<PAGE> 1
As filed with the Securities and Exchange Commission on April 16, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: April 15, 1997
(Date of earliest event reported)
LEGEND PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9885 36-3465359
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1420 Fifth Avenue, Suite 4200, Seattle, Washington 98101
(Former address: 150 South Wacker Drive, Suite 2900 Chicago,
Illinois 60606)
(Address of Principal Executive Offices)
(206) 464-0123
(Registrant's telephone number including area code)
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ITEM 5. OTHER EVENTS
On April 15, 1997, Legend Properties, Inc. ("Legend") announced
that it had reached an agreement in principle to settle various lawsuits.
The agreement is subject to, among other things, court approval. As part of
the settlement, the plaintiffs will likely file a second consolidated amended
and supplemental complaint repeating the allegations contained in their
previous complaints and adding the claims underlying their application pursuant
to Section 225 of the Delaware Code. In addition, RGI Holdings, Inc. and
RGI/US will likely be added as defendants solely for purposes of the
settlement. All of the defendants will subsequently answer this complaint and
have consented to a conditional certification of the lawsuit as a plaintiff
class action pursuant to Rules 23(a) and 23(b)(1)-(2) of the Court of Chancery
of the State of Delaware. As part of this settlement, RGI Holdings, Inc. has
agreed to, among other things: (i) defer interest due on the loans previously
known as the Morgens Loan and the SoGen Loan (collectively, the "Loans") and
now owned by RGI Holdings, Inc. until December 31, 1997; (ii) forebear on any
defaults existing on the Loans as of the effective date of the settlement until
December 31, 1997; (iii) effective January 1, 1997, reduce the interest rate on
the Loans to the lower of the prime rate plus 2% (10.25% at January 1, 1997) or
LIBOR plus 2.5% (8.1% at January 1, 1997); (iv) provide Legend with a line of
credit in the aggregate principal amount of $8.5 million, a portion of which
will be utilized to repay RGI Holdings, Inc. for advances previously made to
Legend; and (v) repurchase up to $300,000 of Legend's shares of common stock
from time to time on the open market over the next twelve months subject to
compliance with the Securities Exchange Commission's rules and regulations
relating to open market repurchase programs. Until the settlement is approved
by the court and becomes effective, management does not expect to be able to
satisfactorily restructure or refinance the Loans. If and when the settlement
is approved, management expects to enter into discussions with RGI Holdings,
Inc. and/or other third party lenders to restructure or refinance the Loans.
The parties will schedule a hearing during the week of April 21, 1997, to
submit the settlement to the Delaware court for its preliminary review.
The Stipulation and Agreement of Settlement dated April 15, 1997, by and
among John A. Hinson, John W. Temple, Gary M. Goldberg, Walter E. Auch, Sr.,
Robert M. Ungerleider, RGI Holdings, Inc. and Legend Properties, Inc. (f/k/a
Banyan Mortgage Investment Fund) is attached hereto as Exhibit 10.1.
2
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
EXHIBITS:
10.1 Stipulation and Agreement of Settlement dated April 15,
1997, by and among John A. Hinson, John W. Temple, Gary M.
Goldberg, Walter E. Auch, Sr., Robert M. Ungerleider, RGI
Holdings, Inc. and Legend Properties, Inc. (f/k/a Banyan
Mortgage Investment Fund).
10.2 Form of Second Loan Modification Agreement, by and between
Legend Properties, Inc. And RGI Holdings, Inc.
(SoGen Loan)
10.3 Form of Second Loan Modification Agreement, by and between
Legend Properties, Inc. And RGI Holdings, Inc. (Morgens
Loan)
3
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SIGNATURE
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 hereunto duly authorized.
LEGEND PROPERTIES, INC.
(Registrant)
By: /s/ Kenneth L. Uptain
-----------------------------
Kenneth L. Uptain
Its: President, Chief Executive Officer and Director
Date: April 16, 1997
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EXHIBIT 10.1
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IN THE CHANCERY COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
X
IN RE BANYAN MORTGAGE INVESTMENT FUND : CONSOLIDATED
SHAREHOLDERS LITIGATION : C. A. NO. 15287
X
STIPULATION AND AGREEMENT OF SETTLEMENT
Plaintiffs on their own behalf and on behalf of the Class (as defined
below), and the Defendants, each acting through their attorneys, hereby enter
into this Stipulation and Agreement of Settlement (the "Stipulation") as of the
15th day of April, 1997 providing for a settlement of the above-captioned action
(the "Action") on the terms and conditions set forth in this Stipulation.
WHEREAS:
A. On or about October 9, 1996, Banyan Mortgage Investment Fund
("Banyan") sent its stockholders a notice of a meeting of stockholders to be
held on November 26, 1996 and a proxy statement and prospectus ("Proxy
Statement") concerning a proposed merger (the "Merger") between Banyan and RGI
U.S. Holdings, Inc. ("RGI/US"). Among other things, the Proxy Statement
solicited the votes of Banyan's stockholders approving the Merger.
B. On October 31, 1996, Plaintiffs John A. Hinson ("Hinson") and John W.
Temple ("Temple"), who together owned more than 1.5 million Banyan shares,
commenced Civil Action No. 15287 in this Court against Banyan, certain of its
directors
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and officers ("Hinson Action"). Hinson and Temple brought the action on behalf
of themselves and all other shareholders of Banyan, except for Defendants,
members of the Defendants' families and entities controlled by any Defendant.
C. Plaintiffs alleged that Banyan's Board of Directors had breached its
fiduciary duties by failing to seek alternative change of control transactions
other than the Merger with RGI/US or appropriately evaluate the alternative of
liquidating Banyan. Plaintiffs also alleged that the Merger unfairly diluted
the voting and equity interests of Banyan's stockholders since it would result
in RGI Holdings, Inc. ("RGI"), the parent of RGI/US, owning approximately 75% of
the outstanding common stock of Banyan, while the other shareholders would have
their interests diluted to approximately 25% of Banyan's outstanding common
stock. In addition, Plaintiffs alleged that the Proxy Statement was misleading
and failed to disclose certain material information. Among other relief,
Plaintiffs sought to enjoin the Merger, and require the defendants to undertake
additional activities to maximize shareholder value and disclose certain
additional information to Banyan's shareholders in connection with their
consideration of the Merger.
D. Contemporaneously with the filing of their complaint, Hinson and
Temple moved for expedited discovery to support a motion to enjoin the Merger
preliminarily. The Court granted the motion for expedited discovery and
scheduled a preliminary injunction hearing for November 21, 1996.
E. On November 13, 1996, Gary M. Goldberg, another Banyan stockholder,
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filed Civil Action No. 15340 ("Goldberg Action") asserting allegations
substantially similar to those in the Hinson Action. The Hinson and
Goldberg Actions were consolidated by Order dated December 11, 1996.
F. The parties engaged in discovery, including the production and review
of thousands of pages of documents and depositions of Leonard G. Levine,
Banyan's President; Robert M. Ungerleider, one of its directors, and Michael
Kollender of Josepthal Lyon Ross Incorporated, which had provided to Banyan a
fairness opinion in connection with the Merger. Plaintiffs filed their motion
for preliminary injunction and opening brief in support of that motion on
November 15, 1996.
G. Contemporaneously with the ongoing discovery, Hinson sent
communications to third parties seeking to elicit their interest in making
competing offers for an alternative change in control or other transaction with
Banyan.
H. On or about November 15, 1996, Apollo Real Estate Advisors II, L.P.
("Apollo"), one of the third parties that Hinson had contacted, sent Banyan's
directors a conditional proposal to acquire Banyan's outstanding common stock
for $0.46875 per share in cash and to assume or purchase certain of Banyan's
outstanding debt. Apollo's proposal was conditioned on, among other things, the
results of its due diligence. Plaintiffs' counsel sent Banyan's directors a
letter urging them to postpone the shareholders' meeting for thirty (30) days,
make due diligence materials available to Apollo, negotiate with Apollo to
improve the terms of its offer, inform Banyan shareholders of the Apollo
proposal and the information Plaintiffs alleged to be omitted from the Proxy
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Statement, and afford Banyan shareholders the opportunity to withdraw any
proxies submitted concerning the Merger.
I. On or about November 18, 1996, Hinson sent a letter to Banyan
shareholders who held their shares through brokerage houses and banks, stating
his opposition to the Merger, informing them of the Apollo proposal and urging
them to vote against the Merger.
J. On or about November 19, 1996, Banyan's directors decided to postpone
the vote of Banyan's shareholders on the Merger and to supplement the Proxy
Statement. In light of these developments, the parties requested and the Court
agreed to cancel the preliminary injunction hearing scheduled for November 21,
1996.
K. After Apollo and Banyan signed a confidentiality agreement, Banyan
gave Apollo access to information and documents necessary for Apollo to conduct
due diligence in connection with its acquisition proposal, and Apollo commenced
its due diligence efforts.
L. On or about December 3, 1996, Banyan received a proposal from D.
Andrew Beal ("Beal") expressing interest in acquiring Banyan for $0.51 per
share, subject to due diligence and other conditions. Banyan agreed to permit
Beal to conduct due diligence subject to his entering into a confidentiality
agreement similar to that signed by Apollo. Beal declined to enter into such a
confidentiality agreement and consequently did not conduct due diligence to
support his proposal.
M. On December 6, 1996, Banyan's Board set 5:00 p.m. on December 9, 1996
as the deadline for receipt of a firm offer from anyone interested in a
transaction with
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Banyan, including Apollo and Beal. Neither Apollo, nor anyone else, submitted a
firm offer by that date and time.
N. On or about December 9, 1996, RGI purchased a total of 6,766,600
shares of Banyan common stock in privately negotiated transactions from nine
stockholders at prices ranging from $0.50 per share to $0.60 per share, all in
excess of the market price, at that time, for Banyan stock (the "December 9
Purchases"). Each purchase agreement contained a provision pursuant to which
each of the sellers revoked any previously voted proxies and granted RGI
irrevocable proxies to vote the purchased shares in favor of the Merger. RGI
also granted certain sellers price protection in the event that other shares
were acquired at more favorable prices.
O. On December 12, 1996, Hinson and Temple filed an individual action in
the United States District Court for the Southern District of New York against
RGI, RGI/US and Kenneth L. Uptain, President of RGI/US (the "New York Action").
Plaintiffs alleged that the December 9 Purchases constituted a tender offer
under the Federal Securities Laws. The complaint sought equitable and financial
relief. On February 19, 1997, RGI and Uptain answered the Complaint and denied
the purchases violated the Federal Securities Laws.
P. On or about December 10, 1996, Hinson sent a letter to all Banyan
shareholders of record as of October 9, 1996, urging them to vote against the
Merger.
Q. Between December 13 and 17, 1996, Banyan sent a Supplement to the
Proxy Statement ("Supplement"), to all Banyan shareholders of record as of
October 9, 1996, advising them that the shareholders' meeting to consider the
Merger was continued to December 27, 1996. The Supplement: described the
proposals received from Apollo,
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Beal and another party, Banyan's responses thereto, and the absence of any firm
offer; the status of the Action; additional valuation information underlying
the Board's continuing recommendation in support of the Merger, and advice that
Banyan had entered into a contract for the sale of one of its properties at a
price in excess of book value. Included with the Supplement was another letter
from Hinson clarifying certain statements contained in his letter of December
10, 1996.
R. On December 23, 1996, Apollo sent Banyan a revised conditional
proposal which contemplated (1) RGI's acquiring most of Banyan's assets, except
for certain tax-loss carry-forwards and Banyan's liabilities, (2) Apollo's
making an investment in Banyan, and (3) Banyan's acquiring and developing new
businesses, under the joint management of Apollo and RGI, so as to utilize the
tax-loss carry-forwards to shelter future income.
S. On December 24, 1996, Plaintiffs served and filed a Consolidated
Amended and Supplemental Complaint. Among other things, this Complaint repeated
the allegations of the Hinson and Goldberg Actions, and added factual
allegations concerning the Apollo and Beal proposals and the Supplement, and a
claim that the December 9 Purchases constituted unlawful vote buying.
T. The Banyan shareholders' meeting reconvened on December 27, 1996.
The polls remained open until 3:00 p.m. on December 30, 1996. First Chicago
Trust Company ("First Chicago"), Banyan's transfer agent, served as inspector of
elections. The final proxy vote tabulation, as certified by First Chicago,
showed that 47,307,527 shares were eligible to vote, 23,862,753 shares were
voted in favor of the Merger, 10,414,143 shares were voted against the Merger,
and 844,969 shares abstained. Consequently, the Merger
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received the votes of 208,990 shares more than the minimum necessary for
approval. On December 31, 1996, a certificate of merger was filed with the
Delaware Secretary of State, thereby effectuating the Merger.
U. The vote tabulation as certified by First Chicago also reported that
Banyan's shareholders approved an amendment to Banyan's Certificate of
Incorporation to effect a 1:25 "reverse stock split."
V. On January 8, 1997, Plaintiffs filed an application pursuant to 8
Del. C. Section 225(b) seeking judicial review of the certified vote on the
Merger. Plaintiffs' Section 225 application contended that: (i) the Merger
was approved by fewer than 210,000 shares, (ii) many shareholders had sought to
revoke proxies initially voting in favor of the Merger so as to vote against the
Merger, and (iii) Banyan had announced varying results of the vote. Plaintiffs
sought an expedited hearing on the Section 225 application.
W. The Court scheduled a hearing on Plaintiffs' Section 225 application
for March 4, 1997. The parties engaged in discovery incident to that
application, including a review of documents obtained from First Chicago and
other third parties, and depositions of Plaintiffs Hinson and representatives of
PaineWebber Incorporated, Beacon Hill Partners (Hinson's proxy solicitor in
connection with the Merger) and Corporate Investor Communications (Banyan's
proxy solicitor in connection with the Merger).
X. The March 4 hearing was postponed at the direction of the Court. In
the interim, the parties entered into discussions with a view towards finding a
mutually agreeable basis for resolving the Action. Shortly thereafter, the
parties reached an agreement in principle to settle the Action.
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Y. On April 14, 1997, Plaintiffs served a Second Consolidated Amended and
Supplemental Complaint. This pleading repeated the allegations of the
Consolidated Amended and Supplemental Complaint, added the claims underlying
Plaintiffs' application pursuant to 8 Del. C. Section 225, and added RGI and
RGI/US as defendants. Solely for purposes of this settlement, Defendants have
consented to a conditional certification of the Action as a plaintiff class
action pursuant to Rules 23(a) and 23(b)(1) & (2) of the Rules of the Court of
Chancery of the State of Delaware.
Z. Contemporaneously with and in conjunction with the resolution of this
Action, plaintiffs and the defendants in the New York Action have signed an
agreement to settle and dismiss the New York Action on the basis that RGI will
purchase all of Plaintiffs' shares of Legend stock for $13.25 per share ($0.53
per pre-Merger Banyan share). In return, Plaintiffs have agreed not to purchase
or otherwise acquire any Legend securities until five years from the date of
this Stipulation or until such time as RGI no longer owns 25% or more of the
equity of Legend, whichever occurs first.
AA. Plaintiffs' counsel have conducted a thorough investigation of the
facts and legal principles relating to the Plaintiffs' claims and the underlying
events and transactions alleged in the Complaint. Plaintiffs' counsel have
engaged in extensive, arm's-length negotiations with counsel for the Defendants
with respect to the possible compromise and settlement of Plaintiffs' asserted
or potential claims against the Defendants. Plaintiffs and their counsel, in
light of these investigations and negotiations, have concluded that settlement
of the Action and resolution of the claims of the Class on the terms set forth
in
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this Stipulation (the "Settlement"), is fair, reasonable and adequate and is in
the best interests of Plaintiffs and the Class.
BB. Defendants deny all allegations of wrongdoing and liability asserted
in the Complaint or otherwise in the Action, and have asserted that the claims
alleged therein are without merit, that the Defendants have meritorious defenses
to those claims, that the conduct of the Defendants has, at all times, been
legal and proper and that a judgment should be entered dismissing the claims
against the Defendants with prejudice.
CC. Without in any way acknowledging any fault or liability, Defendants
also desire to settle, compromise and terminate the Plaintiffs' and the Class's
claims against them in order to avoid the further substantial expense,
inconvenience and distraction of this burdensome and potentially protracted
litigation, to resolve promptly any uncertainty as to the effectiveness of the
Merger, and to put to rest forever all claims which have or could have been
asserted against them herein, or which arise from or are in any way related to
the acts, transactions or occurrences alleged in the Complaint.
NOW, THEREFORE; IT IS HEREBY STIPULATED AND AGREED, between and among the
undersigned parties, through their respective counsel, and subject to all of the
terms and conditions set forth herein and the approval of the Court, that the
Action, as well as any and all of the claims and causes of action of any nature
or description relating to the acts, transactions or occurrences alleged in the
Action, which have or could have been asserted therein against some or all of
the Defendants be, and the same hereby are, compromised and settled on the terms
and conditions hereinafter set forth.
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1. DEFINITIONS
In addition to the terms defined in the recitals above or otherwise in this
Stipulation, for purposes of this Stipulation:
(a) "Complaint" shall mean the Second Consolidated Amended and
Supplemental Complaint served on or about April 14, 1997.
(b) "Plaintiffs" shall mean John A. Hinson, John
W. Temple and Gary M. Goldberg.
(c) "Legend" shall mean Legend Properties Inc., the Delaware
corporation which survived the merger of Banyan and RGI/US, formerly known as
Banyan Mortgage Investment Fund.
(d) "Defendants" shall mean Walter E. Auch, Sr., Robert M.
Ungerleider, Banyan, RGI, Legend, and their present and former agents,
attorneys, employees, officers, directors, heirs, executors, representatives,
successors and assigns.
(e) "Class" shall mean, for purposes of this Stipulation only, all
record and beneficial holders of Banyan common stock from October 9, 1996
through December 31, 1996 and their successors in interest, transferees and
assigns, immediate and remote. Excluded from the Class are the Defendants,
members of their immediate family of each individual defendant and any entity in
which any Defendant has a controlling interest.
(f) "Settled Claims" shall mean any and all claims, demands, rights,
liabilities, suits, actions or causes of action, damages, losses, obligations or
judgments of any kind or nature whatsoever, whether asserted or unasserted,
known or
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unknown, contingent or absolute, disclosed or undisclosed, matured or unmatured,
which have been, could have been or in the future can or might be asserted in
the Action or in any court, tribunal or proceeding (including, but not limited
to, any claims arising under federal or state law relating to alleged fraud,
breach of any duty, negligence, violations of federal securities laws or
otherwise) by Plaintiffs or any member of the Class against Defendants, which
have arisen, could have arisen or hereafter arise out of or relate in any manner
whatsoever, directly or indirectly, to the allegations, facts, events,
transactions, acts, occurrences, statements, representations,
misrepresentations, omissions, or any other matter, thing or cause whatsoever,
or any series thereof, embraced, involved, set forth, or otherwise referred to
or related to, directly or indirectly, in the Complaint.
(g) The "Morgens Loan" shall mean loans previously made to Legend
by a group of lenders for which Morgens, Waterfall, Vintiadis & Co., Inc. served
as agent, which RGI had purchased in or about May, 1996 and which, as of
December 31, 1996, had an outstanding principal balance of $24,258,788.24.
(h) The "SoGen Loan" shall mean the loan previously made to Legend
by Societe Generale, Southwest Agency, which RGI had purchased in or about May,
1996, and which, as of December 31, 1996, had an outstanding principal balance
of $6,391,083.88.
(i) The "$800,000 Advance" shall mean the unsecured loans totaling
$800,000 RGI made to Legend on December 31, 1996 and during January 1997 at an
interest rate of the Prime Rate plus 5%.
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(j) The "$1.8 Million Advance" shall mean the unsecured loans
totaling $1.8 million RGI made to Legend during February 1997 at an interest
rate of the Prime Rate plus 3%.
(k) The "Advances" shall mean the $800,000 Advance and the $1.8
Million Advance, collectively.
(l) The "Repayment Requirement" shall mean any undertakings
incident to Legend's anticipated sale of its Lynwood Shopping Center property
that require Legend to pay the net proceeds resulting from that sale, estimated
to be approximately $5 million, to RGI as a payment against principal and
interest on the Morgens Loan.
(m) The "Prime Rate" shall mean on any day the prime rate as
published in The Wall Street Journal by Dow Jones & Company, Inc., changing as
such prime rate changes.
2. SETTLEMENT CONSIDERATION
In full and final disposition, settlement, discharge, release and
satisfaction of any and all Settled Claims, the parties agree as follows:
(a) On the Effective Date, Legend and RGI will modify the Morgens
Loan (i) to reduce the interest rate effective as of January 1, 1997, from the
Prime Rate plus 2%, to the lower of the Prime Rate plus 2% or the 30-day London
Interbank Borrowing Rate ("LIBOR") plus 2.5%, (ii) provide that no principal or
interest is due or payable until December 31, 1997, although interest shall
continue to accrue, unless a refinancing or other source of payment is available
sooner, (iii) to forbear from enforcing any defaults existing as of the
Effective Date until December 31, 1997, and (iv) to delete
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the Repayment Requirement that Legend pay to RGI 100% of the net sales proceeds
from the Lynnwood Shopping Center, and instead permit Legend to retain the net
proceeds of such sale for its use. Nothing in this subparagraph shall prohibit
Legend from voluntarily making payments of principal on the Morgens Loan. The
agreement effectuating this modification has been reviewed by Plaintiffs'
counsel.
(b) On the Effective Date, Legend and RGI will modify the SoGen
Loan (i) to reduce the interest rate effective as of January 1, 1997, from the
Prime Rate plus 6%, to the lower of the Prime Rate plus 2% or the 30-day LIBOR
rate plus 2.5%, (ii) to provide that no principal or interest is due or payable
until December 31, 1997, although interest shall continue to accrue, unless a
refinancing or other source of payment is available sooner, (iii) to forbear
from enforcing any defaults existing as of the Effective Date until December 31,
1997. Nothing in this subparagraph shall prohibit Legend from voluntarily
making payments of principal on the SoGen Loan. The agreement effectuating this
modification has been reviewed by Plaintiff's counsel.
(c) RGI and Legend agree they will make no modifications to the
SoGen or Morgens Loans (including any modification to increase the interest rate
on these loans) through their maturity, except as contemplated by subsection (f)
below and provided, further, that Legend may modify the SoGen and Morgens Loans:
(i) if a modification is necessary to enable Legend to refinance its existing
indebtedness as of the Effective Date; (ii) if a modification is necessary to
enable Legend to incur additional indebtedness from unaffiliated parties; or
(iii) the modification is on terms and conditions no less favorable to Legend
than the terms set forth in the modification agreements for the
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SoGen and Morgens Loans as of the date hereof; provided, however, that any
modifications contemplated by (i)-(iii) above will not increase the interest
rate on these loans, and must be approved by Legend's Board, including a
majority of the independent directors.
(d) On or before the Effective Date, Legend and RGI shall reduce
the interest rate on the Advances effective as of January 1, 1997, to the Prime
Rate plus 2%, and the principal and accrued interest on the Advances shall be
repaid on or before the Effective Date with the proceeds of the working capital
loan described in subparagraph (e) below. The agreement effectuating this loan
modification has been reviewed by Plaintiffs' counsel.
(e) On or before the Effective Date, RGI will provide a line of
credit to permit Legend to borrow up to an aggregate of $8.5 million, $2.6
million of which shall be used to repay the Advances. The interest rate on all
draws under the line of credit will be equal to the Prime Rate plus 2% and will
mature on December 31, 1997. The interim financing draws on the line of credit
will be secured by one or more mortgages on certain of Legend's properties.
(f) RGI agrees to use its best efforts to assist Legend in
attempting to refinance the Morgens Loan and/or the SoGen Loans as soon as
practicable. If the refinancing of the Morgens and/or SoGen Loans is provided
by RGI it will be at the interest rates set forth in subsections (a) and (b)
above through the period ending September 30, 1999. If the refinancing of the
Morgens and/or SoGen Loans is provided by someone other than RGI, it shall be on
terms generally available in the market except that Legend
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shall pay interest at no more than Prime Rate plus 3.5% or the 30-day LIBOR
rate plus 3.0%, through the period ending September 30, 1999. Nothing herein,
however, shall require RGI to refinance either the Morgens or SoGen Loans upon
their maturity.
(g) RGI agrees to invest up to $300,000 to purchase Legend shares
from Legend at $11.72 per share. Legend agrees to use the proceeds of this RGI
investment to implement an open market share repurchase program through which it
will acquire, consistent with the limitations of the rules and regulations of
the Securities and Exchange Commission, up to $300,000 in Legend shares during
the twelve months from the date of this Stipulation.
(h) Defendants agree that Plaintiffs, Plaintiffs' counsel and the
pendency of prosecution of this Action substantially and materially contributed
to the emergence of the Apollo and Beal proposals for the acquisition of Banyan
described in recitals H, L and R above, and to Banyan's making available to its
shareholders the additional information contained in the Supplement.
3. IMPLEMENTATION AND SCHEDULING
(a) As soon as practicable after execution of this Stipulation, the
parties shall jointly apply to the Court for the approval of the Settlement and
for entry of an Order substantially in the same form annexed as Exhibit A
hereto, providing, inter alia, for the mailing of an individual Notice in
substantially the form of Exhibit B hereto to members of the Class, and Notice
by Publication in the national edition of the Investors' Business Daily in
substantially the form of Exhibit D hereto. Legend shall pay the costs of
printing and mailing the individual Notice, which costs Plaintiffs' counsel
shall reimburse
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to Legend from any fees and expenses the Court awards them pursuant to paragraph
7 below. The Notice by Publication shall be paid for by RGI.
(b) The parties agree to cooperate in the prompt submission of this
Stipulation to the Court, to take all steps that may be required by the Court
and otherwise to use their best efforts to consummate this Settlement and to
obtain the entry of a Final Judgment.
(c) If the Court approves the Settlement following the hearing
contemplated by Exhibit A hereto, the parties shall jointly request the Court to
enter an Order and Final Judgment substantially in the form of Exhibit C hereto.
4. EFFECTIVE DATE
The Settlement shall not become effective until the date upon which
each and all of the following conditions have been satisfied (the "Effective
Date"), unless one or more of the conditions is waived in writing signed by the
parties waiving such conditions.
(a) the entry of an Order for Notice and Hearing in substantially
the form of Exhibit A hereto;
(b) the approval by the Court of the Settlement embodied herein,
following notice to members of the Class and a fairness hearing;
(c) the entry of an Order and Final Judgment in substantially the
form of Exhibit C hereto or as otherwise agreed to by counsel for the parties;
(d) the final judgment to which paragraph 4(c) refers shall have
become final, in that it is no longer subject to review, either by the
expiration of the time
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for appeals therefore without an appeal having been taken or, if an appeal is
taken, by the determination of the appeal by the highest court to which such
appeal may be taken, in such manner as to permit the consummation of the
Settlement embodied herein in accordance with the terms and conditions of this
Stipulation. Provided, however, an appeal or review relating solely to
Plaintiffs' counsel's fees or expenses shall not be cause to delay the Effective
Date.
5. LEGAL OPINION
RGI has received a form of legal opinion satisfactory to RGI that as a
result of the Settlement of the Action the effectiveness of the Merger is not
impaired.
6. EFFECT OF DISAPPROVAL, CANCELLATION OR TERMINATION
In the event that the Court does not approve the settlement set forth
herein or, for any other reason, an Effective Date does not occur then (i) this
Stipulation shall become null and void and of no force and effect, except that
Legend shall not be entitled to reimbursement of costs of mailing notice, (ii)
this Action will proceed on the basis of the Complaint; however, Defendants
shall have the right to withdraw their Answer to the Complaint and file such
motions as they individually or collectively deem appropriate and necessary, and
all negotiations and proceedings relating to this Stipulation shall be without
prejudice to the rights of all parties hereto, who shall be restored to their
respective positions existing immediately prior to the execution of this
Stipulation.
7. RELEASES
(a) Upon the Effective Date, the Plaintiffs and all Class Members,
on behalf of themselves, their heirs, executors and administrators, successors
and assigns
- 17 -
<PAGE> 19
and any person(s) they represent, for good and sufficient consideration, shall
be deemed to have remised, released and forever discharged the Defendants, their
respective present and former agents, predecessors, servants, employees,
officers, directors, heirs, executors, representatives, successors and assigns,
including their attorneys, accountants, consultants, appraisers and actuaries
from each, every and all Settled Claims.
(b) Upon the Effective Date, defendants and their present
and former agents, predecessors, servants, employees, officers and directors
shall be deemed to have remised, released and forever discharged each of the
Plaintiffs and their attorneys from any and all claims, rights and causes of
action arising out of or relating to any acts, conduct, facts or transactions
arising out of or relating to the Merger, Plaintiffs' efforts to oppose the
Merger, and/or the pendency and conduct of the Action.
(c) Upon the Effective Date, each Defendant, on behalf of
themselves, their heirs, executors and administrators, successors and assigns
and any person(s) they represent, for good and sufficient consideration, shall
be deemed to have remised, released and forever discharged each of the other
Defendants, their respective present and former agents, predecessors, servants,
employees, officers, directors, heirs, executors, representatives, successors
and assigns, including their attorneys, accountants, consultants, appraisers and
actuaries from each, every and all Settled Claims.
(d) With respect to any and all Settled Claims, the parties
stipulate and agree that, upon the Effective Date, the Plaintiffs and the Class
shall be deemed to
- 18 -
<PAGE> 20
have, and by operation of the judgment shall have, expressly waived and
relinquished, to the fullest extent permitted by law, the provisions, rights,
and/or any similar provisions of law, and benefits of section 1542 of the
California Civil Code, which provides:
A general release does not extend to claims
which the creditor does not know or suspect
to exist in his favor at the time of executing
the release, which if known by him must have
materially affected his settlement with the debtor.
(e) With respect to any and all Settled Claims, each of the
Plaintiffs and the Class, upon the Effective Date, shall be deemed to have, and
by operation of the judgment shall have, waived any and all provisions, rights
and benefits conferred by any law of any state or territory of the United
States, or principle of common law, that is similar, comparable or equivalent to
section 1542 of the California Civil Code. One or more of the Plaintiffs and
Class may hereafter discover facts in addition to or different from those which
he, she or it now knows or believes to be true with respect to the subject
matter of the Settled Claims, but each Plaintiff and Class Member, upon the
Effective Date, shall be deemed to have, and by operation of the Judgment shall
have, fully, finally and forever settled and released any and all Settled
Claims, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether or not concealed or hidden, that now exist or heretofore
have existed upon any theory of law or equity now existing or coming into
existence in the future, including, but not limited to, conduct that is
negligent, intentional, with or without malice, or a breach of any duty, law or
rule, without regard to the subsequent discovery or existence of such different
or additional facts.
8. ATTORNEYS' FEES AND EXPENSES
- 19 -
<PAGE> 21
If the Court approves the Settlement, Plaintiffs' attorneys will apply
to the Court for an allowance of fees and expenses incurred in the prosecution
of the Action in an amount not to exceed $495,000. Defendants agree that they
will not object to the application and, subject to approval by the Court, Legend
will pay such a fee and expense allowance provided (a) it does not exceed
$495,000, (b) no more than $400,000 shall be payable within ten (10) days of the
Effective Date, with any additional sum to be payable on or before December 31,
1997, and (c) costs of Notice for which paragraph 3(a) provides may be deducted
from the amount payable within ten (10) days of the Effective Date. Payment of
the attorney fees and expenses approved by the Court shall be made to Burt &
Pucillo, who shall be responsible for their disbursement to other Plaintiffs'
counsel. RGI guarantees Legend's obligation for the payment of Plaintiffs
counsel's fees and expenses if Legend is unable to or fails to make the payments
provided by this Stipulation. Defendants shall not otherwise be liable to
Plaintiffs or their attorneys or other agents for any fees, expenses or
disbursements in connection with this Action.
9. NO ADMISSION OF WRONGDOING
This Stipulation, whether or not consummated, and any proceedings
taken pursuant to it:
(a) shall not be offered or received against the Defendants as
evidence of or construed as or deemed to be evidence of any presumption,
concession, or admission by any of the Defendants of the truth of any fact
alleged by Plaintiffs or the validity of any claim that had been or could have
been asserted in the Action or in any litigation, or the deficiency of any
defense that has been or could have been asserted in
- 20 -
<PAGE> 22
the Action or in any litigation, or of any liability, negligence, fault, or
wrongdoing of Defendants;
(b) shall not be offered or received against the Defendants as
evidence of a presumption, concession or admission of any fault,
misrepresentation or omission with respect to any statement or written document
approved or made by any Defendant, or against the Plaintiffs and the Class as
evidence of any infirmity in the claims of Plaintiffs and the Class;
(c) shall not be offered or received against the Defendants as
evidence of a presumption, concession or admission of any liability, negligence,
fault or wrongdoing, or in any way referred to for any other reason as against
any of the parties to this Stipulation, in any other civil, criminal or
administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of this Stipulation; provided, however,
that if this Stipulation is approved by the Court, Defendants may refer to it to
effectuate the liability protection granted them hereunder; and
(d) shall not be construed against the Defendants or the
Plaintiffs and the Class as an admission or concession that the consideration to
be given hereunder represents the amount which could be or would have been
recovered after trial.
10. MISCELLANEOUS
(a) This Stipulation shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, assigns,
executors, administrators, heirs, and legal representatives; provided, however,
that no assignment by any party
- 21 -
<PAGE> 23
hereto shall operate to relieve such party hereto of its obligations hereunder
and shall not be permitted without the prior written consent of all the other
parties.
(b) This Stipulation may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(c) This Stipulation, and the exhibits hereto, constitute the
sole and entire agreement among the parties hereto with respect to the subject
matter hereof and no representations, warranties, inducements, promises, or
agreements oral or otherwise not embodied or incorporated herein have been made
concerning or in connection with this Stipulation, or the exhibits hereto. Any
and all prior discussions, negotiations, agreements, commitments and
understandings relating thereto, are superseded hereby and merged herein.
(d) The terms or provisions of this Stipulation may not be
changed, waived, modified or varied in any manner whatsoever unless in writing
duly signed by all parties. The provisions of this Stipulation (including any
time periods specified herein) may be modified by written agreement of all of
the parties with the consent of the Court without further notice to the Class
unless the Court requires such notice.
(e) Any failure by any party to insist upon the strict
performance by any other party of any of the provisions of this Stipulation
shall not be deemed a waiver of any of the provisions hereof, and such party,
notwithstanding such failure, shall have the right thereafter to insist upon the
strict performance of any and all of the provisions of this Stipulation to be
performed by such other party.
- 22 -
<PAGE> 24
(f) The captions contained in this Stipulation are inserted
only as a matter of convenience and in no way define, limit, extend or describe
the scope of this agreement or the intent of any provision hereof.
(g) This Stipulation including, but not limited to, the
releases contained herein, shall be governed by, and construed in accordance
with the laws of the State of Delaware, without regard to its conflict of laws
principles.
(h) This Stipulation shall not be construed more strictly
against one party than another merely by virtue of the fact that it may have
been prepared by counsel for one of the parties, it being recognized that,
because of the arm's-length negotiations described above, all parties hereto
have contributed substantially and materially to the preparation of this
Stipulation.
(i) All personal pronouns used in this Settlement Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders, and the singular shall include the plural and vice versa.
(j) Each of the attorneys executing this Stipulation on behalf
of one or more of the parties hereto warrants and represents that he or she has
been duly authorized and empowered to execute this Stipulation on behalf of the
indicated party.
(k) The administration and consummation of the Settlement as
embodied in this Stipulation and all final decisions on disputed questions of
law and fact shall be under the authority of the Court.
(l) All agreements or Court orders concerning the
confidentiality of information and/or documents exchanged to date, or the
discussions leading up to this
- 23 -
<PAGE> 25
settlement, shall survive the execution of this Stipulation subject to Court of
Chancery Rule 5(g).
Dated: April 15, 1997
ROSENTHAL, MONHAIT, GROSS & GODDESS, PA.
By:
_____________________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiffs
OF COUNSEL:
Michael J. Pucillo
BURT & PUCILLO
222 Lakeview Avenue
Suite 300 East
West Palm Beach, FL 33401
(516) 835-9400
Lynda Grant
Kenneth McCallion
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017-5563
PRICKETT, JONES, ELLIOTT, KRISTOL & SCHNEE
By: _____________________________________
1310 King Street
P.O. Box 1328
Wilmington, DE 19899
(302) 888-6519
Attorneys for Defendants Legend, Auch,
Ungerleider and RGI
- 24 -
<PAGE> 26
OF COUNSEL:
Allan T. Slagel
SHEFSKY & FROELICH LTD.
444 North Michigan Avenue
Chicago, IL 60611
(312) 527-4000
Attorneys for the Defendants
Legend, Auch and Ungerleider
Marc P. Cherno
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
One New York Plaza
New York, NY 10004
(212) 859-8020
Attorneys for Defendant RGI
- 25 -
<PAGE> 1
EXHIBIT 10.2
<PAGE> 2
(SOCIETE GENERALE)
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement ("Agreement") is entered into
as of _____________, 1997 between RGI Holdings, Inc. a Washington corporation
("Lender"), VMIF/Anden Wayside Venture, an Illinois general partnership
("Borrower"), and VMIF/Anden Southbridge Venture, an Illinois general
partnership ("Obligor").
Recitals
A. At the request of Borrower and Obligor, Lender agreed to
modify the Loan Documents as provided in the Loan Modification Agreement dated
as of May 21, 1996 ("First Loan Modification"). Capitalized terms used herein
and not defined herein shall have the meanings set forth in the First Loan
Modification.
B. Borrower and Obligor have now requested that Lender further
modify the Loan Documents to, among other things, reduce the interest rate on
the Loan, defer certain interest payments, and forbear from taking certain
action against Borrower and Obligor for certain periods of time.
C. Lender is willing to modify the Loan Documents on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth
below, Lender, Borrower, and Obligor agree to the following:
1. Reaffirmation of Obligations Under Loan Documents. Borrower
and Obligor reaffirm all of their respective obligations under the Loan
Documents. Borrower and Obligor acknowledge and confirm that Borrower is
justly indebted to Lender under the Loan Documents and that the amounts owed by
Borrower to Lender under the Loan Agreement and Note are as set forth on
Exhibit A attached hereto.
2. Reduction in Interest Rate. Subject to the fulfillment of the
conditions precedent set forth in Section 5 hereof, Lender agrees to reduce the
interest rate on the Loan, effective as of January 1, 1997, from the Prime Rate
(as defined in Section 8(b) of the First Loan Modification) plus six percent
(6%) to the lesser of (a) the Prime Rate plus two percent (2%) or (b) Libor
Rate (as defined below) plus two and one-half percent (2.5%). The "Libor
Rate" means the one-month London Interbank Offered Rate as published in the
Wall Street Journal by Dow Jones & Company, Inc.
<PAGE> 3
3. Deferral of Interest Payments. Subject to the prior
fulfillment of the conditions precedent set forth in Section 5 hereof, Lender
agrees that all interest payments due on the Loan from and after January 1,
1997 shall be deferred until the earlier of (a) December 31, 1997, (b) the date
on which Borrower refinances the Loan, or (c) the date on which Borrower has
funds available from other sources (such as the sale of certain properties) to
pay accrued interest on the Loan.
4. Forbearance with Respect to Defaults. Subject to the prior
fulfillment of the conditions precedent set forth in Section 5 hereof, Lender
covenants and agrees that from the date hereof until December 31, 1997, for any
and all Events of Default under the Loan Documents as of the date hereof, and
for any event or circumstance which, with the passage of time or the giving of
notice or both, would have constituted an Event of Default under the Loan
Documents as of the date hereof:
a. Lender shall not accelerate the Loan; and
b. Lender shall not attach, sequester, foreclose,
replevin or otherwise initiate any action against Borrower or Obligor
or any of their respective assets or properties.
5. Conditions Precedent. Lender's obligations under this
Agreement are subject to the prior fulfillment of the following conditions
precedent:
a. This Agreement shall have been duly executed and
delivered by Lender, Borrower and Obligor.
b. The Effective Date shall have occurred under Section
4 of the Stipulation and Agreement of Settlement signed in connection
with the class action litigation against Legend Properties, Inc.
("Legend") in Delaware relating to the merger of RGI U.S. Holdings,
Inc. and Legend, and Lender shall have received a legal opinion
satisfactory to it in form and substance confirming that the
effectiveness of said merger can no longer be challenged by the
shareholders of Legend or any other party.
c. Lender shall have received certified copies of (i)
the corporate and/or partnership resolutions authorizing Borrower and
Obligor to enter into and perform this Agreement, (ii) an incumbency
certificate for the person signing this Agreement and related
documents on behalf of Borrower and Obligor, and (iii) such other
statements, certificates, documents, amendments and information with
respect to the matters contemplated by this Agreement and the Loan
Documents as Lender may reasonably request.
2
<PAGE> 4
6. Covenants of Borrower and Obligor. In consideration for
Lender's agreement to enter into this Agreement, Borrower and Obligor covenant
and agree that:
a. Borrower and Obligor shall comply with the terms and
conditions of this Agreement and shall make commercially reasonable
efforts to continue to comply with all of their obligations under the
Loan Documents, as modified by this Agreement.
b. Borrower shall pay all of the costs and expenses
reasonably incurred by Lender in connection with the preparation of
this Agreement and all documents delivered in connection herewith,
including the costs and expenses of counsel to Lender.
c. Borrower and Obligor shall from time to time at their
expense execute such additional documents as are reasonably requested
by Lender (and Fokus Bank ASA, to whom Lender has assigned the Note
and related security documents as collateral for a loan made by Fokus
Bank ASA to Lender) to protect Lender's and Fokus Bank ASA's interest
in all collateral, whether now held or hereafter acquired.
7. Waiver of Defenses. Borrower and Obligor hereby waive and
release any and all defenses they may have with respect to any of the Loan
Documents or any obligations owing thereunder based on or otherwise relating to
any events or circumstances which occurred or existed on or prior to the date
hereof, and hereby release and forever discharge Lender, and its officers,
directors, fiduciaries, agents and employees, from every claim, demand or cause
of action whatsoever, of every kind and nature, whether presently known or
unknown, suspected or unsuspected, arising or alleged to have arisen or which
shall arise hereafter from any act, omission or condition which occurred or
existed on or prior to the Effective Date. Borrower and Obligor expressly waive
any right to setoff any claim, if any, against Lender against any sum owed or
to be owed by Borrower or Obligor under any Loan Document.
8. Representations and Warranties of Borrower and Obligor.
a. Borrower and Obligor acknowledge that the concepts
embodied in this Agreement have been independently negotiated with
Lender by each of Borrower and Obligor, at all times represented by
counsel of Borrower's and Obligor's own choosing, and that this
Agreement is satisfactory to and in the best interests of Borrower and
Obligor, and that Borrower and Obligor have actively requested that
Lender enter into this Agreement.
3
<PAGE> 5
b. Borrower and Obligor hereby represent and warrant
that the execution, delivery and performance of this Agreement have
been duly authorized, and that when executed and delivered by Borrower
and Obligor this Agreement shall constitute a valid and binding
obligation of Borrower and Obligor, enforceable against them in
accordance with its terms, except as the enforceability thereof may be
affected by bankruptcy, insolvency, moratorium, fraudulent transfer
and other similar laws affecting the rights and remedies of creditors
generally.
c. Borrower and Obligor hereby further represent and
warrant that their respective partnership agreements, as well as the
articles of incorporation and bylaws of their respective general
partners, have not been amended or modified since the date the Loan
Agreement was signed.
9. Loan Documents Remain in Effect; References to Loan Documents.
Except as expressly amended by this Agreement, the Loan Agreement, Note, and
Security Documents shall remain in full force and effect. Lender, Borrower,
and Obligor agree that all references to the Loan Agreement in any of the Loan
Documents or any other agreements between Lender and Borrower shall mean the
Loan Agreement as amended by this Agreement.
10. Miscellaneous.
a. Modification. This Agreement may not be modified in
any manner except by written agreement signed by all of the parties
hereto.
b. No Waiver. No course of dealings heretofore or
hereafter among Borrower, Obligor and Lender or any failure on the
part of Lender in exercising any rights or remedies under this
Agreement or any existing by law shall operate as a waiver of any
right or remedy of Lender with respect to any obligations owed to it,
and no single or partial exercise of any right or remedy hereunder
shall operate as a waiver or a preclusion to the exercise of any other
rights or remedies that Lender may have under any other document.
c. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision and
the remaining provisions of this Agreement.
4
<PAGE> 6
d. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York,
excluding its conflict of law rules.
e. Agents, Successors, and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their
agents, successors and assigns.
f. Counterparts. This Agreement may be executed in any
number of counterparts and shall be a valid and binding agreement when
all parties execute the original or a counterpart.
EXECUTED as of the date set forth above.
BORROWER: VMIF/ANDEN WAYSIDE VENTURE, an Illinois
general partnership
By: LPI WAYSIDE L.P., an Illinois
limited partnership, general
partner
By: LPI WAYSIDE CORP., an
Illinois corporation, general
partner
By: _________________________
Printed Name: _______________
Title: ______________________
By: LPI WAYSIDE CORP., an
Illinois corporation, general
partner
By: ______________________________
Printed Name: ____________________
Title: ___________________________
Address:
c/o Legend Properties, Inc.
1420 Fifth Avenue, Suite 4200
Seattle, Washington 98101-2333
Telephone: 206-464-0123
Facsimile: 206-464-0800
OBLIGOR: VMIF/ANDEN SOUTHBRIDGE VENTURE, an
Illinois general partnership
By: LPI SOUTHBRIDGE L.P., an Illinois
limited partnership, general
partner
5
<PAGE> 7
By: LPI SOUTHBRIDGE CORP., a
Delaware corporation, general
partner
By: _________________________
Printed Name: _______________
Title: ______________________
By: LPI SOUTHBRIDGE CORP., a Delaware
corporation, general partner
By: _____________________________
Printed Name: ____________________
Title: ___________________________
Address:
c/o Legend Properties, Inc.
1420 Fifth Avenue, Suite 4200
Seattle, Washington 98101-2333
Telephone: 206-464-0123
Facsimile: 206-464-0800
LENDER: RGI HOLDINGS, INC., a Washington
corporation
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
Address:
1420 Fifth Avenue, 42nd Floor
Seattle, Washington 98101-2333
Telephone: 206-464-0200
Telecopy: 206-448-0404
With a copy to:
Davis Wright Tremaine
1501 Fourth Avenue
2600 Century Square
Seattle, Washington 98101-1688
Attention: Richard M. Rawson
Telephone: 206-628-7746
Telecopy: 206-628-7699
6
<PAGE> 8
EXHIBIT A
Amounts owed by Borrower as of December 31, 1996:
Principal balance as of 12/31/96: $6,391,084
Accrued interest as of 12/31/96: $619,803
7
<PAGE> 1
EXHIBIT 10.3
<PAGE> 2
(MORGENS)
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement ("Agreement") is entered into as of
_____________, 1997 between RGI HOLDINGS, INC., a Washington corporation
("Lender"), LEGEND PROPERTIES, INC., a Delaware corporation ("Borrower"), and
the affiliates and subsidiaries of Borrower identified on the signature pages of
this Agreement (the "Obligors").
Recitals
A. At the request of Borrower and Obligors, Lender agreed to modify the
Loan Documents as provided in the Loan Modification Agreement dated as of May
21, 1996 ("First Loan Modification"). Capitalized terms used herein and not
defined herein shall have the meanings set forth in the First Loan Modification.
B. Borrower and Obligors have now requested that Lender further modify
the Loan Documents to, among other things, reduce the interest rate on the Loan,
defer certain interest payments, and forbear from taking certain action against
Borrower and Obligors for certain periods of time.
C. Lender is willing to modify the Loan Documents on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth below,
Lender, Borrower, and Obligors agree to the following:
1. Reaffirmation of Obligations Under Loan Documents. Borrower and
Obligors reaffirm all of their respective obligations under the Loan Documents.
Borrower and Obligors acknowledge and confirm that Borrower is justly indebted
to Lender under the Loan Documents and that the amounts owed by Borrower to
Lender under the Loan Agreement and Note are as set forth on Exhibit A attached
hereto.
2. Reduction in Interest Rate. Subject to the fulfillment of the
conditions precedent set forth in Section 6 hereof, Lender agrees to reduce the
interest rate on the Loan, effective as of January 1, 1997, from the Prime Rate
(as defined in Section 7(i) of the First Loan Modification) plus two percent
(2%) to the lesser of (a) the Prime Rate plus two percent (2%) or (b) Libor Rate
(as defined below) plus two and one-half percent (2.5%). The "Libor Rate" means
the one-month London Interbank Offered Rate as published in the Wall Street
Journal by Dow Jones & Company, Inc.
<PAGE> 3
3. Deferral of Interest Payments. Subject to the prior fulfillment of
the conditions precedent set forth in Section 6 hereof, Lender agrees that all
interest payments due on the Loan from and after January 1, 1997 shall be
deferred until the earlier of (a) December 31, 1997, (b) the date on which
Borrower refinances the Loan, or (c) the date on which Borrower has funds
available from other sources (such as the sale of certain properties) to pay
accrued interest on the Loan.
4. Use of Sale Proceeds from Lynnwood Shopping Center. Subject to the
prior fulfillment of the conditions precedent set forth in Section 6 hereof, the
definition of "NON-DEVELOPMENT PROPERTY," as set forth in Section 7(i) of the
First Loan Modification, is amended by deleting the second sentence relating to
the Lynnwood Shopping Center. It is the intent of the parties that
notwithstanding the provisions of subsections (a) and (b) of Section 2.4(B)(ii)
of the Credit Agreement, as modified by Section 7(g) of the First Loan
Modification, the proceeds from the sale of the Lynnwood Shopping Center are not
required to be paid to Lender and instead may be retained by Borrower and used
for other purposes.
5. Forbearance with Respect to Defaults. Subject to the prior
fulfillment of the conditions precedent set forth in Section 6 hereof, Lender
covenants and agrees that from the date hereof until December 31, 1997, for any
and all Events of Default or Potential Events of Default under the Loan
Documents as of the date hereof:
a. Lender shall not accelerate the Loan; and
b. Lender shall not attach, sequester, foreclose, replevin or
otherwise initiate any action against Borrower or Obligors or any of their
respective assets or properties.
6. Conditions Precedent. Lender's obligations under this Agreement are
subject to the prior fulfillment of the following conditions precedent:
a. This Agreement shall have been duly executed and delivered by
Lender, Borrower and Obligors.
b. The Effective Date shall have occurred under Section 4 of the
Stipulation and Agreement of Settlement signed in connection with the class
action litigation against Borrower in Delaware relating to the merger of
RGI U.S. Holdings, Inc. and Borrower, and Lender shall have received a
legal opinion satisfactory to it in form and substance confirming that the
effectiveness of said merger can no longer be challenged by the
shareholders of Borrower or any other party.
2
<PAGE> 4
c. Lender shall have received certified copies of (i) the corporate
and/or partnership resolutions authorizing Borrower and Obligors to enter
into and perform this Agreement, (ii) an incumbency certificate for the
person signing this Agreement and related documents on behalf of Borrower
and Obligors, and (iii) such other statements, certificates, documents,
amendments and information with respect to the matters contemplated by this
Agreement and the Loan Documents as Lender may reasonably request.
7. Covenants of Borrower and Obligors. In consideration for Lender's
agreement to enter into this Agreement, Borrower and Obligors covenant and agree
that:
a. Borrower and Obligors shall comply with the terms and conditions
of this Agreement and shall make commercially reasonable efforts to
continue to comply with all of their obligations under the Loan Documents,
as modified by this Agreement.
b. Borrower shall pay all of the costs and expenses reasonably
incurred by Lender in connection with the preparation of this Agreement and
all documents delivered in connection herewith, including the costs and
expenses of counsel to Lender.
c. Borrower and Obligors shall from time to time at their expense
execute such additional documents as are reasonably requested by Lender
(and Fokus Bank ASA, to whom Lender has assigned the Note and related
security documents as collateral for a loan made by Fokus Bank ASA to
Lender) to protect Lender's and Fokus Bank ASA's interest in all
collateral, whether now held or hereafter acquired.
8. Waiver of Defenses. Borrower and Obligors hereby waive and release
any and all defenses they may have with respect to any of the Loan Documents or
any obligations owing thereunder based on or otherwise relating to any events or
circumstances which occurred or existed on or prior to the date hereof, and
hereby release and forever discharge Lender, and its officers, directors,
fiduciaries, agents and employees, from every claim, demand or cause of action
whatsoever, of every kind and nature, whether presently known or unknown,
suspected or unsuspected, arising or alleged to have arisen or which shall arise
hereafter from any act, omission or condition which occurred or existed on or
prior to the date hereof. Borrower and Obligors expressly waive any right to
setoff any claim, if any, against Lender against any sum owed or to be owed by
Borrower or Obligors under any Loan Document.
3
<PAGE> 5
9. Representations and Warranties of Borrower and Obligors.
a. Borrower and Obligors acknowledge that the concepts embodied
in this Agreement have been independently negotiated with Lender by
Borrower and Obligors, at all times represented by counsel of Borrower's
and Obligors' own choosing, and that this Agreement is satisfactory to and
in the best interests of Borrower and Obligors, and that Borrower and
Obligors have actively requested that Lender enter into this Agreement.
b. Borrower and Obligors hereby represent and warrant that the
execution, delivery and performance of this Agreement have been duly
authorized, and that when executed and delivered by Borrower and Obligors
this Agreement shall constitute a valid and binding obligation of Borrower
and Obligors, enforceable against them in accordance with its terms, except
as the enforceability thereof may be affected by bankruptcy, insolvency,
moratorium, fraudulent transfer and other similar laws affecting the rights
and remedies of creditors generally.
c. Borrower and Obligors hereby further represent and warrant that
the amounts set forth in Exhibit A hereto are true and correct as of the
date hereof, and they hereby agree to indemnify, defend and hold Lender
harmless from and against any and all claims, losses, damages, costs or
expenses which Lender may incur arising out of or relating to any errors or
inaccuracies in such Schedules.
d. Borrower and Obligors hereby further represent and warrant that
their articles of incorporation, bylaws, and/or partnership agreements, as
the case may be, as well as the articles of incorporation and bylaws of
their respective general partners (as applicable), have not been amended or
modified since the date the Credit Agreement was signed.
10. Loan Documents Remain in Effect; References to Loan Documents. Except
as expressly amended by this Agreement, the Credit Agreement and all other Loan
Documents shall remain in full force and effect. In addition, Lender, Borrower,
and Obligors agree that all references to the Credit Agreement in any of the
Loan Documents or any other agreements between Lender and Borrower shall mean
the Credit Agreement, as amended by the First Loan Modification and this
Agreement.
11. Miscellaneous.
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a. Modification. This Agreement may not be modified in any manner
except by written agreement signed by all of the parties hereto.
b. No Waiver. No course of dealings heretofore or hereafter among
Borrower, Obligors and Lender or any failure on the part of Lender in
exercising any rights or remedies under this Agreement or any existing by
law shall operate as a waiver of any right or remedy of Lender with respect
to any obligations owed to them, and no single or partial exercise of any
right or remedy hereunder shall operate as a waiver or a preclusion to the
exercise of any other rights or remedies that Lender may have under any
other document.
c. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision and the remaining provisions of this Agreement.
d. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, excluding
its conflict of law rules.
e. Agents, Successors, and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their agents, successors
and assigns.
f. Counterparts. This Agreement may be executed in any number of
counterparts and shall be a valid and binding agreement when all parties
execute the original or a counterpart.
EXECUTED as of the date set forth above.
BORROWER: LEGEND PROPERTIES, INC., a Delaware
Corporation
By: ____________________________
Printed Name: Raymond J. Whitty
Title: Treasurer
Address:
1420 Fifth Avenue, Suite 4200
Seattle, Washington 98101-2333
Telephone: 206-464-0123
Facsimile: 206-464-0800
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<PAGE> 7
OBLIGORS: VMIF/ANDEN SOUTHBRIDG VENTURE, an
Illinois joint venture
By LPI SOUTHBRIDGE CORP., its
managing general partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
BMIF MONTEREY COUNTY CORP.
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
VMIF/ANDEN WAYSIDE VENTURE, a general
partnership
By: LPI WAYSIDE CORP., managing
general partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI CHARLES COUNTY CORP.
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI CHARLES COUNTY L.P.
By: LPI CHARLES COUNTY CORP.,
general partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
6
<PAGE> 8
VMIF CHARLES COUNTY VENTURE, a general
partnership
By: LPI CHARLES COUNTY CORP.,
managing general partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI SOUTHBRIDGE CORP.
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI SOUTHBRIDGE L.P.
By: LPI SOUTHBRIDGE CORP., general
partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI WAYSIDE L.P.
By: LPI WAYSIDE CORP., general
partner
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
LPI WAYSIDE CORP.
By: Raymond J. Whitty (whose
signature appears below)
Title: Treasurer
By ____________________________________
RAYMOND J. WHITTY, for the
entitles and in the capacities
described above
7
<PAGE> 9
LENDER: RGI HOLDINGS, INC., a Washington corporation
By:_______________________________
Printed Name: Kenneth L. Uptain
Title: President
Address:
U.S. Bank Centre
1420 Fifth Avenue, 42nd Floor
Seattle, Washington 98101-2333
Telephone: 206-464-0200
Telecopy: 206-448-0404
With a copy to:
Davis Wright Tremaine
1501 Fourth Avenue
2600 Century Square
Seattle, Washington 98101-1688
Attention: Richard M. Rawson
Telephone: 206-628-7746
Telecopy: 206-628-7699
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EXHIBIT A
Amounts owed by Borrower as of December 31, 1996:
Outstanding Principal Balance as of 12/31/96: $24,258,788
Accrued and Unpaid interest as of 12/31/96: $1,070,045
9
