SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 17, 1997
COMMERCIAL ACQUISITIONS CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 33-30367-D 84-1099421
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
1514 15th Street, Second Floor, Denver, Colorado 80202-1304
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (303) 629-8777
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 17, 1997, Commercial Acquisitions Corporation ("Company") acquired
a commercial building located at 1325 East 16th Avenue, Denver, Colorado 80218
("Building") as an investment property. The Building, built in the 1960's,
contains approximately 8,000 square feet on nearly 18,000 square feet of land.
The Building was acquired from its primary tenant, Dr. Richard W. Metcalfe, DDS,
who has conducted his dental practice in the Building for over 25 years. Dr.
Metcalfe will continue to remain a tenant in the Building under a ten year lease
with the Company ("Lease"), which Lease was signed by Dr. Metcalfe in his
corporate and personal capacities. Prior to the acquisition, Dr. Metcalfe had no
material relationship with the Company, any director or officer of the Company
or any associate of any such director or officer.
The Company will receive $4,500 per month in rent from Dr. Metcalfe under
the Lease, with annual increases in rent in years 6 through 10 based upon the
Metro Denver Consumer Price Index. Dr. Metcalfe is responsible for all taxes,
insurance, maintenance and utilities of the Building under the Lease.
The Company acquired the Building for $465,000.00, which was funded by a
first mortgage from Colorado Community First National Bank in the amount of
$335,000 ("Mortgage") and by the issuance of preferred stock in the Company in
the amount of $144,650. The Mortgage accrues interest at a fixed rate of 8.875%,
amortized over 20 years with a 5 year call provision. The Company's monthly
Mortgage payments are $2,987.00.
The preferred stock issued to acquire the Building is comprised of 144,650
shares of $0.0001 par value Series 1325 East 16th Avenue 9% Convertible
Cumulative Preferred Stock ("Series 1325 Preferred Stock"), representing all of
the authorized shares of Series 1325 Preferred Stock. The Series 1325 Preferred
Stock was issued at $1.00 per share. The holders of the Series 1325 Preferred
Stock have no voting rights and are not entitled to preemptive rights with
respect to the Series 1325 Preferred Stock. Dr. Metcalfe purchased 80,000 shares
of the Series 1325 Preferred Stock as part of the Building acquisition
transaction.
Each share of the Series 1325 Preferred Stock is entitled to receive
quarterly dividends at 9% per annum on the "rental income" received by the
Company from the Building. "Rental income" received from the Building is
determined from the net cash received as rental payments on the Building, less
any expenses relating to the Building. These dividends are cumulative.
On or after April 17, 1999, the board of directors of the Company may
redeem the Series 1325 Preferred Stock at $1.00 per share, plus accrued and
unpaid cumulative dividends. Between April 17, 1999 and April 17, 2002, each
share of the Series 1325 Preferred Stock is convertible, at the option of the
holder and subject to any prior redemption by the board of directors of the
Company, into one share of common stock at a price equal to 80% of the average
market price of the common stock (as determined by the Company's articles of
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incorporation, as amended) for the 30 days prior to the conversion. The
conversion price will be adjusted for various events, including stock splits,
combinations, certain dividends and distributions, reclassification, exchange or
substitution, reorganization, merger, consolidation or sales of assets.
In the event of a liquidation or dissolution of the Company, the Series
1325 Preferred Stock is entitled to preferential payment over the common stock
in an amount equal to $1.00 per share, plus any accrued and unpaid cumulative
dividends. The common stockholders are entitled to all remaining funds, if any.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the Company:
Item 7(a)(3) requires financial statements to be
filed for real estate properties acquired as specified by Rule
3-14 of Regulation S-X. The Company believes financial
statements are not required because: the Building was acquired
from an entity controlled by the primary tenant of the
Building and, therefore, there is no history of prior rental
revenues; the Company has a ten year Lease with this same
tenant, which will be the only rental income to be derived
from the Building; and the Lease is "triple-net" whereby the
tenant will pay all operating expenses of the Building.
(b) Pro forma financial information.
Item 7(b)(1) requires pro forma financial information
to be filed when required under Article 11 of Regulation S-X.
As stated above, financial statements of the Building are not
being filed. Therefore, pro forma financial information is not
required for this transaction. Annual revenue of the Building
will be $54,000, annual interest expense will be $30,000 and
annual depreciation based on a 30 year life will be $16,000.
There are no other revenues and expenses expected to be
incurred by the Company directly related to the Building in
the forthcoming year. The Company will also be required to pay
quarterly dividends related to preferred stock issued to
acquire the Building of up to $0.0225 per share or $13,000 per
year to the extent rental income is received on the Building,
and an imputed dividend of approximately $15,000 per year (for
two years) will also be recorded as a result of a favorable
conversion factor to the preferred stock.
(c) Exhibits.
(3.1) Articles of Amendment to the Articles of
Incorporation of Commercial Acquisitions Corporation,
filed with the Colorado Secretary of State on April
16, 1997.
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(3.2) Articles of Amendment to the Articles of
Incorporation of Commercial Acquisitions Corporation,
filed with the Colorado Secretary of State on June
10, 1997.
(10.1) Commercial Contract to Buy and Sell Real Estate dated
January 16, 1997 for the Building located at 1325
East 16th Avenue, Denver, Colorado 80218.
(10.2) Business Lease dated April 17, 1997 among Commercial
Acquisitions Corporation, as Lessor, Richard W.
Metcalfe, DDS, P.C. and Richard Metcalfe, individually,
as Lessee.
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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 hereunto duly authorized.
Date: August 15, 1997
COMMERCIAL ACQUISITIONS CORPORATION
/s/ David J. Clamage
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David J. Clamage, Chairman of the Board
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EXHIBIT INDEX
Exhibit Description Page No.
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3.1 Articles of Amendment to the Articles of Incorporation of
Commercial Acquisitions Corporation, filed with the
Colorado Secretary of State on April 16, 1997.
3.2 Articles of Amendment to the Articles of Incorporation of
Commercial Acquisitions Corporation, filed with the
Colorado Secretary of State on June 10, 1997.
10.1 Commercial Contract to Buy and Sell Real Estate dated
January 16, 1997 for the Building located at 1325 East 16th
Avenue, Denver, Colorado 80218.
10.2 Business Lease dated April 17, 1997 among Commercial
Acquisitions Corporation, as Lessor, Richard W. Metcalfe,
DDS, P.C. and Richard Metcalfe, individually, as Lessee.
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ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COMMERCIAL ACQUISITIONS CORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Commercial Acquisitions Corporation.
SECOND: The following amendments to the Articles of Incorporation were duly
adopted by the board of directors on April 10, 1997, in accordance with Section
7-106-102 of the Colorado Business Corporation Act.
Article Second of the Articles of Incorporation is hereby amended by adding
the following provisions:
137,500 shares of the corporation's preferred stock shall consist of Series
1325 East 16th Avenue 9% Convertible Cumulative Preferred Stock (hereinafter
referred to as "Series 1325 E. 16th Ave. Preferred Stock"). The rights,
preferences, privileges and restrictions imposed upon the Series 1325 E. 16th
Ave. Preferred Stock are as follows:
(a) Dividends; Right to Dividends. The Series 1325 E. 16th Ave.
Preferred Stock is entitled to receive, out of funds legally available therefor,
dividends at the quarterly rate of up to $0.0225 per share and no more, to the
extent that Rental Income, as defined below, is actually received by the
corporation on the corporation's property located at 1325 East 16th Avenue,
Denver, Colorado 80218 (the "Property"). Rental Income is defined as the net
cash received as rental payments on the Property, less any expenses relating to
the Property. Such dividend shall be paid in cash on or before the 90th day (the
"Dividend Payment Date") after the last day of the quarter with respect to which
such dividend shall be payable, which quarters shall begin on May 1, August 1,
November 1 and February 1 of each year (a "Dividend Period"), commencing May 1,
1997. If any dividends payable on any share of Series 1325 E. 16th Ave.
Preferred Stock shall not be paid for any reason, the right of the holder of
such share of Series 1325 E. 16th Ave. Preferred Stock to receive payment of
such dividend shall not lapse or terminate, but each such unpaid dividend (the
"Unpaid Dividends") shall accumulate and shall be paid without interest to such
holder to the extent that the Rental Income for those past Dividend Periods is
received by the corporation and on the Dividend Payment Date for the Dividend
Period when such past due Rental Income is actually received by the corporation.
In the event that only a portion of the Rental Income due to the corporation is
received by the corporation on the Property during any Dividend Period, holders
of shares of Series 1325 E. 16th Ave. Preferred Stock shall be entitled to
receive their pro rata share of dividends based upon the Rental Income actually
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received by the corporation during that Dividend Period. In the event that the
Property is sold, transferred, assigned or conveyed (a "Transfer") by the
corporation, the holders of shares of Series 1325 E. 16th Ave. Preferred Stock
shall not be entitled to any further dividends after the effective date of the
Transfer. The corporation's determination of Rental Income on the Property shall
be audited on an annual basis at the corporation's expense as part of the
corporation's fiscal year end audit by an independent certified public
accountant to determine that the corporation's determination of Rental Income
has been calculated in accordance with generally accepted accounting principals.
All such dividends shall accrue from the date of issuance whether or not earned
so that no dividends or other distributions shall be made by the corporation
with respect to the common stock, and no common stock shall be purchased or
redeemed by the corporation, unless and until all Unpaid Dividends on the Series
1325 E. 16th Ave. Preferred Stock for all past Dividend Periods and for the then
current Dividend Period shall have been declared and paid or set aside for
payment. After all Unpaid Dividends on the Series 1325 E. 16th Ave. Preferred
Stock for all past Dividend Periods and for the then current Dividend Period
shall have been declared and paid or set aside for payment, if the board of
directors shall declare dividends out of funds legally available therefor, such
additional dividends may be declared on the common stock.
(b) Liquidation and Dissolution. Upon the voluntary or involuntary
liquidation, winding up or dissolution of the corporation, out of the assets
available for distribution to shareholders whether such assets are capital,
surplus or earnings, each share of Series 1325 E. 16th Ave. Preferred Stock
shall be entitled to receive, in preference to any payment on the common stock
only, an amount equal to $1.00 per share, plus cumulative dividends as provided
in paragraph (a) of this Article Second accrued and unpaid to the date payment
is made available to the Series 1325 E. 16th Ave. Preferred Stock. After the
full preferential liquidation amount has been paid to, or determined and set
apart for, Series 1325 E. 16th Ave. Preferred Stock, the remaining assets shall
be payable to the holders of the common stock. In the event the assets of the
corporation are insufficient to pay the full preferential liquidation amount
required to be paid to the Series 1325 E. 16th Ave. Preferred Stock, the Series
1325 E. 16th Ave. Preferred Stock shall receive such funds pro rata on a share
for share basis until the full liquidating preference on the Series 1325 E. 16th
Ave. Preferred Stock is paid in full, and the balance, if any, shall then be
paid to the holders of common stock.
A reorganization shall not be considered to be a liquidation, winding up or
dissolution within the meaning of this paragraph (b) of this Article Second and
the Series 1325 E. 16th Ave. Preferred Stock shall be entitled only to the
rights provided in the plan of reorganization.
(c) Voting. Holders of shares of Series 1325 E. 16th Ave. Preferred
Stock shall not be entitled to voting rights on any matter other than upon those
matters set forth in Section 7-110-104 of the Colorado Business Corporation Act.
(d) Optional Redemption of Series 1325 E. 16th Ave. Preferred Stock.
On or after April 17, 1999, the Series 1325 E. 16th Ave. Preferred Stock is
subject to redemption out of funds legally available therefor in whole, or from
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time to time in part, at the option of the board of directors of the
corporation. If only a part of the shares of Series 1325 E. 16th Ave. Preferred
Stock is to be redeemed, the redemption shall be carried out pro rata subject to
adjustment to avoid redemption of fractional shares. The redemption price shall
be $1.00 per share of Series 1325 E. 16th Ave. Preferred Stock plus cumulative
dividends as provided in paragraph (a) of this Article Second accrued and unpaid
to the date fixed for redemption.
(i) Redemption Notice and Rights After Redemption. The
corporation shall mail a notice of redemption to each holder of record of shares
of Series 1325 E. 16th Ave. Preferred Stock to be redeemed addressed to the
holder at the address of such holder appearing on the books of the corporation
or given by the holder to the corporation for the purpose of notice, or if no
such address appears or is given, at the place where the principal executive
office of the corporation is located, not earlier than 60 nor later than 20 days
before the date fixed for redemption. The notice of redemption shall include (i)
the shares of Series 1325 E. 16th Ave. Preferred Stock to be redeemed, (ii) the
date fixed for redemption, (iii) the redemption price, (iv) the place at which
the shareholders may obtain payment of the redemption price upon surrender of
their share certificates, and (v) the last date prior to the date of redemption
that the right of conversion may be exercised, which is the close of business on
the day prior to the date fixed for redemption. If funds are available on the
date fixed for the redemption, then whether or not the share certificates are
surrendered for payment of the redemption price, the shares shall no longer be
outstanding and the holders thereof shall cease to be shareholders of the
corporation with respect to the shares of Series 1325 E. 16th Ave. Preferred
Stock redeemed on an after the date fixed for redemption and shall be entitled
only to receive the redemption price without interest upon surrender of the
share certificate. If less than all the shares of Series 1325 E. 16th Ave.
Preferred Stock represented by one share certificate are to be redeemed, the
corporation shall issue a new share certificate for the shares of Series 1325 E.
16th Ave. Preferred Stock not redeemed.
(ii) Redemption Trust Fund. If, on or prior to any date fixed for
redemption, the corporation deposits with any bank or trust company in Colorado
as a trust fund a sum sufficient to redeem, on the date fixed for redemption
thereof, the shares of Series 1325 E. 16th Ave. Preferred Stock called for
redemption, with irrevocable instructions and authority to the bank or trust
company to publish the notice of redemption thereof (or to complete such
publication if theretofore commenced) and to pay, on and after the date fixed
for redemption or prior thereto, the redemption price of the shares of Series
1325 E. 16th Ave. Preferred Stock to their respective holders upon the surrender
of their share certificates, then from and after the date of the deposit
(although prior to the date fixed for redemption) the shares of Series 1325 E.
16th Ave. Preferred Stock so called shall be redeemed and dividends on those
shares shall cease to accrue after the date fixed for redemption. The deposit
shall constitute full payment of the shares of Series 1325 E. 16th Ave.
Preferred Stock to their holders and from and after the date of the deposit the
shares of Series 1325 E. 16th Ave. Preferred Stock shall no longer be
outstanding and the holders thereof shall cease to be shareholders with respect
to such shares of Series 1325 E. 16th Ave. Preferred Stock and shall have no
rights with respect thereto except the right to receive from the bank or trust
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company payment of the redemption price of the shares of Series 1325 E. 16th
Ave. Preferred Stock without interest, upon surrender of their certificates
therefor and the right to convert the shares in accordance with paragraph (e) of
this Article Second. After 2 years, the bank or trust company shall return to
the corporation funds deposited and not claimed and thereafter the holder of a
share certificate for shares of Series 1325 E. 16th Ave. Preferred Stock
redeemed shall look to the corporation for payment.
(e) Conversion. The holders of Series 1325 E. 16th Ave. Preferred
Stock have the following conversion rights (the "Conversion Rights"):
(i) Right to Convert and Conversion Price. Each share of Series
1325 E. 16th Ave. Preferred Stock shall be convertible, at the option of the
holder thereof, at any time commencing April 17, 1999 and continuing through
April 17, 2002, subject to any prior redemption by the board of directors of the
corporation of such Series 1325 E. 16th Ave. Preferred Stock shares as provided
for in paragraph (d) of this Article Second. Each share of Series 1325 E. 16th
Ave. Preferred Stock shall be convertible at the office of the corporation or of
any transfer agent for such Series 1325 E. 16th Ave. Preferred Stock, as the
case may be, into one fully paid and nonassessable share of common stock at a
price equal to 80% of the average "Market Price," as defined in paragraph (g) of
this Article Second, of the common stock for the 30 days prior to the conversion
("Conversion Price"), as determined on the day before a notice of conversion is
provided to the corporation.
(ii) Mechanics of Conversion. Before any holder of shares of
Series 1325 E. 16th Ave. Preferred Stock shall be entitled to convert the same
into full shares of common stock pursuant to paragraph (e)(i) of this Article
Second, the holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the corporation or of any transfer agent for
such Series 1325 E. 16th Ave. Preferred Stock, as the case may be, and shall
give written notice to the corporation at such office that the holder elects to
convert the same and shall state therein the holder's name or the name or names
of the holder's nominees in which the holder wishes the certificate or
certificates for shares of common stock to be issued. The corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder,
or to the holder's nominee or nominees, a certificate or certificates for the
number of full shares of common stock to which the holder shall be entitled as
aforesaid. A conversion pursuant to paragraph (e)(i) of this Article Second
shall be deemed to have occurred immediately prior to the close of business on
the date of such surrender of the shares of Series 1325 E. 16th Ave. Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of common stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of common stock on such date.
Each holder of the Series 1325 E. 16th Ave. Preferred Stock who converts any
shares of the Series 1325 E. 16th Ave. Preferred Stock shall be entitled to, and
the corporation shall promptly pay in cash, or set aside for payment, all unpaid
dividends with respect to such converted shares of the Series 1325 E. 16th Ave.
Preferred Stock, whether or not earned or declared, to and including the time of
conversion. A holder of the Series 1325 E. 16th Ave. Preferred Stock who
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converts any shares of the Series 1325 E. 16th Ave. Preferred Stock shall not be
entitled to any remaining dividends with respect to the Series 1325 E. 16th Ave.
Preferred Stock so converted, but shall be entitled to receive, on the date of
the conversion, the arrearages, if any, with respect to any shares of the Series
1325 E. 16th Ave. Preferred Stock so converted.
(iii) Adjustments to Conversion Price.
(1) Special Definition. For purposes of this paragraph (e)(iii)
of this Article Second, the following definition shall apply:
"Original Issue Date" shall mean, the original date on which a
share of Series 1325 E. 16th Ave. Preferred Stock was first issued to each
preferred shareholder.
(2) Adjustment for Stock Splits and Combinations. If the
corporation shall at any time or from time to time after the Original Issue Date
applicable to Series 1325 E. 16th Ave. Preferred Stock effect a subdivision of
the outstanding common stock, the applicable Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased and,
conversely, if the corporation shall at any time or from time to time after the
Original Issue Date applicable to Series 1325 E. 16th Ave. Preferred Stock
combine the outstanding shares of common stock, the applicable Conversion Price
then in effect immediately before the combination shall be proportionately
increased. Any adjustments under this paragraph (e)(iii)(2) of this Article
Second shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(3) Adjustment for Certain Dividends and Distributions. In the
event the corporation at any time, or from time to time, after the Original
Issue Date applicable to Series 1325 E. 16th Ave. Preferred Stock shall make or
issue, or fix a record date for the determination of holders of common stock
entitled to receive, a dividend or other distribution payable in shares of
common stock, then and in each such event the applicable Conversion Price then
in effect shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business on such
record date, by multiplying the Conversion Price then in effect by a fraction:
a) the numerator of which shall be the total number of shares
of common stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
b) the denominator of which shall be the total number of
shares of common stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of common stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
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of business on such record date and thereafter such Conversion Price shall be
adjusted pursuant to this paragraph (e)(iii)(3) of this Article Second as of the
time of actual payment of such dividends or distributions.
(4) Adjustment for Other Dividend and Distributions. In the event
the corporation at any time or from time to time after the Original Issue Date
of Series 1325 E. 16th Ave. Preferred Stock shall make or issue, or fix a record
date for the determination of holders of common stock entitled to receive, a
dividend or other distribution payable in securities of the corporation other
than shares of common stock, then and in such event provisions shall be made so
that the holders of Series 1325 E. 16th Ave. Preferred Stock shall receive upon
conversion thereof, in addition to the number of shares of common stock
receivable thereupon, the amount of securities of the corporation which they
would have received had their Series 1325 E. 16th Ave. Preferred Stock been
converted into common stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities (together with any distributions payable thereon during
such period) receivable by them as aforesaid during such period, giving
application to all adjustments called for during such period under paragraph (e)
of this Article Second with respect to the rights of the holders of the Series
1325 E. 16th Ave. Preferred Stock.
(5) Adjustment for Reclassification, Exchange, or Substitution.
If the common stock issuable upon the conversion of the Series 1325 E. 16th Ave.
Preferred Stock at any time or from time to time after the Original Issue Date
applicable to Series 1325 E. 16th Ave. Preferred Stock, shall be changed into
the same or different number of shares of any class or classes of stock, whether
by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividends provided for in
paragraphs (e)(iii)(2) and (3) of this Article Second, or a reorganization,
merger, consolidation, or sale of assets provided for in paragraph (e)(iii)(6)
of this Article Second), then, and in each such event, provisions shall be made
(by adjustment to the Conversion Price or otherwise) so that the holder of each
share of Series 1325 E. 16th Ave. Preferred Stock shall have the right
thereafter to convert each share of Series 1325 E. 16th Ave. Preferred Stock
into the kind and amount of shares of stock and other securities receivable upon
such reorganization, reclassification, or other change, by holders of the number
of shares of common stock into which such share of Series 1325 E. 16th Ave.
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(6) Adjustment for Reorganization, Merger, Consolidation or Sales
of Assets. If at any time or from time to time after the Original Issue Date of
the Series 1325 E. 16th Ave. Preferred Stock there shall be a capital
reorganization of the corporation (other than a subdivision, combination,
reclassification, exchange or substitution of shares provided for in paragraphs
(e)(iii)(2) and (5) of this Article Second) or a merger or consolidation of the
corporation with or into another corporation, or the sale of all or
substantially all of the corporation's properties and assets to any other person
or entity, then, as a part of such reorganization, merger, consolidation, or
sale, provision shall be made (by adjustment to the Conversion Price or
otherwise) so that the holders of the Series 1325 E. 16th Ave. Preferred Stock
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shall thereafter be entitled to receive upon conversion of the Series 1325 E.
16th Ave. Preferred Stock, the number and kind of shares of stock or other
securities or property of the corporation, or of any successor corporation
resulting from such merger or consolidation or sale, to which a holder of common
stock deliverable upon conversion of such shares would have been entitled if
such capital reorganization, merger, consolidation, or sale occurred on the date
of the conversion.
(iv) No Impairment. The corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
paragraph (e) of this Article Second and in the taking of all such action as may
be necessary or appropriate, in order to protect the conversion rights of the
holders of the Series 1325 E. 16th Ave. Preferred Stock against impairment.
(v) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price or any other adjustment
pursuant to this paragraph (e) of this Article Second, the corporation at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of such Series 1325 E. 16th
Ave. Preferred Stock a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The corporation shall, upon the written request at any time of any holder
of such affected Series 1325 E. 16th Ave. Preferred Stock, furnish or cause to
be furnished to such holder a like certificate setting forth (i) such adjustment
and readjustment, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of common stock and the amount, if any, of other property which
at the time would be received upon the conversion of a share of such Series 1325
E. 16th Ave. Preferred Stock.
(vi) Notices of Record Date. In the event that:
a) the corporation shall set a record date for the purpose of
entitling the holders of its shares of common stock to receive a dividend, or
other distribution, payable otherwise than in cash;
b) the corporation shall set a record date for the purpose of
entitling the holders of its shares of common stock to subscribe for or purchase
any shares of any class or to receive any other rights;
c) there shall occur any capital reorganization of the corporation,
reclassification of the shares of the corporation (other than a subdivision or
combination of its outstanding common stock), consolidation or merger of the
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corporation with or into another corporation or conveyance of all or
substantially all of the assets of the corporation to another person or entity;
or
d) there shall occur a voluntary or involuntary dissolution,
liquidation or winding up of the corporation;
then, and in any such case, the corporation shall cause to be mailed
to the holders of record of the outstanding shares of the Series 1325 E. 16th
Ave. Preferred Stock, at least 15 days prior to the date hereinafter specified,
a notice stating (i) the date which (x) has been set as the record date for the
purpose of such dividend, distribution, or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or,
winding up is to take place and (ii) the record date as of which holders of
common stock of record shall be entitled to other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(vii) Notices. Any notice required by the provisions of this
paragraph (e) of this Article Second to be given to the holders of shares of
Series 1325 E. 16th Ave. Preferred Stock shall be in writing and shall be
delivered by personal service or agent, by telegraph or cable or sent by
registered or certified mail, return receipt requested, with postage thereon
fully prepaid. All such communications shall be addressed to each holder of
record at its address appearing on the books of the corporation. If sent by
telegraph or cable, a conformed copy of such telegraphic or cabled notice shall
promptly be sent by mail (in the manner provided above) to the holders. Service
of any such communication made only by mail shall be deemed complete on the date
of actual delivery as shown by the addressee's registry or certification receipt
or at the expiration of the fourth business day after the date of mailing,
whichever is earlier in time.
(viii) Fractional Shares. No fractional shares of common stock
shall be issued upon conversion of Series 1325 E. 16th Ave. Preferred Stock. ln
lieu of any fractional shares to which the holder would otherwise be entitled,
the corporation shall pay cash equal to the product of such fraction multiplied
by the Market Price of one share of the corporation's common stock on the date
of conversion.
(ix) Payment of Taxes. The corporation will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of common stock upon conversion
of shares of the Series 1325 E. 16th Ave. Preferred Stock, including without
limitation any tax or other charge imposed in connection with any transfer
involved in the issue and delivery of shares of common stock in a name other
than that in which the shares of the Series 1325 E. 16th Ave. Preferred Stock so
converted were registered.
8
<PAGE>
(x) Reservation of Common Stock. The corporation shall at all
times reserve and keep available, out of its authorized but unissued shares of
common stock, solely for the purpose of effecting the conversion of the Series
1325 E. 16th Ave. Preferred Stock, the full number of shares of common stock
deliverable upon the conversion of all shares of Series 1325 E. 16th Ave.
Preferred Stock from time to time outstanding. The corporation shall from time
to time increase the authorized number of shares of common stock if the
remaining unissued authorized shares of common stock shall not be sufficient to
permit the conversion of all of the Series 1325 E. 16th Ave. Preferred Stock at
the time outstanding.
(xi) Retirement of Series 1325 E. 16th Ave. Preferred Stock
Converted. No shares of Series 1325 E. 16th Ave. Preferred Stock that have been
converted shall ever again be reissued, and all such shares so converted shall,
upon such conversion, cease to be a part of the authorized shares of the
corporation.
(f) No Preemptive Rights. Except as provided in paragraph (e) of this
Article Second, no holder of the Series 1325 E. 16th Ave. Preferred Stock and
common stock shall be entitled as of right to subscribe for, purchase, or
receive any part of any new or additional shares of any class, whether now or
hereafter authorized, or of bonds, debentures, or other evidences of
indebtedness convertible into or exchangeable for shares of any class, but all
such new or additional shares of any class, or bonds, debentures, or other
evidences of indebtedness convertible into or exchangeable for shares, may be
issued and disposed of by the board of directors on such terms and for such
consideration (to the extent permitted by law), and to such person or persons as
the board of directors in their absolute discretion may deem advisable.
(g) Market Price. For the purpose hereof "Market Price" for the common
stock shall be:
(i) If the common stock is listed on the New York
Stock Exchange, the American Stock Exchange or such other securities
exchange designated by the board of directors, or admitted to unlisted
trading privileges on any such exchange, or if the common stock is
quoted on a National Association of Securities Dealers, Inc. system
that reports closing prices, the Market Price shall be the closing
price of the common stock as reported by the Wall Street Journal on the
day the Market Price is to be determined, or if no such price is
reported for such day, then the determination of such closing price
shall be as of the last immediately preceding day on which the closing
price is so reported; or
(ii) If the common stock is not so listed or admitted
to unlisted trading privileges or so quoted, the Market Price shall be
the average of the last reported highest bid and the lowest asked
prices quoted on the National Association of Securities Dealers, Inc.
9
<PAGE>
Automated Quotations System or, if not so quoted, then by the National
Quotation Bureau, Inc. on the day the Market Price is determined; or
(iii) If the common stock is not so listed or
admitted to unlisted trading privileges or so quoted, and bid and asked
prices are not reported, the Market Price shall be determined in such
reasonable manner as may be prescribed by the board of directors.
Dated: April 16, 1997
COMMERCIAL ACQUISITIONS CORPORATION,
a Colorado corporation
By: /s/ David J. Clamage
----------------------------------------
David J. Clamage, Chairman of the Board
10
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COMMERCIAL ACQUISITIONS CORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Commercial Acquisitions Corporation.
SECOND: The following amendment to the Articles of Incorporation was duly
adopted by the directors on June 6, 1997, in accordance with Section 7-106-102
of the Colorado Business Corporation Act.
The second paragraph of Article Second of the Articles of
Incorporation which begins by stating "137,500 shares of the corporation's
preferred stock shall consist of Series 1325 East 16th Avenue 9%
Convertible Cumulative Preferred Stock . . . " is amended by deleting the
figure 137,500 from the beginning of the sentence thereof and substituting
the figure 144,650 therefor.
Dated: June 6, 1997.
COMMERCIAL ACQUISITIONS CORPORATION,
a Colorado corporation
By: /s/ David J. Clamage
----------------------------------------
David J. Clamage, Chairman of the Board
The printed portions of this form, except (italiceed)
(differentiated) additions, have been approved by
the Colorado Real Estate Commission (CBS2-7-96)
KELLER WILLIAMS
R E A L T Y, LLC
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT
LEGAL AND TAX OR OTHER COUNSEL BEFORE SIGNING
Date January 16, 1997
1. PARTIES AND PROPERTY. Commercial Acquisitions Corporation and/or assiqns,
buyer(s) [Buyer] agrees to buy, and the undersigned seller(s) [Seller] agrees to
sell, on the terrns and conditions set forth in this contract, the following
described real estate in the County of Denver , Colorado, to wit:
Lots 16-19, Block 27, Park Avenue Addition, County of Denver, State of Colorado
known as No. 1325 East 16th Avenue Denver. CO 80218 (address)
together with all interest of Seller in vacated streets and alleys adjacent
thereto, all easements and other appurtenances thereto, all improvements thereon
and all attached fixtures thereon, except as herein excluded (co11ectively the
Property).
2. INCLUSIONS / EXCLUSIONS. The purchase price includes the following items (a)
if attached to the Property on the date of this contract: lighting, heating,
plumbing, ventilating, and air conditioning fixtures, TV antennas, water
softeners, smoke/ fire/ burglar alarms, security devices, inside telephone
wiring and connecting blocks/jacks, plants, mirrors, floor coverings, intercom
systems, built-in kitchen appliances, sprinkler systems and controls; (b) if on
the Property whether attached or not on the date of this contract: storm
windows, stormdoors, window and porch shades, awnings, blinds, screens, curtain
rods, drapery rods, all keys and (c) All personal and real property, excluding
trade fixtures, currentlv on premesis and used in the operations and/or
management of said real pronertv. The above-described included items
(Inclusions) are to be conveyed to Buyer by Seller by bill of sale at the
closing, free and clear of all taxes, liens and encumbrances, except as provided
in Section 12. The following attached fixtures are excluded from this sale: None
3. PURCHASE PRICE AND TERMS. The purchase price shall be $ 465,000.00, payable
in U.S. dollars by Buyer as follows: (Complete the applicable terms below.)
(a) EARNEST MONEY.
$5,000.00 in the form of a promissory note,as earnest money deposit and part
payment of the purchase price, payable to and held by Midtown Real Properties,
broker,in its trust accunt on behalf of both Seller and Buyer. Broker is
authorized to deliver the earnest money deposit to the closing agent, if any, at
or before closing.
The balance of $ 460,000.00 (purchase price less earnest money) shall be paid as
follows:
(b) CASH AT CLOSING.
$ 45,000.00 , plus closing costs, to be paid by Buyer at closing in funds which
comply with all applicable Colorado laws, which include cash, electronic
transfer funds, certified check, savings and loan teller's check, and cashier's
check (Good Funds). Subject to the provisions of Section 4, if the existing loan
balance at the time of closing shall be different from the loan balance in
Section 3, the adjustment shall be made in Good Funds at closing or paid as
follows: N/A.
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[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS2-9-95)]
(c) NEW LOAN.
$ 335,000.00 by Buyer obtaining a new loan.
This loan will be secured by a First deed of trust.
(1st, 2nd, etc.)
The loan shall be amortized over a period of 30 years at approximately $
2,695.49 per month including principal and interest not to exceed 9 % per annum,
plus, if required by Buyer's lender, a monthly deposit of 1/12 of the estimated
annual real estate taxes, property insurance premium, and mortgage insurance
premium. If the loan is an adjustable interest rate or graduated payment loan,
the monthly payments and interest rate initially shall not exceed the figures
set forth above.
Loan discount points, if any, shall be paid to lender at closing and shall
not exceed O % of the total loan amount. Notwithstanding the loan's interest
rate, the first O loan discount points shall be paid by N/A , and the balance,
if any, shall be paid by N/A .
Buyer shall timely pay a loan origination fee not to exceed 1 % of the loan
amount and Buyer's loan costs.
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4. FINANCING CONDITIONS AND OBLIGATIONS:
(a) LOAN APPLICATION(S). If Buyer is to pay all or part of the purchase
price as set forth in Section 3 by obtaining a new loan or if an existing loan
is not to be released at closing, Buyer, if required by such lender, shall make
written application within 10 calendar days from acceptance of this contract.
Buyer shall cooperate with Seller and lender to obtain loan approval, diligently
and timely pursue same in good faith, execute all documents and furnish all
information and documents required by the lender, and, subject to Section 3,
timely pay the costs of obtaining such loan or lender consent.
(b) LOAN APPROVAL. If Buyer is to pay all or part of the purchase price by
obtaining a new loan as specified in Section 3, this contract is conditional
upon lender's approval of the new loan on or before February 20, 1997. If not so
approved by said date, this contract shall terminate.
[Text here has been manually crossed out]
5. APPRAISAL PROVISION. (Check only one box.) This Section 5 [X] shall [ ]
shall not apply.
If this Section 5 applies, as indicated above, Buyer shall have the sole
option and election to terminate this contract if the purchase price exceeds the
Property's valuation determined by an appraiser engaged by Buyer's lender . The
contract shall terminate by the Buyer causing the Seller to receive written
notice of termination and a copy of such appraisal or written notice from lender
which confirms the Property's valuation is less than the purchase price, on or
before February 20, 1997 , (Appraisal Deadline). If Seller does not receive such
written notice of termination on or before the appraisal deadline, Buyer waives
any right to terminate under this section.
6. COST OF APPRAISAL. Cost of any appraisal to be obtained after to date of this
contract shall be timely paid by Buyer.
7. ASSIGNABLE. This contract shall be assignable by Buyer without Seller's prior
written consent. This contract shall inure to the benefit of and be binding upon
the heirs, personal represenatives, successors and assigns of the parties.
8. EVIDENCE OF TITLE. Seller shall furnish to Buyer, at Seller's expense, a
current commitment for owner's title insurance policy in an amount equal to the
purchase price on or before January 27, 1997 (Title Deadline). Buyer may require
of Seller that copies of instruments (or abstracts of instruments) listed in the
schedule of exceptions (Exceptions) in the title insurance commitment also be
furnished to Buyer at Seller's Expense. This requirement shall pertain only to
instruments shown of record in the office of the clerk and recorder of the
designated county or counties. The title insurance commitment, together with any
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[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS2-9-95)]
copies or abstracts of instruments furnished pursuant to this Section 8,
constitute the title documents (Title Documents). Buyer, or Buyer's designee,
must request Seller , in writing, to furnish copies or abstracts of instruments
listed in the schedule of exceptions no later than 7 calendar days after Title
Deadline. Seller will pay the premium at closing and have the title insurance
policy delivered to Buyer as soon as practicable after closing.
9. TITLE.
(a) TITLE REVIEW. Buyer shall have the right to inspect the Title
Documents. Written notice by Buyer of unmerchantability of title or of any other
unsatisfactory title condition shown by the Title Documents shall be signed by
or on behalf of Buyer and given to Seller on or before 7 calendar days after
Title Deadline, or with in five (5) calendar days after receipt by Buyer of any
Title Document(s) or endorsement(s) adding new Exceptions(s) to the title
commitment together with a copy of the Title Document adding new Exception(s) to
title. If Seller does not receive Buyer's notice by the date(s) specified above,
Buyer accepts the condition of title as disclosed by the Title Documents as
satisfactory.
(b) MATTERS NOT SHOWN BY THE PUBLIC RECORDS. Seller shall deliver to Buyer,
on or before the Title Deadline set forth in Section 8, true copies of all
lease(s) and survey(s) in Seller's possession pertaining to the Property and
shall disclose to Buyer all easements, liens or other title matters not shown by
the public records of which Seller has actual knowledge. Buyer shall have the
right to inspect the Property to determine if any third party(s) has any right
in the Property not shown by the public records (such as an unrecorded easement,
unrecorded lease, or boundary line discrepancy). Written notice of any
unsatisfactory condition(s) disclosed by Seller or revealed by such inspection
shall be signed by or on behalf of Buyer and givern to Seller on or before
January 27, 1997. If Seller does not receive Buyer's notice by said date, Buyer
accepts title subject to such rights, if any, of third parties of which Buyer
has actual knowledge.
(C) SPECIAL TAXING DISTRICTS. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO
GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL
TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN
SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND EXCESSIVE TAX
BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE
RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS
WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER SHOULD INVESTIGATE THE DEBT
FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION INDEBTEDNESS OF SUCH
DISTRICTS, EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS,
AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
In the event the Property is located with in a special taxing district and
Buyer desires to terminate this contract as a result, if written notice is given
to Seller on or before the date set forth in subsection 9(b), this contract
shall then terminate. If Seller does not receive Buyer's notice by the date
specified above, Buyer accepts the effect of the Property's inclusion in such
special taxing district(s) and waives the right to so terminate.
(d) RlGHT TO CURE. If Seller receives notice of unmerchantability of title
or any other unsatisfadory title condition(s) as provided in subsection (a) or
(b) above, Seller shall use reasonable effort to correct said unsatisfactory
title condition(s) prior to the date of closing. If Seller fails to correct said
unsatisfactory title condition(s) on or before the date of closing this contract
shall then terminate; provided, however,Buyer may, by written notice received by
Seller on or before closing, waive objection to said unsatisfactory title
condition(s).
10. INSPECTION. Buyer or any designee, shall have the right to have inspecton(s)
of the physical condition of the Property and Inclusions, at Buyer's expense. If
written notice of any unsatisfactory condition, signed by or on behalf of Buyer,
is not received by Seller on or before February 20, 1997 (Objection Deadline),
the physical condition of the Property and Inclusions shall be deemed to be
satisfactory to Buyer. If such notice is received by Seller as set forth above,
and if Buyer and Seller have not agreed, in writing, to a settlement thereof on
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[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS2-9-95)]
or before February 24, 1997 (Resolution Deadline), this contract shall terminate
three calendar days following the Resolution Deadline; unless, within tne three
calendar days, Seller receives written notice from Buyer waiving objection to
any unsatisfactory condition. Buyer is responsible for and shall pay for any
damage which occurs to tbe Property and Inclusions as a result of such
inspection.
11. DATE OF CLOSING. The date of closing shall be February 28, 1997, or by
mutual agreement at an earlier date. The hour and place of closing shall be as
designated by Midtown Real Properties.
12. TRANSFER OF TITLE. Subject to tender or payment at closing as required
herein and compliance by Buyer with the other terms and provisions hereof,
Seller shall execute and deliver a good and sufficient General Warrantv deed to
Buyer, on closing, conveying the Property free and clear of all taxes except the
general taxes for the year of closing, and except Denver Wa s te Water Tax .
Title shall be conveyed free and clear of all liens for special improvements
installed as of the date of Buyer's signature hereon, whether assessed or not;
except (i) distribution utility easements (including cable TV), (ii) those
matters reflected by the Title Documents accepted by Buyer in accordance with
subsection 9(a), (iii) those rights, if any, of third parties in the Property
not shown by the public records in accordance with subsection 9(b),(iv)
inclusion of the Property within any special taxing district, and (v)subject to
building and zoning regulations.
13. PAYMENT OF ENCUMBRANCES. Any encumbrance required to be paid shall be paid
at or before closing from the proceeds of this transaction or from any other
source.
14. CLOSING COSTS, DOCUMENTS AND SERVICES. Buyer and Seller shall pay, in Good
Funds, their respective closing costs and all other items required to be paid at
closing except as otherwise provided herein. Buyer and Seller shall sign and
complete all customary or required documents at or before closing. Fees for real
estate closing services shall not exceed $ 300 and shall be paid at closing by
1/2 Buyer and 1/2 Seller . The local transfer tax of O %of the purchase price
shall be paid at closing by N /A . Any sales and use tax that may accrue because
of this transaction shall be paid when due by -----------.
15. PRORATIONS. General taxes for the year of closing, based on the taxes for
the calendar year immediately preceding closing, rents, water and sewer charges,
owner's association dues, and interest on continuing loan(s), if any, and None
Other shall be prorated to date of closing.
16. POSSESSION. Possession of the Property shall be delivered to Buyer as
follows: Upon Deliverv Of Deed subject to the following lease(s) or tenancy(s):
10 year, NNN lease from seller to buver detailed in Paragragh 21. If Seller,
after closing, fails to deliver possession on the date herein specified, Seller
shall be subject to eviction and shall be additionally liable to Buyer for
payment of $1,000.00 per day from the date of agreed possession until possession
is delivered.
17. CONDITION OF AND DAMAGE TO PROPERTY. Except as otherwise provided in this
contract, the Property and Inclusions shall be delivered in the condition
existing as of the date of this contract, ordinary wear and tear excepted. In
the event the Property shall be damaged by fire or other casualty prior to time
of closing, in an amount of not more than ten percent of the total purchase
price, Seller shall be obligated to repair the same before the date of closing.
In the event such damage is not repaired within said time or if the damages
exceed such sum, this contract may be terminated at tbe option of Buyer. Should
Buyer elect to carry out this contract despite such damage, Buyer shall be
entitled to credit for all the insurance proceeds resulting from such damage to
the Property and Inclusions, not exceeding, however, the total purchase price.
Should any Inclusion(s) or service(s) fail or be damaged between the date of
this contract and the date of closing or the date of possession, which ever
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[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS2-9-95)]
shall be earlier, then Seller shall be liable for the repair or replacement of
such Inclusion(s) or service(s) with a unit of similar size, age end quality, or
an equivalent credit, less any insurance proceeds received by Buyer covering
such repair or replacement.
18. TIME OF ESSENCE/REMEDIES. Time is of the essence hereof. If any note or
check received as earnest money hereunder or any other payment due hereunder is
not paid, honored or tendered when due, or if any other obligation hereunder is
not performed or waived as herein provided, there shall be the following
remedies:
(a) IF BUYER IS IN DEFAULT:
[Check one box only]
[ ] (1) SPECIFlC PERFORMANCE. Seller may elect to treat this contract as
canceled, in which case all payments and things of value received hereunder
shall be forfeited and retained on behalf of Seller, and Seller may recover such
damages as may be proper, or Seller may elect to treat this contract as being in
full force and effect and Seller shall have the right to specific performance or
damages, or both.
[X] (2) LIQUIDATED DAMAGES. All payments and things of value received
hereunder shall be forfeited by Buyer and retained on behalf of Seller and both
parties shall thereafter be released from all obligations hereunder. It is
agreed that such payments and things of value are LIQUIDATED DAMAGES and (except
as provided in subsection (c)) are SELLER'S SOLE AND ONLY REMEDY for Buyer's
failure to perform the obligations of this contract. Seller expressly waives the
remedies of specific performance and additional damages.
(b) IF SELLER IS IN DEFAULT:
Buyer may elect to treat this contract as canceled, in which case all
payments and things of value received hereunder shall be returned and Buyer may
recover such damages as may be proper, or Buyer may elect to treat this contract
as being in full force and effect and Buyer shall have the right to specific
performance or damages, or both.
(c) COSTS AND EXPENSES. Anything to the contrary herein
notwithstanding in the event of any arbitration or litigation arising out of
this contract, the arbitrator or court shall award to the prevailing party all
reasonable costs and expenses, including attorney fees.
19. EARNEST MONEY DISPUTE. Notwithstanding any termination of this contract,
Buyer and Seller agree that, in the event of any controversy regarding the
earnest money and things of value held by broker or closing agent, unless mutual
written instructions are received by the holder of the earnest money and things
of value, broker or closing agent shall not be required to take any action but
may await any proceeding, or at broker's or closing agent's option and sole
discretion, may interplead all parties and deposit any moneys or things of value
into a court of competent jurisdiction and shall recover court costs and
reasonable attorney fees.
20. ALTERNATIVE DISPUTE RESOLUTION: MEDIATION. If a dispute arises relating to
this contract, and is not resolved, the parties and broker(s) involved in such
dispute (Disputants) shall first proceed in good faith to submit the matter to
mediation. The Disputants will jointly appoint an acceptable mediator and will
share equally in the cost of such mediation. In the event the entire dispute is
not resolved within thirty (30) calendar days from the date written notice
requesting mediation is sent by one Disputant to the other(s), the mediation,
unless otherwise agreed, shall terminate. This section shall not alter any date
in this contract, unless otherwise agreed.
21. ADDITIONAL PROVISlONS (The language of these additional provisions has not
been approved by the Colorado Real Estate Commission).
Re Paragraph 3a: The remaining balance, 80,000.00, of the purchase price,
shall be paid to Seller at closing in the form of Preferred Stock. The
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[The printed portions of this form, except (italicized) (differentiated)
additions, have been approved by the Colorado Real Estate Commission
(CBS2-9-95)]
Seller portion of preferred stock shall receive a periodic payment equal to
9% per annum, (interest only), on the face amount of the preferred stock.
Said preferred stock shall be "cumulative".
Re Paragraph 16: The above mentioned lease shall be for a term of ten
years, "NNN", inclusive of all interior, exterior, & shell maintenance to a
workmanlike standard and at the direction of the Landlord; and at a rental
rate of $4,500.00 per month. This lease shall be prepared for signature at
closing.
22. RECOMMENDATION OF LEGAL COUNSEL. By signing this document, Buyer and Seller
acknowledge that the Selling Company or the Listing Company has advised that
this document has important legal consequences and has recommended the
examination of title and consultation with legal and tax or other counsel before
signing this contract.
23. TERMINATION. In the event this contract is terminated, all payments and
things of value received hereunder shall be returned and the parties shall be
relieved of all obligations hereunder, subject to Section 19.
24. SELLING COMPANY BROKER RELATIONSHIP. The selling broker, Keller Williams
Realty, LLC, and its salespersons have been engaged as Buyer's Aqents. Selling
Company has previously disclosed in writing to the Buyer that different
relationships are available which include buyer ageny, seller agency,
subagency,or transaction broker.
25. NOTICE TO BUYER. Any notice to Buyer shall be effective when received by
Buyer, or, if this box is checked [ ] when received by Selling Company.
26. NOTICE TO SELLER. Any notice to Seller shall be effective when received by
Seller or Listing Company.
27. MODIFICATION OF THIS CONTRACT. No subsequent modification of any of the
terms of this contract shall be valid, binding upon the parties, or enforceable
unless made in writing and signed by the parties.
28. ENTIRE AGREEMENT. This contract constitutes the entire contract between the
parties relating to the subject hereof, and any prior agreements pertaining
thereto, whether oral or written, have been merged and integrated into this
contract.
29. NOTlCE OF ACCEPTANCE: COUNTERPARTS. This proposal shall expire unless
accepted in writing, by Buyer and Seller, as evidenced by their signatures
below, and the offering party receives notice of such acceptance on or before
January 20, 1997 (Acceptance Deadline). If accepted, this document shall become
a contract between Seller and Buyer. A copy of this document may be executed by
each party, separately, and when each party has executed a copy thereof, such
<PAGE>
copies taken together shall be deemed to be a full and complete contract between
the parties.
/s/ David J. Clamage
- ------------------------------------------- ----------------------------------
Buyer Commercial Acquisitions Corp. Buyer David J. Clamage, Chairman
Date of Buyer's signature Januarv 16, 1997 Date of Buyer's signature 01-16-97
Buyer's Address 1614 15th Street, 2nd Floor
- ------------------------------------------- ----------------------------------
Seller Richard W. Metcalfe, D.D.S., M.S. Seller
Date of Seller's signature Attached Addendums
Seller's Address 1325 East 16th Avenue
- --------------------------------------------------------------------------------
The undersigned Broker(s) acknowledges receipt of the earnest money deposit
specified in Section 3, and Selling Company confims its Broker Relationship as
set forth in Section 24.
Selling Company Keller Williams Realty Address 3200 Cherry Creek South Drive
By: /s/ Danny Shwayder Date January 16, 1997
------------------------------------
Danny Shwayder
Listing Company Midtown Real Properties Address 1723 Clarkson Street
By: /s/ Jack Kadelecek Date January 21, 1997
------------------------------------
Jack Kadelecek
/s/ David J. Clamage 01-16-97
- ---------------------------------------- --------------------------------------
Buyer Commercial Acquisitions Corp. Date Buyer David J. Clamage, Chairman Date
- ---------------------------------------------
Seller Richard W. Metcalfe, D.D.S., M.S. Date
<PAGE>
21. ADDITIONAL PROVISIONS (continued) The language of these additional
provisions has not been approved by the Colorado Reale Estate Commission).
Concerning the property known as:
1325 East 16th Avenue Denver, CO 80218
N/A as Appears in this contract shall mean "Not Applicable".
Attached Addendum shall become a part of this contract
Provided that the insurance is competitive in coverage and cost, purchaser
will insure property with Talty Insurance. Talty may require some form of
payment other than Seller escrow.
<PAGE>
This addendum has not been approved by the Colorado Real Estate Commission. It
was prepared by legal counsel for use by Keller Williams Realty, LLC.
Addendum
This document is an addendum to the Commercial Contract to Buy and Sell Real
Estate. The Contract dated January 16, 1997 by and between Richard W. Matcalfe,
D.D.S., M.S. as seller and Commercial Acquisitions Corporation and/or assigns as
purchaser, relating to that certain Real Property located at: 1325 E. 16th Ave.
Denver CO 80218.
In the event of any conflict between the terms of the printed portion of the
contract and the terms of this addendum the provisions of this addendum shall
control.
The following terms and conditions are added to and incorporated into the above
referenced Contract;
1. Inspection Contingency After receipt of items B, C, D, E,& F listed below,
Purchaser shall have 30 business days (the Objection Deadline) to review and
approve the following:
A. Physical inspection of the property, including all improvements
thereon:
B. All rental agreement, leases, service contracts, and all other written
contracts or agreements which affect the property.
C. Operations statements of the property for the last 36 calendar months
prior to the date hereof, including rent roll to determine the
currency of each tenants' rent payments.
D. All architectural renderings, blueprints and surveys recorded and
unrecorded, that are in seller's possession or available to seller.
E. Copies of all insurance policies currently in effect.
F. Inventory of all personal property owned by seller located on the
property and used in the management, operation, or maintenance of the
property.
Seller shall use its best efforts to provide Purchaser with said items B through
F or access to such items within 5 business days after the mutual execution of
this contract. Purchaser shall acknowledge, in writing, receipt of said items.
Delivery of such items to the agent shall constitute delivery to the purchaser.
Unless Purchaser removes all contingencies in writing on or before the Objection
Deadline; or if Purchaser gives notice to Seller if unsatisfactory conditions,
and if Buyer and Seller have not agreed in writing to a settlement thereof on or
before 5 days from the Objection Deadline (the Resolution Deadline), this
contract shall terminate three calendar days following the Resolution Deadline;
unless, within three calendar days, Seller receives written notice from
Purchaser waiving objection to all unsatisfactory conditions. If at that time
this contract is terminated, then the earnest money shall be returned to
Purchaser and Purchaser and Seller shall be excused from any further performance
under this agreement.
2. REMOVAL OF CONTINGENCIES Upon removal of all contingencies in writing by
Purchaser, however, in no event sooner than 45 days from the date of this
contract, the Five Thousand Dollar earnest money note shall be redeemed for cash
and deposited into an interest bearing escrow account with Title Company of
Listing Brokers choice and be non refundable to the Purchaser absent of default
by Seller and shall be considered, in the event of Purchaser default, as
liquidated damages. Any interest earned on the deposit monies prior to closing,
shall belong to the Party entitled to the principal amount of the earned money
deposit if the Purchaser has not defaulted.
<PAGE>
3. PROPERTY MAINTENANCE Seller warrants that he will maintain the property in
the same approximate condition that the property is in at the time of acceptance
of this contract and will not allow any substantial deterioration therefrom.
4. SURVEY Immediately following the waiver of contingencies Seller shall cause
the existing Improvement Location Certificate for the subject property to be
updated at Seller's expense, by a surveyor duly licensed by the State of
Colorado and delivered to Purchaser, or if no Improvement Location Certificate
exists, one will be prepared and delivered to Purchaser at Seller's expense.
5. ENVIRONMENTAL AUDIT The Seller acknowledges that (he/she/it) may be
responsible for conditions existing on the property prior to the closing and
prior to the conveyance of title to the Purchaser. The Purchaser acknowledges
that Keller Williams Realty, LLC has recommended and by this instrument does
recommend that the Purchaser obtain an Environmental Audit of the property by a
qualified company or entity before the removal of contingencies by the Purchaser
as herein provided.
6. BROKER DISCLAIMER [Responsibilities of Purchaser} The Broker has no means of
determining with any degree of accuracy, the operational history of the
Property. The Broker disclaims any representations made by any party of the
value of the Property, the probable operational costs of the Property, income to
be derived from the Property, if any; the status of the title of the Property,
the value of the Property, the tax consequences of the transaction to either
Purchaser or Seller, the zoning and use of the Property, or other items which
may effect the decision of either Purchaser of Seller to execute this contract
or to consummate the transaction contemplated by this agreement. Purchaser and
Seller Specifically agree to make their own physical inspection and examination
of the Property, make their own determination of the operational expenses of
the Property the legal and tax consequences of the transaction contemplated by
this agreement and any other determination which Purchaser or Seller might
determine necessary or prudent to a decision relating to the purchase or sale of
the Property. It is expressly understood by Purchaser that Keller Williams
Realty, LLC has not made any investigation or determination, other than
specifically expressed herein, with respect to the legality of the present,
contemplated or future uses of the Property; violations of any federal, state,
county, or municipal ordinances, statutes, zoning, tract restrictions, or
set-back ordinances; planned or proposed federal, state, county, or municipal
government or any other governmental agency plans for use of the property for
public or private purposes, the presence of lead-based paint; or the presence or
absence of fungi or wood destroying organisms; any circumstances or conditions
which a qualified Environmental Audit might disclose; or the correctness of
income and expense information, existence and text of leases, options or
party-wall agreements, if any, and Purchaser agrees that such investigation and
determination will be his sole responsibility and Keller Williams Realty, LLC
shall not be held responsible therefore.
7. RESPONSIBILITIES All parties acknowledge that they have not relied upon any
statements or representations made by the Real Estate agents concerning the
environmental, legal, tax, or financial consequences of this transaction. the
agents have recommended tat Seller and Purchaser obtain legal, tax, and
accounting advice from their respective attorneys and accountants and all
parties hereby agree not to hold its agents responsible or liable as to the
legal, tax, or financial consequences of this transaction.
Keller Williams Realty, LLC advises and recommends that all parties hereto
obtain legal counsel to represent them in connection with examination of title ,
the execution of this contract, and all other aspects relative to the
transaction contemplated hereby.
<PAGE>
8. COMMISSIONS Seller hereby agrees that it shall pay a 7% commission to Midtown
Real Properties and Keller Williams Realty, LLC in cash or certified funds at
closing in connection with this transaction. Said commission shall be split
50%-50% between Midtown Real Properties and Keller Williams Really, LLC.
9. PURCHASER'S ENTRY ON THE PROPERTY From and after the mutual execution of this
contract, Purchaser and its agents or designees may enter upon the property for
the purpose of making surveys and soil tests or otherwise inspecting and
investigating the property. Purchaser hereby agrees to indemnify and hold the
Seller harmless from any claims of any type and nature, including mechanics lien
claims which may be filed against the Property by reason of the performance of
any such acts and Purchaser will restore the property to the condition which
existed prior to the entry of the Purchaser on the Property.
10. NEXT BUSINESS DAY In the event any date described herein for payment or
performance of the provisions hereof, falls on a Saturday, Sunday, or legal
holiday, the time for such payment or performance shall be extended to the next
business day.
11. SURVIVAL Agreements, representations, covenants and warranties contained in
this agreement and any amendment or supplement hereto shall survive the closing
and delivery of deed hereunder and shall not be merged thereby.
12. REPRESENTATIONS AND WARRANTIES Seller hereby represents and warrants that as
of the date hereof, to the best of his, her, its, personal knowledge without
duty of further inquiry:
A. There is no litigation pending or threatened which in any manner
affects the property.
B. Seller has not received any notice of and has no other knowledge or
information of any pending or contemplated change in any applicable
law, ordinance, or restriction; or of any threatened or pending
judicial or administrative action; or any action threatened by
adjacent landowners which could result in any material change in the
condition of the property.
C. To the best of Sellers personal knowledge, there are no violations of
any Federal, State, or local law, code, ordinance, rule, regulation or
the requirement of any fire underwriters, board of fire underwriters
or board exercising similar functions.
D. To the best of Sellers personal knowledge, the property is currently
zoned so as to allow the existing use thereof.
E. Seller has the full right power, and authority to perform its
obligations hereunder.
F. Seller personally is aware of no condition affecting the soil or
subsurface portion of the property which could cause damage to or
impair the use of the property or any improvements constructed
thereon. The terms "personal knowledge" as used herein shall mean the
actual knowledge of an individual or the actual knowledge of a
President, General Partner, or Manager of an entity other than an
individual.
The representations and warranties herein stated shall be true on the date of
closing.
13. AGENCY RELATIONSHIP The Purchaser and Seller acknowledge that Keller
Williams Realty, LLC and its employees and agents are acting as Buyer Broker in
this transaction. Purchaser and Seller acknowledge timely verbal and written
disclosure of said agency relationship. Seller further acknowledges that two Of
<PAGE>
Commercial Acquisitions Corporation's officers and directors, David J.Clamage
and Kenneth R. Shwayder, are licensed by the Colorado Real Estate Commission.
Additionally, both Mr. Clamage and Mr. Ken Shwayder are officers and directors
of Commercial Acquisitions Corporation. Ken Shwayder & Danny Shwayder are father
and son and are cousins of Mr. Clamage. Mister's Shwayder will put one percent
of the Co-op fee into the same CAC preferred stock that seller is receiving as a
part of the purchase price hereof.
14. LEASES & SECURITY DEPOSITS At the time of closing, Seller shall provide the
Purchaser with a complete accounting for all security deposits made by tenants
occupying any part of the Property as Of that date, which accounting shall
reflect any deductions that Seller has made against any Deposits. The security
deposits and any interest accruing thereon shall be paid to or credited on the
settlement statement to Purchaser at closing and Purchaser will indemnify Seller
from any claims arising from wrongfully retaining or miss application of such
security deposits after they are in the possession of the Purchaser.
15. 1031 EXCHANGE COOPERATION Seller and Purchaser may complete an IRS 1031
Exchange at closing of this property. Both parties agree to cooperate with the
other party and the facilitator regarding any 1031 Exchange.
16. LEGAL ACTION If this Commercial Contract to Buy and Sell Real Estate gives
rise to any legal action or proceeding between Seller and Purchaser, or any
Broker, the prevailing party shall be entitled to recover actual costs and
reasonable attorney's fees in addition to any other relief to which such party,
may be entitled. The provisions of this paragraph shall inure to the benefit of
the parties, and their successors and assigns including the Brokers named herein
who seek to enforce a right hereunder.
Acceptance
The terms and conditions of this addendum as set forth hereinabove, are added to
and fully incorporated into the heretofore referenced Commercial Contract to Buy
and Sell Real Estate.
Agreed and Accepted: Purchaser
By /s/ David J. Clamage Date 01-16-97
---------------------------- ---------
Commercial Acquisitions Corporation, David J. Clamage, Chairman
Broker: Keller Williams Realty, LLC
By /s/ Danny Shwayder Date 1/16/97
---------------------------- --------
Ken and Danny Shwayder, Agents
Broker: Midtown Real Properties
By /s/ Jack Kadelecek Date 1/21/97
---------------------------- -------------
Jack Kadelecek
Agreed and Accepted: Seller
By Date
---------------------------- -------------
Richard W. Metcalfe D.D.S., M.S.
The Language contained in this addendum had been approved by legal counsel for
Keller Williams Realty, LLC.
<PAGE>
THIS FORM HAS IMPORTANT LEGAL CONSEQUENCES AND THE PARTIES SHOULD CONSULT LEGAL
AND TAX OR OTHER COUNSEL BEFORE SIGNING
COUNTERPROPOSAL
January 21, 1997
RE: Proposed contact to buy and sell the following described real estate in the
County of Denver, Colorado, to wit:
Lots 16-19 Inc, Block 27, Park Avenue Addition, County of Denver, State of
Colorado
known as No. 1325 East 16th Avenue Denver CO 80218
Street Address City State Zip
dated January 16, 1997 between
Richard W. Metcalfe, D.D.S., M.S.
Seller, and
Commercial Acquisitions Corporation and/or Assigns
Buyer.
The undersigned accepts the proposed contract, subject to the following
amendments.
1. Promissory note shall be converted to cash on Contract acceptance.
2. Paragraph 16. Possession as reads $1,000.00 per day shall be changed to
$200.00 per day.
3. Addendum Provision #2 shall be deleted.
4. Addendum Provisions 4 & 5 shall be changed to reflect "at Buyer's expense".
5. Add to Additional Provisions: "This contract shall be specifically contingent
on further negotiations and agreement between Buyer and Seller regarding
permanent financing of the purchase by January 28, 1997. Such agreement shall be
contained in an amendment to this contract.
6. It is agreed that Lots 14 and 15, Block 27, Park Avenue Addition, City and
County of Denver are excluded from this Contract.
7) Subject to title commitment verifying legal description.
8) Subject to purchasers review of last three year ending financial statements
and federal income tax returns of seller and tenant.
All other terms and conditions shall remain the same. This counterproposal
shall expire unless accepted in writing by Buyer and Seller as evidence by their
signatures below and the offering party to this document receives notice of such
acceptance on or before January 23, 1997. If accepted, the proposed contract, as
amended hereby, shall become a contract between Seller and Buyer.
SELLER /s/ Richard W. Metcalfe DATE 1/21/97
------------------------------------------------
Richard W. Metcalfe, D.D.S. M.S.
Commercial Acquisitions Corporation and/or Assigns
BUYER /s/ David J. Clamage DATE 1/22/97
-----------------------------------------------
By: David J. Clamage, Chairman
NOTE When this counterproposal form is used, the proposed contract is not to be
signed by the Party initiating this counterproposal. This counterproposal must
be securely attached to said proposed contract.
BUSINESS LEASE
THIS LEASE, made and entered into this 17th day of April, 1997,between
Commercial Acquisitions Corporation hereinafter called the "Lessor," and Richard
W. Metcalfe, DDS, PC and Richard W. Metcalfe, Individual, Jointly and Severally
and as Co-Lessees, hereinafter called the "Lessee;"
WITHNESSETH THAT:
1. Definition of Terms:
Whenever the words "Lessor" and "Lessee" are used this indenture,
they shall include Lessor and Lessee and shall apply to persons, both men
and women, companies, co-partnerships and corporations, and in reading said
indenture, the necessary grammatical changes required to make the
provisions hereof mean and apply as aforesaid shall be made in the same
manner as if written into said indenture.
2. Leased Premises:
In consideration of the payment of the rent hereinafter provided,
and the keeping and performance of each of the covenants and agreements of
the said Lessee hereinafter set forth, said Lessor has and does hereby
lease unto the said Lessee the following described premises, situate in the
City of Denver, County of Denver, and State of Colorado to wit: Lots 16
through 19; Block 27; the Park Avenue Addition of the City and County of
Denver, Colorado, aka 1325 East 16th Avenue; Denver, Colorado.
3. Term of Lease and Minimum Rent:
To have and to hold the same unto the said Lessee for a term of
Ten (10) years commencing at 12:00 o'clock noon on the 17th day of April,
1997 and expiring at 12:00 o'clock noon on the 30th day of April, 2007, for
the minimum rental for the full term aforesaid of the sum of Five hundred
and forty one thousand nine hundred and fifty ($541,950) Dollars payable in
monthly installments of Forty five hundred ($4,500) Dollars per month in
advance on or before 12:00 o'clock noon on the first day of each calendar
month during the said term at the office of Commercial Acquisitions
Corporation in care of P.O. Box 22699 Denver, CO. 80222-0699 or at such
other place as the Lessor may designate, from time to time, in writing.. A
prorated rent of Twenty one hundred dollars, ($2,100), shall be due for the
period of 17 April, 1997 through 30 April, 1997.
4. Security Deposit:
None
5. Lessee's General Agreement:
For and in consideration of the leasing of said premises
aforesaid, the Lessee does covenant and agree as follow, to-wit: To pay the
rent for said premised hereinabove provided promptly when due and payable;
to pay all assessments for water rents and sewer charges levied against
said premises and all charges for heating, cooling and lighting said
premises; to pay all charges for telephone installation; to keep all
improvements upon said premises, including all sewer connections, plumbing,
heating and cooling appliances, wiring and glass, in good order and repair
and to replace same as the need arises at the expense of said Lessee; to
order no repairs at the expense of the Lessor, and, at the expiration of
this lease, to surrender and deliver up said premises in as good order and
condition as when the same were entered upon, loss by fire, inevitable
<PAGE>
accident or ordinary wear excepted; to use said premises for no purposes
prohibited by the ordinances of the City of Denver or the County of Denver
or by the laws of the United States or the State of Colorado, now in force
or hereafter enacted; and for no improper or questionable purpose
whatsoever; to keep the sidewalks in front and surrounding said premises
free from all litter, dirt, debris, snow, ice, water and obstructions; to
keep said premises clean and in the sanitary condition required by the
ordinances and the health, sanitary and police regulations of the City of
Denver and/or County of Denver, or any other political subdivision having
jurisdiction over same; to keep the interior of the premises such as the
windows, floors, walls, doors, showcases and fixtures clean and neat in
appearance; to remove all trash and debris which may be found in or around
the leased premises; to neither permit nor suffer any disorderly conduct,
noise or nuisance about said premises having a tendency to annoy or disturb
any persons occupying adjacent premises, and to commit no waste on the
leased premises; to neither permit nor suffer said premises, or the wall or
floors thereof, to be endangered by overloading; to permit the Lessor to
place a For Rent card upon said premises at any time sixty (60) day before
the end of this lease; to surrender and deliver up the possession of said
premises promptly at the expiration of this lease, or, in case of
termination of this lease on account of breach in the keeping of any one or
more of the covenants or agreements hereof, upon three (3) days' notice.
6. Failure to Tenant to Maintain Premises:
If Lessee refuses or neglects to repair or maintain the premises,
as required hereunder, to the reasonable satisfaction of Lessor as soon as
reasonably possible after written demand, Lessor may make such repairs
without liability to Lessee for any loss or damage that may accrue to
Lessee's merchandise, fixtures or other property, or to Lessee's business
by reason thereof, and upon completion thereof, Lessee shall pay Lessor's
cost for making such repairs up presentation of a bill therefor.
7. Indemnity Agreements:
Lessee agrees to neither hold nor attempt to hold the Lessor
liable for any injury or damage, either proximate or remote, occurring
through or caused by any repairs, alterations, injury or accident to the
above described premises, to adjacent premises or other parts of the above
premises not herein demised, or by reason of the negligence or default of
the owners or occupants thereof, or any person, or liable for any injury or
damage occasioned by defective electric wiring, or the breaking, bursting,
stoppage or leaking resulting from freezing or otherwise hold harmless the
Lessor from all loss, expense, damage or injury to persons or property
arising from or occurring by reason of its occupation or use of the leased
premises, save and except only such losses or injuries arising or occurring
by any act or omission of the Lessor. The Lessor shall not be liable for
any damage to property of the Lessee or of others located on the leased
premises, nor for the loss of or damage to any property of Lessee or of
others by theft or otherwise. All property of Lessee kept or stored on the
leased premises shall be so kept or stored at the risk of Lessee only, and
Lessee shall hold Lessor harmless from any claims arising out of damage to
the same.
8. Repairs to the Premises:
Lessee agrees that all repairs to the structural walls and the
roof of said leased premises shall be its obligation, Lessee shall have the
duty or obligation to repair any damage caused by the Lessee or the
Lessee's employees. Lessee shall notify Lessor, in writing, of any repairs
or maintenance to said structural walls or of which may be required, and
Lessee shall have a reasonable time to make such repairs. Lessee agrees
that all other repairs to and maintenance of said premises, including but
not limited to interior walls, doors, glass and blacktop, shall be the
obligation and responsibility of the Lessee.
<PAGE>
9. Right of Entry, Changes and Additions to Building:
Lessor hereby expressly reserves the right, during normal business
hours, to enter onto the leased premises for the purpose of inspection,
repairs, alterations, improvements and additions to the leased premises or
the building of which it is a part; Lessor also expressly reserves the
right to add extensions or alterations to the existing building. Lessee
shall not, however, contract for or make any alterations, additions,
extensions or construction of any kind to the leased premises, unless
expressly approved by the Lessor in writing.
10. Character of Occupancy:
The leased premises shall be used and occupied only as Dental,
Medical or General Offices.
Insurance:
The Lessee further agrees to provide public liability insurance
with bodily injury limits of not less than $250,000.00 per person,
$500,000.00 per occurrence and property damage insurance with limits of not
less than $250,000.00 per occurrence, $500,000.00 per aggregate, written
with a company having a Best's key rating of A+ 4A+ and shall name Lessor
or its assigns under said insurance policy as additional insured. Lessee
shall furnish to Lessor a certificate of insurance indicating that said
policy is in full force and effect, that Lessor has been named as an
additional insured and that said policy will not be canceled unless ten
(10) days' prior written notice of the proposed cancellation has been given
to Lessor. Further, Lessee agrees to provide building insurance not less
than $425,000 in the event of any building loss; Loss Payee should be
proated to such amounts as any first mortgage lender and their interests
may, from time to time, appear; and, the balance to and for the benefit of
Commercial Acquisitions Corporation.
Signs:
No signs or advertisement shall be placed or printed upon the
outer walls, doors, windows, roof or land area of the demised premises,
except those signs and locations as the Lessor shall approve in writing
prior to installation. Those currently in place, as of the 6th day of
April, 1997, are approved by execution of this lease.
Replacement of Building:
In the event the demised premised or a portion thereof shall
become untenantable on account of damage by fire, act of God, or other
casualty, Lessor shall be given the option to correct the efficiency or
condition which shall render the premises untenantable. Within ten (10)
days after receipt of written notice from Lessee as the damage to the
property, Lessor shall notify Lessee in writing as to whether or not it
elects to repair the same. If, in the opinion of the Lessor, it is not
feasible to repair or rebuild the same, then, and in that event, the Lessor
shall have the right to terminate this lease. In the event Lessor elects to
repair said premises it shall have one hundred (100) days from the date of
its notice to Lessee to effect such repairs. During the period from
Lessor's receipt of notice from Lessee of damage to the demised premises
until said premises are restored to their prior condition and possession
thereof given to Lessee, the rent shall abate upon the portion of the
premises that is untenantable, except that if the premises become
untenantable due to the actions of the Lessee or its agents or employees,
the rent shall continue in full force and effect and shall not abate.
Lessor shall not in any case be liable for any loss of profits or income
occasioned to Lessee during such period. In the event said repair has not
been completed within the period specified, then Lessee may have the option
<PAGE>
to cancel the lease. If either the Lessor or the Lessee terminates this
lease as above provided in this paragraph, any monies due and owing to the
Lessor at that date shall be paid by the Lessee to the date that Lessee
vacates said premises, and all further obligations on the part of both
parties hereto shall cease and Lessor shall incur no obligation whatsoever
from the termination of said lease.
Holdover Agreement:
If, after the expiration of the term of this lease, Lessee shall
remain in possession of the demised premises and continue to pay rent
without any express written agreement as to such holding over, then such
holding over shall be deemed and taken to be a holding over upon a tenancy
from month to month at a monthly rental equivalent to the maximum rental
most recently charged, such payments to be made as hereinbefore provided.
In the event of such holding over, all the terms of the lease as herein set
out are to remain in full force and effect on said month to month basis.
Bankruptcy:
It is further agreed between the parties hereto that, if the Lessee shall
be declared insolvent or bankrupt, or if any assignment of the Lessee's
property shall be made for the benefit of the creditors or otherwise, or if
the Lessee's leasehold interest herein shall be levied upon under
execution., or seized by virtue of any wit of any court of law, or trustee
in bankruptcy, or a receiver by appointed for the property of the Lessee,
whether under operation of the state or the federal statues, then and in
any such case, the Lessor may, at its option, immediately, with or without
notice (notice being expressly waived), terminate this lease an immediately
take possession of said premises without the same working and forfeiture of
the obligations of the Lessee hereunder.
Subordination:
Lessee agrees that this lease is and shall be, at all times,
subject and subordinate to the lien of any mortgages which Lessor or its
assigns shall make covering said premises and to any and all advances to be
made thereunder and to the interest thereon; provided, however, that,
regardless of any default under any mortgages or any possession or sale of
said premises under such mortgages, so long as Lessee performs all
covenants and conditions of this lease and continues to pay rent to
whomsoever may be lawfully entitled to same, this lease and Lessee's
possession thereunder shall no be disturbed by the mortgagee or anyone
claiming under or through such mortgages. Lessee agrees to execute any and
all instruments in writing which may be required by Lessor to subordinate
Lessee rights to lien of such mortgages, subject to the terms of this
paragraph.
Financial Statements:
Within ten (10) days after written request has been made by
Lessor, Lessee (and the guarantor, if any) shall provide the Lessor with
the most recent financial statements as required by the Lessor in its
course of business dealing on the property of which the demised premises
are a part. The submittal of Financial Statements shall be requested no
more frequently than annually and shall be in substantively the same form
as was submitted by the Lessee to the Lessor with this lease.
Default of Tenant:
The Lessee further covenants and agrees that, if the rent above
reserved, or any part thereof, shall be in default, or in case of breach of
any of the covenants or agreements herein, Lessor may declare this lease
terminated, and after the expiration of 10, (Ten) days from the date of
<PAGE>
receipt of service of written notice to that effect, be entitled to the
possession of said premises, either by the expiration of this lease or by
any termination of said term as herein provided for. If the Lessee shall
refuse to surrender and deliver up the possession of said premises, or any
part thereof, and take possession thereof and repossess the same as of the
Lessor's former estate, and expel, remove and put out of possession the
Lessee, using such help, assistance and force in so doing as may be needful
and proper, without being liable for prosecution or damages therefor, and
without prejudice to any remedy allowed by law available in such cases.
This paragraph shall be supplemental to paragraph 4-(b).
Vacating During Term:
If the Lessee shall abandon or vacate the leased premised before
the end of the term of this lease, or shall suffer the rent to be in
arrears, the Lessor may at its option and without notice enter said
premises, remove any signs and property of the Lessee therefrom, and relet
the leased premises or any part hereof as it may see fit without such
retaking, voiding or termination this lease, and for the purposes of such
reletting, the Lessor is authorized to make any repairs or changes in or to
the leased premises, at the expense of the Lessee (which shall be payable
to the Lessor upon demand), as may be necessary or desirable for the
purpose of such reletting, and if a sum shall not be realized from such
reletting to equal the monthly rental reserved and stipulated herein to be
paid by the Lessee, the Lessee will pay such deficiency each month upon
demand therefor, and if suit is filed to collect any monies due from the
Lessee under this lease, reasonable attorney's fees shall be assessed as
part of the judgments.
Assignment and Subletting:
Lessee shall not assign or mortgage this lease in whole or in
part, nor sublet all or any part of the leased premises without the prior
written consent of the Lessor, and Lessor agrees that such consent will not
be unreasonable withheld. In the event the leased premises are sublet by
the Lessee, or this lease is assigned or mortgaged, the Lessee will remain
solely liable under the terms of this lease and shall not be released from
the performance of any of the terms, covenants and conditions contained
herein. Provided that there shall have been a sale of the business of the
tenant, (Dr. Richard W. Metcalfe, DDS, PC), such assignment shall be
permitted if (a) The credit worthiness of the new Lessee shall be equal to
or greater than the current credit worthiness of the existing Lessee; or,
(b) The current Lessee shall remain a guarantor for any and all obligations
of the new Lessee under the terms of this Lease. If (b) shall apply, the
Lessor agrees to review the credit worthiness of the new Lessee no more
frequently than annually and on the annual anniversary date of the Lease
and the existing Lessee shall have the right to request release of its
guaranty, but the Lessor shall have no obligation to do so in whole or in
part until such time as the credit worthiness of the new Lessee shall be
equal to or greater than the current credit worthiness of the existing
Lessee. Further, the terms and conditions of the existing sub-lease shall
be (a) Disclosed to the Lessor; and, (b) Assigned by this Lease to the
Lessor as additional collateral with the Lessors acknowledgment that,
absent any default by the Lessee, any rental income derived therefrom shall
be the property of the Lessee. And, any sublease of any space unused as of
this date is subject to the written approval of the Lessor and said
approval shall not be unreasonably withheld. Further, Lessor hereby
approves of the existing sublease by and between the Lessee and Dr. Daniel
W. Ray, DMD, MS and Lessee hereby assigns said lease to the Lessor in the
event of any uncured default of the Lessee and, with execution of this
lease shall provide the Lessor with written disclosure of the terms and
conditions of said sublease.
<PAGE>
Lien of Lessor:
None
Surrender of Possession:
Lessee agrees to deliver up and surrender to Lessor possession of
the leased premises, including all plumbing, wiring, sewer connections,
lighting fixtures, glass, fixtures, walls, ceilings, floors, and
appurtenances at the expiration or termination of this lease or any
extension hereof, by lapse of time or otherwise, in as good order and
condition as when possession was taken by the Lessee, excepting only
ordinary wear and tear or damage by the elements (occurring without the
fault of the Lessee or other persons permitted by the Lessee to occupy or
enter the leased premises, or any part thereof) or by act of God, or by
insurrection, riot, invasion or commotion, or of military or usurped power.
If the Lessee shall fail to remove any effects which they are entitled to
remove from said premises upon the termination of this lease, or any
extension hereof, for any cause whatsoever, the Lessor, at its option, may
remove the same and store or dispose of the said effects, without liability
for loss or damage thereto, and Lessee agrees to pay to Lessor on demand
any and all expenses incurred in such removal, including the cost of
removal of signs from the windows, making the premises including sidewalks,
courts or alleyway adjacent thereto, if any, free from all dirt, litter,
debris and obstruction, including court costs, attorney's fees, storage and
insurance charges on such effects for any length of time the same shall be
in the Lessor's possession; or the Lessor, at its option, without notice,
may sell such effects, or any of the, at private or public sale and without
legal process, for such price or consideration as the Lessor may obtain,
and apply the proceeds of such sale upon any amounts due under this lease
from the Lessee to the Lessor, and upon the expense incidental to the
removing, cleaning the premises, sell said effects, an other expenses,
rendering the surplus, if any, to the Lessee; provided, however, in the
event the process of such sale or sales are insufficient to reimburse the
Lessor, Lessee shall pay such deficiency upon demand.
Legal Costs and Expenses:
Lessee agrees to pay Lessor for all costs and expenses, including
a reasonable attorney's fee, in any court action brought by Lessor to
recover any rent due and unpaid under the terms hereof, or for the breach
of any of the terms and conditions herein contained, or to recover
possession of the leased premises, whether or not such court action or
actions shall proceed to judgment.
Notices:
All notices, demands, request or other instruments required in
this lease to be given by Lessee to Lessor shall be sent by certified or
registered mail to Lessor at P.O. Box 22699; Denver, Colorado 80222-0699.
All notices, demands, requests or other instruments required in this lease
to be given by Lessor to Lessee shall be sent certified or registered mail
to Lessee at 1325 E. 16th Avenue; Denver, Colorado 80218.
Mechanic's Lien:
The right of the Lessee, or any person claiming through or under
Lessee, to charge any mechanic or materialman's liens for labor or material
upon or against Lessor's interest in the demised premises is hereby
expressly denied.
<PAGE>
Condemnation of Leased Premises:
If the entire demised premises, at any time during the term of
this lease or any extension thereof, shall be taken by the exercise of a
power of eminent domain, this lease shall then terminate as of the date of
title vesting in such proceeding, all rentals shall be paid up to that
date, and Lessee shall have no claim against Lessor nor the condemning
authority for the value of the unexpired term of this lease.
In the event of a partial taking of the building or more than 25%
of the land area, which leaves the premises unfit for the normal and proper
conduct of the business of the Lessee, then the lessee shall have the right
to cancel and terminate this lease effective upon the actual partial
taking, all rentals shall be paid up to that date, and Lessee shall have no
claim against Lessor nor the condemning authority for the value of any
unexpired term of this lease. If this lease shall not be canceled as above
provided, it shall continue in effect and the rental after such partial
taking shall be that part of the rental herein agreed to be paid which the
value of the untaken part of the premises, immediately after the taking,
bears to the value of the entire demised premised immediately before the
taking. If the lessee's continued use of the premises requires alterations
and repairs by reason of a partial taking, the Lessor may elect to
terminate this lease within thirty (30) days after the actual taking; or
subject to Lessee's right of termination above provided, which must be
exercised in writing within thirty (30) days after such partial taking ,may
elect to continue it, in which event the Lessor shall make all necessary
alterations and repairs at its expense which are required because of such
partial taking. Until such alterations and repairs shall have been
completed, and equitable abatement of rent shall be made to Lessee for any
portion of the premises unfit for occupancy and use in the conduct of
Lessee's business for the period during which the same is unfit for such
occupancy and use.
In the event of any condemnation or taking as aforesaid, whether
whole or partial, Lessee shall not be entitled to any part of the award
paid for said condemnation; Lessor is to receive the full amount of such
award, Lessee hereby expressly waiving any right or claim to any part
thereof. Although all such damages awarded in the event of any condemnation
are to belong to the Lessor, whether such damages are awarded as
compensation for diminution value of the leasehold or to the fee of the
leased premises, Lessee shall have the right to claim and recover from the
condemning authority, but not from the Lessor, such compensation as may be
separately awarded or recoverable by Lessee in Lessee's own right on
account of any and all damage to Lessee's business by reason of the
condemnation and for or on account of any cost or loss to which Lessee
might be put in removing Lessee's merchandise, furniture, fixtures,
leasehold improvements and equipment.
Waiver:
The waiver by Lessor of any breach of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition on any subsequent breach of the same or any other
term, covenant or condition herein contained. The subsequent acceptance or
rent hereunder by Lessor shall not be deemed to be a waiver of any
preceding breach by Lessee of any term covenant or condition of the time of
the acceptance of such rent. No covenant, term or condition of this lease
shall be deemed to have been waived by the Lessor, unless such waiver be in
writing duly executed by the Lessor.
<PAGE>
Taxes and Fire and Hazard Insurance:
(a) Lessee shall have the option of (1) Paying the property taxes
when due and providing the Lessor with written evidence in a form
satisfactory to the Lessor that said taxes have been paid in a timely
manner; or (2) Paying the Lessor 1/12th of the taxes estimated by the
Lessor to become due in any subsequent year with each monthly payment. This
option must be elected on the 1st day of January of any year in writing by
the Lessee and by notice to the Lessor. If the Lessee shall fail to comply
with this provision and the Lessor shall advance any sum for the payment of
said taxation, this shall (i) Constitute a default of the Lessee; and, (ii)
Any funds advanced by the Lessor for said purposes, or for any other bona
fide obligation of the Lessee hereunder, shall accrue interest at the rate
of Eighteen percent, (18%), per annum with said interest due and payable by
the Lessee.
(b) Lessee shall insure the property for fire and extended
coverage in the amount of Four hundred and twenty five thousand dollars,
($425,000), as defined herein, i.e. form and terms of coverage, and with
such annual increases in value as may be determined by the greater of (1)
The Metro Denver Consumer Price Index; or, (2) An appraisal by a bona fide
real estate broker or appraiser with the cost of such appraisal born by the
Lessor.
(c) Upon the expiration of the existing coverage, which must meet
the terms and conditions defined herein, i.e. form and terms of coverage,
the Lessor may seek quotes for comparable coverage and, if said quotes are
comparable as to cost and coverage and insurer, the policy may be changed
at the sole discretion of the Lessee. The costs, if any, for seeking said
quotes shall be (1) At the sole costs and expense of the Lessor; (2) The
Lessor shall have no obligation to seek such quotes; and, (3) The Lessee
may seek such quotes at its sole cost and expense and submit same in
writing for approval by the Lessor.
Costs of All Building Areas; Components; Grounds and Facilities
In addition to the rental payable pursuant to paragraph 3 hereof
and in any other provision of this Lease, the Lessee shall pay any and all
costs of operating and maintaining all areas, building components - in
whole or in part - grounds and facilities, including without limitation all
parking areas, access roads, sidewalks, landscaped space and other space
used in or available to the building and property as defined herein..
Operating and maintaining such areas and facilities shall include without
limitation furnishing exterior and parking area lighting, cleaning, snow
removal, line painting, care of grass, shrubs and plants, payment of water
and sewerage charges and general maintenance of all areas and facilities
used in or available to the building and property as defined herein. The
repair or replacement of any portion of the building or the parking
facilities appurtenant thereto shall be included in such operation and
maintenance.
Additional Provisions:
The base or minimum rental as defined herein shall be in full
force and effect for the first Five, (5), year period of the lease term
plus the prorated period of 17 through 30 April, 1997. Thereafter, the base
or minimum monthly rental shall increase on the annual anniversary date of
the lease, by not less than 3.50%, (Three and 50/100's percent) per annum
and no greater than 5.50%, (Five and 50/100's percent), per annum as
determined by the Metro Denver Consumer Price Index, (CPI), as is available
from the Bureau of Labor Statistics or such other bona fide source of like
information. Further, this increase shall be in full force and effect as of
the annual anniversary date of the Lease and the prevailing CPI, i.e. that
which shall have been in effect the January 1st preceding the annual
<PAGE>
anniversary date of the lease. Any subsequent or holdover period shall be
increased by 5.5%, (Five and 50/100's percent), per annum as defined herein
unless there shall have been other terms agreed to in writing by the Lessor
and further, the Lessor is not obligated to any increase in lease term by
this agreement.
Successors and Assigns:
The obligations and rights under this lease shall be binding upon
and inure to the benefit of the heirs, administrators, executors,
successors and assigns of the parties; provided, however, that any
assignment or subletting by the Lessee in violation of the terms of this
lease shall not vest any rights whatsoever in the assignee or subtenant.
IN WITNESS WHEREOF, this lease is hereby executed the day and year
first above written.
ATTEST: Lessor: Commercial Acquisitions Corporation
---------------------------- -----------------------------------
Secretary
By: /s/ David J. Clamage
--------------------------------------
Title: Chairman
-----------------------------------
ATTEST: Kenneth R. Shwayder Lessee: /s/ Richard Metcalfe
---------------------------- -----------------------------------
Secretary
By: Richard W. Metcalfe, DDS, PC
--------------------------------------
Title:
-----------------------------------
<PAGE>
STATE OF COLORADO )
) ss
COUNTY OF ARAPAHOE )
The foregoing Business Lease was acknowledged before me this 16th day
of April, 1997, by Richard W. Metcalfe, individually and on behalf of Richard W.
Metcalfe, DDS, PC.
Witness my hand and official seal.
S E A L
My Commission expires July 31, 1999
/s/ Shirley Hendren
-----------------------------------
Notary Public
STATE OF COLORADO )
) ss
COUNTY OF ARAPAHOE )
The foregoing Business Lease was acknowledged before me this 17th day
of April, 1997, by David J. Clamage as Chairman of Commercial Acquisitions
Corporation.
Witness my hand and official seal.
S E A L
My Commission expires July 31, 1999
/s/ Shirley Hendren
-----------------------------------
Notary Public
