SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended March 31, 1998
----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________.
Commission File No. 0-9458
------
Eagle Exploration Company
-------------------------
(Name of small business issuer in its charter)
Colorado 84-0804143
-------- ----------
(State or other jurisdiction of (IRS Employers ID Number)
incorporation or organization)
1801 Broadway, Suite 1420, Denver, Colorado 80202
-------------------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: 303/296-3677
------------
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, No Par Value
--------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 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 Registrant's revenues for its most recent fiscal year $74,802
-------
At June 8, 1998, 3,072,836 shares of common stock, no par value, the
Registrant's only class of voting stock) were outstanding. The aggregate
market value of the 1,530,378 common shares of Registrant held by
nonaffiliates was approximately $286,946 at June 8, 1998, based on the mean
between the bid and asked prices on the OTC Bulletin Board. See Item 5 herein
for additional information in this regard.
The Exhibit Index appears on page 13.
PART I
Item 1. Description of Business.
- - --------------------------------------
Nature of Business and Management's Plan
- - ---------------------------------------------
Eagle Exploration Company's primary operations included the purchase and
development of residential and commercial real estate. The Company's
operations also primarily included engaging in oil and gas exploration and
production activities, acquiring whole or partial interests in oil and gas
leases, and farming out or reselling all or part of its interest in these
leases to other companies in the oil and gas industry. The Company sold all
land held for development during the year ended March 31, 1995. Also the
Company's commercial property is under contract and scheduled to close
subsequent to the year ended March 31,1998. At this time, the Company has no
plans to acquire additional land for development and sale but is investigating
various potential acquisitions and other business opportunities.
1998 Activities
- - ----------------
As discussed in the Company's previous reports, the Company brought suit
against the manager of Eagle's Landing, LLC, (the "LLC"). The Company owns a
40 percent membership interest in the LLC and the purpose of the LLC was to
develop, lease and sell an apartment house project located in Jefferson
County, Colorado. In this case, the Company, for itself and on behalf of the
LLC sued the manager of the LLC, seeking various relief, including an order
that the manager market and sell the property owned by the LLC, that he
recover moneys owed to the LLC and that he distribute to the members of the
LLC amounts owed to them. The case was stayed on March 11, 1998, by the court
on a joint motion for stipulation filed pursuant to the terms of a settlement
agreement executed by the parties as of January 30, 1998. Under the terms of
the settlement agreement, the property is to be marketed and sold. Upon such
sale the manager is required to pay to the Company its share of the sale
proceeds along with other amounts owed to the Company by the manager. The
Company is not liable to pay any money to any person or entity under the
settlement agreement.
On March 5, 1998, the LLC entered into a Purchase and Sale Agreement with
a qualified buyer. The purchase price for the apartment complex is
$15,300,000. The agreement provides for, among other things, that the buyer's
obligation to close be subject to inspections and financing.
Subsequent to year end, the parties entered into the First Amendment to
Purchase and Sale Agreement (April 10, 1998). The amendment provides for,
among other things, that the buyer remove all inspection contingencies. The
finance contingency was also removed. The buyer was approved by the LLC's
lender to assume the property's existing loan in the amount of approximately
$10,700,000 on March 31, 1998. The purchase price was not adjusted.
Non-refundable earnest money was increased to $865,000, and the Company's
proportionate share was deposited in escrow with the title company. The
closing date was modified to occur on the earlier of July 31, 1998, or the
closing of the buyer's sale of certain improved real estate. Upon closing,
the Company's share of net proceeds, are contemplated to be approximately
$2,000,000.
Also during fiscal 1998 the Company elected to develop potential gas
reserves on certain minerals it owns in Wallace County, Kansas. To cure a
potential title problem related to its mineral ownership, the Company
commenced a quiet title action on the mineral interest acquired by the
Company. On February 2, 1998, the Company received a judgment quieting the
title of its mineral interest.
The Company's mineral interest is a 75 percent interest in the S/2 of
Section 19, Township 13 South, Range 42 West, Wallace County, Kansas. The
Skelly Oil Company drilled the No. 1 Sexson, NESW, Section 19, Township 13
South, Range 42 West, Wallace County, Kansas. After two successful drill stem
tests in August, 1956, Skelly set production casing and completed this well in
February, 1957, for 5,000 MCFGPD in an Upper Morrow Sandstone. It was after
completion that a gas analysis revealed the bad news that the heating value
was only 491 BTU. The gas had burned during previous testing so Skelly had no
suspicion that the gas was unusual. In spite of a relatively high helium
content of 2.3 percent the No. 1 Sexson was later plugged because of the
absence of either a gas or helium market.
During fiscal 1998 the construction of a $100 million gas plant was
commenced nearby the No. 1 Sexson well. The Company entered into a pooling
agreement with the owners of the remaining 25 percent interest under its land
as well as the N/2 of Section 19. The pooling agreement stipulates that the
Company owns a 37.5 percent working interest and a 5.625 percent royalty
interest in 640 acres. The agreement further provides that the Company
subsequent to year end will participate with its 37.5 percent working interest
and attempt a washdown on the old No. 1 Sexson well.
The estimated cost to washdown and complete the well is $75,000.
Reserves for similar gas wells in the area are estimated at 1 billion cubic
feet of gas per well. Based on well control on the pooled acreage, it appears
that one additional gas well may be developed. The cost to drill and complete
an additional test well in the area is approximately $200,000. No additional
drilling is planned at this time.
Employees
- - ---------
At June 8, 1998, the Company had two full-time employees. The Company
has and may retain independent consultants from time to time on a limited
basis.
Item 2. Properties.
- - -----------------------
The Company's assets consist of a 40 percent interest in the LLC, cash,
office furniture and equipment, and very minor interests in oil and gas
properties including one lease operated by the Company.
Item 3. Legal Proceedings.
- - -------------------------------
Eagle Development Company v. Terrence J. O'Connor, Boulder County,
Colorado, District Court, Case No. 97-458. This case was stayed on March 11,
1998, by the court on a Settlement Agreement executed by the parties as of
January 30, 1998. Although the Settlement Agreement resolves all the issues,
the case remains open to assist the Company, if necessary, to implement the
provisions of the Settlement Agreement. The property is scheduled to close
subsequent to year end. Proceeds from the sale are to be disbursed in
accordance with the Settlement Agreement. At that time all the provisions
should be satisfied, and the Company will file a release of this case with the
court.
Item 4. Submissions of Matters to a Vote of Security Holders.
- - -------------------------------------------------------------------------
No matter was submitted during the fourth quarter of fiscal 1998 to a
vote of the Company's security holders.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
- - ------------------------------------------------------------------------------
Matters.
- - --------
The table below presents the range of high and low bid quotations for the
Company's common stock on a calendar quarter basis as reported in the OTC
Bulletin Board. The Company's trading symbol is EGXP. There is little or no
trading in the Company's common stock, hence the quotations set forth below
may not represent actual transactions and do not represent transactions in any
material number of the Company's shares.
<TABLE>
<CAPTION>
Bid High Bid Low
--------- --------
<S> <C> <C>
1996
- - ----
2nd quarter $.30 $.22
3rd quarter $.2825 $.1575
4th quarter $.25 $.125
1997
- - ----
1st quarter $.25 $.125
2nd quarter $.25 $.125
3rd quarter $.25 $.125
4th quarter $.25 $.125
1998
- - ----
1st quarter $.25 $.125
</TABLE>
As of June 8, 1998, the Company had approximately 538 holders of record
of its common stock.
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on its common
stock have been paid by the Company, nor does the Company anticipate that such
dividends will be paid in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
- - -----------------------------------------------------------------------------
Financial Condition, Liquidity and Capital Resources
- - ---------------------------------------------------------
Cash, cash equivalents and certificates of deposit for the year ended
March 31, 1998, were $630,450 as compared to $704,055 for the same period
ended March 31, 1997. This is a decrease of approximately ten percent or
$73,605.
Shareholders' equity for the year ended March 31, 1998, was $696,200 as
compared to the prior fiscal year ended March 31, 1997, shareholders' equity
was $860,463 a loss of $164,263.
The attached auditors' report concluded with no opinion on the Company's
financial statements because the LLC was not audited for its years ended March
31, 1996 and 1997. As a result, the Company is not able to ascertain the
audited value of its investment in the LLC nor its equity interest in the
earnings or losses of the LLC for the year ended March 31, 1998. The Company
did not have a controlling interest in the LLC operating the apartment
project and therefore it was unable to cause the LLC to audit the financial
statements for these periods. Also as a result of the litigation surrounding
the project, the Company did not receive the necessary financial information
to conduct its own audit. However, the Company was successful in causing
the LLC to audit the financial statements for its first year in the
project which included the construction phase of the project. It also
caused a compilation of the LLC's financial statements for its calendar
years ended 1996 and 1997 and through closing of the sale of the apartment
property by an unrelated accounting firm. The 1995 audit and 1996 compilation
assisted management in recognizing issues that facilitated the litigation
process and ultimately assisted management in the settlement of this case.
The compilation for 1997 through closing date of the sale will determine
profits for that period as well as point out any unusual expenses. As a
result the Company's accounting firm will consider reissuing the attached
report subject to review of the compilation and closing documents for the
sale of the apartment project.
Upon closing of the apartment project the Company will add approximately
$2 million in cash to the balance sheet. This closing will also end all
litigation matters and enable management to focus on its on going plan of
investigating various potential acquisition and other business opportunities.
Over the year management has investigated several acquisitions that
were not acceptable.
Results of Operations
- - -----------------------
Fiscal 1998 Compared with Fiscal 1997
- - ------------------------------------------
Total revenue decreased slightly for the year ended March 31, 1998, to
$74,802 as compared to $76,367 for the year ended March 31, 1997. The Company
reported a net loss of $164,263 for the year ended March 31, 1998, as compared
to a net loss or $251,767 for the prior year ended March 31, 1997.
Total expenses for the year ended March 31, 1998, were $239,065 as
compared to $328,134 for the previous year ended March 31, 1997. The net
decrease of $89,069 is primarily attributable to the Company's 40% membership
interest in the LLC's loss for 1997 which totaled approximately $107,000.
As previously discussed, the Company's have equity earnings or losses of
the LLC for the year ended March 31, 1998 were not ascertainable.
Also, this reduction was partially offset by an increase of approximately
$16,000 in legal fees (up from $31,000 to $47,000).
Item 7. Financial Statements.
- - ----------------------------------
See pages F-1 through F-7
<PAGE>
EAGLE EXPLORATION COMPANY
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
MARCH 31, 1998
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
-----------------
Page
----
Independent Auditors' Report F - 2
Consolidated Financial Statements
Consolidated Balance Sheet as of March 31, 1998 F - 3
Consolidated Statements of Operations for the Years
Ended March 31, 1998 and 1997 F - 4
Consolidated Statement of Stockholders' Equity for
the Years Ended March 31, 1998 and 1997 F - 5
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1998 and 1997 F - 6
Notes to Consolidated Financial Statements F - 7
F - 1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Eagle Exploration Company
Denver, Colorado
We were engaged to audit the accompanying balance sheet of Eagle Exploration
Company and Subsidiaries as of March 31, 1998 and the related statements of
operations, stockholders' equity and cash flows for the years ended March 31,
1998 and 1997. These consolidated financial statements are the responsibility
of the Company's management.
We are unable to obtain audited financial statements supporting the Company's
investment in a limited liability company (LLC) stated at $24,725 at March 31,
1998 or its equity in earnings or losses of the LLC, as described in Note 4 to
the consolidated financial statements; nor were we able to satisfy ourselves
as to the carrying value of the investment in the LLC or the equity in its
earnings or losses by other auditing procedures.
Since the Company has not received audited financial statements for the LLC
and we were not able to apply other auditing procedures to satisfy ourselves
as to the carrying value of the investment or the results of its operations,
the scope of our work was not sufficient to enable us to express, and we do
not express, an opinion on these consolidated financial statements.
/s/Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
May 28, 1998
Denver, Colorado
F - 2
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets
Cash and cash equivalents $ 333,450
Certificates of deposit 297,000
Other receivables 4,143
----------
Total current assets 634,593
----------
Office furniture, equipment and other,
net of $228,797 of accumulated
depreciation 44,066
Other assets
Investment in limited liability company
(Notes 4 and 5) 24,725
Other 26,637
---------
Total other assets 51,362
---------
Total assets $ 730,021
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 24,825
Deposits, deferred revenue and other 8,996
--------
Total current liabilities 33,821
--------
Commitments and contingencies (Notes 2 and 4)
Stockholders' equity
Common stock, no par value; authorized
10,000,000 shares; 3,072,836 shares issued
and outstanding 6,632,998
Accumulated deficit (5,936,798)
---------
696,200
---------
Total liabilities and stockholders' equity $ 730,021
=========
</TABLE>
See notes to consolidated financial statements.
F - 3
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
March 31,
----------------------------
1998 1997
------------- -----------
<S> <C> <C>
Revenues (Note 3)
Interest income $ 37,012 $ 39,039
Other income 37,790 37,328
-------- --------
74,802 76,367
-------- --------
Expenses
Equity in loss on investment in LLC
(Notes 4 and 5) - 106,743
Depreciation 6,701 12,775
Other operating expenses 232,364 208,616
--------- --------
239,065 328,134
--------- --------
Loss before income taxes (164,263) (251,767)
--------- --------
Net loss $ (164,263) $ (251,767)
========= =========
Basic loss per share $ (.05) $ (.08)
========= ==========
Weighted average number of shares
outstanding $3,072,836 $3,072,836
========= =========
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock Total
------------------- Accumulated Stockholders'
Shares Amount Deficit Equity
------ ------ ----------- ------------
<S> <C> <C> <C> <C>
Balance - March 31,
1996 3,072,836 $6,632,998 $(5,520,768) $1,112,230
Net (loss) for the year - - (251,767) (251,767)
--------- --------- ---------- ---------
Balance - March 31,
1997 3,072,836 6,632,998 (5,772,535) 860,463
Net (loss) for the
year - - (164,263) (164,263)
--------- --------- --------- ---------
Balance - March 31,
1998 3,072,836 $6,632,998 $(5,936,798) $ 696,200
========= ========= ========== =========
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
March 31,
-------------------------
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (164,263) $ (251,767)
------------ -----------
Adjustments to reconcile net loss
to net cash used by operating activities -
Equity in loss on investment in LLC - 106,743
Depreciation 6,701 12,775
Change in assets and liabilities -
Receivables 795 (1,116)
Other assets 1 (3,251)
Accounts payable 6,177 (18,603)
Deposits, deferred revenue and other (322) (943)
----------- ----------
13,352 95,605
----------- ----------
Net cash used by operating activities (150,911) (156,162)
----------- ----------
Cash flows from investing activities
(Purchase) redemption of certificates
of deposit (103,000) (194,000)
Purchases of office furniture and equipment (17,389) (1,709)
Payments (advances) on notes receivable - 500,000
Investment in limited liability company - -
Distribution from LLC 94,695 320,539
----------- ----------
Net cash used by investing activities (25,694) 624,830
----------- ----------
Net (increase) decrease in cash
and cash equivalents (176,605) 468,668
Cash and cash equivalents,
beginning of year 510,055 41,387
----------- ----------
Cash and cash equivalents, end of year $ 333,450 $ 510,055
=========== ==========
</TABLE>
See notes to consolidated financial statements.
F - 6
<PAGE>
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ------------------------------------------------------------------------------
Nature of Business and Management's Plans
- - ----------------------------------------------
Eagle Exploration Company's primary operations have included the purchase and
development of residential real estate and engaging in oil and gas exploration
and production activities, acquiring whole or partial interests in oil and gas
leases, and farming out or reselling all or part of its interest in these
leases to other companies in the oil and gas industry. Currently, the Company
has no plans to acquire additional land for development and sale nor has it
identified oil and gas investment opportunities.
Principles of Consolidation
- - -----------------------------
The consolidated financial statements include the accounts of Eagle
Exploration Company and its wholly owned subsidiaries (hereinafter the
Company) after elimination of all significant intercompany accounts and
transactions. The following is a listing of the wholly owned subsidiaries of
Eagle Exploration Company, Colorado Eagle Exploration Company, Emsen Energy,
Inc., Eagle Development Company and Overland Energy, Inc.
Use of Estimates
- - ------------------
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Fair Value of Financial Instruments
- - ---------------------------------------
The carrying amounts of financial instruments including cash and cash
equivalents, certificates of deposit, receivables and accounts payable
approximated fair value as of March 31, 1998 because of the relatively short
maturity of these instruments.
Cash and Cash Equivalents
- - ----------------------------
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. The effect of
exchange rate changes on cash flows is not material.
Property and Equipment
- - ------------------------
Property and equipment are recorded at cost. The Company depreciates its
office furniture and equipment over an estimated useful life of five years
using straight-line and accelerated methods.
Investment in Limited Liability Company
- - -------------------------------------------
The Company accounts for its 40 percent investment in a limited liability
company using the equity method of accounting.
Basic Loss Per Share
- - -----------------------
The Company computes loss per share in accordance with Statement of Financial
Accounting Standard No. 128. The Company has presented only basic losses per
share as it had no dilutive potential common shares outstanding during the
years ended March 31, 1997 and 1998. Basic earnings per share has been
computed based on the weighted average number of shares outstanding.
Income Taxes
- - -------------
Deferred income taxes result from temporary differences. Temporary
differences are differences between the tax basis of assets and liabilities
and their reported amounts in the financial statements that will result in
taxable or deductible amounts in future years. The Company's temporary
differences result primarily from the depreciation of fixed assets and oil and
gas property.
NOTE 2 - COMMITMENTS
- - -----------------------
The Company entered into an operating lease for office space requiring monthly
lease payments of $1,191 per month. The lease expires November 30, 1999.
Rent expense for the year ended March 31, 1998 was $13,352. As of March 31,
1998, future minimum annual lease payments are as follows:
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------
<S> <C>
1999 $ 14,292
2000 10,719
--------
$ 25,011
========
</TABLE>
NOTE 3 - INCOME TAXES
- - -------------------------
There was no provision for income taxes due to the operating losses.
Reconciliations between the statutory federal income tax expense (benefit)
rate as a percentage of loss before income taxes is as follows:
<TABLE>
<CAPTION>
March 31,
---------------------------
1998 1997
----------- ---------
<S> <C> <C>
Statutory federal income tax expense rate 34% 34%
Federal net operating losses utilized (34) (34)
----- -----
Effective income tax expense rate -% -%
===== =====
</TABLE>
At March 31, 1998, the Company has net operating loss carryforwards for
federal and state income tax purposes as follows:
<TABLE>
<CAPTION>
Year
Net Operating of
Losses Expiration
-------------- ------------------------
<S> <C>
$ 1,040,000 2000
1,482,000 2001
1,162,000 2002
426,000 2003
464,000 2004
1,000 2005
33,000 2006
- 2007
97,000 2011
740,000 2012
170,000 2013
----------
$ 5,615,000
==========
</TABLE>
The Company has an approximately $1,910,000 deferred tax asset as a result of
the net operating losses assuming a 34% effective tax rate. There is
uncertainty as to whether the Company will generate sufficient revenues in the
future to utilize the net operating loss carryforwards and therefore 100% of
the deferred tax asset resulting from the net operating loss carryforwards has
been fully impaired.
<PAGE>
NOTE 4 - INVESTMENT IN LIMITED LIABILITY COMPANY
- - -------------------------------------------------------
The Company has filed a lawsuit against the managing member of the LLC
relating to the managing partners delaying and/or refusing to sell the
property of the LLC and other matters relating to transactions entered into by
the managing partner. The audited financial statements for the LLC as
required by generally accepted accounting principles and Registration S-X of
the Securities Act of 1933 related to separate financial statements of a
significant subsidiary were not available due to the above litigation. As a
result, the Company has recorded its share of income or loss of the LLC based
on compiled financial statements provided by the LLC through December 31,
1996.
The following is a condensed unaudited balance sheet and statement of
operations for the LLC as of December 31, 1997:
In 1998, the Company received cash distributions from the LLC for $94,695
which has been recorded as a reduction in the Company's investment resulting
in a balance of $24,725 at March 31, 1998. The LLC has placed its property
for sale and has a contract to sell the property. The closing date is
expected to occur on the earlier of July 31, 1998, or the closing. The buyer's
Sale of Certain improved real estate. Upon closing the Company's share of net
proceeds is estimated to be approximately $2,000.00
F - 7
Item 8. Changes in and Disagreements with Accountants on Accounting and
- - ------------------------------------------------------------------------------
Financial Disclosure.
- - ----------------------
The disclosure requirements of Item 304 of Regulation SB are not
applicable.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
- - ------------------------------------------------------------------------------
Compliance with Section 16(a) of the Exchange Act.
- - ---------------------------------------------------------
The following are the directors and executive officers of the Company.
<TABLE>
<CAPTION>
Raymond N. Paul M. M. D.
Joeckel (1) Joeckel (1) Young
------------ ------------ -----
<S> <C> <C> <C>
Director Since October, October, February,
1979 1979 1990
Position(s) with President & Secretary & Director
the Company Director Director
Age 72 46 72
</TABLE>
_______________
(1) Messrs. Raymond N. Joeckel and Paul M. Joeckel, the Company's only
executive officers, have served as the Company's President and Secretary,
respectively, since December, 1979. The executive officers of the Company
hold office until their death, resignation, or removal by the Board of
Directors. There is no arrangement or understanding between any director or
officer or any other person or persons pursuant to which he was or is to be
selected as a director or officer. Paul M. Joeckel is the son of Raymond N.
Joeckel.
Raymond N. Joeckel attended Los Angeles City College and the University
of Southern California in programs which did not lead to degrees. He received
a LL.B. degree from Southwestern University, Los Angeles, California, in 1950.
Mr. Joeckel joined Shell Oil Company as a landman in 1950 and became Land
Manager for the Rocky Mountain region for Shell Oil Company in 1962. He
remained in that position until 1969 at which time he became an independent
oil and gas operator dealing primarily in oil and gas leases.
Paul M. Joeckel received a B.A. degree in Economics from Colorado State
University in 1976. During 1976 and until 1977, Mr. Joeckel was self-employed
as an independent landman. From June, 1977, until joining the Company on a
full-time basis in January, 1980, he was employed as a senior landman by
Diamond Shamrock Corporation.
M. D. Young received a B.A. degree in Geology from Vanderbilt University
in 1951 at Nashville, Tennessee. From 1952 to 1960 Mr. Young worked for Gulf
Oil Corporation as an Area Geologist. Subsequently, he has been a consultant
to various companies in the industry. Mr. Young has also been a working
interest owner in many wildcat wells in the Rocky Mountain region. Mr. Young
is a member of the American Association of Petroleum Geologists.
No director serves as a member of the Board of Directors of any other
company with a class of equity securities registered under the Securities
Exchange Act of 1934 or any company registered as an investment company under
the Investment Company Act of 1940. See Item 11. for information as to
compliance with Section 16(a) of the Exchange Act.
Item 10. Executive Compensation.
- - -------------------------------------
The following information shows the compensation of the named executive
officers for each of the Company's last two fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
Name and
Principal Other Annual
Position Year Salary Bonus Compensation*
- - -------- ------- --------- -------- -------------
<S> <C> <C> <C> <C>
Raymond N. 1998 N/A N/A $2,628
Joeckel, 1997 N/A N/A $1,983
President
Paul M 1998 $60,000 N/A $3,118
Joeckel, 1997 $75,000 N/A $4,200
Secretary
LONG-TERM COMPENSATION
Name and Restricted
Principal Stock Options/ LTIP All Other
Position Year Awards SARs Payouts Compensation
- - -------- ---- --------- -------- --------- ------------
Raymond N. 1998 N/A N/A N/A N/A
Joeckel 1997 N/A N/A N/A N/A
President
Paul M. 1998 N/A N/A N/A N/A
Joeckel 1997 N/A N/A N/A N/A
Secretary
</TABLE>
* Other annual compensation does not include the amount attributable to
Company cars that the officers are allowed to use.
It is anticipated that salary payments to officers by the Company during
the next fiscal year for services in all capacities will not exceed the amount
set forth in the above table.
There are no stock and/or other compensatory plans or arrangements by
which the Company compensates its directors for services as directors, other
than director's fee of $100 per meeting of directors.
The Company provides medical insurance for all of its full-time employees
and executive officers.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
- - ------------------------------------------------------------------------------
The following table sets forth information, as of June 8, 1998, regarding
the common stock ownership of those persons known by the Company to be the
beneficial owners of more than five percent of its common stock, its
directors, and its officers and directors as a group. All of the stock listed
below is no par value common stock.
<TABLE>
<CAPTION>
Name & Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
- - ----------------- --------------------- ----------
<S> <C> <C>
Paul M. Joeckel 195,477 shares 6.36%
1801 Broadway Direct
Suite 1420
Denver, CO 80202
M. D. Young 500 shares -0-
800 Pearl Street Direct
Suite 406
Denver, CO 80203
Paul M. Joeckel, 1,346,481 shares 43.82%
Trustee Direct
Joeckel Family Trust
1801 Broadway
Suite 1420
Denver, CO 80202
Norman K. Brown 329,641 shares 10.73%
801 Broadway Direct
Suite 808
Seattle, WA 98122
All officers and 1,542,458 shares 50.20%
directors as a group Direct
______________
</TABLE>
The Company knows of no arrangements which could at a subsequent date
result in a change in control of the Company.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and officers and persons who own more than
ten percent of the Company's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Directors, officers and greater than ten percent shareholders are
required by the SEC regulation to furnish the Company with copies of all
Section 16(a) reports filed.
Based solely on its review of the copies of the reports it received from
persons required to file, the Company believes that during the period ended
March 31, 1998, all filing requirements applicable to its officers, directors
and greater than ten percent shareholders were complied with.
Item 12. Certain Relationships and Related Transactions.
- - ----------------------------------------------------------------
There were no transactions during this fiscal year required to be
reported hereunder.
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
- - ---------------------------------------------------
(a) Exhibits:
Item No.
Per S-K Document as Form 10-KSB Exhibit Reference
- - -------- ----------------------------------- ---------
(2) Plan of purchase, sale, reorganization - None -
arrangement, liquidation or succession
(3) Articles of Incorporation and By-Laws (1)
(4) Instruments defining the rights of - None -
security holders, including indentures
(5) Opinion re: legality - None -
(6) Opinion re: liquidation preference - None -
(7) Opinion re: tax matters - None -
(8) Voting trust agreement - None -
(9) Material contracts:
Agreement re: Meadows at Westwoods (1)
Operating Agreement re: Meadows at (1)
Westwoods
Promissory Note re: Meadows at (3)
Westwoods
Assignment of Membership Interest re: (4)
Eagle's Landing, LLC
Operating Agreement re: Eagle's (4)
Landing, LLC
Settlement Agreement re: Eagle's
Landing, LLC (5)
Real Estate Purchase and Sale
Agreements (5)
First Amendment to Purchase and
Sale Agreement (5)
(10) Statement re: Computation of per (2)
share earnings
(11) Statement re: Computation of ratios - None -
(12) Annual report to security holders, Form - None -
10-Q or quarterly report to security
holders
(13) Material Foreign Patents - None -
(14) Letter re: unaudited interim financial - None -
statements
(15 Letter re: change in certifying - None -
accountants
(16) Letter re: director's resignation - None -
(17) Letter re: change in accounting - None -
principles
(18) Previously unfiled documents - None -
(19) Reports to securities holder - None -
(20) Other documents or statements to - None -
security holder
(21) Subsidiaries of the Registrant (1)
(22) Published report regarding matters - None -
submitted to vote of security holders
(23) Consents of experts and counsel - None -
(24) Power of attorney - None -
(25) Statement of eligibility of trustee - None -
(26) Financial data schedule (5)
(27) Information from reports furnished - None -
to state insurance regulatory
authorities
(1) Previously filed documents incorporated herein by reference to the
Company's Registration Statement on Form S-1 (No. 2-67971) effective September
14, 1980, and the Company's Reports on Form 10-K for the fiscal year ended
March 31, 1994, and previous years.
(2) Not required, since information is ascertainable from the basic
consolidated financial statements.
(3) Filed with the Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1995.
(4) Filed with the Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1996.
(5) Filed herewith.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EAGLE EXPLORATION COMPANY
By:/s/ Raymond N. Joeckel
Raymond N. Joeckel
President
Date: June 26, 1998
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date
- - ----
June 26, 1998 /s/Raymond N. Joeckel
Raymond N. Joeckel
Principal Executive
Accounting and Financial
Officer and a director
June 26, 1998 /s/Paul M. Joeckel
Paul M. Joeckel
Secretary and a director
June 26, 1998 /s/M.D. Young
M. D. Young
A director
SETTLEMENT AGREEMENT
--------------------
This Settlement Agreement made this 30th day of January, 1998 by and between
Eagle Development Company, a Colorado corporation ("Eagle") and Terrence J.
O'Connor, an individual residing in Boulder, Colorado ("O'Connor").
RECITALS
A. Eagle is the Plaintiff and O'Connor is the Defendant in that certain
civil action pending in Boulder County District Court known as Civil Action
No. 97 CV 458, Division 2 (the "Litigation").
B. Eagle and O'Connor are members of a Colorado limited liability company
known as Eagles Landing, LLC (the "LLC"). O'Connor is the manager of the LLC.
C. The LLC owns certain improved real property in Jefferson County,
Colorado, which contains an apartment house (the "Property").
D. In the Litigation, Eagle alleges that O'Connor has wrongfully failed to
sell the Property as required by the Operating Agreement of the LLC, as
amended, and that Eagle is owed certain moneys by O'Connor and by the LLC that
O'Connor has wrongfully refused to pay or cause to be paid.
E. O'Connor has agreed, in his role as Manager of the LLC, to sell the
Property and has executed on behalf of the LLC a Commercial Contract to Buy
and Sell Real Estate dated January ___, 1998 under which The Ezralow Company
and/or assigns would purchase the Property for the sum of $15.4 million (the
"Ezralow Contract"). Eagle has approved the form of the Ezralow Contract at
the request of O'Connor. O'Connor has advised Eagle that while the Ezralow
Company has agreed on the general business terms contained in the Ezralow
Contract, it has not signed it but is instead providing comments to O'Connor
on it.
F. Eagle and O'Connor have agreed on the terms of a compromise and
settlement of Eagle's claims against O'Connor and the LLC and that O'Connor
will purchase Eagle's interest in the LLC pursuant to the terms and conditions
described below.
AGREEMENT
1. Eagle agrees to sell and O'Connor agrees to purchase Eagle's membership
interest in the LLC for the consideration and on the terms set out below.
2. O'Connor will proceed to attempt to close the sale of the Property
pursuant to the Ezralow Contract. If the Ezralow Contract does not result in
the sale of the Property, O'Connor agrees to immediately seek other contracts
for the sale of the Property at a price and on terms that reflect the
then-current market value of the Property. Specifically, O'Connor agrees to
pursue all reasonable offers from interested parties, to conduct sufficient
investigation on the maker of any offer received for a reasonable person to
determine whether the offer has a reasonable chance of being acceptable and
capable of resulting in a sale of the Property, to assist any potential
purchaser of the property by providing information reasonably necessary for
such person to conduct its due diligence as quickly as possible, and to keep
Eagle informed within two business days of the status of his sales efforts and
any offers or contracts he has received.
3. If the Property is not sold pursuant to the Ezralow contract and
O'Connor is not able by March 15, 1998 to obtain an executed contract to sell
the Property to an unaffiliated third-party at a price and on terms which
reflect the then-current market value of the Property, a sales committee
composed of Eagle, O'Connor (or another person designated by him) and a person
agreed on by Eagle and O'Connor or, if they are not able to agree on the
identity of any person, a person selected by the designees of Eagle and
O'Connor (each having designated a person for the purpose of making such
selection) (the "Sales Committee") shall assume the responsibility of selling
the Property. The Sales Committee shall attempt to sell the Property to an
unaffiliated third-party as quickly as reasonably possible at a price and on
terms which reflect the then-current market value of the Property. A vote by
any two of the members of the Sales Committee shall constitute the decision of
the Sales Committee. O'Connor will follow all directions given to him by the
Sales Committee, including any directions to execute any contract or other
documents relating to the sale of the Property.
4. Eagle and O'Connor will immediately analyze the operating results of
the Property and the other financial results of the LLC from 1/1/97 through
the present and attempt to agree on the amount of distributable profits to
which Eagle is currently entitled, taking into account amounts actually
distributed to Members since 1/1/97 and assuming that all Members are entitled
to pro-rata distributions. If they are not able to agree on such amount
within 45 days, Brock & Co. will be directed to conduct a review of the LLC
financial affairs and records for the calendar year 1997. It will supplement
that review to a date as close as possible to the closing of the sale of the
Property in order to have a complete review prepared for the period 1/1/97
through closing of the sale of the Property. The amount of Eagle's share of
distributable profits (which, for the purpose of this Settlement Agreement,
shall assume that all profits are distributable with no amount retained for
any purpose except for refundable tenants' deposits and ordinary and necessary
operating and third-party management expenses incurred but unpaid as of the
date of closing, and that the amount in the capital accounts of all members of
the LLC on such date is zero ($0), and which shall include any undistributed
profits existing on 1/1/97) for such period reflected in Brock's review shall
be paid by O'Connor to Eagle at the time of and out of the proceeds of the
sale of the Property and, to the extent such proceeds are insufficient to pay
such amount, from O'Connor's other assets. For the purpose of this
calculation, the amount of any distribution or payment to any Member of the
LLC or any affiliated entity, other than payments for services actually needed
by the project at rates not exceeding market rates and approved by Eagle or
expressly authorized by the Operating Agreement of the LLC, shall be added
back to the amount of distributable profits. The parties will be bound by
Brock's determinations contained in the review. The LLC shall pay Brock's fee
for performing the review. For the purpose of determining the amounts payable
to Eagle pursuant to this paragraph and paragraph 5, no amount owing on or
after 1/1/98 related to (i) the SID tax liability, (ii) Richard McKay, Home
Place Land & Cattle Co., Inc., a Colorado corporation or any affiliate or
successor of either entity, or (iii) any development, asset, management,
broker's or other fee, commission, overhead, salary or other payment of any
type to O'Connor or any entity affiliated with him, will be deemed to be
payable by Eagle, the LLC or the purchaser of the Property. Any amount paid
by the LLC after 1/1/98 relating to any of the matters listed in this
paragraph will be added to the total amount of distributable profits of which
Eagle is entitled to receive its 40% share pursuant to paragraph 5, below.
The provisions of this paragraph reflect the compromise and settlement of
various claims by Eagle and are reflected in the amount O'Connor has agreed to
pay to Eagle.
5. At closing of the sale of the Property, O'Connor shall pay or cause to
be paid to Eagle (A) 40% of the net sale proceeds, defined as the gross
selling price less (i) brokers' fees to brokers unaffiliated with either
party, with total brokers' fees not to exceed a total of 2%, (ii) customary
and reasonable closing costs paid to persons unaffiliated with either party,
and (iii) amounts owing to Allstate under the permanent loan; (B) the sum of
$262,500 payable from O'Connor's share of the closing proceeds and, to the
extent such proceeds are insufficient to pay such amount, from O'Connor's
other assets; and (C) Eagle's share of distributable cash for the period
1/1/97 through closing, as described in 3, above. Any amount payable under
subsection B of this paragraph that has not been paid to Eagle on or before
May 20, 1998 shall bear interest at 8%. The payment of all amounts payable to
Eagle under this Settlement Agreement shall be and is the personal obligation
of O'Connor as consideration for his acquisition of Eagle's membership
interest in the LLC.
6. Eagle agrees to keep confidential the amount being paid to it by
O'Connor and the basis for calculation of such amount, except to the extent it
is required to disclose any such information by any law, statute or rule
applicable to it.
7. Eagle agrees to cooperate with any reasonable request by O'Connor
regarding his tax planning related to the settlement or sale of the property
provided such request is reasonably acceptable to Eagle and its counsel and
does not have any actual or potential impact on Eagle or any of the
transactions described above.
8. O'Connor agrees to hold Eagle harmless and indemnify it against any and
all claims, loss, liabilities or expenses, including reasonable attorney's
fees, arising out of or related to the LLC, the Property or the apartment
project or its operation, including, but not limited to, any claim by any
party related to the settlement of the Litigation or any amounts received by
Eagle pursuant to this Settlement Agreement, excepting only claims by third
parties based on the express acts of Eagle or its officers, shareholders or
representatives (other than the acts of negotiating and executing this
Settlement Agreement, which shall be covered by the indemnification), which
claims shall not be covered by the indemnification contained in this
paragraph. Any attorney's fees claimed by Eagle under this paragraph shall be
payable by O'Connor unless a court of competent jurisdiction determines that
the amount of such fees exceeds a reasonable amount under the circumstances,
in which case O'Connor shall be required to pay only such fees as are
determined to be reasonable by such court. Eagle agrees not to voluntarily
cooperate with any person in asserting or supporting any claim against
O'Connor or the LLC except (i) with respect to Eagle's claims which arise out
of either the Litigation, if the Litigation goes to trial pursuant to
paragraph 10, or this Settlement Agreement, or (ii) to the extent that Eagle's
cooperation is legally required by the Colorado Rules of Civil Procedure,
court order or other legal requirement applicable to Eagle.
9. O'Connor agrees that if he breaches any of the provisions of this
Settlement Agreement and the sale of Eagle's interest in the LLC is not
transferred to O'Connor as a result of such breach, O'Connor will resign as
Manager of the LLC, a person elected by a majority of members of the Sales
Committee will become the Manager of the LLC, and Eagle will be entitled to
have a court of competent jurisdiction order such change upon a finding of a
breach hereunder by O'Connor. In the event that Eagle determines that
O'Connor has committed any breach of any of the provisions hereof, Eagle will
give to O'Connor written notice of such breach. If such breach is curable by
O'Connor, he shall have five (5) business days to cure such breach. In the
event of a cure of the breach within such five (5) day period, such that no
breach is then occurring, O'Connor will be deemed not to be in breach of this
Settlement Agreement.
10. Eagle and O'Connor agree to immediately file a joint motion for stay
of the Litigation. Subject to the provisions of paragraph 7, after the
performance of all acts required of O'Connor hereunder, Eagle will deliver to
O'Connor a written assignment of its membership interest in the LLC. At such
time, Eagle and O'Connor agree to and shall be deemed to waive and release all
claims contained in the Litigation and they shall file a joint motion to
dismiss the Litigation with prejudice. If, prior to such time, either party
hereto determines, in its sole discretion, that the other party is not
proceeding in good faith to perform the duties imposed on it by this
Settlement Agreement, the party making such determination shall have the right
to file a motion with the Court in which the Litigation is pending requesting
that the stay of the Litigation be lifted, and upon the filing of such a
motion, the parties agree that it shall be their intent and desire that the
Court lift the stay and order that the Litigation proceed to trial.
11. If any litigation is filed to enforce the terms of this Settlement
Agreement, the prevailing party will be entitled to recover all costs and
expenses incurred in connection with such litigation, including reasonable
attorneys' fees.
12. O'Connor personally guarantees to Eagle the prompt payment of all
amounts payable to Eagle pursuant to this Settlement Agreement. This
guarantee is a guarantee of payment and not of collection, is absolute and
shall not be conditioned or limited in any way based on the occurrence or
non-occurrence of any event or the receipt of any money or other specific
asset by O'Connor, provided, however, that O'Connor shall enjoy and be
entitled to exercise any rights provided to him under Colorado law in the
event of a breach of this Settlement Agreement by Eagle.
13. In the event of any dispute or conflict between any of the terms of
this Settlement Agreement and any other document to which either Eagle or
O'Connor is a party, the provisions of this Settlement Agreement shall control
and be binding on Eagle and O'Connor.
EAGLE DEVELOPMENT COMPANY, a Colorado corporation
By:___________________________________
Paul M. Joeckel, President
_______________________________________
TERRENCE J. O'CONNOR
PURCHASE AND SALE AGREEMENT
------------------------------
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made effective on
the date that the second of Purchaser and Seller has signed this Agreement, as
set forth next to the signature of the second such person to sign (the
"Effective Date"), by and between JON H. OLSON, OR ASSIGNS ("PURCHASER"), and
EAGLES LANDING, LLC, A COLORADO LIMITED LIABILITY COMPANY ("SELLER").
ARTICLE 1 - PROPERTY TO BE CONVEYED
1.1 Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, upon the terms and conditions hereinafter set forth, all rights, title
and interest in that certain parcel of land (herein called "Land") described
on Exhibit "A" attached hereto, all rights, privileges, easements and rights
of way appurtenant to the Land (herein called "Appurtenants"), the buildings
and improvements on the Land (herein called "Improvements") and the
appliances, furniture, fixtures, machinery, computers, software programs,
other equipment, supplies and other personal property, including Seller's
right title and interest (if any), in the name "EAGLES LANDING AT CHURCH
RANCH" and any telephone listings and numbers for the business Seller conducts
on the Land and Appurtenants (herein collectively called the "Personal
Property") attached to, located at or used in connection with the ownership,
operation, management or maintenance of the Land or the Improvements, other
than personal property owned by tenants. The Land, Appurtenants, Improvements
and Personal Property collectively called the "Property".
1.2 The Property shall include all right, title and interest, if any,
of Seller in and to any land lying in the bed of any street, road, highway or
avenue, open or proposed, in front of or adjoining all or any part of the Land
and in all strips, gores or rights-of-way, riparian rights and easements, and
all right, title and interest of Seller, if any, in and to (a) all tenant
leases, rents and profits from and after the Closing (as hereinafter defined),
(b) all tenant security deposits, damage and key deposits, cleaning deposits,
utility deposits and pet deposits, together with interest required by law to
be paid thereon, if any (collectively the "Security Deposits") and (c) all
licenses and permits relating to the Property.
1.3 The Property is known as "EAGLES LANDING AT CHURCH RANCH", is
located at 7402 West Church Ranch Boulevard, City of Westminster, County of
Jefferson, Colorado and is comprised of approximately 180,000 rentable square
feet located in 176 apartment units and related amenities.
ARTICLE 2 - PURCHASE PRICE
2.1 The purchase price (the "Purchase Price") for the Property shall
be Fifteen Million Three Hundred Thousand Dollars ($15,300,000.00) and,
subject to all prorations and adjustments provided herein, shall be paid as
follows:
2.2
2.2.1 Within two (2) business days of the execution and delivery of
this Agreement, Purchaser shall deposit with North American Title Company, 44
Cook Street, Suite 300, Denver, Colorado (the "Escrow Agent") the sum of Fifty
Thousand and No/100 Dollars ($50,000.00), by check or irrevocable federal
funds wire transfer of immediately available funds ( the "First Deposit").
2.1.2 Contemporaneously with Purchaser's removal of all contingencies
pursuant to Sections 10.1, 10.2 and 10.3 , Purchaser shall deposit with the
Escrow Agent the additional sum of One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) by irrevocable federal funds wire transfer of
immediately available funds (the "Second Deposit"). The First and Second
Deposits, and all interest earned thereon pursuant to Section 2.1.3 shall
collectively be referred to herein as the "Deposit".
2.1.3 At all times prior to Closing the Deposits shall be invested by
Escrow Agent in an interest-bearing escrow account and the Deposit and all
interest earned thereon shall be applied to the Purchase Price at Closing.
2.1.4 If Purchaser shall not have delivered the applicable Deposit to
Escrow Agent within one (1) business day after the applicable due date, then
Seller may, at its option, either terminate this Agreement by written notice
to Purchaser or give Purchaser an extension, for a period of two (2) business
days, to deliver the required Deposit to the Escrow Agent. If Seller
terminates this Agreement, then neither party shall have any further liability
or obligation to the other party, except for those which under the terms of
this Agreement expressly survive the termination of this Agreement, including,
without limitation, Seller's right to retain the First Deposit if Seller's
termination occurs by reason of Purchaser's failure to make the Second Deposit
upon removal of contingencies.
2.1.5 The Purchase Price, less the amount of the Deposits, shall be
deposited by Purchaser with Escrow Agent on or before the Closing, to be
disbursed to Seller at Closing subject to all prorations and adjustments
provided herein. On the Closing Date (as hereinafter defined), Seller shall
be responsible at its sole cost and expense to pay off in full and have
cancelled and satisfied of record all mortgages and similar instruments
affecting the Property, other than the Existing Loan to be assumed by
Purchaser or any prepayment or other fees in connection with the Existing Loan
(pursuant to Section 10.3), and Seller shall be responsible to pay any
prepayment or other fees in connection therewith.
ARTICLE 3 - ESCROW AGENT
3.1 The Escrow Agent joins in the execution of this Agreement for the
purpose of acknowledging and agreeing to the provisions of this Article 3.
This Agreement shall serve as instructions to the Escrow Agent. If, in
addition to this Agreement, Escrow Agent requests Purchaser and Seller to
execute additional escrow instructions, or Escrow Agent's general
instructions, Purchaser and Seller shall do so, provided that such additional
or general escrow instructions do not conflict with the terms and conditions
of this Agreement.
3.2 The Deposits shall be held in escrow by Escrow Agent. If
Purchaser furnishes Seller and Escrow Agent with written notification on or
before thirty (30) days after the Effective Date (the "Inspection Contingency
Date"), that: (a) the conditions precedent set forth in Section 10.1 hereof
have not been satisfied; and/or (b) specified matters in the Title Commitment
and/or the Survey are objected to pursuant to Section 10.2, and Seller fails
to cure said objections within the time permitted (as set forth in Section
6.3); and/or (c) that the condition precedent set forth in Section 10.3 has
not been satisfied, then in any such event, Escrow Agent shall return the
Deposits and all interest earned thereon to the Purchaser, and thereupon this
Agreement shall terminate. Upon such termination this Agreement shall be null
and void and of no other force and effect, and except for the Inspection
Indemnity (as hereinafter defined), neither Purchaser nor Seller shall have
any further rights, duties, liabilities or obligations to the other by reason
thereof.
3.3 The duties of the Escrow Agent, in service as escrow agent, shall
be as follows:
3.3.1 During the term of this Agreement, it shall hold and disburse
the Deposits in accordance with the terms and provisions of this Agreement,
including, but not limited to, the application of the Deposits and all
interest earned thereon towards the Purchase Price in accordance with Section
2.1.2 or the return of the Deposits and all interest earned thereon to the
Purchaser in accordance with Section 3.2.
3.3.2 After Buyer has removed all contingencies, pursuant to Section
3.2, above, the Deposits shall be non-refundable except in the event that
Seller breaches its obligations under this Agreement.
3.3.3 If this Agreement shall be terminated by the mutual written
agreement of Seller and Purchaser, or if Escrow Agent is unable to determine
at any time to whom the Deposits should be delivered, or if a dispute shall
develop between Seller and Purchaser concerning to whom the Deposits should be
delivered, then and in any such event, then Escrow Agent shall deliver the
Deposits and all interest earned thereon in accordance with the joint written
instructions of the Seller and Purchaser. In the event that such written
instructions shall not be received by Escrow Agent within ten (10) days after
it has served a written request for instructions upon Seller and Purchaser,
then Escrow Agent shall have the right to deliver the Deposits and all
interest earned thereon into a court of competent jurisdiction in the County
of Jefferson, Colorado, which court Seller and Purchaser agree shall have
jurisdiction and venue as respects any dispute in regard to the Deposits and
all interest earned thereon, and interplead Seller and Purchaser in respect
thereof, and thereupon Escrow Agent shall be discharged of any obligations in
connection with this Agreement.
3.3.4 By joining herein, the Escrow Agent undertakes only to perform
the duties and obligations imposed upon it under the terms of this Agreement
and expressly does not undertake to perform any of the other covenants, terms
and provisions incumbent upon the Seller and/or the Purchaser hereunder.
3.3.5 Purchaser and Seller hereby agree and acknowledge that the
Escrow Agent assumes no liability in connection herewith except for breach of
Escrow Agent's obligations hereunder, negligence, breach of trust or willful
misconduct; that the Escrow Agent shall not be responsible for the validity,
correctness or genuineness of any document or notice referred to under this
Agreement; and that in the event of any dispute under this Agreement, the
Escrow Agent may seek advice from its own counsel and shall be fully
protected in any action taken by it in good faith in accordance with the
opinion of its counsel. Seller and Purchaser each hereby agrees to indemnify
and hold harmless the Escrow Agent, acting in its capacity as escrow agent on
behalf of Seller and Purchaser, against any and all losses, liability, claims,
demands, damages, actions, causes of action and suits (other than for breach
of Escrow Agent's obligations hereunder, negligence, willful misconduct or
breach of trust) which may be imposed upon it in connection with the
performance of its duties hereunder.
ARTICLE 4 - DELIVERIES BY SELLER
4.1 Seller covenants to deliver the following (collectively herein
referred to as the "Delivery Items") at its sole cost and expense to Purchaser
within five (5) days after the Effective Date (the "Delivery Date"):
4.1.1 A complete inventory of all of the Personal Property to be
conveyed hereunder.
4.1.2 A schedule and copies of all of the service contracts,
maintenance contracts, management agreements and all other agreements
affecting the operation or maintenance of the Property (hereinafter referred
to as the "Service Contracts.")
4.1.3 One reproducible (sepia or equivalent) copy of the complete,
detailed plans and specifications for the improvements and buildings which are
a part of the Property, prepared by a registered architect or professional
engineer, and any "as built" plans and specifications (collectively, the
"Plans and Specifications"), to the extent that such Plans and Specifications
are in Seller's possession.
4.1.4 Copies of all building permits, licenses (business, pool, and
otherwise), certificates of occupancy and other similar documentation issued
by any governmental agency having jurisdiction over the Property which pertain
to the operation and occupancy of the Property, to the extent that such
documentation is in Seller's possession or reasonably obtainable by to Seller.
4.1.5 A complete and accurate rent roll for the Property as of
February 1, 1998, which shall be certified by Seller as being true, complete
and correct.
4.1.6
4.1.7 A complete list of the names and current wages (or "in lieu"
compensation) of all employees engaged in the operation or maintenance of the
Property.
4.1.8 Operating statements for the Property, including all line item
detail and also including a schedule of historical capital expenditures, for
year-end 1996 and 1997, and preliminary operating statements for January 1998.
4.1.9 Copies of all topographical surveys and all environmental,
engineering and soils, and any other reports and soil-bearing test data with
respect to the Property to the extent that any of the foregoing are in
Seller's possession or reasonably available to Seller.
4.1.10 A list of all prepaid fees paid by Seller to third parties,
and a list of all prepaid fees paid by third parties to the Seller, with
respect to the ownership and operation of the Property.
4.1.11 A form of the tenant lease agreement currently used at the
Property together with copies of all tenant leases and any amendments or
letter agreements relating thereto.
4.1.12 A copy of the most recent assessed valuation of the Property
and property tax bills for the Property for the two (2) prior calendar years.
4.1.13 All utility bills for the Property for the twenty-four (24)
month period prior to the Effective Date.
4.1.14 Certificates of Insurance currently in effect with respect to
the Property, together with a statement of the premiums payable with respect
to such insurance.
4.1.15 Lead-based paint disclosure, as required by law.
4.2 With respect to the Delivery Items, Seller covenants and
represents as follows:
4.2.1 On or before the Inspection Contingency Date, Purchaser shall
notify Seller as to which of the Service Contracts Purchaser requests be
terminated effective as of the Closing Date. Within five (5) days after
receipt of such notification from Purchaser, Seller shall notify Purchaser as
to which of the Service Contracts requested by Purchaser to be terminated
effective as of the Closing Date Seller agrees to cause to be so terminated at
Seller's sole cost and expense; provided, however, Seller agrees that it will
cause such termination effective as of the Closing Date of all the Service
Contracts so requested by Purchaser which can be (pursuant to the terms
thereof) terminated by Seller. All of the Service Contracts which are not
being terminated effective as of the Closing Date pursuant to this procedure
will be transferred and assigned by Seller to Purchaser at Closing by an
assignment (hereinafter referred to as the "Assignment of Service Contracts")
which will contain an assumption of the Service Contracts by Purchaser
effective as of the Closing Date, and will contain a cross-indemnity between
Seller and Purchaser providing that Seller will indemnify, defend and hold
Purchaser harmless as respects the obligations of the owner of the Property
thereunder for all time periods through and including the day prior to the
Closing Date, and providing that Purchaser will indemnify, defend and hold
Seller harmless as respects the obligations of the owner of the Property
thereunder for all time periods commencing on the Closing Date. Anything
contained in this Section 4.2.1 to the contrary notwithstanding, on the
Closing Date any management, leasing and/or commission agreement, and any
employment agreement, affecting the Property will be terminated by Seller at
its sole expense.
4.2.2 Commencing five (5) days after the date of this Agreement, true
copies of each tenant lease and commission agreement together with each and
every attachment and supplement thereto will be made available for Purchaser's
inspection and review at the Property.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
5.1 Seller hereby makes to Purchaser the following representations
and warranties:
5.1.1 Seller is a validly formed limited liability company in good
standing duly bound by the actions and execution hereof by Terence J.
O'Connor, its Manager, and has the authority and power to enter into this
Agreement and to consummate the transaction contemplated herein, and this
Agreement is a valid and binding obligation of Seller enforceable in
accordance with its terms.
5.1.2 Neither the entering into of this Agreement nor the
consummation of the transaction contemplated hereby will constitute or result
in a violation or breach by Seller of any judgment, order, writ, injunction or
decree issued against or imposed upon Seller, or to Seller's knowledge will
result in a violation of any applicable law, order, rule or regulation of any
governmental authority.
5.1.3 Neither this Agreement, nor anything to be done hereunder,
including, without limitation, the transfer, assignment and sale of the
Property as herein contemplated, violates or shall violate any written or oral
contract, agreement or instrument to which Seller is a party or which affects
the Property or any part thereof.
5.1.4 There is no action, suit, proceeding or investigation pending
or threatened which would become a cloud on the title to the Property or any
portion thereof or which questions the validity or enforceability of the
transaction contemplated by this Agreement or which does or will materially or
adversely affect the Property.
5.1.5 No approval, consent, order or authorization of, or
designation, registration or filing (other than for recording purposes) with
any governmental authority is required in connection with the due and valid
execution and delivery of this Agreement by Seller, compliance with the
provisions hereof by Seller, and consummation of the transaction contemplated
hereby by Seller.
5.1.6 To the best of Seller's knowledge the present use and operation
of the Property as an apartment community is authorized by and in compliance
with all existing zoning, land-use, building, fire, health, labor, safety and
other laws, ordinances, rules and regulations applicable to the Property.
5.1.7 To the best of Seller's knowledge Seller has complied with all
existing laws, ordinances, rules and regulations, including, without
limitation, those relating to zoning, land-use, building, fire, health, labor
and safety, of any government or agency, body or subdivision thereof bearing
on the ownership, construction, use or operation of the Property as an
apartment community.
5.1.8 The Property is connected to and serviced by water, solid waste
and sewage disposal, storm drainage and electricity and gas facilities which
are adequate for the present use and operation of the Property as an apartment
community and, to Seller's knowledge, all of the foregoing are in accordance
with all applicable laws, ordinances, rules and regulations of all public or
quasi-public authorities having or claiming jurisdiction there over.
5.1.9 Except as may be reflected on the rent roll and tenant leases
delivered or otherwise made available to Purchaser or as otherwise noted in
writing by Seller prior to the Inspection Contingency Date, (i) there are no
oral or written tenant occupancy leases or rental agreements in force, (ii) no
person (other than the tenants named in said rent roll and tenant leases) has
any right of possession to the Property or any part thereof, (iii) no rent has
been paid in advance by any tenant, (iv) no tenant has received or is entitled
to receive a rent concession in connection with his tenancy, or is entitled to
any work not yet performed (other than ordinary maintenance), or consideration
not yet given in connection with his tenancy, (v) no tenant or former tenant
has any claim against Seller for any security deposits or other deposits, (vi)
no tenant has, or as of the Closing Date will have, any defense or offset to
rent accruing after the Closing Date, and except as indicated on the rent
roll, there is no default by Seller or tenant with respect to any leases or
occupancy agreements.
5.1.10 Except as noted in writing by Seller prior to the Inspection
Contingency Date all Service Contracts are in full force and effect, and there
are no defaults in any Service Contracts and, except for the Service
Contracts, there are no other management, maintenance, operating, service,
leasing, commission or similar contracts affecting the Property.
5.1.11 Until the Closing Date, Seller will: operate the Property
diligently and only in the ordinary course of business pursuant to its current
business practices; preserve the Property and its business intact; preserve
for the Purchaser the relationships of Seller with its suppliers, tenants, and
others having relations with it; maintain in force all existing insurance
policies, and; not permit any encumbrance to be placed upon the Property,
without Purchaser's consent, whose consent shall not be unreasonably withheld.
Until the Closing Date, Seller shall not enter into any new leases except at
rental rates and on terms no less favorable than the rates and terms at which
Seller is currently marketing such units or extend the term of an existing
lease for more than six (6) months.
5.1.12 Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate as such terms are defined in
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.
5.1.13 To the best of Seller's knowledge the Property does not
contain, no activity upon the Property has produced, and the Property has not
been used in any manner (a) for the discharge, deposit, dumping or storage of,
any hazardous or toxic waste, materials or contamination, whether of soil,
ground water or otherwise, in violation of any law, ordinance, rule or
regulation, or (b) which requires any reporting to any governmental authority.
The Property does not contain underground tanks of any type or any materials
containing or producing any polychlorinated biphenyls or any asbestos.
5.1.14 Seller is the sole owner of, and has good and marketable fee
simple title to, the Property free and clear of all liens, encumbrances,
claims, demands, easements, rights or interests of others, covenants,
conditions, restrictions and encroachments of any kind or nature other than as
listed in the Title Commitment (as defined below) and other than those which
will be removed at or prior to the Closing.
5.1.15 To the best of Seller's knowledge the Improvements were
constructed in good, workmanlike and substantial manner, in conformity with
all rules, regulations, laws, ordinances and building codes.
5.1.16 Seller has no knowledge, and has received no notice from any
governmental authorities, that eminent domain proceedings for the condemnation
of the Property are pending.
5.1.17 The Property is not subject to any assessments, use or
occupancy restrictions (except those imposed by applicable zoning laws and
regulations), or utility fees (except those generally applicable throughout
the tax district in which the Property is located), or traffic impact fees or
charges or restrictions under unrecorded agreements, or arising by operation
of law as set forth in the Title Commitment.
5.1.18 All books, records, information and data furnished or made
available by Seller to Purchaser including, but not limited to, all financial
information, will be true, correct and complete in all material respects as of
the date of such information. Seller has no knowledge of any error,
misrepresentation, omission, or inconsistency with any of the documents or
supplemental documents delivered or made available to Purchaser by Seller
pursuant to this Agreement.
5.1.19 All policies of insurance currently maintained by Seller with
respect to the Property are current and in full force and effect, and all
premiums due thereunder have been paid. No notice has been received by Seller
from any insurance company which issued any of said policies, stating that (i)
any of such policies will not be renewed or will be renewed at rates in excess
of those ordinary and customary for properties similar in size, location, age
and construction to the Property; or (ii) the performance of work will be
required as a condition of continuation of coverage.
5.1.20 The Property does not contain a polybutylene plumbing system.
5.1.21 There are currently no other contracts for the sale of the
Property pending, nor do there exist any rights of first refusal or options to
purchase the Property.
5.1.22 All persons employed by Seller at the Property are employees whom
employment Seller can terminate prior to Closing.
5.2 Whenever the Agreement makes reference to "Seller's knowledge"
the term shall refer to knowledge of Seller's manager and of its members
having more than a 20% membership interest.
5.3 Purchaser's rights with respect to Seller's representations and
warranties shall survive the Closing for a period of one (1) year and shall
not be merged into any documents delivered by Seller at Closing.
ARTICLE 6 - TITLE AND SURVEY
6.1 Not later than fifteen (15) days after the Effective Date (the
"Survey Delivery Date") Seller shall, at its expense cause to be prepared and
delivered to Purchaser a current (no more than 6 months old) "as built" survey
of the Land and Improvements by a licensed Colorado surveyor made to ALTA/ACSM
minimum detail standards for a Class A survey (hereinafter referred to as the
"Survey") and shall deliver the same to Purchaser.
6.2 Not later than the Survey Delivery Date, Seller shall furnish
Purchaser, at Seller's expense, a current commitment for an ALTA Owner's
Extended Coverage Policy of Title Insurance issued by Escrow Agent (the "Title
Commitment"), together with copies of instruments (or abstracts of
instruments) listed in the schedule of exceptions in the Title Commitment.
6.3 The obligation of Purchaser to consummate its purchase of the
Property shall be subject to Purchaser's being able to acquire title to the
Property subject only to those matters approved by Purchaser in accordance
with this Article 6.
6.3.1 Ten days prior to the Inspection Contingency Date, Purchaser
shall deliver to Seller a written statement of any objections to Seller's
title to the Property and any objections as to matters disclosed by the Survey
or the Title Commitment and Seller shall have a reasonable time thereafter,
not to exceed ten (10) days (the "Cure Notice Period"), within which to advise
Purchaser in writing whether Seller elects to cure such matters on or before
the Closing Date.
6.3.2 In the event that Seller fails to notify Purchaser of its
election to cure such objections within the Cure Notice Period Purchaser shall
have the option (to be exercised within ten (10) days after the end of the
Cure Notice Period), to either (i) give Seller written notice of its election
to terminate this Agreement, in which event Purchaser shall be entitled to
receive the return of the Deposit and all interest earned thereon from Escrow
Agent, and thereafter this Agreement shall be null and void and of no further
force or effect, and neither Purchaser nor Seller shall have any further
rights, duties, liabilities or obligations to the other by reason hereof,
except for the Inspection Indemnity, or (ii) waive such objections in writing
to the Seller, and thereafter consummate the transaction contemplated herein
without reduction of the Purchase Price. If Purchaser fails to give timely
notice of its election of either alternative, Purchaser shall be deemed to
have elected the second alternative.
6.3.3 It shall be a condition precedent to the obligation of
Purchaser to consummate its purchase of the Property that Seller convey to
Purchaser good, marketable and insurable fee-simple title to the Land,
Appurtenants and Improvements (collectively, the "Real Property"), subject to
the exceptions to title expressly approved by Purchaser in writing on or
before the Inspection Contingency Date (collectively, the "Permitted
Exceptions"); provided, however, that with respect to any deed of trust, deed
to secure debt, mortgage, assignment of leases, or any other lien or
encumbrance securing money due, Seller may cure such exception to title by
agreeing to discharge the monetary obligation and obtain a termination or
cancellation of the lien evidencing or securing said obligation
contemporaneously with the Closing, provided that Seller does in fact
discharge such monetary obligation and obtain a termination or cancellation of
such lien contemporaneously with the Closing. The foregoing "cure" provisions
shall not apply to the Existing Loan (as defined in Section 10.3) being
assumed by Purchaser.
ARTICLE 7 - TIME AND PLACE OF CLOSING, CLOSING COSTS AND POSSESSION
7.1 The consummation of the transaction contemplated herein shall
take place at the offices of the Escrow Agent, commencing at 10:00 A.M.,
fifteen (15) days after the later of Inspection Contingency Date or approval
by Existing Lender (as defined in Section 10.3), of Buyer's assumption of
Existing Loan, or such other date mutually agreed to by the parties. The
consummation of the transaction contemplated herein and the day such occurs
are referred to in this Agreement as the "Closing" and the "Closing Date".
7.2 As conditions precedent to the obligations of each of the parties
hereto to consummate this transaction, the representations and warranties made
hereunder by the other party shall be, as of the Closing Date, true and
correct and as of the Closing Date there shall have been no material uncured
default by such other party with respect to this Agreement.
7.3 Seller shall pay the costs incident to this transaction specified
in this Agreement to be paid by Seller, Seller's attorneys' fees, and the cost
of the Purchaser's ALTA Extended Coverage policy of title insurance.
Purchaser shall pay the costs incident to this transaction specified in this
Agreement to be paid by Purchaser, Purchaser's attorney's fees, and the fees
and costs of assuming the Existing Loan. Seller and Purchaser shall share
fees of the Escrow Agent equally.
7.4 Possession of the Property shall be given by Seller to Purchaser
at Closing subject to the rights of tenants of the Property.
ARTICLE 8 - ITEMS TO BE DELIVERED AT CLOSING
8.1 At Closing Seller agrees to deliver the following items to
Purchaser:
8.1.1 A duly executed General Warranty Deed in recordable form (the
"Deed"), of the type customarily used for commercial real estate transactions
in the State of Colorado, conveying to Purchaser fee simple title to the Real
Property subject to the Permitted Exceptions, special assessments or bonds,
building and zoning regulations, and existing leases and tenancies, whether or
not of record. Buyer shall pay all applicable governmental documentary fee
and recording fees in connection with the recording of the Deed and transfer
of title to the Property.
8.1.2 A duly executed Bill of Sale, without warranty of title or
fitness of use to all Personal Property, pursuant to which Seller will
relinquish, in favor of Purchaser, all such Personal Property subject to the
lien of personal property taxes, if any, for the fiscal year in which the
Closing Date occurs, and subject to all other security interests, liens or
other charges against the Personal Property, whether or not of record.
Purchaser shall pay for, and shall indemnify and hold Seller harmless from,
any sales tax due to the State of Colorado, or any local governmental agency,
with respect to the transfer by Seller to Purchaser of the Personal Property,
and Purchaser's obligation shall survive the Closing.
8.1.3 A duly executed Assignment (the "Assignment of Leases")
assigning to Purchaser the Seller's interest as lessor in the leases with
respect to the Real Property, including the security and other deposits. The
Assignment of Leases will contain an assumption by Purchaser of the landlord's
obligations thereunder arising from and after Closing, and will also contain a
cross--indemnity pursuant to which Seller will indemnify, defend and hold
Purchaser harmless as respects all tenant claims arising out of occurrences
prior to the Closing Date, and pursuant to which Purchaser will indemnify,
defend and hold Seller harmless as respects such claims arising out of
occurrences commencing on or after the Closing Date.
8.1.4 A duly executed Assignment from Seller to Purchaser of all
third-party warranties with respect to the Improvements and equipment on the
Real Property.
8.1.5 The Assignment of Service Contracts pursuant to which Seller
will transfer and assign to Purchaser all of its interest in and to the
Service Contracts which will, in accordance with Section 4.2.1 hereof, remain
in effect after the Closing Date. The Assignment of Service Contracts will
contain an assumption by Purchaser of the obligations thereunder arising from
and after Closing, and will also contain a cross--indemnity pursuant to which
Seller will indemnify, defend and hold Purchaser harmless as respects all
claims on account of the Service Contracts arising out of occurrences prior to
the Closing Date, and pursuant to which Purchaser will indemnify, defend and
hold Seller harmless as respects such claims arising out of occurrences
commencing on or after the Closing Date.
8.1.6 Evidence reasonably acceptable to Purchaser and acceptable to
Escrow Agent as to the due organization and existence of Seller and, if
necessary, as to Seller's authority to do business in Colorado and that those
acting for Seller have full authority to execute documents on behalf of Seller
and consummate this transaction in accordance with the terms of this Agreement
as modified through the Closing.
8.1.7 A letter to the tenants of the Property (the form and content
of which shall be approved by Purchaser, whose approval shall not be
unreasonably withheld), stating that the Property and the Security Deposits
have been conveyed and transferred to Purchaser, and that rent should be paid
to Purchaser or Purchaser's designated agent after Closing.
8.1.8 A Certificate that Seller is not a foreign person or entity as
defined in the Internal Revenue Code of 1986, as amended and Income Tax
Regulations; and a Colorado Form DR 1083 regarding Seller's Status as a
Colorado resident.
8.1.9 A written acknowledgment by any person or entity entitled to
any commissions, fees or payments with respect to the operation, management or
leasing of the Property as to the termination, effective as of the Closing
Date, of any agency, leasing, management or other similar agreement giving any
right or claim to such person or entity to any such commissions, fees or
payments.
8.1.10 A then-current employee list.
8.1.11 A signed certification, attached to a rent roll (current as of
Closing), which will certify the accuracy of the information contained in the
rent roll.
8.1.12 An assignment of all of Seller's right, title and interest in
and to the name "EAGLES LANDING AT CHURCH RANCH APARTMENTS", and an assignment
of all reports, approvals, claims and other intangible property which pertain
to the ownership, occupancy and operation of the Property, together with
copies thereof which are in Seller's possession.
8.1.13 All original leases and tenant records, all original Service
Contracts remaining in effect after the Closing Date, and originals of the
current real estate and personal property tax bills for the Property.
8.1.14 A signed certificate from Seller stating that Seller's
representations and warranties made in this Agreement are true and correct as
of the Closing Date.
8.1.15 An ALTA Extended Coverage Owner's Policy of Title Insurance
for the Property, with exceptions only for the Permitted Exceptions, and with
coverage in the amount of the Purchase Price.
8.1.16 Any other items or documents required to be delivered by
Seller pursuant to this Agreement or deemed reasonably necessary or
appropriate by Purchaser's and Seller's counsel in connection with this
transaction.
8.2 At Closing, Purchaser agrees to deliver the following items to
Seller:
8.2.1 The Purchase Price in the manner specified in Section 2.1.5
hereof.
8.2.2 A duly executed Assignment of Leases and Assignment of Service
Contracts.
8.2.3 Any other items and documents required to be delivered by
Purchaser pursuant to this Agreement or deemed reasonably necessary or
appropriate by Purchaser's and Seller's counsel in connection with this
transaction.
8.3 At Closing, both parties agree to sign and deliver Closing
Statements evidencing the prorations between Seller and Purchaser and
disbursements made in connection with this transaction.
8.4 The foregoing Deliveries and the Closing shall be accomplished
through the Escrow Agent.
ARTICLE 9 - PRORATIONS, SECURITY DEPOSITS, AND OTHER ADJUSTMENTS
9.1 All items of income and expense with respect to the Property
shall be prorated between Seller and Purchaser at Closing. Seller shall be
entitled to receive all income from the Property, and shall be obligated to
pay all expenses of the Property, for all time periods through and including
the day prior to the Closing Date, and Purchaser shall be entitled to receive
all such income and shall be obligated to pay all such expenses commencing on
the Closing Date.
9.2 Except with respect to rent prorations pursuant to Section 9.5,
and prorations which are incomplete or incorrect as the result of mutual
mistake of both parties, or fraud perpetrated by one party, all prorations
shall be final.
9.3 Real property taxes and personal property taxes shall be prorated
based on the most recent tax bills. In addition, any payments received by
Seller with respect to any third-party rights or any payments made by Seller
with respect to any rights obtained from any third-party, which pertain to the
ownership and operation of the Property (by way of illustration, only, advance
payments received by Seller on account of laundry-equipment installation on
the Property, or advance payments made by Seller in connection with rights to
use adjacent property), shall be pro-rated as between Seller and Purchaser
with respect to the applicable time period for which such payments were to be
applied, in accordance with any written agreements with respect thereto as
between Seller and any such third party.
9.4 At the Closing, Seller shall pay to Purchaser a sum equal to the
aggregate of any prepaid rents and the Security Deposits in existence on the
Closing Date, in the amounts set forth in the rent roll provided to Purchaser
pursuant to Section 4.1.4, above (without any deduction except for amounts of
delinquent rent and amounts paid to refund tenants' security deposits), and
thereafter Purchaser shall hold and apply the Security Deposits as the tenant
leases require.
9.5 Any rent which is due as of the Closing that is collected during
the first 30 days after the Closing by either Seller or Purchaser shall be
allocated, and paid, as between Seller and Purchaser, when received and in the
following order: First to rent which is due and unpaid for the period from the
Closing Date to the date of collection, next to rent which is due and unpaid
for the remainder of the month following the Closing Date month, and next to
rent which is due and unpaid for any period prior to the Closing Date. Any
amounts received by either party on account of such rents shall be accounted
for, and any monies owed by either party to the other shall be remitted to the
other party, within thirty (30) days of receipt.
9.6 The Purchase Price shall be reduced by the outstanding balance
due, on the Closing Date, of any assessments under any special improvement
district assessments or bonds.
9.7 At the Closing, any net adjustment in favor of Seller shall be
paid by immediately available funds, and any net adjustment in favor of
Purchaser shall be paid by setoff against the Purchase Price due at Closing.
ARTICLE 10 - PURCHASER'S INSPECTIONS AND FINANCING
10.1 For a period of time commencing on the Effective Date and ending
at 5 P.M. MST on the Inspection Contingency Date (as defined in Section 3.2)
Purchaser and its agents and representatives shall be permitted to make a
physical inspection of the Property and an investigation of all records and
financial data reasonably requested by Purchaser pertaining to Seller's
ownership and operation of the Property. Subject to such inspection,
Purchaser shall determine whether the physical, financial, and general
condition of the Property is in Purchaser's estimation, satisfactory for
operation and ownership by Purchaser in the manner and on the basis
contemplated by Purchaser. If Purchaser, in its sole discretion, determines
that such physical, financial and general condition of the Property is not
satisfactory, then Purchaser shall on or before the Inspection Contingency
Date so notify Seller and Escrow Agent in writing, in which event the
provisions of Section 3.2 shall control. If Purchaser fails to notify Seller
in writing on or before the Inspection Contingency Date that the Property is
satisfactory, Purchaser shall be deemed to have notified Seller and Escrow
Agent that the Property is satisfactory and that this condition precedent has
been satisfied.
10.2 For the period ending at 5 P.M. MST on the Inspection
Contingency Date, Purchaser and its agents and representatives shall have the
right to review the Title Commitment and the Survey. Subject to such
inspection, Purchaser shall determine whether title to the Property is
satisfactory. If Purchaser, in its sole discretion, determines that title to
the Property is not satisfactory, then Purchaser shall on or before the
Inspection Contingency Date so notify Seller and Escrow Agent in writing, in
which event the provisions of Section 3.2 shall control. If Purchaser fails
to notify Seller in writing on or before the Inspection Contingency Date that
the Property is satisfactory, Purchaser shall be deemed to have notified
Seller and Escrow Agent that the Property is satisfactory and that this
condition precedent has been satisfied. Notwithstanding the foregoing,
Purchaser's satisfaction of this condition precedent is subject to the
Seller's cure of any of Purchaser's objections to the condition of title,
within the time period and subject to all such other terms set forth in
Section 6.3.
10.3 No later than the Inspection Contingency Date, Purchaser and his
agents and representatives shall exercise all good faith and due diligence to
obtain a written commitment from Allstate Life Insurance Company (the
"Existing Lender") which holds a promissory note in the original principal
balance of $11,000,000.00 ("Existing Loan") which is secured by a mortgage
against the Land, Appurtenants and Improvements, to assume said loan. If by
the time of the Inspection Contingency Date Purchaser has not obtained the
consent of the Existing Lender to Buyer's assumption of the Existing Loan,
then Purchaser shall, on or before the Inspection Contingency Date, so notify
Seller, in which event the provisions of Section 3.2 shall control. If
Purchaser fails to so notify Seller on or before the Inspection Contingency
Date, Purchaser shall be deemed to have notified Seller that it has satisfied
the financing condition set forth in this Section 10.3 and that this condition
precedent has been satisfied.
ARTICLE 11 - CONDEMNATION
11.1 If prior to the Closing any part of the Real Property is taken
by condemnation or eminent domain or there is a bona fide threat thereof, or
there is any taking of land lying in the bed of any street, road, highway or
avenue, open or proposed, in front of or adjoining all or any part of the
Land, then Purchaser may, at its option, terminate this Agreement, (in the
manner as provided for in Section 12.2, below, with Purchaser giving notice to
Seller within fifteen (15) days after Purchaser is informed that a
condemnation of all or any part of the Real Property is taken or is
threatened), in which event the Deposits shall be returned to Purchaser and
thereupon this Agreement shall be null and void and of no further force or
effect, and neither Purchaser nor Seller shall have any further rights,
duties, liabilities and obligations to the other by reason thereof, except for
the Inspection Indemnity.
11.2 If this Agreement is not terminated by Purchaser, Purchaser
shall accept title to the Property subject to such taking or threat thereof,
in which event at the Closing the proceeds of the award or payment shall be
assigned by Seller to Purchaser and any moneys theretofore received by Seller
in connection with such taking or threat thereof shall be paid over to
Purchaser.
ARTICLE 12 - CASUALTY LOSS
12.1 If, prior to the Closing Date, there is damage to the Real
Property by fire or other casualty, whether or not insured against by Seller
under its property damage insurance policy, Seller shall promptly give
Purchaser notice of such fact, and if there is $50,000.00 or more of such
damage, Purchaser may elect to terminate this Agreement within thirty (30)
days after receiving written notice from Seller of the occurrence of such
casualty.
12.2 If pursuant to Section 12.1 Purchaser so elects to terminate
this Agreement, it shall give Seller and Escrow Agent written notice thereof
and the Deposits and all interest earned thereon shall be returned by Escrow
Agent to Purchaser, and upon such return, this Agreement shall terminate and
be null and void and of no further force or effect, and neither Purchaser nor
Seller shall have any further rights, duties, liabilities or obligations to
the other hereunder, except for the Inspection Indemnity. Failure of the
Purchaser to so notify Seller within said thirty (30) days that Purchaser has
elected to terminate this Agreement shall be deemed to mean that Purchaser has
not elected to terminate this Agreement.
12.3 If Purchaser does not elect to terminate this Agreement pursuant
to Section 12.1, or if prior to the Closing Date there is less than $50,000.00
of damage to the Real Property by fire or other casualty, this Agreement shall
not terminate, and Purchaser at Closing shall pay the full Purchase Price less
the amount of the applicable deductibles under Seller's hazard insurance
policy, and Purchaser shall receive all insurance proceeds payable as a result
of such damage to the Property. In the event there is damage to the Property
which is not insured against and Purchaser has not elected to terminate this
Agreement as a result of such damage, the Purchase Price shall be reduced by
the amount of such uninsured damage.
12.4 Seller shall not settle any fire or casualty loss claims or
agree to any award or payment in condemnation or eminent domain or any award
or payment in connection with the change in grade of any street, road, highway
or avenue in respect of or in connection with the Property without obtaining
Purchaser's prior consent in each case.
ARTICLE 13 - REMEDIES
13.1 Seller's sole remedy for Purchaser's default in consummating the
transaction contemplated in this Agreement shall be to enforce the payment of
the Deposits and all interest earned thereon. The Deposits and all interest
earned thereon shall constitute Seller's liquidated damages, it being
otherwise difficult or impossible to estimate Seller's actual damages.
Seller hereby waives any right to specific performance, injunctive relief or
other relief to cause Purchaser to perform its obligations under this
Agreement, or to damages in excess of said liquidated damages occasioned by
Purchaser's default under this Agreement. Seller and Purchaser acknowledge
that it is impossible to estimate the actual damages Seller would suffer
because of Purchaser's default, but that the liquidated damages provided
herein represent a reasonable estimate of such actual damages and Seller and
Purchaser therefore intend to provide for liquidated damages as herein
provided, and that the agreed-upon liquidated damages are not punitive or
penalties and are just, fair and reasonable. Except for a termination of this
Agreement which arises solely as the result of the passage of time, Seller
shall give Purchase notice of any default and a reasonable time in which to
cure such default (in no event to exceed 15 business days.)
13.2 If the sale contemplated by this Agreement is not consummated
due to default of Seller, Purchaser shall have the right to elect as its sole
remedy either (i) the termination of this Agreement by giving notice thereof
to Seller and Escrow Agent and upon such notice the Deposits and all interest
earned thereon then held by Escrow Agent or Seller shall be returned to
Purchaser and thereafter this Agreement shall be null and void and of no
further force or effect and neither Purchaser nor Seller shall have any
further rights, duties, liabilities or obligations to the other by reason
hereof, or (ii) the institution of a suit against Seller for specific
performance of Seller's obligations hereunder or for Purchaser's recovery of
its' out-of-pocket expenses reasonably incurred in connection with the
performance of the due diligence inspections of the Property and other items
described hereinabove, and in connection with obtaining the financing
described in Section 10.3, above, and Purchaser's reasonable attorneys' fees.
Except as set forth above, in no event shall Seller be liable for any money
damages to Purchaser and Purchaser expressly waives any right thereto.
ARTICLE 14 - ACCESS
14.1 Purchaser and its agents and representatives shall have the
right to enter upon the Real Property at any reasonable time prior to the
Closing Date for any lawful purpose including, without limitation,
verifications of information, investigations, tests and studies, and during
such period Seller shall furnish to Purchaser all information concerning the
Property that Purchaser may reasonably request. Purchaser hereby agrees to
indemnify, defend and hold Seller harmless from any damage to persons or
property occasioned by Purchaser's and its agent's and representative's
actions on the Real Property pursuant to this Section 14.1, except for damage
or injury caused by Seller's negligence or willful misconduct and damage
resulting from Purchaser's discovery of any information which might have an
adverse economic effect on the Real Property (including, but not limited to,
economic damage to the Seller arising from discovery of hazardous materials on
the Real Property); provided, however, that without Seller's express prior
written consent (whose consent may be withheld in its absolute and sole
discretion), Purchaser shall not disclose to any third party (other than
Purchaser's attorneys, appraisers, lenders, prospective investors, and others
as may be required by law, or in any legal proceeding between Seller and
Purchaser with respect to this Agreement and/or the Property), any information
that is obtained or made known to Purchaser which might have an adverse
economic effect on the Real Property, and the obligation and liability of
Purchaser herein shall survive the Closing and any termination of this
Agreement. The indemnity set forth in the previous sentence is herein
referred to as the "Inspection Indemnity" which shall survive the Closing and
any termination of this Agreement.
ARTICLE 15 - LIKE KIND EXCHANGES
15.1 Seller reserves the right to structure its disposition of the
Property, and Purchaser reserves the right to structure its acquisition of the
Property, as a like-kind exchange pursuant to Section 1031 of the Internal
Revenue Code, and each of them hereby reserve the right to assign their
respective rights (but not their obligations) hereunder to an intermediary
party in connection with such exchange. Each party agrees to cooperate with
the other in such exchange; provided, however, that neither party shall be
obligated to accept title to any other property other than the Property or to
incur any additional cost, delay or expense in connection with the other
party's like-kind exchange.
ARTICLE 16 - NOTICES
16.1 All notices, demands, consents, approvals and other
communications which are required or desired to be given by either party to
the other hereunder shall be in writing and shall be either hand-delivered or
sent by facsimile, by Federal Express, or by other similar overnight delivery
service, charges prepaid, addressed to the appropriate party at its address
set forth below, or at such other address as such party shall have last
designated by notice to the other. Notices, demands, consents, approvals, and
other communications shall be deemed given when hand-delivered, upon
transmission of a facsimile with a receipt from the transmitting facsimile
machine reflecting successful transmission (if sent by facsimile), or one (1)
business day after being delivered to FedEx or similar overnight courier
service, as follows:
To Purchaser:
- - -------------
c/o Jon H. Olson
First Pacific Investments
One Sansome Street, Suite 1900
San Francisco, California 94104
Telephone: 415-822-6000
Facsimile: 415-822-6111
With a copy to:
Louis S. Weller, Esq.
Weller & Drucker LLP
275 Battery Street, 27th Floor
San Francisco, California 94111
Telephone: 415-434-0400
Facsimile: 415-434-0441
To Seller:
- - ----------
Mr. Terence O'Connor
Eagles Landing, LLC
1600 38th Street, Suite 203
Boulder, Colorado 80301
Telephone: 303-443-4575
Facsimile: 303-443-0703
With a copy to:
Dietze and Davis, PC
2060 Broadway, Suite 400
Boulder, Colorado 80302
Attn: Joel Davis
Telephone: 303-447-1375
Facsimile: 303-440-9036
To Escrow Agent:
- - -----------------
North American Title Company
44 Cook Street, Suite 300
Denver, CO 80206
Attn: _____________
Telephone: 303-333-3064
Facsimile: 303-780-9374
ARTICLE 17 - BROKERS
17.1 Seller and Purchaser each hereby represents and warrants to the
other that the representing and warranting party has not dealt with any real
estate agent or broker in connection with the transaction contemplated in this
Agreement except Jeff Hawks and Doug Andrews of CB Commercial Real Estate
Group, Inc. (hereinafter referred to as the "Broker"). The Broker has acted
as agent for Seller, and not Purchaser, and is to be paid a real estate
commission by Seller in the amount of one and one-half percent (1.5%) of the
Purchase Price, but only in the event that the transaction contemplated herein
is closed and consummated. Broker joins in the execution of this Agreement to
acknowledge and agree to the terms and provisions of this Section 17.1, and to
acknowledge and agree that this Agreement may be amended without the necessity
of Broker joining in the execution of such amendment provided that such
amendment in no form or fashion varies or changes Broker's entitlement to its
real estate commissions as herein provided. Seller and Purchaser each hereby
represents and warrants to the other that, except as set forth in the previous
portion of this Section 17.1, the warranting party is not paying any real
estate commission, fee or compensation to any real estate agent or broker in
connection with the transaction contemplated in this agreement.
17.2 Seller hereby agrees to indemnify, defend and hold Purchaser
harmless from and against any claim for real estate commission or other
compensation made by the Broker.
17.3 In the event any other claim(s) for real estate commissions,
fees or compensation arise in connection with this transaction, the party so
incurring or causing such other claim(s) shall indemnify, defend and hold
harmless the other party from any loss or damage which said other party
suffers because of said other claim(s).
ARTICLE 18 - MISCELLANEOUS
18.1 This Agreement constitutes the entire Agreement between the
parties and cannot be changed or modified other than by a written agreement
executed by both parties.
18.2 The provisions of this Agreement shall extend to, bind and inure
to the benefit of the parties hereto and their respective personal
representatives, heirs, successors, and assigns.
18.3 Notwithstanding any provisions to the contrary, whether
expressed or implied, Purchaser shall have the right to assign this Agreement
to any person and Seller shall accept the performance of Purchaser's
obligations hereunder by any such assignee or assignees; provided that such
assignee is an entity controlled by Purchaser or otherwise possesses
substantially equal or greater financial strength as Purchaser or has been
pre-approved by the Existing Lender to assume obligations of the Existing
Loan. If this Agreement is assigned, any reference in this Agreement to
Purchaser shall thereafter be deemed to refer to such assignee or assignees.
18.4 The provisions of this Agreement shall survive the Closing and
the delivery of the Deed. Seller shall, at or after the Closing, and without
further consideration execute, acknowledge and deliver to Purchaser such other
documents and instruments, and take such other actions, as Purchaser shall
reasonably request or as may be necessary more effectively to transfer to
Purchaser the Property in accordance with this Agreement.
18.5 The Purchaser reserves the right to waive, in whole or in part,
any provision hereof which is for the benefit of Purchaser, all such waivers
are only effective if in writing delivered to Seller.
18.6 Irrespective of the place of execution or performance, this
Agreement shall be governed by and construed in accordance with the laws of
the State of Colorado.
18.7 Venue for any legal proceeding which is commenced with respect
to this Agreement, or the subject matter contained herein shall be commenced
in the courts of the State of Colorado.
18.8 This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing
this Agreement to be drafted.
18.9 If any words or phrases in this Agreement shall have been
stricken out or otherwise eliminated, whether or not any other words or
phrases have been added, this Agreement shall be construed as if the words or
phrases so stricken out or otherwise eliminated were never included in this
Agreement and no implication or inference shall be drawn from the fact that
said words or phrases were so stricken out or otherwise eliminated.
18.10 All terms and words used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to include any other
number and any other gender as the context may require.
18.11 Time is of the essence of this Agreement and each term and
provision hereof.
18.12 In the event of any litigation between Seller and Purchaser
concerning the subject matter of this Agreement, the prevailing party shall be
paid by the non-prevailing party all its costs and expenses, including,
without limitation, actual attorney's fees and reasonable costs incurred
incident to such litigation.
18.13 This Agreement may be executed in more than one counterpart,
each of which shall be deemed an original, but all together shall be only one
document. Signatures to this Agreement may be delivered by facsimile
transmission which transmission copy shall be considered an original and shall
be binding and enforceable against the parties.
18.14 The captions of this Agreement are inserted for convenience of
reference only and do not define, describe or limit the scope or intent of
this Agreement or any term hereof.
18.15 If the time period for the performance of any act called for
under this Agreement expires on a Saturday, Sunday or any other day on which
banking institutions in Colorado are authorized by law or executive order to
close (a "Holiday), the act in question may be performed on the next
succeeding day that is not a Saturday, Sunday or Holiday.
xxxxxxxxxxxxxxx
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date which is the second of the dates set forth below
that this Agreement has been signed by Purchaser or Seller.
SELLER:
Date: March ___, 1998 EAGLES LANDING, LLC
a Colorado limited liability company
By: ____________________
Terence J. O'Connor
Manager
PURCHASER:
Date: March ___. 1998
________________________
Jon H. Olson
BROKER:
Date: March ___. 1998 CB COMMERCIAL REAL ESTATE GROUP, INC.
By:
Name:
Title:
North American Title Company joins in the execution of this Agreement for the
purpose of acknowledging the agreement as to the escrow of the Deposit.
ESCROW AGENT:
NORTH AMERICAN TITLE COMPANY OF COLORADO
By:
Name:
Title:
EXHIBIT "A"
(Legal Description)
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
----------------------------------------------------
This First Amendment to Purchase and Sale Agreement is entered into
effective April 10, 1998 by and between JON H. OLSON, or assigns ("Purchaser")
and EAGLES LANDING, L.L.C., a Colorado limited liability company ("Seller")
with reference to the following facts:
A. On March 5, 1998, Purchaser and Seller entered into that certain
"Purchase and Sale Agreement" (the "Agreement"), pursuant to which Purchaser
agreed to purchase, and Seller agreed to sell, that certain improved real
property located in the City of Westminster, County of Jefferson, State of
Colorado, with the commonly known address of 7402 West Church Ranch Boulevard,
also known as "Eagles Landing at Church Ranch"( and hereinafter referred to as
the "Property".)
B. The parties mutually desire to amend the Agreement.
NOW, therefore, Purchaser and Seller agree as follows:
1. Section 2.1.2 of the Agreement is deleted and the following is
inserted in its place:
"Within two (2) business days of signing of this First Amendment, Purchaser
shall deposit with the Escrow Agent the sum of Two Hundred Thousand Dollars
($200,000.00) by irrevocable federal funds wire transfer of immediately
available funds (the "Second Deposit").
Upon the earlier of (a) May 3, 1998 or (b) the consummation of the sale, by
Purchaser, of other real property located in Aurora, Colorado, consisting of
an apartment building known as "Village Green", Purchaser shall deposit with
the Escrow Agent the sum of Six Hundred Fifteen Thousand Dollars ($615,000.00)
by irrevocable federal funds wire transfer of immediately available funds (the
"Third Deposit.")
Escrow Agent is hereby authorized and instructed to release the First Deposit,
the Second Deposit and the Third Deposit (said First, Second and Third Deposit
collectively referred to as the "Deposit"), when:
(A) Escrow Agent can unconditionally deliver to Purchaser the following items:
(i) A Promissory Note, executed by Seller, in the original principal amount of
EIGHT HUNDRED SIXTY FIVE THOUSAND DOLLARS ($865,000.00), bearing interest at
8% per annum, with all sums due and payable on the earlier of the transfer of
the Property from Seller to Purchaser or six (6) months from the date of
execution of said Note, and containing other standard provisions, including a
provision for attorneys' fees; and (ii) a Deed of Trust, on customary standard
form, duly executed by Seller, to secure said Promissory Note, which will be a
lien against the Property subject only to those liens and encumbrances which
are shown as exceptions to title, Items D and E in Schedule B-Section 1, and
all items shown in Schedule B-Section 2, in the Commitment for Title
Insurance issued by North American Title Company of Colorado ("Title Company")
under its file number CM 58995; and
(B) Escrow Agent has received the written consent of the holder of the first
deed of trust, Allstate Life Insurance Company, to the placing of the second
deed of trust against the Property (as described in sub-part "A", above).
Purchaser shall be primarily responsible for processing the approval request
with said deed of trust holder, and Seller shall be responsible for providing,
in a timely manner, all documentation which is requested of it by the
Purchaser to so process such approval request.
Upon the release of the Deposits by Escrow Agent to the Seller, the
amounts released shall be deemed to be "Deposits" for all intents and purposes
under the terms of the Agreement
(e.g., the Deposits, in their entirety, and all interest earned thereon while
said Deposits are held by the Escrow Agent, shall be credited to the Purchase
Price; after Purchaser removes the financing contingency, pursuant to Section
3, below, the Deposits shall be non-refundable if the Purchaser defaults,
except in the event that Seller breaches its obligations under the Agreement,
as amended by this First Amendment.) In the event that, after the Deposits
have become non-refundable, the Closing does not occur due to a breach by
Purchaser of its obligations hereunder, and Seller has performed all
obligations to be performed by Seller, Purchaser shall return to Seller the
Promissory Note marked "canceled" and Purchaser shall reconvey the Deed of
Trust.
2. Section 2.1.5 is modified to provide that, at the time that Purchaser
pays the Purchase Price, the amount of Principal, and all accrued interest,
due on the Promissory Note described in Section 1, above, shall be credited
towards the Purchase Price, and in consideration therefor, at Closing the
Purchaser shall cancel the Promissory Note and reconvey the Deed of Trust.
3. The time period for the Purchaser to remove the financing
contingency, which is in Section 10.3 of the Agreement, is extended to April
17, 1998, which is ten (10) business days after the date that Purchaser
received tentative approval from the existing lender to assume the existing
financing.
4. Section 7.1 is modified to provide that the "Closing Date" shall be
the earlier of July 31, 1998 or the closing of Purchaser's sale of improved
real property known as "Spanish Gate", or, at the option of Purchaser, any
earlier date which falls on a business day, provided that if Purchaser elects
such option, Purchaser shall give Seller ten (10) days advance written notice.
5. This First Amendment may be signed in counterparts, and each such
counterpart shall constitute a duplicate original, but all counterparts
together shall consist of only one document.
Except as the Agreement has been modified by this First Amendment, all of
the terms and conditions of the Agreement shall remain in full force and
effect. In the event of any contradiction between the terms of the Agreement
and this First Amendment, the terms of this First Amendment shall prevail.
In Witness Whereof, the parties hereto have executed this First Amendment
as of the date set forth above.
PURCHASER: SELLER:
EAGLES LANDING, L.L.C., a
Colorado limited liability company
JON H. OLSON BY:
Terence J. O'Connor, Manager
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