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EXHIBIT 10.5
RPS REALTY TRUST
747 Third Avenue
New York, New York 10017
May 10, 1996
To the Persons and Entities
Party to the Master Agreement
defined below and Signatory Hereto
c/o Ramco-Gershenson, Inc.
27600 Northwestern Highway, Suite 200
Southfield, Michigan 48034
Re: Closing of the Ramco Acquisition and Related Transaction
Gentlemen:
Reference is made to the Amended and Restated Master Agreement, dated as
of December 27, 1995, as amended by the First Amendment to Amended and Restated
Master Agreement, dated as of March 19, 1996, among RPS Realty Trust, a
Massachusetts business trust (the "Trust"), Ramco-Gershenson, Inc., a Michigan
corporation ("Ramco"), Dennis Gershenson, Joel Gershenson, Bruce Gershenson,
Richard Gershenson, Michael A. Ward, Michael A. Ward, Trustee U/T/A dated
2/22/77, as amended (collectively, the Ramco Principals"), Ramco-Gershenson
Properties, L.P., a Delaware limited partnership (the "Operating Partnership"),
and the Ramco affiliates listed on Schedule A thereto (the "Ramco Contributing
Parties") (as amended, the "Master Agreement"). Capitalized terms used, but
not defined, in this letter agreement (the "Letter Agreement") shall have the
respective meanings set forth in the Master Agreement.
This Letter Agreement is intended to and shall be a legally enforceable
agreement and shall be binding upon the parties signatory hereto. In connection
with today's closing of the transactions contemplated by the Master Agreement
(collectively, the "Transactions"), this Letter Agreement sets forth the
parties' agreement to proceed with the consummation of the Transactions on the
following additional, amended or modified terms and conditions:
1. Master Agreement. To the extent any term or provision of this Letter
Agreement is supplemental or contrary to, or is otherwise inconsistent with,
the terms and conditions of the Master Agreement, the Ramco Agreements or the
RPS Contribution Agreements (collectively, the "Transaction Documents"), this
Letter Agreement shall be deemed to amend, supplement or modify the Master
Agreement, as applicable, and the terms and conditions of this Letter Agreement
shall in all such cases control.
2. Indemnification by Ramco Principals. (a) Notwithstanding anything to
the contrary set forth in the Transaction Documents, the Ramco Principals shall
be jointly and severally liable (for
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indemnification or otherwise) with respect to any failure or breach of any
representation, warranty, covenant, agreement or obligation of the Ramco Group
under any of the Transactions Documents except that the Ramco Principal's
aggregate liability with respect to any such failure or breach shall be limited
to an aggregate of the greater of $16,000,000 and the value of the Pledged
Collateral (as such term is defined in the Pledge Agreement) determined, as of
the date any claim against the Ramco Principals is compromised or settled by the
parties or determined by a court of competent jurisdiction, based on the Value
(as such term is defined in the Exchange Rights Agreement dated the date hereof
among the Trust and the members of the Ramco Group which are a party thereto) of
the Shares at such time. Any limitation on liability set forth in the
proceeding sentence shall not limit claims against the Ramco Principals with
respect to any Ramco Group intentional misrepresentation or intentional breach
of warranty or intentional failure to perform and comply with any covenant,
agreement or obligation and the Ramco Principals shall be liable with respect to
all Damages with respect thereto. The Ramco Principals liability under this
paragraph 2, remains subject to the limitations set forth in Sections 7.2 and
7.3(a) of the Master Agreement.
(b) Notwithstanding anything herein or in any Transaction Document to the
contrary, the parties hereto acknowledge and agree that (a) it is not (and at
no time will be) necessary for the Trust, in order to enforce any of its rights
and remedies under any Transaction Document, to first institute or exhaust the
Trust's rights and remedies against any Ramco Principal, any holder of an
interest in the Operating Partnership ("Holders") or against any of the Pledged
Collateral (as defined in the Pledge Agreement), in each case, pursuant to the
Pledge Agreement, and (b) any delay in exercising, failure to exercise, or
non-exercise (or partial exercise), from time to time, by the Trust of any
rights or remedies under the Pledge Agreement (or to insist upon strict
performance) in any one or more instances shall not constitute a waiver thereof
(or preclude full exercise or insistence upon strict performance thereof) in
that or any other instance, and any single exercise of the Trust's rights or
remedies under the Pledge Agreement in any one or more instances shall not
preclude full exercise in any other instance.
3. Pashcow Termination Agreement and Deferred Payment. (a) At the
Closing, the Operating Partnership shall borrow $3,950,000 under the Line of
Credit (as defined below), the proceeds of which will be used by the Operating
Partnership (on behalf of the Trust) or RPS Mortgage (as applicable) to pay
certain Excluded Expenses and provide working capital to RPS Mortgage, as
directed by the Trust (the "Closing Loan").
(b) The parties to the Master Agreement hereby waive the condition set
forth in Section 3.1(f) of the Master Agreement with respect to the amounts
payable under Section 3(b)(ii) of the Termination Agreement between the Trust
and Joel M. Pashcow dated March 26, 1996 (the "Pashcow Obligation"). Neither
the Pashcow Obligation nor the Note (as defined below) shall be taken into
account for purposes of making the adjustments set forth in Section 1.10.
Nothing herein is intended to absolve the Trust of its obligation to pay Joel
M. Pashcow any amounts owed to him under such agreement and the Trust
acknowledges that the payment of such amount is not subject to any right of set
off or any right to interpose counterclaims or crossclaims.
(c) At the Closing, RPS Mortgage shall execute and deliver to the Trust a
note (the "Note") in the original principal amount of $5,550,000, in the form
set forth as Schedule 1 hereof, which is secured by a Collateral Agreement in
the form set forth in Schedule 2 hereof, in consideration of the Closing Loan
and the Trust's continuing liability under the Pashcow Obligation.
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(d) The Ramco Principals shall use their best efforts to cause the minimum
amount available under the Line of Credit (without regard to borrowings under
such Line of Credit that occur at or following the Closing) to equal at least
$50,000,000.
(e) For purposes of this letter agreement, the Line of Credit shall mean
the Master Revolving Credit Agreement, dated as of May 6, 1996, by and among
the Operating Partnership, the Trust and the other lending institutions which
may become parties thereto, and First National Bank of Boston, as Agent for the
Banks.
4. Reimbursement of Development Land Expenses. The Ramco Principals and
the Ramco Contributing Parties consent and agree with the Trust that at no time
shall the Operating Partnership reimburse the appropriate Affiliates of Ramco
for third party out-of-pocket expenses incurred by such Affiliates related to
options on the Development Land listed on schedule 1.1(b) to the Master
Agreement (but only to the extent such Affiliates are entitled to such
reimbursement under Section 1.13 of the Master Agreement) unless and until (i)
the funds available under the Line of Credit (assuming that no funds are drawn
down by the Operating Partnership under such Line of Credit) equal or exceed
$50,000,000, and (ii) such Affiliates have presented reasonably detailed
documentation evidencing the occurrence of thereof, which documentation and the
amount of such out-of-pocket expenses are verified and approved by the Trust's
Independent Trustees. The Independent Trustees shall be entitled to retain, at
the Trust's expense, an independent Person to verify such documentation and the
amount of such expenses.
5. Representations and Warranties of Sources and Uses. (a) The Ramco
Principals, jointly and severally, represent and warrant to, and agree with,
the Trust that (i) attached hereto as Schedule 3 is a true, correct and
complete copy of the Ramco Group's "sources and uses" statement relating to the
RPS Cash, the mortgage payoffs detailed therein and generally with respect to
the closing of the several contributions to the Operating Partnership by the
Ramco Contributing Parties and by the Trust, in all cases as contemplated by
the Master Agreement, and (ii) attached hereto as Schedule 4 is a true, correct
and complete copy of the Ramco Group's "sources and uses" statement relating to
the closing of the several contributions to the Operating Partnership by the
Ramco Contributing Parties, as contemplated by the Master Agreement. The
representations and warranties made in this paragraph shall be deemed for all
purposes as representations and warranties under Section 4 of the Master
Agreement.
(b) The Trust represents and warrants to the Ramco Group that attached
hereto as Schedule 5 is a true, correct and complete copy of the Trust's
statement of transaction expenses (other the Excluded Expenses) that have been
incurred through the Closing. The representation and warranty set forth in
this paragraph shall be deemed for all purposes as a representation and
warranty under Section 5 of the Master Agreement.
6. Prorations and Adjustments Procedures. The parties agree that the real
estate related prorations and adjustments contemplated by the Transaction
Documents that are required or scheduled to be made after the Closing shall be
in accordance with the procedures set forth in Schedule 6. Unless otherwise
indicated, all such prorations and adjustments shall be made as if the Closing
occurred as of May 1, 1996. The Independent Trustees shall review and approve
all such prorations and adjustments, including those prorations and adjustments
made at the Closing. The Independent Trustees shall be entitled to retain, at
the Trust's expense, an independent Person to assist them in reviewing and
approving
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such prorations and adjustments. To the extent such prorations and
adjustments result in any payments to the Trust, such amounts will be
distributed to the Trust's shareholders in the distribution to shareholders
that immediately follows the receipt of such amounts.
7. Use of RPS Cash. (a) The parties agree that Section 12.1(b) of the
Master Agreement is amended by deleting the amount $3,200,000 in such Section
and replacing it with the amount $3,605,279. The Ramco Principals represent
and warrant to, and agree with the Trust that, the Operating Partnership will
have cash on hand (without regard to amounts available under the Line of Credit
and amounts identified on the closing statements to be used by the Trust or the
Operating Partnership to pay Excluded Expenses) an amount equal to $3,558,450
to pay expenses relating to the Transactions.
8. New York Office Lease. At the Closing, (i) the space lease (the "New
York Office Lease") relating to the Trust's principal place of business in New
York City shall not be assigned to RPS Mortgage and (ii) the Trust shall enter
into a sublease with RPS Mortgage with respect to 100% of the space covered by
the New York Office Lease. The Trust represents and warrants to the Ramco
Group that the New York Office Lease expires on April 30, 1997.
9. Non-conforming Loans. The Ramco Principals, jointly and severally,
represent and warrant to, and agree with, the Trust that set forth on Schedule
7 is a true, correct and complete copy of the analysis which illustrates the
economic impact (including, without limitation, the impact on cash available
from distribution) on the Trust of the terms of the West Oaks II Loan and the
Spring Meadows Loan which do not conform to the terms set forth in Section
3.3(c)(ii) and (iii) of the Master Agreement.
10. Waivers. The Closing of the Transactions shall for all purposes
hereunder be deemed a waiver in writing of any condition to Closing which has
not been satisfied at or prior to such Closing.
11. Special Distributions. Notwithstanding anything to the contrary set
forth in the Master Agreement, any distributions or dividends that are
contemplated in the Master Agreement to be made to the Trust's shareholders of
record as of the day prior to the Closing Date (other than the dividend or
distribution relating to the shares in RPS Mortgage) shall instead be made to
the Trust's shareholders as of the record date which is established by the
Board of Trustees for distributions to shareholders after the receipt of the
funds or assets which were the subject of such special distribution.
12. Kohl's Lease. The Ramco Principals hereby acknowledge their
obligation to satisfy in full in cash the landlord's obligations under Section
3.5 of the Kohl's Lease.
13. Miscellaneous
A. Specific Performance. The parties acknowledge that the subject
matter of this Letter Agreement is unique and that no adequate remedy of law
would be available for breach of this Letter Agreement. Accordingly, each party
agrees that the other parties will be entitled to an appropriate decree
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of specific performance or other equitable remedies to enforce this Letter
Agreement (without any bond or other security being required) and each party
waives the defense in any action or proceeding brought to enforce this Letter
Agreement that there exists an adequate remedy at law.
B. Captions. The captions in this Letter Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
Letter Agreement.
C. No Waiver. The failure of a party to insist upon strict adherence to
any term of this Letter Agreement on any occasion shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Letter Agreement. Any waiver
must be in writing.
D. Amendment. This Letter Agreement cannot be changed or terminated except
by a written instrument executed by the party or parties against whom
enforcement thereof is sought.
E. Counterparts. This Letter Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
F. Governing Law. This Letter Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal laws of the State of New York, without regard to the conflicts of
law principles thereof.
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IN WITNESS WHEREOF, the parties have executed this Letter Agreement
and caused the same to be delivered on their behalf on May 10, 1996
RPS REALTY TRUST
By: /s/ Stephen R. Blank
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Name: Stephen R. Blank
Title: Trustee
RAMCO GERSHENSON, INC.
By: /s/ Dennis Gershenson
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Name: Dennis Gershenson
Title: Chief Executive Officer
/s/ Dennis Gershenson
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Dennis Gershenson
/s/ Richard Gershenson
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Richard Gershenson
/s/ Bruce Gershenson
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Bruce Gershenson
/s/ Joel Gershenson
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Joel Gershenson
/s/ Michael A. Ward
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Michael A. Ward
MICHAEL A. WARD U/T/A DATED 2/22/77,
AS AMENDED
By: /s/ Michael A. Ward
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Michael A. Ward as trustee
U/T/A dated 2/22/77, as amended
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RAMCO-GERSHENSON PROPERTIES, L.P.
By: RAMCO REIT, INC., its
General Partner
By: /s/ Dennis Gershenson
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Name: Dennis Gershenson
Title:
RAMCO CONTRIBUTING PARTIES
TO THE EXTENT OF SECTIONS 1, 2, 3, 6, 7, 8,
9, 10, 11 and 12
KM BLUE ASH DEVELOPMENT COMPANY,
an Ohio co-partnership
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
LA II GROUP, an Ohio general partnership
By: RAMCO LEWIS ALEXIS ASSOCIATES,
a Michigan general partnership,
its Partner
By: /s/ Bruce Gershenson
-------------------------------
Bruce Gershenson
Partner
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MICHIGAN SHOPPING CENTER VENTURES
II LIMITED PARTNERSHIP, a Michigan
limited partnership
By: RAMCO L & W PARTNERS
a Michigan co-partnership,
its General Partner
By: RAMCO CP, a Michigan
co-partnership, its Partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO CANTON CO.,
a Delaware general partnership
By: FORD SHELDON PLAZA COMPANY,
a Michigan limited partnership, its Partner
By: /s/ Bruce Gershenson
------------------------------------
Bruce Gershenson
General Partner
RAMCO FRASER DEVELOPMENT
COMPANY, a Michigan co-partnership
By: /s/ Bruce Gershenson
-----------------------------------------
Bruce Gershenson
Partner
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RAMCO JACKSON DELAWARE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: RAMCO JACKSON, INC.,
a Michigan corporation,
its General Partner
By: /s/ Bruce Gershenson
--------------------------------
Bruce Gershenson
Vice President
RAMCO KENTWOOD ASSOCIATES
a Michigan co-partnership
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO LANSING ASSOCIATES,
a Michigan co-partnership
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO LAPEER ASSOCIATES LIMITED
PARTNERSHIP, a Michigan limited partnership
By: RAMCO LAPEER, INC., a Michigan
corporation, its General Partner
By: /s/ Bruce Gershenson
--------------------------------
Bruce Gershenson
Vice President
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RAMCO NOVI I CO.,
a Delaware general partnership
By: WEST OAKS DEVELOPMENT
COMPANY, a Michigan co-partnership,
its Partner
By: /s/ Bruce Gershenson
-----------------------------------
Bruce Gershenson
Partner
RAMCO NOVI II CO.,
a Delaware general partnership
By: RAMCO NOVI DEVELOPMENT
ASSOCIATES LIMITED PARTNERSHIP,
a Michigan limited partnership, its Partner
By: RAMCO NOVI DEVELOPMENT
COMPANY, a Michigan
co-partnership, its General Partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO OAK BROOK SQUARE
ASSOCIATES LIMITED PARTNERSHIP,
a Michigan limited partnership
By: RAMCO OAK BROOK SQUARE, INC.,
a Michigan corporation,
its General Partner
By: /s/ Bruce Gershenson
---------------------------------
Bruce Gershenson
Vice President
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RAMCO ORION CO.,
a Delaware general partnership
By: W & G REALTY COMPANY,
a Michigan co-partnership, its Partner
By: /s/ Bruce Gershenson
--------------------------------------
Bruce Gershenson
Partner
RAMCO ROSEVILLE CO.,
a Delaware general partnership
By: ROSEVILLE PLAZA LIMITED
PARTNERSHIP
By: RAMCO VENTURES, a Michigan
co-partnership, its General Partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO SINGER ASSOCIATES LIMITED
PARTNERSHIP, an Ohio limited partnership
By: RAMCO TROY ASSOCIATES,
a Michigan co-partnership, its
General Partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
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RAMCO SOUTHFIELD CO.,
a Delaware general partnership
By: SOUTHFIELD PLAZA LIMITED
PARTNERSHIP, a Michigan
limited partnership, its Partner
By: RAMCO VENTURES, a Michigan
co-partnership, its General Partner
By: /s/ Bruce Gershenson
-----------------------------------
Bruce Gershenson
Partner
RAMCO STERLING MALL CO.,
a Delaware general partnership
By: STERLING MALL ASSOCIATES
LIMITED PARTNERSHIP,
a Michigan limited partnership, its Partner
By: RAMCO CONSUMER MALL
ASSOCIATES LIMITED
PARTNERSHIP, a Michigan limited
partnership, its General Partner
By: /s/ Bruce Gershenson
-----------------------------------
Bruce Gershenson
General Partner
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SOUTHFIELD PLAZA LIMITED
PARTNERSHIP, a Michigan limited partnership
By: RAMCO VENTURES, a Michigan general
partnership, its General Partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
SPRING MEADOWS SHOPPING CENTER
ASSOCIATES, an Ohio general partnership
By: RAMCO SPRING MEADOWS
ASSOCIATES, a Michigan co-partnership,
its Partner
By: /s/ Bruce Gershenson
--------------------------------------
Bruce Gershenson
Partner
WEST ALLIS SHOPPING CENTER
ASSOCIATES, a Wisconsin general partnership
By: RAMCO ALLIS DEVELOPMENT
COMPANY, a Michigan co-partnership,
its Partner
By: /s/ Bruce Gershenson
-----------------------------------
Bruce Gershenson
Partner
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RAMCO SOUTH NAPLES DEVELOPMENT,
a Florida general partnership
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner
RAMCO STERLING STRIP CO.,
a Delaware general partnership
By: KMW STERLING DEVELOPMENT COMPANY,
a Michigan co-partnership, its
partner
By: /s/ Bruce Gershenson
--------------------------
Bruce Gershenson
Partner
RAMCO TEL-TWELVE CO.,
a Delaware general partnership
By: TEL-TWELVE MALL ASSOCIATES
LIMITED PARTNERSHIP,
a Michigan limited partnership,
its partner
By: /s/ Bruce Gershenson
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Bruce Gershenson
Partner