UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 0-7775
WESTLAND DEVELOPMENT CO., INC.
(Exact name of registrant as specified in its charter)
New Mexico 85-0165021
(State or other jurisdiction of (I.R.S. Employer
incorporation or other organization Identification No.)
401 Coors Boulevard, N.W., Albuquerque, New Mexico, 87121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 505-831-9600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
No Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No____.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $4,766,401
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $7,415,520
The number of shares outstanding of each of the Registrant's classes of common
stock, as of September 18, 1995, was:
No Par Value Common: 716,608 shares.
Class A $1.00 Par Value: none.
Class B $1.00 Par Value: 86,100 shares.
PART I
ITEM 1: DESCRIPTION OF BUSINESS
General Development of Business.
Westland Development Co., Inc., a New Mexico for-profit corporation
("Registrant"), is the successor to a community land grant corporation named
Town of Atrisco, Inc., which itself was a successor to a Spanish community land
grant named the Atrisco Land Grant. Information concerning the historical
background of these predecessor organizations and the conversion in 1967 from a
community land grant corporation into a business corporation can be found in the
Registrant's Form 10 and its Form 10-K for the fiscal year ended June 30, 1974.
With limited exceptions, only lineal descendants of the incorporators of the
Town of Atrisco, New Mexico, may own shares of the Registrant's Common Stock.
The Registrant's executive offices are located in its own building at 401 Coors
Boulevard, N.W., Albuquerque, New Mexico, 87121, telephone (505) 831-9600, on
land which was originally part of the Atrisco Land Grant.
The Registrant is the owner of approximately 59,000 acres of land located on the
west side of Albuquerque, New Mexico. Most of its property is held for long term
investment and is not currently marketed or planned for development in the
foreseeable future, most of which is devoted to the grazing of cattle. The
Registrant derives revenues through commercial and land leases, partnerships
formed for various development projects, lot development and sales and land
sales.
As of September 15, 1996, approximately 250 acres of the Registrant's land
located on the west side of the City of Albuquerque, New Mexico which have been
segregated for development remain to be sold.
The Registrant believes that over the next few years it will decrease its
reliance on raw land sales and increase its sales of fully developed residential
lots ready for construction, enter into joint ventures, land developments,
ground leases, limited partnerships and, if warranted by available capital, may
begin the construction of industrial and commercial structures for lease or
sale. The Registrant's long term business philosophy is to enhance the value of
the Registrant's land through careful planning and development, while retaining
ownership of a major portion of the land in perpetuity and simultaneously
increasing the value of the Registrant's stock and to provide dividends for its
shareholders, when consistent with the Registrant's need for a sufficient cash
flow to meet current operating expenses.
Narrative Description of Business.
The Registrant previously developed six sector plans for the development of
certain of its properties. Each such plan encompassed approximately 600 to 1,000
acres and are identified as Atrisco Urban Center and El Rancho Atrisco, Phases I
through V. Portions of Phases I and IV have been developed and sold and
development of Phase V sector plan was abandoned due the introduction of the
Petroglyph National Monument. A revised sector plan for the area between Unser
and Paseo del Volcan was initiated in 1994.
Oil and Gas and Grazing Leases.
Approximately 50,000 acres of the Registrant's land not planned for development
is currently leased to others under grazing lease(s), all of which were with
unaffiliated persons, providing rental income of approximately $143,000 in
fiscal 1996. In the 1997 fiscal year the Registrant agreed to certain rent
abatements for the leased grazing lands because of a prolonged drought that
severely limited the productive capacity of the land.
The Registrant has leased approximately 37,000 acres under and oil and gas lease
upon which it receives rental of approximately $2.00 per acre. In December, the
lessee must pay $2.50 per acre to keep the lease in force.
The Registrant also owns and leases certain commercial buildings at an aggregate
annual rental of $551,000. (See "Revenue Producing Properties").
Development Properties.
As of June 30, 1996, the Registrant continued to own portions of land that it
developed over the last 16 years.. A summary of this acreage is as follows:
a) Atrisco Urban Center.
1). Atrisco Urban Center Development and Sales: The Registrant still owns
approximately 56 acres within this center. During the last fiscal year it sold
approximately 16 acres within the center and continues to work with end users to
develop additional projects. A senior citizen's center, an assisted living
center, a single family housing subdivision, five manufacturing facilities, a
warehouse facility, an office building, a police substation, 400-unit apartment
complex, gas station and car wash are among the projects currently located in
the Center. See items number 3 and 4 below for a discussion of last year's
developed projects.
2) Atrisco Urban Center Rental Properties: The Registrant owns a two-story
office building in the Atrisco Urban Center. The entire first floor
(approximately 5,057 square feet of rentable space) is leased to Sunwest Bank of
Albuquerque, N.A. for use as a branch bank for a term ending in October 1999.
The Registrant occupies the second floor of this building.
3) Cedar Ridge Estates Subdivision: The Registrant owns a 40 acre tract located
within the Atrisco Urban Center zoned for a single family residential
subdivision called Cedar Ridge Estates. The Registrant has completed development
of the first phase consisting of approximately 11 acres and 57 lots and during
fiscal 1995 a builder executed an option agreement for the purchase of those
developed lots upon which the builder is constructing homes priced from $110,000
to $140,000. As of September 20, 1996, Phase I had been fully sold and the
Registrant has initiated construction of Phase Two for the development of an
additional 71 lots.
4) Assisted Living Development Corporation: The Registrant is a Limited Partner
in a partnership managed by Assisted Living Development Corp. of Portland,
Oregon which has built and owns a housing facility for persons in need of some
care but who are otherwise ambulatory. The 40 unit complex was recently
completed and leasing is now underway.
b. Sector Plan.
1) The Registrant has prepared a sector development plan covering approximately
6,400 acres which it planned to have annexed to the City of Albuquerque. The
sector plan area is located north of Interstate 40 and south of the area
designated for the Petroglyph National Monument. The Registrant initially filed
this plan with the City of Albuquerque, but due to the City's inability or
unwillingness to guarantee the availability of water and sewer service to the
property in a timely manner, the plan was withdrawn from the City and submitted
to Bernalillo County. The County has indicated a desire to furnish water and
sewer service to the property.
c. ERA Phase II; Volcano Business Park.
Volcano Business Park consists of approximately 22 acres zoned for industrial
park uses of which 11 acres have been platted and developed into 9 lots. The
Registrant owns 50% of a partnership which constructed, manages and owns a 172
unit storage facility on approximately 1.7 acres of this property. The facility
was completed in December of 1995 and as of September 15, 1996 was approximately
50% occupied.
d. ERA Phase III Commercial, Industrial and Residential Developments.
In 1985, the Registrant completed the planning of Heritage Park and Heritage
Plaza in El Rancho Atrisco Phase III. Those plans included construction of a
total of 200,000 square feet of office space, approximately 100,000 square feet
of retail space. El Rancho Atrisco III also includes, 130 acres for industrial
usage (Ladera Industrial Park), and 31 acres of high density housing. During
fiscal 1995, the Registrant sold a 6.3 acre tract which has been developed as an
affordable apartment complex. The Registrant has also joined a limited liability
corporation for the development of an 9.6 acre tract that will also be developed
for an affordable senior, multi-family apartment units. As of September 15,
1996, the Registrant had entered into agreements for the sale of the LLC
corporation and apartment designated land. During fiscal 1996 the Registrant
sold a 0.86 acre parcel of land to Diamond Shamrock for the development of a
convenience store-gas station at the corner of Unser and Ladera Drive. During
fiscal 1996, the Registrant also sold approximately 16 acre tract to a local
developer for construction of additional single family homes. Prospects for the
sale or development of the office and commercial property are improving because
of the growing demand for such property on Albuquerque's west side, and the
construction of single family homes west of Unser.
e. Other Properties.
1) Travel Plaza: In March 1990, the Registrant submitted a zone change request
to Bernalillo County for 100 acres for a travel center and related commercial
uses. In June 1990, the County Commission approved the request for zone change.
Anticipated users may include restaurants, motel-hotel facilities, fueling
stations, and other travel/tourist related facilities. During 1995, the
Registrant sold two acres, on which there has now been a truck sales facility
developed.
2) Parkway Units 7 and 8: In 1994, the Company agreed to develop approximately
15 acres of land (57 lots) for Sivage Thomas Homes adjacent to its Parkway Unit
7 development. Development of the residential lots is complete and all lots were
sold by November of 1995. The Registrant has also designed and had nearly
completed construction of Parkway Unit 8, and in June, 1996, the total Unit was
sold to Sivage Thomas Homes.
3) Recreation Complex: During fiscal 1994, the Registrant entered into a
lease/option arrangement with PG Corporation, a New Mexico corporation, for 100
acres of Registrant's land located north of I-40 on Paseo del Volcan. A portion
of the property was subsequently developed as a recreation and softball complex.
The Registrant exchanged $100,000 in rental and option payments for a 6% equity
position in the Partnership which owns and operates the recreation venture.
Bernalillo County is currently considering purchasing the complex, including 100
acres of the Registrant's properties.
4). Tierra Oeste: The Registrant committed approximately 28 acres of land north
of Ladera Dr., west of Unser Blvd, to a limited liability corporation. In July,
1995, this limited liability corporation executed a sale agreement with a home
builder for the purchase of developed lots and the Registrant believed that
construction would be started on the property during the fall of 1995. During
1995, the other developer owning 50% of the LLC corporation filed bankruptcy and
the property and LLC corporation became tied up in the bankruptcy procedure The
Registrant paid $100,000 to have the property and the LLC corporation released
from the bankruptcy proceedings, with ownership of the LLC and the property
passing to the Registrant free from the claims of others. The Registrant is
currently negotiating the sale of the property or the corporation to another
home builder.
5). Education and Community Projects: Approximately 50 acres of land have been
donated to the Technical-Vocational Institute for the construction of a
southwest mesa campus. The Company also donated approximately 8 acres to Youth
Development, Inc. The properties are located in the Gun Club Rd. area, but the
Registrant and TVI have agreed to trade the 50 acres which had been donated to
it for a like parcel of land of equal value along the proposed extension of Rio
Bravo. In addition, the Registrant has verbally agreed to donate 12 acres to
Albuquerque Public Schools and up to 10 acres to the Archdiocese of Santa Fe, in
the same area.
6). The Registrant has, in the last year, completed nine transactions totaling
fifty- two acres, not including lots sold to Sivage Thomas Homes and Scott
Patrick Homes.
7). On June 27, 1990, the United States Congress established an approximately
7,000 acre national monument (the Petroglyph National Monument) to preserve and
protect the volcanic escarpment on Albuquerque's West Mesa area. The Monument's
proposed boundaries included approximately 1,964 acres of the Registrant's land.
The Company sold 444 acres in fiscal year 1992, 713 acres in fiscal 1993, 118
acres in fiscal 1994, and 24 acres in fiscal 1995, to the National Park Service.
The Park Service purchased no land from the Registrant during fiscal 1996.
Approximately 665 acres have yet to be acquired by the Park Service and the
Registrant has been given no assurance when the final purchases of the property
may occur. The Registrant's Board of Directors has agreed that, subject to
negotiation of acceptable terms of sale, the Registrant will sell to the
National Park Service the Registrant's remaining lands included in the Monument.
f. Reinvestment Revenue Producing Properties.
As part of the Registrant's plan to defer as much of the tax burden arising from
the sale of its lands to the Park Service for inclusion in the Petroglyph
National Monument, during the last fiscal year it reinvested its funds in the
properties described below. As a result of these purchases, the Registrant
believes that it has deferred approximately $3,555,000 of taxes during fiscal
1995 and 1996.
During the last two fiscal years, as part of its tax deferral program related to
proceeds from the sale of its land included in the Petroglyph Monument, the
Registrant purchased land upon which commercial buildings were constructed and
leased to others. Those properties are:
a) A commercial building at Coors Boulevard and Sequoia Road in Albuquerque at a
cost of $2,630,000, $1,908,000 of which is subject to a mortgage upon which the
Registrant must pay monthly payments of $17,630. This building has been leased
to Walgreen Co. for 20 years at a fixed rent of $19,173 per month plus
additional rent based upon a percentage of gross sales up to a maximum rent of
$460,161 in any one year. Walgreen, Co. may continue the term of the lease for
an additional 40 years
b) A commercial building in Albuquerque's Industrial Park at a cost of
$1,074,000, $768,000 of which is subject to a mortgage upon which the Registrant
must make monthly payments of $6,893. This building has been leased to Circuit
City Stores for 10 years at an escalating rental beginning at $4.25 per square
foot the first year and increasing in stages to $5.55 per square foot in the
tenth year. The lessee has also been granted the right to extend the lease for
two additional 5 year terms at escalating rental rates during each of the years
of any extended term. The current rent is $8,710 per month.
c) A commercial building located at Coors Boulevard and Central Avenue was
purchased during the 1996 fiscal year for a purchase price of $3,504,109. The
building has been leased to Walgreen Co., on a minimum 20 year lease at a fixed
rent of $26,122 per month. Walgreen, Co. may continue the term of the lease for
an additional 40 years. The property was purchased on the basis of a cash down
payment plus assumption of a construction loan in the amount of $1,623,388. Loan
payments for the pending mortgage are estimated to be $25,000 per month for 20
years.
All of the above three properties were purchased by the Registrant in part to
defer taxes resulting from the forced sale of its lands to the National Park
Service for inclusion in the Petroglyph National Monument.
Current Real Estate Market Conditions.
The market conditions for the development and sale of properties in Albuquerque
are positive at the present time. The abundance of properties for sale at
relatively low prices due to foreclosures, failures, and takeovers which existed
for the past several years seems to have been absorbed, including properties
held by the Resolution Trust Corporation. After a period of high occupancies,
the multi-family market enjoyed a building boom, which has resulted in lower
occupancies and rent, on average. For the foreseeable future it appears that
commercial and industrial activity will further stabilize and the boom in single
family residential construction will slow, but continue to be strong.
Competition.
The Registrant's industrial parks - The Atrisco Urban Center, Volcano Business
Park and Ladera Industrial Park compete with other business and industrial parks
in the Albuquerque area, including some that are more established and some that
are located nearer the major population centers of Albuquerque. The Registrant
believes that a sale to Coca Cola by others within the Business Park will add to
the quality of the Park's tenants and will attract other businesses to the Park.
Residential subdivisions on the Registrant's land compete with other areas in
the Albuquerque housing market (essentially Bernalillo County and portions of
Sandoval County and Valencia County), as well as with other subdivisions on the
western side of the City of Albuquerque. A number of large subdivisions to the
north of the Registrant's land are not fully sold. These include Rio Rancho
(about six miles north of the Registrant's land), Paradise Hills (about five
miles north of the Registrant's land), Volcano Cliffs and Taylor Ranch (each
about two to three miles north of the Registrant's land).
Development of a regional shopping center on Registrant's land has been delayed
indefinitely because of the establishment of a regional shopping center located
in the northwest portion of the City of Albuquerque (about 5 miles north of the
Registrant's land), as well as the development of other large strip centers
being constructed by competitors to the north of the Registrant's land, but the
Registrant signed a listing agreement with a broker to market Heritage Plaza at
the corner of I-40 and Unser to potential users as a neighborhood center during
fiscal 1996. The listing agreement expired on August 31, 1996, without any
tenants having been secured.
The mandate by the State Legislature for implementation of Impact Fees may
result in the Registrant's lands being disadvantaged because the fees that
surrounding counties may be permitted to charge may be less than those that will
be charged by Albuquerque and Bernalillo County. Bernalillo County began the
assessment of such fees beginning on January 1, 1996, but the Registrant has not
been able to determine whether these fees will adversely impact its business.
Albuquerque has not yet adopted any Impact Fee structure.
Employees.
As of June 30, 1996, the Registrant had nine full-time and nine part-time
employees. The Registrant's president, who is also a director, is a full time
employee. The Registrant also had contractual relationships with six individuals
who provided various services to the Company.
Government Regulations.
The Registrant's ability to undertake an active program of development of its
land and management of its rental properties, (whether such development is
performed by the Registrant itself or by sale of the Registrant's land to others
for development), is dependent on the Registrant's ability to comply with laws
and regulations of the State of New Mexico and Bernalillo County, and the City
of Albuquerque, applicable to general environmental protection, land-use
planning, annexation, zoning and subdivisions. Both County and City regulate the
subdivision of land and impose zoning and building permit requirements. The
subdivision regulations of both Bernalillo County and the City of Albuquerque
require, as a condition of approval of proposed subdivisions, that adequate
provision be made by the developer for land use planning, water (both to
quantity and quality), liquid waste disposal, solid waste disposal, sufficient
and adequate roads and storm drain management.
Although the compliance with federal, state, and local provisions relating to
the protection of the environment, including laws regulating subdivisions and
land-use planning, has had no material effect upon the capital expenditures,
earnings and competitive position of the Registrant, no assurance can be given
that this situation will continue. Requests relating to flood drainage, traffic
flow and similar matters from the City of Albuquerque have occasionally delayed
the receipt of necessary building permits and required modification of
development proposals. The opening of the Double Eagle II Municipal Airport by
the City of Albuquerque to the north of the Registrant's Land on Paseo del
Volcan may have an impact on the use of and planning for the Registrant's Land
in the vicinity of the airport as will the creation of the Petroglyph National
Monument, although Management believes both facilities will favorably impact the
Company's Lands.
At the Registrant's request, the City of Albuquerque has created Special
Assessment Districts affecting the Atrisco Urban Center and the El Rancho
Atrisco areas for the financing of water, sewer, paving and other street
improvements, and levied assessment liens on them. This has provided a mechanism
for financing these improvements.
Approximately 3,000 acres of the Registrant's land is designated "Developing
Urban" by the current Albuquerque/Bernalillo County Comprehensive Plan.
According to the Plan, "Developing Urban" land is land without accepted and
approved platting, but which has adequate resource capabilities for
urbanization. Certain land use regulations contained in the Comprehensive Plan
apply to said land which may inhibit its development to its highest and best
use.
Availability of Water and Municipal Services.
The unavailability of sufficient water has often been a major inhibiting factor
in the land development business in the Southwest. The extent of the
Registrant's water rights has not been determined. However, lack of ownership of
water rights by the Registrant would not be an inhibiting factor to the
developing of the Registrant's land if adequate water were to be made available
through the City of Albuquerque and/or Bernalillo County and/or other water
sources or by purchase by the Registrant or a developer that might purchase and
develop land. For example, both Tierra West Mobile Home Park and the PG
Corporation Complex leased or purchased water rights and drilled wells to meet
their water needs.
Under present annexation policies of the City of Albuquerque, annexation to the
City of Albuquerque of portions of the Registrant's land is a requirement by the
City before it will extend water and sewer services within a reasonable period
of time after annexation. However, the cost of water distribution and sewer
lines would have to be borne by the developer, or by subsequent purchasers of
the annexed portions. The Registrant has not been given timely assurances by the
City for service, and annexation by the City has not been pursued. Alternative
methods of providing water, sewer and other services are currently being
investigated, including the possibility that Bernalillo County may provide the
services.
With the exception of the Atrisco Urban Center and the residential subdivisions,
most of the Registrant's land lies outside the municipal limits of the City of
Albuquerque and is not furnished with City of Albuquerque water or other City of
Albuquerque services. The Registrant experienced little difficulty in having the
Atrisco Urban Center and the residential subdivisions annexed to the City of
Albuquerque and furnished with services, but the same cannot be assumed for
other areas of Registrant's land.
Other Factors Affecting Development of Registrant's Land.
Various activist groups, as well as neighborhood organizations occasionally have
in the past taken actions which have, to some extent, delayed the Registrant's
plans for the development of some of its lands. During the 1994 fiscal year two
activist groups filed appeals with the City of Albuquerque related to the
Registrant's Sector Plan. However, the Sector Plan was upheld with only minor
modifications.
ITEM 2: DESCRIPTION OF PROPERTIES
The major physical assets owned by the Registrant are its land which is owned in
fee simple. The land comprises approximately 59,000 acres of undeveloped land
held for long-term investment and approximately 250 acres of land remaining from
those which the Registrant has developed to various stages of completion. The
Registrant also owns the Atrisco Urban Center office building, comprising
approximately 11,097 square feet, which the Registrant uses in its rental
operations. This building has mortgages against it aggregating approximately
$290,541 as of June 30, 1996. Approximately 5.500 square footage of the building
is leased to Sunwest Bank at a monthly rental of $3,160. The Registrant also
owns three commercial buildings that are leased to others. See "Item 1. Business
- - Reinvestment Properties." The Registrant also owns a one-half equity ownership
interest in a self storage facility (see "Item 1. "Business - Volcano Business
Park")
The population of the Albuquerque metropolitan area has grown significantly over
the last 40 years. Physical expansion of the City of Albuquerque has taken place
on the north, south and east sides, but the bulk of the most recent growth has
been west of the Rio Grande River where the Registrant's land is located. In
fact, much of the real property directly west of the City of Albuquerque is the
Registrant's land, which was previously considered unmarketable and was,
therefore, generally viewed as being unavailable for the expansion of the City
of Albuquerque. The Registrant anticipates that growth of the West Side will
continue into the foreseeable future.
The Registrant's land is crossed by Interstate Highway I-40, the main east-west
thoroughfare through Albuquerque. Access to the Registrant's land from
Interstate 40 is provided by the Coors Boulevard interchange near the eastern
edge of the Registrant's land, by the Unser Boulevard interchange at the western
edge of the Atrisco Urban Center, by the 98th Street interchange to the west of
the Atrisco Urban Center and by the Paseo del Volcan interchange where I-40,
Paseo del Volcan and Central Avenue meet. Running north from the I-40
interchange, Paseo del Volcan transverses about 4 1/2 miles of the Registrant's
land to the Double Eagle II Airport. In 1994, the Registrant dedicated
approximately 180 acres to Bernalillo County for the linking of Paseo del Volcan
and Rio Bravo. The County has built out Paseo del Volcan south of the I-40
interchange. The County is expected to begin construction on Rio Bravo in early
1997. The Registrant and other landowners and developers (the Northwest Loop
Association) dedicated land and has paid a portion of the design costs for the
Northwest Loop, which has been approved by the New Mexico State Highway
Commission. The Northwest Loop will extend for approximately 39 miles and will
connect I-40 and New Mexico State Highway 44, traversing the western portion of
the Registrant's land. In 1995 the Registrant donated 169 acres for development
of the Northwest Loop. Completion of the Northwest Loop is not expected for 15
to 20 years. Most of the Registrant's land is remote and not readily accessible,
not serviced by utilities, and Registrant believes that the bulk of its land
will not be available for development in the foreseeable future.
There is no limitation on the kind of securities into which the Company may
exchange real estate. The Company has considered, and would, exchange property
for partnership units or other securities issued by others for the purpose of
developing the Company's land.
A large portion of the undeveloped land is leased for agricultural uses (see
"Item 1. Business."). The bulk of the Registrant's undeveloped land is held for
long term investment.
In the opinion of the Company's Management, its property is adequately covered
by insurance.
ITEM 3: LEGAL PROCEEDINGS
Other than ordinary routine litigation incidental to the Company's business,
neither the Company any member of management is the subject of any pending or
threatened legal proceedings.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 1996.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this item is incorporated by reference to the item in
the Registrant's Annual Report to Shareholders for the year ended June 30, 1996
entitled "Market Price and Dividends on Westland's Common Equity and Related
Stockholder Matters."
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item is incorporated by reference to the item
in the Registrant's Annual Report to Shareholders for the fiscal year ended June
30, 1996 entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
ITEM 7: FINANCIAL STATEMENTS
The information required by this item is incorporated by reference to the
Financial Statements in the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 1996 which is attached as exhibit 13 to this report.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with Accountants of the kind
described by Item 304 of Regulation S-B at any time during the Registrant's two
(2) most recent fiscal years.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
The information required by this item is incorporated by reference to the items
in the Registrant's definitive Proxy Statement for the November 1, 1996, Annual
Meeting of Shareholders entitled "Election of Directors" and "Directors and
Executive Officers". All reports required by Section 16(a) of the Exchange Act
to be filed during the fiscal year were filed.
ITEM 10: EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the item
in the Registrant's definitive Proxy Statement for the November 1, 1996, Annual
Meeting of Shareholders entitled "Executive Compensation".
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the item
in the Registrant's definitive Proxy Statement for the November 1, 1996, Annual
Meeting of Shareholders entitled "Voting Securities and Principal Holders
Thereof".
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the item
in the Registrant's definitive Proxy Statement for the November 1, 1996, Annual
Meeting of Shareholders entitled "Voting Securities and Principal Holders
Thereof" and "Executive Compensation".
PART IV
ITEM 13: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSB
1. Financial Statements: are incorporated by reference to the Registrant's
Annual Report to Shareholders for each of the two years ended June 30, 1995 and
1996:
Report of Independent Certified Public Accountants
Balance Sheet
Statements of Earnings
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
2. Exhibits:
Exhibit
(3) Articles of Incorporation and Bylaws:
(3)(1) Articles of Incorporation filed as an exhibit to the Registrant's
Registration Statement on Form 10-K on September 28, 1982 and incorporated
herein by reference.
(3)(ii) Restated Bylaws filed as an exhibit with the registrant's Annual Report
on Form 10-KSB for the fiscal year ended June 30, 1993.
(10) Material Contracts:
(10.1) Consulting Agreement with Sosimo Padilla, dated December 18, 1992, as
filed with the registrants Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1993, and incorporated herein by reference.
(10.2) Consulting Agreement with Polecarpio (Lee) Anaya, dated December 18,
1992, as filed with the registrants Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1993, and incorporated herein by reference.
(10.3) Employment Agreement with Barbara Page, dated December 18, 1992, as filed
with the registrants Annual Report on Form 10-KSB for the fiscal year ended June
30, 1993, and incorporated herein by reference.
(10.4)Lease Agreement dated April 25, 1994, between Central Avenue Partners and
Walgreen Co., as filed with the registrants Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1995, and incorporated herein by reference.
(10.5) Assignment of Lease dated April 20, 1995, from Central Avenue Partners to
the Registrant, as filed with the registrants Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1995, and incorporated herein by reference.
(10.6) Lease Agreement dated March 14, 1995, between George Brunacini and
Jeannette Brunacini and Circuit City Stores, Inc., as filed with the registrants
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995, and
incorporated herein by reference.
(10.7) Assignment of Lease dated June 28, 1995, from George Brunacini and
Jeannette Brunacini to the Registrant, as filed with the registrants Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1995, and incorporated
herein by reference.
(10.8) Lease Agreement dated March 19, 1996, between C.A.P. II, a New Mexico
general partnership and Walgreen Co.
(10.9) Assignment of Lease dated June 21, 1996, from C.A.P. II, a New Mexico
general partnership, to the Registrant.
Statement regarding computation of per share earnings is incorporated by
reference to Note A(8) to the Financial Statements incorporated herein by
reference to Registrant's Annual Report to Shareholders for the Fiscal year
ended June 30, 1996.
Annual Report to Shareholders for the Fiscal year ended June 30, 1996.
Subsidiaries of the Registrant
The registrant has the following subsidiaries:
Name State of Incorporationn
El Campo Santo, Inc. New Mexico - non-profit
Westland Community Services, Inc. New Mexico - non-profit
Westland Somerville Ltd. New Mexico - profit
All other exhibits required by Item 601 of Regulation S-B are inapplicable to
this Registrant in this filing.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the Registrant
filed no reports on Form 8-K:
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WESTLAND DEVELOPMENT CO., INC.
Barbara Page
______________________________________________
Barbara Page, President, Principal
Executive Officer, Chief
Financial Officer and
Director
Date: September 20, 1996
In accordance with the Exchange Act, this report has been signed below by the
following person in behalf of the registrant and in the capacities and on the
dates indicated.
David C. Armijo
______________________________________________
David C. Armijo, Secretary-Treasurer
and Principal Financial
Officer
Date: September 20, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of the registrant and in capacities and on the dates
indicated.
David C. Armijo
______________________________________________
David C. Armijo, Director
Date: September 20, 1996
Polecarpio (Lee) Anaya
______________________________________________
Polecarpio (Lee) Anaya, Director
Date: September 20, 1996
Sosimo S. Padilla
______________________________________________
Sosimo S. Padilla, Chairman of the
Board of Directors
Date: September 20, 1996
Josie G. Castillo
______________________________________________
Josie G. Castillo, Director
Date: September 20, 1996
Carmel T. Chavez
______________________________________________
Carmel T. Chavez, Director
Date: September 20, 1996
Charles V. Pena
______________________________________________
Charles V. Pena, Director
Date: September 20, 1996
Carlos Saavedra
______________________________________________
Carlos Saavedra, Director
Date: September 20, 1996
Joe S. Chavez
______________________________________________
Joe S. Chavez, Director
Date: September 20, 1996
Barbara Page
______________________________________________
Barbara Page, Director
Date: September 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 2183758
<SECURITIES> 0
<RECEIVABLES> 387819
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 746245
<DEPRECIATION> 349769
<TOTAL-ASSETS> 15488167
<CURRENT-LIABILITIES> 0
<BONDS> 6433867
0
0
<COMMON> 87100
<OTHER-SE> 5110530
<TOTAL-LIABILITY-AND-EQUITY> 15488167
<SALES> 4334367
<TOTAL-REVENUES> 4766401
<CGS> 1708993
<TOTAL-COSTS> 1828855
<OTHER-EXPENSES> 2001527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 365458
<INCOME-PRETAX> 936019
<INCOME-TAX> 372000
<INCOME-CONTINUING> 564019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 564019
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
September 27, 1996
Dear Shareholders:
1996 marked another successful year for Westland! With New Mexico growing
rapidly, Westland has benefited from the expansion of the manufacturing and
residential sectors on the west side. The Company's future prospects are bright,
and we will continue to ensure that our shareholders benefit from our success.
With the increased tempo of change in Albuquerque, careful planning is a high
priority. Whether it is working with major developers to investigate a variety
of land use possibilities or cooperating with government officials to ensure the
timely implementation of infrastructure (e.g. utilities), Westland is dedicated
to building the future of the west side on a solid foundation.
The driving force behind our various projects is, and always will be, the
preservation of the Company and its heritage for our future heirs. Seven years
ago, this future was endangered: we do not know of another company in
Albuquerque that has had to overcome such enormous obstacles just to survive.
But with the strength that our people have always shown, we not only have
survived, but thrived since that time.
On August 27, 1996 you received the sixth dividend the Company has paid over the
last five years. We will continue to strive to provide dividends to you from
profits every year. Our sincere "thanks" to so many of you who called with
appreciation of our efforts on your behalf. We also wish to thank the numerous
shareholders who offer prayers for myself, the Board, and our Company's
continued success.
Sincerely,
Barbara Page
President & Chief Executive Officer
P.S. The Annual Meeting will be held on November 1, 1996 at the Double Tree
Hotel, 201 Marquette NW on the first floor in the Ulam Salons II and III.
BUSINESS OF WESTLAND
Westland owns a large tract of land consisting of approximately 59,000
acres (the "Land") located on the west side of the City of Albuquerque, New
Mexico. Most of the Land is held for long-term investment and is leased to
others for grazing purposes while the balance is held for development, sales and
leasing activities. Approximately 48,000 acres of this Land were originally part
of the Atrisco Land Grant, which was granted to a group of Spanish settlers in
1692.
Approximately 700 acres within the monument boundary remain to be purchased
by National Park Service for the Petroglyph National Monument.
Westland generates cash internally through its land operations (grazing
leases, real estate sales and commercial leases) and externally through long and
short-term borrowing. The profitability and resulting cash flows of Westland's
land operations depend on numerous factors, such as demand for grazing leases,
land leases, supply of competitively priced, developed or undeveloped,
properties for residential, industrial or commercial uses. Over the long term,
Westland expects that residential and industrial growth on Albuquerque's west
side will increase demand for Westland's Land, thus increasing Westland's
ability to generate revenue from land development and sales. In the short term,
however, periodic local economic conditions may decrease the number of land
sales and hinder development, such as during the period from 1986 through 1992.
Westland's basic business philosophy has been to hold certain areas of the
land in trust for shareholders and to enhance the value of other areas of the
Land through careful planning and development to assure perpetual benefit to the
Company and its shareholders.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
In the past fiscal year, land sales increased over the prior year as the
Company continued sales of improved residential lots to builders and acquired an
additional property leased by a large national retailer. Increased land revenues
are due to not only the recovery of the housing market in the U.S., but also
Westland's strategy initiated in fiscal 1994 to generate more revenue by
developing infrastructure and selling finished lots to builders rather than land
sales, as well as investment in long-term single tenant leased buildings.
During the last fiscal year there were no sales of lands to the National
Park Service ("NPS") as part of its acquisition of the lands included in the
Petroglyph National Monument. In 1994, such sales were $1,058,000 or 43% of
total revenue and in 1995, $329,000 or 11% of revenue.
With the recovery of the real estate business in Albuquerque, Management
continues to believe that the Company is no longer as dependent on large bulk
sales of its Land and that its income will continue to strengthen with the sale
of small improved parcels and lots, even though the costs associated with such
sales will always be a larger percentage of revenue than the expenses associated
with large bulk sales. Albuquerque continues to be one of the fastest growing
cities in the Southwest and, because of certain geographical and other
limitations on its growth, Westland's Lands lie directly in the path of future
predictable growth patterns. Sales of improved residential lots in 1996 were
approximately $1,147,000, compared to sales of approximately $745,000 in fiscal
1995.
Westland's future revenues will continue to be largely dependent upon the
sale of land. The Company's assets are illiquid, comprising principally
undeveloped land. Sales are dependent upon the market conditions in Albuquerque,
New Mexico, which now appear to have recovered from the depressed state of
several years ago.
Westland anticipates making capital commitments for land development
projects over the next few years if the economy and opportunities continue to
improve to the extent that such expenditures would be warranted. Capital
commitments may include assessments for roads and water and sewer lines on its
land. Infrastructure improvements are paid for by assessments which increase the
value of Westland's land and make further development possible. Westland intends
to incur capital expenditures when management determines such investments will
increase the value of the Land and generate future revenue.
Land is Westland's principal capital resource, and is valued, for financial
accounting purposes, at its 1907 value plus the cost of improvements, Westland's
balance sheet does not reflect the actual current value of this asset. The
Company has no current appraisals of the Land and, therefore, the actual value
of the land is not known. The carrying value of the Land was decreased during
the fiscal year ended June 30, 1996, primarily to reflect land sales. The
carrying value will be increased or decreased regularly as Westland acquires,
sells or develops parcels of land. Management believes the June 30, 1996
carrying value of the Land is substantially less than the current market value
of the land. Westland's balance sheet also segregates income-producing
properties which consist of commercial real estate and improvements. The actual
value of Westland's land varies, depending on national and local market
conditions and the amount and proximity of roads, utilities and other amenities
to the land under development. As Albuquerque continues to grow, the land value
of both developed and undeveloped Land should increase.
The company is continuing to study the feasibility of establishing various
agricultural developments for portions of its Land. Such development is
contingent on the availability of adequate water.
Westland is moving forward on the establishment of its Sector Plan in the
area north of Interstate 40 and south of the area designated for the Petroglyph
National Monument between Unser and Paseo del Volcan for the development of that
portion of its properties. Although the Sector Plan was initially filed with the
City of Albuquerque, the City could not furnish any assurance that water and
sewer services would be made available in a reasonable period of time, which
resulted in the Plan being withdrawn from the City while the Company has been
working with Bernalillo County to determine if those services can be furnished
by the County. The Sector plan excludes land located in the Monument.
Financial Condition:
During fiscal 1996, total assets increased to $15,488,167 from $13,182,499,
while liabilities increased from $8,214,689 to $10,290,537 . This was the result
of the Management's efforts to replace lands sold through investments to defer
taxes. During fiscal 1996 the Company invested $3,065,764 in income producing
and other properties and the accompanying borrowing on notes and mortgages,
which amounted to $2,618,398. This significant net investment along with the
increase in deposits of cash for the retirement of bonds outstanding and payment
of dividends of $475,624 decreased cash and equivalents by $1,045,765, even
though operations provided $1,311,720.
As a result, in fiscal 1996, the Company finalized an arrangement with a
local bank for a $2,000,000 line of credit, collateralized by certain real
property. The purpose of the line of credit is to provide funds necessary for
its continued expansion. At June 30, 1996, only $1,000,000 was available until
interim financing on the newly acquired property at Coors and Central is repaid.
During fiscal 1997, the Company will be obligated to pay income tax of
approximately $144,000 should replacement properties totaling $360,000 for lands
sold to the National Park not be acquired.
Management believes that the uncommitted balance of cash, cash equivalents,
investments and its borrowing capacity are sufficient to meet all of the
Company's obligations during 1997 without considering additional revenues that
may be generated during that period.
Results of Operations:
In 1996, land revenues increased by $1,497,441 from $2,836,926 in 1995 to
$4,334,367. The related cost of land revenues increased to $1,708,993, or
$1,180,598 from $528,395 in fiscal 1995. Management expects this trend of
increasing cost of sales to continue as more and smaller tracts are sold. Rental
revenue increased from $112,666 to $394,419 due to the acquisition of large,
single tenant properties, and the related costs increased from $30,525 to
$119,862. These increases are expected to continue as the Company expands its
activities in these areas.
MARKET PRICE OF AND DIVIDENDS ON WESTLAND'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Because ownership of Westland's stock is restricted in the manner discussed
below, no established public trading market exists for Westland's outstanding
shares and, to the best of Westland's knowledge, no dealer has made, is making,
or is attempting to create such a market from which to determine an aggregate
market value of any of Westland's stock. In 1989, Westland entered into an
arrangement with an independent stockbroker to broker transactions in Westland's
stock between shareholders. The broker has informed Westland that the price at
which Westland's common stock had been bought and sold by Westland's
shareholders during the last two fiscal years and during the ninety (90) days
preceding this date of this report shares has consistently been $9.50 to $10.00
per share.
Since 1982, the outstanding shares have been subject to restrictions
imposed by a majority of Westland's shareholders who amended Westland's Articles
of Incorporation. Those Articles prohibit (with certain limited exceptions)
transfer of Westland stock to persons other than lineal descendants of the
original incorporators of the Town of Atrisco (a New Mexico Land Grant
Corporation).
The following table sets forth the approximate number of holders of record
of each class of Westland's common stock as of September 15, 1996:
Number of
Title of Class Record Holders
No Par Value Common 5366
$1.00 Par Value Common Class A 0
$1.00 Par Value Common Class B 16
Dividends: During each of the last two (2) fiscal years ended June 30, 1995
and June 30, 1996, Westland declared and paid cash dividends to shareholders,
aggregating a total during the two years of $1,243,333. Also, subsequent to June
30, 1996, the Company has paid an additional cash dividend of $0.60 per share
for an aggregate of $480,125.
ON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT ON FORMS 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30, 1996 TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO) TO ANY RECORD HOLDER OR BENEFICIAL OWNER
OF THE COMPANY'S SHARES AS OF THE CLOSE OF BUSINESS ON SEPTEMBER 20, 1996. ANY
EXHIBIT WILL BE PROVIDED ON REQUEST UPON PAYMENT OF THE REASONABLE EXPENSES OF
FURNISHING THE EXHIBIT. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED TO DAVID C.
ARMIJO, SECRETARY, WESTLAND DEVELOPMENT CO., INC., 401 COORS BOULEVARD, N.W.,
ALBUQUERQUE, NEW MEXICO 87121.
Report of Independent Certified Public Accountants
--------------------------------------------------
Stockholders
Westland Development Co., Inc.
We have audited the accompanying balance sheet of Westland Development Co.,
Inc., as of June 30, 1996, and the related statements of earnings, stockholders'
equity, and cash flows for each of the two years in the period ended June 30,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these 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 financial statements referred to above present fairly, in
all material respects, the financial position of Westland Development Co., Inc.,
as of June 30, 1996, and the results of its operations and its cash flows for
each of the two years in the period ended June 30, 1996 in conformity with
generally accepted accounting principles.
Grant Thornton LLP
Oklahoma City, Oklahoma
August 22, 1996
<TABLE>
Westland Development Company, Inc.
BALANCE SHEET
June 30, 1996
<CAPTION>
ASSETS
<S> <C> <C>
Cash and cash equivalents ......................................................................... $ 2,183,758
Receivables
Real estate contracts (note B) ............................................................... $ 363,660
Less related deferred profit ............................................................ (96,567)
------------
267,093
Note receivable - related party (note M) ..................................................... 70,176
Other accounts receivable .................................................................... 49,001
Accrued interest ............................................................................. 1,549 387,819
------------
Land and improvements held for future development (notes C and E) ................................. 5,116,421
Income-producing properties, net (notes D and E) .................................................. 6,396,422
Property and equipment, net of accumulated depreciation of $349,769 (note E) ...................... 396,476
Investments in partnerships and joint ventures .................................................... 451,461
Other (note E) .................................................................................... 555,810
------------
$ 15,488,167
============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Accounts payable, accrued expenses, and other liabilities ......................................... $ 562,139
Accrued interest payable .......................................................................... 61,531
Deferred income taxes (note F) .................................................................... 3,233,000
Notes, bonds, mortgages, and assessments payable (note E) ......................................... 6,433,867
------------
Total liabilities ........................................................ 10,290,537
Commitments and contingencies (notes E, K, and L) ................................................. --
Stockholders' equity (note G)
Common stock - no par value; authorized, 736,668 shares; issued and outstanding,
716,608 shares ............................................................................ 8,500
Class A common stock - $1 par value; authorized, 736,668 shares; issued, none ................ --
Class B common stock - $1 par value; authorized, 491,112 shares; issued and outstanding,
78,600 shares ............................................................................. 78,600
Additional paid-in capital ................................................................... 547,702
Retained earnings ............................................................................ 4,562,828 5,197,630
------------ ------------
$ 15,488,167
============
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
Westland Development Company, Inc.
STATEMENTS OF EARNINGS
Year ended June 30,
1996 1995
----------- -----------
Revenues
Land ...................................... $ 4,334,367 $ 2,836,926
Deferred profit recognized
on installment sales ................. 37,615 57,941
Rentals ................................... 394,419 112,666
----------- -----------
4,766,401 3,007,533
Costs and expenses
Cost of land revenues ..................... 1,708,993 528,395
Cost of rentals ........................... 119,862 30,525
Other general and administrative .......... 1,813,152 1,698,723
Loss on trading securities ................ -- 2,576
Legal ..................................... 81,980 171,577
----------- -----------
3,723,987 2,431,796
----------- -----------
Operating income ................ 1,042,414 575,737
Other (income) expense
Interest income ........................... (101,974) (135,852)
Gain on sale of property and equipment .... (200) (1,958)
Other income .............................. (156,889) (130,633)
Interest expense .......................... 365,458 125,631
----------- -----------
106,395 (142,812)
----------- -----------
Earnings before income taxes .... 936,019 718,549
Income tax expense (note F) .................... 372,000 330,200
----------- -----------
NET EARNINGS .................... $ 564,019 $ 388,349
=========== ===========
Weighted average common and common
equivalent shares outstanding ............. 792,927 770,242
=========== ===========
Earnings per common and common
equivalent shares ......................... $ .71 $ .50
=========== ===========
The accompanying notes are an integral part of these statements.
<TABLE>
Westland Development Company, Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
Years ended June 30, 1996 and 1995
<CAPTION>
Class A Class B
Common stock Common stock Common stock
no par value $1 par value $1 par value Additional
------------------ ---------------- ------------------ paid-in Retained
Shares Amount Shares Amount Shares Amount capital earnings Total
-------- ------- ------ ------ ------ -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1994 716,608 $ 8,500 -- $ -- 51,100 $ 51,100 $ 378,677 $ 4,853,792 $ 5,292,069
Net earnings ............ -- -- -- -- -- -- -- 388,349 388,349
Options exercised ....... -- -- -- -- 10,000 10,000 45,100 -- 55,100
Cash dividends paid -
$1.00 per share .... -- -- -- -- -- -- -- (767,708) (767,708)
------- ------- ------ ------ ------ -------- --------- ----------- -----------
Balances at June 30, 1995 716,608 8,500 -- -- 61,100 61,100 423,777 4,474,433 4,967,810
Net earnings ............ -- -- -- -- -- -- -- 564,019 564,019
Options exercised ....... -- -- -- -- 17,500 17,500 123,925 -- 141,425
Cash dividends paid -
$.60 per share ..... -- -- -- -- -- -- -- (475,624) (475,624)
------- ------- ------ ------ ------ -------- --------- ----------- -----------
Balances at June 30, 1996 716,608 $ 8,500 -- $ -- 78,600 $ 78,600 $ 547,702 $ 4,562,828 $ 5,197,630
======= ======= ====== ====== ====== ======== ========= =========== ===========
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
<TABLE>
Westland Development Company, Inc.
STATEMENTS OF CASH FLOWS
Year ended June 30,
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Cash received from land sales and collections on real estate contracts receivable .......... $ 4,771,163 $ 2,199,392
Development and closing costs paid on land sales .......................................... (1,156,070) (1,721,712)
Cash received from rental operations ...................................................... 357,025 87,102
Cash paid for rental operations ........................................................... (57,359) (23,599)
Cash paid for property taxes and maintenance .............................................. (208,155) (126,661)
Purchase of trading securities ............................................................ -- (9,001,032)
Proceeds on sale of trading securities .................................................... -- 10,920,073
Interest received ......................................................................... 85,197 137,115
Interest paid ............................................................................. (356,765) (125,529)
Income taxes received (paid) .............................................................. (184,320) 49,800
Legal and other general and administrative costs paid ..................................... (2,101,085) (1,504,041)
Other ..................................................................................... 162,089 123,693
------------ ------------
Net cash provided by operating activities ..................................... 1,311,720 1,014,601
Cash flows from investing activities
Capital expenditures ...................................................................... (1,096,068) (3,629,023)
Sinking fund deposit ...................................................................... -- (256,385)
Investments in partnerships and joint ventures ............................................ (346,298) (30,158)
Proceeds from the sale of assets .......................................................... 200 --
------------ ------------
Net cash used in investing activities ......................................... (1,442,166) (3,915,566)
Cash flows from financing activities
Borrowings on notes, mortgages, and assessments payable ................................... 995,000 2,873,864
Repayments of notes, mortgages, and assessments payable ................................... (219,400) (133,721)
Exercise of stock options ................................................................. 96,425 55,100
Payment of dividends ...................................................................... (475,624) (767,708)
------------ ------------
Net cash provided by financing activities ..................................... 396,401 2,027,535
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......................... 265,955 (873,430)
Cash and cash equivalents at beginning of year ............................................... 1,917,803 2,791,233
------------ ------------
Cash and cash equivalents at end of year ..................................................... $ 2,183,758 $ 1,917,803
============ ============
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities
Net earnings ................................................................................. $ 564,019 $ 388,349
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation ........................................................................... 138,778 45,281
Gain on sale of property and equipment ................................................. (200) (1,958)
Sale of land for real estate contract .................................................. (228,664) (425,827)
Collections on real estate contracts receivable ........................................ 487,779 96,387
Profit recognized on installment sales ................................................. (37,614) (57,941)
Deferred income taxes .................................................................. (32,000) 247,000
Change in
Income taxes receivable/payable ..................................................... 190,309 133,000
Trading securities .................................................................. -- 1,919,041
Other accounts receivable ........................................................... 180,310 (190,015)
Accrued interest receivable ......................................................... 828 (573)
Land and improvements held for future development ................................... 552,923 (1,417,088)
Other assets ........................................................................ (68,488) 5,056
Accounts payable, accrued expenses, and other liabilities ........................... (444,952) 266,259
Accrued interest payable ............................................................ 8,692 7,630
------------ ------------
Net cash provided by operating activities .................................. $ 1,311,720 $ 1,014,601
============ ============
Noncash investing and financing activities:
In June, 1996, the Company assumed a $1,623,398 construction loan as part of the
purchase of a commercial building to be completed.
During the year ended June 30, 1996, the Company realized approximately $45,000
of tax benefits from deductible compensation related to the exercise of stock
options.
During the year ended June 30, 1995, the Company exchanged an account receivable
of $100,000 for a partnership interest and contributed land with a cost of
approximately $22,000 to a partnership. In addition, assessments payable of
approximately $25,000 were assumed by the purchaser in association with certain
land sales.
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
Westland Development Company, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 and 1995
NOTE A - SUMMARY OF ACCOUNTING POLICIES
1. History of Company and Beginning Basis of Financial Reporting
In 1892, the descendants of the owners of a land grant deeded in 1692 by the
Kingdom of Spain became incorporators of a land grant corporation named Town of
Atrisco. Ownership of the Town of Atrisco was based on proportionate ownership
of the land grant. In 1967, the Town of Atrisco was reorganized and became
Westland Development Co., Inc. (the "Company"), with the heirs receiving shares
in the Company in proportion to their ancestors' interests in the Town of
Atrisco corporation. The net assets of $232,582 at the date of reorganization
were assigned as follows:
Value of no par common stock as
stated in the Articles of Incorporation $ 8,500
Additional paid-in capital 224,082
----------
$ 232,582
==========
The Company estimated that it owned approximately 49,000 acres of land at the
date of incorporation as Westland Development Co., Inc. Such acreage was used as
the beginning cost basis for financial reporting purposes and was valued at
$127,400 ($2.60 per acre) based on an appraisal in 1973 which determined the
approximate value of the land in 1907. This date approximates the date that the
Patent of Confirmation covering the land comprising the Atrisco Land Grant was
given to the Town of Atrisco by the United States of America. Since the date of
the Patent of Confirmation, the Company's acreage has increased in market value,
but a full determination of such value has not been made.
The Company includes its wholly-owned subsidiary, El Campo Santo, Inc., on a
consolidated basis. El Campo Santo, Inc. is a wholly-owned nonprofit corporation
created to manage cemeteries set aside on Company land for the stockholders. El
Campo Santo, Inc. has no significant assets, liabilities, or operations. All
material intercompany accounts and transactions have been eliminated.
2. Nature of Operations
The Company develops, sells, or leases its land holdings, all of which are
located near Albuquerque, New Mexico. The Company may use joint ventures or
participation in limited partnerships to accomplish these activities. Revenue
sources for the years ended June 30, 1996 and 1995 consist primarily of proceeds
from vacant land sales and rentals from developed properties, such as
single-tenant retail stores and office space. Land sales are primarily to
commercial developers and others in the Albuquerque area and certain
governmental agencies, and the terms of sale include both cash and internal
financing by the Company. Such sales are collateralized by the land. The Company
has relied primarily upon cash land sales over the past several years due to the
collection risk associated with real estate contracts.
3. Cash and Cash Equivalents
Cash and cash equivalents are considered to include highly liquid investments
with maturities of three months or less and money market funds.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits and in money market funds which are not
federally insured. The Company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk on cash and cash
equivalents.
4. Land and Improvements Held for Future Development
Land and improvements held for future development are recorded at cost not to
exceed net realizable value. Improvements consist of abstracts, surveys, legal
fees, master and sector plans, infrastructure improvements, and other costs
related to land held by the Company which are allocated to respective tracts
primarily by specific identification of costs.
5. Income-Producing Properties and Property and Equipment
Income-producing properties and property and equipment are stated at cost, less
accumulated depreciation, computed on a straight-line basis over their estimated
lives of three to thirty years. The cost of the building in which the Company
has its offices, a portion of which is rented to others, has been allocated to
property and equipment and income-producing properties based upon square
footage.
6. Recognition of Income on Real Estate Transactions
The Company recognizes the entire gross profit on sales where the down payment
is sufficient to meet the requirements for the full-accrual method. Transactions
where the down payment is not sufficient to meet the requirements for the
full-accrual method are recorded using the deposit or installment method. Under
the deposit method, cash received is recorded as a deposit on land sale. Under
the installment method, the Company records the entire contract price and the
related costs at the time the transaction is recognized as a sale. Concurrently,
the gross profit on the sale is deferred and is subsequently recognized as
revenue in the statements of earnings as payments of principal are received on
the related contract receivable.
7. Income Taxes
Deferred income tax assets or liabilities are determined based on the difference
between financial statement and tax bases of certain assets and liabilities as
measured by the enacted tax rates in effect using the liability method.
8. Earnings Per Common Share
Earnings per common share are based upon the weighted average number of common
and dilutive common equivalent shares outstanding during the year. Common
equivalent shares include the number of no par value common shares which may be
issued in connection with eliminating fractional shares (which resulted from the
determination made by the Court in the heirship case) and the number of no par
value common shares for which the Court ruled that no incorporator or heirs
existed.
9. Investments in Partnerships and Joint Ventures
Investments in partnerships and joint ventures are accounted for on the equity
method.
10. Trading Securities
Debt and equity securities that are bought and held principally for sale in the
near term are reported at fair value, with unrealized gains and losses included
in earnings.
11. Reclassifications
Certain reclassifications have been made to the prior year financial statements
to conform to the June 30, 1996 presentation.
12. Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect certain reported amounts and disclosures; accordingly, actual
results could differ from those estimates.
13. Recently Issued Accounting Pronouncement
The Financial Accounting Standards Board has issued Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" ("Statement 121"), which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amounts. Statement 121 also addresses
the accounting for long-lived assets for which disposal is expected. The Company
will adopt Statement 121 in the first quarter of the year ended June 30, 1997;
however, the effect of adoption has not been determined.
NOTE B - REAL ESTATE CONTRACTS RECEIVABLE
Real estate contracts receivable are summarized as follows at June 30, 1996:
Promissory note from developer,
noninterest-bearing, due September 12, 1996;
collateralized by land $228,664
Contracts, due in aggregate annual
installments of $56,649, with interest
rates ranging from 10% to 12%; collateralized
by land 134,996
--------
$363,660
========
Principal collections (based upon stated contract maturities and assuming all
delinquent amounts will be collected in 1997) due on the real estate contracts
receivable for the years ending June 30 are as follows:
1997 $273,355
1998 14,246
1999 65,501
2000 2,100
2001 2,353
Thereafter 6,105
--------
$363,660
========
NOTE C - LAND AND IMPROVEMENTS HELD FOR FUTURE DEVELOPMENT
The Company estimates that it presently owns in excess of 58,000 acres of land,
primarily including land located within the boundaries of the Town of Atrisco
Land Grant and land located elsewhere which the Company has acquired since
incorporation. Plans for ultimate development of the properties have not been
finalized.
Land and improvements consist of the following at June 30, 1996:
Land $1,061,702
Improvements 4,054,719
----------
$5,116,421
==========
NOTE D - INCOME-PRODUCING PROPERTIES
Income-producing properties consist of two single-tenant retail store buildings,
one single-tenant retail store under construction, and one-half of the Company's
office building and are summarized as follows at June 30, 1996:
Buildings and equipment $2,926,390
Less accumulated depreciation 191,193
----------
2,735,197
Land 966,939
Construction in progress 2,694,286
----------
$6,396,422
==========
The Company's rentals from income-producing properties are principally obtained
from tenants through rental payments as provided for under noncancelable
operating leases. The lease terms range from one to twenty years and typically
provide for guaranteed minimum rent, percentage rent, and other charges to cover
certain operating costs.
Minimum future rentals from income-producing properties on noncancelable tenant
operating leases as of June 30, 1996 are as follows:
Year ending June 30
1997 $ 551,000
1998 543,000
1999 558,000
2000 541,000
2001 535,000
Thereafter 4,309,000
-----------
$ 7,037,000
===========
NOTE E - NOTES, BONDS, MORTGAGES, AND ASSESSMENTS PAYABLE
Notes, bonds, mortgages, and assessments payable are summarized as follows at
June 30, 1996:
Mortgage notes with a bank, due in
aggregate monthly installments of
$4,650 at June 30, 1996, including
interest at 7.5%, due at various
dates from August, 1998 through November,
1999; collateralized by income-producing
properties and related equipment $ 292,916
Assessments for the installation of
water and sewer lines and paving, with
semiannual payments of $24,700 for the
year ending June 30, 1997 and $5,428
semiannual payments through January, 2002,
plus interest at 7.5%; collateralized by
land and improvements with an approximate
equal carrying value 73,826
Promissory note with an insurance company,
due in monthly installments of $17,970
through May, 2015, including interest at
9.37%; collateralized by income-producing
properties 1,907,636
Note payable to an investment corporation,
due in monthly installments of $6,893 through
September, 2015, including interest at 8.75%;
collateralized by income-producing properties 767,542
Bonds payable, due June 30, 1998, with annual
interest at 7%; collateralized by partial
proceeds of sale of land for national park 625,900
Promissory note with developer, due December 14,
1998, bearing interest at 6%; collateralized by
land and improvements held for future development 194,074
Notes payable to a finance company, due in
aggregate monthly installments of $1,570,
including interest at rates ranging from 9.75%
to 11%, due at various dates through July, 1999;
collateralized by vehicles 33,575
Revolving $1,000,000 note payable to bank;
due December 1, 1996, with interest payable
quarterly at 9.25%; collateralized by land 915,000
Mortgage note with a bank, due in quarterly
installments of $61,537 at June 30, 1996,
including interest at prime plus 0.5%, due
April 16, 1997; collateralized by land 1,623,398
---------
$6,433,867
==========
The Company has general obligation bonds outstanding of $625,900 which provide
for 7% annual interest payments and mature June 30, 1998. Pursuant to the bond
indenture, the Company must deposit with the bond trustee an amount not to
exceed 20% of the face amount of all such issued and outstanding Series B bonds
less the amount of interest accumulated or accrued on funds previously deposited
pursuant to the terms of the agreement, or 20% of the Company's net income from
the sale of such properties, whichever is less. As of June 30, 1996, all
required deposits due July 15, 1995 were on deposit with the bond trustee and
are included in other assets in the amount of $410,024. The Company may redeem
the bonds prior to maturity by payment of the principal amount plus a premium of
2% of the principal balance, plus accrued interest, through the date of
redemption. The bonds are collateralized by 20% of the net income, as defined in
the bond indenture, to be received from the sale of approximately 2,000 acres of
land to the United States Government for inclusion in the Petroglyph National
Monument (Note K).
The Company maintains a line of credit with a bank which provides a maximum of
$2,000,000 (limited to $1,000,000 until a mortgage with the same bank is paid in
full) at the bank's prime rate of interest and is collateralized by specific
tracts of land. Interest is payable quarterly with the balance payable at
maturity, December 1, 1996. At June 30, 1996, the Company had approximately
$75,000 of outstanding letters of credit to the City of Albuquerque in
connection with subdivision improvements done for the Company.
Aggregate required principal payments of the notes, bonds, mortgages, and
assessments payable as of June 30, 1996 are as follows:
Year ending June 30
1997 $2,885,256
1998 737,665
1999 297,879
2000 82,118
2001 84,331
Thereafter 2,346,618
----------
$6,433,867
==========
NOTE F - INCOME TAXES
An analysis of the deferred income tax assets and liabilities as of June 30,
1996 is as follows:
Deferred tax assets
Tax loss and contribution carryforwards $ 240,400
Accrued expenses 71,155
Investments 69,125
Property, equipment, and land 131,066
Other 31,052
Valuation allowance (220,618)
----------
322,180
Deferred tax liabilities
Deferred tax gain on involuntary conversion of land 3,555,180
----------
Net deferred tax liability $3,233,000
==========
Income tax expense (benefit) for continuing operations consists of the
following:
June 30,
-------------------
1996 1995
-------- --------
Current
Federal $363,000 $ 83,200
State 41,000 -
-------- --------
404,000 83,200
Deferred
Federal (29,000) 209,950
State (3,000) 37,050
-------- --------
(32,000) 247,000
-------- --------
$372,000 $330,200
======== ========
The income tax provision for continuing operations is reconciled to the tax
computed at statutory rates as follows:
June 30,
-------------------
1996 1995
-------- --------
Tax expense at statutory rates $318,247 $244,307
State income taxes at statutory rates 56,161 43,113
Adjustment of estimated income tax
liabilities of prior year 41,078 (49,800)
Change in valuation allowance (88,050) 92,786
Nondeductible expenses 29,490 -
Other 15,074 (206)
-------- --------
Total expense from continuing operations $372,000 $330,200
======== ========
A valuation allowance of approximately $220,000 has been recognized at June 30,
1996 based on estimates of tax assets which are not likely to be realized in the
future. Significant changes in assumptions concerning future taxable income and
deductions may cause changes in the valuation allowance.
NOTE G - COMMON STOCK AND STOCK OPTIONS
Under its Articles of Incorporation, the Company is authorized to issue
1,964,448 shares of common stock classified as follows:
(a) 736,668 shares of no par value common stock to represent $8,500 estimated
value of land held by the Town of Atrisco;
(b) 736,668 shares to be sold for $1.45 a share, designated as Class A, $1 par
value common stock. Class A stock is to be sold only to the stockholders of
record as of the date of incorporation as follows:
At the first sale of such stock, each stockholder shall have the right to
purchase up to the number of shares obtained by dividing the total number of
stockholders of record on the date of incorporation into 736,668 shares.
Any stock remaining unpurchased shall be offered for sale at subsequent sales,
and only stockholders who purchased stock at a preceding sale shall have the
right to purchase stock at a subsequent sale, each one being entitled to
purchase up to the number of shares obtained by dividing the total number of
stockholders of record who purchased at the preceding sale into the total number
of unpurchased shares remaining after the preceding sale.
(c) 491,112 shares to be sold for a price to be determined by the Board of
Directors, designated as Class B, $1 par value common stock. Those acquiring no
par value common stock and Class A, $1 par value common stock have no preemptive
rights to purchase Class B, $1 par value common stock.
The following summarizes, at June 30, 1996, the number of shares of common stock
which, upon judicial determination, can be distributed (no par) or offered for
sale (Class A) to stockholders of record as of the date of incorporation:
Price
Number ------------------------
of Per
shares share Total
------- ------- ----------
Shares issuable
No par value common 5,047 $ - $ -
Class A, $1 par value common 736,668 1.45 1,068,169
------- ----------
741,715 $1,068,169
======= ==========
There is no established market value for the Company's common stock. At June 30,
1996, 716,608 shares of the Company's no par value common stock were issued and
outstanding. Of the 5,047 shares of no par value common stock issuable, 1,872
shares may be issued in connection with eliminating fractional shares which
resulted from the determinations made by the Court in the heirship case and
3,175 shares represent shares for which the Court in the heirship case ruled
that no incorporator or heirs existed. The Company also has reacquired and
canceled 15,013 shares of no par value common stock which have been
constructively retired. These shares have not been formally retired and, as
such, may be issuable to stockholders of record as of the date of incorporation.
During 1985, the stockholders of the Company approved a stock option plan for
certain directors and employees. During 1987, the plan was terminated. At the
time of termination, options for 48,000 Class B shares had been granted at $5.51
per share and expire in December, 1996. At June 30, 1996 and 1995, options for
20,500 and 38,000 Class B shares, respectively, were exercisable. Options for
17,500 shares were exercised during 1996 and 10,000 were exercised during 1995.
The Company realized approximately $45,000 in the reduction of income taxes
relating to compensation recognized by the directors and employees for the
excercise of the options. The reduction in income taxes was not included in
earnings but has been reflected as additional paid-in capital.
NOTE H - SEGMENT INFORMATION
The Company operates primarily in two industry segments. They are as follows:
Land - Operations involve the development and sale of tracts, both residential
and commercial. In addition, included are incidental revenues from leasing of
grazing rights.
Rentals - Operations involve rentals from two single-tenant retail store
buildings, one single-tenant retail store under construction, and one-half of
the Company's office building.
Financial information for each industry segment is summarized as follows:
Land Rentals
---------- -----------
1996
Revenues $4,371,982 $ 394,419
Operating profit 2,662,989 274,557
Identifiable assets 5,774,766 6,792,172
Capital expenditures - 2,724,320
Depreciation - 95,823
1995
Revenues $2,894,867 $ 112,666
Operating profit 2,366,472 82,141
Identifiable assets 6,341,330 3,807,369
Capital expenditures - 3,688,900
Depreciation - 16,508
Other corporate assets consist primarily of cash, furniture, equipment, and
one-half of an office building, of which the remaining one-half is included in
income-producing properties.
NOTE I - BENEFIT PLAN
The Company has a Simplified Employee Pension (SEP/IRA) plan under section
408(k) of the Internal Revenue Code. The Company annually may make a voluntary
matching contribution of a maximum of 11% of each eligible employee's
compensation. Company-contribution expense was approximately $53,000 and $47,000
for 1996 and 1995, respectively.
NOTE J - SALES TO MAJOR CUSTOMERS
Sales to major customers are summarized as follows:
During the year ended June 30, 1996, sales to two customers individually
accounted for 24% and 18% of total revenues.
During the year ended June 30, 1995, sales to four customers individually
accounted for 26%, 16%, 15%, and 13% of total revenues.
NOTE K - SALE OF LAND FOR NATIONAL PARK
On June 28, 1990, the Petroglyph National Monument ("National Monument") was
established by an act of the United States Congress ("Congress"). Under the bill
passed by Congress, the National Park Service is authorized to acquire acreage
within the National Monument using funds specifically appropriated by Congress
each year. In 1995, approximately 24 acres were transferred to the National Park
Service for cash of $329,900. The Company's remaining land within the National
Monument boundary of approximately 665 acres is expected to be sold in a series
of transactions over the next several years.
NOTE L - LITIGATION
The Company is engaged in various lawsuits either as plaintiff or defendant
which have arisen in the conduct of its business which, in the opinion of
management, based upon advice of counsel, would not have a material effect on
the Company's financial position.
NOTE M - RELATED PARTY TRANSACTIONS
The Company purchases its directors' and officers' liability insurance through a
corporation controlled by a member of the Board of Directors. Total premiums for
this policies paid in 1996 and 1995 were $68,000 and $60,000, respectively.
The Company loaned $70,500 to a joint venture partner during the year ended June
30, 1996. The note is payable in monthly installments of $758 including interest
at 10% and is collateralized by developed property. The note matures April,
2006.
During the year ended June 30, 1995, the Company acquired certain property from
an ownership group which included a member of the Board of Directors. Under the
sales agreement, the Board member received proceeds in the amount of $74,090.
NOTE N - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value information as of June
30, 1996 as required by Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments" ("SFAS 107"). Such
information, which pertains to the Company's financial instruments, is based on
the requirements set forth in SFAS 107 and does not purport to represent the
aggregate net fair value of the Company. The carrying amounts in the table are
the amounts at which the financial instruments are reported in the financial
statements.
All of the Company's financial instruments are held for purposes other than
trading.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:
1. Cash and Cash Equivalents
The carrying amount approximates fair value because the Company has the
contractual right to receive immediate payment on the deposit accounts.
2. Real Estate Contracts Receivable
Long-term notes receivable are generally collateralized by real estate and
accrue interest at rates from 10% to 12%. Because the ultimate collectibility of
these notes is not reasonably assured, it is not practicable to estimate fair
value. Short-term notes are valued at the present value of future cash flows
based on the current rates at which similar loans would be made to purchasers
with similar credit ratings.
3. Other Notes Receivable
Other notes receivable are valued at the present value of future cash flows
based on the current rates at which similar loans would be made to borrowers
with similar credit ratings.
4. Fixed Rate Long-Term Debt
The discounted amount of future cash flows using the Company's current
incremental rate of borrowing for similar liabilities is used to estimate fair
value.
5. Floating Rate Long-Term Debt
The carrying amount approximates fair value because interest rates adjust to
market rates.
The carrying amounts and estimated fair values of the Company's financial
instruments at June 30, 1996 are as follows:
Carrying Estimated
amount fair value
---------- ----------
Financial assets
Cash and cash equivalents $2,183,758 $2,183,758
Real estate contracts
For which it is not practicable
to estimate fair value 134,996 -
Short-term real estate contract 228,664 224,154
Other notes receivable 70,176 70,176
Financial liabilities
Fixed rate long-term debt (4,810,469) (4,727,926)
Floating rate long-term debt (1,623,398) (1,623,398)
NOTE O - SUBSEQUENT EVENT
On August 9, 1996, the Board of Directors declared a cash dividend of $.60 per
common share payable on August 27, 1996 to stockholders of record on August 13,
1996.
DIRECTORS OF WESTLAND
SOSIMO S. PADILLA, Chairman of the Board of Directors and Director. Member of
the Executive Committee. Mr. Padilla is retired from the circulation department
of the Albuquerque Publishing Company and was owner/operator of Western
Securities Transportation Corporation for over thirty years.
BARBARA PAGE, President, Chief Executive Officer and Director. Secretary of the
Executive Committee. Ms. Page is employed by Westland Development Co., Inc. as
its President.
POLECARPIO (LEE) ANAYA, Executive Vice President, Assistant Secretary/Treasurer
and Director. Chairman of the Executive Committee. Mr. Anaya was owner/operator
of Lee's Conoco.
DAVID C. ARMIJO, Secretary/Treasurer and Director. Mr. Armijo is an insurance
broker and serves as President and Chairman of the Board of California's
All-Risk Insurance Agency, Inc. in Los Angeles.
CARMEL CHAVEZ, Director. Member of the Executive Committee and the Disclaimer
Committee and Vice Chairman of El Campo Santo, Inc. Mr. Chavez is a retired
employee of the Albuquerque Public Schools.
JOSIE G. CASTILLO, Director. Vice Chairman of the Executive Committee, Chairman
of El Campo Santo, Inc. and member of the Disclaimer Committee. Ms. Castillo is
retired from the Human Services Department of the State of New Mexico.
CARLOS SAAVEDRA, Director. Alternate member of the Executive Committee, member
of El Campo Santo, Inc. and Chairman of the Disclaimer Committee. Dr. Saavedra
is a former director of bilingual education for the Colorado Department of
Education and the Oakland Unified School District, Oakland, California. Dr.
Saavedra retired from education in 1985.
JOE S. CHAVEZ, Director. Alternate member of the Disclaimer Committee. Mr.
Chavez is employed at Galles Chevrolet.
CHARLES V. PENA, Director. Mr. Pena owns and operates CJ's New Mexican Food
Restaurant.
EXHIBIT 10.8
LEASE
By this Lease, made in multiple copies the 19th day of March 1996, between
CAP II, a New Mexico general partnership, hereinafter called "Landlord," and
WALGREEN HASTINGS CO., a Nebraska corporation, hereinafter called "Tenant";
Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord,
for the term commencing October 1, 1996, and continuing to and including
September 30, 2056, subject to adjustment pursuant to Article 3 herein and
subject to prior commencement and to prior termination as hereinafter provided,
the premises to include both a building and other improvements and certain real
estate located at the northwest corner of Central Avenue and Coors Road, in the
City of Albuquerque, County of Bernalillo, State of New Mexico, the building to
be erected and completed by Landlord to include not less than 118 feet of
frontage facing Central Avenue and not less than 135 feet of depth, being an
area containing approximately 15,930 square feet of first floor area (the
"Building"), and together with all improvements, appurtenances, easements and
privileges belonging thereto. All of the foregoing shall be as shown on the plan
attached hereto and made a part hereof as Exhibit "A," and as legally described
in Exhibit "B" attached hereto and made a part hereof and the Building, real
estate and other improvements to be constructed thereon are hereinafter
collectively referred to as the "Leased Premises."
(This Instrument Prepared by Elena Kraus, 200 Wilmot Road, Deerfield, Illinois
60015)
THE TERMS, COVENANTS AND CONDITIONS OF SAID LETTING ARE AS FOLLOWS:
USE
1. Subject to Article 13 of this Lease and so long as Tenant shall operate
in the Leased Premises, Tenant shall operate a store similar in nature to a
majority of its other stores in the Albuquerque metropolitan area, with the
right to sell such merchandise and provide such services, as Tenant may, from
time to time, sell and provide in a majority of its other stores in the
Albuquerque metropolitan area. Subject to the restrictions contained in the
Declaration as defined in Section 7(b) below, nothing contained herein shall be
construed so as to prohibit Tenant from expanding or eliminating any
department(s) or from expanding or eliminating any line(s) of merchandise in the
Leased Premises.
RENT
2. Tenant shall pay rent for the Leased Premises, as follows:
(a) A fixed rent of $26,121.75 per month, commencing on the Rent
Commencement Date (as defined in Article 6 hereo@ and continuing thereafter for
the remainder of the Term (as defined in Article 3[b] hereo@. Fixed rent shall
be payable on the first day of each and every month in advance and shall be
properly apportioned for any period less than a full calendar month.
(b) If a sum equal to ----
2.0% of the Gross Sales, as hereinbelow defined, except from the sale of
food, alcoholic beverages and prescriptions,
plus 1.0% of the Gross Sales fronlthe sale of alcoholic beverages,
plus 0.5% of the Gross Sales from the sale of food and prescriptions
made by Tenant in the operation of Tenant's store in the Leased Premises in any
lease year (as defined in Section [c] of Article 3) shall exceed the total fixed
rent for such lease year, then and in such event, and within forty-five (45)
days after the end of each lease year, Tenant shall pay to Landlord the amount
of such excess as additional percentage rent. However, in no event shall the
total of fixed rent plus additional percentage rent (if any) payable by Tenant
in any lease year exceed $626,922.00, which amount shall be proportionately
decreased for any lease year that is not comprised of a full twelve (1 2)
months. Within fortyfive (45) days after the end of each lease year Tenant shall
furnish to Landlord a statement of the total amount of such Gross Sales for such
lease year. The aforesaid amount(s) shall be proportionately adjusted in the
case of a lease year of more or less than a full twelve (1 2) calendar months.
(c) The term "Gross Sales" as used herein is defined as the total amount of
all receipts, whether for cash or on credit (less returns and refunds) from
sales of drugs, food, drinks, goods, wares and merchandise of every sort
whatsoever, made by Tenant in the operation of Tenant's store on the Leased
Premises, or made by any concessionaire on the Leased Premises. The following
shall be specifically excluded from Gross Sales: receipts from sales of milk and
all other non-alcoholic beverages; receipts from sales of tobacco products;
receipts from the sale of prescription items pursuant to third party
prescription plans, as defined below; receipts and commissions from the
operation of public telephones; license and transaction fees received from the
operation of automatic teller machines and any other electronic consumer service
apparatus to the extent such fees do not exceed five percent (5%) of fixed rent
paid in any lease year; credit card processing fees; intercorporate and
interstore sales or transfers; sales of government bonds, savings stamps and
other government securities; sales of postage stamps and ready stamped postcards
and envelopes; sales of government lottery tickets; sales at a discount to
employees; sales at a discount to doctors, dentists, hospitals, nurses, drug
stores or wholesale drug or supply houses; accounts receivable written off as
uncollectible. Tenant shall also have the right to deduct and exclude from Gross
Sales a sum equal to any approximate amounts which may be paid by Tenant or
which Tenant may add to or include in its selling prices of various articles by
reason of any sales taxes, use taxes, retailers' occupation taxes, excise taxes
at the retail level and the like, now or hereafter imposed and however entitled,
and which are based upon the amounts of sales or the units of sales.
Third party prescription plans shall be deemed to be those health benefit
plans wherein all or any portion of the cost of pharmaceuticals and any other
items obtained by a prescription are paid or reimbursed by an organization such
as a governmental agency, an entity created by state or federal law, an
insurance carrier, a health maintenance organization, a union, a trust or
benefit organization or an employer or employer group pursuant to an agreement
between Tenant and such organization.
Tenant shall cause to be kept, in accordance with its customary accounting
procedure, records of the Gross Sales made by Tenant in the operation of
Tenant's store on the Leased Premises. Landlord and Landiord's duly authorized
representative, at reasonable times during business hours, shall have access to
such records at the place where the same are kept, for the purpose of inspecting
and auditing the same, provided that any such inspection and audit be made by
Landlord within six (6) months after the expiration of any lease year. If
Landlord does not object in writing to any statement above mentioned within said
time period, such statement shall be conclusive y presumed to be correct and
final, and thereafter Tenant shall not be required to preserve the records from
which such statement was compiled. Landlord agrees not to divulge to any person
or entity information obtained by Landlord and Landlord's representative from
such records or from the statements above mentioned, except to any mortgagee or
prospective purchaser of the Leased Premises and except as may be necessary to
enforce of Landlord's rights under this Lease. Nothing herein contained,
however, shall be deemed to confer upon Landlord any interest in the business of
Tenant on the Leased Premises.
(d) Until further notice by Landlord to Tenant, rent checks shall be
payable to and mailed to:
CAP II
c/o Peterson Properties
2325 San Pedro, N.E., Suite 2-A
Albuquerque, New Mexico 87110
Attention: James A. Peterson
INITIAL TERM, TERM, LEASE YEAR, OPTIONS
3. (a) The initial term of this Lease shall commence on the date that
Tenant accepts possession of the Leased Premises and shall continue to and
include the day immediately preceding the date that the term of this Lease
commences as below provided (the "Initial Term"). Tenant shall h.ave no
obligation to pay rents or other charges during the Initial Term nor shall any
of the same accrue; all rents and other charges specified in this Lease shall
commence as of the date that the term commences, unless otherwise expressly
provided herein.
(b) The term shall commence on the Rent Commencement Date (as defined in
Article 6) and shall continue for sixty (60) years thereafter (the "Term");
provided, however, that if the Rent Commencement Date be other than the first
day of the calendar month, then the Term shall continue to and include the last
day of the same calendar month of the sixtieth (60th) year thereafter.
(c) The first lease year shall commence on the Rent Commencement Date and,
if such date be on the first day of a calendar month, shall end twelve (12)
months thereafter, or, if such date be other than the first day of the calendar
month, shall end on the last day of the same calendar month of the first year
thereafter, and each succeeding lease year shall be each succeeding twelve (12)
month period.
(d) Tenant shall have the right and option, at Tenant's election, to
terminate this Lease effective as of the last day of the two hundred fortieth
(240th) full calendar month of the Term, effective as of the last day of the
three hundredth (300th) full calendar month of the Term, effective as of the
last day of the three hundred sixtieth (360th) full calendar month of the Term,
effective as of the last day of the four hundred twentieth (420th) full calendar
month of the Term, effective as of the last day of the four hundred eightieth
(480th) full calendar month of the Term, effective as of the last day of the
five hundred fortieth (540th) full calendar month of the Term, effective as of
the last day of the six hundredth (600th) full calendar month of the Term and
effective as of the last day of the six hundred sixtieth (660th) full calendar
month of the Term. If Tenant shall elect to exercise any such option, Tenant
shall send notice thereof to Landlord, at least six (6) months prior to the date
this Lease shall so terminate, but no notice shall be required to terminate this
Lease upon the expiration of the Term.
DELIVERY OF POSSESSION
4. (a) Landlord shall put Tenant into exclusive physical possession of the
Leased Premises on or before October 1, 1996 or as soon as possible thereafter,
and in any case not later than October 1, 1997, and at the same time deliver to
Tenant a full set of keys to the Building, provided that if Landlord shall so
put Tenant into possession between November 1 and January 1, then the Initial
Term shall be extended by the period between the date of such possession and
January 1. Landlord shall send written notice to Tenant, Aftention: Director of
Construction, at least forty-five (45) days (but not more than sixty [60] days)
before such possession is to be delivered. Such notice shall set forth the date
of delivery of possession, which shall be on a Monday (unless such date is a
legal holiday, in which case possession shall be delivered the next business
day). Additionally, as a condition precedent to the delivery of possession of
the Leased Premises to Tenant, Landlord shall send written notice to
Tenant%vhich shall be certified by Landlord's architect, at least seven (7) but
not more than twenty-one (21) days prior to the date of delivery of possession,
which noiice shall confirm the date that possession shall be delivered and that
the Led'sed Premises is (or in the architect's judgment will be as of the date
of delivery of possession) substantially complete and ready for occupancy. If
possession is not delivered by October 1, 1998, Tenant, in addition to Tenant's
remedies at law, equity or under this Lease, may cancel this Lease by notice to
Landlord. The Leased Premises upon delivery shall be in good condition and
repair, free of Hazardous Substances (as defined below), and shall fully comply
with all lawful requirements and shall be constructed in accordance with Article
5 hereof. Tenant shall have the right, without being deemed to have accepted
possession, to enter upon the Leased Premises as soon hereafter as practical, to
take measurements and install its fixtures and exterior signs (including, but
not limited to, the installation of permanent and temporary signs), but such
entry or the opening for business shall not constitute a waiver as to the
condition of the Leased Premises or as to any work to be done or changes to be
made by Landlord, or as to any other obligations of Landlord hereunder. If
available from appropriate governmental authorities, Landlord shall secure from
the appropriate governmental authority and provide to Tenant prior to the
delivery of possession of the Leased Premises, a Certificate of Occupancy
subject only to those items to be completed by Tenant.
(b) (i) Landlord represents that other than as disclosed in that certain
report dated March 5, 1996, prepared by Western Technologies, Inc. and entitled
"Phase I Environmental Site Assessment and Limited Asbestos Sample, 101 Coors
Boulevard, N.W., Albuquerque, New Mexico" (the "Report"), Landlord has no
knowledge concerning any current or previous use of the land and/or Building
comprising the Leased Premises which would lead a reasonable person to suspect
that Hazardous Substances (as defined below) were deposited, stored, disposed of
or placed upon, about or under the Leased Premises. The Report shall be
certified to Tenant prior to delivery of possession of the Leased Premises. In
order to make the foregoing representation, Landlord states that it has made due
inquiry or investigation as appropriate. Landlord has provided to Tenant, at
Landlord's sole cost and expense, a copy of the Report. In the event the Report
discloses the existence of any Hazardous Substances in, on or under the Leased
Premises, including, but not limited to, the existence of any underground
storage tanks and/or petroleum or petroleum by-products, Landlord, at Landlord's
sole cost and expense, prior to the date Landlord delivers possession of the
Leased Premises to Tenant, as provided in Article 4, shall properly remove, and
dispose of any such underground storage tanks and shall properly remove and
dispose of any Hazardous Substances and/or petroleum or petroleum by-products.
All such disposal and removal shall be conducted in accordance with all federal,
state and local laws, ordinances, and rules or regulations, or other binding
determinations of any federal, state, local, or other governmental entity
exercising executive, legislative, judicial, regulatory, or administrative
functions (whether now or hereafter existing). In the event of any such removal
and disposal by Landlord hereunder, upon completion of the same the Leased
Premises shall again be tested by the environmental engineer and/or contractor
and the results delivered to Tenant; Landlord shall also deliver in such event
all necessary governmental inspections and approvals with respect to the
removal, remediation and disposal work. Tenant shall have no obligation to
accept delivery of possession of the Leased Premises until Landlord has complied
with the provisions of this Section; provided, however, that Tenant may, at
Tenant's option, accept possession of the Leased Premises prior to the
completion of any remediation if Landlord provides Tenant with final remediation
plans and Tenant determines that the effectuation of said remediation will not
adversely impact Tenant's full use and enjoyment of the Leased Premises.
(ii) "Hazardous Substances" shall mean any hazardous or toxic chemical,
waste, byproduct, pollutant, contaminant, compound, product or substance,
including, without limitation, asbestos, polychlorinated byphenyls, petroleum
(including crude oil or any fraction or byproduct thereof, and any material the
exposure to, or manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of which is prohibited, controlled or regulated by any
Environmental Law.
(iii) "Environmental Law" shall mean any federal, state, regional, county
or local governmental statute, law, regulation, ordinance, order or code or any
consent decree, judgment, permit, license, code, covenant, deed restriction,
common law, or other requirement pertaining to protection of the environment,
health or safety of persons, natural resources, conservation, wildlife, waste
management, and pollution (including, without limitation, regulation of releases
and disposals to air, land, water and ground water), including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conversation and Recovery Act of 1976 and Solid and Hazardous Waste
Amendments of 1984, 42 U.S.C. 6901 et seq., Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, 33 U.S.C. 1251 et seq., Clean Air Act
of 1966, as amended, 42 U.S.C. 7401 et seq., Toxic Substances Control Act of
1976, 15 U.S.C. 2601 et seq., Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. 651 et seq., Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. 1 1 001 ET SEQ., National Environmental Policy Act of
1975, 42 U.S.C. 300(@ et seq., and all amendments as well as any similar state
or local statute or code and replacements of any of the same and rL4es,
regulations, guidance documents and publications promulgated thereunder.
(c) It shall be a condition precedent to the delivery of possession of the
Leased Premises to Tenant that Landlord shall have first delivered to Tenant
satisfactory evidence of Landlord's title together with each instrument, if any,
required by Section (b) of Article 18. Tenant's acceptance of possession of the
Leased Premises in the absence of full satisfaction of said condition precedent
shall in no manner be deemed a waiver thereof or of any of the requirements of
Article 18.
(d) Landlord shall, prior to the delivery of possession of the Leased
Premises to Tenant, cause Landlord's architect to certify to Tenant the square
foot floor area contained in the Building.
CONSTRUCTION BY LANDLORD
5. (a) Before delivering possession of the Leased Premises to Tenant,
Landlord shall obtain all required zoning and permits (other than Tenant's
business licenses) for the construction and operation of the Leased Premises.
Subject to the restrictions contained in the Declaration, the Building shall be
of such exterior and structural design and character as is acceptable to Tenant
and as will also meet Tenant's requirements for its permanent exterior signs,
which may extend above the Building and shall be at locations and of a size
permitted by appropriate governmental authorities and reasonably acceptable to
Tenant. The Leased Premises and Building shall be erected and completed by
Landlord, in accordance with the plans and specifications described below, and
shall contain Tenant's specific requirements for the operation of Tenant's
business, which requirements will include, among other things, the items and
installations listed in the Criteria Specifications for SelfServe Walgreen Store
prepared by Walgreen Co., revised July 1, 1995, and Criteria Plans, including
the drawings referenced on Exhibit "C" attached hereto, heretofore delivered to
Landlord and incorporated herein by reference and made a part hereof. All such
work by Landlord shall be done by contractors selected by Landlord and
acceptable to Tenant. Such work shall comply with the requirements of public
authorities and shall be done in a first-class, good, and workmanlike manner,
free and clear of all liens and encumbrances for labor and materials furnished
to Landlord. Except as otherwise shown on Exhibit "A" or in the Plans, the
Leased Premises shall contain no grade elevation changes in excess of five
percent (5%); there shall be no steps or ramps (excepting ramps to serve the
handicapped) in any exterior portion of the Leased Premises.
(b) Within one (1) month after the execution and delivery of this Lease,
Tenant shall furnish to Landlord a fixture plan and base sheets relative to the
Building, so that Landlord may be enabled to prepare and furnish to Tenant plans
and specifications covering Tenant's specific requirements. The plans (which
shall be on mylar or vellum) and specifications (collectively the "Plans")
prepared by Landlord shall be furnished to Tenant for Tenant's approval within
forty-five (45) days after the execution and delivery of this Lease or the
receipt of said fixture plan and base sheets from Tenant, whichever is later.
All areas of design and engineering must be certified by and under the direct
supervision of architects and engineers licensed and registered in the State of
New Mexico. Tenant agrees to approve or reject said Plans, within thirty (30)
days of Tenant's receipt thereof, and if not approved or rejected within said
period, said Plans shall be deemed approved. In the event Tenant shall reject
such Plans within the period provided above, Tenant shall return said Plans to
Landlord indicating the items so rejected. Landlord shall then have thirty (30)
days to resubmit the Plans to Tenant, and Tenant shall have thirty (30) days
after resubmittal to approve or reject the same. If not approved or rejected
within said period, said Plans shall be deemed approved; provided, however, that
in no event shall the standards of quality of approved Plans, or of those deemed
approved, be less than those required by the Criteria Plans and Criteria
Specifications above described, which shall control. If said Plans are rejected
after being resubmitted to Tenant, and the parties are unable to agree on
approved Plans within thirty (30) days thereafter, then either party may cancel
this Lease upon thirty (30) days written notice to the other. Any such
cancellation notice shall be null and void if the plans are approved during the
thirty (30) day notice period. After approval of Plans, Tenant, at Tenant's sole
cost and expense, shall have the right to make changes, substitutions and
eliminations in said Plans provided, however, that Tenant shall pay all costs
and expenses on account of any such changes, substitutions and eliminations. In
addition, Tenant shall be solely responsible for paying all costs and expenses
for changes, substitutions and additional requirements in the Plans which
deviate from the Criteria Plans dated July 1, 1995 and further detailed on
Exhibit "C" attached hereto. Landlord and Tenant agree to cooperate with each
other and to diligently and in good faith make all reasonable modifications to
keep the cost of the Building and improvements as economical as is reasonably
practicable.
(c) As soon as the final Plans are available to Landlord from Architect
after Tenant has returned the final set of Plans to Landlord stamped "approved
as noted" pursuant to Section (b) of this Article but in any event prior to the
delivery of possession of the Leased Premises to Tenant, Landlord shall provide
to Tenant a mylar sepia of the final Plans prepared by Landlord as provided
above.
(d) All Plans shall be deemed to be owned by Tenant regardless of by whom
prepared; Landlord shall take all actions as may be appropriate or necessary at
any time and from time to time in order to evidence such ownership in Tenant.
Such Plans may be used by Tenant in their approved form or as modified by Tenant
in connection with any alteration or renovation of the Leased Premises. Landlord
may use the Plans only in connection with a Walgreens Drug Store.
RENT COMMENCEMENT
6. Tenant shall commence paying fixed rents pursuant to Article 2 hereof as
of the date that is two (2) months after Landlord has completed all construction
and has delivered possession as above provided (the "Rent Commencement Date").
The Rent Commencement Date shall be subject to extension equal to any delays
occasioned by strikes, casualties, governmental restrictions, priorities or
allocations, inability to obtain materials or labor, denial of licenses to
operate a pharmacy and/or to conduct its business, any cause the fault of
Landlord or other causes beyond Tenant's control. Anything to the contrary in
this Lease notwithstanding, Tenant shall have no obligation to pay rent or other
charges until Landlord has provided all of the information and instruments
required by Article 18 of this Lease and after such event, Tenant shall remit to
Landlord all monies withheld. Nothing contained in this Lease shall be construed
to obligate Tenant to open for business nor to obligate Tenant (or its
successors or assigns) to continue to operate its business in the Leased
Premises.
PARKING
7. (a) Subject to the provisions of the Declaration, during the Term of
this Lease, Tenant, at Tenant's cost and expense, shall maintain the landscaping
at the Leased Premises and maintain and repair the parking areas located within
the Leased Premises. However, Tenant shall have no obligation to perform nor pay
any costs in connection with the following: (i) any replacements of the
landscaping, light poles, parking areas or other improvements thereon; (ii) any
other item which under generally accepted accounting principles are classified
as a capital expense; (iii) any repair for which the need for repair is a result
of the acts or negligence of Landlord or its agents, employees or licensees;
(iv) any items for which Landlord is reimbursed by insurance, warranty or
otherwise; (v) any item which Landlord's obligation under Article 5, 10, and/or
14 hereof; and (vi) any defects in the construction of the Leased Premises by
Landlord. The foregoing items (i) through (vi) shall remain Landlord's
responsibility to perform. Except as may be provided to the contrary in the
Declaration [defined in(b) below], the parking spaces located on the Leased
Premises shall be for the exclusive use of Tenant and Tenant's customers,
employees, invitees, successors, assigns and sublessees.
(b) This Lease shall be subject to those certain documents described in
paragraph 1 of Exhibit "D" and all rules, regulations and guidelines promulgated
pursuant thereto (hereinafter collectively referred to as the "Declaration").
The Declaration provides for reciprocal ingress and egress rights over and
across the parking areas of the Leased Premises and the adjoining property (as
shown on Exhibit "A-1 " hereto) all as more particularly described in the
Declaration. Tenant hereby agrees to comply with the provisions of the
Declaration and any failure to comply with the provisions of the Declaration and
all applicable documents shall constitute a default under the Lease. Landlord
hereby agrees that it shall not enter into any agreement or modification of the
Declaration which interferes with Tenant's use and enjoyment of the driveways
located on the adjoining property and the Leased Premises without Tenant's prior
written consent thereto. Landlord covenants that upon Tenant's request, Landlord
will cooperate with Tenant who shall have the right to enforce all rights,
covenants and agreements granted Landlord and Tenant pursuant to the Declaration
at no cost to Landlord.
(c) Tenant hereby indemnities and holds harmless Landlord from any claim,
damage or liability arising out of Tenant's use of the ingress and egress rights
provided for in the Declaration over the adjoining property or any violation of
the provisions of the Declaration by Tenant.
(d) Tenant shall be responsible for any maintenance or repairs of the
adjoining property resulting from the use of the adjoining property by Tenant.
EXCLUSIVES
8. (a) Landlord covenants and agrees that, during the Term and any
extensions or renewals thereof and subject to the rights of any tenants on the
Adjoining Property with valid leases in effect as of the date of this Lease, no
additional property which Landlord, directly or indirectly, may now or hereafter
own or control, which is contiguous to, or within five hundred (500) feet of any
boundary of the Leased Premises, including the Adjoining Property, will be used
for any one or combination of the following: (i) the operation of a drug store
or a so-called prescription pharmacy or for any other purpose requiring a
qualified pharmacist or other person authorized by law to dispense medicinal
drugs, directly or indirectly, for a fee or remuneration of any kind; (ii) the
sale of so called health and/or beauty aids and/or drug sundries; (iii) the
operation of a business in which photofinishing services and/or photographic
film are offered for sale; (iv) the operation of a business in which food items
are sold for consumption off the premises (other than a restaurant selling
take-out food items); (v) the operation of a business in which greeting cards or
wrapping paper are offered for sale; and/or (vi) the operation of a business in
which alcoholic beverages shall be sold for consumption off the premises. In the
event that Tenant files suit against any party to enforce the foregoing
restrictions, Landlord agrees to cooperate fully with Tenant in the prosecution
of any such suit.
Notwithstanding the foregoing, if Tenant closes its store to the public for
six (6) months or more, then all of the foregoing exclusive use restrictions
shall terminate, except in the event that Tenant discontinues business as a
result of fire or other casually beyond Tenant's control so long as Tenant
reopens its business within sixty (60) days after the Leased Premises have been
restored or the cause for such discontinuance has ceased. In no event shall said
restrictions terminate in the event that Tenant discontinues business and a
permitted assignee or sublessee of Tenant commences business operations in the
Leased Premises within six (6) months after taking possession of the Leased
Premises, selling any such item or items so restricted as a material part of
such assignee's or sublessee's business.
(b) Except as may be provided in the Declaration, in the event that any
action, claim or suit is brought by any party against Tenant alleging that
Tenant's operations in the Leased Premises are in violation of any use
restriction contained in any instrument executed by Landlord or recorded against
the Leased Premises prior to the delivery of possession of the Leased Premises
to Tenant and in the event that a court of competent jurisdiction shall hold
that Tenant's operations in the Leased Premises are in violation of any use
restriction, Tenant, at Tenant's option shall have the right to terminate this
Lease upon thirty (30) days written notice thereof to Landlord.
UTILITIES
9. Tenant shall pay when due all bills for water, trash removal, sewer
rents, sewer charges, heat, gas and electricity and other utilities and services
used in or serving the Building or the Leased Premises from the commencement of
the Initial Term and until the expiration of the Term. The source of supply and
vendor of each such commodity shall be the local public utility company or
municipality commonly serving the area, provided that if more than one utility
vendor serves the area Landlord shall cause the vendor selected by Tenant to
serve the Leased Premises. Landlord shall furnish to said Building and to the
Leased Premises at all times sufficient gas and water service lines, also sewer
lines and sewer connections, all of the capacity initially specified by Tenant,
and electric service lines of the voltage and amperage initially specified by
Tenant, all connected to an adequate source of supply or disposal. In addition,
Landlord shall furnish to said Building conduit for telephone lines of a
capacity specified by Tenant. If Tenant shall require additional service line
capacity of any of such utilities and if same are available on the Leased
Premises, Tenant, at Tenant's expense, shall have the right to the use of the
same.
REPAIRS, CONFORMITY WITH THE LAW
10. (a) Except as provided below, Tenant, at Tenant's sole cost and
expense, shall, (i) repair and replace heating and cooling equipment and doors
and door equipment serving the Building, (ii) make plate glass replacements
unless required by fault of Landlord or its agents, and (iii) make repairs to
the interior of the Building. Tenant shall also palint the exterior of the
Building and make minor repairs (i.e. patching) to the exterior. Landlord, at
Landiord's sole cost and expense, shall maintain and make all repairs to the
exterior and structural portions of the Building, roof, and all utility lines,
including but not limited to sewers, sewer connections, pipes, ducts, wires and
conduits leading to and from the Leased Premises and/or the Building. Landlord
shall make all repairs required by the fault of Landlord or its agents, or by
fire or other insured casualty (as provided in Paragraph 14 below unless Tenant,
at Tenant's sole option, chooses to make repairs necessitated by casualty) or
the elements. In the event that any Hazardous Substance or any underground
storage tank is discovered at any time in, under or about the Leased Premises
and/or the Building (unless introduced by Tenant, or Tenant's agents, employees
or licensees acting within the scope of their respective agency, employment or
license), Landlord shall, at Landiord's expense, remove and dispose of the same
in the manner described in and provide all documentation required by Section (b)
of Article 4. Landlord hereby indemnifies and saves and holds Tenant harmless
from and against any liability, obligation, damage or cost, including, without
limitation, attorneys'fees and costs, resulting directly or indirectly from the
presence, removal or disposal of any such Hazardous Substance (unless introduced
by Tenant, or Tenant's agents, employees or licensees acting within the scope of
their respective agency, employment or license) or any underground storage tank.
Tenant hereby indemnifies and saves and holds Landlord harmless from and against
any liability, obligation, damage or cost, including, without limitation,
attorneys'fees and costs, resulting directly or indirectly from the presence,
removal or disposal of any such Hazardous Substance introduced on, in or under
the Leased Premises by Tenant, or Tenant's agents, employees or licensees acting
within the scope of their respective agency, employment or license. These
indemnifications shall survive the termination or expiration of this Lease for
any reason. The provisions of this Section shall be complied with as required
from time to time.
(b) If in an emergency situation, a repair to the Leased Premises and/or
the Building which Landlord is obligated to perform is required, Tenant shall
make all reasonable efforts to contact Landlord or Landlord's managing agent by
telephone and/or facsimile to advise Landlord of the need for the repair. If
after making reasonable efforts to contact Landlord, either Tenant is unable to
contact Landlord or Landlord's managing agent, or Tenant succeeds in contacting
Landlord or Landiord's managing agent and Landlord fails to undertake action to
correct the emergency situation within one business day, Tenant may perform the
repair, in such manner as Tenant deems reasonably necessary, on account of
Landlord. Upon completion of the repair, Landlord shall be required to reimburse
Tenant for the actual cost of the repair. Landlord's payment shall be due within
thirty (30) days after receipt of Tenant's bill accompanied by reasonable
evidence that Tenant has paid for the repair. In the event Landlord fails to
make payment to Tenant for said repair within said thirty (3O) days, such
failure shall be deemed a default under this Lease and Tenant shall have all
remedies set forth in Article 17 and those available at law or in equity,
provided however, Tenant shall not have the right to cancel this Lease as. a
result of Landlord's failure to make such payment as herein provided.
For the purpose of this Section, an emergency situation means a condition
or state of facts which if not corrected would result in further damage to the
Leased Premises, the Building or its contentsor which would prevent Tenant from
conducting its business at the Leased Premises in a reasonable manner.
(c) Tenant shall comply with all provisions of the Declaration and shall
make all changes and installations necessary to comply with the valid
requirements of public authorities regarding the conduct of Tenant's particular
business in the Building and the Leased Premises. Except as required above,
Landlord shall make all changes and/or installations and pay the cost, if any,
of all inspections required to comply with valid requirements of public
authorities as they apply to the Leased Premises or the Building.
SIGNS, TENANT'S FIXTURES
11. (a) Subject to the provisions of the Declaration, Tenant may, at
Tenant's sole cost and expense, install and operate interior and exterior
electric and other signs, and in so doing shall comply with all lawful
requirements. Subject to governmental regulations and any other restrictions
which apply to the Leased Premises, including, without limitation, the
Declaration, Tenant shall have the right to install mechanical equipment,
including satellite dishes or other antennae for telecommunications affixed to
the roof or other portions of the Building or other portions of the Leased
Premises, but shall indemnify Landlord from any costs and expenses (including
without limitation the costs for repairs and improvements) relating thereto.
Subject to compliance with any and all lawful requirements or restrictions,
Tenant may, at Tenant's option install within the Leased Premises pay
telephones, automatic teller machines and other electronic consumer service
apparatus.
(b) Tenant shall at all times have the right to remove all fixtures,
machinery, equipment, appurtenances and other property furnished or installed by
Tenant or by Landlord at Tenant's expense, it being expressly understood and
agreed that said property shall not become part of the Building or the Leased
Premises but shall at all times be and remain the personal property of Tenant
and shall not be subject to any Landlord's lien.
(c) If permitted by applicable governmental rules and regulations and the
Declaration Landlord shall, as soon as is possible after the date hereof,
install a readerboard pylon sign foundation with conduit at the location shown
on Exhibit "A," upon which Tenant may install its readerboard and sign panel.
Such readerboard pylon sign shall be electrified by Landlord as soon as is
practical thereafter. Tenant may install the same prior to the date that it
accepts possession of the Leased Premises and such installation of said
readerboard and sign panel shall be deemed neither acceptance of possession of
the Leased Premises nor a waiver of any condition precedent to the delivery of
possession of the Leased Premises.
ALTERATIONS
12. (a) Subject to governmental rules and regulations and any restrictions
which apply to the Leased Premises, including, without limitation, the
Declaration, at any time and from time to time, Tenant, at Tenant's cost and
expense, may make alterations and additions to the Building. Tenant shall obtain
Landiord's consent, which shall not be unreasonably withheld or delayed, before
making any structural changes to the Building. In compliance with the
Declaration, Tenant may, without Landiord's consent, however, make changes to
storefronts, partitions, floors, electric, plumbing and heating, ventilating and
cooling systems or components thereof. Tenant,-at Tenant's sole cost and in
compliance with the Declaration and any other applicable restrictions, and
governmental requirements, if any, shall have the right to reconfigure or
otherwise modify the parking areas on the Leased Premises (including without
limitation, curb cuts, entrances and exits) as Tenant deems necessary or
desirable. Landlord shall cooperate in securing necessary permits and approvals.
Tenant shall not permit any mechanics' or other liens to stand against the
Leased Premises for work or material furnished Tenant and shall indemnify
Landlord from any costs or expenses relating to any repairs or alterations
completed by Tenant.
(b) Landlord covenants and agrees that Landlord shall not, without Tenant's
written consent, make any alterations or additions to the Leased Premises,
including, but not limited to, any modifications to the storefront, signband or
fascia of the Building or to the Parking Areas. Landlord shall not permit any
mechanics' or other liens to stand against the property for work or material
furnished by or on behalf of Landlord and shall indemnify Tenant from any costs
or expenses relating to any repairs or alterations completed by Landlord.
ASSIGNMENT AND SUBLETTING
13. (a) At any time and from time to time, Tenant may discontinue the
operation of its store in the Leased Premises and/or Building.
(b) At any time and from time to time, Tenant's interest under this Lease
may be assigned and re-assigned, without Landlord's consent, provided that any
such assignment or reassignment be only to a corporation which is subsidiary to
or affiliated with Tenant, or to a corporation resulting from any consolidation,
reorganization or merger to which Tenant, or any of its subsidiaries, parent or
affiliates, may be a party. At any time and from time to time, Tenant may also
sublet or license or permit a portion or portions of the Building to be used for
concessions, leased or licensed departments and demonstrations in connection
with and as part of the operation of Tenant's store, the Gross Sales therefrom
to be included in the Gross Sales of Tenant. Tenant shall deliver written notice
to Landlord in the event of any assignment or subletting under this Section (b).
(c) At any time and consent, Tenant may sublet a portion of the Leased
Premises and/or Building, to any person, firm or corporation, other than a
corporation described in Section (b) hereof, for any lawful purpose not in
violation of the Declaration. In such case, the Gross Sales of such subtenant
(but not the subrentals paid by such subtenant) shall be included in the Gross
Sales of Tenant.
(c) (i) At any time and from time to time, without Landlord's consent
except as set forth below, Tenant may assign this Lease or Tenant may sublet all
of the Leased Premises and/or Building to any person, firm or corporation, other
than a corporation described in Section (b) above, for any lawful purpose. In
the event of any subletting, Tenant shall pay to Landlord the rent provided in
Article 2 of this Lease. Tenant shall notify Landlord in writing of any proposed
sublease or assignment, together with the name, address, phone number, any
financial information regarding the proposed sublessee or assignee that Tenant
may have in its possession, and the nature of the business of the proposed
sublessee or assignee. Within forty-five (45) days after Landlord's receipt of
Tenant's notice of a proposed assignee or sublessee, Landlord may terminate this
Lease by written notice to Tenant. Such termination shall be effective as of the
earlier of the following to occur: (x) thirty (30) days after Tenant closes its
store on the Leased Premises, or (y) two (2) years after the date Landlord
delivers the termination notice required by this Section In any event, Tenant
shall deliver to Landlord at least ninety (90) days' prior written notice of the
date on which possession of the Leased Premises will be delivered to Landlord.
If Landlord so elects to terminate this Lease, neither party shall have any
further or unaccrued obligation or liability to the other as of the termination
date of the Lease. If Landlord fails to notify Tenant of termination within said
forty-five (45) day period, such termination right shall be deemed waived but
only as to such subletting or assignment. Notwithstanding the above, if such
sublease or assignment is in connection with Tenant's sublease or assignment of
three (3) or more of Tenant's other stores in the Albuquerque, New Mexico
metropolitan area to a single or related entity, Landlord shall have no such
right to terminate.
(ii) In the event of a subletting pursuant to Section (c)(i) above, then at
any time thereafter, Landlord may, by written notice to Tenant, terminate this
Lease provided, however, Landlord shall concurrently with such termination agree
to attorn to and be bound by the terms of any such sublease. Upon such
termination, neither Landlord nor Tenant shall have any further or unaccrued
obligation or liability to the other. Prior to such termination, Landlord shall
reimburse Tenant the unamortized cost of any leasehold improvements made by
Tenant to the Leased Premises in connection with said subletting, together with
all third party out-of-pocket costs and all brokerage fees incurred by Tenant as
a result of such subletting, prorated over the unexpired sublease term.
(d) If Tenant shall cease the conduct of business on the Leased Premises
for a continuous period in excess of six (6) months (except by reason of
strikes, fire, casualty or other causes beyond reasonable control of Tenant,
except by reason of repairs or remodeling and except by reason of assignment or
subletting as above provided) and the Leased Premises remain continuously vacant
during such period, Landlord shall have the right and option to terminate this
Lease upon written notice to Tenant, effective on the last day of the next
succeeding calendar month following receipt of such notice; provided, however,
that if Tenant shall send written notice to Landlord of Tenant's intent to
sublet the Leased Premises during such period when Landlord shall have the
option, pursuant to this Section to terminate this Lease, Landlord shall have
the right within thirty (30) days after receipt of such notice from Tenant to
terminate this Lease upon written notice to Tenant effective on the last day of
the next succeeding calendar month following Tenant's receipt of such notice and
from and after such date, neither party shall have any liability or further
obligation to the other under this Lease. If Landlord shall not so notify Tenant
within thirty (30) days of receipt of Tenant's notice that Landlord has
exercised its option to cancel this Lease, the termination options contained in
this Section shall be void and of no further force and effect.
(e) Notwithstanding any assignment of this Lease, Walgreen Hastings Co.
shall not be released from liability. However, in the event of a default by any
such assignee, Landlord shall give Walgreen Hastings Co. notice of such default,
shall accept cure of such default by Walgreen Hastings Co. within thirty (30)
days after such notice and shall permit Walgreen Hastings Co. to re-enter and
repossess the Leased Premises for the then unelapsed portion of the Term of this
Lease upon all of the provisions of this Lease.
CASUALTY
14. (a) If the Building and/or Leased Premises and/or any improvements
thereon shall be damaged or destroyed by fire or other casualty, then Landlord,
shall repair and restore the Building and/or Leased Premises and/or any
improvements thereon to their condition immediately prior to such damage or
destruction; but only to the extent possible based upon the insurance proceeds
available to Landlord, and the fixed rent and all other charges shall abate
proportionately according to the extent of such damage or destruction. Landlord
shall commence such restoration as soon as possible after such occurrence [but
in no event later than sixty (60) days thereafter] and shall diligently pursue
such repair or restoration to completion [which shall be not later than two
hundred seventy (270) days after such occurrence]. In the event that such repair
or restoration is not completed within two hundred seventy (270) days after such
occurrence, Tenant may, at Tenant's option, terminate this Lease. Subject to the
payment of proceeds by Tenant as expressly set forth in Section (b) below, under
no circumstances shall Tenant be liable for any loss or damage, (excluding
Tenant's property) including but not limited to damage to the Building or Leased
Premises resulting from fire or other casualty.
(b) If the damage or destruction referred to in Section (a) hereof amounts
to at least twenty-five percent (25%) of the Building and occurs during the last
three (3) years of the Term of this Lease or during the last three (3) years
prior to any of Tenant's options to terminate, then and in such events, Landlord
and Tenant shall have the right and option, to terminate this Lease effective as
of the date of such happening; and any unearned rents paid in advance shall be
refunded. Landlord shall not have the right to exercise the option under this
Section during any period which shall be less than thirty-six (36) months and
more than twelve (12) months prior to any such optional termination date if
Tenant shall, within one (1) month after such happening, advise Landlord that
Tenant will not exercise Tenant's option to terminate this Lease as of the next
optional termination date thereunder, and further, Landlord shall have the right
to exercise the option under this Section during any period which shall be
twelve (12) months or less prior to any such optional termination date only if
Tenant shall have theretofore exercised Tenant's option to terminate this Lease
as of the next optional termination date. Notwithstanding any termination of the
Lease by Tenant hereunder, Tenant shall provide Landlord with a sufficient
amount of the proceeds of the insurance required to be maintained by Tenant
under Article 20 hereof and such other proceeds which may be necessary to enable
Landlord to reconstruct or repair the Building and/or improvements on the Leased
Premises to their condition immediately prior to damage or destruction. In the
event Tenant shall elect to cancel this Lease hereunder, any proceeds payable by
Tenant to Landlord under this Section (b) shall be exclusive of the cost of
improvements made by or on behalf of Tenant to the Leased Premises and/or
Building. In the event Tenant shall elect not to cancel this Lease hereunder,
Landlord and Tenant shall enter into a construction escrow agreement
satisfactory to Landlord and Tenant appointing a third party as escrow agent to
disburse such proceeds as Landiord's repair and reconstruction work progresses
and to monitor the repair and reconstruction of the Building and improvements by
Landlord.
(c) If the fire or casualty is not an insurable casualty under Tenant's
fire and extended coverage insurance, Landlord or Tenant may cancel this Lease
upon notice to the other. Tenant may void Landlord's notice of termination by
notifying Landlord within thirty (30) days after receipt of such notice of
termination that Tenant shall provide Landlord with a sufficient amount of money
necessary for Landlord to reconstruct ot repair the Building and/or improvements
on the Leased Premises, as required by this Article 14. Landlord may void
Tenant's notice of termination by notifying Tenant within thirty (30) days after
receipt of such notice of termination that Landlord intends to reconstruct or
repair the Building and/or Landiord's improvements on the Leased Premises as
required by this Article 14, at Landiord's own cost and expense.
(d) If required by statute, ordinance, governmental rule or regulation,
Landlord, at Landiord's expense, shall cause the fire and sprinkler alarm system
serving the Building to be monitored and maintained by a reputable alarm service
company and/or the local fire department. Landlord shall provide Tenant with a
copy of the above service contract prior to the delivery of possession of the
Leased Premises to Tenant. Provided that Tenant has approved the alarm service
company selected by Landlord, Tenant shall reimburse Landlord for governmentally
required monitoring and maintenance services, including charges for dedicated
phone lines, to the extent the same apply to the Leased Premises. To secure such
reimbursement, Landlord shall submit to Tenant (300 VVilmot Road, Deerfield,
Illinois 60015, Attention: Fixed Assets) a copy of the actual bill therefor
together with a copy of the service contract pursuant to which such bill has
been issued. Landlord shall be responsible for any costs incurred for permits,
inspections and false alarms (except those caused by Tenant). Landlord shall, at
Landlord's expense, install and maintain any phone line(s) required in
connection with such fire and sprinkler alarm system.
LANDLORD'S RIGHT TO INSPECT
15. Landlord may at reasonable times during Tenant's business hours, and
after so advising Tenant, enter the Building for the purpose of examining and of
making repairs required of Landlord under this Lease and during the last six (6)
months of the Term may place the usual "For Rent" signs in the Leased Premises,
but not so"@s to interfere with Tenant's business.
SURRENDER
16. At the expiration or termination of this Lease, Tenant shall surrender
immediate possession of the Leased Premises in good condition, subject to
reasonable wear and tear, changes and alteration, damage by fire, casualty and
the elements, and other repairs which are Landlord's obligation . Any holding
over by Tenant shall not operate, except by written agreement, to extend or
renew this Lease or to imply or create a new lease, but in such case Landlord's
rights shall be limited to either the immediate termination of Tenant's
occupancy or the treatment of Tenant's occupancy as a month to month tenancy,
any custom or law to the contrary notwithstanding. Tenant shall repair damage
caused by the removal of Tenant's fixtures and equipment.
DEFAULT AND REMEDIES
17. (a) If any rent is due and remains unpaid for ten (10) days after
receipt of notice from Landlord, or if Tenant breaches any of the other
covenants of this Lease and if such other breach continues for thirty (30) days
after receipt of notice from Landlord, Landlord shall then but not until then,
as its sole legal remedies but in addition to its remedies in equity, if
available, have the right (a) to sue for rent, (b) to re-enter without
terminating this Lease, provided that Landlord shall use its best efforts to
relet the Leased Premises for Tenant's account and otherwise to mitigate its
damages (it being expressly understood that Tenant shall remain liable on a
monthly basis for the difference between what Tenant's obligations under this
Lease are and what Landlord actually collects, and further provided that-if
Landlord elects to re-enter without terminating this Lease, this Lease shall
nonetheless expire as of the next optional termination date as set forth in
Article 3[d]), or (c) to terminate this Lease and re-enter the Leased Premises;
but if Tenant shall pay said rent within said ten (10) days, or in good faith
within said thirty (30) days commence to correct such other breach, and
diligently proceed therewith, then Tenant shall not be considered in default.
(b) If Landlord shall from time to time fail to pay any sum or sums due to
Tenant and if such failure continues for thirty (30) days after receipt of
notice from Tenant, Tenant shall have the right and is hereby irrevocably
authorized and directed to deduct such sum or sums from fixed and percentage
rent and other sums due Landlord, together with interest thereon at the
so-called prime rate charged from time to time by The First National Bank of
Chicago, plus two per cent until fully reimbursed. If Landlord shall from time
to time fail to perform any act or acts required of Landlord by this Lease and
if such failure continues for thirty (30) days after receipt of notice from
Tenant, Tenant shall then have the right, at Tenant's option, to perform such
act or acts, in such manner as Tenant deems reasonably necessary, and the full
amount of the cost and expense so incurred shall immediately be owing by
Landlord to Tenant, and Tenant shall have the right and is hereby irrevocably
authorized and directed to deduct such amount from fixed and percentage rent and
other sums due Landlord, together with interest thereon at the so-called prime
rate charged from time to time by The First National Bank of Chicago, plus two
per cent until fully reimbursed. If Landlord shall in good faith within said
thirty (30) days commence to correct such breach, and diligently proceed
therewith to completion, then Landlord shall not be considered in default.
(c) No delay on the part of either party in enforcing any of the provisions
of this Lease shall be considered as a waiver thereof. Any consent or approval
granted by either party under this Lease must be in writing and shall not be
deemed to waive or render unnecessary the obtaining of consent or approval with
respect to any subsequent act or omission for which consent is required or
sought.
TITLE AND POSSESSION
18. (a) Landlord covenants, represents and warrants that Landlord has
entered into a contract to acquire fee simple legal title to the Leased Premises
and has the right to enter into this Lease, that said entire property is now and
shall be as of the date of Tenant's recording of a Memorandum of this Lease and
a Ratification Agreement as below defined free and clear of all liens,
encumbrances and restrictions, except for those items set forth on Exhibit "D"
attached hereto and made a part hereof, none of which shall limit, interfere
with or prohibit Tenant's use and occupancy of the Leased Premises or interfere
with any of Tenant's rights under this Lease, and that upon paying the rents and
keeping the agreements of this Lease on its part to be kept and performed,
Tenant shall have peaceful and uninterrupted possession during the continuance
of this Lease. Upon acquisition of fee title, Landlord shall execute an
agreement in the form attached hereto as Exhibit "E", ratifying and adopting
this Lease ("Ratification Agreement") and Landlord, at Landlord's expense, shall
furnish Tenant evidence of Landiord's title and the status thereof as of the
date of such acquisition and as of the date of the recordation of such
Ratification Agreement. Such evidence shall be in form and substance reasonably
satisfactory to Tenant and shall be delivered to Tenant no later than seven (7)
business days prior to the date for delivery of possession as described in
Section (a) of Article 4, and shall include, among other things, evidence that
the Leased Premises and the Adjoining Property are properly zoned for general
retail use, including the operation of a drug store with a drive-through
pharmacy. Landlord shall also provide Tenant with an as-built survey of the
Leased Premises drawn per ALTA standards and certified to Tenant.
(b) If at the date of the recording of the Memorandum of this Lease or the
Ratification Agreement, whichever is later, the Leased Premises, or any part
thereof is subject to any mortgage, deed of trust or other encumbrance in the
nature of a mortgage, which is prior and superior to this Lease, it is a further
express condition hereof that Landlord shall thereupon furnish and deliver to
Tenant, in form and substance reasonably acceptable to Tenant, an agreement
executed by such mortgagee or trustee, either (i) making such mortgage, deed of
trust or other encumbrance in the nature of a mortgage subject and subordinate
to this Lease and to the leasehold estate created hereby and to all of Tenant's
rights hereunder, or (ii) obligating such mortgagee or trustee and any successor
thereto to be bound by this Lease and by all of Tenant's rights hereunder,
provided that Tenant is not then in continued default, after notice, in the
payment of rents or otherwise under the terms of this Lease.
(c) It is understood and agreed that Tenant shall, in no event, be
obligated to accept possession of the Leased Premises until the Landlord has
complied with the provisions of this Article.
(d) (i) If required by Landiord's institutional lender, Tenant shall
subordinate the lien of this Lease to the lien of such mortgage encumbering the
Leased Premises, so long as such lender simultaneously with such subordination
and as a condition of the same, executes in recordable form a Subordination,
Non-Disturbance and Attornment Agreement in form and substance acceptable to
Tenant and agrees to be bound by all of the terms and conditions of this Lease.
In the event of a conflict between the terms of such mortgage and the terms of
this Lease, the terms of this Lease shall prevail.
(ii) Landlord and Tenant agree to execute and deliver to the other within
twenty (20) days from receipt of either party's written request, estoppel
certificates in a form acceptable to the party to whom such request is made,
which certificates shall include information as to any modification of this
Lease, and to the best of Tenant's or Landlord's knowledge, whether or not the
other party is in default of this Lease.
REAL ESTATE TAXES
19. (a) Landlord, prior to the Rent Commencement Date, shall make a mailing
address change on the property tax records so that as of the Rent Commencement
Date the tax bill and tax notices for only the Leased Premises will be mailed to
Tenant at the following address: Walgreen Co., 300 Wilmot Road, Deerfield,
Illinois 60015, Attention: Tax Department. Prior to the date that the tax bill
is mailed directly to Tenant pursuant hereto, Landlord, prior to delinquency,
shall send to Tenant a copy of the tax bill for the Leased Premises if Tenant is
obligated to pay for such taxes.
(b) Upon receipt of the aforesaid tax bills, Tenant shall pay, when due and
before delinquency, the ad valorem real estate taxes (including all special
benefit taxes and special assessments but excluding so-called impact fees)
levied and assessed against the Leased Premises, commencing with the Rent
Commencement Date and continuing for the remainder of the Term. However, the ad
valorem taxes levied or assessed for the year in which Tenant commences paying
fixed rent shall be prorated between Landlord and Tenant so that Tenant shall
pay only such part thereof as pertains to the period commencing on the Rent
Commencementbate and ending December 31st bears to such entire tax year, and the
ad valorem taxes levied or assessed for the year during which this Lease expires
or is terminated shall be prorated between Landlord and Tenant so that Tenant
shall pay only such part thereof as the period commencing on January lst and
ending on the date this Lease expires or is terminated. Within thirty (30) days
after payment of any such taxes, or as soon thereafter as receipt bills are
available, Tenant shall furnish to Landlord photocopies of bills indicating such
payments.
If Landlord is required to pay to its lender a monthly escrow for taxes
levied and assessed against the Leased Premises, Tenant shall pay to Landlord
its pro rata share of such taxes on a monthly basis. At the end of each tax year
for which said taxes are levied, Landlord shall furnish to Tenant a statement
from its lender and a copy of the paid tax bill as furnished to Landlord by its
lender, and any overage paid by Tenant to Landlord shall be reimbursed to Tenant
and any shortage shall be paid to Landlord.
(c) Tenant shall have the right, and is hereby irrevocably authorized and
directed to deduct and retain amounts payable under the provisions of this
Article from additional percentage rents payable under Section (b) of Article 2
for such tax year, or in the alternative, if such taxes for any tax year are
payable after percentage rents under Section (b) of Article 2 for such tax year
are payable, then Tenant shall have no liability under this Article to the
extent of such percentage rents paid for such tax year. In such event, Landlord
shall refund to Tenant the amount of such overpayment of percentage rent.
(d) All special benefit taxes and special assessments shall be spread over
the longest time permitted and Tenant's liability for installments of such
special benefit taxes and special assessments not yet due shall cease upon the
expiration or termination of this Lease. In no event shall Tenant be obligated
to pay any impact fees whether or not billed by the taxing authority as a
special benefit tax or a special assessment.
(e) (i) Tenant shall have the right to contest the validity or the amount
of any tax or assessment levied against the Leased Premises or any improvements
thereon, provided that Tenant shall not take any action which will cause or
allow the institution of foreclosure proceedings against the Leased Premises.
Landlord shall cooperate in the institution of any such proceedings to contest
the validity or amount of real estate taxes and will execute any documents
required therefor.
(ii) Landlord covenants and agrees that if there shall be any refunds or
rebates on account of any tax, governmental imposition or levy paid by Tenant
under the provisions of this Lease, such refund or rebate shall belong to
Tenant. Any such refunds or rebates which shall be received by Landlord shall be
held in trust for the benefit of Tenant and shall be forthwith paid to Tenant.
Landlord shall, on request of Tenant, sign any receipt which may be necessary to
secure the payment of any such refund or rebate, and shall pay over to Tenant
such refund or rebate as received by Landlord.
INSURANCE
20. Commencing with the Initial Term, Tenant shall carry an all risk fire
and extended coverage insurance policy covering the Building and the other
improvements constructed by Landlord on the Leased Premises to the extent of not
less than one hundred percent (100%) pf the full insurable value, less
foundations, with companies which are authorized to do business in the State of
New Mexico and are governed by the regulatory authority which establishes
maximum rates in the vicinity. Tenant, upon request of Landlord's lender, shall
also carry earthquake and/or flood damage insurance to the same extent as may be
acceptable to Tenant and as customary for all risk coverage. Tenant shall also
procure and continue in effect public liability and property damage insurance
with respect to the operation of the Leased Premises (and also covering that
portion of the adjoining property used by Tenant for ingress and egress). Such
public liability insurance shall cover liability for death or bodily injury in
any one accident, mishap or casualty in a sum of not less than One Million
Dollars ($1,000,000.00), and shall cover liability for property damage in one
accident, mishap or casualty in the amount of not less than One Hundred Thousand
Dollars ($100,000.00). Tenant agrees to name the owner of the adjoining property
as an additional insured under such policy in compliance with the provisions of
the Declaration. The proceeds from Tenant's casualty insurance shall be paid and
applied only as set forth in Article 14 hereof. Any insurance carried or
required to be carried by Tenant pursuant to this Lease may, at Tenant's option,
be carried under an insurance policy(ies), self-insurance or pursuant to a
master policy of insurance or so-called blanket policy of insurance covering
other locations of Tenant or its corporation affiliates, or any combination
thereof; provided, however, that in the event Tenant carries any of such
insurance under any policy, Tenant shall have the right and is hereby
irrevocably authorized and directed to deduct and retain the amounts of said
premiums in any lease year from percentage rents payable under Section (b) of
Article 2 for such lease year, provided such premiums are at market rates and
excludes premiums for Tenant's personal property. From time to time and upon
request from Landlord to Tenant's Tax Department, 300 Wilmot Road, Deerfield,
Illinois 60015, Tenant shall cause to be issued to Landlord a current
Certificate of Insurance naming Landlord as additional insured under Tenant's
casualty insurance policy.
Notwithstanding the foregoing, Tenant may self-insure only so long as the
consolidated net worth of Walgreen Co. is not less than Three Hundred Million
Dollars ($300,000,000.00). Proceeds of self-insurance shall be paid to the same
extent as would an all risk fire and extended coverage insurance policy issued
by a reputable insurance company authorized to do business in the State of New
Mexico and which is governed by the regulatory authority which establishes
maximum rates in the vicinity (such as Hartford Casualty Insurance Company or
such other insurer as Landlord's lender may designate from time to time by
notice to Landlord and Tenant), with such endorsements as Landlord's lender
would normally require with respect to such a policy covering property serving
as collateral for a loan by Landlord's lender. On Landiord's request, Tenant
will deliver to Landlord written confirmation of the coverage in a letter or
certificate of insurance.
MUTUAL INDEMNITY
21. Except for loss, cost and expense caused by fire or other casualty,
Landlord and Tenant shall each indemnify and hold harmless the other against and
from any and all loss, cost and expense resulting from their own respective
negligent acts and omissions or the negligent acts and omissions of their
respective employees in the course of their employment.
CONDEMNATION
22. If the entire Leased Premises shall be taken by reason of condemnation
or under eminent domain proceedings, Landlord or Tenant may terminate this Lease
as of the date when possession of the Leased Premises is taken. If a portion of
the Leased Premises shall be taken under eminent domain or by reason of
condemnation and if in the opinion of Tenant, reasonably exercised, the
remainder of the Leased Premises are no longer suitable for Tenant's business,
this Lease, at Tenant's option, to be exercised by notice to Landlord within
sixty (60) days of such taking, shall terminate; any unearned rents paid or
credited in advance shall be refunded to Tenant. If this Lease is not so
terminated, Landlord forthwith and with due diligence, shall restore the Leased
Premises. Until so restored, fixed rent shall abate to the extent that Tenant
shall not be able to conduct business, and thereafter fixed rent for the
remaining portion of the Term shall be proportionately reduced.
Tenant shall be entitled to the award in connection with any condemnation
insofar as the same represents compensation for or damage to Tenant's fixtures,
equipment, leasehold improvements or other property, moving expenses as well as
the loss of leasehold (i.e. the unexpired balance of the lease Term immediately
prior to such taking). Landlord shall be entitled to the award insofar as same
represents compensation for or damage to the fee remainder. Any mortgagee of
Landlord shall be compensated out of Landlord's award.
For the purposes of this Article, the term "condemnation or under eminent
domain proceedings" shall include conveyances and grants made in anticipation of
or in lieu of such proceedings.
BROKERAGE
23. Landlord and Tenant represent that they have dealt with no broker or
agent with respect to this Lease. Landlord hereby indemnifies and saves and
holds Tenant harmless against any claims for brokerage commissions or
compensation or other claims of any kind (including reasonable attorney's fees
and costs) arising out of the negotiation and execution, of this Lease or
Tenant's interest or involvement with respect to the Leased Premises.
PREVAILING PARTY
24. In the event of litigation between Landlord and Tenant in connection
with this Lease, the reasonable attorneys'fees and court costs incurred by the
party prevailing in such litigation shall be borne by the nonprevailing party.
NOTICES
25. All notices hereunder shall be in writing and sent by United States
certified or registered mail, postage prepaid, or by overnight delivery service
providing proof of receipt, addressed if to Landlord, to the place where rent
checks are to be mailed, and if to Tenant, to 200 Wilmot Road, Deerfield,
Illinois 60015, Attention: Law Department, and a duplicate to the Leased
Premises, provided that each party by like notice may designate any future or
different addresses to which subsequent notices shall be sent. Notices shall be
deemed given upon receipt or upon refusal to accept delivery.
RIGHT OF FIRST REFUSAL
26. (a) From and after the date that is Ten (10) years after the date of
this Lease, in the event that Landlord shall receive a Bona Fide Offer to
purchase the Leased Premises at any time and from time to time during the Term
of this Lease or any extensions thereof from any person or entity, Landlord
shall so notify Tenant (Attn: Law Department with a duplicate notice to the Real
Estate Department) together with a true and correct copy of said Bona Fide
Offer. For purposes hereof, a "Bona Fide Offer" shall be deemed to be one made
in writing by a person or entity that is not related or affiliated with Landlord
(or any of Landiord's Partners or principal owners) in which Landlord intends to
accept (subject to this Article). Tenant may, at Tenant's option and within ten
(10) working days after receipt of Landiord's notice of said Bona Fide Offer and
receipt of a copy thereof, offer to purchase the Leased Premises at the price
and upon the terms and conditions as are contained in said Bona Fide Offer, in
which event, Landlord shall sell the Leased Premises to Tenant upon said terms
and conditions and that said price; furthermore, in such event, Landlord shall
convey the Leased Premises to Tenant by warranty deed. Landlord covenants that
it shall accept no such Bona Fide Offer or convey the premises until it has
complied with the terms of this Article. Any conveyance of the Leased Premises
made in the absence of full satisfaction of this Article shall be void. Tenant
may enforce this Article, without limitation, by injunction, specific
performance or other equitable relief.
(b) Tenants election not to exercise any right of first refusal as provided
for in this Article 26 shall not prejudice Tenant's rights hereunder as to any
future Bona Fide Offer. The terms and conditions contained in this Article 26
shall be binding upon the heirs, successors and/or assigns of Landlord.
TRANSFER OF TITLE
27. (a) In the event that Landlord conveys its interest in the Leased
Premises to any other person or entity, Tenant shall have no obligation to pay
rents or any other charges under this Lease to any such transferee until Tenant
has been notified of such conveyance and has received satisfactory evidence of
such conveyance together with a written direction from such transferee as to the
name and address of the new payee of rents and other charges. It is understood
and agreed that Tenant's withholding of rent and other charges until its receipt
of such satisfactory evidence shall not be deemed a default under this Lease.
(b) In the event Landlord sells its interest in the Leased Premises,
Landlord shall be relieved of any and all liability under any of Landlord's
covenants and obligations contained in or derived from this Lease arising out of
any act, occurrence, or omission occurring thereafter, and the assignee or
purchaser at any such sale or any subsequent sale of the Leased Premises or
assignment of this Lease, shall be deemed without any further agreement between
the parties and any such assignee or purchaser, to have assumed and agreed to
carry out any and all of the covenants and obligations of Landlord under this
Lease.
RENT TAX
28. In the event that any governmental authority imposes a tax, charge,
assessment or other imposition upon tenants in general which is based upon the
rents payable under this Lease, Tenant shall pay the same to said governmental
authority or to Landlord if Landlord is responsible to collect the same (in
which case Landlord shall remit the same in a timely manner and, upon request of
Tenant, evidence to Tenant said remittance). Tenant is hereby authorized and
directed to deduct the amount of such taxes, charges, assessments or impositions
from additional percentage rents payable under Section (b) of Article 2 for such
lease year or, in the alternative, in the event that such imposition or a
portion thereof is due after percentage rents, payable under Section (b) of
Article 2 have been paid, Tenant shall have no liability under this Article to
the extent that percentage rents for said lease year have been paid. Nothing
contained herein shall be deemed to obligate Tenant with respect to any income,
inheritance or successor tax or imposition.
MISCELLANEOUS
29. (a) Captions of the several Articles contained in this Lease are for
convenience only and do not constitute a part of this Lease and do not limit,
affect or construe the contents of such Articles.
(b) If any provision of this Lease shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
(c) If the Landlord is comprised of more than one person or entity, the
obligations imposed on Landlord under this Lease shall be joint and several.
(d) All provisions of this Lease have been negotiated by both parties at
arm's length and neither party shall be deemed the scrivener of this Lease. This
Lease shall not be construed for or against either party by reason of the
authorship or alleged authorship of any provision hereof.
(e) This instrument shall merge all undertakings between the parties hereto
with respect to the Leased Premises and shall constitute the entire lease unless
otherwise hereafter modified by both parties in writing.
(f) This instrument shall also bind and benefit, as the case may require,
the heirs, legal representatives, assigns and successors of the respective
parties, and all covenants, conditions and agreements herein contained shall be
construed as covenants running with the land. This instrument shall not become
binding upon the parties until it shall have been executed and delivered by both
Landlord and Tenant.
(g) Landlord has been afforded a full and fair opportunity to seek advice
from legal counsel and Landlord acknowledges that Tenant's attorney represents
Tenant and not Landlord.
(h) Notwithstanding any provision of this Lease to the contrary, the Term
shall commence, if at all, not later than twenty-one (21) years after the date
of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease, under seal, as
of the day and year first above written.
WALGREEN HASTINGS CO. CAP II
By________________________ By: Peterson Properties Real
Vice President Estate Services, Inc., Managing
General Partner
James A. Peterson
________________________________
James A. Peterson,
President
Attest: By: Steven Johnson Development,
L.L.C., General Partner
Steve Johnson
_________________________ ________________________________
Assistant Secretary Steve Johnson,
Managing Member
Witnesses: Witnesses:
_________________________ ________________________________
_________________________ ________________________________
STATE OF ILLINOIS)
)SS
COUNTY OF LAKE )
On this 29th day of March 1996, before me appeared Alan Resnick, to me
personally known, who, being by me duly sworn, did say that he is the Vice
President of WALGREEN HASTINGS CO., a Nebraska corporation, and that the seal
affixed to said instrument is the corporate seal of said corporation, and that
said instrument was signed and sealed in behalf of said corporation by authority
of its board of directors and said Vice President, acknowledged said instrument
to be the free act and deed of said corporation.
SEAL
Elena Kraus
________________________________
(Signature)
________________________________
(Title)
(My commission expires_________)
STATE 0F NEW MEXICO)
)SS
COUNTY OF BERNALILLO)
On this 19th day of March 1996, before me appeared James A. Peterson,
President of Peterson Properties Real Estate Services, Inc., and Managing
General Partner of CAP II, a New Mexico general partnership, and signed said
instrument on behalf of said corporation and said general partner acknowledged
said instrument to be the free act and deed of said partnership.
Seal
Colleen McGrath
________________________________
(Signature)
Notary Public
________________________________
(Title)
(My commission expires 10/18/97)
STATE 0F NEW MEXICO)
)SS
COUNTY OF BERNALILLO)
On this 19th day of March 1996, before me appeared Steven Johnson, Managing
Member of Steve Johnson Development, L.L.C. and General Partner of CAP II, a New
Mexico general partnership, and signed said instrument on behalf of said
corporation and said general partner acknowledged said instrument to be the free
act and deed of said partnership.
Seal
Colleen McGrath
________________________________
(Signature)
Notary Public
________________________________
(Title)
(My commission expires 10/18/97)
EXHIBIT 10.9
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND A13SUMPTION AGREEMENT ("Agreement") is entered into as
of the day of June, 1996, by and between C.A.P. II, a New Mexico general
partnership ("Assignor") and WESTLAND DEVELOPMENT CO., INC., a New Mexico
corporation ("Assignee").
RECITALS:
WHEREAS, pursuant to that certain Real Estate Purchase Agreement for the
Purchase of Non-Residential Real Property ("Purchase Agreement"), dated April 3,
1996, between Assignor and Assignee, covering that certain real property more
particularly described on Exhibit "All attached hereto and by this reference
incorporated herein ("Real Property"), Assignor is concurrently, with the
execution of this Agreement, conveying to Assignee all of its right, title and
interest in and to said Real Property; and
WHEREAS, pursuant to the aforesaid Purchase Agreement and in connection
with the conveyance by Assignor of its interest in said Real Property to
Assignee, the parties are executing this Agreement.
NOW, THEREFORE, in consideration of the above premises, the mutual
covenants hereinafter expressed, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Subject to the rights and interests granted to Western Bank,
Albuquerque, New Mexico, a New Mexico state banking corporation ("Lender"), in
connection with a loan from Lender to Assignor to finance the construction of
certain improvements on the Real Property, which loan Assignee has or will
assume pursuant to the aforesaid Purchase Agreement, Assignor hereby assigns,
transfers and conveys to Assignee all of its right, title and interest in and to
all contracts and agreements relating to the financing, construction,
development, lease or use of all or a portion of the Real Property or the
improvements thereon and all governmental licenses or permits obtained for the
construction of such improvements ("Instruments"), specifically including, but
not limited to the Instruments described on Exhibit "B" attached hereto and by
this reference incorporated herein.
2. Assignor hereby represents and warrants that as of the date hereof, to
the best of Assignor's actual knowledge, no default by any party to any of the
aforesaid Instruments exists thereunder and no circumstance or condition which
with the giving of notice or the passage time, or both, would constitute such a
default.
3 Assignee hereby accepts the foregoing assignment, and, in addition,
expressly assumes and agrees to keep, perform and f ulf ill all of the terms,
covenants, obligations and conditions required to be kept, performed and
fulfilled by Assignor from and after the date hereof under or with respect to
the aforesaid Instruments.
4. Assignor hereby agrees to indemnify, defend, and hold harmless Assignee
from and against any and all liability, loss, cost, damage, or expenses
(including without limitation, attorneys, fees and costs) directly or indirectly
arising out of or related to the failure of Assignor to perform the obligations
of the Assignor under the aforesaid Instruments arising prior to the date
hereof.
5. Assignee hereby agrees to indemnify, defend and hold harmless Assignor
and any guarantors of the obligations of Assignor from and against any and all
liability, loss, cost, damage or expense (including, without limitation,
attorney's fees and costs) directly or indirectly arising out of or related to
the failure of Assignee to perform the obligations under the aforesaid
Instruments assumed by Assignee hereunder arising from and after the date
hereof.
6. Assignor and Assignee each hereby represent and warrant to the other
that it has full right and lawful authority to execute and deliver this
Agreement.
7. Assignor and Assignee each hereby agree to execute, acknowledge, and
deliver any other documents, instruments or materials reasonably necessary or
appropriate to effect the assignment and assumption contemplated by this
Agreement.
8. This Agreement shall be binding upon and inure to the benefit of the
parties, their respective heirs, personal representatives, successors and
assigns.
9. This Agreement may be executed in a number of identical counterparts. If
so executed, each such counterpart is to be deemed an original for all purposes,
and all such counterparts shall collectively constitute one agreement, but for
the purpose of proving the existence of this Assignment and Assumption of Lease
it shall not be necessary to produce or account for more than one such
counterpart except for the purpose of demonstrating that any party is a
signatory thereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
ASSIGNOR: C . A . P . I I , a New general partnership
By: Peterson Properties Real Estate
Services, Inc., a New Mexico
corporation, Managing General
Partner
By: James A. Peterson
__________________________________
James A. Peterson, President
By: Steve Johnson Development Ltd.
Liability Co., a New Mexico limited
liability company, General Partner
Steven A. Johnson
By: ___________________________________
Steven J. Johnson, Managing Member
ASSIGNEE: WESTLAND DEVELOPMENT CO., INC., a New Mexico corporation
Barbara Page
By: ___________________________________
Name:______________________________
President and CEO
Title:_____________________________
ACKNOWLEDGMENTS
STATE OF NEW MEXICO)
)SS
COUNTY OF BERNALILLO)
This instrument was acknowledged before me on June 19, 1996, by James A.
Peterson, President of Peterson Properties Real Estate Services, Inc., Managing
General Partner of C.A.P. II, a New Mexico general partnership, on behalfof said
partnership.
Betty L. Peterson
_______________________________
Notary Public
My commission expires:
February 16, 1997 OFFICIAL SEAL
_____________________
STATE OF NEW MEXICO)
)SS
COUNTY OF BERNALILLO)
This instrument was acknowledged before me on June 19, 1996, by Steven J.
Johnson, Managing Member of Steve Johnson Development Ltd. Liability Co.,
General Partner of C.A.P. II, a New Mexico general partnership, on behalf of
said partnership.
Betty L. Peterson
_______________________________
Notary Public
My commission expires:
February 16, 1997 OFFICIAL SEAL
_____________________
STATE OF NEW MEXICO)
)SS
COUNTY OF BERNALILLO)
This instrument was acknowledged before me on June 14, 1996 by Barbara
Page, President and CEO of Westland Development Coq, Inc., a New Mexico
corporation, on behalf of said corporation.
Robert S. Simon
_______________________________
Notary Public
My commission expires:
May 15, 1998 OFFICIAL SEAL
_____________________
EXHIBIT "A"
DESCRIPTION OF THE REAL PROPERTY
Tract lettered 'IF" of Tracts lettered "All through 'IF", inclusive,
Hubbell Plaza, City of Albuquerque, as the same is shown and designated on the
Replat of said Addition, filed in the Office of the County Clerk of Bernalillo
County, New Mexico, on August 15, 1986, in Plat Book C31, Folio 75.
EXHIBIT "B"
1 Lease dated March 19, 1996, between C.A.P. II, a New Mexico general
partnership, as Landlord, and Walgreen Hastings Co., a Nebraska corporation, as
Tenant.
2. Memorandum of Lease dated March 19, 1996, between C.A.P. II, a New
Mexico general partnership, as Landlord, and Walgreen Hastings Co., a Nebraska
corporation, as Tenant, recorded April 17, 1996 in Book 96-11, Pages 296-304,
Records of Bernalillo County, New Mexico.
3. Ratification Agreement by C.A.P. II, a New Mexico general partnership,
recorded April 17, 1996 in Book 96-11, Pages 305307, Records of Bernalillo
County, New Mexico.
4. Mortgage dated April 17, 1996 by C.A.P. II, a New Mexico general
partnership, to Western Bank, Albuquerque, New Mexico, a New Mexico state
banking corporation, recorded April 17, 1996 in Book 96-11, pages 292-295,
Records of Bernalillo County, New Mexico.
5. Construction Line of Credit (promissory note) in the original principal
sum of $2,490,000.00 dated April 16, 1996 by C.A.P. II, a New Mexico general
partnership, to Western Bank, Albuquerque, New Mexico, a New Mexico state
banking corporation.
6. Agreement between owner and Architect for Professional Services dated
March 28, 1996, between C.A.P. II, as Owner, and George Rainhart & Associates,
as Architect.
7. Standard Form of Agreement Between owner and Contractor dated March 28,
1996, between C.A.P. II, a New Mexico general partnership, as Owner, and Wilger
Enterprises, Inc., as Contractor.
8. Assignment of Architect's Contract dated April 17, 1996 by C.A.P. II, a
New Mexico general partnership, to Western Bank, Albuquerque, New Mexico, a New
Mexico state banking corporation.
9. Assignment of Construction Contracts dated April 17, 1996 by C.A.P. II,
a New Mexico general partnership, to Western Bank, Albuquerque, New Mexico, a
New Mexico state banking corporation.
10. Assignment (of Lease between C.A.P. II and Walgreen Hastings Co., as
described in item 1 above) dated April 17, 1996 by C.A.P. II, a New Mexico
general partnership, to Western Bank, Albuquerque, New Mexico, a New Mexico
state banking corporation, and Acknowledgement of Assignment by Walgreen
Hastings Co.
11. Non-disturbance Agreement dated May 15, 1996 by Western Bank,
Albuquerque, New Mexico, a New Mexico state banking corporation, in favor of
Walgreen Hastings Co., a Nebraska corporation, recorded May 20, 1996, in Book
96-14, Pages 11291130, Records of Bernalillo County, New Mexico.
12. Financing Statement dated April 16, 1996 by C.A.P. II in favor of
Western Bank (covering assignment of Walgreen Hastings Lease described in item 1
above).
13. Median Access Agreement dated April 25, 1996, between C.A.P. II, a New
Mexico general partnership, and South Coors Limited Partnership, a New Mexico
limited partnership, recorded May 1, 1996 in Book 96-12, Pages 5619-5629,
Records of Bernalillo County, New Mexico.
14. Drainage Covenant dated May 31, 1996, between C.A.P. II, a New Mexico
general partnership, and the City of Albuquerque.
