AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 13, 1996
REGISTRATION NO. 333-
=========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
GRAND COURT LIFESTYLES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 8059
-------- ----
(State or other jurisdiction of (Primary standard industrial
incorporation or organization) classification code number)
22-3423087
----------
(I.R.S.employer
identification number)
-----------------
2650 N. Military Trail
Suite 350
Boca Raton, Florida 33431
(407) 997-0323
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
------------------------------
John W. Luciani, III, Executive Vice President
Grand Court Lifestyles, Inc.
2650 N. Military Trail
Suite 350
Boca Raton, Florida 33431
(407) 997-0323
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------------------
Copies to:
Steven L. Wasserman, Esq.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
(212) 603-2000
Approximate date of commencement of proposed distribution to
the public: As promptly as practicable after the effective date
of this registration statement.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box: [ ]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act of
1933, please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering: [ ] ____________
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering: [ ] ____________
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box: [ ]
_______________
CALCULATION OF REGISTRATION FEE
================================================================
TITLE
OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE(1) PRICE(1) FEE
------------------------------------------------------------------------
Common Stock,
$.01 par
value per 2,777,778
share shares $18.00 $50,000,004 $17,241.38
========================================================================
(1) Estimated solely for the purpose of computing the registration fee.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
=========================================================================
<PAGE>
GRAND COURT LIFESTYLES, INC.
Registration Statement
on Form S-1
Cross Reference Sheet
Furnished Pursuant to Item 501(b) of Regulation S-K
Form S-1 Item Number and Caption Location in Prospectus
-------------------------------- ----------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus . . Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus . . Inside Front Cover Page;
Outside Back Cover Page
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges . . . . . . Prospectus Summary;
Summary Consolidated
Financial Data; Risk
Factors
4. Use of Proceeds . . . . . . . . Use of Proceeds
5. Determination of Offering
Price . . . . . . . . . . . . Plan of Distribution
6. Dilution . . . . . . . . . . . Dilution
7. Selling Security Holders . . . Principal and Selling
Stockholders
8. Plan of Distribution . . . . . Outside Front Cover Page;
Plan of Distribution
9. Description of Securities
to be Registered . . . . . . . Outside Front Cover Page;
Prospectus Summary;
Description of Capital
Stock
10. Interests of Named Experts
and Counsel . . . . . . . . . . Legal Matters; Experts
11. Information with Respect to
Registrant . . . . . . . . . . Outside Front Cover Page;
Prospectus Summary; Risk
Factors; Use of Proceeds;
Dividend Policy;
Capitalization;
Selected Consolidated
Financial Data;
Management's Discussion and
Analysis of Results of
Operations and Financial
Condition; Business;
Management; Principal and
Selling Stockholders;
Description of Capital
Stock; Consolidated
Financial Statements
12. Disclosures of Commission
Position on Indemnification
for Securities
Act Liabilities . . . . . . . Not Applicable
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 13, 1996
PROSPECTUS
2,777,778 SHARES
GRAND COURT LIFESTYLES, INC.
COMMON STOCK
Grand Court Lifestyles, Inc. (the "Company") is offering, on
a "best-efforts" basis, a maximum of 2,777,778 shares (the
"Maximum Offering") and a minimum of 1,388,889 shares (the
"Minimum Offering") of its Common Stock, $.01 par value ("Common
Stock") at $18.00 per share. Of the maximum number of shares of
Common Stock being offered hereby, 2,500,000 shares are being
offered by the Company and 277,778 shares are being offered by
certain stockholders (the "Selling Stockholders"). The number of
shares to be sold by the Selling Stockholders will equal 10% of
the aggregate number of shares to be sold in this offering. See
"Principal and Selling Stockholders."
Prior to this offering, there has been no public market for
the Company's Common Stock. The offering price for the Common
Stock has been determined arbitrarily by the Company. See "Plan
of Distribution." The Company intends to apply for listing of
the Common Stock on the NASDAQ National Market
AN INVESTMENT IN THE COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
==========================================================================
PROCEEDS
TO SELLING
PRICE TO COMMISSIONS PROCEEDS STOCKHOLDERS
PUBLIC (1)(2) TO COMPANY (2)
--------------------------------------------------------------------------
Per Share......... $18.00 $1.08 $16.92 $16.92
--------------------------------------------------------------------------
Total Minimum(3).. $25,000,002 $1,500,000.12 $21,150,000 $2,350,001.28
--------------------------------------------------------------------------
Total Maximum..... $50,000,004 $3,000,000.24 $42,300,000 $4,700,003.76
==========================================================================
(1) The shares of Common Stock offered hereby will be offered
through brokers and dealers who are members of the National
Association of Securities Dealers, Inc., as sales agents, at
a commission of up to 6% of the price at which shares are
sold to the public. Brokers and dealers also will be paid
due diligence fees and non-accountable expense allowances,
in the aggregate, of up to 1% of the offering price at which
shares are sold to the public. The Company also intends to
offer shares of the Common Stock directly through the
efforts of its officers and directors. No commissions will
be paid by the Company with respect to shares of Common
Stock which it sells to investors through such efforts. See
"Plan of Distribution."
(2) Assuming that a commission is paid with respect to all
shares of Common Stock offered hereby at a rate of 6%, but
before deducting expenses (which include (i) up to 1% of the
gross proceeds of the offering which is payable to
participating brokers and dealers as due diligence fees and
non-accountable expense allowances and (ii) up to 1% of the
gross proceeds of the offering payable as wholesalers or
finders fees), estimated at $1,860,000 if the Total Minimum
is sold and $2,360,000 if the Total Maximum is sold. All
other expenses of the Offering will be paid by the Company,
except that the Selling Stockholders will pay commissions,
due diligence fees and non-accountable expense allowances
and wholesalers or finders fees with respect to shares sold
by them.
(3) Until at least 1,388,889 shares of Common Stock are sold,
the proceeds of the offering will be held in escrow by First
Union National Bank of North Carolina. If at least
1,388,889 shares of Common Stock are not sold within 60 days
from the date of this Prospectus (subject to an extension of
up to 60 days at the sole discretion of the Company), such
proceeds will be returned to subscribers, without interest
or deductions.
------------------------------
The shares of Common Stock are offered subject to prior
sale, when, as and if delivered and accepted by the Company and
subject to certain other conditions. The Company reserves the
right to withdraw, cancel or modify said offer and to reject
orders in whole or in part.
------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed information and the consolidated financial
statements, including the notes thereto, appearing elsewhere in
this Prospectus. Unless the context otherwise requires, (i) all
references herein to the "Company" include the Company, its
subsidiaries and its predecessors taken as a whole, and (ii) all
references herein to a "fiscal" year refer to the fiscal year
beginning on February 1 of that year (for example, "fiscal 1995"
refers to the fiscal year beginning on February 1, 1995). All
share and per share data has been restated to give effect to a
1084.1-for-1 stock split which will occur upon the closing of the
Offering. This Prospectus contains certain forward-looking
statements which involve certain risks and uncertainties. The
Company's actual results could differ materially from the results
anticipated in these forward-looking statements as a result of
the factors set forth under "Risk Factors" and elsewhere in this
Prospectus.
THE COMPANY
Grand Court Lifestyles, Inc. (the "Company") is one of the
largest operators of adult living communities in the United
States, operating communities offering both independent- and
assisted-living services. The Company currently operates 30
adult living communities containing 4,350 apartment units in 11
states in the Sun Belt and the Midwest. The Company, a fully
integrated provider of adult living accommodations and services,
acquires, finances, develops and manages adult living
communities. The Company's operating objective is to provide
high-quality, personalized living services to senior residents,
primarily persons over the age of 75.
The long-term care industry encompasses a broad range of
services and accommodations that are provided primarily to
seniors. Services are provided in a variety of settings ranging
from home health care to adult living communities to nursing
homes. Services offered in adult-living communities include
independent-living services and assisted-living services.
Residents who choose independent-living services typically desire
to be free from the burdens and expense of home ownership, food
shopping and meal preparation while having access to basic
services in a non-institutional community atmosphere.
Independent-living services generally consist of hotel-type
amenities, including three restaurant-style meals per day, social
and recreational activities, housekeeping and laundry services,
transportation to shopping and medical appointments, 24-hour
security and emergency assistance systems. For residents who
desire additional services, assisted-living programs provide more
extensive support services, including assistance with "activities
of daily living", including eating, bathing, dressing, personal
hygiene, ambulating, health monitoring and medication management.
Current demographic trends suggest that demand for both
independent-living and assisted-living services will continue to
grow. According to U.S. Bureau of Census data, the Company's
target market, people over age 75, is one of the fastest growing
segments of the U.S. population and is projected to increase by
more than 32% to 17.1 million between 1990 and 2000. While the
population of seniors grows, other demographic trends suggest
that an increasing number of them will choose adult living
communities as their residences. The median net worth of
householders over age 75 has increased to over $75,000. At the
same time, the number of seniors living alone has increased,
while women who have been the traditional care-givers are more
likely to be working and unable to provide care in the home.
Many seniors find that adult living communities provide them with
a number of services and features that increasingly they are
unable to provide for themselves at home, including security,
nutritious meals and companionship.
Senior management formed the first predecessor of the
Company over 25 years ago and, in the aggregate, have over 80
years of experience in the acquisition, financing, development,
and management of residential real property. Prior to 1986, the
Company acquired, developed, arranged for the sale of interests
in partnerships owning, and in most cases managed, multi-family
properties containing approximately 20,000 apartment units,
primarily in the Sun Belt and the Midwest. Beginning in 1986,
the Company has focused exclusively on adult living communities.
The Company currently operates one of the largest portfolios of
adult living communities in the United States and has become an
experienced provider of both independent- and assisted-living
services. The Company operates 30 adult living communities
containing 4,350 apartment units and has entered into a contract
to acquire one additional existing adult living community
containing 116 units. The Company also operates one nursing
home. The Company believes that its experience in the
acquisition, development and management of adult living
communities positions it to take advantage of social and economic
trends that are projected to increase demand for adult living
services.
The Company has financed the acquisition and development of
the 30 adult living communities that it operates by utilizing
mortgage financing and by arranging for the sale of limited
partnership interests in 34 limited partnerships ("Investing
Partnerships) formed to acquire interests in the 29 other
partnerships that own adult living communities ("Owning
Partnerships"). The Company is the general partner of all but
one of the Owning Partnerships and manages all of the adult
living communities in its portfolio. The Company is also the
general partner of 22 of the 34 Investing Partnerships. As a
result of its financing acquisitions by arranging for the sale of
partnership interests, the Company retains a participation in the
cash flow, sale proceeds and refinancing proceeds of the
properties after certain priority payments to the limited
partners. The Company intends to continue to finance its future
acquisitions of existing adult living communities by utilizing
mortgage financing and by arranging for the sale of partnership
interests. The Company has derived, and it expects to continue
to derive, a substantial portion of its revenues from sales of
partnership interests in partnerships it organizes to finance the
acquisition of existing adult living centers. The Company plans
to continue to acquire existing adult living communities, and
currently plans to acquire between four to eight existing
communities over the next two years. In addition, the Company
has agreed to acquire two adult living communities from existing
Owning Partnerships, and may engage in other similar
transactions. The Company intends to finance these acquisitions
through mortgage financing and the sale of limited partnership
interests in new Investing Partnerships which will own interests
in new Owning Partnerships. The Company is, and will continue to
be, the managing general partner of the new Owning Partnerships
that own communities acquired in this manner.
The Company has instituted a development plan pursuant to
which it currently intends to construct between 18 and 24 adult
living communities during the next two years containing between
2,268 and 3,458 apartment units. The Company plans to own or
operate pursuant to long-term leases or similar arrangements the
adult living communities that will be developed under the plan.
In order to finance the development and construction of such
communities, the Company has obtained a letter of intent from
Fleet Bank to provide up to $40 million for financing the
construction of new adult living communities and the acquisition
of existing communities and has obtained a letter of intent from
Capstone Capital Corporation ("Capstone") to provide up to $39
million for development of up to four adult living communities
that will be operated by the Company pursuant to long-term leases
with Capstone. The Company's development plan contemplates its
first new communities being built in Texas, where, as of June 12,
1996, it owned one site and held options to acquire seven
additional sites. The Company generally plans to concentrate on
developing projects in only a limited number of states at any
given time. The Company believes that this focus will allow it
to realize certain efficiencies in the development and management
of communities.
The Company's development plan is based upon a "prototype"
adult living community that it has designed. The prototype
incorporates attributes of the various facilities managed by the
Company, which it believes appeal to the elderly. The prototype
has been designed to be built in two sizes: one containing 126
apartment units and the other 142 apartment units. In all other
respects, the two sizes of the prototype are virtually identical
and both will be located on sites of up to seven acres. The
Company believes that its development prototype is larger than
most assisted-living facilities, which typically range from 40 to
80 units. The Company believes that the greater number of units
will allow the Company to achieve economies of scale in
operations, resulting in lower operating costs per unit, without
sacrificing quality of service. Each community will offer
residents a choice between independent-living and assisted-living
services. As a result, the market for each facility will be
broader than for facilities that offer only either independent-
living or assisted-living services. Due to licensing
requirements and the expense and difficulty of converting
existing independent-living units to assisted-living units,
independent-living and assisted-living units generally are not
interchangeable. However, the Company's prototype is designed to
allow, at any time, for conversion of units, at minimum expense,
for use as either independent-living or assisted-living units.
Each community therefore may adjust its mix of independent-living
and assisted-living units as the market or existing residents
demand. The Company believes that part of the appeal of this
type of community is that residents will be able to "age in
place" with the knowledge that they need not move to another
facility if they require assistance with "activities of daily
living." The Company believes that the ability to retain
residents by offering them higher levels of services will result
in stable occupancy with enhanced revenue streams. The Company
believes that the common areas and amenities offered by its
prototype represent the state of the art for independent-living
facilities and are superior to those offered by smaller
independent-living facilities or by most assisted-living
facilities. The Company believes that this will make its
prototype adult living communities attractive to both
independent-living residents who foresee their future need for
assisted-living services and residents who initially seek
assisted-living services.
The Company believes that management and marketing are
critical to the success of an adult living community. In order
to attain high occupancy rates at newly developed properties, the
Company plans to continue its marketing program which has
resulted in an average occupancy rate at May 31, 1996 at its
existing adult living communities of approximately 93%. In
addition, the Company plans to use the common facility design of
its prototype and its "The Grand Court" trademarked name to
promote recognition of its properties nationally. The Company
focuses exclusively on "Private-pay" residents who pay for
housing or related services out of their own funds, rather than
relying on the few states that have enacted legislation which
enables assisted-living facilities to receive Medicaid funding
similar to funding generally provided to skilled nursing
facilities. The Company believes this "Private-pay" focus will
allow the Company to increase rental revenues as demographic
pressure increases demand for adult living facilities and to
avoid potential financial difficulties it might encounter if it
were dependent on Medicaid or other reimbursement programs that
may be scaled back as a result of health care reform, budget
deficit reduction or other pending or future state or Federal
government initiatives.
Grand Court Lifestyles, Inc. is a Delaware corporation
formed in 1996 to consolidate substantially all of the assets of
its predecessors, J&B Management Company, Leisure Centers, Inc.,
and their affiliates. Unless the context otherwise indicates,
all references to the Company include Grand Court Lifestyles
Inc., its subsidiaries and predecessors. The Company's principal
executive offices are located at 2650 N. Military Trail, Suite
350, Boca Raton, Florida 33431 and its telephone number is
(407) 997-0323.
THE OFFERING
Common Stock to be sold by
the Company . . . . .
Minimum offering . . 1,250,000 shares
Maximum offering . . 2,500,000 shares
Common Stock to be sold by
Selling Stockholders
Minimum offering . . 138,889 shares(1)
Maximum offering . . 277,778 shares(1)
Common Stock outstanding before
this offering . . . . 10,000,000 shares
Total Common Stock to be outstanding
after this offering assuming the
minimum number of shares of
Common Stock
are sold(2) . . . . . 11,250,000 shares
Total Common Stock to be outstanding
after this offering assuming the
maximum number of shares of
Common Stock are
sold(2) . . . . . . . 12,500,000 shares
Use of proceeds . . . . The net proceeds of the Offering to
be received by the Company will be
used (i) to fund a portion of the
costs of developing adult living
communities and (ii) for working
capital. See "Use of Proceeds."
(1) The number of shares to be sold by the Selling Stockholders
will equal 10% of the aggregate number of shares to be
sold in this offering.
(2) Excludes 1,250,000 shares reserved for issuance pursuant to
the Company's stock option plans. As of the date hereof,
there were not any options granted under the Company's
stock option plans. See "Management - Stock Plans".
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data and other data)
The summary consolidated financial data have been taken or
derived from, and should be read in conjunction with, the
Company's consolidated financial statements and the related notes
thereto, and the capitalization data included elsewhere in this
Prospectus. See "Capitalization" and "Management's Discussion
and Analysis of Results of Operations and Financial Condition."
YEARS ENDED JANUARY 31,
----------------------------------------------
1992 1993 1994
---- ---- ----
STATEMENT OF
OPERATIONS DATA:
Revenues:
Sales . . . . . . $ 23,088 $ 24,654 $ 29,461
Deferred profit
earned . . . . . 253 792 6,668
Interest income . 25,584 13,209 13,315
Property management fees
and other income . 449 584 4,079
-------- -------- --------
49,374 39,239 53,523
-------- -------- --------
Costs and expenses:
Cost of sales . . 15,983 14,685 26,548
Selling . . . . . 6,256 7,027 6,706
Interest . . . . 14,021 11,874 10,991
General and administrative 5,836 5,617 5,226
Officers' Compensation(1) 1,200 1,200 1,200
Depreciation and amortization 412 975 1,433
-------- -------- --------
43,708 41,378 52,104
-------- -------- --------
Net income (loss) . 5,666 (2,139) 1,419
Pro-forma income taxes
(benefit)(2) . . 2,266 (856) 568
-------- -------- --------
Pro-forma net income
(loss)(2) . . . . $ 3,400 $ (1,283) $ 851
======== ======== ========
Pro-forma earnings (loss) per
common share(2) . $ .34 $ (.13) $ .09
======== ======== ========
Weighted average common
shares used . . . 10,000 10,000 10,000
======== ======== ========
OTHER DATA:
Adult living communities
operated (end of period) 8 14 18
======== ======== ========
Number of units (end of
period) . . . . 1,503 2,336 2,834
======== ========= ========
Average occupancy
percentage . . 82.1% 90.6% 90.4%
======== ========= ========
1995 1996
---- ----
STATEMENT OF
OPERATIONS DATA:
Revenues:
Sales . . . . . . $ 29,000 $ 41,407
Deferred profit
earned . . . . . 3,518 9,140
Interest income . 9,503 12,689
Property management fees
and other income . 4,278 5,075
-------- --------
. . 46,299 68,311
-------- --------
Costs and expenses:
Cost of sales . . 21,249 27,112
Selling . . . . . 6,002 7,664
Interest . . . . 13,610 15,808
General and administrative 6,450 7,871
Officers' Compensation(1) 1,200 1,200
Depreciation and amortization 2,290 2,620
-------- --------
50,801 62,275
-------- --------
Net income (loss) . (4,502) 6,036
Pro-forma income taxes
(benefit)(2) . . (1,801) 2,414
-------- --------
Pro-forma net income
(loss)(2) . . . . $ (2,701) $ 3,622
======== ========
Pro-forma earnings (loss) per
common share(2) . $ (.27) $ .36
======== ========
Weighted average common
shares used . . . 10,000 10,000
======== ========
OTHER DATA:
Adult living communities
operated (end of period) 25 28
======== ========
Number of units (end of
period) . . . . 3,683 4,164
======== ========
Average occupancy
percentage . . 89.3% 94.4%
======== ========
<TABLE>
Year ended Year ended
January 31, 1996 January 31, 1996
---------------- ----------------
As of January 31, Minimum Maximum
----------------------------- ------- -------
1992 1993 1994 1995 Actual Adjusted(3) Actual Adjusted(3)
---- ---- ---- ---- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet
Data:
Cash and cash
equivalents . . $3,477 $6,455 $9,335 $10,950 $17,961 $37,301 $17,961 $58,001
Notes and
receivables-net 230,760 234,115 227,411 220,014 223,736 223,736 223,736 223,736
Total assets 241,691 251,118 249,203 249,047 260,742 280,082 260,742 300,782
Total
liabilities . . 191,234 203,990 211,647 217,879 225,238 225,238 225,238 225,238
Stockholders'
equity . . . . 50,457 47,128 37,556 31,168 35,504 54,844 35,504 75,544
</TABLE>
------------------
(1) John Luciani and Bernard M. Rodin, the Chairman of the Board
and President, respectively, of the Company received
dividends and distributions from the Company's predecessors
but did not receive compensation. Officers' Compensation is
based upon the aggregate compensation currently received by
such officers. See "Management."
(2) The Company's predecessors were Subchapter S corporations and
a partnership. The pro forma statement of operations data
reflects provisions for federal and state income taxes as if
the Company had been subject to federal and state income
taxation as a C corporation during each of the periods
presented.
(3) "As Adjusted" amounts give effect to the application by the
Company of its net proceeds of this offering (based upon an
assumed initial public offering price of $18.00 per share,
after deducting commissions and other offering expenses
payable by the Company) if both the minimum and maximum
number of shares of Common Stock are sold. See
"Capitalization."
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby
should consider carefully the factors set forth below, as well as
other information contained in this Prospectus, before making a
decision to purchase the Common Stock offered hereby.
POTENTIAL FOR OPERATING LOSSES
The Company has begun developing new adult living
communities. The Company anticipates that the construction of
each community will require at least 12 months and expects each
newly constructed community to incur start-up losses for at least
nine months after commencing operations. In addition, during the
past ten years the Company's revenues have been derived
principally from arranging for the sale of partnership interests
to finance the acquisition of existing adult living communities.
Competition to acquire such communities has intensified, and
there can be no assurance that the Company will be able to
acquire such communities on terms favorable enough to offset the
start-up losses associated with newly developed communities and
the costs and cash requirements arising from the Company's
overhead and existing debt and guaranty obligations. Such
factors could cause the Company to incur operating losses until,
at least, its newly constructed communities are completed, leased
up and begin generating positive cash flow. If the Company
incurs operating losses, this could have a material adverse
effect on the Company's business, operating results and financial
condition and the market price of the shares of Common Stock.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations" and
"- Liquidity and Capital Resources" and "Business - Growth
Strategy."
DEVELOPMENT DELAYS AND COST OVERRUNS
The Company currently expects to begin construction of
between 18 and 24 new adult living communities during the next
two years. There can be no assurance that the Company will not
suffer delays in its development program, which could adversely
affect the Company's growth. To date, the Company has not opened
any newly developed adult living communities. Development of
adult living communities can be delayed or precluded by various
zoning, healthcare licensing and other applicable governmental
regulations and restrictions. Real estate development projects
generally are subject to various risks, including permitting,
licensing and construction delays, that may result in
construction cost overruns and longer periods of operating
losses. The Company intends to rely on third-party general
contractors to construct new communities. There can be no
assurance that the Company will not experience difficulties in
working with general contractors and subcontractors, any of which
difficulties also could result in increased construction costs
and delays. Furthermore, project development is subject to a
number of contingencies over which the Company will have little
control and that may adversely affect project cost and completion
time, including inability to obtain construction financing,
shortages of or the inability to obtain labor or materials, the
inability of the general contractors or subcontractors to perform
under their contracts, strikes, adverse weather conditions,
delays in property lease-ups and changes in applicable laws or
regulations or in the method of applying such laws and
regulations. If the Company's development schedule is delayed,
the Company's business, operating results and financial condition
could be adversely affected. See "Business - Growth Strategy"
and " - Operations."
SUBSTANTIAL DEBT OBLIGATIONS OF THE COMPANY
At January 31, 1996 the Company had approximately $140
million principal amount of debt ("Total Debt") at an average
interest rate of 11.51% per annum. Of the Total Debt, $78.3
million principal amount were debentures ("Debenture Debt")
issued in ten separate series, secured by notes owed to the
Company by partnerships formed to invest in multifamily housing
(the "Multi-family Notes"), investor notes and limited
partnership interests arising from offerings arranged by the
Company in connection with acquisitions of multi-family housing
(the "Purchase Note Collateral"). The Debenture Debt has an
average interest rate of 11.95% per annum and has maturities
ranging from 1996 through 2002. During the fiscal year ended
January 31, 1996, total interest expense with respect to
Debenture Debt was approximately $8.7 million, the Purchase Note
Collateral produced approximately $3.0 million of interest and
related payments to the Company, which was approximately $5.7
million less than the amount required to pay interest on the
Debenture Debt. The Company paid the shortfall from cash
generated by its operations. There can be no assurance that
amounts received with respect to the Purchase Note Collateral
will be sufficient to pay the Company's future debt service
obligations with respect to the Debenture Debt. Several of the
Multi-family Notes have reached their final maturity dates and
these final maturity dates have been extended by the Company.
The Company may elect to extend maturities of other Multi-family
Notes.
Of the Company's Total Debt, an additional $18.9 million
principal amount was unsecured, having an average interest rate
of 12.6% per annum ("Unsecured Debt") and an additional $12
million of such debt is mortgage debt ("Mortgage Debt") with an
average interest rate of 10.6% per annum. The Company incurred
the Mortgage Debt, which is secured by adult living communities,
in order to facilitate the acquisition financing for such
communities. At January 31, 1996, the Company had approximately
$30 million principal amount of debt ("Investor Note Debt")
secured by promissory notes from investors in offerings of
limited partnership interests, which debt has an average interest
rate of 10.7% per annum. In each of the last five years, the
collection rate with respect to such investor notes has exceeded
99% of the principal amount thereof that became due and such
collections have been sufficient to pay interest and principal
with respect to the Company's related Investor Note Debt. The
Company intends to continue to incur Investor Note Debt,
utilizing as collateral investor notes generated by future sales
of limited partnership interests in Investing Partnerships formed
in connection with acquisitions of existing adult living
communities. Although the Company currently does not anticipate
incurring additional Debenture Debt or Unsecured Debt, there can
be no assurance that this will be the case. For example, the
Company may incur additional Debenture Debt or Unsecured Debt as
a means of refinancing its existing debt or for working capital
purposes. See "Management's Discussion of Results of Operations
and Financial Condition" and Note 4 of Notes to Consolidated
Financial Statements.
DIFFICULTIES OF MANAGING RAPID EXPANSION
The Company will pursue an aggressive expansion program, and
it expects that its rate of growth will increase as it implements
its development program for new adult living communities. The
Company's success will depend in large part on identifying
suitable development opportunities, and its ability to pursue
such opportunities, complete development, and lease up and
effectively operate its adult-living communities. The Company's
growth has placed a significant burden on the Company's
management and operating personnel. The Company's ability to
manage its growth effectively will require it to continue to
attract, train, motivate, manage and retain key employees. If
the Company is unable to manage its growth effectively, its
business, operating results and financial condition could be
adversely affected. See "Business - Growth Strategy" and
"Management - Directors and Executive Officers."
PARTNERSHIP OFFERINGS
The Company has financed the acquisition of existing adult
living communities it operates by arranging for the private
placement of limited partnership interests in Investing
Partnerships and intends to continue this practice for all of its
future acquisitions of existing adult living communities. The
limited partners typically agree to pay their capital
contributions over a five-year period. Past offerings have, and
it is anticipated that future offerings will, include a guaranty
that the limited partners will receive distributions during each
of the first five years of their investment equal to between 11%
to 12% of their then paid-in capital. The Company is required to
pay to limited partners any part of such guaranteed return not
paid from cash flow from the related property. During the fiscal
year ended January 31, 1996, the Company paid approximately
$905,000 with respect to its guaranteed return obligations. The
Company anticipates that for at least the next two years, the
guaranteed return obligations for certain existing partnerships
will exceed the cash flow generated by the related properties,
which will result in the need to utilize cash generated by the
Company to pay limited partners their guaranteed return. The
Company will attempt to structure future offerings by Investing
Partnerships to minimize the likelihood that it will be required
to utilize the cash it generates to pay limited partners their
guaranteed returns, but there can be no assurance that this will
be the case. In the past, limited partners have been allowed to
prepay capital contributions. These prepayments reduce the
recorded value of the Company's note receivables and reduce
interest income received by the Company. Pursuant to the terms
of offerings, the Company, as the general partner of each
Investing Partnership, has the option not to, and may not accept,
future prepayments by limited partners of capital contributions.
In addition, by financing the acquisition of existing adult
living communities through, and acting as the general partner of,
partnerships, the potential exists for claims by limited partners
for violations of the terms of the partnership or guaranty
agreements and of applicable federal and state securities and
blue sky laws and regulations. See "Business - Partnership
Offerings."
PROPERTY FINANCING
The adult living communities currently operated by the
Company are generally encumbered with mortgage financing. While
these mortgage loans are obligations of the respective
partnerships that own the communities rather than direct
obligations of the Company, the Company typically provides a
guaranty of certain obligations under the mortgages including,
for example, any costs incurred for the correction of hazardous
environmental conditions. The debt service payments on such
mortgage debt reduces the cash flow available for distribution by
partnerships to limited partners to whom the Company typically
guarantees an annual distribution of between 11% and 12% of their
paid-in capital during the first five years of any partnership,
to the extent not paid from cash flow from the related property.
The Company anticipates that it will continue to finance its
future acquisitions of existing adult living communities through
mortgage financing and partnership offerings. The Company
intends to finance its development of adult living communities
through mortgage financing and other types of financing,
including long-term operating leases arising through
sale/leaseback transactions. The financing of Company-developed
communities will be direct obligations of the Company and,
accordingly, the amount of mortgage indebtedness is expected to
increase and the Company expects to have substantial debt service
and annual lease payment requirements in the future as the
Company pursues its growth strategy. As a result, a substantial
portion of the Company's cash flow will be devoted to debt
service and fixed lease payments. There can be no assurance that
the Company will generate sufficient cash flow from operations to
pay its interest and principal obligations on its mortgage debt
or to make its lease payments. In addition, the Company arranged
for the sale of limited partnership interests in two partnerships
organized to make second mortgage loans to the Company to fund
approximately 20% of the costs of developing three new adult
living communities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation - Liquidity and
Capital Resources," "Business - Properties," " - Partnership
Offerings" and Note 2 of Notes to the Company's Consolidated
Financial Statements.
RIGHT OF PARTNERSHIPS TO TERMINATE MANAGEMENT CONTRACTS
All of the adult living communities operated by the Company
and the nursing home operated by the Company are managed by the
Company pursuant to written management contracts, which generally
have a five year term coterminous with the Company's guaranty of
annual distributions to limited partners. This five-year
guaranty obligation has terminated for four of the 34 Investing
Partnerships. After the initial five year term, the management
contracts are automatically renewed each year, but are cancelable
on 30 to 60 days notice at the election of either the Company or
the Owning Partnership. Action can be taken in each partnership
by a majority in interest of partners on such major matters as
the removal of the general partners, the request for or approval
or disapproval of a sale of a property owned by a partnership or
other significant actions affecting the properties or the
partnership. The Company is the general partner of 28 of the 29
Owning Partnerships that own the adult living communities and the
nursing home operated by the Company. The Company is also the
general partner of 22 of the 34 Investing Partnerships formed to
acquire 98% to 99% of the equity interests in said Owning
Partnerships. In these cases, termination of the management
contracts after their initial five-year terms generally would
require removal of the Company as general partner of the Owning
and/or Investing Partnership. Removing the Company as the
general partner of an Investing Partnership requires the vote of
a majority of the holders of limited partner interest and would
result in loss of the fee income under those contracts. See
"- Conflicts of Interest" and "Business - Partnership Offerings."
CONFLICTS OF INTEREST
Messrs. Luciani and Rodin, the Chairman of the Board and
President of the Company, respectively, and entities controlled
by them serve as general partners of partnerships directly and
indirectly owning multi-family properties and on account of such
general partner status have personal liability for recourse
partnership obligations and own small equity ownership interests
in the partnerships. The Company holds notes, aggregating $163.6
million, that are secured by the limited partnership interests in
such partnerships. These individuals have provided personal
guarantees in certain circumstances to obtain mortgage financing
for certain adult living communities operated by the Company and
for certain of the Company's Investor Note Debt, and the
obligations thereunder may continue. In addition, Messrs.
Luciani and Rodin and certain employees will devote a portion of
their time to overseeing the third-party managers of multi-family
properties and one adult living community in which Messrs.
Luciani and Rodin have financial interests but the Company does
not. These activities, ownership interests and general partner
interests create actual or potential conflicts of interest on the
part of these officers. See "Certain Transactions" and Note 10
of Notes to the Company's Consolidated Financial Statements.
The Company is the managing general partner for 28 of the 29
Owning Partnerships which own the 30 adult living communities and
one nursing home which the Company operates. The Company also is
the general partner for 22 of the 34 Investing Partnerships that
own 99% partnership interests in these owning partnerships. In
addition, the Company is the managing agent for all of the
Company's 30 adult living communities and one nursing home. The
Company has financed the acquisition of adult living communities
through the sales of limited partnership interests in the
investing partnerships. By serving in all of these capacities,
the Company may have conflicts of interest in that it has both a
duty to act in the best interests of partners of various
partnerships, including the limited partners of the Investing
Partnerships, and the desire to maximize earnings for the
Company's stockholders in the operation of such adult living
communities and nursing home. See "Business - Partnership
Offerings" and Note 10 of Notes to the Company's Consolidated
Financial Statements.
The Company has agreed to acquire two adult living
communities from existing Owning Partnerships. The Company will
finance these acquisitions using mortgage financing and by
arranging for the sale of limited partnership interests in new
Investing Partnerships. The Company has obtained the consent to
these transactions of the limited partners in the existing
Investing Partnerships that own interests in the Owning
Partnerships from which the communities will be acquired. The
Company may engage in similar transactions in the future.
Potential conflicts of interest may exist because of the
Company's roles as general partner of each of the selling and
acquiring Owning Partnerships and of each of the acquiring
Investing Partnerships and, in some cases, the selling Investing
Partnerships.
The Company also may have a conflict of interest in that
certain of the adult living communities operated by the Company
may face direct competition from other communities operated by
the Company. Decisions made by the Company to benefit one such
community may not be beneficial to the other, thus exposing the
Company to a claim of a breach of fiduciary duty by limited
partners. See "Business - Communities."
DEPENDENCE ON SENIOR MANAGEMENT AND SKILLED PERSONNEL
The Company depends, and will continue to depend, on the
service of its principal executive officers. The loss of the
services of one or more of them could have a material adverse
effect on the Company's operating results and financial
condition. Certain of the Company's officers or entities
controlled by them are general partners of partnerships that own
or invest in real property and they may be required to devote
time to such partnerships. The Company also depends on its
ability to attract and retain management personnel who will be
responsible for the day-to-day operations of each of its adult
living communities. If the Company is unable to hire qualified
management to operate such communities, the Company's business,
operating results and financial condition could be adversely
affected. See " - Conflicts of Interest" and "Management."
COMPETITION
The long-term care industry is highly competitive, and the
Company believes that the assisted-living segment, in particular,
will become even more competitive in the future. The Company
will be competing with numerous other companies providing similar
long-term care alternatives such as home healthcare agencies,
community-based service programs, adult living communities and
convalescent centers. The Company expects that, as the provision
of assisted-living services receives increased attention and the
number of states providing reimbursement for assisted-living
rises, competition will intensify as a result of new market
entrants. The Company also faces potential competition from
skilled-nursing facilities that provide long-term care services.
Moreover, in implementing its growth strategy, the Company
expects to face competition in its efforts to develop and acquire
adult living communities. Some of the Company's present and
potential competitors are significantly larger and have, or may
obtain, greater financial resources than those of the Company.
Consequently, there can be no assurance that the Company will not
encounter increased competition in the future that could limit
its ability to attract residents or expand its business and
therefore have a material adverse effect on its business,
operating results and financial condition. See "Business -
Competition."
STAFFING AND LABOR COSTS
The Company competes with other providers of independent-
and assisted-living services with respect to attracting and
retaining qualified personnel. The Company also is dependent
upon the available labor pool of employees. A shortage of
trained or other personnel may require the Company to enhance its
wage and benefits package in order to compete. No assurance can
be given that the Company's labor costs will not increase, or
that if they do increase, they can be matched by corresponding
increases in rental or management revenue. Any significant
failure by the Company to attract and retain qualified employees,
to control its labor costs or to match increases in its labor
expenses with corresponding increases in revenues could have a
material adverse effect on the Company's business, operating
results and financial condition. See "Business - Employees."
DEPENDENCE ON ATTRACTING SENIORS WITH SUFFICIENT RESOURCES TO PAY
The Company currently, and for the foreseeable future,
expects to rely primarily on its residents' ability to pay the
Company's fees from their own or familial financial resources.
Inflation or other circumstances that adversely affect the
ability of seniors to pay for the Company's services could have
an adverse effect on the Company. If the Company encounters
difficulty in attracting seniors with adequate resources to pay
for its services, its business, operating results and financial
condition could be adversely affected. See "Business -
Operations."
GOVERNMENT REGULATION
Healthcare is heavily regulated at the Federal, state and
local levels and represents an area of extensive and frequent
regulatory change. Currently no federal rules explicitly define
or regulate independent- or assisted-living communities. A
number of legislative and regulatory initiatives relating to
long-term care are proposed or under study at both the federal
and state levels that, if enacted or adopted, could have an
adverse effect on the Company's business and operating results.
The Company cannot predict whether and to what extent any such
legislative or regulatory initiative will be enacted or adopted,
and therefore cannot assess what effect any current or future
initiative would have on the Company's business and operating
results. Changes in applicable laws and new interpretations of
existing laws can significantly affect the Company's operations,
as well as its revenues and expenses. The Company's adult living
communities are subject to varying degrees of regulation and
licensing by local and state health and social service agencies
and other regulatory authorities specific to their location.
While regulations and licensing requirements often vary
significantly from state to state, they typically relate to fire
safety, sanitation, staff training, staffing levels and living
accommodations such as room size, number of bathrooms and
ventilation, as well as regulatory requirements relating
specifically to certain of the Company's health-related services.
The Company's success will depend in part on its ability to
satisfy such regulations and requirements and to acquire and
maintain any required licenses. Federal, state and local
governments occasionally conduct unannounced investigations,
audits and reviews to determine whether violations of applicable
rules and regulations exist. Devoting management and staff time
and legal resources to such investigations, as well as any
material violation by the Company that is discovered in any such
investigation, audit or review, could have a material adverse
effect on the Company's business and operating results. See
"Business - Growth Strategy" and " - Governmental Regulation."
CONTROL BY CERTAIN STOCKHOLDERS
Each share of Common Stock is entitled to one vote on all
matters submitted to a vote of the holders of the Common Stock.
After giving effect to this Offering, John Luciani and Bernard M.
Rodin will collectively beneficially own shares of Common Stock
representing approximately 88% of the Company's Common Stock if
the Minimum Offering is sold and approximately 78% of the
Company's Common Stock if the Maximum Offering is sold. As a
result, they will maintain control over the election of a
majority of the Company's directors and, thus, over the
operations and business of the Company as a whole. In addition,
such stockholders will have the ability to prevent certain types
of material transactions, including a change of control of the
Company. The control by John Luciani and Bernard M. Rodin over a
substantial majority of the Company's Common Stock may make the
Company a less attractive target for a takeover than it otherwise
might be, or render more difficult or discourage a merger
proposal or a tender offer. See "Principal and Selling
Stockholders."
POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local environmental laws,
ordinances and regulations, a current or previous owner or
operator of real property may be held liable for the costs of
removal or remediation of certain hazardous or toxic substances,
including, without limitation, asbestos-containing materials,
that could be located on, in or under such property. Such laws
and regulations often impose liability whether or not the owner
or operator knows of, or was responsible for, the presence of the
hazardous or toxic substances. The costs of any required
remediation or removal of these substances could be substantial
and the liability of an owner or operator as to any property is
generally not limited under such laws and regulations, and could
exceed the property's value and the aggregate assets of the owner
or operator. The presence of these substances or failure to
remediate such substances properly may also adversely affect the
owner's ability to sell or rent the property, or to borrow using
the property as collateral. Under these laws and regulations, an
owner, operator or any entity who arranges for the disposal of
hazardous or toxic substances, such as asbestos-containing
materials, at a disposal site may also be liable for these costs,
as well as certain other costs, including governmental fines and
injuries to persons or properties. As a result, the presence,
with or without the Company's knowledge, of hazardous or toxic
substances at any property held or operated by the Company could
have an adverse effect on the Company's business, operating
results and financial condition. See "Business - Government
Regulation."
GENERAL REAL ESTATE RISKS
The performance of the Company's adult living communities is
influenced by factors affecting real estate investments,
including the general economic climate and local conditions, such
as an oversupply of, or a reduction in demand for, adult living
communities. Other factors include the attractiveness of
properties to tenants, zoning, rent control, environmental
quality regulations or other regulatory restrictions, competition
from other forms of housing and the ability of the Company to
provide adequate maintenance and insurance and to control
operating costs, including maintenance, insurance premiums and
real estate taxes. Real estate investments also are affected by
such factors as applicable laws, including tax laws, interest
rates and the availability of financing. In addition, real
estate investments are relatively illiquid and, therefore, limit
the ability of the Company to vary its portfolio promptly in
response to changes in economic or other conditions.
RESTRICTIONS IMPOSED BY LAWS BENEFITING DISABLED PERSONS
Under the Americans with Disabilities Act of 1990 (the
"ADA"), all places of public accommodation are required to meet
certain federal requirements related to access and use by
disabled persons. A number of additional Federal, state and
local laws exist which also may require modifications to existing
and planned properties to create access to the properties by
disabled persons. While the Company believes that its properties
are substantially in compliance with present requirements or are
exempt therefrom, if required changes involve a greater
expenditure than anticipated or must be made on a more
accelerated basis than anticipated, additional costs would be
incurred by the Company. Further legislation may impose
additional burdens or restrictions with respect to access by
disabled persons, the costs of compliance with which could be
substantial. See "Business - Government Regulation."
LIABILITY AND INSURANCE
The Company's business entails an inherent risk of
liability. In recent years, participants in the long-term care
industry have become subject to an increasing number of lawsuits
alleging malpractice or related legal claims, many of which seek
large amounts and result in significant legal costs. The Company
expects that from time to time it will be subject to such suits
as a result of the nature of its business. The Company currently
maintains insurance policies in amounts and with such coverage
and deductibles as it deems appropriate, based on the nature and
risks of its business, historical experience and industry
standards. There can be no assurance, however, that claims in
excess of the Company's insurance coverage or claims not covered
by the Company's insurance coverage will not arise. A successful
claim against the Company not covered by, or in excess of, the
Company's insurance could have a material adverse effect on the
Company's operating results and financial condition. Claims
against the Company, regardless of their merit or eventual
outcome, may also have a material adverse effect on the Company's
ability to attract residents or expand its business and would
require management to devote time to matters unrelated to the
operation of the Company's business. In addition, the Company's
insurance policies must be renewed annually, and there can be no
assurance that the Company will be able to obtain liability
insurance coverage in the future or, if available, that such
coverage will be on acceptable terms. See "Business - Legal
Proceedings."
UNILATERAL DETERMINATION OF OFFERING PRICE
The public offering price of the shares was determined
unilaterally by the Company and has not been negotiated by
underwriters or other third parties. Among the factors
considered by the Company in determining the price were the
history of, and the prospects for, the Company and the industry
in which it competes, its past and present operations, its past
and present earnings and the trend of such earnings, the present
state of the Company's development, the general condition of the
securities markets at the time of this offering and the recent
market prices of publicly traded common stocks of comparable
companies. There can be no assurance that the Shares can be
resold at the offering price, if at all. Purchasers of the
Shares will be exposed to a substantial risk of a decline in the
market price of the Common Stock after the offering, if a market
develops. See "Plan of Distribution."
DISCRETIONARY USE OF PROCEEDS
The Company intends to use its net proceeds from the
Offering to finance the development of new adult living
communities and for working capital and general corporate
purposes. The Company's management will, therefore, retain broad
discretion in allocating all of the net proceeds of the Offering.
See "Use of Proceeds."
LACK OF UNDERWRITER
This offering will be made on a "self-underwritten" basis
made under the provisions of Rule 3a4-1 of the Exchange Act. The
Company has never engaged in the public sale of its securities,
and it has no experience in the underwriting of any public
securities offerings. Accordingly, there is no prior experience
from which investors may judge the Company's ability to
consummate this offering. There can be no assurance that the
Company will be successful in selling the shares of Common Stock
offered hereby. See "Plan of Distribution."
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offering, there has been no public market for
the Common Stock and there can be no assurance that an active
trading market will develop or be sustained after the Offering.
The Company intends to apply for listing of the Common Stock on
the NASDAQ National Market. There can be no assurance that the
Common Stock will be approved for listing. After completion of
the Offering, the market price of the Common Stock could be
subject to significant fluctuations in response to various
factors and events, including the liquidity of the market for the
shares of Common Stock, variations in the Company's operating
results, new statutes or regulations or changes in the
interpretation of existing statutes or regulations affecting the
healthcare industry in general or the independent or
assisted-living industry in particular. In addition, the stock
market in recent years has experienced broad price and volume
fluctuations that often have been unrelated to the operating
performance of particular companies. These market fluctuations
also may adversely affect the market price of the shares of
Common Stock. See "Plan of Distribution."
ANTI-TAKEOVER CONSIDERATIONS
The Company's Board of Directors (the "Board of Directors")
has the authority, without action by the stockholders, to issue
up to 1,000,000 shares of Preferred Stock par value $.0001 per
share (the "Preferred Stock"), and to fix the rights and
preferences of such shares. This authority, together with
certain provisions in the Company's Restated Certificate of
Incorporation (the "Certificate") and By-Laws (including
provisions that implement staggered terms for directors, limit
stockholder ability to call a stockholders meeting or to remove
directors and require a two-thirds vote of stockholders for
amendment of certain provisions of the Certificate or approval of
certain business combinations), may delay, deter or prevent a
change in control of the Company, may discourage bids for the
Common Stock at a premium over the market price of the Common
Stock and may adversely affect the market price of, and the
voting and other rights of the holders of, the Common Stock. See
"Description of Capital Stock."
IMMEDIATE AND SUBSTANTIAL DILUTION
The existing stockholders of the Company acquired their
shares of Common Stock at an average cost substantially below the
assumed initial public offering price set forth on the cover page
of this Prospectus. Therefore, purchasers of Common Stock in the
Offering will experience immediate and substantial dilution,
which, assuming an initial public offering price of $18.00 per
share, will be $13.91 per share assuming the Minimum Offering and
$12.66 per share assuming the Maximum Offering. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of shares of Common Stock in
the public market after the Offering or the perception that such
sales could occur could adversely affect the market price of the
Common Stock and the Company's ability to raise equity. Upon
completion of the Offering, the Company will have 11,250,000
shares of Common Stock outstanding assuming the Minimum Offering
and 12,500,000 shares of Common Stock outstanding assuming the
Maximum Offering. Of the shares outstanding after this Offering,
all shares sold in the Offering will be freely tradable without
restriction or limitation under the Securities Act of 1933, as
amended (the "Securities Act"), except for any shares purchased
by "affiliates" of the Company, as such term is defined in Rule
144 promulgated under the Securities Act. The remaining shares
are "restricted securities" within the meaning of Rule 144. Such
restricted securities may be sold subject to the limitations of
Rule 144. Furthermore, the Company intends to register
approximately 1,250,000 shares of Common Stock reserved for
issuance pursuant to the Company's stock option plans. See
"Shares Eligible for Future Sale."
USE OF PROCEEDS
The net proceeds to the Company from the Offering, after
deducting estimated commissions and offering expenses payable by
the Company, are estimated to be approximately $40.0 million if
the Maximum Offering is completed and $19.3 million if the
Minimum Offering is completed. The Company intends to use the
net proceeds to finance the development of new adult living
communities and for working capital and general corporate
purposes. See "Business - Strategy".
Pending the uses outlined above, funds will be placed into
short term investments such as governmental obligations, bank
certificates of deposit, banker's acceptances, repurchase
agreements, short term debt obligations, money market funds, and
interest bearing accounts. The Company will not receive any
proceeds from the sale of any shares by the Selling Stockholders.
DIVIDEND POLICY
The Company does not currently pay dividends on its Common
Stock and does not anticipate paying dividends. It is the
present policy of the Company's Board of Directors to retain
earnings, if any, to finance the expansion of the Company's
business. The payment of dividends in the future will depend on
the results of operations, financial condition, capital
expenditure plans and other cash obligations of the Company and
will be at the sole discretion of the Board of Directors. In
addition, certain provisions of existing, proposed and future
indebtedness of the Company may prohibit or limit the Company's
ability to pay dividends. During fiscal 1994 and fiscal 1995,
the Company's predecessors paid dividends and other distributions
of $1,886,000 and $1,700,000, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources" and "Certain
Transactions."
CAPITALIZATION
The following table sets forth the actual consolidated
capitalization of the Company at January 31, 1996, and as
adjusted to reflect (i) the sale of the minimum and maximum
number of shares of Common Stock by the Company in this offering
and (ii) the application of the estimated net proceeds thereof.
The table should be read in conjunction with the Company's
Consolidated Financial Statements and the related notes thereto
included elsewhere in this Prospectus. See "Use of Proceeds" and
"Management's Discussion and Analysis of Results of Operations
and Financial Condition."
As of January 31, 1996
----------------------
As As
Adjusted Adjusted
Minimum Maximum
Actual Offering Offering
------ -------- --------
(in thousands)
--------------
Bank Debt . . . . . . . . . . . $38,366 $38,366 $38,366
Other debt, principally
debentures . . . . . . . . . . 88,094 88,094 88,094
Stockholders' equity:
Preferred Stock, $.0001 par
value; 1,000,000 shares
authorized; none issued and
outstanding . . . . . . . . -- -- --
Common Stock, $.01 par value;
30,000,000 shares
authorized; 10,000,000 shares
issued and outstanding;
11,250,000 and 12,500,000
shares issued and
outstanding as adjusted for
Minimum Offering and
Maximum Offering,
respectively(1) . . . . . . 100 113 125
Additional paid-in capital . 35,404 54,731 75,419
------ ------ ------
Total stockholders'
equity . . . . . . . . 35,504 54,844 75,544
------ ------ ------
Total capitalization . $161,964 $181,304 $202,004
======== ======== ========
(1) Does not include 1,250,000 shares reserved for issuance
under the Company's stock option plans.
DILUTION
The net tangible book value of the Company's Common Stock at
January 31, 1996 was approximately $26,678,000, or $2.67 per
share. Net tangible book value per share is determined by
dividing the number of outstanding shares of Common Stock into
the net tangible book value of the Company (total net assets of
$35,504,000 less intangible assets $8,826,000). After giving
effect to the Minimum Offering (based upon an assumed initial
public offering price of $18.00 per share, and after deduction
of commissions and estimated offering expenses), the pro forma
net tangible book value of the Common Stock at January 31, 1996
would have been $46,018,000, or $4.09 per share, representing
an immediate increase in pro forma net tangible book value of
$1.42 per share to existing stockholders and an immediate
dilution of $13.91 per share to new investors. After giving
effect to the Maximum Offering (based upon an assumed initial
public offering price of $18.00 per share and after deduction
of commissions and estimated offering expenses), pro forma net
tangible book value of the Common Stock of January 31, 1996
would have been $66,718,000, or $5.34 per share, representing
an immediate increase in pro forma net tangible book value of
$2.67 per share to existing shareholders and an immediate
dilution of $12.66 per share to new investors. The following
table illustrates the immediate per share dilution:
Minimum Maximum
Offering Offering
-------- --------
Assumed initial public offering
price per share . . . . . . . . . $18.00 $18.00
Net tangible book value per
share as of
January 31, 1996 . . . . . . 2.67 2.67
Increase per share attributable
to new investors . . . . . . 1.42 2.67
----- -----
Pro forma net tangible book value
per share after offering . . . . 4.09 5.34
----- -----
Net tangible book value dilution
per share to new investors . . . $13.91 $12.66
====== ======
The following tables summarize, on a pro forma basis at
January 31, 1996, the difference between the number of shares
purchased from the Company, total consideration paid and the
average price paid per share by existing stockholders and new
investors after giving effect to the Minimum Offering and the
Maximum Offering, respectively:
Minimum Offering
----------------
Average
Price
Shares Purchased Total Per
from the Company Consideration Paid Share
---------------- ------------------ -------
Number Percent Amount Percent
------ ------- ------ -------
Selling
Stockholders(1) . 9,861,111 88 $35,504,000 59 $3.60
New investors(1) 1,388,889 12 25,000,000 41 $18.00
---------- --- ----------- ---
Total . . . 11,250,000 100 $60,504,000 100
========== === =========== ===
(1) Upon completion of the Minimum Offering, the Selling
Stockholders will own 9,861,111 shares of Common Stock,
and the new investors will own 1,388,889 shares of
Common Stock, representing 100% of the outstanding
shares of Common Stock.
Maximum Offering
----------------
Average
Shares Purchased Total Price Per
from the Company Consideration Paid Share
---------------- ------------------ -----
Number Percent Amount Percent
------ ------- ------ -------
Selling
Stockholders(1) . . 9,722,222 78 $35,504,000 42 $3.65
New investors(1) . 2,777,778 22 50,000,000 58 $18.00
--------- --- ----------- ---
Total . . . . . . 12,500,000 100 $85,504,000 100
========== === =========== ===
(1) Upon completion of the Maximum Offering, the Selling
Stockholders will own 9,722,222 shares of Common Stock,
and the new investors will own 2,777,778 shares of
Common Stock, representing 100% of the outstanding
shares of Common Stock.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data and other data)
The following selected consolidated financial data, except
as noted herein, have been taken or derived from the Company's
consolidated financial statements and should be read in
conjunction with the consolidated financial statements and the
related notes thereto included herein.
Years Ended January 31,
-----------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
STATEMENT OF
OPERATIONS DATA:
Revenues:
Sales . . . . . .$23,088 $24,654 $29,461 $29,000 $41,407
Deferred profit 253 792 6,668 3,518 9,140
earned . . . .
Interest income . 25,584 13,209 13,315 9,503 12,689
Property
management fees
and other income 449 584 4,079 4,278 5,075
------ ------ ------ ------ ------
49,374 39,239 53,523 46,299 68,311
------ ------ ------ ------ ------
Costs and expenses:
Cost of sales . . 15,983 14,685 26,548 21,249 27,112
Selling . . . . . 6,256 7,027 6,706 6,002 7,664
Interest . . . . 14,021 11,874 10,991 13,610 15,808
General and 5,836 5,617 5,226 6,450 7,871
administrative .
Officers' 1,200 1,200 1,200 1,200 1,200
Compensation(1).
Depreciation and 412 975 1,433 2,290 2,620
amortization . . ------ ------ ------ ------ ------
43,708 41,378 52,104 50,801 62,275
------ ------ ------ ------ ------
Net income (loss) . 5,666 (2,139) 1,419 (4,502) 6,036
Pro-forma income 2,266 (856) 568 (1,801) 2,414
taxes (benefit)(2). ------ -------- ---- -------- ------
Pro-forma net $3,400 $(1,283) $851 $(2,701) $3,622
income (loss)(2) . ====== ======== ===== ======== ======
Pro-forma earnings
(loss) per
common share(2) . $.34 $(.13) $.09 $(.27) $.36
====== ====== ==== ====== ====
Weighted average
common
shares used . . . 10,000 10,000 10,000 10,000 10,000
====== ====== ====== ====== ======
OTHER DATA:
Adult living
communities
operated (end
of period) . . 8 14 18 25 28
====== ====== ====== ====== ======
Number of units
(end of period). 1,503 2,336 2,834 3,683 4,164
====== ====== ====== ====== ======
Average occupancy
percentage . . 82.1% 90.6% 90.4% 89.3% 94.4%
====== ====== ====== ====== ======
As of January 31,
--------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
Balance Sheet Data:
Cash and cash
equivalents . . . . $3,477 $6,455 $9,335 $10,950 $17,961
Notes and
receivables-net . . 230,760 234,115 227,411 220,014 223,736
Total assets . . . . 241,691 251,118 249,203 249,047 260,742
Total liabilities . . 191,234 203,990 211,647 217,879 225,238
Stockholders' equity 50,457 47,128 37,556 31,168 35,504
------------------------
(1) John Luciani and Bernard M. Rodin, the Chairman of the
Board and President, respectively, of the Company received
dividends and distributions from the Company's predecessors
but did not receive compensation. Officers' Compensation
is based upon the aggregate compensation currently received
by such officers. See "Management."
(2) The Company's predecessors were Subchapter S corporations
and a partnership. The pro forma statement of operations
data reflects provisions for federal and state income taxes
as if the Company had been subject to federal and state
income taxation as a C corporation during each of the
periods presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The Company is one of the largest operators of adult living
communities in the United States, operating communities offering
both independent and assisted living services. The Company
currently operates 30 adult living communities containing 4,350
apartment units in 11 states in the Sun Belt and the Mid-West.
The Company is a fully integrated provider of adult living
accommodations and services which acquires, finances, develops
and manages adult living communities. The Company also operates
one 60-bed skilled nursing facility.
Historically, the Company has financed the acquisition and
development of multi-family and adult living properties by
utilizing mortgage financing and by arranging for the sale of
limited partnership interests. The Company is the general
partner of all but one of the partnerships that owns the adult
living communities in the Company s portfolio and the Company
manages all of the adult living communities in its portfolio.
The Company has a participation in the cash flow, sale proceeds
and refinancing proceeds of the properties after certain priority
payments to the limited partners. The Company intends to
continue to finance its future acquisitions of existing adult
living communities by utilizing mortgage financing and by
arranging for the sale of partnership interests, and anticipates
acquiring four to eight such communities during the next two
years.
The Company has adopted a development plan pursuant to
which it intends to construct between 18 and 24 adult living
communities during the next two years containing between 2,268
and 3,408 apartment units. The Company plans to own or operate
pursuant to long-term leases or similar arrangements the adult
living communities that will be developed under the plan. The
Company will use proceeds of this Offering, mortgage financing
and long-term leases or similar arrangements to finance the
development, construction and initial operating costs.
The Company derives its revenues from sales of interests in
adult living real estate limited partnerships, recognition of
deferred profits with respect to such partnerships, interest on
notes received by the Company from such partnerships as part of
the purchase price for the sale of interests, and property
management fees received by the Company:
. Sales. Sales of interests in adult living real estate
partnerships are recognized when the profit on the transaction is
determinable, that is, the collectibility of the sales price is
reasonably assured and the earnings process is virtually
complete. The Company determines the collectibility of the sales
price by evidence supporting the buyers' substantial initial and
continuing investment in the adult living communities as well as
other factors such as age, location and cash flow of the
underlying property.
. Deferred Profit Earned. The Company has deferred profits on
sales of interests in limited partnerships in connection with the
Company's guarantee of cash flow to the limited partners. The
Company has generally guaranteed a 11% to 12% annual return to
the limited partners on cash invested in the respective limited
partnerships for a period of approximately five years after the
date on which limited partners are admitted to the partnership.
The amount of the deferred profit is calculated by determining
the difference between the underlying property's cash flow and
the amount needed to meet the limited partners' future guarantee
and is included in deferred income. Any changes in the deferred
income either due to a passage of time or to a decrease or
increase in the underlying property's cash flow is recorded as
additional income or expense in the year determined. For
properties that do not meet the Company's revenue recognition
policy, the Company accounts for the sales under the installment
method. Under the installment method the gross profit is
determined at the time of sale. The revenue recorded in any
given year would equal the cash collections multiplied by the
gross profit percentage. The Company has deferred all future
income to be recognized on these transactions. Losses on these
properties are recognized immediately upon sale.
Interest Income. The Company has note receivables from
Investing Partnerships which were formed to acquire interests in
Owning Partnerships which own adult living communities. Such
notes generally have interest rates ranging from 11% to 13.875%
per annum and are due in installments over five years from the
date the Investing Partnership acquired its interest in the
Owning Partnership. The notes represent senior indebtedness of
the related limited partnership and are collateralized by
Investing Partnership's interest in the Owning Partnership that
owns the related adult living community. These properties are
generally encumbered by mortgages. The mortgages generally bear
interest at rates ranging from 8% to 9.5% per annum. The
mortgages are generally collateralized by a mortgage lien on the
related adult living communities. Principal and interest payments
on each note are also collateralized by the investor notes
payable to the Investing Partnership to which the limited
partners are admitted.
The Company also has note receivables from limited
partnerships which were formed to acquire controlling interests
in multi-family properties. The notes have maturity dates
ranging from ten to fifteen years from the date the partnership
interests were sold. Several notes have reached their final
maturity dates and these final maturity dates have been extended
by the Company. The notes represent senior indebtedness of the
related limited partnership and are collateralized by a 99%
partnership interest in the partnership that owns the related
multi-family property. These properties are encumbered by
mortgages, which generally bear interest rates ranging from 7% to
12% per annum. The mortgages are collateralized by a mortgage
lien on the related multi-family property. Interest payments on
each note also are collateralized by the investor notes.
Management fees. Property management fees are recognized as
revenue when related services have been performed.
REVENUES
Revenues for the fiscal year ended January 31, 1996
("Fiscal 1995") were $68.3 million compared to $46.3 million for
the year ending January 31, 1995 ("Fiscal 1994"), representing an
increase of $22.0 million or 47%. Revenues for Fiscal 1994 were
$46.3 million compared to $53.5 million for the year ended
January 31, 1994 ("Fiscal 1993"), representing a decrease of $7.2
million or 13.5%.
Sales for Fiscal 1995 were $41.4 million compared to $29.0
million for Fiscal 1994, representing an increase of $12.4
million or 42.7%. The increase is attributable to the sale of
partnership interests relating to six adult living communities in
Fiscal 1995 compared to four in Fiscal 1994. Sales for Fiscal
1994 were $29.0 million compared to $29.5 million for Fiscal
1993, representing a decrease of $500,000 or 1.7%. In both Fiscal
1994 and 1993, the Company arranged for the sale of partnership
interests relating to four adult living communities.
Deferred profit earned increased to $9.1 million in Fiscal
1995 from $3.5 million in Fiscal 1994, representing an increase
of $5.6 million or 160%. The increase in the recognition of
deferred profits earned reflects the realization of profits that
previously were deferred, primarily as a result of increased cash
flows from adult living communities and the refinancing of a
number of adult living communities in March 1996, which resulted
in the return of over $43.0 million of capital to limited
partners and which reduced the Company s obligations with respect
to the guarantee of annual returns to such limited partners.
Deferred profits earned in Fiscal 1994 were $3.5 million compared
to $6.7 million for Fiscal 1993, representing a decrease of $3.2
million or 47.8%. This decrease is principally due to the high
amount of deferred profits earned in Fiscal 1993 because of a
significant increase in the cash flow of a number of adult
living communities in that year as compared to previous years,
thus allowing for the realization of a substantial amount of
deferred income in Fiscal 1993. While cash flow from adult
living communities continued to increase in Fiscal 1994, it did
not increase at the same rate as in Fiscal 1993, resulting in the
realization of less deferred income in Fiscal 1994 than in Fiscal
1993.
Interest income for Fiscal 1995 was $12.6 million compared
to $9.5 million for Fiscal 1994, representing an increase of $3.1
million or 32.6%. Such increase reflects the increased aggregate
interest received on notes from limited partnerships as a result
of an increase in the aggregate principal amount of such notes.
The increase in aggregate principal amount reflects an increase
in the number of existing adult living communities operated by
the Company and in the number of offerings in connection with
acquisitions of adult living communities to six in Fiscal 1995,
compared to four in Fiscal 1994. The increase in interest income
in Fiscal 1995 also reflects an interest payment realized in
connection with a mortgage debt restructuring for a multi-family
property. Interest income for Fiscal 1994 was $9.5 million
compared to $13.3 million for Fiscal 1993, representing a
decrease of $3.8 million or 28.5%. This decrease was primarily
attributable to the continuing decline in the amounts receivable
and collected of investor notes relating to offerings in
connection with acquisitions of multi-family properties (which
decline reflects the Company's discontinuance of multi-family
property acquisitions and offerings after 1986), which investor
note collections were applied as interest payments under their
respective limited partnership note payable to the Company.
Property management fees and other income were $5.1 million
in Fiscal 1995 compared to $4.3 million in Fiscal 1994,
representing an increase of $800,000 or 18.6%. The increase is
attributable to additional properties under management as well as
higher property cash flows for existing properties which
generated increased incentive management fees. Property
management fees and other income increased to $4.3 million in
Fiscal 1994 compared to $4.1 million in Fiscal 1993, representing
an increase of $200,000 or 4.9%. The increase is attributable to
additional properties under management during the period.
COST OF SALES
Cost of sales, which include the cash portion of the
purchase price for properties plus related transaction costs and
expenses, for Fiscal 1995 was $27.1 million compared to $21.2
million in Fiscal 1994, representing an increase of $5.9 million
or 27.8%. The increase is due to the acquisition by the Company
of six properties in Fiscal 1995 with combined purchase prices of
$35 million as compared to the acquisition of four properties in
Fiscal 1994 with combined purchase prices of $22.3 million. The
increase in the aggregate purchase price of properties acquired
was partially offset by an increased use of mortgage financing
for acquisitions in Fiscal 1995 from levels of mortgage financing
for Fiscal 1994, which reduced cash expenditures by the Company
for such acquisitions. Cost of sales as a percent of sales
decreased from 73.2% in Fiscal 1994 to 65.5% in Fiscal 1995. The
decrease can be attributed principally to the Company's ability
to obtain more favorable mortgage financing for its acquisitions
(i.e. -higher loan-to-value ratios and preferred interest rates),
which has contributed to the decrease in the cost of sales, and
has enabled the Company to also obtain more favorable pricing
when arranging for the sale of partnership interests, which has
contributed to the increase in sales, thus creating larger gross
margins. Cost of sales for Fiscal 1994 were $21.2 million
compared to $26.5 million for Fiscal 1993, a decrease of $5.3
million or 20%. This decrease was due primarily to the use of
mortgage financing for property acquisitions in Fiscal 1994,
which reduced cash expenditures by the Company for property
acquisitions from such expenditures for Fiscal 1993 where no such
mortgage financing was used. Cost of sales as a percent of sales
decreased from 90% in Fiscal 1993 to 73.2% in Fiscal 1994. This
decrease is principally due to the use of mortgage financing for
property acquisitions in Fiscal 1994, which reduced cash
expenditures by the Company for property acquisitions from such
expenditures for Fiscal 1993, in which mortgage financing was not
used.
Several factors, including the collapse of the real estate
market in the late 1980's and early 1990's, which resulted in a
number of distressed property sales and limited competition from
other prospective purchasers, allowed the Company to acquire
properties on relatively favorable terms. Mortgage financing,
however, was generally either not available or available only on
relatively unattractive terms during this period, which made
acquisitions more difficult because they either required large
outlays of cash or the use of mortgage financing on relatively
unfavorable terms. During the last several years, several
factors have contributed towards a trend to less favorable terms
for acquisitions of adult living communities, including a
recovery in the market for adult living communities and increased
competition from other prospective purchasers of adult living
communities. However, the Company has been able to obtain
mortgage financing on increasingly favorable terms (i.e. - the
Company has obtained mortgages for a greater percentage of the
purchase price and at preferred rates). These factors, combined
with an overall reduction of interest rates, have partially
offset the factors that have led to more unfavorable acquisition
terms. A significant change in these or other factors
(including, in particular, a significant rise in interest rates)
could prevent the Company from acquiring communities on terms
favorable enough to offset the start-up losses of newly-developed
communities as well as the Company's debt service obligations,
guaranty obligations and the Company's selling, general and
administrative expenses.
SELLING EXPENSES
Selling expenses for Fiscal 1995 were $7.6 million compared
to $6.0 million in Fiscal 1994, representing an increase of $1.6
million or 26.6%. The increase was attributable to additional
commissions paid for assistance in the sale of limited
partnership interests and related selling costs in connection
with the sale of limited partnership interests in partnerships
that acquired six adult living communities in Fiscal 1995 for
$41.4 million compared to the sale of limited partnership
interests in partnerships that acquired four adult living
communities in Fiscal 1994 for $29.0 million. Selling expenses
for Fiscal 1994 were $6.0 million compared to $6.7 million in
Fiscal 1993, representing a decrease of $700,000 or 10.4%. This
decrease is due primarily to reductions in the rate of
commissions paid to brokers selling limited partnership
interests.
INTEREST EXPENSE
Interest expense for Fiscal 1995 was $15.8 million compared
to $13.6 million for Fiscal 1994, representing an increase of
$2.2 million or 16.2%. Interest Expense included interest
payments on Debenture Debt which had an average interest rate of
11.95% per annum and was secured by the Purchase Note Collateral.
During Fiscal 1995, total interest expense with respect to
Debenture Debt was approximately $8.7 million, Purchase Note
Collateral produced approximately $3.0 million of interest and
related payments to the Company, which was $5.7 million less than
the amount required to pay interest on the Debenture Debt.
Interest expense for Fiscal 1994 was $13.6 million compared to
$11.0 million for Fiscal 1993, an increase of $2.6 million or
23.6%. The increases can be attributed to increases in debt
during the periods and was somewhat offset by reductions in
interest rates during the periods. See "Liquidity and Capital
Resources."
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $7.8 million in
Fiscal 1995 compared to $6.5 million in Fiscal 1994, representing
an increase of $1.3 million or 20%. The increase primarily
reflects additional salary costs incurred in instituting the
Company's new development program and in managing and financing
the Company's portfolio of properties, which increased by six in
Fiscal 1995, and also reflects increases in various office
expenses. General and administrative expenses were $6.5 million
in Fiscal 1994 compared to $5.2 million in Fiscal 1993 or an
increase of 23%. The increase primarily reflects the write-off in
Fiscal 1993 of previously existing accounts payable and accrued
expenses that the Company determined would not be paid.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for Fiscal 1995 was $2.6
million compared to $2.3 million for Fiscal 1994. Depreciation
and amortization consists of amortization of deferred debt
expense incurred in connection with debt issuance. Depreciation
and amortization for Fiscal 1994 was $2.3 million compared to
$1.4 million in Fiscal 1993. Depreciation and amortization
consists of amortization of deferred debt expense incurred with
debt issuance. The increase can be attributable to the issuance
of additional debenture debt in Fiscal 1993 which had its full
amortization impact in Fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company historically has financed operations through
cash flow generated by operations, by arranging for the sale of
partnership interests and through borrowings consisting of
Investor Note Debt, Unsecured Debt, Mortgage Debt and Debenture
Debt. The Company's principal liquidity requirements are for
payment of operating expenses, costs associated with development
of new adult living communities, debt service obligations and
guaranteed return obligations to limited partners of Investing
Partnerships to the extent that guaranteed returns cannot be
funded from the cash flow of such partnerships.
The Company's cash and cash equivalents were $18.0 million
at January 31, 1996, $11.0 million at January 31, 1995 and $9.3
million at January 31, 1994. The increase in cash and cash
equivalents at January 31, 1996 reflects, among other things, (i)
net income of $6.0 million for Fiscal 1995, compared to a loss of
$4.5 million for Fiscal 1994, (ii) increases in loans and accrued
interest payable by $52.0 million, and (iii) amortization and
depreciation for Fiscal 1995 of $2.6 million, offset in part by,
among other things, (i) a decrease in loans payable by $39.3
million, (ii) distributions of $1.7 million and (iii) payments of
other notes payable of $1.6 million. The increase in cash and
equivalents at January 31, 1995 reflects, among other things, (i)
increases in loans and accrued interest payable by $44.0 million
and (ii) amortization and depreciation of $2.3 million offset, in
part, by (i) a loss of $4.5 million for Fiscal 1994, (ii) a
decrease in loans payable by $31.3 million, (iii) distributions
of $1.9 million and (iv) payments of notes payable of $2.6
million.
At January 31, 1996, the Company had total indebtedness of
$140.0 million, consisting of $78.3 million of Debenture Debt,
$18.9 million of Unsecured Debt, $12.0 million of Mortgage Debt
and $30.0 million of Investor Note Debt. Subsequent to January
31, 1996, the Company has reduced outstanding Investor Note Debt
from $30 million to $21 million, Unsecured Debt from $18.9
million to $17.8 million, and Mortgage Debt from $12 million to
$6.9 million. Since that date, Debenture Debt increased from
$78.3 million to $78.7 million. As a result, total indebtedness,
decreased from $140.0 million to $125.2 million and the Company
had cash and cash equivalents at April 30, 1996 of $11.8 million.
Contributing to this debt repayment was the refinancing in March
1996 of certain adult living communities the Company manages
resulting in the return of over $43 million of capital to limited
partners and the reduction of both Investor Note Debt and
Mortgage Debt.
At January 31, 1996, the Company had approximately $37.2
million principal amount of debt that matures during the year
ending January 31, 1997. Of this amount, $6.8 million is
Investor Note Debt which the Company anticipates will be repaid
through the collection of investor notes. The balance,
approximately $30.4 million, included $9.9 million of Debenture
Debt, $5.2 million of Mortgage Debt and $15.3 million of
Unsecured Debt. The Company repaid the entire $5.2 million of
Mortgage Debt due by January 31, 1997 by refinancing said debt,
which refinanced debt became obligations of the partnerships that
own the properties and ceased being obligations of the Company.
The Company anticipates that the balance of $9.9 million of
Debenture Debt and $15.3 million of Unsecured Debt that matures
during the current fiscal year, together with interest on
outstanding debt, will be repaid from the Company s existing cash
and cash equivalents, which amounted to $11.8 million on April
30, 1996, along with the cash flow that will be generated by
property operations and by arranging for the sale of partnership
interests to finance the acquisition of additional existing adult
living communities. However, competition to acquire such
communities has intensified and there can be no assurance that
the Company will be able to acquire such communities on terms
favorable enough to offset start-up costs of newly developed
communities and the cash requirements of the Company's existing
operations and debt service.
The Company has financed the acquisition of the adult
living communities it operates by arranging for the private
placement of limited partnership interests, and intends to
continue this practice for all of its future acquisitions of
existing communities. Past offerings have included, and it is
anticipated that future offerings will include, a guaranty from
the Company that the limited partners will receive during a five-
year period an annual return generally equal to 11% to 12% of
their then paid-in capital. The Company is required to pay to
limited partners any part of such guaranteed return not paid from
cash flow from the related property. During Fiscal 1995, the
Company paid approximately $905,000 with respect to its
guaranteed return obligations. The Company anticipates that for
at least two years the guaranteed return obligations for certain
partnerships will exceed the cash flow generated by the related
properties, which will result in the need to utilize cash
generated by the Company to pay limited partners in such
partnerships their guaranteed return. The Company will attempt
to structure future offerings to minimize the likelihood that it
will be required to utilize the cash it generates to pay
guaranteed returns to limited partners, but there can be no
assurance that this will be the case. In addition, in the past,
limited partners have been allowed to prepay capital
contributions. These prepayments reduce the recorded value of
the Company's note receivables and reduce interest income
received by the Company. Pursuant to the terms of offerings, the
Company, as the general partner of each Investing Partnership,
has the option not to accept and may not accept, future
prepayments by limited partners of capital contributions.
The future growth of the Company will be based upon the
continued acquisition of existing adult living communities and
the development of newly-constructed adult living communities.
The Company anticipates that it will acquire between four and
eight existing adult living communities over the next two years.
It is anticipated that future acquisitions of existing adult
living communities will be financed by a combination of mortgage
financing and by arranging for the sale of partnership interests.
The Company regularly obtains such acquisition financing from
three different commercial mortgage lenders and, in view of its
ready access to such mortgage financing, has not sought any
specific commitments or letters of intent with regard to future,
unidentified acquisitions. Similarly, the Company believes that
it has sufficient ability to finance its future acquisitions in
part by arranging for the sale of partnership interests. Limited
partners typically agree to pay their capital contributions over
a five-year period, and deliver notes representing the portion of
their capital contribution that has not been paid in cash. The
Company borrows against the notes delivered by investors to
generate cash when needed, including to pursue its development
plan and to repay debt. The Company s present Investor Note Debt
lenders do not have sufficient lending capacity to meet all of
the Company s future requirements. However, the Company
currently is negotiating with several new Investor Note Debt
lenders which the Company believes will have sufficient lending
capacity to meet all of the Company s foreseeable Investor Note
Debt borrowing requirements.
The Company also has implemented a new development plan
pursuant to which it currently intends to construct between 18
and 24 new adult living communities during the next two years.
The Company will utilize the proceeds of this offering plus
mortgage financing to construct, own and operate new communities.
The Company has obtained a letter of intent from Fleet Bank to
provide up to $40.0 million in financing, including up to $20.0
million for the construction of new adult living communities.
The Company also intends to utilize long-term lease financing
arrangements to develop and operate new communities. The Company
has obtained a letter of intent from Capstone for up to $39.0
million for the development of four adult living communities that
will be operated by the Company pursuant to long-term leases with
Capstone. These arrangements are anticipated to be sufficient to
finance the Company s development plan through the end of its
current fiscal year. The Company is actively engaged in
negotiations with other mortgage and long-term lease lenders to
provide additional construction financing for future years.
BUSINESS
GENERAL
Grand Court Lifestyles, Inc. (the "Company") is one of the
largest operators of adult living communities in the United
States, operating facilities offering both independent- and
assisted-living services. The American Seniors Housing
Association ranks the Company as one of the top ten owners and
operators of adult living communities. The Company currently
operates 30 adult living communities containing 4,350 apartment
units in 11 states in the Sun Belt and the Midwest. The Company
also operates one skilled nursing facility containing 60 beds and
one of the adult living facilities it operates contains 70
skilled nursing beds. The facilities operated by the Company had
an average occupancy rate of approximately 93% at May 31, 1996.
The Company is a fully integrated provider of adult living
accommodations and services which acquires, finances, develops
and manages adult living communities. The Company's operating
objective is to provide high-quality, personalized living
services to senior residents, primarily persons over the age of
75.
Current demographic trends suggest that demand for both
independent-living and assisted-living services will continue to
grow. According to U.S. Bureau of Census data, the Company's
target market, people over age 75, is one of the fastest growing
segments of the U.S. population and is projected to increase by
more than 32% to 17.1 million between 1990 and 2000. While the
population of seniors grows, other demographic trends suggest
that an increasing number of them will choose adult living
centers as their residences. The median net worth of
householders over age 75 has increased to over $75,000. At the
same time, the number of seniors living alone has increased,
while women, who have been the traditional care-givers, are more
likely to be working and unable to provide care in the home.
Many seniors find that adult living centers provide them with a
number of services and features that increasingly they are unable
to find at home, including security, good nutritious food and
companionship. Furthermore, a recent Federal study indicates
that, despite the growth in the elderly population, the
percentage of elderly that are disabled and need assistance with
activities of daily living ("ADLs") has decreased substantially
and is expected to continue to decrease. This suggests that
demand for independent living communities will increase in the
future.
Assisted-living supplements independent-living services
with assistance with ADLs in a cost effective manner while
maintaining residents' independence, dignity and quality of life.
Such assistance consists of personalized support services and
health care in a non-institutional setting designed to respond to
the individual needs of the elderly who need assistance but who
do not need the level of health care provided in a skilled
nursing facility.
The Company has instituted a development plan which will
result in the new construction of between 18 and 24 adult living
communities during the next two years which it will own or will
operate pursuant to long-term leases or similar arrangements.
The Company anticipates that each new community to be developed
by it will offer both independent- and assisted-living. The
Company's development plan contemplates its first new communities
being built in Texas, where, as of June 12, 1996, it owns one
site and holds options to acquire seven additional sites. The
Company generally plans to concentrate on developing projects in
only a limited number of states at any given time. The Company
believes that this focus will allow it to realize certain
efficiencies in the development and management of communities.
The Company also plans to expand its portfolio of adult living
communities by acquiring between four and eight communities
during the next two years and to finance the acquisitions by
arranging for the sale of partnership interests in limited
partnerships. The Company is the managing general partner of the
partnerships that own all but one of the 30 adult living centers
and one nursing home in its current portfolio and will continue
to act in this capacity for all future properties which it
acquires. All of the adult living communities and the one
nursing home are managed by the Company pursuant to written
management contracts. The Company currently has entered into
agreements to acquire two existing adult living communities
containing an aggregate of 280 apartment units.
The Company's adult living communities offer personalized
assistance, supportive services and selected health care services
in a professionally managed group living environment. Residents
may receive individualized assistance which is available 24 hours
a day, and is designed to meet their scheduled and unscheduled
needs. The services for independent-living generally include
three restaurant-style meals per day served in a common dining
room, weekly housekeeping and flat linen service, social and
recreational activities, transportation to shopping and medical
appointments, 24 hour security and emergency call systems in each
unit. The services for assisted-living residents generally
include those provided to independent-living residents, as
supplemented by assistance with ADLs including eating, bathing,
dressing, grooming, personal hygiene and ambulating; health
monitoring; medication management; personal laundry services; and
daily housekeeping services.
The Company focuses exclusively on "private-pay" residents,
who pay for housing or related services out of their own funds or
through private insurance, rather than relying on the few states
that have enacted legislation enabling assisted-living facilities
to receive Medicaid funding similar to funding generally provided
to skilled nursing facilities. The Company intends to continue
its "private-pay" focus as it believes this market segment is,
and will continue to be, the most profitable. This focus will
enable the Company to increase rental revenues as demographic
pressure increases demand for adult living facilities and avoid
potential financial difficulties it might encounter if it were
dependent on Medicaid or other government reimbursement programs
that may suffer from health care reform, budget deficit reduction
or other pending or future government initiatives.
THE LONG TERM CARE MARKET
The long-term care services industry encompasses a broad
range of accommodations and healthcare services that are provided
primarily to seniors. Independent-living communities attract
seniors who desire to be freed from the burdens and expense of
home ownership, food shopping and meal preparation and who are
interested in the companionship and social and recreational
opportunities offered by such communities. As a senior's need
for assistance increases, the provision of assisted-living
services in a community setting is more cost-effective than care
at home or in a nursing home. A community which offers its
residents assisted-living services can provide assistance with
various ADLs (such as bathing, dressing, personal hygiene,
grooming, ambulating and eating), support services (such as
housekeeping and laundry services) and health-related services
(such as medication supervision and health monitoring), while
allowing seniors to preserve a high degree of autonomy.
Generally, residents of assisted-living communities require
higher levels of care than residents of independent-living
facilities, but require lower levels of care than residents of
skilled-nursing facilities.
FAVORABLE TRENDS
The Company believes its business benefits from significant
trends affecting the long-term care industry. The first is an
increase in the demand for elder care resulting from the
continued aging of the U.S. population, with the average age of
the Company's residents (83 years old) falling within the fastest
growing segments of the U.S. population. While increasing
numbers of Americans are living longer and healthier lives, many
choose community living as a cost-effective method of obtaining
the services and life-style they desire. Adult living facilities
that offer both independent and assisted-living services give
seniors the comfort of knowing that they will be able to "age in
place" something they are increasingly unable to do at home.
The primary consumers of long-term care services are
persons over the age of 65. This group represents one of the
fastest growing segments of the population. According to U.S.
Bureau of the Census data, the number of people in the U.S. age
65 and older increased by more than 27% from 1981 to 1994,
growing from 26.2 million to 33.2 million. The segment of the
population over 85 years of age, which comprises the largest
percentage of residents at long-term care facilities, is
projected to increase by more than 37% between the years 1990 and
2000, growing from 3.0 million to 4.1 million. The Company
believes that these trends depicted in the graph below will
contribute to continued strong demand for adult living
communities.
PROJECTED PERCENTAGE CHANGE IN THE ELDERLY POPULATION OF THE U.S.
1981 1990 1995 2000 2005 2010
---- ---- ---- ---- ---- ----
65-84 0 17.5% 25.2% 26.2% 27.3% 34.6%
85+ 0 28.4% 54.3% 76.3% 94.1% 112.7%
Source: U.S. Bureau of the Census
Other trends benefiting the Company include the increased
financial net worth of the elderly population, the changing role
of women and the increase in the population of individuals living
alone. As the number of elderly in need of assistance has
increased, so too has the number of the elderly able to afford
residences in communities which offer independent and/or
assisted-living services. According to U.S. Bureau of the Census
data, the median net worth of householders age 75 or older has
increased from $55,178 in 1984 and $61,491 in 1988 to $76,541 in
1991. Furthermore, according to the same source, the percentage
of people 65 years and older below the poverty line has decreased
from 24.6% in 1970 to 15.7% in 1980 to 12.2% in 1990.
Historically, unpaid women (mostly daughters or daughters-in-law)
represented a large portion of the care givers of the non-
institutionalized elderly. The increased number of women in the
labor force, however, has reduced the supply of care givers, and
led many seniors to choose adult living communities as an
alternative. Since 1960, the population of individuals living
alone has increased significantly as a percentage of the total
elderly population. This increase has been the result of an
aging population in which women outlive men by an average of 6.8
years, rising divorce rates, and an increase in the number of
unmarried individuals. The increase in the number of the elderly
living alone has also led many seniors to choose to live in adult
living communities.
The increased financial net worth of the elderly population
is illustrated by the following chart:
MEDIAN NET WORTH
1988 1991
---- ----
45-54 57,466 58,250
55-64 80,032 83,041
65+ 73,471 88,192
A trend benefiting the Company, and especially its provision of
independent-living services, is that as the population of seniors swells,
the percentage of seniors that are disabled and need assistance with ADLs
has steadily declined. According to the National Long Term Care Surveys, a
federal study, disability rates for persons aged 65 and older have declined
by 1 to 2 percent each year since 1982, the year the study was commenced.
In 1982, approximately 21% of the 65 and over population was disabled and
in 1995 only 10% was disabled. This trend suggests that demand for
independent living services will increase in the future.
Another trend benefiting the Company, and especially its provision of
assisted-living services, is the effort by the government, private insurers
and managed care organizations to contain health care costs by limiting
lengths of stay, services, and reimbursement amounts. This has resulted in
hospitals discharging patients earlier and referring them to nursing homes.
At the same time, nursing home operators continue to focus on providing
services to sub-acute patients requiring significantly higher levels of
skilled nursing care. The Company believes that this "push down" effect
has and will continue to increase demand for assisted-living facilities
that offer the appropriate levels of care in a non-institutional setting in
a more cost-effective manner. The Company believes that all of these
trends have, and will continue to, result in an increasing demand for adult
living facilities which provide both independent and assisted-living
services.
STRATEGY
Growth. The Company's growth strategy focuses on the development of
communities offering both independent and assisted-living apartment units
and on continued intensive communities management. The Company believes
that there are numerous markets that are not served or are underserved by
existing adult living communities and intends to take advantage of these
circumstances, plus the present availability of construction financing on
favorable terms, to develop new communities of its own design in desirable
markets. Historically, the Company has expanded by acquisition of existing
communities. The Company has taken advantage of the inexperience and
operating inefficiencies of the previous owners of these communities and
has improved the financial performance of these properties by implementing
its own management and marketing techniques. The Company's sophistication
in management and marketing is evidenced by its approximate 93% occupancy
rate at May 31, 1996 at its existing communities.
The Company will continue to acquire existing communities and intends
to finance these acquisitions, in part, by arranging for the sale of
partnership interests in such communities. The Company believes that its
continuing acquisition and financing of adult living communities will
provide additional cash flow to help the Company pursue its development
program. The Company also believes its established ability to privately
place equity and debt securities will help insure its ability to pursue its
development plan regardless of changes in the economy that may make
conventional and sale/leaseback construction financing unavailable or
available on only unfavorable terms.
Senior management, collectively, has over 80 years of experience in
the acquisition, financing, development and management of multi-family
housing, having acquired or developed and, in most cases, managed a
property portfolio consisting of approximately 20,000 multi-family
apartment units. In addition, senior management of the Company has over 40
years experience in the long-term care industry including independent-
living, assisted-living and, to a lesser extent, skilled-nursing
communities.
New Development. The Company's development plan emphasizes a
"prototype" adult living community that it has designed. The prototype
incorporates attributes of the various communities managed by the Company,
which it believes appeal to the elderly. The prototype has been designed
to be built in two sizes: one containing 126 apartment units and the other
142 apartment units. In all other respects, the two sizes of the prototype
are identical and both will be located on sites of up to seven acres. The
Company believes that its development prototype is larger than many
independent-living and most assisted-living communities, which typically
range from 40 to 80 units. The Company believes that the greater number of
units will allow the Company to achieve economies of scale in operations,
resulting in lower operating costs per unit, without sacrificing quality of
service. The Company designed its prototype to achieve economics of scale
in management and operations. These savings primarily are achieved through
lower staffing, maintenance and food preparation costs per unit, without
sacrificing quality of service. In that the time and effort required to
develop a community (including site selection, land acquisition, zoning
approvals, financing, and construction) do not vary materially for a larger
community than for a smaller one, developmental economics of sale are also
realized in that more apartment units are being produced for each community
that is developed.
Common areas will include recreation areas, dining rooms, a kitchen,
administrative offices, an arts and crafts room, a multi-purpose room,
laundry rooms for each floor, a beauty salon/barber shop, a library reading
area, card rooms, a billiards room, a health center to monitor residents'
medical needs and covered and assigned parking. The Company believes that
the common areas and amenities offered by prototype represent the state of
the art for independent-living communities and are superior to those
offered by smaller independent-living communities or by most communities
that offer only assisted living services. Unit sizes will range from 432
square feet for a studio to 1,062 square feet for a two bedroom/two bath
unit. The Company's 126-unit prototype contains 15 studio apartments, 105
one bedroom/one bathroom units and six two bedroom/two bathroom units. The
126-unit prototype will encompass approximately 110,000 square feet. The
142 unit prototype contains 46 studio apartments, 92 one bedroom/one
bathroom apartments and 4 two bedroom/two bathroom apartments. The 142-
unit prototype will encompass approximately 120,000 square feet. Each
apartment unit will be a full apartment, including a kitchen or
kitchenette.
Each community will offer residents a choice between independent-
living and assisted-living services. As a result, the market for each
community will be broader than for communities that offer only either
independent-living or assisted-living services. Due to licensing
requirements and the expense and difficulty of converting existing
independent-living units to assisted-living units, independent-living and
assisted-living units in many communities generally are not
interchangeable. However, the prototype is designed to allow, at any time,
for conversion of units, at minimum expense, for use as either independent-
living or assisted-living units. Each community therefore may adjust its
mix of independent-living and assisted-living units as the market or
existing residents demand. The Company believes that part of the appeal
of this type of community is that residents will be able to "age in place"
with the knowledge that they need not move to another community if they
require assistance with ADLs. The Company believes that the ability to
retain residents by offering them higher levels of services will result in
stable occupancy with enhanced revenue streams.
Market Selection Process. In selecting geographic markets for
potential expansion, the Company considers such factors as a potential
market's population, demographics and income levels, including the existing
and anticipated future population of seniors who may benefit from the
Company's services, the number of existing long-term care communities in
the market area and the income level of the target population. While the
Company does not apply its market selection criteria mechanically or
inflexibly, it generally seeks to select adult living community locations
that are non-urban with populations of no more than 100,000 people and
containing 3,000 elderly households within a 20-mile radius with an annual
income of at least $35,000, and have a regulatory climate that the Company
considers favorable toward development. The Company has found that
communities with these characteristics, so-called "secondary markets,"
generally have a receptive population of seniors who desire and can afford
the services offered in the Company's adult living communities. In
focusing on secondary markets, the Company believes it will avoid
overdevelopment to which primary markets are prone and obtain the benefit
of demographic concentrations that do not exist in yet smaller markets.
While not limiting itself to any specific geographic market, the
Company generally plans to concentrate its development projects to only a
limited number of states at any given time. This focus will allow the
Company to realize certain efficiencies in the development process and in
the management of the communities. For 1996, the Company anticipates that
its development efforts will be focused primarily in the State of Texas.
The Company currently owns one development site in Corpus Christi, Texas
and has obtained a letter of intent from Fleet Bank for $40.0 million of
financing for the construction of new adult living communities and the
acquisition of existing communities and a letter of intent from Capstone
for $39 million of sale/leaseback construction financing. Construction is
expected to commence in July 1996. The Company also has obtained options
to acquire seven additional sites in Amarillo, El Paso, Round Rock, San
Angelo, Temple, Tyler and Wichita Falls, Texas. The Company anticipates
that it will commence construction on between 18 and 24 new communities in
the next two years. The Company also anticipates developing adult living
communities in one or more of the following states: New Mexico, North
Carolina, South Carolina, and Kentucky.
Centralized Management. The adult living business is a highly
management intensive one. While the location of a community and its
physical layout are extremely important, another key to the success of an
adult living community lies in the ability to maximize its financial
potential through sophisticated, experienced management. Such success
requires the establishment and supervision of programs involving the
numerous facets of an adult living community, including menu planning, food
and supply purchasing, meal preparation and service, assistance with
"activities of daily living," recreational activities, social events,
health care services, housekeeping, maintenance and security. The Company's
strategy emphasizes centralized management in order to achieve operational
efficiencies and ensure consistent quality of services. The Company has
established standardized policies and procedures governing, among other
things, social activities, maintenance and housekeeping, health care
services, and food services. An annual budget is established by the
Company for each community against which performance is tested each month.
Marketing. Marketing is critical to the rent up and continued high
occupancy of a community. The Company's marketing strategy focuses on
enhancing the reputation of the Company's communities and creating
awareness of the Company and its services among potential referral sources.
The Company's experience is that satisfied residents and their families are
an important source of referrals for the Company. In addition, the Company
plans to use its common community design and its "The Grand Court"
trademarked name to promote national brand-name recognition.
SERVICES
It is important to identify the specific tastes and needs of the
residents of an adult living community, which can vary from region to
region and from one age group to the next. Residents who are 70 years old
have different needs than those who are 85. The Company has retained a
gerontologist to insure that programs and activities are suitable for all
of the residents in a community and that they are adjusted as these
residents "age in place". Both independent and assisted-living services
will be offered at all of the Company's newly, developed communities.
Basic Service and Care Package. The Company provides four levels of
service at its adult-living communities:
Level I is Independent Living which includes three meals per day,
weekly housekeeping, activities program, 24-hour security and
transportation for shopping and medical appointments.
Level II or Catered Living offers all of the amenities of Level I in
addition to all utilities, personal laundry and daily housekeeping.
Level III is Assisted Living, which offers three meals per day, daily
housekeeping, 24-hour security, all utilities, medication management,
activities and nurse's aides to assist the residents in daily bathing and
dressing.
Level IV is especially designed to meet the needs of our assisted
living residents who require increased assistance with the activities of
daily living. We are able to accommodate residents with walkers or
wheelchairs, or who suffer from the early stages of Alzheimer's.
Rehabilitative services such as physical and speech therapy are also
provided by licensed third party home health care providers. Each resident
can design a package of services that will be monitored by his or her own
physician.
The Company charges an average fee of $1,400 per month for Level One
services, $1,700 per month for Level Two services, $2,000 per month for
Level Three services, and $2,500 per month for Level IV services, but the
fee levels vary from community to community. As the residents of the
communities managed by the Company continue to age, the Company expects
that an increasing number of residents will utilize Level Three and Level
Four services. The Company's internal growth plan is focused on increasing
revenue by continuing to expand the number and diversity of its tiered
additional assisted-living services and the number of residents using these
services.
COMMUNITIES
The Company currently operates 30 communities containing 4,350 units
and one nursing home containing 60 beds. One of the Company's adult living
communities contains 70 nursing home beds. The following chart sets forth
information regarding the communities operated by the Company:
OCCUPANCY
NUMBER YEAR % AT
OF ACQUIRED MAY 31,
COMMUNITY(1) STATE UNITS (2) 1995
------------ ----- ------ --------- --------
The Grand Court Phoenix Arizona 136 1991 98%
The Grand Court Fort Myers Florida 184 1989 95%
The Grand Court Lakeland Florida 126 1996 85%
The Grand Court Lake Worth Florida 170 1992 91%
The Grand Court North Miami Florida 189 1995 60%
The Grand Court Pensacola Florida 60 1994 91%
The Grand Court I Pompano Beach(3) Florida 72 1994 87%
The Grand Court II Pompano Beach(3) Florida 42 1994 88%
The Grand Court Tavares Florida 94 1995 97%
The Grand Court Belleville Illinois 76 1993 100%
The Grand Court II Kansas City Kansas 127 1994 97%
The Grand Court Overland Park Kansas 275 1990 97%
The Grand Court Farmington Hills Michigan 164 1993 95%
The Grand Court Novi Michigan 114 1994 98%
The Grand Court I Kansas City Missouri 167 1989 97%
The Grand Court III Kansas City Missouri 217 1991 80%
The Grand Court IV Kansas City Missouri 237 1990 69%
The Grand Court Las Vegas Nevada 152 1991 100%
The Grand Court Columbus Ohio 120 1994 100%
The Grand Court Dayton Ohio 185 1994 99%
The Grand Court Findlay Ohio 73 1992 99%
The Grand Court Springfield Ohio 77 1992 100%
The Grand Court I Chattanooga Tennessee 143(4) 1995 99%
The Grand Court II Chattanooga Tennessee 146 1995 99%
The Grand Court Memphis Tennessee 197 1992 98%
The Grand Court Bryan Texas 180 1993 98%
The Grand Court Longview Texas 132 1990 96%
The Grand Court Lubbock Texas 139 1991 99%
The Grand Court I San Antonio Texas 198 1993 98%
The Grand Court II San Antonio Texas 60(5) 1995 87%
The Grand Court Weatherford Texas 60 1996 98%
The Grand Court Bristol Virginia 98 1995 97%
----------
(1) In certain cases, more than one Investing Partnership owns an interest
in one Owning Partnership. There are therefore, more Investing
Partnerships than there are Owning Partnership. One of the Owning
Partnerships owns two adult living communities, one Owning Partnership
owns one adult living community and one nursing home. In addition,
the Company's properties in Pompano Beach, Florida are adjacent to one
another and are counted as one property. As a result, there are 32
communities listed, but only 29 Owning Partnerships.
See " - Partnership Offerings."
(2) Represents year in which an affiliate of the Company acquired the
community.
(3) These are adjacent properties and are counted as one adult living
community.
(4) Grand Court I Chattanooga's unit count includes a 70-bed nursing wing.
(5) Grand Court II San Antonio is a 60-bed licensed nursing facility.
The Company has executed a contract to acquire an adult living
community in Indianapolis, Indiana containing 116 units. The Company will
be the general partner of the partnership that will own this community and
is arranging mortgage financing and for the sale of partnership interests
to finance this acquisition.
All 30 adult living communities and the nursing home are managed by
the Company in its capacity as property manager and, for all but one of the
related owning partnerships, as managing general partner. Because the
Company serves as both the managing general partner and the property
manager, it receives partnership administration fees and property
management fees. As the managing general partner of these partnerships, the
Company generally has full authority and power to act for the partnerships
as if it were the sole general partner. The Company has fiduciary
responsibility for the management and administration of these partnerships
and, subject to certain matters requiring the consent of the other partners
such as a sale of the related property, may generally, on behalf of the
partnerships, borrow money, execute contracts, employ persons and services,
compromise and settle claims, determine and pay distributions, prepare and
distribute reports, and take such other actions which are necessary or
desirable with respect to matters affecting the partnerships or individual
partners. See "- Partnership Offerings."
OPERATIONS
Corporate. Over the past ten years the Company has developed
extensive policies, procedures and systems for the operation of its adult-
living communities. The Company also has adopted a formal quality
assurance program. In connection with this program the Company requires a
minimum of two full-day annual quality assurance reviews at each community.
The entire regional staff team participates in the review which thoroughly
examines all aspects of the long-term care community from the provision of
services to the maintenance of the physical buildings. The reports
generated from these quality assurance reviews are then implemented by the
community administrator. Corporate headquarters also provides human
resources services, a licensing facilitator, and in-house accounting and
legal support systems.
Regional. The Company has nine regional administrators: one
responsible for three communities in Florida, one responsible for six
communities in Tennessee, Texas, Arizona and Nevada, one responsible for
five communities in Texas and Virginia, one responsible for five
communities in Ohio and Tennessee, one responsible for five communities in
Missouri, Kansas, and Michigan, one responsible for four communities in
Florida, one responsible for three communities in Missouri and Illinois and
one who oversees the food division. In addition, one regional
administrator and various other Company personnel oversee the third-party
managing agents that operate multi-family properties in which the equity
interests are pledged to the Company to secure notes owed to it. Each
regional administrator is reported to by the manager of those communities
he oversees.
Community. The management team at each community consists of an
administrator, who has overall responsibility for the operation of the
community, an activity director, a marketing director and, at certain
larger communities, one or two assistant administrators. Each community
which offers assisted-living services has a staff responsible for the
assisted-living care giving services. This staff consists of a lead
resident aide, a medication room aide, certified nurse aides and trained
aides, and, in those states which so require, registered nurses. At least
one staff member is on duty 24 hours per day to respond to the emergency or
scheduled 24-hour assisted-living services available to the residents. Each
community has a kitchen staff, a housekeeping staff and a maintenance
staff. The average community currently operated by the Company has 40 to 50
full-time employees depending on the size of the community and the extent
of services provided in that community.
The Company places emphasis on diet and nutrition, as well as
preparing attractively presented healthy meals which can be enjoyed by the
residents. The Company's in-house food service program is led by a regional
administrator who reviews all menus and recipes for each community. The
menus and recipes are reviewed and changed based on consultation with the
food director and input from the residents. The Company provides special
meals for residents who require special diets.
Employees. The Company emphasizes maximizing each employee's
potential through support and training. The Company's training program is
conducted on three levels. Approximately six times per year, corporate
headquarters staff conduct training sessions for the management staff in
the areas of supervision and management skills, and caring for the needs of
an aging population. At the regional level, regional staff train the
community staff on issues such as policies, procedures and systems,
activities for the elderly, the administration and provision of specific
services, food service, maintenance, reporting systems and other
operational areas of the business. At the community level, the
administrators of each community conduct training sessions on at least a
monthly basis relating to various practical areas of care-giving at the
community. These monthly sessions cover, on an annual basis, all phases of
the community's operations, including special areas such as safety, fire
and disaster procedures, resident care, and policies and procedures.
PARTNERSHIP OFFERINGS
Historically, the Company has financed the acquisition and development
of adult living properties by utilizing mortgage financing and by arranging
for the sale of limited partnership interests in Investing Partnerships
formed to acquire controlling interests in Owning Partnerships. The
Company is the general partner of all but one of the Owning Partnerships
that own the adult living communities currently included in the Company's
portfolio and the Company manages all of the adult living communities in
its portfolio. The Company is also the general partner of 22 of the 34
Investing Partnerships. As the general partner of such partnerships the
Company has a participation in the cash flow, sale proceeds and refinancing
proceeds of the properties after certain priority payments to the limited
partners. Typically, an Owning Partnership is organized by the Company to
acquire a property which the Company has identified and selected based on a
broad range of factors. Generally, 99% to 100% of the partnership
interests in an Operating Partnership initially are owned by the Company.
An Investing Partnership is formed as a limited partnership for the purpose
of acquiring all or a portion of the total partnership interests owned by
the Company. Limited partnership interests in the Investing Partnership
are sold to investors in exchange for (i) all cash or (ii) a cash down
payment and full recourse promissory notes (an "Investor Note"). In the
case of an investor that does not purchase a limited partnership interest
for all cash, the investor's limited partnership interest (a "Limited
Partnership Interest") serves as collateral security for that investor's
Investor Note. Under the terms of an agreement (a "Purchase Agreement"),
the Investing Partnership purchases from the Company the partnership
interests in the Operating Partnership partially with cash raised from the
cash down payment made by its investors and the balance by the delivery of
the Investing Partnership's promissory note (a "Purchase Note"). The
Purchase Notes executed by Investing Partnerships prior to 1986 have
balloon payments of principal due on maturity. The Purchase Notes executed
since January 1, 1987 are self-liquidating (without balloon payments). The
Investing Partnership, as collateral security for its Purchase Note,
pledges to the Company the Investor Notes received from its investors, its
interest in the Limited Partnership Interests securing the Investor Notes,
as well as the entire partnership interest it holds in the Owning
Partnership which it purchased from the Company.
The limited partners in Investing Partnerships typically agree to pay
their capital contributions over a five-year period. Past offerings have,
and it is anticipated that future offerings will, include a guaranty that
the limited partners will receive distributions during each of first five
years of their investment equal to between 11% to 12% of their paid-in
capital. The Company is required to pay to limited partners any part of
such guaranteed return not paid from cash flow from the related property.
During Fiscal 1996, the Company paid approximately $905,000 with respect to
its guaranteed return obligation. The Company anticipates that for at
least the next two years, the guaranteed return obligations for certain
existing partnerships will exceed the cash flow generated by the related
properties, which will result in the need to utilize cash generated by the
Company to pay limited partners their guaranteed return. The Company will
attempt to structure future offerings to minimize the likelihood that it
will be required to utilize the cash it generates to pay limited partners
their guaranteed returns, but there can be no assurance that this will be
the case. In the past, limited partners have been allowed to prepay
capital contributions. These prepayments reduce the recorded value of the
Company's note receivables and reduce interest income received by the
Company. Pursuant to the terms of offerings, the Company has the option
not to accept, and may not accept, future prepayments by limited partners
of capital contributions.
All of the adult living communities operated by the Company are
managed by the Company pursuant to written management contracts, which
generally have a five year term coterminous with the Company's guaranty of
annual distributions to limited partners. This five-year guaranty
obligation has terminated for four of the 34 Investing Partnerships. After
the initial five year term, the management contracts are automatically
renewed each year, but are cancelable on 30 to 60 days notice at the
election of either the Company or the related Owning Partnership. Action
can be taken in each partnership by a majority in interest of partners on
such major matters as the removal of the general partners, the request for
or approval or disapproval of a sale of a property owned by a partnership
or other significant actions affecting the properties or the partnership.
In these cases, termination of the management contracts after their initial
five-year terms generally would require removal of the Company as general
partner of the owning and/or investing partnership. Removing the Company
as the general partner of an investing partnership requires the vote of a
majority of the holders of limited partner interest and would result in
loss of the fee income under those contracts.
The Company intends to continue to finance its future acquisitions of
existing adult living communities by utilizing mortgage financing and by
arranging for the sale of partnership interests. The Company has derived,
and it expects to continue to derive, a substantial portion of its revenues
from sales of partnership interests in partnerships it organizes to finance
the acquisition of existing adult living communities. The Company plans to
continue to acquire existing adult living communities, and currently plans
to acquire between four to eight existing communities over the next two
years. However, competition to acquire such communities has intensified,
and there can be no assurance that the Company will be able to acquire such
communities on terms favorable enough to offset the start-up losses
associated with newly developed communities and the costs and cash
requirements arising from the Company's overhead and existing debt and
guarantee obligations. The Company is, and will continue to be, the
managing general partner of the partnerships that own acquired communities.
In addition, the Company arranged for the sale of limited partnership
interests in two partnerships organized to make second mortgage loans to
the Company to fund approximately 20% of the costs of developing three new
adult living communities.
COMPETITION
The senior housing and health care industries are highly competitive
and the Company expects that both the independent-living business, and
assisted-living businesses in particular, will become more competitive in
the future. The Company will continue to face competition from numerous
local, regional and national providers of long-term care whose communities
and services are on either end of the senior care continuum. The Company
will compete in providing independent-living services with home health care
providers and other providers of independent-living services, primarily on
the basis of quality and cost of communities and services offered. The
Company will compete in providing assisted-living with other providers of
assisted-living services, skilled nursing communities and acute care
hospitals primarily on the bases of cost, quality of care, array of
services provided and physician referrals. The Company also will compete
with companies providing home based health care, and even family members,
based on those factors as well as the reputation, geographic location,
physical appearance of communities and family preferences. In addition,
the Company expects that as the provision of long-term care receives
increased attention, competition from new market entrants, including, in
particular, companies focused on independent and assisted-living, will
grow. Some of the Company's competitors operate on a not-for-profit basis
or as charitable organizations, while others have, or may obtain, greater
financial resources than those of the Company. However, the Company
anticipates that its most significant competition will come from other
adult living communities within the same geographic area as the Company's
communities because management's experience indicates that senior citizens
frequently elect to move into communities near their homes.
Moreover, in the implementation of the Company's expansion program,
the Company expects to face competition for the development of adult living
communities. Some of the Company's present and potential competitors are
significantly larger or have, or may obtain, greater financial resources
than those of the Company. Consequently, there can be no assurance that
the Company will not encounter increased competition in the future which
could limit its ability to attract residents or expand its business and
could have a material adverse effect on the Company's financial condition,
results of operations and prospects.
COMPANY HISTORY
The predecessors of Grand Court Lifestyles, Inc. are J&B Management
Company, Leisure Centers, Inc. and their affiliates. J&B Management
Company is a private partnership founded in 1969 with a successful history
in the development and management of multi-family real estate and adult
living communities. J&B's headquarters are in Fort Lee, New Jersey and it
conducted its property development and management operations through its
affiliate, Leisure Centers, Inc., located in Boca Raton, Florida. Grand
Court Lifestyles, Inc., its subsidiaries, J&B Management Company and
Leisure Centers, Inc. and their affiliates are collectively referred to as
the "Company".
Through the 1970's and early 1980's, the Company's primary focus was
on the acquisition, development, finance and management of multi-family
properties. Senior management, collectively, has over 80 years of
experience in multi-family housing, having had interests in properties
containing approximately 20,000 apartment units located in 22 states,
primarily in the sun-belt. Beginning in the mid-1980's, the Company's sole
focus has been on the acquisition, finance and management of adult living
communities building one of the largest operating portfolios of adult
living communities in the nation, encompassing the entire spectrum of the
long-term care industry, from independent-living to assisted-living, with a
limited involvement in nursing homes. Senior management, collectively, has
over 40 years of experience in the adult living field. The Company is
ranked by the American Seniors Housing Association in the top ten owners
and managers of adult living properties and currently has ownership
interests in and manages 30 adult living communities containing 4,350
apartment units (including 70 skilled nursing beds) and one nursing home
containing 60 skilled nursing beds in 11 states.
GOVERNMENT REGULATION
Regulations applicable to the Company's operations vary among the
types of communities operated by the Company and from state to state.
Independent-living communities generally do not have any licensing
requirements. Assisted-living communities are subject to less regulation
than other licensed health care providers but more regulation than
independent-living communities. However, the Company anticipates that
additional regulations and licensing requirements will likely be imposed by
the states and the federal government. Currently, California, New Jersey,
Ohio, Massachusetts, Texas and Florida require licenses to provide the
assisted-living services provided by the Company. The licensing statutes
typically establish physical plant specifications, resident care policies
and services, administration and staffing requirements, financial
requirements and emergency service procedures. The licensing process can
take from two months to one year. New Jersey requires Certificates of Need
for assisted-living communities. The Company's communities must also
comply with the requirements of the Americans With Disabilities Act and are
subject to various local building codes and other ordinances, including
fire safety codes. While the Company relies almost exclusively on private
pay residents, the Company operates a nursing home containing 60 beds and
one adult living community operated by the Company contains 70 nursing home
beds in which some residents rely on Medicaid. As a provider of services
under the Medicaid program, the Company would be subject to Medicaid
regulations designed to limit fraud and abuse, violations of which could
result in civil and criminal penalties and exclusion from participation in
the Medicaid program. Revenues derived from Medicaid comprise less than 1%
of the Company's revenues. The Company does not intend to expand its
nursing home activities and intends to pursue an exclusively "private-pay"
clientele. The Company believes it is in substantial compliance with all
applicable regulatory requirements. No actions are pending against the
Company for non-compliance with any regulatory requirement.
Under various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner or operator of real property
may be held liable for the costs of removal or remediation of certain
hazardous or toxic substances, including, without limitation, asbestos-
containing materials, that could be located on, in or under such property.
Such laws and regulations often impose liability whether or not the owner
or operator knows of, or was responsible for, the presence of the hazardous
or toxic substances. The costs of any required remediation or removal of
these substances could be substantial and the liability of an owner or
operator as to any property is generally not limited under such laws and
regulations, and could exceed the property's value and the aggregate assets
of the owner or operator. The presence of these substances or failure to
remediate such substances properly may also adversely affect the owner's
ability to sell or rent the property, or to borrow using the property as
collateral. Under these laws and regulations, an owner, operator or any
entity who arranges for the disposal of hazardous or toxic substances, such
as asbestos-containing materials, at a disposal site may also be liable for
these costs, as well as certain other costs, including governmental fines
and injuries to persons or properties. As a result, the presence, with or
without the Company's knowledge, of hazardous or toxic substances at any
property held or operated by the Company could have an adverse effect on
the Company's business, operating results and financial condition.
Under the ADA, all places of public accommodation are required to meet
certain federal requirements related to access and use by disabled persons.
A number of additional Federal, state and local laws exist which also may
require modifications to existing and planned properties to create access
to the properties by disabled persons. While the Company believes that its
properties are substantially in compliance with present requirements or are
exempt therefrom, if required changes involve a greater expenditure than
anticipated or must be made on a more accelerated basis than anticipated,
additional costs would be incurred by the Company. Further legislation may
impose additional burdens or restrictions with respect to access by
disabled persons, the costs of compliance with which could be substantial.
EMPLOYEES
As of the date hereof, the Company employs approximately 1,500
persons, including 25 in the Company's corporate headquarters. None of the
Company's employees is covered by collective bargaining agreements. The
Company believes its employee relations are good.
LEGAL PROCEEDINGS
J&B Management Company, a predecessor of the Company ("J&B Management
Company") that managed certain multi-family properties for which the United
States Department of Housing and Urban Development ("HUD") provided
mortgage insurance, was the subject of an audit and investigation by HUD
during 1990 and 1991. Pending the conclusion of the inquiry, J&B
Management Company, its partners and key employees were suspended by HUD
from the management of such multi-family properties. On April 10, 1991,
HUD and J&B Management Company entered into a Settlement Agreement which
provided, among other things, that HUD vacate the suspension retroactively.
Certain conditions were imposed in the Settlement Agreement, including that
J&B Management Company and such principals and employees not engage in the
management of HUD-insured properties for an indefinite period of time.
Pursuant to a letter agreement dated January 11, 1994, (i) J & B Management
Company agreed to reimburse various properties for certain expenses,
aggregating approximately $445,000, deemed not eligible by HUD, (ii) J & B
Management Company agreed to pay HUD's costs for the audit, and to
reimburse HUD for certain subsidy overpayments, aggregating approximately
$861,000, and (iii) all issues relating to the audit and investigation were
concluded and fully resolved.
In 1993, the SEC informed J&B Management Company that it had
instituted an investigation in connection with the offer and sale of
securities issued or sponsored by J&B Management Company (the
"Securities"). The SEC has indicated that this investigation should not be
construed as an indication by the SEC that any violation has occurred or as
a reflection upon any person, entity or security. The investigation is
made pursuant to the general authority of the SEC to monitor and assure
compliance with Federal laws and regulations involving securities. The
investigation appears to be focused on issues pertaining to the payment or
receipt of commissions relating to the Securities. To date, to the
Company's knowledge, there have been no findings resulting from this
investigation.
The Company is involved in various lawsuits and other matters arising
in the normal course of business. In the opinion of management of the
Company, although the outcomes of these claims and suits are uncertain, in
the aggregate they should not have a material adverse effect on the
Company's financial position or results of operations. The Company
business entails an inherent risk of liability. In recent years,
participants in the long-term care industry have become subject to an
increasing number of lawsuits alleging malpractice or related legal claims,
many of which seek large amounts and result in significant legal costs.
The Company expects that from time to time it will be subject to such suits
as a result of the nature of its business. The Company currently maintains
insurance policies in amounts and with such coverage and deductibles as it
deems appropriate, based on the nature and risks of its business,
historical experience and industry standards. There can be no assurance,
however, that claims in excess of the Company's insurance coverage or
claims not covered by the Company's insurance coverage will not arise. A
successful claim against the Company not covered by, or in excess of, the
Company's insurance could have a material adverse effect on the Company's
operating results and financial condition. Claims against the Company,
regardless of their merit or eventual outcome, may also have a material
adverse effect on the Company's ability to attract residents or expand its
business and would require management to devote time to matters unrelated
to the operation of the Company's business. In addition, the Company's
insurance policies must be renewed annually, and there can be no assurance
that the Company will be able to obtain liability insurance coverage in the
future or, if available, that such coverage will be on acceptable terms.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
Name Age Position
---- --- --------
John Luciani(1) 64 Chairman of the Board and Chief Executive
Officer
Bernard M. Rodin(2) 65 Chief Operating Officer, President and
Director
John W. Luciani III 43 Executive Vice President and Director
Paul Jawin 40 Chief Financial Officer
Dorian Luciani 40 Senior Vice President - Acquisition and
Construction
Deborah Luciani 39 Vice President - New Business Development
and Acquisitions
Edward J. Glatz 52 Vice President - Construction
Catherine V. Merlino 31 Treasurer
Keith Marlowe 33 Secretary
Walter Feldesman(1)(2) 78 Director
Leslie E. Goodman(1)(2) 53 Director
-------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
JOHN LUCIANI, Chief Executive Officer and Chairman of the Board of
Directors, founded the earliest predecessor of the Company in 1969 and has
been engaged in a number of business activities and investments since 1952.
Commencing in 1960, he entered into the real estate development and
construction business, concentrating initially on the development,
construction and sale of residential high-rise apartment buildings and
single-family homes and subsequently on the acquisition and development of
multi-family rental housing complexes. Since 1986, he has concentrated on
the acquisition, development and financing of adult living communities for
the elderly. Mr. Luciani founded the earliest predecessor of the Company
with Bernard M. Rodin in 1969.
BERNARD M. RODIN, Chief Operating Officer, President and Director, has
been engaged, since the formation of the earliest predecessor of the
Company in 1969, in the financing of property acquisitions by arranging for
the sale of partnership interests and in property management. This
activity initially focused on the Company's multi-family housing portfolio
and, since 1986, on the Company's adult living communities. Mr. Rodin is a
certified public accountant and was actively engaged in the practice of
public accounting prior to founding the earliest predecessor of the Company
with John Luciani in 1969.
JOHN W. LUCIANI III, Executive Vice President and Director, a son of
John Luciani, joined the Company in 1975 and has since been actively
involved in the management and operation of the Company's property
portfolios, initially focusing on multi-family housing and later on the
Company's adult-living communities.
PAUL JAWIN, Chief Financial Officer, a son-in-law of Bernard M. Rodin,
joined the Company in May 1991. His activities primarily involve the
various financial aspects of the Company's business including its debt
financings and matters involving the Company's equity and debt securities.
Mr. Jawin is an attorney and was actively engaged in a real estate/
corporate practice prior to joining the Company.
DORIAN LUCIANI, Senior Vice President - Acquisition and Construction,
a son of John Luciani, joined the Company in 1977 and was initially
involved in the acquisition, development and management of the Company's
multi-family housing portfolio. Later, Mr. Luciani focused exclusively on
the acquisition and development of the Company's adult living communities.
DEBORAH LUCIANI, Vice President - New Business Development and
Acquisitions, a daughter of John Luciani, joined the Company in January
1992. Ms. Luciani is primarily involved in new business development,
acquisitions, obtaining financing and various marketing responsibilities
for the Company's existing and new adult living communities. Prior to
joining the Company, Ms. Luciani worked for Prudential Bache Securities as
an oil futures trader from November 1988 to December 1991.
EDWARD J. GLATZ, Vice President - Construction, joined the Company in
September 1992 and has been actively involved in the design, site selection
and construction for the new "Grand Court" adult living communities.
Additionally, Mr. Glatz supervises the capital improvements of the
Company's real estate holdings. Prior to joining the Company, Mr. Glatz
performed asset management duties for Kovens Enterprises from June 1988
until September 1992.
CATHERINE V. MERLINO, Treasurer, joined the Company in September 1993,
and has since been actively involved in the financial reporting and
analysis needs of the Company. Prior to joining the Company, Mrs. Merlino
was a Senior Accountant from June 1989 through June 1993 and a Supervisor
from June 1993 through September 1993 at Feldman Radin & Co., P.C., a
public accounting firm located in New York City.
KEITH MARLOWE, Secretary of the Company, joined the Company in August
1994. From 1987 through August 1994, Mr. Marlowe, an attorney, was an
associate in the tax department at the law firm of Reid & Priest LLP where
he was involved in a general transactional tax practice.
WALTER FELDESMAN, Director, has been Of Counsel to the law firm of
Baer Marks & Upham LLP since March 1993 and for more than five years prior
thereto was a partner of Summit, Rovins and Feldesman. Mr. Feldesman is
currently a Director and Chairman of the Audit Committee of Sterling
Bancorp and a Director of its subsidiary, Sterling National Bank & Trust
Co. Mr. Feldesman is a member of the Board of Advisors of the National
Institute on Financial Services for Elders, the National Academy of Elder
Law Attorneys, the American Association of Homes for the Aging, the
National Council on the Aging and American Society on Aging. He has
authored an article entitled "Long-Term Care Insurance Helps Preserve an
Estate," and a soon-to-be published work entitled the Eldercare Primer
--------- ------
Series.
------
LESLIE E. GOODMAN, Director, is the Area President for the North
Jersey Region for First Union National Bank and a Senior Executive Vice
President of First Union Corporation. From September 1990 through January
1994, he served as President and Chief Executive Officer of First Fidelity
Bank, N.A., New Jersey. From January 1994 to December 1995, Mr. Goodman
served as a Senior Executive Vice President and a Director of First
Fidelity Bank, National Association until it was merged into First Union.
From January 1990 until December 1995, he also served as Senior Executive
Vice President, member of the Office of the Chairman and a Director of
First Fidelity Bancorporation. Mr. Goodman served as the Chairman of the
New Jersey Bankers Association from March 1995 to March 1996. He is a
member of the Board of Directors and Chairman of the Audit Committee of
Wawa Inc.
DIRECTOR COMPENSATION
The Company will pay each Director who is not an employee of the
Company $1000 per Board meeting attended and $500 per Committee meeting
attended. All Directors are reimbursed by the Company for their out-of-
pocket expenses incurred in connection with attendance at meetings of, and
other activities related to service on, the Board of Directors or any Board
Committee.
AUDIT COMMITTEE
The Board of Directors established an Audit Committee in June 1996.
The Audit Committee is currently composed of Messrs. Rodin, Feldesman and
Goodman. The Audit Committee's duties include reviewing internal financial
information, monitoring cash flow, budget variances and credit
arrangements, reviewing the audit program of the Company, reviewing with
the Company's independent accountants the results of all audits upon their
completion, annually selecting and recommending independent accountants,
overseeing the quarterly unaudited reporting process and taking such other
action as may be necessary to assure the adequacy and integrity of all
financial information distributed by the Company.
COMPENSATION COMMITTEE
The Board of Directors established a Compensation Committee in June
1996. The Compensation Committee is currently composed of Messrs. John
Luciani, Feldesman and Goodman. The Compensation Committee recommends
compensation levels of senior management and works with senior management
on benefit and compensation programs for Company employees. In addition,
the Compensation Committee will administer the Company's 1996 Stock Option
Plan.
EXECUTIVE COMPENSATION
The following table shows, as to the Chief Executive Officer and each
of the four other most highly compensated executive officers information
concerning compensation accrued for services to the Company in all
capacities during the fiscal year ended January 31, 1996.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------
OTHER ALL
ANNUAL OTHER
COMPEN- COMPEN-
SALARY BONUS SATION SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)
--------------------------- ---- ---- ---- ------ -----
John Luciani, Chairman of the
Board and Chief Executive fiscal
Officer(1) . . . . . . 1995 $1,228,750 --- --- ---
Bernard M. Rodin, Chief
Operating Officer, . . fiscal
President and Director(1) 1995 $1,228,750 --- --- ---
John W. Luciani, III,
Executive Vice President fiscal
and Director . . . . . . 1995 $315,000 --- --- ---
Dorian Luciani, . . . . . fiscal
Senior Vice President . . 1995 $315,000 --- --- ---
Paul Jawin, Chief Financial fiscal
Officer . . . . . . . 1995 $289,050 --- --- ---
----------
(1) As of April 1, 1996 the salary of each of Messrs. Luciani and Rodin
has been reduced to $600,000 per year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors established a Compensation Committee in June
1996. The Compensation Committee currently consists of Messrs. John
Luciani, Feldesman and Goodman. None of the executive officers of the
Company currently serves on the compensation committee of another entity or
on any other committee of the board of directors of another entity
performing similar functions. For a description of transactions between
the Company and members of the Compensation Committee or their affiliates,
see "Certain Transactions."
STOCK PLANS
1996 Stock Option and Performance Award Plan
The Company has adopted the 1996 Stock Option and Performance Award
Plan (the "Plan"), which authorizes the grant to officers and key employees
of the Company and any parent or subsidiary of the Company and the
directors, franchisees, licensees and other independent contractors,
incentive or non-qualified stock options, performance shares, restricted
shares and performance units. Under the Plan, directors may be granted
non-qualified stock options. The Company plans to reserve 1,250,000 shares
of Common Stock for issuance pursuant to the Plan. As of the date hereof,
no options had been granted under the Plan.
The Plan will be administered by the Compensation Committee which
consists of Messrs. John Luciani, Feldesman and Goodman. The Compensation
Committee will determine the prices and terms at which options may be
granted. Options may be exercisable in installments over the option
period, but no options may be exercised after ten years from the date of
grant.
The exercise price of any incentive stock option granted to an
eligible employee may not be less than 100% of the fair market value of the
shares underlying such option on the date of grant, unless such employee
owns more than 10% of the outstanding Common Stock or stock of any
subsidiary or parent of the Company, in which case the exercise price of
any incentive stock option may not be less than 110% of such fair market
value. No option may be exercisable more than ten years after the date of
grant and, in the case of an incentive stock option granted to an eligible
employee owning more than 10% of the outstanding Common Stock or stock of
any subsidiary or parent of the Company, no more than five years from its
date of grant. Options are not transferable, except upon the death of the
optionee. In general, upon termination of employment of an optionee, all
options granted to such person which are not exercisable on the date of
such termination immediately expire, and any options that are exercisable
expire three months following termination of employment if such termination
is not the result of death or retirement, two years following such
termination if such termination was because of death and one year following
such termination if such termination was because of disability or
retirement under the provisions of any retirement plan that may be
established by the Company, or with the consent of the Company.
At the time each grant of restricted shares or performance shares or
units is made, the Compensation Committee will determine the duration of
the performance or restriction period, if any, the performance targets, if
any, for earning performance shares or units, and the times at which
restrictions placed on restricted shares shall lapse.
CERTAIN TRANSACTIONS
In the first quarter of 1996, the Selling Stockholders reorganized
their businesses by consolidating them into the Company. The Selling
Stockholders transferred all of the issued and outstanding stock of each of
16 Sub-chapter S corporations along with various other assets to the
Company in exchange for 2,168,257 shares of the Company's Common Stock. A
partnership in which the Selling Stockholders are the sole partners
transferred to the Company substantially all of its assets, subject to
substantially all of its liabilities, in exchange for 1,084,128 shares of
the Company's Common Stock. The partnership distributed the shares
received to the Selling Stockholders. Six Sub-chapter S corporations which
were wholly-owned by the Selling Stockholders were merged into the Company.
Pursuant to the mergers the shares of the four merged companies were
converted into an aggregate of 6,747,615 shares of the Company's Common
Stock. After the reorganization was complete, the Selling Stockholders
owned an aggregate of 10,000,000 shares of the Company's Common Stock.
Prior to the reorganization discussed above, the business of the
Selling Stockholders was conducted through a partnership and various Sub-
chapter S corporations. These entities made distributions to each of the
Selling Stockholders of $5,495,500, $943,000 and $850,000 in 1994, 1995 and
1996 respectively.
During Fiscal 1995 and the first quarter of the current fiscal year,
the Company paid to Francine Rodin, the wife of Bernard M. Rodin, the
Company's Chief Operating Officer, President and a Director, $121,876 and
$30,500, respectively, as fees for introducing to the Company
broker/dealers that have assisted the Company in the sale of limited
partnership interests in Investing Partnerships. Mrs. Rodin will receive a
fee with respect to any future sales of such limited partnership interests
and other securities offered by the Company, including shares of Common
Stock offered hereby, by such broker/dealers. During Fiscal 1995 and the
first quarter of the current fiscal year, Francine Rodin received
consulting fees of $51,510 and $23,322, respectively, in connection with
coordinating the Company's travel arrangements and marketing efforts.
Michele R. Jawin, the daughter of Mr. Rodin and wife of Paul Jawin,
the Company's Chief Financial Officer, is of counsel to Reid & Priest LLP,
which acts as securities counsel to the Company, including in connection
with this offering.
Messrs. Luciani and Rodin, the Chairman of the Board and President of
the Company, respectively, and entities controlled by them serve as general
partners of partnerships directly and indirectly owning multi-family
properties and on account of such general partner status have personal
liability for recourse partnership obligations and own small equity
ownership interests in the partnerships. The Company holds notes,
aggregating $163.6 million, that are secured by the limited partnership
interests in such partnerships. These individuals have provided personal
guarantees in certain circumstances to obtain mortgage financing for
certain adult living communities operated by the Company and for certain of
the Company's Investor Note Debt, and the obligations thereunder may
continue. In addition, Messrs. Luciani and Rodin and certain employees
will devote a portion of their time to overseeing the third-party managers
of multi-family properties and one adult living community in which Messrs.
Luciani and Rodin have financial interests but the Company does not.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information as of June 14,
1996, before and after giving effect to the Minimum Offering and the
Maximum Offering, regarding the beneficial ownership of the Company's
Common Stock by (i) each executive officer and director of the Company,
(ii) each stockholder known by the Company to beneficially own 5% or more
of such Common Stock, (iii) each Selling Stockholder and (iv) all directors
and officers as a group. Except as otherwise indicated, the address of
each beneficial holder of 5% or more of such Common Stock is the same as
the Company.
BEFORE OFFERING
---------------
BENEFICIAL OWNER NUMBER % SHARES OFFERED(1)
---------------- ------ - -----------------
John Luciani . . . . . . 5,000,000 50% 138,889
Bernard M. Rodin . . . . 5,000,000 50% 138,889
All directors and
officers as a
group . . . . . . . . . 10,000,000 100% 277,778
AFTER AFTER
MINIMUM MAXIMUM
OFFERING OFFERING
---------------- --------------
BENEFICIAL OWNER NUMBER % NUMBER %
---------------- ------ - ------ -
John Luciani . . . . . . . . . 4,930,555.5 44% 4,861,111 39%
Bernard M. Rodin . . . . . . . 4,930,555.5 44% 4,861,111 39%
All directors and
officers as a
group . . . . . . . . . . . . 9,861,111 88% 9,722,222 78%
----------
(1) The number of shares to be sold by the Selling Stockholders will equal
10% of the aggregate number of shares to be sold in this Offering.
DESCRIPTION OF CAPITAL STOCK
There are currently 30,000,000 authorized shares of Common Stock. The
Company also currently has authorized 1,000,000 shares of Preferred Stock,
par value $.0001 per share (the "Preferred Stock"). Upon completion of the
Minimum Offering, there will be outstanding: (a) 11,250,000 shares of
Common Stock, consisting of (i) the 9,861,111 shares currently owned by the
Selling Stockholders and not offered hereby; (ii) the 1,250,000 shares to
be sold by the Company hereby; and (iii) the 138,889 shares to be sold by
the Selling Stockholders hereby; and (b) no shares of Preferred Stock.
Upon completion of the Maximum Offering, there will be outstanding: (a)
12,500,000 shares of Common Stock, consisting of (i) 9,722,222 shares
currently owned by the Selling Stockholders and not offered hereby; (ii)
2,500,000 shares to be sold by the Company hereby; (iii) the 277,778 shares
to be sold by the Selling Stockholders hereby and (b) no shares of
Preferred Stock.
The following summary description relating to the Common Stock, and
the Preferred Stock does not purport to be complete. A description of the
Company's capital stock is contained in the Certificate of Incorporation of
the Company (the "Certificate"), which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Reference is
made to such exhibit for a detailed description of the provisions thereof
summarized below.
COMMON STOCK
The Certificate authorizes the Company to issue 30,000,000 shares of
Common Stock. All shares outstanding upon completion of this offering will
be validly issued, fully paid and non-assessable.
Stockholders of the Company have no preemptive rights or other rights
to subscribe for additional shares. Subject to the rights of holders of
Preferred Stock and Long-term Debt all holders of Common Stock, regardless
of class, are entitled to share equally on a share-for-share basis in any
assets available for distribution to stockholders on liquidation,
dissolution or winding up of the Company. No shares of any class of Common
Stock have conversion rights or are subject to redemption.
Holders of Common Stock are entitled to receive such dividends, if
any, as may be declared by the Company's Board of Directors out of funds
legally available therefor, but only if all dividends due on the
outstanding Preferred Stock have been paid.
PREFERRED STOCK
The authorized capital stock of the Company includes 1,000,000 shares
of Preferred Stock. The Board of Directors is authorized to fix the
rights, preferences, privileges and restrictions of any series of Preferred
Stock, including the dividend rights, original issue price, conversion
rights, voting rights, terms of redemption, liquidation preferences and
sinking fund terms thereof, and the number of shares constituting any such
series and the designation thereof and to increase or decrease the number
of shares of such series subsequent to the issuance of shares of such
series (but not below the number of shares of such series then
outstanding). Because the terms of the Preferred Stock can be fixed by the
Board of Directors without stockholder action, the Preferred Stock could be
issued quickly with terms calculated to defeat a proposed takeover of the
Company or to make the removal of management more difficult. The Board of
Directors, without stockholder approval, could issue Preferred Stock with
dividend, voting and conversion rights which could adversely affect the
rights of the holders of Common Stock. At present, the Company has no
plans to issue any Preferred Stock.
CERTAIN DELAWARE LAW PROVISIONS
Section 203 of the Delaware Law prevents an "interested stockholder"
(defined in Section 203, generally, as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with a publicly held Delaware
corporation for three years following the date such person became an
interested stockholder unless: (i) before such person became an interested
stockholder, the board of directors of the corporation approved the
transaction in which the interested stockholder became an interested
stockholder or approved the business combination; (ii) upon consummation of
the transaction that resulted in the interested stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with
the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following
the date on which such person became an interested stockholder, the
business combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of 66-2/3% of the outstanding voting stock of the
corporation not owned by the interested stockholder. Section 203 may have
a depressive effect on the market price of the Common Stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE COMPANY'S CERTIFICATE OF
INCORPORATION AND BY-LAWS
Certain provisions of the Certificate and By-Laws of the Company
summarized in the following paragraphs will become operative immediately
prior to consummation of this offering and may be deemed to have an anti-
takeover effect and may delay or prevent a tender offer or takeover attempt
that a stockholder might consider in its best interest, including those
attempts that might result in a premium over the market price for the
shares held by stockholders. These provisions may have a depressive effect
on the market price of the Common Stock.
SPECIAL MEETING OF STOCKHOLDERS. The Certificate provides that
special meetings of stockholders of the Company may be called only by the
Board of Directors. This provision will make it more difficult for
stockholders to take action opposed by the Board of Directors. This
provision of the Certificate may not be amended or repealed by the
stockholders of the Company, except with the approval of the holders of
two-thirds of the Company's outstanding Common Stock.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT. The Certificate provides
that no action required or permitted to be taken at any annual or special
meeting of the stockholders of the Company may be taken without a meeting,
and the power of stockholders of the Company to consent in writing, without
a meeting, to the taking of any action is specifically denied. Such
provision limits the ability of any stockholders to take action immediately
and without prior notice to the Board of Directors. Such a limitation on a
majority stockholder's ability to act might impact such person's or
entity's decision to purchase voting securities of the Company. This
provision of the Certificate may not be amended or repealed by the
stockholders of the Company, except with the approval of the holders of
two-thirds of the Company's outstanding Common Stock.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The By-Laws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate
candidates for election as directors at an annual or special meeting of
stockholders, must provide timely notice thereof in writing. To be timely,
a stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company (a) in the case of an annual
meeting that is called for a date that is within 30 days before or after
the anniversary date of the immediately preceding annual meeting of
stockholders, not fewer than 60 days nor more than 90 days prior to such
anniversary date and (b) in the case of the annual meeting to be held
during the first complete fiscal year following the date of this Prospectus
and in the case of an annual meeting that is called for a date that is not
within 30 days before or after the anniversary date of the immediately
preceding annual meeting, or in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than
the close of business on the tenth day following the day on which notice of
the date of the meeting was mailed or public disclosure of the date of the
meeting was made, whichever occurs first. The By-Laws also specify certain
requirements for a stockholder's notice to be in proper written form.
These provisions may preclude some stockholders from bringing matters
before the stockholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting. As set forth
below, the By-Laws may not be amended or repealed by the stockholders of
the Company, except with the approval of holders of two-thirds of the
Company's outstanding Common Stock.
ADJOURNMENT OF MEETINGS OF STOCKHOLDERS. The By-Laws provide that
when a meeting of stockholders of the Company is convened, the presiding
officer, if directed by the Board of Directors, may adjourn the meeting, if
no quorum is present for the transaction of business or if the Board of
Directors determines that adjournment is necessary or appropriate to enable
the stockholders to consider fully information the Board of Directors
determines has not been made sufficiently or timely available to
stockholders or to otherwise effectively exercise their voting rights.
This provision will, under certain circumstances, make more difficult or
delay actions by the stockholders opposed by the Board of Directors. The
effect of such provision could be to delay the timing of a stockholders'
meeting, including in cases where stockholders have brought proposals
before the stockholders that are in opposition to those brought by the
Board of Directors and therefore may provide the Board of Directors with
additional flexibility in responding to such stockholder proposals. As set
forth below, the By-Laws may not be amended or repealed by the stockholders
of the Company, except with the approval of holders of two-thirds of the
Company's outstanding Common Stock.
AMENDMENT OF THE BY-LAWS. The Certificate provides that the By-Laws
may be amended or repealed by the Board of Directors and may not be amended
or repealed by the stockholders of the Company, except with the consent of
holders of two-thirds of the Company's outstanding Common Stock. This
provision will make it more difficult for stockholders to make changes to
the By-Laws that are opposed by the Board of Directors. This provision of
the Certificate may not be amended or repealed by the stockholders of the
Company, except with the approval of the holders of two-thirds of the
Company's outstanding Common Stock.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar will be First Union
National Bank of North Carolina.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for securities
of the Company. No prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of shares of
Common Stock for sale will have on the market price prevailing from time to
time. Nevertheless, sales of substantial amounts of Common Stock of the
Company in the public market after the lapse of the restrictions described
below could adversely affect the prevailing market price and the ability of
the Company to raise equity capital in the future at a time and price it
deems appropriate.
Upon completion of the Minimum Offering, the Company will have
outstanding 11,250,000 shares of Common Stock. Upon completion of the
Maximum Offering, the Company will have outstanding 12,500,000 shares of
Common Stock. Of these shares, 1,388,889 shares of Common Stock,
representing all of the shares sold in the Minimum Offering, or 2,777,778
shares of Common Stock, representing all of the shares sold in the Maximum
Offering, as the case may be, will be freely tradeable without restriction
or limitation under the Securities Act, except for shares, if any,
purchased by an "affiliate" of the Company (as defined in the rules and
regulations of the Commission under the Securities Act) which shares will
be subject to the resale limitations of Rule 144 under the Securities Act.
The remaining outstanding shares are "restricted" shares within the meaning
of Rule 144 (the "Restricted Shares"). The Restricted Shares outstanding
on the date hereof were issued and sold by the Company in private
transactions in reliance upon exemptions from registration under the
Securities Act and may be sold only if they are registered under the
Securities Act or unless an exemption from registration, such as the
exemption provided by Rule 144 under the Securities Act, is available.
In general, under Rule 144, as currently in effect, any person (or
persons whose shares are aggregated), including an affiliate, who has
beneficially owned Restricted Shares for at least a two-year period (as
computed under Rule 144) is entitled to sell within any three-month period
a number of such shares that does not exceed the greater of (i) 1% of the
then outstanding shares of Common Stock (approximately 112,500 shares after
giving effect to the Minimum Offering and approximately 125,000 shares
after giving effect to the Maximum Offering) and (ii) the average weekly
trading volume in the Company's Common Stock during the four calendar weeks
immediately preceding such sale. Sales under Rule 144 are also subject to
certain provisions relating to the manner and notice of sale and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed an affiliate of the
Company at any time during the 90 days immediately preceding a sale, and
who has beneficially owned Restricted Shares for at least a three-year
period (as computed under Rule 144), would be entitled to sell such shares
under Rule 144(k) without regard to the volume limitation and other
conditions described above.
PLAN OF DISTRIBUTION
The shares of Common Stock are being offered on a "best-efforts" basis
through Participating Dealers ("Participating Dealers") who are members of
the National Association of Securities Dealers, Inc. (the "NASD"). The
Company has agreed to indemnify all Participating Dealers against certain
liabilities, including liabilities under the Securities Act of 1933. The
Company will pay the Participating Dealers a selling commission of up to 6%
of the offering price ($1.08 per share) for all shares of Common Stock
sold. The foregoing will be paid upon the closing of the offering. In
addition, the Company will reimburse Participating Dealers for due
diligence expenses and provide a non-accountable expense allowance in the
aggregate amount of up to 1% per share ($.18 per share) and will pay
wholesalers or finders fees in the aggregate amount of up to 1% per share
($.18 per share). No Participating Dealers are affiliated with the
Company.
There is no lead underwriter for this offering. Participating Dealers
will execute Selling Agency Agreements with the Company; however, such
Participating Dealers will be under no obligation to sell any or all of the
Shares of Common Stock offered hereby. The Division of Corporation Finance
of the U.S. Securities and Exchange Commission has taken the position that
any broker/dealer that sells shares of Common Stock in the offering may be
deemed an underwriter as defined in Section 2(11) of the Securities Act of
1933, as amended. The Company currently has not entered into Selling
Agency Agreements with any brokers or dealers. The Company anticipates
that it will enter into Selling Agency Agreements with Participating
Dealers. The Company reserves the right to enter into Selling Agency
Agreements with Participating Dealers after the commencement of this
offering. There is no assurance that, even if any Participating Dealers
sell the shares of Common Stock offered hereby, a court of competent
jurisdiction or arbitration panel would deem any such Participating Dealer
to be an underwriter as so defined.
The shares of Common Stock are being offered subject to prior sale,
withdrawal, cancellation or modification of the offer, including its
structure, terms and conditions, without notice. The Company reserves the
right, in its sole discretion, to reject, in whole or in part, any offer to
purchase the shares of Common Stock.
The Company intends to sell the shares of Common Stock in this
offering only in the states in which the offering is qualified. An offer
to purchase may only be made and the purchase of the shares of Common Stock
may only be negotiated and consummated in such states. The Subscription
Agreement for the shares of Common Stock must be executed, and the shares
of Common Stock may be delivered only in, such states. Resale or transfer
of the shares of Common Stock may be restricted under state law.
If the Company does not terminate the offering earlier, which it may,
in its sole discretion, the offering of shares of Common Stock will
continue until the Company raises an aggregate of $50,000,000, provided
that the offering period for all of the shares of Common Stock of the
Company will not exceed 120 days from the date of this Prospectus.
The Participating Dealers have agreed in accordance with the
provisions of Rule 15c2-4 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, to cause
all funds received upon subscription for shares of Common Stock to be
forwarded to the Escrow Agent upon the receipt of the executed Subscription
Agreement and related funds by the Participating Dealer by or before noon
of the next business day following the subscription for said shares of
Common Stock.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price has been unilaterally determined
by the Company without being negotiated with an underwriter or other third
party. Among the factors considered by the Company in determining the
price were the history of, and the prospects for, the Company and the
industry in which it competes, its past and present operations, its past
and present earnings and the trend of such earnings, the prospects for
future earnings, the present state of the Company's development, the
general condition of the securities markets at the time of this offering,
and the recent market prices of publicly traded common stocks of comparable
companies.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed
upon for the Company by Reid & Priest LLP.
EXPERTS
The consolidated financial statements and financial statement schedule
of the Company as of January 31, 1995 and 1996 and for each of the three
years in the period ended January 31, 1996, included in this Prospectus and
Registration Statement have been audited by DELOITTE & TOUCHE LLP,
independent accountants, as set forth in their reports thereon appearing
elsewhere herein, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-1 under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of
the Commission thereunder. For further information with respect to the
Company and the Common Stock, reference is made to the Registration
Statement and the exhibits and schedules thereto. The Registration
Statement, including exhibits and schedules thereto, may be inspected and
copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies may be obtained at the prescribed rates
from the Public Reference Section of the Commission at its principal office
in Washington, D.C. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
The Company intends to furnish to its stockholders annual reports
containing financial statements audited by an independent certified public
accounting firm and quarterly reports containing unaudited financial
information for the first three quarters of each fiscal year.
GRAND COURT LIFESTYLES, INC. and SUBSIDIARIES
__________
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
__________
Page
----
Independent Auditors' Report F-2
Consolidated Balance Sheets as of January 31, 1995 and 1996 F-3
Consolidated Statements of Operations for the Years ended
January 31, 1994, 1995 and 1996 F-4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended January 31, 1994, 1995 and 1996 F-5
Consolidated Statements of Cash Flows for the Years Ended
January 31, 1994, 1995 and 1996 F-6
Notes to Consolidated Financial Statements F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Grand Court Lifestyles, Inc.
Boca Raton, Florida
We have audited the accompanying consolidated balance sheets of Grand Court
Lifestyles, Inc. and subsidiaries as of January 31, 1996 and 1995 and the
related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended January 31,
1996. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Grand
Court Lifestyles, Inc. and subsidiaries as of January 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the
three years in the period ended January 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
April 26, 1996
Except for Note 11, as to which the date is June 11, 1996
<PAGE>
GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 1995 AND 1996
(In Thousands)
--------------------------------------------------------------------------
1995 1996
---------- ----------
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . $ 10,950 $ 17,961
Notes and receivables - net . . . . . . . . . . . . 220,014 223,736
Investments in partnerships . . . . . . . . . . . . 3,002 3,794
Other assets - net . . . . . . . . . . . . . . . . 15,081 15,251
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . $249,047 $260,742
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Loans and accrued interest payable . . . . . . . . $127,355 $140,094
Notes and commissions payable . . . . . . . . . . . 3,569 1,684
Other liabilities . . . . . . . . . . . . . . . . . 2,000 4,018
Deferred income . . . . . . . . . . . . . . . . . . 84,955 79,442
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . 217,879 225,238
Commitments and contingencies
Stockholders' equity
Preferred Stock, $.0001 par value;
1,000 shares authorized;
none issued and outstanding . . . . . . . . . . . -- --
Common Stock, $.01 par value -
authorized, 30,000 shares;
issued and outstanding, 10,000 shares . . . . . . 100 100
Paid-in capital . . . . . . . . . . . . . . . . . 31,068 35,404
-------- --------
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . 31,168 35,504
-------- --------
Total liabilities and stockholders' equity . . . . $249,047 $260,742
======== ========
See Notes to Consolidated Financial Statements.
<PAGE>
GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED JANUARY 31, 1994, 1995 AND 1996
(In Thousands)
--------------------------------------------------------------------------
1994 1995 1996
------- ------- --------
Revenues:
Sales . . . . . . . . . . . . $29,461 $29,000 $41,407
Deferred profit earned . . . . . . . . . 6,668 3,518 9,140
Interest income . . . . . . . . . . . . . 13,315 9,503 12,689
Property management fees
and other income . . . . . . . . . . . 4,079 4,278 5,075
------- ------- -------
53,523 46,299 68,311
------- ------- -------
Cost and Expenses:
Cost of sales . . . . . . . . . . . . 26,548 21,249 27,112
Selling . . . . . . . . . . . . 6,706 6,002 7,664
Interest . . . . . . . . . . . . 10,991 13,610 15,808
General and administrative . . . . . . . 5,226 6,450 7,871
Officers' Compensation . . . . . . . . . 1,200 1,200 1,200
Depreciation and amortization . . . . . . 1,433 2,290 2,620
------- -------- -------
52,104 50,801 62,275
------- -------- -------
Net income (loss) . . . . . . . . . . . . . 1,419 (4,502) 6,036
Pro forma income tax provision (benefit) . 568 (1,801) 2,414
------- -------- -------
Pro forma net income (loss) . . . . . . . . $ 851 $ (2,701) $ 3,622
======= ======== =======
Pro forma earnings (loss) per common share $ .09 $ (.27) $ .36
======= ======== =======
See Notes to Consolidated Financial Statements.
<PAGE>
GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JANUARY 31, 1994, 1995 AND 1996
(In Thousands)
--------------------------------------------------------------------------
Stockholders' equity, January 31, 1993 . . . . . . . . . . $47,128
Net income . . . . . . . . . . . . . . . . . . . . . . . 1,419
Dividends . . . . . . . . . . . . . . . . . . . . . . . . (10,991)
-------
Stockholders' equity, January 31, 1994 . . . . . . . . . . 37,556
Net loss . . . . . . . . . . . . . . . . . . . . . . . . (4,502)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . (1,886)
-------
Stockholders' equity, January 31, 1995 . . . . . . . . . . 31,168
Net income . . . . . . . . . . . . . . . . . . . . . . . 6,036
Dividends . . . . . . . . . . . . . . . . . . . . . . . . (1,700)
-------
Stockholders' equity, January 31, 1996 . . . . . . . . . . $35,504
=======
See Notes to Consolidated Financial Statements.
<PAGE>
GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JANUARY 31, 1994, 1995 and 1996
(In Thousands)
--------------------------------------------------------------------------
1994 1995 1996
------- ------- -------
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . $ 1,419 $(4,502) $ 6,036
------- ------- -------
Adjustments to reconcile net income
to net cash provided by
operating activities:
Amortization and depreciation . . . . . 1,433 2,290 2,620
Adjustment for changes in assets
and liabilities:
Accrued interest income on notes
receivable and receipt of notes
receivable . . . . . . . . . . . . (1,241) 174 (2,560)
(Increase) decrease in notes
and receivables . . . . . . . . . . . 7,945 7,223 (1,162)
Increase in commissions payable . . . . 7,016 5,242 9,239
Increase (decrease) in other
liabilities . . . . . . . . . . . . . (1,278) (506) 2,018
Increase in deferred income . . . . . . 4,401 632 3,627
------- ------- -------
18,276 15,055 13,782
------- ------- -------
Net cash provided by operating
activities . . . . . . . . . . . . . 19,695 10,553 19,818
------- ------- -------
Cash flows used in investing activities:
Increase in other assets . . . . . . . . (2,701) (7,180) (2,790)
Increase in investments . . . . . . . . . (641) (736) (792)
------- ------- -------
Net cash used in investing
activities . . . . . . . . . . . . . (3,342) (7,916) (3,582)
------- ------- -------
Cash flows used in financing
activities:
Decrease in loans payable . . . . . . . . (21,629) (31,311) (39,326)
Increase in loans and accrued
interest payable . . . . . . . . . . . 34,429 44,014 52,065
Payments of commissions payable . . . . . (6,005) (5,743) (9,483)
Payments of notes payable . . . . . . . . (2,609) (2,578) (1,641)
Deferred income earned . . . . . . . . . (6,668) (3,518) (9,140)
Distributions . . . . . . . . . . . . (10,991) (1,886) (1,700)
-------- -------- --------
Net cash used in financing
activities . . . . . . . . . . . . (13,473) (1,022) (9,225)
-------- -------- --------
Increase in cash and cash equivalents . . . 2,880 1,615 7,011
Cash and cash equivalents, beginning
of year . . . . . . . . . . . . 6,455 9,335 10,950
-------- -------- --------
Cash and cash equivalents, end of year . . $ 9,335 $10,950 $17,961
======== ======== ========
Supplemental information:
Interest paid . . . . . . . . . . . . $10,710 $12,914 $16,922
======== ======== ========
See Notes to Consolidated Financial Statements.
<PAGE>
GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 1994, 1995 AND 1996
(In Thousands)
--------------------------------------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION
Grand Court Lifestyles, Inc. (the "Company"), was formed pursuant to
the merger into the Company of various affiliated Sub-chapter S
corporations owned by the Selling Stockholders and the transfer of
certain assets from and assumption of certain liabilities of the
Selling Stockholders and a partnership owned by the Selling
Stockholders (these transactions are, collectively, the
"Reorganization"). The Reorganization was effective as of April 1,
1996. The Company, a fully integrated provider of adult living
accommodations and services, acquires, finances, develops and manages
adult living communities. As a result of the Company's financing
activities, limited partnerships ("Investing Partnerships") are formed
whereby the Company retains a 1% to 2.5% general partnership interest.
LINE OF BUSINESS - The Company is involved in acquiring, financing,
developing and managing adult living communities. The Company
receives a significant portion of its income from the sale of
partnership interests in partnerships which own adult living
communities ("Owning Partnerships"). Another source of income is
interest income on notes receivable.
The adult living communities and multi-family properties are located
throughout the United States. The Company as of January 31, 1996
manages approximately 30 adult living centers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS - The Company considers cash and cash
equivalents to include cash on hand, demand deposits and highly liquid
investments with maturities of three months or less.
REVENUE RECOGNITION - Revenue from sales of interests in Owning
Partnerships as discussed in Note 1, is recognized under the full
accrual method of accounting when the profit on the transaction is
determinable, that is, the collectibility of the sales price is
reasonably assured and the earnings process is virtually complete.
The Company determines the collectibility of the sales price by
evidence supporting the buyers' substantial initial and continuing
investment in the adult living communities as well as other factors
such as age, location and cash flow of the underlying property.
The Company has deferred revenue on the above transactions in
connection with the Company's guarantee of cash flow to the investors
The Company has generally guaranteed an 11% to 12% return to the
investors on cash invested in the respective limited partnerships for
a period of approximately 5 years from the date the respective
partnership interests are sold. The amount of the deferred revenue is
calculated by determining the difference between the underlying
property's cash flow and the amount needed to meet the investors'
future guarantee and is included in deferred income. Any changes in
the deferred income either due to a passage of time or to a decrease
or increase in the underlying property's cash flow is recorded as
additional income or expense in the year determined.
For properties that do not meet the Company's revenue recognition
policy the Company accounts for such sales under the installment
method. Under the installment method the gross profit is determined
at the time of sale. The revenue recorded in any given year would
equal the cash collections multiplied by the gross profit percentage.
The Company has deferred all future income to be recognized on these
transactions. Losses on these projects are recognized immediately
upon sale.
ALLOWANCE ON NOTES RECEIVABLE - In the event that the facts and
circumstances indicate that the collectibility of a note may be
impaired, an evaluation of recoverability is performed. If an
evaluation is performed the Company compares the recorded value of the
note to the value of the underlying property less any encumbrances to
determine if a write-down to market value is required.
ACCOUNTING ESTIMATES - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make significant estimates and assumptions that affect
the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
DEFERRED FINANCING AND DEBT EXPENSE - Costs incurred in connection
with obtaining long-term financing have been capitalized and are
amortized over the term of the financing.
INVESTMENTS - The Company accounts for its interest in limited
partnerships under the equity method of accounting. The Company uses
this method because as the general partner it can exercise significant
influence over the operating and financial policies of such
partnerships. Under this method the Company records its share of
income and loss of the entity as well as any distributions or
contributions as an increase or decrease to the investment account.
The carrying amount of the investments in limited partnerships differs
from the Company's underlying equity interest based upon its stated
ownership percentages. Such differences are attributable to the
disproportionate amount of money and notes invested in the entities by
the Company for its equity interest as compared to the other
investors. This difference is being amortized over the life of the
underlying partnership assets.
MANAGEMENT FEES - Property management fees are recognized as revenue
when related services have been performed.
PRO FORMA INCOME TAXES - The Reorganization occurred subsequent to
year end and, as such, income tax provisions at a combined Federal and
state tax rate of 40% have been provided on a pro forma basis. The
various Sub-chapter S corporations which were either merged into or
acquired by the Company and the partnership which transferred assets
to the Company were not required to pay taxes because any taxes were
the responsibility of the Seller Stockholders who were the sole
shareholders and partners of those entities.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
In December 1991, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments." The Company is unable to
determine the fair value of its notes and receivables as such
instruments do not have a ready market. Other financial instruments
are believed to be stated at approximately their fair value.
4. NOTES AND RECEIVABLES
Notes and other receivables consist of the following:
JANUARY 31,
1995 1996
-------- --------
Notes and accrued interest receivable
(a) and (b) . . . . . . . . . . . . . $168,339 $165,986
Loans receivable . . . . . . . . . . . 10,367 10,417
Other receivables(c) . . . . . . . . . 46,984 53,145
Mortgages(d) . . . . . . . . . . . . . 7,324 7,188
-------- --------
233,014 236,736
Less allowance for uncollectible
receivables . . . . . . . . . . . . . 13,000 13,000
-------- --------
$220,014 $223,736
======== ========
(a) The Company has notes receivable from the Investing Partnerships,
which were formed to acquire controlling interests in Owning
Partnerships which own adult living communities. Such notes
generally have interest rates ranging from 11% to 13.875% and are
due in installments over five years from the date of acquisition
of the respective controlling interests. The notes represent
senior indebtedness of the related Investing Partnerships, and
are collateralized by the respective interests in the Owning
Partnerships. These properties are generally encumbered by
mortgages. Principal and interest payments on each note are also
collateralized by the investor notes payable to the Investing
Partnerships to which the investors are admitted. The Company
has recorded the notes receivable net of the investor note
collections.
(b) The Company has notes receivable from the Investing Partnerships
which were formed to acquire controlling interests in Owning
Partnerships which own multi-family properties. The notes have
maturity dates ranging from ten to fifteen years from the date of
the acquisition of the respective controlling interests. Several
notes have reached their final maturity dates and these final
maturity dates have been extended by the Company. It is the
Company's intention to collect the principal and interest
payments on the aforementioned notes from the cash flows
distributed by the related multi-family properties and the
proceeds in the event of a sale or refinancing.
(c) Other receivables represent reimbursable expenses and advances
made to the limited partnerships. These amounts do not bear
interest and have no specific repayment date.
(d) The mortgages bear interest at rates ranging from 8% to 9%. The
mortgages are generally collateralized by a mortgage lien on the
related adult living communities.
5. OTHER ASSETS
a. Financing costs of $2,410 and $3,578 were capitalized during the
years ended January 31, 1995 and 1996, respectively. These costs
are being amortized over periods ranging from one to ten years.
The unamortized balance at January 31, 1995 and 1996 amounted to
$6,910 and $7,994, respectively.
b. The Company has approximately a 50% equity interest in Caton
Associates, a limited partnership which owns a mortgage loan
collateralized by interests in a cooperative apartment building.
The Company's equity interest in this partnership totaled $466 at
January 31, 1995 and 1996. Additionally, the Company owns
certain cooperative apartments recorded at $1,388 at January 31,
1995 and 1996.
c. The Company has capitalized $595 of remaining costs associated
with the financing of the acquisition of an adult living
community by arranging for the sale of partnership interests,
which were substantially sold at January 31, 1996. Upon
completion of the transaction such costs will be charged to cost
of sales.
6. LOANS AND ACCRUED INTEREST PAYABLE
Loans payable consists of the following:
JANUARY 31,
1995 1996
-------- --------
Banks (including mortgages) (a) and (b) $ 39,261 $ 41,361
Other, principally debentures (c) . . . 88,094 98,733
-------- --------
$127,355 $140,094
======== ========
(a) The bank loans bear interest per annum at the banks' prime rate plus
1% to 2%. The bank loans generally have terms of at least one year,
but in the event a particular bank elects not to renew or extend the
credit, the entire unpaid balance is converted to a term loan which
self-liquidates in four to five years. Generally the bank loans are
collateralized by the Company's entitlement to the assigned limited
partner investor notes which serve as collateral for the respective
purchase notes.
(b) In addition to the aforementioned bank loans, the Company has three
additional loans from banks. Each of the loans are collateralized by
an assignment of the first mortgage loans payable to the Company. Two
of the loans bear interest at rates varying from 8% to 9% per annum
and come due on various dates through 1996. In March 1996, the
partnerships that own these properties refinanced two of these
mortgages, which eliminated them as obligations of the Company. The
third loan bears interest at the rate of 9.5% per annum and matures on
March 31, 1997.
(c) Debentures are collateralized by various purchase notes and investor
notes related to multi-family property financings. They mature in
1996 through 2003 and bear interest rates of 11% to 12% per annum.
Future annual maturities, excluding interest, over the next five years and
thereafter, are as follows:
Year Ending
January 31
-----------
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,170
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,887
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,660
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,426
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,428
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . 26,628
--------
139,199
Accrued interest . . . . . . . . . . . . . . . . . . . . . 895
--------
$140,094
========
7. OTHER LIABILITIES
a. Other liabilities include advances and certain expenses. These
amounts do not bear interest and have no specific repayment date.
b. Unearned income of $963 was recorded for the amount of
unsubscribed partnership interests in an adult living community
financed during the year. Upon full subscription this amount
will be recognized as income.
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amount used for income taxes
purposes. The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are presented below:
Deferred tax assets:
Notes and receivables . . . . . . . . . . . . . . . . . . $ 8,920
Accrued expenses and other liabilities . . . . . . . . . 1,257
-------
Total gross deferred tax assets . . . . . . . . . . . . . 10,177
Less valuation allowance . . . . . . . . . . . . . . . . 2,760
-------
Deferred tax assets net of valuation allowance . . . . . . 7,417
-------
Deferred tax liabilities:
Deferred income . . . . . . . . . . . . . . . . . . . . . 4,560
Other assets . . . . . . . . . . . . . . . . . . . . . . 2,492
Investment in partnerships . . . . . . . . . . . . . . . 365
-------
Total gross deferred tax liabilities . . . . . . . . . . 7,417
-------
Net deferred tax assets (liabilities) . . . . . . . . . . . $ --
=======
As discussed in footnote 1, the Company became a taxable entity as of
April 1, 1996,therefore the current and prior year tax provision
(benefit) is presented on a pro forma basis at an effective tax rate
of approximately 40%. The Company has recorded a valuation allowance
of $2,760, because it was uncertain that such deferred tax assets in
excess of deferred tax liabilities would be realizable in future
years.
9. COMMITMENTS AND CONTINGENCIES
a. The Company and its principals have guaranteed $6,800 of
indebtedness relating to a refinanced first mortgage on a
property acquired by an Owning Partnership in 1988.
b. The Company rents office space under a lease expiring February
1997. Annual base rent under such lease is approximately $178.
The Company entered into a ten year lease for additional office
space, commencing September 1, 1991. The annual base rent is
approximately $113 and will increase 5% each year for ten years.
10. RELATED PARTY TRANSACTIONS
The Company has transactions with related parties that are
unconsolidated affiliates of the Company. The Company provides
management, accounting and bookkeeping services to such affiliates.
The Company receives a monthly fee in return for such management
services rendered on behalf of its affiliates for each of their adult
living communities. Aggregate fees for such services for the years
ended January 31, 1994, 1995 and 1996 totaled $1,010, $898 and $1,873,
respectively.
In addition, the Company has amounts due from unconsolidated
affiliates of $413 and $248 as of January 31, 1995 and 1996,
respectively.
The Chairman of the Board and President of the Company and entities
controlled by them serve as general partners of partnerships directly
and indirectly owning multi-family properties and on account of such
general partner status have personal liability for recourse
partnership obligations and own small equity ownership interests in
the partnerships. The Company holds note receivables, aggregating
$163,608, that are secured by the equity interests in such
partnerships. These individuals have provided personal guarantees in
certain circumstances to obtain mortgage financing for certain adult
living properties operated by the Company and for certain of the
Company's Investor Note Debt, and the obligations thereunder may
continue. In addition, such officers and certain employees will
devote a portion of their time to overseeing the third-party managers
of multi-family properties and one adult living community in which
such officers have financial interests but the Company does not.
These activities, ownership interests and general partner interests
create actual or potential conflicts of interest on the part of these
officers.
The Company is the managing general partner for 28 of the 29 owning
partnerships which own the 30 adult living communities and one nursing
home which the Company operates. The Company also is the general
partner for 22 of the 34 investing partnerships that own 99%
partnership interests in these owning partnerships. In addition, the
Company is the managing agent for all of the Company's 30 adult living
communities and one nursing home. The Company has financed the
acquisition of adult living communities through the sales of limited
partnership interests in the investing partnerships. By serving in
all of these capacities, the Company may have conflicts of interest in
that it has both a duty to act in the best interests of partners of
various partnerships, including the limited partners of the investing
partnerships, and the desire to maximize earnings for the Company's
stockholders in the operation of such adult living communities and
nursing home.
11. SUBSEQUENT EVENTS
a. Refinancings
Subsequent to January 31, 1996, the Company completed refinancings of ten
adult living communities. These transactions resulted in a return of
capital to the investors of $43,717. This refinancing reduced the
Company's obligations to guarantee the investors' returns as discussed in
Note 2. The Company was also able to reduce its overall indebtedness by
$8,900.
b. Letters of Intent
The Company has obtained a letter of intent, dated June 3, 1996, from
Fleet Bank to provide up to $40 million for financing of the construction
and the acquisition of existing communities and has obtained a letter of
intent, dated April 25, 1996, from Capstone Capital Corporation
("Capstone") to provide up to $39 million for the development of up to
four adult living communities that will be operated by the Company
pursuant to long-term leases with Capstone.
c. New Acquisition
The Company has entered into an agreement to acquire an additional
existing adult living community in Indianapolis, Indiana.
d. Capitalization
Prior to the effectiveness of the proposed public offering of the
Company's Common Stock, the Board of Directors and the stockholders are
expected to approve (i) the filing of a Restated Certificate of
Incorporation that would provide for, among other things, the
authorization of 30,000,000 shares of Common Stock and 1,000,000 shares
of Preferred Stock and a 1084.1284-for-1 stock split of the issued and
outstanding Common Stock and (ii) a Stock Option Plan reserving for
issuance up to 1,250,000 shares of Common Stock pursuant to stock options
and other stock awards. The proposed changes in the Company's capital
structure have been given retroactive effect in the accompanying
consolidated financial statements.
=================================== ===================================
UNTIL _____, 1996 (25 DAYS
AFTER THE COMMENCEMENT OF THIS
OFFERING), ALL DEALERS EFFECTING 2,777,778 SHARES
TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS GRAND COURT
UNDERWRITERS AND WITH RESPECT TO LIFESTYLES, INC.
THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------
TABLE OF CONTENTS
PAGE COMMON STOCK
----
Prospectus Summary . . . . . . . 2
Risk Factors . . . . . . . . . . 8
Use of Proceeds . . . . . . . . 15
Dividend Policy . . . . . . . . 16 ----------
Capitalization . . . . . . . . 17 PROSPECTUS
Dilution . . . . . . . . . . . 18 -----------
Selected Consolidated
Financial Data . . . . . . . 19
Management's Discussion
and Analysis
of Results of
Operations and
Financial Condition . . . . . 21
Business . . . . . . . . . . . 27
Management . . . . . . . . . . 40
Certain Transactions . . . . . 43
Principal and Selling
Stockholders . . . . . . . . 45
Description of Capital Stock . 46
Shares Eligible
for Future Sale . . . . . . . 48
Plan of Distribution . . . . . 50
Legal Matters . . . . . . . . . 51
Experts . . . . . . . . . . . . 51
Additional Information . . . . 51
Index to Consolidated
Financial Statements . . . . F-1
------------------
NO DEALER, SALESPERSON OR OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION
AND REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF
THE SELLING STOCKHOLDERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
UNDER NO CIRCUMSTANCES SHALL THE
DELIVERY OF THIS PROSPECTUS, OR ANY
SALE MADE PURSUANT TO THIS
PROSPECTUS, CREATE ANY IMPLICATION JUNE 13, 1995
THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF
THIS PROSPECTUS.
=================================== ==================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the Common Stock being
registered assuming both the Minimum Offering and the Maximum Offering.
All expenses will be borne by the Company, except that the Selling
Stockholders will pay a 10% pro rata share of the non-accountable expense
allowances and the wholesalers or finders fees.
Minimum Maximum
------- -------
Securities and Exchange
Commission
registration fee . . . . $17,241.38 $17,241.38
NASDAQ National Market
listing fee . . . . . . . 19,000 19,000
Accounting fees and expenses 900,000 * 900,000 *
Legal fees and expenses . . 250,000 * 250,000 *
Printing and engraving
expenses . . . . . . . . 130,000 * 130,000 *
Nonaccountable expense
allowances
Minimum . . . . . . . 250,000 * --
Maximum . . . . . . . -- 500,000 *
Wholesalers or finders fees
Minimum . . . . . . . 250,000 * --
Maximum . . . . . . . -- 500,000 *
Blue Sky fees and expenses 21,000 * 21,000 *
Transfer agent and registrar
fees and expenses . . . . 3,000 * 3,000 *
Escrow agent . . . . . . . 5,000 * 5,000 *
Miscellaneous . . . . . . . 14,758.62 * 14,758.62 *
------------- -------------
Total
Minimum . . . . . $1,860,000 *
==========
Maximum . . . . . $2,360,000 *
==========
----------------------------
* estimated
Item 14. Indemnification of Directors and Officers
Article IX of the Company's Restated Certificate of Incorporation
provides that:
"The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or complete
action, suit or proceeding, whether civil, criminal, administrative or
investigative, or by or in the right of the Corporation to procure judgment
in its favor, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, in accordance with and to the full extent permitted by
statute. Expenses incurred in defending a civil or criminal action, suit
or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this section. The
indemnification provided by this section shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled
under this Restated Certificate of Incorporation or any agreement or vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
Article X of the Company's By-Laws provides that:
"Any person made or threatened to be made a party to or involved
in any action, suit or proceeding, whether civil or criminal,
administrative or investigative (hereinafter, "proceeding") by reason of
the fact that he, his testator or intestate, is or was a director, officer
or employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended (but in the case of any such
amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) against all expense, loss
and liability (including, without limitation, judgments, fines, amounts
paid in settlement and reasonable expenses, including attorneys' fees),
actually and necessarily incurred or suffered by him in connection with the
defense of or as a result of such proceeding, or in connection with any
appeal therein. The Corporation shall have the power to purchase and
maintain insurance for the indemnification of such directors, officers and
employees to the full extent permitted under the laws of the State of
Delaware from time to time in effect. Such right of indemnification shall
not be deemed exclusive of any other rights of indemnification to which
such director, officer or employee may be entitled.
The right to indemnification conferred in this By-Law shall be a
contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its
final disposition; provided, however, that if the General Corporation Law
-------- -------
of the State of Delaware requires, the payment of such expenses incurred by
a director or officer in his or her capacity as a director or officer (and
not in any other capacity in which services were or are rendered by such
person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this By-Law or
otherwise."
Statutory
Generally, Section 145 of the General Corporation Law of the
State of Delaware authorizes Delaware corporations, under certain
circumstances, to indemnify their officers and directors against all
expenses and liabilities (including attorneys' fees) incurred by them as a
result of any suit brought against them in their capacity as a director or
an officer, if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, if they had no
reasonable cause to believe their conduct was unlawful. A director or
officer may also be indemnified against expenses incurred in connection
with a suit by or in the right of the corporation if such director or
officer acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was
adjudged liable to the corporation.
Item 15. Recent Sales of Unregistered Securities
Since January 31, 1993, the Company issued Debentures in ten
series, with interest rates ranging from 11% to 12%, and maturity dates
from 1996 to 2004 in an aggregate principal amount of $68,927,157.08. Each
series was issued in reliance on exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "1933 Act")
under Sections 3(b) and 4(2) of such act and Regulation D promulgated
thereunder to accredited investors and up to 35 non-accredited investors.
In connection with such issuances, the Company paid commissions to
qualified broker dealers of between 10% and 15%.
In connection with offerings of limited partnership interests in
limited partnerships organized to invest in adult living communities and
for which the Company has acted as general partner, the terms of the
partnership offerings guarantee that limited partners will receive
distributions during each of the first five years equal to between 11% and
12% of their paid-in capital. The Company is required to pay to limited
partners any part of such guaranteed return not paid from cash flow from
the related property. Since January 31, 1993, there were 14 such limited
partnership offerings for an aggregate of $138,500,000. Each such offering
was issued in reliance on exemptions from the registration requirements
under the 1933 Act under Sections 3(b) and 4(2) of such act and Regulation
D promulgated thereunder to accredited investors and up to 35 non-
accredited investors. In connection with such issuances, the Company paid
commissions to qualified brokers and dealers of between 10% and 15%.
Two limited partnerships for which the Company is general partner
have issued limited partnership interests for, in the aggregate,
$9,250,000, the net proceeds of which have been used to make second
mortgage loans to the Company to fund approximately 20% of the costs of
developing three new adult living communities. Each such offering was
issued in reliance on exemptions from the registration requirements under
the 1933 Act under Sections 3(b) and 4(2) of such act and Regulation D
promulgated thereunder to accredited investors and up to 35 non-accredited
investors. In connection with such issuances, the Company paid commissions
to qualified brokers and dealers of between 10% and 15%.
In connection with the reorganization of the Company's
businesses, the Company issued 10,000,000 shares of Common Stock to Messrs.
Luciani and Rodin in exchange for assets having an aggregate value of
$35,504,000. This offering was issued in reliance on exemptions from the
registration requirements under the 1933 Act under Sections 3(b) and 4(2)
of such act.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
**1 - Form of Selling Agreement.
2.1 - Consolidation Agreement dated as of April 1, 1996 among
John Luciani, Bernard M. Rodin, J&B Management Company
and the Company.
2.2(a) - Merger Agreement dated as of April 1, 1996 between
Leisure Centers, Inc. and the Company.
2.2(b) - Merger Agreement dated as of April 1, 1996 between
Leisure Centers Development, Inc. and the Company.
2.2(c) - Merger Agreement dated as of April 1, 1996 between J&B
Management Corp. and the Company.
2.2(d) - Merger Agreement dated as of April 1, 1996 between
Wilmart Development Corp. and the Company.
2.2(e) - Merger Agreement dated as of April 1, 1996 between
Sulgrave Realty Corporation and the Company.
2.2() - Merger Agreement dated as of April 1, 1996 between Riv
Development Inc. and the Company.
**3.1 - Restated Certificate of Incorporation of the Company.
**3.2 - By-Laws of the Company.
**4 - Form of Stock Certificate.
**5 - Form of Opinion of Reid & Priest LLP.
**10.1 - 1996 Stock Option and Performance Award Plan.
10.2 - Letter of Intent dated June 3, 1996 from Fleet Bank to
the Company.
10.3 - Letter of Intent dated April 25, 1996 from Capstone
Capital Corp. to the Company.
10.4(a) - Form of 12% Debenture due June 16, 2000 - Series 1.
10.4(b) - Form of 12% Debenture due April 15, 1999 - Series 2.
10.4(c) - Form of 11% Debenture due December 31, 1996 - Series 3.
10.4(d) - Form of 11.5% Debenture due April 15, 2000 - Series 4.
10.4(e) - Form of 12% Debenture due January 15, 2003 - Series 5.
10.4(f) - Form of 12% Debenture due April 15, 2003 - Series 6.
10.4(g) - Form of 11% Debenture due January 15, 2002 - Series 7.
10.4(h) - Form of 11% Debenture due January 15, 2002 - Series 8.
10.4(i) - Form of 12% Debenture due September 15, 2001 - Series
9.
10.4(j) - Form of 12% Debenture due January 15, 2004 - Series 10.
10.5(a) - Bank Agreement dated August 14, 1990 between The Bank
of New York and the Company with respect to 12%
Debentures, Series 1.
10.5(b) - First Amendment dated as of August 21, 1992 to Bank
Agreement dated August 14, 1990 between The Bank of New
York and the Company with respect to 12%
Debentures,Series 1.
10.5(c) - Bank Agreement dated October 11, 1991 between The Bank
of New York and the Company with respect to 12%
Debentures, Series 2.
10.5(d) - Bank Agreement dated October 17, 1991 between The Bank
of New York and the Company with respect to 11%
Debentures, Series 3.
10.5(e) - Bank Agreement dated April 1, 1992 between The Bank of
New York and the Company with respect to 11.5%
Debentures, Series 4.
10.5(f) - Bank Agreement dated October 30, 1992 between The Bank
of New York and the Company with respect to 12%
Debentures, Series 5.
10.5(g) - Bank Agreement dated May 24, 1993 between The Bank of
New York and the Company with respect to 12%
Debentures, Series 6.
10.5(h) - Bank Agreement dated October 27, 1993 between The Bank
of New York and the Company with respect to 11%
Debentures, Series 7.
10.5(i) - First Amendment dated November 29, 1993 to Bank
Agreement dated October 27, 1993 between The Bank of
New York and the Company with respect to 11%
Debentures,Series 7.
10.5(j) - Bank Agreement dated November 29, 1993 between The Bank
of New York and the Company with respect to 11%
Debentures, Series 8.
10.5(k) - Bank Agreement dated September 12, 1994 between The
Bank of New York and the Company with respect to 12%
Debentures, Series 9.
10.5(l) - Bank Agreement dated July 12, 1995 between The Bank of
New York and the Company with respect to 12%
Debentures, Series 10.
10.6(a) - Form of Short-term Step-up Bond due March 15, 2001 -
Series 1.
10.6(b) - Form of 12.375% Bond due April 15, 2003 - Series 2.
10.7(a) - Bank Agreement between The Bank of New York and the
Company with respect to Short-term Step-up Bonds -
Series 1.
10.7(b) - Bank Agreement between The Bank of New York and the
Company with respect to 12.375% Bonds - Series 2.
10.8 - Revolving Credit Agreement dated as of May 7, 1985
between Sterling National Bank & Trust Company and the
Company.
21 - List of Subsidiaries of the Company.
**23.1 - Consent of Reid & Priest LLP (to be included in
Exhibit 5 hereto).
23.2 - Consent of DELOITTE & TOUCHE LLP.
24 - Power of Attorney (included on Signature page).
27 - Financial Data Schedule
-----------------
** To be filed by amendment.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) The undersigned registrant hereby undertakes to provide to the
Transfer Agent at the closing certificates in such denominations and
registered in such names as required by the Transfer Agent to permit prompt
delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act") may be permitted
to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or con-
trolling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(3) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and this offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on
behalf by the undersigned, thereunto duly authorized, in the town of Fort
Lee, the State of New Jersey, on June 12, 1996.
GRAND COURT LIFESTYLES, Inc.
By: /s/ John Luciani
----------------------------------
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Bernard M. Rodin and Paul Jawin, and
each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, to act, without the other, for
him and in his name, place and stead, in any and all capacities, to sign
any or all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated:
Signature Title Date
------------------------ --------------------- ---------------
/s/ John Luciani Chairman of the June 12, 1996
------------------------ Board of Directors
John Luciani and Chief Executive
Officer
(Principal Executive
Officer)
/s/ Bernard M. Rodin President and Chief June 12, 1996
------------------------ Operating Officer
Bernard M. Rodin and Director
(Principal Executive
Officer)
/s/ John W. Luciani, III Executive Vice June 12, 1996
------------------------ President and
John W. Luciani, III Director
/s/ Paul Jawin Chief Financial June 12, 1996
------------------------ Officer (Principal
Paul Jawin Financial Officer
and Principal
Accounting Officer)
/s/ Walter Feldesman Director June 12, 1996
------------------------
Walter Feldesman
/s/ Leslie E. Goodman Director June 12, 1996
------------------------
Leslie E. Goodman
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
*1 - Form of Selling Agreement.
2.1 - Consolidation Agreement dated as of April 1, 1996
among John Luciani, Bernard M. Rodin, J&B
Management Company and the Company.
2.2(a) - Merger Agreement dated as of April 1, 1996 between
Leisure Centers, Inc. and the Company.
2.2(b) - Merger Agreement dated as of April 1, 1996 between
Leisure Centers Development, Inc. and the Company.
2.2(c) - Merger Agreement dated as of April 1, 1996 between
J&B Management Corp. and the Company.
2.2(d) - Merger Agreement dated as of April 1, 1996 between
Wilmart Development Corp. and the Company.
2.2(e) - Merger Agreement dated as of April 1, 1996 between
Sulgrave Realty Corporation and the Company.
2.2(f) - Merger Agreement dated as of April 1, 1996 between
Riv Development Inc. and the Company.
**3.1 - Restated Certificate of Incorporation of the
Company.
**3.2 - By-Laws of the Company.
**4 - Form of Stock Certificate.
**5 - Form of Opinion of Reid & Priest LLP.
**10.1 - 1996 Stock Option and Performance Award Plan.
10.2 - Letter of Intent dated June 3, 1996 from Fleet
Bank to the Company.
10.3 - Letter of Intent dated April 25, 1996 from
Capstone Capital Corp. to the Company.
10.4(a) - Form of 12% Debenture due June 16, 2000 - Series
1.
10.4(b) - Form of 12% Debenture due April 15, 1999 - Series
2.
10.4(c) - Form of 11% Debenture due December 31, 1996 -
Series 3.
10.4(d) - Form of 11.5% Debenture due April 15, 2000 -
Series 4.
10.4(e) - Form of 12% Debenture due January 15, 2003 -
Series 5.
10.4(f) - Form of 12% Debenture due April 15, 2003 - Series
6.
10.4(g) - Form of 11% Debenture due January 15, 2002 -
Series 7.
10.4(h) - Form of 11% Debenture due January 15, 2002 -
Series 8.
10.4(i) - Form of 12% Debenture due September 15, 2001 -
Series 9.
10.4(j) - Form of 12% Debenture due January 15, 2004 -
Series 10.
10.5(a) - Bank Agreement dated August 14, 1990 between The
Bank of New York and the Company with respect to
12% Debentures, Series 1.
10.5(b) - First Amendment dated as of August 21, 1992 to
Bank Agreement dated August 14, 1990 between The
Bank of New York and the Company with respect to
12% Debentures,Series 1.
10.5(c) - Bank Agreement dated October 11, 1991 between The
Bank of New York and the Company with respect to
12% Debentures, Series 2.
10.5(d) - Bank Agreement dated October 17, 1991 between The
Bank of New York and the Company with respect to
11% Debentures, Series 3.
10.5(e) - Bank Agreement dated April 1, 1992 between The
Bank of New York and the Company with respect to
11.5% Debentures, Series 4.
10.5(f) - Bank Agreement dated October 30, 1992 between The
Bank of New York and the Company with respect to
12% Debentures, Series 5.
10.5(g) - Bank Agreement dated May 24, 1993 between The Bank
of New York and the Company with respect to 12%
Debentures, Series 6.
10.5(h) - Bank Agreement dated October 27, 1993 between The
Bank of New York and the Company with respect to
11% Debentures, Series 7.
10.5(i) - First Amendment dated November 29, 1993 to Bank
Agreement dated October 27, 1993 between The Bank
of New York and the Company with respect to 11%
Debentures,Series 7.
10.5(j) - Bank Agreement dated November 29, 1993 between The
Bank of New York and the Company with respect to
11% Debentures, Series 8.
10.5(k) - Bank Agreement dated September 12, 1994 between
The Bank of New York and the Company with respect
to 12% Debentures, Series 9.
10.5(l) - Bank Agreement dated July 12, 1995 between The
Bank of New York and the Company with respect to
12% Debentures, Series 10.
10.6(a) - Form of Short-term Step-up Bond due March 15, 2001
- Series 1.
10.6(b) - Form of 12.375% Bond due April 15, 2003 - Series
2.
10.7(a) - Bank Agreement between The Bank of New York and
the Company with respect to Short-term Step-up
Bonds - Series 1.
10.7(b) - Bank Agreement between The Bank of New York and
the Company with respect to 12.375% Bonds - Series
2.
10.8 - Revolving Credit Agreement dated as of May 7, 1985
between Sterling National Bank & Trust Company and
the Company.
21 - List of Subsidiaries of the Company.
**23.1 - Consent of Reid & Priest LLP (to be included in
Exhibit 5 hereto).
23.2 - Consent of DELOITTE & TOUCHE LLP.
24 - Power of Attorney (included on Signature page).
27 - Financial Data Schedule
-----------------
** To be filed by amendment.
Exhibit 2.1
CONSOLIDATION AGREEMENT
This consolidation agreement and plan of reorganization
("Agreement") is made as of the 1st day of April, 1996, between
Grand Court Lifestyles, Inc., a Delaware corporation (hereinafter
the "Buyer"), party of the first part, and John Luciani and
Bernard M. Rodin (the "Transferring Shareholders") and J. & B.
Company, a New Jersey partnership (hereinafter the "Company"),
parties of the second part.
W I T N E S S E T H
Whereas, the Buyer has been formed to consolidate with
and succeed to the respective businesses and operations of
certain entities owned by the Transferring Shareholders;
Whereas, the Transferring Shareholders desire to
transfer certain of their shares of capital stock of the
corporations set forth on Schedule 1.1 hereto (the "Shares") to
the Buyer;
Whereas, the Transferring Shareholders further desire
to transfer the interests in partnerships, limited liability
companies, joint ventures and purchase notes as set forth on
Schedule 1.2 hereto (the "Transferring Shareholder Interests") to
the Buyer;
Whereas, the Company desires to transfer certain
interests as set forth on Schedule 1.3 hereto (the "Company
Interests") to the Buyer;
Whereas, in exchange for the Shares, the Transferring
Shareholder Interests and the Company Interests, the Buyer
desires to transfer to the Transferring Shareholders and the
Company shares of the Common Stock, par value $.10 per share of
the Buyer;
Whereas, the transactions contemplated by this
Agreement will be undertaken in connection with a related
"Agreement of Merger and Plan of Reorganization," dated as of
April 1, 1996 between Buyer and certain corporations wholly-owned
by the Transferring Shareholders; and
Whereas, the transactions contemplated by this
Agreement are intended to generally qualify for nonrecognition
treatment under Section 351 of the Internal Revenue Code of 1986,
as amended;
Accordingly, the parties hereto agree as follows:
ARTICLE I
STOCK AND INTERESTS ACQUIRED BY THE BUYER
SECTION 1.1. Stock transferred by Transferring
---------------------------------
Shareholders.
------------
The Transferring Shareholders hereby transfer,
assign and convey, and the Buyer hereby acquires, the Shares from
the Transferring Shareholders.
SECTION 1.2. Interests transferred by the Transferring
-----------------------------------------
Shareholders.
------------
The Transferring Shareholders hereby transfer,
assign and convey to the Buyer, and the Buyer hereby acquires
from the Transferring Shareholders, the Transferring Shareholder
Interests.
SECTION 1.3. Interests transferred by the Company.
------------------------------------
The
Company hereby transfers, assigns and conveys to the Buyer, and
the Buyer hereby acquires from the Company, the Company
Interests.
ARTICLE 2
OBLIGATIONS
SECTION 2.1 Obligations assumed by the Buyer.
--------------------------------
Subject to
the terms and conditions contained in this Agreement, the Buyer
will assume the obligations and guarantees listed on Schedule
2.1. The Buyer hereby agrees to indemnify the Company and the
principals, officers, employees and agents of the Company against
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses,
incurred by or asserted against the Company or any such person
arising out of Obligations expressly assumed by the Buyer.
SECTION 2.2. Obligations expressly not assumed by the Buyer.
----------------------------------------------
The Buyer will not assume the liabilities listed on Schedule 2.2.
The Company hereby agrees to indemnify the Buyer and the
directors, officers, employees and agents of the Buyer against
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses,
incurred by or asserted against the Buyer or any such person
arising out of Obligations expressly not assumed by the Buyer.
ARTICLE 3
CONSIDERATION
SECTION 3.1. In consideration of the transfer to the
Buyer of (i) the Shares, (ii) the Transferring Shareholder
Interests and (iii) the Company Interests, the Buyer hereby
delivers, in the aggregate, 3,000 shares of the Buyer's Common
Stock, par value of $.10 per share, which shall be issued to the
Transferring Shareholders and the Company as stated on Schedule
3.1.
ARTICLE 4
FURTHER ASSURANCES
SECTION 4.1 The Transferring Shareholders shall
execute and deliver all such documents and do all things
necessary or proper to effect the transactions contemplated
herein.
ARTICLE 5
EXPENSES
SECTION 5.1 All of the expenses of the Buyer,
Transferring Shareholders and the Company in connection with the
negotiation, preparation, delivery and performance of this
Agreement and the transactions contemplated hereby shall be borne
by the Buyer.
ARTICLE 6
TERMINATION
This Agreement may be terminated at any time upon the
mutual written consent of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
/s/ John Luciani /s/ Bernard M. Rodin
----------------------- ----------------------------
John Luciani Bernard M. Rodin
J&B Management Company
/s/ John Luciani /s/ Bernard M. Rodin
----------------------- ----------------------------
By: John Luciani By: Bernard M. Rodin
Partner Partner
Grand Court Lifestyles, Inc.
/s/ John Luciani /s/ Bernard M. Rodin
----------------------- ----------------------------
By: John Luciani By: Bernard M. Rodin
President Vice-President
<PAGE>
SCHEDULE 1.1
SHARES
The Transferring Shareholders will transfer to the Buyer all
of the issued and outstanding Common Stock of the following
entities, each a Delaware corporation:
Leisure Facilities, Inc
Leisure Facilities, Inc, II
Leisure Facilities, Inc, III
Leisure Facilities, Inc, IV
Leisure Facilities, Inc, V
Leisure Facilities, Inc, VI
Leisure Facilities, Inc, VII
Leisure Facilities, Inc, VIII
Leisure Facilities, Inc, IX
Leisure Facilities, Inc, X
Leisure Facilities, Inc, XI
Leisure Facilities, Inc, XII
Leisure Facilities, Inc, XIII
Leisure Facilities, Inc, XIV
Leisure Facilities, Inc, XV
Leisure Facilities, Inc, XVI
<PAGE>
SCHEDULE 1.2
TRANSFERRING SHAREHOLDER INTERESTS
The Transferring Shareholders will transfer to the Buyer the
following interests which are currently held by the Transferring
Shareholders:
(a) interests in T Lakes L.C., a Florida limited liability
company;
(b) any and all interests in the Company Purchase Notes, as
defined herein, otherwise being transferred to the
Buyer pursuant to this Agreement (subject to the
limitations set forth in paragraph (a) of Schedule
1.3);
(c) any and all interests in the Waterford Place Apartments
Joint Venture ("Waterford Joint Venture");
(d) interests in Leisure Centers, L.L.C., a Texas limited
liability company;
(e) interests in J&B Financing, LLC, a Delaware limited
liability company; and
(f) any and all interests under the "Assignment of Certain
Rights Relating to Limited Partner Class A Interests
and Limited Partner Class B Interests" dated as of
January 1, 1994 and related documents entered into by
J. & B. Management Corp., John Luciani, Bernard M.
Rodin, Whitney Associates, Tulsa Associates and Silver
Spring Associates.
<PAGE>
SCHEDULE 1.3
COMPANY INTERESTS
The Company will transfer to the Buyer the following interests
which are currently held by the Company:
(a) all of its ownership rights in the purchase notes from
the following entities (the "Company Purchase Notes"),
provided, however, that (1) all interest on the Company
Purchase Notes which has accrued and is unpaid prior to
the date of this Agreement will remain with the Company
and (2) this accrued interest, if any, on each Company
Purchase Note will be paid to the Company with the
proceeds that remain, if any, after the Buyer is paid
in full the outstanding principal balance on such
Company Purchase Note along with all interest which
accrues beginning on the date of this Agreement:
(i) Abbey Lane Associates
(ii) Alice Associates - I Limited Partnership
(iii) Alice Associates - II Limited
Partnership
(iv) Alice Associates - III Limited
Partnership
(v) Alice Associates - IV Limited
Partnership
(vi) Allen Associates Two, Limited
Partnership
(vii) Anderson Associates
(viii) Antioch Associates
(ix) Argyle Associates
(x) Augusta Associates
(xi) Baskerville Associates
(xii) Bastrop Associates
(xiii) Bayou Ridge Associates
(xiv) Beaufort Associates
(xv) Beauregard Associates
(xvi) Bedford Associates
(xvii) Belton Associates
(xviii) Berkshire Associates
(xix) Bissel Associates
(xx) Blair Associates
(xxi) Bossier Associates
(xxii) Bridges Phase II Associates
(xxiii) Brushcreek Associates
(xxiv) Carrboro Associates
(xxv) Carolina Associates
(xxvi) Carolina Main Associates
(xxvii) Center Associates
(xxviii) Century Associates
(xxix) Chambersburg Associates
(xxx) Chase Hills Associates
(xxxi) Chesterfield Associates
(xxxii) Cipal Associates
(xxxiii) Clovis Associates
(xxxiv) College Hill Associates
(xxxv) Columbia Associates
(xxxvi) Contessa Associates
(xxxvii) Cockrell Hill Associates
(xxxviii) Corpus Christi Associates I Limited
Partnership
(xxxix) Corpus Christi Associates II Limited
Partnership
(xl) Corpus Christi Associates III Limited
Partnership
(xli) Corpus Christi Associates IV Limited
Partnership
(xlii) County Chesterfield Associates
(xliii) Delaware River Associates
(xliv) Dickinson Associates
(xlv) Douglas Associates
(xlvi) Duncan South Associates
(xlvii) Durham Associates
(xlviii) East Texas Associates
(xlix) Eastland Associates
(l) Eastview Associates
(li) Euclid Associates
(lii) Evangeline Associates
(liii) Ewing Associates, Limited Partnership
(liv) Farmington Associates
(lv) Forsyth, NC Associates
(lvi) Fort Worth Associates
(lvii) Fox Associates
(lviii) Fox Run Associates
(lix) Freshfield Associates
(lx) Garfield Associates
(lxi) Gateway Nine Associates
(lxii) Gladstone Associates
(lxiii) Golden Village Associates
(lxiv) Greentree Associates
(lxv) Grand Associates
(lxvi) Grandview Associates
(lxvii) Greenville Associates
(lxviii) Gregg Associates
(lxix) Groves Associates
(lxx) Gwinnett Associates
(lxxi) Harrisonville Associates
(lxxii) Hiawatha Associates
(lxxiii) Hillside Associates
(lxxiv) Hill Top-Abilene Associates Limited
Partnership
(lxxv) Huntsville Associates
(lxxvi) Ivanhoe Associates
(lxxvii) Jackson Associates
(lxxviii) Jackson Hills Associates
(lxxix) Jason Associates
(lxxx) Jesup Associates
(lxxxi) Kansas Associates
(lxxxii) Kings Villa Associates
(lxxxiii) Kirksville Associates - I Limited
Partnership
(lxxxiv) Kirksville Associates - II Limited
Partnership
(lxxxv) Kirksville Associates - III Limited
Partnership
(lxxxvi) Kirksville Associates - IV Limited
Partnership
(lxxxvii) Lake June Associates
(lxxxviii) Lake Michigan Associates
(lxxxix) Lakeshore Associates
(xc) Lancaster Associates
(xci) Laredo Associates
(xcii) Las Cruces Associates
(xciii) Linwood Associates
(xciv) Llewellyn Associates
(xcv) Logan Place Associates
(xcvi) Lovett Associates
(xcvii) Lubbock Associates
(xcviii) Marble Falls Associates
(xcix) Marble Falls II Associates
(c) McAllen Grande Associates
(ci) Magnum Associates
(cii) The Meadows Associates
(ciii) Midland Associates
(civ) Millville Associates - I
(cv) Millville Associates - II
(cvi) Millville Associates - III
(cvii) Millville Associates - IV
(cviii) Missouri Associates
(cix) Monroe Place Associates
(cx) Muskogee Associates
(cxi) New Iberia Associates, Ltd.
(cxii) The New West Associates
(cxiii) Newport Associates
(cxiv) Oak Hills Associates
(cxv) Old Vineyard Associates
(cxvi) Pagefield Associates
(cxvii) Parkhill Associates
(cxviii) Park Manor Associates
(cxix) Parkside Associates
(cxx) Place South Associates
(cxxi) Plains Associates
(cxxii) Plano Associates
(cxxiii) Port Arthur Associates
(cxxiv) Republic Associates
(cxxv) Richardson Associates
(cxxvi) Rio Alma Associates
(cxxvii) Rio Dolores Associates
(cxxviii) Rio Donna Associates
(cxxix) Rio Juanita Associates
(cxxx) Rio Rosa Associates
(cxxxi) Royal Oaks Associates
(cxxxii) Royal Palms Associates
(cxxxiii) Running Fox Associates
(cxxxiv) St. Louis Associates
(cxxxv) Benito Associates (AKA San Benito
Associates -II)
(cxxxvi) Benito Valley Associates
(cxxxvii) San Benito Associates - I
(cxxxviii) Rio Benito Associates (AKA San Benito
Assoc. - IV)
(cxxxix) Sedalia Associates
(cxl) Seguin Associates I Limited Partnership
(cxli) Seguin Associates II Limited Partnership
(cxlii) Seguin Associates III Limited
Partnership
(cxliii) Seguin Associates IV Limited Partnership
(cxliv) Shreveport Associates
(cxlv) Sidehill Associates
(cxlvi) Silver Springs Associates
(cxlvii) Somerset Associates
(cxlviii) South Belt Associates
(cxlix) South Dade Associates, Ltd.
(cl) South Florida Associates
(cli) Spartan Associates
(clii) Tahoe Realty Associates
(cliii) Tarrant Associates
(cliv) Taylor Associates
(clv) Troost Associates
(clvi) Tulsa Associates
(clvii) Tumbleweed Associates
(clviii) University Place Associates
(clix) Village Associates (Duncan)
(clx) Village Associates
(clxi) Vine Hill Associates
(clxii) Wagon Hill Associates
(clxiii) Walnut Place Associates
(clxiv) West Oaks Associates
(clxv) Westbury Associates
(clxvi) Wharton Associates
(clxvii) Whitney Associates
(clxviii) Wilkes-Barre Associates
(clxix) Winston-Salem Associates
(clxx) Woodhall Associates
(clxxi) Woodlands Associates
(clxxii) Woodlen Place Associates
(clxxiii) Worth Associates
(clxxiv) Wyandotte Associates
(b) all of its rights, entitlements and obligations
pursuant to the Loan and Exchange Accounts ("L&E
Accounts") which relate to the Company Purchase Notes;
(c) the receivables from the following:
(i) Marquis Apts L.P.,
(ii) Camel L.P.,
(iii) 4800 Roanoke L.P.,
(iv) Laplacita Apts L.P.,
(v) Winchell Apts L.P. and
(vi) 707 West 10th L.P.;
(d) its interest in Waterford Joint Venture;
(e) its interest in the note from Bryan Center Associates
dated as of March 27, 1992, as modified as of March 31,
1995 (the "Bryan Note"); and
(f) the Deed of Trust with Security Agreement and
Assignment of Rents for the Walden Retirement Center.
which secures the Bryan Note;
(g) the $126,000 Bryan Center Associates receivable
relating to the original turnkey mortgage.
(h) the following interests in and related to Caton Towers
Corp. ("Caton Corp"):
(i) its 22,554 shares in Caton Corp, subject to
the liability secured with certain of such
shares,
(ii) the mortgage receivables, along with any
security interests, secured by shares in
Caton Corp, and
(iii) its 50% interest in Caton Associates, a
_________ general partnership.
<PAGE>
SCHEDULE 2.1
OBLIGATIONS ASSUMED BY THE BUYER
The Buyer will assume the following obligations and guarantees:
(a) obligations owing to the following:
(i) Aras Associates,
(ii) Boatman's First National Bank,
(iii) Citizens Banking Company,
(iv) FLBA, Inc.,
(v) George Batchelor,
(vi) Gotham Bank of New York,
(vii) Hillcrest Bank,
(viii) IAL Aircraft Holding, Inc.,
(ix) Interbank of New York,
(x) Joseph Lovenduski,
(xi) Maroon Investors, Inc.,
(xii) North Fork Bank,
(xiii) Panasia Bank,
(xiv) State Bank of Long Island,
(xv) Sterling National Bank, and
(xvi) Wirmaw Associates.
(b) the lease on the office space at One Executive Drive,
Fort Lee, New Jersey, which is currently in the name of
Joburn Operating, Inc.;
(c) the guarantees given to or to be given to the investors
in Retirement Financing Associates, L.P.-I and
Retirement Associates, L.P.-II, each a Delaware limited
partnership;
(d) the guarantee given to the investors in the Waterford
Joint Venture;
(e) the guarantees relating to the restructuring of the
liabilities secured by the properties owned by the
following entities:
(i) Marquis Apts L.P.;
(ii) Camel L.P.;
(iii) 4800 Roanoke L.P.;
(iv) Laplacita Apts L.P.;
(v) Winchell Apts L.P.;
(vi) 707 West 10th L.P.;
(vii) Venue Apts., L.P.; and
(viii) Tempo Apts, L.P.
(f) the guarantees given to the limited partners of the
following limited partnerships:
(i) Bayswater Associates, L.P.;
(ii) Brighton Manor Associates, L.P.;
(iii) Brookstone Associates, L.P.;
(iv) Bryan Station Associates, L.P.;
(v) Cloverset Associates, L.P.;
(vi) Concorde Associates, L.P.;
(vii) Dover Associates, L.P.;
(viii) Edgemere Associates, L.P.;
(ix) Essex Associates, L.P.;
(x) Green Hills Associates, L.P.;
(xi) Harrow Associates, L.P.;
(xii) Harvard Heights Associates, L.P.;
(xiii) Lubbock Village Associates, L.P.;
(xiv) Magnolia Hills Associates, L.P.;
(xv) Millbrook Hills Associates, L.P.;
(xvi) Nine Ten Penn Associates, L.P.;
(xvii) Palm Gardens Associates, L.P.;
(xviii) Palm Villas Associates, L.P.;
(xix) Paradise Valley Associates, L.P.;
(xx) Riverhills Associates, L.P.;
(xxi) Salisbury Associates, L.P.;
(xxii) Sierra Vista Associates, L.P.;
(xxiii) Sommerville Associates, L.P.;
(xxiv) Stratford Associates, L.P.;
(xxv) Tudor Associates, L.P.;
(xxvi) Western Oaks Associates, L.P.; and
(xxvii) Windsor Associates, L.P.
(g) the guarantee given to the Hillcrest Bank by the
Company relating to the mortgage on the Victory Hills Town Homes
given to the Hillcrest Bank by Victory Hills Associates;
(h) any and all obligations relating to the following
securities:
(i) Series 1, Short Term Step-Up Bonds due March
15, 2001
(ii) Series 2, 12.375% Bonds due April 15, 2003
(iii) Series 1, 12% Debentures due June 16, 2000
(iv) Series 2, 12% Debentures due April 15, 1999
(v) Series 3, 11% Debentures due December 31,
1996
(vi) Series 4, 11.5% Debentures due April 15, 2000
(vii) Series 5, 12% Debentures due January 15, 2003
(viii) Series 6, 12% Debentures due April 15, 2003
(ix) Series 7, 11% Debentures due January 15, 2002
(x) Series 8, 11% Debentures due January 15, 2002
(xi) Series 9, 12% Debentures due September 15,
2001
(xii) Series 10, 12% Debentures due January 15,
2004
<PAGE>
SCHEDULE 2.2
OBLIGATIONS EXPRESSLY NOT ASSUMED BY THE BUYER
The Buyer will not assume the portion of any liabilities owing to
Sterling National Bank which are secured with investor notes from
Golden Home Associates, Drake Associates or Gateway 10
Associates.
<PAGE>
SCHEDULE 3.1
CONSIDERATION
The 3,000 shares of the Buyer's Common Stock, par value of $.10
per share, shall be issued to the Transferring Shareholders and
the Company as follows:
John Luciani: 1,000 shares
Bernard M. Rodin: 1,000 shares
J. & B. Management Company: 1,000 shares
Exhibit 2.2(a)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between Leisure Centers, Inc., a Delaware corporation,
hereinafter called the First Company and Grand Court Lifestyles,
Inc., a Delaware corporation, hereinafter called the Second
Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 3,000 shares, of which 3,000 shares have been
duly issued and are now outstanding; and
WHEREAS, the Second Company has an authorized capital
stock consisting of 10,000 shares of common stock, par value $.10
per share, of which 3,000 shares have been duly issued and are
now outstanding; and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the General Corporation Law of the State of
Delaware in a transaction structured to qualify as a
reorganization as described in section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the State
of Delaware, the time of such effectiveness being hereinafter
called the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
13. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- -----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
/s/ Bernard M. Rodin
(SEAL) ------------------------
Secretary
Exhibit 2.2(b)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between Leisure Centers Development Corp., a Delaware
corporation, hereinafter called the First Company and Grand Court
Lifestyles, Inc., a Delaware corporation, hereinafter called the
Second Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 3,000 shares, of which 3,000 shares have been
duly issued and are now outstanding, and
WHEREAS, the Second Company has an authorized capital
stock consisting of 3,000 shares of common stock, par value $.10
per share, of which 10,000 shares have been duly issued and are
now outstanding, and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the General Corporation Law of the State of
Delaware in a transaction structured to qualify as a
reorganization as described in section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the State
Delaware, the time of such effectiveness being hereinafter called
the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
13. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
/s/ Bernard M. Rodin
(SEAL) ------------------------
Secretary
Exhibit 2.2(c)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between J. & B. Management Corp., a New Jersey
corporation, hereinafter called the First Company and Grand Court
Lifestyles, Inc., a Delaware corporation, hereinafter called the
Second Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 200 shares, of which 20 shares have been duly
issued and are now outstanding, and
WHEREAS, the Second Company has an authorized capital
stock consisting of 10,000 shares of common stock, par value $.10
per share, of which 3,000 shares have been duly issued and are
now outstanding, and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the New Jersey Business Corporation Act and of the
General Corporation Law of the State of Delaware in a transaction
structured to qualify as a reorganization as described in section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the States
of New Jersey and Delaware, the time of such effectiveness being
hereinafter called the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. SERVICE OF PROCESS ON SECOND COMPANY. The Second
Company agrees that it may be served with process in the State of
New Jersey in any proceeding for enforcement of any obligation of
the First Company as well as for the enforcement of any
obligations of the Second Company arising from the merger,
including any suit or other proceeding to enforce the right of
any shareholder as determined in appraisal proceedings pursuant
to the provisions of Section 14A:10-7 of the New Jersey Business
Corporation Act.
13. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
14. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- -----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
/s/ Bernard M. Rodin
(SEAL) ------------------------
Secretary
Exhibit 2.2(d)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between Wilmart Development Corp., a New Jersey
corporation, hereinafter called the First Company and Grand Court
Lifestyles, Inc., a Delaware corporation, hereinafter called the
Second Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 2,500 shares, of which 2 shares have been
duly issued and are now outstanding, and
WHEREAS, the Second Company has an authorized capital
stock consisting of 10,000 shares of common stock, par value $.10
per share, of which 3,000 shares have been duly issued and are
now outstanding, and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the New Jersey Business Corporation Act and of the
General Corporation Law of the State of Delaware in a transaction
structured to qualify as a reorganization as described in section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the States
of New Jersey and Delaware, the time of such effectiveness being
hereinafter called the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. SERVICE OF PROCESS ON SECOND COMPANY. The Second
Company agrees that it may be served with process in the State of
New Jersey in any proceeding for enforcement of any obligation of
the First Company as well as for the enforcement of any
obligations of the Second Company arising from the merger,
including any suit or other proceeding to enforce the right of
any shareholder as determined in appraisal proceedings pursuant
to the provisions of Section 14A:10-7 of the New Jersey Business
Corporation Act.
13. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
14. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- -----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
/s/ Bernard M. Rodin
(SEAL) ------------------------
Secretary
Exhibit 2.2(e)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between Sulgrave Realty Corporation., a New Jersey
corporation, hereinafter called the First Company and Grand Court
Lifestyles, Inc., a Delaware corporation, hereinafter called the
Second Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 200 shares, of which 200 shares have been
duly issued and are now outstanding, and
WHEREAS, the Second Company has an authorized capital
stock consisting of 10,000 shares of common stock, par value $.10
per share, of which 3,000 shares have been duly issued and are
now outstanding, and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the New Jersey Business Corporation Act and of the
General Corporation Law of the State of Delaware in a transaction
structured to qualify as a reorganization as described in section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code").
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the States
of New Jersey and Delaware, the time of such effectiveness being
hereinafter called the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. SERVICE OF PROCESS ON SECOND COMPANY. The Second
Company agrees that it may be served with process in the State of
New Jersey in any proceeding for enforcement of any obligation of
the First Company as well as for the enforcement of any
obligations of the Second Company arising from the merger,
including any suit or other proceeding to enforce the right of
any shareholder as determined in appraisal proceedings pursuant
to the provisions of Section 14A:10-7 of the New Jersey Business
Corporation Act.
13. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
14. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
(SEAL) /s/ Bernard M. Rodin
----------------------
Secretary
Exhibit 2.2(f)
AGREEMENT OF MERGER
Agreement of Merger made as of this 1st day of April,
1996, between Riv Development Inc., a Missouri corporation,
hereinafter called the First Company and Grand Court Lifestyles,
Inc., a Delaware corporation, hereinafter called the Second
Company.
WHEREAS, the First Company has an authorized capital
stock consisting of 30,000 shares, of which 2 shares have been
duly issued and are now outstanding, and
WHEREAS, the Second Company has an authorized capital
stock consisting of 10,000 shares of common stock, par value $.10
per share, of which 3,000 shares have been duly issued and are
now outstanding, and
WHEREAS, the Board of Directors of the First Company
and the Second Company, respectively, deem it advisable and
generally to the advantage and welfare of the two corporate
parties and their respective shareholders that the First Company
merge with the Second Company under and pursuant to the
provisions of the Missouri General and Business Corporation Law
and of the General Corporation Law of the State of Delaware in a
transaction structured to qualify as a reorganization as
described in section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
WHEREAS, this merger and related mergers are being
undertaken in connection with the transactions contemplated by
the related "Consolidation Agreement," which transactions are
intended to qualify under Code section 351; and
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of the mutual benefits
hereby provided, it is agreed by and between the parties hereto
as follows:
1. MERGER. The First Company shall be and it hereby is
merged into the Second Company.
2. EFFECTIVE DATE. This Agreement of Merger shall become
effective immediately upon compliance with the laws of the States
of Missouri and Delaware, the time of such effectiveness being
hereinafter called the Effective Date.
3. SURVIVING CORPORATION. The Second Company shall survive
the merger herein contemplated and shall continue to be governed
by the laws of the State of Delaware, but the separate corporate
existence of the First Company shall cease forthwith upon the
Effective Date.
4. AUTHORIZED CAPITAL. The authorized capital stock of the
Second Company following the Effective Date shall be 10000 shares
of Common Stock, par value $.10 per share, unless and until the
same shall be changed in accordance with the laws of the State of
Delaware.
5. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation set forth as Appendix A hereto shall be the
Certificate of Incorporation of the Second Company following the
Effective Date unless and until the same shall be amended or
repealed in accordance with the provisions thereof, which power
to amend or repeal is hereby expressly reserved, and all rights
or powers of whatsoever nature conferred in such Certificate of
Incorporation or herein upon any shareholder or director or
officer of the Second Company or upon any other persons whosoever
are subject to the reserve power. Such Certificate of
Incorporation shall constitute the Certificate of Incorporation
of the Second Company separate and apart from this Agreement of
Merger and may be separately certified as the Certificate of
Incorporation of the Second Company.
6. BYLAWS. The Bylaws of the Second Company as they exist
on the effective date shall be the Bylaws of the Second Company
following the Effective Date unless and until the same shall be
amended or repealed in accordance with the provisions thereof.
7. BOARD OF DIRECTORS AND OFFICERS. The members of the
Board of Directors and the officers of the Second Company
immediately after the effective time of the merger shall be those
persons who were the members of the Board of Directors and the
officers, respectively, of the Second Company immediately prior
to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by
law or in the Bylaws, or until their respective successors are
elected and qualified.
8. FURTHER ASSURANCE OF TITLE. If at any time the Second
Company shall consider or be advised that any acknowledgements or
assurances in law or other similar actions are necessary or
desirable in order to acknowledge or confirm in and to the Second
Company any right, title, or interest of the First Company held
immediately prior to the Effective Date, the First Company and
its proper officers and directors shall and will execute and
deliver all such acknowledgements or assurances in law and do all
things necessary or proper to acknowledge or confirm such right,
title, or interest in the Second Company as shall be necessary to
carry out the purposes of this Agreement of Merger, and the
Second Company and the proper officers and directors thereof are
fully authorized to take any and all such action in the name of
the First Company or otherwise.
9. RETIREMENT OF ORGANIZATION STOCK. Forthwith upon the
Effective Date, each of the 3,000 shares of the Common Stock of
the Second Company presently issued and outstanding shall be
retired, and no shares of Common Stock or other securities of the
Second Company shall be issued in respect thereof.
10. CONVERSION OF OUTSTANDING STOCK. Forthwith upon the
Effective Date, each of the issued and outstanding shares of
Common Stock of the First Company and all rights in respect
thereof shall be converted into one full paid and nonassessable
share of Common Stock of the Second Company, and each certificate
nominally representing shares of Common Stock of the First
Company shall for all purposes be deemed to evidence the
ownership of a like number of shares of Common Stock of the
Second Company. The holders of such certificates shall not be
required immediately to surrender the same in exchange for
certificates of Common Stock in the Second Company but, as
certificates nominally representing shares of Common Stock of the
First Company are surrendered for transfer, the Second Company
will cause to be issued certificates representing shares of
Common Stock of the Second Company, and, at any time upon
surrender by any holder of certificates nominally representing
shares of Common Stock of the First Company, the Second Company
will cause to be issued therefor certificates for a like number
of shares of Common Stock of the Second Company.
11. RIGHTS AND LIABILITIES OF SECOND COMPANY. At and after
the effective time of the merger, the Second Company shall
succeed to and possess, without further act or deed, all of the
estate rights, privileges, powers, and franchises, both public
and private, and all of the property, real, personal, and mixed
of each of the parties hereto; all debts due to the First Company
or whatever account shall be vested in the Second Company; all
claims, demands, property rights, privileges, powers and
franchises and every other interest of either of the parties
hereto shall be as effectively the property of the Second Company
as they were of the respective parties hereto; the title to any
real estate vested by deed or otherwise in the First Company
shall not revert or be in any way impaired by reason of the
merger, but shall be vested in the Second Company; all rights of
creditors and all liens upon any property of either of the
parties hereto shall be preserved unimpaired, limited in lien to
the property affected by such lien at the effective time of the
merger; all debts, liabilities, and duties of the respective
parties hereto shall thenceforth attach to the Second Company and
may be enforced against it to the same extent as if such debts,
liabilities, and duties had been incurred or contracted by it;
and the Second Company shall indemnify and hold harmless the
shareholders, officers and directors of each of the parties
hereto against all such debts, liabilities and duties and against
all claims and demands arising out of the merger.
12. SERVICE OF PROCESS ON SECOND COMPANY. The Second
Company agrees that it may be served with process in the State of
Missouri in any proceeding for enforcement of any obligation of
the First Company as well as for the enforcement of any
obligations of the Second Company arising from the merger,
including any suit or other proceeding to enforce the right of
any shareholder as determined in appraisal proceedings pursuant
to the provisions of Section 351.410 of the Missouri General and
Business Corporation Law.
13. TERMINATION. This Agreement of Merger may be
terminated and abandoned by action of the Board of Directors of
the First Company at any time prior to the Effective Date,
whether before or after approval by the shareholders of the two
corporate parties hereto.
14. PLAN OF REORGANIZATION. This Agreement of Merger
constitutes a Plan of Reorganization for all purposes, including
but not limited to the Code, to be carried out in the manner, on
the terms and subject to the conditions herein set forth.
IN WITNESS WHEREOF each of the corporate parties
hereto, pursuant to authority duly granted by the Board of
Directors, has caused this Agreement of Merger to be executed by
John Luciani, its President and attested by Bernard M. Rodin, its
Secretary and its corporate seal to be hereunto affixed.
ATTEST: First Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ------------------------
Secretary
Corporate Seal
ATTEST: Second Company
/s/ Bernard M. Rodin BY: /s/ John Luciani
--------------------------- ----------------------
Secretary
(Corporate Seal)
<PAGE>
CERTIFICATE OF THE SECRETARY
OF
GRAND COURT LIFESTYLES, INC.
I, Bernard M. Rodin, the Secretary of Grand Court
Lifestyles, Inc., hereby certify that the Agreement of Merger to
which this certificate is attached, after having been first duly
signed on behalf of the corporation by the President and
Secretary under the corporate seal of said corporation, was duly
approved and adopted by unanimous written consent of the
stockholders of Grand Court Lifestyles, Inc. held on April 1,
1996 by the holders of a majority of the outstanding stock
entitled to vote thereon.
WITNESS my hand and seal of said Grand Court Lifestyles,
Inc. this day of May, 1996.
(SEAL) /s/ Bernard M. Rodin
----------------------
Secretary
Exhibit 10.2
[On Fleet Bank Letterhead]
June 3, 1996
Mr. Paul Jawin
Grand Court Lifestyles, Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Re: Construction/Acquisition Loan Letter of Intent
Dear Paul:
Fleet National Bank would be interested in providing financing
for the construction of up to three congregate care facilities in
various Texas cities and acquisition of up to three congregate
care facilities nationally. Fleet will fund up to $20,000,000 or
80% of total project cost for construction related projects and
$20,000,000 or 80% of total purchase price for acquisition
related projects.
It is the intent of Fleet Bank to complete its formal due
diligence of the data submitted for the subject financings and
upon full approval according to Fleet Financial Group Credit
Policy, issue formal commitments for said financings under terms
and conditions acceptable to both the Bank and the proposed
Borrower.
Among other conditions, each loan commitment will be subject to
receipt of acceptable appraisals and environmental reviews for
all sites/projects, as commissioned by Fleet. Fleet will require
final approval of complete construction specifications and
drawings by a qualified engineer/architect contracted by Fleet
for construction loans and a full structural review by a
qualified structural engineer for acquisition loans.
Additionally, each site or project is subject to a site/market
inspection by Fleet as part of the due diligence process.
Attached as Exhibit A to this letter are our basic loan
parameters, and subject to satisfactory completion of our due
diligence and formal approval by Fleet, will be suggested terms
and conditions of all loans.
Please be informed that this letter is not a commitment to make
the requested loans and all requests are subject to the usual due
diligence and approval requirements according to Fleet Financial
Group Credit Policy. Further, the terms and conditions outlined
on the attached Exhibit are for discussion purposes only and
cannot be guaranteed. All loan terms on approved loans are
subject to market conditions at the time.
I look forward to working with you on this transaction.
Regards,
/s/ Casey Moore
Casey Moore
Vice President
<PAGE>
SUMMARY OF TERMS AND CONDITIONS
-------------------------------
Project: Construction of up to three retirement
properties in various Texas locations and the
acquisition of up to three retirement
properties nationally.
Purpose: To provide construction and acquisition
financing to build and acquire rental
retirement projects.
Borrower: To be named limited partnerships or limited
liability corporations.
Loan Amount: Construction: $20,000,000 or maximum 80% of
total project cost.
Acquisition: $20,000,000 or maximum 80% of
total purchase price.
Rate: Prime + 1% or COF + 3.0% (30,60, and 90 day).
All interest payable monthly and computed on
basis of 360 day year. Maximum of three COF
advance at any one time.
Fees: 1% of total loan amount payable
$10,000/project upon acceptance of the
commitment letter, with the balance at
closing.
Term: Construction: 36 months
Acquisition: 24 months
Extension
Option: Two 6 month extension options at 1/2% per
option for construction projects only.
Collateral: First mortgage and security agreement on land
and the improvements to be constructed
thereon.
Assignment of leases and rents.
Assignment of licenses and contracts related
to the operation of each facility.
Assignment of management contracts.
Amortization: Construction: Interest only
Acquisition: Interest only months 1 - 12
and 25 year schedule months 13
- 24.
Guarantor: Grand Court Lifestyles, Inc. shall provide a
full completion, principal, interest, and
operating deficit guarantee, as well as full
environmental compliance and indemnification.
Equity: Minimum 20% of total project costs. Cash
equity will be contributed prior to funding
any loan proceeds.
Costs: Included in total costs will be a hard cost
contingency allocation no less than 5% of the
total hard cost budget, an interest reserve
during the construction period, and a lease
up reserve to cover operating deficits during
all lease up periods.
Basis for
Advances: An initial advance will be made to reimburse
for Project Costs previously incurred in
excess of Borrower's Required Equity
Contribution. Thereafter, monthly advances
will be made to pay current Project Costs,
subject to retention of 10% on construction
costs. Monthly requisitions shall require
inspections, title updates, lien waivers and
certifications from the Borrower, the
Architect and the Contractor. All advances
will be conditioned upon the loan being in
balance, the absence of any default and
satisfaction of the other conditions which
will be set forth in the Construction Loan
Agreement.
Hazardous
Materials
and Toxic
Substances: Prior to closing, Lender shall be provided
with current reports which comply with
Lender's standard environmental assessment
protocols (and which will include subsurface
and ground water testing results if required
by the Lender) addressed to the Lender from
qualified professionals acceptable to the
Lender, and any independent consultants
engaged by Lender indicating (i) the absence
of hazardous materials, hazardous wasters and
toxic substances from the Project or surround
areas; (ii) satisfactory disposition of all
matters disclosed by such reports; and (iii)
the acceptability of any environmental risk.
The loan documents will contain appropriate
provisions, representations, warranties,
covenants and indemnifications by Borrower
and Guarantor relating to environmental
matters.
Other
Conditions
to Closing: Approval by the Lender in its reasonable
discretion of the form and substance of the
following:
A) Construction and project matters
including, but not limited to Project
budgets, plans and specifications,
construction contracts, architect's
contracts, other major contracts,
licensees and permits, certifications
from Borrower's architects and engineers
and reports of Lender's construction
consultant.
B) Satisfactory MAI appraisals of the
Projects from an appraiser acceptable to
the Lender yielding a LTV not greater
than 75%.
C) Financial statements of Guarantors dated
12/31/95.
D) Hazard, liability, rental, and other
insurance naming the Lender as
mortgagee, loss payee and additional
insured; evidence relating to the flood
plain status of the Projects and flood
insurance where required by the Lender.
E) Preliminary title report, Mortgagee's
title insurance policy, evidence of
current status of municipal liens and
assessments and current survey certified
to the Lender.
F) Soils reports and hazardous materials
and toxic substances and reports.
G) Evidence of adequate utility connections
and availability.
H) Organizational documents and votes,
consents and other authorizations.
I) Legal and other professional opinions
and certificates.
J) Evidence that the Projects and any other
tangible collateral; (i) are in
satisfactory condition, and (ii) are not
subject to any pending or threatened
condemnation or taking.
K) One (1) sets of plans and
specifications.
L) An itemized cost breakdown by trade in
the form specified by the Lender, signed
by the Borrower.
M) A completion and draw schedule signed by
the Borrower.
N) Demographic information or market study
by an independent third party,
indicating detailed age and income
demographics of the market area.
O) Evidence that: (i) the Projects and the
collateral comply with all legal
requirements, and (ii) all licenses and
permits for the completion and the
subsequent development of the Projects
are in full force and effect and not
subject to appeal.
P) The absence of any material adverse
change in the financial condition,
business or control of the Borrower or
the Guarantors.
Q) No sale, transfer, pledge or assignment
of any ownership interests in the
Borrower, without the consent of Lender.
R) No sale or transfer of the Projects,
without the consent of the Lender.
Additional indebtedness will be limited
to subordinated second mortgage debt
only.
S) After substantial completion of
construction, quarterly and annual
operating statements of the Projects,
annual financial statements and cash
flow statements of the Borrower and the
Guarantors.
T) Borrower to maintain at all times
hazard, liability and other insurance
satisfactory to Lender.
U) The Borrower shall pay all costs and
expenses incurred by the Lender
incidental to the Loan, including
without limitation legal fees and
expenses, title insurance, recording
fees, costs of architectural
supervision, appraisal costs, bank site
inspections to a maximum of $3,000 over
the life of each loan, environmental
site assessments and related costs, and
costs of collection and enforcement.
V) Lender shall have the right to sell all
or any portion of the loan or
participation interests therein and to
furnish all relevant information to any
potential buyer or participant. Fleet
will remain the lead lender.
W) Guarantor covenants will include
distribution and liability restrictions
acceptable to lender.
Any commitment which is issued will be
conditional upon closing of the transaction
within 60 days of the commitment and:
A) The preparation, execution and delivery
of legal documentation in form and
substance satisfactory to the Lender and
the Lender's counsel incorporating
substantially the terms and conditions
outlined or referred to above.
B) The absence of a material adverse change
in the financial condition or operations
of the Borrower, any Guarantor or their
principals since the date of their
respective financial statements most
recently delivered to the Lender.
Exhibit 10.3
[CAPSTONE CAPITAL LETTERHEAD]
April 25, 1996
Mr. Paul Jawin
Grand Court Lifestyles, Inc.
2650 North Military Trail
Suite 350
Boca Raton, FL 33491
Dear Paul:
Attached is the final term sheet reflecting Capstone Capital
Corporation's ("CCT") and Grand Court Lifestyles' ("GCL")
intent to enter into a $39,000,000 commitment for the
development, financing and leasing of four assisted living
facilities.
If you are in agreement with the provisions contained therein,
kindly indicate your agreement in the space provided below and
send the executed letter back to me via fax. Upon receipt of
your agreement, I will instruct our counsel to proceed with
the preparation of closing documents.
Neither CCT nor GCL shall have any commitment to consummate
the transaction contemplated hereby until a formal Master
Development Agreement specifying each party s commitment has
been executed by the parties. Such Master Development
Agreement will contain exhibits specifying the form of Lease
and Development Agreement to be utilized for each development.
However, GCL does agree to reimburse CCT for any reasonable
out-of-pocket expenses related to the preparation of the
closing documents should the commitment contemplated by the
attached term sheet not close by June 30, 1996.
Sincerely,
/s/ John W. McRoberts
John W. McRoberts
JWM/akl
Agreed to this 2nd day of May, 1996
GRAND COURT LIFESTYLES, INC.
By: /s/ John Luciani
---------------------------------
Its: President
------------------------------
<PAGE>
TERM SHEET FOR THE DEVELOPMENT AND
LEASING OF ASSISTED LIVING FACILITIES
Owner/Lessor: Capstone Capital Corporation ("CCT")
Developer/Lessee: Grand Court Lifestyles, Inc. ("GCL")
Projects: Up to 4 assisted living residences
( ALR ) each consisting of up to
150 units for a total cost not to
exceed $39,000,000 ("Commitment
Total").
Project Development: After approval by CCT of the
proposed development of a specific
ALR (site, design, budget, etc.)
(the "Approved Development Plan")
CCT will acquire the specified land
and will contemporaneously enter
into (1) a Development Agreement
with GCL to develop the ALR
according to the Approved
Development Plan, and (2) a Lease
Agreement with GCL for the
completed project. The Approved
Development Plan may include a 5%
contingency factor, a 5%
development fee, marketing and
lease-up carry of up to $450,000.
Commitment Cancellation: At the end of twenty-four months,
if there exists an unfunded amount
of the Commitment Total and such
amount is not necessary for the
completion of an ALR under an
Approved Development Plan, such
unfunded amount will be deemed
canceled and GCL will pay a
Commitment Cancellation Fee equal
to 1% of such unfunded amount in
excess of $2,000,000. Additionally,
if at any time within twenty-four
months from the Commitment Date,
GCL elects to terminate or cancel
all or any portion of the Commitment
Agreement, GCL will pay a Commitment
Cancellation Fee equal to 1% of such
unfunded portion of Commitment Total.
Terms of Development Agreement
------------------------------
Closing Fee: 1% of the development cost pursuant
to the Approved Development Plan of
each ALR payable at the date of
execution of each Development
Agreement.
Construction
Commencement: Within thirty days after land
acquisition
Construction
Completion: Within twelve months of
Commencement
Completion Guaranty: GCL
Financing: CCT to provide construction
financing to GCL for 100% of
development cost pursuant to the
Approved Development Plan at a rate
equal to Prime + 1% on funds
advanced.
Inspection Fee: Developer will pay up to $1,000 per
month to reimburse CCT's inspecting
architect during the construction
period.
Terms of Lease Agreement
------------------------
Commencement: Upon completion of the facility
pursuant to the Development
Agreement.
Initial Term: Up to fifteen years. All leases
will expire on the same date.
Optional Renewal
Periods: Three separate five year periods
(total of fifteen years). However,
no lease may be extended unless all
leases are extended.
Initial Lease Rate: 350 basis points in excess of the
ten year Treasury bill yield;
however, in no event less than
9.75%.
Annual Lease Adjustment: Annual increase equal to 3% of the
previous year s base rent.
Lease Covenants: After a twenty-one month
stabilization period, rent coverage
(EBITDAR for the latest three
months, annualized divided by rent
due for the next twelve months) equal
to or greater than 1.25x.
Cross Defaults: Leases for ALRs developed under
this Commitment will be cross-
defaulted.
Lease Guaranty: All lease obligations to be
guaranteed by GCL. GCL agrees to
maintain a net worth of at least
$35,000,000.
First Right of Refusal: Granted to GCL.
Option to Purchase: Granted to GCL after the fourth
year at a price equal to the
greater of (i) an amount equal to
(a) the original development cost
plus (b) any improvements/additions
paid for by CCT plus (c) a lease
cancellation fee equal to twenty
percent of the sum of (a) and (b).
Such lease cancellation fee
multiplier shall decline by two
percentage points each year of the
lease after the fifth year.
However, in no event shall the
lease cancellation fee multiplier
be less than ten percent., or (ii)
the replacement cost of the
facility as determined by an
independent MAI appraisal.
Replacement cost will include a
development fee of at least 5% and
a marketing and lease-up carry
equal to that used in the original
development of the facility.
Triple Net: Lessee is responsible for all
maintenance, upkeep, insurance,
taxes, etc. with respect to each
facility.
Capital Replacement
Reserve: Lessor will fund a Capital
Replacement Reserve Account equal
to $75 per unit per year and
increasing $25 per unit per year up
to a maximum annual funding of $250
per unit per year.
Inspection Fee: Lessor to reimburse CCT up to
$15,000 per facility during the
initial term of lease agreement.
Cost of Transaction: All costs of entering into this
Commitment plus all cost associated
with each individual development
including, but not limited to, CCT
and GCL attorneys fees, title
insurance, surveys and environmental
reports, shall be paid by GCL.
Conditions Precedent: Approval by CCT's Board of
Directors.
Exhibit 10.4(a)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
AS CO-OBLIGORS
12% DEBENTURES DUE JUNE 16, 2000
SERIES 1
$------------- -------------------, ----
Registered Owner: -------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, and Wilmart Development Corp., a New Jersey
corporation, as co-obligors on the Debentures (collectively, the
"Company"), hereby promise to pay to the registered owner
specified above or registered assigns, the principal amount
specified above on June 16, 2000, together with accrued but
unpaid interest. Interest on the unpaid balance of this
Debenture from the date hereof, shall be payable monthly on the
15th day of each month hereafter, at the rate of 12% per annum
until the entire principal amount of this Debenture shall have
been paid (whether at maturity or at a date fixed for prepayment
or otherwise). Interest on any overdue principal (including any
overdue prepayment of principal) and (to the extent permitted
under applicable law) on any overdue installment of interest, at
the rate of 12% per annum until paid, shall be payable monthly as
aforesaid or, at the option of the holder hereof, on demand.
Interest shall be computed on the basis of a year of 365 or 366
days, as the case may be, for the actual number of days elapsed.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 1, 12% Debentures due
June 16, 2000, of the Company (the "Debentures"), originally
issued in the principal amount of $_______________ pursuant to
the Subscription Agreement, dated as of ______________, 199__
(the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Agreement, dated as of
August 14, 1990 (the "Agreement") between the Company and The
Bank of New York (the "Bank"). Reference is hereby made to the
Subscription Agreement and the Agreement and to all amendments
and supplements thereto for a description of the terms and
conditions upon which this Debenture is issued and the rights,
duties and obligations of the Company, the Bank and the holder of
this Debenture. Copies of the Subscription Agreement and the
Agreement are on file in the principal corporate trust office of
the Bank.
This Debenture shall be governed by the laws of the State
of New Jersey.
IN WITNESS WHEREOF, the Company has caused this Debenture
to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Agreement.
THE BANK OF NEW YORK
By:-------------------------
Authorized Signatory
Date of
Authentication:-------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto ______________ the within Debenture and does
hereby irrevocably constitute and appoint ___________ attorney to
transfer the said Debenture on the books kept for registration
thereof, with full power of substitution in the premises.
Date:---------------- ----------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond
with the name of the registered owner as it appears
upon the face of the within Debenture in every
particular, without alteration or enlargement or any
change whatever.
Exhibit 10.4(b)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12% DEBENTURES DUE APRIL 15, 1999
SERIES 2
$--------------- ---------------------, ----
Registered Owner: -----------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
April 15, 1999, together with accrued but unpaid interest.
Interest on the unpaid balance of this Debenture from the date
hereof, shall be payable monthly on the 15th day of each month
hereafter, at the rate of 12% per annum until the entire
principal amount of this Debenture shall have been paid (whether
at maturity or at a date fixed for prepayment or otherwise).
Interest on any overdue principal (including any overdue
prepayment of principal) and (to the extent permitted under
applicable law) on any overdue installment of interest, at the
rate of 12% per annum until paid, shall be payable monthly as
aforesaid or, at the option of the holder hereof, on demand.
Interest shall be computed on the basis of a year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 2, 12% Debentures
due April 15, 1999, of the Company (the "Debentures"), originally
issued in the principal amount of $------------- pursuant to the
Subscription Agreement, dated as of ---------------------, 19--
(the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Bank Agreement, dated as of
October 11, 1991 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank"). Reference is hereby made to
the Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:-------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:-------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:-------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:-------------------------
Authorized Signatory
Date of
Authentication:-------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto ---------- the within Debenture and does hereby
irrevocably constitute and appoint ------ attorney to transfer
the said Debenture on the books kept for registration thereof,
with full power of substitution in the premises.
Date:---------------- ----------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(c)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
11% DEBENTURES DUE DECEMBER 31, 1996
SERIES 3
$------------- ----------------, 1996
Registered Owner: -------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
December 31, 1996, together with accrued but unpaid interest.
Interest on the unpaid balance of this Debenture from the date
hereof, shall be payable monthly on the 15th day of each month
hereafter, at the rate of 11% per annum until the entire
principal amount of this Debenture shall have been paid (whether
at maturity or at a date fixed for prepayment or otherwise).
Interest on any overdue principal (including any overdue
prepayment of principal) and (to the extent permitted under
applicable law) on any overdue installment of interest, at the
rate of 11% per annum until paid, shall be payable monthly as
aforesaid or, at the option of the holder hereof, on demand.
Interest shall be computed on the basis of a year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 3, 11% Debentures due
December 31, 1996, of the Company (the "Debentures"), originally
issued in the principal amount of $--------------- pursuant to
the Subscription Agreement, dated as of ------------------, 19--
(the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Bank Agreement, dated as of
October 17, 1991 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank"). Reference is hereby made to
the Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the State
of New Jersey.
IN WITNESS WHEREOF, the Company has caused this Debenture
to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:-------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:-------------------------
Authorized Signatory
Date of
Authentication:-------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto ---------- the within Debenture and does hereby
irrevocably constitute and appoint ------ attorney to transfer
the said Debenture on the books kept for registration thereof,
with full power of substitution in the premises.
Date:---------------- ----------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond
with the name of the registered owner as it appears
upon the face of the within Debenture in every
particular, without alteration or enlargement or any
change whatever.
Exhibit 10.4(d)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
11.5% DEBENTURES DUE APRIL 15, 2000
SERIES 4
$
--------------- --------------, ----
Registered Owner:
-----------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
April 15, 2000, together with accrued but unpaid interest.
Interest on the unpaid balance of this Debenture from the date
hereof, shall be payable monthly on the 15th day of each month
hereafter, at the rate of 11.5% per annum until the entire
principal amount of this Debenture shall have been paid (whether
at maturity or at a date fixed for prepayment or otherwise).
Interest on any overdue principal (including any overdue
prepayment of principal) and (to the extent permitted under
applicable law) on any overdue installment of interest, at the
rate of 11.5% per annum until paid, shall be payable monthly as
aforesaid or, at the option of the holder hereof, on demand.
Interest shall be computed on the basis of a year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 4, 11.5% Debentures
due April 15, 2000, of the Company (the "Debentures"), originally
issued in the principal amount of $____________ pursuant to the
Subscription Agreement, dated as of _________________, 199__ (the
"Subscription Agreement"), between the Company and the purchaser
named therein, and the Bank Agreement, dated as of April 1, 1992
(the "Bank Agreement") between the Company and The Bank of New
York (the "Bank"). Reference is hereby made to the Subscription
Agreement and the Bank Agreement and to all amendments and
supplements thereto for a description of the terms and conditions
upon which this Debenture is issued and the rights, duties and
obligations of the Company, the Bank and the holder of this
Debenture. Copies of the Subscription Agreement and the Bank
Agreement are on file in the principal corporate trust office of
the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:
------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:
------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:
------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:
------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:
------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By: ___________________
Authorized Signatory
Date of
Authentication:____________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto __________ the within Debenture and does hereby
irrevocably constitute and appoint ________ attorney to transfer
the said Debenture on the books kept for registration thereof, with
full power of substitution in the premises.
Date:________________ ____________________________
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(e)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12% DEBENTURES DUE JANUARY 15, 2003
(With Mandatory Redemption of Approximately 30.7% on April 15,
1998, 40.2% on March 15, 1999, 4.2% on September 15, 2000, 3.8%
on April 15, 2002, 5.5% on June 15, 2002, 2.5% on July 15, 2002,
and 13.1% on January 15, 2003)
SERIES 5
$----------------- -------------, ----
Registered Owner: -----------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
January 15, 2003, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Debenture from the date hereof, shall be payable monthly on
the 15th day of each month hereafter, at the rate of 12% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 12% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 5, 12% Debentures
due January 15, 2003, of the Company (the "Debentures"),
originally issued in the principal amount of $------------
pursuant to the Subscription Agreement, dated as of -------------
---, 19-- (the "Subscription Agreement"), between the Company and
the purchaser named therein, and the Bank Agreement, dated as of
October 30, 1992 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank"). Reference is hereby made to
the Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:----------------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:----------------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:----------------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:----------------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:----------------------------
Authorized Signatory
Date of
Authentication:----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Debenture
and does hereby irrevocably constitute and appoint --------------
------------ attorney to transfer the said Debenture on the books
kept for registration thereof, with full power of substitution in
the premises.
Date:---------------- ------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(f)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12% DEBENTURES DUE APRIL 15, 2003
(WITH MANDATORY REDEMPTION OF APPROXIMATELY 21% ON JANUARY 15,
1997, 10% ON JANUARY 15, 1998, 23% ON APRIL 15, 2001, 23% ON
APRIL 15, 2002, AND 23% ON APRIL 15, 2003)
SERIES 6
$
------ ------------------, ---
Registered Owner:
------------------------------------------
Certificate Number:
------------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
April 15, 2003, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Debenture from the date hereof, shall be payable monthly on
the 15th day of each month hereafter, at the rate of 12% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 12% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 6, 12% Debentures
due April 15, 2003 of the Company (the "Debentures"), originally
issued in the principal amount of $ ___________ pursuant to the
Subscription Agreement, dated as of ___________________, 19__ the
"Subscription Agreement"), between the Company and the purchaser
named therein, and the Bank Agreement, dated as of May 24,
1993 (the "Bank Agreement") between the Company and The Bank of
New York (the "Bank"). Reference is hereby made to the
Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the rights,
duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate trust
office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:
----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:
----------------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:
----------------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:
----------------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:
----------------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:
----------------------------
Authorized Signatory
Date of Authentication:
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto __________________________ the within Debenture
and does hereby irrevocably constitute and appoint
_________________________ attorney to transfer the said
Debenture on the books kept for registration thereof, with full
power of substitution in the premises.
Date:
---------------- ----------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(g)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
11% DEBENTURES DUE JULY 15, 2001
(With Mandatory Redemption of Approximately 6.95% on March 15,
1995, 7.11% on March 15, 1996, 7.26% on March 15, 1997, 6.60% on
March 15, 1998, 5.94% on March 15, 1999, 5.28% on March 15, 2000
and 60.86% on July 15, 2001)
SERIES 7
$---------------- ----------------, ----
Registered Owner: ------------------------------------------
Certificate Number: ------------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
July 15, 2001, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Debenture from the date hereof, shall be payable monthly on
the 15th day of each month hereafter, at the rate of 11% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 11% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 7, 11% Debentures
due July 15, 2001 of the Company (the "Debentures"), originally
issued in the principal amount of $--------------- pursuant to
the Subscription Agreement, dated as of --------------------, 19-
- (the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Bank Agreement, dated as of
October 27, 1993 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank"). Reference is hereby made to
the Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:----------------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By:----------------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By:----------------------------------
Title: Vice President
LEISURE CENTERS, INC.
By:----------------------------------
Title: Vice President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:----------------------------
Authorized Signatory
Date of Authentication: ----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Debenture
and does hereby irrevocably constitute and appoint --------------
------------ attorney to transfer the said Debenture on the books
kept for registration thereof, with full power of substitution in
the premises.
Date:---------------- -------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(h)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
11% DEBENTURES DUE JANUARY 15, 2002
(With Mandatory Redemption of Approximately 5.16% on March 15,
1995, 5.10% on March 15, 1996, 5.10% on March 15, 1997, 4.87% on
March 15, 1998, 4.64% on March 15, 1999, 2.93% on March 15, 2000,
32.20% on November 15, 2000 and 40% on January 15, 2002)
SERIES 8
$------------ ----------------, ----
Registered Owner: --------------------------------------------
Certificate Number: --------------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
January 15, 2002, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Debenture from the date hereof, shall be payable monthly on
the 15th day of each month hereafter, at the rate of 11% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 11% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 8, 11% Debentures
due January 15, 2002 of the Company (the "Debentures"),
originally issued in the principal amount of $---------------
pursuant to the Subscription Agreement, dated as of -------------
--------, 19-- (the "Subscription Agreement"), between the
Company and the purchaser named therein, and the Bank Agreement,
dated as of November 29, 1993 (the "Bank Agreement") between the
Company and The Bank of New York (the "Bank"). Reference is
hereby made to the Subscription Agreement and the Bank Agreement
and to all amendments and supplements thereto for a description
of the terms and conditions upon which this Debenture is issued
and the rights, duties and obligations of the Company, the Bank
and the holder of this Debenture. Copies of the Subscription
Agreement and the Bank Agreement are on file in the principal
corporate trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:----------------------------------
Title: President
SULGRAVE REALTY CORPORATION
By:----------------------------------
Title: President
WILMART DEVELOPMENT CORP.
By:----------------------------------
Title: President
LEISURE CENTERS, INC.
By:----------------------------------
Title: President
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:----------------------------
Authorized Signatory
Date of Authentication:-----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Debenture
and does hereby irrevocably constitute and appoint --------------
------------ attorney to transfer the said Debenture on the books
kept for registration thereof, with full power of substitution in
the premises.
Date:---------------- ----------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(i)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12% DEBENTURES DUE SEPTEMBER 15, 2001
(With Mandatory Redemption of Approximately 4.6% on March 15,
1995, 4.4% on March 15, 1996, 4.3% on March 15, 1997, 4.3% on
March 15, 1998, 4.2% on March 15, 1999, 1.7% on March 15, 2000,
29.2% on June 15, 2000, 9.6% on January 15, 2001, 14.4% on
July 15, 2001, and 23.3% on September 15, 2001)
SERIES 9
$________________ ______________, ____
Registered Owner: ___________________________________________
Certificate Number: ___________________________________________
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
September 15, 2001, subject to mandatory redemption, together
with accrued but unpaid interest. Interest on the unpaid balance
of this Debenture from the date hereof, shall be payable monthly
on the 15th day of each month hereafter, at the rate of 12% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 12% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 9, 12% Debentures
due September 15, 2001 of the Company (the "Debentures"),
originally issued in the principal amount of $__________ pursuant
to the Subscription Agreement, dated as of ________________, 19__
(the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Bank Agreement, dated as of
September 12, 1994 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank"). Reference is hereby made to
the Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:__________________________________
Title: General Partner
J&B MANAGEMENT CORP.
By:__________________________________
Title:
SULGRAVE REALTY CORPORATION
By:__________________________________
Title:
WILMART DEVELOPMENT CORP.
By:__________________________________
Title:
LEISURE CENTERS, INC.
By:__________________________________
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:____________________________
Authorized Signatory
Date of Authentication: ___________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto __________________________ the within Debenture
and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer the said Debenture on
the books kept for registration thereof, with full power of
substitution in the premises.
Date:________________ ____________________________
Signature Guaranteed:
_____________________
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.4(j)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12% DEBENTURES DUE JANUARY 15, 2004
(With Mandatory Redemption of Approximately 11.96% on May 15,
1998, 16.30% on April 15, 2000, 60.33% on January 15, 2002,
11.41% on January 15, 2004
SERIES 10
$------------ ---------------, ----
Registered Owner: ---------------------------------------
Certificate Number: ---------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Debentures (collectively, the "Company"),
hereby promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
January 15, 2004, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Debenture from the date hereof, shall be payable monthly on
the 15th day of each month hereafter, at the rate of 12% per
annum until the entire principal amount of this Debenture shall
have been paid (whether at maturity or at a date fixed for
prepayment or otherwise). Interest on any overdue principal
(including any overdue prepayment of principal) and (to the
extent permitted under applicable law) on any overdue installment
of interest, at the rate of 12% per annum until paid, shall be
payable monthly as aforesaid or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the address of the registered owner of this Debenture at the
registered owner's address as it appears in the register.
This Debenture is one of the Series 10, 12% Debentures
due January 15, 2004 of the Company (the "Debentures"),
originally issued in the principal amount of $---------- pursuant
to the Subscription Agreement, dated as of ---------------, 19--
(the "Subscription Agreement"), between the Company and the
purchaser named therein, and the Bank Agreement, dated as of
July 12, 1995 (the "Bank Agreement") between the Company and The
Bank of New York (the "Bank"). Reference is hereby made to the
Subscription Agreement and the Bank Agreement and to all
amendments and supplements thereto for a description of the terms
and conditions upon which this Debenture is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Debenture. Copies of the Subscription Agreement
and the Bank Agreement are on file in the principal corporate
trust office of the Bank.
This Debenture will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Debenture shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this
Debenture to be executed by its partner or officer thereunto duly
authorized, the day and year first above written.
J&B MANAGEMENT COMPANY
By:--------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:--------------------------------
Title:
SULGRAVE REALTY CORPORATION
By:--------------------------------
Title:
WILMART DEVELOPMENT CORP.
By:--------------------------------
Title:
LEISURE CENTERS, INC.
By:--------------------------------
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Debenture is one of the Debentures of the issue
described in the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:----------------------------
Authorized Signatory
Date of Authentication: ----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Debenture
and does hereby irrevocably constitute and appoint --------------
------------ attorney to transfer the said Debenture on the books
kept for registration thereof, with full power of substitution in
the premises.
Date:---------------- -------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
Exhibit 10.5(a)
AGREEMENT
THIS AGREEMENT, dated as of August 14, 1990 (as
amended, modified or supplemented from time to time, this
"Agreement"), is by and among J&B Management Company, a New
Jersey general partnership ("J&B"), and its affiliates J&B
Management Corp., Sulgrave Realty Corporation, and Wilmart
Development Corp., each of which is a corporation organized and
existing under the laws of the State of New Jersey (hereinafter
J&B, J&B Management Corp., Sulgrave Realty Corporation and
Wilmart Development Corp. are sometimes referred to collectively
as the "Company" or the "Co-Obligors"), and The Bank of New York
(the "Bank").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 1, 12%
Debentures due 2000 (the "Debentures") pursuant to the Company's
Confidential Private Placement Memorandum dated August 14, 1990,
as the same may be from time to time amended (the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) December
31, 1991;
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least
$1,000,000 principal amount of Debentures have been sold and,
thereafter, from time to time (each, singly, an "Additional
Closing," and, collectively, the "Additional Closings"), at the
discretion of the Company, on such day or days as may be
determined by the Company, as subscriptions are received and
accepted (hereinafter the date of the Initial Closing and the
date of any Additional Closing are each referred to as a "Closing
Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Escrow Fund
Account No. 186635 (the "Fund") with the Bank;
WHEREAS, the Company wishes to grant the Bank, for the
benefit of the Bank and the Purchasers, a security interest in
and to assign to the Bank certain notes, instruments and
documents more fully described below and the Bank is willing to
accept such security interest and assignment upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Registrar, Paying Agent and
Custodian with respect to the Debentures and the above-mentioned
notes, instruments and documents and the Bank is willing to
accept such appointments upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2. Escrow.
------
The Company shall from time to
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be deposited in
short term certificates of deposits (including certificates of
deposits issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified by the Company
and held in trust for the benefit of the Purchasers. The Bank is
not responsible for interest losses, taxes or other charges on
investments. All checks delivered to the Bank for deposit in the
Fund shall be payable to the order of "J&B Management Company -
Escrow Account". Concurrently with such delivery, the Company
shall deliver to the Bank a statement of the name, mailing
address and tax identification number of each Purchaser whose
Subscription Payment is being delivered, and a schedule listing
the aggregate Debentures and aggregate cumulative Subscription
Payments to date delivered for deposit in the Fund. For the
purposes of this Agreement, the Company is authorized to make
deposits and give instructions as to investments of deposits and
otherwise, as contemplated in this Agreement, to the Bank.
Section 1.3. Interest.
--------
During the period (the "Escrow
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 365
or 366 days, as the case may be, for the actual number of days
elapsed. Interest shall be payable on the fifteenth day of each
month. Four Business Days prior to each such interest payment
date, the Bank shall give the Company written notice of the
difference between the amount of interest which will be payable
on Subscription Payments on such interest payment date and the
amount of interest accruing on the Fund's assets which will be
available for such payment on such interest payment date. Not
later than 11:30 a.m. (New York time) on the second Business Day
preceding such interest payment date, the Company shall deposit
with the Bank its check in the amount of such difference. On
each interest payment date, the Bank shall pay interest which is
due and payable to the respective Purchasers by mailing its check
in the appropriate amount to each Purchaser by first class mail
at the Purchaser's mailing address provided to the Bank pursuant
to Section 1.2 hereof. In the event that the Company shall
default in its payment obligations to the Bank under this Section
1.3, the Bank shall mail its check in the amount of each
Purchaser's pro rata share of interest earned and paid on the
Fund's assets as provided in this Section 1.3. For purposes of
this Agreement, "Business Day" shall mean any day other than a
day on which the Bank is authorized to remain closed in New York
City.
Section 1.4. Conditions of Initial Closing and
---------------------------------
Additional Closings.
-------------------
Notwithstanding anything to the contrary in
this Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes in an aggregate principal
amount equal to at least twice the principal amount of the
Debentures which will be sold at that Initial Closing or
Additional Closing, together with each related Consent and
Agreement pertaining to that Set Aside Purchase Note, Consent,
Assignment and Agreement, Consent and Agreement pertaining to a
Contract and the Management Fees thereunder, and related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing.
Section 1.5. Cancellation.
------------
The Company shall give the
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6. Payment.
-------
The Bank, at the Initial
Closing and each Additional Closing, upon written instruction
from the Company, shall transfer to the Company or to such third
party or parties as may be directed by the Company the Cleared
Funds then held in the Fund by the Bank. Any interest earned
thereon and not theretofore distributed in accordance with
Section 1.3 hereof shall be paid to the Purchasers in accordance
with Section 1.3 hereof.
Section 1.7. Fees and Expenses.
-----------------
The Bank shall be
entitled to compensation for its services under this Section 1 in
the amount of $5,000 as an administration and acceptance fee,
payable upon execution and delivery of this Agreement. The
Company shall also pay the Bank $3 for the preparation and
execution of each Purchaser's account including the calculation
of interest accrued; $1 for the preparation of each Purchaser's
1099 tax form; $25 for each investment transaction in the Fund;
$25 for each returned "bounced" check of a Purchaser; and $500
for each Additional Closing, payable within 10 days after the
Bank gives the Company notice that any such amounts are due and
payable. Notwithstanding anything herein to the contrary, the
Bank shall not charge the Company for the issuance of checks or
wire transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, and retention of
records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Agreement. The provisions of
this Section 1.7 shall survive the termination of this Agreement.
Section 1.8. Termination of Offering.
-----------------------
If the Offering
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon making such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Agreement.
Section 1.9. Form 1099, etc.
---------------
In compliance with the
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Escrow Agent
such Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10. Uncollected Funds.
-----------------
In the event that
any funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this
Agreement.
Section 1.11. Cleared Funds.
-------------
For the purpose of this
agreement, Subscription Payments shall constitute "Cleared Funds"
in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
---------
The Debentures shall be
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2. Authentication.
--------------
Only such Debentures as
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Agreement. No Debentures shall be
valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures.
----------
Subject to applicable law, in the event any
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2. Registration, Transfer and Exchange of
--------------------------------------
Debentures.
----------
The Debentures are issuable only as registered
Debentures without coupons in the denominations of $100,000 or
any multiple or any fraction thereof at the sole discretion of
the Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the pre-
ceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3. Owner.
-----
The person in whose name any
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4. Transfer Agent.
--------------
The Bank shall send
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Agreement, by
first class mail.
Section 5.5. Charges.
-------
No service charge shall be made
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6. Redemption.
----------
Whenever the Company shall
be required to effect mandatory redemption of part or all of the
Debentures, the Company shall give notice thereof to the Bank at
least forty (40) days prior to the date set forth for redemption,
the manner in which redemption shall be effected and all the
relevant details thereof. The Company shall deliver all redeemed
Debentures to the Bank for cancellation of the whole or portion
thereof, as appropriate, and issuance of new Debentures in
denominations equal to the unredeemed portion.
Section 5.7. Expenses.
--------
As a condition to the transfer
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, and retention of
records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Agreement.
Section 6. Paying Agent.
------------
Section 6.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2. Payment Provisions.
------------------
The Bank shall pay
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, in accordance with the terms and provisions of
this Agreement and the Debentures, by check mailed by first class
mail to the registered owner of a Debenture at his address as it
appears in the register; provided that not later than 11:30 a.m.
(New York time) on the second Business Day preceding each date on
which interest on or principal of any Debenture is due and
payable, the Company shall deposit with the Bank its check in the
amount due.
Section 6.3. Expenses.
--------
The Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 6
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Agreement.
Section 7. The Custodian.
-------------
Section 7.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2. Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign the Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of the Purchase Agreement, payments of interest due under the
Purchase Note may be offset and reduced by payments made under
certain Investor Notes issued by the limited partners of the
Investing Partnership, which have been pledged to secure
obligations owed by J&B to one or more banks. Only that interest
("Excess Interest") under the Purchase Note which is in excess of
the amount offset and reduced by payments made to the bank, if
any, may be payable to the holder of the Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.5 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate principal amount of
$14,080,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Purchase Note, the Bank
shall execute and deliver to the Company a receipt therefor.
Notwithstanding the assignment of the Set Aside Purchase Notes to
the Bank, all of the Set Aside Purchase Notes shall be payable
directly to the Company until such time as an Event of Default
(as defined in Section 7.7 hereof) shall occur and be continuing.
Under the terms of the Set Aside Purchase Notes, only that
interest thereon which is Excess Interest may be payable to the
Bank.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default, the Investing
Partnership shall pay all sums due under its Set Aside Purchase
Note directly to the Bank. Upon receipt of each such Consent and
Agreement, the Bank shall execute and deliver to the Company a
receipt therefor.
Section 7.3. Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.5 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective Investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.6(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.6(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Agreement) until
all outstanding obligations under the Set Aside Purchase Note
which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses) and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4. Management Fees.
---------------
(a) J&B is the managing agent of each Operating
Partnership listed in Exhibit A hereto and is entitled under its
management contract (a "Contract") with each such Operating
Partnership to receive management fees (the "Management Fees").
(b) In order to secure the Bank's fees and expenses
under this Section 7 and the payment of principal of and interest
on the Debentures, subject to the terms and conditions of Section
7.5 hereof, J&B hereby grants the Bank a security interest in and
assigns to the Bank, for the benefit of the Bank and the owners
of the Debentures from time to time, all of J&B's rights, title
and interest in and to each Contract and all of the Management
Fees listed in Exhibit A hereto, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank a Financing Statement for filing with the appropriate
governmental authority indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authority in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above-mentioned Management Fees to the Bank, all such Management
Fees shall be payable directly to the Company, until such time as
an Event of Default shall occur and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit D hereto, executed by each
Operating Partnership listed in Exhibit A hereto under which the
Operating Partnership shall (i) consent to J&B's assignment to
the Bank of the Contract and J&B's Management Fees and the
proceeds thereof; (ii) consent to J&B's delivery of the above
mentioned Financing Statements and to the Bank's filing of the
above mentioned Financing Statements from time to time with the
appropriate governmental authority; and (iii) agree that upon
receiving the Bank's notice of an Event of Default, the Operating
Partnership shall pay all Management Fees directly to the Bank.
Upon receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.5. Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement pertaining
to that Set Aside Purchase Note, Consent, Assignment and
Agreement, and Consent and Agreement pertaining to a Contract and
the Management Fees thereunder. J&B shall be obligated to
deliver to the Bank only those Set Aside Purchase Notes selected
by J&B in its sole discretion as shall be in an aggregate
principal amount equal to at least twice the principal amount of
the Debentures which will be sold at the respective Initial
Closing or Additional Closing, together with each related Consent
and Agreement pertaining to that Set Aside Purchase Note,
Consent, Assignment and Agreement, Consent and Agreement
pertaining to a Contract and the Management Fees thereunder, and
related Financing Statements. At such time as the Company shall
send to the Bank the Company's irrevocable notice that there will
not be any further Additional Closings, the Company and the Bank
shall thereupon acknowledge and append hereto an additional
Exhibit E listing the Set Aside Purchase Notes, and the Investing
Partnerships, Operating Partnerships, Security Agreements,
Contracts and Management Fees relating thereto, in which the Bank
will have security interests under this Section 7.
Section 7.6. Duties of the Bank.
------------------
(a) The Bank shall hold the notes, agreements and
instruments deposited with it for the purposes of this Agreement
and for the benefit of the Bank and of the owners of the
Debentures from time to time, shall file the Financing Statements
delivered to it from time to time by J&B with the appropriate
governmental authorities indicated by J&B to the Bank and shall
perform all duties imposed upon it by this Agreement until this
Agreement is terminated. The security interests and assignments
created by this Agreement and by each Consent, Assignment and
Agreement shall automatically terminate when all of the
Debentures and all amounts payable to the Bank under this
Agreement have been paid in full. Thereupon, the Bank shall
return to J&B the Set Aside Purchase Notes deposited with it
pursuant to Section 7.2(b) hereof, and shall file with the
appropriate governmental authorities indicated by J&B to the Bank
Financing Statements delivered by J&B to the Bank recording the
termination of the Bank's security interests and assignments
granted under this Agreement and each Consent, Assignment and
Agreement.
(b) Upon the occurrence of an Event of Default, the
Bank shall declare the entire outstanding aggregate principal
balance of all the Debentures due and immediately payable with
accrued interest thereon. In addition, the Bank shall:
(i) immediately notify the makers of the Set Aside
Purchase Notes that all payments to be made thereafter on
the Set Aside Purchase Notes shall be paid directly to the
Bank; and
(ii) immediately notify the respective Operating
Partnerships that all Management Fees payable to J&B from
the Operating Partnerships shall be paid directly to the
Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence of an Event of Default, the
Bank shall be entitled to institute action against the
Co-Obligors, jointly or severally, to collect payment under the
Debentures without any prior requirement to attempt to collect
any funds under the Set Aside Purchase Notes, the related
Purchased Partnership Interests or the assigned Management Fees.
In the event that the Company shall default on its payment
obligations to the Bank under this Agreement, the Bank shall be
entitled to institute action against the Co-Obligors, jointly or
severally, to collect payment under this Agreement, without any
prior requirement to attempt to collect any funds under the Set
Aside Purchase Notes, the related Purchased Partnership Interests
or the assigned Management Fees.
(d) Upon the occurrence of an Event of Default, the
Bank, in its discretion, is authorized to, but shall not be
required to, proceed in any way legally available to it to
liquidate the Set Aside Purchase Notes, the Purchased Partnership
Interests (if the Bank shall have foreclosed on such Set Aside
Purchase Note pursuant to Section 7.6(e) hereof) and the
assignments of Management Fees including, but not limited to, the
public or private sale of all or any part thereof upon three (3)
days' prior notice to the Co-Obligors, free and clear of any
claim, lien, charge or encumbrance including, without limitation,
any right of equity of redemption. The Bank shall apply the
proceeds of any such sale firstly to the payment of the expenses
of the sale, secondly to the payment of the Bank's fees and
expenses, thirdly to the payment of accrued interest including
accrued interest from and after the Event of Default, and next to
the payment of principal of the Debentures. The Bank shall not
be liable to any of the Co-Obligors or their affiliates because
of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Agreement shall operate as an assignment of such distributions by
the Investing Partnership, subject to the limitations set forth
in Section 7.3(c). In addition, while an Event of Default is
continuing, if there shall occur or if there shall have occurred
and be continuing an event of default under any Set Aside
Purchase Note or under any partnership agreement governing the
Operating Partnership related to the Purchased Partnership
Interest or a failure of payment under the assignment of
Management Fees related to that Operating Partnership, the Bank
shall be authorized to exercise any and all rights and remedies
available to it as the holder of the respective Set Aside
Purchase Note, the substituted partner or assignee with respect
to the Purchased Partnership Interest in the related Operating
Partnership, or the assignee of the assigned Management Fees
under the terms of the related governing documents and/or
instruments, as well as any other remedy available under law or
equity. The Bank shall apply the proceeds of its exercise of the
above mentioned rights and remedies firstly to the payment of all
costs of collection, secondly to the payment of the Bank's fees
and expenses, thirdly to the payment of all accrued interest
(including, without limitation, interest accrued after the date
of the Event of Default) and next to repayment of principal of
the Debentures, until all amounts due under the Debentures shall
have been paid in full together with all costs of collection,
fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur while no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default occurs. If and when such Event of Default shall
occur, the Bank shall follow the procedures specified in Sections
7.6 (b)-(e) of this Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note, Purchased Partnership
Interest or assigned Management Fees to amounts owing to the Bank
under this Agreement unless an Event of Default shall occur and
be continuing. The Bank shall be entitled to exercise one or
more remedies at the same time, all such rights and remedies
being cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds collected by the Bank including, but not limited to, all
actual costs and expenses of collection (including, without
limitation, reasonable attorneys' fees and expenses). If any
funds shall remain in the possession of the Bank after the
payment of all amounts due under the Debentures, all such costs
of collection thereof and all other actual fees and expenses
(including without limitation reasonable attorney's fees and
expenses) of the Bank, the Bank shall deliver such remaining
funds to the Company. The provisions of this Section 7.6(h)
shall survive the termination of this Agreement.
Section 7.7. Events of Default.
-----------------
If either of the following events (an "Event of
Default") shall occur and be continuing for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any part
of the principal of or interest on any Debenture when the
same shall become due and payable, and such default shall
have continued for more than 15 days; or
(ii) the Company fails to redeem a pro rata portion
of the Debentures at the time set for mandatory redemption
and such default shall have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.8. Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one or more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt notice thereof to
the Bank together with all relevant details of the proposed
transaction.
(ii) As part of the consideration to be paid by the
purchaser of each Set Aside Purchase Note to be sold, the
purchaser shall pay directly to the Bank cash in the amount equal
to 50% of the face amount of principal of that Set Aside Purchase
Note plus an amount sufficient to pay accrued interest on the pro
rata portion of Debentures to be prepaid pursuant to subparagraph
(iv) below.
(iii) The total consideration to be paid upon sale of
a Set Aside Purchase Note shall not be less the 50% of the face
amount of principal thereof plus an amount sufficient to pay
accrued interest on the pro rata portion of Debentures to be
prepaid pursuant to subparagraph (iv) below.
(iv) Upon receipt of cash as provided in subparagraph
(ii) above, the Bank will apply the proceeds to the pro rata
redemption of the Debentures at par plus payment of accrued
interest thereon. Thereafter, the Bank shall deliver each Set
Aside Purchase Note that is then sold to the purchaser together
with an assignment of security interest and security agreement
covering the related Purchased Partnership Interest. The Bank
shall have no liability whatsoever to the purchaser or any party
hereto for its actions pursuant to this Section 7.8.
Section 7.9. Fees and Expenses.
-----------------
The Bank shall be
entitled to compensation for its services under this Section 7 in
the amount of $2,500 as an administration fee, payable upon
execution and delivery of this Agreement; and administrative
fees, payable annually in advance, based upon the aggregate
principal amount of outstanding Debentures on the anniversary
date, in the following amounts:
$1,000,000 outstanding . . . . . . . . . . . . . . . . . $2,000
$1,000,001 to $2,000,000 outstanding . . . . . . . . . . $3,000
$2,000,001 to $3,000,000 outstanding . . . . . . . . . . $4,000
$3,000,001 to $4,000,000 outstanding . . . . . . . . . . $5,000
$4,000,001 to $5,000,000 outstanding . . . . . . . . . . $6,000
$5,000,001 to $6,000,000 outstanding . . . . . . . . . . $7,000
$6,000,001 to $7,000,000 outstanding . . . . . . . . . . $8,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
retention of records, and the filing of Financing Statements, and
reasonable fees and expenses of counsel), payable within ten (10)
days after the Bank gives notice to the Company that it incurred
such expenses. The obligation to pay such compensation and
reimburse such expenses shall be borne solely by the Company.
The Set Aside Purchase Notes, the related Purchased Partnership
Interests and the assigned Management Fees in which the Bank has
a security interest will be available to satisfy the Company's
payment obligations to the Bank under this Section 7.9 only when
an Event of Default has occurred and is continuing. The Company
shall not be obligated to reimburse the Bank for any costs or
expenses incurred in connection with the preparation and
execution of this Agreement. The provisions of this Section 7.9
shall survive the termination of this Agreement.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Agreement and no others.
(b) The Bank may not be relieved from liability for
its own grossly negligent action, its own grossly negligent
failure to act, or its own willful misconduct except that:
1. This paragraph does not limit the effect of
paragraph (a) of this Section.
2. The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations.
------------------
The Bank makes no
representation as to the validity or adequacy of this Agreement
or the Debentures, or any Set Aside Purchase Note, Purchased
Partnership Interest or Management Fees in which the Bank has a
security interest, or any Financing Statement delivered to it by
J&B or the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification.
---------------
The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Agreement, including
the legal costs and expenses of defending itself against any
claim or liability in connection with its performance under this
Agreement. The Bank shall notify the Company promptly of any
claim for which it may seek indemnity. The Company shall defend
the claim and the Bank shall cooperate in the defense. The Bank
may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need
not reimburse any expense or indemnify against any loss or
liability incurred by the Bank through gross negligence or bad
faith. The provisions of this Section 10 shall survive the
termination of this Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any reason, the
Company shall promptly appoint a successor Bank.
(ii) If a successor Bank does not take office within
60 days after the retiring Bank gives notice of resignation or
action is taken to remove the retiring Bank, the retiring Bank,
the Company or the owners of at least 10% in principal amount of
the Debentures outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and the
Company. Thereupon the resignation or removal of the retiring
Bank shall become effective and the successor Bank shall have all
the rights, powers and duties of the Bank under this Agreement.
The successor Bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of all
amounts owed to it under this Agreement, the retiring Bank shall
promptly transfer all property held by it as Bank to the
successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices.
-------
All notices and other
communications pursuant to this Agreement shall be in writing and
shall be delivered by hand or sent by registered or certified
mail, return receipt requested, or by facsimile, confirmed by
writing, delivered by hand or sent by registered or certified
mail, return receipt requested, delivered or sent on the date of
the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: 201 947-6663
Attention: Bernard M. Rodin
With a copy to
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: 212 815-5999
Attention: Diane Bligh, Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law.
-------------
This Agreement shall be
governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment.
---------------------------
This
Agreement, together with each Consent and Agreement referred to
in Section 7 hereof, sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, contracts, promises,
representations, warranties, statements, arrangements and
understandings, if any, among the parties hereto or their
representatives with respect to the subject matter hereof. No
waiver, modification or amendment of any provision, term or
condition hereof shall be valid unless in writing and signed by
all parties hereto, and any such waiver, modification or
amendment shall be valid only to the extent therein set forth.
Section 15. Successors.
----------
This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability.
--------------
Any provision of this
Agreement which may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 17. Counterparts.
------------
This Agreement may be
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions.
-----------
All terms used in this
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
J&B MANAGEMENT COMPANY
By /s/ John Luciani
--------------------------
Title: General Partner
By /s/ Bernard M. Rodin
--------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By /s/ John Luciani
--------------------------
Title: President
By /s/ Bernard M. Rodin
--------------------------
Title: Secretary
SULGRAVE REALTY CORPORATION
By /s/ John Luciani
--------------------------
Title: President
By /s/ Bernard M. Rodin
--------------------------
Title: Secretary
WILMART DEVELOPMENT CORP.
By /s/ John Luciani
--------------------------
Title: President
By /s/ Bernard M. Rodin
--------------------------
Title: Secretary
THE BANK OF NEW YORK
By /s/ Vincent P. McConnell
------------------------------
Title: Assistant Vice President
Exhibit 10.5(b)
FIRST AMENDMENT TO
BANK AGREEMENT
(SERIES 1)
FIRST AMENDMENT, dated as of August 21, 1992 (the
"First Amendment"), to the agreement by and among J&B Management
Company, J&B Management Corp., Sulgrave Realty Corporation,
Wilmart Development Corp. and The Bank of New York, dated as of
August 14, 1990 (the "Bank Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B Management Company, a New Jersey general
partnership, and its affiliates: J&B Management Corp., Sulgrave
Realty Corporation, and Wilmart Development Corp., each of which
is a corporation duly organized and validly existing under the
laws of the State of New Jersey (hereinafter J&B Management
Company, J&B Management Corp., Sulgrave Realty Corporation and
Wilmart Development Corp. are sometimes referred to,
collectively, as the "Company") and The Bank of New York (the
"Bank") executed the Bank Agreement as of August 14, 1990, in
connection with the Company's issuance of its Series 1 12%
Debentures due June 16, 2000 (the "Debentures") (capitalized
terms not defined herein shall have the meanings ascribed to them
in the Bank Agreement); and
WHEREAS, the Company desires to amend the Bank
Agreement so that the Company at its discretion may (i) deposit
with the Bank additional Purchase Notes as Set Aside Purchase
Notes or (ii) withdraw any of the Set Aside Purchase Notes held
by the Bank and replace such withdrawn Set Aside Purchase Note
with any one or more Purchase Notes of which the Company is the
holder; provided, however, that following such substitution the
aggregate principal balance of Set Aside Purchase Notes held by
the Bank shall not be less than twice the aggregate principal
balance of the Debentures that remain outstanding; and
WHEREAS, the Company desires to amend the Bank
Agreement to reflect that the Company no longer serves as
managing agent for the properties that underlie the Set Aside
Purchase Notes and, accordingly, management fees no longer serve
as collateral for the Debentures.
NOW, THEREFORE, the parties hereto agree as follows;
1. The Bank Agreement is hereby amended by adding the
following as Section 7.10.
Section 7.10. Substitution and Addition of
----------------------------
Set Aside Purchase Notes. (a) The Company may from
-------------------------
time to time deposit with the Bank as a Set Aside
Purchase Note any one or more Purchase Notes of which
it is the holder (any such Purchase Note shall be
defined for the purposes herein as an "Additional Set
Aside Purchase Note").
(b) The Company may from time to time
withdraw any one or more of the Set Aside
Purchase Notes (a withdrawn Set Aside
Purchase Note shall be defined for the
purposes herein as a "Withdrawn Set Aside
Purchase Note") and substitute for the
Withdrawn Set Aside Purchase Note any one or
more Purchase Notes of which it is the holder
(any such Purchase Note shall be defined for
the purposes herein as a "Substitute Set
Aside Purchase Note"); provided, however,
that the Company may only withdraw and
substitute Set Aside Purchase Notes so long
as (i) no Event of Default has occurred as is
continuing and (ii) the aggregate principal
balance of the Set Aside Purchase Notes held
by the Bank after the Withdrawn Set Aside
Purchase Note is withdrawn and the Substitute
Set Aside Purchase Note is deposited with the
Bank remains twice the principal balance of
the Debentures that remain outstanding.
(c) In order to effect the deposit of
an Additional Set Aside Purchase Note as
described in Section 7.10(a) hereof or the
substitution of a Substitute Set Aside
Purchase Note for a Withdrawn Set Aside
Purchase Note as described in Section 7.3(b)
hereof, the Company shall deliver the
Additional Set Aside Purchase Note or the
Substitute Set Aside Purchase, as the case
may be, to the Bank along with the Consent
and Agreement described in Section 7.2(c)
hereof, the Financing Statements pertaining
to such Additional Set Aside Purchase Note or
Substitute Set Aside Purchase Note, the
Consent, Assignment and Agreement described
in Section 7.3(c) hereof, and the related
Financing Statements pertaining to the
Purchased Partnership Interest securing such
Additional Set Aside Purchase Note or
Substitute Set Aside Purchase Note. Upon
receiving a Substitute Set Aside Purchase
Note and the related documents described in
the preceding sentence, the security interest
and assignment created by this Bank
Agreement, the Consent and Agreement
described in section 7.2(c) hereof, the
Consent, Assignment and Agreement described
in Section 7.3(c) hereof and, if held by the
Bank, the Consent and Agreement described in
Section 7.4(c) hereof, each as relates to the
Withdrawn Set Aside Purchase Note, shall
automatically terminate and shall have no
further force or effect. Thereupon, the Bank
shall (i) return the Withdrawn Set Aside
Purchase Note to the Company, (ii) execute
and deliver to the Company an instrument
prepared by J&B effecting a release by the
Bank of the existing assignment of the
Security Interest and Security Agreement
covering the related Purchased Partnership
Interest, (iii) file with the appropriate
governmental authorities indicated by J&B to
the Bank, Financing Statements delivered by
J&B to the Bank recording the termination of
the Bank's security interest and assignment
granted under this Bank Agreement and (iv)
return to J&B the Consent, Agreement
described in Section 7.2(c) hereof and the
Consent and Assignment and Agreement
described in Section 7.3(c) hereof, each as
relates to such Withdrawn Set Aside Purchase
Note. The Company will notify the Debenture
holders of any addition or substitution of a
Set Aside Purchase Note within sixty (60)
days thereof and provide those Debenture
holders with the information pertaining to
the Additional Set Aside Purchase Note or
Substitute Set Aside Purchase Note, as the
case may be, that would have been contained
in the Memorandum had such additional Set
Aside Purchase Note originally been included
as one of the Set Aside Purchase Notes
described therein.
(d) After the deposit of an Additional
Set Aside Purchase Note or the substitution
of a Substitute Set Aside Purchase Note for a
Withdrawn Set Aside Purchase Note, such
Additional Set Aside Purchase Note or
Substitute Set Aside Purchase Note shall be
deemed to be a Set Aside Purchase Note for
all purposes as set forth in this Bank
Agreement.
2. The Bank Agreement is hereby further amended to
accurately reflect that the Company will not serve as managing
agent for the properties that underlie the Set Aside Purchase
Notes and will not receive management fees from those properties
by deleting all references to Management Fees, contracts for
Management Fees and the Consents and Agreements executed pursuant
to Section 7.4(c) in connection therewith.
3. The Bank Agreement is hereby further amended by
deleting Section 7.4 in its entirety. The Bank shall file with
the appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements, which J&B shall deliver to the Bank,
amending the Financing Statements pertaining to the properties
that underlie the Set Aside Purchase Notes to release from the
security interest created thereby the management fees associated
with each such property.
4. The Bank shall return to the Company within 15
days from the date hereof, the Consent and Agreement as described
in Section 7.4(c) hereof pertaining to each Set Aside Purchase
Note.
5. Except as herein specifically amendment, all of
the terms, covenants, provisions and conditions of the Bank
Agreement shall continue to remaining in full force and effect.
6. This First Amendment may be executed in any number
of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment as of the date first above written.
J&B MANAGEMENT COMPANY
By: /s/ Bernard M. Rodin
---------------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
--------------------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
--------------------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
--------------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Peter Lagatta
-------------------------------------
Title: Assistant Vice President
Exhibit 10.5(c)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of October 11, 1991 (as
amended, modified or supplemented from time to time, this "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 2, 12%
Debentures due April 15, 1999 (the "Debentures") pursuant to the
Company's Confidential Private Placement Memorandum dated October
11, 1991, as the same may be from time to time amended (the
"Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) June 30,
1993 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least
$1,000,000 principal amount of Debentures have been sold and,
thereafter, from time to time (each, singly, an "Additional
Closing," and, collectively, the "Additional Closings"), at the
discretion of the Company, on such day or days as may be
determined by the Company, as subscriptions are received and
accepted (hereinafter the date of the Initial Closing and the
date of any Additional Closing are each referred to as a "Closing
Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Series 2 Escrow
Fund Account No. 201315 (the "Fund") with the Bank;
WHEREAS, the Company wishes to grant the Bank, for the
benefit of the Bank and the Purchasers, a security interest in
and to assign to the Bank certain notes, instruments and
documents more fully described below and the Bank is willing to
accept such security interest and assignment upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Registrar, Paying Agent and
Custodian with respect to the Debentures and the above-mentioned
notes, instruments and documents and the Bank is willing to
accept such appointments upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Escrow Agent for the purposes set
forth in this Section l, and the Bank hereby accepts such
appointment.
Section 1.2. Escrow.
------
The Company shall from time to
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposits (including certificates of
deposits issued by the Bank), A-l, P-l commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3. Interest.
--------
During the period (the "Escrow
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month. Four Business Days
prior to each such interest payment date, the Bank shall give the
Company written notice of the difference between the amount of
interest which will be payable on Subscription Payments on such
interest payment date and the amount of interest accruing on the
Fund's assets which will be available for such payment on such
interest payment date. Not later than 11:30 a.m. (New York time)
on the second Business Day preceding such interest payment date,
the Company shall deposit with the Bank its check in the amount
of such difference. On each interest payment date, the Bank
shall pay interest which is due and payable to the respective
Purchasers by mailing its check in the appropriate amount to each
Purchaser by first class mail at the Purchaser's mailing address
provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations
to the Bank under this Section 1.3, the Bank shall mail its check
in the amount of each Purchaser's pro rata share of interest
earned and paid on the Fund's assets as provided in this Section
1.3 and subject to Section 1.7 hereof.
For purposes of this Bank Agreement, "Business Day" shall mean
any day other than a day on which the Bank is authorized to
remain closed in New York City.
Section 1.4. Conditions of Initial Closing and
---------------------------------
Additional Closings.
-------------------
Notwithstanding anything to the contrary in
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes which at maturity will have an
aggregate outstanding balance of principal equal to at least
twice the principal amount of the Debentures which will be sold
at that Initial Closing or Additional Closing, together with the
related Consent and Agreement pertaining to each such Set Aside
Purchase Note and the related Consent, Assignment and Agreement
pertaining to the Purchased Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing. As used in this Section 1.4 and elsewhere in this Bank
Agreement, a statement concerning the outstanding principal
amount at maturity of any Set Aside Purchase Note refers to an
amount that does not include any payments on a Set Aside Purchase
Note deferred by the obligor thereof with the consent of the
Company.
Section 1.5. Cancellation.
------------
The Company shall give the
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6. Payment.
-------
The Bank, at the Initial
Closing and each Additional Closing, upon written instruction
from the Company, shall transfer to the Company or to such third
party or parties as may be directed by the Company the Cleared
Funds then held in the Fund by the Bank.
Any interest earned thereon and not theretofore distributed in
accordance with Section 1.3 hereof shall be paid to the
Purchasers in accordance with Section 1.3 hereof.
Section 1.7. Fees and Expenses.
-----------------
In addition to the
fees set forth in Section 7.8 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to June 30, 1993, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Bank Agreement. The provisions
of this Section 1.7 shall survive the termination of this Bank
Agreement.
Section 1.8. Termination of Offering.
-----------------------
If the Offering
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon making such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9. Form 1099, etc.
--------------
In compliance with the
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10. Uncollected Funds.
-----------------
In the event that
any funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11. Cleared Funds.
-------------
For the purpose of this
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
---------
The Debentures shall be
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2. Authentication.
--------------
Only such Debentures as
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures.
----------
Subject to applicable law, in the event any
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2. Registration, Transfer and Exchange of
--------------------------------------
Debentures.
----------
The Debentures are issuable only as registered
Debentures without coupons in the denominations of $100,000 or
any multiple or any fraction thereof at the sole discretion of
the Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the pre-
ceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3. Owner.
-----
The person in whose name any
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4. Transfer Agent.
--------------
The Bank shall send
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5. Charges.
-------
No service charge shall be made
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6. Redemption.
----------
Whenever the Company shall
be required to effect mandatory redemption of part or all of the
Debentures, the Company shall give notice thereof to the Bank at
least forty (40) days prior to the date set forth for redemption,
the manner in which redemption shall be effected and all the
relevant details thereof. The Bank shall give notice to the
Purchasers of that redemption at least thirty (30) days prior to
the date set forth for redemption. The Company shall deliver all
redeemed Debentures to the Bank for cancellation of the whole or
portion thereof, as appropriate, and issuance of new Debentures
in denominations equal to the unredeemed portion.
Section 5.7. Expenses.
--------
As a condition to the transfer
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Bank Agreement.
Section 6. Paying Agent.
------------
Section 6.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2. Payment Provisions.
------------------
The Bank shall pay
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, in accordance with the terms and provisions of
this Bank Agreement and the Debentures, by check mailed by first
class mail to the registered owner of a Debenture at his address
as it appears in the register; provided that not later than 11:30
a.m. (New York time) on the second Business Day preceding each
date on which interest on or principal of any Debenture is due
and payable, the Company shall deposit with the Bank its check in
the amount due.
Section 6.3. Expenses.
--------
The Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 6
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1. Appointment.
-----------
The Company hereby appoints
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2. Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign each Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of each Purchase Agreement, payments of interest and, where
required, annual payments of principal due under the Purchase
Note may be offset and reduced by payments made under certain
Investor Notes issued by the limited partners of the respective
Investing Partnership, which have been pledged to secure
obligations owed by J&B to one or more banks. Only that interest
and, where applicable, annual principal payments ("Excess
Interest and Principal") under a Purchase Note which is in excess
of the amount offset and reduced by payments made to such banks,
if any, may be payable to the holder of the Purchase Note. Any
interest and, where required, annual payment of principal that
are due but unpaid on Purchase Notes shall be deferred until the
maturity of that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $16,880,000
and an aggregate balance of principal due at maturity equal to
$14,654,500, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Purchase Note, the Bank
shall execute and deliver to the Company a receipt therefor.
Notwithstanding the assignment of the Set Aside Purchase Notes to
the Bank, the annual payments of principal due on certain Set
Aside Purchase Notes so providing and interest payments on all of
the Set Aside Purchase Notes shall be payable directly to the
Company until such time as an Event of Default (as defined in
Section 7.6 hereof) shall occur and be continuing. Under the
terms of the Set Aside Purchase Notes, only that principal and
interest thereon which is Excess Interest and Principal may be
payable to the Bank. The parties hereto confirm that annual
principal payments made under the Set Aside Purchase Notes listed
in Exhibit A hereto, as requiring such annual principal payment,
will belong to the Company until such time as an Event of Default
shall occur and be continuing. The parties hereto further
confirm that any deferred interest and principal on a Set Aside
Purchase Note paid at the maturity thereof shall belong to the
Company so long as an Event of Default shall not have occurred
and be continuing.
(c) J&B shall deliver to the Bank a Consent Agreement
in the form of Exhibit B hereto, executed by each Investing
Partnership listed in Exhibit A hereto, under which the Investing
Partnership shall (i) consent to J&B's assignment to the Bank of
the Investing Partnership's Set Aside Purchase Note, (ii) consent
to J&B's delivery of the Investing Partnership's Set Aside
Purchase Note to the Bank, and (iii) agree that upon receiving
the Bank's notice of an Event of Default, the Investing
Partnership shall pay all sums due under its Set Aside Purchase
Note directly to the Bank. Upon receipt of each such Consent and
Agreement, the Bank shall execute and deliver to the Company a
receipt therefor.
Section 7.3. Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective Investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.5(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Bank Agreement)
until all outstanding obligations under the Set Aside Purchase
Note which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses) and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4. Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note
and the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B in its sole
discretion as shall have an aggregate balance of principal due at
maturity equal to at least twice the principal amount of the
Debentures which will be sold at the respective Initial Closing
or Additional Closing, together with the related Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, and the related Consent, Assignment and Agreement
and related Financing Statements pertaining to the Purchased
Partnership Interest. At such time as the Company shall send to
the Bank the Company's irrevocable notice that there will not be
any further Additional Closings, the Company and the Bank shall
thereupon acknowledge and append hereto an additional Exhibit E
listing the Set Aside Purchase Notes, Investing Partnerships,
Operating Partnerships and Security Agreements, in which the Bank
will have security interests under this Section 7.
Section 7.5. Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes deposited with it pursuant to Section 7.2(b) hereof, and
shall file with the appropriate governmental authorities
indicated by J&B to the Bank Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interests and assignments granted under this Bank Agreement and
each Consent, Assignment and Agreement.
(b) Upon the occurrence of an Event of Default, the
Bank shall declare the entire outstanding aggregate principal
balance of all the Debentures due and immediately payable with
accrued interest thereon. In addition, the Bank shall
immediately notify the makers of the Set Aside Purchase Notes
that all payments to be made thereafter on the Set Aside Purchase
Notes shall be paid directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence of an Event of Default, the
Bank shall be entitled to institute action against the
Co-Obligors, jointly or severally, to collect payment under the
Debentures without any prior requirement to attempt to collect
any funds under the Set Aside Purchase Notes or the related
Purchased Partnership Interests. In the event that the Company
shall default on its payment obligations to the Bank under this
Bank Agreement, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under this Bank Agreement, without any prior requirement to
attempt to collect any funds under the Set Aside Purchase Notes
or the related Purchased Partnership Interests.
(d) Upon the occurrence of an Event of Default, the
Bank, in its discretion, is authorized to, but shall not be
required to, proceed in any way legally available to it to
liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof)
including, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Co-Obligors, free and clear of any claim, lien, charge or
encumbrance including, without limitation, any right of equity of
redemption. The Bank shall apply the proceeds of any such sale
firstly to the payment of the expenses of the sale, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of accrued interest including accrued interest from and
after the Event of Default, and next to the payment of principal
of the Debentures. The Bank shall not be liable to any of the
Co-Obligors or their affiliates because of any sale or the
consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Bank Agreement shall operate as an assignment of such
distributions by the Investing Partnership, subject to the
limitations set forth in Section 7.3(c). In addition, while an
Event of Default is continuing, if there shall occur or if there
shall have occurred and be continuing an event of default under
any Set Aside Purchase Note or under any Partnership Agreement
governing the Operating Partnership related to the Purchased
Partnership Interest, the Bank shall be authorized to exercise
any and all rights and remedies available to it as the holder of
the respective Set Aside Purchase Note, the substituted partner
or assignee with respect to the Purchased Partnership Interest in
the related Operating Partnership, as well as any other remedy
available under law or equity. The Bank shall apply the proceeds
of its exercise of the above mentioned rights and remedies
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to repayment of principal of the Debentures, until all amounts
due under the Debentures shall have been paid in full together
with all costs of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur while no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Bank Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default occurs. If and when such Event of Default shall
occur, the Bank shall follow the procedures specified in Sections
7.5 (b)-(e) of this Bank Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank under this Bank
Agreement unless an Event of Default shall occur and be
continuing. The Bank shall be entitled to exercise one or more
remedies at the same time, all such rights and remedies being
cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorney's
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.5(h) shall survive the termination of this Bank Agreement.
Section 7.6. Events of Default.
-----------------
If either of the following events (an "Event of
Default") shall occur and be continuing for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any part of
the principal of or interest on any Debenture when the same
shall become due and payable, and such default shall have
continued for more than 15 days; or
(ii) the Company fails to redeem a pro rata portion of
the Debentures at the time set for mandatory redemption and
such default shall have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.7. Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one or more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details of
the proposed transaction.
(ii) As part of the consideration to be paid by the
purchaser of each Set Aside Purchase Note to be sold, the
purchaser shall pay directly to the Bank cash in the amount
equal to 50% of the principal balance due at maturity of
that Set Aside Purchase Note plus an amount sufficient to
pay accrued interest on the pro rata portion of Debentures
to be prepaid pursuant to subparagraph (iv) below.
(iii) The total consideration to be paid upon sale of a
Set Aside Purchase Note shall not be less the 50% of the
principal balance due at maturity thereof plus an amount
sufficient to pay accrued interest on the pro rata portion
of Debentures to be prepaid pursuant to subparagraph (iv)
below.
(iv) Upon receipt of cash as provided in subparagraph
(ii) above, the Bank will apply the proceeds to the pro rata
redemption of the Debentures at par plus payment of accrued
interest thereon. Thereafter, the Bank shall deliver each
Set Aside Purchase Note that is then sold to the purchaser
together with an assignment of Security Interest and
Security Agreement covering the related Purchased
Partnership Interest. Subject to Section 8(b) hereof the
Bank shall have no liability whatsoever to the purchaser or
any party hereto for its actions pursuant to this Section
7.7.
Section 7.8. Fees and Expenses.
-----------------
In addition to the
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$1,000,000 outstanding . . . . . . . . . . . . . . . $2,500
$1,000,001 to $2,000,000 outstanding . . . . . . . . $3,000
$2,000,001 to $3,000,000 outstanding . . . . . . . . $4,000
$3,000,001 to $4,000,000 outstanding . . . . . . . . $5,000
$4,000,001 to $5,000,000 outstanding . . . . . . . . $6,000
$5,000,001 to $6,000,000 outstanding . . . . . . . . $7,000
$6,000,001 to $7,000,000 outstanding . . . . . . . . $8,000
$7,000,001 to $7,300,000 outstanding . . . . . . . . $9,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The Company shall not
be obligated to reimburse the Bank for any costs or expenses
incurred in connection with the preparation and execution of this
Bank Agreement. The provisions of this Section 7.8 shall survive
the termination of this Bank Agreement.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that:
1. This paragraph does not limit the effect of
paragraph (a) of this Section.
2. The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations.
------------------
The Bank makes no
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification.
---------------
The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an insolvent;
(ii) a receiver or public officer takes charge of the
Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any reason, the
Company shall promptly appoint a successor Bank.
(ii) If a successor Bank does not take office within
60 days after the retiring Bank gives notice of resignation or
action is taken to remove the retiring Bank, the retiring Bank,
the Company or the owners of at least 10% in principal amount of
the Debentures outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and the
Company. Thereupon the resignation or removal of the retiring
Bank shall become effective and the successor Bank shall have all
the rights, powers and duties of the Bank under this Bank
Agreement. The successor Bank shall mail a notice of its
succession to Debenture owners. Upon payment to the retiring
Bank of all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held by it as
Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices.
-------
All notices and other
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered or
certified mail, return receipt requested, or by facsimile,
confirmed by writing, delivered by hand or sent by registered or
certified mail, return receipt requested, delivered or sent on
the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: 201 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Gerald E. Eppner
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: 212 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law.
-------------
This Bank Agreement shall
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment.
---------------------------
This Bank
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereof shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors.
----------
This Bank Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability.
--------------
Any provision of this
Bank Agreement which may be determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts.
------------
This Bank Agreement may be
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions.
-----------
All terms used in this Bank
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY
By: /s/ John Luciani
--------------------------
Title: General Partner
LEISURE CENTERS, INC.
By: /s/ John Luciani
--------------------------
Title: President
J&B MANAGEMENT CORP.
By: /s/ John Luciani
--------------------------
Title: President
SULGRAVE REALTY CORPORATION
By: /s/ John Luciani
--------------------------
Title: President
WILMART DEVELOPMENT CORP.
By: /s/ John Luciani
--------------------------
Title: President
THE BANK OF NEW YORK
By: /s/ Peter Lagatta
--------------------------
Title: Assistant
Vice President
Exhibit 10.5(d)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of October 17, 1991 (as
amended, modified or supplemented from time to time, this "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 3, 11%
Debentures due December 31, 1996 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum dated
October 17, 1991, as the same may be from time to time amended
(the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) June 30,
1993 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 11%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Series 3 Escrow
Fund Account No. 201316 (the "Fund") with the Bank;
WHEREAS, the Company wishes to grant the Bank, for the
benefit of the Bank and the Purchasers, a security interest in
and to assign to the Bank certain notes, instruments and
documents more fully described below and the Bank is willing to
accept such security interest and assignment upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Registrar, Paying Agent and
Custodian with respect to the Debentures and the above-mentioned
notes, instruments and documents and the Bank is willing to
accept such appointments upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1. Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2. Escrow. The Company shall from time to
------
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposits (including certificates of
deposits issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3. Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 11% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month. Four Business Days
prior to each such interest payment date, the Bank shall give the
Company written notice of the difference between the amount of
interest which will be payable on Subscription Payments on such
interest payment date and the amount of interest accruing on the
Fund's assets which will be available for such payment on such
interest payment date. Not later than 11:30 a.m. (New York time)
on the second Business Day preceding such interest payment date,
the Company shall deposit with the Bank its check in the amount
of such difference. On each interest payment date, the Bank
shall pay interest which is due and payable to the respective
Purchasers by mailing its check in the appropriate amount to each
Purchaser by first class mail at the Purchaser's mailing address
provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations
to the Bank under this Section 1.3, the Bank shall mail its check
in the amount of each Purchaser's pro rata share of interest
earned and paid on the Fund's assets as provided in this Section
1.3 and subject to Section 1.7 hereof. For purposes of this Bank
Agreement, "Business Day" shall mean any day other than a day on
which the Bank is authorized to remain closed in New York City.
Section 1.4. Conditions of Initial Closing and
---------------------------------
Additional Closings. Notwithstanding anything to the contrary in
-------------------
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes which at maturity will have an
aggregate outstanding balance of principal equal to at least
twice the principal amount of the Debentures which will be sold
at that Initial Closing or Additional Closing, together with the
related Consent and Agreement pertaining to each such Set Aside
Purchase Note and the related Consent, Assignment and Agreement
pertaining to the Purchased Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(l) Business Day prior to the date scheduled for each such
closing. As used in this Section 1.4 and elsewhere in this Bank
Agreement, a statement concerning the outstanding principal
amount at maturity of any Set Aside Purchase Note refers to an
amount that does not include any payments on a Set Aside Purchase
Note deferred by the obligor thereof with the consent of the
Company.
Section 1.5. Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6. Payment. The Bank, at the Initial
-------
Closing and each Additional Closing, upon written instruction
from the Company, shall transfer to the Company or to such third
party or parties as may be directed by the Company the Cleared
Funds then held in the Fund by the Bank. Any interest earned
thereon and not theretofore distributed in accordance with
Section 1.3 hereof shall be paid to the Purchasers in accordance
with Section 1.3 hereof.
Section 1.7. Fees and Expenses. In addition to the
-----------------
fees set forth in Section 7.8 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section l in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to June 30, 1993, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction, the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section l
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Bank Agreement. The provisions
of this Section 1.7 shall survive the termination of this Bank
Agreement.
Section 1.8. Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon making such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9. Form 1099, etc. In compliance with the
---------------
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10. Uncollected Funds. In the event that
-----------------
any funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11. Cleared Funds. For the purpose of this
-------------
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Debentures shall be
---------
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1. Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2. Authentication. Only such Debentures as
--------------
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures. Subject to applicable law, in the event any
----------
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1. Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2. Registration, Transfer and Exchange of
--------------------------------------
Debentures. The Debentures are issuable only as registered
----------
Debentures without coupons in the denominations of $100,000 or
any multiple or any fraction thereof at the sole discretion of
the Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3. Owner. The person in whose name any
-----
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4. Transfer Agent. The Bank shall send
--------------
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5. Charges. No service charge shall be made
-------
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6. Redemption. Whenever the Company shall
----------
be required to effect mandatory redemption of part or all of the
Debentures, the Company shall give notice thereof to the Bank at
least forty (40) days prior to the date set forth for redemption,
the manner in which redemption shall be effected and all the
relevant details thereof. The Bank shall give notice to the
Purchasers of that redemption at least thirty (30) days prior to
the date set forth for redemption. The Company shall deliver all
redeemed Debentures to the Bank for cancellation of the whole or
portion thereof, as appropriate, and issuance of new Debentures
in denominations equal to the unredeemed portion.
Section 5.7. Expenses. As a condition to the transfer
--------
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Bank Agreement.
Section 6. Paying Agent.
------------
Section 6.1. Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2. Payment Provisions. The Bank shall pay
------------------
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, in accordance with the terms and provisions of
this Bank Agreement and the Debentures, by check mailed by first
class mail to the registered owner of a Debenture at his address
as it appears in the register; provided that not later than 11:30
a.m. (New York time) on the second Business Day preceding each
date on which interest on or principal of any Debenture is due
and payable, the Company shall deposit with the Bank its check in
the amount due.
Section 6.3. Expenses. The Company shall reimburse
--------
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 6
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1. Appointment. The Company hereby appoints
-----------
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2. Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign each Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of each Purchase Agreement, payments of interest and, where
required, scheduled payments of principal payable prior to
maturity due under the Purchase Note may be offset and reduced by
payments made under certain Investor Notes issued by the limited
partners of the respective Investing Partnership, which have been
pledged to secure obligations owed by J&B to one or more banks.
Only that interest and, where applicable, scheduled principal
payments payable prior to maturity ("Excess Interest and
Principal") under a Purchase Note which is in excess of the
amount offset and reduced by payments made to such banks, if any,
may be payable to the holder of the Purchase Note. Any interest
and, where required, scheduled payments of principal payable
prior to maturity that are due but unpaid on Purchase Notes shall
be deferred until the maturity of that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $12,675,000
and an aggregate balance of principal due at maturity equal to
$11,066,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the scheduled payments of principal
payable prior to maturity on certain Set Aside Purchase Notes so
providing and interest payments on all of the Set Aside Purchase
Notes shall be payable directly to the Company until such time as
an Event of Default (as defined in Section 7.6 hereof) shall
occur and be continuing. Under the terms of the Set Aside
Purchase Notes, only that principal and interest thereon which is
Excess Interest and Principal may be payable to the Bank. The
parties hereto confirm that scheduled payments of principal
payable prior to maturity made under the Set Aside Purchase Notes
listed in Exhibit A hereto, as requiring such scheduled principal
payment, will belong to the Company until such time as an Event
of Default shall occur and be continuing. The parties hereto
further confirm that any deferred interest and principal on a Set
Aside Purchase Note paid at the maturity thereof shall belong to
the Company so long as an Event of Default shall not have
occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3. Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective Investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.5(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Bank Agreement)
until all outstanding obligations under the Set Aside Purchase
Note which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses) and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4. Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note
and the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B in its sole
discretion as shall have an aggregate balance of principal due at
maturity equal to at least twice the principal amount of the
Debentures which will be sold at the respective Initial Closing
or Additional Closing, together with the related Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, and the related Consent, Assignment and Agreement
and related Financing Statements pertaining to the Purchased
Partnership Interest. At such time as the Company shall send to
the Bank the Company's irrevocable notice that there will not be
any further Additional Closings, the Company and the Bank shall
thereupon acknowledge and append hereto an additional Exhibit D
listing the Set Aside Purchase Notes, Investing Partnerships,
Operating Partnerships and Security Agreements, in which the Bank
will have security interests under this Section 7.
Section 7.5. Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes deposited with it pursuant to Section 7.2(b) hereof, and
shall file with the appropriate governmental authorities
indicated by J&B to the Bank Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interests and assignments granted under this Bank Agreement and
each Consent, Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures due and
immediately payable with accrued interest thereon. In addition,
the Bank shall immediately notify the makers of the Set Aside
Purchase Notes that all payments to be made thereafter on the Set
Aside Purchase Notes shall be paid directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests. In the event that the
Company shall default on its payment obligations to the Bank
under this Bank Agreement, the Bank shall be entitled to
institute action against the Co-Obligors, jointly or severally,
to collect payment under this Bank Agreement, without any prior
requirement to attempt to collect any funds under the Set Aside
Purchase Notes or the related Purchased Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof)
including, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Co-Obligors, free and clear of any claim, lien, charge or
encumbrance including, without limitation, any right of equity of
redemption. The Bank shall apply the proceeds of any such sale
firstly to the payment of the expenses of the sale, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of accrued interest including accrued interest from and
after the Event of Default, and next to the payment of principal
of the Debentures. The Bank shall not be liable to any of the
Co-Obligors or their affiliates because of any sale or the
consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Bank Agreement shall operate as an assignment of such
distributions by the Investing Partnership, subject to the
limitations set forth in Section 7.3(c). In addition, while an
Event of Default is continuing, if there shall occur or if there
shall have occurred and be continuing an event of default under
any Set Aside Purchase Note or under any Partnership Agreement
governing the Operating Partnership related to the Purchased
Partnership Interest, the Bank shall be authorized to exercise
any and all rights and remedies available to it as the holder of
the respective Set Aside Purchase Note, the substituted partner
or assignee with respect to the Purchased Partnership Interest in
the related Operating Partnership, as well as any other remedy
available under law or equity. The Bank shall apply the proceeds
of its exercise of the above mentioned rights and remedies
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to repayment of principal of the Debentures, until all amounts
due under the Debentures shall have been paid in full together
with all costs of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur while no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Bank Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the procedures specified in Sections 7.5 (b)-(e) of this Bank
Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank under this Bank
Agreement unless an Event of Default shall occur and be
continuing. The Bank shall be entitled to exercise one or more
remedies at the same time, all such rights and remedies being
cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorney's
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.5(h) shall survive the termination of this Bank Agreement.
Section 7.6. Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any part of
the principal of any Debenture when the same shall become
due and payable, and such default shall have continued for
more than 30 days; or
(ii) the Company defaults in the payment of any part of
the interest on any Debenture when the same shall become due
and payable, and such default shall have continued for more
than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.7. Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one or more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details of
the proposed transaction.
(ii) As part of the consideration to be paid by the
purchaser of each Set Aside Purchase Note to be sold, the
purchaser shall pay directly to the Bank cash in the amount
equal to 50% of the principal balance due at maturity of
that Set Aside Purchase Note plus an amount sufficient to
pay accrued interest on the pro rata portion of Debentures
to be prepaid pursuant to subparagraph (iv) below.
(iii) The total consideration to be paid upon sale of a
Set Aside Purchase Note shall not be less the 50% of the
principal balance due at maturity thereof plus an amount
sufficient to pay accrued interest on the pro rata portion
of Debentures to be prepaid pursuant to subparagraph (iv)
below.
(iv) Upon receipt of cash as provided in subparagraph
(ii) above, the Bank will apply the proceeds to the pro rata
redemption of the Debentures at par plus payment of accrued
interest thereon. Thereafter, the Bank shall deliver each
Set Aside Purchase Note that is then sold to the purchaser
together with an assignment of Security Interest and
Security Agreement covering the related Purchased
Partnership Interest. Subject to Section 8(b) hereof the
Bank shall have no liability whatsoever to the purchaser or
any party hereto for its actions pursuant to this Section
7.7.
Section 7.8. Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$500,000 to $1,000,000 outstanding $2,500
$1,000,001 to $2,000,000 outstanding $3,000
$2,000,001 to $3,000,000 outstanding $4,000
$3,000,001 to $4,000,000 outstanding $5,000
$4,000,001 to $5,000,000 outstanding $6,000
$5,000,001 to $5,500,000 outstanding $7,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The Company shall not
be obligated to reimburse the Bank for any costs or expenses
incurred in connection with the preparation and execution of this
Bank Agreement. The provisions of this Section 7.8 shall survive
the termination of this Bank Agreement.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that:
1. This paragraph does not limit the effect of
paragraph (a) of this Section.
2. The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed wit
Section 9. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c)(i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any reason, the
Company shall promptly appoint a successor Bank.
(ii) If a successor Bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring Bank, the
retiring Bank, the Company or the owners of at least 10% in
principal amount of the Debentures outstanding may petition any
court of competent jurisdiction for the appointment of a
successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and the
Company. Thereupon the resignation or removal of the
retiring Bank shall become effective and the successor Bank
shall have all the rights, powers and duties of the Bank
under this Bank Agreement. The successor Bank shall mail a
notice of its succession to Debenture owners. Upon payment
to the retiring Bank of all amounts owed to it under this
Bank Agreement, the retiring Bank shall promptly transfer
all property held by it as Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered or
certified mail, return receipt requested, or by facsimile,
confirmed by writing, delivered by hand or sent by registered or
certified mail, return receipt requested, delivered or sent on
the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: 201 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Gerald E. Eppner, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the
Bank.
(c) If to the Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: 212 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment. This Bank
---------------------------
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereof shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability. Any provision of this
--------------
Bank Agreement which may be determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts. This Bank Agreement may be
------------
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions. All terms used in this Bank
-----------
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY
By: /s/ Bernard M. Rodin
-----------------------------
Title: General Partner
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
-----------------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bermard M. Rodin
-----------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
-----------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
-----------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Jenepher Lattibeaudiere
-----------------------------
Title: Assistant Vice President
Exhibit 10.5(e)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of April 1, 1992 (as
amended, modified or supplemented from time to time, this "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 4, 11.5%
Debentures due April 15, 2000 (the "Debentures") pursuant to the
Company's Confidential Private Placement Memorandum dated April
2, 1992, as the same may be from time to time amended (the
"Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) December
31, 1993 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least
$1,000,000 principal amount of Debentures have been sold and,
thereafter, from time to time (each, singly, an "Additional
Closing," and, collectively, the "Additional Closings"), at the
discretion of the Company, on such day or days as may be
determined by the Company, as subscriptions are received and
accepted (hereinafter the date of the Initial Closing and the
date of any Additional Closing are each referred to as a "Closing
Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of
11.5% per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Series 4 Escrow
Fund Account No. 201317 (the "Fund") with the Bank;
WHEREAS, the Company wishes to grant the Bank, for the
benefit of the Bank and the Purchasers, a security interest in
and to assign to the Bank certain notes, instruments and
documents more fully described below and the Bank is willing to
accept such security interest and assignment upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Registrar, Paying Agent and
Custodian with respect to the Debentures and the above-mentioned
notes, instruments and documents and the Bank is willing to
accept such appointments upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1. Appointment.
----------- The Company hereby appoints
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2. Escrow.
------ The Company shall from time to
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposits (including certificates of
deposits issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3. Interest.
-------- During the period (the "Escrow
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 11.5% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month. Four Business Days
prior to each such interest payment date, the Bank shall give the
Company written notice of the difference between the amount of
interest which will be payable on Subscription Payments on such
interest payment date and the amount of interest accruing on the
Fund's assets which will be available for such payment on such
interest payment date. Not later than 11:30 a.m. (New York time)
on the second Business Day preceding such interest payment date,
the Company shall deposit with the Bank its check in the amount
of such difference. On each interest payment date, the Bank
shall pay interest which is due and payable to the respective
Purchasers by mailing its check in the appropriate amount to each
Purchaser by first class mail at the Purchaser's mailing address
provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations
to the Bank under this Section 1.3, the Bank shall mail its check
in the amount of each Purchaser's pro rata share of interest
earned and paid on the Fund's assets as provided in this Section
1.3. For purposes of this Bank Agreement, "Business Day" shall
mean any day other than a day on which the Bank is authorized to
remain closed in New York City.
Section 1.4. Conditions of Initial Closing and
---------------------------------
Additional Closings.
------------------- Notwithstanding anything to the contrary in
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes which at maturity will have an
aggregate outstanding balance of principal equal to at least
twice the principal amount of the Debentures which will be sold
at that Initial Closing or Additional Closing, together with the
related Consent and Agreement pertaining to each such Set Aside
Purchase Note and the related Consent, Assignment and Agreement
pertaining to the Purchased Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing. As used in this Section 1.4 and elsewhere in this Bank
Agreement, a statement concerning the outstanding principal
amount at maturity of any Set Aside Purchase Note refers to an
amount that does not include any payments on a Set Aside Purchase
Note deferred by the obligor thereof with the consent of the
Company.
Section 1.5. Cancellation.
------------
The Company shall give the Bank notice of any Purchaser who
cancels his Subscription prior to his Closing Date or whose
Subscription Payment was deposited pursuant to Section 1.2 but
whose Subscription is rejected, setting forth the name and
mailing address of the Purchaser and the amount of the rejected
or cancelled subscription. As promptly as practicable
thereafter, the Bank shall pay the amount of the cancelled or
rejected subscription from the Fund to the Purchaser whose
Subscription was cancelled or rejected as directed by the
Company. Any interest earned thereon and not theretofore
distributed pursuant to Section 1.3 hereof shall be paid to the
Purchaser in accordance with Section 1.3 hereof. Payment shall
be made by check payable to the Purchaser mailed by the Bank by
first class mail directly to the Purchaser at the mailing address
of the Purchaser.
Section 1.6. Payment.
------- The Bank, at the Initial Closing
and each Additional Closing, upon written instruction from the
Company, shall transfer to the Company or to such third party or
parties as may be directed by the Company the Cleared Funds then
held in the Fund by the Bank. Any interest earned thereon and
not theretofore distributed in accordance with Section 1.3 hereof
shall be paid to the Purchasers in accordance with Section 1.3
hereof.
Section 1.7. Fees and Expenses.
-----------------
In addition to the fees set forth in Section 7.8 hereof, the Bank
shall be entitled to an administration fee as compensation for
its services under this Section 1 in the amount of $5,000 payable
(i) upon the execution and delivery of this Bank Agreement and
(ii) subject to an adjustment as provided in the next succeeding
sentence of this Section 1.7, on the first anniversary date of
this Bank Agreement, provided however that the Bank shall not be
entitled to payment of an administration fee on such first
anniversary date if all of the Debentures have been sold prior
thereto. In the event the Offering terminates prior to December
31, 1993, the Company shall be entitled to a refund payable ten
days after the Offering Termination Date, of that portion of the
administration fee paid to the Bank on the first anniversary date
of the Bank Agreement, in an amount calculated as the difference
between (a) $5,000 and (b) the product of (x) $5,000 and (y) a
fraction, the numerator of which is the number of days between
the first anniversary date of this Bank Agreement and the
Offering Termination Date, inclusive, and the denominator of
which is 365. In no event shall the Bank be entitled to payment
of an administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Bank Agreement. The provisions
of this Section 1.7 shall survive the termination of this Bank
Agreement.
Section 1.8. Termination of Offering.
-----------------------
If the Offering should be terminated, the Company shall promptly
so advise the Bank in writing, and shall authorize and direct the
Bank to return the Subscription Payments to the Purchasers. The
Bank thereupon shall return those Subscription Payments to the
extent they have not been distributed per Section 1.6 to the
Purchasers from whom they were received. Any interest earned on
the Subscription Payments and not theretofore distributed
pursuant to Section 1.3 hereof shall be paid in accordance with
Section 1.3 hereof. Upon making such disbursements to the
Purchasers and the Company, the Bank shall be relieved of all of
its obligations and liabilities under this Bank Agreement.
Section 1.9. Form 1099, etc.
-------------- In compliance with the
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10. Uncollected Funds.
----------------- In the event that any
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11. Cleared Funds.
------------- For the purpose of this
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
--------- The Debentures shall be
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
---------------------
Section 3.1. Appointment.
------------ The Company hereby appoints
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2. Authentication.
--------------- Only such Debentures as
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures.
----------- Subject to applicable law, in the event any
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
-----------------------------
Section 5.1. Appointment.
-----------
The Company hereby appoints and designates the Bank as Registrar
and Transfer Agent for the purposes set forth in this Section 5,
and the Bank hereby accepts such appointment.
Section 5.2. Registration, Transfer and Exchange of
-------------------------------------
Debentures.
---------- The Debentures are issuable only as registered
Debentures without coupons in the denominations of $100,000 or
any multiple or any fraction thereof at the sole discretion of
the Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3. Owner.
----- The person in whose name any
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4. Transfer Agent.
--------------- The Bank shall send
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5. Charges.
------- No service charge shall be made
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6. Redemption.
-----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall be
without premium or penalty, or is required to effect mandatory
redemption of part or all of the Debentures, the Company shall
give notice thereof to the Bank at least forty (40) days prior to
the date set forth for redemption, the manner in which redemption
shall be effected and all the relevant details thereof. The Bank
shall give notice to the Purchasers of that redemption at least
thirty (30) days prior to the date set forth for redemption. The
Company shall deliver all redeemed Debentures to the Bank for
cancellation of the whole or portion thereof, as appropriate, and
issuance of new Debentures in denominations equal to the
unredeemed portion. In no event, however, shall the Bank pay the
redeemed amount or issue new Debentures in denominations equal to
the unredeemed portion to a registered owner if that registered
owner has not surrendered its Debenture to the Company. No
interest shall be payable on the redeemed portion of a Debenture
from and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank will
return to the Company Set Aside Purchase Notes selected by the
Company that in the aggregate will have a principal balance at
their respective maturities equal to twice the principal amount
of the redeemed portion of the Debentures, together with a
release of the existing assignment of the Security Interest and
Security Agreement covering the related Purchased Partnership
Interest (as such terms are defined in Section 7.3(a) herein).
In no event, however, will the Bank release Set Aside Purchase
Notes that will result in the amount of Set Aside Purchase Notes
held by the Bank to be less than twice the principal amount of
the Debentures that remain outstanding.
Section 5.7. Expenses.
--------- As a condition to the transfer
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Bank Agreement.
Section 6. Paying Agent.
-------------
Section 6.1. Appointment.
---------- The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2. Payment Provisions.
------------------- The Bank shall pay
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in Section
5.6(a) and in accordance with the terms and provisions of this
Bank Agreement and the Debentures, by check mailed by first class
mail to the registered owner of a Debenture at his address as it
appears in the register; provided that not later than 11:30 a.m.
(New York time) on the second Business Day preceding each date on
which interest on or principal of any Debenture is due and
payable, the Company shall deposit with the Bank its check in the
amount due.
Section 6.3. Expenses.
--------- The Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 6
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1. Appointment.
----------- The Company hereby appoints
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2. Set Aside Purchase Notes.
-------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign each Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of each Purchase Agreement, payments of interest and, where
required, scheduled payments of principal payable prior to
maturity due under the Purchase Note may be offset and reduced by
payments made under certain Investor Notes issued by the limited
partners of the respective Investing Partnership, which have been
pledged to secure obligations owed by J&B to one or more banks.
Only that interest and, where applicable, scheduled principal
payments payable prior to maturity ("Excess Interest and
Principal") under a Purchase Note which is in excess of the
amount offset and reduced by payments made to such banks, if any,
may be payable to the holder of the Purchase Note. Any interest
and, where required, scheduled payments of principal payable
prior to maturity that are due but unpaid on Purchase Notes shall
be deferred until the maturity of that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $24,405,000
and an aggregate balance of principal due at maturity equal to
$21,539,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the scheduled payments of principal
payable prior to maturity on certain Set Aside Purchase Notes so
providing and interest payments on all of the Set Aside Purchase
Notes shall be payable directly to the Company until such time as
an Event of Default (as defined in Section 7.6 hereof) shall
occur and be continuing. Under the terms of the Set Aside
Purchase Notes, only that principal and interest thereon which is
Excess Interest and Principal may be payable to the Bank. The
parties hereto confirm that scheduled payments of principal
payable prior to maturity made under the Set Aside Purchase Notes
listed in Exhibit A hereto, as requiring such scheduled principal
payment, will belong to the Company until such time as an Event
of Default shall occur and be continuing. The parties hereto
further confirm that any deferred interest and principal on a Set
Aside Purchase Note paid at the maturity thereof shall belong to
the Company so long as an Event of Default shall not have
occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3. Purchased Partnership Interests.
--------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective Investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.5(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Bank Agreement)
until all outstanding obligations under the Set Aside Purchase
Note which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses) and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4. Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note
and the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B in its sole
discretion as shall have an aggregate balance of principal due at
maturity equal to at least twice the principal amount of the
Debentures which will be sold at the respective Initial Closing
or Additional Closing, together with the related Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, and the related Consent, Assignment and Agreement
and related Financing Statements pertaining to the Purchased
Partnership Interest. At such time as the Company shall send to
the Bank the Company's irrevocable notice that there will not be
any further Additional Closings, the Company and the Bank shall
thereupon acknowledge and append hereto an additional Exhibit D
listing the Set Aside Purchase Notes, Investing Partnerships,
Operating Partnerships and Security Agreements, in which the Bank
will have security interests under this Section 7.
Section 7.5. Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes deposited with it pursuant to Section 7.2(b) hereof, and
shall file with the appropriate governmental authorities
indicated by J&B to the Bank Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interests and assignments granted under this Bank Agreement and
each Consent, Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures due and
immediately payable with accrued interest thereon. In addition,
the Bank shall immediately notify the makers of the Set Aside
Purchase Notes that all payments to be made thereafter on the Set
Aside Purchase Notes shall be paid directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests. In the event that the
Company shall default on its payment obligations to the Bank
under this Bank Agreement, the Bank shall be entitled to
institute action against the Co-Obligors, jointly or severally,
to collect payment under this Bank Agreement, without any prior
requirement to attempt to collect any funds under the Set Aside
Purchase Notes or the related Purchased Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof)
including, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Co-Obligors, free and clear of any claim, lien, charge or
encumbrance including, without limitation, any right of equity of
redemption. The Bank shall apply the proceeds of any such sale
firstly to the payment of the expenses of the sale, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of accrued interest including accrued interest from and
after the Event of Default, and next to the payment of principal
of the Debentures. The Bank shall not be liable to any of the
Co-Obligors or their affiliates because of any sale or the
consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Bank Agreement shall operate as an assignment of such
distributions by the Investing Partnership, subject to the
limitations set forth in Section 7.3(c). In addition, while an
Event of Default is continuing, if there shall occur or if there
shall have occurred and be continuing an event of default under
any Set Aside Purchase Note or under any Partnership Agreement
governing the Operating Partnership related to the Purchased
Partnership Interest, the Bank shall be authorized to exercise
any and all rights and remedies available to it as the holder of
the respective Set Aside Purchase Note, the substituted partner
or assignee with respect to the Purchased Partnership Interest in
the related Operating Partnership, as well as any other remedy
available under law or equity. The Bank shall apply the proceeds
of its exercise of the above mentioned rights and remedies
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to repayment of principal of the Debentures, until all amounts
due under the Debentures shall have been paid in full together
with all costs of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur while no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Bank Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the procedures specified in Sections 7.5 (b)-(e) of this Bank
Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank under this Bank
Agreement unless an Event of Default shall occur and be
continuing. The Bank shall be entitled to exercise one or more
remedies at the same time, all such rights and remedies being
cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorney's
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.5(h) shall survive the termination of this Bank Agreement.
Section 7.6. Events of Default.
------------------ If any of the
following events (an "Event of Default") shall occur and be
continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
(i) the Company defaults in the payment of any part of
the principal of any Debenture when the same shall become
due and payable, and such default shall have continued for
more than 30 days; or
(ii) the Company defaults in the payment of any part
of the interest on any Debenture when the same shall become
due and payable, and such default shall have continued for
more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.7. Sale of Set Aside Purchase Notes.
---------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one or more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details of
the proposed transaction.
(ii) As part of the consideration to be paid by the
purchaser of each Set Aside Purchase Note to be sold, the
purchaser shall pay directly to the Bank cash in the amount
equal to 50% of the principal balance due at maturity of
that Set Aside Purchase Note plus an amount sufficient to
pay accrued interest on the pro rata portion of Debentures
to be prepaid pursuant to subparagraph (iv) below.
(iii) The total consideration to be paid upon sale of
a Set Aside Purchase Note shall not be less the 50% of the
principal balance due at maturity thereof plus an amount
sufficient to pay accrued interest on the pro rata portion
of Debentures to be prepaid pursuant to subparagraph (iv)
below.
(iv) Upon receipt of cash as provided in subparagraph
(ii) above, the Bank will apply the proceeds to the pro rata
redemption of the Debentures at par plus payment of accrued
interest thereon. Thereafter, the Bank shall deliver each
Set Aside Purchase Note that is then sold to the purchaser
together with an assignment of Security Interest and
Security Agreement covering the related Purchased
Partnership Interest. Subject to Section 8(b) hereof the
Bank shall have no liability whatsoever to the purchaser or
any party hereto for its actions pursuant to this Section
7.7.
Section 7.8. Fees and Expenses.
----------------- In addition to
the administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $1,000,000 outstanding $ 2,500
$ 1,000,001 to $2,000,000 outstanding $ 3,000
$ 2,000,001 to $3,000,000 outstanding $ 4,000
$ 3,000,001 to $4,000,000 outstanding $ 5,000
$ 4,000,001 to $5,000,000 outstanding $ 6,000
$ 5,000,001 to $6,000,000 outstanding $ 7,000
$ 6,000,001 to $7,000,000 outstanding $ 8,000
$ 7,000,001 to $8,000,000 outstanding $ 9,000
$ 8,000,001 to $9,000,000 outstanding $10,000
$ 9,000,001 to $10,000,000 outstanding $11,000
$10,000,001 to $10,750,000 outstanding $12,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The Company shall not
be obligated to reimburse the Bank for any costs or expenses
incurred in connection with the preparation and execution of this
Bank Agreement. The provisions of this Section 7.8 shall survive
the termination of this Bank Agreement.
Section 8. Other Rights and Duties of Bank.
--------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that:
1. This paragraph does not limit the effect of
paragraph (a) of this Section.
2. The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed wit
Section 9. No Representations.
------------------- The Bank makes no
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification.
---------------- The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an insolvent;
(ii) a receiver or public officer takes charge of the
Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any reason, the
Company shall promptly appoint a successor Bank.
(ii) If a successor Bank does not take office within
60 days after the retiring Bank gives notice of resignation or
action is taken to remove the retiring Bank, the retiring Bank,
the Company or the owners of at least 10% in principal amount of
the Debentures outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and the
Company. Thereupon the resignation or removal of the retiring
Bank shall become effective and the successor Bank shall have all
the rights, powers and duties of the Bank under this Bank
Agreement. The successor Bank shall mail a notice of its
succession to Debenture owners. Upon payment to the retiring
Bank of all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held by it as
Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices.
-------- All notices and other
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered or
certified mail, return receipt requested, or by facsimile,
confirmed by writing, delivered by hand or sent by registered or
certified mail, return receipt requested, delivered or sent on
the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: 201 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Gerald E. Eppner, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the
Bank.
(c) If to the Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: 212 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law.
------------- This Bank Agreement shall
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment.
---------------------------- This Bank
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereof shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors.
----------- This Bank Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability.
-------------- Any provision of this Bank
Agreement which may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 17. Counterparts.
------------- This Bank Agreement may be
execute n any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions.
------------ All terms used in this Bank
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed this
Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY
By: /s/ Bernard M. Rodin
---------------------
Title: Vice President
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
---------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
--------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Peter Lagatta
-----------------------
Title: Assistant
Vice President
Exhibit 10.5(f)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of October 30, 1992 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 5, 12%
Debentures due January 15, 2003 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum dated
November 3, 1992, as the same may be from time to time amended
(the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii)
December 31, 1993 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least
$1,000,000 principal amount of Debentures have been sold and,
thereafter, from time to time (each, singly, an "Additional
Closing," and, collectively, the "Additional Closings"), at the
discretion of the Company, on such day or days as may be
determined by the Company, as subscriptions are received and
accepted (hereinafter the date of the Initial Closing and the
date of any Additional Closing are each referred to as a "Closing
Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to thy Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Series 5 Escrow
Fund Account No. 201318 (the "Fund") with the Bank;
WHEREAS, the Company wishes to grant the Bank, for the
benefit of the Bank and the Purchasers, a security interest in
and to assign to the Bank certain notes, instruments and
documents more fully described below and the Bank is willing to
accept such security interest and assignment upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Registrar, Paying Agent and
Custodian with respect to the Debentures and the above-mentioned
notes, instruments and documents and the Bank is willing to
accept such appointments upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow. The Company shall from time to
------
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposits (including certificates of
deposits issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3 Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month. Four Business Days
prior to each such interest payment date, the Bank shall give the
Company written notice of the difference between the amount of
interest which will be payable on Subscription Payments on such
interest payment date and the amount of interest accruing on the
Fund's assets which will be available for such payment on such
interest payment date. Not later than 11:30 a.m. (New York time)
on the second Business Day preceding such interest payment
date,the Company shall deposit with the Bank its check in the
amount of such difference. On each interest payment date, the
Bank shall pay interest which is due and payable to the
respective Purchasers by mailing its check in the appropriate
amount to each Purchaser by first class mail at the Purchaser's
mailing address provided to the Bank pursuant to Section 1.2
hereof. In the event that the Company shall default in its
payment obligations to the Bank under this Section 1.3, the Bank
shall mail its check in the amount of each Purchaser's pro rata
share of interest earned and paid on the Fund's assets as
provided in this Section 1.3. For purposes of this Bank
Agreement, "Business Day" shall mean any day other than a day on
which the Bank is authorized to remain closed in New York City.
Section 1.4 Conditions of Initial Closing and
---------------------------------
Additional Closings. Notwithstanding anything to the contrary in
-------------------
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes which at maturity will have an
aggregate outstanding balance of principal equal to at least
twice the principal amount of the Debentures which will be sold
at that Initial Closing or Additional Closing, together with the
related Consent and Agreement pertaining to each such Set Aside
Purchase Note and the related Consent, Assignment and Agreement
pertaining to the Purchased Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing. As used in this Section 1.4 and elsewhere in this Bank
Agreement, a statement concerning the outstanding principal
amount at maturity of any Set Aside Purchase Note refers to an
amount that does not include any payments on a Set Aside Purchase
Note deferred by the obliger thereof with the consent of the
Company.
Section 1.5 Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment. The Bank, at the Initial Closing
-------
and each Additional Closing, upon written instruction from the
Company, shall transfer to the Company or to such third party or
parties as may be directed by the Company the Cleared Funds then
held in the Fund by the Bank. Any interest earned thereon and
not theretofore distributed in accordance with Section 1.3 hereof
shall be paid to the Purchasers in accordance with Section 1.3
hereof.
Section 1.7 Fees and Expenses. In addition to the
-----------------
fees set forth in Section 7.8 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to December 31, 1993, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction, the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Bank Agreement. The provisions
of this Section 1.7 shall survive the termination of this Bank
Agreement.
Section 1.8 Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the
---------------
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds. In the event that any
-----------------
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds. For the purpose of this
-------------
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Debentures shall be
---------
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication. Only such Debentures as
--------------
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures. Subject to applicable law, in the event any
----------
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall satisfactory to the Company and
the Bank. The Company may charge the Purchaser of such Debenture
with any amounts be satisfactory to the Company and the Bank and
permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures. The Debentures are issuable only as registered
----------
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner. The person in whose name any
-----
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send
--------------
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges. No service charge shall be made
-------
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or Exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall be
without premium or penalty, or is required to effect mandatory
redemption of part or all of the Debentures, the Company shall
give notice thereof to the Bank at least forty (40) days prior to
the date set forth for redemption, the manner in which redemption
shall be effected and all the relevant details thereof. The Bank
shall give notice to the Purchasers of that redemption at least
thirty (30) days prior to the date set forth for redemption. The
Company shall deliver all redeemed Debentures to the Bank for
cancellation of the whole or portion thereof, as appropriate, and
issuance of new Debentures in denominations equal to the
unredeemed portion. In no event, however, shall the Bank pay the
redeemed amount or issue new Debentures in denominations equal to
the unredeemed portion to a registered owner if that registered
owner has not surrendered its Debenture to the Company. No
interest shall be payable on the redeemed portion of a Debenture
from and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank shall (i)
return to the Company Set Aside Purchase Notes selected by the
Company that in the aggregate will have a principal balance at
their respective maturities equal to twice the principal amount
of the redeemed portion of the Debentures, (ii) execute and
deliver to the Company an instrument prepared by J&B effecting a
release by the Bank of the existing assignment of the Security
Interest and Security Agreement covering the related Purchased
Partnership Interest (as such terms are defined in Section 7.3(a)
hereof) (iii) file with the appropriate governmental authorities
indicated by J&B to the Bank, Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interest and assignment granted under this Bank Agreement and
(iv) return to J&B the Consent and Agreement described in
Section 7.2(c) hereof and the Consent, Assignment and Agreement
described in Section 7.3(c) hereof, each as relates to such
returned Set Aside Purchase Notes. In no event, however, will
the Bank release Set Aside Purchase Notes that will result in the
amount of Set Aside Purchase Notes held by the Bank to be less
than twice the principal amount of the Debentures that remain
outstanding.
Section 5.7 Expenses. As a condition to the transfer
--------
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Bank Agreement.
Section 6. Paying Agent.
------------
Section 6.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions. The Bank shall pay
------------------
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in Section
5.6(a) and in accordance with the terms and provisions of this
Bank Agreement and the Debentures, by check mailed by first class
mail to the registered owner of a Debenture at his address as it
appears in the register; provided that not later than 11:30 a.m.
(New York time) on the second Business Day preceding each date on
which interest on or principal of any Debenture is due and
payable, the Company shall deposit with the Bank its check in the
amount due.
Section 6.3 Expenses. The Company shall reimburse the
--------
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of chucks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign each Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of each Purchase Agreement, payments of interest and, where
required, scheduled payments of principal payable prior to
maturity due under the Purchase Note may be offset and reduced by
payments made under certain Investor Notes issued by the limited
partners of the respective Investing Partnership, which have been
pledged to secure obligations owed by J&B to one or more banks.
Only that interest and, where applicable, scheduled principal
payments payable prior to maturity ("Excess Interest and
Principal") under a Purchase Note which is in excess of the
amount offset and reduced by payments made to such banks, if any,
may be payable to the holder of the Purchase Note. Any interest
and, where required, scheduled payments of principal payable
prior to maturity that are due but unpaid on Purchase Notes shall
be deferred until the maturity of that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $26,565,000
and an aggregate balance of principal due at maturity equal to
$23,632,500, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the scheduled payments of principal
payable prior to maturity on certain Set Aside Purchase Notes so
providing and interest payments on all of the Set Aside Purchase
Notes shall be payable directly to the Company until such time as
an Event of Default (as defined in Section 7.6 hereof) shall
occur and be continuing. Under the terms of the Set Aside
Purchase Notes, only that principal and interest thereon which is
Excess Interest and Principal may be payable to the Bank. The
parties hereto confirm that scheduled payments of principal
payable prior to maturity made under the Set Aside Purchase Notes
listed in Exhibit A hereto, as requiring such scheduled principal
payment, will belong to the Company until such time as an Event
of Default shall occur and be continuing. The parties hereto
further confirm that any deferred interest and principal on a Set
Aside Purchase Note paid at the maturity thereof shall belong to
the Company so long as an Event of Default shall not have
occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above-mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.5(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above-mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Bank Agreement)
until all outstanding obligations under the Set Aside Purchase
Note which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses); and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4 Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note
and the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B in its sole
discretion as shall have an aggregate balance of principal due at
maturity equal to at least twice the principal amount of the
Debentures which will be sold at the respective Initial Closing
or Additional Closing, together with the related Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, and the related Consent, Assignment and Agreement
and related Financing Statements pertaining to the Purchased
Partnership Interest. At such time as the Company shall send to
the Bank the Company's irrevocable notice that there will not be
any further Additional Closings, the Company and the Bank shall
thereupon acknowledge and append hereto an additional Exhibit D
listing the Set Aside Purchase Notes, Investing Partnerships,
Operating Partnerships and Security Agreements, in which the Bank
will have security interests under this Section 7.
Section 7.5 Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes deposited with it pursuant to Section 7.2(b) hereof, and
shall file with the appropriate governmental authorities
indicated by J&B to the Bank Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interests and assignments granted under this Bank Agreement and
each Consent, Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures due and
immediately payable with accrued interest thereon. In addition,
the Bank shall immediately notify the makers of the Set Aside
Purchase Notes that all payments to be made thereafter on the Set
Aside Purchase Notes shall be paid directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests. In the event that the
Company shall default on its payment obligations to the Bank
under this Bank Agreement, the Bank shall be entitled to
institute action against the Company, jointly or severally, to
collect payment under this Bank Agreement, without any prior
requirement to attempt to collect any funds under the Set Aside
Purchase Notes or the related Purchased Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof)
including, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Company, free and clear of any claim, lien, charge or encumbrance
including, without limitation, any right of equity of redemption.
The Bank shall apply the proceeds of any such sale firstly to the
payment of the expenses of the sale, secondly to the payment of
the Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to any of the Company or its
affiliates because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Bank Agreement shall operate as an assignment of such
distributions by the Investing Partnership, subject to the
limitations set forth in Section 7.3(c). In addition, while an
Event of Default is continuing, if there shall occur or if there
shall have occurred and be continuing an event of default under
any Set Aside Purchase Note or under any Partnership Agreement
governing the Operating Partnership related to the Purchased
Partnership Interest, the Bank shall be authorized to exercise
any and all rights and remedies available to it as the holder of
the respective Set Aside Purchase Note, the substituted partner
or assignee with respect to the Purchased Partnership Interest in
the related Operating Partnership, as well as any other remedy
available under law or equity. The Bank shall apply the proceeds
of its exercise of the above-mentioned rights and remedies
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to repayment of principal of the Debentures, until all amounts
due under the Debentures shall have been paid in full together
with all costs of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Bank Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the procedures specified in Sections 7.5(b)-(e) of this Bank
Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank under this Bank
Agreement unless an Event of Default shall occur and be
continuing. The Bank shall be entitled to exercise one or more
remedies at the same time, all such rights and remedies being
cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.5(h) shall survive the termination of this Bank Agreement.
Section 7.6 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall by voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.7 Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one of more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) As part of the consideration to be paid by
the purchaser of each Set Aside Purchase Note to be
sold, the purchaser shall pay directly to the Bank cash
in the amount equal to 50% of the principal balance due
at maturity of that Set Aside Purchase Note plus an
amount sufficient to pay accrued interest on the pro
rata portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iii) The total consideration to be paid upon sale
of a Set Aside Purchase Note shall not be less the 50%
of the principal balance due at maturity thereof plus
an amount sufficient to pay accrued interest on the pro
rata portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iv) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note that is then sold to the purchaser
together with an assignment of Security Interest and
Security Agreement covering the related Purchased
Partnership Interest. Subject to Section 8(b) hereof
the Bank shall have no liability whatsoever to the
purchaser or any party hereto for its actions pursuant
to this Section 7.7.
Section 7.8 Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $ 1,000,000 outstanding . . $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding . . $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding . . $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding . . $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding . . $ 6,000
$ 5,000,001 to $ 6,000,000 outstanding . . $ 7,000
$ 6,000,001 to $ 7,000,000 outstanding . . $ 8,000
$ 7,000,001 to $ 8,000,000 outstanding . . $ 9,000
$ 8,000,001 to $ 9,000,000 outstanding . . $10,000
$ 9,000,001 to $10,000,000 outstanding . . $11,000
$10,000,001 to $11,000,000 outstanding . . $12,000
$11,000,001 to $11,800,000 outstanding . . $13,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The Company shall not
be obligated to reimburse the Bank for any costs or expenses
incurred in connection with the preparation and execution of this
Bank Agreement. The provisions of this Section 7.8 shall survive
the termination of this Bank Agreement.
Section 7.9 Substitution of Set Aside Purchase Notes.
----------------------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes (a withdrawn Set Aside
Purchase Note shall be defined for the purposes herein as the
"Withdrawn Set Aside Purchase Note") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") so
long as (i) no Event of Default has occurred and is continuing
and (ii) the aggregate outstanding principal balance of the Set
Aside Purchase Notes held by the Bank after the Withdrawn Set
Aside Purchase Note is withdrawn and the New Set Aside Purchase
Note is deposited with the Bank remains twice the outstanding
principal balance of the Debentures that remain outstanding.
(b) In order the effect the substitution described in
Section 7.9(a) hereof, the Company shall deliver the New Set
Aside Purchase Note to the Bank along with the Consent and
Agreement as described in Section 7.2(c) hereof, the Financing
Statements pertaining to the New Set Aside Purchase Note, the
Consent, Assignment and Agreement as described in Section 7.3(c)
hereof, and the related Financing Statements pertaining to the
Purchased Partnership Interest that secures such New Set Aside
Purchase Note. Upon receiving the New Set Aside Purchase Note
and the related documents described in the preceding sentence,
the security interest and assignment created by this Bank
Agreement, the Consent, Assignment and Agreement described in
Section 7.2(c) hereof, the Consent, Assignment and Agreement
described in 7.3(c) hereof, each as relates to the Withdrawn Set
Aside Purchase Note shall automatically terminate and shall have
no further force or effect. Thereupon, the Bank shall (i) return
the Withdrawn Set Aside Purchase Note to the Company, (ii)
execute and deliver to the Company an instrument prepared by J&B
effecting a release by the Bank of the existing assignment of the
Security Interest and Security Agreement covering the related
Purchased Partnership Interest, (iii) file with the appropriate
governmental authorities indicated by J&B to the Bank, Financing
Statements delivered by J&B to the Bank recording the termination
of the Bank's security interest and assignment granted under this
Bank Agreement and (iv) return to J&B the Consent and Agreement
described in Section 7.2(c) hereof and the Consent, Assignment
and Agreement described in Section 7.3(c) hereof, each as relates
to such Withdrawn Set Aside Purchase Note. The Company will
notify the Debenture holders of the substitution of the Withdrawn
Set Aside Purchase Note with the New Set Aside Purchase Note
within sixty (60) days thereof and provide those Debenture
holders with the information pertaining to the New Set Aside
Purchase Note that would have been contained in the Memorandum if
the New Set Aside Purchase Note had been included as one of the
Set Aside Purchase Notes described therein.
(c) After the substitution of the New Set Aside
Purchase Note for the Withdrawn Set Aside Purchase Note, the New
Set Aside Purchase Note shall be deemed to be a Set Aside
Purchase Note for all purposes as set forth in this Bank
Agreement.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any
reason, the Company shall promptly appoint a successor
Bank.
(ii) If a successor Bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor Bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor Bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it as Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered,
certified, return receipt requested, or first class mail, or by
facsimile, confirmed by writing, delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the state of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment. This Bank
---------------------------
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability. Any provision of this
--------------
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts. This Bank Agreement may be
------------
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
[INTENTIONALLY LEFT BLANK]
Section 18. Definitions. All terms used in this
-----------
Consent and Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
J&B MANAGEMENT COMPANY
By: /s/ Bernard M. Rodin
----------------------
Title: General Partner
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ D. Beaty
----------------------
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
1. (a) Investing Partnership: Lovett Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lovett Place, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $87,500
(ii) Date of Issue: May 23, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $87,500
(viii) Prepaid Interest as of
July 31, 1992: $100,186
(d) Security Agreement: Sale and Purchase Agreement dated
May 23, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Lovett Associates, Grandview
Associates, Argyle Associates and Century Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
2. (a) Investing Partnership: Argyle Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lovett Place, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $87,500
(ii) Date of Issue: May 23, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $87,500
(viii) Prepaid Interest as of
July 31, 1992: $100,186
(d) Security Agreement: Sale and Purchase Agreement dated
May 23, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Lovett Associates, Grandview
Associates, Argyle Associates and Century Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
3. (a) Investing Partnership: Century Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lovett Place, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $87,500
(ii) Date of Issue: May 23, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $87,500
(viii) Prepaid Interest as of
July 31, 1992: $100,186
(d) Security Agreement: Sale and Purchase Agreement dated
May 23, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Lovett Associates, Grandview
Associates, Argyle Associates and Century Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
4. (a) Investing Partnership: Grandview Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lovett Place, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $87,500
(ii) Date of Issue: May 23, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $87,500
(viii) Prepaid Interest as of
July 31, 1992: $100,186
(d) Security Agreement: Sale and Purchase Agreement dated
May 23, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Lovett Associates, Grandview
Associates, Argyle Associates and Century Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
5. (a) Investing Partnership: South Belt Associates, a New
Jersey limited partnership
(b) Operating Partnership: Saddlewood, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $50,000
(ii) Date of Issue: May 14, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $50,000
(viii) Prepaid Interest as of
July 31, 1992: $48,396
(d) Security Agreement: Sale and Purchase Agreement dated
May 14, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Sedalia Associates, South Belt
Associates, Gladstone Associates and Antioch
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
6. (a) Investing Partnership: Antioch Associates, a New
Jersey limited partnership
(b) Operating Partnership: Saddlewood, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $50,000
(ii) Date of Issue: May 14, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $50,000
(viii) Prepaid Interest as of
July 31, 1992: $48,396
(d) Security Agreement: Sale and Purchase Agreement dated
May 14, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Sedalia Associates, South Belt
Associates, Gladstone Associates and Antioch
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
7. (a) Investing Partnership: Gladstone Associates, a New
Jersey limited partnership
(b) Operating Partnership: Saddlewood, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $50,000
(ii) Date of Issue: May 14, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $50,000
(viii) Prepaid Interest as of
July 31, 1992: $48,396
(d) Security Agreement: Sale and Purchase Agreement dated
May 14, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Sedalia Associates, South Belt
Associates, Gladstone Associates and Antioch
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
8. (a) Investing Partnership: Sedalia Associates, a New
Jersey limited partnership
(b) Operating Partnership: Saddlewood, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $50,000
(ii) Date of Issue: May 14, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $50,000
(viii) Prepaid Interest as of
July 31, 1992: $48,396
(d) Security Agreement: Sale and Purchase Agreement dated
May 14, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Sedalia Associates, South Belt
Associates, Gladstone Associates and Antioch
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
9. (a) Investing Partnership: Royal Oaks Associates, a New
Jersey limited partnership
(b) Operating Partnership: West Lake Village, a Texas
general partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,100,000
(ii) Date of Issue: July 1, 1982
(iii) Maturity Date: December 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $3,100,000
(viii) Accrued Interest as of
July 31, 1992: $587,584
(d) Security Agreement: Purchase Agreement dated July 1,
1982, by and among John Luciani, Eugene R. Sanders
("Sellers") and Royal Oaks Associates (Sellers'
respective rights and interests under the Security
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
10. (a) Investing Partnership: Jackson Associates, a New
Jersey limited partnership
(b) Operating Partnership: Ivanhoe Gardens, Ltd., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $185,000
(ii) Date of Issue: May 24, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $185,000
(viii) Prepaid Interest as of
July 31, 1992: $137,335
(d) Security Agreement: Sale and Purchase Agreement dated
May 24, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Ivanhoe Associates, Euclid
Associates, Garfield Associates and Jackson
Associates, (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
11. (a) Investing Partnership: Euclid Associates, a New
Jersey limited partnership
(b) Operating Partnership: Ivanhoe Gardens, Ltd., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $185,000
(ii) Date of Issue: May 24, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $185,000
(viii) Prepaid Interest as of
July 31, 1992: $137,335
(d) Security Agreement: Sale and Purchase Agreement dated
May 24, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Ivanhoe Associates, Euclid
Associates, Garfield Associates and Jackson Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
12. (a) Investing Partnership: Garfield Associates, a New
Jersey limited partnership
(b) Operating Partnership: Ivanhoe Gardens, Ltd., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $185,000
(ii) Date of Issue: May 24, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $185,000
(viii) Prepaid Interest as of
July 31, 1992: $137,335
(d) Security Agreement: Sale and Purchase Agreement dated
May 24, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Ivanhoe Associates, Euclid
Associates, Garfield Associates and Jackson Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
13. (a) Investing Partnership: Ivanhoe Associates, a New
Jersey limited partnership
(b) Operating Partnership: Ivanhoe Gardens, Ltd., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $185,000
(ii) Date of Issue: May 24, 1982
(iii) Maturity Date: May 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $185,000
(viii) Prepaid Interest as of
July 31, 1992: $137,335
(d) Security Agreement: Sale and Purchase Agreement dated
May 24, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Ivanhoe Associates, Euclid
Associates, Garfield Associates and Jackson Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
14. (a) Investing Partnership: Lancaster Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lancaster Apts. Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $147,500
(ii) Date of Issue: June 17, 1982
(iii) Maturity Date: June 30, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $147,500
(viii) Prepaid Interest as of
July 31, 1992: $91,906
(d) Security Agreement: Sale and Purchase Agreement dated
June 17, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Chesterfield Associates,
Lancaster Associates, Carolina Associates and Columbia
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
15. (a) Investing Partnership: Carolina Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lancaster Apts. Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $147,500
(ii) Date of Issue: June 17, 1982
(iii) Maturity Date: June 30, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $147,500
(viii) Prepaid Interest as of
July 31, 1992: $91,906
(d) Security Agreement: Sale and Purchase Agreement dated
June 17, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Chesterfield Associates,
Lancaster Associates, Carolina Associates and Columbia
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
16. (a) Investing Partnership: Chesterfield Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lancaster Apts. Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $147,500
(ii) Date of Issue: June 17, 1982
(iii) Maturity Date: June 30, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $147,500
(viii) Prepaid Interest as of
July 31, 1992: $91,906
(d) Security Agreement: Sale and Purchase Agreement dated
June 17, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Chesterfield Associates,
Lancaster Associates, Carolina Associates and Columbia
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
17. (a) Investing Partnership: Columbia Associates, a New
Jersey limited partnership
(b) Operating Partnership: Lancaster Apts. Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $147,500
(ii) Date of Issue: June 17, 1982
(iii) Maturity Date: June 30, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $147,500
(viii) Prepaid Interest as of
July 31, 1992: $91,906
(d) Security Agreement: Sale and Purchase Agreement dated
June 17, 1982, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. ("Sellers") and Chesterfield Associates,
Lancaster Associates, Carolina Associates and Columbia
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
18. (a) Investing Partnership: University Place Associates, a
New Jersey limited partnership
(b) Operating Partnership: Winston Place Associates, a
Kansas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,725,000
(ii) Date of Issue: July 22, 1983
(iii) Maturity Date: March 31, 1998
(iv) Annual Payment of
Principal: $17,500
(v) Total Payments of
Principal deemed made
as of July 31, 1992: $100,000
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $262,500
(vii) Balance of Principal
Due at Maturity: $1,462,500
(viii) Accrued Interest as of
July 31, 1992: $787,967
(d) Security Agreement: Purchase Agreement dated July 22,
1983, by and among Philip A. Stewart, Martin Cohen,
Stephen Weiss, Thadeus Smith, Julius Kramer, Joel S.
Waltzer, Joan Brown, Joseph Struhl, Allen S. Feinblum,
Daniel S. Shapiro, Myron Nash, John Luciani, Bernard
M. Rodin ("Sellers") and University Place Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
19. (a) Investing Partnership: Baltimore Tower Associates, a
New Jersey limited partnership
(b) Operating Partnership: Centre Tower Associates, a New
Jersey limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,000,000
(ii) Date of Issue: June 27, 1983
(iii) Maturity Date: March 31, 1998
(iv) Annual Payment of
Principal: $30,000
(v) Total Payments of
Principal deemed made
as of July 31, 1992: None
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $450,000
(vii) Balance of Principal
Due at Maturity: $2,550,000
(viii) Accrued Interest as of
July 31, 1992: $1,493,250
(d) Security Agreement: Purchase Agreement dated June 27,
1983, by and among John Luciani, Bernard M. Rodin,
Steven D. Klein ("Sellers") and Baltimore Tower
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
20. (a) Investing Partnership: St. Charles Associates, a New
Jersey limited partnership
(b) Operating Partnership: The Farm Associates, a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,765,000
(ii) Date of Issue: October 31, 1983
(iii) Maturity Date: March 31, 1998
(iv) Annual Payment of
Principal: $35,000
(v) Total Payments of
Principal deemed made
as of July 31, 1992: None
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $525,000
(vii) Balance of Principal
Due at Maturity: $3,240,000
(viii) Accrued Interest as of
July 31, 1992: $2,038,808
(d) Security Agreement: Purchase Agreement dated
October 31, 1983, by and among John Luciani, Bernard
M. Rodin ("Sellers") and St. Charles Associates
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 74% limited
partnership interest in the Operating Partnership
<PAGE>
21. (a) Investing Partnership: Beaufort Associates, a New
Jersey limited partnership
(b) Operating Partnership: Spanish Trace Apts.
Associates, a South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,565,000
(ii) Date of Issue: June 1, 1984
(iii) Maturity Date: March 31, 1999
(iv) Annual Payment of
Principal: $16,000
(v) Total Payments of
Principal deemed made
as of July 31, 1992: $84,000
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $240,000
(vii) Balance of Principal
Due at Maturity: $1,325,000
(viii) Accrued Interest as of
July 31, 1992: $543,102
(d) Security Agreement: Purchase Agreement dated June 1,
1984, by and among Seymour Heller, James Heller,
Steven P. Heller, Caren Heller Barness, Barbara H.
Freitag, Harvey R. Heller, Lenore Frankel, John
Luciani, Bernard M. Rodin ("Sellers") and Beaufort
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 98.5% limited
partnership interest in the Operating Partnership
<PAGE>
22. (a) Investing Partnership: Farmington Associates, a New
Jersey limited partnership
(b) Operating Partnership: Conquistador Apartments, Co.,
a New Mexico limited partnership in commendam
(c) Set Aside Purchase Note:
(i) Principal Amount: $900,000
(ii) Date of Issue: August 31, 1984
(iii) Maturity Date: March 31, 2002
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $900,000
(viii) Accrued Interest as of
July 31, 1992: $230,000
(d) Security Agreement: Purchase Agreement dated
August 31, 1984, by and among Howard L. Kletter, Frank
Thomas Reinisch, Josephine A. Reinisch, Erich H.
Schultz, Ira Goldstein, Eugene Birnbaum, Leonard
Grumet, Robert E. Becker, Max Roemer, Howard Samuels,
Jay Berman, Arnold Glickman, Hazan Associates, John
Luciani, Bernard M. Rodin ("Sellers") and Farmington
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
23. (a) Investing Partnership: Plains Associates, a New
Jersey limited partnership
(b) Operating Partnership: South Plains Apts., Ltd., a
Texas limited partnership in commendam
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,205,000
(ii) Date of Issue: April 9, 1984
(iii) Maturity Date: March 31, 1999
(iv) Annual Payment of
Principal: $32,000
(v) Total Payments of
Principal deemed made
as of July 31, 1992: None
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $480,000
(vii) Balance of Principal
Due at Maturity: $2,725,000
(viii) Accrued Interest as of
July 31, 1992: $1,332,470
(d) Security Agreement: Purchase Agreement dated April 9,
1984, by and among Donald Shutello, Raymond J. Curcio,
Rita H. Denerstein, Jack Esformes, Esformes
Properties, Seymour Heller, James Heller, Kenneth
Keusch, Stanley Worton, John Luciani, Bernard M. Rodin
("Sellers") and Plains Associates (Sellers' respective
rights and interests under the Security Agreement have
been sold, transferred and assigned to J&B Management
Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
24. (a) Investing Partnership: Bossier Associates, a New
Jersey limited partnership
(b) Operating Partnership: North Park Apartments, a
Louisiana ordinary partnership in commendam
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,770,000
(ii) Date of Issue: As of February 29,
1984
(iii) Maturity Date: March 31, 1999
(iv) Annual Payment of
Principal: $18,000
(v) Total Payments of
Principal deemed made
as of July 31, 1992: $116,000
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $270,000
(vii) Balance of Principal
Due at Maturity: $1,500,000
(viii) Accrued Interest as of
July 31, 1992: $579,898
(d) Security Agreement: Purchase Agreement dated as of
February 29, 1984, by and among Hazan Associates,
Gerald Reich, Ellen Reich, John Luciani, Bernard M.
Rodin ("Sellers") and Bossier Associates (Sellers'
respective rights and interests under the Security
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 98% limited
partnership interest in the Operating Partnership
<PAGE>
25. (a) Investing Partnership: Greenville Associates, a New
Jersey limited partnership
(b) Operating Partnership: Highland Square II Apts.,
Associates, a South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $2,125,000
(ii) Date of Issue: April 24, 1984
(iii) Maturity Date: March 31, 1999
(iv) Annual Payment of
Principal: $21,500
(v) Total Payments of
Principal deemed made
as of July 31, 1992: $166,000
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $322,500
(vii) Balance of Principal
Due at Maturity: $1,802,500
(viii) Accrued Interest as of
July 31, 1992: $489,841
(d) Security Agreement: Purchase Agreement dated
April 24, 1984, by and among Otto Preuss, Dr. DeWayne
Richey, Julian Kahan, Joseph Cirigliano, Norman
Berman, William Bohl, Earl Brightman, Paul Kittay,
George Batchelor, Stephen Kaufman, Richard A. Miller,
Henry Lempke, Chester Hunter, Robert Daniels, William
Reith, Jr., William Reith, III, John Zachary, John
Luciani, Bernard M. Rodin ("Sellers") and Greenville
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 97% limited
partnership interest in the Operating Partnership
<PAGE>
26. (a) Investing Partnership: Heritage Associates, a New
Jersey limited partnership
(b) Operating Partnership: Hidden Hills Apartments, Ltd.,
a Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $2,530,000
(ii) Date of Issue: February 10, 1984
(iii) Maturity Date: March 31, 1999
(iv) Annual Payment of
Principal: $25,500
(v) Total Payments of
Principal deemed made
as of July 31, 1992: None
(vi) Total Scheduled
Principal Payments
Prior to Maturity: $382,500
(vii) Balance of Principal
Due at Maturity: $2,147,500
(viii) Accrued Interest as of
July 31, 1992: $1,230,951
(d) Security Agreement: Purchase Agreement dated
February 10, 1984, by and among Colonial Estates
Associates, John Luciani, Bernard M. Rodin ("Sellers")
and Heritage Associates (Sellers' respective rights
and interests under the Security Agreement have been
sold, transferred and assigned to J&B Management
Company).
(e) Purchased Partnership Interest: 99% limited
partnership interest in the Operating Partnership
<PAGE>
27. (a) Investing Partnership: Linwood Associates, a New
Jersey limited partnership
(b) Operating Partnership: Highgate Apartments, Ltd., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,000,000
(ii) Date of Issue: October 3, 1985
(iii) Maturity Date: September 30, 2000
(iv) Annual Payment of
Principal: Not Applicable
(v) Total Payments of
Principal deemed made
as of July 31, 1992: Not Applicable
(vi) Total Scheduled
Principal Payments
Prior to Maturity: Not Applicable
(vii) Balance of Principal
Due at Maturity: $1,000,000
(viii) Prepaid Interest as of
July 31, 1992: $60,833
(d) Security Agreement: Sale and Purchase Agreement dated
October 3, 1985, by and among John Luciani, Bernard M.
Rodin ("Sellers") and Linwood Associates (Sellers'
respective rights and interests under the Security
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 98% limited
partnership interest in the Operating Partnership
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[Form of Consent and Agreement]
CONSENT AND AGREEMENT
[pursuant to Section 7.2(c)]
THIS CONSENT AND AGREEMENT, dated as of ___________,
19__, is by and between [name of Investing Partnership] (the
"Investing Partnership"), J&B Management Company ("J&B"), and The
Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.2(c) of the Bank Agreement provides
for the execution of this Consent and Agreement by the parties
hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby convent and agree as follows:
Section 1. Consents and Agreements. The Investing
-----------------------
Partnership hereby (i) consents to J&B's assignment to the Bank
of the Investing Partnership's Set Aside Purchase Note; (ii)
consents to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank; and (iii) agrees that upon
receiving the Bank's notice of an Event of Default, the Investing
Partnership shall pay all sums due under its Set Aside Purchase
Note directly to the Bank. The Bank hereby acknowledges that
interest and, where required, annual payments of principal, may
be deferred until the maturity of that Set Aside Purchase Note.
Section 2. Notices. All notices and other
-------
communications pursuant or relating to this Consent and Agreement
shall be in writing and shall be delivered by hand or sent by
registered or certified mail, return receipt requested, or by
facsimile, confirmed by writing delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Investing Partnership:
-----------------------------------
-----------------------------------
-----------------------------------
(b) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 3. Choice of Law. This Consent and Agreement
-------------
shall be governed by the laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
Section 4. Successors. This Consent and Agreement
----------
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 5. Counterparts. This Consent and Agreement
------------
may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute
one instrument.
Section 6. Definitions. All terms used in this
-----------
Consent and Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Bank Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
[Name of Investing Partnership]
By:
-------------------------------
J&B MANAGEMENT COMPANY
By:
-------------------------------
Title:
THE BANK OF NEW YORK
By:
-------------------------------
Title:
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
[Form of Consent, Assignment and Agreement]
CONSENT, ASSIGNMENT AND AGREEMENT
[pursuant to Section 7.3(c)]
THIS CONSENT, ASSIGNMENT AND AGREEMENT, dated as of
______________, 19__, is by and between [name of Investing
Partnership] (the "Investing Partnership"), J&B Management
Company ("J&B"), and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.3(c) of the Bank Agreement provides
for the execution of this Consent, Assignment and Agreement by
the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby consent and agree as follows:
Section 1. Consents, Assignments and Agreements. The
------------------------------------
Investing Partnership and the Operating Partnership in which the
Investing Partnership owns a Purchased Partnership interest
hereby (i) consent to J&B's assignment to the Bank of the
Security Agreement, Security Interest, Purchased Partnership
Interest, all distributions which may be due and payable or paid
from time to time on such Purchased Partnership Interest, and the
proceeds thereof, relating to the Investing Partnership's Set
Aside Purchase Note; (ii) consent to J&B's delivery to the Bank
of Financing Statements and to the Bank's filing of such
Financing Statements with the appropriate governmental
authorities in order to perfect and to continue the perfection of
the Bank's security interest in the Security Agreement, Security
Interest, Purchased Partnership Interest and distributions which
may be due and payable or paid from time to time on the Purchased
Partnership Interest; (iii) subject to the terms and conditions
of the Bank Agreement, assign to the Bank all distributions which
shall be due and payable or made from time to time on the
Purchased Partnership Interest, and the proceeds thereof, until
all outstanding obligations under the Set Aside Purchase Note, if
such be in default, have been paid in full (including, without
limitation, all costs of collection, reasonable attorneys' fees
and other fees and expenses); and (iv) subject to the terms and
conditions of the Bank Agreement, agree that upon foreclosure of
the Security Interest all distributions made on the Purchased
Partnership Interest shall by paid directly to the Bank, as the
assignee of J&B, regardless of whether the Bank becomes a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership but subject to the limitations set
forth in clause (iii) above.
Section 2. Representations of the Operating
--------------------------------
Partnership. The Operating Partnership hereby agrees to keep a
-----------
copy of this Consent, Assignment and Agreement with its business
records.
Section 3. Agreement of the Operating Partnership.
--------------------------------------
The Operating Partnership hereby agrees to admit the Bank as a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership upon the Bank's foreclosure on the
Security Interest and request, subject to the Bank's obtaining
HUD 2530 Clearance and the rights of the Investing Partnership
under Section 9.505 of the Uniform Commercial Code.
Section 4. Amendment to Partnership Agreement. Upon
----------------------------------
substitution of the Bank for the Investing Partnership as a
limited partner in the Operating Partnership pursuant to the Bank
Agreement and this Consent, Alignment and Agreement, this
Consent, Assignment and Agreement shall constitute an amendment
to the partnership agreement of the Operating Partnership, and
the Bank shall not be liable for the obligations of any
predecessor which has assigned the Purchased Partnership Interest
to make any contributions to the Operating Partnership.
Section 5. Further Assurances and Power of Attorney.
----------------------------------------
Each of the parties hereto shall, from time to time, upon request
of a party hereto, duly execute, acknowledge and deliver or cause
to be duly executed, acknowledged and delivered, all such further
instruments and documents reasonably requested by a party to
effectuate the intent and purposes of this Consent, Assignment
and Agreement. Notwithstanding the foregoing, this Consent,
Assignment and Agreement shall constitute an irrevocable power of
attorney coupled with an interest for the Bank to execute and
file a certificate of amendment to the certificate of limited
partnership of the Operating Partnership or any other document or
instrument in order to effectuate the intent and purposes of this
Consent, Assignment and Agreement; provided, however, that the
Bank may not be substituted as a partner of the Operating
Partnership unless such substitution is permitted under the
Uniform Commercial Code and HUD 2530 Clearance, if required, has
been obtained.
Section 6. Notices. All notices and other
-------
communications pursuant or relating to this Consent, Assignment
and Agreement shall be in writing and shall be delivered by hand
or sent by registered or certified mail, return receipt
requested, or by facsimile, confirmed by writing delivered by
hand of sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Operating Partnership:
---------------------------------------
---------------------------------------
---------------------------------------
(b) If to the Investing Partnership:
---------------------------------------
---------------------------------------
---------------------------------------
(c) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Sandra Padmore-Lewis,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 7. Choice of Law. This Consent, Assignment
-------------
and Agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law
thereof.
Section 8. Successors. This Consent, Assignment and
----------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
Section 9. Counterparts. This Consent, Assignment and
------------
Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall
constitute one instrument.
Section 10. Definitions. All terms used in this
-----------
Consent, Assignment and Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Bank
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent, Assignment and Agreement as of the date first above
written.
[Name of Investing Partnership]
By:
------------------------------
J&B MANAGEMENT COMPANY
By:
-------------------------------
Title:
THE BANK OF NEW YORK
By:
-------------------------------
Title:
Exhibit 10.5(g)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of May 24, 1993 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 6, 12%
Debentures due April 15, 2003 (the "Debentures") pursuant to the
Company's Confidential Private Placement Memorandum dated May 26,
1993, as the same may be from time to time amended (the
"Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii)
December 31, 1994 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Company Series 6
Escrow Fund Account No. 201319 (the "Fund") with the Bank;
WHEREAS, the Company, for the benefit of the Bank and
the Purchasers, wishes to assign to, and to grant the Bank a
security interest in, certain notes, instruments and documents as
more fully described below and the Bank is willing to accept such
security interest and assignment upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Custodian, Paying Agent,
Registrar and Transfer Agent with respect to the Debentures and
the above-mentioned notes, instruments and documents and the Bank
is willing to accept such appointments upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow. The Company shall from time to
-------
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3 Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month. Four Business Days
prior to each such interest payment date, the Bank shall give the
Company written notice of the difference between the amount of
interest which will be payable on Subscription Payments on such
interest payment date and the amount of interest accruing on the
Fund's assets which will be available for such payment on such
interest payment date. Not later than 11:30 a.m. (New York time)
on the second Business Day preceding such interest payment
date,the Company shall deposit with the Bank its check in the
amount of such difference. On each interest payment date, the
Bank shall pay interest which is due and payable to the
respective Purchasers by mailing its check in the appropriate
amount to each Purchaser by first class mail at the Purchaser's
mailing address provided to the Bank pursuant to Section 1.2
hereof. In the event that the Company shall default in its
payment obligations to the Bank under this Section 1.3, the Bank
shall mail its check in the amount of each Purchaser's pro rata
share of interest earned and paid on the Fund's assets as
provided in this Section 1.3. For purposes of this Bank
Agreement, "Business Day" shall mean any day other than a day on
which the Bank is authorized to remain closed in New York City.
Section 1.4 Conditions of Initial Closing and
------------------------------------
Additional Closings.
------------------- Notwithstanding anything to the contrary in
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes which at maturity will have an
aggregate outstanding balance of principal equal to at least
twice the principal amount of the Debentures which will be sold
at that Initial Closing or Additional Closing, together with the
related Consent and Agreement pertaining to each such Set Aside
Purchase Note and the related Consent, Assignment and Agreement
pertaining to the Purchased Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing. As used in this Section 1.4 and elsewhere in this Bank
Agreement, a statement concerning the outstanding principal
amount at maturity of a Set Aside Purchase Note refers to the
amount of principal that would be due at maturity on that Set
Aside Purchase Note if all payments of principal on that Set
Aside Purchase Note scheduled to be made prior to maturity were
made when due and none of such payments were deferred by the
obligor thereof with the consent of the Company.
Section 1.5 Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment. The Bank, at the Initial Closing
-------
and each Additional Closing, upon written instruction from the
Company, shall transfer to the Company or to such third party or
parties as may be directed by the Company the Cleared Funds then
held in the Fund by the Bank. Any interest earned thereon and
not theretofore distributed in accordance with Section 1.3 hereof
shall be paid to the Purchasers in accordance with Section 1.3
hereof.
Section 1.7 Fees and Expenses. In addition to the
------------------
fees set forth in Section 7.8 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to December 31, 1994, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction, the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for its actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The Company shall not be obligated to reimburse the
Bank for any costs or expenses incurred in connection with the
preparation and execution of this Bank Agreement. The provisions
of this Section 1.7 shall survive the termination of this Bank
Agreement.
Section 1.8 Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the
---------------
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds. In the event that any
-----------------
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds. For the purpose of this
-------------
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Debentures shall be
----------
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication. Only such Debentures as
--------------
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures.
---------- Subject to applicable law, in the event any Debenture
is mutilated, lost, stolen or destroyed, the Company may
authorize the execution and delivery of a new Debenture of like
date, number, maturity and denomination as that mutilated, lost,
stolen or destroyed, provided, however, that in the case of any
mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall satisfactory to the Company and
the Bank. The Company may charge the Purchaser of such Debenture
with any amounts be satisfactory to the Company and the Bank and
permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures. The Debentures are issuable only as registered
----------
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner. The person in whose name any
-----
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send
--------------
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges. No service charge shall be made
-------
for any transfer or exchange of Debentures, but in all cases in
which Debentures shall be transferred or exchanged hereunder, the
Company or the Bank may collect from the registered owner of a
Debenture a charge for every transfer or exchange of Debentures
sufficient to reimburse them for any tax, fee or other
governmental charge required to be paid with respect to such
transfer or Exchange, and such charge shall be paid before any
such new Debenture shall be delivered.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall be
without premium or penalty, or is required to effect mandatory
redemption of part or all of the Debentures, the Company shall
give notice thereof to the Bank at least forty (40) days prior to
the date set forth for redemption, the manner in which redemption
shall be effected and all the relevant details thereof. The Bank
shall give notice to the Purchasers of that redemption at least
thirty (30) days prior to the date set forth for redemption. The
Company shall deliver all redeemed Debentures to the Bank for
cancellation of the whole or portion thereof, as appropriate, and
issuance of new Debentures in denominations equal to the
unredeemed portion. In no event, however, shall the Bank pay the
redeemed amount or issue new Debentures in denominations equal to
the unredeemed portion to a registered owner if that registered
owner has not surrendered its Debenture to the Company. No
interest shall be payable on the redeemed portion of a Debenture
from and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank shall (i)
return to the Company Set Aside Purchase Notes selected by the
Company that in the aggregate will have a principal balance at
their respective maturities equal to twice the principal amount
of the redeemed portion of the Debentures, (ii) execute and
deliver to the Company an instrument prepared by J&B effecting a
release by the Bank of the existing assignment of the Security
Interest and Security Agreement covering the related Purchased
Partnership Interest (as such terms are defined in Section 7.3(a)
hereof) (iii) file with the appropriate governmental authorities
indicated by J&B to the Bank, Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interest and assignment granted under this Bank Agreement and
(iv) return to J&B the Consent and Agreement described in Section
7.2(c) hereof and the Consent, Assignment and Agreement described
in Section 7.3(c) hereof, each as relates to such returned Set
Aside Purchase Notes. In no event, however, will the Bank
release Set Aside Purchase Notes that will result in the amount
of Set Aside Purchase Notes held by the Bank to be less than
twice the principal amount of the Debentures that remain
outstanding.
Section 5.7 Expenses. As a condition to the transfer
--------
or exchange of any Debenture, the owner of the Debenture shall
reimburse the Company and the Bank for their respective actual
out-of-pocket expenses incurred in connection therewith
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.7 shall survive the
termination of this Bank Agreement.
Section 6. Paying Agent.
------------
Section 6.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions. The Bank shall pay
------------------
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in Section
5.6(a) and in accordance with the terms and provisions of this
Bank Agreement and the Debentures, by check mailed by first class
mail to the registered owner of a Debenture at his address as it
appears in the register; provided that not later than 11:30 a.m.
(New York time) on the second Business Day preceding each date on
which interest on or principal of any Debenture is due and
payable, the Company shall deposit with the Bank its check in the
amount due.
Section 6.3 Expenses. The Company shall reimburse the
--------
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes. Each
such Purchase Note has been issued by an Investing Partnership,
pursuant to a certain Purchase Agreement. Under the terms of
each such Purchase Note and Purchase Agreement, J&B is entitled
to assign each Purchase Note and J&B's right to payments of
interest thereon and principal amount thereof. Under the terms
of each Purchase Agreement, payments of interest and, where
required, scheduled payments of principal payable prior to
maturity due under the Purchase Note will be offset and reduced
by payments made under certain Investor Notes issued by the
limited partners of the respective Investing Partnership, which
may have been pledged to secure obligations owed by J&B to one or
more banks. Only that interest and, where applicable, scheduled
principal payments payable prior to maturity ("Excess Interest
and Principal") under a Purchase Note which is in excess of the
amount offset and reduced by payments made to the Company and/or
such banks, if any, may be payable to the holder of the Purchase
Note. Any interest and, where required, scheduled payments of
principal payable prior to maturity that are due but unpaid on
Purchase Notes shall be deferred until the maturity of that
Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $11,377,000
and an aggregate balance of principal due at maturity equal to
$11,230,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the scheduled payments of principal
payable prior to maturity on certain Set Aside Purchase Notes so
providing and interest payments on all of the Set Aside Purchase
Notes shall be payable directly to the Company until such time as
an Event of Default (as defined in Section 7.6 hereof) shall
occur and be continuing. Under the terms of the Set Aside
Purchase Notes, only that principal and interest thereon which is
Excess Interest and Principal may be payable to the Bank. The
parties hereto confirm that scheduled payments of principal
payable prior to maturity made under the Set Aside Purchase Notes
listed in Exhibit A hereto, as requiring such scheduled principal
payment, will belong to the Company until such time as an Event
of Default shall occur and be continuing. The parties hereto
further confirm that any deferred interest and principal on a Set
Aside Purchase Note paid at the maturity thereof shall belong to
the Company so long as an Event of Default shall not have
occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Security Agreement listed in Exhibit A hereto (a "Security
Agreement") under which the Investing Partnership has granted a
security interest (a "Security Interest") in that Investing
Partnership's limited partnership interest listed in Exhibit A
hereto (a "Purchased Partnership Interest") in a respective
Operating Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.4 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Security
Agreement listed in Exhibit A hereto, each Security Interest in a
Purchased Partnership Interest created under any such Security
Agreement, each such Purchased Partnership Interest, each
distribution due and payable or made from time to time on such
Purchased Partnership Interest, and the proceeds thereof. In
order to perfect such security interest, J&B shall deliver to the
Bank Uniform Commercial Code Financing Statements ("Financing
Statements") for filing by the Bank with the such appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments of the
above-mentioned Security Agreements, Security Interests,
Purchased Partnership Interests, and due and payable or paid
distributions on Purchased Partnership Interests to the Bank, all
distributions on such Purchased Partnership Interests shall be
payable directly to the respective investing Partnership if an
event of default shall not have occurred and be continuing under
that Investing Partnership's Set Aside Purchase Note; or to the
Bank for payment to the Company if the Bank shall foreclose on
the Security Interest pursuant to Section 7.5(f) hereof, and
shall be payable directly to the Bank for the benefit of the Bank
and the owners of the Debentures only if the Bank shall foreclose
on the Security Interest pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank of the respective Security Agreement, Security
Interest, Purchased Partnership Interest, each distribution due
and payable or made from time to time on the Purchased
Partnership Interest, and the proceeds thereof; (ii) consent to
J&B's delivery of the above-mentioned Financing Statements and
the Bank's filing of the Financing Statements from time to time
with the appropriate governmental authorities; (iii) assign to
the Bank all distributions which may be due and payable or made
from time to time on the Purchased Partnership Interest (subject
to the terms and conditions set forth in this Bank Agreement)
until all outstanding obligations under the Set Aside Purchase
Note which is in default shall have been paid in full (including,
without limitation, all costs of collection, reasonable attorney
fees and other fees and expenses); and (iv) agree that upon
foreclosure of the Security Interest, all distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations set forth in clause (iii) above. Upon receipt of
each such Consent, Assignment and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.4 Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note
and the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B in its sole
discretion as shall have an aggregate balance of principal due at
maturity equal to at least twice the principal amount of the
Debentures which will be sold at the respective Initial Closing
or Additional Closing, together with the related Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, and the related Consent, Assignment and Agreement
and related Financing Statements pertaining to the Purchased
Partnership Interest.
Section 7.5 Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes deposited with it pursuant to Section 7.2(b) hereof, and
shall file with the appropriate governmental authorities
indicated by J&B to the Bank Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interests and assignments granted under this Bank Agreement and
each Consent, Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures due and
immediately payable with accrued interest thereon. In addition,
the Bank shall immediately notify the makers of the Set Aside
Purchase Notes that all payments to be made thereafter on the Set
Aside Purchase Notes shall be paid directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests. In the event that the
Company shall default on its payment obligations to the Bank
under this Bank Agreement, the Bank shall be entitled to
institute action against the Company, jointly or severally, to
collect payment under this Bank Agreement, without any prior
requirement to attempt to collect any funds under the Set Aside
Purchase Notes or the related Purchased Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof)
including, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Company, free and clear of any claim, lien, charge or encumbrance
including, without limitation, any right of equity of redemption.
The Bank shall apply the proceeds of any such sale firstly to the
payment of the expenses of the sale, secondly to the payment of
the Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to any of the Company or its
affiliates because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all distributions
from that Operating Partnership as the assignee of J&B and this
Bank Agreement shall operate as an assignment of such
distributions by the Investing Partnership, subject to the
limitations set forth in Section 7.3(c). In addition, while an
Event of Default is continuing, if there shall occur or if there
shall have occurred and be continuing an event of default under
any Set Aside Purchase Note or under any Partnership Agreement
governing the Operating Partnership related to the Purchased
Partnership Interest, the Bank shall be authorized to exercise
any and all rights and remedies available to it as the holder of
the respective Set Aside Purchase Note, the substituted partner
or assignee with respect to the Purchased Partnership Interest in
the related Operating Partnership, as well as any other remedy
available under law or equity. The Bank shall apply the proceeds
of its exercise of the above-mentioned rights and remedies
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to repayment of principal of the Debentures, until all amounts
due under the Debentures shall have been paid in full together
with all costs of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
Security Interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, or if the Bank may not be
admitted as a substituted limited partner in the Operating
Partnership for any reason, the Bank shall be entitled
nevertheless to receive all distributions from that Operating
Partnership as the assignee of J&B and this Bank Agreement shall
operate as an assignment of such distributions by the Investing
Partnership, subject to the limitations set forth in Section
7.3(c). The Bank shall pay over to the Company any amounts
received from the Operating Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the procedures specified in Sections 7.5(b)-(e) of this Bank
Agreement.
(g) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank under this Bank
Agreement unless an Event of Default shall occur and be
continuing. The Bank shall be entitled to exercise one or more
remedies at the same time, all such rights and remedies being
cumulative and not mutually exclusive.
(h) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this
Section 7.5(h) shall survive the termination of this Bank
Agreement.
Section 7.6 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.7 Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one of more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) As part of the consideration to be paid by
the purchaser of each Set Aside Purchase Note to be
sold, the purchaser shall pay directly to the Bank cash
in the amount equal to 50% of the principal balance due
at maturity of that Set Aside Purchase Note plus an
amount sufficient to pay accrued interest on the pro
rata portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iii) The total consideration to be paid upon
sale of a Set Aside Purchase Note shall not be less the
50% of the principal balance due at maturity thereof
plus an amount sufficient to pay accrued interest on
the pro rata portion of Debentures to be prepaid
pursuant to subparagraph (iv) below.
(iv) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note that is then sold to the purchaser
together with an assignment of Security Interest and
Security Agreement covering the related Purchased
Partnership Interest. Subject to Section 8(b) hereof
the Bank shall have no liability whatsoever to the
purchaser or any party hereto for its actions pursuant
to this Section 7.7.
Section 7.8 Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $ 1,000,000 outstanding $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding $ 6,000
$ 5,000,001 to $ 5,600,000 outstanding $ 7,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The Company shall not
be obligated to reimburse the Bank for any costs or expenses
incurred in connection with the preparation and execution of this
Bank Agreement. The provisions of this Section 7.8 shall survive
the termination of this Bank Agreement.
Section 7.9 Substitution of Set Aside Purchase Notes.
----------------------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes (a withdrawn Set Aside
Purchase Note shall be defined for the purposes herein as the
"Withdrawn Set Aside Purchase Note") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") so
long as (i) no Event of Default has occurred and is continuing
and (ii) the aggregate outstanding principal balance of the Set
Aside Purchase Notes held by the Bank after the Withdrawn Set
Aside Purchase Note is withdrawn and the New Set Aside Purchase
Note is deposited with the Bank remains twice the outstanding
principal balance of the Debentures that remain outstanding.
(b) In order to effect the substitution described in
Section 7.9(a) hereof, the Company shall deliver the New Set
Aside Purchase Note to the Bank along with the Consent and
Agreement as described in Section 7.2(c) hereof, the Financing
Statements pertaining to the New Set Aside Purchase Note, the
Consent, Assignment and Agreement as described in Section 7.3(c)
hereof, and the related Financing Statements pertaining to the
Purchased Partnership Interest that secures such New Set Aside
Purchase Note. Upon receiving the New Set Aside Purchase Note
and the related documents described in the preceding sentence,
the security interest and assignment created by this Bank
Agreement, the Consent, Assignment and Agreement described in
Section 7.2(c) hereof, the Consent, Assignment and Agreement
described in 7.3(c) hereof, each as relates to the Withdrawn Set
Aside Purchase Note shall automatically terminate and shall have
no further force or effect. Thereupon, the Bank shall (i) return
the Withdrawn Set Aside Purchase Note to the Company, (ii)
execute and deliver to the Company an instrument prepared by J&B
effecting a release by the Bank of the existing assignment of the
Security Interest and Security Agreement covering the related
Purchased Partnership Interest, (iii) file with the appropriate
governmental authorities indicated by J&B to the Bank, Financing
Statements delivered by J&B to the Bank recording the termination
of the Bank's security interest and assignment granted under this
Bank Agreement and (iv) return to J&B the Consent and Agreement
described in Section 7.2(c) hereof and the Consent, Assignment
and Agreement described in Section 7.3(c) hereof, each as relates
to such Withdrawn Set Aside Purchase Note. The Company will
notify the Debenture holders of the substitution of the Withdrawn
Set Aside Purchase Note with the New Set Aside Purchase Note
within sixty (60) days thereof and provide those Debenture
holders with the information pertaining to the New Set Aside
Purchase Note that would have been contained in the Memorandum if
the New Set Aside Purchase Note had been included as one of the
Set Aside Purchase Notes described therein.
(c) After the substitution of the New Set Aside
Purchase Note for the Withdrawn Set Aside Purchase Note, the New
Set Aside Purchase Note shall be deemed to be a Set Aside
Purchase Note for all purposes as set forth in this Bank
Agreement.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
17(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any
reason, the Company shall promptly appoint a successor
Bank.
(ii) If a successor Bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor Bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor Bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it as Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered,
certified, return receipt requested, or first class mail, or by
facsimile, confirmed by writing, delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the state of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment. This Bank
---------------------------
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability. Any provision of this
--------------
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts. This Bank Agreement may be
------------
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions. All terms used in this Bank
-----------
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin By: /s/ Bernard M. Rodin
-------------------------- --------------------------
Title: General Partner Title: Vice President
LEISURE CENTERS, INC. THE BANK OF NEW YORK
By: /s/ Bernard M. Rodin By: /s/ Harley Jeanty
--------------------------- --------------------------
Title: Vice President Title: Assistant Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
---------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
----------------------------
Title: Vice President
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
1. (a) Investing Partnership: Bedford Associates, a New
Jersey limited partnership
(b) Operating Partnership: Bedford Towers Apts., Ltd., a
Georgia limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,200,000
(ii) Date of Issue: October 31, 1980
(iii) Final Maturity Date: December 31, 2022
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $1,200,000
(vii) Prepaid Interest as of
December 31, 1992 $952,000
(d) Security Agreement: Sale and Purchase Agreement dated
October 31, 1980, by and among John Luciani, Bernard M.
Rodin and J&B Management Corp., the successor by merger
of Executive Offices Realty Corp. ("Sellers") and
Bedford Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
2. (a) Investing Partnership: Bissel Associates, a New Jersey
limited partnership
(b) Operating Partnership: Bissel Apartments, Ltd., an
Illinois limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,000,000
(ii) Date of Issue: March 23, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $1,000,000
(vii) Prepaid Interest as of
December 31, 1992 $60,000
(d) Security Agreement: Sale and Purchase Agreement dated
March 23, 1981, by and among John Luciani, Bernard M.
Rodin and J&B Management Corp., successor by merger of
Executive Offices Realty Corp. ("Sellers") and Bissel
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
3. (a) Investing Partnership: Carolina Main Associates, a New
Jersey limited partnership
(b) Operating Partnership: Duncan Village Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $115,000
(ii) Date of Issue: July 31, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $115,000
(vii) Prepaid Interest as of
December 31, 1992 $82,292
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodland Associates, Realty
Executive Associates, John Luciani and Bernard M. Rodin
("Sellers") and Carolina Main Associates, Spartan
Associates, Village Associates and Duncan South
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
4. (a) Investing Partnership: County Chesterfield Associates,
a New Jersey limited partnership
(b) Operating Partnership: Pageland Place Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $107,500
(ii) Date of Issue: July 1, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $107,500
(vii) Prepaid Interest as of
December 31, 1992 $80,793
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodlands Associates,
Realty Executive Associates, John Luciani and Bernard
M. Rodin ("Sellers") and County Chesterfield
Associates, Magnum Associates, Pagefield Associates and
Place South Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
5. (a) Investing Partnership: Duncan South Associates, a New
Jersey limited partnership
(b) Operating Partnership: Duncan Village, a South
Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $115,000
(ii) Date of Issue: July 31, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $115,000
(vii) Prepaid Interest as of
December 31, 1992 $82,292
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodlands Associates,
Realty Executive Associates, John Luciani and Bernard
M. Rodin ("Sellers") and Duncan South Associates,
Spartan Associates, Village Associates and Carolina
Main Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
6. (a) Investing Partnership: Eastview Associates, a New
Jersey limited partnership
(b) Operating Partnership: Eastview Terrace Limited
Partnerships, an Arkansas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $770,000
(ii) Date of Issue: April 14, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $770,000
(vii) Prepaid Interest as of
December 31, 1992 $464,200
(d) Security Agreement: Sale and Purchase Agreement dated
April 14, 1981 by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and
Eastview Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
7. (a) Investing Partnership: Fox Associates, a New Jersey
limited partnership
(b) Operating Partnership: Fox Run Apts., Ltd., a Kansas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $100,000
(ii) Date of Issue: April 6, 1982
(iii) Final Maturity Date: December 31, 2024
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $100,000
(vii) Prepaid Interest as of
December 31, 1992 $50,667
(d) Security Agreement: Sale and Purchase Agreement dated
April 6, 1982, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and Fox
Associates, Hiawatha Associates, Fox Run Associates and
Running Fox Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
8. (a) Investing Partnership: Fox Run Associates, a New
Jersey limited partnership
(b) Operating Partnership: Fox Run Apts., Ltd., a Kansas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $100,000
(ii) Date of Issue: April 6, 1982
(iii) Final Maturity Date: December 31, 2024
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $100,000
(vii) Prepaid Interest as of
December 31, 1992 $50,667
(d) Security Agreement: Sale and Purchase Agreement dated
April 6, 1982, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and Fox
Run Associates, Hiawatha Associates, Fox Associates and
Running Fox Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
9. (a) Investing Partnership: Greentree Associates, a New
Jersey limited partnership
(b) Operating Partnership: Greentree Apartments, Ltd., a
Tennessee limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $655,000
(ii) Date of Issue: April 23, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $655,000
(vii) Prepaid Interest as of
December 31, 1992 $391,300
(d) Security Agreement: Sale and Purchase Agreement dated
April 23, 1981, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and
Greentree Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
10. (a) Investing Partnership: Hiawatha Associates, a New
Jersey limited partnership
(b) Operating Partnership: Fox Run Apts., Ltd., a Kansas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $100,000
(ii) Date of Issue: April 6, 1982
(iii) Final Maturity Date: December 31, 2024
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $100,000
(vii) Prepaid Interest as of
December 31, 1992 $50,667
(d) Security Agreement: Sale and Purchase Agreement dated
April 6, 1982, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and
Hiawatha Associates, Fox Run Associates, Running Fox
Associates, and Fox Associates (Sellers' respective
rights and interests under the Security Agreement have
been sold, transferred and assigned to J&B Management
Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
11. (a) Investing Partnership: Jesup Associates, a New Jersey
limited partnership
(b) Operating Partnership: Jesup Manor Apts., Ltd., a
Georgia limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $610,000
(ii) Date of Issue: April 21, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $610,000
(vii) Prepaid Interest as of
December 31, 1992 $396,550
(d) Security Agreement: Sale and Purchase Agreement dated
April 21, 1981, by and among J&B Management Corp.,
successor by merger to Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and
(Sellers' respective rights and interests under the
Security Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
12. (a) Investing Partnership: Magnum Associates, a New Jersey
limited partnership
(b) Operating Partnership: Pageland Place Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $107,500
(ii) Date of Issue: July 1, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $107,500
(vii) Prepaid Interest as of
December 31, 1992 $80,793
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodlands Associates,
Realty Executive Associates, John Luciani and Bernard
M. Rodin ("Sellers") and Magnum Associates, Pagefield
Associates, County Chesterfield Associates and Place
South Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
13. (a) Investing Partnership: Muskogee Associates, a New
Jersey limited partnership
(b) Operating Partnership: Meadowbrook Apartments
Associates, an Oklahoma limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,627,000
(ii) Date of Issue: August 30, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Payments of Principal
Deemed Made as of
December 31, 1992 None
(vi) Total Scheduled Principal
Payments Prior to Final
Maturity: $147,000
(vii) Balance of Principal
Due at Final Maturity: $1,480,000
(viii) Accrued Interest as of
December 31, 1992 $70,500
(d) Security Agreement: Sale and Purchase Agreement dated
August 30, 1982, by and among Augostine Malerba, Burton
Cooperberg, Raymond J. Wayman, William Goldberg, Irving
Weiss, John Luciani and Bernard M. Rodin ("Sellers")
and Muskogee Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 99% of the capital,
99% of the profits and losses and 99% of the cash flow
of the Operating Partnership
<PAGE>
14. (a) Investing Partnership: The New West Associates, a New
Jersey limited partnership
(b) Operating Partnership: The New West Apts., Ltd., a
Texas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,350,000
(ii) Date of Issue: September 1, 1980
(iii) Final Maturity Date: December 31, 2022
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $1,350,000
(vii) Prepaid Interest as of
December 31, 1992 $1,221,000
(d) Security Agreement: Sale and Purchase Agreement dated
September 1, 1980, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and The
New West Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
15. (a) Investing Partnership: Pagefield Associates, a New
Jersey limited partnership
(b) Operating Partnership: Pageland Place Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $107,500
(ii) Date of Issue: July 1, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $107,500
(vii) Prepaid Interest as of
December 31, 1992 $80,793
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodland Associates, Realty
Executive Associates, John Luciani and Bernard M. Rodin
("Sellers") and Pagefield Associates, Magnum
Associates, Country Chesterfield Associates and Place
South Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
16. (a) Investing Partnership: Park Manor Associates, a New
Jersey limited partnership
(b) Operating Partnership: Park Manor, Ltd., a Texas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,230,000
(ii) Date of Issue: April 27, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $1,230,000
(vii) Prepaid Interest as of
December 31, 1992 $755,800
(d) Security Agreement: Sale and Purchase Agreement dated
April 27, 1981, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and Park
Manor Associates (Sellers' respective rights and
interests under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
17. (a) Investing Partnership: Place South Associates, a New
Jersey limited partnership
(b) Operating Partnership: Pageland Place Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $107,500
(ii) Date of Issue: July 1, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $107,500
(vii) Prepaid Interest as of
December 31, 1992 $80,793
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodland Associates, Realty
Executive Associates, John Luciani and Bernard M. Rodin
("Sellers") and Place South Associates, Pagefield
Associates, Magnum Associates and Country Chesterfield
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
18. (a) Investing Partnership: Rio Rosa Associates, a New
Jersey limited partnership
(b) Operating Partnership: Santa Rosa Village, Ltd., a
Texas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,085,000
(ii) Date of Issue: December 23, 1983
(iii) Final Maturity Date: December 31, 1997
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $1,085,000
(vii) Accrued Interest as of
December 31, 1992 $644,350
(d) Security Agreement: Sale and Purchase Agreement dated
December 23, 1983, by and among Windmill Two Associates
("Sellers") and Rio Rosa Associates (Sellers'
respective rights and interests under the Security
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 99% of the capital,
99% of the profits and losses and 99% of the cash flow
of the Operating Partnership
<PAGE>
19. (a) Investing Partnership: Running Fox Associates, a New
Jersey limited partnership
(b) Operating Partnership: Fox Run Apts., Ltd., a Kansas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $100,000
(ii) Date of Issue: April 6, 1982
(iii) Final Maturity Date: December 31, 2024
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $100,000
(vii) Accrued Interest as of
December 31, 1992 $50,667
(d) Security Agreement: Sale and Purchase Agreement dated
April 6, 1982, by and among J&B Management Corp.,
successor by merger of Executive Offices Realty Corp.,
John Luciani and Bernard M. Rodin ("Sellers") and
Running Fox Associates, Hiawatha Associates, Fox Run
Associates and Fox Associates (Sellers' respective
rights and interests under the Security Agreement have
been sold, transferred and assigned to J&B Management
Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.5% of
the cash flow of the Operating Partnership
<PAGE>
20. (a) Investing Partnership: Spartan Associates, a New
Jersey limited partnership
(b) Operating Partnership: Duncan Village Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $115,000
(ii) Date of Issue: July 31, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $115,000
(vii) Prepaid Interest as of
December 31, 1992 $82,292
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodlands Associates,
Realty Executive Associates, John Luciani and Bernard
M. Rodin ("Sellers") and Spartan Associates, Village
Associates, Carolina Main Associates and Duncan South
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.375%
of the cash flow of the Operating Partnership
<PAGE>
21. (a) Investing Partnership: Village Associates, a New
Jersey limited partnership
(b) Operating Partnership: Duncan Village Associates, a
South Carolina limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $115,000
(ii) Date of Issue: July 31, 1982
(iii) Final Maturity Date: December 31, 1996
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $115,000
(vii) Prepaid Interest as of
December 31, 1992 $82,292
(d) Security Agreement: Sale and Purchase Agreement dated
July 27, 1982, by and among Woodlands Associates,
Realty Executive Associates, John Luciani and Bernard
M. Rodin ("Sellers") and Village Associates, Spartan
Associates, Carolina Main Associates and Duncan South
Associates (Sellers' respective rights and interests
under the Security Agreement have been sold,
transferred and assigned to J&B Management Company).
(e) Purchased Partnership Interest: 12.375% of the
capital, 24.25% of the profits and losses and 12.375%
of the cash flow of the Operating Partnership
<PAGE>
22. (a) Investing Partnership: Woodlen Place Associates, a New
Jersey limited partnership
(b) Operating Partnership: Woodlen Place, Ltd., a Missouri
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $560,000
(ii) Date of Issue: May 27, 1981
(iii) Final Maturity Date: December 31, 2023
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $560,000
(vii) Prepaid Interest as of
December 31, 1992 $237,600
(d) Security Agreement: Sale and Purchase Agreement dated
May 27, 1981, by and among John Luciani and Bernard M.
Rodin ("Sellers") and J&B Management Corp., successor
by merger of Executive Offices Realty Corp. (Sellers'
respective rights and interests under the Security
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 49.5% of the capital,
97% of the profits and losses and 50% of the cash flow
of the Operating Partnership
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[Form of Consent and Agreement]
CONSENT AND AGREEMENT
[PURSUANT TO SECTION 7.2(C)]
THIS CONSENT AND AGREEMENT, dated as of
________________, 19__, is by and between [name of Investing
Partnership] (the "Investing Partnership"), J&B Management
Company ("J&B"), and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.2(c) of the Bank Agreement provides
for the execution of this Consent and Agreement by the parties
hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby convent and agree as follows:
Section 1. Consents and Agreements. The Investing
-----------------------
Partnership hereby (i) consents to J&B's assignment to the Bank
of the Investing Partnership's Set Aside Purchase Note; (ii)
consents to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank; and (iii) agrees that upon
receiving the Bank's notice of an Event of Default, the Investing
Partnership shall pay all sums due under its Set Aside Purchase
Note directly to the Bank. The Bank hereby acknowledges that
interest and, where required, annual payments of principal, may
be deferred until the maturity of that Set Aside Purchase Note.
Section 2. Notices. All notices and other
-------
communications pursuant or relating to this Consent and Agreement
shall be in writing and shall be delivered by hand or sent by
registered or certified mail, return receipt requested, or by
facsimile, confirmed by writing delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Investing Partnership:
__________________________________
__________________________________
__________________________________
(b) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 3. Choice of Law. This Consent and Agreement
-------------
shall be governed by the laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
Section 4. Successors. This Consent and Agreement
----------
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 5. Counterparts. This Consent and Agreement
------------
may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute
one instrument.
Section 6. Definitions. All terms used in this
-----------
Consent and Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Bank Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
[Name of Investing Partnership]
By:____________________________
J&B MANAGEMENT COMPANY
By:____________________________
Title:
THE BANK OF NEW YORK
By:____________________________
Title:
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
[Form of Consent, Assignment and Agreement]
CONSENT, ASSIGNMENT AND AGREEMENT
[PURSUANT TO SECTION 7.3(C)]
THIS CONSENT, ASSIGNMENT AND AGREEMENT, dated as of
_______ , 19__, is by and between [name of Investing Partnership]
(the "Investing Partnership"), J&B Management Company ("J&B"),
and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.3(c) of the Bank Agreement provides
for the execution of this Consent, Assignment and Agreement by
the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby consent and agree as follows:
Section 1. Consents, Assignments and Agreements. The
------------------------------------
Investing Partnership and the Operating Partnership in which the
Investing Partnership owns a Purchased Partnership interest
hereby (i) consent to J&B's assignment to the Bank of the
Security Agreement, Security Interest, Purchased Partnership
Interest, all distributions which may be due and payable or paid
from time to time on such Purchased Partnership Interest, and the
proceeds thereof, relating to the Investing Partnership's Set
Aside Purchase Note; (ii) consent to J&B's delivery to the Bank
of Financing Statements and to the Bank's filing of such
Financing Statements with the appropriate governmental
authorities in order to perfect and to continue the perfection of
the Bank's security interest in the Security Agreement, Security
Interest, Purchased Partnership Interest and distributions which
may be due and payable or paid from time to time on the Purchased
Partnership Interest; (iii) subject to the terms and conditions
of the Bank Agreement, assign to the Bank all distributions which
shall be due and payable or made from time to time on the
Purchased Partnership Interest, and the proceeds thereof, until
all outstanding obligations under the Set Aside Purchase Note, if
such be in default, have been paid in full (including, without
limitation, all costs of collection, reasonable attorneys' fees
and other fees and expenses); and (iv) subject to the terms and
conditions of the Bank Agreement, agree that upon foreclosure of
the Security Interest all distributions made on the Purchased
Partnership Interest shall by paid directly to the Bank, as the
assignee of J&B, regardless of whether the Bank becomes a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership but subject to the limitations set
forth in clause (iii) above.
Section 2. Representations of the Operating
--------------------------------
Partnership. The Operating Partnership hereby agrees to keep a
-----------
copy of this Consent, Assignment and Agreement with its business
records.
Section 3. Agreement of the Operating Partnership.
--------------------------------------
The Operating Partnership hereby agrees to admit the Bank as a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership upon the Bank's foreclosure on the
Security Interest and request, subject to the Bank's obtaining
HUD 2530 Clearance and the rights of the Investing Partnership
under Section 9.505 of the Uniform Commercial Code.
Section 4. Amendment to Partnership Agreement. Upon
----------------------------------
substitution of the Bank for the Investing Partnership as a
limited partner in the Operating Partnership pursuant to the Bank
Agreement and this Consent, Alignment and Agreement, this
Consent, Assignment and Agreement shall constitute an amendment
to the partnership agreement of the Operating Partnership, and
the Bank shall not be liable for the obligations of any
predecessor which has assigned the Purchased Partnership Interest
to make any contributions to the Operating Partnership.
Section 5. Further Assurances and Power of Attorney.
----------------------------------------
Each of the parties hereto shall, from time to time, upon request
of a party hereto, duly execute, acknowledge and deliver or cause
to be duly executed, acknowledged and delivered, all such further
instruments and documents reasonably requested by a party to
effectuate the intent and purposes of this Consent, Assignment
and Agreement. Notwithstanding the foregoing, this Consent,
Assignment and Agreement shall constitute an irrevocable power of
attorney coupled with an interest for the Bank to execute and
file a certificate of amendment to the certificate of limited
partnership of the Operating Partnership or any other document or
instrument in order to effectuate the intent and purposes of this
Consent, Assignment and Agreement; provided, however, that the
Bank may not be substituted as a partner of the Operating
Partnership unless such substitution is permitted under the
Uniform Commercial Code and HUD 2530 Clearance, if required, has
been obtained.
Section 6. Notices. All notices and other
-------
communications pursuant or relating to this Consent, Assignment
and Agreement shall be in writing and shall be delivered by hand
or sent by registered or certified mail, return receipt
requested, or by facsimile, confirmed by writing delivered by
hand or sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Operating Partnership:
__________________________________
__________________________________
__________________________________
(b) If to the Investing Partnership:
__________________________________
__________________________________
__________________________________
(c) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 7. Choice of Law. This Consent, Assignment
-------------
and Agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law
thereof.
Section 8. Successors. This Consent, Assignment and
----------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
Section 9. Counterparts. This Consent, Assignment and
------------
Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall
constitute one instrument.
Section 10. Definitions. All terms used in this
-----------
Consent, Assignment and Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Bank
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent, Assignment and Agreement as of the date first above
written.
[Name of Investing Partnership]
By:____________________________
J&B MANAGEMENT COMPANY
By:____________________________
Title:
THE BANK OF NEW YORK
By:____________________________
Title:
Exhibit 10.5(h)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of October 27, 1993 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership (J&B), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 7, 11%
Debentures due January 15, 2002 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum dated
October 26, 1993, as the same may be from time to time amended
(the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) December
31, 1994 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 11%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Company Series 7
Escrow Fund Account (the "Fund") with the Bank;
WHEREAS, the Company, for the benefit of the Bank and
the Purchasers, wishes to assign to, and to grant the Bank a
security interest in, certain notes, instruments and documents as
more fully described below and the Bank is willing to accept such
security interest and assignment upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Custodian, Paying Agent,
Registrar and Transfer Agent with respect to the Debentures and
the above-mentioned notes, instruments and documents and the Bank
is willing to accept such appointments upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
-------------
Section 1.1 Appointment. The Company hereby appoints
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow.
------ The Company shall from time to
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1, P-1 commercial paper, interest
bearing money market accounts, all as specified in writing by the
Company and held in trust for the benefit of the Purchasers. The
Bank is not responsible for interest, losses, taxes or other
charges on investments. All checks delivered to the Bank for
deposit in the Fund shall be payable to the order of "J&B
Management Company - Escrow Account." Concurrently with such
delivery, the Company shall deliver to the Bank a statement of
the name, mailing address and tax identification number of each
Purchaser whose Subscription Payment is being delivered, and a
schedule listing the aggregate Debentures and aggregate
cumulative Subscription Payments to date delivered for deposit in
the Fund. For the purposes of this Bank Agreement, the Company
is authorized to make deposits and give instructions as to
investments of deposits and otherwise, as contemplated in this
Bank Agreement, to the Bank.
Section 1.3 Interest.
-------- During the period (the "Escrow
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 11% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month (each, an "Interest
Payment Date"). Four Business Days prior to each such Interest
Payment Date, the Bank shall give the Company written notice of
the difference between the amount of interest which will be
payable on Subscription Payments on such Interest Payment Date
and the amount of interest accruing on the Fund's assets which
will be available for such payment on such Interest Payment Date.
Not later than 11:30 a.m. (New York time) on the second Business
Day preceding such Interest Payment Date, the Company shall
deposit with the Bank its check in the amount of such difference.
On each Interest Payment Date, the Bank shall pay interest which
is due and payable to the respective Purchasers by mailing its
check in the appropriate amount to each Purchaser by first class
mail at the Purchaser's mailing address provided to the Bank
pursuant to Section 1.2 hereof. In the event that the Company
shall default in its payment obligations to the Bank under this
Section 1.3, the Bank shall mail its check in the amount of each
Purchaser's pro rata share of interest earned and paid on the
Fund's assets as provided in this Section 1.3. For purposes of
this Bank Agreement, "Business Day" shall mean any day other than
a day on which the Bank is authorized to remain closed in New
York City.
Section 1.4 Conditions of Initial Closing and
---------------------------------
Additional Closings.
------------------- Notwithstanding anything to the contrary in
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes and the Investor Notes that
serve as collateral security for the repayment of the principal
of and interest on such Set Aside Purchase Notes (the "Set Aside
Investor Notes") in such an amount that the sum of 50% of the
principal amount of the Set Aside Purchase Notes plus 90% of the
principal amount of the Set Aside Investor Notes equals the
principal amount of the Debentures which will be sold at that
Initial Closing or Additional Closing, together with the related
Consent and Agreement pertaining to each such Set Aside Purchase
Note and Set Aside Investor Notes and the related Consent,
Assignment and Agreement pertaining to the Purchased Partnership
Interest and the related Consent, Assignment and Agreement
pertaining to the Secured Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date for each such closing.
Section 1.5 Cancellation.
------------ The Company shall give the
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment.
-------- The Bank, at the Initial Closing
and each Additional Closing, upon written instruction from the
Company, shall transfer to the Company or to such third party or
parties as may be directed by the Company the Cleared Funds then
held in the Fund by the Bank. Any interest earned thereon and
not theretofore distributed in accordance with Section 1.3 hereof
shall be paid to the Purchasers in accordance with Section 1.3
hereof.
Section 1.7 Fees and Expenses.
----------------- In addition to the fees
set forth in Section 7.10 hereof, the Bank shall be entitled to
an administration fee as compensation for its services under this
Section 1 in the amount of $5,000 payable (i) upon the execution
and delivery of this Bank Agreement and (ii) subject to an
adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to December 31, 1994, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction, the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the
termination of this Bank Agreement.
Section 1.8 Termination of Offering.
----------------------- If the Offering
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc.
----------------
In compliance with
the Interest and Dividend Tax Compliance Act of 1983, the
Company shall request that each Purchaser furnish to the
Bank such Purchaser's taxpayer identification number and a
statement certified under penalties of perjury that (a) such
taxpayer identification number is true and correct and (b) the
Purchaser is not subject to the requirements of such Act
providing for withholding of 20% of reportable interest,
dividends or other payments.
Section 1.10 Uncollected Funds.
----------------- In the event that any
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds.
------------- For the purpose of this
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
--------- The Debentures shall be executed
on behalf of the Company by the manual or facsimile signature of
a partner or officer of the Company. All such facsimile
signatures shall have the same force and effect as if the partner
or officer had manually signed the Debentures. In case any
partner or officer of the Company whose signature shall appear on
a Debenture shall cease to be such partner or officer before the
delivery of such Debenture or the issuance of a new Debenture
following a transfer or exchange, such signature or such
facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
----------------------
Section 3.1 Appointment.
----------- The Company hereby appoints
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication.
--------------- Only such Debentures as
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
Debentures. ------------------------------------
---------- Subject to applicable law, in the event any Debenture
is mutilated, lost, stolen or destroyed, the Company may
authorize the execution and delivery of a new Debenture of like
date, number, maturity and denomination as that mutilated, lost,
stolen or destroyed, provided, however, that in the case of any
mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
------------------------------
Section 5.1 Appointment.
------------ The Company hereby appoints
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures.
---------- The Debentures are issuable only as registered
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner.
------ The person in whose name any
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent.
-------------- The Bank shall send
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges and Expenses.
-------------------- No service charge
shall be made for any transfer or exchange of Debentures, but in
all cases in which Debentures shall be transferred or exchanged
hereunder, as a condition to any such transfer or exchange, the
owner of the Debenture shall, prior to the delivery of any new
Debenture pursuant to such transfer or exchange, reimburse the
Company and the Bank for their respective actual out-of-pocket
expenses incurred in connection therewith (including, but not
limited to, any tax, fee or other governmental charge required to
be paid with respect to such transfer or exchange, actual
expenses for stationery, postage, telephone, telex, wire
transfers, telecopy and retention of records, and reasonable fees
and expenses of their respective counsel). The provisions of
this Section 5.5 shall survive the termination of this Bank
Agreement.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall be
without premium or penalty, or is required to effect mandatory
redemption of part or all of the Debentures, the Company shall
give written notice thereof to the Bank at least forty (40) days
prior to the date set forth for redemption, the manner in which
redemption shall be effected and all the relevant details
thereof. The Bank shall give written notice to the Purchasers of
that redemption at least thirty (30) days prior to the date set
forth for redemption. The Company shall deliver all redeemed
Debentures to the Bank for cancellation of the whole or portion
thereof, as appropriate, and issuance of new Debentures in
denominations equal to the unredeemed portion. In no event,
however, shall the Bank pay the redeemed amount or issue new
Debentures in denominations equal to the unredeemed portion to a
registered owner if that registered owner has not surrendered its
Debenture to the Company. No interest shall be payable on the
redeemed portion of a Debenture from and after the date of
redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank shall (i)
return to the Company Set Aside Purchase Notes selected by the
Company and the related Set Aside Investor Notes in such an
amount that the sum of 50% of the principal amount of such Set
Aside Purchase Notes plus 90% of the principal amount of such Set
Aside Investor Notes equals the principal amount of the redeemed
portion of the Debentures, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest and the related Secured Partnership Interests (as such
terms are defined in Section 7.3(a) hereof), (iii) file with the
appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements delivered by J&B to the Bank recording
the termination of the Bank's security interest and assignment
granted under this Bank Agreement, and (iv) return to J&B the
Consent and Agreement described in Section 7.2(c) hereof, the
Consent, Assignment and Agreement described in Section 7.3(c)
hereof relating to such returned Set Aside Purchase Notes and the
Purchased Partnership Interest, respectively, the Consent and
Agreement described in Section 7.4(c) hereof and the Consent,
Assignment and Agreement described in Section 7.5(c) hereof
relating to such returned Set Aside Investor Notes and Secured
Partnership Interests, respectively. In no event, however, will
the Bank release Set Aside Purchase Notes and Set Aside Investor
Notes if the sum of 50% of the principal amount of Set Aside
Purchase Notes and plus 90% of the principal amount of the Set
Aside Investor Notes held by the Bank following such release
would be less than the principal amount of the Debentures that
remain outstanding.
Section 6. Paying Agent.
------------
Section 6.1 Appointment.
----------- The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions.
-------------------
The Bank shall pay interest on Subscription Payments and
principal of and interest on the Debentures to the persons in
whose names the Debentures are registered, subject to the
limitations contained in Section 5.6(a) and in accordance with
the terms and provisions of this Bank Agreement and the
Debentures, by check mailed by first class mail to the registered
owner of a Debenture at his address as it appears in the
register; provided that not later than 11:30 a.m. (New York time)
on the second Business Day preceding each Interest Payment Date
or date on which principal of any Debenture is due and payable,
the Company shall provide the Bank with sufficient funds to make
those payments.
Section 6.3 Expenses.
-------- The Company shall reimburse the
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment.
------------
The Company hereby appoints and designates the Bank as Custodian
for the purposes set forth in this Section 7, and the Bank hereby
accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes and
the Investor Notes pledged pursuant to a Purchase Agreement by
the respective Investing Partnerships as collateral security for
their respective Purchase Notes. Under the terms of each such
Purchase Note and Purchase Agreement, J&B is entitled to assign
each Purchase Note and J&B's right to payments of interest
thereon and the principal amount thereof. Under the terms of
each Purchase Agreement, payments of interest due under the
Purchase Note will be offset and reduced by payments made under
the related Investor Notes issued by the limited partners of the
respective Investing Partnership. Interest which is in excess of
the amount offset and reduced by payments made under a Purchase
Note ("Excess Interest") shall be deferred until the maturity of
that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, in an aggregate principal amount of
$11,750,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the interest payments on all of the
Set Aside Purchase Notes shall be payable directly to the Company
until such time as an Event of Default (as defined in Section 7.8
hereof) shall occur and be continuing. The parties hereto
further confirm that any Excess Interest and deferred principal
on a Set Aside Purchase Note paid at the maturity thereof shall
belong to the Company so long as an Event of Default shall not
have occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Notes directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
--------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Purchase Agreement under which the Investing Partnership has
granted a security interest in that Investing Partnership's
limited partnership interest listed in Exhibit A hereto (a
"Purchased Partnership Interest") in a respective Operating
Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Purchase
Agreement listed in Exhibit A hereto, each security interest in a
Purchased Partnership Interest created under any such Purchase
Agreement, each such Purchased Partnership Interest, each
allocation and distribution due and payable or to be made from
time to time on such Purchased Partnership Interest, and the
proceeds thereof. In order to perfect such security interest,
J&B shall deliver to the Bank Financing Statements ("Financing
Statements") for filing by the Bank with the appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments,
pursuant to this Section 7.3(b), of the above-mentioned Purchase
Agreements, security interests, Purchased Partnership Interests,
and due and payable allocations and distributions on Purchased
Partnership Interests to the Bank, all allocations and
distributions on such Purchased Partnership Interests, if any, in
excess of the amounts due and payable by the Investing
Partnership on account of principal and interest on their
respective Purchase Notes shall be payable directly to the
respective Investing Partnership if an event of default shall not
have occurred and be continuing under that Investing
Partnership's Set Aside Purchase Note 7.7(g) and shall be payable
directly to the Bank for the benefit of the Bank and the owners
of the Debentures only if the Bank shall foreclose on the
security interest granted pursuant to this Section 7.3(b)
pursuant to Section 7.7(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank, pursuant to Section 7.3(b) hereof, of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, each allocation and
distribution due and payable or to be made from time to time on
the Purchased Partnership Interest, and the proceeds thereof;
(ii) consent to J&B's delivery of the above-mentioned Financing
Statements and the Bank's filing of the Financing Statements from
time to time with the appropriate governmental authorities; (iii)
assign to the Bank all allocations and distributions which may be
due and payable or made from time to time on the Purchased
Partnership Interest (subject to the terms and conditions set
forth in this Bank Agreement) until all outstanding obligations
under the Set Aside Purchase Note which is in default shall have
been paid in full (including, without limitation, all costs of
collection, reasonable attorney fees and other fees and
expenses); and (iv) agree that upon foreclosure of the security
interest granted pursuant to Section 7.3(b) hereof, pursuant to
Section 7.7(e) hereof, all allocations and distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations in clause (iii) above. Upon receipt of each such
Consent, Assignment and Agreement, the Bank shall execute and
deliver to the Company a receipt therefor.
Section 7.4 Set Aside Investor Notes.
------------------------
(a) Each Investing Partnership listed on Exhibit A
hereto is the payee of Investor Notes made by its respective
limited partners as partial consideration for their limited
partnership interests. Each Investor Note is a full recourse
non-interest bearing promissory note payable in one lump sum on
its maturity date. After the maturity of an Investor Note any
unpaid past-due principal will be subject to interest at the
default rate and for the period of time specified in the
defaulted Investor Note ("Investor Default Interest"). Under the
terms of their respective Purchase Agreements, each Investing
Partnership has pledged its Investor Notes to J&B as collateral
security for the Investing Partnership's obligations under its
respective Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Investor Notes, having an aggregate face value of $4,418,500
listed on Exhibit D hereto, and maturity dates as set forth on
Exhibit D hereto (the "Set Aside Investor Notes"), pledged to J&B
by the Investing Partnerships listed in Exhibit A hereto, and the
proceeds thereof. Upon receipt of each Set Aside Investor Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Investor Notes to the Bank, the lump sum payments of principal on
all Set Aside Investor Notes and Investor Default Interest, if
any, shall be payable directly to the Company until such time as
an Event of Default shall occur and be continuing. The parties
hereto hereby confirm that the principal payable at maturity on
each Set Aside Investor Note and Investor Default Interest, if
any, listed on Exhibit D hereto will belong to the Company until
such time as an Event of Default shall occur and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank pursuant to Section 7.4(b) hereof of the Set Aside
Investor Notes payable to such Investing Partnership, (ii)
consent to J&B's delivery to the Bank of the Investor Notes, and
(iii) agree that upon receiving the Bank's notice of an Event of
Default that is continuing, the Investing Partnership shall
notify the makers of the Set Aside Investor Notes that all
payments thereunder shall be made directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.5 Secured Partnership Interests.
------------------------------
(a) Each maker of a Set Aside Investor Note
("Investor") has pledged, pursuant to the terms of the
subscription agreement between the Investing Partnership listed
on Exhibit A hereto and such Investor ("Investor Subscription
Agreement"), its limited partnership interest in the Investing
Partnership (the "Secured Partnership Interest"), as collateral
security for its obligation to pay the principal amount of the
Set Aside Investor Note at maturity. Each Investing Partnership
listed on Exhibit A hereto, has, pursuant to its Purchase
Agreement, pledged and granted to J&B a security interest in all
of its right, title and interest in the Secured Partnership
Interests, as collateral security for its obligations under its
Purchase Note listed on Exhibit A hereto.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each security
interest in a Secured Partnership Interest created under the
Purchase Agreements listed in Exhibit A hereto, each allocation
and distribution due and payable or to be made from time to time
on such Secured Partnership Interests, and the proceeds thereof.
In order to perfect such security interest, J&B shall deliver to
the Bank Financing Statements for filing by the Bank with the
appropriate governmental authorities indicated by J&B to the
Bank, and hereby agrees to deliver to the Bank from time to time
such additional Financing Statements as must be filed with such
appropriate governmental authorities in order to continue the
perfection of such security interest. Notwithstanding the
assignments, pursuant to this Section 7.5(b), of the
above-mentioned security interests, Secured Partnership Interests
and due and payable allocations and distributions on Secured
Partnership Interests to the Bank, all allocations and
distributions on such Secured Partnership Interests shall be
payable directly to: (i) the Investor which owns the Secured
Partnership Interest, if an event of default shall not have
occurred under such Investor's Investor Notes and/or Investor
Subscription Agreement (an "Investor Default"); (ii) the
Investing Partnership, if an Investor Default shall have occurred
and no event of default shall have occurred and be continuing
under the Investing Partnership's Purchase Agreement; and (iii)
the Bank for payment to the Company, if the Bank shall foreclose
on its security interest pursuant to Section 7.7(g) hereof and to
the Bank for the benefit of the Bank and the owners of the
Debentures from time to time only if the Bank shall foreclose on
the security interest granted pursuant to this Section 7.5(b)
pursuant to Section 7.7(f) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership listed in Exhibit A
hereto, under which the Investing Partnership shall (i) consent
to J&B's assignment to the Bank pursuant to Section 7.5(b) hereof
of the security interest in the Secured Partnership Interests,
each allocation and distribution due and payable or made from
time to time on the Secured Partnership Interests, and the
proceeds thereof; (ii) consent to J&B's delivery of the above
mentioned Financing Statements and the Bank's filing of the
Financing Statements from time to time with the appropriate
governmental authorities; (iii) assign to the Bank all
allocations and distributions which may be due and payable or
made from time to time on the Secured Partnership Interests
(subject to the terms and conditions set forth in this Bank
Agreement) until all outstanding obligations under any Set Aside
Investor Notes which are in default shall have been paid in full
(including, without limitation, all costs of collection,
reasonable attorney fees and other fees and expenses); and (iv)
agree that upon foreclosure of the security interests granted
pursuant to Section 7.5(b) hereof, pursuant to Section 7.7(f)
hereof, all allocations and distributions on the Secured
Partnership Interests shall be paid directly to the Bank, as the
assignee of J&B (subject to the terms and conditions set forth in
this Bank Agreement), regardless of whether the Bank becomes a
substitute limited partner in the Investing Partnership in place
of the defaulting Investor. Upon receipt of each Consent,
Assignment and Agreement, the Bank shall execute and deliver to
the Company a receipt therefor.
Section 7.6 Attachment of Security Interests.
---------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note,
the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the related Set Aside Investor Notes, and the related
Consent and Agreement and Financing Statements pertaining to such
Set Aside Investor Notes, and the related Consent, Assignment and
Agreement and related Financing Statements pertaining to the
Secured Partnership Interests. J&B shall be obligated to deliver
to the Bank only those Set Aside Purchase Notes selected by J&B,
in its sole discretion, and the related Set Aside Investor Notes
in such an amount that the sum of 50% of the principal amount of
the Set Aside Purchase Notes plus 90% of the principal amount of
the related Set Aside Investor Notes equals the principal amount
of the Debentures which will be sold at the respective Initial
Closing or Additional Closing, together with the Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, the Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the Consent and Agreement and Financing Statements
pertaining to such Set Aside Investor Notes, and the Consent,
Assignment and Agreement and Financing Statements pertaining to
the Secured Partnership Interests.
Section 7.7 Duties of the Bank.
-------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes and the related Set Aside Investor Notes deposited with it
pursuant to Section 7.2(b) and Section 7.4(b) hereof, and shall
file with the appropriate governmental authorities indicated by
J&B to the Bank Financing Statements delivered by J&B to the Bank
recording the termination of the Bank's security interests and
assignments granted under this Bank Agreement and each Consent,
Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures plus all
accrued interest due and immediately payable. In addition, the
Bank shall immediately notify each Investing Partnership in
writing of the occurrence of such Event of Default. Upon receipt
of such notice, each Investing Partnership shall (i) make all
payments of principal and interest on its respective Set Aside
Purchase Note to the Bank and (ii) notify each Investor, in
writing, that all payments on its Set Aside Investor Notes shall
be made directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests, Set Aside Investor Notes
or Secured Partnership Interests. In the event that the Company
shall default on its payment obligations to the Bank under this
Bank Agreement, the Bank shall be entitled to institute action
against the Company, jointly or severally, to collect payment
under this Bank Agreement, without any prior requirement to
attempt to collect any funds under the Set Aside Purchase Notes
or the related Purchased Partnership Interests, Set Aside
Investor Notes or Secured Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate (i) the Set Aside Purchase Notes and the
Purchased Partnership Interests (if the Bank shall have
foreclosed on such Set Aside Purchase Note pursuant to Section
7.7(e) hereof) or (ii) the Set Aside Investor Notes and Secured
Partnership Interests (if an Investor Default shall have occurred
and the Bank shall have foreclosed on such Set Aside Investor
Note pursuant to Section 7.7(f) hereof) including, in each case,
but not limited to, the public or private sale of all or any part
thereof upon three (3) days' prior notice to the Company, free
and clear of any claim, lien, charge or encumbrance including,
without limitation, any right of equity of redemption. The Bank
shall apply the proceeds of any such sale firstly to the payment
of the expenses of the sale, secondly to the payment of the
Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to the Company or its affiliates
because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
security interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to the limitations set forth
in Section 7.3(c)(iii) hereof, and to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all allocations
and distributions from that Operating Partnership as the assignee
of J&B and this Bank Agreement shall operate as an assignment of
such allocations and distributions by the Investing Partnership
subject to the limitations set forth in Section 7.3(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
there shall occur or if there shall have occurred and be
continuing an event of default under any Set Aside Purchase Note
or under any Partnership Agreement governing the Operating
Partnership related to the Purchased Partnership Interest, the
Bank shall be authorized to exercise any and all rights and
remedies available to it as the holder of the respective Set
Aside Purchase Note, the substituted partner or assignee with
respect to the Purchased Partnership Interest in the related
Operating Partnership, as well as any other remedy available
under law or equity. The Bank shall apply the proceeds of its
exercise of the above-mentioned rights and remedies firstly to
the payment of all costs of collection, secondly to the payment
of the Bank's fees and expenses, thirdly to the payment of all
accrued interest (including, without limitation, interest accrued
after the date of the Event of Default) and next to repayment of
principal of the Debentures, until all amounts due under the
Debentures shall have been paid in full together with all costs
of collection, fees and expenses.
(f) While an Event of Default is continuing, if an
Investor Default shall occur and be continuing, the Bank shall
immediately send written notice of that Investor Default to the
defaulting Investor and to the general partner of the Investing
Partnership. If the Investor Default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Investor Note, the Bank shall immediately foreclose on the
security interest in the related Secured Partnership Interest by
notifying the defaulting Investor and general partner of the
related Investing Partnership of the foreclosure. The Bank shall
send a notice to the Investing Partnership, which shall deliver a
copy of such notice to the defaulting Investor, stating that it
is retaining the Secured Partnership Interest in discharge of the
defaulted Set Aside Investor Note pursuant to Section 9-505 of
the Uniform Commercial Code and shall request admission as a
substituted limited partner in place of the defaulting Investor
in that Investing Partnership, subject to the limitations set
forth in Section 7.5(c)(iii) hereof. If the Bank may not be
admitted as a substituted limited partner in the Investing
Partnership for any reason, the Bank shall nevertheless be
entitled to receive all allocations and distributions from the
Investing Partnership in respect of such Secured Partnership
Interest as the assignee of such Secured Partnership Interest,
and this Bank Agreement shall operate as an assignment of such
allocations and distributions by the Investing Partnership,
subject to the limitations set forth in Section 7.5(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
an Investor Default shall occur or shall have occurred and be
continuing or an event of default under any Partnership Agreement
governing the Investing Partnership related to the Secured
Partnership Interest shall occur or shall have occurred and be
continuing, the Bank shall be authorized to exercise any and all
rights and remedies available to it as the holder of the
respective Set Aside Investor Note, the substituted limited
partner or assignee with respect to the Secured Partnership
Interest in the related Investing Partnership, as well as any
other remedy available under law or equity. The Bank shall apply
the proceeds of its exercise of the above-mentioned rights and
remedies firstly to the payment of all costs of collection,
secondly to the payment of the Bank's fees and expenses, thirdly
to the payment of all accrued interest (including, without
limitation, interest accrued after the date of the Event of
Default) and next to the repayment of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(g) If an Investor Default shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank and the defaulting Investor notice thereof. If that
event of default is continuing after the expiration of the grace
period, if any, contained in the Set Aside Investor Note in
respect of which the Investor Default occurred, if the Company
shall not effect a substitution pursuant to Section 7.11(e)
hereof, the Bank shall immediately foreclose on the security
interest in the related Secured Partnership Interest by notifying
the general partner of the related Investing Partnership of such
foreclosure. The Bank shall send a notice to the Investing
Partnership, which shall deliver a copy of such notice to the
defaulting Investor, stating that it is retaining the Secured
Partnership Interest in discharge of the defaulted Set Aside
Investor-Note pursuant to Section 9-505 of the Uniform Commercial
Code and shall request admission as a substituted limited partner
in the Investing Partnership in place of the defaulting Investor,
subject to the limitations in Section 7.5(c)(iii) hereof. If the
Bank may not be admitted as a substituted limited partner in the
Investing Partnership for any reason, the Bank shall be entitled
nevertheless to receive all allocations and distributions from
that Investing Partnership as the assignee of the Secured
Partnership Interest and this Bank Agreement shall operate as an
assignment of such allocations and distributions by the Investing
Partnership, subject to the limitations in Section 7.5(c)(iii)
hereof. The Bank shall pay over to the Company any amounts
received from the Investing Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the proceedings specified in this Section 7.7.
(h) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note, Purchased Partnership
Interest, Set Aside Investor Note, or Secured Partnership
Interest to amounts owing to the Bank or the owners of the
Debentures under this Bank Agreement unless an Event of Default
shall occur and be continuing. The Bank shall be entitled to
exercise one or more remedies at the same time, all such rights
and remedies being cumulative and not mutually exclusive.
(i) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note, or
Secured Partnership Interest collected by the Bank including, but
not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.7(i) shall survive the termination of this Bank Agreement.
Section 7.8 Events of Default.
-------------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.9 Sale of Set Aside Purchase Notes and
------------------------------------
Related Set Aside Investor Notes.
--------------------------------
The Company may from time to time while no Event
of Default shall have occurred and be continuing arrange the
sale of one of more Set Aside Purchase Notes and all of the
related Set Aside Investor Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) The Bank shall receive cash in the amount
equal to (x) the sum of 50% of the principal balance
due at maturity of the Set Aside Purchase Note being
sold plus 90% of the principal amount of the related
Set Aside Investor Notes being sold and (y) an amount
sufficient to pay accrued interest on the pro rata
portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iii) Notwithstanding the above, in no event may
a Set Aside Purchase Note be sold apart from all of the
related Set Aside Investor Notes and no Set Aside
Investor Note may be sold apart from the related Set
Aside Purchase Note.
(iv) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note and related Set Aside Investor Notes that
are then sold to J&B, or at the written request of J&B,
to the purchaser, together with an assignment of
security interest and Purchase Agreement covering the
related Purchased Partnership Interest and Secured
Partnership Interests. Subject to Section 8(b) hereof
the Bank shall have no liability whatsoever to the
purchaser or any party hereto for its actions pursuant
to this Section 7.9.
Section 7.10 Fees and Expenses.
------------------- In addition to the
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $ 1,000,000 outstanding . . . . . . . $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding . . . . . . . $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding . . . . . . . $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding . . . . . . . $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding . . . . . . . $ 6,000
$ 5,000,001 to $ 6,000,000 outstanding . . . . . . . $ 7,000
$ 6,000,001 to $ 7,000,000 outstanding . . . . . . . $ 8,000
$ 7,000,001 to $ 8,000,000 outstanding . . . . . . . $ 9,000
$ 8,000,001 to $ 9,000,000 outstanding . . . . . . . $10,000
$ 9,000,001 to $ 9,850,000 outstanding . . . . . . . $11,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.10 only when an
Event of Default has occurred and is continuing. The provisions
of this Section 7.10 shall survive the termination of this Bank
Agreement.
Section 7.11 Substitution of Set Aside Purchase Notes
----------------------------------------
and Set Aside Investor Notes.
------------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes together with all of the
related Set Aside Investor Notes (a withdrawn Set Aside Purchase
Note shall be defined for the purposes herein as the "Withdrawn
Set Aside Purchase Note" and the withdrawn related Set Aside
Investor Notes shall be defined for the purposes herein as the
"Withdrawn Set Aside Investor Notes") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") and
replace the Withdrawn Set Aside Investor Notes with Investor
Notes payable to the maker of the New Set Aside Purchase Note
(any such Investor Notes shall be defined for the purposes herein
as the "New Set Aside Investor Notes") so long as (i) no Event of
Default has occurred and is continuing and (ii) the sum of (x)
50% of the aggregate principal amount of the Set Aside Purchase
Notes held by the Bank after the Withdrawn Set Aside Purchase
Note is withdrawn and the New Set Aside Purchase Notes are
deposited plus (y) 90% of the aggregate principal balance of the
Set Aside Investor Notes held by the Bank after the Withdrawn Set
Aside Notes are withdrawn and the New Set Aside Investor Notes
are deposited is equal to the principal amount of the Debentures
that remain outstanding.
(b) The Company may only substitute a New Set Aside
Purchase Note for a Withdrawn Set Aside Purchase Note if (i) it
simultaneously substitutes the New Set Aside Investor Notes for
the withdrawn Set Aside Investor Notes and (ii) the New Set Aside
Investor Notes are payable to the Investing Partnership that is
the maker of the New Set Aside Purchase Notes.
(c) In order to effect the substitution described in
Section 7.11(a) hereof, the Company shall deliver to the Bank (i)
the New Set Aside Purchase Note along with the Consent and
Agreement as described in Section 7.2(c) hereof, the Financing
Statements pertaining to the New Set Aside Purchase Note, the
Consent, Assignment and Agreement as described in Section 7.3(c)
hereof, and the related Financing Statements pertaining to the
Purchased Partnership Interest that secures such New Set Aside
Purchase Note and (ii) the New Set Aside Investor Notes along
with the Consent and Agreement as described in Section 7.4(c)
hereof, the Financing Statements pertaining to the New Set Aside
Investor Notes, the Consent, Assignment and Agreement as
described in Section 7.5(c) hereof, and the related Financing
Statements pertaining to the Secured Partnership Interests that
secure such New Set Aside Investor Notes. Upon receiving the New
Set Aside Purchase Note, the New Set Aside Investor Notes and the
related documents described in the preceding sentence, the
security interest and assignment created by this Bank Agreement,
each Consent, Assignment and Agreement described in Section
7.2(c) hereof and Section 7.4(c) hereof each as relates to the
Withdrawn Set Aside Purchase Note, each Consent, Assignment and
Agreement described in Section 7.3(c) hereof and Section 7.5(c)
hereof each as relates to the Withdrawn Set Aside Investor Notes,
shall automatically terminate and shall have no further force or
effect. There upon, the Bank shall (i) return the Withdrawn Set
Aside Purchase Note and Withdrawn Set Aside Investor Notes to the
Company, (ii) execute and deliver to the Company an instrument
prepared by J&B effecting a release by the Bank of the existing
assignment of the security interest and Purchase Agreement
covering the related Purchased Partnership Interest and the
Secured Partnership Interests, (iii) file with the appropriate
governmental authorities indicated by J&B to the Bank, Financing
Statements delivered by J&B to the Bank recording the termination
of the Bank's security interest and assignment granted under this
Bank Agreement, and (iv) return to J&B the Consent and Agreement
described in Section 7.2(c) hereof and the Consent, Assignment
and Agreement described in Section 7.3(c) hereof, each as relates
to such Withdrawn Set Aside Purchase Note, and return to J&B the
Consent and Agreement described in Section 7.4(c) hereof and the
Consent, Assignment and Agreement described in Section 7.5(c)
hereof, each as relates to the Withdrawn Set Aside Investor
Notes. The Company will notify the Debenture holders of the
substitution of the Withdrawn Set Aside Purchase Note and
Withdrawn Set Aside Investor Notes with the New Set Aside
Purchase Note and New Set Aside Investor Notes, respectively,
within sixty (60) days thereof and provide those Debenture
holders with the information pertaining to the New Set Aside
Purchase Note and New Set Aside Investor Notes that would have
been contained in the Memorandum if the New Set Aside Purchase
Note and New Set Aside Investor Notes had been included with the
Set Aside Purchase Notes and Set Aside Investor Notes described
therein.
(d) After the substitution of the New Set Aside
Purchase Note and the New Set Aside Investor Notes for the
Withdrawn Set Aside Purchase Note and Withdrawn Set Aside
Investor Notes, respectively, the New Set Aside Purchase Note
shall be deemed to be a Set Aside Purchase Note and the New Set
Aside Investor Notes shall be deemed to be Set Aside Investor
Notes, in each case, for all purposes as set forth in this Bank
Agreement.
(e) Anything in this Bank Agreement to the contrary
notwithstanding, so long as no Event of Default shall occur and
be continuing and so long as the provisions of Section 7.11
hereof are complied with, upon the occurrence of an Investor
Default, J&B shall have the right, within 90 days of the
occurrence of such Investor Default, to arrange for the sale of
the Secured Partnership Interest of the defaulting Investor to a
new Investor and to substitute Investor Notes ("Substitute
Investor Notes"), of the new Investor (which shall be in like
principal amount and maturity as the defaulted Investor Notes and
be payable to the same Investing Partnership as the defaulted
Investor Notes for the Investor Notes) of the defaulting
Investor. Upon such substitution the Bank shall return the
defaulted Investor Notes to the Company and the Substitute
Investor Notes shall be Set Aside Investor Notes for all purposes
hereunder.
Section 7.12 Delivery of Set Aside Purchase Notes and
----------------------------------------
Set Aside Investor Notes.
-------------------------- The Company shall deliver the Set
Aside Purchase Notes and the related Set Aside Investor Notes
together with the Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c), and the Consent and
Agreement required by Section 7.2(c) hereof and Section 7.4(c)
hereof, and the related Financing Statements as follows:
(a) Original Set Aside Purchase Notes and related
original Set Aside Investor Notes shall be
delivered to:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Mr. Vincent Nardone,
A.V.P., Security Operation
Free Receive Area, 5th Floor.
No less than ten days prior to the delivery by the
Company to the Bank of the first Set Aside
Purchase Note, the Company shall deliver a
schedule in duplicate form of all Set Aside
Purchase Notes and Set Aside Investor Notes to the
Bank at the address set forth in Section 12
hereof.
(b) Copies of each Set Aside Purchase Note and related
Set Aside Investor Notes together with the
Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c) hereof,
and the Consent and Agreement required by Section
7.2(c) hereof and Section 7.4(c) hereof, and the
related Financing Statements shall be delivered by
the Company to the Bank for execution at the
address set forth in Section 12 hereof and
promptly returned to Company's counsel at the
address as set forth in Section 12 hereof.
Section 8. Other Rights and Duties of Bank.
--------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
18(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or remains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations.
------------------ The Bank makes no
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note or
Secured Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification.
---------------- The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
--------------------
(a) A resignation or removal of the Bank and
appointment of a successor Bank shall become effective only upon
the successor Bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any reason
the Company shall promptly appoint a successor Bank.
(ii) If a successor Bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor Bank.
(iii) A successor Bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor Bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor Bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it as Bank to the successor Bank.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Bank.
Section 12. Notices.
-------- All notices and other
communications pursuant to this Bank Agreement shall be in
writing and shall be delivered by hand or sent by registered,
certified, return receipt requested, or first class mail, or by
facsimile, confirmed by writing, delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law.
--------------- This Bank Agreement shall
be governed by the laws of the state of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment.
--------------------------- This Bank
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire Agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior Agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors.
----------- This Bank Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability.
--------------- Any provision of this
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts.
------------ This Bank Agreement may be
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
[INTENTIONALLY LEFT BLANK]
Section 18. Definitions.
--------------
All terms used in this Bank Agreement and not otherwise
defined herein shall have the meanings ascribed to them in the
Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s/ John Luciani By: /s/ Harley Jeanty
---------------------- ------------------------------
Title: GENERAL PARTNER Title: ASSISTANT VICE PRESIDENT
LEISURE CENTERS, INC.
By: /s/ John Luciani
--------------------------
Title: PRESIDENT
J&B MANAGEMENT CORP.
By: /s/ John Luciani
---------------------------
Title: PRESIDENT
SULGRAVE REALTY CORPORATION
By: /s/ John Luciani
--------------------------
Title: PRESIDENT
WILMART DEVELOPMENT CORP.
By: /s/ John Luciani
------------------------------
Title: PRESIDENT
Exhibit 10.5(i)
FIRST AMENDMENT TO BANK AGREEMENT
(SERIES 7)
THIS FIRST AMENDMENT TO BANK AGREEMENT (the "First
Amendment"), dated as of November 29, 1993, is by and among J&B
Management Company, a New Jersey general partnership ("J&B"), and
its affiliates; Leisure Centers, Inc., a corporation organized
and existing under the laws of the State of Delaware, J&B
Management Corp., Sulgrave Realty Corporation, and Wilmart
Development Corp., each of which is a corporation organized and
existing under the laws of the State of New Jersey (hereinafter
J&B, Leisure Centers, Inc., J&B Management Corp., Sulgrave Realty
Corporation and Wilmart Development Corp. are sometimes referred
to collectively as the "Company" or the "Co-Obligors"), and The
Bank of New York (the "Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Bank have heretofore
entered into that certain Bank Agreement dated as of October 27,
1993 (Capitalized terms used herein but not defined herein shall
have the meanings ascribed thereto in the Bank Agreement); and
WHEREAS, the Company and the Bank desire to amend the
Bank Agreement to provide that the Bank may transfer Cleared
Funds from the Fund to the Company or other third parties upon
the written instructions of only Mr. John Luciani or
Mr. Bernard M. Rodin;
NOW, THEREFORE, the Bank and the Company agree to amend
the Bank Agreement as follows:
1. Section 1.6 of the Bank Agreement is hereby
deleted in its entirety and replaced to read in its entirety as
follows:
Section 1.6. Payment
-------
(a) The Bank, at the Initial Closing and each
Additional Closing, upon receipt of written instructions from
either Mr. John Luciani or Mr. Bernard M. Rodin, shall transfer
to the Company or to such third party or parties as may be
directed by Mr. Luciani or Mr. Rodin the Cleared Funds then held
in the Fund by the Bank. Any interest thereon and not
theretofore distributed in accordance with Section 1.3 shall be
paid to the Purchasers in accordance with Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) of this
Section 1.6 from any one other than Mr. Luciani or Mr. Rodin,
regardless of whether that person is an employee, agent or
representative of any Co-Obligor, those instructions are to be
deemed to be invalid and contrary to the intent of this Bank
Agreement.
2. Except as herein specifically amended, all of the
terms, covenants, provisions and conditions of the Bank Agreement
shall continue to remain in full force and effect.
3. This First Amendment may be executed in any number
of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment as of the date first above written.
J&B MANAGEMENT COMPANY SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin By: /s/ Bernard M. Rodin
-------------------------- -------------------------
Title: Vice President Title: Vice President
LEISURE CENTERS, INC. WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin By: /s/ Bernard M. Rodin
-------------------------- --------------------------
Title: Vice President Title: Vice President
J&B MANAGEMENT CORP. THE BANK OF NEW YORK
By: /s/ Bernard M. Rodin By: /s/ Harley Jeanty
------------------------- --------------------------
Title: Vice President Title: Assistant Vice
President
Exhibit 10.5(j)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of November 29, 1993 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 8, 11%
Debentures due January 15, 2002 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum dated
November 30, 1993, as the same may be from time to time amended
(the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii)
December 31, 1994 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 11%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Company Series 8
Escrow Fund Account (the "Fund") with the Bank;
WHEREAS, the Company, for the benefit of the Bank and
the Purchasers, wishes to assign to, and to grant the Bank a
security interest in, certain notes, instruments and documents as
more fully described below and the Bank is willing to accept such
security interest and assignment upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Custodian, Paying Agent,
Registrar and Transfer Agent with respect to the Debentures and
the above-mentioned notes, instruments and documents and the Bank
is willing to accept such appointments upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
-------------
Section 1.1 Appointment.
-----------
The Company hereby appoints and designates the Bank as Escrow
Agent for the purposes set forth in this Section 1, and the Bank
hereby accepts such appointment.
Section 1.2 Escrow.
------
The Company shall from time to time deliver amounts received from
Purchasers in payment for the Debentures ("Subscription
Payments") to the Bank. The Bank shall deposit the Subscription
Payments in the Fund to be established in the Company's name for
this purpose by the Bank. Subscription Payments delivered for
deposit in the Fund shall be invested in short term certificates
of deposit (including certificates of deposit issued by the
Bank), A-1, P-1 commercial paper, interest bearing money market
accounts, all as specified in writing by the Company and held in
trust for the benefit of the Purchasers. The Bank is not
responsible for interest, losses, taxes or other charges on
investments. All checks delivered to the Bank for deposit in the
Fund shall be payable to the order of "J&B Management Company -
Escrow Account." Concurrently with such delivery, the Company
shall deliver to the Bank a statement of the name, mailing
address and tax identification number of each Purchaser whose
Subscription Payment is being delivered, and a schedule listing
the aggregate Debentures and aggregate cumulative Subscription
Payments to date delivered for deposit in the Fund. For the
purposes of this Bank Agreement, the Company is authorized to
make deposits and give instructions as to investments of deposits
and otherwise, as contemplated in this Bank Agreement, to the
Bank.
Section 1.3 Interest.
--------
During the period (the "Escrow Period") commencing upon the date
that any Purchaser's Subscription Payment constitutes Cleared
Funds (as defined in Section 1.11 hereof) and ending on the day
immediately preceding the Closing Date with respect to that
Purchaser's Debentures, interest will accrue on that Purchaser's
Subscription Payment at a rate of 11% per annum, computed on the
basis of a year of 360 days consisting of 12 thirty day months.
Interest shall be payable on the fifteenth day of each month
(each, an "Interest Payment Date"). Four Business Days prior to
each such Interest Payment Date, the Bank shall give the Company
written notice of the difference between the amount of interest
which will be payable on Subscription Payments on such Interest
Payment Date and the amount of interest accruing on the Fund's
assets which will be available for such payment on such Interest
Payment Date. Not later than 11:30 a.m. (New York time) on the
second Business Day preceding such Interest Payment Date, the
Company shall deposit with the Bank its check in the amount of
such difference. On each Interest Payment Date, the Bank shall
pay interest which is due and payable to the respective
Purchasers by mailing its check in the appropriate amount to each
Purchaser by first class mail at the Purchaser's mailing address
provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations
to the Bank under this Section 1.3, the Bank shall mail its check
in the amount of each Purchaser's pro rata share of interest
earned and paid on the Fund's assets as provided in this
Section 1.3. For purposes of this Bank Agreement, "Business Day"
shall mean any day other than a day on which the Bank is
authorized to remain closed in New York City.
Section 1.4 Conditions of Initial Closing and
----------------------------------
Additional Closing.
------------------- Notwithstanding anything to the contrary in
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes and the Investor Notes that
serve as collateral security for the repayment of the principal
of and interest on such Set Aside Purchase Notes (the "Set Aside
Investor Notes") in such an amount that the sum of 80% of the
principal amount of the Set Aside Purchase Notes plus 80% of the
principal amount of the Set Aside Investor Notes equals the
principal amount of the Debentures which will be sold at that
Initial Closing or Additional Closing, together with the related
Consent and Agreement pertaining to each such Set Aside Purchase
Note and Set Aside Investor Notes and the related Consent,
Assignment and Agreement pertaining to the Purchased Partnership
Interest and the related Consent, Assignment and Agreement
pertaining to the Secured Partnership Interest and the related
Financing Statements (as such terms are defined in Section 7
hereof), as provided in Section 7 hereof. Upon the scheduling of
the Initial Closing and each Additional Closing, the Company
shall give written notice thereof to the Bank not less than one
(1) Business Day prior to the date scheduled for each such
closing.
Section 1.5 Cancellation.
------------ The Company shall give the
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment.
------- (a) The Bank, at the Initial
Closing and each Additional Closing, upon written instruction
from either Mr. John Luciani and Mr. Bernard M. Rodin, as the
sole partners or sole officers and directors of the Company,
shall transfer to the Company or to such third party or parties
as may be directed by Mr. Luciani or Mr. Rodin the Cleared Funds
then held in the Fund by the Bank. Any interest earned thereon
and not theretofore distributed in accordance with Section 1.3
hereof shall be paid to the Purchasers in accordance with
Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) above from any
one other than Mr. Luciani or Mr. Rodin, regardless of whether
that person is an employee, agent or representative of the
Company, those instructions are to be deemed to be invalid and
contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses.
----------------- In addition to the fees
set forth in Section 7.10 hereof, the Bank shall be entitled to
an administration fee as compensation for its services under this
Section 1 in the amount of $5,000 payable (i) upon the execution
and delivery of this Bank Agreement and (ii) subject to an
adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to December 31, 1994, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between
(a) $5,000 and (b) the product of (x) $5,000 and (y) a fraction,
the numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the
termination of this Bank Agreement.
Section 1.8 Termination of Offering.
----------------------- If the Offering
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc.
--------------- In compliance with the
Interest and Dividend Tax Compliance Act of 1983, the Company
shall request that each Purchaser furnish to the Bank such
Purchaser's taxpayer identification number and a statement
certified under penalties of perjury that (a) such taxpayer
identification number is true and correct and (b) the Purchaser
is not subject to the requirements of such Act providing for
withholding of 20% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds.
------------------ In the event that
any funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds.
------------- For the purpose of this
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
---------- The Debentures shall be
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
-----------------------
Section 3.1 Appointment.
------------
The Company hereby appoints and designates the Bank as
Authenticating Agent for the purposes set forth in this
Section 3, and the Bank hereby accepts such appointment.
Section 3.2 Authentication.
-------------- Only such Debentures as
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
-------------------------------------
Debentures.
----------- Subject to applicable law, in the event any
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment.
------------ The Company hereby appoints
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures.
----------- The Debentures are issuable only as registered
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner.
----- The person in whose name any
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent.
--------------- The Bank shall send
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges and Expenses.
--------------------- No service charge
shall be made for any transfer or exchange of Debentures, but in
all cases in which Debentures shall be transferred or exchanged
hereunder, as a condition to any such transfer or exchange, the
owner of the Debenture shall, prior to the delivery of any new
Debenture pursuant to such transfer or exchange, reimburse the
Company and the Bank for their respective actual out-of-pocket
expenses incurred in connection therewith (including, but not
limited to, any tax, fee or other governmental charge required to
be paid with respect to such transfer or exchange, actual
expenses for stationery, postage, telephone, telex, wire
transfers, telecopy and retention of records, and reasonable fees
and expenses of their respective counsel). The provisions of
this Section 5.5 shall survive the termination of this Bank
Agreement.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall
be without premium or penalty, or is required to effect
mandatory redemption of part or all of the Debentures, the
Company shall give written notice thereof to the Bank at least
forty (40) days prior to the date set forth for redemption, the
manner in which redemption shall be effected and all the relevant
details thereof. The Bank shall give written notice to the
Purchasers of that redemption at least thirty (30) days prior to
the date set forth for redemption. The Company shall deliver all
redeemed Debentures to the Bank for cancellation of the whole or
portion thereof, as appropriate, and issuance of new Debentures
in denominations equal to the unredeemed portion. In no event,
however, shall the Bank pay the redeemed amount or issue new
Debentures in denominations equal to the unredeemed portion to a
registered owner if that registered owner has not surrendered its
Debenture to the Company. No interest shall be payable on the
redeemed portion of a Debenture from and after the date of
redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank shall (i)
return to the Company Set Aside Purchase Notes selected by the
Company and the related Set Aside Investor Notes in such an
amount that the sum of 80% of the principal amount of such Set
Aside Purchase Notes plus 80% of the principal amount of such Set
Aside Investor Notes equals the principal amount of the redeemed
portion of the Debentures, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest and the related Secured Partnership Interests (as such
terms are defined in Section 7.3(a) hereof), (iii) file with the
appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements delivered by J&B to the Bank recording
the termination of the Bank's security interest and assignment
granted under this Bank Agreement, and (iv) return to J&B the
Consent and Agreement described in Section 7.2(c) hereof, the
Consent, Assignment and Agreement described in Section 7.3(c)
hereof relating to such returned Set Aside Purchase Notes and the
Purchased Partnership Interest, respectively, the Consent and
Agreement described in Section 7.4(c) hereof and the Consent,
Assignment and Agreement described in Section 7.5(c) hereof
relating to such returned Set Aside Investor Notes and Secured
Partnership Interests, respectively. In no event, however, will
the Bank release Set Aside Purchase Notes and Set Aside Investor
Notes if the sum of 80% of the principal amount of Set Aside
Purchase Notes and plus 80% of the principal amount of the Set
Aside Investor Notes held by the Bank following such release
would be less than the principal amount of the Debentures that
remain outstanding.
Section 6. Paying Agent.
-------------
Section 6.1 Appointment.
----------- The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions.
------------------ The Bank shall pay
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in
Section 5.6(a) and in accordance with the terms and provisions of
this Bank Agreement and the Debentures, by check mailed by first
class mail to the registered owner of a Debenture at his address
as it appears in the register; provided that not later than 11:30
a.m. (New York time) on the second Business Day preceding each
Interest Payment Date or date on which principal of any Debenture
is due and payable, the Company shall provide the Bank with
sufficient funds to make those payments.
Section 6.3 Expenses.
--------- The Company shall reimburse the
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment.
----------- The Company hereby appoints
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
-------------------------
(a) J&B is the holder of certain Purchase Notes and the
Investor Notes pledged pursuant to a Purchase Agreement by the
respective Investing Partnerships as collateral security for
their respective Purchase Notes. Under the terms of each such
Purchase Note and Purchase Agreement, J&B is entitled to assign
each Purchase Note and J&B's right to payments of interest
thereon and the principal amount thereof. Under the terms of
each Purchase Agreement, payments of interest due under the
Purchase Note will be offset and reduced by payments made under
the related Investor Notes issued by the limited partners of the
respective Investing Partnership. Interest which is in excess of
the amount offset and reduced by payments made under a Purchase
Note ("Excess Interest") shall be deferred until the maturity of
that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, in an aggregate principal amount of
$7,850,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the interest payments on all of the
Set Aside Purchase Notes shall be payable directly to the Company
until such time as an Event of Default (as defined in Section 7.8
hereof) shall occur and be continuing. The parties hereto
further confirm that any Excess Interest and deferred principal
on a Set Aside Purchase Note paid at the maturity thereof shall
belong to the Company so long as an Event of Default shall not
have occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Notes directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Purchase Agreement under which the Investing Partnership has
granted a security interest in that Investing Partnership's
limited partnership interest listed in Exhibit A hereto (a
"Purchased Partnership Interest") in a respective Operating
Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Purchase
Agreement listed in Exhibit A hereto, each security interest in a
Purchased Partnership Interest created under any such Purchase
Agreement, each such Purchased Partnership Interest, each
allocation and distribution due and payable or to be made from
time to time on such Purchased Partnership Interest, and the
proceeds thereof. In order to perfect such security interest,
J&B shall deliver to the Bank Financing Statements ("Financing
Statements") for filing by the Bank with the appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments,
pursuant to this Section 7.3(b), of the above-mentioned Purchase
Agreements, security interests, Purchased Partnership Interests,
and due and payable allocations and distributions on Purchased
Partnership Interests to the Bank, all allocations and
distributions on such Purchased Partnership Interests, if any, in
excess of the amounts due and payable by the Investing
Partnership on account of principal and interest on their
respective Purchase Notes shall be payable directly to the
respective Investing Partnership if an event of default shall not
have occurred and be continuing under that Investing
Partnership's Set Aside Purchase Note 7.7(g) and shall be payable
directly to the Bank for the benefit of the Bank and the owners
of the Debentures only if the Bank shall foreclose on the
security interest granted pursuant to this Section 7.3(b)
pursuant to Section 7.7(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank, pursuant to Section 7.3(b) hereof, of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, each allocation and
distribution due and payable or to be made from time to time on
the Purchased Partnership Interest, and the proceeds thereof;
(ii) consent to J&B's delivery of the above-mentioned Financing
Statements and the Bank's filing of the Financing Statements from
time to time with the appropriate governmental authorities; (iii)
assign to the Bank all allocations and distributions which may be
due and payable or made from time to time on the Purchased
Partnership Interest (subject to the terms and conditions set
forth in this Bank Agreement) until all outstanding obligations
under the Set Aside Purchase Note which is in default shall have
been paid in full (including, without limitation, all costs of
collection, reasonable attorney fees and other fees and
expenses); and (iv) agree that upon foreclosure of the security
interest granted pursuant to Section 7.3(b) hereof, pursuant to
Section 7.7(e) hereof, all allocations and distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations in subparagraph (iii) above. Upon receipt of each
such Consent, Assignment and Agreement, the Bank shall execute
and deliver to the Company a receipt therefor.
Section 7.4 Set Aside Investor Notes.
-------------------------
(a) Each Investing Partnership listed on Exhibit A
hereto is the payee of Investor Notes made by its respective
limited partners as partial consideration for their limited
partnership interests. Each Investor Note is a full recourse
non-interest bearing promissory note payable in one lump sum on
its maturity date. After the maturity of an Investor Note any
unpaid past-due principal will be subject to interest at the
default rate and for the period of time specified in the
defaulted Investor Note ("Investor Default Interest"). Under the
terms of their respective Purchase Agreements, each Investing
Partnership has pledged its Investor Notes to J&B as collateral
security for the Investing Partnership's obligations under its
respective Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Investor Notes, having an aggregate face value of $3,025,000
listed on Exhibit D hereto, and maturity dates as set forth on
Exhibit D hereto (the "Set Aside Investor Notes"), pledged to J&B
by the Investing Partnerships listed in Exhibit A hereto, and the
proceeds thereof. Upon receipt of each Set Aside Investor Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Investor Notes to the Bank, the lump sum payments of principal on
all Set Aside Investor Notes and Investor Default Interest, if
any, shall be payable directly to the Company until such time as
an Event of Default shall occur and be continuing. The parties
hereto hereby confirm that the principal payable at maturity on
each Set Aside Investor Note and Investor Default Interest, if
any, listed on Exhibit D hereto will belong to the Company until
such time as an Event of Default shall occur and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank pursuant to Section 7.4(b) hereof of the Set Aside
Investor Notes payable to such Investing Partnership,
(ii) consent to J&B's delivery to the Bank of the Investor Notes,
and (iii) agree that upon receiving the Bank's notice of an Event
of Default that is continuing, the Investing Partnership shall
notify the makers of the Set Aside Investor Notes that all
payments thereunder shall be made directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.5 Secured Partnership Interests.
------------------------------
(a) Each maker of a Set Aside Investor Note
("Investor") has pledged, pursuant to the terms of the
subscription agreement between the Investing Partnership listed
on Exhibit A hereto and such Investor ("Investor Subscription
Agreement"), its limited partnership interest in the Investing
Partnership (the "Secured Partnership Interest"), as collateral
security for its obligation to pay the principal amount of the
Set Aside Investor Note at maturity. Each Investing Partnership
listed on Exhibit A hereto, has, pursuant to its Purchase
Agreement, pledged and granted to J&B a security interest in all
of its right, title and interest in the Secured Partnership
Interests, as collateral security for its obligations under its
Purchase Note listed on Exhibit A hereto.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each security
interest in a Secured Partnership Interest created under the
Purchase Agreements listed in Exhibit A hereto, each allocation
and distribution due and payable or to be made from time to time
on such Secured Partnership Interests, and the proceeds thereof.
In order to perfect such security interest, J&B shall deliver to
the Bank Financing Statements for filing by the Bank with the
appropriate governmental authorities indicated by J&B to the
Bank, and hereby agrees to deliver to the Bank from time to time
such additional Financing Statements as must be filed with such
appropriate governmental authorities in order to continue the
perfection of such security interest. Notwithstanding the
assignments, pursuant to this Section 7.5(b), of the above-
mentioned security interests, Secured Partnership Interests and
due and payable allocations and distributions on Secured
Partnership Interests to the Bank, all allocations and
distributions on such Secured Partnership Interests shall be
payable directly to: (i) the Investor which owns the Secured
Partnership Interest, if an event of default shall not have
occurred under such Investor's Investor Notes and/or Investor
Subscription Agreement (an "Investor Default"); (ii) the
Investing Partnership, if an Investor Default shall have occurred
and no event of default shall have occurred and be continuing
under the Investing Partnership's Purchase Agreement; and (iii)
the Bank for payment to the Company, if the Bank shall foreclose
on its security interest pursuant to Section 7.7(g) hereof and to
the Bank for the benefit of the Bank and the owners of the
Debentures from time to time only if the Bank shall foreclose on
the security interest granted pursuant to this Section 7.5(b)
pursuant to Section 7.7(f) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership listed in Exhibit A
hereto, under which the Investing Partnership shall (i) consent
to J&B's assignment to the Bank pursuant to Section 7.5(b) hereof
of the security interest in the Secured Partnership Interests,
each allocation and distribution due and payable or made from
time to time on the Secured Partnership Interests, and the
proceeds thereof; (ii) consent to J&B's delivery of the above-
mentioned Financing Statements and the Bank's filing of the
Financing Statements from time to time with the appropriate
governmental authorities; (iii) assign to the Bank all
allocations and distributions which may be due and payable or
made from time to time on the Secured Partnership Interests
(subject to the terms and conditions set forth in this Bank
Agreement) until all outstanding obligations under any Set Aside
Investor Notes which are in default shall have been paid in full
(including, without limitation, all costs of collection,
reasonable attorney fees and other fees and expenses); and
(iv) agree that upon foreclosure of the security interests
granted pursuant to Section 7.5(b) hereof, pursuant to Section
7.7(f) hereof, all allocations and distributions on the Secured
Partnership Interests shall be paid directly to the Bank, as the
assignee of J&B (subject to the terms and conditions set forth in
this Bank Agreement), regardless of whether the Bank becomes a
substitute limited partner in the Investing Partnership in place
of the defaulting Investor. Upon receipt of each Consent,
Assignment and Agreement, the Bank shall execute and deliver to
the Company a receipt therefor.
Section 7.6 Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note,
the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the related Set Aside Investor Notes, and the related
Consent and Agreement and Financing Statements pertaining to such
Set Aside Investor Notes, and the related Consent, Assignment and
Agreement and related Financing Statements pertaining to the
Secured Partnership Interests. J&B shall be obligated to deliver
to the Bank only those Set Aside Purchase Notes selected by J&B,
in its sole discretion, and the related Set Aside Investor Notes
in such an amount that the sum of 80% of the principal amount of
the Set Aside Purchase Notes plus 80% of the principal amount of
the related Set Aside Investor Notes equals the principal amount
of the Debentures which will be sold at the respective Initial
Closing or Additional Closing, together with the Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, the Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the Consent and Agreement and Financing Statements
pertaining to such Set Aside Investor Notes, and the Consent,
Assignment and Agreement and Financing Statements pertaining to
the Secured Partnership Interests.
Section 7.7 Duties of the Bank.
-------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes and the related Set Aside Investor Notes deposited with it
pursuant to Section 7.2(b) and Section 7.4(b) hereof, and shall
file with the appropriate governmental authorities indicated by
J&B to the Bank Financing Statements delivered by J&B to the Bank
recording the termination of the Bank's security interests and
assignments granted under this Bank Agreement and each Consent,
Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures plus all
accrued interest due and immediately payable. In addition, the
Bank shall immediately notify each Investing Partnership in
writing of the occurrence of such Event of Default. Upon receipt
of such notice, each Investing Partnership shall (i) make all
payments of principal and interest on its respective Set Aside
Purchase Note to the Bank and (ii) notify each Investor, in
writing, that all payments on its Set Aside Investor Notes shall
be made directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests, Set Aside Investor Notes
or Secured Partnership Interests. In the event that the Company
shall default on its payment obligations to the Bank under this
Bank Agreement, the Bank shall be entitled to institute action
against the Company, jointly or severally, to collect payment
under this Bank Agreement, without any prior requirement to
attempt to collect any funds under the Set Aside Purchase Notes
or the related Purchased Partnership Interests, Set Aside
Investor Notes or Secured Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate (i) the Set Aside Purchase Notes and the
Purchased Partnership Interests (if the Bank shall have
foreclosed on such Set Aside Purchase Note pursuant to
Section 7.7(e) hereof) or (ii) the Set Aside Investor Notes and
Secured Partnership Interests (if an Investor Default shall have
occurred and the Bank shall have foreclosed on such Set Aside
Investor Note pursuant to Section 7.7(f) hereof) including, in
each case, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Company, free and clear of any claim, lien, charge or encumbrance
including, without limitation, any right of equity of redemption.
The Bank shall apply the proceeds of any such sale firstly to the
payment of the expenses of the sale, secondly to the payment of
the Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to the Company or its affiliates
because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
security interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to the limitations set forth
in Section 7.3(c)(iii) hereof, and to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all allocations
and distributions from that Operating Partnership as the assignee
of J&B and this Bank Agreement shall operate as an assignment of
such allocations and distributions by the Investing Partnership
subject to the limitations set forth in Section 7.3(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
there shall occur or if there shall have occurred and be
continuing an event of default under any Set Aside Purchase Note
or under any Partnership Agreement governing the Operating
Partnership related to the Purchased Partnership Interest, the
Bank shall be authorized to exercise any and all rights and
remedies available to it as the holder of the respective Set
Aside Purchase Note, the substituted partner or assignee with
respect to the Purchased Partnership Interest in the related
Operating Partnership, as well as any other remedy available
under law or equity. The Bank shall apply the proceeds of its
exercise of the above-mentioned rights and remedies firstly to
the payment of all costs of collection, secondly to the payment
of the Bank's fees and expenses, thirdly to the payment of all
accrued interest (including, without limitation, interest accrued
after the date of the Event of Default) and next to repayment of
principal of the Debentures, until all amounts due under the
Debentures shall have been paid in full together with all costs
of collection, fees and expenses.
(f) While an Event of Default is continuing, if an
Investor Default shall occur and be continuing, the Bank shall
immediately send written notice of that Investor Default to the
defaulting Investor and to the general partner of the Investing
Partnership. If the Investor Default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Investor Note, the Bank shall immediately foreclose on the
security interest in the related Secured Partnership Interest by
notifying the defaulting Investor and general partner of the
related Investing Partnership of the foreclosure. The Bank shall
send a notice to the Investing Partnership, which shall deliver a
copy of such notice to the defaulting Investor, stating that it
is retaining the Secured Partnership Interest in discharge of the
defaulted Set Aside Investor Note pursuant to Section 9-505 of
the Uniform Commercial Code and shall request admission as a
substituted limited partner in place of the defaulting Investor
in that Investing Partnership, subject to the limitations set
forth in Section 7.5(c)(iii) hereof. If the Bank may not be
admitted as a substituted limited partner in the Investing
Partnership for any reason, the Bank shall nevertheless be
entitled to receive all allocations and distributions from the
Investing Partnership in respect of such Secured Partnership
Interest as the assignee of such Secured Partnership Interest,
and this Bank Agreement shall operate as an assignment of such
allocations and distributions by the Investing Partnership,
subject to the limitations set forth in Section 7.5(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
an Investor Default shall occur or shall have occurred and be
continuing or an event of default under any Partnership Agreement
governing the Investing Partnership related to the Secured
Partnership Interest shall occur or shall have occurred and be
continuing, the Bank shall be authorized to exercise any and all
rights and remedies available to it as the holder of the
respective Set Aside Investor Note, the substituted limited
partner or assignee with respect to the Secured Partnership
Interest in the related Investing Partnership, as well as any
other remedy available under law or equity. The Bank shall apply
the proceeds of its exercise of the above-mentioned rights and
remedies firstly to the payment of all costs of collection,
secondly to the payment of the Bank's fees and expenses, thirdly
to the payment of all accrued interest (including, without
limitation, interest accrued after the date of the Event of
Default) and next to the repayment of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(g) If an Investor Default shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank and the defaulting Investor notice thereof. If that
event of default is continuing after the expiration of the grace
period, if any, contained in the Set Aside Investor Note in
respect of which the Investor Default occurred, if the Company
shall not effect a substitution pursuant to Section 7.11(e)
hereof, the Bank shall immediately foreclose on the security
interest in the related Secured Partnership Interest by notifying
the general partner of the related Investing Partnership of such
foreclosure. The Bank shall send a notice to the Investing
Partnership, which shall deliver a copy of such notice to the
defaulting Investor, stating that it is retaining the Secured
Partnership Interest in discharge of the defaulted Set Aside
Investor Note pursuant to Section 9-505 of the Uniform Commercial
Code and shall request admission as a substituted limited partner
in the Investing Partnership in place of the defaulting Investor,
subject to the limitations in Section 7.5(c)(iii) hereof. If the
Bank may not be admitted as a substituted limited partner in the
Investing Partnership for any reason, the Bank shall be entitled
nevertheless to receive all allocations and distributions from
that Investing Partnership as the assignee of the Secured
Partnership Interest and this Bank Agreement shall operate as an
assignment of such allocations and distributions by the Investing
Partnership, subject to the limitations in Section 7.5(c)(iii)
hereof. The Bank shall pay over to the Company any amounts
received from the Investing Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the proceedings specified in this Section 7.7.
(h) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note, Purchased Partnership
Interest, Set Aside Investor Note, or Secured Partnership
Interest to amounts owing to the Bank or the owners of the
Debentures under this Bank Agreement unless an Event of Default
shall occur and be continuing. The Bank shall be entitled to
exercise one or more remedies at the same time, all such rights
and remedies being cumulative and not mutually exclusive.
(i) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note, or
Secured Partnership Interest collected by the Bank including, but
not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this
Section 7.7(i) shall survive the termination of this Bank
Agreement.
Section 7.8 Events of Default.
------------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.9 Sale of Set Aside Purchase Notes and
------------------------------------
Related Set Aside Investor Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one of more Set Aside Purchase Notes and all of the related Set
Aside Investor Notes to a third party, subject to the following
conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) The Bank shall receive cash in the amount
equal to (x) the sum of 80% of the principal balance
due at maturity of the Set Aside Purchase Note being
sold plus 80% of the principal amount of the related
Set Aside Investor Notes being sold and (y) an amount
sufficient to pay accrued interest on the pro rata
portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iii) Notwithstanding the above, in no event may
a Set Aside Purchase Note be sold apart from all of the
related Set Aside Investor Notes and no Set Aside
Investor Note may be sold apart from the related Set
Aside Purchase Note.
(iv) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note and related Set Aside Investor Notes that
are then sold to J&B, or at the written request of J&B,
to the purchaser, together with an assignment of
security interest and Purchase Agreement covering the
related Purchased Partnership Interest and Secured
Partnership Interests. Subject to Section 8(b) hereof
the Bank shall have no liability whatsoever to the
purchaser or any party hereto for its actions pursuant
to this Section 7.9.
Section 7.10 Fees and Expenses.
------------------
In addition to the administration fee set forth in Section 1.7
hereof, the Bank shall be entitled to compensation for its
services under this Section 7 in the amount of $2,500 as an
acceptance fee, payable upon execution and delivery of this Bank
Agreement; and administrative fees, payable annually on the
anniversary date of this Bank Agreement, based upon the aggregate
principal amount of outstanding Debentures ten days prior to the
anniversary date, in the following amounts:
$ 500,000 to $ 1,000,000 outstanding . . . . . . . $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding . . . . . . . $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding . . . . . . . $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding . . . . . . . $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding . . . . . . . $ 6,000
$ 5,000,001 to $ 6,000,000 outstanding . . . . . . . $ 7,000
$ 6,000,001,to $ 7,000,000 outstanding . . . . . . $ 8,000
$ 7,000,001 to $ 8,000,000 outstanding . . . . . . . $ 9,000
$ 8,000,001 to $ 8,700,000 outstanding . . . . . . . $10,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.10 only when an
Event of Default has occurred and is continuing. The provisions
of this Section 7.10 shall survive the termination of this Bank
Agreement.
Section 7.11 Substitution of Set Aside Purchase Notes
-----------------------------------------
and Set Aside Investor Notes.
-----------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes together with all of the
related Set Aside Investor Notes (a withdrawn Set Aside Purchase
Note shall be defined for the purposes herein as the "Withdrawn
Set Aside Purchase Note" and the withdrawn related Set Aside
Investor Notes shall be defined for the purposes herein as the
"Withdrawn Set Aside Investor Notes") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") and
replace the Withdrawn Set Aside Investor Notes with Investor
Notes payable to the maker of the New Set Aside Purchase Note
(any such Investor Notes shall be defined for the purposes herein
as the "New Set Aside Investor Notes") so long as (i) no Event of
Default has occurred and is continuing and (ii) the sum of (x)
80% of the aggregate principal amount of the Set Aside Purchase
Notes held by the Bank after the Withdrawn Set Aside Purchase
Note is withdrawn and the New Set Aside Purchase Notes are
deposited plus (y) 80% of the aggregate principal balance of the
Set Aside Investor Notes held by the Bank after the Withdrawn Set
Aside Notes are withdrawn and the New Set Aside Investor Notes
are deposited is equal to the principal amount of the Debentures
that remain outstanding.
(b) The Company may only substitute a New Set Aside
Purchase Note for a Withdrawn Set Aside Purchase Note if (i) it
simultaneously substitutes the New Set Aside Investor Notes for
the withdrawn Set Aside Investor Notes and (ii) the New Set Aside
Investor Notes are payable to the Investing Partnership that is
the maker of the New Set Aside Purchase Notes.
(c) In order to effect the substitution described in
Section 7.11(a) hereof, the Company shall deliver to the Bank
(i) the New Set Aside Purchase Note along with the Consent and
Agreement as described in Section 7.2(c) hereof, the Financing
Statements pertaining to the New Set Aside Purchase Note, the
Consent, Assignment and Agreement as described in Section 7.3(c)
hereof, and the related Financing Statements pertaining to the
Purchased Partnership Interest that secures such New Set Aside
Purchase Note and (ii) the New Set Aside Investor Notes along
with the Consent and Agreement as described in Section 7.4(c)
hereof, the Financing Statements pertaining to the New Set Aside
Investor Notes, the Consent, Assignment and Agreement as
described in Section 7.5(c) hereof, and the related Financing
Statements pertaining to the Secured Partnership Interests that
secure such New Set Aside Investor Notes. Upon receiving the New
Set Aside Purchase Note, the New Set Aside Investor Notes and the
related documents described in the preceding sentence, the
security interest and assignment created by this Bank Agreement,
each Consent, Assignment and Agreement described in
Section 7.2(c) hereof and Section 7.4(c) hereof each as relates
to the Withdrawn Set Aside Purchase Note, each Consent,
Assignment and Agreement described in Section 7.3(c) hereof and
Section 7.5(c) hereof each as relates to the Withdrawn Set Aside
Investor Notes, shall automatically terminate and shall have no
further force or effect. Thereupon, the Bank shall (i) return
the Withdrawn Set Aside Purchase Note and Withdrawn Set Aside
Investor Notes to the Company, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest and the Secured Partnership Interests, (iii) file with
the appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements delivered by J&B to the Bank recording
the termination of the Bank's security interest and assignment
granted under this Bank Agreement, and (iv) return to J&B the
Consent and Agreement described in Section 7.2(c) hereof and the
Consent, Assignment and Agreement described in Section 7.3(c)
hereof, each as relates to such Withdrawn Set Aside Purchase
Note, and return to J&B the Consent and Agreement described in
Section 7.4(c) hereof and the Consent, Assignment and Agreement
described in Section 7.5(c) hereof, each as relates to the
Withdrawn Set Aside Investor Notes. The Company will notify the
Debenture holders of the substitution of the Withdrawn Set Aside
Purchase Note and Withdrawn Set Aside Investor Notes with the New
Set Aside Purchase Note and New Set Aside Investor Notes,
respectively, within sixty (60) days thereof and provide those
Debenture holders with the information pertaining to the New Set
Aside Purchase Note and New Set Aside Investor Notes that would
have been contained in the Memorandum if the New Set Aside
Purchase Note and New Set Aside Investor Notes had been included
with the Set Aside Purchase Notes and Set Aside Investor Notes
described therein.
(d) After the substitution of the New Set Aside
Purchase Note and the New Set Aside Investor Notes for the
Withdrawn Set Aside Purchase Note and Withdrawn Set Aside
Investor Notes, respectively, the New Set Aside Purchase Note
shall be deemed to be a Set Aside Purchase Note and the New Set
Aside Investor Notes shall be deemed to be Set Aside Investor
Notes, in each case, for all purposes as set forth in this Bank
Agreement.
(e) Anything in this Bank Agreement to the contrary
notwithstanding, so long as no Event of Default shall occur and
be continuing and so long as the provisions of Section 7.11
hereof are complied with, upon the occurrence of an Investor
Default, J&B shall have the right, within 90 days of the
occurrence of such Investor Default, to arrange for the sale of
the Secured Partnership Interest of the defaulting Investor to a
new Investor and to substitute Investor Notes ("Substitute
Investor Notes"), of the new Investor (which shall be in like
principal amount and maturity as the defaulted Investor Notes and
be payable to the same Investing Partnership as the defaulted
Investor Notes for the Investor Notes) of the defaulting
Investor. Upon such substitution the Bank shall return the
defaulted Investor Notes to the Company and the Substitute
Investor Notes shall be Set Aside Investor Notes for all purposes
hereunder.
Section 7.12 Delivery of Set Aside Purchase Notes and
----------------------------------------
Set Aside Investor Notes.
-------------------------- The Company shall deliver the Set
Aside Purchase Notes and the related Set Aside Investor Notes
together with the Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c), and the Consent and
Agreement required by Section 7.2(c) hereof and Section 7.4(c)
hereof, and the related Financing Statements as follows:
(a) Original Set Aside Purchase Notes and related
original Set Aside Investor Notes shall be
delivered to:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Mr. Vincent Nardone,
A.V.P., Security Operation
Free Receive Area, 5th Floor.
No less than ten days prior to the delivery by the
Company to the Bank of the first Set Aside Purchase
Note, the Company shall deliver a schedule in duplicate
form of all Set Aside Purchase Notes and Set Aside
Investor Notes to the Bank at the address set forth in
Section 12 hereof.
(b) Copies of each Set Aside Purchase Note and related
Set Aside Investor Notes together with the
Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c) hereof,
and the Consent and Agreement required by
Section 7.2(c) hereof and Section 7.4(c) hereof,
and the related Financing Statements shall be
delivered by the Company to the Bank for execution
at the address set forth in Section 12 hereof and
promptly returned to Company's counsel at the
address as set forth in Section 12 hereof.
Section 8. Other Rights and Duties of Bank.
--------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to
Section 18(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations.
--------------------- The Bank makes no
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note or
Secured Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification.
--------------- The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor bank shall become effective only upon
the successor bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any
reason, the Company shall promptly appoint a successor
bank.
(ii) If a successor bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor bank.
(iii) A successor bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it under the terms of this Bank Agreement.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor bank.
Section 12. Notices.
------- All notices and other communications
pursuant to this Bank Agreement shall be in writing, subject to
the terms of Section 1.6 hereof, and shall be delivered by hand
or sent by registered, certified, return receipt requested, or
first class mail, or by facsimile, confirmed by writing, delivered
by hand or sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law.
------------- This Bank Agreement shall
be governed by the laws of the state of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment.
--------------------------- This Bank
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors.
---------- This Bank Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability.
-------------- Any provision of this Bank
Agreement which may by determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 17. Counterparts.
------------ This Bank Agreement may be
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Definitions.
----------- All terms used in this Bank
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s/ Bernard M. Rodin By: /s/ Harley Jeanty
-------------------------- ------------------------
Title: General Partner Title: Assistant Vice
President
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernaed M. Rodin
--------------------------
Title: Vice President
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
1. (a) Investing Partnership: South Florida Associates, a
Texas limited partnership
(b) Operating Partnerships: Casa Devon, Ltd., Timbercreek
Gardens, Ltd., Timbercreek I, Ltd., each a Florida
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,500,000
(ii) Date of Issue: December 1, 1985
(iii) Final Maturity Date: October 31, 2000
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $3,500,000
(vii) Prepaid Interest as of
July 31, 1993 $ 648,334
(d) Purchase Agreement: Sale and Purchase Agreement dated
December 1, 1985, by and among John Luciani and Bernard
M. Rodin and South Florida Associates (Sellers'
respective rights and interests under the Purchase
Agreement have been sold, transferred and assigned to
J&B Management Company).
(e) Purchased Partnership Interest: 98.5% of the profits
and losses and 98.25% of the cash flow of the Operating
Partnership
<PAGE>
2. (a) Investing Partnership: Ewing Associates, a South
Carolina limited partnership
(b) Operating Partnership: Lucas Heights III, L.P., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $4,350,000
(ii) Date of Issue: December 30, 1986
(iii) Final Maturity Date: December 30, 2001
(iv) Annual Payment of Principal Not Applicable
(v) Total Scheduled Principal
Payments Prior to Final Maturity: Not Applicable
(vi) Balance of Principal
Due at Final Maturity: $4,350,000
(vii) Prepaid Interest as of
July 31, 1992 $ 904,000
(d) Purchase Agreement: Sale and Purchase Agreement dated
December 30, 1986, by and among John Luciani and
Bernard M. Rodin ("Sellers") and Ewing Associates
(Sellers' respective rights and interests under the
Purchase Agreement have been sold, transferred and
assigned to J&B Management Company).
(e) Purchased Partnership Interest: 98.75% of the profits
and losses (which shall decrease to 91.875% after the
return of the capital contributions to the limited
partners of Lucas Heights III, L.P. as a result of
annual distributions of cash flow or of a refinancing)
and 98.75% of the cash flow of the Operating
Partnership.
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[Form of Consent and Agreement]
CONSENT AND AGREEMENT
[pursuant to Section 7.2(c)] and Section 7.4(c)]
THIS CONSENT AND AGREEMENT, dated as of
-------------------, 19--, is by and between [name of Investing
Partnership] (the "Investing Partnership"), J&B Management
Company ("J&B"), and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.2(c) and Section 7.4(c) of the Bank
Agreement provide for the execution of this Consent and Agreement
by the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby convent and agree as follows:
Section 1. Consents.
-------- The Investing Partnership hereby
consents to (i) J&B's assignment to the Bank, pursuant to Section
7.2(c) of the Bank Agreement, of the Investing Partnership's Set
Aside Purchase Note; (ii) J&B's assignment to the Bank, pursuant
to Section 7.4(c) of the Bank Agreement, of the Set Aside
Investor Notes; (iii) J&B's delivery of the Investing
Partnership's Set Aside Purchase Note to the Bank; and (iv) J&B's
delivery of the Set Aside Investor Notes to the Bank. The Bank
hereby acknowledges that interest may be deferred until the
maturity of that Set Aside Purchase Note.
Section 2. Agreements.
---------- The Investing Partnership
hereby agrees that upon receiving the Bank's notice of an Event
of Default, the Investing Partnership shall (i) pay all sums due
under its Set Aside Purchase Note directly to the Bank and (ii)
notify the makers of the Set Aside Investor Notes that all
payments thereunder shall be made directly to the Bank.
Section 3. Notices.
-------
All notices and other communications pursuant or relating to this
Consent and Agreement shall be in writing and shall be delivered
by hand or sent by registered or certified mail, return receipt
requested, or by facsimile, confirmed by writing delivered by
hand or sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Investing Partnership:
--------------------------------
--------------------------------
--------------------------------
(b) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 4. Choice of Law.
-------------
This Consent and Agreement shall be governed by the laws of the
State of New York without giving effect to the principles of
conflicts of law thereof.
Section 5. Successors.
-----------
This Consent and Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
Section 6. Counterparts.
------------
This Consent and Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
Section 7. Definitions.
-----------
All terms used in this Consent and Agreement and not otherwise
defined herein shall have the meanings ascribed to them in the
Bank Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
[Name of Investing Partnership]
By: ------------------------------
J&B MANAGEMENT COMPANY
By: ------------------------------
Title:
THE BANK OF NEW YORK
By: -----------------------------
Title:
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
[Form of Consent, Assignment and Agreement]
CONSENT, ASSIGNMENT AND AGREEMENT
[pursuant to Section 7.3(c) and Section 7.5(c)]
THIS CONSENT, ASSIGNMENT AND AGREEMENT, dated as of ---
---------------------, 19--, is by and among [name of Investing
Partnership] (the "Investing Partnership") [name of Operating
Partnership] (the "Operating Partnership"), J&B Management
Company ("J&B"), and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.3(c) and Section 7.5(c) of the Bank
Agreement provide for the execution of this Consent, Assignment
and Agreement by the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby consent and agree as follows:
Section 1. Consents, Assignments and Agreements with
-----------------------------------------
Respect to Purchased Partnership Interests.
----------------------------------------- The Investing
Partnership and the Operating Partnership in which the Investing
Partnership owns a Purchased Partnership interest hereby (i)
consent to J&B's assignment to the Bank of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, all allocations and
distributions which may be due and payable or made from time to
time on such Purchased Partnership Interest, and the proceeds
thereof, relating to the Investing Partnership's Set Aside
Purchase Note; (ii) consent to J&B's delivery to the Bank of
Financing Statements and to the Bank's filing of such Financing
Statements with the appropriate governmental authorities in order
to perfect and to continue the perfection of the Bank's security
interest in the Purchase Agreement, security interest in the
Purchased Partnership Interest, Purchased Partnership Interest
allocations and distributions which may be due and payable from
time to time on the Purchased Partnership Interest; (iii) subject
to the terms and conditions of the Bank Agreement, assign to the
Bank all allocations and distributions which shall be due and
payable or made from time to time on the Purchased Partnership
Interest, and the proceeds thereof, until all outstanding
obligations under the Set Aside Purchase Note, if such be in
default, have been paid in full (including, without limitation,
all costs of collection, reasonable attorneys' fees and other
fees and expenses); and (iv) subject to the terms and conditions
of the Bank Agreement, agree that upon foreclosure of the
security interest in the Purchased Partnership Interest all
allocations and distributions made on the Purchased Partnership
Interest shall by paid directly to the Bank, as the assignee of
J&B, regardless of whether the Bank becomes a substituted limited
partner in the Operating Partnership in place of the Investing
Partnership.
Section 2. Consents, Assignments and Agreements with
-----------------------------------------
respect to Secured Partnership Interests.
---------------------------------------- The Investing
Partnership hereby (i) consents to J&B's assignment to the Bank
of the security interests in the Secured Partnership Interests,
each allocation and distribution due and payable or made from
time to time on the Secured Partnership Interests, and the
proceeds thereof, relating to the Set Aside Investor Notes
("Security Interest"); (ii) consents to J&B's delivery to the
Bank of Financing Statements and to the Bank's filing of such
Financing Statements with the appropriate governmental
authorities in order to perfect and to continue the perfection of
the Security Interest; (iii) subject to the terms and conditions
of the Bank Agreement, assign to the Bank all allocations and
distributions which shall be due and payable or made from time to
time on the Secured Partnership Interests, and the proceeds
thereof, until all outstanding obligations under any Set Aside
Investor Notes, if such be in default, shall have been paid in
full (including, without limitation, all costs of collection
reasonable attorney's fees and other fees and expenses); and (iv)
subject to the terms and conditions of the Bank Agreement, agree
that upon foreclosure of the Security Interest all allocations
and distributions made on the Secured Partnership Interest shall
be paid directly to the Bank, as the assignee of J&B, regardless
of whether the Bank becomes a substituted limited partner in the
Investing Partnership.
Section 3. Representations of the Operating
----------------------------------
Partnership.
----------- The Operating Partnership hereby agrees to keep a
copy of this Consent, Assignment and Agreement with its business
records.
Section 4. Agreement of the Operating Partnership.
----------------------------------------
The Operating Partnership hereby agrees to admit the Bank as a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership upon the Bank's foreclosure on the
security interest in the Purchased Partnership Interest and
written request, subject to the limitations in Section 1(iii)
hereof, the Bank's obtaining HUD 2530 Clearance and the rights of
the Investing Partnership under Section 9.505 of the Uniform
Commercial Code.
Section 5. Amendment to Operating Partnership
----------------------------------
Agreement.
--------- Upon substitution of the Bank for the Investing
Partnership as a limited partner in the Operating Partnership
pursuant to the Bank Agreement and this Consent, Assignment and
Agreement, this Consent, Assignment and Agreement shall
constitute an amendment to the partnership agreement of the
Operating Partnership, and the Bank shall not be liable for the
obligations of any predecessor which has assigned the Purchased
Partnership Interest to make any contributions to the Operating
Partnership.
Section 6. Agreement of the Investing Partnership.
--------------------------------------
The Investing Partnership hereby agrees that upon the
occurrence of an Investor Default and following the Bank's
foreclosure on the Security Interest and written request to the
Investing Partnership, the Investing Partnership shall admit the
Bank as a substituted limited partner in the Investing
Partnership, subject to the limitations in Section 2(iii) hereof.
Section 7. Amendment to the Investing Partnership
--------------------------------------
Agreement.
--------- Upon admission of the Bank as a substituted limited
partner in the Investing Partnership pursuant to the Bank
Agreement and this Consent, Assignment and Agreement, this
Consent, Assignment and Agreement shall constitute an amendment
to the partnership agreement of the Investing Partnership, and
the Bank shall not be liable for the obligations of any
predecessor which has assigned the Secured Partnership Interest
to make any contributions to the Investing Partnership.
Section 8. Further Assurances and Power of Attorney.
---------------------------------------
Each of the parties hereto shall, from time to time, upon
request of a party hereto, duly execute, acknowledge and deliver
or cause to be duly executed, acknowledged and delivered, all
such further instruments and documents reasonably requested by a
party to effectuate the intent and purposes of this Consent,
Assignment and Agreement. Notwithstanding the foregoing, this
Consent, Assignment and Agreement shall constitute an irrevocable
power of attorney coupled with an interest for the Bank to
execute and file a certificate of amendment to the certificate of
limited partnership of the Operating Partnership or any other
document or instrument in order to effectuate the intent and
purposes of this Consent, Assignment and Agreement; provided,
however, that the Bank may not be substituted as a partner of the
Operating Partnership unless such substitution is permitted under
the Uniform Commercial Code and HUD 2530 Clearance, if required,
has been obtained.
Section 9. Notices.
-------
All notices and other communications pursuant or relating to
this Consent, Assignment and Agreement shall be in writing and
shall be delivered by hand or sent by registered or certified
mail, return receipt requested, or by facsimile, confirmed by
writing delivered by hand or sent by registered or certified
mail, return receipt requested, delivered or sent on the date of
the facsimile, addressed as follows:
(a) If to the Operating Partnership:
-------------------------------
-------------------------------
-------------------------------
(b) If to the Investing Partnership:
--------------------------------
--------------------------------
--------------------------------
(c) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 10. Choice of Law.
------------- This Consent, Assignment
and Agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law
thereof.
Section 11. Successors.
---------- This Consent, Assignment and
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
Section 12. Counterparts.
------------- This Consent, Assignment
and Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall
constitute one instrument.
Section 13. Definitions.
----------- All terms used in this
Consent, Assignment and Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Bank
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent, Assignment and Agreement as of the date first above
written.
[Name of Investing Partnership]
By:------------------------------------
[Name Of Investing Partnership]
By:---------------------------
J&B MANAGEMENT COMPANY
By: ------------------------
Title:
THE BANK OF NEW YORK
By: ------------------------
Title:
<PAGE>
EXHIBIT D
TO BANK AGREEMENT
SUMMARY OF INVESTOR NOTES
--------------------------
INVESTOR INVESTOR INVESTOR
NOTES NOTES NOTES
MATURING MATURING MATURING
INVESTOR PARTNERSHIP 1995 1996 1997
SOUTH FLORIDA
ASSOCIATES $225,000 $225,000 $225,000
EWING ASSOCIATES 336,000 330,000 330,000
------- -------- -------
TOTAL $561,000 $555,000 $555,000
======== ======== ========
INVESTOR INVESTOR INVESTOR
NOTES NOTES NOTES
MATURING MATURING MATURING
INVESTOR PARTNERSHIP 1998 1999 2000 TOTAL
SOUTH FLORIDA
ASSOCIATES $182,000 $186,000 --- $1,043,000
EWING ASSOCIATES 348,000 319,000 $319,000 1,982,000
------- ------- ------- ---------
TOTAL $530,000 $505,000 $319,000 $3,025,000
======== ======== ======== ==========
Exhibit 10-5(k)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of September 12, 1994 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 9, 12%
Debentures due September 15, 2001 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum dated
September 14, 1994, as the same may be from time to time amended
(the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii)
December 31, 1995 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Company Series 9
Escrow Fund Account (the "Fund") with the Bank;
WHEREAS, the Company, for the benefit of the Bank and
the Purchasers, wishes to assign to, and to grant the Bank a
security interest in, certain notes, instruments and documents as
more fully described below and the Bank is willing to accept such
security interest and assignment upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Custodian, Paying Agent,
Registrar and Transfer Agent with respect to the Debentures and
the above-mentioned notes, instruments and documents and the Bank
is willing to accept such appointments upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow. The Company shall from time to
------
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1 commercial paper, P-1 commercial
paper, interest bearing money market accounts, all as specified
in writing by the Company and held in trust for the benefit of
the Purchasers. The Bank is not responsible for interest,
losses, taxes or other charges on investments. All checks
delivered to the Bank for deposit in the Fund shall be payable to
the order of "J&B Management Company - Escrow Account."
Concurrently with such delivery, the Company shall deliver to the
Bank a statement of the name, mailing address and tax
identification number of each Purchaser whose Subscription
Payment is being delivered, and a schedule listing the aggregate
Debentures and aggregate cumulative Subscription Payments to date
delivered for deposit in the Fund. For the purposes of this Bank
Agreement, the Company is authorized to make deposits and give
instructions as to investments of deposits and otherwise, as
contemplated in this Bank Agreement, to the Bank.
Section 1.3 Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month (each, an "Interest
Payment Date"). Four Business Days prior to each such Interest
Payment Date, the Bank shall give the Company written notice of
the difference between the amount of interest which will be
payable on Subscription Payments on such Interest Payment Date
and the amount of interest accruing on the Fund's assets which
will be available for such payment on such Interest Payment Date.
Not later than 11:30 a.m. (New York time) on the second Business
Day preceding such Interest Payment Date, the Company shall
deposit with the Bank its check in the amount of such difference.
On each Interest Payment Date, the Bank shall pay interest which
is due and payable to the respective Purchasers by mailing its
check in the appropriate amount to each Purchaser by first class
mail at the Purchaser's mailing address provided to the Bank
pursuant to Section 1.2 hereof. In the event that the Company
shall default in its payment obligations to the Bank under this
Section 1.3, the Bank shall mail its check in the amount of each
Purchaser's pro rata share of interest earned and paid on the
Fund's assets as provided in this Section 1.3. For purposes of
this Bank Agreement, "Business Day" shall mean any day other than
a day on which the Bank is authorized to remain closed in New
York City.
Section 1.4 Conditions of Initial Closing and
---------------------------------
Additional Closings.
-------------------
Notwithstanding anything to the contrary in this Bank Agreement,
it is a condition precedent to the Initial Closing and to each
Additional Closing that J&B shall deliver to the Bank Set Aside
Purchase Notes and the Investor Notes that serve as collateral
security for the repayment of the principal of and interest on
such Set Aside Purchase Notes (the "Set Aside Investor Notes") in
such an amount that the sum of 80% of the principal amount of the
Set Aside Purchase Notes plus 80% of the principal amount of the
Set Aside Investor Notes equals the principal amount of the
Debentures which will be sold at that Initial Closing or
Additional Closing, together with the related Consent and
Agreement pertaining to each such Set Aside Purchase Note and Set
Aside Investor Notes and the related Consent, Assignment and
Agreement pertaining to the Purchased Partnership Interest and
the related Consent, Assignment and Agreement pertaining to the
Secured Partnership Interest and the related Financing Statements
(as such terms are defined in Section 7 hereof), as provided in
Section 7 hereof. Upon the scheduling of the Initial Closing and
each Additional Closing, the Company shall give written notice
thereof to the Bank not less than one (1) Business Day prior to
the date scheduled for each such closing.
Section 1.5 Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment. (a) The Bank, at the Initial
-------
Closing and each Additional Closing, upon written instruction
from either Mr. John Luciani and Mr. Bernard M. Rodin, as the
sole partners and directors of the Company, shall transfer to the
Company or to such third party or parties as may be directed by
Mr. Luciani or Mr. Rodin the Cleared Funds then held in the Fund
by the Bank. Any interest earned thereon and not theretofore
distributed in accordance with Section 1.3 hereof shall be paid
to the Purchasers in accordance with Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) above from any
one other than Mr. Luciani or Mr. Rodin, regardless of whether
that person is an employee, agent or representative of the
Company, those instructions are to be deemed to be invalid and
contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses. In addition to the
-----------------
fees set forth in Section 7.10 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to December 31, 1995, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between
(a) $5,000 and (b) the product of (x) $5,000 and (y) a fraction,
the numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the -
termination of this Bank Agreement.
Section 1.8 Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the
--------------
Internal Revenue Code of 1986, as amended, the Company shall
request that each Purchaser furnish to the Bank such Purchaser's
taxpayer identification number and a statement certified under
penalties of perjury that (a) such taxpayer identification number
is true and correct and (b) the Purchaser is not subject to
withholding of 31% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds. In the event that any
-----------------
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds.
-------------
For the purpose of this Bank Agreement, Subscription Payments
shall constitute "Cleared Funds" in accordance with the
following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Debentures shall be
---------
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication. Only such Debentures as
--------------
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures. Subject to applicable law, in the event any
----------
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures. The Debentures are issuable only as registered
----------
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner. The person in whose name any
-----
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send
--------------
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges and Expenses. No service charge
--------------------
shall be made for any transfer or exchange of Debentures, but in
all cases in which Debentures shall be transferred or exchanged
hereunder, as a condition to any such transfer or exchange, the
owner of the Debenture shall, prior to the delivery of any new
Debenture pursuant to such transfer or exchange, reimburse the
Company and the Bank for their respective actual out-of-pocket
expenses incurred in connection therewith (including, but not
limited to, any tax, fee or other governmental charge required to
be paid with respect to such transfer or exchange, actual
expenses for stationery, postage, telephone, telex, wire
transfers, telecopy and retention of records, and reasonable fees
and expenses of their respective counsel). The provisions of
this Section 5.5 shall survive the termination of this Bank
Agreement.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption of part or all of the Debentures, which shall be
without premium or penalty, or is required to effect mandatory
redemption of part or all of the Debentures, the Company shall
give written notice thereof to the Bank at least forty (40) days
prior to the date set forth for redemption, the manner in which
redemption shall be effected and all the relevant details
thereof. The Bank shall give written notice to the Purchasers of
that redemption at least thirty (30) days prior to the date set
forth for redemption. The Company shall deliver all redeemed
Debentures to the Bank for cancellation of the whole or portion
thereof, as appropriate, and issuance of new Debentures in
denominations equal to the unredeemed portion. In no event,
however, shall the Bank pay the redeemed amount or issue new
Debentures in denominations equal to the unredeemed portion to a
registered owner if that registered owner has not surrendered its
Debenture to the Company. No interest shall be payable on the
redeemed portion of a Debenture from and after the date of
redemption.
(b) The Bank hereby acknowledges that the Company may
effect a voluntary redemption of part or all of the Debentures
without premium or penalty. In the event the Company should
effect a partial redemption of the Debentures, the Bank shall (i)
return to the Company Set Aside Purchase Notes selected by the
Company and the related Set Aside Investor Notes in such an
amount that the sum of 80% of the principal amount of such Set
Aside Purchase Notes plus 80% of the principal amount of such Set
Aside Investor Notes equals the principal amount of the redeemed
portion of the Debentures, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest and the related Secured Partnership Interests (as such
terms are defined in Section 7.3(a) hereof), (iii) file with the
appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements delivered by J&B to the Bank recording
the termination of the Bank's security interest and assignment
granted under this Bank Agreement, and (iv) return to J&B the
Consent and Agreement described in Section 7.2(c) hereof, the
Consent, Assignment and Agreement described in Section 7.3(c)
hereof relating to such returned Set Aside Purchase Notes and the
Purchased Partnership Interest, respectively, the Consent and
Agreement described in Section 7.4(c) hereof and the Consent,
Assignment and Agreement described in Section 7.5(c) hereof
relating to such returned Set Aside Investor Notes and Secured
Partnership Interests, respectively. In no event, however, will
the Bank release Set Aside Purchase Notes and Set Aside Investor
Notes if the sum of 80% of the principal amount of Set Aside
Purchase Notes and plus 80% of the principal amount of the Set
Aside Investor Notes held by the Bank following such release
would be less than the principal amount of the Debentures that
remain outstanding.
Section 6. Paying Agent.
------------
Section 6.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions. The Bank shall pay
------------------
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in
Section 5.6(a) and in accordance with the terms and provisions of
this Bank Agreement and the Debentures, by check mailed by first
class mail to the registered owner of a Debenture at his address
as it appears in the register; provided that not later than 11:30
a.m. (New York time) on the second Business Day preceding each
Interest Payment Date or date on which principal of any Debenture
is due and payable, the Company shall provide the Bank with
sufficient funds to make those payments.
Section 6.3 Expenses. The Company shall reimburse the
--------
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes and
the Investor Notes pledged pursuant to a Purchase Agreement by
the respective Investing Partnerships as collateral security for
their respective Purchase Notes. Under the terms of each such
Purchase Note and Purchase Agreement, J&B is entitled to assign
each Purchase Note and J&B's right to payments of interest
thereon and the principal amount thereof. Under the terms of
each Purchase Agreement, payments of interest due under the
Purchase Note will be offset and reduced by payments made under
the related Investor Notes issued by the limited partners of the
respective Investing Partnership. Interest which is in excess of
the amount offset and reduced by payments made under a Purchase
Note ("Excess Interest") shall be deferred until the maturity of
that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, in an aggregate principal amount of
$10,350,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the interest payments on all of the
Set Aside Purchase Notes shall be payable directly to the Company
until such time as an Event of Default (as defined in Section 7.8
hereof) shall occur and be continuing. The parties hereto
further confirm that any Excess Interest and deferred principal
on a Set Aside Purchase Note paid at the maturity thereof shall
belong to the Company so long as an Event of Default shall not
have occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Notes directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Purchase Agreement under which the Investing Partnership has
granted a security interest in that Investing Partnership's
limited partnership interest listed in Exhibit A hereto (a
"Purchased Partnership Interest") in a respective Operating
Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Purchase
Agreement listed in Exhibit A hereto, each security interest in a
Purchased Partnership Interest created under any such Purchase
Agreement, each such Purchased Partnership Interest, each
allocation and distribution due and payable or to be made from
time to time on such Purchased Partnership Interest, and the
proceeds thereof. In order to perfect such security interest,
J&B shall deliver to the Bank Financing Statements ("Financing
Statements") for filing by the Bank with the appropriate
governmental authorities indicated by J&B to the Bank, and hereby
agrees to deliver to the Bank from time to time such additional
Financing Statements as must be filed with such appropriate
governmental authorities in order to continue the perfection of
such security interest. Notwithstanding the assignments,
pursuant to this Section 7.3(b), of the above-mentioned Purchase
Agreements, security interests, Purchased Partnership Interests,
and due and payable allocations and distributions on Purchased
Partnership Interests to the Bank, all allocations and
distributions on such Purchased Partnership Interests, if any, in
excess of the amounts due and payable by the Investing
Partnership on account of principal and interest on their
respective Purchase Notes shall be payable directly to the
respective Investing Partnership if an event of default shall not
have occurred and be continuing under that Investing
Partnership's Set Aside Purchase Note 7.7(g) and shall be payable
directly to the Bank for the benefit of the Bank and the owners
of the Debentures only if the Bank shall foreclose on the
security interest granted pursuant to this Section 7.3(b)
pursuant to Section 7.7(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank, pursuant to Section 7.3(b) hereof, of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, each allocation and
distribution due and payable or to be made from time to time on
the Purchased Partnership Interest, and the proceeds thereof;
(ii) consent to J&B's delivery of the above-mentioned Financing
Statements and the Bank's filing of the Financing Statements from
time to time with the appropriate governmental authorities; (iii)
assign to the Bank all allocations and distributions which may be
due and payable or made from time to time on the Purchased
Partnership Interest (subject to the terms and conditions set
forth in this Bank Agreement) until all outstanding obligations
under the Set Aside Purchase Note which is in default shall have
been paid in full (including, without limitation, all costs of
collection, reasonable attorney fees and other fees and
expenses); and (iv) agree that upon foreclosure of the security
interest granted pursuant to Section 7.3(b) hereof, pursuant to
Section 7.7(e) hereof, all allocations and distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations in subparagraph (iii) above. Upon receipt of each
such Consent, Assignment and Agreement, the Bank shall execute
and deliver to the Company a receipt therefor.
Section 7.4 Set Aside Investor Notes.
------------------------
(a) Each Investing Partnership listed on Exhibit A
hereto is the payee of Investor Notes made by its respective
limited partners as partial consideration for their limited
partnership interests. Each Investor Note is a full recourse
non-interest bearing promissory note payable in one lump sum on
its maturity date. After the maturity of an Investor Note any
unpaid past-due principal will be subject to interest at the
default rate and for the period of time specified in the
defaulted Investor Note ("Investor Default Interest"). Under the
terms of its respective Purchase Agreements, each Investing
Partnership has pledged its Investor Notes to J&B as collateral
security for the Investing Partnership's obligations under its
respective Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Investor Notes, having an aggregate face value of $3,179,000
listed on Exhibit D hereto, and maturity dates as set forth on
Exhibit D hereto (the "Set Aside Investor Notes"), pledged to J&B
by the Investing Partnerships listed in Exhibit A hereto, and the
proceeds thereof. Upon receipt of each Set Aside Investor Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Investor Notes to the Bank, the lump sum payments of principal on
all Set Aside Investor Notes and Investor Default Interest, if
any, shall be payable directly to the Company until such time as
an Event of Default shall occur and be continuing. The parties
hereto hereby confirm that the principal payable at maturity on
each Set Aside Investor Note and Investor Default Interest, if
any, listed on Exhibit D hereto will belong to the Company until
such time as an Event of Default shall occur and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank pursuant to Section 7.4(b) hereof of the Set Aside
Investor Notes payable to such Investing Partnership,
(ii) consent to J&B's delivery to the Bank of the Investor Notes,
and (iii) agree that upon receiving the Bank's notice of an Event
of Default that is continuing, the Investing Partnership shall
notify the makers of the Set Aside Investor Notes that all
payments thereunder shall be made directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.5 Secured Partnership Interests.
-----------------------------
(a) Each maker of a Set Aside Investor Note
("Investor") has pledged, pursuant to the terms of the
subscription agreement between the Investing Partnership listed
on Exhibit A hereto and such Investor ("Investor Subscription
Agreement"), its limited partnership interest in the Investing
Partnership (the "Secured Partnership Interest"), as collateral
security for its obligation to pay the principal amount of the
Set Aside Investor Note at maturity. Each Investing Partnership
listed on Exhibit A hereto, has, pursuant to its Purchase
Agreement, pledged and granted to J&B a security interest in all
of its right, title and interest in the Secured Partnership
Interests, as collateral security for its obligations under its
Purchase Note listed on Exhibit A hereto.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each security
interest in a Secured Partnership Interest created under the
Purchase Agreements listed in Exhibit A hereto, each allocation
and distribution due and payable or to be made from time to time
on such Secured Partnership Interests, and the proceeds thereof.
In order to perfect such security interest, J&B shall deliver to
the Bank Financing Statements for filing by the Bank with the
appropriate governmental authorities indicated by J&B to the
Bank, and hereby agrees to deliver to the Bank from time to time
such additional Financing Statements as must be filed with such
appropriate governmental authorities in order to continue the
perfection of such security interest. Notwithstanding the
assignments, pursuant to this Section 7.5(b), of the above-
mentioned security interests, Secured Partnership Interests and
due and payable allocations and distributions on Secured
Partnership Interests to the Bank, all allocations and
distributions on such Secured Partnership Interests shall be
payable directly to: (i) the Investor which owns the Secured
Partnership Interest, if an event of default shall not have
occurred under such Investor's Investor Notes and/or Investor
Subscription Agreement (an "Investor Default"); (ii) the
Investing Partnership, if an Investor Default shall have occurred
and no event of default shall have occurred and be continuing
under the Investing Partnership's Purchase Agreement; and (iii)
the Bank for payment to the Company, if the Bank shall foreclose
on its security interest pursuant to Section 7.7(g) hereof and to
the Bank for the benefit of the Bank and the owners of the
Debentures from time to time only if the Bank shall foreclose on
the security interest granted pursuant to this Section 7.5(b)
pursuant to Section 7.7(f) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership listed in Exhibit A
hereto, under which the Investing Partnership shall (i) consent
to J&B's assignment to the Bank pursuant to Section 7.5(b) hereof
of the security interest in the Secured Partnership Interests,
each allocation and distribution due and payable or made from
time to time on the Secured Partnership Interests, and the
proceeds thereof; (ii) consent to J&B's delivery of the above-
mentioned Financing Statements and the Bank's filing of the
Financing Statements from time to time with the appropriate
governmental authorities; (iii) assign to the Bank all
allocations and distributions which may be due and payable or
made from time to time on the Secured Partnership Interests
(subject to the terms and conditions set forth in this Bank
Agreement) until all outstanding obligations under any Set Aside
Investor Notes which are in default shall have been paid in full
(including, without limitation, all costs of collection,
reasonable attorney fees and other fees and expenses); and
(iv) agree that upon foreclosure of the security interests
granted pursuant to Section 7.5(b) hereof, pursuant to
Section 7.7(f) hereof, all allocations and distributions on the
Secured Partnership Interests shall be paid directly to the Bank,
as the assignee of J&B (subject to the terms and conditions set
forth in this Bank Agreement), regardless of whether the Bank
becomes a substitute limited partner in the Investing Partnership
in place of the defaulting Investor. Upon receipt of each
Consent, Assignment and Agreement, the Bank shall execute and
deliver to the Company a receipt therefor.
Section 7.6 Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note,
the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the related Set Aside Investor Notes, and the related
Consent and Agreement and Financing Statements pertaining to such
Set Aside Investor Notes, and the related Consent, Assignment and
Agreement and related Financing Statements pertaining to the
Secured Partnership Interests. J&B shall be obligated to deliver
to the Bank only those Set Aside Purchase Notes selected by J&B,
in its sole discretion, and the related Set Aside Investor Notes
in such an amount that the sum of 80% of the principal amount of
the Set Aside Purchase Notes plus 80% of the principal amount of
the related Set Aside Investor Notes equals the principal amount
of the Debentures which will be sold at the respective Initial
Closing or Additional Closing, together with the Consent and
Agreement and Financing Statements pertaining to that Set Aside
Purchase Note, the Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest, the Consent and Agreement and Financing Statements
pertaining to such Set Aside Investor Notes, and the Consent,
Assignment and Agreement and Financing Statements pertaining to
the Secured Partnership Interests.
Section 7.7 Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, shall file the Financing
Statements delivered to it from time to time by J&B with the
appropriate governmental authorities indicated by J&B to the Bank
and shall perform all duties imposed upon it by this Bank
Agreement until this Bank Agreement is terminated. The security
interests and assignments created by this Bank Agreement and by
each Consent, Assignment and Agreement shall automatically
terminate when all of the Debentures and all amounts payable to
the Bank under this Bank Agreement have been paid in full.
Thereupon, the Bank shall return to J&B the Set Aside Purchase
Notes and the related Set Aside Investor Notes deposited with it
pursuant to Section 7.2(b) and Section 7.4(b) hereof, and shall
file with the appropriate governmental authorities indicated by
J&B to the Bank Financing Statements delivered by J&B to the Bank
recording the termination of the Bank's security interests and
assignments granted under this Bank Agreement and each Consent,
Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures plus all
accrued interest due and immediately payable. In addition, the
Bank shall immediately notify each Investing Partnership in
writing of the occurrence of such Event of Default. Upon receipt
of such notice, each Investing Partnership shall (i) make all
payments of principal and interest on its respective Set Aside
Purchase Note to the Bank and (ii) notify each Investor, in
writing, that all payments on its Set Aside Investor Notes shall
be made directly to the Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests, Set Aside Investor Notes
or Secured Partnership Interests. In the event that the Company
shall default on its payment obligations to the Bank under this
Bank Agreement, the Bank shall be entitled to institute action
against the Company, jointly or severally, to collect payment
under this Bank Agreement, without any prior requirement to
attempt to collect any funds under the Set Aside Purchase Notes
or the related Purchased Partnership Interests, Set Aside
Investor Notes or Secured Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate (i) the Set Aside Purchase Notes and the
Purchased Partnership Interests (if the Bank shall have
foreclosed on such Set Aside Purchase Note pursuant to
Section 7.7(e) hereof) or (ii) the Set Aside Investor Notes and
Secured Partnership Interests (if an Investor Default shall have
occurred and the Bank shall have foreclosed on such Set Aside
Investor Note pursuant to Section 7.7(f) hereof) including, in
each case, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Company, free and clear of any claim, lien, charge or encumbrance
including, without limitation, any right of equity of redemption.
The Bank shall apply the proceeds of any such sale firstly to the
payment of the expenses of the sale, secondly to the payment of
the Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to the Company or its affiliates
because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
security interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to the limitations set forth
in Section 7.3(c)(iii) hereof, and to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all allocations
and distributions from that Operating Partnership as the assignee
of J&B and this Bank Agreement shall operate as an assignment of
such allocations and distributions by the Investing Partnership
subject to the limitations set forth in Section 7.3(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
there shall occur or if there shall have occurred and be
continuing an event of default under any Set Aside Purchase Note
or under any Partnership Agreement governing the Operating
Partnership related to the Purchased Partnership Interest, the
Bank shall be authorized to exercise any and all rights and
remedies available to it as the holder of the respective Set
Aside Purchase Note, the substituted partner or assignee with
respect to the Purchased Partnership Interest in the related
Operating Partnership, as well as any other remedy available
under law or equity. The Bank shall apply the proceeds of its
exercise of the above-mentioned rights and remedies firstly to
the payment of all costs of collection, secondly to the payment
of the Bank's fees and expenses, thirdly to the payment of all
accrued interest (including, without limitation, interest accrued
after the date of the Event of Default) and next to repayment of
principal of the Debentures, until all amounts due under the
Debentures shall have been paid in full together with all costs
of collection, fees and expenses.
(f) While an Event of Default is continuing, if an
Investor Default shall occur and be continuing, the Bank shall
immediately send written notice of that Investor Default to the
defaulting Investor and to the general partner of the Investing
Partnership. If the Investor Default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Investor Note, the Bank shall immediately foreclose on the
security interest in the related Secured Partnership Interest by
notifying the defaulting Investor and general partner of the
related Investing Partnership of the foreclosure. The Bank shall
send a notice to the Investing Partnership, which shall deliver a
copy of such notice to the defaulting Investor, stating that it
is retaining the Secured Partnership Interest in discharge of the
defaulted Set Aside Investor Note pursuant to Section 9-505 of
the Uniform Commercial Code and shall request admission as a
substituted limited partner in place of the defaulting Investor
in that Investing Partnership, subject to the limitations set
forth in Section 7.5(c)(iii) hereof. If the Bank may not be
admitted as a substituted limited partner in the Investing
Partnership for any reason, the Bank shall nevertheless be
entitled to receive all allocations and distributions from the
Investing Partnership in respect of such Secured Partnership
Interest as the assignee of such Secured Partnership Interest,
and this Bank Agreement shall operate as an assignment of such
allocations and distributions by the Investing Partnership,
subject to the limitations set forth in Section 7.5(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
an Investor Default shall occur or shall have occurred and be
continuing or an event of default under any Partnership Agreement
governing the Investing Partnership related to the Secured
Partnership Interest shall occur or shall have occurred and be
continuing, the Bank shall be authorized to exercise any and all
rights and remedies available to it as the holder of the
respective Set Aside Investor Note, the substituted limited
partner or assignee with respect to the Secured Partnership
Interest in the related Investing Partnership, as well as any
other remedy available under law or equity. The Bank shall apply
the proceeds of its exercise of the above-mentioned rights and
remedies firstly to the payment of all costs of collection,
secondly to the payment of the Bank's fees and expenses, thirdly
to the payment of all accrued interest (including, without
limitation, interest accrued after the date of the Event of
Default) and next to the repayment of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(g) If an Investor Default shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank and the defaulting Investor notice thereof. If that
event of default is continuing after the expiration of the grace
period, if any, contained in the Set Aside Investor Note in
respect of which the Investor Default occurred, if the Company
shall not effect a substitution pursuant to Section 7.11(e)
hereof, the Bank shall immediately foreclose on the security
interest in the related Secured Partnership Interest by notifying
the general partner of the related Investing Partnership of such
foreclosure. The Bank shall send a notice to the Investing
Partnership, which shall deliver a copy of such notice to the
defaulting Investor, stating that it is retaining the Secured
Partnership Interest in discharge of the defaulted Set Aside
Investor Note pursuant to Section 9-505 of the Uniform Commercial
Code and shall request admission as a substituted limited partner
in the Investing Partnership in place of the defaulting Investor,
subject to the limitations in Section 7.5(c)(iii) hereof. If the
Bank may not be admitted as a substituted limited partner in the
Investing Partnership for any reason, the Bank shall be entitled
nevertheless to receive all allocations and distributions from
that Investing Partnership as the assignee of the Secured
Partnership Interest and this Bank Agreement shall operate as an
assignment of such allocations and distributions by the Investing
Partnership, subject to the limitations in Section 7.5(c)(iii)
hereof. The Bank shall pay over to the Company any amounts
received from the Investing Partnership unless and until an Event
of Default shall occur and be continuing. If and when such Event
of Default shall occur and be continuing, the Bank shall follow
the proceedings specified in this Section 7.7.
(h) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note, Purchased Partnership
Interest, Set Aside Investor Note, or Secured Partnership
Interest to amounts owing to the Bank or the owners of the
Debentures under this Bank Agreement unless an Event of Default
shall occur and be continuing. The Bank shall be entitled to
exercise one or more remedies at the same time, all such rights
and remedies being cumulative and not mutually exclusive.
(i) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note, or
Secured Partnership Interest collected by the Bank including, but
not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this
Section 7.7(i) shall survive the termination of this Bank
Agreement.
Section 7.8 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Debentures, by notice to
the Company and to the Bank, may declare the entire principal of
and accrued interest on all Debentures to become immediately due
and payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.9 Sale of Set Aside Purchase Notes and
------------------------------------
Related Set Aside Investor Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one of more Set Aside Purchase Notes and all of the related Set
Aside Investor Notes to a third party, subject to the following
conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) The Bank shall receive cash in the amount
equal to (x) the sum of 80% of the principal balance
due at maturity of the Set Aside Purchase Note being
sold plus 80% of the principal amount of the related
Set Aside Investor Notes being sold and (y) an amount
sufficient to pay accrued interest on the pro rata
portion of Debentures to be prepaid pursuant to
subparagraph (iv) below.
(iii) Notwithstanding the above, in no event may a
Set Aside Purchase Note be sold apart from all of the
related Set Aside Investor Notes and no Set Aside
Investor Note may be sold apart from the related Set
Aside Purchase Note.
(iv) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note and related Set Aside Investor Notes that
are then sold to J&B, or at the written request of J&B,
to the purchaser, together with an assignment of
security interest and Purchase Agreement covering the
related Purchased Partnership Interest and Secured
Partnership Interests. Subject to Section 8(b) hereof
the Bank shall have no liability whatsoever to the
purchaser or any party hereto for its actions pursuant
to this Section 7.9.
Section 7.10 Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $ 1,000,000 outstanding . . $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding . . $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding . . $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding . . $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding . . $ 6,000
$ 5,000,001 to $ 6,000,000 outstanding . . $ 7,000
$ 6,000,001,to $ 7,000,000 outstanding . . $ 8,000
$ 7,000,001 to $ 8,000,000 outstanding . . $ 9,000
$ 8,000,001 to $ 9,000,000 outstanding . . $10,000
$ 9,000,001 to $10,000,000 outstanding . . $11,000
$10,000,001 to $10,800,000 outstanding . . $12,000
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.10 only when an
Event of Default has occurred and is continuing. The provisions
of this Section 7.10 shall survive the termination of this Bank
Agreement.
Section 7.11 Substitution of Set Aside Purchase Notes
----------------------------------------
and Set Aside Investor Notes.
----------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes together with all of the
related Set Aside Investor Notes (a withdrawn Set Aside Purchase
Note shall be defined for the purposes herein as the "Withdrawn
Set Aside Purchase Note" and the withdrawn related Set Aside
Investor Notes shall be defined for the purposes herein as the
"Withdrawn Set Aside Investor Notes") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") and
replace the Withdrawn Set Aside Investor Notes with Investor
Notes payable to the maker of the New Set Aside Purchase Note
(any such Investor Notes shall be defined for the purposes herein
as the "New Set Aside Investor Notes") so long as (i) no Event of
Default has occurred and is continuing and (ii) the sum of (x)
80% of the aggregate principal amount of the Set Aside Purchase
Notes held by the Bank after the Withdrawn Set Aside Purchase
Note is withdrawn and the New Set Aside Purchase Notes are
deposited plus (y) 80% of the aggregate principal balance of the
Set Aside Investor Notes held by the Bank after the Withdrawn Set
Aside Notes are withdrawn and the New Set Aside Investor Notes
are deposited is equal to the principal amount of the Debentures
that remain outstanding.
(b) The Company may only substitute a New Set Aside
Purchase Note for a Withdrawn Set Aside Purchase Note if (i) it
simultaneously substitutes the New Set Aside Investor Notes for
the withdrawn Set Aside Investor Notes and (ii) the New Set Aside
Investor Notes are payable to the Investing Partnership that is
the maker of the New Set Aside Purchase Notes.
(c) In order to effect the substitution described in
Section 7.11(a) hereof, the Company shall deliver to the Bank
(i) the New Set Aside Purchase Note along with the Consent and
Agreement as described in Section 7.2(c) hereof, the Financing
Statements pertaining to the New Set Aside Purchase Note, the
Consent, Assignment and Agreement as described in Section 7.3(c)
hereof, and the related Financing Statements pertaining to the
Purchased Partnership Interest that secures such New Set Aside
Purchase Note and (ii) the New Set Aside Investor Notes along
with the Consent and Agreement as described in Section 7.4(c)
hereof, the Financing Statements pertaining to the New Set Aside
Investor Notes, the Consent, Assignment and Agreement as
described in Section 7.5(c) hereof, and the related Financing
Statements pertaining to the Secured Partnership Interests that
secure such New Set Aside Investor Notes. Upon receiving the New
Set Aside Purchase Note, the New Set Aside Investor Notes and the
related documents described in the preceding sentence, the
security interest and assignment created by this Bank Agreement,
each Consent, Assignment and Agreement described in
Section 7.2(c) hereof and Section 7.4(c) hereof each as relates
to the Withdrawn Set Aside Purchase Note, each Consent,
Assignment and Agreement described in Section 7.3(c) hereof and
Section 7.5(c) hereof each as relates to the Withdrawn Set Aside
Investor Notes, shall automatically terminate and shall have no
further force or effect. Thereupon, the Bank shall (i) return
the Withdrawn Set Aside Purchase Note and Withdrawn Set Aside
Investor Notes to the Company, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest and the Secured Partnership Interests, (iii) file with
the appropriate governmental authorities indicated by J&B to the
Bank, Financing Statements delivered by J&B to the Bank recording
the termination of the Bank's security interest and assignment
granted under this Bank Agreement, and (iv) return to J&B the
Consent and Agreement described in Section 7.2(c) hereof and the
Consent, Assignment and Agreement described in Section 7.3(c)
hereof, each as relates to such Withdrawn Set Aside Purchase
Note, and return to J&B the Consent and Agreement described in
Section 7.4(c) hereof and the Consent, Assignment and Agreement
described in Section 7.5(c) hereof, each as relates to the
Withdrawn Set Aside Investor Notes. The Company will notify the
Debenture holders of the substitution of the Withdrawn Set Aside
Purchase Note and Withdrawn Set Aside Investor Notes with the New
Set Aside Purchase Note and New Set Aside Investor Notes,
respectively, within sixty (60) days thereof and provide those
Debenture holders with the information pertaining to the New Set
Aside Purchase Note and New Set Aside Investor Notes that would
have been contained in the Memorandum if the New Set Aside
Purchase Note and New Set Aside Investor Notes had been included
with the Set Aside Purchase Notes and Set Aside Investor Notes
described therein.
(d) After the substitution of the New Set Aside
Purchase Note and the New Set Aside Investor Notes for the
Withdrawn Set Aside Purchase Note and Withdrawn Set Aside
Investor Notes, respectively, the New Set Aside Purchase Note
shall be deemed to be a Set Aside Purchase Note and the New Set
Aside Investor Notes shall be deemed to be Set Aside Investor
Notes, in each case, for all purposes as set forth in this Bank
Agreement.
(e) Anything in this Bank Agreement to the contrary
notwithstanding, so long as no Event of Default shall occur and
be continuing and so long as the provisions of Section 7.11
hereof are complied with, upon the occurrence of an Investor
Default, J&B shall have the right, within 90 days of the
occurrence of such Investor Default, to arrange for the sale of
the Secured Partnership Interest of the defaulting Investor to a
new Investor and to substitute Investor Notes ("Substitute
Investor Notes"), of the new Investor (which shall be in like
principal amount and maturity as the defaulted Investor Notes and
be payable to the same Investing Partnership as the defaulted
Investor Notes for the Investor Notes) of the defaulting
Investor. Upon such substitution the Bank shall return the
defaulted Investor Notes to the Company and the Substitute
Investor Notes shall be Set Aside Investor Notes for all purposes
hereunder.
Section 7.12 Delivery of Set Aside Purchase Notes and
----------------------------------------
Set Aside Investor Notes. The Company shall deliver the Set
------------------------
Aside Purchase Notes and the related Set Aside Investor Notes
together with the Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c), and the Consent and
Agreement required by Section 7.2(c) hereof and Section 7.4(c)
hereof, and the related Financing Statements as follows:
(a) Original Set Aside Purchase Notes and related
original Set Aside Investor Notes shall be
delivered to:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Mr. Vincent Nardone,
A.V.P., Security Operation
Free Receive Area, 5th Floor.
No less than ten days prior to the delivery by the
Company to the Bank of the first Set Aside
Purchase Note, the Company shall deliver a
schedule in duplicate form of all Set Aside
Purchase Notes and Set Aside Investor Notes to the
Bank at the address set forth in Section 12
hereof.
(b) Copies of each Set Aside Purchase Note and related
Set Aside Investor Notes together with the
Consent, Assignment and Agreement required by
Section 7.3(c) hereof and Section 7.5(c) hereof,
and the Consent and Agreement required by
Section 7.2(c) hereof and Section 7.4(c) hereof,
and the related Financing Statements shall be
delivered by the Company to the Bank for execution
at the address set forth in Section 12 hereof and
promptly returned to Company's counsel at the
address as set forth in Section 12 hereof.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to
Section 18(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note,
Purchased Partnership Interest, Set Aside Investor Note or
Secured Partnership Interest in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor bank shall become effective only upon
the successor bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns
\or is re
moved or if a
vacancy exists in the office of the Bank for any
reason, the Company shall promptly appoint a successor
bank.
(ii) If a successor bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor bank.
(iii) A successor bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it under the terms of this Bank Agreement.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor bank.
Section 12. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing, subject to the terms of Section 1.6 hereof, and shall be
delivered by hand or sent by registered, certified, return
receipt requested, or first class mail, or by facsimile,
confirmed by writing, delivered by hand or sent by registered or
certified mail, return receipt requested, delivered or sent on
the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment. This Bank
---------------------------
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability. Any provision of this
--------------
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts. This Bank Agreement may
------------
be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.
Section 18. Definitions. All terms used in this
-----------
Bank Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s/ Bernard M. Rodin By: /s/ Harley Jeanty
-------------------------- ----------------------
Title: General Partner Title: Assistant Vice
President
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
--------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s Bernard M. Rodin
--------------------------
Title: Vice President
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
1. (a) Investing Partnership: Lake Michigan Associates, a
Texas limited partnership
(b) Operating Partnership: Clement Kern Gardens Limited
Dividend Housing Association Limited Partnership, a
Michigan limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,300,000
(ii) Date of Issue: December 1, 1985
(iii) Final Maturity Date: November 30, 2000
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,300,000
(vii) Prepaid Interest as of
July 31, 1994 $173,833
(d) Purchase Agreement: Sale and Purchase Agreement dated
December 1, 1985, by and among John Luciani, Bernard
M. Rodin and Lake Michigan Associates (Sellers'
respective rights and interests under the Purchase
Agreement have been sold, transferred and assigned to
J&B Management Company)
(e) Purchased Partnership Interest: 98.50% of the profits
and losses and 98.50% of the cash flow of the
Operating Partnership
<PAGE>
2. (a) Investing Partnership: Village Associates, a Texas
limited partnership
(b) Operating Partnership: Lucas Heights Village I, Ltd.,
a Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $2,200,000
(ii) Date of Issue: August 1, 1986
(iii) Final Maturity Date: July 30, 2001
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $2,200,000
(vii) Prepaid Interest as of
July 31, 1994 $13,200
(d) Purchase Agreement: Sale and Purchase Agreement dated
May 5, 1986, by and among John Luciani, Bernard M.
Rodin, John Luciani, III, Dorian Luciani and Village
Associates (Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 98.75% of the profits
and losses and 98.75% of the cash flow of the
Operating Partnership
<PAGE>
3. (a) Investing Partnership: Hill Top-Abilene Associates
Limited Partnership, a New Jersey limited partnership
(b) Operating Partnership: Abilene North Apts., Ltd., a
Texas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $950,000
(ii) Date of Issue: August 11, 1986
(iii) Final Maturity Date: August 10, 2001
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $950,000
(vii) Accrued Interest as of
July 31, 1994 $43,200
(d) Purchase Agreement: Sale and Purchase Agreement dated
August 11, 1986, by and among John Luciani, Bernard M.
Rodin and Hill Top-Abilene Associates Limited
Partnership (Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 98.75% of the profits
and losses and 98.75% of the cash flow of the
Operating Partnership
<PAGE>
4. (a) Investing Partnership: Richardson Associates, a Texas
limited partnership
(b) Operating Partnership: The Habitat, Ltd., a Texas
limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,950,000
(ii) Date of Issue: June 28, 1985
(iii) Final Maturity Date: May 31, 2000
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $3,950,000
(vii) Accrued Interest as of
July 31, 1994 $1,262,575
(d) Purchase Agreement: Sale and Purchase Agreement dated
June 28, 1985, by and among John Luciani, Bernard M.
Rodin, J&B Management Corp., J&B Management Company,
John Luciani, III, Frederick Modell, Gerald Modell,
Gerald Reich, Leonard Rubin, Mitchell Sirgany, Ivars
Sprogis, the Estate of Harry Zuckerman, the Estate of
Henry Kalman and Richardson Associates (Sellers'
respective rights and interests under the Purchase
Agreement have been sold, transferred and assigned to
J&B Management Company)
(e) Purchased Partnership Interest: 97% of the profits and
losses (which is reduced to 49.5% upon the return to
The Habitat, Ltd. limited partners of their capital
contributions) and 49.5% of the cash flow of the
Operating Partnership
<PAGE>
5. (a) Investing Partnership: Gregg Associates, a Texas
limited partnership
(b) Operating Partnerships: Longview Apts., Ltd. and
Marshall Apts., Ltd., Texas limited partnerships
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,950,000
(ii) Date of Issue: June 27, 1986
(iii) Final Maturity Date: June 26, 2001
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final
Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,950,000
(vii) Accrued Interest as of
July 31, 1994 $3,250
(d) Purchase Agreement: Sale and Purchase Agreement dated
May 5, 1986, by and among John Luciani, Bernard M.
Rodin, John Luciani, III, Dorian Luciani and Gregg
Associates (Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 98.75% of the profits
and losses and 98.75% of the cash flow of the
Operating Partnerships
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[Form of Consent and Agreement]
CONSENT AND AGREEMENT
[pursuant to Section 7.2(c)] and Section 7.4(c)]
THIS CONSENT AND AGREEMENT, dated as of --------------,
19--, is by and between [name of Investing Partnership] (the
"Investing Partnership"), J&B Management Company ("J&B"), and The
Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.2(c) and Section 7.4(c) of the Bank
Agreement provide for the execution of this Consent and Agreement
by the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby convent and agree as follows:
Section 1. Consents. The Investing Partnership
--------
hereby consents to (i) J&B's assignment to the Bank, pursuant to
Section 7.2(c) of the Bank Agreement, of the Investing
Partnership's Set Aside Purchase Note; (ii) J&B's assignment to
the Bank, pursuant to Section 7.4(c) of the Bank Agreement, of
the Set Aside Investor Notes; (iii) J&B's delivery of the
Investing Partnership's Set Aside Purchase Note to the Bank; and
(iv) J&B's delivery of the Set Aside Investor Notes to the Bank.
The Bank hereby acknowledges that interest may be deferred until
the maturity of that Set Aside Purchase Note.
Section 2. Agreements. The Investing Partnership
----------
hereby agrees that upon receiving the Bank's notice of an Event
of Default, the Investing Partnership shall (i) pay all sums due
under its Set Aside Purchase Note directly to the Bank and (ii)
notify the makers of the Set Aside Investor Notes that all
payments thereunder shall be made directly to the Bank.
Section 3. Notices. All notices and other
-------
communications pursuant or relating to this Consent and Agreement
shall be in writing and shall be delivered by hand or sent by
registered or certified mail, return receipt requested, or by
facsimile, confirmed by writing delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Investing Partnership:
------------------------------------
------------------------------------
------------------------------------
(b) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 4. Choice of Law. This Consent and Agreement
-------------
shall be governed by the laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
Section 5. Successors. This Consent and Agreement
----------
shall be binding upon inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 6. Counterparts. This Consent and Agreement
------------
may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute
one instrument.
Section 7. Definitions. All terms used in this
-----------
Consent and Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Bank Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
[Name of Investing Partnership]
By:
------------------------------
J&B MANAGEMENT COMPANY
By:
-------------------------------
Title:
THE BANK OF NEW YORK
By:
-------------------------------
Title:
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
[Form of Consent, Assignment and Agreement]
CONSENT, ASSIGNMENT AND AGREEMENT
[pursuant to Section 7.3(c) and Section 7.5(c)]
THIS CONSENT, ASSIGNMENT AND AGREEMENT, dated as of ---
-------, 19--, is by and among [name of Investing Partnership]
(the "Investing Partnership") [name of Operating Partnership]
(the "Operating Partnership"), J&B Management Company ("J&B"),
and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.3(c) and Section 7.5(c) of the Bank
Agreement provide for the execution of this Consent, Assignment
and Agreement by the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby consent and agree as follows:
Section 1. Consents, Assignments and Agreements
------------------------------------
with Respect to Purchased Partnership Interests. The Investing
-----------------------------------------------
Partnership and the Operating Partnership in which the Investing
Partnership owns a Purchased Partnership interest hereby (i)
consent to J&B's assignment to the Bank of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, all allocations and
distributions which may be due and payable or made from time to
time on such Purchased Partnership Interest, and the proceeds
thereof, relating to the Investing Partnership's Set Aside
Purchase Note; (ii) consent to J&B's delivery to the Bank of
Financing Statements and to the Bank's filing of such Financing
Statements with the appropriate governmental authorities in order
to perfect and to continue the perfection of the Bank's security
interest in the Purchase Agreement, security interest in the
Purchased Partnership Interest, Purchased Partnership Interest
allocations and distributions which may be due and payable from
time to time on the Purchased Partnership Interest; (iii) subject
to the terms and conditions of the Bank Agreement, assign to the
Bank all allocations and distributions which shall be due and
payable or made from time to time on the Purchased Partnership
Interest, and the proceeds thereof, until all outstanding
obligations under the Set Aside Purchase Note, if such be in
default, have been paid in full (including, without limitation,
all costs of collection, reasonable attorneys' fees and other
fees and expenses); and (iv) subject to the terms and conditions
of the Bank Agreement, agree that upon foreclosure of the
security interest in the Purchased Partnership Interest all
allocations and distributions made on the Purchased Partnership
Interest shall by paid directly to the Bank, as the assignee of
J&B, regardless of whether the Bank becomes a substituted limited
partner in the Operating Partnership in place of the Investing
Partnership.
Section 2. Consents, Assignments and Agreements with
-----------------------------------------
respect to Secured Partnership Interests. The Investing
----------------------------------------
Partnership hereby (i) consents to J&B's assignment to the Bank
of the security interests in the Secured Partnership Interests,
each allocation and distribution due and payable or made from
time to time on the Secured Partnership Interests, and the
proceeds thereof, relating to the Set Aside Investor Notes
("Security Interest"); (ii) consents to J&B's delivery to the
Bank of Financing Statements and to the Bank's filing of such
Financing Statements with the appropriate governmental
authorities in order to perfect and to continue the perfection of
the Security Interest; (iii) subject to the terms and conditions
of the Bank Agreement, assign to the Bank all allocations and
distributions which shall be due and payable or made from time to
time on the Secured Partnership Interests, and the proceeds
thereof, until all outstanding obligations under any Set Aside
Investor Notes, if such be in default, shall have been paid in
full (including, without limitation, all costs of collection
reasonable attorney's fees and other fees and expenses); and (iv)
subject to the terms and conditions of the Bank Agreement, agree
that upon foreclosure of the Security Interest all allocations
and distributions made on the Secured Partnership Interest shall
be paid directly to the Bank, as the assignee of J&B, regardless
of whether the Bank becomes a substituted limited partner in the
Investing Partnership.
Section 3. Representations of the Operating
--------------------------------
Partnership. The Operating Partnership hereby agrees to keep a
-----------
copy of this Consent, Assignment and Agreement with its business
records.
Section 4. Agreement of the Operating Partnership.
--------------------------------------
The Operating Partnership hereby agrees to admit the Bank as a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership upon the Bank's foreclosure on the
security interest in the Purchased Partnership Interest and
written request, subject to the limitations in Section 1(iii)
hereof, the Bank's obtaining HUD 2530 Clearance and the rights of
the Investing Partnership under Section 9.505 of the Uniform
Commercial Code.
Section 5. Amendment to Operating Partnership
----------------------------------
Agreement. Upon substitution of the Bank for the Investing
---------
Partnership as a limited partner in the Operating Partnership
pursuant to the Bank Agreement and this Consent, Assignment and
Agreement, this Consent, Assignment and Agreement shall
constitute an amendment to the partnership agreement of the
Operating Partnership, and the Bank shall not be liable for the
obligations of any predecessor which has assigned the Purchased
Partnership Interest to make any contributions to the Operating
Partnership.
Section 6. Agreement of the Investing Partnership.
--------------------------------------
The Investing Partnership hereby agrees that upon the occurrence
of an Investor Default and following the Bank's foreclosure on
the Security Interest and written request to the Investing
Partnership, the Investing Partnership shall admit the Bank as a
substituted limited partner in the Investing Partnership, subject
to the limitations in Section 2(iii) hereof.
Section 7. Amendment to the Investing Partnership
--------------------------------------
Agreement. Upon admission of the Bank as a substituted limited
---------
partner in the Investing Partnership pursuant to the Bank
Agreement and this Consent, Assignment and Agreement, this
Consent, Assignment and Agreement shall constitute an amendment
to the partnership agreement of the Investing Partnership, and
the Bank shall not be liable for the obligations of any
predecessor which has assigned the Secured Partnership Interest
to make any contributions to the Investing Partnership.
Section 8. Further Assurances and Power of Attorney.
----------------------------------------
Each of the parties hereto shall, from time to time, upon request
of a party hereto, duly execute, acknowledge and deliver or cause
to be duly executed, acknowledged and delivered, all such further
instruments and documents reasonably requested by a party to
effectuate the intent and purposes of this Consent, Assignment
and Agreement. Notwithstanding the foregoing, this Consent,
Assignment and Agreement shall constitute an irrevocable power of
attorney coupled with an interest for the Bank to execute and
file a certificate of amendment to the certificate of limited
partnership of the Operating Partnership or any other document or
instrument in order to effectuate the intent and purposes of this
Consent, Assignment and Agreement; provided, however, that the
Bank may not be substituted as a partner of the Operating
Partnership unless such substitution is permitted under the
Uniform Commercial Code and HUD 2530 Clearance, if required, has
been obtained.
Section 9. Notices. All notices and other
-------
communications pursuant or relating to this Consent, Assignment
and Agreement shall be in writing and shall be delivered by hand
or sent by registered or certified mail, return receipt
requested, or by facsimile, confirmed by writing delivered by
hand or sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Operating Partnership:
----------------------------------
----------------------------------
----------------------------------
(b) If to the Investing Partnership:
----------------------------------
----------------------------------
----------------------------------
(c) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Harley Jeanty,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 10. Choice of Law. This Consent, Assignment
-------------
and Agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law
thereof.
Section 11. Successors. This Consent, Assignment and
----------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
Section 12. Counterparts. This Consent, Assignment
------------
and Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall
constitute one instrument.
Section 13. Definitions. All terms used in this
-----------
Consent, Assignment and Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Bank
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent, Assignment and Agreement as of the date first above
written.
[Name of Investing Partnership]
By:
---------------------------
[Name Of Operating Partnership]
By:
--------------------------
J&B MANAGEMENT COMPANY
By:
--------------------------
Title:
THE BANK OF NEW YORK
By:
--------------------------
Title:
<PAGE>
EXHIBIT D
TO BANK AGREEMENT
SUMMARY OF INVESTOR NOTES
--------------------------
INVESTOR INVESTOR INVESTOR
NOTES NOTES NOTES
MATURING MATURING MATURING
1995 1996 1997
INVESTING PARTNERSHIP
Richardson
Associates $231,000 $231,000 $231,000
Lake Michigan
Associates 126,000 105,000 105,000
Gregg
Associates 88,000 88,000 88,000
Hilltop-Abilene
Associates 60,500 60,500 60,500
Village
Associates 117,000 117,000 107,250
------- -------- -------
TOTAL 622,500 601,500 583,750
======= ======= =======
INVESTOR INVESTOR INVESTOR
NOTES NOTES NOTES
MATURING MATURING MATURING
1998 1999 2000 TOTAL
INVESTING PARTNERSHIP
Richardson
Associates 231,000 231,000 --- 1,155,000
Lake Michigan
Associates 105,000 105,000 --- 546,000
Gregg
Associates 76,500 68,000 68,000 468,500
Hilltop-Abilene
Associates 55,000 49,500 44,000 330,000
Village
Associates 112,750 112,750 112,750 679,500
------- ------- ------- -------
TOTAL 580,250 566,250 224,750 3,179,000
======= ======= ======= =========
Exhibit 10.5(l)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of July 12, 1995 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 10, 12%
Debentures due January 15, 2004 (the "Debentures") pursuant to
the Company's Confidential Private Placement Memorandum, as the
same may be from time to time amended (the "Memorandum");
WHEREAS, the Company's private placement of the
Debentures (the "Offering") will terminate on the earlier of (i)
the date on which all the Debentures are sold or (ii) June 30,
1996 (the "Offering Termination Date");
WHEREAS, subscribers will purchase Debentures at a
closing (the "Initial Closing") to be held when at least $500,000
principal amount of Debentures have been sold and, thereafter,
from time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date");
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Debentures
(each, singly, a "Purchaser," and, collectively, the
"Purchasers"), in payment for the Debentures, which amounts shall
be released to the Company at the Initial Closing and at each
Additional Closing;
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Debentures, distributions representing interest
accrued on that Purchaser's subscription payment at a rate of 12%
per annum;
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called J&B Management Company Series 10
Escrow Fund Account (the "Fund") with the Bank;
WHEREAS, the Company, for the benefit of the Bank and
the Purchasers, wishes to assign to, and to grant the Bank a
security interest in, certain notes, instruments and documents as
more fully described below and the Bank is willing to accept such
security interest and assignment upon the terms and conditions
hereinafter set forth; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Custodian, Paying Agent,
Registrar and Transfer Agent with respect to the Debentures and
the above-mentioned notes, instruments and documents and the Bank
is willing to accept such appointments upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow. The Company shall from time to
------
time deliver amounts received from Purchasers in payment for the
Debentures ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1 commercial paper, P-1 commercial
paper, interest bearing money market accounts, all as specified
in writing by the Company and held in trust for the benefit of
the Purchasers. In the event the Company should fail to so
specify, Subscription Payments delivered for deposit in the Fund
shall be invested in the Bank's Deposit Reserve, an interest-
bearing account, for the benefit of the Purchasers. The Bank is
not responsible for interest, losses, taxes or other charges on
investments. All checks delivered to the Bank for deposit in the
Fund shall be payable to the order of "J&B Management Company -
Escrow Account." Concurrently with such delivery, the Company
shall deliver to the Bank a statement of the name, mailing
address and tax identification number of each Purchaser whose
Subscription Payment is being delivered, and a schedule listing
the aggregate Debentures and aggregate cumulative Subscription
Payments to date delivered for deposit in the Fund. For the
purposes of this Bank Agreement, the Company is authorized to
make deposits and give instructions as to investments of deposits
and otherwise, as contemplated in this Bank Agreement, to the
Bank.
Section 1.3 Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Debentures,
interest will accrue on that Purchaser's Subscription Payment at
a rate of 12% per annum, computed on the basis of a year of 360
days consisting of 12 thirty day months. Interest shall be
payable on the fifteenth day of each month if such day is a
Business Day. If such day is not a Business Day, then the next
Business Day shall be deemed the Interest Payment Date (each, an
"Interest Payment Date"). Four Business Days prior to each such
Interest Payment Date, the Bank shall give the Company written
notice of the difference between the amount of interest which
will be payable on Subscription Payments on such Interest Payment
Date and the amount of interest accruing on the Fund's assets
which will be available for such payment on such Interest Payment
Date. Not later than 11:30 a.m. (New York time) on such Interest
Payment Date, the Company shall deposit with the Bank the amount
of such difference. On each Interest Payment Date, the Bank
shall pay interest which is due and payable to the respective
Purchasers by mailing its check in the appropriate amount to each
Purchaser by first class mail at the Purchaser's mailing address
provided to the Bank pursuant to Section 1.2 hereof. In the
event that the Company shall default in its payment obligations
to the Bank under this Section 1.3, the Bank shall mail its check
in the amount of each Purchaser's pro rata share of interest
earned and paid on the Fund's assets as provided in this Section
1.3. For purposes of this Bank Agreement, "Business Day" shall
mean any day other than a day on which the Bank is authorized to
remain closed in New York City.
Section 1.4 Conditions of Initial Closing and
---------------------------------
Additional Closings. Notwithstanding anything to the contrary in
-------------------
this Bank Agreement, it is a condition precedent to the Initial
Closing and to each Additional Closing that J&B shall deliver to
the Bank Set Aside Purchase Notes in such an amount, as
calculated by J&B, that 80% of the aggregate principal balance
outstanding at maturity of the Set Aside Purchase Notes equals
the principal amount of the Debentures which will be sold at that
Initial Closing or Additional Closing, together with the related
Consent and Agreement pertaining to each such Set Aside Purchase
Note and the related Consent, Assignment and Agreement pertaining
to the Purchased Partnership Interest and the related Financing
Statements (as such terms are defined in Section 7 hereof), as
provided in Section 7 hereof. Upon the scheduling of the Initial
Closing and each Additional Closing, the Company shall give
written notice thereof to the Bank not less than one (1) Business
Day prior to the date scheduled for each such closing. As used
in this Section 1.4 and elsewhere in this Bank Agreement, a
statement concerning the outstanding principal amount at maturity
of a Set Aside Purchase Note refers to the amount of principal
that would be due at maturity on that Set Aside Purchase Note if
all payments of principal on that Set Aside Purchase Note
scheduled to be made prior to maturity were made when due and
none of such payments were deferred by the obligor thereof with
the consent of the Company.
Section 1.5 Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment. (a) The Bank, at the Initial
-------
Closing and each Additional Closing, upon written instruction
from either Mr. John Luciani and Mr. Bernard M. Rodin, as the
sole partners and directors of the Company, shall transfer to the
Company or to such third party or parties as may be directed by
Mr. Luciani or Mr. Rodin the Cleared Funds then held in the Fund
by the Bank. Any interest earned thereon and not theretofore
distributed in accordance with Section 1.3 hereof shall be paid
to the Purchasers in accordance with Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) above from any
one other than Mr. Luciani or Mr. Rodin, regardless of whether
that person is an employee, agent or representative of the
Company, those instructions are to be deemed to be invalid and
contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses. In addition to the
-----------------
fees set forth in Section 7.10 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Debentures have been sold prior thereto. In
the event the Offering terminates prior to June 30, 1996, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of this Bank
Agreement, in an amount calculated as the difference between (a)
$5,000 and (b) the product of (x) $5,000 and (y) a fraction, the
numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the
termination of this Bank Agreement.
Section 1.8 Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the
---------------
Internal Revenue Code of 1986, as amended, the Company shall
request that each Purchaser furnish to the Bank such Purchaser's
taxpayer identification number and a statement certified under
penalties of perjury that (a) such taxpayer identification number
is true and correct and (b) the Purchaser is not subject to
withholding of 31% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds. In the event that any
------------------
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds. For the purpose of this
-------------
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Debentures shall be
---------
executed on behalf of the Company by the manual or facsimile
signature of a partner or officer of the Company. All such
facsimile signatures shall have the same force and effect as if
the partner or officer had manually signed the Debentures. In
case any partner or officer of the Company whose signature shall
appear on a Debenture shall cease to be such partner or officer
before the delivery of such Debenture or the issuance of a new
Debenture following a transfer or exchange, such signature or
such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such partner or officer had remained a
partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication. Only such Debentures as
--------------
shall have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Debenture
attached to the Memorandum, duly executed by the manual signature
of an authorized signatory of the Bank, shall be entitled to any
right or benefit under this Bank Agreement. No Debentures shall
be valid or obligatory for any purpose unless and until such
Certificate of Authentication shall have been duly executed by
the Bank; and such executed certificate upon any such Debenture
shall be conclusive evidence that such Debenture has been
authenticated and delivered under this Bank Agreement. The
Certificate of Authentication on any Debenture shall be deemed to
have been executed by the Bank if signed by an authorized
signatory of the Bank, but it shall not be necessary that the
same person sign the Certificate of Authentication on all of the
Debentures.
Section 4. Mutilated, Lost, Stolen or Destroyed
------------------------------------
Debentures. Subject to applicable law, in the event any
----------
Debenture is mutilated, lost, stolen or destroyed, the Company
may authorize the execution and delivery of a new Debenture of
like date, number, maturity and denomination as that mutilated,
lost, stolen or destroyed, provided, however, that in the case of
any mutilated Debenture, such mutilated Debenture shall first be
surrendered to the Company, and in the case of any lost, stolen
or destroyed Debenture, there shall be first furnished to the
Company and the Bank, evidence of the ownership thereof and of
such loss, theft or destruction satisfactory to the Company and
the Bank, together with indemnification through a bond of
indemnity or otherwise as shall be satisfactory to the Company
and the Bank. The Company may charge the Purchaser of such
Debenture with any amounts satisfactory to the Company and the
Bank and permitted by applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Debentures. The Debentures are issuable only as registered
----------
Debentures without coupons in the denomination of $100,000 or any
multiple or any fraction thereof at the sole discretion of the
Company. Each Debenture shall bear the following restrictive
legend: "These securities have not been registered under the
Securities Act of 1933, as amended, and may be offered and sold
or otherwise transferred only if registered pursuant to the
provisions of that Act or if an exemption from registration is
available." The Bank shall keep at its principal corporate trust
office a register in which the Bank shall provide for the
registration and transfer of Debentures. Upon surrender for
registration of transfer of any Debenture at such office of the
Bank, the Company shall execute, pursuant to Section 2 hereof,
and mail by first class mail to the Bank, and the Bank shall
authenticate, pursuant to Section 3 hereof, and mail by first
class mail to the designated transferee, or transferees, one or
more new Debentures in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Debenture, registered
in the name of the designated transferee or transferees. Every
Debenture presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument
of transfer duly executed, by the holder of such Debenture or his
attorney duly authorized in writing. Notwithstanding the
preceding, the Debentures may not be transferred without an
effective registration statement under the Securities Act of 1933
covering the Debentures or an opinion of counsel to the holder of
such Debentures satisfactory to the Company and its counsel that
such registration is not necessary under the Securities Act of
1933 (the "Securities Act"). At the option of the owner of any
Debenture, such Debenture may be exchanged for other Debentures
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered
Debenture, upon surrender of the Debenture to be exchanged at the
principal corporate trust office of the Bank; provided, however,
that any exchange for denominations other than $100,000 or an
integral multiple thereof shall be at the sole discretion of the
Company. Whenever any Debenture is so surrendered for exchange,
the Company shall execute, pursuant to Section 2 hereof, and
deliver to the Bank, and the Bank shall authenticate, pursuant to
Section 3 hereof, and mail by first class mail to the designated
transferee, or transferees, the Debenture or Debentures which the
Debenture owner making the exchange is entitled to receive. Any
Debenture or Debentures issued in exchange for any Debenture or
upon transfer thereof shall be dated the date to which interest
has been paid on such Debenture surrendered for exchange or
transfer, and neither gain nor loss of interest shall result from
any such exchange or transfer. In addition, each Debenture
issued upon such exchange or transfer shall bear the restrictive
legend set forth above unless in the opinion of counsel to the
Company, such legend is not required to ensure compliance with
the Securities Act.
Section 5.3 Owner. The person in whose name any
-----
Debenture shall be registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on
account of the principal of or interest on such Debenture shall
be made only to or upon the order of the registered owner thereof
or his duly authorized legal representative. Such registration
may be changed only as provided in this Section 5, and no other
notice to the Company or the Bank shall affect the rights or
obligations with respect to the transfer of a Debenture or be
effective to transfer any Debenture. All payments to the person
in whose name any Debenture shall be registered shall be valid
and effectual to satisfy and discharge the liability upon such
Debenture to the extent of the sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send
--------------
executed, authenticated Debentures to Purchasers on Closing Dates
and to subsequent owners and transferees who are entitled to
receive Debentures pursuant to the terms of this Bank Agreement,
by first class mail.
Section 5.5 Charges and Expenses. No service charge
--------------------
shall be made for any transfer or exchange of Debentures, but in
all cases in which Debentures shall be transferred or exchanged
hereunder, as a condition to any such transfer or exchange, the
owner of the Debenture shall, prior to the delivery of any new
Debenture pursuant to such transfer or exchange, reimburse the
Company and the Bank for their respective actual out-of-pocket
expenses incurred in connection therewith (including, but not
limited to, any tax, fee or other governmental charge required to
be paid with respect to such transfer or exchange, actual
expenses for stationery, postage, telephone, telex, wire
transfers, telecopy and retention of records, and reasonable fees
and expenses of their respective counsel). The provisions of
this Section 5.5 shall survive the termination of this Bank
Agreement.
Section 5.6 Redemption.
----------
(a) Whenever the Company shall effect a voluntary
redemption, at any time in its sole and absolute discretion, of
part or all of the Debentures, which shall be without premium or
penalty, or is required to effect mandatory redemption, pursuant
to the schedule set forth in Exhibit D included herewith, of part
or all of the Debentures, the Company shall give written notice
thereof to the Bank at least forty (40) days prior to the date
set forth for redemption, the manner in which redemption shall be
effected and all the relevant details thereof. The Bank shall
give written notice to the Purchasers in the form included
herewith as Exhibit E of that redemption at least thirty (30)
days prior to the date set forth for redemption. The Bank shall
register the cancellation of the whole or a portion of the
redeemed Debentures, as appropriate. In any event, new
debentures will not be issued to reflect the non-redeemed portion
of the Debentures. No interest shall be payable on the redeemed
portion of a Debenture from and after the date of redemption.
(b) Notwithstanding the schedule for mandatory
redemption of part or all of the Debentures set forth in the
schedule set forth in Exhibit D, the Bank hereby acknowledges
that the Company may effect a voluntary redemption, at any time
in its sole and absolute discretion, of part or all of the
Debentures without premium or penalty. In the event the Company
should effect a partial voluntary redemption of the Debentures,
the Bank shall (i) return to the Company Set Aside Purchase Notes
selected by the Company in such an amount that 80% of the
aggregate principal balance outstanding at maturity of such Set
Aside Purchase Notes equals the principal amount of the redeemed
portion of the Debentures, (ii) execute and deliver to the
Company an instrument prepared by J&B effecting a release by the
Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest (as such terms are defined in Section 7.3(a) hereof),
(iii) file with the appropriate governmental authorities
indicated by J&B to the Bank, Financing Statements delivered by
J&B to the Bank recording the termination of the Bank's security
interest and assignment granted under this Bank Agreement, and
(iv) return to J&B the Consent and Agreement described in Section
7.2(c) hereof, the Consent, Assignment and Agreement described in
Section 7.3(c) hereof relating to such returned Set Aside
Purchase Notes and the Purchased Partnership Interest,
respectively. In no event, however, will the Bank release Set
Aside Purchase Notes if the sum of 80% of the aggregate principal
balance outstanding of the Set Aside Purchase Notes would be less
than the principal amount of the Debentures that remain
outstanding.
Section 6. Paying Agent.
------------
Section 6.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions. The Bank shall pay
------------------
interest on Subscription Payments and principal of and interest
on the Debentures to the persons in whose names the Debentures
are registered, subject to the limitations contained in Section
5.6(a) and in accordance with the terms and provisions of this
Bank Agreement and the Debentures, by check mailed by first class
mail to the registered owner of a Debenture at his address as it
appears in the register; provided that not later than 11:30 a.m.
(New York time) on the Interest Payment Date or date on which
principal of any Debenture is due and payable, the Company shall
provide the Bank with sufficient funds to make those payments.
Section 6.3 Expenses. The Company shall reimburse the
--------
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the
Debentures. The provisions of this Section 6.3 shall survive the
termination of this Bank Agreement.
Section 7. The Custodian.
-------------
Section 7.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Custodian for the purposes set forth
in this Section 7, and the Bank hereby accepts such appointment.
Section 7.2 Set Aside Purchase Notes.
------------------------
(a) J&B is the holder of certain Purchase Notes and
the Investor Notes pledged pursuant to a Purchase Agreement by
the respective Investing Partnerships as collateral security for
their respective Purchase Notes. Under the terms of each such
Purchase Note and Purchase Agreement, J&B is entitled to assign
each Purchase Note and J&B's right to payments of interest
thereon and the principal amount thereof. Under the terms of
each Purchase Agreement, payments of interest and, where
required, scheduled payments of principal payable prior to
maturity due under the Purchase Note will be offset and reduced
by payments made under the Investor Notes issued by the limited
partners of the respective Investing Partnership, which Investor
Notes may have been pledged to secure obligations owed by J&B to
one or more banks. Only that interest and, where applicable,
scheduled principal payments payable prior to maturity ("Excess
Interest and Principal") under a Purchase Note which is in excess
of the amount offset and reduced by payments made to the Company
and/or such banks, if any, may be payable to the holder of the
Purchase Note. Any interest and, where required, scheduled
payments of principal payable prior to maturity that are due but
unpaid on Purchase Notes shall be deferred until the maturity of
that Purchase Note.
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of Debentures from time to time, all of
the Purchase Notes, having an aggregate face value of $9,340,000,
and an aggregate balance of principal due at maturity equal to
$9,200,000, listed in Exhibit A hereto (the "Set Aside Purchase
Notes") issued by the Investing Partnerships listed in Exhibit A
hereto, and the proceeds thereof. In order to perfect such
security interests, J&B shall deliver to the Bank the Set Aside
Purchase Notes. Upon receipt of each Set Aside Purchase Note,
the Bank shall execute and deliver to the Company a receipt
therefor. Notwithstanding the assignment of the Set Aside
Purchase Notes to the Bank, the scheduled payments of principal
payable prior to maturity on certain Set Aside Purchase Notes so
providing and interest payments on all of the Set Aside Purchase
Notes shall be payable directly to the Company until such time as
an Event of Default (as defined in Section 7.6 hereof) shall
occur and be continuing. Under the terms of the Set Aside
Purchase Notes, only that principal and interest thereon which is
Excess Interest and Principal may be payable to the Bank. The
parties hereto confirm that scheduled payments of principal
payable prior to maturity made under the Set Aside Purchase Notes
listed in Exhibit A hereto, as requiring such scheduled principal
payment, will belong to the Company until such time as an Event
of Default shall occur and be continuing. The parties hereto
further confirm that any Excess Interest and Principal on a Set
Aside Purchase Note paid at the maturity thereof shall belong to
the Company so long as an Event of Default shall not have
occurred and be continuing.
(c) J&B shall deliver to the Bank a Consent and
Agreement in the form of Exhibit B hereto, executed by each
Investing Partnership listed in Exhibit A hereto, under which the
Investing Partnership shall (i) consent to J&B's assignment to
the Bank of the Investing Partnership's Set Aside Purchase Note,
(ii) consent to J&B's delivery of the Investing Partnership's Set
Aside Purchase Note to the Bank, and (iii) agree that upon
receiving the Bank's notice of an Event of Default that is
continuing, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank. Upon
receipt of each such Consent and Agreement, the Bank shall
execute and deliver to the Company a receipt therefor.
Section 7.3 Purchased Partnership Interests.
-------------------------------
(a) Each Investing Partnership listed in Exhibit A
hereto, in order to secure its payment of the principal of and
interest on its Set Aside Purchase Note, has entered into a
Purchase Agreement under which the Investing Partnership has
granted a security interest in that Investing Partnership's
limited partnership interest listed in Exhibit A hereto (a
"Purchased Partnership Interest") in a respective Operating
Partnership listed in Exhibit A hereto (an "Operating
Partnership").
(b) In order to secure the payment of the Bank's fees
and expenses under this Section 7 and the payment of principal of
and interest on the Debentures, subject to the terms and
conditions of Section 7.6 hereof, J&B hereby grants the Bank a
security interest in and assigns to the Bank, for the benefit of
the Bank and the owners of the Debentures from time to time, all
of J&B's rights, title and interest in and to each Purchase
Agreement listed in Exhibit A hereto, each security interest in a
Purchased Partnership Interest created under any such Purchase
Agreement, each such Purchased Partnership Interest, each
allocation and distribution due and payable or to be made from
time to time on such Purchased Partnership Interest, and the
proceeds thereof. In order to perfect such security interest,
J&B shall deliver to the Bank Financing Statements ("Financing
Statements") for execution by the Bank. The Bank shall return
promptly those executed Financing Statements for filing by J&B
with the appropriate governmental authorities. J&B hereby agrees
to deliver to the Bank for execution, from time to time, such
additional Financing Statements as must be filed by J&B with such
appropriate governmental authorities in order to continue the
perfection of such security interest. Notwithstanding the
assignments, pursuant to this Section 7.3(b), of the above-
mentioned Purchase Agreements, security interests, Purchased
Partnership Interests, and due and payable allocations and
distributions on Purchased Partnership Interests to the Bank, all
allocations and distributions on such Purchased Partnership
Interests, if any, in excess of the amounts due and payable by
the Investing Partnership on account of principal and interest on
their respective Purchase Notes shall be payable directly to the
respective Investing Partnership if an event of default shall not
have occurred and be continuing under that Investing
Partnership's Set Aside Purchase Note and shall be payable
directly to the Bank for the benefit of the Bank, subject to
Section 7.5(g) and the owners of the Debentures only if the Bank
shall foreclose on the security interest granted pursuant to this
Section 7.3(b) pursuant to Section 7.5(e) hereof.
(c) J&B shall deliver to the Bank a Consent,
Assignment and Agreement in the form of Exhibit C hereto,
executed by each Investing Partnership and Operating Partnership
listed in Exhibit A hereto, under which the Investing Partnership
and Operating Partnership shall (i) consent to J&B's assignment
to the Bank, pursuant to Section 7.3(b) hereof, of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, each allocation and
distribution due and payable or to be made from time to time on
the Purchased Partnership Interest, and the proceeds thereof;
(ii) consent to J&B's delivery of the above-mentioned Financing
Statements and the Bank's filing of the Financing Statements from
time to time with the appropriate governmental authorities; (iii)
assign to the Bank all allocations and distributions which may be
due and payable or made from time to time on the Purchased
Partnership Interest (subject to the terms and conditions set
forth in this Bank Agreement) until all outstanding obligations
under the Set Aside Purchase Note which is in default shall have
been paid in full (including, without limitation, all costs of
collection, reasonable attorney fees and other fees and
expenses); and (iv) agree that upon foreclosure of the security
interest granted pursuant to Section 7.3(b) hereof, pursuant to
Section 7.5(e) hereof, all allocations and distributions on the
Purchased Partnership Interest shall be paid directly to the
Bank, as the assignee of J&B, regardless of whether the Bank
becomes a substituted limited partner in place of the Investing
Partnership in the Operating Partnership but subject to the
limitations in subparagraph (iii) above. Upon receipt of each
such Consent, Assignment and Agreement, the Bank shall execute
and deliver to the Company a receipt therefor.
Section 7.4 Attachment of Security Interests.
--------------------------------
Notwithstanding anything to the contrary in this Bank
Agreement, each security interest granted by J&B to the Bank
under this Section 7 shall become effective and shall attach only
upon J&B's delivery to the Bank of the respective Set Aside
Purchase Note, and the related Consent and Agreement and
Financing Statements pertaining to that Set Aside Purchase Note,
the related Consent, Assignment and Agreement and related
Financing Statements pertaining to the Purchased Partnership
Interest. J&B shall be obligated to deliver to the Bank only
those Set Aside Purchase Notes selected by J&B, in its sole
discretion, in such an amount that 80% of the aggregate principal
balance outstanding at maturity of the Set Aside Purchase Notes
equals the principal amount of the Debentures which will be sold
at the respective Initial Closing or Additional Closing, together
with the Consent and Agreement and Financing Statements
pertaining to that Set Aside Purchase Note, the Consent,
Assignment and Agreement and related Financing Statements
pertaining to the Purchased Partnership Interest.
Section 7.5 Duties of the Bank.
------------------
(a) The Bank shall hold the notes, Agreements and
instruments deposited with it for the purposes of this Bank
Agreement and for the benefit of the Bank and of the owners of
the Debentures from time to time, and shall perform all duties
imposed upon it by this Bank Agreement until this Bank Agreement
is terminated. The security interests and assignments created by
this Bank Agreement and by each Consent, Assignment and Agreement
shall automatically terminate when all of the Debentures and all
amounts payable to the Bank under this Bank Agreement have been
paid in full. Thereupon, the Bank shall return to J&B the Set
Aside Purchase Notes deposited with it pursuant to Section 7.2(b)
hereof, and shall file with the appropriate governmental
authorities indicated by J&B to the Bank Financing Statements
delivered by J&B to the Bank recording the termination of the
Bank's security interests and assignments granted under this Bank
Agreement and each Consent, Assignment and Agreement.
(b) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Debentures plus all
accrued interest due and immediately payable. In addition, the
Bank shall promptly notify each Investing Partnership in writing
of the occurrence of such Event of Default in the form included
herewith as Exhibit F. Upon receipt of such notice, each
Investing Partnership shall (i) make all payments of principal
and interest on its respective Set Aside Purchase Note to the
Bank.
The Bank shall collect all payments received under the
foregoing security interests and assignments and apply them for
the benefit of the Bank and of the owners of the Debentures
firstly to the payment of all costs of collection, secondly to
the payment of the Bank's fees and expenses, thirdly to the
payment of all accrued interest (including, without limitation,
interest accrued after the date of the Event of Default) and next
to the repayment of principal of the Debentures, until all
amounts due under the Debentures shall have been paid in full
together with all costs of collection, fees and expenses.
(c) Upon the occurrence and continuation of an Event
of Default, the Bank shall be entitled to institute action
against the Co-Obligors, jointly or severally, to collect payment
under the Debentures without any prior requirement to attempt to
collect any funds under the Set Aside Purchase Notes or the
related Purchased Partnership Interests. In the event that the
Company shall default on its payment obligations to the Bank
under this Bank Agreement, the Bank shall be entitled to
institute action against the Company, jointly or severally, to
collect payment under this Bank Agreement, without any prior
requirement to attempt to collect any funds under the Set Aside
Purchase Notes or the related Purchased Partnership Interests.
(d) Upon the occurrence and continuation of an Event
of Default, the Bank, in its discretion, is authorized to, but
shall not be required to, proceed in any way legally available to
it to liquidate the Set Aside Purchase Notes and the Purchased
Partnership Interests (if the Bank shall have foreclosed on such
Set Aside Purchase Note pursuant to Section 7.5(e) hereof), in
each case, but not limited to, the public or private sale of all
or any part thereof upon three (3) days' prior notice to the
Company, free and clear of any claim, lien, charge or encumbrance
including, without limitation, any right of equity of redemption.
The Bank shall apply the proceeds of any such sale firstly to the
payment of the expenses of the sale, secondly to the payment of
the Bank's fees and expenses, thirdly to the payment of accrued
interest including accrued interest from and after the Event of
Default, and next to the payment of principal of the Debentures.
The Bank shall not be liable to the Company or its affiliates
because of any sale or the consequences thereof.
(e) While an Event of Default is continuing, if there
shall occur or if there shall have occurred and be continuing an
event of default under any Set Aside Purchase Note, the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note. If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
security interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of the foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to the limitations set forth
in Section 7.3(c)(iii) hereof, and to obtaining previous
Multi-family Participation Clearance from the United States
Department of Housing and Urban Development ("HUD 2530
Clearance") with respect to that Operating Partnership, if
required, in satisfaction of that Set Aside Purchase Note (but
not of any Debenture); provided, that during any time period
pending obtaining HUD 2530 Clearance, if required, or if HUD 2530
Clearance is required for that Operating Partnership but cannot
be obtained, or if the Bank may not be admitted as a substituted
limited partner in the Operating Partnership for any reason, the
Bank shall nevertheless be entitled to receive all allocations
and distributions from that Operating Partnership as the assignee
of J&B and this Bank Agreement shall operate as an assignment of
such allocations and distributions by the Investing Partnership
subject to the limitations set forth in Section 7.3(c)(iii)
hereof. In addition, while an Event of Default is continuing, if
there shall occur or if there shall have occurred and be
continuing an event of default under any Set Aside Purchase Note
or under any Partnership Agreement governing the Operating
Partnership related to the Purchased Partnership Interest, the
Bank shall be authorized to exercise any and all rights and
remedies available to it as the holder of the respective Set
Aside Purchase Note, the substituted partner or assignee with
respect to the Purchased Partnership Interest in the related
Operating Partnership, as well as any other remedy available
under law or equity. The Bank shall apply the proceeds of its
exercise of the above-mentioned rights and remedies firstly to
the payment of all costs of collection, secondly to the payment
of the Bank's fees and expenses, thirdly to the payment of all
accrued interest (including, without limitation, interest accrued
after the date of the Event of Default) and next to repayment of
principal of the Debentures, until all amounts due under the
Debentures shall have been paid in full together with all costs
of collection, fees and expenses.
(f) If a default on any payment of principal or
interest on a Set Aside Purchase Note shall occur when no Event
of Default is continuing, then the Company shall immediately give
the Bank notice thereof and upon receiving such notice the Bank
shall immediately send written notice of that event of default
under that Set Aside Purchase Note to the maker of that Set Aside
Purchase Note.
(g) If that event of default is continuing after the
expiration of the grace period, if any, contained in that Set
Aside Purchase Note, the Bank shall immediately foreclose on the
security interest in the related Purchased Partnership Interest
by notifying the general partner of the related Operating
Partnership of such foreclosure. The Bank shall send a notice to
the Investing Partnership stating that it is retaining the
Purchased Partnership Interest in discharge of the defaulted Set
Aside Purchase Note pursuant to Section 9-505 of the Uniform
Commercial Code and shall request admission as a substituted
limited partner in place of the related Investing Partnership in
that Operating Partnership, subject to obtaining HUD 2530
Clearance, if required, in satisfaction of that Set Aside
Purchase Note (but not of any Debenture); provided that during
any time period pending obtaining HUD 2530 Clearance, if
required, or if HUD 2530 Clearance is required for that Operating
Partnership but cannot be obtained, the Bank may not be admitted
as a substituted limited partner in the Operating Partnership for
any reason, the Bank shall be entitled nevertheless to receive
all allocations and distributions from that Operating Partnership
as the assignee of J&B and this Bank Agreement shall operate as
an assignment of such allocations and distributions by the
Operating Partnership, subject to the limitations in Section
7.3(c)(iii) hereof. The Bank shall pay over to the Company any
amounts received from the Operating Partnership unless and until
an Event of Default shall occur and be continuing. If and when
such Event of Default shall occur and be continuing, the Bank
shall follow the proceedings specified in this Section 7.5.
(h) The rights and remedies enumerated herein are in
addition to and not in lieu of any other right or remedy
available to the Bank under law or equity, including, without
limitation, rights and remedies available to a secured party
under the Uniform Commercial Code; provided, however, that the
Bank shall not be entitled to apply the proceeds of the
foreclosure of any Set Aside Purchase Note or Purchased
Partnership Interest to amounts owing to the Bank or the owners
of the Debentures under this Bank Agreement unless an Event of
Default shall occur and be continuing. The Bank shall be
entitled to exercise one or more remedies at the same time, all
such rights and remedies being cumulative and not mutually
exclusive.
(i) The Co-Obligors shall remain jointly and severally
liable for any deficiency remaining after the application of
proceeds of the foreclosure of any Set Aside Purchase Note or
Purchased Partnership Interest collected by the Bank including,
but not limited to, all actual costs and expenses of collection
(including, without limitation, reasonable attorneys' fees and
expenses). If any funds shall remain in the possession of the
Bank after the payment of all amounts due under the Debentures,
all such costs of collection thereof and all other actual fees
and expenses (including without limitation reasonable attorneys'
fees and expenses) of the Bank, the Bank shall deliver such
remaining funds to the Company. The provisions of this Section
7.5(i) shall survive the termination of this Bank Agreement.
Section 7.6 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Debenture when the same
shall become due and payable, and such default shall
have continued for more than 15 days;
then, the Bank, upon instruction by the owners of at least 50% of
the principal amount of the Debentures, by notice to the Company,
or the owners of at least 75% of the principal amount of the
Debentures, by notice to the Company and to the Bank, may declare
the entire principal of and accrued interest on all Debentures to
become immediately due and payable at par without presentment,
demand, protest or other notice of any kind, all of which are
waived by the Company.
Section 7.7 Sale of Set Aside Purchase Notes.
--------------------------------
The Company may from time to time while no Event of
Default shall have occurred and be continuing arrange the sale of
one of more Set Aside Purchase Notes to a third party, subject to
the following conditions:
(i) The Company shall give prompt written notice
thereof to the Bank together with all relevant details
of the proposed transaction.
(ii) The Bank shall receive cash in the amount
equal to (x) the sum of 80% of the principal balance
due at maturity of the Set Aside Purchase Note being
sold and (y) an amount sufficient to pay accrued
interest on the pro rata portion of Debentures to be
prepaid pursuant to subparagraph (iv) below.
(iii) Upon receipt of cash as provided in
subparagraph (ii) above, the Bank will apply the
proceeds to the pro rata redemption of the Debentures
at par plus payment of accrued interest thereon.
Thereafter, the Bank shall deliver each Set Aside
Purchase Note then sold to J&B, or at the written
request of J&B, to the purchaser, together with an
assignment of security interest and Purchase Agreement
covering the related Purchased Partnership Interest.
Subject to Section 8(b) hereof the Bank shall have no
liability whatsoever to the purchaser or any party
hereto for its actions pursuant to this Section 7.7.
Section 7.8 Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Debentures ten days prior to the anniversary date, in
the following amounts:
$ 500,000 to $1,000,000 outstanding . . . . $ 2,500
$ 1,000,001 to $ 2,000,000 outstanding . . . . $ 3,000
$ 2,000,001 to $ 3,000,000 outstanding . . . . $ 4,000
$ 3,000,001 to $ 4,000,000 outstanding . . . . $ 5,000
$ 4,000,001 to $ 5,000,000 outstanding . . . . $ 6,000
$ 5,000,001 to $ 6,000,000 outstanding . . . . $ 7,000
$ 6,000,001,to $ 7,000,000 outstanding . . . . $ 8,000
$ 7,000,001 to $ 7,350,000 outstanding . . . . $ 8,350
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The Set Aside Purchase Notes and the related
Purchased Partnership Interests in which the Bank has a security
interest will be available to satisfy the Company's payment
obligations to the Bank under this Section 7.8 only when an Event
of Default has occurred and is continuing. The provisions of
this Section 7.8 shall survive the termination of this Bank
Agreement.
Section 7.9 Substitution of Set Aside Purchase Notes.
----------------------------------------
(a) The Company may from time to time withdraw any one
or more of the Set Aside Purchase Notes (a withdrawn Set Aside
Purchase Note shall be defined for the purposes herein as the
"Withdrawn Set Aside Purchase Note") and replace the Withdrawn
Set Aside Purchase Note with any one or more Purchase Notes of
which it is the holder (any such Purchase Note shall be defined
for the purposes herein as the "New Set Aside Purchase Note") so
long as (i) no Event of Default has occurred and is continuing
and (ii) the sum of 80% of the aggregate principal balances of
the Set Aside Purchase Notes held by the Bank after the Withdrawn
Set Aside Purchase Note is withdrawn and the New Set Aside
Purchase Note is equal to the principal amount of the Debentures
that remain outstanding.
(b) In order to effect the substitution described in
Section 7.9(a) hereof, the Company shall deliver to the Bank the
New Set Aside Purchase Note along with the Consent and Agreement
as described in Section 7.2(c) hereof, the Financing Statements
pertaining to the New Set Aside Purchase Note, the Consent,
Assignment and Agreement as described in Section 7.3(c) hereof,
and the related Financing Statements pertaining to the Purchased
Partnership Interest that secures such New Set Aside Purchase
Note. Upon receiving the New Set Aside Purchase Note, and the
related documents described in the preceding sentence, the
security interest and assignment created by this Bank Agreement,
each Consent and Agreement described in Section 7.2(c) and each
Consent, Assignment and Agreement described in Section 7.3(c)
hereof each as relates to the Withdrawn Set Aside Purchase Note,
shall automatically terminate and shall have no further force or
effect. Thereupon, the Bank shall (i) return the Withdrawn Set
Aside Purchase Note to the Company, (ii) execute and deliver to
the Company an instrument prepared by J&B effecting a release by
the Bank of the existing assignment of the security interest and
Purchase Agreement covering the related Purchased Partnership
Interest, (iii) file with the appropriate governmental
authorities indicated by J&B to the Bank, Financing Statements
delivered by J&B to the Bank recording the termination of the
Bank's security interest and assignment granted under this Bank
Agreement, and (iv) return to J&B the Consent and Agreement
described in Section 7.2(c) hereof and the Consent, Assignment
and Agreement described in Section 7.3(c) hereof, each as relates
to such Withdrawn Set Aside Purchase Note. The Company will
notify the Debenture holders of the substitution of the Withdrawn
Set Aside Purchase Note with the New Set Aside Purchase Note
within sixty (60) days thereof and provide those Debenture
holders with the information pertaining to the New Set Aside
Purchase Note that would have been contained in the Memorandum if
the New Set Aside Purchase Note had been included with the Set
Aside Purchase Notes described therein.
(c) After the substitution of the New Set Aside
Purchase Note for the Withdrawn Set Aside Purchase Note, the New
Set Aside Purchase Note shall be deemed to be a Set Aside
Purchase Note for all purposes as set forth in this Bank
Agreement.
Section 7.10 Delivery of Set Aside Purchase Notes.
------------------------------------
The Company shall deliver the Set Aside Purchase Notes together
with the Consent, Assignment and Agreement required by Section
7.3(c) hereof, and the Consent and Agreement required by Section
7.2(c) hereof, and the related Financing Statements as follows:
(a) Original Set Aside Purchase Notes and related
original Set Aside Investor Notes shall be
delivered to:
The Bank of New York
1 Wall Street
New York, New York 10286
Attention: Mr. Vincent Nardone,
A.V.P., Security Operation
Free Receive Area, 5th Floor.
No less than ten days prior to the delivery by the
Company to the Bank of the first Set Aside
Purchase Note, the Company shall deliver a
schedule in duplicate form of all Set Aside
Purchase Notes and Set Aside Investor Notes to the
Bank at the address set forth in Section 12
hereof.
(b) Copies of each Set Aside Purchase Note together
with the Consent, Assignment and Agreement
required by Section 7.3(c) hereof, and the Consent
and Agreement required by Section 7.2(c) hereof,
and the related Financing Statements shall be
delivered by the Company to the Bank for execution
at the address set forth in Section 12 hereof and
promptly returned to Company's counsel at the
address as set forth in Section 12 hereof.
Section 7.11 Matured Set Aside Purchase Notes. The
--------------------------------
Bank shall return promptly to the Company matured Set Aside
Purchase Notes (the "Matured Set Aside Purchase Notes") after
delivery by the Company to the Bank of sufficient funds to make
payment of all principal and interest on the Debentures being
redeemed pursuant to Section 5.6 hereof. In addition to the
return of those Matured Set Aside Purchase Notes, the Bank shall
(i) execute and deliver to the Company an instrument prepared by
J&B effecting a release by the Bank of the existing assignment of
the security interest and Purchase Agreement covering the related
Purchased Partnership Interest, (ii) file with the appropriate
governmental authorities indicated by J&B, financing statements
delivered by J&B to the Bank recording the termination of the
Bank's security interest and assignment granted under this Bank
Agreement and (iii) return to J&B the Consent and Agreement
described in Section 7.2(c) hereof and the Consent, Assignment
and Agreement described in Section 7.3(c) hereof, each as relates
to such Matured Set Aside Purchase Note.
Section 8. Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a Notice received by it pursuant to Section
18(b) of the Subscription Agreement.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 9. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Debentures, or any Set Aside Purchase Note or
Purchased Partnership Interest, in which the Bank has a security
interest, or any Financing Statement delivered to it by J&B or
the Bank's filing of any such Financing Statement with any
governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Debentures and it shall
not be responsible for any statement in the Memorandum or in the
Debentures other than its authentication.
Section 10. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Bank through gross negligence
or bad faith. The provisions of this Section 10 shall survive
the termination of this Bank Agreement.
Section 11. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor bank shall become effective only upon
the successor bank's acceptance of appointment as provided in
this Section 11.
(b) The Bank may resign by so notifying the Company.
The owners of a majority in principal amount of the Debentures
outstanding may remove the Bank for any reason by so notifying
the Bank and the Company. The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(iv) If the Bank resigns or is removed or if a
vacancy exists in the office of the Bank for any
reason, the Company shall promptly appoint a successor
bank.
(v) If a successor bank does not take office
within 60 days after the retiring Bank gives notice of
resignation or action is taken to remove the retiring
Bank, the retiring Bank, the Company or the owners of
at least 10% in principal amount of the Debentures
outstanding may petition any court of competent
jurisdiction for the appointment of a successor bank.
(vi) A successor bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor bank shall mail a notice of its succession to
Debenture owners. Upon payment to the retiring Bank of
all amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it under the terms of this Bank Agreement.
(c) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor bank.
Section 12. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing, subject to the terms of Section 1.6 hereof, and shall be
delivered by hand or sent by registered, certified, return
receipt requested, or first class mail, or by facsimile,
confirmed by writing, delivered by hand or sent by registered or
certified mail, return receipt requested, delivered or sent on
the date of the facsimile, addressed as follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Debenture owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Peter Lagatta
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 13. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 14. Prior Agreements; Amendment. This Bank
---------------------------
Agreement, together with each Consent and Agreement and each
Consent, Assignment and Agreement referred to in Section 7
hereof, sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 15. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 16. Enforceability. Any provision of this
--------------
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Counterparts. This Bank Agreement may be
------------
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 18. Use of The Bank of New York Name.
--------------------------------
(a) No printed or other material in any language,
including prospectuses, notices, reports, and promotional
materials which mentions The Bank of New York by name or the
rights, powers, or duties of the Bank under this Bank Agreement
shall be issued by any of the other parties hereto, or on such
party's behalf, without the prior written consent of The Bank of
New York.
(b) Notwithstanding the above, the Bank hereby
consents to the use of its name and its rights, powers and duties
under this Bank Agreement in the Memorandum and any notices and
reports required under applicable Federal and state securities
laws in connection therewith. In addition, the Bank hereby
consents to the use of its name and its rights, powers, and
duties under this Bank Agreement in the promotional material
included herewith as Exhibit G.
[INTENTIONALLY LEFT BLANK]
Section 19. Definitions. All terms used in this Bank
-----------
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s/ John Luciani By: /s/ Peter M. Lagatta
------------------------ --------------------------
Title: General Partner Title: Assistant Treasurer
LEISURE CENTERS, INC.
By: /s/ John Luciani
------------------------
Title: President
J&B MANAGEMENT CORP.
By: /s/ John Luciani
------------------------
Title: President
SULGRAVE REALTY CORPORATION
By: /s/ John Luciani
------------------------
Title: President
WILMART DEVELOPMENT CORP.
By: /s/ John Luciani
------------------------
Title: President
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
1. (a) Investing Partnership: Gwinnet Associates, a New
Jersey limited partnership
(b) Operating Partnership: Gwinnet Garden Apts., Ltd., a
Georgia limited partnership
(c) Set Aside Promissory Note:
(i) Principal Amount: $1,050,000.00
(ii) Date of Issue: 11/24/80
(iii) Final Maturity Date: 12/31/2022
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,050,000.00
(vii) Accrued Interest as of
January 31, 1995 $2,000
(d) Purchase Agreement: Sale and Purchase Agreement dated
11/24/80, by and between John Luciani, Bernard M.
Rodin, J&B Management Corp., Executive Offices Realty
Corp. (the "Sellers") and Gwinnet Associates (the
"Purchaser") (Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 97% of the profits and
losses and 50% of the cash flow of the Operating
Partnership
<PAGE>
2. (a) Investing Partnership: Allen Associates Two, Limited
Partnership, a South Carolina limited partnership
(b) Operating Partnership: Grandview Heights, L.P., a
Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,200,000.00
(ii) Date of Issue: 12/30/86
(iii) Final Maturity Date: 12/30/2001
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,200,000.00
(vii) Prepaid Interest as of
January 31, 1995 $317,300
(d) Purchase Agreement: Sale and Purchase Agreement dated
12/30/86, by and between John Luciani, Bernard M. Rodin
(the "Sellers") and Allen Associates Two, Limited
Partnership (the "Purchaser") (Sellers' respective
rights and interests under the Purchase Agreement have
been sold, transferred and assigned to J&B Management
Company)
(e) Purchased Partnership Interest: 98.75% of the profits
and losses and 98.75% of the cash flow of the Operating
Partnership
<PAGE>
3. (a) Investing Partnership: Augusta Associates, a Texas
limited partnership
(b) Operating Partnership: Ridgeview Housing Associates,
Limited Partnership, a South Carolina limited
partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,100,000.00
(ii) Date of Issue: 5/16/86
(iii) Final Maturity Date: 12/31/2001
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,100,000.00
(vii) Prepaid Interest as of
January 31, 1995 $226,883
(d) Purchase Agreement: Sale and Purchase Agreement dated
5/16/86, by and between John Luciani, John W. Luciani
III, Dorian Luciani, Bernard M. Rodin (the "Sellers")
and Augusta Associates (the "Purchaser")(Sellers'
respective rights and interests under the Purchase
Agreement have been sold, transferred and assigned to
J&B Management Company)
(e) Purchased Partnership Interest: 98.5% of the profits
and losses and 98.5% of the cash flow of the Operating
Partnership
<PAGE>
4. (a) Investing Partnership: Beauregard Associates, a Texas
limited partnership
(b) Operating Partnership: DeRidder Apartments Limited
Partnership, a Louisiana limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,500,000.00
(ii) Date of Issue: 5/14/85
(iii) Final Maturity Date: 3/31/2000
(iv) Annual Payment of Principal N/A
(v) Total Scheduled Principal
Payments Prior to Final Maturity: N/A
(vi) Balance of Principal
Due at Final Maturity: $1,500,000.00
(vii) Prepaid Interest as of
January 31, 1995 $319,250
(d) Purchase Agreement: Sale and Purchase Agreement dated
5/14/85, by and between John Luciani, Bernard M. Rodin
(the"Sellers") and Beauregard Associates (the
"Purchaser") (Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 98.5% of the profits
and losses and 98.5% of the cash flow of the Operating
Partnership
<PAGE>
5. (a) Investing Partnership: Contessa Associates, a New
Jersey limited partnership
(b) Operating Partnership: Portland Contessa Associates
Ltd., a Texas limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $1,240,000.00
(ii) Date of Issue: 6/21/83
(iii) Final Maturity Date: 4/30/98
(iv) Annual Payment of Principal $10,000
(v) Total Scheduled Principal
Payments Prior to Final Maturity: $140,000
(vi) Balance of Principal
Due at Final Maturity: $1,100,000
(vii) Accrued Interest as of
January 31, 1995 $894,140
(d) Purchase Agreement: Sale and Purchase Agreement dated
6/21/83, by and between S. Jerome Berman, Shirley
Greenblatt, John E. Button, George Button II, Arthur V.
Pinski, Stanley L. Wiener, Jacob L. Drier, Bernard M.
Rodin (the "Sellers") and Contessa Associates (the
"Purchaser")(Sellers' respective rights and interests
under the Purchase Agreement have been sold,
transferred and assigned to J&B Management Company)
(e) Purchased Partnership Interest: 99% of the profits and
losses and 50% of the cash flow of the Operating
Partnership
<PAGE>
6. (a) Investing Partnership: Blair Associates, Limited
Partnership, a South Carolina limited partnership
(b) Operating Partnership: College Hill Apartments, L.P.,
a Missouri limited partnership
(c) Set Aside Purchase Note:
(i) Principal Amount: $3,250,000.00
(ii) Date of Issue: 12/30/86
(iii) Final Maturity Date: 12/30/2001
(iv) Annual Payment of Principal NA
(v) Total Scheduled Principal
Payments Prior to Final Maturity: NA
(vi) Balance of Principal
Due at Final Maturity: $3,250,000.00
(vii) Prepaid Interest as of
January 31, 1995 $917,937
(d) Purchase Agreement: Sale and Purchase Agreement dated
12/30/86, by and between John W. Luciani and Bernard M.
Rodin (the "Sellers") and Blair Associates, Limited
Partnership (the "Purchaser")(Sellers' respective
rights and interests under the Purchase Agreement have
been sold, transferred and assigned to J&B Management
Company)
(e) Purchased Partnership Interest: 98.75% of the profits
and losses and 98.75% of the cash flow of the Operating
Partnership
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[Form of Consent and Agreement]
CONSENT AND AGREEMENT
[PURSUANT TO SECTION 7.2(C)]
THIS CONSENT AND AGREEMENT, dated as of ____________,
19__, is by and between [name of Investing Partnership] (the
"Investing Partnership"), J&B Management Company ("J&B"), and The
Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.2(c) of the Bank Agreement provides
for the execution of this Consent and Agreement by the parties
hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby convent and agree as follows:
Section 1. Consents. The Investing Partnership hereby
--------
consents to (i) J&B's assignment to the Bank, pursuant to Section
7.2(c) of the Bank Agreement, of the Investing Partnership's Set
Aside Purchase Note; and (ii) J&B's delivery of the Investing
Partnership's Set Aside Purchase Note to the Bank. The Bank
hereby acknowledges that interest may be deferred until the
maturity of that Set Aside Purchase Note.
Section 2. Agreements. The Investing Partnership
----------
hereby agrees that upon receiving the Bank's notice of an Event
of Default, the Investing Partnership shall pay all sums due
under its Set Aside Purchase Note directly to the Bank.
Section 3. Notices. All notices and other
-------
communications pursuant or relating to this Consent and Agreement
shall be in writing and shall be delivered by hand or sent by
registered or certified mail, return receipt requested, or by
facsimile, confirmed by writing delivered by hand or sent by
registered or certified mail, return receipt requested, delivered
or sent on the date of the facsimile, addressed as follows:
(a) If to the Investing Partnership:
___________________________________
___________________________________
___________________________________
(b) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: ___________,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 4. Choice of Law. This Consent and Agreement
-------------
shall be governed by the laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
Section 5. Successors. This Consent and Agreement
----------
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
Section 6. Counterparts. This Consent and Agreement
------------
may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute
one instrument.
Section 7. Definitions. All terms used in this
-----------
Consent and Agreement and not otherwise defined herein shall have
the meanings ascribed to them in the Bank Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent and Agreement as of the date first above written.
[Name of Investing Partnership]
By:______________________________
J&B MANAGEMENT COMPANY
By:______________________________
Title:
THE BANK OF NEW YORK
By:______________________________
Title:
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
[Form of Consent, Assignment and Agreement]
CONSENT, ASSIGNMENT AND AGREEMENT
[PURSUANT TO SECTION 7.3(C)
THIS CONSENT, ASSIGNMENT AND AGREEMENT, dated as of
_______________, 19__, is by and among [name of Investing
Partnership] (the "Investing Partnership") [name of Operating
Partnership] (the "Operating Partnership"), J&B Management
Company ("J&B"), and The Bank of New York (the "Bank")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J&B, Leisure Centers, Inc., J&B Management
Corp., Sulgrave Realty Corporation, Wilmart Development Corp. and
the Bank have entered into that certain Bank Agreement of even
date herewith (the "Bank Agreement"); and
WHEREAS, Section 7.3(c) of the Bank Agreement provides
for the execution of this Consent, Assignment and Agreement by
the parties hereto;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto hereby consent and agree as follows:
Section 1. Consents, Assignments and Agreements with
-----------------------------------------
Respect to Purchased Partnership Interests. The Investing
------------------------------------------
Partnership and the Operating Partnership in which the Investing
Partnership owns a Purchased Partnership interest hereby (i)
consent to J&B's assignment to the Bank of the Purchase
Agreement, security interest in the Purchased Partnership
Interest, Purchased Partnership Interest, all allocations and
distributions which may be due and payable or made from time to
time on such Purchased Partnership Interest, and the proceeds
thereof, relating to the Investing Partnership's Set Aside
Purchase Note; (ii) consent to J&B's delivery to the Bank of
Financing Statements and to the Bank's filing of such Financing
Statements with the appropriate governmental authorities in order
to perfect and to continue the perfection of the Bank's security
interest in the Purchase Agreement, security interest in the
Purchased Partnership Interest, Purchased Partnership Interest
allocations and distributions which may be due and payable from
time to time on the Purchased Partnership Interest; (iii) subject
to the terms and conditions of the Bank Agreement, assign to the
Bank all allocations and distributions which shall be due and
payable or made from time to time on the Purchased Partnership
Interest, and the proceeds thereof, until all outstanding
obligations under the Set Aside Purchase Note, if such be in
default, have been paid in full (including, without limitation,
all costs of collection, reasonable attorneys' fees and other
fees and expenses); and (iv) subject to the terms and conditions
of the Bank Agreement, agree that upon foreclosure of the
security interest in the Purchased Partnership Interest all
allocations and distributions made on the Purchased Partnership
Interest shall by paid directly to the Bank, as the assignee of
J&B, regardless of whether the Bank becomes a substituted limited
partner in the Operating Partnership in place of the Investing
Partnership.
Section 2. Representations of the Operating
--------------------------------
Partnership. The Operating Partnership hereby agrees to keep a
-----------
copy of this Consent, Assignment and Agreement with its business
records.
Section 3. Agreement of the Operating Partnership.
--------------------------------------
The Operating Partnership hereby agrees to admit the Bank as a
substituted limited partner in place of the Investing Partnership
in the Operating Partnership upon the Bank's foreclosure on the
security interest in the Purchased Partnership Interest and
written request, subject to the limitations in Section 1(iii)
hereof, the Bank's obtaining HUD 2530 Clearance and the rights of
the Investing Partnership under Section 9.505 of the Uniform
Commercial Code.
Section 4. Amendment to Operating Partnership
----------------------------------
Agreement. Upon substitution of the Bank for the Investing
---------
Partnership as a limited partner in the Operating Partnership
pursuant to the Bank Agreement and this Consent, Assignment and
Agreement, this Consent, Assignment and Agreement shall
constitute an amendment to the partnership agreement of the
Operating Partnership, and the Bank shall not be liable for the
obligations of any predecessor which has assigned the Purchased
Partnership Interest to make any contributions to the Operating
Partnership.
Section 5. Further Assurances and Power of Attorney.
----------------------------------------
Each of the parties hereto shall, from time to time, upon request
of a party hereto, duly execute, acknowledge and deliver or cause
to be duly executed, acknowledged and delivered, all such further
instruments and documents reasonably requested by a party to
effectuate the intent and purposes of this Consent, Assignment
and Agreement. Notwithstanding the foregoing, this Consent,
Assignment and Agreement shall constitute an irrevocable power of
attorney coupled with an interest for the Bank to execute and
file a certificate of amendment to the certificate of limited
partnership of the Operating Partnership or any other document or
instrument in order to effectuate the intent and purposes of this
Consent, Assignment and Agreement; provided, however, that the
Bank may not be substituted as a partner of the Operating
Partnership unless such substitution is permitted under the
Uniform Commercial Code and HUD 2530 Clearance, if required, has
been obtained.
Section 6. Notices. All notices and other
-------
communications pursuant or relating to this Consent, Assignment
and Agreement shall be in writing and shall be delivered by hand
or sent by registered or certified mail, return receipt
requested, or by facsimile, confirmed by writing delivered by
hand or sent by registered or certified mail, return receipt
requested, delivered or sent on the date of the facsimile,
addressed as follows:
(a) If to the Operating Partnership:
______________________________
______________________________
______________________________
(b) If to the Investing Partnership:
______________________________
______________________________
______________________________
(c) If to J&B:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: _____________,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 7. Choice of Law. This Consent, Assignment
-------------
and Agreement shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law
thereof.
Section 8. Successors. This Consent, Assignment and
----------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
Section 9. Counterparts. This Consent, Assignment and
------------
Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall
constitute one instrument.
Section 10. Definitions. All terms used in this
-----------
Consent, Assignment and Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Bank
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Consent, Assignment and Agreement as of the date first above
written.
[Name of Investing Partnership]
By:___________________________
[Name Of Operating Partnership]
By:___________________________
J&B MANAGEMENT COMPANY
By:___________________________
Title:
THE BANK OF NEW YORK
By:___________________________
Title:
<PAGE>
EXHIBIT D
TO BANK AGREEMENT
J&B Management Company and its affiliates: J&B
Management Corp. Sulgrave Realty Corporation, Wilmart Development
Corp. and Leisure Centers, Inc. shall be obligated to redeem the
Debentures on a pro rata basis as follows:
--- ----
11.96% of the original principal amount of the
Debentures on May 15, 1998
16.30% of the original principal amount of the
Debentures on April 15, 2000
60.33% of the original principal amount of the
Debentures on January 15, 2002
11.41% of the original principal amount of the
Debentures on January 15, 2004
<PAGE>
EXHIBIT E
TO BANK AGREEMENT
[FORM OF NOTICE]
NOTICE OF VOLUNTARY REDEMPTION
-------------------------------
OF
J&B MANAGEMENT COMPANY AND AFFILIATES:
J&B MANAGEMENT CORP., SULGRAVE REALTY CORPORATION,
WILMART DEVELOPMENT CORP., AND LEISURE CENTERS, INC.
12% DEBENTURES -SERIES 10
To holders of J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp., and Leisure Centers, Inc. (the "Company") 12%
Debentures due January 15, 2004 -Series 10 (the "Debentures"):
NOTICE is hereby given by The Bank of New York (the
"Bank"), as paying agent for the Debentures, that, pursuant to
the voluntary redemption provision of Section 5.6 of the Bank
Agreement between the Company and the Bank, dated [month]
---------
[day] , [year] , the Company has elected to redeem and pay off
------- --------
on [month] [day] , [year] (the "Redemption Date") [all] [a
--------- ------- --------
portion of] the above mentioned Debentures then outstanding, in
accordance with the terms of the Debentures, and that [all] [a
portion of] the Debentures are called for redemption on the
Redemption Date.
The redemption price on the Redemption Date shall be
$_______. Interest on the Debentures so redeemed shall cease
from and after the Redemption Date.
Dated: [month] [day] , [year]
--------- ------- --------
THE BANK OF NEW YORK
<PAGE>
[FORM OF NOTICE]
NOTICE OF VOLUNTARY REDEMPTION
------------------------------
OF
J&B MANAGEMENT COMPANY AND AFFILIATES:
J&B MANAGEMENT CORP., SULGRAVE REALTY CORPORATION,
WILMART DEVELOPMENT CORP., AND LEISURE CENTERS, INC.
12% Debentures -Series 10
To holders of J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp., and Leisure Centers, Inc. (the "Company") 12%
Debentures due January 15, 2004 -Series 10 (the "Debentures"):
NOTICE is hereby given by The Bank of New York (the
"Bank"), as paying agent for the Debentures, that, pursuant to
the mandatory redemption provision of Section 5.6 of the Bank
Agreement between the Company and the Bank, dated [month]
---------
[day] , [year] , the Company will redeem and pay off on
------- --------
[month] [day] , [year] (the "Redemption Date") __% of the
--------- ------- --------
above mentioned Debentures, in accordance with the terms of the
Debentures, and that __% of the Debentures are called for
redemption on the Redemption Date.
Interest on the Debentures so redeemed shall cease from
and after the Redemption Date.
Dated: [month] [day] , [year]
--------- ------ --------
THE BANK OF NEW YORK
<PAGE>
EXHIBIT F
TO BANK AGREEMENT
[FORM OF NOTICE]
NOTICE OF EVENT OF DEFAULT
--------------------------
BY
J&B MANAGEMENT COMPANY
ON PAYMENT OF PRINCIPAL ON
12% DEBENTURES -SERIES 10
To ________________ Associates (the "Partnership"):
NOTICE is hereby given that when payment of principal
came due and payable on J&B Management Company (the "Company")
12% Debentures due January 15, 2004 -Series 10 (the
"Debentures") the Company defaulted in the payment of such
principal and such default has continued for more than 30 days
(the "Default"). The Default qualifies as an Event of Default
under the Bank Agreement between the Company and The Bank of New
York (the "Bank"), dated [month] [day ] , [year] (the "Bank
--------- -------- --------
Agreement"). Pursuant to Section 2 of the Consent and Agreement
between the Partnership, the Company and the Bank, dated the same
date as the Bank Agreement, an Event of Default requires the
Partnership to make all payments of principal and interest on its
purchase note, executed in connection with its acquisition of its
interest in [operating partnership] and pledged to the Bank by
---------------------
the Company as collateral for the Debentures, directly to the
Bank.
Dated: [month] [day] , [year]
--------- ------- --------
THE BANK OF NEW YORK
<PAGE>
[FORM OF NOTICE]
NOTICE OF EVENT OF DEFAULT
--------------------------
BY
J&B MANAGEMENT COMPANY
ON PAYMENT OF PRINCIPAL ON
12% DEBENTURES -SERIES 10
To ________________ Associates (the "Partnership"):
NOTICE is hereby given that when payment of interest
came due and payable on J&B Management Company (the "Company")
12% Debentures due January 15, 2004 -- Series 10 (the
"Debentures") the Company defaulted in the payment of such
interest and such default has continued for more than 15 days
(the "Default"). The Default qualifies as an Event of Default
under the Bank Agreement between the Company and The Bank of New
York (the "Bank"), dated [month] [day] , [year] (the "Bank
--------- ------- --------
Agreement"). Pursuant to Section 2 of the Consent and Agreement
between the Partnership, the Company and the Bank, dated the same
date as the Bank Agreement, an Event of Default requires the
Partnership to make all payments of principal and interest on its
purchase note, executed in connection with its acquisition of its
interest in [operating partnership] and pledged to the Bank by
---------------------
the Company as collateral for the Debentures, directly to the
Bank.
Dated: [month] [day] , [year]
--------- ------- --------
THE BANK OF NEW YORK
<PAGE>
EXHIBIT G
TO BANK AGREEMENT
DRAFT OF PROMOTIONAL MATERIALS
TO BE USED IN CONNECTION WITH
THE 12% DEBENTURES SERIES 10 OFFERING
Exhibit 10.6(a)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
SHORT TERM STEP-UP BONDS DUE MARCH 15, 2001
With Repayment at the Option of the Bond Holder on
March 15, 1997 and March 15, 1999
SERIES 1
$------------------- ------------------, ----
Registered Owner: ----------------------------------
Certificate Number: ----------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Bonds (collectively, the "Company"), hereby
promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
March 15, 2001, subject to early redemption at the option of the
registered owner of this Bond pursuant to the attached Redemption
Notice, together with accrued but unpaid interest. Interest on
the unpaid balance of this Bond shall be payable monthly on the
15th day of each month hereafter, at the rate of 11% per annum
from the date hereof through March 15, 1997, 11.5% per annum from
March 16, 1997 through March 15, 1999 and 12% per annum from
March 16, 1999 through March 15, 2001 or until the entire
principal amount of this Bond shall have been paid. Interest on
any overdue principal and on any overdue installment of interest
(to the extent permitted under applicable law), shall be payable
monthly at a rate equal to the interest rate per annum then being
borne by the Bond until paid, or, at the option of the holder
hereof, on demand. Interest shall be computed on the basis of a
year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the registered owner of this Bond at the registered owner's
address as it appears in the register.
This Bond is one of the Series 1, Short Term Step-Up
Bonds due March 15, 2001 of the Company (the "Bonds"), originally
issued in the principal amount of $------------ pursuant to the
Subscription Agreement, dated as of -------------------, 19--
(the "Subscription Agreement"), between the Company and the
purchaser named therein, the Bank Agreement, dated as of
December 15, 1994 (the "Bank Agreement") between the Company and
The Bank of New York (the "Bank") and the Confidential Private
Placement Memorandum of the Company dated December 16, 1994, as
amended from time to time (the "Memorandum"). Reference is
hereby made to the Subscription Agreement, the Bank Agreement and
the Memorandum and to all amendments and supplements thereto for
a description of the terms and conditions upon which this Bond is
issued and the rights, duties and obligations of the Company,
the Bank and the holder of this Bond. Copies of the Subscription
Agreement, the Bank Agreement and the Memorandum are on file in
the principal corporate trust office of the Bank.
This Bond will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Bond shall be governed by the laws of the State of
New Jersey.
IN WITNESS WHEREOF, the Company has caused this Bond to
be executed by its partner or officer thereunto duly authorized,
the day and year first above written.
J&B MANAGEMENT COMPANY
By:----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:----------------------------------
Title:
SULGRAVE REALTY CORPORATION
By:----------------------------------
Title:
WILMART DEVELOPMENT CORP.
By:----------------------------------
Title:
LEISURE CENTERS, INC.
By:----------------------------------
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in
the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:--------------------------------
Authorized Signatory
Date of Authentication:-----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Bond and
does hereby irrevocably constitute and appoint ------------------
- attorney to transfer the said Bond on the books kept for
registration thereof, with full power of substitution in the
premises.
Date:---------------- -------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Bond in every particular, without
alteration or enlargement or any change whatever.
<PAGE>
REDEMPTION NOTICE
FOR REDEMPTION ON MARCH 15, 1997
To exercise the right to cause the Company to redeem all or any
portion (in integral multiples of $5,000) of this Bond on
March 15, 1997, complete and sign the following Redemption Notice
and deliver this certificate to The Bank of New York, 101 Barclay
Street, New York, New York 10286, attention: Corporate Trust
Trustee Administration (or its successor) ("Bank") not earlier
than December 16, 1996 and not later than 5:00 P.M., Eastern
Standard Time, on January 15, 1997. Any Redemption Notice so
delivered to the Bank may not be revoked or canceled without the
written consent of the Company.
PLEASE TAKE NOTICE that the registered owner of this Bond
elects to cause $------,000 in principal amount of this Bond to
be redeemed on March 15, 1997. Such principal amount, plus
accrued interest thereon, if any, should be mailed to the
registered owner at the following address:
----------------------------------------------------------------
----------------------------------------------------------------
If less than the entire principal amount of this Bond is to be
redeemed, a certificate registered in the name of the registered
owner representing the principal amount not to be redeemed should
be mailed to the following address:
----------------------------------------------------------------
----------------------------------------------------------------
Date: ________ ____________________________________________
Signature of registered owner or duly
authorized agent or attorney
(If an agent or attorney signs, attach the power of attorney or
other proof of appointment or authority. All signatures must be
guaranteed by a commercial bank or trust company having an office
in the United States of America. Addresses must be printed or
typewritten.)
FOR REDEMPTION ON MARCH 15, 1999
To exercise the right to cause the Company to redeem all or any
portion (in integral multiples of $5,000) of this Bond on
March 15, 1999, complete and sign the following Redemption Notice
and deliver this certificate to The Bank of New York, 101 Barclay
Street, New York, New York 10286, attention: Corporate Trust
Trustee Administration (or its successor) ("Bank") not earlier
than December 15, 1998 and not later than 5:00 P.M., Eastern
Standard Time, on January 15, 1999. Any Redemption Notice so
delivered to the Bank may not be revoked or canceled without the
written consent of the Company.
PLEASE TAKE NOTICE that the registered owner of this Bond
elects to cause $------,000 in principal amount of this Bond to
be redeemed on March 15, 1999. Such principal amount, plus
accrued interest thereon, if any, should be mailed to the
registered owner at the following address:
-----------------------------------------------------------------
-----------------------------------------------------------------
If less than the entire principal amount of this Bond is to be
redeemed, a certificate registered in the name of the registered
owner representing the principal amount not to be redeemed should
be mailed to the following address:
----------------------------------------------------------------
----------------------------------------------------------------
Date:____________ _________________________________________
Signature of registered owner or duly
authorized agent or attorney
(If an agent or attorney signs, attach the power of attorney or
other proof of appointment or authority. All signatures must be
guaranteed by a commercial bank or trust company having an office
in the United States of America. Addresses must be printed or
typewritten.)
Exhibit 10.6(b)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED
AND SOLD OR OTHERWISE TRANSFERRED ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THAT ACT OR IF
AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
J&B MANAGEMENT COMPANY
J&B MANAGEMENT CORP.
SULGRAVE REALTY CORPORATION
WILMART DEVELOPMENT CORP.
LEISURE CENTERS, INC.
AS CO-OBLIGORS
12.375% BONDS DUE APRIL 15, 2003
(With Mandatory Redemption of 50% of the Original Principal
Amount on October 15, 2002)
SERIES 2
$------------- ---------------, ----
Registered Owner: --------------------------------------
Certificate Number: --------------------------------------
FOR VALUE RECEIVED, the undersigned, J&B Management
Company, a New Jersey general partnership, J&B Management Corp.,
a New Jersey corporation, Sulgrave Realty Corporation, a New
Jersey corporation, Wilmart Development Corp., a New Jersey
corporation, and Leisure Centers, Inc., a Delaware corporation,
as co-obligors on the Bonds (collectively, the "Company"), hereby
promise to pay to the registered owner specified above or
registered assigns, the principal amount specified above on
April 15, 2002, subject to mandatory redemption, together with
accrued but unpaid interest. Interest on the unpaid balance of
this Bond from the date hereof will be payable monthly on the
15th day of each month if such day is a Business Day (as
hereinafter defined) at the rate of 12.375% per annum until the
entire principal of this Bond shall have been paid. If such day
is not a Business Day, the next Business Day shall be the date
interest on the Bonds is payable. For the purposes of this Bond,
Business Day shall mean any day other than a day on which The
Bank of New York is authorized to remain closed in New York City.
Interest on any overdue principal and on any overdue installment
of interest (to the extent permitted under applicable law), shall
be payable monthly at a rate equal to the interest rate per annum
then being borne by the Bond until paid, or, at the option of the
holder hereof, on demand. Interest shall be computed on the
basis of a year of 360 days.
Payments of principal and interest shall be made in
lawful money of the United States of America by check mailed to
the registered owner of this Bond at the registered owner's
address as it appears in the register.
This Bond is one of the Series 2 Bonds due April 15,
2003 of the Company (the "Bonds"), originally issued in the
principal amount of $--------- pursuant to the Subscription
Agreement, dated as of -----------------------, 19-- (the
"Subscription Agreement"), between the Company and the purchaser
named therein, the Bank Agreement, dated as of August 3, 1995
(the "Bank Agreement") between the Company and The Bank of New
York (the "Bank") and the Confidential Private Placement
Memorandum of the Company dated August 7, 1995, as amended from
time to time (the "Memorandum"). Reference is hereby made to the
Subscription Agreement, the Bank Agreement and the Memorandum and
to all amendments and supplements thereto for a description of
the terms and conditions upon which this Bond is issued and the
rights, duties and obligations of the Company, the Bank and the
holder of this Bond. Copies of the Subscription Agreement, the
Bank Agreement and the Memorandum are on file in the principal
corporate trust office of the Bank.
This Bond will be without recourse to the general
partners of J&B Management Company or the shareholders of J&B
Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp. and Leisure Centers, Inc.
This Bond shall be governed by the laws of the State of
New Jersey.
IN WITNESS WHEREOF, the Company has caused this Bond to
be executed by its partner or officer thereunto duly authorized,
the day and year first above written.
J&B MANAGEMENT COMPANY
By:----------------------------------
Title: General Partner
J&B MANAGEMENT CORP.
By:----------------------------------
Title:
SULGRAVE REALTY CORPORATION
By:----------------------------------
Title:
WILMART DEVELOPMENT CORP.
By:----------------------------------
Title:
LEISURE CENTERS, INC.
By:----------------------------------
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the issue described in
the within mentioned Bank Agreement.
THE BANK OF NEW YORK
By:--------------------------------
Authorized Signatory
Date of Authentication: ----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto -------------------------- the within Bond and
does hereby irrevocably constitute and appoint ------------------
------ attorney to transfer the said Bond on the books kept for
registration thereof, with full power of substitution in the
premises.
Date:---------------- -------------------------
Signature Guaranteed:
---------------------
NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears upon the
face of the within Bond in every particular, without
alteration or enlargement or any change whatever.
Exhibit 10.7(a)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of December 15, 1994 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 1, Short
Term Step-up Bonds due March 15, 2001 (the "Bonds") pursuant to
the Company's Confidential Private Placement Memorandum dated
December 16, 1994, as the same may be from time to time amended
(the "Memorandum"); and
WHEREAS, the Company's private placement of the Bonds
(the "Offering") will terminate on the earlier of (i) the date on
which all the Bonds are sold or (ii) December 31, 1995 (the
"Offering Termination Date"); and
WHEREAS, subscribers will purchase Bonds at a closing
(the "Initial Closing") to be held when at least $500,000
principal amount of Bonds have been sold and, thereafter, from
time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date"); and
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Bonds (each,
singly, a "Purchaser," and, collectively, the "Purchasers"), in
payment for the Bonds, which amounts shall be released to the
Company at the Initial Closing and at each Additional Closing;
and
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Bonds, distributions representing interest accrued on
that Purchaser's subscription payment at a rate of 11% per annum;
and
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called the J&B Management Company
Series 1 Bond Escrow Fund Account (the "Fund") with the Bank; and
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis after the Closing Date with respect to that
Purchaser's Bonds, interest on his Bond at the rate of 11% per
annum through March 15, 1997, 11.5% per annum through March 15,
1999, and 12% per annum through March 15, 2001; and
WHEREAS, each Purchaser will have the option to have
his Bonds repaid at 100% of the then outstanding principal amount
on each March 15, 1997 and March 15, 1999, together with interest
payable to the date of repayment; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Paying Agent, Registrar and
Transfer Agent with respect to the Bonds and the Bank is willing
to accept such appointments upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow. The Company shall from time to
------
time deliver amounts received from Purchasers in payment for the
Bonds ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1 commercial paper, P-1 commercial
paper, interest bearing money market accounts, all as specified
in writing by the Company and held in trust for the benefit of
the Purchasers. The Bank is not responsible for interest,
losses, taxes or other charges on investments. All checks
delivered to the Bank for deposit in the Fund shall be payable to
the order of "J&B Management Company - Escrow Account."
Concurrently with such delivery, the Company shall deliver to the
Bank a statement of the name, mailing address and tax
identification number of each Purchaser whose Subscription
Payment is being delivered, and a schedule listing the aggregate
Bonds and aggregate cumulative Subscription Payments to date
delivered for deposit in the Fund. For the purposes of this Bank
Agreement, the Company is authorized to make deposits and give
instructions as to investments of deposits and otherwise, as
contemplated in this Bank Agreement, to the Bank.
Section 1.3 Interest. During the period (the "Escrow
--------
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Bonds, interest
will accrue on that Purchaser's Subscription Payment at a rate of
11% per annum, computed on the basis of a year of 360 days
consisting of 12 thirty day months. Interest shall be payable on
the fifteenth day of each month (each, an "Interest Payment
Date"). Four Business Days prior to each such Interest Payment
Date, the Bank shall give the Company written notice of the
difference between the amount of interest which will be payable
on Subscription Payments on such Interest Payment Date and the
amount of interest accruing on the Fund which will be available
for such payment on such Interest Payment Date. Not later than
11:30 a.m. (New York time) on the second Business Day preceding
such Interest Payment Date, the Company shall deposit with the
Bank its check in the amount of such difference. On each
Interest Payment Date, the Bank shall pay interest which is due
and payable to the respective Purchasers by mailing its check in
the appropriate amount to each Purchaser by first class mail at
the Purchaser's mailing address provided to the Bank pursuant to
Section 1.2 hereof. In the event that the Company shall default
in its payment obligations to the Bank under this Section 1.3,
the Bank shall mail its check in the amount of each Purchaser's
pro rata share of interest earned and paid on the Fund's assets
as provided in this Section 1.3. For purposes of this Bank
Agreement, "Business Day" shall mean any day other than a day on
which the Bank is authorized to remain closed in New York City.
Section 1.4 The Initial Closing and Additional
----------------------------------
Closings. Upon the scheduling of the Initial Closing and each
--------
Additional Closing, the Company shall give written notice thereof
to the Bank not less than one (1) Business Day prior to the date
scheduled for each such closing.
Section 1.5 Cancellation. The Company shall give the
------------
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment. (a) The Bank, at the Initial
-------
Closing and each Additional Closing, upon written instruction
from either Mr. John Luciani and Mr. Bernard M. Rodin, as the
sole partners and owners of the Company, shall transfer to the
Company or to such third party or parties as may be directed by
Mr. Luciani or Mr. Rodin the Cleared Funds then held in the Fund
by the Bank. Any interest earned thereon and not theretofore
distributed in accordance with Section 1.3 hereof shall be paid
to the Purchasers in accordance with Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) above from any
one other than Mr. Luciani or Mr. Rodin, regardless of whether
that person is an employee, agent or representative of the
Company, those instructions are to be deemed to be invalid and
contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses. In addition to the
-----------------
fees set forth in Section 7.3 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Bonds have been sold prior thereto. In the
event the Offering terminates prior to December 31, 1995, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between
(a) $5,000 and (b) the product of (x) $5,000 and (y) a fraction,
the numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the
termination of this Bank Agreement.
Section 1.8 Termination of Offering. If the Offering
-----------------------
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc. In compliance with the
---------------
Internal Revenue Code of 1986, as amended, the Company shall
request that each Purchaser furnish to the Bank such Purchaser's
taxpayer identification number and a statement certified under
penalties of perjury that (a) such taxpayer identification number
is true and correct and (b) the Purchaser is not subject to
withholding of 31% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds. In the event that any
-----------------
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds. For the purpose of this
-------------
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution. The Bonds shall be executed on
---------
behalf of the Company by the manual or facsimile signature of a
partner or officer of the Company. All such facsimile signatures
shall have the same force and effect as if the partner or officer
had manually signed the Bonds. In case any partner or officer of
the Company whose signature shall appear on a Bond shall cease to
be such partner or officer before the delivery of such Bond or
the issuance of a new Bond following a transfer or exchange, such
signature or such facsimile shall nevertheless be valid and
sufficient for all purposes, the same as if such partner or
officer had remained a partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication. Only such Bonds as shall
--------------
have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Bond attached to
the Memorandum, duly executed by the manual signature of an
authorized signatory of the Bank, shall be entitled to any right
or benefit under this Bank Agreement. No Bonds shall be valid or
obligatory for any purpose unless and until such Certificate of
Authentication shall have been duly executed by the Bank; and
such executed certificate upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered
under this Bank Agreement. The Certificate of Authentication on
any Bond shall be deemed to have been executed by the Bank if
signed by an authorized signatory of the Bank, but it shall not
be necessary that the same person sign the Certificate of
Authentication on all of the Bonds.
Section 4. Mutilated, Lost, Stolen or Destroyed Bonds.
------------------------------------------
Subject to applicable law, in the event any Bond is mutilated,
lost, stolen or destroyed, the Company may authorize the
execution and delivery of a new Bond of like date, number,
maturity and denomination as that mutilated, lost, stolen or
destroyed, provided, however, that in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the
Company, and in the case of any lost, stolen or destroyed Bond,
there shall be first furnished to the Company and the Bank,
evidence of the ownership thereof and of such loss, theft or
destruction satisfactory to the Company and the Bank, together
with indemnification through a bond of indemnity or otherwise as
shall be satisfactory to the Company and the Bank. The Company
may charge the Purchaser of such Bond with any amounts
satisfactory to the Company and the Bank and permitted by
applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Bonds. The Bonds are issuable only as registered Bonds without
-----
coupons in the denomination of $100,000 or any multiple or any
fraction thereof at the sole discretion of the Company. Each
Bond shall bear the following restrictive legend: "These
securities have not been registered under the Securities Act of
1933, as amended, and may be offered and sold or otherwise
transferred only if registered pursuant to the provisions of that
Act or if an exemption from registration is available." The Bank
shall keep at its principal corporate trust office a register in
which the Bank shall provide for the registration and transfer of
Bonds. Upon surrender for registration of transfer of any Bond
at such office of the Bank, the Company shall execute, pursuant
to Section 2 hereof, and mail by first class mail to the Bank,
and the Bank shall authenticate, pursuant to Section 3 hereof,
and mail by first class mail to the designated transferee, or
transferees, one or more new Bonds in an aggregate principal
amount equal to the unpaid principal amount of such surrendered
Bond, registered in the name of the designated transferee or
transferees. Every Bond presented or surrendered for
registration of transfer shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by
the holder of such Bond or his attorney duly authorized in
writing. Notwithstanding the preceding, the Bonds may not be
transferred without an effective registration statement under the
Securities Act of 1933 covering the Bonds or an opinion of
counsel to the holder of such Bonds satisfactory to the Company
and its counsel that such registration is not necessary under the
Securities Act of 1933 (the "Securities Act"). At the option of
the owner of any Bond, such Bond may be exchanged for other Bonds
of any authorized denominations, in an aggregate principal amount
equal to the unpaid principal amount of such surrendered Bond,
upon surrender of the Bond to be exchanged at the principal
corporate trust office of the Bank; provided, however, that any
exchange for denominations other than $100,000 or an integral
multiple thereof shall be at the sole discretion of the Company.
Whenever any Bond is so surrendered for exchange, the Company
shall execute, pursuant to Section 2 hereof, and deliver to the
Bank, and the Bank shall authenticate, pursuant to Section 3
hereof, and mail by first class mail to the designated
transferee, or transferees, the Bond or Bonds which the Bond
owner making the exchange is entitled to receive. Any Bond or
Bonds issued in exchange for any Bond or upon transfer thereof
shall be dated the date to which interest has been paid on such
Bond surrendered for exchange or transfer, and neither gain nor
loss of interest shall result from any such exchange or transfer.
In addition, each Bond issued upon such exchange or transfer
shall bear the restrictive legend set forth above unless in the
opinion of counsel to the Company, such legend is not required to
ensure compliance with the Securities Act.
Section 5.3 Owner. The person in whose name any Bond
-----
shall be registered shall be deemed and regarded as the absolute
owner thereof for all purposes, and payment of or on account of
the principal of or interest on such Bond shall be made only to
or upon the order of the registered owner thereof or his duly
authorized legal representative. Such registration may be c-
hanged only as provided in this Section 5, and no other notice to
the Company or the Bank shall affect the rights or obligations
with respect to the transfer of a Bond or be effective to
transfer any Bond. All payments to the person in whose name any
Bond shall be registered shall be valid and effectual to satisfy
and discharge the liability upon such Bond to the extent of the
sum or sums to be paid.
Section 5.4 Transfer Agent. The Bank shall send
--------------
executed, authenticated Bonds to Purchasers on Closing Dates as
required and to subsequent owners and transferees who are
entitled to receive Bonds pursuant to the terms of this Bank
Agreement, by first class mail.
Section 5.5 Charges and Expenses. No service charge
--------------------
shall be made for any transfer or exchange of Bonds, but in all
cases in which Bonds shall be transferred or exchanged hereunder,
as a condition to any such transfer or exchange, the owner of the
Bond shall, prior to the delivery of any new Bond pursuant to
such transfer or exchange, reimburse the Company and the Bank for
their respective actual out-of-pocket expenses incurred in
connection therewith (including, but not limited to, any tax, fee
or other governmental charge required to be paid with respect to
such transfer or exchange, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.5 shall survive the
termination of this Bank Agreement.
Section 5.6 Redemption at the Option of the Company.
---------------------------------------
(a) Whenever the Company shall effect a redemption at
the option of the Company of part or all of the Bonds, which
shall be without premium or penalty, the Company shall give
written notice thereof to the Bank at least forty (40) days prior
to the date set forth for redemption, the manner in which
redemption shall be effected and all the relevant details
thereof. The Bank shall give written notice to the Purchasers of
that redemption at least thirty (30) days prior to the date set
forth for redemption. The Company shall deliver all redeemed
Bonds received by it to the Bank for cancellation of the whole or
portion thereof, as appropriate, and issuance of new Bonds in
denominations equal to the unredeemed portion. In no event,
however, shall the Bank pay the redeemed amount or issue new
Bonds in denominations equal to the unredeemed portion to a
registered owner if that registered owner has not surrendered its
Bond to the Company. No interest shall be payable on the
redeemed portion of a Bond, regardless of whether received by the
Company, from and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may
effect a redemption at the option of the Company of part or all
of the Bonds without premium or penalty.
Section 5.7 Redemption at the Option of the
-------------------------------
Purchaser. Any Purchaser may redeem all or any portion (in
---------
integral multiples of $5,000) of the Purchaser's Bonds on
March 15, 1997 and/or March 15, 1999 at the price of 100% of the
principal amount thereof plus accrued interest, if any, to the
date of redemption. For a Purchaser to exercise his redemption
right, the Purchaser must deliver to the Bank his certificate or
certificates representing the Bonds to be redeemed together with
the appropriately completed "Redemption Notice" printed on the
reverse side of the certificate representing the Bonds not
earlier than December 16, 1996 and not later than 5:00 p.m,
Eastern Standard Time ("E.S.T."), January 15, 1997 for Bonds to
be redeemed on March 15, 1997 and not earlier than December 15,
1998 and not later than 5:00 p.m., E.S.T., January 15, 1999 for
Bonds to be redeemed on March 15, 1999. On January 16 of both
1997 and 1999 the Bank shall inform the Company which Purchasers
exercised their redemption rights and the dollar amount of the
Bonds so redeemed. No interest shall be payable on the redeemed
portion of a Bond from and after the date of redemption. Payment
to the Purchasers shall be made in accordance with Section 6. In
the event a Purchaser redeems less than 100% of the principal
amount of his Bond, the Company will issue a new Bond in the
denomination equal to the unredeemed portion.
Section 6. Paying Agent.
------------
Section 6.1 Appointment. The Company hereby appoints
-----------
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions.
------------------
(a) The Bank shall pay interest on Subscription
Payments and principal of and interest on the Bonds to the
persons in whose names the Bonds are registered, subject to the
limitations contained in Section 5.6(a), Section 5.7 and in
accordance with the terms and provisions of this Bank Agreement
and the Bonds, by check mailed by first class mail to the
registered owner of a Bond at his address as it appears in the
register; provided that not later than 11:30 a.m. (New York time)
on the second Business Day preceding each Interest Payment Date
or date on which principal of any Bond is due and payable, the
Company shall provide the Bank with sufficient funds to make
those payments.
(b) Subject to Section 5.7 herein, each Purchaser
shall be entitled to receive with respect to that Purchaser's
Bonds, interest from the Closing Date through March 15, 1997 at
the rate of 11% per annum, from March 16, 1997 through March 15,
1999 at the rate of 11.5% per annum and from March 16, 1999
through March 15, 2001 at the rate of 12% per annum.
Section 6.3 Expenses. The Company shall reimburse the
--------
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the Bonds.
The provisions of this Section 6.3 shall survive the termination
of this Bank Agreement.
Section 7. Rights and Duties of Bank.
-------------------------
Section 7.1 Duties of the Bank.
------------------
(a) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Bonds plus all accrued
interest due and immediately payable.
(b) In the event that the Company shall default on its
payment obligations to the Bank under this Bank Agreement, the
Bank shall be entitled to institute action against the Company,
jointly or severally, to collect payment under this Bank
Agreement.
Section 7.2 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Bond when the same shall
become due and payable, and such default shall have
continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Bond when the same shall
become due and payable, and such default shall have
continued for more than 15 days;
then, the Bank, by notice to the Company, or the owners of at
least 25% of the principal amount of the Bonds, by notice to the
Company and to the Bank, may declare the entire principal of and
accrued interest on all Bonds to become immediately due and
payable at par without presentment, demand, protest or other
notice of any kind, all of which are waived by the Company.
Section 7.3 Fees and Expenses. In addition to the
-----------------
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Bonds ten days prior to the anniversary date, in the
following amounts:
$ 500,000 to $ 1,000,000 outstanding . . $2,500.00
$ 1,000,001 to $ 2,000,000 outstanding . . $3,000.00
$ 2,000,001 to $ 3,000,000 outstanding . . $4,000.00
$ 3,000,001 to $ 4,000,000 outstanding . . $5,000.00
$ 4,000,001 to $ 5,000,000 outstanding . . $6,000.00
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The provisions of this Section 7.3 shall survive
the termination of this Bank Agreement.
Section 7.4 Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a notice received by it pursuant to the
subscription agreements executed by the Purchasers in
connection with the purchase of the Bonds.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 8. No Representations. The Bank makes no
------------------
representation as to the validity or adequacy of this Bank
Agreement or the Bonds or any Financing Statement delivered to it
by J&B or the Bank's filing of any such Financing Statement with
any governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Bonds and it shall not be
responsible for any statement in the Memorandum or in the Bonds
other than its authentication.
Section 9. Indemnification. The Company shall
---------------
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and shall pay
the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss or liability
incurred by the Bank through gross negligence or bad faith. The
provisions of this Section 9 shall survive the termination of
this Bank Agreement.
Section 10. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor bank shall become effective only upon
the successor bank's acceptance of appointment as provided in
this Section 10.
(b) The Bank may resign by so notifying the Company.
The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c) (i) If the Bank resigns or is removed, the
Company shall promptly appoint a successor bank.
(ii) A successor bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor bank shall mail a notice of its succession to
Bond owners. Upon payment to the retiring Bank of all
amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it under the terms of this Bank Agreement.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor bank.
Section 11. Notices. All notices and other
-------
communications pursuant to this Bank Agreement shall be in
writing, subject to the terms of Section 1.6 hereof, and shall be
delivered by hand or sent by registered, certified, return
receipt requested, or first class mail, or by facsimile,
confirmed by writing, delivered by hand or sent by registered,
certified, return receipt requested, or first class mail
delivered or sent on the date of the facsimile, addressed as
follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Bernard M. Rodin
With a copy to:
Reid & Priest
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Bond owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Peter Lagatta,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 12. Choice of Law. This Bank Agreement shall
-------------
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 13. Prior Agreements; Amendment. This Bank
---------------------------
Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 14. Successors. This Bank Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 15. Enforceability. Any provision of this
--------------
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 16. Counterparts. This Bank Agreement may be
------------
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
[INTENTIONALLY LEFT BLANK]
Section 17. Definitions. All terms used in this Bank
-----------
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s Bernard M. Rodin By: /s/ B. Cocozza
---------------------- ------------------------
Title: General Partner Title: Assistant Treasurer
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
----------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
-----------------------
Title: Vice President
<PAGE>
EXHIBIT A
FEE SCHEDULE FOR
J&B MANAGEMENT COMPANY
SERIES 1, 11% BOND ESCROW FUND ACCOUNT
SERVICES AS
ESCROW AGENT
(INCLUDING AUTHENTICATING AGENT,
REGISTRAR AND PAYING AGENT)
December 13, 1994
ACCEPTANCE FEE . . . . . . . . . . . . . . . . . . . . $2,500.00
ANNUAL ADMINISTRATION FEE:
ESCROW AGENT . . . . . . . . . . . . . . . . . . $5,000.00
$ 500,000 to $ 1,000,000 outstanding . . $2,500.00
$ 1,000,001 to $ 2,000,000 outstanding . . $3,000.00
$ 2,000,001 to $ 3,000,000 outstanding . . $4,000.00
$ 3,000,001 to $ 4,000,000 outstanding . . $5,000.00
$ 4,000,001 to $ 5,000,000 outstanding . . $6,000.00
For the preparation and creation of each subscriber
account including the calculation of interest accrued . . $5.00
Preparation of 1099 tax form . . . . . . . . . . . . . . . $1.00
For each investment transaction . . . . . . . . . . . . $25.00
For each returned check ("bounced check") . . . . . . . $25.00
Subsequent closings and extensions . . . . . . . . . . . $500.00
<PAGE>
FEE SCHEDULE FOR
J&B MANAGEMENT COMPANY
SERIES 1, 11% BOND ESCROW FUND ACCOUNT
SERVICES AS
ESCROW AGENT
(INCLUDING AUTHENTICATING AGENT,
REGISTRAR AND PAYING AGENT)
December 13, 1994
PAGE -2-
TERMS OF PROPOSAL
OUT-OF-POCKET EXPENSES
Fees quoted do not included out-of-pocket expenses and counsel
fees, if any, which will be billed to the Company.
The charge will be based upon an appraisal of services to be
rendered and responsibility assumed.
TERMS OF PROPOSAL
The Bank of New York's final acceptance of this appointment is
subject to full review and approval of all related documentation
and financials and our conflict investigation. Please note that
if this transaction does not proceed to a successful conclusion,
you will be responsible for paying any expenses incurred for this
transaction. This offer shall be deemed terminated if we do not
enter into a written agreement within three months from the date
of transmittal. In the event the transaction terminates before
------
closing, all out-of-pocket expenses incurred, including our
------- ---
counsel fees, if applicable, will be billed to the account.
Exhibit 10.7(b)
BANK AGREEMENT
THIS BANK AGREEMENT, dated as of August 3, 1995 (as
amended, modified or supplemented from time to time, the "Bank
Agreement"), is by and among J&B Management Company, a New Jersey
general partnership ("J&B"), and its affiliates; Leisure Centers,
Inc., a corporation organized and existing under the laws of the
State of Delaware, J&B Management Corp., Sulgrave Realty
Corporation, and Wilmart Development Corp., each of which is a
corporation organized and existing under the laws of the State of
New Jersey (hereinafter J&B, Leisure Centers, Inc., J&B
Management Corp., Sulgrave Realty Corporation and Wilmart
Development Corp. are sometimes referred to collectively as the
"Company" or the "Co-Obligors"), and The Bank of New York (the
"Bank").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company is issuing its Series 2 Bonds due
April 15, 2003 (the "Bonds") pursuant to the Company's
Confidential Private Placement Memorandum, as the same may be
from time to time amended (the "Memorandum"); and
WHEREAS, the Company's private placement of the Bonds
(the "Offering") will terminate on the earlier of (i) the date on
which all the Bonds are sold or (ii) December 31, 1996 (the
"Offering Termination Date"); and
WHEREAS, subscribers will purchase Bonds at a closing
(the "Initial Closing") to be held when at least $500,000
principal amount of Bonds have been sold and, thereafter, from
time to time (each, singly, an "Additional Closing," and,
collectively, the "Additional Closings"), at the discretion of
the Company, on such day or days as may be determined by the
Company, as subscriptions are received and accepted (hereinafter
the date of the Initial Closing and the date of any Additional
Closing are each referred to as a "Closing Date"); and
WHEREAS, the Company desires to deliver to the Bank
amounts received by the Company from subscribers for Bonds (each,
singly, a "Purchaser," and, collectively, the "Purchasers"), in
payment for the Bonds, which amounts shall be released to the
Company at the Initial Closing and at each Additional Closing;
and
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis prior to the Closing Date with respect to that
Purchaser's Bonds, distributions representing interest accrued on
that Purchaser's subscription payment at a rate of 12.375% per
annum; and
WHEREAS, the Company desires to establish an interest
bearing escrow fund to be called the J&B Management Company
Series 2 Bond Escrow Fund Account (the "Fund") with the Bank; and
WHEREAS, each Purchaser shall be entitled to receive,
on a monthly basis after the Closing Date with respect to that
Purchaser's Bonds, interest on his Bond at the rate of 12.375%
per annum; and
WHEREAS, the Company wishes to appoint the Bank as
Escrow Agent, Authenticating Agent, Paying Agent, Registrar and
Transfer Agent with respect to the Bonds and the Bank is willing
to accept such appointments upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants herein contained and other good
and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Escrow Agent.
------------
Section 1.1 Appointment.
-----------
The Company hereby appoints
and designates the Bank as Escrow Agent for the purposes set
forth in this Section 1, and the Bank hereby accepts such
appointment.
Section 1.2 Escrow.
------
The Company shall from time to
time deliver amounts received from Purchasers in payment for the
Bonds ("Subscription Payments") to the Bank. The Bank shall
deposit the Subscription Payments in the Fund to be established
in the Company's name for this purpose by the Bank. Subscription
Payments delivered for deposit in the Fund shall be invested in
short term certificates of deposit (including certificates of
deposit issued by the Bank), A-1 commercial paper, P-1 commercial
paper, interest bearing money market accounts, all as specified
in writing by the Company and held in trust for the benefit of
Purchasers. In the event the Company should fail to so specify,
Subscription Payments delivered for deposit in the Fund shall be
invested in the Bank's Deposit Reserve, an interest-bearing
account, for the benefit of the Purchasers. The Bank is not
responsible for interest, losses, taxes or other charges on
investments. All checks delivered to the Bank for deposit in the
Fund shall be payable to the order of "J&B Management Company -
Escrow Account." Concurrently with such delivery, the Company
shall deliver to the Bank a statement of the name, mailing
address and tax identification number of each Purchaser whose
Subscription Payment is being delivered, and a schedule listing
the aggregate Bonds and aggregate cumulative Subscription
Payments to date delivered for deposit in the Fund. For the
purposes of this Bank Agreement, the Company is authorized to
make deposits and give instructions as to investments of deposits
and otherwise, as contemplated in this Bank Agreement, to the
Bank.
Section 1.3 Interest.
--------
During the period (the "Escrow
Period") commencing upon the date that any Purchaser's
Subscription Payment constitutes Cleared Funds (as defined in
Section 1.11 hereof) and ending on the day immediately preceding
the Closing Date with respect to that Purchaser's Bonds, interest
will accrue on that Purchaser's Subscription Payment at a rate of
12.375% per annum, computed on the basis of a year of 360 days
consisting of 12 thirty day months. Interest shall be payable on
the fifteenth day of each month if such day is a Business Day.
If such day is not a Business Day, then the next Business Day
shall be deemed the Interest Payment Date (each, an "Interest
Payment Date"). Four Business Days prior to each such Interest
Payment Date, the Bank shall give the Company written notice of
the difference between the amount of interest which will be
payable on Subscription Payments on such Interest Payment Date
and the amount of interest accruing on the Fund which will be
available for such payment on such Interest Payment Date. Not
later than 11:30 a.m. (New York time) on such Interest Payment
Date, the Company shall deposit with the Bank the amount of such
difference. On each Interest Payment Date, the Bank shall pay
interest which is due and payable to the respective Purchasers by
mailing its check in the appropriate amount to each Purchaser by
first class mail to the Purchaser's mailing address provided to
the Bank pursuant to Section 1.2 hereof. In the event that the
Company shall default in its payment obligations to the Bank
under this Section 1.3, the Bank shall mail its check in the
amount of each Purchaser's pro rata share of interest earned and
paid on the Fund's assets as provided in this Section 1.3. For
purposes of this Bank Agreement, "Business Day" shall mean any
day other than a day on which the Bank is authorized to remain
closed in New York City.
Section 1.4 The Initial Closing and Additional
----------------------------------
Closings.
--------
Upon the scheduling of the Initial Closing and each
Additional Closing, the Company shall give written notice thereof
to the Bank not less than one (1) Business Day prior to the date
scheduled for each such closing.
Section 1.5 Cancellation.
------------
The Company shall give the
Bank notice of any Purchaser who cancels his Subscription prior
to his Closing Date or whose Subscription Payment was deposited
pursuant to Section 1.2 but whose Subscription is rejected,
setting forth the name and mailing address of the Purchaser and
the amount of the rejected or cancelled subscription. As
promptly as practicable thereafter, the Bank shall pay the amount
of the cancelled or rejected subscription from the Fund to the
Purchaser whose Subscription was cancelled or rejected as
directed by the Company. Any interest earned thereon and not
theretofore distributed pursuant to Section 1.3 hereof shall be
paid to the Purchaser in accordance with Section 1.3 hereof.
Payment shall be made by check payable to the Purchaser mailed by
the Bank by first class mail directly to the Purchaser at the
mailing address of the Purchaser.
Section 1.6 Payment.
-------
(a) The Bank, at the Initial
Closing and each Additional Closing, upon written instruction
from either Mr. John Luciani and Mr. Bernard M. Rodin, as the
sole partners and owners of the Company, shall transfer to the
Company or to such third party or parties as may be directed by
Mr. Luciani or Mr. Rodin the Cleared Funds then held in the Fund
by the Bank. Any interest earned thereon and not theretofore
distributed in accordance with Section 1.3 hereof shall be paid
to the Purchasers in accordance with Section 1.3 hereof.
(b) In the event that the Bank should receive written
instructions as contemplated in subparagraph (a) above from any
one other than Mr. Luciani or Mr. Rodin, regardless of whether
that person is an employee, agent or representative of the
Company, those instructions are to be deemed to be invalid and
contrary to the intent of this Bank Agreement.
Section 1.7 Fees and Expenses.
-----------------
In addition to the
fees set forth in Section 7.3 hereof, the Bank shall be entitled
to an administration fee as compensation for its services under
this Section 1 in the amount of $5,000 payable (i) upon the
execution and delivery of this Bank Agreement and (ii) subject to
an adjustment as provided in the next succeeding sentence of this
Section 1.7, on the first anniversary date of this Bank
Agreement, provided however, that the Bank shall not be entitled
to payment of an administration fee on such first anniversary
date if all of the Bonds have been sold prior thereto. In the
event the Offering terminates prior to December 31, 1996, the
Company shall be entitled to a refund payable ten days after the
Offering Termination Date, of that portion of the administration
fee paid to the Bank on the first anniversary date of the Bank
Agreement, in an amount calculated as the difference between
(a) $5,000 and (b) the product of (x) $5,000 and (y) a fraction,
the numerator of which is the number of days between the first
anniversary date of this Bank Agreement and the Offering
Termination Date, inclusive, and the denominator of which is 365.
In no event shall the Bank be entitled to payment of an
administration fee, as provided for in this Section 1.7,
following the Offering Termination Date. The Company shall also
pay the Bank $5 for the preparation and execution of each
Purchaser's account including the calculation of interest
accrued; $1 for the preparation of each Purchaser's 1099 tax
form; $25 for each investment transaction in the Fund; $25 for
each returned "bounced" check of a Purchaser; and $500 for each
Additional Closing, payable within 10 days after the Bank gives
the Company notice that any such amounts are due and payable.
Notwithstanding anything herein to the contrary, the Bank shall
not charge the Company for the issuance of checks or wire
transfers to make monthly payments of accrued interest on
Subscription Payments. No additional fee will be payable with
respect to wire transfers of and unreturned checks for
Subscription Payments. In addition, the Company shall reimburse
the Bank for other actual out-of-pocket expenses incurred in
connection with its obligations pursuant to this Section 1
(including, but not limited to, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it has incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. Amounts held in the Fund shall not be available to
satisfy this obligation or any other obligation of the Company to
the Bank. The provisions of this Section 1.7 shall survive the -
termination of this Bank Agreement.
Section 1.8 Termination of Offering.
-----------------------
If the Offering
should be terminated, the Company shall promptly so advise the
Bank in writing, and shall authorize and direct the Bank to
return the Subscription Payments to the Purchasers. The Bank
thereupon shall return those Subscription Payments to the extent
they have not been distributed per Section 1.6 to the Purchasers
from whom they were received. Any interest earned on the
Subscription Payments and not theretofore distributed pursuant to
Section 1.3 hereof shall be paid in accordance with Section 1.3
hereof. Upon paying such disbursements to the Purchasers and the
Company, the Bank shall be relieved of all of its obligations and
liabilities under this Bank Agreement.
Section 1.9 Form 1099, etc.
---------------
In compliance with the
Internal Revenue Code of 1986, as amended, the Company shall
request that each Purchaser furnish to the Bank such Purchaser's
taxpayer identification number and a statement certified under
penalties of perjury that (a) such taxpayer identification number
is true and correct and (b) the Purchaser is not subject to
withholding of 31% of reportable interest, dividends or other
payments.
Section 1.10 Uncollected Funds.
-----------------
In the event that any
funds, including Cleared Funds, deposited in the Fund prove
uncollectible after the funds represented thereby have been
released by the Bank pursuant to this Bank Agreement, the Company
shall reimburse the Bank upon request for the face amount of such
check or checks; and the Bank shall, upon instruction from the
Company, deliver the returned checks or other instruments to the
Company. This section shall survive the termination of this Bank
Agreement.
Section 1.11 Cleared Funds.
-------------
For the purpose of this
Bank Agreement, Subscription Payments shall constitute "Cleared
Funds" in accordance with the following:
(a) if paid by wire transfer, such funds shall
constitute Cleared Funds on the date received by the Bank;
(b) if paid by check drawn on a New York Clearing
House Bank, such funds shall constitute Cleared Funds on the
second Business Day following the date received by the Bank; and
(c) if paid by check drawn on any bank other than a
New York Clearing House Bank, such funds shall constitute Cleared
Funds on the third Business Day following the date received by
the Bank.
Section 2. Execution.
---------
The Bonds shall be executed on
behalf of the Company by the manual or facsimile signature of a
partner or officer of the Company. All such facsimile signatures
shall have the same force and effect as if the partner or officer
had manually signed the Bonds. In case any partner or officer of
the Company whose signature shall appear on a Bond shall cease to
be such partner or officer before the delivery of such Bond or
the issuance of a new Bond following a transfer or exchange, such
signature or such facsimile shall nevertheless be valid and
sufficient for all purposes, the same as if such partner or
officer had remained a partner or officer until delivery.
Section 3. Authenticating Agent.
--------------------
Section 3.1 Appointment.
-----------
The Company hereby appoints
and designates the Bank as Authenticating Agent for the purposes
set forth in this Section 3, and the Bank hereby accepts such
appointment.
Section 3.2 Authentication.
--------------
Only such Bonds as shall
have the Certificate of Authentication endorsed thereon in
substantially the form set forth in the form of Bond attached to
the Memorandum, duly executed by the manual signature of an
authorized signatory of the Bank, shall be entitled to any right
or benefit under this Bank Agreement. No Bonds shall be valid or
obligatory for any purpose unless and until such Certificate of
Authentication shall have been duly executed by the Bank; and
such executed certificate upon any such Bond shall be conclusive
evidence that such Bond has been authenticated and delivered
under this Bank Agreement. The Certificate of Authentication on
any Bond shall be deemed to have been executed by the Bank if
signed by an authorized signatory of the Bank, but it shall not
be necessary that the same person sign the Certificate of
Authentication on all of the Bonds.
Section 4. Mutilated, Lost, Stolen or Destroyed Bonds.
------------------------------------------
Subject to applicable law, in the event any Bond is mutilated,
lost, stolen or destroyed, the Company may authorize the
execution and delivery of a new Bond of like date, number,
maturity and denomination as that mutilated, lost, stolen or
destroyed, provided, however, that in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the -
Company, and in the case of any lost, stolen or destroyed Bond,
there shall be first furnished to the Company and the Bank,
evidence of the ownership thereof and of such loss, theft or
destruction satisfactory to the Company and the Bank, together
with indemnification through a bond of indemnity or otherwise as
shall be satisfactory to the Company and the Bank. The Company
may charge the Purchaser of such Bond with any amounts
satisfactory to the Company and the Bank and permitted by
applicable law.
Section 5. Registrar and Transfer Agent.
----------------------------
Section 5.1 Appointment.
-----------
The Company hereby appoints
and designates the Bank as Registrar and Transfer Agent for the
purposes set forth in this Section 5, and the Bank hereby accepts
such appointment.
Section 5.2 Registration, Transfer and Exchange of
--------------------------------------
Bonds.
-----
The Bonds are issuable only as registered Bonds without
coupons in the denomination of $100,000 or any multiple or any
fraction thereof at the sole discretion of the Company. Each
Bond shall bear the following restrictive legend: "These
securities have not been registered under the Securities Act of
1933, as amended, and may be offered and sold or otherwise
transferred only if registered pursuant to the provisions of that
Act or if an exemption from registration is available." The Bank
shall keep at its principal corporate trust office a register in
which the Bank shall provide for the registration and transfer of
Bonds. Upon surrender for registration of transfer of any Bond
at such office of the Bank, the Company shall execute, pursuant
to Section 2 hereof, and mail by first class mail to the Bank,
and the Bank shall authenticate, pursuant to Section 3 hereof,
and mail by first class mail to the designated transferee, or
transferees, one or more new Bonds in an aggregate principal
amount equal to the unpaid principal amount of such surrendered
Bond, registered in the name of the designated transferee or
transferees. Every Bond presented or surrendered for
registration of transfer shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by
the holder of such Bond or his attorney duly authorized in
writing. Notwithstanding the preceding, the Bonds may not be
transferred without an effective registration statement under the
Securities Act of 1933 covering the Bonds or an opinion of
counsel satisfactory to the Company and its counsel that such
registration is not necessary under the Securities Act of 1933
(the "Securities Act"). At the option of the owner of any Bond,
such Bond may be exchanged for other Bonds of any authorized
denominations, in an aggregate principal amount equal to the
unpaid principal amount of such surrendered Bond, upon surrender
of the Bond to be exchanged at the principal corporate trust
office of the Bank; provided, however, that any exchange for
denominations other than $100,000 or an integral multiple thereof
shall be at the sole discretion of the Company. Whenever any
Bond is so surrendered for exchange, the Company shall execute,
pursuant to Section 2 hereof, and deliver to the Bank, and the
Bank shall authenticate, pursuant to Section 3 hereof, and mail
by first class mail to the designated transferee, or transferees,
the Bond or Bonds which the Bond owner making the exchange is
entitled to receive. Any Bond or Bonds issued in exchange for
any Bond or upon transfer thereof shall be dated the date to
which interest has been paid on such Bond surrendered for
exchange or transfer, and neither gain nor loss of interest shall
result from any such exchange or transfer. In addition, each
Bond issued upon such exchange or transfer shall bear the
restrictive legend set forth above unless in the opinion of
counsel to the Company, such legend is not required to ensure
compliance with the Securities Act.
Section 5.3 Owner.
-----
The person in whose name any Bond
shall be registered shall be deemed and regarded as the absolute
owner thereof for all purposes, and payment of or on account of
the principal of or interest on such Bond shall be made only to
or upon the order of the registered owner thereof or his duly
authorized legal representative. Such registration may be changed
only as provided in this Section 5, and no other notice to
the Company or the Bank shall affect the rights or obligations
with respect to the transfer of a Bond or be effective to
transfer any Bond. All payments to the person in whose name any
Bond shall be registered shall be valid and effectual to satisfy
and discharge the liability upon such Bond to the extent of the
sum or sums to be paid.
Section 5.4 Transfer Agent.
--------------
The Bank shall send
executed, authenticated Bonds to Purchasers on Closing Dates as
required and to subsequent owners and transferees who are
entitled to receive Bonds pursuant to the terms of this Bank
Agreement, by first class mail.
Section 5.5 Charges and Expenses.
--------------------
No service charge
shall be made for any transfer or exchange of Bonds, but in all
cases in which Bonds shall be transferred or exchanged hereunder,
as a condition to any such transfer or exchange, the owner of the
Bond shall, prior to the delivery of any new Bond pursuant to
such transfer or exchange, reimburse the Company and the Bank for
their respective actual out-of-pocket expenses incurred in
connection therewith (including, but not limited to, any tax, fee
or other governmental charge required to be paid with respect to
such transfer or exchange, actual expenses for stationery,
postage, telephone, telex, wire transfers, telecopy and retention
of records, and reasonable fees and expenses of their respective
counsel). The provisions of this Section 5.5 shall survive the
termination of this Bank Agreement.
Section 5.6 Redemption at the Option of the Company.
---------------------------------------
(a) Whenever the Company shall effect a redemption at
the option of the Company, at any time in its sole and absolute
discretion, of part or all of the Bonds, which shall be without
premium or penalty, the Company shall give written notice thereof
to the Bank at least forty (40) days prior to the date set forth
for redemption, the manner in which redemption shall be effected
and all the relevant details thereof. The Bank shall give
written notice to the Purchasers of that redemption at least
thirty (30) days prior to the date set forth for redemption in
the form included herewith as Exhibit A. The Bank shall register
the cancellation of the whole or a portion of the unredeemed
Bonds, as appropriate. In any event, new Bonds will not be
issued to reflect the non-redeemed portion of the Bonds. No
interest shall be payable on the redeemed portion of a Bond from
and after the date of redemption.
(b) The Bank hereby acknowledges that the Company may
effect a redemption at the option of the Company, at any time in
its sole and absolute discretion, of part or all of the Bonds
without premium or penalty.
Section 5.7 Mandatory Redemption.
--------------------
The Company shall
be obligated to redeem the Bonds on a pro rata basis as follows:
--------
50% of the original principal amount of the Bonds on October 15,
2002 and 50% of the original principal amount of the Bonds on
April 15, 2003. Whenever the Company shall effect a mandatory
redemption, the Company shall give written notice thereof to the
Bank at least forty (40) days prior to the date set forth for
redemption, the manner in which redemption shall be effected and
all relevant details thereof. The Bank shall give written notice
to the Purchasers of that redemption at least thirty (30) days
prior to the date set forth for redemption in the form included
herewith as Exhibit B. The Bank shall register the cancellation
of the whole or 50% of the original principal amount of the
redeemed Bonds, as appropriate. In any event, new Bonds will not
be issued to reflect the non-redeemed portion of the Bonds.
Section 6. Paying Agent.
------------
Section 6.1 Appointment.
-----------
The Company hereby appoints
and designates the Bank as Paying Agent for the purposes set
forth in this Section 6, and the Bank hereby accepts such
appointment.
Section 6.2 Payment Provisions.
------------------
(a) The Bank shall pay interest on Subscription
Payments and principal of and interest on the Bonds to the
persons in whose names the Bonds are registered, subject to the
limitations contained in Section 5.6(a), Section 5.7 and in
accordance with the terms and provisions of this Bank Agreement
and the Bonds, by check mailed by first class mail to the
registered owner of a Bond at his address as it appears in the
register; provided that not later than 11:30 a.m. (New York time)
on the Interest Payment Date or date on which principal of any
Bond is due and payable, the Company shall provide the Bank with
sufficient funds to make those payments.
(b) Each Purchaser shall be entitled to receive with
respect to that Purchaser's Bonds, interest from the Closing Date
through April 15, 2003.
Section 6.3 Expenses.
--------
The Company shall reimburse the
Bank for its actual out-of-pocket expenses incurred in connection
with its obligations pursuant to this Section 6 (including, but
not limited to, actual expenses for stationery, postage,
telephone, telex, wire transfers, telecopy and retention of
records), payable within ten (10) days after the Bank gives
notice to the Company that it has incurred such expenses. The
obligation to pay such compensation and reimburse such expenses
shall be borne solely by the Company. Notwithstanding anything
herein to the contrary, the Bank shall not charge the Company any
fees for the issuance of checks or wire transfers to make
payments of interest on or repayments of principal of the Bonds.
The provisions of this Section 6.3 shall survive the termination
of this Bank Agreement.
Section 7. Rights and Duties of Bank.
-------------------------
Section 7.1 Duties of the Bank.
------------------
(a) Upon the occurrence and continuation of an Event
of Default, the Bank shall declare the entire outstanding
aggregate principal balance of all the Bonds plus all accrued
interest due and immediately payable.
(b) In the event that the Company shall default on its
payment obligations to the Bank under this Bank Agreement, the
Bank shall be entitled to institute action against the Company,
jointly or severally, to collect payment under this Bank
Agreement.
Section 7.2 Events of Default.
-----------------
If any of the following events (an "Event of Default")
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
part of the principal of any Bond when the same shall
become due and payable, and such default shall have
continued for more than 30 days; or
(ii) the Company defaults in the payment of any
part of the interest on any Bond when the same shall
become due and payable, and such default shall have
continued for more than 15 days;
then, the Bank, upon instruction by the owners of at least 50% of
the principal amount of the Bonds, by notice to the Company, or
the owners of at least 75% of the principal amount of the Bonds,
by notice to the Company and to the Bank, may declare the entire
principal of and accrued interest on all Bonds to become
immediately due and payable at par without presentment, demand,
protest or other notice of any kind, all of which are waived by
the Company.
Section 7.3 Fees and Expenses.
-----------------
In addition to the
administration fee set forth in Section 1.7 hereof, the Bank
shall be entitled to compensation for its services under this
Section 7 in the amount of $2,500 as an acceptance fee, payable
upon execution and delivery of this Bank Agreement; and
administrative fees, payable annually on the anniversary date of
this Bank Agreement, based upon the aggregate principal amount of
outstanding Bonds ten days prior to the anniversary date, in the
following amounts:
$ 500,000 to $ 1,000,000 outstanding . . $2,500.00
$ 1,000,001 to $ 2,000,000 outstanding . . $3,000.00
$ 2,000,001 to $ 3,000,000 outstanding . . $4,000.00
$ 3,000,001 to $ 4,000,000 outstanding . . $5,000.00
$ 4,000,001 to $ 5,000,000 outstanding . . $6,000.00
$ 5,000,001 to $ 6,000,000 outstanding . . $7,000.00
$ 6,000,001 to $ 7,000,000 outstanding . . $8,000.00
$ 7,000,001 to $ 7,500,000 outstanding . . $8,500.00
The Company shall reimburse the Bank for its actual out-of-pocket
expenses incurred in connection with its obligations pursuant to
this Section 7 (including, but not limited to, actual expenses
for stationery, postage, telephone, telex, wire transfers,
telecopy, retention of records, and the filing of Financing
Statements, and reasonable fees and expenses of counsel), payable
within ten (10) days after the Bank gives notice to the Company
that it incurred such expenses. The obligation to pay such
compensation and reimburse such expenses shall be borne solely by
the Company. The provisions of this Section 7.3 shall survive
the termination of this Bank Agreement.
Section 7.4 Other Rights and Duties of Bank.
-------------------------------
(a) The Bank need exercise only those rights and need
perform only those duties that are contemplated or specifically
set forth in this Bank Agreement and no others.
(b) Notwithstanding anything herein to the contrary,
the Bank may not be relieved from liability for its own grossly
negligent action, its own grossly negligent failure to act, or
its own willful misconduct except that
(i) This paragraph does not limit the effect of
paragraph (a) of this Section.
(ii) The Bank shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a notice received by it pursuant to the
subscription agreements executed by the Purchasers in
connection with the purchase of the Bonds.
(c) The Bank may rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Bank need not investigate any fact or matter stated
in the document.
(d) Before the Bank acts or refrains from acting, it
may require an officer's certificate or an opinion of counsel.
The Bank shall not be liable for any action it takes or omits to
take in good faith in reliance on the certificate or opinion.
(e) The Bank may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
Section 8. No Representations.
------------------
The Bank makes no
representation as to the validity or adequacy of this Bank
Agreement or the Bonds or any Financing Statement delivered to it
by J&B or the Bank's filing of any such Financing Statement with
any governmental authority; it shall not be accountable for the
Company's use of the proceeds from the Bonds and it shall not be
responsible for any statement in the Memorandum or in the Bonds
other than its authentication.
Section 9. Indemnification.
---------------
The Company shall
indemnify, defend and hold the Bank harmless from and against any
and all loss, damage, liability, claim and expense, including
taxes (other than taxes based on the income of the Bank) incurred
by the Bank arising out of or in connection with its acceptance
or performance of its obligations under this Bank Agreement,
including the legal costs and expenses of defending itself
against any claim or liability in connection with its performance
under this Bank Agreement. The Bank shall notify the Company
promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Bank shall cooperate in
the defense. The Bank may have separate counsel and shall pay
the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss or liability
incurred by the Bank through gross negligence or bad faith. The
provisions of this Section 9 shall survive the termination of
this Bank Agreement.
Section 10. Replacement of Bank.
-------------------
(a) A resignation or removal of the Bank and
appointment of a successor bank shall become effective only upon
the successor bank's acceptance of appointment as provided in
this Section 10.
(b) The Bank may resign by so notifying the Company.
The Company may remove the Bank if:
(i) the Bank is adjudged a bankrupt or an
insolvent;
(ii) a receiver or public officer takes charge of
the Bank or its property; or
(iii) the Bank becomes incapable of acting.
(c)(i) If the Bank resigns or is removed, the
Company shall promptly appoint a successor bank.
(ii) A successor bank shall deliver a written
acceptance of its appointment to the retiring Bank and
the Company. Thereupon the resignation or removal of
the retiring Bank shall become effective and the
successor bank shall have all the rights, powers and
duties of the Bank under this Bank Agreement. The
successor bank shall mail a notice of its succession to
Bond owners. Upon payment to the retiring Bank of all
amounts owed to it under this Bank Agreement, the
retiring Bank shall promptly transfer all property held
by it under the terms of this Bank Agreement.
(d) If the Bank consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor bank.
Section 11. Notices.
-------
All notices and other
communications pursuant to this Bank Agreement shall be in
writing, subject to the terms of Section 1.6 hereof, and shall be
delivered by hand or sent by registered, certified, return
receipt requested, or first class mail, or by facsimile,
confirmed by writing, delivered by hand or sent by registered,
certified, return receipt requested, or first class mail
delivered or sent on the date of the facsimile, addressed as
follows:
(a) If to the Company:
J&B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
Facsimile Number: (201) 947-6663
Attention: Gary Hoffson
With a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Facsimile Number: (212) 603-2298
Attention: Michele R. Jawin, Esq.
(b) If to Bond owners:
At the addresses of the registered owners
appearing in the register maintained by the Bank.
(c) If to Bank:
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile Number: (212) 815-5999
Attention: Peter Lagatta,
Corporate Trust
Trustee Administration
or at such other address as a party shall have last furnished to
the other parties hereto in writing. Any notice provided for
herein shall be deemed to have been given on the date of the
receipt of the notice by hand delivery or of the facsimile or the
third Business Day after the date of mailing, certified mail,
return receipt requested.
Section 12. Choice of Law.
-------------
This Bank Agreement shall
be governed by the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
Section 13. Prior Agreements; Amendment.
---------------------------
This Bank
Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all
prior agreements, contracts, promises, representations,
warranties, statements, arrangements and understandings, if any,
among the parties hereto or their representatives with respect to
the subject matter hereof. No waiver, modification or amendment
of any provision, term or condition hereto shall be valid unless
in writing and signed by all parties hereto, and any such waiver,
modification or amendment shall be valid only to the extent
therein set forth.
Section 14. Successors.
----------
This Bank Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 15. Enforceability.
--------------
Any provision of this
Bank Agreement which may by determined by competent authority to
be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 16. Counterparts.
------------
This Bank Agreement may be
executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
Section 17. Use of The Bank of New York Name.
--------------------------------
(a) No printed or other material in any language,
including prospectuses, notices, reports, and promotional
materials which mentions the Bank by name or the rights, powers,
or duties of the Bank under this Bank Agreement shall be issued
by any of the other parties hereto, or on such party's behalf,
without the prior written consent of the Bank.
(b) Notwithstanding the above, the Bank hereby
consents to the use of its name and its rights, powers and duties
under this Bank Agreement in the Memorandum and any notices and
reports required under applicable Federal and state securities
laws in connection therewith. In addition, the Bank hereby
consents to the use of its name and its rights, powers, and
duties under this Bank Agreement in the promotional material
included herewith as Exhibit C.
[INTENTIONALLY LEFT BLANK]
Section 18. Definitions.
-----------
All terms used in this Bank
Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Memorandum.
IN WITNESS WHEREOF, the parties hereto have executed
this Bank Agreement as of the date first above written.
J&B MANAGEMENT COMPANY THE BANK OF NEW YORK
By: /s/ Bernard M. Rodin By: /s/ Illegible
------------------------- ----------------------
Title: General Partner Title:
LEISURE CENTERS, INC.
By: /s/ Bernard M. Rodin
-------------------------
Title: Vice President
J&B MANAGEMENT CORP.
By: /s/ Bernard M. Rodin
-------------------------
Title: Vice President
SULGRAVE REALTY CORPORATION
By: /s/ Bernard M. Rodin
-------------------------
Title: Vice President
WILMART DEVELOPMENT CORP.
By: /s/ Bernard M. Rodin
-------------------------
Title: Vice President
<PAGE>
EXHIBIT A
TO BANK AGREEMENT
[FORM OF NOTICE]
NOTICE OF VOLUNTARY REDEMPTION
------------------------------
of
J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation,
Wilmart Development Corp., and Leisure Centers, Inc.
12.375% Bonds -- Series 2
To holders of J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp., and Leisure Centers, Inc. (the "Company")
12.375% Bonds due April 15, 2003 -- Series 2 (the "Bonds"):
NOTICE is hereby given by The Bank of New York (the
"Bank"), as paying agent for the Bonds, that, pursuant to the
voluntary redemption provision of Section 5.6 of the Bank
Agreement between the Company and the Bank, dated [month] [day],
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[year], the Company has elected to redeem and pay off on [month]
------ -------
[day], [year] (the "Redemption Date") [all] [a portion of] the
----- ------
above mentioned Bonds then outstanding, in accordance with the
terms of the Bonds, and that [all] [a portion of] the Bonds are
called for redemption on the Redemption Date.
The redemption price on the Redemption Date shall be
$_______. Interest on the Bonds so redeemed shall cease from and
after the Redemption Date.
Dated: [month] [day], [year]
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THE BANK OF NEW YORK
<PAGE>
EXHIBIT B
TO BANK AGREEMENT
[FORM OF NOTICE]
NOTICE OF MANDATORY REDEMPTION
------------------------------
of
J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation,
Wilmart Development Corp., and Leisure Centers, Inc.
12.375% Bonds - Series 2
To holders of J&B Management Company and affiliates:
J&B Management Corp., Sulgrave Realty Corporation, Wilmart
Development Corp., and Leisure Centers, Inc. (the "Company")
12.375% Bonds due April 15, 2003 -- Series 2 (the "Bonds"):
NOTICE is hereby given by The Bank of New York (the
"Bank"), as paying agent for the Bonds, that, pursuant to the
mandatory redemption provision of Section 5.6 of the Bank
Agreement between the Company and the Bank, dated [month] [day],
------- -----
[year], the Company will redeem and pay off on [month] [day],
------ ------- -----
[year] (the "Redemption Date") __% of the above mentioned Bonds,
------
in accordance with the terms of the Bonds, and that __% of the
Bonds are called for redemption on the Redemption Date.
Interest on the Bonds so redeemed shall cease from and
after the Redemption Date.
Dated: [month] [day], [year]
------- ----- ------
THE BANK OF NEW YORK
<PAGE>
EXHIBIT C
TO BANK AGREEMENT
DRAFT OF PROMOTIONAL MATERIALS
TO BE USED IN CONNECTION WITH
THE 12.375% BONDS - SERIES 2 OFFERING
Exhibit 10.8
REVOLVING CREDIT AGREEMENT dated as of May 7, 1985
between Sterling National Bank & Trust Company of New York, 540
Madison Avenue, New York, New York 10022 ("Bank"), and J & B
Management Company, a New Jersey partnership ("J & B") having its
office at One Executive Drive, Fort Lee, New Jersey.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, J & B, J & B Management Corp., and Executives
Offices Realty Corp., both New Jersey corporations, and Realty
Executive Associates a joint venture comprised of John W. Luciani
III and Bernard M. Rodin and Woodlands Associates, a joint
venture comprised of Dorian Luciani and John W. Luciani
(collectively exclusive of J & B the "Affiliates"), John W.
Luciani ("Luciani") and Bernard M. Rodin ("Rodin"), all having
their principal office at One Executive Drive, Fort Lee, New
Jersey, or certain of them, in the regular course of their
business, sell or cause to be sold, to unrelated limited
partnerships their partnership interests in limited partnerships
which own and operate real estate projects ("Owning
Partnerships"); and
WHEREAS, as consideration for the sale of these
interests, J & B, the Affiliates, Luciani and Rodin, or certain
of them, receive promissory notes ("Purchase Notes") issued by
the purchasing limited partnerships ("Buying Partnerships"),
which notes are usually collateralized by the partnership
interests sold, or caused to be sold, by J & B, the Affiliates ,
Luciani and Rodin or certain of them, and by negotiable investor
notes ("Investor Notes") evidencing obligations of limited
partners of the Buying Partnerships to make future contributions
to the capital of the Buying Partnerships; and;
WHEREAS, J & B, the Affiliates, Luciani and Rodin have
previously entered into a letter agreement with Bank dated
September 30, 1983 relating to a loan request of J & B for $15
million, which letter agreement is hereby superseded and
cancelled, and of no further force and effect; and
WHEREAS, J & B desires to borrow from and repay to the
Bank, on a revolving basis, an amount not to exceed $15 million
pursuant to the terms and conditions contained in this Agreement
("Agreement"); and
WHEREAS, J & B agrees to cause the guaranty, pledge and
grant of a security interest to the Bank in collateral that will
secure and support the payment of its obligations to the Bank and
to assure that J & B will duly and punctually perform all of the
terms, conditions, covenants, agreements and indemnities of J & B
under this Agreement, including the execution and delivery to
Bank of a Security Agreement by J & B (the "Security Agreement"),
a Hypothecation and Security Agreement by Luciani and Rodin (the
"L&R Agreement") and a Guaranty of All Liability and Security
Agreement by each Affiliate and Security Agreement supplement
thereto (collectively, the "Affiliates' Secured Guarantys");
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants contained herein, the parties hereto agree
as follows:
SECTION 1. AMOUNT AND TERMS OF THE REVOLVING CREDIT
----------------------------------------
1.1 Advances. J & B may borrow hereunder, repay,
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and reborrow at any time, and from time to time through and
including March 1, 1989, up to an aggregate outstanding at any
time of $15 million in accordance with the terms and conditions
contained herein. Each loan request must be made at least 10
days prior to the date of the requested advance ("Advances"), and
must contain a description of the underlying transaction, a
detailed description of any additional collateral and such other
information as Bank may request. The aggregate of the Advances
remaining outstanding hereunder shall at no time exceed 75% of
the Qualified Portion of Eligible Accounts as defined below.
Subject to such conditions precedent as the Bank may reasonably
request, including but not limited to the non-existence of a
default pursuant to Section 4 of this Agreement, a reaffirmation
by J & B of the covenants, representations and warranties
contained in Sections 2 and 3 of the Agreement, the execution
and/or continuance in full force and effect of the Security
Agreement, the L&R Agreement and Affiliates' Secured Guarantys
and a written opinion of counsel to J & B with respect to those
matters set forth in Exhibit E hereto, both addressed to the
Bank, acceptable to Bank, dated the date of each Advance, the
Bank shall deposit in the account of J & B with the Bank, in
immediately available funds, the amount requested on the date
specified in the notice. "Eligible Accounts" shall mean those
Investor Notes which are and at all times shall continue to be
acceptable to Bank in all respects, as determined in its sole
discretion. "Qualified Portion of Eligible Accounts" shall mean
only such portion of the aggregate outstanding principal balance
of Eligible Accounts pledged, and as to which Bank has been
granted a security interest pursuant to the terms of the Security
Agreement, the L&R Agreement and the Affiliates' Secured
Guarantys, that mature within five years (i) from any date upon
which an Advance has been requested, and (ii) with respect to any
calculation pursuant to Section 3.19 of this Agreement from any
date upon which such calculation is made.
1.2 The Note. Each Advance shall be evidenced by a
--------
secured demand note, substantially in the form of Exhibit A
annexed hereto (the "Notes") and made a part hereof. Bank hereby
agrees, notwithstanding anything to the contrary contained in
this Agreement or the Notes, or any other document related to
this transaction, not to seek recourse against the personal
assets of Luciani and Rodin for the payment of the Notes and any
other obligations of J & B created pursuant to this Agreement,
except those constituting interests in J & B and those pledged
and/or as to which a security interest was granted pursuant to
the L&R Agreement and any Affiliates' Secured Guaranty. Each
Notes shall be dated as of the date of the Advance, shall be
payable on demand, and shall bear interest as provided herein.
The terms and conditions contained in the Notes are hereby
incorporated by reference, and said terms and conditions shall
have the same force and effect as if more fully set forth herein.
Notwithstanding the foregoing, and anything to the
contrary contained in this Agreement or the Notes, if at any time
Bank shall in its sole discretion refuse to make a requested
Advance that complies with all of the requirements of Section 1.1
of the Agreement, the entire principal balance evidenced by the
outstanding Notes shall immediately be converted to a term loan
due five (5) years from the date of receipt by J & B of notice
from Bank of its election not to make any requested Advance
subject, however, to acceleration pursuant to the terms and
conditions of Section 4 of the Agreement. Prior to the date Bank
shall send its refusal to make an Advance, however, Bank shall
treat Advances strictly as demand loans.
1.3 Prepayments. J & B may at any time and from time
-----------
to time prepay any Note given to the Bank hereunder in whole or
part in multiples of $10,000.00 without premium or penalty, upon
ten days' prior written notice to Bank.
1.4 Interest rate. (a) All amounts borrowed hereunder
-------------
shall bear interest from and after the date of each Note on the
unpaid principal amount thereof at a rate per annum at all times
equal to two per cent (2%) above the Base Rate (as hereinafter
defined) from time to time in effect. Interest shall be payable
on the first day of each month commencing on the first day of the
month immediately following the initial Advance.
(b) If all or a portion of the principal amount of any
Note issued hereunder shall not be paid when due (whether at the
stated maturity, by acceleration, or otherwise), such overdue
principal amount shall bear interest at a rate per annum which is
equal to 2% above the rate which would otherwise be applicable
hereunder from the date of such non-payment until paid in full
(as well after as before judgment).
1.5 Computation of Interest. Interest in respect of
-----------------------
each Note shall be calculated on the basis of a 360 day year for
the actual number of days elapsed. Any change in the interest
rate on any Note resulting from a change in the Bank's Base Rate
shall become effective as of the opening of business on the day
on which such change in the Bank's Base Rate shall become
effective. "Base Rate," as used herein, shall mean the rate
announced by the Bank from time to time as a guide for
determining interest, and is not necessarily the lowest rate
charged to the Bank's customers.
1.6 Payments. All payments to be made by J & B or any
--------
Affiliate hereunder and in accordance with the terms, covenants
and provisions hereof shall be made, without set-off or
counterclaim, to the Bank at the Bank's office located at 540
Madison Avenue, New York, New York 10022, in lawful money of the
United States of America.
If any payment hereunder becomes due and payable on a
day other than a business day of the Bank, such payment shall be
extended to the next succeeding business day and, with respect to
payments of principal, or interest thereon, shall be payable at
the then applicable rate during such extension.
SECTION 2. SECURITY INTEREST,
COLLATERAL POOL AND GUARANTY
----------------------------
As security for the payment in full of all obligations
of J & B to the Bank, including all amounts borrowed hereunder,
J & B hereby grants, or will cause to be granted, to Bank a
continuing security interest in, and pledges, and sets over to
Bank solely for such security purpose, all right, title and
interest in and to all Purchase Notes, Investor Notes, and Owning
Partnerships, set forth, and to be set forth, with respect to
each Advance made by Bank subsequent to the date hereof in the
Schedules to the forms of Security Agreement, L&R Agreement and
Affiliates' Secured Guarantys annexed, respectively, as Exhibits
B, C, and D hereto, whether such interests are now owned or
hereafter acquired, whether owned outright, contingently, or
obtained as collateral security, and whether now existing or
hereafter created and all proceeds of such collateral in whatever
form ("Collateral").
J & B agrees to grant, or to cause to be granted, to
Bank in connection with each Purchase Note given as Collateral, a
pledge and security interest in all Investor Notes and interests
in Owning Partnerships pledged, or as to which a security
interest was granted J & B or Luciani, Rodin or any Affiliate in
connection with the execution and delivery of a particular
Purchase Note, together with all other interests held by J & B,
Luciani, Rodin and the Affiliates in the Owning Partnership so
pledged, and as to which J & B or Luciani or Rodin or any
Affiliate was granted a security interest. Such Collateral shall
then be available to be included in Eligible Accounts. J & B
agrees to execute and deliver or cause to be executed and
delivered, to Bank, forms of a Security Agreement, the L&R
Agreement and Affiliates' Secured Guarantys properly completed,
and further agrees to execute and deliver or cause to be executed
and delivered any and all other and further documents or
agreements which Bank may deem necessary in order to further
secure its' interest in any Collateral. The terms and conditions
contained in any Security Agreement, any L&R Agreement and any
Affiliates' Secured Guarantys shall have the same force and
effect as if more fully set forth herein. In the event of any
ambiguity or inconsistency between the Agreement and any other
agreement or document contemplated hereby the provisions of this
Agreement shall control.
SECTION 3. REPRESENTATIONS, WARRANTIES AND
COVENANTS BY J & B
---------------------------------
Reference to Investor Notes, Purchase Notes, Buying
Partnerships and Owning Partnerships in this Section 3 shall only
include those that relate to or constitute Collateral. J & B
represents, warrants and covenants to the Bank as of the date
hereof and as of the date of each Advance:
3.1 J & B, the Affiliates, the Owning Partnerships and
the Buying Partnerships, are and will be, corporations,
partnerships or joint ventures, as the case may be, duly formed
or incorporated and validly existing under the laws of the state
of organization or formation and in which they are required to
register in order to conduct their business; J & B, the
Affiliates, Rodin and Luciani (to the extent of their interests
therein), and the Buying Partnerships have, and will have, full
power, authority and legal right to execute and deliver, and to
perform and observe all obligations and agreements in the
Purchase Notes, under their respective certificates of
incorporation or agreements of partnership or joint venture, and
hereunder, and such obligations and agreements and the
obligations of J & B pursuant to the Notes, the Agreement and the
Security Agreement and pursuant to the Affiliates' Secured
Guarantys and Rodin and Luciani pursuant to the L&R Agreement,
are the genuine, legal, valid and binding obligations of the
respective obligors or parties thereto enforceable in accordance
with their terms.
3.2 Any sale, transfer, pledge, or grant of a security
interest in a partnership interest in an Owning Partnership, to
J & B, Louis Biancone, Eugene R. Sanders, a Buying Partnership,
an Affiliate, Rodin, Luciani, and to Bank is the genuine, legal,
valid and binding obligation of the seller or transferor thereof.
3.3 Neither J & B, Luciani, Rodin, any Affiliate, any
Owning Partnership, or Buying Partnership has sold, pledged,
assigned, hypothecated or granted a security interest in the
Collateral, nor will any of them do so in the future, to any
person or entity, except to the Bank in accordance with the terms
of the Security Agreement, the L&R Agreement or the Affiliates'
Secured Guarantys, to J & B, another Affiliate, Rodin or Luciani,
to a Buying Partnership or to Louis Biancone and Eugene R.
Sanders, provided, however, that any such transfer to Baincone
and Sanders does not, or will not, restrict or prevent the
transferor thereof from pledging or hypothecating such Collateral
to Bank pursuant to the terms and provisions of a Purchase Note.
3.4 All information submitted to Bank is true and
correct, and all Investor Notes and Purchase Notes are, and will
be, genuine, validly issued obligations of their respective
obligors fully enforceable in accordance with their terms, and
the amount of the indebtedness outstanding to or by J & B, any
Affiliate, Luciani or Rodin submitted to Bank will be true and
correct.
3.5 All consents, approvals or authorizations, if any,
of any governmental authority required on the part of J & B, any
Affiliate, Luciani, Rodin, Owning Partnership and/or Buying
Partnership in connection with the execution and delivery of this
Agreement, the Security Agreement, the L&R Agreement, any
Affiliates' Secured Guaranty, any Note, any Purchase Note, and
any Investor Note, has been, or will be, duly obtained, and there
has been, or will be, compliance with all applicable provisions
of law requiring any declaration, filing, registration and/or
qualification with any governmental authority in connection with
such obligations and agreements.
3.6 The issuance, sale or delivery of any Note,
Investor Note, Purchase Note, and partnership interests in Owning
Partnerships and Buying Partnerships, are exempted transactions
under the registration provisions of the Securities Act of 1933,
as amended, and exempt from compliance with any requirement of
the Trust Indenture Act of 1939. Furthermore, any such issuance,
sale or delivery does not violate the provisions (including but
not limited to the antifraud provisions) of the Securities Act of
1933 or the Securities Exchange Act of 1934.
3.7 The execution and delivery of each Note and the
pledge, and granting of a security interest in, the Investor
Notes, the Purchase Notes, and the Owning Partnership interests
do not conflict with, or result in any breach of any of the
provisions of, or constitute a default under, the provisions of
the respective certificates of incorporation, partnership or
joint venture agreements of the respective parties thereto, or
any agreement or other instrument to which they are a party or by
which they are bound, including without limitation, any agreement
or mortgage insured or held by the Department of Housing and
Urban Development ("HUD").
3.8 There are no proceedings pending, or to the
knowledge of J & B, threatened against or affecting J & B, any
Affiliate, Luciani, Rodin, any buying Partnership or any Owning
Partnership, in any court or before any governmental authority,
taxing agency, or arbitration board or tribunal that may at any
time result inaggregate liabilities exceeding $1 million.
3.9 There has been no adverse tax ruling against
J & B, nor any Affiliate, Luciani, Rodin, any Buying Partnership,
or Owning Partnership.
3.10 Neither J & B, nor any Affiliate, Buying
Partnership, Owning Partnership, Luciani, or Rodin, is in default
with respect to any order of any court, governmental authority or
arbitration board or tribunal.
3.11 The principal office and location of all records
of J & B, the Affiliates, Luciani, Rodin, all Owning Partnerships
and Buying Partnerships concerning the Agreement, the Notes, the
Purchase Notes, Investor Notes, the Security Agreement, L&R
Agreement, Affiliates' Secured Guarantys, and other documents
relating to the Collateral are and have been for the last ten
years at an office located at One Executive Drive, Fort Lee, New
Jersey 07024 or at 1610 Woodstead Court, Suite 460, The
Woodlands, Texas 77380.
3.12 Neither J & B, nor any Affiliate, Luciani or
Rodin, or any Buying Partnership, will rescind, cancel, or modify
any term or provision of any Purchase Note, Investor Note or any
agreement relating to Collateral without the prior written
consent of the Bank.
3.13 J & B, the Affiliates, Luciani, Rodin, the Owning
Partnerships, and Buying Partnerships will fulfill in accordance
with their terms all obligations on their part to be performed
and will do nothing to impair the rights of the Bank in and under
the Note, this Agreement, the Security Agreement, the L&R
Agreement, the Affiliates' Secured Guarantys or with respect to
any of the Collateral.
3.14 Until authority so to do is terminated by written
notice from Bank (which notice Bank may give at any time in its
sole discretion), J & B will, at its own cost and expense, but on
Bank's behalf and for bank's account, collect and otherwise
enforce, or cause to be collected and otherwise enforced, as
Bank's property and in trust for Bank, all amounts due on
Purchase Notes and Investor Notes, and shall not commingle such
collections with its own funds, or the funds of others, or use
the same except to pay J & B's obligations to Bank. J & B shall
forthwith remit, or cause to be remitted, to Bank all amounts so
collected in kind, whether in the form of cash, checks, drafts,
note acceptances or other evidence of payment, including all
prepayments by obligors.
3.15 Neither J & B, nor any Affiliates, any Buying
Partnership or Owning Partnership will, create, incur, assume or
suffer to exist any debt for borrowed money, provided, however,
that (a) J & B and the Affiliates, may create, incur, assume or
suffer to exist debt for borrowed money equal to 150% of
consolidated net worth described in the financial statements
provided to Bank for the semi-annual period ended December 31,
1984 in accordance with Section 3.17 of this Agreement;
(b) Owning Partnerships may incur and suffer to exist mortgage
indebtedness evidenced by HUD insured or HUD held mortgages; and
(c) Owning Partnerships may incur and suffer to exist debt to
defray cash deficiencies arising in the normal course of their
business, and Buying Partnerships may incur and suffer to exist
debt for costs, exclusive of the purchase price, incurred in
connection with the acquisition by the Buying Partnership of
interests in Owning Partnership, which cost is described in the
offering memorandum for such acquisition, in an aggregate
principal amount outstanding at any one time by both Buying and
Owning Partnerships not to exceed $2.5 million.
3.16 The real estate projects owned by the Owning
Partnerships have been, or will be constructed, and, to the best
of the knowledge of J & B, have been and are being, or will be,
maintained in conformity with all applicable local, state and
federal governmental regulations including, where applicable, the
rules and regulations of HUD and the pledge, and granting of a
security interest in, the partnership interests of the Owning
Partnerships do not violate any HUD regulations or any provision
under any HUD mortgage. The mortgage indebtedness of all Owning
Partnerships have been or will be finally endorsed for insurance
issued by HUD.
3.17 J & B will furnish to Bank within 90 days after
the close of each semiannual period of its fiscal year
consolidating and consolidated balance sheets of J & B and the
Affiliates described in the audited financial statements of J & B
and its combined entities provided to Bank for the semiannual
period ended December 31, 1984, and a profit and loss statement
and surplus statement, all as of the end of such periods,
certified by independent certified public accountants acceptable
to Bank, which shall include, but is not limited to Rose,
Feldman, Radin, Feinsod and Skehan, certified independent public
accountants. All such statements shall correspond to the books
of account of J & B and the Affiliates described immediately
above and such books shall have been kept and such statements
prepared in accordance with generally accepted accounting
principles.
3.18 J & B covenants that it will not permit
consolidated net worth of J & B and the Affiliates, as described
in the financial statements required pursuant to Section 3.17 of
this Agreement, at any time to be less than $60 million.
3.19 If at any time the aggregate outstanding principal
balance of Notes shall exceed 75% of the Qualified Portion of
Eligible Accounts, J & B shall on notification of such fact by
Bank forthwith deliver to Bank such additional Collateral as
shall be necessary to restore the requisite 75% of the Qualified
Portion of Eligible Accounts level or, failing same, shall
forthwith pay, or cause to be paid, to Bank such amount as will
reduce the aggregate outstanding principal balance of the Notes
to 75% of the Qualified Portion of Eligible Accounts.
3.20 J & B will cause John W. Luciani and Bernard M.
Rodin to be at all times during which any Notes remain
outstanding the sole general partners managing the business
affairs of J & B and the Affiliates.
3.21 J & B shall cause the Bank at all reasonable times
to have full access to and right to audit the accounts, books,
records and correspondence of J & B, the Affiliates, Luciani,
Rodin, any Buying Partnership or any Owning Partnership and to
conform and verify all Eligible Accounts pledged or as to which a
security interest has been granted to Bank. J & B irrevocably
authorizes all independent certified public accountants and
auditors employed by J & B, the Affiliates, Luciani, Rodin, any
Buying Partnership and any Owning Partnership at any time during
the time of this Agreement to exhibit to Bank copies of any
financial statements, trial balances or other accounting records
of any sort in their possession of J & B, the Affiliates,
Luciani, Rodin, any Buying Partnerships and any Owning
Partnerships. In addition J & B shall furnish, or cause to be
furnished, to Bank, such additional financial and other
information as the Bank may from time to time reasonably request.
3.22 J & B shall furnish, or cause to be furnished, to
the Bank, concurrently with the delivery of the financial
statements referred to in Section 3.17, a certificate of a
general partner, stating, to the best of such partner's
knowledge, J & B has observed or performed or caused to be
performed or observed, all of the covenants and other agreements,
and satisfied every condition, contained in the Agreement to be
observed, performed or satisfied therein, and that such general
partner has obtained no knowledge of any breach of any covenant
or condition contained in the Agreement.
3.23 J & B agrees to secure any necessary or required
consents or approvals from HUD with respect to the execution and
delivery of the Purchase Notes and Investor Notes, and for the
transfer of the limited partnership interests in the Owning
Partnerships to the Buying Partnerships purchasing such interests
from J & B, the Affiliates, Rodin or Luciani, as the case may be,
and to provide copies of same to Bank, within six months from the
date of this Agreement.
SECTION 4. EVENTS OF DEFAULT
-----------------
After conversion of the Notes into a term loan pursuant
to the terms of Section 1.2 of this Agreement and upon the
occurrence of any of the following events:
4.1 Any principal of or any interest on any Note or
any other amount payable to Bank pursuant to the terms and
conditions of this Agreement or any agreement with respect to any
Collateral shall have failed to have been paid within five days
after the date such amount is due in accordance with the terms
thereof or hereof; or
4.2 Any representation or warranty, made by, or caused
to be made by, J & B or contained in any certificate, document or
financial or other statement furnished, or cause to be furnished,
at any time under or in connection with this Agreement shall
proven to have been incorrect in any material respect on or as of
the date made; or
4.3 Default in the observance or performance of any
covenant or agreement contained in Sections 2 and 3 of this
Agreement shall have occurred, and such default shall continue
unremedied for a period of 30 days after such failure shall first
become known to any officer or general partner of J & B, any
Affiliate, Luciani, Rodin, or Owning Partnership; or
4.4 Default in the observance or performance of any
other agreement contained herein other than an agreement for the
payment of money shall have occurred, and such default shall
continue unremedied for a period of 30 days after written notice
thereof shall have been received by J & B from Bank; or
4.5 J & B, any Affiliate, Luciani, Rodin, any Buying
Partnership, or any Owning Partnership, shall (a) default in any
payment of principal of or interest on any obligation to any
party in respect of money borrowed or incurred for the deferred
purchase price of property, or other similar type financing
obligation or evidenced by a note, debenture or other similar
written obligation to pay money, or in payment of any contingent
obligation, or guaranty, beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement
under which such indebtedness or contingent obligation or
guaranty was created; or (b) default in the observance or
performance of any other agreement evidencing, securing or
relating thereto, or any other event shall occur, the effect of
which default or other event is to cause or to permit the holder
or holders of such indebtedness or beneficiary or beneficiaries
of such contingent obligation or guaranty (or a trustee or agent
on behalf of such holder or beneficiaries) to cause, with the
giving of notice if required, such obligation to become due prior
to its stated maturity or such contingent obligation or guaranty
to become payable (it being understood that trade or professional
service obligations are not intended to be included in this
restriction); or
4.6 J & B, any Affiliate, Luciani, Rodin, any Owning
Partnership or any Buying Partnership (a) shall commence any
case, proceeding or other action (i) under any existing or future
law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to its
property or its debt, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or (iii) shall make a general
assignment for the benefit of its creditors; or (b) there shall
be commenced against J & B, any Affiliate, Luciani, Rodin, any
Owning Partnership or any Buying Partnership any case, proceeding
or other action of a nature referred to in clause (a) above which
(i) results in the entry of an order for relief or any such
adjudication or appointment or (ii) remains undismissed,
undischarged or unbonded for a period of 60 days; or (c) there
shall be commenced against J & B, any Affiliate, Luciani, Rodin,
any Owning Partnership, or any Buying Partnership any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all
or any substantial part of its assets, which results in the entry
of an order for such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (d) J & B, any Affiliate, Luciani,
Rodin, any Owning Partnership, or any Buying Partnership, shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in
clause (a), (b) or (c) above; or (e) J & B, any Affiliate,
Luciani, Rodin, any Owning Partnership or any Buying Partnership
shall be unable to, or shall admit in writing its inability to,
pay its debts as they become due and Bank shall deem itself
insecure.
THEN, and in any such event the Bank may, in its
discretion, and in addition to any right, power or remedy
permitted by law or equity, declare all loans hereunder (with
accrued interest thereon) and all other amounts owing under this
Agreement and all Notes issued hereunder to be immediately due
and payable. Presentment, demand, protests and all other notices
of any kind are hereby expressly waived.
Notwithstanding anything to the contrary contained in
the immediately preceding paragraph, should any event described
in Section 4 of this Agreement occur and continue to exist with
respect to a Buying or Owning Partnership, Bank shall not declare
any loans hereunder due and owing prior to 60 days after
occurrence of such event, during which period J & B shall have
the right to substitute as Eligible Collateral a Purchase Note,
all unmatured Investor Notes and all interests in an Owning
Partnership pledged as collateral for such Purchase Note in lieu
of Collateral previously pledged, which is the Purchase Note, or
the partnership interests of an Owning Partnership with respect
to which there has occurred and continues to exist an event
described in Section 4 of this Agreement.
Upon the timely completion by J & B of such substitution of
Collateral as hereinabove described, Bank shall not have the
right to declare all loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and all
Notes issued hereunder to be immediately due and payable.
SECTION 5. MISCELLANEOUS
-------------
5.1 Amendments and Waivers. Neither this Agreement
-----------------------
nor any portion or provision hereof, may be changed, modified,
amended, waived, supplemented, discharged, cancelled, or
terminated orally or in any manner other than by an agreement in
writing signed by the party to be charged. Failure by Bank to
exercise any right, remedy or option under this Agreement or
delay by Bank in exercising the same shall not operate as a
waiver thereof or as a waiver of any similar right or remedy in
any other situation. No waiver by Bank shall be effective unless
it is confirmed in writing and then only to the extent
specifically stated. Bank's rights and remedies under this
Agreement shall be cumulative and not exclusive of any other
right or remedy which Bank may have. No course of dealing shall
be effective to change, modify or discharge any provision hereof.
5.2 Notices. All notices, requests and demands to or
--------
upon the respective parties hereto to be effective shall be in
writing and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or received when delivered by
hand, or when sent by certified mail, return receipt requested,
postage prepaid, three days after having been so mailed, and
shall be addressed as follows or to such address or other address
as may be hereafter notified by the respective parties hereto and
any future holders of any Note:
J & B: One Executive Drive
Fort Lee, New Jersey 07024
Attention: John W. Luciani
and Bernard M. Rodin and a
copy to Eugene R. Sanders,
Esq., 3625 North Hall St.,
Suite 1130, Lock Box 123,
Dallas, Texas 75219
the Bank: 540 Madison Avenue
New York, New York 10022
Attention: President and
a copy to the Law Division,
Attention: General Counsel,
provided that any notice, request or demand to or upon the Bank
pursuant to subsection 1.1 shall not be effective until received.
5.3 Survival of Representations and Warranties.
------------------------------------------
All representations and warranties made hereunder and
in any document, certificate of statement delivered pursuant
hereto or in connection herewith shall survive the execution and
delivery of this Agreement and each Note.
5.4 Payment of Expenses and Taxes.
-----------------------------
J & B agrees (a) to pay or reimburse the Bank for all
its out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and any Note and
any other documents prepared in connection herewith, and the
consummation of the transactions contempleated hereby and
thereby, including, without limitation, the fees and
disbursements of counsel to the Bank, (b) to pay or reimburse the
Bank for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this
Agreement, any Note and any other documents prepared in
connection therewith, including, without limitation, fees and
disbursements of counsel to the Bank, (c) to pay, indemnify, and
to hold the Bank harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting
from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or
modification of or any waiver or consent under or in respect of,
this Agreement, the Note and any other documents prepared in
connection therewith, and (d) to pay, indemnify, and hold the
Bank harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Note and
any such other documents, except any such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever described in subparagraphs (c) and (d) above resulting
from the gross negligence or misconduct of the Bank.
5.5 Successors and Assigns. This agreement shall be
-----------------------
binding upon and inure to the benefit of J & B, the Bank, all
future holders of any Notes and their respective successors and
assigns, except that J & B may not assign or transfer any of its
rights under this Agreement without the prior written consent of
the Bank.
5.6 Counterparts. This Agreement may be executed by
-------------
one more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
5.7 Governing Law. This Agreement and the Notes and
--------------
the rights and obligations of the parties under this Agreement
and the Notes shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.
5.8 Sales of Participations by Bank. The Bank may
--------------------------------
grant participations in this Agreement and the Notes issued
hereunder. J & B acknowledges and agrees that the Bank is
entitled hereunder, in its own name, to enforce for the benefit
of, or as agent for, any participants any and all rights, claims
and interests of such participants in respect hereto.
5.9 Further Assurances. J & B agrees, from time to
-------------------
time, to do and perform, or to cause to be done and performed,
any and all acts and to execute any and all further instruments
required or reasonably requested by the Bank more fully to effect
the purpose of this Agreement, including, without limitation, the
execution of any financing statements or continuation statements
relating to the Collateral for filing under the provisions of the
Uniform Commercial Code of any applicable jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized partners or officers as of the day and year first
above written.
J & B MANAGEMENT COMPANY
BY: /s/ John Luciani
------------------------------
General Partner
BY: /s/ Bernard M. Rodin
------------------------------
General Partner
STERLING NATIONAL BANK & TRUST
COMPANY OF NEW YORK
BY: /s/ Illegible
------------------------------
Title: Vice Chairman
BY: /s/ Illegible
------------------------------
Title: President
<PAGE>
EXHIBIT A
---------
J & B Management Company
One Executive Drive
Fort Lee, New Jersey 07024
On demand J & B Management Company, a New Jersey
Partnership ("J & B"), for value received, hereby promises to pay
to Sterling National Bank & Trust Company of New York ("Bank") or
order the principal sum of
Dollars ($ ); and to pay interest (computed on the
basis of 360-day year for the actual number of days elapsed) on
the unpaid principal balance thereof until maturity at a rate per
annum at all times equal to 2% above the Bank's Base Loan Rate,
from time to time in effect, monthly, on the first day of each
month commencing with the first day of each month next succeeding
the date hereof; and to pay interest on any overdue principal at
the rate per annum which is equal to 2% above the rate which
would otherwise be applicable hereunder, from the date of such
non-payment until paid in full (as well after as before
judgment).
Payments of principal and interest shall be made at the
principal office of the Bank in New York, New York, in such coin
and currency of the United States of America as at the time of
payment is legal tender for the payment of public and private
debts.
This Note is one of a series of Notes of J & B issued
in an aggregate principal amount limited to $15,000,000.00
pursuant to J & B's Revolving Credit Agreement with Bank dated
19 , (the
"Agreement") and is entitled to the benefits thereof. As
provided in such Agreement, this Note is subject to prepayment,
in whole or in part, as specified in said Agreement.
This note is transferable by endorsement and delivery.
Under certain circumstances, as specified in said
Agreement, the principal of this Note may be declared due and
payable in the manner and with the effect provided in said
Agreement, including but not limited to the security of the
Collateral, the Security Agreement, the L & R Agreement and the
Affiliates' Secured Guarantys referred to in said Agreement.
Terms which are defined in said Agreement shall, unless the
context requires otherwise, have the same meaning when used in
this Note.
This Note may be converted into a term loan as
specified in said Agreement. Notwithstanding anything to the
contrary contained in said Agreement, or in any other document
related to this transaction or in this Note, the Bank or any
holder shall not seek recourse against the personal assets of
John W. Luciani and Bernard M. Rodin, the two general partners of
J & B, for the payments of this Note and any other obligations of
J & B to Bank, except those constituting interests in J & B and
those pledged and/or as to which a security interest was granted
pursuant to the L & R Agreement and any Affiliates' Secured
Guaranty, all subject to and as more particularly described in
said Agreement.
This Note and said Agreement are governed by and
construed in accordance with New York law.
J & B MANAGEMENT COMPANY
By________________________
General Partner
By__________________________
General Partner
<PAGE>
EXHIBIT B
GENERAL LOAN AND SECURITY AGREEMENT
The undersigned (jointly and severally, if more than
one) expect from time to time, directly or indirectly, to procure
credit for themselves or others from STERLING NATIONAL BANK &
TRUST COMPANY OF NEW YORK (hereinafter called Bank) and to
deliver to Bank property as collateral security for the payment
of the undersigned's liabilities to Bank. To induce Bank to
become or continue, so long as Bank may see fit, as the owner or
holder of any liabilities, in any amount, in any form, and of any
nature, whether absolute or contingent, direct or indirect, due
or not due, now existing or hereafter arising, upon or with
respect to which any of the undersigned may in any way be or
become liable to Bank, and which at any time have been or may
hereafter be acquired by Bank (all of which, whether one or more
than one, and including the undersigned's obligations hereunder,
are hereinafter called the Liabilities), the undersigned hereby
agree that all property of any nature whatsoever of the
undersigned at any time heretofore or hereafter pledged, assigned
and transferred to or deposited with Bank or its agents by the
undersigned or otherwise coming into the possession of the Bank
or its agents in any way shall be held subject to all the terms
of this agreement solely a collateral security for the prompt and
unconditional payment of the Liabilities, and the undersigned
further agrees that as additional security for the payment of all
the Liabilities, the undersigned does hereby grant to the Bank a
security interest in and does hereby pledge and set over to the
Bank solely for such security purposes all its right, title and
interest in and to and under and the proceeds therefrom in and to
Purchase Notes specified in Schedule A and the Investor Notes
listed in Schedule B together with any and all notes, assets,
interests or other property and proceeds therefrom which
collateralize the Purchase Notes, and any partnership interest,
whether general or limited or both, in the Partnerships listed in
Schedule C, all as more particularly described and defined in the
Revolving Credit Agreement, dated as of May 7, 1985, between you
and the Bank (the "Agreement"). In the event of any ambiguity or
inconsistency between the Agreement and this document, the
provisions of the Agreement shall control.
The undersigned further agree that, in order to further
secure the payment of the Liabilities, Bank is hereby given a
continuing lien and right of offset upon and against all debts,
credits and credit balances owing from Bank to the undersigned
and against all moneys, securities, uncollected deposits,
collection items, choses in action, the avails of any thereof and
any other property of any nature whatsoever of the undersigned
which may for any purpose be actually or constructively held by
or in transit to Bank or any of its affiliates, correspondents or
agents, or the subagents of any of them, or placed in any safe
deposit box leased by Sterling Safe Deposit Company of New York
to the undersigned, and agree that Bank may apply the same on
account of the Liabilities. The undersigned further agree that,
if there should be any default hereunder or with respect to the
Liabilities or if the Notes issued pursuant to the Agreement
should become immediately due and payable in accordance with the
Agreement, then Bank is hereby authorized, at any time or times,
to sell, at one or more sales, assign and deliver the whole or
any part of such collateral security, whether or not the same
consists in whole or in part of commercial paper, choses in
action or any other property of any other nature whatsoever, and
any substitutions therefor and additions thereto, and any other
unliquidated security provided for herein, and any and all right,
title and interest of the undersigned in any thereof, at any
broker's board or at public or private sale, at the option of
Bank, with or without demand for payment or for additional
collateral security or for other performance and without regard
to any such demand, if made, and that Bank may be the purchaser
of any and all such collateral security or other property so sold
and hold the same thereafter in its own right absolutely free
from any claim or right of redemption on the part of the
undersigned, which is hereby waived and released, without any
responsibility in that or any other event on Bank's part for any
inadequacy of price.
The undersigned hereby authorize Bank to sign and file
financing statements at any time with respect to any collateral
security without the signature of the undersigned. The
undersigned will, however, at any time on request of Bank, sign
financing statements, trust receipts, security agreements or
other agreements with respect to any collateral security. Upon
the undersigned's failure to do so Bank is authorized as the
agent of the undersigned to sign any such instrument. The
undersigned agree to pay all filing fees and to reimburse Bank
for all costs and expenses of any kind incurred in any way in
connection with the collateral security.
Bank is authorized, whether or not any of the
Liabilities be due, in its own name or in the name of the
undersigned or otherwise, to demand, sue for, collect and receive
any money or property at any time due, payable or receivable upon
or on account of or in exchange for, or make any compromise or
settlement it deems desirable with reference to, or otherwise
realize upon, with or without suit, any collateral or other
security for payment of the Liabilities. Any of the Liabilities
and any security therefor, and the obligations of any party with
respect to any of them, may at any time or times and in whole or
in part be increased, decreased, renewed, extended, accelerated,
modified, compromised, transformed or released by Bank as it may
deem advisable, without notice to or further assent by the
undersigned and without affecting the obligations of the
undersigned hereunder and without any liability on the part of
Bank for any such action taken by it. Bank may pursue any of its
remedies hereunder or otherwise against any party obligated upon
any of the Liabilities and against any security therefor
hereunder or otherwise at any time or times as it may deem
advisable, without being obligated to resort to any other party
or security unless and until it shall deem it advisable to do so.
The undersigned hereby waive all presentment for payment, protest
and notice of protest of all negotiable or other instruments to
which the undersigned may be a party.
If the undersigned, as registered holder of collateral
security, shall become entitled to receive or do receive any
stock certificate, option or the proceeds from or right, whether
as an addition to, in substitution of, or in exchange for, such
collateral security, or otherwise the undersigned agree to accept
same as Bank's agent and to hold same in trust for Bank, and to
forthwith deliver the same to Bank in the exact form received,
with the undersigned's indorsement when necessary, to be held by
Bank as collateral security.
Bank may apply the net proceeds of any sale, lease or
other disposition of collateral security, after deducting all
costs and expenses of every kind incurred therein or incidental
to the retaking, holding, preparing for sale, selling, leasing,
or the like of said collateral security or in any way relating to
the rights of Bank thereunder, including attorney's fees
hereinafter provided for and legal expenses, to the payment, in
whole or in part, in such order as Bank may elect, of one or more
of the Liabilities, whether due or not due, absolute or
contingent, making proper rebate for interest or discount on
items not then due, and only after so applying such net proceeds
and after the payment by Bank of any other amounts required by
any existing or future provision of law (including Section 9-
504(1)(c) of the Uniform Commercial Code of any jurisdiction in
which any of the collateral security may at time be located) need
Bank account for the surplus, if any. The undersigned shall
remain liable to Bank for the payment of any deficiency, with
legal interest. Notwithstanding the holding by Bank of any
collateral or other security for payment of the Liabilities, or
any sale, exchange, enforcement, collection of, realization upon,
compromise or settlement, attempted or effected, with reference
to any such security, the undersigned shall be and remain liable
for the payment in full of the Liabilities, including the
aforesaid expense, except only to the extent that the same or any
part thereof shall have been reduced by payment or actual
application thereon by Bank of any security hereunder or the
avails thereof.
If the notes issued pursuant to the Agreement should
become immediately due and payable in accordance with the
Agreement, and at any time thereafter, Bank shall have, in
addition to all other rights and remedies, the remedies of a
secured party under the Uniform Commercial Code. The undersigned
shall, upon request of Bank, assemble the collateral security and
make it available to Bank at a place to be designated by Bank
which is reasonably convenient to Bank and the undersigned. Bank
will give the undersigned notice of the time and place of any
public sale of the collateral security or of the time after which
any private sale or any other intended disposition thereof is to
be made by sending notice, as herein provided, at least five days
before the time of the sale or disposition, which provisions for
notice the undersigned and Bank agree are reasonable. No such
notice need be given by Bank with respect to collateral security
which is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market. Any notice
to Bank shall be deemed effective only if sent to and received at
the branch, division or department of Bank conducting the
transaction or transactions hereunder. Any notice to the
undersigned shall be deemed sufficient if sent to the undersigned
whose name appears first below to the last known address of such
undersigned appearing on the records of Bank. Each of the
undersigned hereby designates the one whose name appears first
below among the undersigned as agent to receive notice hereunder
on his or its behalf. The word ("property") as used herein
includes but is not limited to instruments, documents, goods,
inventory, equipment, chattel paper, contract rights, consumer
goods, accounts, general intangibles, and fixtures together with
the proceeds, products and accessions, of and to any of the
foregoing, all as defined by the Uniform Commercial Code and any
and all other forms of property whether real, personal
or mixed, and any right, title or interest of the undersigned
therein or thereto. Bank may pledge any of the collateral
security hereunder (either alone or with others) to the United
States or to the Federal Reserve Bank of New York, in its own
right or as agent of the United States, to secure deposits or
other obligations of the Bank of any amounts whatever. No delay
on the part of Bank or any other holder hereof in exercising any
power or right hereunder shall operate as a waiver of any such
power or right; nor shall any single or partial exercise of any
power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. No
executory agreement unless in writing and signed by Bank, and no
course of dealing between the undersigned and Bank shall be
effective to change or modify or to discharge in whole or in part
this agreement. The undersigned agree that, whenever an attorney
is used to collect or enforce this agreement or to enforce,
declare or adjudicate any rights or obligations under this
agreement or with respect to collateral security, whether by suit
or by any other means whatsoever reasonable an attorney's fee
shall be payable by the undersigned against whom this agreement
or any obligation or right hereunder is sought to be enforced,
declared or adjudicated. The undersigned, in any litigation
(whether or not arising out of or relating to the Liabilities or
said collateral security) in which Bank and any of them shall be
adverse parties, waive trial by jury and, the right to interpose
any defense based upon any Statute of Limitations or any claim of
laches and set-off or counterclaim of any nature or description.
Bank is hereby authorized to correct patent errors
herein. Bank shall have no duty to collect income or principal,
or to send notices, perform services or take any action of any
kind respecting the management of any property deposited as
collateral security hereunder. None of the provisions hereof
shall be waived, modified, or changed orally or otherwise than in
writing signed by the duly authorized officers of Bank and the
undersigned. Waiver by Bank of any provision hereof on any one
or more occasions shall not constitute a waiver thereof on any
other occasion.
If the avails of any security therefor be applied on
account of any of the Liabilities, neither the undersigned nor
any other party shall have any right of subrogation to Bank's
rights in any other security for any of the Liabilities, and the
undersigned hereby waive all rights, if any, of subrogation with
respect to such other security and all rights, if any, of
contribution from Bank by reason of any such application or
otherwise. The undersigned hereby waive any notice of the
acceptance of this agreement by Bank. The rights and powers
herein granted to Bank are not intended to limit any rights or
powers granted in any note or other instrument taken in
connection with any of the Liabilities, and shall in all respects
be cumulative thereto. The undersigned hereby expressly consent
to and ratify all the terms, provisions and conditions of any
such note or other instrument now or hereafter taken in
connection with any of the Liabilities, and waive any further
notice of the creation, maturity and nonpayment of any such note
or other instrument or of any of the Liabilities evidenced
thereby. Bank is hereby authorized, at its option, but without
any obligation to do so, to transfer or register any of the
aforesaid collateral in the name of any of its nominees without
further notice to the undersigned. Bank may assign and transfer
any of the Liabilities and any or all the collateral security
therefor and shall be thereafter fully discharged from all
liability and responsibility with respect to the Liabilities and
collateral security so transferred and the transferee shall be
vested with all the powers and rights of Bank hereunder with
respect to the collateral security so transferred, but with
respect to the Liabilities and security therefor not so
transferred, Bank shall retain all rights and powers given it
herein.
The undersigned agree that this agreement shall
continue in full force and effect until notice of termination
thereof shall have been given in writing, actually delivered to
Bank, and receipt thereof acknowledged in writing, signed by
Bank, provided, however, that such notice shall not become
effective as to the Liabilities unpaid on the date of receipt of
such notice, together with any subsequent extensions or renewals
of the Liabilities and all other obligations arising therefrom,
until the same shall have been paid in full to Bank. The terms
of this agreement shall be construed under and in accordance with
the laws of the State of New York. All the terms, provisions and
conditions hereof shall be binding upon the undersigned, their
respective executors, administrators, successors and assigns.
Any provision hereof which may prove (Rider A attached)
unenforceable under any law shall not affect the validity of any
other provision hereof.
In witness whereof, the undersigned have signed, sealed
and delivered this instrument as of the day of
19
<PAGE>
J & B MANAGEMENT COMPANY
By:_____________________ (L. S.)
John W. Luciani,
General Partner
_______________________________
Witness
By:____________________ (L. S.)
Bernard M. Rodin,
General Partner
STATE OF NEW YORK
COUNTY OF NEW YORK ss.:
On the day of , 19 , before
me came to me known to be the
individual(s) described in, and who executed, the within
agreement, and acknowledged that he executed the same
STATE OF NEW YORK
COUNTY OF NEW YORK ss.:
On the day of , 19 , before
me came John W. Luciani and Bernard M. Rodin to me known, who,
being by me duly sworn, did depose and say that they reside at
; that they are
general partners of J & B Management Company, a New York
partnership, the partnership described in, and which executed,
the within agreement;
<PAGE>
RIDER A
-------
Any provision herein to the contrary notwithstanding, the terms,
covenants, provisions and conditions contained in this instrument
are expressly made subject to a restriction of the U.S.
Department of Housing and Urban Development (HUD) prohibiting
transfer of a limited and a general partnership interest, as the
case may be, without HUD's consent. It is understood and agreed,
however, that such prohibition will not prevent Bank from
realizing upon any distributions or other proceeds accruing to
the named holders of limited and general partnership interests,
as the case may be, notwithstanding the transfer of such limited
and general partnership interests, as the case may be, to the
Bank not having been formalized by amendment of the particular
limited partnership agreement.
In the event of any ambiguity or inconsistency between the
Agreement and this instrument, the provisions of the Agreement
shall control.
Unless the context indicates otherwise, terms which are defined
in the Agreement shall have the same respective meanings when
used herein.
<PAGE>
SCHEDULE A
----------
PURCHASE NOTES
--------------
Debtor
and Principal
Address Amount Payee
------- ---------- -----
<PAGE>
SCHEDULE B
----------
INVESTOR NOTES
--------------
Buying Partnership
Name
------------------
Investors
--------
Buying Partnership
Name
-----------------
Investors
---------
Buying Partnership
Name
------------------
Investors
---------
<PAGE>
SCHEDULE C
----------
Owning Partnership
Name Address
------------------ -------
<PAGE>
EXHIBIT C
HYPOTHECATION AND SECURITY AGREEMENT
STERLING NATIONAL BANK
& TRUST COMPANY OF NEW YORK
New York City, May 19 85
Gentlemen:
FOR VALUE RECEIVED, the undersigned (hereinafter called
"Owner") hereby (1) pledges, delivers, and grants you a security
interest in the following property, to wit:
All their right, title and interest in and to and under and the
proceeds therefrom in and to Purchase Notes specified in Schedule
A, the Investor Notes listed in Schedule B, together with any and
all notes, assets, interests or other property and proceeds
therefrom which collateralize the Purchase Notes, and any
partnership interest whether general or limited or both, in the
Partnerships listed in Schedule C, all as more particularly
described and defined in the Revolving Credit Agreement, dated as
of May 7, 1985, between you and the Bank (the "Agreement") of
which the undersigned is the absolute owner as (2) collateral
security for each and every obligation and liability of ----
------------------------------------------------------------
(hereinafter called the "Customer") and/or the Owner to you,
(hereinafter called "Obligations") whether now existing or
hereafter incurred, originally contracted with you and/or with
another or others, and now or hereafter owning to, or acquired in
any manner, in whole or in part, by you or in which you may
acquire a participation, whether contracted by the Customer
and/or the Owner alone or jointly and/or severally with another
or others, absolute or contingent, direct or indirect, secured or
unsecured, matured or not matured.
The Owner hereby requests that said property be
accepted by you for the purposes above stated, subject to, and
upon, the terms of this agreement, and any and all notes,
security agreements, documents, applications and other agreements
heretofore or hereafter executed, made, indorsed, transferred or
delivered by the Customer to you, all of which shall apply to
said property with the same force and effect as though said
property belonged absolutely to the Customer (3) instead of the
Owner and as though the Owner were a party to such notes,
security agreements, documents, applications, or other
agreements.
The Owner hereby agrees that, without notice or further
assent, before, at or after the maturity of Obligations,
expressed or declared (1) the liability of the Customer or of any
other party, for or upon said Obligations, may, from time to
time, in whole or in part, be renewed, extended, modified,
prematured, compromised or released by you, as you may deem
advisable and (2) you may from time to time, in your discretion,
exchange, modify, release or surrender, in whole or in part, with
or to the Customer or his or its representatives or successors,
or the Owner or his representatives, or any other appropriate
party, as the case may be, (a) the said property or any
substitutes or additions thereto, or (b) the surplus net proceeds
derived from the sale or sales of such property by you pursuant
to the terms of any such note, security agreement, document,
application or other agreement, (c) any collateral for said
Obligations, or (d) to the customer any deposit balance or
balances to the credit of the customer, or to any other party
liable for or upon any of said Obligations any deposit balance or
balances to the credit of such party.
In the case of securities, if the Owner, as registered
holder of said property, shall become entitled to receive or does
receive any stock certificate, option or right, whether as an
addition to, in substitution of, or in exchange for, such
property or otherwise, the Owner agrees to accept same as your
agent and to hold same in trust for you, and to forthwith deliver
the same to you in the exact form received, with the Owner's
indorsement when necessary, to be held by you as collateral
security for Obligations.
In the case of securities, you may register at any time
in your discretion, without notice, (whether or not a default
exists with respect to said Obligations, or in the event of the
death or legal disability of the Owner) any of said property in
your name or in the name of your nominee, and you or your nominee
may exercise all voting and corporate rights with respect thereto
as if the absolute owner thereof.
You shall be under no obligation to resort first to any
additional collateral securing Customer's Obligations to you or
to accord pro rata treatment with respect thereto.
The Owner hereby waives any and all notice of the
acceptance of this agreement or of the creation, accrual or
maturity (whether by declaration or otherwise) of any and all of
said Obligations, or of any renewals or extensions thereof from
time to time or of your reliance upon this agreement.
You shall use reasonable care in the custody and
preservation of said property in your possession but need not
take any steps to preserve rights against prior parties or to
keep said property identifiable. You shall have no obligations
to comply with any recording, re-recording, filing, re-filing or
other legal requirements necessary to establish or maintain the
validity, priority or enforceability of, or your rights in and to
any of said property.
The Owner hereby authorizes you to sign and file
financing statements at any time with respect to any of said
property without the signature of either the Customer or the
Owner. The Owner will, however, at any time on your request,
sign financing statements, trust receipts, security agreements or
other agreements with respect to any of said property. Upon the
Owner's failure to do so, you are authorized as the agent of
Owner to sign any such instrument. The Owner agrees to pay all
filing fees.
In addition to all other rights and remedies, you shall
have the remedies of a secured party under the New York Uniform
Commercial Code. You will give Owner notice, as provided below,
of the time and place of any public sale of any of said property
or of the time when any private sale or any other intended
disposition thereof is to be made by sending notice, as provided
below at least five days before the time of the sale or
disposition, which provisions for notice you and Owner agree are
reasonable. No such notice need be given by you with respect to
property which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.
You may apply the net proceeds of any sale, lease or
other disposition of said property after deducting all costs and
expenses of every kind incurred therein or incidental to the
holding, preparing for sale, selling, leasing or the like of said
property or in any way relating to your rights thereunder,
including attorney's fees hereinafter provided for and legal
expenses, to the payment in whole or in part, in such order as
you may elect, of one or more of said Obligations, whether due or
not due, absolute or contingent, making proper rebate for
interest or discount on items not then due, and only after so
applying such net proceeds and after the payment by you of any
other amounts required by any existing or future provision of law
(including Section 9-504(1)(c) of the New York Uniform Commercial
Code) need you account for the surplus, if any. You may account
for the surplus, if any, to the Customer or Owner.
No executory agreement unless in writing and signed by
you, and no course of dealing between you and either the Customer
or the Owner shall be effective to waive, change or modify or to
discharge in whole or in part this agreement. Waiver by you of
any provision hereof on any one of more occasions shall not
constitute a waiver thereof on any other occasion.
Any notice to you shall be deemed effective only if
sent to and received at your branch, division or department
conducting the transaction or transactions hereunder. Any notice
to the Owner shall be deemed sufficient if sent to the Customer
at the last known address of the Customer appearing on your
records. Each of the undersigned hereby designates the Customer
as agent with whom you may deal solely and in all respects with
regard to the property or the Obligations.
The termination of the agency created by any of the
undersigned in this agreement may be effected only in writing
sent to you, as above provided, and shall not affect your rights
with respect to any of said property or Obligations existing
prior to the date of your receipt of such notice nor shall the
same affect the agency created by any other of the undersigned.
Whenever an attorney is used to enforce, declare or
adjudicate any rights or obligations under this agreement or with
respect to said property or relating to said Obligations, whether
by suit or by any other means whatsoever, reasonable attorney's
fee of the Obligations then due shall be payable by each Owner
against whom this agreement or any obligation or right hereunder
is sought to be enforced, declared or adjudicated. You and the
Owner, in any litigation (whether or not arising out of or
relating to said Obligations or said property or any of the
matters contained in this agreement) in which you and the Owner
shall be adverse parties, and the Owner in addition, waives the
right to interpose any defense based upon and any set-off or
counterclaim of any nature or description.
This agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any provision
hereof which may prove (4) unenforceable under any law shall not
affect the validity of any other provision hereof.
Witness: Very truly yours,
----------------------------------------------------------------
(SIGNATURE) John W. Luciani
-----------------------------
(ADDRESS)
STATE OF NEW YORK -----------------------------
SS.: (SIGNATURE) Bernard M. Rodin
COUNTY OF
-----------------------------
(ADDRESS)
On this day of , 19 , before
me personally came /John W. Luciani and /Bernard M. Rodin to me
known, and known to me to be the individual(s) described in and
who executed the foregoing instrument, and (t)(s)he(y) duly
acknowledged to me that (t)(s)he(y) executed the same.
-----------------------------
(NOTARY PUBLIC)
<PAGE>
(1) sets over to Bank solely for such security purpose
(2) or holder of a valid security interest in
(3) or Customer holds a valid security interest in
(4) Any provision herein to the contrary notwithstanding, the
terms, covenants, provisions and conditions contained in
this instrument are expressly made subject to a restriction
of the U.S. Department of Housing and Urban Development
(HUD) prohibiting transfer of a limited and a general
partnership interest, as the case may be, without HUD's
consent. It is understood and agreed, however, that such
prohibition will not prevent Bank from realizing upon any
distributions or other proceeds accruing to the named
holders of limited and general partnership interests, as the
case may be, notwithstanding the transfer of such limited
and general partnership interests, as the case may be, to
the Bank not having been formalized by amendment of the
particular limited partnership agreement.
In the event of any ambiguity or inconsistency between the
Agreement and this instrument, the provisions of the
Agreement shall control.
Unless the context indicates otherwise, terms which are
defined in the Agreement shall have the same respective
meanings when used herein.
<PAGE>
SCHEDULE A
----------
PURCHASE NOTES
--------------
Debtor
and Principal
Address Amount Payee
------- ----------- -----
<PAGE>
SCHEDULE B
----------
INVESTOR NOTES
--------------
Buying Partnership
Name
------------------
Investors
---------
Buying Partnership
Name
-----------------
Investors
---------
Buying Partnership
Name
------------------
Investors
---------
<PAGE>
SCHEDULE C
----------
Owning Partnership
Name Address
------------------ -------
<PAGE>
EXHIBIT D
GUARANTY OF ALL LIABILITY AND SECURITY AGREEMENT
New York, May 7, 1985
IN CONSIDERATION of the credit, discount, loan,
extension of time or financial accommodation in any other form at
any time given by the within named Bank to the within named
Obligor, the undersigned (which term, and any context in which it
may be used herein, shall be deemed to be singular in sense, if
this agreement is not signed by more than one party) hereby
unconditionally guarantee the payment to Sterling National Bank &
Trust Company of New York (hereinafter called Bank) it
successors, transferees, and assigns, of any and every liability
or liabilities in any amount, of any nature and in any form now
existing or hereafter arising, of or from
(hereinafter called Obligor), to Bank including, without limiting
the generality of the foregoing, all negotiable and other
instruments and all obligations of any other nature or form,
whether absolute or contingent, direct or indirect, matured or
unmatured, upon or with respect to which Obligor may be liable
and which may at any time be acquired by Bank, (all hereinafter
whether one or more than one, called Liabilities).
The undersigned agree that they shall be jointly and
severally bound hereunder; that the Liabilities and the
obligations of any party with respect thereto may at any time or
times and in whole or in party be increased, decreased, renewed,
extended, accelerated, modified, compromised, transformed or
released by Bank as it may deem advisable, without notice to or
further assent by the undersigned and without affecting the
obligations of the undersigned hereunder; and that Bank may
pursue any of its remedies hereunder, upon any of the Liabilities
or otherwise against any party or security at any time or times
as it may deem advisable, without being obligated to resort to
any other party or security unless and until it shall deem it
advisable to do so. The undersigned hereby waive all demands for
performance or of payment of the Liabilities, any presentment for
payment, any protest and all notices of presentment, non-payment
and protest of all negotiable or other paper upon which Obligor
may be liable, all notices of acceptance of this guaranty, notice
of adverse change in the Obligor's financial condition or of any
other fact which might materially increase its credit risk, and
all demands, and notices if any, which Bank might otherwise be
required to give in connection with the exercise of any of its
rights hereunder upon any of the Liabilities or otherwise. The
undersigned agree that Bank may, at its option, sue separately
hereon or upon any one or more of the Liabilities and hereby
waive any defense in any action that Bank has split its cause of
action.
The undersigned further agree that, if the Notes, as
defined and provided for in the Revolving Credit Agreement, dated
as of May 7, 1985, between Obligor and Bank (the "Agreement"),
shall become immediately due and payable, then, and upon the
occurrence of any such event, unless Bank shall otherwise elect,
all the Liabilities of Obligor to Bank shall without notice or
demand become immediately due and payable and shall forthwith be
paid by the undersigned, notwithstanding any time or credit
allowed under any of the Liabilities or any instrument evidencing
the same.
The undersigned does hereby give to Bank for the amount
of the Liabilities a continuing lien and/or right of offset upon
and against all debts, credits and credit balances owing from
Bank to each of the undersigned, and, further, a continuing lien
upon and/or right of offset against all money, securities,
uncollected deposits, collection items, choses in action, the
avails of any thereof, and any other property of any nature
whatsoever of each of the undersigned which may for any purpose
be actually or constructively held by, or in transit to Bank or
any of its affiliates, agents, correspondents or the sub-agents
of any of them; or which may be placed in any safe deposit box
leased by Bank to the undersigned; that Bank may at its option
apply any or all of the aforesaid properties on account of any of
the Liabilities as it may elect; that Bank may exercise any and
all of its other rights hereunder, upon any of the Liabilities or
otherwise, and, upon the occurrence of any default hereunder or
with respect to any of the Liabilities, Bank may forthwith
collect, receive, appropriate and realize upon any and all
collateral security, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase, and deliver
said collateral security, or any part thereof, or any property
whatever of any kind to which it may be entitled as collateral
security for the Liabilities, in one or more parcels, at public
or private sale or sales, at any exchange, brokers' board or at
any of Bank's offices or elsewhere, at such prices as it may deem
best, for cash, or on credit, or for future delivery, without
assumption of any credit risk, with the right to Bank upon any
such sale or sales, public or private to purchase the whole or
any part of said collateral security so sold. The undersigned
further agree that Bank may be the purchaser at any such sale
without any responsibility in that or any other event on Bank's
part for any inadequacy of price; and that, if the avails of any
security therefor be applied on account of any of the
Liabilities, neither the undersigned nor any other party shall
have any right of subrogation to Bank's rights in any other
security for any of the Liabilities, and the undersigned hereby
waive all rights, if any, of subrogation with respect to such
other security and all rights, if any, of contribution from Bank
by reason of any such application or otherwise. Bank may apply
the net proceeds of any such collection, receipt, appropriation,
realization or sale, after deducting all costs and expenses of
every kind incurred therein or incidental to the care,
safekeeping or otherwise of said collateral security or in any
way relating to the rights of Bank hereunder, including
reasonable counsel fees, to the payment in whole or in part, in
such order as Bank may elect, of one or more of the Liabilities,
whether then due or not due, absolute or contingent, making
proper rebate for interest or discount on items not then due and
accounting for the surplus, if any, to the undersigned, who shall
remain liable to Bank for the payment of any deficiency with
legal interest. Bank will give the undersigned notice of the
time and place of any public sale of the collateral security or
of the time after which any private sale or any other intended
disposition thereof is to be made by sending notice, as herein
provided, at least five days before the time of the sale or
disposition, which provisions for notice the undersigned and Bank
agree are reasonable. No such notice need be given by Bank with
respect to collateral security which is perishable or threatens
to decline speedily in value or is of a type customarily sold on
a recognized market. The undersigned agree that, whenever an
attorney is used to collect or enforce this agreement or to
enforce, declare or adjudicate any rights or obligations under
this agreement, whether by suit or by any other means whatsoever
a reasonable attorney's fee shall be payable by the undersigned
against whom this agreement or any obligation or right hereunder
is sought to be enforced, declared or adjudicated. The
undersigned, in any litigation (whether or not arising out of or
relating to the Liabilities or any security therefor) in which
Bank and any of them shall be adverse parties, waive the right to
interpose any defense based upon and set-off or counterclaim of
any nature or description.
In the event of any ambiguity or inconsistency between
the Agreement and this instrument, the provisions of the
Agreement shall control. Any provision herein to the contrary
notwithstanding, the terms, covenants, provisions and conditions
contained in this instrument are expressly made subject to a
restriction of the U.S. Department of Housing and Development
(HUD) prohibiting transfer of a limited and general partnership
interest, as the case may be, without HUD's consent. It is
understood and agreed, however, that such prohibition will not
prevent Bank from realizing upon any distributions or other
proceeds accruing to the named holders of limited and general
partnership interests, as the case may be, notwithstanding the
transfer of such limited and general partnership interests, as
the case may be to the Bank not having been formalized by
amendment of the particular limited partnership agreement.
Unless the context indicates otherwise, terms which are defined
in the Agreement shall have the respective meanings when used
herein.
The execution and delivery hereafter by the undersigned
to Bank of a new agreement of guaranty shall not terminate,
supersede or cancel this agreement, unless expressly provided
therein, and all rights and remedies of Bank hereunder or under
any agreement of guaranty hereafter executed and delivered to
Bank by the undersigned shall be cumulative and may be exercised
singly or concurrently. The undersigned further agree that this
guaranty shall continue in full force and effect until notice of
termination thereof shall have been given in writing, actually
delivered to Bank, and receipt thereof acknowledged in writing,
signed by Bank, provided, however, that such notice shall not
become effective as to Liabilities unpaid on the date of receipt
of such notice, together with any subsequent extensions or
renewals of such Liabilities and all other obligations arising
therefrom, until all such Liabilities shall have been paid in
full to Bank; that all of the Bank's rights hereunder shall
continue until the same shall have been paid in full to Bank;
that none of the provisions of this agreement shall be waived,
modified or changed orally, or otherwise than in writing signed
by the duly authorized officers of Bank and the undersigned; that
there are no oral understandings between Bank and the undersigned
in any wise varying, contradicting or amplifying the terms
hereof; that waiver by Bank of any provision hereof on any one or
more occasions shall not constitute a waiver thereof on any other
occasion; that no delay on the part of Bank or any other holder
hereof in exercising any power or right hereunder shall operate
as a waiver of any such power or right; nor shall any single or
partial exercise of any power or right hereunder preclude other
or further exercise thereof or the exercise of any other power or
right. No executory agreement unless in writing and signed by
Bank, and no course of dealing between the undersigned and Bank
shall be effective to change or modify or to discharge in whole
or in part this agreement. This agreement shall be construed in
accordance with the laws of the State of New York and the
undersigned consent to the jurisdiction of any local, state or
federal court, located within the State of New York and each of
the undersigned who is presently or who shall in the future
become a non-resident of the State of New York, hereby waives
personal service of any and all process and consents that all
such service of process shall be made by certified or registered
mail, return receipt requested, directed to the undersigned at
the address of the undersigned appearing on the records of the
Bank and service so made shall be complete ten (10) days after
the same has been posted as aforesaid; and all the terms,
provisions and conditions of this agreement shall be binding upon
the undersigned, their respective executors, administrators,
successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed, sealed
and delivered this instrument as of the date hereinbefore set
forth.
---------------------------- (L.S.)
--------------------------------
Residence Address
----------------------------- (L.S.)
-----------------------------
STATE OF NEW YORK
COUNTY OF ss:
On the day of , 19 , before
me came to me known to be the
individual described in, and who executed the foregoing
instrument, and acknowledged that he executed the same.
STATE OF NEW YORK
COUNTY OF ss:
On the day of , 19 , before
me came to me known to be the
individual described in, and who executed the foregoing
instrument, and acknowledged that he executed the same.
STATE OF NEW YORK
COUNTY OF ss:
On the day of , 19 , before
me came to me known, who, being
by me duly sworn, did depose and say that he resides at<PAGE>
in ; that he is
the of
the corporation described in, and which executed the foregoing
instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said
corporation and that he signed his name thereto by like
order.
<PAGE>
SUPPLEMENT TO GUARANTY OF ALL LIABILITY AND SECURITY AGREEMENT
STERLING NATIONAL BANK
& TRUST COMPANY OF NEW YORK New York, N.Y. Date: May 7, 1985
Re: Collateral Security for Guaranty of All Liabilities
and Securities Agreement (GALSA)
----------------------------------------------------------------
The undersigned (the Guarantor) has executed and delivered to you
GALSA dated May 7, 1985, with respect to J & B Management
Company, One Executive Drive, Fort Lee, New Jersey ,
the Obligor thereunder.
The Guarantor hereby consents and agrees that the following
property (the Property), to wit:
All its right, title and interest in and to and under and the
proceeds therefrom in and to Purchase Notes specified in
Schedule A, the Investor Notes listed in Schedule B, together
with any and all notes, assets, interests or other property and
proceeds therefrom which collateralize the Purchase Notes, and
any partnership interests, whether general or limited or both, in
the Partnerships listed in Schedule C, all as more particularly
described and defined in the Revolving Credit Agreement, dated as
of May 7, 1985 between you and the Bank (the "Agreement") of
which the Guarantor is the absolute owner is hereby pledged and
delivered to you and a security interest therein granted to you
as collateral security for the Liabilities (as defined in the
GALSA) of the Obligor and the Guarantor to you.
The Guarantor hereby agrees that without notice or further
assent, the liability of the Obligor for the Liabilities may from
time to time in whole or in part be renewed, extended, modified,
compromised or released to you.
In the case of securities, you may register at any time, in your
discretion, without notice, any of the property in your name or
in the name of your nominee and you or your nominee may exercise
all voting and corporate rights with respect thereto as if the
absolute owner thereof.
You shall be under no obligation to resort first to any
additional collateral securing Obligor's Liabilities to you or to
accord pro rata treatment with respect thereto. The Guarantor
hereby authorizes you to sign and file financing statements at
any time with respect to the property without the signature of
either the Obligor or the Guarantor. The Guarantor will at any
time on your request sign financing statements, security
agreements or other agreements with respect to the property and,
on the Guarantor's failure to do so, you are authorized as the
agent of the Guarantor to sign any such instrument.
In addition to all other rights and remedies, you shall have the
remedies of a secured party under the New York Uniform Commercial
Code. You will give the Guarantor notice, as provided below, of
the time and place of any public sale of any of the property or
of the time when any private sale or any other intended
disposition thereof is to be made by sending notice, as provided
below at least five days before the time of the sale or
disposition, which provisions for notice you and the Guarantor
agree are reasonable. No such notice need be given by you with
respect to property which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a
recognized market.
<PAGE>
Rider A
-------
Any provision herein to the contrary notwithstanding, the terms,
covenants, provisions and conditions contained in this instrument
are expressly made subject to a restriction of the U.S.
Department of Housing and Urban Development (HUD) prohibiting
transfer of a limited and a general partnership interest, as the
case may be, without HUD's consent. It is understood and agreed,
however, that such prohibition will not prevent Bank from
realizing upon any distributions or other proceeds accruing to
the named holders of limited and general partnership interests,
as the case may be, notwithstanding the transfer of such limited
and general partnership interests, as the case may be, to the
Bank not having been formalized by amendment of the particular
limited partnership agreement.
In the event of any ambiguity or inconsistency between the
Agreement and this instrument, the provisions of the Agreement
shall control.
Unless the context indicates otherwise, terms which are defined
in the Agreement shall have the same respective meanings when
used herein
<PAGE>
SCHEDULE A
----------
PURCHASE NOTES
--------------
Debtor
and Principal
Address Amount Payee
------- --------- -----
<PAGE>
SCHEDULE B
----------
INVESTOR NOTES
--------------
Buying Partnership
Name
------------------
Investors
---------
Buying Partnership
Name
-----------------
Investors
---------
Buying Partnership
Name
------------------
Investors
---------
<PAGE>
SCHEDULE C
----------
Owning Partnership
Name Address
------------------ -------
<PAGE>
EXHIBIT E
Description of J & B Counsel's Opinion
The legal opinion of Eugene P. Sanders, counsel for J & B, which
is called for by Section 1.1 of the Agreement shall be dated the
date of each Advance and addressed to Bank, shall be satisfactory
in form and substance to Bank and shall be to the effect that:
1. The hypothecation, pledge or grant of a security interest in
a partnership interest in the Owning Partnerships to J & B, to
Luciani, to Rodin or to any Affiliate, as the holder of the
particular Purchase Note and of any Collateral therein provided,
which interest has subsequently been rehypothecated and repledged
to Bank pursuant to the Agreement, the Security Agreement, the
L & R Agreement or the Affiliates' Secured Guarantys is the
genuine, legal, valid and binding obligation of the obligor
making such hypothecation, pledge or grant of the security
interest, enforceable in accordance with the terms thereof.
2. J & B, Luciani, Rodin and the Affiliates, as the case may
be, with respect to each such transaction and to the extent of
their respective interests therein, have full power and authority
and legal right to sell their interests or hypothecate or
rehypothecate or pledge or repledge or grant security interest
with respect thereto in the Owning Partnership; and
the respective Purchase Agreements effecting such sales to the
Buying Partnerships and providing for the pledge or granting of a
security interest by the respective Buyers to the respective
Sellers (the "Purchase Agreements") are the genuine, legal, valid
and binding obligations of J & B, Luciani, Rodin and the
Affiliates, as the case may be, enforceable in accordance with
its terms, provided, however, that such sales of partnership
interests in the Owning Partnerships must comply with the rules,
regulations and requirements of federal and state securities
commissions, provided, further, however, that the transactions
giving rise to the sales of partnership interests in the Owning
Partnerships require the approval of HUD, which approval has been
obtained except with respect to the sale of the interests in the
partnerships set forth in Schedule hereto.
3. The Buying Partnerships have full power and authority and
legal right to execute and deliver the Purchase Notes, and to
hypothecate, pledge or grant a security interest in their
respective interests in the Owning Partnerships to any or all of
J & B, Luciani, Rodin and the Affiliates, and the respective
Purchase Agreements effecting such sales and the hypothecation
pledges and granting of the security interest as aforesaid
constitute the legal, valid and binding obligations of the Buying
Partnerships, listed on Schedule of the enforceable in
accordance with their terms.
4. J & B, Luciani, Rodin and the Affiliates have full power and
authority to execute and deliver and to perform their respective
obligations in the Agreement, the Notes, the Security Agreement,
the L & R Agreement and the Affiliates' Secured Guarantys, as the
case may be, and such obligations constitute the legal, valid and
binding obligations of the respective parties thereto enforceable
in accordance with their terms.
5. In connection with the execution and delivery of the
Purchase Notes, pursuant to the respective Purchase Agreements,
the Buying Partnerships authorized the sellers therein named or
any other holder of appropriately endorsed Investor Notes to
utilize these same Investor Notes by way of hypothecation,
pledge, collateral security or otherwise to transact any and all
other unrelated business for the sellers or holders own account;
thus, in addition to collateralizing the Purchase Notes, J & B,
Rodin, Luciani and any Affiliate, as the case may be, as the
holder of an appropriately endorsed Purchase Note, has the full
power and authority to utilize these same Investor Notes by way
of hypothecation, pledge or as collateral security to Bank
pursuant to the Agreement, L & R Agreement, Security Agreement
and Affiliates' Secured Guarantys and such granting of a security
interest in the Investor Notes by J & B, Rodin, Luciani, and any
Affiliates, as the case may be, constitutes the legal, valid and
binding obligations of J & B, Rodin, Luciani and the Affiliates,
as the case may be, to Bank enforceable in accordance with their
terms.
6. The execution and delivery of the Agreement, Notes, the L &
R Agreement, Security Agreement, the Affiliates' Secured
<PAGE>
Sterling National Bank & Trust Company
of New York
540 Madison Avenue at 55th Street
New York, N.Y. 10022
GERARD P. GRIFFIN, JR. (212) 826-8036
Senior Vice President
& General Counsel
June 19, 1985
Mr. John W. Luciani
J&B Management Company
One Executive Drive
Fort Lee, N.J. 07024
Dear John:
Enclosed is a manually executed copy of the Revolving Credit
Agreement and a composite copy of the manually executed Security
Agreements, that is, one schedule which is the same for all
Security Agreements. I am also returning, marked CANCELLED, one
of the two manually executed Notes. It is only necessary for one
copy to be executed.
By separate cover of this letter, I am sending the same set of
documents to Gene Sanders, less the cancelled Note.
Very truly yours,
/s/ Gerard P. Griffin, Jr.
GPG/pr
enclosures
cc: Eugene R. Sanders, Esq.
Exhibit 21
LIST OF SUBSIDIARIES
FOR
GRAND COURT LIFESTYLES, INC.
Grand Court Facilities, Inc.
Grand Court Facilities, Inc., II
Grand Court Facilities, Inc., III
Grand Court Facilities, Inc., IV
Grand Court Facilities, Inc., V
Grand Court Facilities, Inc., VI
Grand Court Facilities, Inc., VII
Grand Court Facilities, Inc., VII
Grand Court Facilities, Inc., IX
Grand Court Facilities, Inc., X
J&B Financing, LLC
Leisure Centers, LLC-I
Leisure Facilities, Inc.
Leisure Facilities, Inc., II
Leisure Facilities, Inc., III
Leisure Facilities, Inc., IV
Leisure Facilities, Inc., V
Leisure Facilities, Inc., VI
Leisure Facilities, Inc., VII
Leisure Facilities, Inc., VIII
Leisure Facilities, Inc., IX
Leisure Facilities, Inc., X
Leisure Facilities, Inc., XI
Leisure Facilities, Inc., XII
Leisure Facilities, Inc. XIV
Leisure Facilities, Inc. XV
Leisure Facilities, Inc. XVI
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Grand
Court Lifestyles, Inc. on Form S-1 of our report dated April 26,
1996, except for Note 11 which is as of June 11, 1996, appearing
in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
June 10, 1996
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