 letter agreement (the "Agreement")
for purposes of amending our S-11 Registration Statement and referencing the
Agreement, therein, it occurs to me that Paragraph 4 is somewhat open-ended with
regard to timing. I trust that each of the three of you understands that UIRT
has not promised to maintain an Advisory Board forever; nor has UIRT promised to
grant, for an unlimited number of years, options covering 1,000 shares of common
stock per year to the three of you as a group.
We do not have an agenda with regard to the life of the Advisory Board.
Although the first year will be experimental, I hope that it will serve the
needs of UIRT and that UIRT's Board of Trust Managers will continue it from year
to year. Similarly, no options will be granted annually to anyone who is not
serving on the Advisory Board (or in your situation, as part of the "Group").
Thus, if the Advisory Board is discontinued after the first year or if you as a
Group decide that you no longer wish to participate, or if the Board of Trust
Managers, in its infinite wisdom (as only such Boards can have) that the Group
should no longer serve on the Advisory Board, then in any of such events, no
additional options will be granted to the Group. In any of such events however,
it seems to me that any options that have already been granted and are not yet
vested, should vest immediately and that you should have a period of ninety days
thereafter in which to exercise all vested options. The foregoing is not
intended to abrogate any rights granted in the Agreement with respect to a
merger or similar event in which UIRT is not the surviving entity.
Please forgive me for not focusing on these issues earlier. I trust
that the forgoing will not cause anyone any heartburn, but if you thing that I
am being unreasonable, please call me direct. Assuming that you are in agreement
with the foregoing, this letter will constitute an amendment to the Agreement.
2
Accordingly, will you please indicate your approval in the space provided
hereinbelow and return a faxed copy to me at (000) 000-0000. Your early
attention to this will be greatly appreciated as a description of the Agreement
is going into the amended S-11 Registration Statement.
Very truly yours,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
President and CEO
Approved:
Town 'N Country Plaza of Tampa, Limited
By: Town 'N Country Park, Inc.
its general partner
By: /s/ Xxxxx X. Xxxxxxxx Date: 11/26/97
---------------------------------- -------------------
PSK Associates, Limited Partnership
its general partner
By: Xxxxxx X. Xxxxxxx Company
as agent
By:/s/ Xxxxx X. Xxxxx Date: 11/26/97
---------------------------------- -------------------
Xxxxx X. Xxxxxxxx as Trustee for fee landowners
By:/s/ Xxxxx X. Xxxxxxxx Date: 11/26/97
---------------------------------- -------------------
-2-
3
UNITED INVESTORS REALTY TRUST
0000 XXX XXXXXX
XXXXX 000
XXXXXXX, XXXXX 00000
OCTOBER 15, 1997
BY FAX: (000) 000-0000
Town N Country Plaza of Tampa, Limited
&
Trustee, Xxxxx X. Xxxxxxxx
on Behalf of Landowner
c/o Xxxxxx X. Xxxxxxx Company
00000 XX Xxxxxxx 00 Xxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Re: Town 'N Country Shopping (the "Property")
Gentlemen:
Confirming our telephone conversations regarding the above-referenced
Property, you (as "Seller") have agreed to grant to United Investors Realty
Trust ("UIRT") and UIRT has agreed to acquire from Seller, an option (the
"Option") to purchase the fee estate and 100% of the groundlessee's estate in
the Property, on the terms and conditions set forth below. As consideration for
the Seller's granting of the Option, UIRT shall remit to Seller within five (5)
business days after receipt by UIRT of a fully executed duplicate original of
this letter agreement, the sum of five thousand dollars ($5,000), which sum (the
"Option Payment") shall be deemed earned by Seller upon receipt, but which
Option Payment shall be credited against the Purchase Price (defined below) in
the event that UIRT timely exercises the Option.
We have agreed that the current market value of the Property, including
the fee simple estate and the groundlease, is $4,918,000. If UIRT exercises its
option, it will purchase (i) the fee simple estate, subject to the groundlease,
but free and clear of any liens or mortgages, for a price of $250,000, all cash,
and (ii) the groundlessee's estate, free and clear of any liens or mortgages,
for a price of $4,668,000, all cash (collectively, the payments of (i) and (ii)
which aggregate the sum of $4,918,000, are hereinafter sometimes referred to as
the "Purchase Price" ). The Option may be exercised at any time on or after
January 1, 1998, but before July 1, 1998, upon fifteen (15) days' prior written
notice.
UIRT hereby agrees that the Property may be subjected to a five (5)
year first mortgage loan (the "Loan") in the maximum principal amount of
$2,500,000. The interest rate on the Loan shall not exceed 8.25% per annum. The
Loan may be amortized over a term of not less than 20 years and must be
prepayable at any time without premium, penalty or cost to UIRT. Assuming a
$2,500,000 first mortgage on the Property, upon exercise of the Option, UIRT
will pay Seller the sum of $2,418,000, all cash, for the Property, including the
fee and groundlessee estates. Closing adjustments will take into account any
reduction in the outstanding principal balance of the mortgage (i.e., the cash
portion of the Purchase Price will be increased by any reduction in the
principal balance outstanding on the Loan.)
4
Purchase Price will also be adjusted by various closing adjustments
including, but not limited to pro-rations for rent, expenses, annualized CAM and
other expense recoveries, (the tax and/or insurance recoveries may have to be
pro-rated post closing as to some of the tenants), percentage rents based on the
percentage rent payable during the current lease year for each tenant (this may
be a post-closing pro-rata adjustment), tax and insurance deposits, if any, that
are held by the mortgagee and assignable and assigned to UIRT at Closing,
security deposits, rent concessions and persistent delinquencies, as well as
other pro-rations typically made in the Tampa area with respect to transactions
of a similar nature to the one contemplated herein. The Seller will pay for
title abstract charges and a title insurance policy in the amount of the
Purchase Price (as adjusted), a current (within 30 days of the date of a binding
purchase contract) survey, and ADA report, as well as transfer taxes or deed
stamps and any mortgagee consent or assumption fees or related costs and any
documentary stamps incurred in connection with the assumption (if required by
the mortgagee) of the mortgage. UIRT will be responsible for any costs incurred
with respect to an engineering study (or update), environmental study report (or
update), audit fees (for the S-11), and recording charges for the deeds and
recording charges for any mortgage assumption agreement. Each party will pay for
its own legal fees and will share in any purchase contract escrow fees. UIRT
will front the cost of the current survey (or survey updates), but the Seller
will reimburse UIRT for this cost at Closing, provided, however, that if Seller
obtains a survey in connection with its anticipated Loan on Town 'n Country,
UIRT will only be required to front the cost of the survey update for this
Property. UIRT would like the Seller to order such surveys or survey updates so
that we can take advantage of your local knowledge and expertise.
2. If any lease is replaced prior to Closing, we will adjust the
current market value (and Purchase Price) to reflect the replacement. Similarly,
if there is any rent concession (including base rent, CAM, real estate tax
and/or insurance premium reimbursement) the projected extension thereof beyond
the Closing Date will be a closing adjustment. Along the same lines, in the
event of any persistent delinquency (i.e., where a tenant is delinquent for two
consecutive months immediately prior to Closing or for any three months out of
the last twelve months immediately prior to Closing), there will be an equitable
adjustment to the Purchase Price (or the Seller may master-lease or otherwise
guaranty the rent payments for the duration of the lease term).
3. UIRT will not exercise the Option unless it has completed, by
February 15, 1998, its initial public offering of approximately $80,000,000.
4. Considering our anticipation of an ongoing relationship between the
parties, we welcome your suggestion that you have some input into the
substantive issues that UIRT will face after the IPO. In this regard, you had
suggested that you have some Board representation. Because of the inherent
conflict of interest that this poses, not to mention the example to other
prospective sellers that this poses, we propose to give the three of you (Xxxxx
X. Xxxxx, Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxxx) as a group (the "Group") a
seat on UIRT's Advisory Board which UIRT is forming. The Advisory Board will
participate in all meetings, but its members will have no vote. You could
rotate, internally, the membership on this Board on an annual basis. UIRT will
grant to the Seller, options to purchase an aggregate of 3,000 shares of UIRT
common stock at the IPO price. These options will vest over a three year period
(so long as the Group, or any one of you, is on the Advisory Board) Each of you
will be entitled to exercise options for 333 shares per year commencing January
1, 1999. Thereafter, commencing January 1, 2002, 1,000 options per year will be
granted to the three of you as a group (to be allocated among you as you shall
direct) at an exercise price equal to the market price of UIRT's common stock on
the date of the grant. In the event of a merger or similar event pursuant to
which UIRT
-2-
5
is not the surviving entity, all outstanding options will be deemed vested and
UIRT will purchase them at a price equal to the excess of the market price of
the shares immediately preceding the merger or similar event and the option
exercise price. UIRT will expect one member of your Group to attend all meetings
of the Trust Managers and will reimburse such member of the Advisory Board for
his or her expenses incurred in attending such meetings. If more than one of
your Group wishes to attend a Board Meeting, that will be fine, although only
one of you will be reimbursed. Although, an Advisory Board member will have no
vote, such member will not be subject to election by the shareholders. The
Advisory Board members will be appointed by the Trust Managers. I think that
with respect to our anticipated purchase of other properties owned by you and
the possibility of joint venture development with you, it is important that we
avoid any conflicts of interest, especially in the initial years of our public
format. Hopefully, the Advisory Board will serve our respective needs and
desires.
5. We understand that you own or control a number of additional
shopping centers in the central Florida area that you may have an interest in
either selling or exchanging for OP Units. We will be more than happy to explore
this with you after the completion of our IPO. Should we agree on a purchase
price for any or all of these properties, and you wish to exchange them for OP
Units, we will do so at a discount off of the UIRT market price of $0.25 per
share. In order to avoid any perception of manipulation, we propose to use the
average market price of the UIRT common stock for the 30 trading days
immediately prior to the acquisition.
6. With respect to the Twelve Oaks Shopping Center, I understand that
you have temporarily withdrawn this property from consideration for sale pending
your ability to find a replacement tenant for the Craft Depot lease. We respect
your decision on this maker and wish you Godspeed. When you have a new tenant in
place, we will be happy to revisit the acquisition of this center and the price
that we will be willing to pay for it. Should we go forward with this center. we
will also grant to your group an option for an additional 3,000 shares of UIRT
common stock. The option exercise price will be tied to the market price of the
stock at the time of the grant.
7. Upon timely remittance of the Option Payment, UIRT may conduct its
due diligence investigation of the Property. In connection therewith, UIRT may
inspect and make copies of Seller's books and records in so far as they pertain
to the operation and maintenance of the Property for the years 1994, 1995 and
1996 and year-to-date 1997. UIRT may also make, or cause its agents to make,
physical inspections of the Property. Seller shall remit to UIRT monthly a
current rent roll for the Property and agrees to keep UIRT informed on a current
basis regarding any new, modified, or canceled leases and rent concessions and
maintenance and capital expenditures.
Thanks again to each of you for your cooperation in this maker.
Sincerely,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
President and CEO
-3-
6
Approved:
Town 'N Country Plaza of Tampa, Limited
By: Town 'N Country Park, Inc.
its general partner
By: /s/ Xxxxx X. Xxxxxxxx Date: 10/23/97
------------------------------- -------------------
PSK Associates, Limited Partnership
its general partner
By: Xxxxxx X. Xxxxxxx Company
as agent
By:/s/ Xxxxx X. Xxxxx Date: 10/23/97
------------------------------- -------------------
Name: Xxxxx X. Xxxxx
----------------------------- -------------------
Title: as Agent
---------------------------- -------------------
Xxxxx X. Xxxxxxxx as Trustee for fee landowners
By:/s/ Xxxxx X. Xxxxxxxx Date: 10/23/97
------------------------------- -------------------
Name: Xxxxx X. Xxxxxxxx
---------------------------- -------------------
Title: Trustee
---------------------------- -------------------
cc: Xxx Xxxxxxx
Xxxxx Xxxxx
Xxx Xxxxx
-4-
