<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 23, 1997
TEAM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-9950 74-1765729
- ------------------------ ------------ --------------
(State or other juris- (Commission (IRS Employer
diction of incorporation File No.) Identification No.)
1019 South Hood Street
Alvin, Texas 77511
- -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (281) 331-6154.
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
Effective May 23, 1997, certain wholly-owned subsidiaries of Registrant sold
substantially all of the assets of the 801 Military Housing Projects to U.S.
National Housing Limited Partnership, an Alaska limited partnership ("Buyer").
The assets sold consist mainly of approximately 300 housing units for military
personnel in Pensacola, Florida, approximately 250 housing units for military
personnel in Fort Bragg, North Carolina, and approximately 150 housing units
for military personnel in Portales, New Mexico. The consideration given by
Buyer consisted of $3,200,000 in immediately available funds and the assumption
of the indebtedness remaining on each of the 801 Military Housing Projects.
The amount of the consideration for the sale of these assets was determined as
a result of arms-length negotiations and agreement between unrelated parties.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma consolidated financial statements are filed
with this report:
Pro Forma Consolidated Balance Sheet as of February 28, 1997 ... Page F-1
Pro Forma Consolidated Statement of Earnings:
Year Ended May 31, 1996 ............................... Page F-2
Nine Months Ended February 28, 1997 ................... Page F-3
Notes to Pro Forma Consolidated Financial Statements ........... Page F-4
The following unaudited pro forma consolidated statements of earnings for the
year ended May 31, 1996 and the nine months ended February 28, 1997 give effect
to the disposition of substantially all of the assets of the Military Housing
Projects as if the sale and the resulting debt reduction occurred on June 1,
1995 and June 1, 1996, respectively. The following unaudited pro forma
consolidated balance sheet as of February 28, 1997 gives effect to the sale of
substantially all of the assets of the Military Housing Projects as if the sale
and the reduction of debt with the proceeds thereof occurred as of that date.
The pro forma financial information is presented for illustrative purposes and
is not indicative of either a) the results of Registrant's operations which
would have actually been obtained if the disposition had occurred on the dates
indicated, or b) the results of Registrant's operations which will be reported
in the future.
The pro forma statements of earnings do not reflect the anticipated loss on the
sale of the Military Housing Projects. The Company
<PAGE> 3
treated the Military Housing Projects as a discontinued operation and,
accordingly, the loss is not part of the pro forma requirements.
(c) Exhibits
2.1 Agreement of Purchase and Sale, dated September 13, 1996, among
Registrant and Ft. Bragg 801, Inc. and Pensacola 801, Inc.
and Portales 801, Inc., collectively as Seller, and U.S.
National Housing, L.L.C. as Purchaser. (Registrant hereby
agrees to furnish supplementally to the Securities and
Exchange Commission upon request a copy of any omitted
Exhibit, all of which are listed on the last page of the
Agreement and Purchase of Sale.)
2.2 Assignment and Assumption Agreement, dated May 8, 1997, between
U.S. National Housing, LLC and U.S. National Housing Limited
Partnership.
2.3 First Amendment to Purchase and Sale Agreement, dated as of
May 8, 1997, among Registrant and Ft. Bragg 801, Inc. and
Pensacola 801, Inc. and Portales 801, Inc. and First American
Capital Corporation, collectively as Seller, and U.S. National
Housing Limited Partnership, as Purchaser.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 6, 1997 TEAM, INC.
/s/ William A. Ryan
-----------------------------------------
By: William A. Ryan
Chairman of the Board,
Chief Executive Officer and
President
/s/ Margie E. Rogers
-----------------------------------------
By: Margie E. Rogers
Vice President, Treasurer
and Secretary
4
<PAGE> 5
TEAM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS TEAM, INC. PRO-FORMA PRO-FORMA
AND SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
---------------- ----------- ------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents 1,301,000 183,000 1,484,000
Receivables 7,742,000 0 7,742,000
Materials and supplies 6,034,000 0 6,034,000
Prepaid expenses & other current assets 750,000 0 750,000
----------- ----------- -----------
Total Current Assets 15,827,000 183,000 16,010,000
Net Assets of Discontinued Operations 2,990,000 (2,990,000) 0
Property, Plant and Equipment
Land and buildings 6,541,000 0 6,541,000
Machinery and equipment 11,505,000 0 11,505,000
----------- ----------- -----------
18,046,000 0 18,046,000
Less accumulated depreciation and amortization 12,231,000 0 12,231,000
----------- ----------- -----------
5,815,000 0 5,815,000
Other Assets 2,315,000 0 2,315,000
----------- ----------- -----------
26,947,000 (2,807,000) 24,140,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt 1,613,000 (1,294,000) 319,000
Accounts payable 941,000 0 941,000
Other accrued liabilities 2,973,000 137,000 3,110,000
Current income taxes payable 81,000 0 81,000
----------- ----------- -----------
Total Current Liabilities 5,608,000 (1,157,000) 4,451,000
Long-term Debt and Other 9,764,000 (1,650,000) 8,114,000
Stockholders' Equity:
Preferred stock, cumulative, par value $100
per share, 500,000 authorized, none issued 0 0 0
Common stock, par value $.30 per share,
10,000,000 authorized, 5,169,542 shares
issued 1,551,000 0 1,551,000
Additional capital 24,992,000 0 24,992,000
Accumulated deficit (14,871,000) 0 (14,871,000
Treasury stock at cost, 9,700 shares (97,000) 0 (97,000)
----------- ----------- -----------
Total Stockholders' Equity 11,575,000 0 11,575,000
----------- ----------- -----------
26,947,000 (2,807,000) 24,140,000
=========== =========== ===========
</TABLE>
See notes to Pro Forma Consolidated Financial Statements
F-1
<PAGE> 6
TEAM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED MAY 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TEAM, INC. MILITARY
AND HOUSING PRO-FORMA PRO-FORMA
SUBSIDIARIES PROJECTS ADJUSTMENTS CONSOLIDATED
------------ ------------- --------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Operating revenue $ 47,449,000 $ $ $ 47,449,000)
Military housing project lease revenue 5,036,000 (5,036,000) 0
------------ ------------ --------------- ----------------
52,485,000 (5,036,000) 0 47,449,000
Operating Costs and Expenses
Operating expenses 25,161,000 25,161,000
Selling, general and administrative expenses 23,446,000 23,446,000
Interest 1,188,000 (252,000) 936,000
Writedown of assets 7,697,000 7,697,000
------------ ------------ --------------- ----------------
57,492,000 0 (252,000) 57,240,000
Military Housing Project Costs and Expenses
Operating expenses 2,198,000 (2,198,000) 0
Selling, general and administrative expenses 289,000 (289,000) 0
Interest 3,359,000 (3,359,000) 0
------------ ------------ --------------- ----------------
5,846,000 (5,846,000) 0 0
Earnings (Loss) from Continuing Operations
Before Income Taxes (10,853,000) 810,000 252,000 (9,791,000)
Provision for Income Taxes (1,575,000) 275,000 86,000 (1,214,000)
Earnings (Loss) from Continuing
------------ ------------ --------------- ----------------
Operations Net of Income Taxes $ (9,278,000) $ 535,000 $ 166,000 $ (8,577,000)
============ ============ =============== ================
Net Earnings (Loss) Per Share:
Earnings (Loss) from Continuing
Operations $ (1.80) $ (1.66)
============ ================
Weighted Average Number of Shares
Outstanding 5,161,000 5,161,000
============ ================
</TABLE>
See notes to Pro Forma Consolidated Financial Statements
F-2
<PAGE> 7
TEAM, INC. AND SUBSIDIARIES
PROFORMA CONSOLIDATED STATEMENTS OF EARNINGS
NINE MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TEAM, INC. AND PRO-FORMA PRO-FORMA
SUBSIDIARIES ADJUSTMENTS CONSOLIDATED
------------- -------------- --------------
<S> <C> <C> <C>
Revenues $ 32,732,000 $ $ 32,732,000
Operating expenses 18,414,000 18,414,000
Selling, general and administrative expenses 12,652,000 12,652,000
Interest 687,000 (182,000) 505,000
------------- -------------- --------------
Earnings from Continuing Operations Before Income Taxes 979,000 182,000 1,161,000
Provision for Income Taxes 450,000 62,000 512,000
Earnings from Continuing Operations
------------- -------------- --------------
Net of Income Taxes $ 529,000 $ 120,000 $ 649,000
============= ============== ==============
Net Earnings Per Share:
Earnings from Continuing Operations $ 0.10 $ 0.13
============= ==============
Weighted Average Number of Shares Outstanding 5,160,000 5,160,000
============= ==============
</TABLE>
See notes to Pro Forma Consolidated Financial Statements
F-3
<PAGE> 8
Team, Inc. and Subsidiaries
Notes to Pro Forma Consolidated Financial Statements
For the Year Ended May 31, 1996 and the Nine Months Ended February 28, 1997
(Unaudited)
Balance Sheet
The pro forma adjustments to the consolidated balance sheet as of February 28,
1997 reflect the following:
a) The disposition of substantially all of the assets of the Military
Housing Projects for $3.2 million, the resulting reduction of debt of
$2,944,000, the additional cash of $183,000 and estimated transaction
costs of $137,000.
Income Statement
The pro forma adjustments to the consolidated statements of income reflect the
following:
a) The elimination of the Military Housing Projects' operations for the
year ended May 31, 1996.
b) The decrease in interest expense for the year ended May 31, 1996,
resulting from the debt repayment of $2,944,000 at an interest rate of
8.56%. The decrease in interest expense for the nine months ended
February 28, 1997, resulting from the debt repayment of $2,944,000 at
an interest rate of 8.25%.
c) The tax effect of pro forma adjustments at the Company's statutory
rate.
F-4
<PAGE> 9
EXHIBIT INDEX
-------------
2.1 Agreement of Purchase and Sale dated September 13, 1996, among
Registrant, and Ft. Bragg 801, Inc. and Pensacola 801, Inc.
and Portales 801, Inc., collectively as Seller, and U.S.
National Housing, L.L.C. as Purchaser. (Registrant hereby
agrees to furnish supplementally to the Securities and
Exchange Commission upon request a copy of any omitted
Exhibit, all of which are listed on the last page of the
Agreement and Purchase of Sale.)
2.2 Assignment and Assumption Agreement dated May 8, 1997, between
U.S. National Housing, LLC and U.S. National Housing Limited
Partnership.
2.3 First Amendment to Purchase and Sale Agreement, dated as of
May 8, 1997, among Registrant, and Ft. Bragg 801, Inc. and
Pensacola 801, Inc. and Portales 801, Inc. and First American
Capital Corporation, collectively as Seller, and U.S. National
Housing Limited Partnership, as Purchaser.
3
<PAGE> 1
AGREEMENT OF PURCHASE AND SALE
among
Ft. Bragg 801, Inc.
and
Pensacola 801, Inc.
and
Portales 801, Inc.,
as Seller,
and
U.S. National Housing, L.L.C., as Purchaser
Dated: September 13,1996
Premises Location: McLauchlin Township, North Carolina
Pensacola, Florida
Portales, New Mexico
<PAGE> 2
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (the "Agreement") is made and entered
into this 13th day of September, 1996, by and between Ft. Bragg 801,
Inc. ("Ft. Bragg"), Pensacola 801, Inc. ("Pensacola") and Portales 801, Inc.
("Portales"), each a Texas corporation,(Ft. Bragg, Pensacola and Portales are
hereinafter collectively referred to as "Seller"), and U.S. National Housing,
L.L.C., an Alaska limited liability company (hereinafter referred to as
"Purchaser").
W I T N E S S E T H:
Ft. Bragg is the owner of property located in McLauchlin
Township, No. Carolina (the "Ft. Bragg Parcel"), Pensacola is the owner of
property located in Pensacola, Florida (the "Pensacola Parcel") and Portales is
the owner of property located in Portales, New Mexico (the "Portales Parcel");
all of which more precisely described in Exhibits A-1, A-2 and A-3 respectively
(collectively "Exhibit A"); the various Parcels are individually referred to as
a "Parcel" and collectively referred to as the "Property". Each Seller intends
to sell its Parcel, and Purchaser intends to purchase the Property upon the
terms, covenants and conditions hereinafter set forth.
NOW THEREFORE in consideration of the mutual covenants and
agreements contained herein and intending to be legally bound hereby, Seller
and Purchaser agree as follows:
1. Sale and Purchase of Property. Each Seller will sell
to Purchaser and Purchaser will purchase from each Seller, upon the terms and
conditions hereinafter set forth, all of such Seller's right, title and
interest in and to each Parcel. The term "Property" in this Agreement shall
include, without limitation, the following:
(a) All those pieces or parcels of land and all
rights, privileges, servitudes and appurtenances thereunto belonging as set
forth in Exhibit A hereto (hereinafter referred to as the "Land");
(b) All buildings and other improvements thereon
erected (collectively, the "Improvements");
<PAGE> 3
(c) All easements, rights of way, development
rights, riparian rights, privileges, appurtenances and other rights pertaining
to the Property (all such easements, rights and privileges are hereinafter
referred to collectively as the "Rights");
(d) All right, title and interest of the Seller
in and to (i) any land lying in the bed of any street, road or avenue opened or
proposed, public or private, in front of or adjoining the Property, (ii) any
award made or to be made in lieu thereof, (iii) any unpaid award for damage to
the Property by reason of change of grade of any street, and (iv) any strips,
gaps and gores adjoining or adjacent to the Land (all such land and awards are
hereinafter referred to collectively as the "Awards");
(e) All right, title and interest of each Seller
in and to fixtures, machinery, equipment, articles of personal property and
improvements in the nature of personal property attached or appurtenant to, or
located on, or used in connection with the use or operation of, or used or
adapted for use in connection with the enjoyment or occupancy of, the Land or
the Improvements (hereinafter collectively referred to as the ("Personal
Property");
(f) All rights of each Seller under the leases
set forth in the Schedule of Leases attached hereto as Exhibit B and all
modifications and amendments thereto and renewals or extensions thereof
(hereinafter referred to as the "Leases").
The Seller shall execute and deliver to the Purchaser at the
Closing (as such term is hereinafter defined) all proper and necessary
instruments for the conveyance of all of each Seller's right, title and
interest in, to and under the Parcel owned by it. In the event that the Seller
shall not convey all of its right, title and interest in, to and under the
Property at the Closing, then, the Seller shall, on demand thereafter, execute
all such proper and necessary instruments for the conveyance of any such right,
title or interest. The provisions of the immediately preceding sentence shall
survive the Closing.
2. Purchase Price and Payment. The purchase price
(hereinafter referred to as the ("Purchase Price") for the Property shall be as
follows:
2
<PAGE> 4
(a) $3,200,000, payable in cash, on the Closing Date, as
defined in paragraph 4 hereof.
(b) The balance by either (i) taking title to the Property
subject to the outstanding balance of the Indebtedness, as defined in paragraph
7(z) hereof, on the Closing Date, or (ii) by payment of the outstanding balance
of, and other sums due and owing on, the Indebtedness and the Security
Documents, as defined in paragraph (7)(z) hereof.
(c) For the convenience of the parties, the Purchase Price
allocation for each parcel (including a proportionate share of the cash and the
outstanding balance of the Indebtedness) is as follows:
Ft. Bragg Parcel [$14,100,000]
Pensacola Parcel [$17,000,000]
Portales Parcel [$10,355,280].
(d) The Purchase Price is subject to adjustments and
prorations as herein set forth. The cash portion of the Purchase Price shall
be payable by Purchaser at the Closing by certified check, wire transfer of
immediately available Federal funds, or title insurance company check, or
otherwise as agreed to by Seller and Purchaser.
3. Escrow Deposit. For the purpose of securing the
performance of Purchaser under the terms and provisions of this Agreement,
Richard W. Fisher, Individually, shall deliver to the Title Company (as herein
defined), at the same time as the request for the Title Report defined in
paragraph 6, a promissory note (the "Note") in the amount of Twenty Thousand
and No/100 ($20,000) Dollars (the "Escrow Deposit"), due and payable one (1)
day after Closing (as hereinafter defined), and which shall be delivered by the
Title Company to Seller in the event Purchaser defaults under this Agreement as
provided in Article 15 hereof. At the Closing, the Escrow Deposit shall be
returned to the Purchaser.
4. Closing; Possession. (a) The closing or settlement of
the transactions contemplated by this Agreement (hereinafter referred to as
the "Closing") shall be held at the offices of Reid & Priest, 40 West 57th
Street, New York, New York 10019, or the offices of the Purchaser or the
Purchaser's lending institution or its attorneys at 10:00 a.m., on a date
agreed to by
3
<PAGE> 5
Purchaser and Seller (such date or any other date agreed to by Purchaser and
Seller which Seller and Purchaser mutually agree upon for the Closing is
hereinafter referred to as the "Closing Date"). The Closing Date shall be no
later than December 5, 1996 subject to extension as provided herein.
(b) Possession of the Property shall be delivered to
Purchaser at Closing, subject only to the occupancy rights of the tenants under
the Leases.
5. Title. At the Closing, each Seller shall convey to
Purchaser, or one or more entities designated by the Purchaser by Special
Warranty Deed, good and marketable and indefeasible fee title to the Property,
free and clear of all mortgages, liens, encumbrances, dedications, security
interests, covenants, conditions, restrictions, rights of way, easements,
encroachments and any other matters affecting title, excepting, however, only
the below-described Leases and the below-described Permitted Exceptions, a copy
of which is attached hereto as Exhibit "C" and Seller shall provide all
documentation necessary to cause the Title Company to insure Purchaser's title
to the Property as aforesaid.
6. Title and Survey Examination. (a) Within thirty (30)
days after the Agreement has been executed and delivered by Seller and
Purchaser, Purchaser at Purchaser's sole expense shall cause to be issued to
Purchaser by a title insurance company or companies (hereinafter referred to as
the "Title Company") selected by Purchaser, a title report of, and commitment
to insure title to, the Property (hereinafter referred to as the "Title
Report"), and within such same thirty (30) day period Purchaser at Purchaser's
expense may cause to be delivered to Purchaser surveys of each Parcel and
related Improvements by a licensed surveyor satisfactory to Purchaser and the
Title Company.
(b) Purchaser will have thirty (30) days after receipt of
each of such surveys and the Title Report to review and approve same. In the
event any portion of such surveys or Title Report is unacceptable to Purchaser,
then Purchaser shall within the thirty (30) day period, give Seller written
notice of any title or survey objection. Purchaser's failure to give Seller
such written notice shall be deemed to be Purchaser's acceptance of the survey
and Title Report. Seller may, if it so chooses, promptly undertake to cure all
such objections to the reasonable satisfaction of Purchaser, provided, however,
Seller shall not be required to cure
4
<PAGE> 6
any objection or expend any funds in such regard, except payment shall be
deducted at Closing to release liens covering the Property, other than the
Indebtedness. In the event Seller chooses not to so cure, Purchaser may
terminate this Agreement, receive a return of the Escrow Deposit, with the Note
marked canceled and thereafter neither party shall have any further liabilities
hereunder; or Purchaser may waive such objection whereupon the parties agree to
consummate the transaction provided for in this Agreement. The exceptions set
forth on Exhibit "C" hereto and those identified on the Title Report and
encroachments shown on surveys and either accepted by Purchaser or objected to
and not cured by Seller, without Purchaser terminating this Agreement, are
hereinafter referred to as the "Permitted Exceptions."
7. Representations and Warranties of Seller. To induce
Purchaser to enter into this Agreement, Seller covenants, represents and
warrants to Purchaser as follows:
(a) Each Seller (i) is duly organized, validly
existing and in good standing under the laws of Texas (ii) has good and
marketable fee simple title to its Parcel, subject to the Leases, liens to be
released at Closing and the Permitted Exceptions, (iii) has the full power and
authority to sell and convey its Parcel on the terms and conditions
contemplated by this Agreement and to execute this Agreement and all documents
contemplated hereby, and (iv) has taken all actions and obtained all consents
and approvals required for the consummation of the transactions contemplated by
this Agreement, in connection with this Agreement and the sale of the Property.
(b) On the Closing Date each Seller will own
legal and beneficial fee simple title to its Parcel free and clear of all liens
and encumbrances, except the Leases, the Indebtedness and the Security
Documents, liens to be released at Closing and the Permitted Exceptions, and no
other person or entity will have any (i) legal or beneficial right, title or
interest in the Property, or any portion thereof, or (ii) right or option to
acquire the Property, or any portion thereof.
(c) The Schedule of Leases attached hereto as
Exhibit B contains a complete and correct list of all leases (the "Leases"),
tenancies, licenses and other rights of occupancy or use of any portion of the
Property on the date of this Agreement, all of which are in full force and
effect.
5
<PAGE> 7
(d) There are no other agreements, oral or
written, in the nature of leases, licenses, permits, franchises, concessions,
dedications or occupancy agreements affecting the Property or the use of the
Property other than the Leases set forth in Exhibit B, and there are no
modifications, extensions, renewals or options with respect to the Leases,
whether oral or written, except as set forth in Exhibit B.
(e) True and complete copies of the Leases as set
forth in Exhibit B, and all amendments, guarantees and other documents relating
thereto, have been made available to Purchaser.
(f) There are no security deposits under the
Leases and except for rents paid less than thirty (30) days in advance, no
tenant under any of the Leases has prepaid any rent, fees or other charges.
The landlord under the Leases is not in default under any of the Leases and
neither the landlord nor the Seller has received any notice of default from any
tenant under any of the Leases which has not been cured and Seller is not aware
of any condition or circumstance which, with or without the giving of notice or
the passage of time, would constitute such a default. Seller or its designee
has performed all of the obligations on its or the landlord's part to be
performed pursuant to each of the Leases and is in full and timely compliance
with all of the terms, covenants, provisions and conditions thereof.
(g) Exhibit D attached hereto is a complete and
correct list of all written and oral management, service, equipment, supply,
maintenance or concession agreements with respect to or affecting the Property
(hereinafter referred to as the "Service Contracts"). Each of said agreements
is in full force and effect and all amounts due thereunder have been paid in
full. Neither Seller nor its agents have received any notice from any party to
said agreements claiming the existence of any default or breach thereunder.
(h) Except for the Pensacola Parcel, as set forth
on Exhibit N, there are no employees employed by Seller or by any management
company or otherwise at or in connection with the Property for or to which
Purchaser shall have any responsibilities or liabilities following the Closing.
There are no employment, union, collective bargaining agreements, contracts or
similar agreements in effect in connection with the Property or the
6
<PAGE> 8
operation and/or maintenance thereof, except for the Pensacola Parcel.
(i) All Improvements (including but not limited
to all buildings, roads, parking areas, curbs, sidewalks, utility lines and
systems and sewers) have been constructed in accordance with the plans and
specifications approved by the governmental authorities having jurisdiction and
comply with all building, zoning and other applicable laws. All site
improvements required by the applicable government authorities in connection
with the existing Improvements have been completed and paid for in full.
(j) To the best of Seller's knowledge, the
Improvements (including, but not limited to, their structural parts,
foundation, roofs and basements) and other improvements on the Property are in
good condition and repair, and the mechanical, heating, air conditioning,
plumbing, electrical, water, sewer, ventilating equipment, elevators and space
and storm drainage systems at or servicing the Property and the Improvements
and all facilities and equipment relating thereto are in good condition and
working order, free from leaks, and of sufficient capacity to adequately serve
the tenants on the Property.
(k) Attached hereto as Exhibit E are operating
statements pertaining to the Property for the calendar years 1994, 1995 and
1996, which are true and correct in all respects, and fairly present the costs
and expenses of the operation of the Property for the period covered. At the
time of Closing, there shall have been no material adverse change in the income
and expenses of the Property from that shown on Exhibit E, and Seller has no
knowledge or information concerning any prospective material changes in such
items.
(l) Permanent certificates of occupancy and all
other licenses, permits, authorizations and approvals required by all
governmental authorities having jurisdiction and the requisite certificates of
the local board of fire underwriters (or other body exercising similar
functions) have been issued for the Improvements, have been paid for, and are
in full force and effect, and the use of the Property and Improvements comply
in all respects with such licenses, permits, authorizations, approvals and
certificates.
7
<PAGE> 9
(m) All curbcut and street opening permits or
licenses required for vehicular access to and from the Property to any
adjoining public street have been obtained, have been paid for in full, and are
in full force and effect, and the owner of the Property has full access thereto
from any such adjoining public street.
(n) All public utilities required for the
operation of the Property enter the Property through open public streets
adjoining the Property.
(o) To the best of Seller's knowledge, there are
no existing violations of any Federal, State, County or other municipal laws,
ordinances, orders, regulations or requirements affecting the Property
including, without limitation, violations of the building, safety, health, fire
or zoning ordinances, and no written notice of any such violation has been
issued by any governmental authority. To the best of Seller's knowledge, there
are no conditions existing at the Property which could result in the issuance
or entering of any such violation.
(p) Except ordinary repair and maintenance for
the Pensacola Parcel which will be paid for in the ordinary course of business,
and as previously disclosed regarding the Fort Bragg and Portales Parcel, as
set forth on Exhibit O, no work has been performed or is in progress at, and no
materials have been furnished to, the Property which, though not presently the
subject of, might give rise to mechanic's, materialmen's or other liens against
the Property or any portion thereof, or if such work has been done, the cost
thereof has been paid in full.
(q) The total assessed valuation and real estate
taxes assessed against each Parcel for the current tax year is set forth on the
attached Exhibit F. Copies of real property tax bills and copies of all paid
receipts for such taxes for years 1994 and 1995 taxes are available for
Purchaser to review at Seller's office. Seller has no notice of any proposed
changes in the assessed valuation or rate of taxation except as shown on
Exhibit F.
(r) Seller has not received any written notice
from the holder(s) of any mortgages upon the Property, any insurance company
which has issued a policy with respect to the Property, or any board of fire
underwriters (or other body exercising similar functions) claiming any defects
or deficiencies to the Property.
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(s) No notice has been served upon Seller for
assessments for public improvements against the Property which remain unpaid,
and no notice or order by any governmental or other public authority has been
served upon the Seller which (i) requires the performance of any work or the
making of any repairs or alterations in the Property or in the streets abutting
the Property, or (ii) orders the construction, repair or alteration of any
public improvements on or about the Property or the streets abutting the
Property.
(t) Except as previously disclosed, as set forth
on Exhibit P, there is no litigation or administrative or governmental
proceeding pending or to Seller's knowledge threatened against or relating to
the title to the Property or which would adversely affect Purchaser's purchase,
ownership, operation of and construction on the Property.
(u) A schedule of all insurance policies
currently in force with respect to the Property and the limits of each policy
is attached hereto as Exhibit G. Each of said policies is in full force and
effect and all premiums due thereunder have been paid. No notice has been
received from any of the insurance companies which issued the aforesaid
policies or from any agents thereof stating, in effect, that any of such
policies will not be renewed.
(v) To the best of Seller's knowledge, all oil
and/or gas burners, incinerators, furnaces and other fuel burning devices on
the Property comply with the requirements of all applicable governmental or
quasi governmental departments, agencies and other entities having jurisdiction
thereover, including, without limitation, all air pollution and environmental
control laws, orders, rules and regulations, and valid certificates of
operation, if required, have been issued therefor and are in full force and
effect.
(w) To the best of Seller's knowledge, there is
no asbestos in the Improvements and Seller has not generated, treated, stored
or disposed of any hazardous substances (as defined in Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended 42 U.S.C. 9001, et seq. (hereinafter referred to as CERCLA), or any
similar state or local law applicable to the Property in, on or under the
Property other than in compliance with all applicable laws and (ii) to the best
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knowledge of Seller, there are no hazardous substances present in, on or under
the Property the nature, amount or concentration of which would entitle either
the United States Environmental Protection Agency (acting pursuant to CERCLA)
or any state or local environmental protection agency to undertake or require
the owner of the Property to undertake removal or remediation of such hazardous
substances.
(x) To the best of Seller's knowledge, the
Property and the Improvements have been and are presently used and operated in
compliance in all material respects with, and in no material way violates any
applicable statute, law, regulation, rule, ordinance or order of any kind
whatsoever, including, but not limited to, any building, fire, health, safety,
pollution, environmental (including, without being limited to, the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6921, et seq., and
the regulations adopted pursuant thereto, or any other similar applicable
federal, state or local law, rule, regulation or ordinance).
(y) Seller represents that it is not now nor will
it be at the time of Closing a "foreign person" as defined in the Foreign
Investment Real Property Tax Act, Internal Revenue Code Section 1445, and will
deliver at Closing an affidavit as to such fact.
(z) True and complete copies of the notes (the
"Indebtedness") from Seller, as borrower, to the lender therein ("Lender"), and
the documents securing or related to the Indebtedness, including the mortgages,
deeds of trust, trust agreement, intercreditor agreement and other documents
listed on Schedule H hereto, have been delivered to Purchaser and such
instruments constitute all pertinent documents issued in connection with
certain Certificates of Participation (the "Certificates of Participation") in
the original principal amount of $____ ________________ which are in existence
on the date hereof and in a current outstanding amount of $38,255,280
collectively the "Security Documents").
(aa) A true and correct schedule of the escrow
accounts (the "Accounts") in force with respect to the Property and outstanding
balances thereof, as of the date set forth thereon, is attached hereto as
Exhibit M.
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It shall be a condition of the Closing that all of the
representations and warranties of the Seller set forth in this Agreement shall
be true upon the execution of this Agreement and as of the Closing Date as if
repeated at and as of the Closing Date. The representations and warranties of
the Seller contained in this Agreement, together with an indemnity by the
Seller of the Purchaser from and against all direct liabilities, losses,
damages, claims, costs and expenses (including reasonable attorneys' fees,
disbursements and expenses) which may result from a breach of any of such
representations and warranties, shall survive the Closing for a period of two
(2) years. Subject to this two (2) year limitation, the Closing shall not
constitute or be construed as a waiver of any of the Purchaser's rights by
reason of any misrepresentation by the Seller or failure of the Seller to
comply with any of its agreements hereunder unless and to the extent that such
deficiencies have been waived by the Purchaser in writing.
8. Representations, Warranties and Covenants of
Purchaser. (a) This Agreement has been duly authorized by requisite
action and is enforceable against Purchaser in accordance with its terms;
neither the execution and delivery of this Agreement nor the consummation of
the purchase provided for herein will constitute a violation or breach by
Purchaser of any provision of any agreement or other instrument to which
Purchaser is a party or to which Purchaser may be subject although not a party,
or will result in or constitute a violation or breach of any judgment, order,
writ, junction or decree issued against or binding upon Purchaser.
(b) At Closing, Purchaser will take subject to all of
Seller's liabilities and obligations under the Indebtedness and Security
Documents, and will assume all of Seller's liabilities and obligations under
the Leases and Service Contracts.
9. Conditions Precedent to Closing. (a)The obligation of
Purchaser under this Agreement to purchase the Property from Seller and to pay
the Purchase Price is subject to the satisfaction at the time of Closing of
each of the following condition (any one of which may be waived in whole or in
part by Purchaser at or prior to Closing):
(i) All of the representations and warranties by
Seller set forth in Paragraph 7 of this Agreement shall be true and correct as
of Closing Date in all material respects, as though such
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representations and warranties were made at and as of Closing Date, and Seller
shall deliver a certificate confirming the same.
(ii) Seller shall have performed, observed and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, observed and complied with on its part prior to or
as of Closing.
(iii) Seller shall deliver the Improvements to
Purchaser in at least as good physical condition as when inspected by Purchaser
on ________________, reasonable wear and tear excepted.
(iv) All instruments and documents required on
Seller's part to effectuate this Agreement, and the transactions contemplated
herein, as set forth in Paragraph 11, shall be delivered and shall be in form
and substance mutually satisfactory to Purchaser, Seller, and the Title
Company.
(v) Title to the Property is in the condition
required under paragraphs 5 and 6 hereof.
(vi) Purchaser is satisfied as to the status of
financing, as further set forth in paragraph 18(c).
(vii) Purchaser is satisfied as to the status of
all zoning designations and zoning related matters affecting the Property.
(b) If the conditions set forth in Paragraph 9(a) above
have not been satisfied as of Closing, then the Purchaser may as its sole and
exclusive remedies elect to either (i) terminate this Agreement and receive the
return of the Escrow Deposit, with the Note marked canceled and the parties
shall thereafter be relieved of all further liabilities, or (ii) the Purchaser
may, sue for and obtain specific performance of the Seller's obligations
hereunder.
(c) The obligation of Seller under this Agreement to sell
the Property to Purchaser is subject to the satisfaction at the time of Closing
of the following conditions (which may be waived in whole or in part by Seller
at or prior to Closing):
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(i) Purchaser shall obtain the release of Seller
from any and all liability under the Indebtedness and the Security Documents.
(ii) If the condition set forth in paragraph 9(c)
above has not been satisfied as of Closing, then the Seller may as its sole and
exclusive remedy terminate this Agreement and the parties shall thereafter be
relieved of all further liabilities.
10. Operation and Obligations of Seller to Closing.
(a) From the date of this Agreement to the
Closing:
(i) Seller shall operate and maintain the
Pensacola Parcel in at least as good a condition as presently exists,
reasonable wear and tear excepted, making all necessary repairs and
replacements which are required for the proper maintenance and upkeep, timely
making of all payments due for utilities and under the Service Contracts; and
as to all portions of the Property, Seller shall timely made all payments due
under any notes and mortgages affecting the Property, and shall comply with all
applicable ordinances, laws and regulations and all contractual obligations of
Seller provided for in this Agreement. If any repairs or replacements are
needed to place the Improvements and building operating systems in the
condition required hereunder, Seller shall perform, at its sole cost and
expense, all such repairs prior to Closing. The tenants for the Ft. Bragg
Parcel and the Portales Parcel are responsible for the maintenance of such
Parcels.
(ii) Seller shall not remove any fixtures
or Personal Property from the Property unless such removal is in the ordinary
course of business and is due to obsolescence or is for the purpose of
repairing, maintaining or replacing such property, in which event such fixtures
or Personal Property shall be promptly serviced and/or replaced.
(iii) Seller shall deliver, upon receipt,
to Purchaser copies of any notice or correspondence from any of the tenants
under the Leases.
(iv) Seller shall immediately notify
Purchaser of any event or occurrence having a material effect on the operation,
leasing, or condition of the Property, including but not
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limited to fire or other casualty loss, or receipt of notice of condemnation or
violation of any health, safety, fire, environmental, or zoning code or
ordinance.
(v) Seller shall deliver to Purchaser at
Closing operating statements for Property for the period from the date of the
last operating statement set forth on Exhibit E, through the end of the month
two (2) months prior to the Closing Date.
(vi) Seller shall notify Purchaser of any
violation of any law, ordinances, regulation or requirement affecting or which
will affect the Property of which Seller has actual knowledge prior to or at
Closing, and to the extent required by the Leases will use reasonable efforts
to cure such matters prior to the Closing Date.
(vii) Seller shall deliver to Purchaser a
copy of any notice of an assessment for public improvements or an order
requiring the performance of any work or the making of any repairs or
alterations in or to the Property or the Improvements or the streets abutting
the Property or ordering the construction, repair or alteration of any public
improvements on or about the streets abutting the Property. Provided Purchaser
closes hereunder, Purchaser shall be responsible for the entire cost of such
assessment and/or construction, repairs or alterations, assessed or charged
after the date of this Agreement and Seller shall be responsible for all such
costs assessed or charged prior to the date of this Agreement.
(viii) Seller shall make all payments due
and owing on the Indebtedness in accordance with the terms and provisions of
the instruments executed and delivered in connection therewith. Seller shall
not request, or accept, any disbursements from any of the Accounts, except for
normal reimbursements from the First American Operating Account and tax and/or
insurance payments from Tax and Insurance Accounts, which shall be paid to
appropriate taxing authorities or insurance companies.
(ix) Seller shall take all necessary
actions and pay all required fees necessary to maintain all current and
effective zoning, environmental and all other approvals and permits
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affecting the Property. Seller shall not apply for or secure any approvals or
permits other than those currently in effect subsequent to the date of this
Agreement without the express written consent of the Purchaser.
(b) From the date of this Agreement to the
Closing, Seller shall not without the prior written consent of Purchaser in
each instance do the following:
(i) Modify, extend, renew, amend,
terminate, accept the surrender of or otherwise alter any of the Leases, nor
waive any of the Seller's rights under any of the Leases, nor enter into any
new leases, provided, however, in accordance with the Leases, and to reflect
insurance and tax escalations Seller may amend the Leases to increase the
rental to be paid thereunder. Seller will provide Purchaser notice prior to
such amendments and such additional information as Purchaser shall reasonably
request with respect thereto.
(ii) Modify, amend, renew, extend,
terminate or otherwise alter any of the Service Contracts in any material
respects, nor enter into any new maintenance, management or service contracts
affecting the Property and/or the Improvements.
(iii) Hire any employees or enter into any
employment contract, collective bargaining agreement, or union contract with
any persons, firms or other entities in connection with the operation and/or
maintenance of the Property or otherwise affecting the Property.
(iv) Undertake or commence or contract to
make any capital improvements to the Property or the Improvements.
(v) Create or suffer to exist any liens,
encumbrances, easements, restrictions, covenants or other agreements affecting
title to the Property other than the Indebtedness, Security Documents and
Permitted Exceptions.
(vi) modify or amend any documents
executed and delivered in connection with the Indebtedness or Security
Documents.
11. Documents. Prior to or at Closing, Seller shall
deliver to Purchaser the following:
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(a) Special Warranty Deeds with covenants against
Grantor's acts executed by Seller in proper form for recording and approved by
the Title Company, which shall convey to Purchaser title to the Property,
subject only to the Leases, the Indebtedness, the Security Documents and the
Permitted Exceptions, and in substantially the forms attached hereto as Exhibit
I-1, I-2 and I-3, with appropriate changes made to reflect the agreements set
forth herein.
(b) At the Purchaser's option, a bill of sale for
the Personal Property, executed by Seller, which shall sell and transfer to
Purchaser all right, title and interest of Seller in and to the Personal
Property, without warranty, except as to title.
(c) Copies (or originals, if in Seller's
possession) of certificates of occupancy, registrations, licenses, permits,
authorizations and approvals required by law and issued by governmental
authorities having jurisdiction over the Property, and held by Seller.
(d) A fully executed assignment by Seller to
Purchaser of Seller's interest as landlord in the Leases (including but not
limited to Seller's interest in all rentals paid thereunder), wherein Purchaser
after the Closing Date assumes all of Seller's obligations, as lessor, under
the Leases, with Seller's indemnification in favor of Purchaser with respect to
any costs or liability resulting from Seller's failure to comply, prior to the
Closing Date, with the terms of the Leases and Purchaser's indemnification in
favor of Seller with respect to any costs or liability resulting from
Purchaser's failure to comply, after the Closing Date, with the terms of the
Leases.
(e) Original executed Leases and all
correspondence and other pertinent data relating to the Leases.
(f) An estoppel certificate from the tenant under
each of the Leases, which estoppel certificates shall be in the form of Exhibit
J hereto.
(g) A fully executed assignment by Seller to
Purchaser of Seller's interest in (i) the Service Contracts of which Purchaser
requests an assignment, with Seller's indemnification from all costs and
liability resulting from Seller's failure to perform its obligations under said
contracts prior to Closing Date, and with Purchaser's assumption of Seller's
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obligations under the Service Contracts, and with Purchaser's indemnification
of Seller from all costs and liability resulting from Purchaser's failure to
perform its obligations under said contracts after the Closing Date, (ii) all
guarantees, warranties and agreements from vendors or suppliers of services or
materials to the Property, (iii) the business and trade names used by Seller
with respect to the Property, (iv) the telephone number(s) for the Property,
and (v) all permits, licenses and governmental approvals related to the
Property and the Improvements to the extent assignable by Seller to Purchaser.
In the event Purchaser decides to retain the services of the current Pensacola
Parcel maintenance employees after Closing, Seller and Purchaser shall execute
at Closing an agreement addressing workman's compensation issues regarding such
employees.
(h) A fully executed assignment from Seller and
First American Capital Corporation of all of their interests in the Accounts,
other than the First American Corporation Account referred to in 3.12(a) of the
Escrow Agreement.
(i) The original of each Service Contract,
warranty, guarantee, permit and license being assigned.
(j) An assignment of all of Seller's right, title
and interest in, to and under any and all contracts, and all warranties and
covenants therein, entered into in connection with the construction of the
Improvements including, without limitation, contracts, architects, engineers,
contractors and subcontractors (all of which contracts are hereinafter
collectively referred to as "Construction Contracts"), to the extent that the
same are assignable, together with an understanding of Seller to reasonably
cooperate with Purchaser, at no cost to Seller, in the exercise by Purchaser of
any of the rights and privileges under any of the Construction Contracts or in
the event Purchaser shall make any claim or exercise any remedy pursuant to any
of the Construction Contracts.
(k) All plans and specifications (collectively
the "Plans") for the Improvements and structures erected on the Property, and
all operating manuals, plans and specifications for mechanical, electrical,
plumbing, heating, air conditioning, ventilating, elevators and other systems,
and all components thereof, attached to or used in connection with the
Improvements. Provided, however, Seller and Purchaser agree that the Plans
will
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be delivered to Purchaser within seven (7) days after the Closing Date.
Further, Purchaser agrees that after the Closing Date Seller may have
reasonable access to the Plans for review and/or to make copies.
(l) A copy of each bill for current real estate
and ad valorem taxes, personal property taxes, sewer charges and assessments,
water charges and other utility bills with respect to the Property that has
been paid (except those utilities that are billed directly to tenants by the
utilities), together with proof of payment thereof, and the original of each
bill that has not been paid.
(m) Copies of all records, files and information
stored on computer relating to operation and maintenance of the Property,
including but not limited to tenant cards, inspection reports, cash receipts
and cash disbursements journals, and work orders for the period from Seller's
purchase of each Parcel to Closing, if held by Seller.
(n) Revised exhibits to this Agreement providing
corrected information dated not earlier than fifteen (15) days prior to
Closing.
(o) If the Title Report discloses judgments,
bankruptcies or other returns against other persons or entities having names
the same as or similar to that of Seller, Seller, on request, shall deliver to
Purchaser and the Title Company affidavits showing that such judgments,
bankruptcies or other returns are not against the Seller. Seller shall deliver
an affidavit with respect to mechanic's liens certifying that, if true, there
are no unpaid bills for service rendered or materials furnished to the
Property, which affidavit shall include an indemnity in favor of Purchaser and
the Title Company from and against any and all claims, liabilities, damages,
losses, costs and expenses (including reasonable attorneys' fees, expenses and
disbursements) arising under any claims made or liens filed by reason of
contracts for any such services or materials or the failure of Seller to have
paid in full for any service rendered or materials provided to the Property.
(p) A certificate of the Seller certifying that
the warranties and representations of the Seller set forth in this
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Agreement are true, accurate and complete on and as of the Closing Date.
(q) A letter signed by Seller, substantially in
the form attached hereto as Exhibit K, addressed to each of the tenants under
the Leases, giving notice of the sale of the Property and the assignment of
Seller's rights as landlord under the Leases and designating the address for
future payments of rent and notices by tenants under the Leases.
(r) An affidavit attesting to the representation
made in Paragraph 7(y), substantially in the form of the affidavit attached
hereto as Exhibit L.
(s) Such other documents as may be required to
carry out the intent and purpose of this Agreement.
12. Condemnation and Destruction.
(a) Seller shall provide prompt written notice to
Purchaser if Seller is notified of any eminent domain proceeding affecting or
threatened to affect the Property. If, prior to the Closing Date, all or any
portion of the Property or the ingress or egress thereto is threatened or taken
by eminent domain (or is the subject of a pending taking which has not been
consummated), such that the Purchaser's use of the Property will be materially
and detrimentally affected, Purchaser shall have the option to terminate this
Agreement, upon written notice to the Seller given not later than ten (10) days
after receipt of the Seller's notice. If the Purchaser does not exercise its
option to terminate this Agreement pursuant to this Paragraph (a), or if an
insignificant portion of the Property is taken by eminent domain, the parties
shall proceed to close this Agreement, there shall be no adjustment of the
Purchase Price and the Seller shall assign and turn over, and the Purchaser
shall be entitled to receive and keep, all awards for the taking by eminent
domain.
(b) Except as otherwise provided herein, the risk
of loss for any damages or loss from fire or other casualty shall remain with
the Seller until such time as title has passed pursuant to this Agreement.
Seller shall provide prompt written notice to Purchaser if Seller is notified
that the Property has suffered any damage or loss from fire or other casualty.
If a material part of the Property is damaged or destroyed by fire or other
casualty, the
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Purchaser shall have the option to terminate this Agreement upon notice to the
Seller given not later than ten (10) days after receipt of the Seller's notice.
If the Purchaser does not exercise its option to terminate this Agreement
pursuant to this Paragraph (b), the parties shall proceed to close this
Agreement, there shall be no adjustment of the Purchase Price and the Seller
shall assign to the Purchaser at the Closing all of the Seller's right, title
and interest in and to the insurance proceeds awarded or to be awarded to the
Seller as the result of such damage or destruction. In the event there is
damage to or destruction of an immaterial part of the Property by fire or other
casualty, such damage or destruction shall be repaired promptly by the Seller
prior to the Closing Date, it being agreed that if such repairs are not
completed, the parties shall close title notwithstanding that such repairs have
not been completed, in which event the Purchase Price shall be reduced by the
amount reasonably estimated by Seller and Purchaser as required to complete
such repairs. An "immaterial" part of the Property shall be deemed to have
been damaged or destroyed if the reasonably estimated cost of repair or
replacement thereof shall be less than $100,000, and a "material" part thereof
shall be deemed to have been damaged or destroyed if (i) the cost of repair or
replacement thereof shall be in excess thereof, or (ii) damage is such that
under any Lease a tenant may vacate its demised premises or have its rent
abated in amount greater than $100,000.
13. Adjustments/Settlement Costs. (a) No closing
adjustments will be made in connection with the Closing. As contemplated by
paragraph 2 hereof, at Closing Purchaser shall obtain a release of the
Indebtedness either through payment thereof or substitution of collateral for
the Property pursuant to the Security Documents. In the event of a
substitution of collateral for the Property, the disbursement from the First
American Corporation Account pursuant to Section 3.12(d) of the Escrow
Agreement described in Exhibit H hereof following the July, 1997 Payment Date,
as defined in the Escrow Agreement, shall be received by the Purchaser and the
amounts retained in such account attributable to tax and insurance reserves
plus a pro rata portion of the accrued interest in such account in the ratio
that the time period from July 15, 1996 through the Closing Date bears to 365
shall be forwarded to Seller. All rights in the Escrow Agreement and Security
Documents shall be assigned to Purchaser at Closing.
(b) In the event of payment of the Indebtedness
and release of the Security Documents, all proceeds under the Escrow Agreement
and Security Documents shall be paid to Purchaser with the exception of the
First American Corporation Account, the net proceeds of which shall be paid to
Seller.
(c) After the Closing Date, the Seller shall have
no further responsibility for expenses of the Property except as expressly set
forth in this Agreement, and Purchaser shall be responsible for all such
expenses of the Property, after the Closing Date.
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(d) Seller shall use reasonable efforts to cause
all public utilities serving the Property (that are not billing the tenants
directly) to issue final bills to Seller on the basis of readings made as of
the day prior to Closing. For those utilities for which a final bill cannot be
obtained as of the day prior to Closing, Seller shall obtain meter readings as
close as possible to Closing. If meter readings are not or cannot be available
at Closing, Seller and Purchaser shall adjust such items based on past meter
readings and Seller and Purchaser shall compute the adjustments when meter
readings are available.
(e) Seller and Purchaser shall split 50/50 all
state and local transfer, excise or stamp taxes or similar impositions (the
"Transfer Taxes"), if any, imposed upon or relating to the transaction
contemplated by this Agreement. Seller shall pay all income, capital gains or
other taxes imposed upon the Seller's sales contemplated by this Agreement.
Provided, however, if Purchaser is successful in its efforts to obtain early
repayment of certain bondholders interests in the Certificates of Participation
and as a result the Indebtedness will be repaid, at a discount below par or
face value, but including costs incurred in such repayment (the "Discount"),
Seller shall be credited and paid by Purchaser from the Discount up to the
amount Seller paid for the Transfer Taxes, with Purchaser being entitled to any
amount in excess of that paid to Seller.
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(f) Purchaser shall pay the premium for owner's
title insurance insuring Purchaser as owner of the Property and Purchaser shall
pay the fees to record the deeds; Purchaser shall also pay for all deletions
and/or endorsements to such title insurance policies.
14. Seller's Default. If, at or before the Closing Date,
any of the Seller's representations set forth herein are inaccurate or
incorrect in any material respect, or if the Seller breaches any of its
warranties set forth herein then the Purchaser shall so notify the Seller and
Seller shall have the option to cure any such deficiency and any other
deficiency of which the Seller shall have been notified by the Purchaser,
provided, however, except for the requirement to obtain the release of any
liens from the Property, Seller shall not be required to cure any deficiency or
spend any funds to cure. If (i) on or before the Closing Date, all of such
deficiencies shall not have been cured by the Seller, or (ii) the Seller shall
fail or otherwise be unable to deliver title to the Property on the Closing
Date as provided in this Agreement, or (iii) the Seller shall fail to comply
with any of the other agreements, covenants or obligations on its part to be
performed pursuant to this Agreement, then the Purchaser may as its sole and
exclusive remedies either (i) terminate this Agreement and receive the return
of the Escrow Deposit, with the Note marked canceled and the parties shall
thereafter be released from all further liability, or (ii) sue for and obtain
specific performance of the Seller's obligations hereunder.
15. Purchaser's Default. In the event Purchaser should
fail to consummate the purchase of the Property, or Purchaser shall be in
default hereunder, Seller as its sole and exclusive remedy shall have the right
to receive the Escrow Deposit from the Title Company, and in such event, the
parties agree to execute any document required by the Title Company or Escrow
Agent to release the Escrow Deposit.
16. Further Assurances. In addition to the obligations
required to be performed hereunder by either party at or prior to Closing, both
parties shall execute, acknowledge and deliver, subsequent to Closing, such
other instruments and documents as may reasonably be necessary in order to
effectuate the transactions contemplated herein.
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17. Brokers. Each party shall indemnify, defend, and hold
harmless the other from and against any demand or claim (including, without
limitation, reasonable attorneys' fees and expenses) from any person or entity
for a broker's or finder's fee in connection with the sale of the Property.
Each party represents to the other that it has dealt with no party purporting
to represent it in connection with the transactions contemplated hereby other
than as applicable to Purchaser regarding Millennium Capital Markets, LLC.
("Millennium"). Any commissions or fee to be paid Millennium shall be paid by
Purchaser.
18. Inspection Rights.
(a) During normal business hours, upon
twenty-four (24) hour prior notice to Seller, and with a representative of
Seller present, if Seller so desires, the Purchaser, its agents, employees and
contractors shall have the right subject to prior approval by any tenants, to
(i) enter onto the Property, including the interior and exterior and structural
components of the Improvements and any tenant spaces to perform any and all
physical inspections of the Property, including, but not limited to, wetlands
location studies, surveys, percolation tests, soil analysis, environmental
tests, title examination, soil borings, feasibility studies and any other tests
and investigations of a similar nature, (ii) investigate and review any and all
governmental resolutions, reports, agreements, permits and approvals issued in
connection with the development of the Property, for the purpose of determining
the feasibility for Purchaser to develop the Property in the manner represented
by Purchaser to Seller, (iii) investigate all leases, tenant records, copies of
bills for utilities and other operational costs, expense records, architectural
renderings, surveys, plans, warranties and guarantees concerning the Property,
(iv) have Purchaser's representatives conduct a complete financial audit of
Seller's financial records to the Property since the date they purchased it,
(v) prepare an itemized list of damages, missing property and other breaches of
warranties and conditions hereunder, and (vi) perform such other
investigations, studies and reviews with respect to the Property as it deems
necessary or appropriate.
(b) Purchaser's Inspection Indemnity and Clean-up
Responsibilities. Purchaser shall make the results of such tests, studies,
audits and inspections (the "Studies") fully available to Seller. The cost of
performing such Studies shall be paid by
23
<PAGE> 25
Purchaser. In the event any activities have taken place on or about the
Property during Purchaser's Studies, Purchaser agrees to restore the Property
to its original condition as far as is practical, to Seller's reasonable
satisfaction. Purchaser agrees to indemnify Seller form all costs, expenses,
injuries and/or damages arising from or related to Purchaser's Studies,
irrespective of whether Seller is at fault.
(c) The period from the date this Agreement is signed by
all parties hereto through the Closing Date is herein referred to as the
"Financing Contingency Period" for the Property. During this Financing
Contingency Period, Purchaser shall satisfy itself that it can either (i) pay
off the Indebtedness described in Paragraph 7(z) and obtain the release of the
Security Documents; or (ii) retain the current Indebtedness on the Property,
and substitute other collateral for the Property, pursuant to the terms of the
documents described in Paragraph 7(z). If prior to the end of the Financing
Contingency Period Purchaser cannot satisfy itself that it can accomplish
either of such alternatives to Purchaser's satisfaction, Purchaser may either
terminate this Agreement instructing the Title Company to return to it the
Escrow Deposit, and pay the Seller the cash sum of $2,000, as consideration for
this termination option, or waive this right to terminate and the parties shall
proceed to close this Agreement.
19. Assignment. Subject to Seller's prior written
consent, which consent will not be unreasonably withheld or delayed, Purchaser
shall have the right to assign this Agreement and any or all of its rights
hereunder to any person, firm, corporation or other entity, and thereafter
Purchaser shall have no obligations under this Agreement and Seller shall look
solely to such assignee for performance of Purchaser's obligations under and
pursuant to this Agreement. Provided, however, Purchaser shall have the
absolute right to assign this Agreement to a parent, subsidiary or affiliated
corporation or limited liability corporation of Purchaser, or to a partnership
or limited liability partnership or company of which Purchaser or Richard W.
Fischer is a general partner or member. Prior to Purchaser assigning this
Agreement or any of its rights hereunder, Purchaser shall first obtain the
written consent of The United States of America.
20. Notices. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed to
have been given if personally delivered with a written
24
<PAGE> 26
receipt obtained or sent by (i) certified or registered mail, return receipt
requested, (ii) recognized overnight courier, such as Federal Express (so long
as delivery is made only upon a receipt to be signed by the addressee) or (iii)
overnight express mail, addressed as follows:
If to Seller:
c/o Team, Inc.
1019 S. Hood Street
Alvin, Texas 77511
Attn: Mr. William A. Ryan
With a copy to:
Chamberlain, Hrdlicka, White,
Williams and Martin
1200 Smith Street, Suite 1400
Houston, Texas 77002
Attn: Sidney B. Williams, Esq.
If to Buyer:
U.S. National Housing L.L.C.
937 Harvard Avenue East
Seattle, Washington 98102
Attn: Mr. Richard W. Fisher
With a copy to:
Reid & Priest
40 W. 57th Street
New York, New York 10019
Attn: Edward J. Martin, Esq.
With additional
copy to: Millennium Capital Markets, LLC
200 Madison Avenue, Suite 2300
New York, New York 10016
Attn: Ronald S. Krolick
or such other person or address which Seller or Purchaser shall have given by
notice as herein provided.
25
<PAGE> 27
21. Right of First Refusal. Pursuant to the provisions of
the Leases, The United States of America ("US") holds a right of first refusal
to purchase the Property (the "Right") and must consent to the transfer of the
Property (the "Consent"). In the event the US does not waive the Right and
grant the Consent, then either party may terminate this Agreement, in which
event the Title Company shall return the Escrow Deposit to Purchaser, marking
the note cancelled and thereafter neither party shall have any further
liabilities hereunder.
22. Miscellaneous. (a) All of the representations and
warranties of Seller and Purchaser contained in this Agreement shall survive
Closing, for a period of two (2) years.
(b) This Agreement embodies and constitutes the
entire understanding between the parties with respect to the transactions
contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged
into this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument in
writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
(c) This Agreement has been delivered in the
State of New York and shall be governed by and construed in accordance with the
laws of New York.
(d) This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors and assigns.
(e) The headings preceding the text of the
paragraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
(f) This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together constitutes one and the same instrument.
26
<PAGE> 28
(g) In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
(h) Each and every provision of this Agreement,
including representations, warranties, and certifications of Seller, whether
contained herein or made separately, has been mutually negotiated, prepared and
drafted and in connection with the construction of any provisions hereof or
deletions herefrom, no consideration shall be given to the issue of which party
actually prepared, drafted, requested or negotiated any provision or deletion.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
the day and year first above written.
SELLER:
FT. BRAGG 801, INC.
By: /s/ WILLIAM A. RYAN
------------------------------------
Name: William A. Ryan
----------------------------------
Title: Vice President
---------------------------------
PENSACOLA 801, INC.
By: /s/ WILLIAM A. RYAN
------------------------------------
Name: William A. Ryan
----------------------------------
Title: Vice President
---------------------------------
PORTALES 801, INC.
By: /s/ WILLIAM A. RYAN
------------------------------------
Name: William A. Ryan
----------------------------------
Title: Vice President
---------------------------------
27
<PAGE> 29
BUYER:
U.S. NATIONAL HOUSING, L.L.C.
By: /s/ R.W. FISCHER
------------------------------------
Name: R. W. Fischer
----------------------------------
Title: Member
---------------------------------
The undersigned Team, Inc. ("Team") is the owner and holder of
all of the issued and outstanding shares of First America Capital Corporation
("First American") which in turn owns all of the issued and outstanding stock
of the Seller. Team joins in this Agreement to evidence its approval of the
terms and provisions hereof, (ii) join in the representations and warranties of
Seller set forth herein on a joint and several basis with Seller and (iii)
agree to cause the Seller to comply with the terms and provisions this
Agreement. First American as owner of the Accounts, joins in the Agreement to
(i) evidence its approval of the terms and provisions hereof and (ii) agree to
assign and transfer such Accounts to Purchaser as provided herein.
TEAM, Inc.
By: /s/ WILLIAM A. RYAN
------------------------------------
Name: William A. Ryan
----------------------------------
Title: Vice President
---------------------------------
FIRST AMERICAN CAPITAL
CORPORATION
By: /s/ WILLIAM A. RYAN
------------------------------------
Name: William A. Ryan
----------------------------------
Title: Vice President
---------------------------------
28
<PAGE> 30
EXHIBITS
A. Description of the Land
B. Schedule of Leases
C. Permitted Exceptions
D. Schedule of Service Contracts
E. Operating Statements*
F. Assessed Valuation and Taxes
G. Schedule of Insurance*
H. Certificate of Participation Documents
I. Special Warranty Deed*
J. Tenant Estoppel Certificate
K. Tenant Notice Letter*
L. FIRPTA Certificate*
M. Accounts*
N. First American Corporation Employees*
O. Repair/Condition
P. Litigation
*Omitted Exhibit
<PAGE> 31
EXHIBIT A
Descriptions of the Land
All those certain pieces or parcels of land (herein referred to as the
Land) described on the attached Exhibits A-1, A-2 and A-3.
<PAGE> 32
EXHIBIT A-1
Fort Bragg Parcel, McLaughlin Township, North Carolina
<PAGE> 33
EXHIBIT A-1
Fort Bragg Parcel:
A certain tract or parcel of land in McLauchlin Township, Hoke County,
North Carolina situated about 2.6 miles east of Raeford, N.C. fronting on the
north side of State Road No. 1406, Rockfish Road about 1100 feet west of its
intersection with State Road No. 1410, Townsend Road, adjoining the lands of
Neill L. McFadyen on the northeast, north and west and by lands of Ricky
Spencer and R.C. Herring on the east, being further described as follows:
BEGINNING at a 1/2 inch rebar in the north right of way line (30 feet
from center) of State Road No. 1406, Rockfish Road, at its intersection with
the west right of way line of a 20 foot access easement described in Deed Book
232, Page 108, said beginning point being further located N88-05-10W 20.39 feet
from an iron pipe at the south corner of the Ricky Spencer Tract No. II
described in Deed Book 232, Page 271, said iron pipe also being the southwest
corner of the Ricky Spencer tract described in Deed Book 206, Page 877; running
thence from the beginning as the north right of way line of State Road No.
1406, N88-05-10W 933.92 feet to a 1/2 inch rebar; thence continuing as the
north right of way line of State Road No. 1406 the following 5 (five) chords:
N89-05-15W 99.84 feet to a 1/2 inch rebar; thence S87-36-10W 100.09 feet to a
1/2 inch rebar; thence S81-08-45W 100.10 feet to a 1/2 inch rebar; thence
S74-15-25W 100.42 feet to a 1/2 inch rebar; thence S67-44-10W 99.61 feet to a
1/2 inch rebar; thence continuing as the northwest right of way line of State
Road No. 1406 S64-06-50W 46.02 feet to a 1/2 inch rebar in said right of way
line; thence leaving the road, N07-00-30W 2053.70 feet to a 5/8 inch rebar in a
branch with gum pointer; thence N86-29-05E 1230.80 feet to a 1/2 inch rebar at
the edge of a field; thence S28-21-40E 130.48 feet to a 1/2 inch rebar at the
edge of a field; thence S37-40- 10E 247.98 feet to a 1/2 inch rebar at the edge
of a field; thence S57-51-10E 81.50 feet to a 1/2 inch rebar; thence S50-16-35E
144.58 feet to a 1/2 inch rebar; thence S28-24-15E 143.03 feet to a 1/2 inch
rebar; thence S56-41-20E 171.48 feet to a 1/2 inch rebar at a fence, said rebar
being in the west line of the Ricky Spencer Tract No. I described in Deed Book
232, Page 271; thence as a common line with Spencer, S00-02-10W 506.85 feet to
a 5/8 iron, the southwest corner of Ricky Spencer's Tract No. I (Deed Book 232,
Page 271), the northwest corner of Ricky Spencer (Deed Book 230, Page 354) and
the northeast corner of R.C. Herring (Deed Book 230, Page 212); thence as the
north line of R.C. Herring's tracts described in Deed Book 230, Page 212 and
Deed Book 232, Page 108, N88-23-35W 239.13 feet to a 5/8 inch iron, the
northwest corner of R.C. Herring (Deed Book 232, Page 108); thence continuing,
N88-23-35W 20.33 feet to a 1/2 inch rebar at the northwest terminus of a 20
foot access easement as described in Deed Book 232, Page 108; thence as the
west right of
<PAGE> 34
way line of said easement, S08-41-15E 445.96 feet to a 1/2 inch rebar; thence
continuing as the west right of way line of said 20 foot access easement,
S09-22-10E 440.92 feet to the point of beginning containing 70.00 acres more or
less.
<PAGE> 35
EXHIBIT A-2
Pensacola Parcel, Pensacola Florida
<PAGE> 36
EXHIBIT A-2
Pensacola Parcel:
PARCEL 1:
Begin at an existing 4"X4" concrete monument with a brass disk number 3578 at
the Southwest corner of Section 29, Township 2 South, Range 31 West, Escambia
County, Florida; thence go North 00 degrees 43 minutes 20 seconds West along
the West line of the aforesaid Section 29 a distance of 1317.63 feet to a 4"X4"
concrete monument 4882 at the Northwest corner of the South half of Government
Lot 5 of the aforesaid Section 29; thence go South 89 degrees 35 minutes 54
seconds East along the North line of the South half of Government Lots 5 and 6
of the aforesaid Section 29 a distance of 2636.70 feet to a 4"X4" concrete
monument number 4882, at the Northeast corner of the South half of Government
Lot 6 of the aforesaid Section 29; thence go North 89 degrees 28 minutes 44
seconds East a distance of 1606.85 feet to a capped iron rod, number 4882;
thence go South 31 degrees 10 minutes 32 seconds West a distance of 429.14 feet
to a capped iron rod, number 4882; thence go South 29 degrees 17 minutes 35
seconds West a distance of 246.83 feet to a 4"X4" concrete monument number
4882, thence go South 60 degrees 42 minutes 25 seconds East a distance of
500.00 feet to a capped iron rod number 4882, on the Northerly right of way
line of Blue Angel Parkway (S.R. S-173, 200 foot right of way); thence go South
29 degrees 17 minutes 35 seconds West along the aforesaid Northerly right of
way line a distance of 66.00 feet to a capped iron rod number 4882; thence go
North 60 degrees 42 minutes 25 seconds West a distance of 573.45 feet to a
capped iron rod number 4882; thence go South 29 degrees 17 minutes 35 seconds
West a distance of 550.00 feet to a capped iron rod, number 4882; thence go
South 60 degrees 42 minutes 25 seconds East a distance of 189.01 feet to a
4"X4" concrete monument, number 4882, on the Northerly line of the Francisco
Lopez Grant in Section 30, Township 2 South, Range 31 West; thence go South 67
degrees 17 minutes 53 seconds West along the aforesaid Northerly line a
distance of 471.41 feet to an existing 4"X4" concrete monument (unnumbered) at
the section corner common to Sections 29 and 30, Township 2 South, Range 31
West and Sections 5 and 8, Township 3 South, Range 31 West; thence go North 89
degrees 12 minutes 56 seconds West along the South line of the aforesaid
Section 29 a distance of 3248.70 feet to a Point of Beginning. The above
described parcel of land is situated in Section 29, Township 2 South, Range 31
West, Escambia County, Florida.
PARCEL 2:
Commence at an existing 4"X4" concrete monument with a brass disk number 3578
at the Southwest corner of Section 29, Township 2 South, Range 31 West,
Escambia County, Florida; thence go North 00 degrees 43 minutes 20 seconds West
along the West line of the aforesaid Section 29 a distance of 1317.63 feet to a
4"X4" concrete monument number 4882 at the Northwest corner of the South half
of Government Lot 5 of the aforesaid Section 29; thence go South 89 degrees 35
minutes 54 seconds East along the North line of the South half of Government
Lots 5 and 6 of the aforesaid Section 29 a distance of 2636.70 feet to a 4"X4"
concrete monument number 4882, at the Northeast corner of the South half of
Government Lot 6 of the aforesaid Section 29 and the Point of Beginning; thence
go North 00 degrees 37 minutes 49 seconds West along the East line of the
aforesaid
<PAGE> 37
EXHIBIT A-2 (cont'd.)
Government Lot 6 a distance of 830.00 feet to a 4"X4" concrete monument number
4882; thence go North 89 degrees 22 minutes 11 seconds East a distance of
1583.65 feet to a 4"X4" concrete monument number 4882; thence go South 38
degrees 49 minutes 28 seconds East a distance of 488.21 feet to a 4"X4"
concrete monument number 4882, thence go South 31 degrees 10 minutes 32 seconds
West a distance of 528.77 feet to a capped iron rod number 4882, thence go
South 89 degrees 28 minutes 44 seconds West a distance of 1606.85 feet to the
Point of Beginning. The above described parcel of land is situated in Section
29, Township 2 South, Range 31 West, Escambia County, Florida.
PARCEL 3:
Commence at an existing 4"X4" concrete monument with a brass disk number 3578
at the Southwest corner of Section 29, Township 2 South, Range 31 West,
Escambia County, Florida; thence go North 00 degrees 43 minutes 20 seconds West
along the West line of the aforesaid Section 29 a distance of 1317.63 feet to a
4"X4" concrete monument number 4882 at the Northwest corner of the South half
of Government Lot 5 of the aforesaid Section 29; thence go South 89 degrees 35
minutes 54 seconds East along the North line of the South half of Government
Lots 5 and 6 of the aforesaid Section 29 a distance of 2636.70 feet to a 4"X4"
concrete monument number 4882, at the Northeast corner of the South half of
Government Lot 6 of the aforesaid Section 29; thence go North 00 degrees 37
minutes 49 seconds West along the East line of the aforesaid Government Lot 6 a
distance of 830.00 feet to a 4"X4" concrete monument number 4882; thence go
North 89 degrees 22 minutes 11 seconds East a distance of 1328.24 feet to the
Point of Beginning; thence go North 05 degrees 25 minutes 58 seconds East a
distance of 40.06 feet to a point of curvature; thence go along a curve to the
left having a radius of 325.00 feet, an arc distance of 75.07 feet (chord =
74.91 feet, chord bearing = North 01 degrees 11 minutes 05 seconds West) to a
point of reverse curvature; thence go along a curve to the right having a
radius of 225.00 feet, an arc distance 327.38 feet (chord = 299.26 feet, chord
bearing = North 33 degrees 52 minutes 52 seconds East) to the point of
tangency; thence go North 75 degrees 33 minutes 53 seconds East a distance of
894.73 feet to a point of curvature; thence go along a curve to the left having
a radius of 432.51 feet, an arc distance of 224.17 feet (chord = 221.67 feet,
chord bearing = North 60 degrees 43 minutes 00 seconds East) to the point of
tangency; thence go North 45 degrees 52 minutes 07 seconds East a distance of
12.49 feet to a point of curvature; thence go along a curve to the left having
a radius of 25.00 feet, an arc distance of 36.62 feet (chord = 33.43 feet,
chord bearing = North 03 degrees 54 minutes 36 seconds East) to an intersection
with the curved Southwesterly right of way line of Dog Track Road (State Road
S-297, 100 foot right of way) being concave Southwesterly and having a radius
of 2814.93 feet; thence go Southeasterly along the aforesaid curved
Southwesterly right of way line having a radius of 2814.93 feet, an arc
distance of 101.69 feet (chord = 101.68 feet, chord bearing = South 37 degrees
00 minutes 49 seconds East) to an intersection with a curve concave Southerly
and having a radius of 25.00 feet; thence go Northwesterly along the aforesaid
curve having a radius of 25.00 feet, an arc distance of 42.83 feet (chord =
37.78 feet, chord bearing = North 85 degrees 03 minutes 18 seconds West) to a
point of reverse curvature; thence go along a curve to the right having a
radius of 482.51
2
<PAGE> 38
EXHIBIT A-2 (cont'd.)
feet, an arc distance of 250.08 feet (chord = 247.29 feet, chord bearing =
South 60 degrees 43 minutes 00 seconds West) to the point of tangency; thence
go South 75 degrees 33 minutes 53 seconds West a distance of 894.73 feet to a
point of curvature; thence go along a curve to the left having a radius of
175.00 feet, an arc distance of 254.63 feet (chord = 232.75 feet, chord bearing
= South 33 degrees 52 minutes 52 seconds West) to a point of reverse curvature;
thence go along a curve to the right having a radius of 375.00 feet, an arc
distance of 86.62 feet (chord = 86.43 feet, chord bearing = South 01 degrees 11
minutes 05 seconds East) to the point of tangency; thence go South 05 degrees
25 minutes 58 seconds West a distance of 34.75 feet; thence go South 89 degrees
22 minutes 11 seconds West a distance of 50.28 feet to the Point of Beginning.
The above described parcel of land is situated in Section 29, Township 2 South,
Range 31 West, Escambia County, Florida.
PARCEL 4(a):
5 foot Utility Easement Number 1
Commence at an existing 4" x 4" concrete monument with a brass disk number 3578
at the Southwest corner of Section 29, Township 2 South, Range 31 West,
Escambia County, Florida; thence go North 00 degrees 43 minutes 20 seconds West
along the West line of the aforesaid Section 29 a distance of 1317.63 feet to a
4"X4" concrete monument number 4882, at the Northwest corner of the South half
of Government Lot 5 of the aforesaid Section 29; thence to South 89 degrees 35
minutes 54 seconds East along the North line of the South half of Government
Lots 5 and 6 of the aforesaid Section 29 a distance of 2636.70 feet to a 4"X4"
concrete monument number 4882, at the Northeast corner of the South half of
Government Lot 6 of the aforesaid Section 29; thence go North 00 degrees 37
minutes 49 seconds West along the East line of the aforesaid Government Lot 6 a
distance of 830.00 feet to a 4"X4" concrete monument number 4882; thence go
North 89 degrees 22 minutes 11 seconds East a distance of 1323.21 feet to the
Point of Beginning; thence continue North 89 degrees 22 minutes 11 seconds East
a distance of 5.03 feet; thence go North 05 degrees 25 minutes 58 seconds East
a distance of 40.06 feet to a point of curvature; thence go along a curve to
the left having a radius of 325.00 feet, an arc distance of 75.07 feet (chord =
74.91 feet, chord bearing = North 01 degrees 11 minutes 05 seconds West) to a
point of reverse curvature; thence go along a curve to the right having a
radius of 225.00 feet, an arc distance of 327.38 feet (chord = 299.26 feet,
chord bearing = North 33 degrees 52 minutes 52 seconds East) to the point of
tangency; thence go North 75 degrees 33 minutes 53 seconds East a distance of
894.73 feet to a point of curvature; thence go along a curve to the left having
a radius of 432.51 feet, an arc distance of 224.17 feet (chord = 221.67 feet,
chord bearing = North 60 degrees 43 minutes 00 seconds East) to the point of
tangency; thence go North 45 degrees 52 minutes 07 seconds East a distance of
12.49 feet to a point of curvature; thence go along a curve to the left having
a radius of 25.00 feet, an arc distance of 36.62 feet (chord = 33.43 feet,
chord bearing = North 03 degrees 54 minutes 36 seconds East) to an intersection
with the curved Southwesterly right-of-way line of Dog Track Road (State Road
S-297, 100 foot right of way) being concave Southwesterly and having a radius
of 2814.93 feet; thence go
3
<PAGE> 39
EXHIBIT A-2 (cont'd.)
South 51 degrees 57 minutes 06 seconds West a distance of 5.00 feet to an
intersection with a curve concave Westerly and having a radius of 20.00 feet;
thence go Southerly along the aforesaid curve having a radius of 20.00 feet, an
arc distance of 29.29 feet (chord = 26.74 feet, chord bearing = South 03
degrees 54 minutes 36 seconds West) to the point of tangency; thence go South
45 degrees 52 minutes 07 seconds West a distance of 12.49 feet to a point of
curvature; thence go along a curve to the right having a radius of 427.51 feet,
an arc distance of 221.58 feet (chord = 219.10 feet, chord bearing = South 60
degrees 43 minutes 00 seconds West) to the point of tangency; thence go South
75 degrees 33 minutes 53 seconds West a distance of 894.73 feet to a point of
curvature; thence go along a curve to the left having a radius of 230.00 feet,
an arc distance of 334.66 feet (chord = 305.91 feet, chord bearing = South 33
degrees 52 minutes 52 seconds West) to a point of reverse curvature; thence go
along a curve to the right having a radius of 320.00 feet, an arc distance of
73.92 feet (chord = 73.75 feet, chord bearing = South 01 degrees 11 minutes 05
seconds East) to the point of tangency; thence go South 05 degrees 25 minutes
58 seconds West a distance of 40.59 feet to the Point of Beginning. The above
described parcel of land is situated in Section 29, Township 2 South, Range 31
West, Escambia County, Florida.
PARCEL 4(b):
5 foot Utility Easement Number 2
Commence at an existing 4"X4" concrete monument with a brass disk number 3578
at the Southwest corner of Section 29, Township 2 South, Range 31 West,
Escambia County, Florida; thence go North 00 degrees 43 minutes 20 seconds West
along the West line of the aforesaid Section 29 a distance of 1317.63 feet to a
4"X4" concrete monument number 4882, at the Northwest corner of the South half
of Government Lot 5 of the aforesaid Section 29; thence go South 89 degrees 35
minutes 54 seconds East along the North line of the South half of Government
Lots 5 and 6 of the aforesaid Section 29 a distance of 2636.70 feet to a 4"X4"
concrete monument number 4882, at the Northeast corner of the South half of
Government Lot 6 of the aforesaid Section 29; thence go North 00 degrees 37
minutes 49 seconds West along the East line of the aforesaid Government Lot 6 a
distance of 830.00 feet to a 4"X4" concrete monument number 4882; thence go
North 89 degrees 22 minutes 11 seconds East a distance of 1378.52 feet to the
Point of Beginning; thence continue North 89 degrees 22 minutes 11 seconds East
a distance of 5.03 feet; thence go North 05 degrees 25 minutes 58 seconds East
a distance of 34.22 feet to a point of curvature; thence go along a curve to
the left having a radius of 380.00 feet, an arc distance of 87.78 feet (chord =
87.58 feet, chord bearing = North 01 degrees 11 minutes 05 seconds West) to a
point of reverse curvature; thence go along a curve to the right having a
radius of 170.00 feet, an arc distance of 247.35 feet (chord = 226.10 feet,
chord bearing = North 33 degrees 52 minutes 52 seconds East) to the point of
tangency; thence go North 75 degrees 33 minutes 53 seconds East a distance of
894.73 feet to a point of curvature; thence go along a curve to the left having
a radius of 487.51 feet, an arc distance of 252.67 feet (chord = 249.85 feet,
chord bearing = North 60 degrees 43 minutes 00 seconds East) to a point of
reverse curvature; thence go along a curve to the right having a radius of
20.00 feet, an arc distance of 34.26
4
<PAGE> 40
EXHIBIT A-2 (cont'd.)
feet (chord = 30.22 Feet, chord bearing = South 85 degrees 03 minutes 18
seconds East); thence go North 54 degrees 01 minutes 17 seconds East a distance
of 5.00 feet to an intersection with a curve concave Southerly and having a
radius of 25.00 feet; thence go Northwesterly along the aforesaid curve having
a radius of 25.00 feet, an arc distance of 42.83 feet (chord = 37.78 feet,
chord bearing = North 85 degrees 03 minutes 18 seconds West) to a point of
reverse curvature; thence go along a curve to the right having a radius of
482.51 feet, an arc distance of 250.08 feet (chord = 247.29 feet, chord bearing
= South 60 degrees 43 minutes 00 seconds West) to the point of tangency; thence
go South 75 degrees 33 minutes 53 seconds West a distance of 894.73 feet to a
point of curvature; thence go along a curve to the left having a radius of
175.00 feet, an arc distance of 254.63 feet (chord = 232.75 feet, chord bearing
= South 33 degrees 52 minutes 52 seconds West) to a point of reverse curvature;
thence go along a curve to the right having a radius of 375.00 feet, an arc
distance of 86.62 feet (chord = 86.43 feet, chord bearing = South 01 degrees 11
minutes 05 seconds East) to the point of tangency; thence go South 05 degrees
25 minutes 58 seconds West a distance of 34.75 feet to the Point of Beginning.
The above described parcel of land is situated in Section 29, Township 2 South,
Range 31 West, Escambia County, Florida.
5
<PAGE> 41
EXHIBIT A-3
Portales Parcel, Portales, New Mexico
<PAGE> 42
EXHIBIT A-3
Portales Parcel:
SURFACE AND SURFACE ESTATE ONLY IN AND TO:
A tract of land in the S.W. 1/4 of Section 34, T1S, R34E, N.M.P.M., City of
Portales, Roosevelt County, New Mexico, being more particularly described as
follows:
BEGINNING at the center corner of said Section 34, T1S, R34E, Thence
S. 0 degrees 15' 59" W. 1466.24 feet. Thence N. 89 degrees 40' 34" W. 1319.68
feet. Thence N. 0 degrees 46' 22" E. 694.75 feet. Thence N. 0 degrees 10' 26"
E. 764.31 feet. Thence S. 89 degrees 59' 22" E. 1314.79 feet to the point of
beginning.
Now known as Cannon Meadows Addition to the City of Portales, Roosevelt County,
New Mexico, according to the plat recorded in Cabinet A in Slide 325 and 326 of
the Plat Records of Roosevelt County, New Mexico.
<PAGE> 43
EXHIBIT B
Schedule of Leases
1. Lease, dated October 12, 1993, between Pensacola 801, Inc., as Lessor
and The United States of America, as Lessee.
2. Lease, dated November 16, 1993, between Fort Bragg 801, Inc., as
Lessor and The United States of America, as Lessee.
3. Lease, dated July 29, 1993, between Portales 801, Inc., as Lessor and
The United States of America, as Lessee.
<PAGE> 44
EXHIBIT C
Permitted Exceptions
Those exceptions set forth in the following:
1. Schedule B exceptions 2, 3, 4 and 5, as set forth in Loan Policy,
dated June 27, 1992, issued by Lawyers Title Insurance Corporation,
through Lawyers Title of North Carolina, under Owner's Policy No.
113-00-659536 and Loan Policy No. 82-02-374284, regarding Fort Bragg
Parcel.
2. Schedule B exceptions 4, 5, 7 and 8, as set forth in Owner's Policy,
dated July 8, 1992, issued by Chicago Title Insurance Company, under
Policy No. FL 010 04 58766, regarding Pensacola Parcel.
3. Schedule B exceptions 10, 11, 12, 13, 15 and 17, as further set forth
in Owner's Title Policy, issued by Stewart Title Guaranty Company,
through Graham Abstract Company, Inc., under Policy No. 0-4501-05005,
and Loan Policy No. M-4502-05001 dated November 14, 1991, and subject
to endorsements thereto, regarding Portales Parcel.
<PAGE> 45
EXHIBIT D
Schedule of Service Contracts
Pensacola Parcel:
Oral maintenance agreement, between Pensacola 801 and First American
Development Corporation
Certain service contracts regarding telephones, beepers, mobile phones
and copy machine for Pensacola Parcel.
Portales Parcel:
None
Ft. Bragg Parcel:
None
<PAGE> 46
EXHIBIT E
Operating Statements
<PAGE> 47
EXHIBIT F
801 PROJECTS
Assessed Valuation and Property Taxes
Portales 801, Inc. (Roosevelt County)
<TABLE>
<CAPTION>
Taxable Value Tax Paid
------------- --------
<S> <C> <C>
1996 $ not received yet - in November $ 49,178.44 (installment)
1995 $ 3,370,637 $ 49,178.44 (installment)
1994 $ 3,274,222 $ 70,829.73 (installment)
1993 $ 2,690,190 $ 52,446.09 (during construction)
Pensacola 801, Inc. (Escambia County)
1996 $ not received yet - in November
1995 $ 11,668,620 $ 215,668.64 (with discount)
1994 $ 11,666,680 $ 220,710.80 (with discount)
1993 $ 491,030 $ 9,186.77 (during construction)
Pensacola 801, Inc. (Escambia County)
Fire Protection Municipal Services
1996 not received yet - in November
1995 $ 1,505.00
1994 $ 401.00
Ft. Bragg 801, Inc. (Hoke County)
1996 $ 13,000,000 $ 133,769.74 (with discount)
1995 $ 13,000,000 $ 133,770.00 (with discount)
1994 $ 13,000,000 $ 130,000.00 (protested)
1993 $ 3,777,200 $ 37,016.56 (during construction)
</TABLE>
<PAGE> 48
EXHIBIT G
SCHEDULE OF INSURANCE
<PAGE> 49
EXHIBIT H
Certificate of Participation Documents
1. Preliminary Information Statement, dated June 3, 1992, regarding
approximate $52,000,000 United States Government % Certificates of
Participation, and attachments thereto.
2. Escrow Agreement Relating to Military Family Housing Projects, dated
June 1, 1992, regarding all 801 projects, and attachments thereto.
3. Credit Agreement, dated June 1, 1992, regarding 801 projects, and
attachments thereto.
4. Loan Agreement, dated June 1, 1992, regarding 801 project, and
attachments thereto.
5. Trust Agreement, dated June 1, 1992, regarding 801 projects, and
attachments thereto.
6. Lease, dated October 12, 1993, between Pensacola 801, Inc., as Lessor
and The United States of America, as Lessee, and amendments and
modifications thereto.
7. Lease, dated November 16, 1993, between Fort Bragg 801, Inc., as
Lessor and The United States of America, as Lessee, and amendments and
modifications thereto.
8. Lease, dated July 29, 1993, between Portales 801, Inc., as Lessor and
The United States of America, as Lessee, and amendments and modifications
thereto.
9. Correspondence regarding 801 projects previously delivered to
Purchaser.
<PAGE> 50
EXHIBIT I
Special Warranty Deeds
Those certain deeds copies of which are attached as Exhibits I-1, I-2 and I-3.
<PAGE> 51
EXHIBIT I-1
Pensacola Parcel Deed
<PAGE> 52
EXHIBIT I-2
Fort Bragg Parcel Deed
<PAGE> 53
EXHIBIT I-3
Portales Parcel Deed
<PAGE> 54
EXHIBIT J
Tenant Estoppel Certificate
<PAGE> 55
ESTOPPEL CERTIFICATE
LEASE AGREEMENT BETWEEN
PORTALES 801, INC. AND
THE UNITED STATES OF AMERICA
The undersigned, acting by and through the Office of the Contracting
Officer, Canon Air Force Base, New Mexico (hereafter referred to as
"Government"), under a certain Lease dated July 29, 1993, and any amendments
thereto (hereafter referred to as the "Lease"), entered into with Portales 801,
Inc., as landlord (hereafter referred to as "Lessor"), for certain land and the
improvements located thereon as specifically described in the Lease
(hereinafter referred to as the "Demised Premises"), and situated in City of
Portales, Roosevelt County, New Mexico, hereby certifies to U.S. National
Housing L.L.C. (hereinafter referred to as "Purchaser"), a prospective
purchaser of the Demised Premises and to ___________________ as Trustee
(hereinafter referred to as "Trustee") and their respective successors and
assigns that:
1. The Lease is currently in full force and effect. The term of
the Lease commenced on July 29, 1993, and shall expire on July 28, 2013, unless
sooner terminated or extended in accordance with the terms of the Lease. A
true, correct and complete copy of the Lease and all amendments, modifications
and Supplemental Lease Agreements thereto is attached to this Estoppel
certificate as Attachment A, and there has been no other amendment or
modification of any kind or nature varying the stated terms and conditions
thereof.
2. The Government accepted final possession of the Demised
Premises on ____________ and the time period for determination of rent
increases or decreases by reason of increases or decreases in the real property
taxes or insurance for the Demised Premises shall be the time period of
____________. All items of an executory nature relating to the construction
and delivery of the Demised Premises for final acceptance by the Government
have been completed under the terms of the Lease, any and all improvements
thereon or thereto required to be made by the Lessor have been completed in
accordance with applicable plans and specifications and the term of the Lease
has commenced.
3. The Demised Premises consist of 150 residential housing units
(the "Units").
4. As of the date of this Estoppel Certificate the rent payable
under the Lease is $_________ per year and $__________ per month, payable
monthly in arrears, representing original rent of $1,185,156 per year and
$98,763 per month, as adjusted for increases or decreases in insurance premiums
and real property taxes as follows:
<PAGE> 56
Real property taxes $________:
Insurance premiums: $_______.
5. The Government represents that all rents and other amounts due
and payable under the Lease by the Government have been paid currently in
accordance with the terms and requirements of the Lease. No rent or other
amounts due under the Lease have been prepaid.
6. The Government has not given the Lessor any notice of a
default on the part of the Lessor under the Lease which has not been cured
except as may be specifically identified by the Government on Attachment B
hereto. Further, the Government, as of the date hereof, is aware of no default
by the Lessor under the Lease or any defense to the Government's obligations
under the Lease and of no charge, lien, claim or offset against Lessor under
the Lease or otherwise or against rents or other amounts due or to become due
under the Lease except as may be specifically identified by the Government on
Attachment B hereto. This paragraph shall in no way be construed as a waiver of
the Lessor's obligations to maintain the property and correct deficiencies with
respect thereto as required by the Lease.
7. The Government represents that it is not in default in the
performance of any of its obligations under the Lease, and no notice has been
received by the Government of a default by the Government under the Lease which
has not been cured.
8. The Lessor is not holding a security deposit for the
performance of the Government's obligations under the Lease.
9. The Government, upon receipt of a copy of the Estoppel
Certificate Agreement in the form attached to this Estoppel Certificate as
Attachment C, which has been signed by the Lessor and the Trustee, will sign
and execute such document to evidence its agreement with, and intent to be
bound by the terms thereof, having read and agreed to the terms of such
document prior to its execution of this Estoppel Certificate.
10. Upon receipt of the notice from the Trustee in the form
attached hereto as Attachment D duly and properly executed, which the Trustee
intends to provide to the Government on or before ________________, the
Government shall make any and all payments of rent and other amounts due or
thereafter becoming due under the Lease directly to the Trustee or as directed
by the Trustee pursuant to and in accordance with the Assignment of Claims Act,
as amended (31 U.S.C. Sec. 3727, 41 U.S.C. Sec.15, 48 CFR 42.1204).
<PAGE> 57
11. It is understood that the Purchaser and the Trustee are
specifically relying on the covenants and representations made by the
Government in this Estoppel Certificate in acquiring the Demised Premises and
agreeing to advance the proceeds of a loan and that they have a right to rely
thereon and are the intended beneficiaries of this Estoppel Certificate.
- ------------------------------------- -------------------------------------
Date
Contracting Officer
Canon Air Force Base, New Mexico
Attachment A: Lease
Attachment B: Defaults
Attachment C: Estoppel Certificates
Attachment D: Notice
3
<PAGE> 58
Attachment A
Lease
<PAGE> 59
Attachment B
Defaults
<PAGE> 60
Attachment C
ESTOPPEL CERTIFICATE AGREEMENT
This ESTOPPEL CERTIFICATE AGREEMENT is made and entered into
this _____ day of __________, 1996 by and among U.S. National Housing, L.L.C.,
an Alaska limited liability company (referred to herein as "LESSOR"),
_____________________, as Trustee (referred to herein as the "TRUSTEE") of
___________________________ Trust, and its successors and assigns (referred to
herein as the "TRUST"), MCM Finance Corporation, a Delaware corporation
(referred to herein as "LENDER") and the United States of America, acting by
and through the Contracting Officer, Canon Air Force Base, New Mexico (referred
to herein as "GOVERNMENT").
RECITALS:
A. LESSOR has acquired title to certain improved real
property located in the City of Portales, Roosevelt County, New Mexico and
which is more particularly described on Exhibit "A" attached hereto and made a
part hereof (the "Land").
B. GOVERNMENT and LESSOR'S predecessor in title have
entered into that certain Lease Agreement dated July 29, 1993, as amended, (the
documents comprising the lease being herein referred to collectively as the
"Government Lease Documents"), pursuant to which GOVERNMENT has agreed to lease
the Land and all improvements thereon, which include, among other things, 150
residential housing units (the "Project").
C. LENDER and LESSOR have entered into a loan agreement
which provides for the issuance of LESSOR's note in the principal amount of
$___________ (the "Existing Loan") secured by a mortgage or deed of trust on
the Project and other collateral security which includes an assignment of
rentals under the Government Lease Documents to LENDER (collectively the
"Collateral Security").
<PAGE> 61
D. The Collateral Security has been, or will be,
assigned by LENDER to MCM Deposit Corp. III which, in turn, has assigned, or
will assign the Collateral Security to Trustee, in trust, in connection with
the issuance by the Trustee of "Pass Through Certificates" in a maximum face
amount of $_____________, the repayment of which will be secured by, among
other things, the Collateral Security including the rents and other amounts
payable by GOVERNMENT to LESSOR under the Government Lease Documents. Proceeds
of the sale of the Pass Through Certificates have provided, or will provide,
funds for purchase of the Existing Loan from Lender. In connection with the
issuance of the Pass Through Certificates, accommodations have been, will be,
or made to the LESSOR and substantial reserves and reserve accounts for the
maintenance and operation of the Project will be established. LENDER will
provide servicing assistance to the TRUSTEE in connection with servicing the
Existing Loan.
E. The parties hereto desire to set forth their
agreements and understandings with respect to the rights and obligations of the
parties in the event of a default by LESSOR and in certain other instances
under the Existing Loan and the Government Lease Documents.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which
each of the parties hereto does hereby acknowledge, the parties hereto do
hereby agree as follows:
1. Priorities of Agreements.
Priorities with respect to title in the Land with
respect to the Existing Loan and the Government Lease Documents have been
established prior to the date hereof by recordation, and the new financial
arrangements described herein shall have the same priority as the Existing
Loan. This Agreement shall not operate to adversely or otherwise effect any
right of GOVERNMENT or LESSOR under the Government Lease Documents or disturb
GOVERNMENT's possession of the Project, except as expressly set forth herein.
2
<PAGE> 62
2. Default and Foreclosure.
If the TRUSTEE, or any affiliate of the TRUSTEE, or
any purchaser at foreclosure of the Existing Loan shall acquire the LESSOR's
interest in the Project by virtue of the default by LESSOR under the Existing
Loan or the new financial arrangements described herein or otherwise, the
Government Lease Documents shall continue in full force and effect so long as
the TRUSTEE, its affiliate or the purchaser at foreclosure, as the case may be,
is not in material default under the Government Lease Documents. The TRUSTEE,
its affiliate or the purchaser at foreclosure, as the case may be, may not
appoint an agent or nominee to operate the Project on its behalf without
obtaining the prior written approval of the GOVERNMENT's designated
representative, such approval not to be unreasonably withheld so long as such
proposed agent/nominee has experience/expertise in management and operation of
residential housing as determined acceptable by the Government. For the period
of time during which the TRUSTEE, its affiliate or the purchaser at foreclosure
holds the LESSOR's interest in the Project, the TRUSTEE, its affiliate or the
purchaser at foreclosure shall become liable and fully bound by the provisions
of the Government Lease Documents. Nothing contained in this Agreement shall
(i) relieve LESSOR from any of its obligations as the "Lessor" under the
Government Lease Documents, or (ii) impose any liability on the TRUST or
TRUSTEE to perform any of LESSOR's obligations under the Government Lease
Documents, except to the extent the any of them acquires the LESSOR's interest
in the Project and succeeds to LESSOR's interest as "Lessor" under the
Government Lease Documents or such liability or obligations are expressly
assumed by any of them in writing.
3. Other Rights and Obligations of the Parties.
(a)(i) GOVERNMENT agrees to accept, performance of
and compliance by the TRUSTEE with any term, covenant, agreement, provision,
condition or limitation on LESSOR's part to be kept, performed or observed by
it under the Government Lease Documents, in the place and stead of LESSOR and
upon the same terms and conditions as are applicable to LESSOR except as
expressly modified herein. Nothing contained in this paragraph shall relieve
Lessor of any of its obligations as "Lessor" under the Government Lease
Documents.
3
<PAGE> 63
(a)(ii) Upon giving LESSOR any notice of default
under the Government Lease Documents, or notice of the termination of any of
said documents, GOVERNMENT shall furnish a copy of such notice to the TRUSTEE,
at the address and in the manner specified in Section 6 below. No notice of
default or termination shall be deemed to be legally effective unless and until
such notice shall have been given to the TRUSTEE in the manner provided in this
Agreement.
(a)(iii) The TRUSTEE may, at its option, remedy any
default under the Government Lease Documents or cause the same to be remedied
within the time period set forth in the next following sentence. Such right to
remedy shall include, to the extent necessary, the right to remedy defaults
within the time period for cure provided to LESSOR under the Government Lease
Documents, plus an additional thirty (30) days, provided, however, that so long
as any such default is reasonably capable of being cured and the GOVERNMENT
agrees that a cure is being diligently prosecuted by the TRUSTEE, such thirty
(30) day additional cure period shall be extended for so long as the TRUSTEE
continues to diligently prosecute same.
(a)(iv) Notwithstanding the time limits set forth in
Section 3(a)(iii) above, the TRUSTEE shall have the right to extend the period
of time to cure any default under the Government Lease Documents for such
additional period as, in good faith would enable the TRUSTEE to institute
foreclosure proceedings, appoint a receiver, acquire by foreclosure LESSOR's
interests under the Government Lease Documents and in the Project, remove
LESSOR from the Project, and acquire possession of the Project. It is also
agreed that, if by reason of a bankruptcy, insolvency or similar legal
proceeding, or by reason of any other judicial order or legislative enactment,
the TRUST, TRUSTEE or TRUSTEE is stayed from commencing or continuing any such
proceedings, then the TRUSTEE shall be deemed to be diligently prosecuting such
foreclosure proceedings so long as it is in good faith diligently attempting to
obtain relief from any such stay.
(a)(v) GOVERNMENT hereby consents to and approves
the re-assignment pursuant to the Assignment of Claims Act of 1940, as amended,
to the TRUSTEE of LESSOR's right
4
<PAGE> 64
to receive the rent and all other amounts payable under the Government Lease
Documents by GOVERNMENT and acknowledges and agrees that GOVERNMENT shall pay
to the TRUSTEE, instead of to LESSOR (or the Existing Loan Trustee), all rent
and other payments coming due under the Government Lease Documents (in
accordance with the applicable provisions of the Government Lease Documents).
(b) Upon the occurrence of an event of default
under the terms of the Existing Loan, and the continuance thereof after the
giving of all required notices and the expiration of all applicable cure
periods the parties hereto agree as follows:
(b)(i) Provided the obligations under the Government
Lease Documents are performed, GOVERNMENT agrees that its obligation to make
any and all payments of rent and other amounts due under the Government Lease
Documents as provided under Paragraph 3 or any other provision of the
Government Lease Documents will not be affected by the Existing Loan being
declared in default or by any foreclosure action with respect to the Project.
(b)(ii) The TRUSTEE may declare the total
indebtedness due by LESSOR to the TRUST immediately due and payable without in
any way effecting any of the rights or obligations of the Government under the
Government Lease Documents.
(b)(iii) If the TRUSTEE so elects, it may perform or
cause its nominee to perform the obligations of LESSOR contained in the
Government Lease Documents and exercise the rights of LESSOR therein contained
as fully as could LESSOR itself. In such event (x) the TRUSTEE and GOVERNMENT
shall agree to such extensions of the time reasonably necessary (subject to the
Government's urgent need for habitable units in good repair) for the
performance of LESSOR's obligations under the Government Lease Documents
(provided, however, that GOVERNMENT shall be under no obligation to grant any
such extension unless and until the TRUSTEE shall notify GOVERNMENT in writing
of its intent to perform or have its nominee perform all obligations of
5
<PAGE> 65
LESSOR under the Government Lease Documents which are capable of performance),
and (y) GOVERNMENT shall recognize the TRUSTEE or its nominee or affiliates as
the "Lessor" under the Government Lease Documents.
(c) If any purchaser, including the TRUSTEE or
the TRUST or its nominee or affiliate, shall authorize the Project (a) upon any
foreclosure of the mortgage securing the Existing Loan, or (b) by deed in lieu
of foreclosure of the mortgage securing the Existing Loan (such purchaser at
such foreclosure sale or such grantee named in such deed in lieu of foreclosure
being hereinafter referred to as the "Subsequent Owner"), GOVERNMENT shall
recognize the Subsequent Owner as "Lessor" under the terms of the Government
Lease Documents, subject to the terms and provisions of the Government Lease
Documents regarding the management and operation of the Project, and provided
that the Subsequent Owner shall cure all material defaults by LESSOR under the
Government Lease Documents, and shall perform all obligations of LESSOR
thereunder which are capable of being performed. GOVERNMENT and the Subsequent
Owner shall execute such revisions to the Government Lease Documents or such
other documents as shall be necessary to evidence the foregoing relationship.
Notwithstanding the foregoing, the GOVERNMENT shall be under no obligation to
modify any term of the Government Lease Documents except to recognize the
Subsequent Owner as the lessor under the Government Lease Documents. The
interests of the LESSOR so acquired shall not merge with the mortgage securing
the Existing Loan and the same shall remain in full force and effect until the
Existing Loan has been repaid in full.
4. Additional Documents.
Promptly upon the request of one party to another,
each party hereto shall duly execute and deliver any additional documents,
instruments and agreements, in a form reasonably acceptable to the executing
party, and shall take or cause to be taken such further action (including the
making of filings), which are reasonably necessary or desirable in connection
with the consummation of the transactions contemplated herein so long as such
documents do not prejudice
6
<PAGE> 66
any right of the Government under the Government Lease Documents. The cost of
recording any such document shall be the responsibility of the party requesting
such recordation.
5. Term and Provisions of Government Lease Documents.
At the special request of the TRUSTEE, GOVERNMENT
hereby confirms and certifies as follows:
(a) Assignment.
(i) In the event GOVERNMENT shall assign the
Government Lease Documents or sublet all or any part of the Project, such
assignment or subletting shall not relieve GOVERNMENT of its liabilities or
obligations under the Government Lease Documents.
(ii) The GOVERNMENT hereby approves of LESSOR as
the transferee of the Project.
(b) Mortgage.
(i) The Government hereby approves the Existing
Loan and the transactions described in Paragraphs C and D of this Agreement for
the purposes of Article IX of the Government Loan Documents. The foregoing
limitation does not apply in the event of an occurrence covered by the
provisions of Article VI of the Government Lease Documents.
(ii) The GOVERNMENT hereby agrees that the TRUSTEE
shall be entitled to the notices contemplated by Article A of the Government
Lease Documents.
(c) Right of First Refusal.
(i) The GOVERNMENT hereby waives its Right of
First Refusal set forth in Paragraph V of the Government Lease Documents with
respect to the acquisition of the Project by LESSOR.
7
<PAGE> 67
(ii) The GOVERNMENT shall not interfere with any
foreclosure, deed in lieu of foreclosure or other similar transaction, and the
Right of First Refusal granted to GOVERNMENT with respect to a bona fide,
voluntary sale of the Project shall not be applicable to any such transaction.
Such Right of First Refusal, however, shall be applicable in accordance with
its terms to any bona fide, voluntary sale of the Project by a third party who
acquires the Project from the TRUSTEE, TRUST or any of their affiliates or is
the purchaser at foreclosure. This is in confirmation of the rights set forth
in the Government Lease Documents.
(d) Amendment of Government Lease Documents.
Government will not materially amend any of the Government Lease Documents
without the prior written consent of TRUSTEE, as required by Article XV
paragraph A, subparagraph 3 of the Government Lease Documents.
6. Notices.
All notices, demands, certificates, requests or other
communications which may be or are required hereunder shall be given in writing
and shall be deemed sufficiently given when (i) personally delivered, (ii)
delivered by telefax, (iii) delivered by overnight commercial courier, or (iv)
three (3) days after the date when mailed by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
To LESSOR: U.S. National Housing, L.L.C.
937 Harvard Avenue East
Seattle, Washington 98102
Attention: Richard W. Fischer
with a copy to: Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Edward J. Martin
8
<PAGE> 68
To the TRUSTEE:
Attention:
To GOVERNMENT: Contracting Officer
27th Contracting Squadron COC
100 North Torch Blvd.
Canon Air Force Base
New Mexico 88103-5331
with a copy to:
Attention:
To LENDER:
with a copy to:
Each party hereto may designate by notice in writing any different address to
which subsequent notice, demands, certificates, requests or other
communications shall be sent.
7. Binding Effect; Successors.
Subject to any provisions hereof, or of the
Government Lease Documents restricting assignment, this Agreement shall be
binding upon and inure to the benefit of GOVERNMENT, the TRUSTEE, the LENDER
and LESSOR and their respective successors and assigns.
8. Government's Rent Payment Obligations.
As provided in Article IV, Paragraph F of the
Government Lease Documents, the GOVERNMENT's obligations to make any payments
under said Article are such to the availability of appropriations for that
purpose in any fiscal year.
9
<PAGE> 69
9. Entire Agreement.
This Agreement constitutes the entire agreement among
the parties hereto with respect to the transactions contemplated herein, and it
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
10. Amendments.
No amendment or modification to, or extension or
waiver of, any provision of, or consent provided under, this Agreement shall be
valid unless such amendment, modification, extension, waiver or consent is in
writing and executed by the parties against whom enforcement of the amendment,
modification, extension, waiver or consent is sought.
11. Severability.
If any clause or provision contained in this
Agreement operates or would prospectively operate to invalidate this Agreement
in whole or in part, then such clause or provision only shall be held
ineffective, as though not herein contained, and the remainder of this
Agreement shall remain operative and in full force and effect.
12. Governing Law.
This Agreement, the rights and obligations of the
parties hereto and any claims or disputes relating hereto, and any claims or
disputes relating thereto shall be governed by and construed under Federal law
and regulation to the extent applicable, and the laws of the State of (but not
including the choice of law rules thereof), to the extent Federal law is not
applicable.
13. No Partnership.
Nothing contained in this Agreement shall be deemed
(or construed) to constitute a partnership or joint venture among any one of
the GOVERNMENT, the TRUST, the LENDER, the TRUSTEE and LESSOR.
10
<PAGE> 70
14. Counterparts.
This Agreement may be executed in several
counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.
U.S. NATIONAL HOUSING L.L.C.
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
[TRUSTEE]
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
MCM FINANCE CORPORATION
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
11
<PAGE> 71
THE UNITED STATES OF AMERICA
By:
-------------------------------------
Contracting Officer
Canon Air Force Base
New Mexico
12
<PAGE> 72
Attachment D
NOTICE OF RE-ASSIGNMENT OF RENTS
To: ____________________ Contracting Officer.
This Notice of Re-Assignment of Rents has reference to that
certain Lease (the "Lease") No. F2960591C0007 dated July 29, 1993, entered
into between Portales 801, Inc. and the United States of America, acting by and
through the Office of the Contracting Officer, Canon Air Force Base, New Mexico
(the "Government"), pursuant to which the Government has leased certain real
property, and all of the improvements located thereon, which include, but are
not limited to 150 residential housing units, located in the City of Portales,
Roosevelt County, New Mexico.
Moneys due or to become due under the described above were
originally assigned to MCM Finance Corporation under the provisions of the
Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15 (the "Act") and
have subsequently been re-assigned to MCM Deposit Corp. III and then to the
undersigned also, in each case, under the provisions of the Act. A true copy of
the instrument of re-assignment executed on ________________, 1996 is attached
to this original notice.
All payments due or to become due under the Lease from and
after the date of this Notice of Re- Assignment shall be made to
____________________ by wire transfer as follows:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Please return to the undersigned the three copies of this
notice with appropriate notations showing the date and hour of receipt on
behalf of the addressee.
----------------------------------------
By:
------------------------------------
Title:
---------------------------------
ACKNOWLEDGMENT
Receipt is acknowledged of the above Notice of Re-Assignment
of Rents and of a copy of the attached instrument of re-assignment. They were
received at _____ (am.)(p.m.) on ______________, 1996.
-----------------------------------------
Contracting Officer
Canon Air Force Base
New Mexico
<PAGE> 73
ESTOPPEL CERTIFICATE
LEASE AGREEMENT BETWEEN
FT. BRAGG 801, INC. AND
THE UNITED STATES OF AMERICA
The undersigned, acting by and through the US Army Engineer District,
Savannah (hereafter referred to as "Government"), under a certain Lease dated
November 16, 1993, and any amendments thereto (hereafter referred to as the
"Lease"), entered into with Ft. Bragg 801, Inc., as landlord (hereafter
referred to as "Lessor"), for certain land and the improvements located thereon
as specifically described in the Lease (hereinafter referred to as the "Demised
Premises"), and situated in McLauchlin Township, Hoke County, North Carolina,
hereby certifies to U.S. National Housing L.L.C. (hereinafter referred to as
"Purchaser"), a prospective purchaser of the Demised Premises and to
___________________ as Trustee (hereinafter referred to as "Trustee") and their
respective successors and assigns that:
1. The Lease is currently in full force and effect. The term of
the Lease commenced on November 1, 1993, and shall expire on October 31, 2013,
unless sooner terminated or extended in accordance with the terms of the Lease.
A true, correct and complete copy of the Lease and all amendments,
modifications and Supplemental Lease Agreements thereto is attached to this
Estoppel certificate as Attachment A, and there has been no other amendment or
modification of any kind or nature varying the stated terms and conditions
thereof.
2. The Government accepted final possession of the Demised
Premises on ____________ and the time period for determination of rent
increases or decreases by reason of increases or decreases in the real property
taxes or insurance for the Demised Premises shall be the time period of
____________. All items of an executory nature relating to the construction
and delivery of the Demised Premises for final acceptance by the Government
have been completed under the terms of the Lease, any and all improvements
thereon or thereto required to be made by the Lessor have been completed in
accordance with applicable plans and specifications and the term of the Lease
has commenced.
3. The Demised Premises consist of 300 residential housing units
(the "Units").
4. As of the date of this Estoppel Certificate the rent payable
under the Lease is $_________ per year and $__________ per month, payable
monthly in arrears, representing original rent of $1,587,369 per year and
$132,280.75 per month, as adjusted for increases or decreases in insurance
premiums and real property taxes as follows:
<PAGE> 74
Real property taxes $________:
Insurance premiums: $_______.
5. The Government represents that all rents and other amounts due
and payable under the Lease by the Government have been paid currently in
accordance with the terms and requirements of the Lease. No rent or other
amounts due under the Lease have been prepaid.
6. The Government has not given the Lessor any notice of a
default on the part of the Lessor under the Lease which has not been cured
except as may be specifically identified by the Government on Attachment B
hereto. Further, the Government, as of the date hereof, is aware of no default
by the Lessor under the Lease or any defense to the Government's obligations
under the Lease and of no charge, lien, claim or offset against Lessor under
the Lease or otherwise or against rents or other amounts due or to become due
under the Lease except as may be specifically identified by the Government on
Attachment B hereto. This paragraph shall in no way be construed as a waiver of
the Lessor's obligations to maintain the property and correct deficiencies with
respect thereto as required by the Lease.
7. The Government represents that it is not in default in the
performance of any of its obligations under the Lease, and no notice has been
received by the Government of a default by the Government under the Lease which
has not been cured.
8. The Lessor is not holding a security deposit for the
performance of the Government's obligations under the Lease.
9. The Government, upon receipt of a copy of the Estoppel
Certificate Agreement in the form attached to this Estoppel Certificate as
Attachment C, which has been signed by the Lessor and the Trustee, will sign
and execute such document to evidence its agreement with, and intent to be
bound by the terms thereof, having read and agreed to the terms of such
document prior to its execution of this Estoppel Certificate.
10. Upon receipt of the notice from the Trustee in the form
attached hereto as Attachment D duly and properly executed, which the Trustee
intends to provide to the Government on or before ________________, the
Government shall make any and all payments of rent and other amounts due or
thereafter becoming due under the Lease directly to the Trustee or as directed
by the Trustee pursuant to and in accordance with the Assignment of Claims Act,
as amended (31 U.S.C. Sec. 3727, 41 U.S.C. Sec.15, 48 CFR 42.1204).
<PAGE> 75
11. It is understood that the Purchaser and the Trustee are
specifically relying on the covenants and representations made by the
Government in this Estoppel Certificate in acquiring the Demised Premises and
agreeing to advance the proceeds of a loan and that they have a right to rely
thereon and are the intended beneficiaries of this Estoppel Certificate.
- --------------------------------- -----------------------------------------
Date
Director, Real Estate Division,
US Army Engineer District,
Savannah, Georgia
Attachment A: Lease
Attachment B: Defaults
Attachment C: Estoppel Certificates
Attachment D: Notice
3
<PAGE> 76
Attachment A
Lease
<PAGE> 77
Attachment B
Defaults
<PAGE> 78
Attachment C
ESTOPPEL CERTIFICATE AGREEMENT
This ESTOPPEL CERTIFICATE AGREEMENT is made and entered into
this _____ day of __________, 1996 by and among U.S. National Housing, L.L.C.,
an Alaska limited liability company (referred to herein as "LESSOR"),
_____________________, as Trustee (referred to herein as the "TRUSTEE") of
___________________________ Trust, and its successors and assigns (referred to
herein as the "TRUST"), MCM Finance Corporation, a Delaware corporation
(referred to herein as "LENDER") and the United States of America, acting by
and through the US Army Engineer District, Savannah, Georgia (referred to
herein as "GOVERNMENT").
RECITALS:
A. LESSOR has acquired title to certain improved real
property located in McLauchlin Township, Hoke County, North Carolina and which
is more particularly described on Exhibit "A" attached hereto and made a part
hereof (the "Land").
B. GOVERNMENT and LESSOR'S predecessor in title have
entered into that certain Lease Agreement dated October 12, 1993, as amended,
(the documents comprising the lease being herein referred to collectively as
the "Government Lease Documents"), pursuant to which GOVERNMENT has agreed to
lease the Land and all improvements thereon, which include, among other things,
300 residential housing units (the "Project").
C. LENDER and LESSOR have entered into a loan agreement
which provides for the issuance of LESSOR's note in the principal amount of
$___________ (the "Existing Loan") secured by a mortgage or deed of trust on
the Project and other collateral security which includes an assignment of
rentals under the Government Lease Documents to LENDER (collectively the
"Collateral Security").
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D. The Collateral Security has been, or will be,
assigned by LENDER to MCM Deposit Corp. III which, in turn, has assigned, or
will assign the Collateral Security to Trustee, in trust, in connection with
the issuance by the Trustee of "Pass Through Certificates" in a maximum face
amount of $_____________, the repayment of which will be secured by, among
other things, the Collateral Security including the rents and other amounts
payable by GOVERNMENT to LESSOR under the Government Lease Documents. Proceeds
of the sale of the Pass Through Certificates have provided, or will provide,
funds for purchase of the Existing Loan from Lender. In connection with the
issuance of the Pass Through Certificates, accommodations have been, will be,
or made to the LESSOR and substantial reserves and reserve accounts for the
maintenance and operation of the Project will be established. LENDER will
provide servicing assistance to the TRUSTEE in connection with servicing the
Existing Loan.
E. The parties hereto desire to set forth their
agreements and understandings with respect to the rights and obligations of the
parties in the event of a default by LESSOR and in certain other instances
under the Existing Loan and the Government Lease Documents.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which
each of the parties hereto does hereby acknowledge, the parties hereto do
hereby agree as follows:
1. Priorities of Agreements.
Priorities with respect to title in the Land with respect to
the Existing Loan and the Government Lease Documents have been established
prior to the date hereof by recordation, and the new financial arrangements
described herein shall have the same priority as the Existing Loan. This
Agreement shall not operate to adversely or otherwise effect any right of
GOVERNMENT or LESSOR under the Government Lease Documents or disturb
GOVERNMENT's possession of the Project, except as expressly set forth herein.
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2. Default and Foreclosure.
If the TRUSTEE, or any affiliate of the TRUSTEE, or any
purchaser at foreclosure of the Existing Loan shall acquire the LESSOR's
interest in the Project by virtue of the default by LESSOR under the Existing
Loan or the new financial arrangements described herein or otherwise, the
Government Lease Documents shall continue in full force and effect so long as
the TRUSTEE, its affiliate or the purchaser at foreclosure, as the case may be,
is not in material default under the Government Lease Documents. The TRUSTEE,
its affiliate or the purchaser at foreclosure, as the case may be, may not
appoint an agent or nominee to operate the Project on its behalf without
obtaining the prior written approval of the GOVERNMENT's designated
representative, such approval not to be unreasonably withheld so long as such
proposed agent/nominee has experience/expertise in management and operation of
residential housing as determined acceptable by the Government. For the period
of time during which the TRUSTEE, its affiliate or the purchaser at foreclosure
holds the LESSOR's interest in the Project, the TRUSTEE, its affiliate or the
purchaser at foreclosure shall become liable and fully bound by the provisions
of the Government Lease Documents. Nothing contained in this Agreement shall
(i) relieve LESSOR from any of its obligations as the "Lessor" under the
Government Lease Documents, or (ii) impose any liability on the TRUST or
TRUSTEE to perform any of LESSOR's obligations under the Government Lease
Documents, except to the extent the any of them acquires the LESSOR's interest
in the Project and succeeds to LESSOR's interest as "Lessor" under the
Government Lease Documents or such liability or obligations are expressly
assumed by any of them in writing.
3. Other Rights and Obligations of the Parties.
(a)(i) GOVERNMENT agrees to accept, performance of
and compliance by the TRUSTEE with any term, covenant, agreement, provision,
condition or limitation on LESSOR's part to be kept, performed or observed by
it under the Government Lease Documents, in the place and stead of LESSOR and
upon the same terms and conditions as are applicable to LESSOR except as
expressly modified herein. Nothing contained in this paragraph shall relieve
Lessor of any of its obligations as "Lessor" under the Government Lease
Documents.
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<PAGE> 81
(a)(ii) Upon giving LESSOR any notice of default
under the Government Lease Documents, or notice of the termination of any of
said documents, GOVERNMENT shall furnish a copy of such notice to the TRUSTEE,
at the address and in the manner specified in Section 6 below. No notice of
default or termination shall be deemed to be legally effective unless and until
such notice shall have been given to the TRUSTEE in the manner provided in this
Agreement.
(a)(iii) The TRUSTEE may, at its option, remedy any
default under the Government Lease Documents or cause the same to be remedied
within the time period set forth in the next following sentence. Such right to
remedy shall include, to the extent necessary, the right to remedy defaults
within the time period for cure provided to LESSOR under the Government Lease
Documents, plus an additional thirty (30) days, provided, however, that so long
as any such default is reasonably capable of being cured and the GOVERNMENT
agrees that a cure is being diligently prosecuted by the TRUSTEE, such thirty
(30) day additional cure period shall be extended for so long as the TRUSTEE
continues to diligently prosecute same.
(a)(iv) Notwithstanding the time limits set forth in
Section 3(a)(iii) above, the TRUSTEE shall have the right to extend the period
of time to cure any default under the Government Lease Documents for such
additional period as, in good faith would enable the TRUSTEE to institute
foreclosure proceedings, appoint a receiver, acquire by foreclosure LESSOR's
interests under the Government Lease Documents and in the Project, remove
LESSOR from the Project, and acquire possession of the Project. It is also
agreed that, if by reason of a bankruptcy, insolvency or similar legal
proceeding, or by reason of any other judicial order or legislative enactment,
the TRUST, TRUSTEE or TRUSTEE is stayed from commencing or continuing any such
proceedings, then the TRUSTEE shall be deemed to be diligently prosecuting such
foreclosure proceedings so long as it is in good faith diligently attempting to
obtain relief from any such stay.
(a)(v) GOVERNMENT hereby consents to and approves
the re-assignment pursuant to the Assignment of Claims Act of 1940, as amended,
to the TRUSTEE of LESSOR's right
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<PAGE> 82
to receive the rent and all other amounts payable under the Government Lease
Documents by GOVERNMENT and acknowledges and agrees that GOVERNMENT shall pay
to the TRUSTEE, instead of to LESSOR (or the Existing Loan Trustee), all rent
and other payments coming due under the Government Lease Documents (in
accordance with the applicable provisions of the Government Lease Documents).
(b) Upon the occurrence of an event of default under the
terms of the Existing Loan, and the continuance thereof after the giving of all
required notices and the expiration of all applicable cure periods the parties
hereto agree as follows:
(b)(i) Provided the obligations under the Government
Lease Documents are performed, GOVERNMENT agrees that its obligation to melee
any and all payments of rent and other amounts due under the Government Lease
Documents as provided under Paragraph 3 or any other provision of the
Government Lease Documents will not be affected by the Existing Loan being
declared in default or by any foreclosure action with respect to the Project.
(b)(ii) The TRUSTEE may declare the total
indebtedness due by LESSOR to the TRUST immediately due and payable without in
any way effecting any of the rights or obligations of the Government under the
Government Lease Documents.
(b)(iii) If the TRUSTEE so elects, it may
perform or cause its nominee to perform the obligations of LESSOR captained in
the Government Lease Documents and exercise the rights of LESSOR therein
contained as fully as could LESSOR itself. In such event (x) the TRUSTEE and
GOVERNMENT shall agree to such extensions of the time reasonably necessary
(subject to the Government's urgent need for habitable units in good repair)
for the performance of LESSOR's obligations under the Government Lease
Documents (provided, however, that GOVERNMENT shall be under no obligation to
grant any such extension unless and until the TRUSTEE shall notify GOVERNMENT
in writing of its intent to perform or have its nominee performing all
obligations
5
<PAGE> 83
of LESSOR under the Government Lease Documents which are capable of
performance), and (y) GOVERNMENT shall recognize the TRUSTEE or its nominee or
affiliates as the "Lessor" under the Government Lease Documents.
(c) If any purchaser, including the TRUSTEE or the TRUST
or its nominee or affiliate, shall authorize the Project (a) upon any
foreclosure of the mortgage securing the Existing Loan, or (b) by deed in lieu
of foreclosure of the mortgage securing the Existing Loan (such purchaser at
such foreclosure sale or such grantee named in such deed in lieu of foreclosure
being hereinafter referred to as the "Subsequent Owner"), GOVERNMENT shall
recognize the Subsequent Owner as "Lessor" under the terms of the Government
Lease Documents, subject to the terms and provisions of the Government Lease
Documents regarding the management and operation of the Project, and provided
that the Subsequent Owner shall cure all material defaults by LESSOR under the
Government Lease Documents, and shall perform all obligations of LESSOR
thereunder which are capable of being performed. GOVERNMENT and the Subsequent
Owner shall execute such revisions to the Government Lease Documents or such
other documents as shall be necessary to evidence the foregoing relationship.
Notwithstanding the foregoing, the GOVERNMENT shall be under no obligation to
modify any term of the Government Lease Documents except to recognize the
Subsequent Owner as the lessor under the Government Lease Documents. The
interests of the LESSOR so acquired shall not merge with the mortgage securing
the Existing Loan and the same shall remain in full force and effect until the
Existing Loan has been repaid in full.
4. Additional Documents.
Promptly upon the request of one party to another,
each party hereto shall duly execute and deliver any additional documents,
instruments and agreements, in a form reasonably acceptable to the executing
party, and shall take or cause to be taken such further action (including the
making of filings), which are reasonably necessary or desirable in connection
with the consummation of the transactions contemplated herein so long as such
documents do not prejudice
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<PAGE> 84
any right of the Government under the Government Lease Documents. The cost of
recording any such document shall be the responsibility of the party requesting
such recordation.
5. Term and Provisions of Government Lease Documents.
At the special request of the TRUSTEE, GOVERNMENT hereby
confirms and certifies as follows:
(a) Assignment.
(i) In the event GOVERNMENT shall assign
the Government Lease Documents or sublet all or any part of the Project, such
assignment or subletting shall not relieve GOVERNMENT of its liabilities or
obligations under the Government Lease Documents.
(ii) The GOVERNMENT hereby approves of
LESSOR as the transferee of the Project.
(b) Mortgage.
(i) The Government hereby approves the
Existing Loan and the transactions described in Paragraphs C and D of this
Agreement for the purposes of Article XIV of the Government Loan Documents.
The foregoing limitation does not apply in the event of an occurrence covered
by the provisions of Article X of the Government Lease Documents.
(ii) The GOVERNMENT hereby agrees that
the TRUSTEE shall be entitled to the notices contemplated by Article A of the
Government Lease Documents.
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<PAGE> 85
(c) Right of First Refusal.
(i) The GOVERNMENT hereby waives its
Right of First Refusal set forth in Paragraph V of the Government Lease
Documents with respect to the acquisition of the Project by LESSOR.
(ii) The GOVERNMENT shall not interfere
with any foreclosure, deed in lieu of foreclosure or other similar transaction,
and the Right of First Refusal granted to GOVERNMENT with respect to a bona
fide, voluntary sale of the Project shall not be applicable to any such
transaction. Such Right of First Refusal, however, shall be applicable in
accordance with its terms to any bona fide, voluntary sale of the Project by a
third party who acquires the Project from the TRUSTEE, TRUST or any of their
affiliates or is the purchaser at foreclosure. This is in confirmation of the
rights set forth in the Government Lease Documents.
(d) Amendment of Government Lease Documents.
Government will not materially amend any of the
Government Lease Documents without the prior written consent of TRUSTEE, as
required by Article X, paragraph A, subparagraph 3 of the Government Lease
Documents.
6. Notices.
All notices, demands, certificates, requests or other
communications which may be or are required hereunder shall be given in writing
and shall be deemed sufficiently given when (i) personally delivered, (ii)
delivered by telefax, (iii) delivered by overnight commercial courier, or (iv)
three (3) days after the date when mailed by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
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<PAGE> 86
To LESSOR: U.S. National Housing, L.L.C.
937 Harvard Avenue East
Seattle, Washington 98102
Attention: Richard W. Fischer
with a copy to: Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Edward J. Martin
To the TRUSTEE:
Attention:
To GOVERNMENT: U.S. Army Engineer District
Savannah, Georgia 31402-0889
Attention: Commander
with a copy to:
Attention:
To LENDER:
with a copy to:
Each party hereto may designate by notice in writing any different address to
which subsequent notice, demands, certificates, requests or other
communications shall be sent.
7. Binding Effect: Successors.
Subject to any provisions hereof, or of the Government Lease
Documents restricting assignment, this Agreement shall be binding upon and
inure to the benefit of GOVERNMENT, the TRUSTEE, the LENDER and LESSOR and
their respective successors and assigns.
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<PAGE> 87
8. Government's Rent Payment Obligations.
As provided in Article IV, Paragraph E of the Government Lease
Documents, the GOVERNMENT's obligations to make any payments under said Article
are such to the availability of appropriations for that purpose in any fiscal
year.
9. Entire Agreement.
This Agreement constitutes the entire agreement among the
parties hereto with respect to the transactions contemplated herein, and it
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
10. Amendments.
No amendment or modification to, or extension or waiver of,
any provision of, or consent provided under, this Agreement shall be valid
unless such amendment, modification, extension, waiver or consent is in writing
and executed by the parties against whom enforcement of the amendment,
modification, extension, waiver or consent is sought.
11. Severability.
If any clause or provision contained in this Agreement
operates or would prospectively operate to invalidate this Agreement in whole
or in part, then such clause or provision only shall be held ineffective, as
though not herein contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
12. Governing Law.
This Agreement, the rights and obligations of the parties
hereto and any claims or disputes relating hereto, and any claims or disputes
relating thereto shall be governed by and construed under Federal law and
regulation to the extent applicable, and the laws of the State of (but not
including the choice of law rules thereof), to the extent Federal law is not
applicable.
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<PAGE> 88
13. No Partnership.
Nothing contained in this Agreement shall be deemed (or
construed) to constitute a partnership or joint venture among any one of the
GOVERNMENT, the TRUST, the LENDER the TRUSTEE and LESSOR.
14. Counterparts.
This Agreement may be executed in several counterparts, each
of which shall be an original but all of which shall constitute one and the
same instrument.
U.S. NATIONAL HOUSING L.L.C.
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
[TRUSTEE]
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
MCM FINANCE CORPORATION
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
11
<PAGE> 89
THE UNITED STATES OF AMERICA
By:
-------------------------------------
Chief, Real Estate Division,
US Army Engineer District,
Savannah, Georgia
12
<PAGE> 90
Attachment D
NOTICE OF RE-ASSIGNMENT OF RENTS
To: ____________________ Contracting Officer.
This Notice of Re-Assignment of Rents has reference to that
certain Lease (the "Lease") No. N62467-94-RP-00001 dated October 12, 1993,
entered into between Pensacola 801, Inc. and the United States of America,
acting by and through the Southern Division, Naval Facilities Engineering
Carurnand, Charleston, South Carolina Georgia (the "Government"), pursuant to
which the Government has leased certain real property, and all of the
improvements located thereon, which include, but are not limited to 300
residential housing units, located in the City of Pensacola, Escambia County,
Florida.
Moneys due or to become due under the described above were
originally assigned to MCM Finance Corporation under the provisions of the
Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15 (the "Act") and
have subsequently been re-assigned to MCM Deposit Corp. III and then to the
undersigned also, in each case, under the provisions of the Act. A true copy of
the instrument of re-assignment executed on ________________, 1996 is attached
to this original notice.
All payments due or to become due under the Lease from and
after the date of this Notice of Re-Assignment shall be made to by wire
transfer as follows:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Please return to the undersigned the three copies of this
notice with appropriate notations showing the date and hour of receipt on
behalf of the addressee.
----------------------------------------
By:
-------------------------------------
Title:
----------------------------------
13
<PAGE> 91
ACKNOWLEDGMENT
Receipt is acknowledged of the above Notice of Re-Assignment
of Rents and of a copy of the attached instrument of re-assignment. They were
received at _____ (am.)(p.m.) on ______________, 1996.
-------------------------------------------------------
, Contracting Officer
----------------------------------
Chief, Real Estate Division
US Army Engineer District, Savannah, Georgia
14
<PAGE> 92
ESTOPPEL CERTIFICATE
LEASE AGREEMENT BETWEEN
PENSACOLA 801, INC. AND
THE UNITED STATES OF AMERICA
The undersigned, acting by and through the Southern Division, Naval
Facilities Engineering Command, Charleston, South Carolina (hereafter referred
to as "Government"), under a certain Lease dated October 12, 1993, and any
amendments thereto (hereafter referred to as the "Lease"), entered into with
Pensacola 801, Inc., as landlord (hereafter referred to as "Lessor"), for
certain land and the improvements located thereon as specifically described in
the Lease (hereinafter referred to as the "Demised Premises"), and situated in
City of Pensacola, Escambia County, Florida hereby certifies to U.S. National
Housing L.L.C. (hereinafter referred to as "Purchaser"), a prospective
purchaser of the Demised Premises and to ___________________ as Trustee
(hereinafter referred to as "Trustee") and their respective successors and
assigns that:
1. The Lease is currently in full force and effect. The term of
the Lease commenced on October 12, 1993, and shall expire on October 11, 2013,
unless sooner terminated or extended in accordance with the terms of the Lease.
A true, correct and complete copy of the Lease and all amendments,
modifications and Supplemental Lease Agreements thereto is attached to this
Estoppel certificate as Attachment A, and there has been no other amendment or
modification of any kind or nature varying the stated terms and conditions
thereof.
2. The Government accepted final possession of the Demised
Premises on ____________ and the time period for determination of rent
increases or decreases by reason of increases or decreases in the real property
taxes or insurance for the Demised Premises shall be the time period of
____________. All items of an executory nature relating to the construction
and delivery of the Demised Premises for final acceptance by the Government
have been completed under the terms of the Lease, any and all improvements
thereon or thereto required to be made by the Lessor have been completed in
accordance with applicable plans and specifications and the term of the Lease
has commenced.
3. The Demised Premises consist of 300 residential housing units
(the "Units").
4. As of the date of this Estoppel Certificate the rent payable
under the Lease is $_________ per year and $__________ per month, payable
monthly in arrears, representing original rent of $2,316,744 per year and
$193,062 per month, as adjusted by Consumer Price Index as follows: $_________
per year and $__________ per month and as further adjusted for increases or
decreases in insurance premiums and real property taxes as follows:
<PAGE> 93
Real property taxes $________:
Insurance premiums: $_______.
5. The Government represents that all rents and other amounts due
and payable under the Lease by the Government have been paid currently in
accordance with the terms and requirements of the Lease. No rent or other
amounts due under the Lease have been prepaid.
6. The Government has not given the Lessor any notice of a
default on the part of the Lessor under the Lease which has not been cured
except as may be specifically identified by the Government on Attachment B
hereto. Further, the Government, as of the date hereof, is aware of no default
by the Lessor under the Lease or any defense to the Government's obligations
under the Lease and of no charge, lien, claim or offset against Lessor under
the Lease or otherwise or against rents or other amounts due or to become due
under the Lease except as may be specifically identified by the Government on
Attachment B hereto. This paragraph shall in no way be construed as a waiver of
the Lessor's obligations to maintain the property and correct deficiencies with
respect thereto as required by the Lease.
7. The Government represents that it is not in default in the
performance of any of its obligations under the Lease, and no notice has been
received by the Government of a default by the Government under the Lease which
has not been cured.
8. The Lessor is not holding a security deposit for the
performance of the Government's obligations under the Lease.
9. The Government, upon receipt of a copy of the Estoppel
Certificate Agreement in the form attached to this Estoppel Certificate as
Attachment C, which has been signed by the Lessor and the Trustee, will sign
and execute such document to evidence its agreement with, and intent to be
bound by the terms thereof, having read and agreed to the terms of such
document prior to its execution of this Estoppel Certificate.
10. Upon receipt of the notice from the Trustee in the form
attached hereto as Attachment D duly and properly executed, which the Trustee
intends to provide to the Government on or before ________________, the
Government shall make any and all payments of rent and other amounts due or
thereafter becoming due under the Lease directly to the Trustee or as directed
by the Trustee pursuant to and in accordance with the Assignment of Claims Act,
as amended (31 U.S.C. Sec. 3727, 41 U.S.C. Sec.15, 48 CFR 42.1204).
<PAGE> 94
11. It is understood that the Purchaser and the Trustee are
specifically relying on the covenants and representations made by the
Government in this Estoppel Certificate in acquiring the Demised Premises and
agreeing to advance the proceeds of a loan and that they have a right to rely
thereon and are the intended beneficiaries of this Estoppel Certificate.
- --------------------------------------- ------------------------------------
Date
Director, Real Estate Division,
Southern Division
Naval Facilities Engineering Command
Charleston, South Carolina
Attachment A: Lease
Attachment B: Defaults
Attachment C: Estoppel Certificates
Attachment D: Notice
3
<PAGE> 95
Attachment A
Lease
<PAGE> 96
Attachment B
Defaults
<PAGE> 97
Attachment C
ESTOPPEL CERTIFICATE AGREEMENT
This ESTOPPEL CERTIFICATE AGREEMENT is made and entered into
this _____ day of __________, 1996 by and among U.S. National Housing, L.L.C.,
an Alaska limited liability company (referred to herein as "LESSOR"),
_____________________, as Trustee (referred to herein as the "TRUSTEE") of
___________________________ Trust, and its successors and assigns (referred to
herein as the "TRUST"), MCM Finance Corporation, a Delaware corporation
(referred to herein as "LENDER") and the United States of America, acting by
and through the Southern Division, Naval Facilities Engineering Command,
Charleston, South Carolina (referred to herein as "GOVERNMENT").
RECITALS:
A. LESSOR has acquired title to certain improved real
property located in the City of Pensacola, Escambia County, Florida and which
is more particularly described on Exhibit "A" attached hereto and made a part
hereof (the "Land").
B. GOVERNMENT and LESSOR'S predecessor in title have
entered into that certain Lease Agreement dated October 12, 1993, as amended,
(the documents comprising the lease being herein referred to collectively as
the "Government Lease Documents"), pursuant to which GOVERNMENT has agreed to
lease the Land and all improvements thereon, which include, among other things,
300 residential housing units (the "Project").
C. LENDER and LESSOR have entered into a loan agreement
which provides for the issuance of LESSOR's note in the principal amount of
$___________ (the "Existing Loan") secured by a mortgage or deed of trust on
the Project and other collateral security which includes an
1
<PAGE> 98
assignment of rentals under the Government Lease Documents to LENDER
(collectively the "Collateral Security").
D. The Collateral Security has been, or will be,
assigned by LENDER to MCM Deposit Corp. III which, in turn, has assigned, or
will assign the Collateral Security to Trustee, in trust, in connection with
the issuance by the Trustee of "Pass Through Certificates" in a maximum face
amount of $_____________, the repayment of which will be secured by, among
other things, the Collateral Security including the rents and other amounts
payable by GOVERNMENT to LESSOR under the Government Lease Documents. Proceeds
of the sale of the Pass Through Certificates have provided, or will provide,
funds for purchase of the Existing Loan from Lender. In connection with the
issuance of the Pass Through Certificates, accommodations have been, will be,
or made to the LESSOR and substantial reserves and reserve accounts for the
maintenance and operation of the Project will be established. LENDER will
provide servicing assistance to the TRUSTEE in connection with servicing the
Existing Loan.
E. The parties hereto desire to set forth their
agreements and understandings with respect to the rights and obligations of the
parties in the event of a default by LESSOR and in certain other instances
under the Existing Loan and the Government Lease Documents.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which
each of the parties hereto does hereby acknowledge, the parties hereto do
hereby agree as follows:
1. Priorities of Agreements.
Priorities with respect to title in the Land with respect to
the Existing Loan and the Government Lease Documents have been established
prior to the date hereof by recordation, and the new financial arrangements
described herein shall have the same priority as the Existing Loan. This
Agreement shall not operate to adversely or otherwise effect any right of
GOVERNMENT or
2
<PAGE> 99
LESSOR under the Government Lease Documents or disturb GOVERNMENT's possession
of the Project, except as expressly set forth herein.
2. Default and Foreclosure.
If the TRUSTEE, or any affiliate of the TRUSTEE, or any
purchaser at foreclosure of the Existing Loan shall acquire the LESSOR's
interest in the Project by virtue of the default by LESSOR under the Existing
Loan or the new financial arrangements described herein or otherwise, the
Government Lease Documents shall continue in full force and effect so long as
the TRUSTEE, its affiliate or the purchaser at foreclosure, as the case may be,
is not in material default under the Government Lease Documents. The TRUSTEE,
its affiliate or the purchaser at foreclosure, as the case may be, may not
appoint an agent or nominee to operate the Project on its behalf without
obtaining the prior written approval of the GOVERNMENT's designated
representative, such approval not to be unreasonably withheld so long as such
proposed agent/nominee has experience/expertise in management and operation of
residential housing as determined acceptable by the Government. For the period
of time during which the TRUSTEE, its affiliate or the purchaser at foreclosure
holds the LESSOR's interest in the Project, the TRUSTEE, its affiliate or the
purchaser at foreclosure shall become liable and fully bound by the provisions
of the Government Lease Documents. Nothing contained in this Agreement shall
(i) relieve LESSOR from any of its obligations as the "Lessor" under the
Government Lease Documents, or (ii) impose any liability on the TRUST or
TRUSTEE to perform any of LESSOR's obligations under the Government Lease
Documents, except to the extent the any of them acquires the LESSOR's interest
in the Project and succeeds to LESSOR's interest as "Lessor" under the
Government Lease Documents or such liability or obligations are expressly
assumed by any of them in writing.
3. Other Rights and Obligations of the Parties.
(a)(i) GOVERNMENT agrees to accept, performance of
and compliance by the TRUSTEE with any term, covenant, agreement, provision,
condition or limitation on LESSOR's part to be kept, performed or observed by
it under the Government Lease Documents, in the place
3
<PAGE> 100
and stead of LESSOR and upon the same terms and conditions as are applicable to
LESSOR except as expressly modified herein. Nothing contained in this paragraph
shall relieve Lessor of any of its obligations as "Lessor" under the Government
Lease Documents.
(a)(ii) Upon giving LESSOR any notice of default
under the Government Lease Documents, or notice of the termination of any of
said documents, GOVERNMENT shall furnish a copy of such notice to the TRUSTEE,
at the address and in the manner specified in Section 6 below. No notice of
default or termination shall be deemed to be legally effective unless and until
such notice shall have been given to the TRUSTEE in the manner provided in this
Agreement.
(a)(iii) The TRUSTEE may, at its option, remedy
any default under the Government Lease Documents or cause the same to be
remedied within the time period set forth in the next following sentence. Such
right to remedy shall include, to the extent necessary, the right to remedy
defaults within the time period for cure provided to LESSOR under the
Government Lease Documents, plus an additional thirty (30) days, provided,
however, that so long as any such default is reasonably capable of being cured
and the GOVERNMENT agrees that a cure is being diligently prosecuted by the
TRUSTEE, such thirty (30) day additional cure period shall be extended for so
long as the TRUSTEE continues to diligently prosecute same.
(a)(iv) Notwithstanding the time limits set forth in
Section 3(a)(iii) above, the TRUSTEE shall have the right to extend the period
of time to cure any default under the Government Lease Documents for such
additional period as, in good faith would enable the TRUSTEE to institute
foreclosure proceedings, appoint a receiver, acquire by foreclosure LESSOR's
interests under the Government Lease Documents and in the Project, remove
LESSOR from the Project, and acquire possession of the Project. It is also
agreed that, if by reason of a bankruptcy, insolvency or similar legal
proceeding, or by reason of any other judicial order or legislative enactment,
the TRUST, TRUSTEE or TRUSTEE is stayed from commencing or continuing any such
proceedings, then the
4
<PAGE> 101
TRUSTEE shall be deemed to be diligently prosecuting such foreclosure
proceedings so long as it is in good faith diligently attempting to obtain
relief from any such stay.
(a)(v) GOVERNMENT hereby consents to and approves
the re-assignment pursuant to the Assignment of Claims Act of 1940, as amended,
to the TRUSTEE of LESSOR's right to receive the rent and all other amounts
payable under the Government Lease Documents by GOVERNMENT and acknowledges and
agrees that GOVERNMENT shall pay to the TRUSTEE, instead of to LESSOR (or the
Existing Loan Trustee), all rent and other payments coming due under the
Government Lease Documents (in accordance with the applicable provisions of the
Government Lease Documents).
(b) Upon the occurrence of an event of default under the
terms of the Existing Loan, and the continuance thereof after the giving of all
required notices and the expiration of all applicable cure periods the parties
hereto agree as follows:
(b)(i) Provided the obligations under the Government
Lease Documents are performed, GOVERNMENT agrees that its obligation to melee
any and all payments of rent and other amounts due under the Government Lease
Documents as provided under Paragraph 3 or any other provision of the
Government Lease Documents will not be affected by the Existing Loan being
declared in default or by any foreclosure action with respect to the Project.
(b)(ii) The TRUSTEE may declare the total
indebtedness due by LESSOR to the TRUST immediately due and payable without in
any way effecting any of the rights or obligations of the Government under the
Government Lease Documents.
(b)(iii) If the TRUSTEE so elects, it may perform
or cause its nominee to perform the obligations of LESSOR captained in the
Government Lease Documents and exercise the rights of LESSOR therein contained
as fully as could LESSOR itself. In such event (x) the TRUSTEE
5
<PAGE> 102
and GOVERNMENT shall agree to such extensions of the time reasonably necessary
(subject to the Government's urgent need for habitable units in good repair)
for the performance of LESSOR's obligations under the Government Lease
Documents (provided, however, that GOVERNMENT shall be under no obligation to
grant any such extension unless and until the TRUSTEE shall notify GOVERNMENT
in writing of its intent to perform or have its nominee performing all
obligations of LESSOR under the Government Lease Documents which are capable of
performance), and (y) GOVERNMENT shall recognize the TRUSTEE or its nominee or
affiliates as the "Lessor" under the Government Lease Documents.
(c) If any purchaser, including the TRUSTEE or the TRUST
or its nominee or affiliate, shall authorize the Project (a) upon any
foreclosure of the mortgage securing the Existing Loan, or (b) by deed in lieu
of foreclosure of the mortgage securing the Existing Loan (such purchaser at
such foreclosure sale or such grantee named in such deed in lieu of foreclosure
being hereinafter referred to as the "Subsequent Owner"), GOVERNMENT shall
recognize the Subsequent Owner as "Lessor" under the terms of the Government
Lease Documents, subject to the terms and provisions of the Government Lease
Documents regarding the management and operation of the Project, and provided
that the Subsequent Owner shall cure all material defaults by LESSOR under the
Government Lease Documents, and shall perform all obligations of LESSOR
thereunder which are capable of being performed. GOVERNMENT and the Subsequent
Owner shall execute such revisions to the Government Lease Documents or such
other documents as shall be necessary to evidence the foregoing relationship.
Notwithstanding the foregoing, the GOVERNMENT shall be under no obligation to
modify any term of the Government Lease Documents except to recognize the
Subsequent Owner as the lessor under the Government Lease Documents. The
interests of the LESSOR so acquired shall not merge with the mortgage securing
the Existing Loan and the same shall remain in full force and effect until the
Existing Loan has been repaid in full.
6
<PAGE> 103
4. Additional Documents.
Promptly upon the request of one party to another, each party
hereto shall duly execute and deliver any additional documents, instruments and
agreements, in a form reasonably acceptable to the executing party, and shall
take or cause to be taken such further action (including the making of
filings), which are reasonably necessary or desirable in connection with the
consummation of the transactions contemplated herein so long as such documents
do not prejudice any right of the Government under the Government Lease
Documents. The cost of recording any such document shall be the responsibility
of the party requesting such recordation.
5. Term and Provisions of Government Lease Documents.
At the special request of the TRUSTEE, GOVERNMENT hereby
confirms and certifies as follows:
(a) Assignment.
(i) In the event GOVERNMENT shall assign
the Government Lease Documents or sublet all or any part of the Project, such
assignment or subletting shall not relieve GOVERNMENT of its liabilities or
obligations under the Government Lease Documents.
(ii) The GOVERNMENT hereby approves of
LESSOR as the transferee of the Project.
(b) Mortgage.
(i) The Government hereby approves the
Existing Loan and the transactions described in Paragraphs C and D of this
Agreement for the purposes of Article IX of the Government Loan Documents. The
foregoing limitation does not apply in the event of an occurrence covered by
the provisions of Article VI of the Government Lease Documents.
7
<PAGE> 104
(ii) The GOVERNMENT hereby agrees that
the TRUSTEE shall be entitled to the notices contemplated by Article A of the
Government Lease Documents.
(c) Right of First Refusal.
(i) The GOVERNMENT hereby waives its
Right of First Refusal set forth in Paragraph IV of the Government Lease
Documents with respect to the acquisition of the Project by LESSOR.
(ii) The GOVERNMENT shall not interfere
with any foreclosure, deed in lieu of foreclosure or other similar transaction,
and the Right of First Refusal granted to GOVERNMENT with respect to a bona
fide, voluntary sale of the Project shall not be applicable to any such
transaction. Such Right of First Refusal, however, shall be applicable in
accordance with its terms to any bona fide, voluntary sale of the Project by a
third party who acquires the Project from the TRUSTEE, TRUST or any of their
affiliates or is the purchaser at foreclosure. This is in confirmation of the
rights set forth in the Government Lease Documents.
(d) Amendment of Government Lease Documents.
Government will not materially amend any of the
Government Lease Documents without the prior written consent of TRUSTEE, as
required by Article X, paragraph A, subparagraph 3 of the Government Lease
Documents.
6. Notices.
All notices, demands, certificates, requests or other
communications which may be or are required hereunder shall be given in writing
and shall be deemed sufficiently given when (i) personally delivered, (ii)
delivered by telefax, (iii) delivered by overnight commercial courier, or (iv)
three (3) days after the date when mailed by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
8
<PAGE> 105
To LESSOR: U.S. National Housing, L.L.C.
937 Harvard Avenue East
Seallle, Washington 98102
Attention: Richard W. Fischer
with a copy to: Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Edward J. Martin
To the TRUSTEE:
Attention:
To GOVERNMENT: Southern Division
2155 Eagle Drive
P.O. Box 10068
Naval Facilities Engineering Command
Charleston, South Carolina 29411-0068
Attention: Director, Real Estate Division
with a copy to:
To LENDER: Attention:
with a copy to:
Each party hereto may designate by notice in writing any different address to
which subsequent notice, demands, certificates, requests or other
communications shall be sent.
7. Binding Effect: Successors.
Subject to any provisions hereof, or of the Government Lease
Documents restricting assignment, this Agreement shall be binding upon and
inure to the benefit of GOVERNMENT, the TRUSTEE, the LENDER and LESSOR and
their respective successors and assigns.
9
<PAGE> 106
8. Government's Rent Payment Obligations.
As provided in Article XLIV of the Government Lease Documents,
the GOVERNMENT's obligations to make any payments under said Article are such
to the availability of appropriations for that purpose in any fiscal year.
9. Entire Agreement.
This Agreement constitutes the entire agreement among the
parties hereto with respect to the transactions contemplated herein, and it
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
10. Amendments.
No amendment or modification to, or extension or waiver of,
any provision of, or consent provided under, this Agreement shall be valid
unless such amendment, modification, extension, waiver or consent is in writing
and executed by the parties against whom enforcement of the amendment,
modification, extension, waiver or consent is sought.
11. Severability.
If any clause or provision contained in this Agreement
operates or would prospectively operate to invalidate this Agreement in whole
or in part, then such clause or provision only shall be held ineffective, as
though not herein contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
12. Governing Law.
This Agreement, the rights and obligations of the parties
hereto and any claims or disputes relating hereto, and any claims or disputes
relating thereto shall be governed by and construed under Federal law and
regulation to the extent applicable, and the laws of the State of (but not
including the choice of law rules thereof), to the extent Federal law is not
applicable.
10
<PAGE> 107
13. No Partnership.
Nothing contained in this Agreement shall be deemed (or
construed) to constitute a partnership or joint venture among any one of the
GOVERNMENT, the TRUST, the LENDER the TRUSTEE and LESSOR.
14. Counterparts.
This Agreement may be executed in several counterparts, each
of which shall be an original but all of which shall constitute one and the
same instrument.
U.S. NATIONAL HOUSING L.L.C.
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
[TRUSTEE]
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
MCM FINANCE CORPORATION
By:
------------------------------------
Its:
-----------------------------------
Name:
----------------------------------
11
<PAGE> 108
THE UNITED STATES OF AMERICA
By:
-------------------------------------
Director, Real Estate Division,
Southern Division, Naval
Facilities Engineering
Command
Charleston, South Carolina
12
<PAGE> 109
Attachment D
NOTICE OF RE-ASSIGNMENT OF RENTS
To: ____________________ Contracting Officer.
This Notice of Re-Assignment of Rents has reference to that
certain Lease (the "Lease") No. N62467-94-RP-00001 dated October 12, 1993,
entered into between Pensacola 801, Inc. and the United States of America,
acting by and through the Southern Division, Naval Facilities Engineering
Carurnand, Charleston, South Carolina Georgia (the "Government"), pursuant to
which the Government has leased certain real property, and all of the
improvements located thereon, which include, but are not limited to 300
residential housing units, located in the City of Pensacola, Escambia County,
Florida.
Moneys due or to become due under the described above were
originally assigned to MCM Finance Corporation under the provisions of the
Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15 (the "Act") and
have subsequently been re-assigned to MCM Deposit Corp. III and then to the
undersigned also, in each case, under the provisions of the Act. A true copy of
the instrument of re-assignment executed on ________________, 1996 is attached
to this original notice.
All payments due or to become due under the Lease from and
after the date of this Notice of Re-Assignment shall be made to by wire
transfer as follows:
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Please return to the undersigned the three copies of this
notice with appropriate notations showing the date and hour of receipt on
behalf of the addressee.
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
13
<PAGE> 110
ACKNOWLEDGMENT
Receipt is acknowledged of the above Notice of Re-Assignment
of Rents and of a copy of the attached instrument of re-assignment. They were
received at _____ (am.)(p.m.) on ______________, 1996.
------------------------------------------------
, Contracting Officer
---------------------------
Southern Division
Naval Facilities Engineering Command
Charleston, South Carolina
14
<PAGE> 111
EXHIBIT K
Tenant Notice Letter
<PAGE> 112
EXHIBIT L
FIRPTA Affidavit
<PAGE> 113
EXHIBIT M
ACCOUNTS
<PAGE> 114
EXHIBIT M
<PAGE> 115
EXHIBIT N
FIRST AMERICAN DEVELOPMENT CORPORATION EMPLOYEES
<PAGE> 116
EXHIBIT N
<PAGE> 117
EXHIBIT O
REPAIR/CONDITION
<PAGE> 118
EXHIBIT O
Repairs to 801 Projects:
1) Ft. Bragg
a. Per the first report from Ft. Bragg Family Housing, Hurricane
Fran has caused damage to thirty-three houses. Their Report is attached
indicating most damage is minor. Ft. Bragg 801 Inc. has contacted the
Insurance Company and an adjustor is schedule to make his report on September
13, 1996. Ft. Bragg 801 Inc. has also contacted a sub-contractor to make a
visit on Monday, September 16, 1996 to make his evaluation of the damage.
b. Ft. Bragg Family Housing has requested information on the
Mini-Blinds installed at Ft. Bragg. A report from the U.S. Consumer Product
Safety Commission has stated that nonglossy mini-blinds deteriorate from long
periods in the sun and emit lead that can be potentially dangerous to small
children. Ft. Bragg 801 Inc. has contacted the General Contractor, Metric
Constructors, concerning the type of mini-blinds installed at Ft. Bragg. Ft.
Bragg 801 Inc. has received verbal statements from Metric Constructors that the
mini-blinds at Ft. Bragg Housing are the highly-glossy type, will not emit lead
and pose no problem to small children.
2) Portales (Cannon AFB) 801 Inc.
On August 30, 1996, a hail storm with very high winds hit the Portales, New
Mexico area. According to our roofing sub-contractor some twelve houses
sustained roof damage. These houses as of September 13, 1996 have been
repaired.
<PAGE> 119
STORM DAMAGE AT HERITAGE VILLAGE
101 Hoke Ct. Shingles blown off on front & side
110 Hoke Ct. Gutter damage on back of quarters
100 Lee Ct. Tree fell on quarters, roof and ceiling in bedroom damaged
206 Swing Siding loose left side of quarters
211 Swing Post and down spout out and laying on ground
213 Swing Fascia metal missing
101 Tolson Siding off end of quarters and small hole
104 Tolson Gutter on left side bent and shingles blown off back of
quarters
109 Tolson Tree fell on garage
201 Tolson Siding off left side of quarters
203 Tolson Gutter right side mashed
205 Tolson Tree fell on quarters damaged to quarters
206 Tolson Fascia metal strip missing front of quarters
207 Tolson Siding missing and fascia strip missing
101 Porter Down spout off
100 McCarthy Gutter front of quarters loose
100 Lang Vei Shingles missing on front of quarters
103 Lang Vei Fascia strip off left side of quarters
108 Lang Vei Gutter in front fell off
112 Lang Vei Gutter in front fell off and bent
<PAGE> 120
100 Joel Gutter missing and shingles missing
104 Joel Gutter missing loose fascia board
106 Soyang Shingles off front of quarters
101 Williams Fascia missing on left side of quarters and siding loose
117 Pershing Fascia loose front of quarters and right side of quarters
105 Duncan Fascia on left side of quarters loose
206 Nathanial Green Siding Loose on left side
800 Nathanial Green Tree hit house, gutter in front mashed and shingles
missing
802 Nathanial Green Gutter damaged
806 Nathanial Green Shingles blown off front of quarters (10 ea.)
900 Nathanial Green Shingles blown off front of quarters (5 ea.)
902 Nathanial Green Shingles blown off front of quarters (5 ea.)
107 Porter Siding missing in front at carport
<PAGE> 121
EXHIBIT P
LITIGATION
<PAGE> 122
- --------------------------------------------------------------------------------
LITIGATION & CLAIM REPORT
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NAME OF SUIT/CLAIM: Randy K. Martyn and Robin Dawn Martyn v. Ft. Bragg 801, Inc.,
Jestech, Inc. and Kam Snider
- -------------------------------------------------------------------------------------------------------
DIVISION OF TEAM: Ft. Bragg 801, Inc.
COURT: N/A
CASE NUMBER: 96-CUS-96CU-00041
DATE FILED: 2-2-96
DATE SERVED: 2-12-96
ANSWER DUE:
TYPE OF LAWSUIT: Personal Injury
DETAILS OF CLAIM: Letter from attorney representing above referenced individuals in
claim for injuries and damages allegedly sustained August 18, 1993
due to a fire on his stove top which should have been extinguished
by the fire suppression system over the stove.
DAMAGES CLAIMED: Burns - Excess of $10,000.00
LIABILITY EXPOSURE: Unknown
INSURANCE CARRIER: Aetna
CARRIER DEFENDING? Yes
INSURANCE RESERVE: Unknown
COSTS TO DATE:
LAW FIRM: Adams, Kleemeier, Hagan, Hannah and Fouts
ATTORNEY: R. Harper Heckman
Phone: 910-373-1600
Fax: 910-273-5357
OPPOSING COUNSEL: Paul P. Browne
James, McElroy & Diehl, P.A.
600 South College St.
Charlotte, NC 28202
Phone: (704) 372-9870
Fax: (704) 333-5508
PROGRESS IN CASE:
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement is made this 8th day of May, 1997, by and between U.S.
National Housing, LLC (the "LLC") and U.S. National Housing Limited Partnership
(the "Partnership").
WHEREAS, the LLC entered into an Agreement of Purchase and Sale (the
"Agreement") with Fort Bragg 801, Inc., Pensacola 801, Inc. and Portales 801,
Inc. for certain military housing developments in McLauchlin township, North
Carolina, Pensacola, Florida, and Portales, New Mexico.
WHEREAS, the LLC desires to assign the Agreement to the Partnership
and the Partnership desires to accept the assignment and to assume the duties,
liabilities and obligations of the LLC under the Agreement.
NOW, THEREFORE, in consideration of the sum of ten dollars ($10.00),
and other good and valuable consideration, the LLC assigns and transfers all of
its right, title and interest under the Agreement to the Partnership, and the
Partnership assumes all the LLC's duties, liabilities and obligations under the
Agreement, as if the Partnership were the original party to the Agreement.
U.S. NATIONAL HOUSING, LLC
By: /s/ Richard W. Fischer
--------------------------------------
Richard W. Fischer
Managing Member
U.S. NATIONAL HOUSING LIMITED PARTNERSHIP
U.S. National Management Corporation
By: /s/ Richard W. Fischer
--------------------------------------
Richard W. Fischer
President/General Partner
<PAGE> 1
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT is made this 8th
day of May, 1997, by and between FT. BRAGG 801, INC., PENSACOLA
801, INC., and PORTALES 801, INC., (collectively the "801 Companies") and TEAM,
INC. and FIRST AMERICAN CAPITAL CORPORATION (the 801 Companies, Team, Inc. and
First American Capital Corporation being collectively referred to as the
"Seller") and U.S. NATIONAL HOUSING LIMITED PARTNERSHIP (the "Purchaser").
WHEREAS, the Seller and U.S. National Housing, L.L.C. (which entity
assigned its rights to Purchaser) entered into that certain Agreement of
Purchase and Sale (the "Sales Agreement") dated September 13, 1996, for the
sale of those certain 801 military housing projects (the "Projects"), including
the real property, improvements, personal property, equipment, leases, and
Service Contracts, described therein; and
WHEREAS, the parties desire to amend the Sales Agreement as set forth
below.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, paid each unto the other, the receipt
and sufficiency of which is hereby acknowledged and confessed the parties
hereto agree as follows:
1. Amendment to Paragraph 2(c) of Sales Agreement. Paragraph
2(c) is hereby deleted in its entirety and replaced with the following:
"(c) For the convenience of the parties, the Purchase
Price allocation for each parcel (including a proportionate share of
the cash and the outstanding balance of the Indebtedness) is as
follows:
<TABLE>
<S> <C>
Ft. Bragg Parcel 14,000,000
Pensacola Parcel 16,500,000
Portales Parcel 10,424,190"
</TABLE>
3. Miscellaneous.
A. Amendment. This First Amendment is irrevocable, and
may not be amended, modified or supplemented except by written instrument
signed by Seller and Purchaser.
B. Captions and Severability. Section headings and
captions have been inserted for convenience only and do not in any way limit
the provisions set out in the various Sections hereof. If one or more of the
provisions contained herein shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and this
agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
<PAGE> 2
C. Successors and Assigns. This First Amendment shall
inure to the benefit of the parties, their respective successors and assigns.
D. Counterparts. This First Amendment may be executed
in several counterparts, and the several signed counterparts shall be deemed a
single, integrated instrument.
E. Governing Law. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas.
The venue for any action arising hereunder or in connection herewith shall be
in Harris County, Texas.
F. Defined Terms. Any capitalized term not otherwise
defined herein shall have the meaning ascribed to it in the Sales Agreement.
SELLER:
FT. BRAGG 801, INC.
By: /s/ William A. Ryan
---------------------------------
William A. Ryan, President
PENSACOLA 801, INC.
By: /s/ William A. Ryan
---------------------------------
William A. Ryan, President
PORTALES 801, INC.
By: /s/ William A. Ryan
---------------------------------
William A. Ryan, President
TEAM, INC.
By: /s/ William A. Ryan
---------------------------------
William A. Ryan, President
2
<PAGE> 3
FIRST AMERICAN CAPITAL
CORPORATION
By: /s/ William A. Ryan
---------------------------------
William A. Ryan, President
PURCHASER:
U.S. NATIONAL HOUSING LIMITED
PARTNERSHIP, an Alaska limited
partnership
By: U.S. NATIONAL MANAGEMENT
CORPORATION, Its General Partner
By: /s/ Richard W. Fischer
---------------------------------
Printed Name: Richard W. Fischer
-----------------------
Title: President
------------------------------
3
