AMENDED AND RESTATED PAYOFF AGREEMENT
THIS AMENDED AND RESTATED PAYOFF AGREEMENT
("Agreement") is made and entered as of the 30th day of
January, 1998, into by and between FOGELMAN
ENTERPRISES, L.P., a Delaware limited partnership
("FELP"), AVRON B. FOGELMAN, an individual resident of
Memphis, Tennessee ("ABF" and together with FELP, the
"General Partners") and FOGELMAN MORTGAGE L.P. I, a
Tennessee limited partnership ("FMLP").
RECITALS:
A. FMLP is the holder of two mortgage loans
(collectively, the "Mortgage Loans"): (1) a loan (the
"Pointe Royal Loan") in the face amount of $22,745,000
made to FPI Royal View, Ltd., L.P. ("Royal View"),
which is secured by a first mortgage and related
security documents encumbering the Pointe Royal
Apartments, which is a 437 unit residential rental
property located in Overland Park, Kansas (the "Pointe
Royal Property"); and (2) a loan (the "Westmont Loan")
in the face amount of $23,320,000 made to FPI
Chesterfield, L.P. ("Chesterfield" and together with
Pointe Royal, the "Partnerships"), which is secured by
a first mortgage and related security documents that
encumber the Westmont Apartments, a 489 unit
residential rental property located in Chesterfield,
Missouri (the "Westmont Property" and together with the
Pointe Royal Property, the "Properties").
B. The Pointe Royal Loan matures on April 23,
1999, and the Westmont Loan matures on July 8, 1999.
C. Each of the Mortgage Loans is a non-recourse
loan that bears interest (the "Basic Interest") at 9.5%
per annum. The Basic Interest is payable monthly in an
amount equal to 100% of the Property Cash Flow (as
defined in the documents evidencing and securing the
Mortgage Loans), and to the extent that the Property
Cash Flow is insufficient to pay the Basic Interest,
the difference between the Basic Interest calculated at
9.5% per annum and the Property Cash Flow accrues and
bears interest at 9.5% compounded annually.
D. In addition to the Basic Interest, contingent
interest is payable from any Property Cash Flow or the
proceeds of a sale or refinancing of the Properties as
follows: (1) 75% thereof until the Basic Interest plus
contingent interest results in a yield of 10.75% per
annum on each respective Mortgage Loan; (2) 50% of the
remaining balance until the Basic Interest plus
contingent interest results in a yield of 12.75% per
annum on each respective Mortgage Loan; and (3) 25% of
the remaining balance thereof.
E. Under the terms of the documents (the "Loan
Documents") evidencing and securing the Mortgage Loans,
the entire principal balance, together with accrued and
unpaid interest, is due and payable on the respective
maturity date of each of the Mortgage Loans.
F. ABF and FELP are the general partners of each
of the Partnerships.
G. CIGNA Investments, Inc. ("CIGNA") has issued
commitments to affiliates of the General Partners
respecting two first mortgage loans (the "CIGNA Loans")
secured by the Properties, which such loans will be
cross-collateralized. A description of the CIGNA Loans
is provided on Exhibit "A" attached hereto.
H. General Electric Capital Corporation ("GECC")
has issued a commitment to an affiliate of the General
Partners respecting the terms and conditions of an
equity investment (the "GECC Equity") with respect to
the Properties. A description of the GECC Equity is
provided on Exhibit "A" attached hereto.
I. The CIGNA Loans and the GECC Equity, together
with funds provided by FELP or its affiliates, will
enable the Payoff Amount (hereinafter defined) to be
paid in full satisfaction of the obligations of the
Partnerships in respect of the Mortgage Loans.
J. In order to fix the interest rate payable in
respect of the CIGNA Loans and to commence its formal
application and due diligence process, CIGNA has
required the payment of $410,000; and the completion of
the process required the payment of an additional
$410,000. Furthermore, GECC required that FELP agree to
commit to pay its expenses in connection with its
formal due diligence and approval process. FELP was
willing to commit such amounts only if FMLP agreed to
accept the Payoff Amount in full satisfaction of the
Mortgage Loans.
K. Through its general partner, Prudential-Bache
Properties, Inc. ("PBP"), FMLP has advised FELP that
FMLP will accept the Payoff Amount in full satisfaction
of the Mortgage Loans, if (1) FMLP obtains a written
opinion (the "Fairness Opinion") in form and substance
satisfactory to PBP from a financial advisory firm to
the effect that the transactions (the "Transactions")
contemplated in this Agreement are fair to FMLP and its
partners from a financial point of view, and (2) the
Transactions are approved by a majority in interest of
the limited partners of FMLP.
L. PBP has further advised FELP that FMLP has
retained the firm of Scott-Macon Securities, Inc.
("Scott-Macon") to serve as its exclusive financial
advisor with respect to the Transactions and to render
the Fairness Opinion.
M. Scott-Macon has advised PBP that Scott-Macon is
willing to render the Fairness Opinion only if the
Mortgage Loans are first offered to a selected list of
potential buyers in an open bidding process (the
"Marketing Process") to be conducted by Scott-Macon.
N. Scott-Macon has completed the Marketing
Process, together with such other analysis, review and
investigation as it deems necessary, and has advised
PBP that it is now willing to issue the Fairness
Opinion with respect to the Transactions.
O. The form and substance of the Fairness Opinion
are satisfactory to PBP.
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P. The parties hereto entered into that certain
Payoff Agreement executed by the General Partners on
December 1, 1997, and executed by FMLP and PBP on
November 26, 1997 (the "Prior Agreement").
Q. Certain of the conditions contained in the
Prior Agreement have been satisfied, certain of the
terms respecting the repayment of the Mortgage Loans
have been revised, and the parties hereto desire to
enter into this Agreement to amend and restate the
Prior Agreement in its entirety and to evidence their
agreements respecting the repayment of the Mortgage
Loans.
NOW, THEREFORE, in consideration of the mutual
covenants, agreements, representations and warranties
set forth in this Agreement, and for other good and
valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the
parties hereto hereby amend and restate the Prior
Agreement in its entirety and agree as follows:
1. Payoff and Satisfaction.
(a) Subject to terms and conditions
hereinafter set forth, FELP agrees to pay (or cause to
be paid on behalf of the Partnerships) to FMLP an
amount (the "Payoff Amount") in cash or immediately
available funds equal to the sum of:
(i) $48,000,000; and
(ii) an amount, if any, by which the
aggregate amount of interest paid to FMLP by the
Partnerships in respect of the Mortgage Loans for the
period from October 1, 1997, through the Closing Date
(hereinafter defined) is less than interest on the face
amount of the Mortgage Loans during such period
calculated at an annual rate of 7.7%.
(b) Subject to the terms and conditions
hereinafter set forth, FMLP agrees to accept the Payoff
Amount in full satisfaction of all obligations owed by
the Partnerships to FMLP in respect of the Mortgage
Loans.
(c) To the extent not earlier paid pursuant to
any provision of this Agreement, the Payoff Amount
shall be payable at the Closing (hereinafter defined)
in cash or immediately available funds, and upon
receipt of the Payoff Amount, FMLP shall (i) release
the liens and encumbrances securing each Mortgage Loan;
(ii) cancel each promissory note evidencing the
respective Mortgage Loan and return the same to the
respective Partnership marked "Paid in Full"; and (ii)
provide to each Partnership and affiliates thereof
general releases with respect to the Mortgage Loans.
2. Additional Representations, Warranties and
Covenants of FELP and ABF. Each of FELP and ABF
represents, warrants and covenants as follows:
(a) Each of FELP and ABF shall use its
reasonable best efforts to consummate the Transactions.
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(b) The partners in each of the Partnerships
have substantial negative capital accounts which would
trigger the allocation of a substantial amount of
phantom income or gain (income or gain in excess of
cash distributions) if either of the Properties was
sold or transferred in a taxable transaction.
(c) Each of FELP and ABF agrees that, for a
period of one (1) year from the Closing Date, neither
FELP nor ABF will sell or otherwise transfer any
interest in either of the Properties, other than (i)
the transfers described on Exhibit "A" attached hereto,
and (ii) transfers of the interests owned by FELP
and/or ABF in the entities described on Exhibit "A"
attached hereto to affiliates or immediate family
members.
(d) For the period commencing December 1, 1997
and continuing through the last day of the month
immediately preceding the month in which the Closing
occurs, ABF and FELP shall cause the Partnerships to
pay to FMLP not less than $295,583.75 each month as
interest in respect of the Mortgage Loans, which such
interest shall be payable in arrears on the date
specified in the documents evidencing and securing the
Mortgage Loans.
3. Fairness Opinion and Limited Partner Approval.
(a) Subject to the satisfaction of any other
condition set forth in Section 5 hereof, PBP has
advised FELP that PBP is willing to cause FMLP to
consummate the Transactions only if the Transactions
are approved by a majority in interest of the limited
partners of FMLP. Accordingly, in addition to the
satisfaction of any other condition set forth in
Section 5 hereof, FMLP's obligation to consummate the
Transactions shall be contingent upon obtaining the
approval of a majority in interest of the limited
partners of FMLP.
(b) Promptly following its execution of this
Agreement, (i) PBP shall take all steps necessary to
solicit the approval of FMLP's limited partners to the
Transactions; and (ii) in connection with such
solicitation, PBP shall recommend that such limited
partners approve the Transactions.
(i) Subject to any right or obligation
contained in Section 11 hereof, in connection with the
solicitation of the approval of FMLP's limited
partners, PBP shall: (A) cause to be prepared a
statement (the "Consent Statement") to be furnished to
the limited partners of FMLP, (B) cause FMLP to file
the Consent Statement, together with such other
documents and instruments as may be required by
applicable law, with the Securities and Exchange
Commission (the "SEC"), (C) use its reasonable best
efforts to cause such filing to be made on or before
February 20, 1998, and (D) use its reasonable best
efforts to obtain the SEC's timely approval of the
Consent Statement.
(ii) PBP shall include FELP and its counsel
on the distribution list to receive drafts of the
Consent Statement.
(c) If a majority in interest of FMLP's
limited partners approves or disapproves the
Transactions, FMLP shall provide notice thereof to FELP
not later than the
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business day following such approval or disapproval.
4. Conditions to FELP's Obligation to Close. The
obligation of FELP to consummate the Transactions is
conditioned upon and subject to each of the following:
(a) The Transactions are consummated on or
before May 29, 1998; and
(b) FMLP having performed and complied with
all agreements, covenants and conditions to be
performed or complied with on or before the Closing
Date.
5. Conditions to FMLP's Obligation to Close.
Subject to the right to terminate pursuant to Section
11 hereof, the obligation of FMLP to consummate the
Transactions is conditioned upon and subject to each of
the following:
(a) The Transactions shall have been approved
by a majority in interest of FMLP's limited partners;
and
(b) FELP having performed and complied (or
shall have caused the Partnerships to have performed
and complied) with all agreements, covenants and
conditions to be performed or complied with on or
before the Closing Date.
6. Closing. The Transactions shall be consummated
(the "Closing") on a date (the "Closing Date") and at a
time and place acceptable to FELP and FMLP, which such
date shall be on or before ten (10) business days
following notice from FMLP to FELP that a majority in
interest of the limited partners of FMLP have approved
the Transactions but in no event later than May 29,
1998.
(a) At Closing, FELP shall deliver, or cause
to be delivered, to FMLP the following:
(i) To the extent not previously paid, the
Payoff Amount, which shall be paid by federal wire
transfer of immediately available funds; and
(ii) A general release releasing each of
FMLP, PBP and their respective partners, agents,
affiliates, successors and assigns from any and all
liability in respect of the Mortgage Loans.
(b) At the Closing, FMLP shall deliver to FELP
the following:
(i) Such documents and instruments as are
necessary to release each and every lien and
encumbrance securing the Mortgage Loans;
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(ii) Either (A) the original of the
promissory notes evidencing each Mortgage Loan, which
such notes shall be marked "Paid in Full"; or (B) such
other documentation evidencing the payment and
satisfaction of the Mortgage Loans as may be agreeable
to the parties;
(iii) A general release releasing each
of the Partnerships and their respective partners,
agents, affiliates, successors and assigns from any and
all liability in respect of the Mortgage Loans; and
(iv) Such other, further and different
documents which are reasonably necessary or appropriate
to consummate the Transactions.
7. Costs and Expenses. The costs, fees and
expenses incurred in connection with the Transactions
shall be payable as follows:
(a) FMLP shall pay:
(i) the fees and expenses of Scott-Macon
incurred in connection with the rendering of the
Fairness Opinion;
(ii) any and all costs associated with the
winding-up of its affairs; and
(iii) any and all costs, fees and
expenses (the "FMLP Transaction Costs") incurred by or
on behalf of FMLP in connection with the Transactions,
including, without limitation, the fees and expenses
incurred in connection with (A) the preparation and
review of this Agreement and the Prior Agreement
(including the determination to proceed with the
Transactions), and (B) the solicitation of the consent
of FMLP's limited partners and the consummation of the
Transactions, which such fees and expenses shall
include, without limitation, all legal and accounting
fees and expenses, all solicitation costs, all printing
and filing fees and expenses.
(b) FELP shall pay any and all costs, fees and
expenses incurred by or on behalf of FELP, ABF, the
Partnerships or any party, other than FMLP or PBP, in
connection with the Transactions, including, without
limitation, the fees and expenses incurred in
connection with (i) the preparation and review of this
Agreement and the Prior Agreement (including the
determination to proceed with the Transactions); and
(ii) the fees and expenses incurred in connection with
the CIGNA Loans or the GECC Equity.
(c) If the Transactions are not consummated
because FMLP exercises any of its rights of termination
provided in this Agreement, except for the right of
termination provided in Section 10.(b) hereof, in
addition to the costs described in Section 7.(a)
hereof, FMLP shall promptly pay to FELP the amount, if
any, by which the aggregate payments made pursuant to
Section 2.(d) hereof exceed the Property Cash Flow for
the applicable period.
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8. Damage or Destruction of the Properties. In
the event that all or any portion of either of the
Properties is damaged or destroyed by fire or other
casualty prior to the Closing Date, FELP shall have the
option to:
(a) terminate this Agreement, in which event,
this Agreement shall be null, void and of no further
force or effect, except for the provisions of Section 7
hereof; or
(b) terminate this Agreement with respect to
the Property to which such damage or destruction has
occurred and consummate the Transactions with respect
to the remaining Property, in which case, the Payoff
Amount shall be reduced by an amount equal to the face
amount of the Mortgage Loan encumbering the Property
which was damaged or destroyed; or
(c) consummate the Transactions and require
FMLP to deliver to FELP at Closing a duly executed
assignment, in form and substance reasonably
satisfactory to FELP, assigning all of MLP's right,
title and interest in and to all insurance proceeds
payable as a result of such fire or casualty.
FELP shall have fifteen (15) business days from the
date of any such damage or destruction within which to
exercise its rights under this Section.
9. Condemnation. In the event that either of the
Partnerships receives written notice that any
condemnation or eminent domain proceedings are
threatened or initiated which might result in a taking
of all or any part of the Properties, FELP may:
(a) terminate this Agreement, in which event,
this Agreement shall be null, void and of no further
force or effect, except for the provisions of Section 7
hereof; or
(b) terminate this Agreement with respect to
the Property which is the subject of the condemnation
or eminent domain proceeding and consummate the
Transactions with respect to the remaining Property, in
which case, the Payoff Amount shall be reduced by an
amount equal to the face amount of the Mortgage Loan
encumbering the Property that is the subject of such
condemnation or eminent domain proceeding; or
(c) consummate the Transactions and require
FMLP to deliver to FELP at Closing a duly executed
assignment, in form and substance reasonably
satisfactory to FELP, assigning all of FMLP's right,
title and interest in and to all proceeds payable as a
result of such condemnation or eminent domain
proceeding.
10. Breach of Agreement.
(a) If FMLP should breach any of its covenants
or agreements contained in this Agreement or in any
other agreement, instrument, certificate or document
delivered pursuant to this Agreement or if FMLP should
fail to consummate the Transactions for any reason
other than FELP's default or the exercise of FMLP's
right to terminate this Agreement in accordance
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with the terms hereof, FELP may: (i) terminate this
Agreement, in which event, this Agreement shall be
null, void and of no further force or effect, including
the provisions of Section 7 hereof; or (ii) enforce
specific performance of this Agreement.
(b) If FELP or ABF should breach any of their
covenants or agreements contained in this Agreement,
except the agreement contained in Section 2.(c) hereof,
or in any other agreement, instrument, certificate or
document delivered pursuant to this Agreement or if
FELP should fail to consummate the Transactions for any
reason other than FMLP's default or FELP's termination
of this Agreement in accordance with the terms hereof,
FMLP may (i) terminate this Agreement and recover its
actual out-of pocket expenses incurred in connection
with the Transactions as full and final liquidated
damages; or (ii) enforce specific performance of this
Agreement. FMLP and FELP hereby acknowledge that in
the event of FELP's failure to consummate the
Transactions, the actual damages suffered by FMLP would
be difficult and/or inconvenient to determine or
ascertain.
(c) In the event that FELP breaches the
agreement contained in Section 2.(c) hereof, FMLP shall
be entitled to receive from FELP as liquidated damages
the greater of (i) $1.0 million, or (ii) the excess, if
any, of the amount received by FELP as a result of any
such sale or transfer over that portion of the Payoff
Amount set forth in Section 1.(a)(i) hereof.
11. Other Termination Rights. Notwithstanding
anything contained herein to the contrary, in the event
that after the date on which FMLP receives the Fairness
Opinion but prior to the Closing Date, FMLP or PBP has
received one or more written offers to purchase the
Mortgage Loans from FMLP which PBP has determined to be
more favorable to FMLP and its partners than the terms
and conditions contained in this Agreement, PBP may
consider such offers, and to the extent that it
believes it would be in the best interest of FMLP and
its partners to do so, may accept such offer and
terminate this agreement by providing written notice
thereof to FELP, in which event all of the rights,
duties and obligations of the parties hereto shall
immediately terminate and this Agreement shall be null,
void and of no further force or effect; provided,
however, FMLP shall have no such right of termination
unless, not less than five (5) business days prior to
the exercise of such right of termination, FMLP shall
have provided to FELP written notice setting forth with
particularity the terms of such offer and FELP shall
have failed to agree to meet or exceed the terms of
such offer; provided further, however,
contemporaneously with the exercise of its right of
termination provided in this Section 11, FMLP shall pay
to FELP a break up fee of $750 thousand.
(a) Notwithstanding the foregoing, from and
after the date on which FMLP receives the Fairness
Opinion, neither FMLP nor PBP will (y) initiate or
solicit any offer to purchase the Mortgage Loans or any
similar transaction; or (z) negotiate with or provide
any information respecting the Mortgage Loans to any
person or entity; provided, however, PBP may
(i) furnish such information as may be
required to be contained in the Consent Statement or as
may otherwise be required to be furnished in connection
with the solicitation of the consent of FMLP's limited
partners, or
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(ii)furnish such information or enter into
such negotiations that PBP in good faith determines to
be required in the exercise of its fiduciary duty.
(b) PBP agrees to provide to FELP prompt
written notice of any and all information provided or
negotiations entered into in reliance upon subsection
11.(a)(ii) hereof.
12. Notice. All notices, demands, requests and
other communications required or permitted to be given
by any provision of this Agreement shall be in writing
and sent by first class, regular, registered, certified
mail, commercial delivery service, overnight courier,
telegraph, telex, telecopier or facsimile transmition,
air or other courier or hand delivery to the party to
be notified, addressed as follows:
If to FELP or ABF:
Fogelman Enterprises, L.P.
5400 Poplar Avenue
Memphis, Tennessee 38119
Attention: Richard L. Fogelman, President
Telephone: (901) 762-6720
Telecopier: (901) 762-6708
With Required Copy to:
Krivcher Magids PLC
International Place II
6410 Poplar Avenue
Suite 300
Memphis, Tennessee 38119
Attention: L. Don Campbell, Jr., Esq.
Telephone: (901) 682-6431
Telecopier: (901) 682-6453
If to FMLP:
Fogelman Mortgage L.P. I
c/o Prudential-Bache Properties, Inc.
199 Water Street
28th Floor
New York, New York 10292
Attention: Chester A. Piskorowski
Telephone: (212) 214-1339
Telecopier: (212) 214-1422
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With a Required Copy to:
Greenberg Traurig
200 Park Avenue
New York, New York 10166
Attention: Judith D. Fryer, Esq.
Telephone: (212) 801-9330
Telecopier: (212) 801-6400
Any such notice, demand, request or communication
shall be deemed to have been given and received for all
purposes under this Agreement: (i) three (3) business
days after the same is deposited in any official
depository or receptacle of the United States Postal
Service first class, certified mail, return receipt
requested, postage-prepaid; (ii) on the date of
transmission when delivered by telecopier or facsimile
transmission, telex, telegraph or other communication
device (provided receipt is confirmed and such notice
is promptly confirmed by notice given by some other
means described herein); (iii) on the next business day
after the same is deposited with a nationally
recognized overnight delivery service that guarantees
overnight delivery; and (iv) on the date of actual
delivery to such party by any other means; provided,
however, if the day such notice, demand, request or
communication shall be deemed to have been given as
aforesaid is not a business day, such notice, demand,
request or communication shall be deemed to have been
given and received on the next business day.
Any party to this Agreement may change such party's
address for the purpose of notice, demands, requests
and communications required or permitted hereunder by
providing written notice of such change of address to
all of the parties hereto by written notice as provided
herein.
13. Entire Agreement. This Agreement contains the
entire agreement between the parties regarding the
subject matter hereof. Any prior agreements,
discussions or representations not expressly contained
herein shall be deemed to be replaced by the provisions
hereof and no party has relied upon any such prior
agreements, discussions or representations as an
inducement to the execution hereof. Without limiting
the generality of the foregoing, this Agreement amends,
restates and replaces the Prior Agreement, which shall
become null, void and of no further force and effect
upon the execution of this Agreement by all of the
parties hereto.
14. Amendments. This Agreement may be modified or
amended only by a written instrument executed by all
the parties hereto.
15. Waiver. Each and every waiver of any covenant,
representation, warranty or other provision of this
Agreement must be in writing and signed by the party
whose interest are adversely affected by such waiver.
No waiver granted in any one instance shall be
construed as a continuing waiver applicable in any
other instance.
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16. Section Headings. The section headings
contained in this Agreement are for reference purposes
only and shall not affect the interpretation of this
Agreement.
17. Governing Law. This Agreement shall be
governed in all respects, including validity,
interpretation and effect by and shall be enforceable
in accordance with the internal laws of the State of
New York, without regard to conflicts of laws
principles.
18. Jurisdiction. Each party to this Agreement
hereby consents to the exclusive jurisdiction of all
courts of the State of New York and the United States
District Court for the Southern District of New York,
as well as to the jurisdiction of all courts from which
any appeal may be taken from such courts, for the
purpose of any suit, action or other proceeding arising
out of or with respect to this Agreement, and any other
agreements, instruments, certificates or other
documents executed in connection herewith, or any of
the transactions contemplated hereby or thereby.
19. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
assigns.
20. Assignment. This Agreement and any of FELP's
rights hereunder may be assigned by FELP prior to the
Closing Date upon written notice to FMLP and without
the prior consent of FMLP; provided, however, the right
of FELP to make any such assignment shall be
conditioned upon such assignee executing a document
satisfactory to FMLP, pursuant to which such assignee
agrees to be bound by the terms and conditions hereof
and FELP agrees to guarantee the obligations assigned.
FMLP may not assign any of its rights or obligations
hereunder prior to the Closing Date without the express
written consent of FELP.
21. Time of Essence. Time is of the essence with
respect to this Agreement.
22. Lawful Authority. If any party executing this
Agreement is a corporation, the person executing on
behalf of the corporation hereby personally represents
and warrants to all of the parties that he has been
fully authorized to execute and deliver this Agreement
on behalf of the corporation, pursuant to a duly
adopted resolution of its board of directors or by
virtue of its bylaws.
23. Attorneys Fees. If any legal action or other
proceeding is brought for the enforcement of this
Agreement or because of any alleged dispute, breach,
default or misrepresentation in connection with any
provisions of this Agreement and such action is
successful, the prevailing party shall be entitled to
recover reasonably attorneys fees, court costs and all
reasonable expenses, even if not taxable or assessable
as court costs (including, without limitation, all such
fees, costs and expenses incident to appeal) incurred
in that action or proceeding in addition to any other
relief to which such party may be entitled.
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24. Counterpart Execution. This Agreement may be
executed in multiple counterparts, each of which shall
be deemed an original, but all of which shall be
considered together as one and the same instrument.
Further, in making proof of this Agreement, it shall
not be necessary to produce or account for more than
one such counterpart. Execution by a party of a
signature page hereto shall constitute due execution
and shall create a valid, binding obligation of the
party so signing and it shall not be necessary or
required that the signatures of all parties appear on a
single signature page hereto.
25. Waiver of Jury Trial. FMLP and FELP, for
themselves and their respective successors and assigns,
knowingly, voluntarily and intelligently waive all
right to trial by jury in any action or proceeding to
enforce or defend any rights or remedies under this
Agreement.
26. Business Day. The term "business day" shall
mean and refer to any day other than a Saturday, a
Sunday or a day on which national banks located in
Memphis, Tennessee are obligated or authorized to close
their regular banking business.
27. Further Assurances. Each of the parties hereto
agrees to execute such other, further and different
documents and perform such other acts as may reasonably
be necessary or desirable to carry out the intents and
purposes of this Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized
representatives on the dates set forth below.
FELP: FMLP:
FOGELMAN ENTERPRISES, L.P. FOGELMAN MORTGAGE L.P. I
By: Fogelman Limited Partnership By: Prudential-Bache Properties,
Its General Partner Inc.
By: Fogelman Properties, Inc. By: _______
Name: _____
Title: ____
By: _______
Richard L. Fogelman Date signed:__________________
President
Date Signed:
ABF:
____
AVRON B. FOGELMAN
Date Signed: ___
13
JOINDER BY PBP
As of the date of execution on behalf of FMLP, PBP
joins in and executes this Agreement to evidence its
obligations as the general partner of FMLP under
Section 3 hereof.
PBP:
PRUDENTIAL-BACHE PROPERTIES, INC.
By: ____
Name:___
Title:__
14
EXHIBIT A
DESCRIPTION OF CIGNA LOANS, GECC EQUITY
AND RELATED TRANSACTIONS
The following description of the GECC Equity, the
CIGNA Loans and the related transactions is intended
only for quick reference, is neither complete nor
exact, and is subject in all respects to the documents
and instruments which will evidence the GECC Equity,
the CIGNA Loans and the related transactions.
Furthermore, the amount of either the CIGNA Loans or
the GECC Equity may vary, pursuant to final agreements
among CIGNA, GECC and the General Partners, and the
capital interests of GECC and the Fogelman Party
(hereinafter defined) will be adjusted to reflect any
such variance; provided, however, any change in the
amount of the CIGNA Loans or the GECC Equity will not
alter the Payoff Amount.
GECC Equity
GECC and FELP and/or its affiliates (FELP and/or
such affiliates is hereinafter referred to as the
"Fogelman Party") will form a limited liability company
("Funding LLC") to facilitate the acquisition,
refinancing and operation the Properties. Each of the
Properties will be owned by a separate limited
liability company, and Funding LLC will be the sole
member in each separate sub-tier entity that will own
and hold title to the Properties.
GECC will contribute $5,000,000 in cash to the
capital of Funding LLC, and the Fogelman Party will
make cash contributions to Funding LLC equal to
$3,000,000. In exchange for its capital contributions,
GECC will hold an 62.5% preferred capital interest in
Funding LLC, and the Fogelman Party will hold a 37.5%
subordinated capital interest therein. The capital
contributions of GECC shall earn preferred returns as
follows: (i) a preferred return (the "Class A Preferred
Return") equal to 12% per annum, which will be
cumulative and will be compounded annually; (ii) a
preferred return (the "Class B Preferred Return") equal
to 8% per annum, which shall be cumulative, but not
compounded; and (iii) a preferred return of 25% per
annum (with annual compounding) on any additional funds
(the "Default Contributions") contributed to the
capital of Funding LLC by GECC that should have been
made by the Fogelman Party.
Cash flow generated by the operation of the
Properties after payment of operating expenses, debt
service, approved capital expenditures and operating
reserves shall be distributed as follows: first, to
pay the 25% preferred returns on any Default
Contributions and then to repay all Default
Contributions; second, 100% to GECC until the Class A
Preferred Return (including any unpaid portion from
prior years) is fully paid; third, 100% to GECC until
the Class B Preferred Return (including any unpaid
portion from prior years) is fully paid; and the
balance, if any, to the Fogelman Party.
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The net proceeds of any sale or refinancing of the
Properties shall be distributed as follows: first, to
pay the 25% preferred returns on any Default
Contributions and then to repay all Default
Contributions; second, 100% to GECC until the Class A
Preferred Return (including any unpaid portion from
prior years) is fully paid; third, 100% to GECC until
the Class B Preferred Return (including any unpaid
portion from prior years) is fully paid; fourth, to
return to GECC its initial capital contribution; and
the balance, if any, to the Fogelman Party.
In order to comply with GECC's requirement that
each Property be owned by a separate limited liability
company and that the cash flow from both Properties be
combined for purposes of determining the cash flow
available to pay preferred returns, while avoiding a
taxable transfer of the Properties, the following
transactions will occur:
1. Royal View will contribute the Point Royal
Property to Point Royal, LLC in exchange for 100% of
the membership interests therein; and Chesterfield will
contribute the Westmont Property to Chesterfield, LLC
in exchange for 100% of the membership interests
therein.
2. Royal View will contribute the membership
interests in Point Royal, LLC to Royal Fogelman, LLC in
exchange for a membership interest therein;
Chesterfield will contribute the membership interests
in Chesterfield, LLC to Royal Fogelman, LLC in exchange
for a membership interest therein; and the Fogelman
Party will contribute cash equal to $3,000,000 to Royal
Fogelman, LLC in exchange for a membership interest
therein. The membership interest of each of the
members in Royal Fogelman have not been determined as
of the date of this Agreement.
3. Royal Fogelman, LLC will contribute $3,000,000
in cash, the Point Royal, LLC membership interest and
the Chesterfield, LLC membership interest to Funding
LLC in exchange for a membership interest therein; and
GECC (or a wholly owned subsidiary thereof) will
contribute $5,000,000 cash to Funding LLC in exchange
for a membership interest therein.
CIGNA Loans
CIGNA will make the CIGNA Loans in the aggregate
amount of $41,000,000; one in the amount of $19,800,000
secured by a first mortgage and related security
interests that will encumber the Point Royal Property;
and one in the amount of $21,200,000 that will be
secured by a first mortgage and related security
interests that will encumber the Westmont Property. In
addition to the first mortgage and related security
interests, each CIGNA Loan will be cross-defaulted and
cross-collateralized. Other than the Property that
will serve as the primary security and matters of local
law, the terms of each of the CIGNA Loans will be
identical, which such terms are summarized as follows:
1. Each of the CIGNA Loans will bear interest at a
fixed rate equal to 7.28% per annum.
2. Monthly installments of interest only at 7.28%
per annum are payable for thirty-six (36) months.
A-2
3. During the period that interest only is
payable, monthly deposits in an amount that
approximates the principal payments that would be
required ($23,400 for the Pointe Royal Property and
$25,000 for the Westmont Property) had the CIGNA Loans
been amortizing are payable into an escrow account, and
the amounts on deposit therein are available to be used
for capital improvements at the applicable Property.
4. After the end of the interest-only period,
installments of principal and interest, each in an
amount sufficient to amortize the principal balance of
the CIGNA Loans over a term of twenty-five (25) years,
are payable monthly.
5. The CIGNA Loans mature on the first day of the
first calendar month following the seventh anniversary
of the closing date; provided, however, upon the
satisfaction of certain conditions, either of the CIGNA
Loans may be extended for an additional thirty-six (36)
months.
6. The CIGNA Loans are closed to pre-payment for a
period of three (3) years. Thereafter, the CIGNA
Loans may be prepaid in whole, but not in part, on any
monthly payment date; provided, that the applicable
borrower gives CIGNA at least forty-five (45) days
prior written notice and pays a prepayment premium
equal to 3% of the loan balance on any of the 25th
through the 60th monthly payment dates; 2% of the loan
balance on any of the 61st through the 70th monthly
payment dates and 1% of the loan balance on any of the
71st through the 80th monthly payment dates. The CIGNA
Loans are open to prepayment at par from and after the
81st monthly payment date.
7. With certain exceptions, the CIGNA Loans shall
be nonrecourse to the applicable borrower.
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