SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
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|x| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ______________
Commission File Number 1-11550
WELLSFORD RESIDENTIAL PROPERTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 13-3675988
(State of organization) (I.R.S. employer identification number)
610 Fifth Avenue, New York, NY 10020
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 333-2300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
Common Shares of Beneficial which registered
Interest, $.01 par value New York Stock Exchange
Series A Cumulative Convertible New York Stock Exchange
Preferred Shares of Beneficial
Interest, $.01 par value
Series B Cumulative New York Stock Exchange
Preferred Shares of Beneficial
Interest, $.01 par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. |x|
The aggregate market value of the voting shares held by non-affiliates of the
registrant was approximately $517.0 million based on the closing price on the
New York Stock Exchange for such shares on March 19, 1997.
The number of the Registrant's Common Shares of Beneficial Interest outstanding
was 17,233,143 as of March 19, 1997.
Documents Incorporated By Reference
None.
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<PAGE>
TABLE OF CONTENTS
Form
10-K
Item Report
No. Page
- ---- -------
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . .8
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 14
4. Submission of Matters to a Vote of Security-Holders. . . . 14
PART II
5. Market for Registrant's Common Equity, Preferred Equity
and Related Shareholder Matters . . . . . . . . . . . 15
6. Selected Consolidated Financial Data . . . . . . . . . . . 17
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 18
8. Consolidated Financial Statements and Supplementary Data . 28
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 28
PART III
10. Trustees and Executive Officers of the Registrant. . . . . 29
11. Executive Compensation . . . . . . . . . . . . . . . . . . 31
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . . . 34
13. Certain Relationships and Related Transactions . . . . . . 37
PART IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . 38
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . . .F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994. . . . . . . . . . .F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1996, 1995 and 1994. . .F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994. . . . . . . . . . .F-7
Notes to Consolidated Financial Statements . . . . . . . .F-8
FINANCIAL STATEMENTS SCHEDULE
III. Real Estate and Accumulated Depreciation . . . . . . . . .S-1
All other schedules have been omitted because the required information for such
other schedules is not present, is not present in amounts sufficient to require
submission of the schedule or is included in the consolidated financial
statements.
<PAGE>
PART I
Item 1. Business
Wellsford Residential Property Trust was organized on July 21, 1992 as a
Maryland real estate investment trust ("REIT") and had its initial public
offering on November 27, 1992 (the "IPO").
Wellsford Residential Property Trust and subsidiaries (the "Company") is
a fully-integrated and self-administered equity REIT which owns and operates
high quality multifamily communities located in the Southwest and Pacific
Northwest regions of the United States. The Company owns and operates 72
multifamily communities (the "Communities") containing 19,004 apartment units
with an aggregate historical cost of approximately $773 million.
The Company's mission is to maximize long-term profitability for its
shareholders by providing quality housing and exceptional service for its
residents. The Company attempts to achieve its mission by acquiring,
developing and operating multifamily communities in target markets, applying
sophisticated management and operating techniques, and maintaining a
conservative capital structure. The Company generally seeks to acquire or
develop high quality communities that contain many interior and exterior
amenities and are well located within major metropolitan markets.
On January 16, 1997, the Company entered into a definitive merger
agreement with Equity Residential Properties Trust ("EQR"). The merger is
expected to close during the second quarter of 1997. See "Item 1. Business -
Recent Developments".
Acquisition and Development Strategy. The Company attempts to purchase or
develop communities with physical and market characteristics similar to the
Communities. The Company generally will seek to acquire or develop multifamily
communities that are (i) no more than ten years of age at the time of
acquisition; (ii) well located in their markets; (iii) capable of enhanced
performance through intensive management and cosmetic improvements; and (iv)
capable of producing a high component of anticipated total return derived from
current income. In connection with its acquisition and development of
multifamily communities, the Company will consider such factors as: (i) the
geographic location and type of community; (ii) the age, construction quality
and cost, condition and design of the community; (iii) the current and
projected cash flow of the community and the ability to increase cash flow;
(iv) the potential for capital appreciation of the community; (v) the terms of
tenant leases, including the potential for rent increases; (vi) the potential
for economic growth and the tax and regulatory environment of the neighborhoods
in which the community is located; (vii) the occupancy and demand by tenants
for communities of similar type in the vicinity; and (viii) the prospects for
liquidity through sale, financing or refinancing of the community.
The Company has generally considered acquiring a community if it meets the
criteria described above and has a minimum anticipated Initial Capitalization
Rate under current conditions of between 8.5% and 9.5%. Development of
communities would generally require anticipated Initial Capitalization Rates of
at least 10% upon stabilization of the community. "Initial Capitalization
Rate" means estimated net operating cash flow from a community for the 12
months following acquisition or stabilization and is expressed as a percentage
of the Company's total capitalized acquisition or development costs for the
community, which includes reserves for immediate capital improvements. The
Initial Capitalization Rate is calculated on the basis of projected rental
rates, expenses and occupancy levels, after adjustments are made to reflect
trends and to reflect occupancy rates which the Company believes are
sustainable on an ongoing basis. Therefore, an Initial Capitalization Rate
constitutes an estimate, and no assurance can be given that actual future
results will be consistent with such estimate. Nevertheless, the Company
believes that an Initial Capitalization Rate based upon careful criteria is a
reasonable estimate of the initial operating returns of a community to be
acquired or developed by the Company.
In December 1996, the Company sold two of its Communities located in
Washington, containing a total of 120 units, and received net proceeds of $1.6
million. A net loss of $0.1 million was recorded in connection with these
sales. The Company held a 50% interest in one of the sold communities.
In July 1996, the Company originated a $17.8 million mortgage on a 344
unit, newly constructed community in Tucson, Arizona known as Sonterra at
Williams Centre (the "Sonterra Mortgage"). The Company has the exclusive
option to purchase the community for approximately $20.5 million through
December 1997 and approximately $21 million during 1998.
In April 1996, the Company, through a wholly-owned subsidiary, acquired
Marks West, a multifamily community containing 280 units located in Denver,
Colorado, for approximately $18 million. The community's operations have been
combined with those of The Marks, an existing community located contiguous to
Marks West.
In December 1996, the Company completed its Summit at Lake Union
development project located in Seattle, Washington and containing 150 units at
a cost of approximately $16.5 million.
In October 1996, the Company completed two development projects. The Village
at Bear Creek II, a Denver, Colorado apartment community contiguous to the
Company's existing Bear Creek community, contains 216 units and was developed
at a cost of $18.8 million, including satisfaction of the developer's fixed
price contract. The operations of the two Bear Creek communities have been
combined. Seeley Lake III, a Tacoma, Washington apartment community developed
as an expansion to the Company's Village at Seeley Lake community, contains 182
units and was developed at a cost of $9.5 million.
In July 1996, the Company made a $0.7 million loan in connection with the
infrastructure related to a 441 unit development project in Portland, Oregon,
which the Company has an option to purchase. The Company expects to purchase
the land underlying the project for $2.8 million in mid-1997.
In May 1996, the Company purchased a parcel of land in Denver, Colorado
for $2.1 million. The land is located contiguous to the Company's Blue Ridge
development and will represent the second phase of the Company's Palomino Park
project.
The Company intends to develop selectively multifamily communities. It is
anticipated that the cost of projects under development at any time will
generally not exceed an amount equal to 10% of the total market value of the
Company's assets. The Company currently has the following development projects
under construction (collectively, the "Development Communities"):
Number Estimated
of Estimated Stabilization
Name Units Location Total Cost Date
-------------- ------ -------- ---------- -----------------
Blue Ridge 456 Denver $42.5 million Fourth Qtr. 1997
Red Canyon 304 Denver $33.6 million Fourth Qtr. 1998
--- -------------
760 $76.1 million
=== =============
The Blue Ridge and Red Canyon projects are being developed pursuant to
agreements whereby the Company has committed to purchase the projects for a
fixed price from a third-party developer upon their completion, thus reducing
the Company's exposure to construction risk. In the State of Washington, where
the Company has substantial development experience, the Company plans to
develop communities directly. However, in its other target markets, the
Company plans to explore entering into agreements to acquire newly developed
communities upon completion and achievement of certain specified occupancy
rates. The Company currently intends to fund the acquisition and construction
of the Development Communities with working capital, proceeds from $14.8
million of tax exempt bonds described in Item 7 below, and proceeds from its
line of credit with The First National Bank of Boston.
The Company will be subject to the risks of real estate development with
respect to the Development Communities, including the lack of financing,
construction delays, budget overruns and lease-up. The Company will be subject
to similar risks in connection with any future development of other
communities.
From time to time, the Company engages in the rehabilitation of its
communities in order to reposition a community within its market or where it
believes rehabilitation will enhance its ability to increase cash flow through
higher occupancy and rental rates.
Operating Strategy and Management. The Company aggressively manages the
Communities by monitoring daily community performance. The Company uses
sophisticated management information systems to identify and track competing
properties, monitor resident satisfaction and manage apartment inventory. Each
of the Communities is equipped with an on-site computer which compiles
occupancy, tenant traffic, leasing and turnover statistics, as well as
standardized revenue and expense data. This information is electronically
transferred from the Communities to the Company's offices in Denver, Tacoma
and New York.
The Company manages all of its Communities in Arizona, Colorado, New
Mexico, Oklahoma, Washington and San Antonio, totaling approximately 85% of the
Company's portfolio. The Company has a total of approximately 560 employees,
of which approximately 480 participate in the on-site management of the
Communities, including such tasks as leasing, rent collection, maintenance and
repairs. The Company's other employees work at the Company's executive and
regional offices. The Company currently retains local property management
companies supervised by the Company for its Communities in other locations.
The Company places special emphasis on its Resident Satisfaction Surveys
to measure the quality of its management and to obtain information about its
residents. Results from the Company's most recent Resident Satisfaction
Survey, which was returned by approximately 35% of the Company's residents,
indicated that nine out of ten residents would recommend their community to a
friend.
The Company attempts to balance rent increases with high occupancy and
controlled turnover costs. The Company believes that the management techniques
described above have contributed to the strong operating performance of its
portfolio, including a weighted average physical occupancy rate in excess of
94% for the eight year period ended December 31, 1996.
Each of the Communities is operated by a staff of approximately six to
seven individuals which includes a resident manager, assistant manager, leasing
agents, and a maintenance and apartment preparation staff. Policies and
procedures utilized at the community sites follow established federal and state
laws and regulations, including lease contracts, on-site marketing procedures,
credit collection and eviction standards. As a result of active on-site
management and strict prospective tenant qualification standards, the Company
experiences low rent loss due to delinquencies or early lease termination.
The Company generally offers leases of six to 12 months in term, although
approximately 7% of the current leases are for terms of 13-24 months,
reflecting part of the Company's attempt to reduce turnover costs. Individual
community lease programs are structured to respond to local market conditions.
None of the Communities are currently subject to rent control or rent
stabilization regulations. Standard lease terms stipulate due dates for rent
payments, late charges (typically with no grace period), no offset or
withholding provisions, security deposits and damage reimbursement clauses, as
well as many other provisions considered favorable to the property owner. Non-
payment of rent generally will be handled at the communities within 15 days
from the beginning of the month, with either collection or eviction occurring
within that time period.
All of the Communities are located in developed areas. There are numerous
other multifamily properties and real estate companies within the market area
of each such Community which will compete with the Company for tenants and
development and acquisition opportunities. The number of competitive
multifamily properties and real estate companies in such areas could have a
material effect on (i) the Company's ability to rent the apartments at the
Communities and the rents charged and (ii) development and acquisition
opportunities. The Company competes for tenants and acquisitions with others
who may have greater resources than the Company.
Financing Strategies. The Company seeks to maintain a well balanced,
conservative and flexible capital structure by : (i) targeting a ratio of long-
term debt to total market value of assets of approximately 35%; (ii) extending
and sequencing the maturity dates of its debt; (iii) borrowing generally at
fixed rates; (iv) borrowing generally on an unsecured basis; and (v)
maintaining conservative debt service and fixed charge coverage ratios.
Furthermore, the Company's strategy of maintaining a conservative ratio of
shareholder distributions to funds from operations applicable to common
shareholders enables the Company to retain funds for capital improvements,
acquisitions, development, other investments and scheduled payments of
principal and interest on indebtedness. Management believes that these
strategies have enabled and should continue to enable the Company to access the
debt and equity capital markets for its long-term capital requirements such as
debt refinancings and financings for acquisitions and development.
Since the IPO, the Company has demonstrated its ability to access several
different sources of financing. The proceeds from these financings have been
used to acquire and develop communities and prepay debt and for working capital
purposes. These financings have included: (i) a public offering of 2,594,000
common shares in July 1993 for an aggregate of approximately $64.9 million (the
"July 1993 Offering"), (ii) a public offering of 4,000,000 convertible
preferred shares in November 1993 for an aggregate of $100 million (the "Series
A Preferred Offering"), (iii) private offerings to domestic and foreign
institutional investors of 1,550,000 common shares in August 1994 for an
aggregate of approximately $32.6 million (the "August 1994 Private Placement"),
(iv) the sale, in five separate secured transactions, of approximately $53.9
million of tax exempt bonds (the "Tax Exempt Bonds"), (v) a $150 million
unsecured revolving credit facility with The First National Bank of Boston (the
"Bank of Boston Credit Facility"), (vi) the assumption of certain indebtedness,
including a $100 million non-recourse mortgage loan from General Electric
Capital Corporation ("GECC") assumed in connection with the acquisition of the
Communities located in Oklahoma (the "GECC Oklahoma Loan"), and a $115 million
non-recourse structured real estate mortgage (the "REMIC") assumed in
connection with the merger of Holly Residential Properties, Inc. ("Holly") into
a wholly-owned subsidiary of the Company (the "Holly Acquisition"), (vii) the
issuance of approximately 6,000,000 common shares in connection with the Holly
Acquisition at an aggregate market value of approximately $119.7 million,
(viii) the issuance of $100 million of senior unsecured notes due in 2002 (the
"2002 Notes") in January 1995, (ix) the issuance of $55 million of senior
unsecured notes due in 2000 (the "2000 Notes") and $70 million of senior
unsecured notes due in 2005 (the "2005 Notes") in August 1995, (x) a public
offering of 2,300,000 preferred shares in August 1995 for an aggregate of $57.5
million (the "Series B Preferred Offering") and (xi) the issuance of $25
million of medium-term senior unsecured notes due in 1999 (the "1999 Notes") in
November 1996.
Risks Associated with Forward-Looking Statements. This Form 10-K, together
with other statements and information publicly disseminated by the Company,
contains certain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements are based on current
expectations which involve a number of risk factors and uncertainties,
including, but not limited to, risks associated with the acquisition,
construction and development of multifamily communities, including the risk of
an over-supply of apartment units or a reduction in the demand for such units,
risks associated with construction and lease-up delays, budget over-runs, risks
that the Company's acquisition and development communities will fail to perform
as expected, financing risks, such as the availability of debt or equity
financing in the future and the risk of increasing costs of such financing, as
well as other risks listed from time to time in the Company's reports filed
with the SEC. Therefore, actual results could differ materially from those
projected in such statements.
Recent Developments. The Company has entered into an Agreement and Plan of
Merger, dated as of January 16, 1997 (the "Agreement"), with EQR. The
Agreement provides for the exchange of all of the outstanding common shares of
the Company for common shares of the surviving trust, at an exchange ratio of
0.625 common shares of the surviving trust for each common share of the Company
(the "Merger").
The Company has entered into contracts on five commercial office properties
(the "Commercial Properties") for $47.6 million in aggregate, and has closed on
four of the properties subsequent to December 31, 1996. The aggregate purchase
price for the Commercial Properties includes approximately $2.25 million in
value of common shares of Wellsford Real Properties, Inc. ("WRP Newco"), a
subsidiary of the Company, to be issued to an entity in consideration for the
assignment of the purchase contracts entered into by such entity. Upon
liquidation of such entity, each of the Chairman of the Board and President of
the Company, Messrs. Lynford and Lowenthal, will receive approximately 16.4% of
such shares, and the wife of Mark Germain, a trustee of the Company, will
receive approximately 13.8% of such shares. Each are owners of such entity.
Immediately prior to the Merger, and subject to the satisfaction or waiver of
all conditions thereto, the Company will contribute certain of its assets,
including the Commercial Properties, and certain of its liabilities to its
subsidiary (formed in 1997), WRP Newco, and distribute to its common
shareholders, on a pro rata basis, all of the shares it owns in WRP Newco.
The Merger is subject to the approval of the common shareholders of both EQR
and the Company and other conditions.
Item 2. Properties.
Multifamily Communities. The Company owns and operates 72 multifamily
communities located in eight states - Washington (27 communities), Texas (11),
Oklahoma (10), Colorado (10), Arizona (7), Nevada (3), Utah (3) and New Mexico
(1). Substantially all of the Communities are located in and around the
following major metropolitan areas: Albuquerque (1 community), Dallas (2),
Denver (9), Las Vegas (3), Oklahoma City (5), Phoenix (5), Salt Lake City (3),
San Antonio (9), Seattle (14), Tacoma (13), Tucson (2), and Tulsa (5). The
Communities include 46 multifamily communities having 200 or more apartment
units with the largest community having 714 apartment units. Forty-four of the
Communities were built since 1986, 26 were built between 1980 and 1985 and two
were built in 1979. All of the Communities are garden style communities except
for four mid-rise buildings (419 apartment units) in downtown Seattle. As of
December 31, 1996, the Communities had an average physical occupancy rate of
approximately 95.3%. All of the Communities provide residents with attractive
amenities. The Company manages all of its Communities in Arizona, Colorado,
New Mexico, Oklahoma, Washington and San Antonio. The Company currently
retains local property management companies supervised by the Company for its
Communities in other locations.
The Company believes the Communities provide the opportunity for increased
cash flows and appreciation in value through increases in occupancy rates and
rents, as well as expense controls. The Company also believes that the
Communities are well located in their markets and are well constructed and
designed.
The Communities are geographically diversified as follows:
Number of Number of Historical Cost
State Communities Units (in thousands)
- --------------- ----------- ---------- --------------
Arizona 7 2,110 $115,880
Colorado 10 3,142 136,092
Nevada 3 966 39,398
New Mexico 1 472 17,891
Oklahoma 10 3,121 99,332
Texas 11 2,725 64,235
Utah 3 1,298 36,522
Washington 27 5,170 264,019
-- ------ --------
72 19,004 $773,369
== ====== ========
<PAGE>
The following tables present information concerning the Communities:
<TABLE>
<CAPTION>
Average
Year Unit 1995 1996
Number Square Acreage Const- Size Average Average Encumbrance
of Units Footage (approx.) ructed (Sq. Ft.) Occupancy Occupancy (000's)
-------- ---------- --------- ------ --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Albuquerque, NM
Mountain Run 472 335,744 16 1985 711 94.7% 92.0% --
Dallas, TX
Burn Brae 282 221,966 12 1984 787 97.8% 98.9% --
Calais 264 206,210 13 1986 781 96.1% 96.6% --
Denver, CO
The Village at
Bear Creek (A) 472 466,610 38 1987 989 96.5% 95.5% --
Cimarron Ridge 296 229,048 10 1984 774 97.3% 97.4% --
Colinas Pointe 272 213,984 13 1986 787 96.4% 94.3% --
Highland Point 318 237,886 14 1984 748 96.1% 97.4% --
Ironwood at the
Ranch 226 184,081 9 1986 815 94.4% 96.8% $ 6,070
The Marks (A) 616 520,712 26 1987 845 94.2% 94.9% $ 21,325
The Registry 208 156,558 9 1987 753 96.3% 97.0% --
Sterling Point 143 130,120 9 1979 910 95.9% 95.8% --
Warwick Station 332 250,432 18 1986 754 95.0% 96.1% $ 10,243
Fort Collins, CO
Parkwood East 259 215,064 25 1986 830 96.1% 98.2% --
Las Vegas, NV
Catalina Shores 256 230,872 14 1989 902 96.8% 96.3% --
Crossing at
Green Valley 384 330,714 15 1986 861 97.2% 97.2% --
Reflections at
the Lakes 326 274,992 16 1989 844 96.5% 95.6% --
Oklahoma City, OK
Augusta 197 153,308 7 1986 778 96.8% 95.0% --
Heritage Park 452 392,218 23 1983 868 90.5% 90.5% --
Invitational 344 254,976 10 1983 741 93.9% 91.9% --
Raindance 504 327,248 22 1984 649 91.9% 95.5% --
Windrush 160 130,112 10 1982 813 91.8% 93.4% --
Phoenix, AZ
Copper Creek 144 146,024 8 1984 1014 94.9% 94.1% --
Crown Court 416 464,582 27 1987 1117 95.1% 90.2% $ 5,679
Dos Caminos 264 265,884 16 1983 1007 96.0% 92.0% --
The Pointe at
South Mountain 364 309,548 14 1988 850 94.7% 93.2% $ 12,900
San Tropez 316 332,080 13 1989 1051 96.0% 94.9% --
Salt Lake City, UT
Quail Cove 420 362,580 17 1987 863 97.2% 96.6% --
Settlers Point 288 263,040 16 1986 913 95.6% 96.0% --
Springs of
Country Woods 590 486,648 24 1982 825 95.9% 96.0% --
San Antonio, TX
Copperfield 258 197,736 10 1984 766 92.6% 92.0% --
Countryside 220 159,214 9 1980 724 94.0% 93.7% --
Forest Valley 185 149,493 8 1983 808 93.6% 93.0% --
Landera 184 168,176 9 1983 914 93.3% 93.2% --
The Overlook (B) 411 298,133 16 1985 725 91.5% 92.7% --
Regatta (C) 200 171,634 10 1983 858 92.7% 96.3% --
Trails End 308 202,376 19 1983 657 94.4% 93.7% --
Villas of Oak
Creste (D) 280 208,446 10 1979 744 92.3% 94.8% --
Waterford 133 87,376 5 1983 657 96.4% 95.7% --
Seattle, WA
North Creek
Heights 114 104,306 9 1990 915 96.4% 98.4% --
Panther Ridge 260 221,000 20 1980 850 94.4% 95.5% --
Highland Creste 198 192,556 10 1989 973 94.8% 97.8% --
Ridgegate 153 141,594 9 1990 925 96.9% 96.5% --
Whitedove Pointe 96 102,834 5 1992 1071 93.3% 97.6% --
Cherry Hill 108 101,390 7 1991 939 95.0% 96.3% --
Plum Tree Park 196 174,310 8 1991 889 98.3% 97.3% --
Firdale Village 386 323,522 23 1986 838 95.1% 95.0% --
Martha Lake 155 135,662 8 1991 875 93.6% 96.2% --
Country Club
Village 151 157,898 7 1991 1046 94.0% 96.6% --
2300 Elliott 91 67,403 0.5 1992 741 93.9% 95.5% --
Metropolitan Park 82 49,702 0.4 1991 606 95.5% 95.8%
Seventh & James 96 61,282 0.7 1992 638 92.1% 94.6% --
Summit at Lake
Union 150 109,352 1.2 1996 729 N/A N/A (H) --
Tacoma, WA
Merrill Creek 149 138,867 15 1994 932 92.0% 93.5% $ 5,659
Stoney Creek 231 211,580 16 1990 916 92.1% 95.3% --
Windridge 80 65,111 4 1989 814 96.3% 91.2% --
Surprise Lake
Village 338 328,032 32 1986 971 93.9% 95.7% --
Cambridge 96 86,473 5 1988 901 93.5% 94.2% --
Chestnut Hills 157 143,236 8 1991 912 91.7% 90.5% --
The Hamptons 230 202,324 11 1991 880 93.3% 93.8% $ 6,100
Windemere 36 30,000 3 1987 833 95.1% 90.9% --
Crown Pointe 76 68,060 4 1987 896 93.8% 87.8% --
Gold Pointe 84 88,422 5 1990 1053 93.0% 95.8% --
The Village at
Seeley Lake (A) 522 473,370 30 1990 907 90.9% 94.1% --
The Westridges(E) 714 686,675 38 1991 962 93.1% 93.5% --
The Ridgetop 221 197,250 13 1988 893 95.0% 92.5% --
Tucson, AZ
Mission Palms 360 372,918 35 1980 1036 94.4% 95.5% --
Skyline Gateway 246 179,422 8 1985 729 95.5% 95.0% --
Tulsa, OK
Wellsford Oaks(F) 300 216,368 9 1991 721 92.7% 95.9% --
Huntington
Hollow (G) 288 180,648 9 1981 627 92.4% 95.8% --
One Eton Square 448 313,904 17 1985 701 95.8% 95.0% --
Silver Springs 200 143,704 12 1984 719 94.6% 97.5% --
Woodland Oaks 228 180,273 12 1983 791 94.4% 97.0% --
-------- ---------- --- ----- ------ ------ ----------
All Communities 19,004 15,985,273 955 841 94.6% 94.9% $ 67,976
======== ========== === ===== ====== ====== ==========
</TABLE>
(A) Includes expansion completed / acquired in 1996.
(B) Formerly known as Springtree.
(C) Formerly known as Polo Run.
(D) Formerly known as Beacon Hill.
(E) During 1995, the Company combined the operations of its Westridge, The
Pointe at Westridge and The Village at Westridge Communities.
(F) Formerly known as Lincoln Oaks.
(G) Formerly known as The Mill.
(H) Summit at Lake Union was completed in December 1996. Therefore, it's
occupancy has been excluded.
<PAGE>
<TABLE>
<CAPTION>
Wellsford Residential Property Trust
Community Amenity Chart
Apartment Amenities
--------------------------------------------------------------------------------------------------------
Vaulted Patio or Laundry Cable Mini- Covered
Ceilings Balcony Hook-ups Ready Fireplace Blinds Parking Other
-------- -------- -------- ----- --------- ------ ------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Albuquerque, NM
Mountain Run 41% All All(3) All 81% All 34% Microwaves, ceiling fans
Dallas, TX
Burn Brae 34% All All All 69% 85% -
Calais 50% All All All All All -
Denver, CO
The Village at
Bear Creek 12% All All(3) All All All 74% Microwaves
Cimarron Ridge 42% All All All All 11% All
Colinas Pointe - All All(3) All All - -
Highland Point 50% All All All All All 81%
Ironwood at the
Ranch 33% All All All All All 30% Central A/C
The Marks 33% All All All 90% All 50%
The Registry 40% All All All All - 22%
Sterling Point - All All All All All 51%
Warwick Station 34% All All All 66% All 28%
Fort Collins, CO
Parkwood East - All All(3) All All All -
Las Vegas, NV
Catalina Shores - All All(3) All - All All Microwaves, basic cable included
Crossing at Green
Valley 50% All 50% All 50% All All Microwaves, most units;
ceiling fans, all units
Reflections at the
Lakes 50% All All All All All All Microwaves, all units;
washer/dryers most units
Oklahoma City, OK
Augusta 41% All All(3) All All All - Ceiling fans, basic cable
included
Heritage Park - All All All 81% All - Intrusion alarms (some),
ceiling fans
Invitational - All All(3) All 17% All 12% 45% have ceiling fans
Raindance - All 16% All 55% All - Microwaves and ceiling fans
Windrush - All All(3) All 79% All - Microwaves and ceiling fans
Phoenix, AZ
Copper Creek 63% 81% All(3) All All All All
Crown Court 50% All All(3) All All All All Microwaves
Dos Caminos 63% 82% All(3) All All All All
The Pointe at South
Mountain All All All 7% All All Microwaves and ceiling fans,
all units; washer/dryers, 342 units
San Tropez - All All(3) All All All All Microwaves, ceiling fans
Salt Lake City, UT
Quail Cove - All - All - All - Basic cable included
Settlers Point 50% All All All All All All Microwaves
Springs OCW 36% All All All 36% All All Basic cable included
San Antonio, TX
Copperfield 11% All 72% All 57% All - Washer/dryers, 52 units; microwaves,
65 units
Countryside 33% 74% 20% All 27% All -
Forest Valley 19% All All All All All - Microwaves, all units; skylights,
12 units
Landera 43% All All All All All - Wetbars, microwaves, basic cable
included
The Overlook 39% All 60% All 23% 75% -
Regatta 52% All All All All All 49% Washer/dryers, 100 units;
microwaves, all units
Trails End 44% All All All 35% All - Ceiling fans in some units
Villas of Oak Creste 22% 68% 16% All 32% All - Four 2-car garages; microwaves, 62 units
Waterford 50% All All All 34% All - Ceiling fans in some units;
dry bar, 45 units
Seattle, WA
North Creek Heights All(2) All All(3) All All All All Storage, ice-maker
Panther Ridge 8%(2) All All(3) All All 75% All
Highland Creste All(2) All All(3) All All All All Storage
Ridgegate All(2) All All(3) All 84% All All Storage, ice-maker, microwaves
Whitedove Pointe All(2) All All(3) All All All All Storage, microwaves
Cherry Hill All(2) All All(3) All All All 33% Storage, ice-maker
Plum Tree Park All(2) All All(3) All All All 90% Storage, ice-maker
Firdale Village - All All(3) All 81% 50% 25% Storage
Martha Lake All(2) All All(3) All 85% All All Storage
Country Club Village 19%(2) All All(3) All 95% All All Storage, ice-maker, microwaves
2300 Elliott (1) All(2) All All(3) All 88% All All Storage, ice-maker
Metropolitan Park (1) - All All(3) All 37% All All Storage, ice-maker, microwaves
Seventh & James (1) - All All(3) All 83% All All Storage, ice-maker
Summit at Lake Union (1) - All - All - All All
Tacoma, WA
Merrill Creek - All All(3) All All All All Storage, ice-maker
Stoney Creek All(2) All All(3) All 81% All 86% Storage, ice-maker, microwaves
Windridge All(2) All All(3) All 75% All All Storage, ice-maker, microwaves
Surprise Lake
Village All(2) All All(3) All All 70% All Storage
Cambridge All(2) All All(3) All 96% All All Storage, microwaves
Chestnut Hills All(2) All All(3) All All All All Storage, ice-maker
The Hamptons All(2) All All(3) All All All All Storage
Windemere - All All(3) All All All All Storage, ice-maker, microwaves
Crown Pointe All(2) All All(3) All All All All Storage, ice-maker, microwaves
Gold Pointe All(2) All All(3) All All All All Storage, ice-maker, microwaves
The Village at Seeley
Lake 32%(2) All All(3) All 94% All All Storage, ice-maker
The Westridges All(2) All All(3) All 92% All 93% Storage, ice-maker, microwaves
The Ridgetop All(2) All All(3) All 91% All All Storage, ice-maker, microwaves
Tucson, AZ
Mission Palms - All All All All All All Storage
Skyline Gateway - All All All 28% - - Access gates & intercoms;
washer/dryers
Tulsa, OK
Wellsford Oaks - All All All 67% All - Microwaves, ceiling fans,
intrusion alarms
Huntington Hollow - All 9% - - All - Ceiling fans
One Eton Square - All All All All All - Ceiling fans, microwaves,
alarm systems, basic cable
included, trash compactors
Silver Springs 36% All All All 72% All - Microwaves, washer/dryers
Woodland Oaks 50% All 65% All All All - Ceiling fans, microwaves,
all units; alarm systems,
114 units, washer/dryers,
182 units
<CAPTION>
Recreational Amenities
-------------------------------------------------------------------------------------------------------------
Swimming Fitness Jacuzzi/ Tennis Volley/
Clubhouse Pool(s) Center Spa Sauna Court(s) Basket Other
--------- ----------- ---------- --------- --------- ------------ ------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Albuquerque, NM
Mountain Run Yes Yes Yes Yes Yes - Yes Jogging trail, playground,
barbecue areas
Dallas, TX
Burn Brae Yes Yes - Yes Yes - - Water volleyball
Calais Yes Yes Yes Yes - - -
Denver, CO
The Village at
Bear Creek Yes(two) Yes(two) Yes Yes(two) Yes Yes(two) - Bike path
Cimarron Ridge Yes Yes Yes Yes Yes - -
Colinas Pointe Yes Yes - Yes - Yes -
Highland Point Yes Yes Yes Yes Yes - - Water volleyball, steam
Ironwood at the
Ranch Yes Yes Yes Yes Yes - Yes Sun deck, barbecue area,
racquetball court
The Marks Yes(four) Yes(two) Yes(three) Yes(two) - - - Free aerobics classes,
barbecue area
The Registry Yes Yes Yes Yes Yes - - Racquetball
Sterling Point Yes Yes - - Yes Yes Yes
Warwick Station Yes Yes - Yes - - - Free aerobics classes
Fort Collins, CO
Parkwood East Yes Yes Yes Yes - Yes(two) Yes Tanning bed, racquetball
courts
Las Vegas, NV
Catalina Shores Yes Yes Yes Yes - - Yes Barbecue area, car wash bay
Crossing at Green
Valley Yes Yes(two) Yes Yes - - Yes Playground
Reflections at the
Lakes Yes Yes(two) Yes Yes Yes Yes Yes Playground
Oklahoma City, OK
Augusta Yes Yes - Yes - - Yes Landscaped courtyard areas
w/ foot bridges
Heritage Park Yes Yes(two) - - - - Yes Landscaped courtyards,
access gates
Invitational Yes Yes Yes - - Yes - Swimming pool has
waterfall, stream, ponds
Raindance Yes Yes Yes Yes - Yes Yes Barbecue areas, sundeck,
access gates
Windrush Yes Yes(two) Yes Yes Yes Yes Yes Racquetball/handball court
Phoenix, AZ
Copper Creek Yes Yes(two) - Yes(two) - - - Two barbecue areas
Crown Court Yes Yes(two) Yes Yes(two) Yes Yes - Convenience store,
movie theater
Dos Caminos Yes Yes(two) - Yes(two) - - -
The Pointe at South
Mountain Yes Yes(two) Yes* Yes(two) Yes* Yes* Yes* * Off-site at Pointe Resort
Playground and barbecue
on site
San Tropez Yes Yes Yes Yes Yes(two) - Yes
Salt Lake City, UT
Quail Cove Yes Yes Yes Yes - Yes(two) Yes Two racquetball courts,
tanning bed
Settlers Point Yes Yes Yes Yes Yes Yes(two) -
Springs OCW Yes(two) Yes(two) Yes Yes(two) - Yes(two) Yes Indoor pool, tanning bed,
playground, two
racquetball courts.
San Antonio, TX
Copperfield Yes Yes - Yes - Yes - Water volleyball
Countryside Yes Yes(two) - - - - - Two barbecue areas
Forest Valley Yes Yes Yes - Yes - -
Landera Yes Yes - - - - - Playground
The Overlook Yes Yes(two) Yes Yes - Yes Yes
Regatta Yes Yes Yes Yes - Yes - Lake w/ jogging path,
fishing & picnic areas
Trails End Yes Yes(two) - Yes - - - Barbecue area
Villas of Oak Creste Yes Yes(two) - - - - - Water volleyball
Waterford Yes Yes - Yes - - - Barbecue area
Seattle, WA
North Creek Heights Yes Yes Yes Yes Yes Yes - Playground, tanning bed
Panther Ridge Yes Yes - Yes Yes Yes - Playground
Highland Creste Yes Yes Yes Yes Yes Yes -
Ridgegate Yes Yes Yes Yes(two) Yes Yes - Playground, computer room,
racquetball
Whitedove Pointe Yes Yes Yes Yes - - - Playground, tanning bed
Cherry Hill Yes Yes Yes Yes Yes - -
Plum Tree Park Yes Yes(two) Yes Yes Yes - -
Firdale Village Yes(two) Yes(two) Yes Yes Yes - - Playground, racquetball,
tanning bed, jog track
Martha Lake Yes Yes Yes Yes(two) Yes Yes - Playground, racquetball,
tanning bed
Country Club Village Yes Yes(two) Yes Yes Yes(two) - - Golf, playground,
racquetball, tanning bed
2300 Elliott (1) Yes - Yes Yes Yes - - Rooftop garden,
Metropolitan Park(1) Yes - Yes Yes Yes - - Rooftop garden, tanning bed
Seventh & James(1) Yes - Yes Yes Yes - - Rooftop garden, tanning bed
Summit at Lake
Union(1) Yes - Yes Yes Yes - -
Tacoma, WA
Merrill Creek Yes Yes Yes Yes Yes - - Playground, racquetball,
tanning bed
Stoney Creek Yes Yes Yes Yes(two) Yes - - Playground, racquetball,
tanning bed
Windridge Yes Yes Yes Yes Yes - - Playground, tanning bed
Surprise Lake
Village Yes Yes Yes Yes Yes - - Playground, tanning bed
Cambridge Yes Yes Yes Yes Yes - - Sport court
Chestnut Hills Yes Yes Yes Yes Yes - - Playground, racquetball,
tanning bed
The Hamptons Yes Yes Yes Yes Yes - - Racquetball, tanning bed
Windemere - - - - - - -
Crown Pointe - - - - - - - Playground, lake front
Gold Pointe Yes Yes Yes Yes Yes - - Playground
The Village at
Seeley Lake Yes(two) Yes(three) Yes Yes(two) Yes(two) - yes Playground, racquetball,
tanning bed, jog track
The Westridges Yes Yes(four) Yes Yes(six) Yes - - Playground, racquetball,
tanning bed, gym
The Ridgetop Yes Yes Yes Yes(two) Yes - - Playground, racquetball,
tanning bed
Tucson, AZ
Mission Palms Yes Yes - Yes - Yes - Billiards, guard gate,
barbecue area
Skyline Gateway Yes Yes Yes Yes - Yes - Billiards, indoor
driving range
Tulsa, OK
Wellsford Oaks Yes Yes Yes - - - - Privacy fence with limited
access iron gate
Huntington Hollow Yes Yes - - - - - Barbecue area, game room
One Eton Square Yes Yes Yes - Yes Yes(two) Yes Stereo system, big screen
TV, pool table
Silver Springs Yes Yes Yes Yes - Yes(two) Yes
Woodland Oaks Yes Yes Yes Yes - - -
</TABLE>
- ------------------------------------------------------------------------------
(1) Located in downtown Seattle and have elevators, TV rooms, and mountain or
marina views.
(2) Upper units only.
(3) Washer/dryer in all units.
<PAGE>
Item 3. Legal Proceedings.
Neither the Company nor the Communities are presently subject to any material
litigation nor, to the Company's knowledge, is any material litigation
threatened against the Company or the Communities, other than routine
litigation arising in the ordinary course of business and which is expected to
be covered by liability insurance.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity, Preferred Equity and Related
Shareholder Matters.
(A) Market Information
The Company's common shares, Series A preferred shares and Series B
preferred shares are traded on the New York Stock Exchange under the symbols
"WRP", "WRPPr" and "WRPPrB", respectively. The high and low sales prices for
the common shares and preferred shares on the New York Stock Exchange and the
dividends declared for the last two fiscal years are as follows:
<TABLE>
<CAPTION>
Series A Series B
Common Shares Preferred Shares Preferred Shares
---------------------------- -------------------------- ------------------------------
1995 High Low Dividends High Low Dividends High Low Dividends
--------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Quarter $21-3/4 $19-1/4 $.48 $19-3/8 $17-3/4 $.4375 -- -- --
2nd Quarter $22-3/4 $20 $.48 $20-5/8 $18-1/8 $.4375 -- -- --
3rd Quarter $22-3/4 $21-1/8 $.48 $20-5/8 $19-1/4 $.4375 $26-3/8 $24-5/8 $.2546 *
4th Quarter $23-1/8 $19-5/8 $.48 $21 $18-5/8 $.4375 $26-1/2 $25 $.6031
Series A Series B
Common Shares Preferred Shares Preferred Shares
---------------------------- -------------------------- ------------------------------
1996 High Low Dividends High Low Dividends High Low Dividends
--------- ------- ------- --------- ------- ------- --------- ------- ------- ---------
1st Quarter $24-1/4 $21-3/8 $.485 $21-3/4 $19-1/2 $.4375 $26-3/8 $25-1/8 $.6031
2nd Quarter $22-7/8 $20-1/2 $.485 $20-3/4 $19-1/8 $.4375 $25-3/4 $24-1/8 $.6031
3rd Quarter $23-1/8 $20-3/4 $.485 $20-5/8 $19-1/2 $.4375 $26 $24-3/8 $.6031
4th Quarter $25 $21-1/2 $.485 $21-3/8 $19-1/4 $.4375 $26-1/2 $25-1/4 $.6031
</TABLE>
* Represents the period from August 24, 1995 to September 30, 1995.
(B) Holders
The approximate number of holders of record of the common shares, Series
A preferred shares, and Series B preferred shares were 635, 74 and 89,
respectively, as of March 1, 1997. These holders represent the interests of
approximately 22,000 beneficial shareholders.
(C) Dividends
In 1996, the Company made quarterly distributions of $.485 per share
($1.94 annually) to the holders of its common shares, $.4375 per share ($1.75
annually) to the holders of its Series A preferred shares and $.603125
($2.4125 annually) to the holders of its Series B preferred shares. In 1997,
the Company intends to make quarterly distributions of $.485 per share ($1.94
annually) to the holders of its common shares, $.4375 per share ($1.75
annually) to the holders of its Series A preferred shares and $.603125 per
share ($2.4125 annually) to the holders of its Series B preferred shares.
The Company believes that the assumptions underlying its estimate of cash
flow that will be available for distributions constitutes a reasonable basis
for setting its intended 1997 distributions. The actual cash flow that the
Company will realize will be affected by a number of factors including the
revenues received from rental communities, the operating expenses of the
Company, the interest expense on its borrowings, the ability of residents to
meet their obligations to the Company and unanticipated capital expenditures.
No assurance can be given that the Company's estimate will prove accurate.
Future distributions paid by the Company will be at the discretion of the
trustees of the Company and will depend on the actual cash flow of the
Company, its financial condition, capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code and such other factors as the trustees of the Company deem relevant.
In 1995, the Company implemented a dividend reinvestment and share
purchase plan (the "DRIP"). One million common shares have been allocated for
the DRIP. This plan allows shareholders to acquire additional shares by
automatically reinvesting and making optional cash payments.
Item 6. Selected Consolidated Financial Data.
The following table sets forth selected consolidated financial data for the
Company and should be read in conjunction with the consolidated financial
statements included elsewhere in this Form 10-K.
Summary
Consolidated Statement of
Operations Data
Year Ended December 31,
-------------------------------------------------
(in thousands except per share data)
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Revenues $131,821 $131,232 $ 82,794 $ 42,007 $ 26,229
Expenses (109,035) (113,712) (73,299) (34,816) (26,991)
Gain (loss) on sale of
investment communities (66) (819) -- 882 --
Loss on joint venture
communities (58) (279) -- -- --
-------- -------- -------- -------- --------
Income (loss) before
extraordinary item $ 22,662 $ 16,422 $ 9,495 $ 8,073 $ (762)
-------- -------- -------- -------- --------
Net income (loss) $ 22,662 $ 10,869 $ 9,495 $ 8,073 $ (762)
Preferred dividends (12,548) (8,973) (7,000) (972) --
-------- -------- -------- -------- --------
Net income (loss)
available for common
shareholders $ 10,114 $ 1,896 $2,495 $7,101 $ (762)
-------- -------- -------- -------- --------
Net income (loss) per
common share $ 0.59 $ 0.11 $0.25 $0.91 $ (0.34)
-------- -------- -------- -------- --------
Weighted average number
of common shares
outstanding 17,056,882 16,937,731 10,070,278 7,812,591 2,273,464
---------- ---------- ---------- --------- ---------
Summary
Consolidated Balance Sheet Data
Year Ended December 31,
-------------------------------------------------
(in thousands except per share data)
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Real estate assets
before accumulated
depreciation $795,580 $736,399 $747,519 $301,389 $156,568
Real estate assets
after accumulated
depreciation 711,614 677,908 712,742 282,224 143,787
Total assets 756,289 729,638 745,754 322,400 165,963
Mortgage notes payable 82,731 77,137 208,858 24,203 17,155
Convertible notes payable -- -- -- 46,070 55,358
Unsecured credit facility 18,075 -- 140,000 -- --
Senior unsecured notes 248,496 223,307 -- -- --
Shareholders' equity 376,686 398,359 371,655 239,775 89,986
Cash dividends declared
per Series A
preferred share $ 1.75 $ 1.75 $ 1.75 $ 0.24 $ --
======== ======== ======== ======== =======
Cash dividends declared
per Series B
preferred share $ 2.41 $ 0.86 $ -- $ -- $ --
======== ======== ======== ======== =======
Cash dividends declared
per common share $ 1.94 $ 1.92 $ 1.80 $ 1.68 $ 0.16
======== ======== ======== ======== =======
Weighted average number
of apartment
units owned 18,532 19,401 13,280 6,945 5,025
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview. The following discussion should be read in conjunction with
the "Selected Consolidated Financial Data" and the Company's Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
Results of Operations. The Company's operations consist of owning and
operating multifamily communities located in the Southwest and Pacific
Northwest regions of the United States. At December 31, 1996, the Company
owned 72 multifamily communities containing 19,004 apartment units.
Increases in revenues and expenses in the years compared below were due
primarily to the acquisition and development of communities, including the
acquisition of 48 communities during 1994 and the acquisition of one community
and the development of three communities during 1996 (collectively, the
"Acquisition Communities"). Seven of the Acquisition Communities were
subsequently sold in 1995 and two were sold in 1996 (collectively, the
"Disposition Communities"). Certain comparisons between years have been made
on an actual basis as well as on a weighted average per unit basis, a
technique which adjusts for certain increases in existing communities and
increases related to the acquisitions of communities.
Recent Developments. For a discussion of the Company's pending Merger and
acquisition of certain commercial properties, see "Item 1. Business - Recent
Developments, above".
Comparison of year ended December 31, 1996 to year ended December 31, 1995.
Rental income increased by $0.8 million or 1%. This increase represents a
$4.6 million decrease due to 1995 rental income from the Disposition
Communities, which is offset by $3.0 million of rental income from the
Acquisition Communities acquired in 1996 and by occupancy and rental rate
increases on other communities. On a per unit basis, rental income increased
from $6,369 to $6,713 or 5% due primarily to increases in rental rates and
dispositions of communities with lower per unit rents than the currently owned
communities. Revenues for the 72 communities which were owned during all of
1995 and 1996 increased by 2%. Average occupancy increased from 94.6% to
94.9%.
Other income increased by $0.3 million or 5%. This increase represents a $0.2
million decrease due to 1995 other income from the Disposition Communities,
which is offset by $0.1 million of other income from the Acquisition
Communities acquired in 1996 and by increased lease cancellation fees related
to residents leaving to acquire homes. On a per unit basis, other income
increased from $280 to $309 or 10%, due primarily to increases in lease
cancellation fees related to residents leaving to acquire homes.
Interest income decreased by $0.5 million due primarily to 1995 receipts under
the Company's interest rate protection agreements during the period subsequent
to the repayment of all of the Company's then outstanding variable rate debt
and prior to the sale of the interest rate protection agreements and to 1995
interest on the investment of the proceeds from the 2000 Notes and 2005 Notes
for one month prior to their utilization for the repayment of debt.
As a result of the above changes, total revenues increased from $131.2 million
to $131.8 million or less than 1%. On a per unit basis, total revenue
increased from $6,764 to $7,113 (or from $564 to $593 per unit per month) or
5%.
Property operating and maintenance expenses decreased by $0.6 million or
1%. $2.0 million of this decrease represents 1995 property operating and
maintenance expenses from the Disposition Communities, which is offset by $0.7
million of property operating and maintenance expenses from the Acquisition
Communities acquired in 1996 and by increased turnover costs and repair and
maintenance costs. On a per unit basis, these expenses increased from $2,109
to $2,178 or 3% due primarily to the sale of communities having lower per unit
operating costs than the currently owned communities, as well as the increased
costs described above. Property operating and maintenance expenses for the 72
communities which were owned during all of 1995 and 1996 increased by 2%.
Real estate taxes increased by $0.3 million or 3%. This increase is
primarily attributable to increased assessed values in certain cities, net of
$0.3 million of decrease attributable to the sale of the Disposition
Communities and $0.2 million of real estate taxes on the Acquisition
Communities acquired in 1996. On a per unit basis, real estate taxes
increased from $495 to $533 or 8% due primarily to increases in assessed
values in certain cities.
Property management expense decreased by less than $0.2 million or 4%.
This decrease represents a more than $0.2 million decrease due to 1995
property management expense related to the Disposition Communities, which is
offset by $0.1 million of property management expense from the Acquisition
Communities acquired in 1996. On a per unit basis, property management
expense increased from $255 to $257 or 1% due primarily to the sale of
communities having lower per unit management expenses than the currently owned
communities.
Interest expense decreased by $3.4 million or 13%. This decrease is
primarily the result of reduced interest from the repayment of debt with
proceeds of the Series B Preferred Share issuance and with proceeds from the
sales of the Disposition Communities.
General and administrative expenses decreased by $0.5 million. On a per
unit basis, this expense decreased from $225 to $209 or 7%. This decrease is
primarily the result of decreased compensation for certain executive officers.
Depreciation and amortization decreased by $0.3 million or 1% due
primarily to the disposition of communities.
The Company's share of the net loss of its joint venture community was
$0.1 million during 1996, net of $0.1 million of depreciation. This community
was sold in December 1996.
During 1996, the Company realized a net book loss of $0.1 million on the
sale of two of its communities.
Comparison of year ended December 31, 1995 to year ended December 31,
1994. Rental income increased by $44.8 million or 57%. $42.0 million of this
increase represents rental income from the Acquisition Communities. On a per
unit basis, rental income increased from $5,933 to $6,369 or 7% due primarily
to increases in rental rates and the acquisition of communities with higher
per unit rents than the previously owned communities. For the 32 Communities
which were owned during all of 1994 and 1995, revenues increased by 5%.
Average occupancy decreased slightly from 94.8% to 94.6%.
Other income increased by $2.1 million or 63%. $1.7 million of this
increase represents other income from the Acquisition Communities. On a per
unit basis, other income increased from $252 to $280 or 11%, due primarily to
the acquisition of communities with higher other income per unit than the
previously owned communities.
Interest income increased by $1.6 million due primarily to interest on a
promissory note payable to the Company from one of its community sales,
interest on the investment of the proceeds from the 2000 Notes and 2005 Notes
for one month prior to their utilization for the repayment of debt, and the
payments under the Company's interest rate protection agreements during the
period subsequent to the repayment of all of the Company's then outstanding
variable rate debt and prior to the sale of the interest rate protection
agreements.
As a result of the above changes, total revenues increased from $82.8
million to $131.2 million or 58%. On a per unit basis, total revenues
increased from $6,234 to $6,764 (or from $520 to $564 per unit per month) or
8%.
Property operating and maintenance expenses increased by $13.4 million or
49%. $13.7 million of this increase represents property operating and
maintenance expenses from the Acquisition Communities, which is offset by
reduced property operating and maintenance expenses on certain other
Communities. On a per unit basis, these expenses increased from $2,069 to
$2,109 or 2% due primarily to increased marketing and maintenance expenditures
on the Company's San Antonio and Oklahoma Communities. Property operating and
maintenance expenses for the 32 Communities which were owned during all of
1994 and 1995 decreased by 2%.
Real estate taxes increased by $3.7 million or 63%. $3.9 million of this
increase represents real estate taxes on the Acquisition Communities, which is
offset by reduced real estate taxes on certain other Communities. On a per
unit basis, real estate taxes increased from $442 to $495 or 12% due primarily
to the acquisition of communities with higher per unit real estate taxes than
the previously owned communities.
Property management expense increased by $1.8 million or 58%. $1.6
million of this increase represents property management expense related to the
Acquisition Communities. On a per unit basis, property management expense
increased from $237 to $255 or 8% due primarily to the acquisition of smaller
sized communities with a higher per unit cost.
Interest expense increased by $11.7 million or 76%. This increase is
primarily the result of additional debt used to finance the purchase of the
Acquisition Communities and higher interest rates on long term fixed rate
unsecured borrowings used to refinance short term adjustable rate debt.
General and administrative expenses increased by $0.4 million. On a per
unit basis, this expense decreased from $300 to $225. The aggregate increase
reflects the additional costs related to administering the Company's expanded
portfolio, while the per unit decrease reflects the economies of scale which
have been achieved from operating a larger portfolio.
Depreciation and amortization increased by $9.4 million or 53% due
primarily to the acquisition of additional communities and the amortization of
fees related to the Bank of Boston Credit Facility.
The Company's share of the net loss of its three joint venture
communities was $0.3 million during 1995, net of $0.3 million of depreciation.
These communities were acquired in December 1994 and two of these communities
were sold in December 1995.
During 1995, the Company realized a net book loss of $0.8 million on the
sale of seven of the Acquisition Communities.
During 1995, the Company recognized an extraordinary loss of $5.6 million
from the early extinguishment of debt. The loss was primarily attributable to
a 1% prepayment penalty incurred for the retirement of the REMIC and a non-
cash charge for the sale of the related interest rate protection agreement.
Comparison of year ended December 31, 1994 to year ended December 31,
1993. Rental income increased by $39.2 million or 99%. $38.2 million of this
increase represents rental income from the Acquisition Communities. On a per
unit basis, rental income increased from $5,696 to $5,933 or 4% due primarily
to increases in rental rates and the acquisition of communities with higher
per unit rents than the previously owned communities. For the 28 Communities
which were owned during the fourth quarter of both 1993 and 1994, revenues
increased by 6%. Average occupancy decreased slightly from 95.7% to 94.8%.
Other income increased by $1.7 million or 103%. This increase represents
other income from the Acquisition Communities. On a per unit basis, other
income increased from $237 to $252 or 6%, due primarily to the acquisition of
communities with higher other income per unit, as a result of lease
cancellation fees, than the previously owned communities.
Interest income decreased by $0.1 million due primarily to a decrease in
average cash balances resulting from equity proceeds being fully invested
during 1994.
As a result of the above changes, total revenues increased from $42.0
million to $82.8 million or 97%. On a per unit basis, total revenue increased
from $6,048 to $6,234 (or from $504 to $520 per unit per month) or 3%.
Property operating and maintenance expenses increased by $13.7 million or
99%. $12.7 million of this increase represents property operating and
maintenance expenses from the Acquisition Communities. On a per unit basis,
these expenses increased from $1,986 to $2,069 or 4% due primarily to the
acquisition of communities with larger units and higher expenses per unit than
the previously owned communities.
Real estate taxes increased by $2.6 million or 79%. $2.3 million of this
increase represents real estate taxes on the Acquisition Communities. On a
per unit basis, real estate taxes decreased from $472 to $442 or 6% due to
decreases in assessed values on certain communities and the acquisition of
communities in cities which have lower real estate taxes than the previously
owned communities.
Property management expenses increased by $1.6 million or 107%. $1.4
million of this increase represents property management expenses related to
the Acquisition Communities. On a per unit basis, property management
expenses increased from $218 to $237 or 8% due primarily to increased
revenues.
Interest expense increased $10.0 million due to increased borrowings
under the Bank of Boston Credit Facility and the assumption of debt in
connection with the acquisition of additional communities. $9.5 million of
this increase relates to interest on debt used to finance the purchase of the
Acquisition Communities.
General and administrative expenses increased by $1.5 million. On a per
unit basis, this expense decreased from $356 to $300. The aggregate increase
reflects the additional costs related to administering the Company's expanded
portfolio, while the per unit decrease reflects the economies of scale which
have been achieved from operating a larger portfolio.
Depreciation and amortization increased by $9.1 million or 109% due
primarily to the acquisition of additional communities and the amortization of
fees related to the Company's credit facilities. $8.6 million of this
increase relates to depreciation on the Acquisition Communities.
Liquidity and Capital Resources. The Company expects to meet its short-
term liquidity requirements generally through its working capital and cash
flow provided by operations. The Company considers its ability to generate
cash to be adequate and expects it to continue to be adequate to meet
operating requirements and shareholder distributions in accordance with REIT
requirements both in the short and long terms.
The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and financing
capital improvements by long-term borrowings, through the issuance of debt and
the offering of additional debt and equity securities.
The Bank of Boston Credit Facility, a $150 million revolving credit
facility, may be used by the Company for financing acquisitions, development,
capital expenditures, repayment of indebtedness and working capital purposes.
At December 31, 1996, $18.1 million was outstanding on the Bank of Boston
Credit Facility, leaving $131.9 million undrawn. During January and February
1997, the Company drew an additional $23.0 million to fund the purchase of
four commercial properties, leaving $108.9 million undrawn. The Company
anticipates that, as a result of its intention to maintain a conservative
ratio of long-term debt to total market capitalization, it will be able to
obtain financing for its long-term capital needs.
The Company's long-term debt matures as follows: $6.3 million in 1997,
$24.2 million in 1998, $25.6 million in 1999, $68.6 million in 2000, $6.8
million in 2001 and $219.7 million thereafter with an average term to maturity
of approximately eight years.
The 1999 Notes, 2000 Notes, 2002 Notes and 2005 Notes contain various
customary loan covenants, and also require the Company to maintain its status
as a REIT, to maintain a ratio of total consolidated debt to total
consolidated assets of not more than 0.6 to 1, to maintain a ratio of total
consolidated secured debt to total consolidated assets of not more than 0.4 to
1, to maintain a ratio of total consolidated unencumbered assets to total
consolidated unsecured debt of not less than 1.5 to 1, and to maintain an
overall debt service ratio of not less than 1.5 to 1.
The Bank of Boston Credit Facility contains various customary loan
covenants and requires the Company to maintain its status as a REIT, to
maintain a ratio of total consolidated liabilities to total consolidated
assets of not more than 0.55 to 1, to maintain a ratio of total consolidated
secured debt to gross consolidated real estate assets of not more than 0.4 to
1, to maintain a ratio of total consolidated unencumbered operating real
estate assets to total consolidated unsecured debt of not less than 1.8 to 1
and to maintain an overall debt service coverage ratio of at least 2 to 1.
The facility also limits the number of development projects the Company may
undertake.
For a discussion of the Company's Development Communities and related
capital commitments, see "Item 1. Business - Acquisition and Development
Strategy," above.
In December 1996, the Company completed its Summit at Lake Union
development project located in Seattle, Washington and containing 150 units at
a cost of $16.5 million.
In December 1996, the Company sold two of its Communities located in
Washington, containing a total of 120 units, and received net proceeds of $1.6
million which were used to fund development costs at the Company's development
projects. The Company held a 50% interest in one of the sold Communities.
In November 1996, the Company, as part of its medium-term notes program,
sold $25 million of investment grade senior unsecured notes, which are rated
Baa3 by Moody's and BBB by Standard and Poor's and Duff and Phelps. The 1999
Notes bear interest at LIBOR plus 0.32%, are due in November 1999 and are
callable in November 1997. The net proceeds from the sale of the 1999 Notes
were used to repay amounts outstanding under the Bank of Boston Credit
Facility. The Company filed a prospectus in October 1996 allowing it to issue
up to $100 million of medium-term notes.
In October 1996, the Company completed two development projects. The
Village at Bear Creek II, a Denver, Colorado apartment community contiguous to
the Company's existing Bear Creek community, contains 216 units and was
developed at a cost of $18.8 million, including settlement of the developer's
fixed price contract, which was paid with proceeds of a $17 million draw on
the Bank of Boston Credit Facility. The operations of the two Bear Creek
communities have been combined. Seeley Lake III, a Tacoma, Washington
apartment community developed as an expansion to the Company's Village at
Seeley Lake community, contains 182 units and was developed at a cost of $9.5
million.
During the second and third quarters of 1996, the Company drew $26.0
million on the Bank of Boston Credit Facility to purchase a parcel of land,
fund the Sonterra Mortgage and fund certain developments.
In July 1996, the Company originated a $17.8 million mortgage on a 344
unit, newly constructed community in Tucson, Arizona known as Sonterra at
Williams Centre. The Sonterra Mortgage bears interest at 9% per annum and
matures in June 1999. The Company also has the exclusive option to purchase
the community for approximately $20.5 million through December 1997 and
approximately $21 million during 1998.
In July 1996, the Company filed a multi-security shelf registration
statement with the Securities and Exchange Commission for the issuance of up
to $250 million in securities. The registration statement provides the
Company with the ability to issue senior or subordinated debt securities,
preferred shares of beneficial interest, common shares of beneficial interest,
warrants to purchase debt securities, preferred shares or common shares, and
rights to purchase common shares.
In July 1996, the Company made a $0.7 million loan in connection with the
infrastructure related to a 441 unit development project in Portland, Oregon
which the Company has an option to purchase. The Company expects to purchase
the land underlying the project for $2.8 million in mid-1997 and begin
construction in the third quarter of 1997.
In June 1996, the Company's Board of Trustees approved a share
repurchase plan which authorizes the Company to repurchase up to two million
common shares. No shares have been repurchased through December 31, 1996.
In May 1996, the Company purchased a parcel of land in Denver, Colorado
for $2.1 million. The land is located contiguous to the Company's Blue Ridge
development and will represent the second phase of the Company's Palomino Park
project.
In April 1996, the Company, through a wholly-owned subsidiary, acquired
Marks West, a multifamily community containing 280 units located in Denver,
Colorado, for approximately $18 million including the estimated cost for
certain capital improvements. The acquisition was funded from cash on hand
and the assumption of $11.2 million of tax-exempt bond financing. During
October 1996, the Company remarketed the bonds which now bear interest at
6.65% and have a term of 30 years. The community's operations have been
combined with those of The Marks, an existing community located contiguous to
Marks West.
In January 1996, the Company prepaid it's $4.9 million mortgage on the
community known as Parkwood East from cash on hand. This mortgage bore
interest at 9.625% and would have matured in March 1996.
In December 1995, the Company marketed and sold $14.8 million of tax
exempt bonds to fund construction at one of its Development Communities. The
bonds have a variable rate of interest and a term of 40 years. $4.8 million
of the bond proceeds were being held in escrow at December 31, 1996 pending
their use for the funding of development.
In December 1995, the Company sold a 440 unit community located in
Oklahoma and two communities located in Washington consisting of 233 apartment
units in which it held a 50% interest, and received aggregate net proceeds of
approximately $6.3 million. These proceeds were primarily used to repay a
$4.9 million mortgage in January 1996.
In August 1995, the Company sold $125 million of investment grade senior
unsecured notes, which are rated Baa3 by Moody's and BBB by Standard & Poor's
and Duff & Phelps. The 2000 Notes bear interest at 7.25%, are due on August
15, 2000 and were priced at 99.381% to yield 7.40%. The 2005 Notes bear
interest at 7.75%, are due on August 15, 2005 and were priced at 98.785% to
yield 7.93%. The 2005 Notes are redeemable at any time after August 24, 2002,
at the option of the Company, subject to certain make whole provisions as
defined in the 2005 Notes. The net proceeds from the sale of the 2000 Notes
and the 2005 Notes were used to repay the outstanding balance of the Bank of
Boston Credit Facility and to prepay the REMIC.
In August 1995, the Company sold 2,300,000 Series B Preferred Shares,
which are rated Ba1 by Moody's and BBB- by Standard & Poor's and Duff &
Phelps. The net proceeds from the issuance totaled approximately $55.7
million and were used to repay a portion of the outstanding balance of the
Bank of Boston Credit Facility.
In August 1995, the Company sold a 32 unit community located in Tacoma,
Washington for approximately $0.6 million. Proceeds from the sale were used
to prepay a portion of the REMIC.
In June 1995, the Company sold three communities located in Oklahoma,
which consisted of 1,540 apartment units, for approximately $29.3 million. The
net proceeds from these sales were used to repay a portion of the outstanding
balance of the Bank of Boston Credit Facility.
In June 1995, the Bank of Boston Credit Facility was modified to convert
it to an unsecured facility and to reduce the interest rate on advances from
LIBOR plus 1.75% to LIBOR plus 1.50%. These modifications resulted in the
release of liens on 18 Communities with a gross book value of approximately
$206 million and also provided for further rate reductions based upon the
achievement of certain increases in the Company's investment grade credit
rating. In addition, the term of the facility was extended from two to three
years, with subsequent annual one-year extensions subject to bank approval.
In April 1995, the Company implemented the DRIP. During 1996 and 1995,
the Company issued approximately $0.6 million and $1.6 million of additional
common equity, respectively.
In January 1995, the Company completed the sale of its 2002 Notes. The
2002 Notes were priced at 99.396% to yield 9.495% and will have an effective
interest cost to the Company of 9.65% after giving effect to an interest rate
protection agreement. The 2002 Notes, which are rated Baa3 by Moody's and BBB
by Standard & Poor's and Duff & Phelps, are redeemable at any time after
February 1, 2000, at the option of the Company, subject to certain make whole
provisions as defined in the 2002 Notes. The net proceeds from the sale of
the 2002 Notes were used to prepay the remaining balance of the GECC Oklahoma
Loan and to repay a portion of the outstanding balance of the Bank of Boston
Credit Facility.
In December 1994, the Company completed the Holly Acquisition which was
financed through the issuance of approximately 6 million common shares and the
assumption of $129.7 million of mortgage notes, approximately $118.1 million
of which were subsequently repaid in 1995.
In September 1994, the Company increased the Bank of Boston Credit
Facility to $150 million and subsequently borrowed an additional $90 million
under this facility. Proceeds from those borrowings were used for working
capital purposes and to prepay (i) the $13.3 million balance on a mortgage
note, (ii) the remaining balance of $25.1 million on a convertible note due to
GECC, (iii) $41 million of the GECC Oklahoma Loan and (iv) the $8 million
balance outstanding on a credit facility with GECC, which was terminated
simultaneously with this prepayment.
In August 1994, the Company completed the August 1994 Private Placement.
The net proceeds from the August 1994 Private Placement totaled approximately
$31 million, and were used to prepay a portion of the GECC Oklahoma Loan.
In May 1994, the Company acquired a portfolio of eight multifamily
communities in Tulsa, Oklahoma and six multifamily communities in Oklahoma
City, Oklahoma, containing 5,101 apartment units for an aggregate purchase
price of approximately $133 million. In connection with this acquisition, the
Company assumed the GECC Oklahoma Loan. This loan has subsequently been
prepaid. The balance of the purchase price was funded with borrowings under
the Company's credit facilities and from cash on hand.
In March 1994, the Company acquired two multifamily communities in
Phoenix, Arizona and a multifamily community in Tucson, Arizona containing
1,092 apartment units for an aggregate purchase price of approximately $67.3
million. In connection with the two Phoenix acquisitions, the Company assumed
two first mortgage notes, one for approximately $6 million which bears
interest at a fixed rate of 9.05% and matures in November 1997 and one for
approximately $13.4 million which was subsequently prepaid by the Company in
September 1994.
In January 1994, the Company prepaid $21.8 million in principal on a
convertible note due to GECC; in September 1994, the Company prepaid the
remaining $25.1 million principal balance of this note. GECC did not exercise
its conversion rights.
During 1993 the Company raised $165 million of new equity in connection
with the July 1993 Offering and the Series A Preferred Offering. The proceeds
from these offerings were used primarily to acquire communities and to prepay
$20.3 million of adjustable rate debt.
The net cash flow of the Company provided by operating activities
increased from $41.8 million for the year ended December 31, 1995 to $55.2
million for the year ended December 31, 1996 and increased from $35.7 million
for the year ended December 31, 1994 to $41.8 million for the year ended
December 31, 1995. These increases generally resulted from the acquisition
and development of communities and increases in revenues and control over
operating expenses of previously owned communities.
Investing activities of the Company used $65.6 million and $87.0 million
during the years ended December 31, 1996 and 1994, respectively, and provided
$7.3 million of cash during the year ended December 31, 1995. Investing
activities consist primarily of the acquisition (disposition) and development
of multifamily communities. The Company completed the development of its
first three multifamily communities in 1996. The Company has acquired
additional communities through the assumption of debt and the issuance of
common shares. The Company acquired one and 51 multifamily communities during
the years ended December 31, 1996 and 1994, respectively, and did not acquire
any multifamily communities during the year ended December 31, 1995. The
Company sold two and seven multifamily communities during the years ended
December 31, 1996 and 1995, respectively, and did not sell any multifamily
communities during the year ended December 31, 1994. The Company currently
has two communities under development.
Financing activities of the Company used $8.2 million and $32.8 million
during the years ended December 31, 1996 and 1995, respectively, and provided
$32.1 million during the year ended December 31, 1994. The 1999 Notes, 2000
Notes, 2002 Notes, 2005 Notes, Series B Preferred Offering, Bank of Boston
Credit Facility, Tax Exempt Bonds, August 1994 Private Placement, July 1993
Offering, and Series A Preferred Offering served as the primary sources of
cash flow from financing activities. The primary uses of cash flow were the
acquisition and development of communities, the payment of distributions to
shareholders and the repayment of debt, as described above.
See the accompanying consolidated statements of cash flows included in
the consolidated financial statements for a reconciliation of the Company's
cash position for the years described therein.
Funds from Operations. The Company and industry analysts generally
consider funds from operations to be one appropriate measure of the
performance of real estate companies including an equity REIT because it is
predicated on a cash flow analysis, as opposed to a measure predicated on
generally accepted accounting principals ("GAAP"), which gives effect to non-
cash items such as depreciation. Funds from operations as defined by the
National Association of Real Estate Investment Trusts ("NAREIT") represents
net income (loss) (computed in accordance with GAAP), excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect funds from operations on the same basis. Funds from
operations does not represent cash generated from operating activities in
accordance with GAAP and therefore should not be considered an alternative to
net income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity and is not necessarily
indicative of cash available to fund cash needs.
During 1995, NAREIT implemented a revised definition of FFO to be adopted
in 1996. The principal change impacting the Company under the new definition
is that only real estate related depreciation and amortization is added back
to net operating income in computing FFO. The FFO disclosed herein has been
retroactively restated to comply with the revised definition.
For the year ended December 31, 1996, FFO increased by $1.7 million, when
compared to the year ended December 31, 1995, to approximately $36.1 million.
For the year ended December 31, 1995, FFO increased by $14.3 million, when
compared to the year ended December 31, 1994, to approximately $34.4 million.
Summary Statements
of Operating Data
Year Ended December 31
------------------------------------------
1996 1995 1994
------------ ----------- -----------
Revenues $131,821 $131,232 $ 82,794
Expenses 109,035 113,712 73,299
-------- -------- --------
22,786 17,520 9,495
Loss on sale of
investment communities (66) (819) --
Loss on joint venture communities (58) (279) --
Loss on debt extinguishment -- (5,553) --
-------- -------- --------
22,662 10,869 9,495
Preferred distributions 12,548 8,973 7,000
-------- -------- --------
Net income (loss) available for
common shareholders $ 10,114 $ 1,896 $ 2,495
Add:
Depreciation and amortization 25,773 25,744 16,393
Depreciation on JV communities 105 343 --
Write off of deferred financing costs -- -- 1,203
Loss on debt extinguishment -- 5,553 --
(Gain) loss on sale of investment
communities 66 819 --
-------- -------- --------
Funds from operations $ 36,058 $ 34,355 $ 20,091
======== ======== ========
NAREIT's new definition did not address the treatment of capitalized
expenditures, which varies widely within the REIT industry. Below is a
listing of certain repair and replacement expenditures that are common to all
residential communities and the accounting treatment utilized by the Company.
1996 1995
Amount Amount Company's
Item (000s) (000s) Treatment
- -------------------------------- -------- -------- -----------
Carpet Replacement $2,138 $2,399 Expensed
Floor tiles 491 465 Expensed
Appliances 522 321 Expensed
Blinds, shades 153 158 Expensed
Hot water heaters 110 108 Expensed
Exterior painting of apartments 668 185 Expensed
Landscaping 1,931 2,020 Expensed
Roof 63 50 < $5,000 Expensed
Driveway, parking lot 27 1,091 < $5,000 Expensed
The Company capitalized approximately $2,502,000 or $135 per unit and
expensed approximately $12,504,000 or $675 per unit of non-acquisition related
repair and replacement expenditures in 1996. In 1995, the Company capitalized
$1,400,000 or $137 per unit and expensed $12,382,000 or $638 per unit of such
expenditures. Had the Company capitalized a greater portion of such
expenditures, reported earnings would have been increased. The Company plans
to maintain these approximate levels of capital expenditures in 1997.
Inflation. Over 90% of the leases at the Communities are for a term of
one year or less which may enable the Company to seek increased rents upon
renewal or reletting of apartment units. Such short term leases generally
minimize the risk to the Company of the adverse effects of inflation.
Item 8. Consolidated Financial Statements and Supplementary Data.
The response to this Item 8 is included as a separate section of this
annual report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Trustees and Executive Officers of the Registrant.
The current trustees and executive officers of the Company, their ages
and their positions and offices are as follows:
Name Age Positions and Offices Held
- --------------------------- ---- ---------------------------------------
Jeffrey H. Lynford. . . . 49 Chairman of the Board, Secretary and
Trustee**
Edward Lowenthal. . . . . 52 President, Chief Executive Officer and
Trustee*
Daniel M. Kelley. . . . . 50 Vice Chairman of the Board and Trustee*
Donald D. MacKenzie . . . 34 Executive Vice President - Director of
Property Operations
Gregory F. Hughes . . . . 33 Vice President - Chief Financial Officer
David M. Strong . . . . . 38 Vice President
Rodney F. Du Bois . . . . 60 Trustee*
Mark S. Germain . . . . . 46 Trustee**
Frank J. Hoenemeyer . . . 77 Trustee***
Frank J. Sixt . . . . . . 45 Trustee***
______________________
* Term expires 1997.
** Term expires 1998.
*** Term expires 1999.
Following are biographical descriptions of the current trustees and
executive officers of the Company:
Jeffrey H. Lynford has been the Chairman of the Board and Secretary
of the Company since its formation in July 1992 and was the Chairman of the
Board of the Company's predecessor, Wellsford Group, Inc. ("WGI"), since its
formation in 1986. From July 1992 until December 1994 he also was the Chief
Financial Officer of the Company. Mr. Lynford currently serves as trustee of
the National Trust for Historic Preservation and as a director of three mutual
funds: Cohen & Steers Total Return Realty Fund, Inc., Cohen & Steers Realty
Shares, Inc. and Cohen & Steers Realty Income Fund, Inc. He is also a member
of the New York bar. Prior to founding WGI, Mr. Lynford gained real estate and
investment banking experience as a partner of Bear Stearns & Co., and a
managing director of A.G. Becker Paribas, Inc..
Edward Lowenthal has been the President and Chief Executive Officer
and a trustee of the Company since its formation in July 1992 and was
president of WGI since its formation in 1986. Mr. Lowenthal currently serves
as a director of United American Energy Corporation, a developer, owner and
operator of hydroelectric and other alternative energy facilities, a director
of Corporate Renaissance Group, Inc., a mutual fund, a director of Omega
Healthcare, Inc., a REIT, a director of Great Lakes REIT, Inc., a REIT that
owns and operates office buildings, and as a trustee of Corporate Realty
Income Trust, a REIT. He is also a member of The Board of Governors of
NAREIT. Prior to founding WGI, Mr. Lowenthal gained real estate and
investment banking experience as a partner of Bear Stearns & Co., a managing
director of A.G. Becker Paribas, Inc., and a partner in the law firm of
Robinson Silverman Pearce Aronsohn & Berman LLP.
Daniel M. Kelley has been, since the Holly Acquisition, the Vice
Chairman of the Board and a trustee of the Company. In addition, Mr. Kelley
is the President of the Company's development subsidiary and the subsidiary
which owns the Communities in Washington. Mr. Kelley was the President, Chief
Executive Officer, and a director of Holly since its inception. Mr. Kelley
co-founded the predecessor of Holly in 1972 and was its President from 1972
and its Chief Executive Officer from 1978. He is a past director of the
Tacoma Homebuilders Association, and is currently a director of Puget Sound
Title Insurance Company.
Donald D. MacKenzie has been Executive Vice President - Director of
Property Operations of the Company since September 1996. From December 1994
until September 1996 he was Vice President - Acquisitions and Development of
the Company. From July 1992 until December 1994 he was Vice President for
Acquisitions of the Company. He also was a Vice President of WGI since 1988.
From 1986 to 1988, Mr. MacKenzie was an asset manager with Wallace Associates
Consulting Group, a national real estate consulting firm specializing in
providing strategic consultation to the banking industry. Previously he was
employed with Paine Webber Incorporated as a financial analyst in the Mergers
and Acquisitions Group.
Gregory F. Hughes has been Vice President - Chief Financial Officer
of the Company since December 1994. From March 1993 until December 1994 he was
a Vice President and Chief Accounting Officer of the Company. During 1992,
Mr. Hughes was a controller with Jones Lang Wootton Realty Advisors, a firm
that provides real estate asset management and investment consultation
services. From 1985 to 1991, Mr. Hughes was a manager with Kenneth Leventhal
& Company, a public accounting firm specializing in real estate and financial
services. Mr. Hughes is a certified public accountant.
David M. Strong has been Vice President of the Company since July
1995. From July 1994 until July 1995 he was Acquisitions and Development
Associate of the Company. From 1991 to 1994, Mr. Strong was President and
owner of LPI Management, Inc., a commercial real estate company providing
management and consulting services. From 1984 to 1991, he was a senior
executive with the London Pacific Investment Group, a real estate development,
investment and management firm active in Southern California and Western
Canada. From 1979 to 1984, Mr. Strong was a manager with Arthur Young, a
public accounting firm. Mr. Strong is a member of the Canadian Institute of
Chartered Accountants.
Rodney F. Du Bois has been a trustee of the Company since November
1992. Mr. Du Bois also has been President and co-owner of Goshawk
Corporation, which provides finance and general corporate services, since
1982. Mr. Du Bois was a founder of Mountain Cable Company, a cable TV
multiple system operator, and its Chairman from 1985 until the company's sale
in 1988. Previously Mr. Du Bois served as Executive Vice President and a
director of C. Brewer and Co., Chairman of Alexander and Baldwin Agribusiness,
Inc., a managing director of Warburg, Paribas, Becker, Inc. and a Professor of
Real Estate at the Amos Tuck School of Business Administration at Dartmouth
College.
Mark S. Germain has been a trustee of the Company since November
1992. Currently he is employed by Olmsted Group L.L.C., which is a consultant
to biotechnology and other high technology companies. Mr. Germain also serves
as a board member of several privately held biotechnology companies.
Previously, from 1990 to 1994, Mr. Germain was employed by D. Blech &
Company, Incorporated, a merchant bank. From 1986 to 1989, he was President
and Chief Operating Officer of The Vista Organization, Ltd., and from 1989 to
1990, its President and Chief Executive Officer. Mr. Germain was a partner in
a New York law firm prior to 1986.
Frank J. Hoenemeyer has been a trustee of the Company since November
1992. Mr. Hoenemeyer also currently serves as a director of American
International Group, Inc., Mitsui Trust Bank (U.S.A.), W.P. Carey Advisors,
Inc. and Carey Fiduciary Advisors, Inc. (subsidiaries of W.P. Carey & Co.,
Inc.) and ARIAD Pharmaceuticals, Inc. and as Vice Chairman of the Investment
Committee of W.P. Carey & Co., Inc. From 1947 to 1984, he was employed by The
Prudential Insurance Company of America where he served as Vice Chairman and
Chief Investment Officer prior to his retirement.
Frank J. Sixt has been a trustee of the Company since November
1992. Mr. Sixt also currently serves as an executive director of Cheung Kong
(Holdings) Limited, Cheung Kong Infrastructure Holdings Limited and Hutchison
Whampoa Limited groups of Companies. He also serves as a director of Husky
Oil Limited, Concord Property and Financial Company Limited and World
Financial Properties Limited. He is also a director of and Chairman of the
Executive Committee of the Board of Directors of Gordon Capital Corporation.
Previously, from 1987 to 1990, Mr. Sixt was a partner in the law firm of
Stikeman Elliott.
Item 11. Executive Compensation.
The following table sets forth certain information concerning the compensation
of the Chief Executive Officer and the four other most highly compensated
Executive Officers of the Company for the fiscal years ended December 31,
1996, 1995 and 1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
-------------------------------------------- ------------------------------------------------------
Awards Payouts
----------------------- -------------------------
Other Restricted Securities LTIP All Other
Name and Principal Annual Stock Underlying Payouts Compensation
Position Year Salary Bonus Compensation Award(s) Options/SAR (B) (C)
- ------------------- ---- -------- -------- ------------ ---------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward Lowenthal 1996 $220,500 $227,115 --- --- --- --- $201,916
President and 1995 $220,500 --- --- --- 25,000 $100,000 $217,588
Chief Executive Officer 1994 $210,000 $157,500 --- --- 62,500 $100,000 $ 73,764
Jeffrey H. Lynford 1996 $220,500 $227,115 --- --- --- --- $201,907
Chairman of the Board 1995 $220,500 --- --- --- 25,000 $100,000 $217,577
and Secretary 1994 $210,000 $157,500 --- --- 62,500 $100,000 $ 75,602
Daniel M. Kelley 1996 $220,500 $115,762 --- --- --- --- $ 43,245
Vice Chairman 1995 $220,500 --- --- --- 25,000 --- $ 47,805
of the Board 1994 $ 10,932 (D) --- --- --- 115,625 --- $ 1,111
Donald D. MacKenzie 1996 $144,250 $ 72,093 --- --- --- --- $ 76,906
Executive Vice President 1995 $132,300 --- --- --- 25,000 $ 25,000 $ 45,318
Director of Property 1994 $126,000 $ 94,500 --- --- 10,000 $ 25,000 $ 16,008
Operations
Gregory F. Hughes 1996 $130,750 $ 65,375 --- --- --- --- $ 76,906
Vice President - 1995 $120,000 --- --- --- 25,000 $ 25,000 $ 45,318
Chief Financial Officer 1994 $100,000 $ 75,000 --- --- 5,000 $ 25,000 $ 15,943
</TABLE>
___________________
Footnotes:
(A) No named Executive Officer received perquisites or other personal
benefits aggregating the lesser of 10% of his total annual salary and
bonus or $50,000.
(B) "LTIP Payouts" refers to long-term incentive plan payouts. The amounts
set forth in this column represent the value of the restricted Common
Shares previously granted to each Executive Officer which vested in 1994
and 1995, based upon the value of such shares on the date of grant. In
December 1993, Messrs. Lowenthal and Lynford each received a grant of
18,957 restricted Common Shares and Messrs. MacKenzie and Hughes each
received a grant of 4,739 restricted Common Shares. Pursuant to the
terms of the original grants, twenty (20%) percent of each Executive
Officer's restricted Common Shares were to vest on each anniversary date
of the grant (the first of which was December 6, 1994) over a 5-year
period provided that the Company has achieved certain performance goals
(a 5% increase in funds from operations per share per annum based on a
September 30 year end) and the Executive Officer is employed by the
Company on the applicable anniversary date. In the event either
condition is not satisfied as of the applicable anniversary date, the
Company was to redeem the Common Shares that were due to vest on such
date at $.01 per share. No restricted Common Shares vested during 1996;
the Executive Compensation Committee of the Company's Board of Directors
elected not to redeem such shares but rather to have all of such shares
and the other remaining unvested shares vest in equal amounts on the two
remaining anniversary dates of the original grant, subject to the same
performance and employment conditions. If the Executive Officer resigns
or is terminated for cause, the Company will also redeem, at the same
price, all Common Shares that have not yet vested. Unless and until the
Company redeems such Common Shares, each named Executive Officer has sole
voting power and the right to receive all distributions with respect to
such Common Shares. The number of restricted Common Shares granted to
each of Messrs. Lowenthal, Lynford, MacKenzie and Hughes and which have
not yet vested is 11,375, 11,375, 2,843 and 2,843, respectively, and the
value of such restricted Common Shares is $275,844, $275,844, $68,943 and
$68,943, respectively, based on the closing price of the Common Shares on
December 31, 1996, the last day of trading in calendar year 1996.
(C) The amounts set forth include imputed interest and forgiven loan
principal for the years ended December 31, 1996, 1995 and 1994. Messrs.
Lowenthal and Lynford each received a $500,000 loan to purchase 18,957
Common Shares from the Company at $26.375 per Common Share, the closing
price on the date of the loans, in 1993, and a $1,210,938 loan to
purchase 62,500 Common Shares from the Company at $19.375 per Common
Share, the closing price on the date of the loans, in 1994. Mr. Kelley
received a $312,500 loan to purchase 15,625 Common Shares from the
Company at $20.00 per Common Share, the closing price on the date of the
loans, in 1994. Messrs. MacKenzie and Hughes each received a $125,000
loan to purchase 4,739 Common Shares from the Company in 1993 and a
$242,188 loan to purchase 12,500 Common Shares from the Company in 1994,
at the same prices as Messrs. Lynford and Lowenthal, a $250,000 loan to
purchase 10,989 Common Shares from the Company at $22.75 per Common
Share, the closing price on the date of the loans, in 1995, and a
$500,000 loan to purchase 21,621 Common Shares from the Company at
$23.125 per Common Share, the closing price on the date of the loans, in
1996. These loans mature ten years after the date of grant, bear no
interest, are secured by the Common Shares purchased and are otherwise
non-recourse. Five (5%) percent of each officer's loans will be forgiven
each year during the term of the loan provided that the officer is then
employed by the Company. In the event of a change of control of the
Company, an officer's death or permanent disability or termination of his
employment by the Company without cause, the outstanding amount of the
applicable loan will be forgiven in full. In the event an officer leaves
the employ of the Company or is terminated with cause, the outstanding
amount of the applicable loan will be immediately due and payable.
The amounts set forth also include contributions to the Company's defined
contribution savings plan pursuant to Section 401 of the Internal Revenue
Code. $750 of such contributions were made by the Company on behalf of
each of Messrs. Lowenthal, Lynford, Kelley, MacKenzie, and Hughes
relating to 1996. $2,310 of such contributions were made by the Company
on behalf of each of Messrs. Lowenthal, Lynford, MacKenzie and Hughes
relating to 1995. $968 of such contributions were made by the Company on
behalf of each of Messrs. Lowenthal, Lynford and MacKenzie relating to
1994; Mr. Hughes received $903 of such contributions in 1994.
The amounts set forth also include annual premiums of $14,594 and $14,585
in 1996, $14,596 and $14,585 in 1995 and $11,871 and $13,709 in 1994 made
by the Company related to split dollar life insurance plans for the
benefit of Messrs. Lowenthal and Lynford, respectively. The Company
expects to be reimbursed for these payments from the proceeds of this
insurance, if any.
The amounts set forth also include $10,839 and $8,130 of lease payments
related to Mr. Kelley's automobile in 1995 and 1996, respectively.
(D) The amount set forth represents the salary received from the Company
during the fiscal year ended December 31, 1994. On an annualized basis,
Mr. Kelley would have received $210,000.
The Company did not grant any options or free-standing share appreciation
rights to any of the Executive Officers named in the Summary Compensation
Table above during this year.
The following table sets forth certain information concerning the value
of unexercised options as of December 31, 1996 held by the Executive Officers
named in the Summary Compensation Table above. No options were exercised by
the Executive Officers during the fiscal year ended December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of in-the Money
Options/SARs at Fiscal Options/SARs at
Year-End (A) Fiscal Year-End (B)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Edward Lowenthal 142,500 95,000 $316,375 $309,250
Jeffrey H. Lynford 142,500 95,000 $316,375 $309,250
Daniel M. Kelley 103,125 37,500 $340,032 $103,875
Donald D. MacKenzie 41,000 35,000 $100,620 $ 86,230
Gregory F. Hughes 11,200 35,800 $ 5,310 $ 64,990
____________
Footnotes:
(A) All options had an equal number of tandem share appreciation rights
("SARs") that may be exercised in lieu of, and not in addition to, the
corresponding options; such SARs were waived in February, 1997 by the
Executive Officers. The right to receive reload options was given in
connection with such options. The reload options enable the Executive
Officer to purchase a number of Common Shares equal to the number of
Common Shares delivered by him to exercise the underlying option. The
effective date of the grant of the reload options will be the date the
underlying option is exercised by delivering Common Shares to the
Company. The reload options have the same expiration date as the
underlying options and will have an exercise price equal to the fair
market value of the Common Shares on the effective date of the grant of
the reload options. Certain Executive Officers and trustees of the
Company exercised their right to receive reload options in March 1997.
(B) The fair market value on December 31, 1996 of the Common Shares
underlying the options was $24.25 per Common Share.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial ownership
of common shares by each person known by the Company to be the beneficial
owner of more than five percent of the Company's outstanding common shares, by
each trustee of the Company, by each officer of the Company named in the
Summary Compensation Table incorporated by reference into Item 11 above, and
by all trustees and officers of the Company as a group. Unless specifically
stated in the notes to the table, no person named in the table is the
beneficial owner of any preferred shares. Each person named in the table has
sole voting and investment power with respect to all shares shown as
beneficially owned by such person, except as otherwise set forth in the notes
to the table.
Percent of
Shares Shares
Beneficially Beneficially
Name of Beneficial Owner and Business Address Owned Owned
- --------------------------------------------- ------------ ----------
Jeffrey H. Lynford (1). . . . . . . . . . . . . . . .405,708. . . . . .2.2%
c/o Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Edward Lowenthal (2). . . . . . . . . . . . . . . . .406,701. . . . . .2.2
c/o Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Daniel M. Kelley (3). . . . . . . . . . . . . . . . .251,528. . . . . .1.4
c/o Wellsford Residential Property Trust
101 East 26th Street, Suite 301
Tacoma, Washington 98421
Rodney F. Du Bois (4) . . . . . . . . . . . . . . . . .7,000. . . . .(*)
32 Rip Road
Hanover, New Hampshire 03755
Mark S. Germain (5) . . . . . . . . . . . . . . . . . 15,000. . . . . .0.1
6 Olmsted Road
Scarsdale, New York 10583
Frank J. Hoenemeyer (6) . . . . . . . . . . . . . . . .3,732. . . . .(*)
7 Harwood Drive
Madison, New Jersey 07940
Frank J. Sixt (5) . . . . . . . . . . . . . . . . . . 15,000. . . . . .0.1
c/o Cheung Kong (Holdings) Limited
29 Queen's Road Central
Hong Kong
Donald D. MacKenzie (7) . . . . . . . . . . . . . . .143,571. . . . . .0.8
c/o Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, Colorado 80202
Gregory F. Hughes (8) . . . . . . . . . . . . . . . .102,086. . . . . .0.6
c/o Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
David M. Strong (9) . . . . . . . . . . . . . . . . . 32,787. . . . . .0.2
c/o Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, CO 80202
All trustees and officers as a group
(10 persons) (10) . . . . . . . . . . . . . . . . .1,383,113. . . . . .7.6
_____________
Footnotes:
(*) Less than 0.1 percent.
(1) Includes 206,672 common shares issuable upon the exercise of options
(129,172 of which are currently exercisable) granted pursuant to the
Company's share option plans and 6,802 common shares held in the
Company's 401(K) savings plan for the benefit of Mr. Lynford. Also
includes 6,732 common shares held by the Lynford Family Charitable
Trust, u/a dated December 16, 1984; Mr. Lynford disclaims beneficial
ownership of such shares.
(2) Includes 206,672 common shares issuable upon the exercise of options
(129,172 of which are currently exercisable) granted pursuant to the
Company's share option plans, 3,146 common shares held in the Company's
401(K) savings plan for the benefit of Mr. Lowenthal and 279 common
shares purchased through the DRIP. Also includes 1,162 common shares
held by Ilene Lowenthal, Mr. Lowenthal's wife, and 599 common shares
held by Jared Lowenthal, Mr. Lowenthal's son; Mr. Lowenthal disclaims
beneficial ownership of such shares. Does not include 1,000 Series B
preferred shares held by Mr. Lowenthal.
(3) Includes 114,246 common shares issuable upon the exercise of options
(84,871 of which are currently exercisable), granted pursuant to the
Company's share option plans and 600 common shares held in a Keogh plan.
Also includes 675 common shares held by Nancy Kelley, Mr. Kelley's wife;
Mr. Kelley disclaims beneficial ownership of such shares.
(4) Includes 6,000 common shares held by Carol Du Bois, Mr. Du Bois' wife;
Mr. Du Bois disclaims beneficial ownership of such shares. Does not
include 4,000 Series A preferred shares held by Mr. Du Bois.
(5) Includes 15,000 common shares issuable upon the exercise of options (all
of which are currently exercisable) granted pursuant to the Company's
share option plans.
(6) Includes 3,732 common shares held by Frank J. Hoenemeyer Employee's
Retirement Plan & Trust of which Mr. Hoenemeyer is trustee.
(7) Includes 76,000 common shares issuable upon the exercise of options
(48,000 of which are currently exercisable) granted pursuant to the
Company's share option plans. Does not include 1,000 Series A preferred
shares held by Mr. MacKenzie.
(8) Includes 45,345 common shares issuable upon the exercise of options
(15,545 of which are currently exercisable) granted pursuant to the
Company's share option plans.
(9) Includes 15,345 common shares issuable upon the exercise of options
(2,045 of which are currently exercisable) granted pursuant to the
Company's share option plans.
(10) Includes the common shares referred to in footnotes (1) through (9)
above.
Item 13. Certain Relationships and Related Transactions.
In connection with the merger of Holly into a wholly-owned subsidiary of
the Company in December 1994, the Company entered into a two-year consulting
agreement with David M. Kelley, Daniel M. Kelley's brother, providing for an
annual consulting fee of $170,000 in 1995 and 1996. Under the agreement,
David M. Kelley consulted with and advised the Company with respect to the
construction of certain development projects in the Puget Sound region of the
State of Washington.
In connection with the construction by the Company of one of its
development projects, a construction management contract was entered into with
DRK Development, Inc. ("DRK"), the stock of which is owned solely by D. Reed
Kelley, the nephew of Daniel M. Kelley. During 1996 and 1995, DRK was paid
$89,600 and $132,000 respectively, under this contract.
Pursuant to the Company's Long-Term Management Incentive Plan certain of
the Company's Executive Officers received a loan from the Company during 1996
to purchase Common Shares from the Company. Messrs. MacKenzie and Hughes each
received a $500,000 loan to purchase 21,621 Common Shares at $23.125 per
Common Share, the closing price on the date of the loans. Mr. Strong received
a $250,000 loan to purchase 10,810 Common Shares at the same price as Messrs.
MacKenzie and Hughes. These loans mature in ten years, bear no interest, are
secured by the Common Shares purchased and are otherwise non-recourse. Five
(5%) percent of each officer's loan will be forgiven each year during the term
of the loan provided that the officer is then employed by the Company. In the
event of a change in control of the Company, an officer's death or permanent
disability or termination of his employment by the Company without cause, the
outstanding amount of the applicable loan will be forgiven in full. In the
event an officer leaves the employ of the Company or is terminated with cause,
the outstanding amount of the applicable loan will be immediately due and
payable. The largest aggregate loan amounts outstanding to each of the
Executive Officers during the fiscal year ended December 31, 1996 were
$1,600,391, $1,600,391, $296,875, $1,092,578, $1,092,578, and $375,000,
relating to Messrs. Lowenthal, Lynford, Kelley, MacKenzie, Hughes, and Strong,
respectively.
The Company has entered into employment agreements with each of its
officers. Such agreements are for terms which expire between December 1997
and December 1998, and provide for aggregate annual base salaries of $1.1
million and $0.9 million in 1997 and 1998, respectively.
The aggregate purchase price for the Commercial Properties, described in
"Item 1. Business - Recent Developments" above, includes approximately $2.25
million in value of common shares of WRP Newco to be issued to an entity in
consideration for the assignment of the purchase contracts entered into by
such entity. Upon liquidation of such entity, each of the Chairman of the
Board and President of the Company, Messrs. Lynford and Lowenthal, will
receive approximately 16.4% of such shares, and the wife of Mark Germain, a
trustee of the Company, will receive approximately 13.8% of such shares. Each
are owners of such entity.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
The following consolidated financial information is included as a
separate section of this annual report on Form 10-K:
Consolidated Balance Sheets as of December 31, 1996 and 1995.
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Changes in Shareholders' Equity for
the years ended December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
III. Real Estate and Accumulated Depreciation
All other schedules have been omitted because the required
information of such other schedules is not present, is not present in amounts
sufficient to require submission of the schedule or is included in the
consolidated financial statements.
(3) Exhibits
(a) 3.1 Amended and Restated Declaration of Trust and amendments
thereto.*
3.2 Amended and Restated Bylaws.++++
3.3 Articles Supplementary classifying 4,600,000 Shares of
Beneficial Interest as Series A Cumulative Convertible
Preferred Shares of Beneficial Interest.*
3.4 Articles Supplementary classifying 2,300,000 Shares of
Beneficial Interest as Series B Cumulative Redeemable
Preferred Shares of Beneficial Interest.***
4.1 Specimen certificate for Common Shares of Beneficial
Interest.o
4.2 Specimen certificate for Series A Cumulative Convertible
Preferred Shares of Beneficial Interest.oo
4.3 Specimen certificate for Series B Cumulative Redeemable
Preferred Shares of Beneficial Interest.***
10.1 Employment Agreement between Wellsford Residential Property
Trust (the "Company") and Jeffrey H. Lynford.oooo
10.2 Employment Agreement between the Company and Edward
Lowenthal.oooo
10.3 Employment Agreement between the Company and Donald D.
MacKenzie. oooo
10.4 Employment Agreement between the Company and Gregory F.
Hughes. oooo
10.5 Employment Agreement between the Company and Daniel M.
Kelley.ooo
10.6 Employment Agreement between the Company and David M. Strong.
oooo
10.7 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and Jeffrey H. Lynford.
10.8 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and Edward Lowenthal.
10.9 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and Daniel M. Kelley.
10.10 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and Donald D. MacKenzie.
10.11 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and Gregory F. Hughes.
10.12 Amendment to Compensation Agreements dated as of September
16, 1996 between the Company and David M. Strong.
10.13 Wellsford Residential Property Trust 1992 Share Option
Plan.**
10.14 Wellsford Residential Property Trust Long-Term Management
Incentive Plan.ooo
10.15 Amendment to Restricted Share Grant Letter Agreement dated as
of October 10, 1996 between the Company and Jeffrey H.
Lynford.
10.16 Amendment to Restricted Share Grant Letter Agreement dated as
of October 10, 1996 between the Company and Edward Lowenthal.
10.17 Amendment to Restricted Share Grant Letter Agreement dated as
of October 10, 1996 between the Company and Donald D.
MacKenzie.
10.18 Amendment to Restricted Share Grant Letter Agreement dated as
of October 10, 1996 between the Company and Gregory F.
Hughes.
10.19 $150 million Second Amended and Restated Revolving Credit
Agreement, dated as of June 30, 1995, between The First
National Bank of Boston, as agent, and the Company.+
10.20 First Amendment to Second Amended and Restated Revolving
Credit Agreement, dated as of December 1, 1995, by and among
The First National Bank of Boston, as agent, and the Company.
10.21 Promissory Notes from the Company to The First National Bank
of Boston and to other lenders party to Second Amended and
Restated Revolving Credit Agreement, aggregating $150
million. oooo
10.22 Indenture dated as of January 30, 1995 with The First
National Bank of Boston, as Trustee, for the Company's 9-3/8%
Notes due February 1, 2002. ooo
10.23 9-3/8% Note due February 1, 2002 in the principal amount of
$100 million.ooo
10.24 Indenture dated as of August 21, 1995 with United States
Trust Company of New York, as Trustee. oooo
10.25 7-1/4% Note due August 15, 2000 in the principal amount of
$55 million. oooo
10.26 7-3/4% Note due August 15, 2005 in the principal amount of
$70 million. oooo
10.27 Trust Indenture dated as of December 1, 1995 between Palomino
Park Public Improvements Corporation ("PPPIC") and United
States Trust Company of New York, as trustee, securing the
Company's Assessment Lien Revenue Bonds Series 1995 $14.8
million. oooo
10.28 Letter of Credit Reimbursement Agreement dated as of December
1, 1995 between PPPIC, the Company, and Dresdner Bank AG, New
York Branch. oooo
10.29 Purchase and Sale Agreement dated June 6, 1995 between WOP
Limited Partnership, as seller, and McSHA Properties, Inc.,
as buyer, related to the sale of the Company's Quail Ridge
Community. oooo
10.30 Purchase and Sale Agreement dated May 3, 1995 between WOP
Limited Partnership, as seller, and Case & Associates
Properties, Inc., as buyer, related to the sale of the
Company's Observation Point and Bristol Park Communities.
oooo
10.31 Purchase and Sale Agreement dated September 11, 1995 between
WOP Limited Partnership, as seller, and Case & Associates
Properties, Inc., as buyer, related to the sale of the
Company's Foxfire Community. oooo
10.32 Purchase and Sale Agreement dated December 26, 1995 between
Uplands North Associates, as seller, and OTR, as buyer,
related to the sale of the Company's Elliott Bay Plaza East
and Elliott Bay Plaza West joint venture Communities. oooo
10.33 Agreement between Holly Property Holdings, Inc., as seller,
and Morgan Guaranty Trust Company of New York, as buyer,
related to the sale of the Company's interest rate protection
agreement in the notional amount of $115 million. oooo
10.34 Amended and Restated Operating Agreement of Village at Bear
Creek LLC between the Company, Wellsford Bear Creek II Corp.
and Al Feld. oooo
10.35 Operating Agreement of Park at Highlands LLC, dated as of
April 27, 1995, between Wellsford Park Highlands Corp. and Al
Feld. oooo
10.36 First Amendment to Operating Agreement of Park at Highlands
LLC, dated as of December 29, 1995, between Wellsford Park
Highlands Corp. and Al Feld.
10.37 Tri-Party Agreement by and among Park at Highlands LLC,
NationsBank of Texas, N.A., Wellsford Park Highlands Corp.,
the Company, and Al Feld dated December 29, 1995 relating to
Blue Ridge.
10.38 Operating Agreement of Red Canyon at Palomino Park LLC
between Wellsford Park Highlands Corp. and Al Feld, dated as
of April 17, 1996 relating to Red Canyon.
10.39 Second Amended and Restated Vacant Land Purchase and Sale
Agreement between Mission Viejo Company and The Feld Company
dated March 23, 1995, as amended by First Amendment, dated
May 1, 1996 relating to the land underlying Palomino Park.
10.40 Agreement dated as of January 15, 1996 between the Company
and John W. Magnuson. oooo
10.41 Agreement and Plan of Merger, dated as of January 16, 1997,
between Equity Residential Properties Trust and the Company.
++++++
10.42 Consulting Agreement with Gareth Y. Hudson, dated as of
December 26, 1996.
10.43 Indenture dated as of October 25, 1996, with United States
Trust Company of New York, as Trustee. +++++
10.44 Floating Rate Note due November 24, 1999 in the principal
amount of $25 million.
10.45 $11.2 million Loan Agreement between City of Englewood,
Colorado and Wellsford Marks West Corp., dated as of October
1, 1996, relating to the property known as Marks West.
10.46 Guaranty Agreement made by the Company to American National
Bank and Trust Company of Chicago dated October 25, 1996
relating to the property known as Marks West.
10.47 $17.8 million Loan Agreement, dated as of June 28, 1996, by
and between the Company, as lender, and Specified Properties
VIII, L.P., as borrower, relating to Sonterra.
10.48 Option Agreement between the Company, as purchaser, and
Specified Properties VIII, L.P., as seller, dated as of June
28, 1996, relating to Sonterra.
10.49 Real Estate Purchase and Sale Agreement between Roy Street
Associates, as seller, and Josef F. Stanzl, as purchaser,
dated October 3, 1996, as amended by First Amendment dated
October 21, 1996, Second Amendment dated October 31, 1996 and
Third Amendment dated December, 1996.
10.50 Agreement of Purchase and Sale and Joint Escrow Instructions
between the Company, as purchaser, and Derby-Heinze
Partnership, as seller, dated April 30, 1996, relating to
Altamont.
10.51 Agreement of Purchase and Sale dated as of December 6, 1995
between HG Venture, as seller, and the Company, as buyer,
related to Marks West, and Amendment dated February 1, 1996,
Second Amendment dated February 29, 1996, and Third Amendment
dated March 8, 1996.
10.52 Purchase and Sale Agreement dated as of October 9, 1996
between Jerry W. and Diane E. Thompson, as buyer, and Holly
Property Holdings, Inc., as seller, related to the community
known as Silver Ridge.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young, LLP.
27.1 Financial Data Schedule (EDGAR Filing Only).
__________________
* Previously filed as an Exhibit to the Company's Registration
Statement on Form S-3 (No. 33-91352) and incorporated herein by
reference.
** Previously filed as an Exhibit to the Company's Registration
Statement on Form S-11 (No. 33-61998) and incorporated herein by
reference.
*** Previously filed as an Exhibit to the Company's Registration
Statement on Form 8-A (No. 1-11550) dated September 5, 1995 and
incorporated herein by reference.
o Previously filed as an Exhibit to the Company's Registration
Statement on Form S-11 (No. 33-52406) and incorporated herein by
reference.
oo Previously filed as an Exhibit to the Company's Registration
Statement on Form S-11 (No. 33-69868) and incorporated herein by
reference.
ooo Previously filed as an Exhibit to the Company's Form 10-K for the
year ended December 31, 1994 and incorporated herein by reference.
oooo Previously filed as an Exhibit to the Company's Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference.
+ Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1995 and incorporated herein
by reference.
++ Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1994 and incorporated herein
by reference.
+++ Previously filed as an Exhibit to the Company's Current Report on
Form 8-K dated June 10, 1994 and incorporated herein by reference.
++++ Previously filed as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 1996 and incorporated
herein by reference.
+++++ Previously filed as an Exhibit to the Company's Current Report on
Form 8-K dated October 31, 1996 and incorporated herein by
reference.
++++++ Previously filed as an Exhibit to the Company's Current Report on
Form 8-K dated February 3, 1997 and incorporated herein by
reference.
(b) During the last quarter of the period covered by this report, the
Company filed the following reports on Form 8-K:
Current Reports on Form 8-K dated October 24, 1996 and October 31,
1996.
(c) The following exhibits are filed as exhibits to this Form 10-K:
See Item 14 (a) (3) above.
(d) The following documents are filed as a part of this report:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WELLSFORD RESIDENTIAL PROPERTY TRUST
By: /s/ Jeffrey H. Lynford
---------------------------
(Jeffrey H. Lynford)
Chairman of the Board, Secretary and Trustee
Dated: March 19, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
---------------------- ------------------------------ --------------
/s/ Jeffrey H. Lynford Chairman of the Board and March 19, 1997
- --- -------------------- Trustee
(Jeffrey H. Lynford)
/s/ Edward Lowenthal President, Chief Executive March 19,1997
- --- -------------------- Officer and Trustee (Principal
(Edward Lowenthal) Executive Officer)
/s/ Daniel M. Kelley Vice Chairman of the Board March 19, 1997
- --- -------------------- and Trustee
(Daniel M. Kelley)
/s/ Gregory F. Hughes Vice President and Chief March 19, 1997
- --- -------------------- Financial Officer (Principal
(Gregory F. Hughes) Financial and Accounting Officer)
/s/ Rodney F. Du Bois Trustee March 19, 1997
- --- --------------------
(Rodney F. Du Bois)
/s/ Mark S. Germain Trustee March 19, 1997
- --- --------------------
(Mark S. Germain)
/s/ Frank J. Hoenemeyer Trustee March 19, 1997
- --- --------------------
(Frank J. Hoenemeyer)
/s/ Frank J. Sixt Trustee March 19, 1997
- --- --------------------
(Frank J. Sixt)
<PAGE>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page No. in
Form 10-K
---------
Report of Independent Auditors. . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995. . F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . F-4
Consolidated Statements of Changes in Shareholders' Equity for
the Years Ended December 31, 1996, 1995 and 1994. . . . . . . . F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements. . . . . . . . . . . F-8
FINANCIAL STATEMENT SCHEDULES
III - Real Estate and Accumulated Depreciation . . . . . . . . S-1
All other schedules have been omitted because the required information for
such other schedules is not present, is not present in amounts sufficient to
require submission of the schedule or because the required information is
included in the consolidated financial statements.
<PAGE>
REPORT OF
INDEPENDENT AUDITORS
--------------------
To the Shareholders and Board of Trustees of
Wellsford Residential Property Trust and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Wellsford
Residential Property Trust and subsidiaries (the "Company") as of December 31,
1996 and 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Wellsford Residential Property Trust and subsidiaries at December 31, 1996
and 1995, and the consolidated results of its operations and cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG, LLP
/s/ Ernst & Young LLP
______________________________
New York, New York
February 10, 1997,
except for Note 13, as to which the date is
February 28, 1997
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
-------------
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Real estate assets, at cost - Notes 4 and 5
Land ..................................................................... $ 114,214,888 $ 105,121,296
Buildings and improvements ............................................... 659,153,965 605,087,385
------------- -------------
773,368,853 710,208,681
Less, accumulated depreciation ........................................ (83,965,956) (58,490,833)
------------- -------------
689,402,897 651,717,848
Construction in progress ................................................. 22,210,933 26,189,876
------------- -------------
711,613,830 677,907,724
Cash and cash equivalents ................................................... 10,811,505 29,444,008
Restricted cash - Note 3 .................................................... 7,666,598 12,916,328
Mortgage note receivable - Note 4 ........................................... 17,800,000 --
Deferred financing costs .................................................... 5,400,787 5,928,869
Prepaid and other assets .................................................... 2,995,854 3,441,408
------------- -------------
Total Assets ................................................................ $ 756,288,574 $ 729,638,337
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Senior unsecured notes - Note 8 .......................................... $ 248,495,847 $ 223,306,778
Mortgage notes payable - Note 5 .......................................... 82,730,831 77,136,941
Unsecured credit facilities - Note 7 ..................................... 18,075,000 --
Accrued expenses and other liabilities ................................... 15,617,516 16,403,724
Dividends payable - Note 10 .............................................. 11,433,547 11,310,053
Security deposits ........................................................ 3,249,607 3,122,229
------------- -------------
Total Liabilities ........................................................ 379,602,348 331,279,725
------------- -------------
Commitments and contingencies - Notes 4, 5,
7, 8, 9, 10, 11 and 12 ................................................... -- --
Shareholders' Equity:
Shares of beneficial interest,
100,000,000 shares authorized -
3,999,800 Series A Convertible
Preferred Shares, $.01 par value per share,
liquidation preference $25 per share, issued
and outstanding at December 31, 1996 and 1995; ........................ 39,998 39,998
2,300,000 Series B Preferred Shares, $.01
par value per share, liquidation preference
$25 per share, issued and outstanding at
December 31, 1996 and 1995; ........................................... 23,000 23,000
17,101,812 and 17,026,342 Common Shares, $.01
par value per share, issued and outstanding at
December 31, 1996 and 1995, respectively .............................. 171,018 170,264
Paid in capital in excess of par ......................................... 461,290,031 459,634,825
Distributions in excess of net income - Note 10 .......................... (78,284,695) (55,284,084)
Deferred compensation and shareholder loans
receivable - Note 11 .................................................. (6,553,126) (6,225,391)
------------- -------------
Total Shareholders' Equity .................................................. 376,686,226 398,358,612
------------- -------------
Total Liabilities and Shareholders' Equity .................................. $ 756,288,574 $ 729,638,337
/TABLE
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
--------------------------------------------------------------
1996 1995 1994
---------------- ----------------- ---------------
<S> <C> <C> <C>
REVENUE
Rental income $124,407,810 $123,566,442 $ 78,789,579
Other income 5,730,658 5,441,497 3,340,899
Interest income 1,682,935 2,224,263 663,429
--------------- --------------- --------------
Total Revenue 131,821,403 131,232,202 82,793,907
--------------- --------------- --------------
EXPENSES
Property operating and maintenance 40,353,994 40,919,501 27,476,613
Real estate taxes 9,881,577 9,595,845 5,869,684
Depreciation and amortization 26,564,838 26,912,423 17,535,935
Property management 4,770,188 4,950,773 3,139,266
Interest 23,599,368 26,972,892 15,297,950
General and administrative 3,865,444 4,360,566 3,979,875
--------------- --------------- --------------
Total Expenses 109,035,409 113,712,000 73,299,323
(Loss) on sale of investment communities (65,745) (819,288)
(Loss) on joint venture communities (57,859) (279,594)
--------------- --------------- --------------
Income before extraordinary items 22,662,390 16,421,320 9,494,584
Extraordinary item - (loss) on early
extinguishment of debt - Note 5 (5,553,048)
--------------- --------------- --------------
Net income 22,662,390 10,868,272 9,494,584
Preferred dividends 12,548,400 8,972,681 7,000,000
--------------- --------------- --------------
Net income available to common shareholders $10,113,990 $1,895,591 $2,494,584
=============== =============== ==============
Income per common share before
extraordinary items $0.59 $0.44 $0.25
=============== =============== ==============
Net income per common share $0.59 $0.11 $0.25
=============== =============== ==============
Weighted average number of common shares
outstanding 17,056,882 16,937,731 10,070,278
================ ================ ==============
Cash dividends declared per common share $1.94 $1.92 $1.80
================ ================ ==============
/TABLE
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Series A Series B
Preferred Shares Preferred Shares
------------------------------ ------------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
JANUARY 1, 1994 4,000,000 $ 40,000
Repurchase of common
shares
Private offering of common
shares (net of issuance costs)
Issuance of common shares
in connection with Holly
Acquisition (net of issuance costs)
Shares issued pursuant to
deferred compensation and
shareholder loan plans
- Note 11 (net of issuance costs)
Deferred compensation and
shareholder loans receivable
Amortization of deferred
compensation and shareholder
loans receivable
Net income
Common dividends declared
Preferred dividends declared
------------ ----------- ----------- -------------
DECEMBER 31, 1994 4,000,000 40,000
Public offering of Series B
preferred shares (net of
issuance costs) 2,300,000 $ 23,000
Shares issued pursuant to
dividend reinvestment plan
(net of issuance costs)
Conversion of Series A
preferred shares into
common shares (200) (2)
Net shares issued pursuant to
deferred compensation and
shareholder loan plans
- Note 11 (net of issuance costs)
Deferred compensation and
shareholder loans receivable
Amortization of deferred
compensation and shareholder
loans receivable
Net income
Common dividends declared
Preferred dividends declared
------------ ----------- ----------- -------------
DECEMBER 31, 1995 3,999,800 39,998 2,300,000 23,000
Shares issued pursuant to
dividend reinvestment plan
(net of issuance costs)
Shares issued pursuant to
exercised options
Net shares issued pursuant to
deferred compensation and
shareholder loan plans
-Note 11 (net of issuance costs)
Deferred compensation and
shareholder loans receivable
Amortization and repayment
of shareholder loans receivable
Net income
Common dividends declared
Preferred dividends declared
------------ ----------- ----------- -------------
DECEMBER 31, 1996 3,999,800 $ 39,998 2,300,000 $ 23,000
============ =========== =========== =============
/TABLE
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (Continued)
Common Shares Distributions Total
------------------------- Paid-in in Excess of Shareholders'
Shares Amount Capital Net Income Equity
----------- ----------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
JANUARY 1, 1994 9,206,712 $ 92,067 $246,058,566 $ (6,415,449) $ 239,775,184
Repurchase of common
shares (13,819) (138) (347,548) (347,686)
Private offering of common
shares (net of issuance costs) 1,550,000 15,500 30,887,605 30,903,105
Issuance of common shares
in connection with Holly
Acquisition (net of issuance costs) 5,985,168 59,852 119,143,508 119,203,360
Shares issued pursuant to
deferred compensation and
shareholder loan plans
- Note 11 (net of issuance costs) 181,250 1,812 3,521,625 3,523,437
Deferred compensation and
shareholder loans receivable (3,523,437) (3,523,437)
Amortization of deferred
compensation and shareholder
loans receivable 343,749 343,749
Net income 9,494,584 9,494,584
Common dividends declared (20,717,098) (20,717,098)
Preferred dividends declared (7,000,000) (7,000,000)
----------- ----------- ------------- ---------------- -------------
DECEMBER 31, 1994 16,909,311 169,093 396,084,068 (24,637,963) 371,655,198
Public offering of Series B
preferred shares (net of
issuance costs) 55,231,512 55,254,512
Shares issued pursuant to
dividend reinvestment plan
(net of issuance costs) 81,376 814 1,584,562 1,585,376
Conversion of Series A
preferred shares into
common shares 162 2 --
Net shares issued pursuant to
deferred compensation and
shareholder loan plans
- Note 11 (net of issuance costs) 35,493 355 864,370 864,725
Deferred compensation and
shareholder loans receivable (875,000) (875,000)
Amortization of deferred
compensation and shareholder
loans receivable 519,922 519,922
Net income 10,868,272 10,868,272
Common dividends declared (32,541,712) (32,541,712)
Preferred dividends declared (8,972,681) (8,972,681)
------------ ----------- ------------- ---------------- -------------
DECEMBER 31, 1995 17,026,342 170,264 453,409,434 (55,284,084) 398,358,612
Shares issued pursuant to
dividend reinvestment plan
(net of issuance costs) 28,026 280 597,342 597,622
Shares issued pursuant to
exercised options 500 5 9,465 9,470
Net shares issued pursuant to
deferred compensation and
shareholder loan plans
-Note 11 (net of issuance costs) 46,944 469 1,235,899 1,236,368
Deferred compensation and
shareholder loans receivable (1,250,000) (1,250,000)
Amortization and repayment of
shareholder loans receivable 734,765 734,765
Net income 22,662,390 22,662,390
Common dividends declared (33,114,601) (33,114,601)
Preferred dividends declared (12,548,400) (12,548,400)
----------- ----------- ------------- ---------------- -------------
DECEMBER 31, 1996 17,101,812 $ 171,018 $454,736,905 $(78,284,695) $ 376,686,226
----------- ----------- ------------- ---------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended December 31,
----------------------------------------------------------------
1996 1995 1994
------------------ ------------------ -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,662,390 $ 10,868,272 $ 9,494,584
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 27,479,653 29,966,707 20,437,548
Loss on sale of investment communities 65,745 819,288 --
Loss on early extinguishment of debt -- 5,553,048 --
Decrease (increase) in assets
Escrow cash 123,686 1,461,324 (381,590)
Debt service and construction reserve 5,126,044 (10,580,819) (258,635)
Rent receivables (410,169) 358,678 (672,671)
Prepaid and other assets 817,683 (787,832) (1,244,275)
(Decrease) increase in liabilities
Accounts payable (2,046,244) 1,824,210 770,939
Accrued expenses and other liabilities 1,260,036 2,252,959 5,787,321
Security deposits 127,378 30,173 1,811,208
------------------ --------------------- --------------------
Net cash provided by operating activities 55,206,202 41,766,008 35,744,429
------------------ --------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate assets (49,392,852) (28,166,487) (87,044,798)
Investment in note receivable (17,800,000) --
Proceeds from sale of real estate assets 1,567,351 35,511,101 --
------------------ --------------------- --------------------
Net cash provided by (used in) investing activities (65,625,501) 7,344,614 (87,044,798)
------------------ --------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of deferred financing costs (730,635) (4,637,168) (4,014,601)
Proceeds from sale of rate protection agreements -- 3,055,500 --
Proceeds from mortgage notes payable -- 15,549,971 21,581,450
Proceeds from senior unsecured notes 25,000,000 223,205,050 --
Proceeds (payment) from credit facilities 18,075,000 (140,000,000) 140,000,000
Principal payments on mortgage notes (5,625,154) (146,090,053) (132,808,320)
Prepayment premium on mortgage notes -- (1,178,966) --
Distributions to shareholders (45,539,507) (39,563,528) (23,197,125)
Proceeds from dividend reinvestment plan 597,622 1,585,376 --
Proceeds from exercise of options 9,470 -- --
Proceeds from offerings of common shares -- -- 30,903,105
Proceeds from offerings of preferred shares -- 55,254,512 --
Repurchase of common shares -- -- (347,686)
------------------ ---------------------- --------------------
Net cash provided by (used in) financing activities (8,213,204) (32,819,306) 32,116,823
------------------ ---------------------- --------------------
Net increase (decrease) in cash and cash
equivalents (18,632,503) 16,291,316 (19,183,546)
Cash and cash equivalents, beginning of year 29,444,008 13,152,692 32,336,238
------------------ --------------------- --------------------
Cash and cash equivalents, end of year $ 10,811,505 $ 29,444,008 $ 13,152,692
================== ===================== ====================
SUPPLEMENTAL INFORMATION:
Cash paid during the year for interest $ 24,354,749 $ 19,627,141 $ 12,061,431
Fourth quarter dividends declared $ 11,433,547 $ 11,310,053 $ 9,359,190
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Purchase money and other mortgage notes
assumed, and common shares issued, in
connection with the acquisition of certain
multifamily communities and other assets:
Cost of assets acquired $ 17,512,162 $ -- $ 434,779,640
Value of common shares issued -- -- (119,203,360)
Cash paid (6,312,162) -- (66,594,551)
------------------ ----------------- -------------------
Purchase money and other mortgage notes $ 11,200,000 $ -- $ 248,981,729
================== ================== ===================
</TABLE>
<PAGE>
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Business
Wellsford Residential Property Trust was organized on July 21, 1992 as a
Maryland real estate investment trust ("REIT"). Wellsford Residential
Property Trust and its subsidiaries (the "Company") is a fully integrated
and self-administered equity REIT engaged in the acquisition, development
and operation of multifamily communities located in the Southwest and
Pacific Northwest regions of the United States. At December 31, 1996, the
Company owned 72 multifamily communities containing 19,004 apartment
units (the "Communities").
In December 1994, the Company consummated a merger (the "Holly
Acquisition") with Holly Residential Properties, Inc. ("Holly"), a public
REIT which owned and operated 34 multifamily communities containing 5,223
apartment units located in the Puget Sound region of the State of
Washington (the "Holly Communities"). The merger was financed through
the issuance of approximately six million common shares and the
assumption of approximately $129.7 million of mortgage notes.
(2) Summary of Significant Accounting Policies
Principles of Consolidation and Financial Statement Presentation. The
accompanying consolidated financial statements include the accounts of
Wellsford Residential Property Trust and its wholly-owned subsidiaries.
Investments in partnerships where the Company does not have a controlling
interest are accounted for under the equity method. All significant
inter-company accounts and transactions among Wellsford Residential
Property Trust and its subsidiaries have been eliminated in
consolidation.
The Holly Acquisition has been accounted for under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16.
Income Recognition. Residential communities are leased under operating
leases with terms generally one year or less. Rental revenue is
recognized monthly as it is earned.
Cash and Cash Equivalents. The Company considers all demand and money
market accounts and short term investments in government funds with an
original maturity of three months or less to be cash and cash
equivalents.
Real Estate and Depreciation. Costs directly related to the acquisition
and improvement of real estate are capitalized, including all
improvements identified during the underwriting of a community
acquisition. Only those expenditures which generally do not recur
annually and/or that will increase the revenue potential of a property or
substantially extend its useful life are capitalized.
Ordinary repairs and maintenance are expensed as incurred. Expenditures
for painting, and replacement of items such as carpets, appliances and
blinds are generally expensed; major replacements and betterments are
capitalized and depreciated over their estimated useful lives.
Depreciation is computed over the expected useful lives of depreciable
property on a straight line basis, principally 25 years for buildings and
improvements and 5 to 12 years for furnishings and equipment.
Depreciation expense was $25.6 million in 1996.
In 1995, the Company adopted Statement of Financial Accounting Standard
("SFAS") 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of" which requires that long-lived
assets to be held and used be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The adoption of SFAS 121 has not had an impact
on the Company's consolidated financial statements.
Mortgage Note Receivable Impairment. The Company considers a note
impaired if, based on current information and events, it is probable that
all amounts due under the note agreement are not collectable. Impairment
is measured based upon the fair value of the underlying collateral. No
impairment has been recorded through December 31, 1996.
Financing Costs. The Company has incurred costs relating to certain
financings, refinancings and credit facilities (Notes 5, 6, 7 and 8).
Financing and refinancing costs are capitalized and amortized over the
term of the related loan under the interest method. Credit facility fees
are capitalized and amortized over the term of the commitment on a
straight-line basis.
Interest Rate Protection Agreements. In November 1992, the Company
acquired a four-year interest rate protection agreement for $1.9 million
with a notional amount of $56.5 million. In connection with the Holly
Acquisition, the Company acquired an interest rate protection agreement
valued at $9.1 million. The costs of these interest rate protection
agreements were amortized over the life of the agreements into interest
expense using an effective yield method.
Share Based Compensation. SFAS 123 "Accounting for Stock-Based
Compensation" establishes a fair value based method of accounting for
share based compensation plans, including share options. The disclosure
requirements of SFAS 123 are effective for financial statements for
fiscal years beginning after December 15, 1995. However, registrants may
elect to continue accounting for share option plans under Accounting
Principles Board ("APB") 25, but are required to provide proforma net
income and earnings per share information "as if" the new fair value
approach had been adopted (see Note 11). Because the Company has elected
to continue to account for its share based compensation plans under APB
25, there has been no impact on the Company's consolidated financial
statements resulting from SFAS 123.
Income Taxes. The Company has elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code"). As a result, the
Company generally will not be subject to federal income taxation at the
corporate level to the extent it distributes annually at least 95% of its
REIT taxable income, as defined in the Code, to its shareholders and
satisfies certain other requirements. Accordingly, no provision has been
made for federal income taxes in the accompanying consolidated financial
statements.
In connection with the Company's initial public offering, the tax basis
of the real estate assets has been recorded based upon the value of
the consideration paid by the Company.
In connection with the Holly Acquisition, the tax basis of the real
assets has been recorded based on Holly's tax basis. Accordingly, the
tax basis of the real estate assets exceeds the book basis by
approximately $60.5 million.
Per Share Data. Earnings per common share are computed based upon the
weighted average number of common shares outstanding during the period
and after giving effect for the payment of dividends on the Company's
preferred shares.
Primary earnings per common share are based upon the weighted average
number of such shares and the assumed equivalent shares outstanding
during the period. The assumed exercise of outstanding share options,
using the treasury stock method, is not materially dilutive and such
amounts are not presented.
Fully diluted earnings per common share are based upon the increased
number of common shares that would be outstanding assuming the exercise
of common share options and the conversion of the convertible preferred
shares. Since fully diluted earnings per share amounts are anti-
dilutive, such amounts are not presented.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(3) Restricted Cash
Restricted cash primarily consists of escrow deposits for real estate
taxes and security deposits, and debt service and construction reserve
balances. At December 31, 1996 and 1995, escrow deposits amounted to
$1,131,401 and $1,255,087, respectively, and reserve balances amounted to
$6,535,197 and $11,661,241, respectively.
(4) Multifamily Communities and Mortgage Note Receivable
At December 31, 1993, the Company owned 32 communities containing a total
of 9,125 apartment units.
In 1994, the Company acquired two multifamily communities in Phoenix,
Arizona and a multifamily community in Tucson, Arizona, containing 1,092
apartment units for an aggregate purchase price of approximately $67.3
million. The Company also acquired a portfolio of eight multifamily
communities in Tulsa, Oklahoma and six multifamily communities in
Oklahoma City, Oklahoma, containing 5,101 apartment units for an
aggregate purchase price of approximately $133 million.
In 1994, the Company also acquired the Holly Communities for
approximately $254.9 million.
In 1995, the Company combined the operations of two of its Tacoma,
Washington communities into one community known as Ridgetop, consisting
of 221 apartment units.
In 1995, the Company sold four of its Oklahoma communities containing a
total of 1,980 apartment units for an aggregate of $36.7 million.
The Company also sold three of its Washington communities containing
a total of 265 apartment units for an aggregate of approximately $10.1
million. The Company held a 50% interest in two of these communities.
In December 1996, the Company sold two of its Communities located in
Washington, containing a total of 120 units, and received net proceeds of
$1.6 million after paying $0.8 million of related incentive compensation
to certain officers of the Company. The Company held a 50% interest in
one of the sold communities.
In July 1996, the Company originated a $17.8 million mortgage on a 344
unit, newly constructed community in Tucson, Arizona known as Sonterra at
Williams Centre (the "Sonterra Mortgage"). The Sonterra Mortgage is due
in July 1999 and bears interest at 9% per annum. The Company has the
exclusive option to purchase the community for approximately $20.5
million through December 1997 and approximately $21 million during 1998.
The fair market value of the company's note receivable, estimated by
using a discounted cash flow analysis, approximates the carrying amount.
In April 1996, the Company, through a wholly-owned subsidiary, acquired
Marks West, a multifamily community containing 280 units located in
Denver, Colorado, for approximately $18 million. The community's
operations have been combined with those of The Marks, an existing
community located contiguous to Marks West.
In October 1996, the Company completed two development projects. The
Village at Bear Creek II, a Denver, Colorado apartment community
contiguous to the Company's existing Bear Creek community, contains 216
units and was developed at a cost of $18.8 million, including
satisfaction of the developer's fixed price contract. The operations of
the two Bear Creek communities have been combined. Seeley Lake III, a
Tacoma, Washington apartment community developed as an expansion to the
Company's Village at Seeley Lake community, contains 182 units and was
developed at a cost of $9.5 million.
In December 1996, the Company completed its Summit at Lake Union
development project located in Seattle, Washington and containing 150
units at a cost of approximately $16.5 million.
The Company currently has two multifamily projects under development
totaling 760 apartment units (collectively, the "Development
Communities"). The Company expects to fund the construction of its
Development Communities from its working capital and with proceeds from
the Bank of Boston Credit Facility (Note 7) and a $14.8 million tax
exempt mortgage (Note 5). The Development Communities are being
developed pursuant to fixed-price contracts and are estimated to cost
approximately $76.1 million in total, including certain development and
incentive fees payable to the developer. The Company is committed to
purchase 100% of these projects upon completion and the achievement of
certain occupancy levels. During the year ended December 31, 1996, the
Company capitalized $2.3 million of interest to the Development
Communities and to certain development projects which were completed
during the year, as described above.
(5) Mortgage Notes Payable
Mortgage notes payable at December 31, 1996 and 1995 aggregated $82.7
million and $77.1 million, respectively, and were collateralized by six
and eight multifamily communities, respectively (plus one development
project). At December 31, 1996 and 1995, mortgage notes payable net of
discounts consist of the following:
Stated Balance
Community Maturity Interest -----------------------
- -
Securing Debt Date Rate 12/31/96 12/31/95
------------- --------- --------- ---------- ---------
- -
(000s) (000s)
The Pointe @ South Mt. 03/2000 8.00% (A) $12,900 $12,900
Parkwood East Repaid 01/1996 9.625% -- 4,928
Crown Court 11/1997 9.05% 5,679 5,767
The Hamptons 11/2001 8.48% 6,100 6,100
Merrill Creek 11/1998 8.00% 5,659 5,738
Palomino Park (B) 12/2035 Variable (C) 14,755 14,755
Ironwood @ the Ranch (B) 12/2019 Average 7.34% 6,070 6,150
The Marks East (B) 12/2018 6.00% 10,125 10,337
Warwick Station (B) 12/2018 6.00% 10,243 10,462
Marks West tax exempt
bonds 12/2026 6.65% 11,200 --
------- -------
$82,731 $77,137
======= =======
(A) 7.5% before May 1, 1996.
(B) Mortgage secures tax exempt bonds.
(C) Rate approximates the Standard & Poor's / J.J. Kenney index for short-term
high grade tax-exempt bonds (currently 3.65%).
During 1995 the Company recognized an extraordinary loss of $5.6 million
from the early extinguishment of debt. The loss was primarily
attributable to a 1% prepayment penalty incurred for the retirement of
certain debt assumed in the Holly Acquisition and a non-cash charge for
the sale of the related interest rate protection agreement.
The tax-exempt bonds which are secured by the Palomino Park mortgage are
backed by a letter of credit from a AAA rated financial institution. The
Company has guaranteed the reimbursement of the financial institution in
the event that the letter of credit is drawn upon.
The fair market value of the fixed rate mortgage notes, estimated by
discounting cash flows and adjusting the results for subjective factors
including loan to value ratios, approximates the carrying amount of the
mortgage notes. The fair market value of the variable rate mortgage notes
is considered to be the carrying amount.
(6) Convertible Note Payable
In connection with its initial public offering, the Company issued a $56.5
million convertible note (the "Convertible Note") in modification of
approximately $56.5 million of non-recourse participating mortgage
notes secured by liens on nine of the Communities. The holder of the
Convertible Note was General Electric Capital Corporation ("GECC").
Interest on the Convertible Note was payable quarterly at an adjustable
rate equal to LIBOR plus 1.75% until the second anniversary of its
issuance and thereafter at a rate equal to LIBOR plus 3.75%.
(7) Credit Facilities
In June 1995, the Company modified its $150 million revolving credit
facility from The First National Bank of Boston (the "Bank of Boston
Credit Facility") to reduce the interest rate on advances under the
facility to LIBOR + 1.50% and eliminate the need for communities to serve
as collateral for such borrowings. Proceeds from the Bank of Boston
Credit Facility may be used to provide short-term financing for
acquisitions, development, capital expenditures, repayment of indebtedness
and related expenditures. All outstanding borrowings under the Bank of
Boston Credit Facility will be due and payable on June 30, 1998 with a
provision for annual one year extensions subject to bank approval. The
Company is obligated to pay a fee equal to one-quarter of one percent
(.25%) per annum on the average daily amount of the unused portion of the
commitment during the revolving loan period. Borrowings under the
facility will bear interest at either (i) The First National Bank of
Boston's base rate (which is substantially similar to the prime rate) or
(ii) 1.50% per annum above the Eurodollar Rate (which is substantially
similar to LIBOR), at the Company's option. The average interest rate on
the Bank of Boston Credit Facility during 1996 and 1995 was 6.9% and 7.9%,
respectively.
The Bank of Boston Credit Facility is a recourse obligation of the
Company. The Bank of Boston Credit Facility contains various customary
loan covenants, and requires the Company to maintain its status as a REIT,
to maintain a ratio of total consolidated liabilities to total
consolidated assets of not more than 0.55 to 1, to maintain a ratio of
total consolidated secured debt to gross consolidated real estate assets
of not more than 0.4 to 1, to maintain a ratio of total consolidated
unencumbered operating real estate assets to total consolidated unsecured
debt of not less than 1.8 to 1, and to maintain an overall debt service
coverage ratio of at least 2 to 1. The facility also limits the number of
development projects the Company may undertake. The Bank of Boston Credit
Facility is cross-defaulted with respect to certain other borrowings of
the Company. As of December 31, 1996 $18.1 million was outstanding on
the Bank of Boston Credit Facility, leaving $131.9 million undrawn.
In 1994, the Company terminated its $45 million credit facility with GECC
(the "GECC Credit Facility"). In connection with any advance under the
GECC Credit Facility, the Company was obligated to pay an advance fee
equal to 1% of the amount of such borrowing. Borrowings under the
facility bore interest at an adjustable rate equal to LIBOR plus 2.50%,
payable monthly.
In connection with the Holly Acquisition, the Company assumed two
unsecured credit facilities from Key Bank of Washington which bore
interest at Key Bank's prime rate plus one percent (1%). Both of these
facilities were repaid and terminated in February 1995.
The fair market value of the credit facilities is considered to be the
carrying amount.
(8) Senior Unsecured Notes
In January 1995, the Company sold $100 million of 9.375% investment grade
senior unsecured notes due February 1, 2002 (the "2002 Notes"). The 2002
Notes were priced at 99.396% to yield 9.495% and have an effective
interest cost to the Company of 9.65% after giving effect to an interest
rate protection agreement. The 2002 Notes, which are rated Baa3 by
Moody's and BBB by Standard & Poor's and Duff & Phelps, are redeemable at
any time after February 1, 2000, at the option of the Company, subject to
certain make whole provisions as defined in the 2002 Notes. The net
proceeds from the sale of the 2002 Notes were used to prepay the remaining
balance of a mortgage on five Oklahoma communities and to repay a portion
of the Bank of Boston Credit Facility.
In August 1995, the Company sold $125 million of investment grade senior
unsecured notes, which are rated Baa3 by Moody's and BBB by Standard &
Poor's and Duff & Phelps. $55 million of these notes (the "2000 Notes")
bear interest at 7.25%, are due on August 15, 2000, and were priced at
99.381% to yield 7.40%. $70 million of these notes (the "2005 Notes")
bear interest at 7.75%, are due on August 15, 2005, and were priced at
98.785% to yield 7.93%. The 2005 Notes are redeemable at any time after
August 24, 2002, at the option of the Company, subject to certain make
whole provisions as defined in the 2005 Notes. The net proceeds from the
sale of the 2000 Notes and the 2005 Notes were used to repay the
outstanding balances of the Bank of Boston Credit Facility and certain
debt assumed in the Holly Acquisition.
In November 1996, the Company sold $25 million of investment grade senior
unsecured notes (the "1999 Notes"), which are rated Baa3 by Moody's and
BBB by Standard & Poor's and Duff & Phelps. The 1999 Notes bear interest
at LIBOR plus 0.32%, are due in November 1999 and are redeemable beginning
in November 1997. The net proceeds from the sale of the 1999 Notes were
used to repay amounts outstanding under the Bank of Boston Credit
Facility.
The 1999 Notes, 2000 Notes, 2002 Notes, and 2005 Notes contain various
customary loan covenants, and also require the Company to maintain its
status as a REIT, to maintain a ratio of total consolidated debt to total
consolidated assets of not more than 0.6 to 1, to maintain a ratio of
total consolidated secured debt to total consolidated assets of not more
than 0.4 to 1, to maintain a ratio of total consolidated unencumbered
assets to total consolidated unsecured debt of not less than 1.5 to 1, and
to maintain an overall debt service coverage ratio of not less than 1.5 to
1.
The fair market value of the senior unsecured notes, determined by
reference to various market data, aggregates approximately $260.8 million
at December 31, 1996.
The Company's long-term debt obligations, including the mortgage notes
payable (Note 5), the credit facilities (Note 7), and the senior unsecured
notes, as of December 31, 1996, require aggregate principal (or principal
sinking fund, as applicable) payments (before giving effect to applicable
discounts) as follows:
Year Amount
------------ -----------
1997 $ 6.3 million
1998 24.2 million
1999 25.6 million
2000 68.6 million
2001 6.8 million
Thereafter $ 219.7 million
(9) Transactions With Affiliates
In connection with the Holly Acquisition, the Company entered into a two-
year consulting agreement with David M. Kelley, the brother of the
Company's Vice Chairman, Daniel M. Kelley. Under the agreement, David
Kelley consulted with and advised the Company with respect to the
construction of certain development projects in the Puget Sound region of
the State of Washington and received an annual consulting fee of $170,000.
In addition, pursuant to the merger agreement with Holly, David Kelley
was granted options to purchase 100,000 common shares at an exercise price
of $21 per share.
In connection with the construction by the Company of one of its
development projects, a construction management contract was entered into
with DRK Development, Inc. ("DRK"), the stock of which is owned solely by
D. Reed Kelley, the nephew of Daniel M. Kelley. During 1996 and 1995, DRK
was paid $89,600 and $132,000, respectively, under this contract.
(10) Shareholders' Equity
The Company has 3,999,800 shares of Series A Cumulative Convertible
Preferred Shares ("Series A Preferred Shares") outstanding. The rating on
the Series A Preferred Shares was upgraded to an investment grade level of
BBB- by both Standard & Poor's and Duff & Phelps in August 1995. The
holders of the Series A Preferred Shares are entitled to an annual cash
distribution of $1.75 per share, payable quarterly, and a liquidation
preference of $25 per share plus accrued and unpaid distributions. The
Series A Preferred Shares are convertible at any time at the option of the
holder at a conversion rate of approximately .8122 common shares for each
Series A Preferred Share. The Series A Preferred Shares are not redeemable
prior to November 1, 1998. On or after November 1, 1998, the Series A
Preferred Shares can be redeemed, in whole or in part, at the option of
the Company, at an initial conversion rate of $25.875 per share and
thereafter at prices declining to $25 per share on and after November 1,
2003.
In August 1994, the Company completed a private offering to domestic and
foreign institutional investors of 1,550,000 common shares of beneficial
interest at $21 per share. The net proceeds from this offering were
approximately $31 million and were used for the repayment of certain
adjustable rate debt. These shares were registered for trading in
January, 1995.
In connection with the Holly Acquisition, the Company issued 5,985,168
common shares of beneficial interest at $20 per share in exchange for all
of the outstanding common shares of Holly.
In April 1995, the Company implemented a dividend reinvestment and share
purchase plan (the "DRIP"). One million common shares have been allocated
for the DRIP. This plan allows shareholders to acquire additional shares
by automatically reinvesting dividends and making optional cash payments.
During 1996 and 1995, the Company issued 28,026 and 81,376 new common
shares, respectively, to shareholders who elected to participate in this
plan at an average price of $21.62 and $20.74 per share, respectively.
In August 1995, the Company issued 2,300,000 Series B Cumulative
Redeemable Preferred Shares ("Series B Preferred Shares") at $25 per
share. The Series B Preferred Shares carry an investment grade rating of
BBB- from both Standard & Poor's and Duff & Phelps and are rated Ba1 by
Moody's. The holders of the Series B Preferred Shares are entitled to an
annual cash distribution of $2.4125 per share, payable quarterly, and a
liquidation preference of $25 per share plus accrued and unpaid
distributions. The Series B Preferred Shares are not redeemable prior to
August 24, 2000. On or after August 24, 2000, the Series B Preferred
Shares can be redeemed, in whole or in part, at the option of the Company,
at a redemption price of $25 per share. The Series B Preferred Shares
rank pari passu with the Company's Series A Preferred Shares.
In 1996, the Company made quarterly distributions of $.485 per share
($1.94 annually) to the holders of its common shares.
As described in Note 2, the Company has elected to be treated, for federal
income tax purposes, as a REIT. As such, the Company is required to
distribute annually, in the form of dividends to its shareholders, at
least 95% of its taxable income. In reporting periods where taxable
income exceeds net income, shareholders' equity will be reduced by the
distributions in excess of net income in such period; and will be
increased by the excess of net income over distributions in reporting
periods where net income exceeds taxable income. For tax reporting
purposes, a portion of the dividends declared during the years ended
December 31, 1996, 1995 and 1994 represents a return of capital.
For federal income tax purposes, the following summarizes the taxability
of dividends paid in 1996:
Common Shares Preferred Shares
-------------------------- --------------------------
Dividend Percentage Dividend Percentage
--------------- ---------- -------------- ----------
Ordinary Income $19.15 million 57.83% $12.55 million 100.00%
Return of Capital 13.96 million 42.17% -- --
-------------- --------- -------------- ---------
$33.11 million 100.00% $12.55 million 100.00%
============== ========= ============== =========
(11) Share Option Plan, Loans to Shareholders and Deferred Compensation
The Company has adopted certain incentive plans for the purpose of
attracting and retaining the Company's trustees, officers and employees.
The Company has established Share Option Plans (the "Option Plans") which
reserved 1,332,900 common shares for issuance under the Option Plans.
Options granted under the Option Plans expire ten years from the date of
grant and contain certain share appreciation rights and the right to
receive reload options under certain conditions. At December 31, 1996,
634,540 of the Company's outstanding options are exercisable. Options
outstanding for the periods ended December 31, 1996 and 1995 are as
follows:
December 31, 1995 (issued between $18.94 and $29.38 per share) 1,043,025
Issued in 1996 (at $21.69 per share) 23,750
Exercised in 1996 (at $18.94 per share) (500)
Forfeited in 1996 (61,950)
Expired in 1996 --
---------
December 31, 1996 (weighted average exercise price of $21.94) 1,004,325
=========
Pursuant to SFAS 123, described in Note 2, the pro forma 1996 and 1995 net
income available to common shareholders as if the fair value approach to
accounting for share-based compensation had been applied would be $10.1
million and $1.7 million, respectively, or $0.59 and $0.10 per common
share, respectively. The 1996 proforma amounts just described do not
differ materially from the actual amounts reported. The fair values of
the options used in calculating these amounts were calculated using the
Black-Scholes option pricing model and the following assumptions: (i) a
risk-free interest rate of 6.29% and 5.59% in 1996 and 1995, respectively,
(ii) an expected life of 10 years, (iii) an expected volatility of 12%
and 16% in 1996 and 1995, respectively, and (iv) expected dividends of
$1.94 per common share per year. The Black-Scholes option pricing model
was developed for use in estimating the fair value of traded options which
have no vesting restrictions and are fully transferable. In addition,
option pricing models require the input of highly subjective assumptions
including the expected share price volatility. Because the Company's
employee share options have characteristics significantly different from
those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee share options.
In December 1993, five shareholders who are officers of the Company
purchased 52,131 of the Company's common shares at the average market
price of $26.375 per share. In December 1994, seven shareholders who are
officers of the Company purchased 181,250 of the Company's common shares
at the average market price of approximately $19.44 per share. In
December 1995, four shareholders who are officers of the Company purchased
38,462 of the Company's common shares at the average market price of
approximately $22.75 per share. In September 1996, three shareholders who
are officers of the Company purchased 54,052 of the Company's common
shares at the average market price of approximately $23.125 per share.
The Company financed these purchases with loans that are secured by the
shares, bear no interest and mature in ten years. One twentieth of each
loan will be forgiven each year for ten years so long as the officer is
still employed by the Company. Approximately $254,687 of these loans were
forgiven during 1996, which is included in general and administrative
expense.
In December 1995, one of these officers retired from the Company effective
February 1996. At such time, the shares securing the $59,375 balance of
his loans were returned to the Company. In September 1996, one of these
officers resigned from the Company. At such time, the shares securing the
$112,500 balance of his loans were returned to the Company. The remaining
$480,079 balance of his loans was repaid to the Company in January 1997.
In December 1993, the Company granted 52,131 restricted common shares to
its officers. The grants were to vest, and become unrestricted, ratably
over a five year period on each anniversary of the share grant assuming
that each recipient is employed by the Company on such anniversary, and
assuming that the Company has achieved certain annual performance
requirements based upon growth in its Funds from Operations. None of
these shares vested and became unrestricted during 1996. The remaining
unvested shares will vest and become unrestricted ratably over the next
two years on each anniversary of the share grant, assuming that the
aforementioned conditions are met. This results in a maximum annual
vesting of $375,000.
In September 1996, one of these officers resigned from the Company. At
such time, his 2,843 unvested shares were returned to the Company.
(12) Commitments and Contingencies
Two of the communities transferred to the Company, Countryside and The
Overlook (the "San Antonio Communities"), were transferred subject to
existing contract rights between the Company and affiliates of Laramie
Associates (collectively, "Laramie") which are unaffiliated with the
Company. Pursuant to these contracts, Laramie has certain rights relating
to a subsequent sale of each of the San Antonio Communities, including a
right of first refusal to match a bona fide third party offer. In
addition, Laramie could receive 1% of annual net cash flow from operations
of the San Antonio Communities and 15% to 20% of net proceeds from sales
of such San Antonio Communities based upon the achievement of certain
levels of cash flow from operations, none of which were achieved during
1996, subordinated to significant priorities in favor of the Company.
The Company has entered into employment agreements with each of its
officers. Such agreements are for terms which expire between December 1997
and December 1998, and provide for aggregate annual base salaries of
$1.1 million and $0.9 million in 1997 and 1998, respectively.
As a commercial real estate owner, the Company is subject to potential
environmental costs. At this point in time, management of the Company is
not aware of any environmental concerns that would have a material adverse
effect on the Company's financial position or future results of
operations.
In 1994 the Company adopted a defined contribution savings plan pursuant
to Section 401 of the Internal Revenue Code. Under such a plan there are
no prior service costs. All employees are eligible to participate in the
plan after one year of service. Employer contributions are made based on a
discretionary amount determined by the Company's management. Employer
contributions, if any, are based upon the amount contributed by an
employee. During 1996, 1995 and 1994 the Company made contributions of
approximately $42,000, $29,000 and $5,400, respectively.
(13) Recent Developments
The Company has entered into an Agreement and Plan of Merger, dated as of
January 16, 1997 (the "Agreement"), with Equity Residential Properties
Trust ("EQR"). The Agreement provides for the exchange of all of the
outstanding common shares of the Company for common shares of the
surviving trust, at an exchange ratio of 0.625 common shares of the
surviving trust for each common share of the Company (the "Merger").
The Company has entered into contracts on five commercial office
properties (the "Commercial Properties") for $47.6 million in aggregate,
and has closed on four of the properties subsequent to December 31, 1996.
The aggregate purchase price for the Commercial Properties includes
approximately $2.25 million in value of common shares of Wellsford Real
Properties, Inc. ("WRP Newco") to be issued to an entity in consideration
for the assignment of the purchase contracts entered into by such entity.
Upon liquidation of such entity, each of the Chairman of the Board and
President of the Company, Messrs. Lynford and Lowenthal, will receive
approximately 16.4% of such shares, and the wife of Mark Germain, a
trustee of the Company, will receive approximately 13.8% of such shares.
Each are owners of such entities.
Immediately prior to the Merger, and subject to the satisfaction or waiver
of all conditions thereto, the Company will contribute certain of its
assets, including the Commercial Properties, and certain of its
liabilities to its subsidiary (formed in 1997), WRP Newco, and distribute
to its common shareholders, on a pro rata basis, all of the shares it owns
in WRP Newco.
The Merger is subject to the approval of the common shareholders of both
EQR and the Company and other conditions.
(14) Unaudited Summarized Consolidated Quarterly Information
Summarized consolidated quarterly financial information for the years
ended December 31, 1996 and 1995 is as follows:
Three Months Ended (Unaudited)
----------------------------------------------------
December 31 September 30 June 30 March 31
----------- ------------ ----------- -----------
1996
_____________
Revenue $34,669,041 $32,752,665 $32,360,211 $32,039,486
Expenses 28,909,883 27,020,853 26,797,059 26,365,473
Gain (loss) on sale
of communities (65,745) -- -- --
----------- ----------- ----------- -----------
Net income (loss) 5,693,413 5,731,812 5,563,152 5,674,013
Preferred dividends 3,137,100 3,137,100 3,137,100 3,137,100
----------- ----------- ----------- -----------
Net income (loss)
available for common
shareholders $ 2,556,313 $ 2,594,712 $ 2,426,052 $ 2,536,913
=========== =========== =========== ===========
Net income (loss)
per common share $ 0.15 $ 0.15 $ 0.14 $ 0.15
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding 17,104,096 17,053,683 17,038,158 17,031,108
=========== =========== =========== ===========
Three Months Ended (Unaudited)
----------------------------------------------------
December 31 September 30 June 30 March 31
----------- ------------ ----------- -----------
1995
_____________
Revenue $33,169,285 $32,666,357 $32,654,707 $32,741,853
Expenses 27,684,240 28,927,920 28,636,040 28,743,394
Gain (loss) on sale
of communities (1,335,057) (162,849) 678,618 --
(Loss) on early
extinguishment of debt (423,684) (5,129,364) -- --
----------- ------------ ----------- -----------
Net income (loss) 3,726,304 (1,553,776) 4,697,285 3,998,459
Preferred dividends 3,137,101 2,335,580 1,750,000 1,750,000
Net income (loss)
available for common
shareholders $ 589,203 $(3,889,356) $ 2,947,285 $ 2,248,459
=========== =========== =========== ===========
Net income (loss)
per common share $ 0.03 $ (0.23) $ 0.18 $ 0.13
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding 16,987,603 16,944,495 16,909,403 16,909,311
=========== =========== =========== ===========
<PAGE>
<TABLE>
<CAPTION>
December 31, 1996
------------------------------
Initial Cost (b)
------------------------------
Date Year # of Bldgs &
Property Name Acquired Location Built Units Land Improve Total
- ----------------------------- -------- ------------------------ ----- ----- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Countryside 1/88 San Antonio, TX 1980 220 $742 $3,187 $3,929
Colinas Pointe 6/88 Denver, CO 1986 272 1,224 6,292 7,516
The Overlook 10/88&10/89 San Antonio, TX 1985 411 1,792 7,306 9,098
The Village at Bear Creek (B) 12/88 Denver, CO 1987 472 3,912 23,965 27,877
Waterford 6/89 San Antonio, TX 1983 133 500 2,154 2,654
Trails End 6/89 San Antonio, TX 1983 308 1,000 6,075 7,075
Springs of Country Woods 11/89 Salt Lake City, UT 1982 590 1,700 15,448 17,148
Settlers Point 3/90 Salt Lake City, UT 1986 288 700 5,977 6,677
Villas of Oak Creste 9/90 San Antonio, TX 1979 280 824 4,062 4,886
Burn Brae 9/90 Dallas, TX 1984 282 1,507 5,627 7,134
Cimarron Ridge 9/90 Denver, CO 1984 296 825 5,507 6,332
Copperfield 9/90 San Antonio, TX 1980 258 1,144 4,518 5,662
Highland Point 9/90 Denver, CO 1984 318 965 5,900 6,865
Sterling Point 9/90 Denver, CO 1979 143 605 3,100 3,705
Skyline Gateway 4/91 Tucson, AZ 1985 246 738 5,363 6,101
Quail Cove 8/91 Salt Lake City, UT 1987 420 1,785 9,849 11,634
Reflections at the Lakes 9/92 Las Vegas, NV 1989 326 2,016 11,424 13,440
Ironwood at the Ranch 12/92 Westminster, CO 1986 226 1,580 8,948 10,528
Calais 12/92 Dallas, TX 1986 264 1,011 5,732 6,743
Pointe at South Mountain 4/93 Phoenix, AZ 1988 364 2,558 15,078 17,636
The Registry 7/93 Denver, CO 1987 208 1,269 7,229 8,498
Catalina Shores 7/93 Las Vegas, NV 1989 256 1,501 8,541 10,042
Crossing at Green Valley 7/93 Las Vegas, NV 1986 384 2,338 13,270 15,608
Parkwood East 7/93 Fort Collins, CO 1986 259 1,602 9,109 10,711
Regatta 8/93 San Antonio, TX 1983 200 968 5,519 6,487
Forest Valley 8/93 San Antonio, TX 1983 185 567 3,249 3,816
Landera 8/93 San Antonio, TX 1983 184 608 3,477 4,085
Mountain Run 9/93 Albuquerque, NM 1985 472 2,628 14,944 17,572
The Marks (B) 11/93 Denver, CO 1987 616 5,268 30,252 35,520
Warwick Station 11/93 Denver, CO 1986 332 2,438 13,740 16,178
Dos Caminos 12/93 Phoenix, AZ 1983 264 2,273 12,896 15,169
Copper Creek 12/93 Phoenix, AZ 1984 144 1,165 6,615 7,780
Mission Palms 3/94 Tucson, AZ 1980 360 2,699 15,539 18,238
San Tropez 3/94 Phoenix, AZ 1989 316 3,254 18,557 21,811
Crown Court 3/94 Phoenix, AZ 1987 416 4,154 23,791 27,945
Augusta 5/94 Oklahoma City, OK 1986 197 1,197 6,711 7,908
Heritage Park 5/94 Oklahoma City, OK 1983 452 1,831 10,924 12,755
Invitational 5/94 Oklahoma City, OK 1983 344 1,629 9,845 11,474
Raindance 5/94 Oklahoma City, OK 1984 504 1,449 8,536 9,985
Windrush 5/94 Oklahoma City, OK 1982 160 767 4,513 5,280
Wellsford Oaks 5/94 Tulsa,OK 1991 300 1,811 10,303 12,114
Huntington Hollow 5/94 Tulsa,OK 1981 288 800 5,120 5,920
One Eton Square 5/94 Tulsa,OK 1985 448 2,567 14,464 17,031
Silver Springs 5/94 Tulsa,OK 1984 200 838 4,739 5,577
Woodland Oaks 5/94 Tulsa,OK 1983 228 1,071 6,426 7,497
North Creek Heights 12/94 Seattle, WA 1990 114 1,621 5,215 6,836
Panther Ridge 12/94 Seattle, WA 1980 260 2,608 7,398 10,006
Highland Creste 12/94 Seattle, WA 1989 198 1,284 8,652 9,936
Ridgegate 12/94 Seattle, WA 1990 153 1,037 4,472 5,509
Whitedove Pointe 12/94 Seattle, WA 1992 96 619 5,164 5,783
Cherry Hill 12/94 Seattle, WA 1991 108 1,497 5,222 6,719
Plum Tree Park 12/94 Seattle, WA 1991 196 2,786 7,525 10,311
Firdale Village 12/94 Seattle, WA 1986 386 3,285 16,070 19,355
Martha Lake 12/94 Seattle, WA 1991 155 1,950 6,370 8,320
Country Club Village 12/94 Seattle, WA 1991 151 1,948 6,900 8,848
2300 Elliott 12/94 Seattle, WA 1992 91 1,299 6,676 7,975
Metropolitan Park 12/94 Seattle, WA 1991 82 920 5,091 6,011
Seventh & James 12/94 Seattle, WA 1992 96 1,475 5,652 7,127
Merrill Creek 12/94 Tacoma, WA 1994 149 1,185 6,315 7,500
Stoney Creek 12/94 Tacoma, WA 1990 231 1,571 8,486 10,057
Windridge 12/94 Tacoma, WA 1989 80 303 2,463 2,766
Surprise Lake Village 12/94 Tacoma, WA 1986 338 957 12,711 13,668
Cambridge 12/94 Tacoma, WA 1988 96 564 3,792 4,356
Chestnut Hills 12/94 Tacoma, WA 1991 157 609 6,549 7,158
The Hamptons 12/94 Tacoma, WA 1991 230 1,602 8,536 10,138
Windemere 12/94 Tacoma, WA 1987 36 234 882 1,116
Crown Pointe 12/94 Tacoma, WA 1987 76 107 2,644 2,751
Gold Pointe 12/94 Tacoma, WA 1990 84 673 3,646 4,319
The Village at Seeley Lake (B) 12/94 Tacoma, WA 1990 522 2,566 23,124 25,690
The Westridges (C) 12/94 Tacoma, WA 1991 714 4,476 29,178 33,654
The Ridgetop 12/94 Tacoma, WA 1988 221 731 7,954 8,685
Summit at Lake Union 12/96 Seattle, WA 1996 150 2,485 14,077 16,562
19,004 $114,212 $644,585 $758,797
<CAPTION>
December 31, 1996
-------------------------------------------------------------------------------------
Cost
Capitalized Total Cost (A) Total Cost
Subsequent ----------------------------- Net of
to Bldgs & Accum Accumulated
Property Name Acquisition Land Improve Total Depr Depreciation Encumbrances
- ----------------------------- ----------- -------- -------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Countryside $124 $742 $3,311 $4,053 $1,290 $2,763 ---
Colinas Pointe 149 1,224 6,441 7,665 2,226 5,439 ---
The Overlook 630 1,792 7,936 9,728 2,504 7,224 ---
The Village at Bear Creek (B) 112 3,912 24,077 27,989 2,881 25,108 ---
Waterford 58 500 2,212 2,712 712 2,000 ---
Trails End 484 1,000 6,559 7,559 2,050 5,509 ---
Springs of Country Woods 269 1,700 15,717 17,417 4,732 12,685 ---
Settlers Point 167 700 6,144 6,844 1,733 5,111 ---
Villas of Oak Creste 107 824 4,169 4,993 1,059 3,934 ---
Burn Brae 257 1,507 5,884 7,391 1,475 5,916 ---
Cimarron Ridge 262 825 5,769 6,594 1,480 5,114 ---
Copperfield 117 1,144 4,635 5,779 1,176 4,603 ---
Highland Point 361 965 6,261 7,226 1,568 5,658 ---
Sterling Point 846 605 3,946 4,551 1,017 3,534 ---
Skyline Gateway 255 738 5,618 6,356 1,264 5,092 ---
Quail Cove 627 1,785 10,476 12,261 2,403 9,858 ---
Reflections at the Lakes 26 2,016 11,450 13,466 1,944 11,522 ---
Ironwood at the Ranch 100 1,583 9,045 10,628 1,447 9,181 $6,070
Calais 300 1,011 6,032 7,043 981 6,062 ---
Pointe at South Mountain 169 2,558 15,247 17,805 2,246 15,559 12,900
The Registry 75 1,269 7,304 8,573 1,010 7,563 ---
Catalina Shores 128 1,501 8,669 10,170 1,197 8,973 ---
Crossing at Green Valley 154 2,338 13,424 15,762 1,856 13,906 ---
Parkwood East 17 1,602 9,126 10,728 1,263 9,465 ---
Regatta 175 968 5,694 6,662 767 5,895 ---
Forest Valley 219 567 3,468 4,035 471 3,564 ---
Landera 197 608 3,674 4,282 500 3,782 ---
Mountain Run 319 2,628 15,263 17,891 2,026 15,865 ---
The Marks (B) 285 5,268 30,537 35,805 2,340 33,465 21,325
Warwick Station 155 2,438 13,895 16,333 1,735 14,598 10,243
Dos Caminos 336 2,273 13,232 15,505 1,653 13,852 ---
Copper Creek 118 1,165 6,733 7,898 839 7,059 ---
Mission Palms 138 2,699 15,677 18,376 1,763 16,613 ---
San Tropez 50 3,254 18,607 21,861 2,089 19,772 ---
Crown Court 134 4,154 23,925 28,079 2,687 25,392 5,679
Augusta 59 1,197 6,770 7,967 710 7,257 ---
Heritage Park 695 1,831 11,619 13,450 1,209 12,241 ---
Invitational 390 1,629 10,235 11,864 1,080 10,784 ---
Raindance 800 1,449 9,336 10,785 966 9,819 ---
Windrush 108 767 4,621 5,388 487 4,901 ---
Wellsford Oaks 121 1,811 10,424 12,235 1,094 11,141 ---
Huntington Hollow 747 800 5,867 6,667 624 6,043 ---
One Eton Square 226 2,567 14,690 17,257 1,542 15,715 ---
Silver Springs 304 838 5,043 5,881 529 5,352 ---
Woodland Oaks 341 1,071 6,767 7,838 709 7,129 ---
North Creek Heights 55 1,621 5,270 6,891 430 6,461 ---
Panther Ridge 287 2,608 7,685 10,293 622 9,671 ---
Highland Creste 60 1,284 8,712 9,996 711 9,285 ---
Ridgegate 82 1,037 4,554 5,591 374 5,217 ---
Whitedove Pointe 14 619 5,178 5,797 423 5,374 ---
Cherry Hill 21 1,497 5,243 6,740 430 6,310 ---
Plum Tree Park 74 2,786 7,599 10,385 626 9,759 ---
Firdale Village 221 3,285 16,291 19,576 1,339 18,237 ---
Martha Lake 245 1,950 6,615 8,565 548 8,017 ---
Country Club Village 132 1,948 7,032 8,980 574 8,406 ---
2300 Elliott 80 1,299 6,756 8,055 552 7,503 ---
Metropolitan Park 23 920 5,114 6,034 418 5,616 ---
Seventh & James 89 1,475 5,741 7,216 470 6,746 ---
Merrill Creek 15 1,185 6,330 7,515 517 6,998 5,659
Stoney Creek 106 1,571 8,592 10,163 706 9,457 ---
Windridge 63 303 2,526 2,829 208 2,621 ---
Surprise Lake Village 334 957 13,045 14,002 1,076 12,926 ---
Cambridge 38 564 3,830 4,394 311 4,083 ---
Chestnut Hills 43 609 6,592 7,201 539 6,662 ---
The Hamptons 66 1,602 8,602 10,204 703 9,501 6,100
Windemere 12 234 894 1,128 73 1,055 ---
Crown Pointe 8 107 2,652 2,759 216 2,543 ---
Gold Pointe 70 673 3,716 4,389 307 4,082 ---
The Village at Seeley Lake (B) 64 2,566 23,188 25,754 1,322 24,432 ---
The Westridges (C) 601 4,476 29,779 34,255 2,435 31,820 ---
The Ridgetop 58 731 8,012 8,743 655 8,088 ---
Summit at Lake Union 0 2,485 14,077 16,562 47 16,515 ---
---------------- -------- -------- -------- ------- -------- -------
Total: $14,572 $114,215 $659,154 $773,369 $83,966 $689,403 $67,976
---------------- -------- -------- -------- ------- -------- -------
</TABLE>
(A) The aggregate cost for federal income tax purposes at December 31, 1996 is
$833,883. Total cost excludes construction in process of $22,211.
(B) Includes expansion(s) completed/acquired in 1996.
(C) In 1996, the Company combined the operations of its Westridge, Pointe at
Westridge and Village at Westridge communities.
Schedule III
WELLSFORD RESIDENTIAL PROPERTY TRUST AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Asset Amount 1996 1995 1994
- ------------------------------ ---------- --------- ---------
Balance at beginning of period $710,209 $742,411 $301,389
Acquisitions 62,098 -- 439,122
Dispositions (1,612) (39,087) --
Improvements 2,674 6,885 1,900
--------- -------- ---------
Balance at end of period $ 773,369 $710,209 $742,411
========= ======== ========
Accumulated Depreciation
- ----------------------------
Balance at beginning of period $ 58,491 $ 34,777 $ 19,165
Depreciation 25,591 25,308 15,612
Dispositions (116) (1,594) --
--------- -------- ---------
Balance at end of period $ 83,966 $ 58,491 $ 34,777
========= ========= =========
Exhibit 10.7
AMENDMENT TO
COMPENSATION AGREEMENTS
Jeffrey H. Lynford
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of January 1, 1996, (ii) Restricted
Share Grant Letter Agreement, dated as of December 6, 1993, (iii) Share Option
Agreement, dated as of December 6, 1993, with respect to 42,418 Common Shares
of Beneficial Interest, $.01 par value per share, of the Company (the
"Shares"), as amended by letter agreement, dated as of December 11, 1995,
(iv) Share Option Agreement, dated as of December 12, 1994, with respect to
10,558 Shares, as amended by letter agreement, dated as of December 11, 1995,
(v) Share Option Agreement, dated as of December 12, 1994, with respect to
51,942 Shares, as amended by letter agreement, dated as of December 11, 1995,
(vi) Share Option Agreement, dated as of December 11, 1995, with respect to
8,888 Shares, (vii) Share Option Agreement, dated as of December 11, 1995, with
respect to 16,112 Shares, and (viii) Change in Control Share Grant Letter
Agreement, dated as of December 11, 1995, and (B) the following Term Notes
executed by you in favor of the Company: (i) Term Note, dated as of December 6,
1993, in the principal amount of $500,000 and (ii) Term Note, dated as of
December 12, 1994, in the principal amount of $1,210,938 (the documents listed
in clauses (A) and (B) are collectively referred to herein as the "Documents").
1. Amendment to Employment Agreement. Section 11 of the Employment
Agreement is hereby amended by (i) adding a closed parenthesis on the sixth
line thereof after the word "terminated" and before the word "in" and
(ii) deleting the word "cost" at the beginning of the thirteenth line thereof
and substituting therefor the word "cash".
2. Amendments to all Documents. Notwithstanding any other
definitions therefor set forth therein, each of the Documents, including the
Employment Agreement, is hereby amended to provide that a "change in control"
of the Company and a "change of control" of the Company shall be deemed to
occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells all
or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects.
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
--------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Jeffrey H. Lynford
- -----------------------
Jeffrey H. Lynford
Exhibit 10.8
AMENDMENT TO
COMPENSATION AGREEMENTS
Edward Lowenthal
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of January 1, 1996, (ii) Restricted
Share Grant Letter Agreement, dated as of December 6, 1993, (iii) Share Option
Agreement, dated as of December 6, 1993, with respect to 42,418 Common Shares
of Beneficial Interest, $.01 par value per share, of the Company (the
"Shares"), as amended by letter agreement, dated as of December 11, 1995,
(iv) Share Option Agreement, dated as of December 12, 1994, with respect to
10,558 Shares, as amended by letter agreement, dated as of December 11, 1995,
(v) Share Option Agreement, dated as of December 12, 1994, with respect to
51,942 Shares, as amended by letter agreement, dated as of December 11, 1995,
(vi) Share Option Agreement, dated as of December 11, 1995, with respect to
8,888 Shares, (vii) Share Option Agreement, dated as of December 11, 1995, with
respect to 16,112 Shares, and (viii) Change in Control Share Grant Letter
Agreement, dated as of December 11, 1995, and (B) the following Term Notes
executed by you in favor of the Company: (i) Term Note, dated as of December 6,
1993, in the principal amount of $500,000 and (ii) Term Note, dated as of
December 12, 1994, in the principal amount of $1,210,938 (the documents listed
in clauses (A) and (B) are collectively referred to herein as the "Documents").
1. Amendment to Employment Agreement. Section 11 of the Employment
Agreement is hereby amended by (i) adding a closed parenthesis on the sixth
line thereof after the word "terminated" and before the word "in" and
(ii) deleting the word "cost" at the beginning of the thirteenth line thereof
and substituting therefor the word "cash".
2. Amendments to all Documents. Notwithstanding any other
definitions therefor set forth therein, each of the Documents, including the
Employment Agreement, is hereby amended to provide that a "change in control"
of the Company and a "change of control" of the Company shall be deemed to
occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells all
or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects.
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Jeffrey H. Lynford
---------------------------
Name: Jeffrey H. Lynford
Title: Chairman of the Board
AGREED TO AND ACCEPTED:
/s/ Edward Lowenthal
- ---------------------
Edward Lowenthal
Exhibit 10.9
AMENDMENT TO
COMPENSATION AGREEMENTS
Daniel M. Kelley
Wellsford Holly Residential Properties, Inc.
101 East 26th Street
Tacoma, Washington 98421
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of August 2, 1994, (ii) Share Option
Agreement, dated as of December 13, 1994, with respect to 6,250 Common Shares
of Beneficial Interest, $.01 par value per share, of the Company (the
"Shares"), as amended by letter agreement, dated as of December 11, 1995,
(iii) Share Option Agreement, dated as of December 13, 1994, with respect to
9,375 Shares, as amended by letter agreement, dated as of December 11, 1995,
(iv) Share Option Agreement, dated as of December 11, 1995, with respect to
8,888 Shares, (v) Share Option Agreement, dated as of December 11, 1995, with
respect to 16,112 Shares and (vi) Change in Control Share Grant Letter
Agreement, dated as of December 11, 1995, and (B) Term Note, dated as of
December 13, 1994, in the principal amount of $312,500 executed by you in favor
of the Company (the documents listed in clauses (A) and (B) are collectively
referred to herein as the "Documents").
Notwithstanding any other definitions therefor set forth therein,
each of the Documents, including the Employment Agreement, is hereby amended to
provide that a "change in control" of the Company and a "change of control" of
the Company shall be deemed to occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells all
or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects.
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
-------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Daniel M. Kelley
- -----------------------
Daniel M. Kelley
Exhibit 10.10
AMENDMENT TO
COMPENSATION AGREEMENTS
Donald D. MacKenzie
Wellsford Residential Property Trust
370 17th Street
Denver, Colorado 80202
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of January 1, 1996, (ii) Restricted
Share Grant Letter Agreement, dated as of December 6, 1993, (iii) Share Option
Agreement, dated as of December 6, 1993, with respect to 3,000 Common Shares of
Beneficial Interest, $.01 par value per share, of the Company (the "Shares"),
as amended by letter agreement, dated as of December 11, 1995, (iv) Share
Option Agreement, dated as of December 12, 1994, with respect to 4,000 Shares,
as amended by letter agreement, dated as of December 11, 1995, (v) Share Option
Agreement, dated as of December 12, 1994, with respect to 6,000 Shares, as
amended by letter agreement, dated as of December 11, 1995, (vi) Share Option
Agreement, dated as of December 11, 1995, with respect to 8,888 Shares and
(vii) Share Option Agreement, dated as of December 11, 1995, with respect to
16,112 Shares, and (B) the following Term Notes executed by you in favor of the
Company: (i) Term Note, dated as of December 6, 1993, in the principal amount
of $125,000, (ii) Term Note, dated as of December 12, 1994, in the principal
amount of $242,188, and (iii) Term Note, dated as of December 27, 1995, in the
principal amount of $250,000 (the documents listed in clauses (A) and (B) are
collectively referred to herein as the "Documents").
1. Amendment to Employment Agreement. The Employment Agreement is
hereby amended as follows:
(i) Section 1(a) of the Employment Agreement is hereby amended by
(A) deleting the words "Vice President -- Acquisitions and Development" at the
end of the third and the beginning of the fourth lines thereof, and
substituting therefor the words "Executive Vice President -- Director of
Operations" and (B) adding the word "Executive" before the words "Vice
President" on the fifth line thereof.
(ii) Section 3(a) of the Employment Agreement is hereby deleted and
replaced by a new Section 3(a) which reads in its entirety as follows:
"Compensation. For all services rendered by the Executive
pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual base
salary at the following rates:
(i) for the period from January 1, 1996 through September 30,
1996 - $138,915 per annum;
(ii) for the period from October 1, 1996 through December 31,
1996 - $160,000 per annum;
(iii) for the period from January 1, 1997 through December 31,
1997 - $164,800 per annum;
(iv) for the period from January 1, 1998 through December 31,
1998 - $169,744 per annum; and
(v) for each additional year thereafter, the annual base
salary for the immediately preceding year plus three
percent (3%) of such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company
may establish from time to time for executive employees of the
Company."
(iii) Section 5 of the Employment Agreement is hereby amended by (A)
deleting the word "such" at the end of the first line thereof and replacing it
with the words "five weeks of" and (B) deleting the word "time" on the second
line thereof.
2. Amendments to all Documents. Notwithstanding any other
definitions therefor set forth therein, each of the Documents, including the
Employment Agreement, is hereby amended to provide that a "change in control"
of the Company and a "change of control" of the Company shall be deemed to
occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells
all or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects .
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
-------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Donald D. MacKenzie
- -------------------------
Donald D. MacKenzie
Exhibit 10.11
AMENDMENT TO
COMPENSATION AGREEMENTS
Gregory F. Hughes
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of January 1, 1996, (ii) Restricted
Share Grant Letter Agreement, dated as of December 6, 1993, (iii) Share Option
Agreement, dated as of April 1, 1993, with respect to 12,000 Common Shares of
Beneficial Interest, $.01 par value per share, of the Company (the "Shares"),
as amended by letter agreement, dated as of December 11, 1995, (iv) Share
Option Agreement, dated as of December 6, 1993, with respect to 3,000 Shares,
as amended by letter agreement, dated as of December 11, 1995, (v) Share Option
Agreement, dated as of December 12, 1994, with respect to 2,000 Shares, as
amended by letter agreement, dated as of December 11, 1995, (vi) Share Option
Agreement, dated as of December 12, 1994, with respect to 3,000 Shares, as
amended by letter agreement, dated as of December 11, 1995, (vii) Share Option
Agreement, dated as of December 11, 1995, with respect to 8,888 Shares and
(viii) Share Option Agreement, dated as of December 11, 1995, with respect to
16,112 Shares, and (B) the following Term Notes executed by you in favor of the
Company: (i) Term Note, dated as of December 6, 1993, in the principal amount
of $125,000, (ii) Term Note, dated as of December 12, 1994, in the principal
amount of $242,188, and (iii) Term Note, dated as of December 27, 1995, in the
principal amount of $250,000 (the documents listed in clauses (A) and (B) are
collectively referred to herein as the "Documents").
1. Amendment to Employment Agreement. Section 3(a) of the
Employment Agreement is hereby deleted and replaced by a new Section 3(a) which
reads in its entirety as follows:
"Compensation. For all services rendered by the Executive
pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual base
salary at the following rates:
(i) for the period from January 1, 1996 through September 30,
1996 - $126,000 per annum;
(ii) for the period from October 1, 1996 through December 31,
1996 - $145,000 per annum;
(iii) for the period from January 1, 1997 through December 31,
1997 - $149,350 per annum;
(iv) for the period from January 1, 1998 through December 31,
1998 - $153,831 per annum; and
(v) for each additional year thereafter, the annual base
salary for the immediately preceding year plus three
percent (3%) of such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company
may establish from time to time for executive employees of the
Company."
2. Amendments to all Documents. Notwithstanding any other
definitions therefor set forth therein, each of the Documents, including the
Employment Agreement, is hereby amended to provide that a "change in control"
of the Company and a "change of control" of the Company shall be deemed to
occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells
all or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects.
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
---------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Gregory F. Hughes
- -----------------------
Gregory F. Hughes
Exhibit 10.12
AMENDMENT TO
COMPENSATION AGREEMENTS
David M. Strong
Wellsford Residential Property Trust
370 17th Street
Denver, Colorado 80202
Dear Sir:
Reference is made to (A) the following documents between you and
Wellsford Residential Property Trust (the "Company"): (i) Employment Agreement
(the "Employment Agreement"), dated as of January 1, 1996, (ii) Share Option
Agreement, dated as of December 12, 1994, with respect to 3,000 Common Shares
of Beneficial Interest, $.01 par value per share, of the Company (the
"Shares"), as amended by letter agreement, dated as of December 11, 1995,
(iii) Share Option Agreement, dated as of December 12, 1994, with respect to
2,500 Shares, as amended by letter agreement, dated as of December 11, 1995,
(iv) Share Option Agreement, dated as of December 11, 1995, with respect to
5,000 Shares and (v) Share Option Agreement, dated as of December 11, 1995,
with respect to 7,500 Shares, and (B) Term Note, dated as of December 27, 1995,
in the principal amount of $125,000, executed by you in favor of the Company
(the documents listed in clauses (A) and (B) are collectively referred to
herein as the "Documents").
1. Amendment to Employment Agreement. Section 3(a) of the
Employment Agreement is hereby deleted and replaced by a new Section 3(a) which
reads in its entirety as follows:
"Compensation. For all services rendered by the Executive
pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual base
salary at the following rates:
(i) for the period from January 1, 1996 through September 30,
1996 - $100,000 per annum;
(ii) for the period from October 1, 1996 through December 31,
1996 - $115,000 per annum;
(iii) for the period from January 1, 1997 through December 31,
1997 - $120,000 per annum;
(iv) for the period from January 1, 1998 through December 31,
1998 - $130,000 per annum; and
(v) for the period from January 1, 1999 through December 31,
1999 - $140,000 per annum; and
(vi) for each additional year thereafter, the annual base
salary for the immediately preceding year plus three
percent (3%) of such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company
may establish from time to time for executive employees of the
Company."
2. Amendments to all Documents. Notwithstanding any other
definitions therefor set forth therein, each of the Documents, including the
Employment Agreement, is hereby amended to provide that a "change in control"
of the Company and a "change of control" of the Company shall be deemed to
occur if:
(i) there shall have occurred a change in control of a
nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof, whether or not the Company is then subject to
such reporting requirement, provided, however, that there shall not
be deemed to be a "change in control" of the Company if immediately
prior to the occurrence of what would otherwise be a "change in
control" of the Company (a) the Executive is the other party to the
transaction (a "Control Event") that would otherwise result in a
"change in control" of the Company or (b) the Executive is an
executive officer, trustee, director or more than 5% equity holder of
the other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells
all or substantially all of its assets to, another company (each, a
"Transaction"), provided, however, that a Transaction shall not be
deemed to result in a "change in control" of the Company if (a)
immediately prior thereto the circumstances in (i)(a) or (i)(b) above
exist, or (b) (1) the shareholders of the Company, immediately before
such Transaction own, directly or indirectly, immediately following
such Transaction in excess of fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving
Corporation") in substantially the same proportion as their ownership
of the voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the Company's
Board of Trustees immediately prior to the execution of the agreement
providing for such Transaction constitute at least a majority of the
members of the board of directors or the board of trustees, as the
case may be, of the Surviving Corporation, or of a corporation or
other entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company
(each, an "Other Transaction") and (a) the shareholders of the
Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less
of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such Other Transaction
(the "Other Surviving Corporation") in substantially the same
proportion as their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals who
were members of the Company's Board of Trustees immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the Other
Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
Except as explicitly provided for herein, the Documents shall remain
in full force and effect in all respects.
This letter agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
New York's conflicts of law principles.
This letter agreement and all documents, agreements, understandings
and arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of September 16, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
-----------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ David M. Strong
- --------------------
David M. Strong
Exhibit 10.15
AMENDMENT TO
RESTRICTED SHARE GRANT LETTER AGREEMENT
Jeffrey H. Lynford
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to the Restricted Share Grant Letter Agreement (the
"Agreement"), dated as of December 6, 1993, between you and Wellsford
Residential Property Trust (the "Company").
Paragraph (c) of the Agreement is hereby deleted and replaced in its
entirety with the following new paragraph (c):
"(c) If (1) the undersigned is an employee of the Company on
December 6 of 1994, 1995, 1997 and 1998, respectively (each such date is
hereinafter referred to as a "Vesting Date") and (2) for the four fiscal
quarters ending with the third fiscal quarter immediately preceding the
applicable Vesting Date, the Company has achieved, on a consolidated
basis, a minimum increase of 5% in funds from operations per share over
funds from operations per share for the four fiscal quarters ending with
the third fiscal quarter of the prior fiscal year, the Company shall
deliver to the undersigned the certificate(s) representing the Shares
which vest on such date, as set forth below, and such Shares shall no
longer be subject to repurchase pursuant to paragraph (e) below:
Certificate Number of Shares
December 6 of No(s). Which Vest
1994 W0140 3,791
1995 WO141 3,791
1997 W0143 and W1539 5,688
1998 W0144 and W1540 5,687
For the purposes of this agreement, "funds from operations per share" shall be
as determined by the Company's Chief Accounting Officer and reported in the
Company's quarterly report to shareholders."
Except as explicitly provided for herein, the Agreement shall remain in
full force and effect in all respects.
This letter agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to New York's
conflicts of law principles.
This letter agreement and all documents, agreements, understandings and
arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of October 10, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
-------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Jeffrey H. Lynford
- ------------------------
Jeffrey H. Lynford
Exhibit 10.16
AMENDMENT TO
RESTRICTED SHARE GRANT LETTER AGREEMENT
Edward Lowenthal
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to the Restricted Share Grant Letter Agreement (the
"Agreement"), dated as of December 6, 1993, between you and Wellsford
Residential Property Trust (the "Company").
Paragraph (c) of the Agreement is hereby deleted and replaced in its
entirety with the following new paragraph (c):
"(c) If (1) the undersigned is an employee of the Company on
December 6 of 1994, 1995, 1997 and 1998, respectively (each such date is
hereinafter referred to as a "Vesting Date") and (2) for the four fiscal
quarters ending with the third fiscal quarter immediately preceding the
applicable Vesting Date, the Company has achieved, on a consolidated
basis, a minimum increase of 5% in funds from operations per share over
funds from operations per share for the four fiscal quarters ending with
the third fiscal quarter of the prior fiscal year, the Company shall
deliver to the undersigned the certificate(s) representing the Shares
which vest on such date, as set forth below, and such Shares shall no
longer be subject to repurchase pursuant to paragraph (e) below:
Certificate Number of Shares
December 6 of No(s). Which Vest -----------------------
---------------
1994 W0135 3,791
1995 WO136 3,791
1997 W0138 and W1543 5,688
1998 W0139 and W1544 5,687
For the purposes of this agreement, "funds from operations per share" shall be
as determined by the Company's Chief Accounting Officer and reported in the
Company's quarterly report to shareholders."
Except as explicitly provided for herein, the Agreement shall remain in
full force and effect in all respects.
This letter agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to New York's
conflicts of law principles.
This letter agreement and all documents, agreements, understandings and
arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of October 10, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Jeffrey H. Lynford
---------------------------
Name: Jeffrey H. Lynford
Title: Chairman of the Board
AGREED TO AND ACCEPTED:
/s/ Edward Lowenthal
- ---------------------
Edward Lowenthal
Exhibit 10.17
AMENDMENT TO
RESTRICTED SHARE GRANT LETTER AGREEMENT
Donald D. MacKenzie
Wellsford Residential Property Trust
370 17th Street
Denver, Colorado 80202
Dear Sir:
Reference is made to the Restricted Share Grant Letter Agreement (the
"Agreement"), dated as of December 6, 1993, between you and Wellsford
Residential Property Trust (the "Company").
Paragraph (c) of the Agreement is hereby deleted and replaced in its
entirety with the following new paragraph (c):
"(c) If (1) the undersigned is an employee of the Company on
December 6 of 1994, 1995, 1997 and 1998, respectively (each such date is
hereinafter referred to as a "Vesting Date") and (2) for the four fiscal
quarters ending with the third fiscal quarter immediately preceding the
applicable Vesting Date, the Company has achieved, on a consolidated
basis, a minimum increase of 5% in funds from operations per share over
funds from operations per share for the four fiscal quarters ending with
the third fiscal quarter of the prior fiscal year, the Company shall
deliver to the undersigned the certificate(s) representing the Shares
which vest on such date, as set forth below, and such Shares shall no
longer be subject to repurchase pursuant to paragraph (e) below:
Certificate Number of Shares
December 6 of No(s). Which Vest
1994 W0130 948
1995 W0131 948
1997 W0133 and W1541 1,422
1998 W0134 and W1542 1,421
For the purposes of this agreement, "funds from operations per share" shall be
as determined by the Company's Chief Accounting Officer and reported in the
Company's quarterly report to shareholders."
Except as explicitly provided for herein, the Agreement shall remain in
full force and effect in all respects.
This letter agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to New York's
conflicts of law principles.
This letter agreement and all documents, agreements, understandings and
arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of October 10, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
----------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Donald D. MacKenzie
- -------------------------
Donald D. MacKenzie
Exhibit 10.18
AMENDMENT TO
RESTRICTED SHARE GRANT LETTER AGREEMENT
Gregory F. Hughes
Wellsford Residential Property Trust
610 Fifth Avenue
New York, New York 10020
Dear Sir:
Reference is made to the Restricted Share Grant Letter Agreement (the
"Agreement"), dated as of December 6, 1993, between you and Wellsford
Residential Property Trust (the "Company").
Paragraph (c) of the Agreement is hereby deleted and replaced in its
entirety with the following new paragraph (c):
"(c) If (1) the undersigned is an employee of the Company on
December 6 of 1994, 1995, 1997 and 1998, respectively (each such date is
hereinafter referred to as a "Vesting Date") and (2) for the four fiscal
quarters ending with the third fiscal quarter immediately preceding the
applicable Vesting Date, the Company has achieved, on a consolidated
basis, a minimum increase of 5% in funds from operations per share over
funds from operations per share for the four fiscal quarters ending with
the third fiscal quarter of the prior fiscal year, the Company shall
deliver to the undersigned the certificate(s) representing the Shares
which vest on such date, as set forth below, and such Shares shall no
longer be subject to repurchase pursuant to paragraph (e) below:
Certificate Number of Shares
December 6 of No(s). Which Vest -----------------------
---------------
1994 W0120 948
1995 W0121 948
1997 W0123 and W1545 1,422
1998 W0124 and W1546 1,421
For the purposes of this agreement, "funds from operations per share" shall be
as determined by the Company's Chief Accounting Officer and reported in the
Company's quarterly report to shareholders."
Except as explicitly provided for herein, the Agreement shall remain in
full force and effect in all respects.
This letter agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to New York's
conflicts of law principles.
This letter agreement and all documents, agreements, understandings and
arrangements relating to this letter agreement have been executed by the
undersigned in his/her capacity as an officer or trustee of the Company which
has been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of the Company dated as of July 20, 1992, as amended, and
not individually, and neither the trustees, officers or shareholders of the
Company shall be bound or have any personal liability hereunder or thereunder.
You shall look solely to the assets of the Company for satisfaction of any
liability of the Company in respect of this letter agreement and all documents,
agreements, understandings and arrangements relating to this letter agreement
and will not seek recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
Dated as of October 10, 1996
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
------------------------
Name: Edward Lowenthal
Title: President
AGREED TO AND ACCEPTED:
/s/ Gregory F. Hughes
- ---------------------------
Gregory F. Hughes
Exhibit 10.20
FIRST AMENDMENT TO SECOND AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT (this "Amendment") made as of the 1st day of December,
1995, by and among WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland real
estate investment trust ("Borrower"), THE FIRST NATIONAL BANK OF BOSTON,
individually ("FNBB"), the other lenders which are a party to this
Amendment, and THE FIRST NATIONAL BANK OF BOSTON, as Agent (the
"Agent").
W I T N E S E T H:
WHEREAS, Borrower, Agent and the lenders a party thereto entered
into that certain Second Amended and Restated Revolving Credit Agreement
dated June 30, 1995 (the "Credit Agreement"); and
WHEREAS, Borrower has requested that Agent, FNBB and the other
lenders which are a party hereto modify and amend certain terms and
provisions of the Credit Agreement;
NOW, THEREFORE, for and in consideration of the sum of TEN and
NO/100 DOLLARS ($10.00), and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties
hereto do hereby covenant and agree as follows:
1. Definitions. All the terms used herein which are not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
2. Modification of the Credit Agreement. Borrower, Banks and
Agent do hereby modify and amend the Credit Agreement as follows:
(a) By inserting the following definitions in Section 1.1 of
the Credit Agreement:
"Bonds. The Palomino Park Public Improvements
Corporation Assessment Lien Revenue Bonds Series
1995-$14,755,000.00.
Bond Trustee. United States Trust Company of New York or
its permitted successors and assigns.
LC Expiration Date. The date upon which the Letter of
Credit has expired by its terms and been returned to the
Letter of Credit Issuer or has otherwise been surrendered to
the Letter of Credit Issuer without possibility of any further
drawing thereunder, and (i) all amounts owing to the Letter of
Credit Issuer under the Reimbursement Agreement and the other
Related Documents have been paid in full, and (ii) all
Obligations hereunder with respect to the Letter of Credit or
Loans made pursuant to Section 2.9 have been paid in full.
LC Exposure. The sum, as of any date of determination,
of (i) the maximum amount which the Letter of Credit Issuer
may be required to pay on such date or at any future time
under the Letter of Credit (without regard to any amounts that
as of such date of determination have been advanced and may be
reinstated in the future), plus (ii) the aggregate amount of
all payments that have been made by Letter of Credit Issuer
with respect to the Letter of Credit but have not been
reimbursed by the Borrower or any other person pursuant to the
Reimbursement Agreement or the promissory notes executed
pursuant thereto or converted into Loans pursuant to Section
2.9 hereof.
Letter of Credit Commitment. With respect to each Bank
the amount set forth on Schedule 1 hereto as the amount of
such Bank's Lender of Credit Commitment to make or maintain
advances with respect to the Letter of Credit, as the same may
be changed from time to time in accordance with the terms of
this Agreement. The Letter of Credit Commitment shall equal
$15,773,702.00 in the aggregate, except as such amount may be
reduced from time to time in accordance with the terms of this
Agreement; it being agreed that the Letter of Credit
Commitment shall not exceed $15,773,702.00.
Letter of Credit Commitment Percentage. With respect to
each Bank the percentage set forth on Schedule 1 hereto as
such Bank's percentage of the aggregate Letter of Credit
Commitments of all of the Banks, as the same may be changed
from time to time in accordance with the terms of this
Agreement.
Palomino Park. Palomino Park Public Improvements
Corporation, a Colorado nonprofit corporation.
Reimbursement Agreement. The Letter of Credit
Reimbursement Agreement among Palomino Park, Borrower and
Letter of Credit Issuer, dated as of December 1, 1995,
relating to the Letter of Credit, together with all
amendments, modifications, restatements, supplements or
consolidations thereof.
Related Documents. The "Related Documents," as such term
is defined in the Reimbursement Agreement, together with all
amendments, modifications, restatements, supplements or
consolidations thereof.
Revolver Commitment. With respect to each Bank the
amount set forth on Schedule 1 hereto as the amount of such
Bank's Revolver Commitment to make or maintain Loans to the
Borrower (other than with respect to advances relating to the
Letter of Credit pursuant to Section 2.9), as the same may be
changed from time to time in accordance with the terms of this
Agreement. The Revolver Commitment shall equal $133,000,000.00
in the aggregate, as such amount may be changed from time to
time in accordance with the terms of this Agreement.
Revolver Commitment Percentage. With respect to each
Bank, the percentage set forth on Schedule 1 hereto as such
Bank's percentage of the aggregate Revolver Commitments of all
of the Banks, as the same may be changed from time to time in
accordance with the terms of this Agreement.
Stated Amount. The term "Stated Amount" shall have the
meaning given to such term in Paragraph 2 of the Letter of
Credit.";
(b) By deleting the definition of the terms "Commitment,"
"Commitment Percentage," "Letter of Credit," "Letter of Credit Request"
and "Loans" appearing in Section 1.1 of the Credit Agreement, and
inserting in lieu thereof the following:
"Commitment. With respect to each Bank the Letter of
Credit Commitment and Revolver Commitment for such Bank, as
the same may be changed from time to time in accordance with
the terms of this Agreement.
Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's
percentage of the aggregate Letter of Credit Commitments and
Revolver Commitments of all of the Banks.
Letter of Credit. The Irrevocable Letter of Credit No.
967-95 in the stated amount of $15,773,702.00 issued by Letter
of Credit Issuer, dated December 1, 1995, together with any
replacements, substitutes, amendments, modifications or
supplements thereto permitted by this Agreement.
Letter of Credit Issuer. Dresdner Bank AG, New York
Branch, or any other branch or agency thereof which may issue
a substitute Letter of Credit as permitted in the
Reimbursement Agreement.
Loans. The aggregate Loans to be made by the Banks
hereunder, including without limitation, Loans made pursuant
to Section 2.1 and Section 2.9.";
(c) By deleting Section 2.1 of the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"Section 2.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally
agrees to lend to the Borrower, and the Borrower may borrow (and
repay and reborrow) from time to time between the Closing Date and
the Maturity Date upon notice by the Borrower to the Agent given in
accordance with Section 2.6, such sums as are requested by the
Borrower for the purposes set forth in Section 7.11 up to a maximum
aggregate principal amount outstanding (after giving effect to all
amounts requested) at any one time equal to such Bank's Commitment,
provided, that, in all events no Default or Event of Default shall
have occurred and be continuing, and provided, further that at any
time the LC Exposure shall be greater than zero or any Loan made
pursuant to Section 2.9 shall remain Outstanding, none of the Banks
shall have any obligation to have an aggregate principal amount
outstanding under this Section 2.1 at any time greater than such
Banks' Revolver Commitment. In no event shall the outstanding
principal amount of the Loans pursuant to this Section 2.1 at any
time exceed the Total Commitment (or, if the LC Exposure is greater
than zero or any Loan made pursuant to Section 2.9 shall remain
Outstanding, the aggregate of the Revolver Commitments) or cause a
violation of the covenants set forth in Section 7.15 nor shall the
sum of (a) the outstanding principal amount of the Loans made
pursuant to this Section 2.1, and (b) the amount of the LC Exposure
and Loans made pursuant to Section 2.9 at any time exceed the Total
Commitment or cause a violation of the covenants set forth in
Section 7.15. The Loans pursuant to Section 2.1 shall be made pro
rata in accordance with each Bank's Commitment Percentage or if
prior to the LC Expiration Date, the Revolver Commitment
Percentage. The funding of a Loan hereunder shall constitute a
representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of
the initial Loan and Section 11, in the case of all other Loans,
have been satisfied on the date of such funding.";
(d) By deleting Section 2.2 of the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"Section 2.2. Facility Fee. The Borrower agrees to pay to
the Agent for the accounts of the Banks in accordance with their
respective Commitment Percentages a facility fee calculated at the
rate of one-fourth of one percent (0.25%) per annum on the average
amount by which the Total Commitment exceeds the outstanding
principal amount of Loans made pursuant to Section 2.1 and Section
2.9 plus the amount of the LC. Exposure during each calendar
quarter or portion thereof commencing on the date hereof and ending
on the Maturity Date, provided, however, that in the event for any
quarter the ratio (expressed as a percentage) of (a) the average
amount of the outstanding principal amount of the Loans made
pursuant to Section 2.1 and Section 2.9 plus the amount of the LC
Exposure during such quarter to (b) the Total Commitment is greater
than sixty percent (60%), then the facility fee shall be calculated
at the rate of one-eighth of one percent (0.125%) for such quarter.
The facility fee shall be payable quarterly in arrears on the first
day of each calendar quarter for the immediately preceding calendar
quarter or portion thereof, and on any earlier date on which the
Commitments shall be reduced or shall terminate as provided in
Section 2.3, with a final payment on the Maturity Date.";
(e) By deleting Section 2.3 of the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"Section 2.3. Reduction and Termination of Commitment. The
Borrower shall have the right at any time and from time to time
upon five Business Days' prior written notice to the Agent to
reduce by $1,000,000 or an integral multiple of $100,000 in excess
thereof or to terminate entirely the unborrowed portion of the
Commitments, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment
Percentages of the amount specified in such notice or, as the case
may be, terminated, any such termination or reduction to be without
penalty (unless such termination or reduction requires repayment of
a Eurodollar Rate Loan); provided, however that the Commitments
shall not be reduced below the amount of the LC Exposure. Promptly
after receiving any notice of the Borrower delivered pursuant to
this Section 2.3, the Agent will notify the Banks of the substance
thereof. Upon the effective date of any such reduction or
termination, the Borrower shall pay to the Agent for the respective
accounts of the Banks the full amount of any facility fee under
Section 2.2 then accrued on the amount of the reduction. No
reduction or termination of the Commitment may be reinstated. At
any time that any amount is available to be drawn under the Letter
of Credit or may be reinstated thereunder, the Letter of Credit
Commitment may be reduced only as provided in Paragraph 3(b) of the
Letter of Credit, and in the event of any reduction in the Letter
of Credit Commitment as provided herein, the Revolver Commitment
shall be increased on a dollar for dollar basis. In the event that
the Letter of Credit Commitment shall be reduced and the Revolver
Commitment increased as provided in the preceding sentence, the
Revolver Commitment Percentages and Letter of Credit Commitment
Percentages shall be adjusted in the following manner: (i) Letter
of Credit Issuer's Letter of Credit Commitment Percentage shall
equal fifty percent (50%); (ii) the sum of each Bank's Letter of
Credit Commitment and Revolver Commitment shall continue to equal
such Bank's Commitment; (iii) the Revolver Commitment and the
Letter of Credit Commitment, respectively, shall be equal for all
Banks that have equal Commitment Percentages; and (iv) Agent in the
exercise of its good faith judgment, while attempting to maintain
the relative proportions of the Banks existing prior to such
reallocation, shall allocate the increase in the Revolver
Commitment, and, subject to clause (i) above, the decrease in the
Letter of Credit Commitment among the Banks in such manner as Agent
shall determine. Following such allocation, the Revolver
Commitment, the Letter of Credit Commitment, the Revolver
Commitment Percentages and the Letter of Credit Commitment
Percentages of the Banks shall be recalculated by Agent, and such
calculations shall be binding upon Borrower and the Banks.";
(f) By inserting the following sentence at the end of Section
2.7 of the Credit Agreement:
"To the extent that Section 2.1 shall only require a Bank to
make available its Revolver Commitment Percentage of a requested
Loan, the references in this Section 2.7 to a Bank's Commitment
Percentage shall be deemed to be a reference to such Bank's
Revolver Commitment Percentage.";
(g) By deleting the fourth (4th) sentence of Section
2.8(a)(iv) of the Credit Agreement, in inserting in lieu thereof the
following:
"In the event that the amount approved by the Agent, the Banks
and the Potential Banks pursuant to Section 2.8(a)(iv) for such
extension is less than the Total Commitment, then the Borrower may
not request, and the Banks shall not be obligated to make, any
Loans pursuant to Section 2.1 for a period which is thirty (30)
days prior to the then effective Maturity Date which, when added to
the LC Exposure and any Loans made pursuant to Section 2.1 and
Section 2.9, would be in excess of the amount of the Total
Commitments approved by the Banks and the Potential Banks. ";
(h) By deleting Section 2.9 of the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"Section 2.9 Letter of Credit.
(a) The Borrower has requested that Letter of Credit Issuer
provide the Letter of Credit as credit enhancement for the Bonds.
Park at Highlands LLC, a Subsidiary of the Borrower, is the owner
of Real Estate located in Douglas County, Colorado which will be
benefitted by the issuance of the Bonds and the improvements to be
constructed with the proceeds from the issuance of the Bonds. The
issuance of the Bonds and the Letter of Credit will inure to the
direct interest and benefit of the Borrower. The Borrower
acknowledges and agrees that the Letter of Credit Issuer would not
have agreed to provide the Letter of Credit unless the Banks agreed
to participate in advances made thereunder as provided in this
Agreement, and the Banks would not have agreed to participate in
such advances without (i) the agreement of the Borrower to repay
such advances in accordance with the terms of this Agreement and
(ii) the reservation of the Letter of Credit Commitment from the
Total Commitment.
(b) In the event that the Letter of Credit Issuer shall honor
any draw or other presentation for payment under the Letter of
Credit and the amount so paid by Letter of Credit Issuer shall not
be reimbursed by the Borrower or any other Person in the manner and
within the time period set forth in Section 2.1 or Section 2.2 of
the Reimbursement Agreement, the Letter of Credit Issuer shall
promptly notify the Agent in writing of the amount of such draw and
whether such draw was an "Interest Drawing," a "Principal Drawing'
or a "Liquidity Drawing" (as such terms are defined in the Letter
of Credit). In the event such notice shall be delivered to Agent
on or before 10:00 a.m. (Boston time) of a Business Day, the Agent
shall, prior to the end of such Business Day, without notice to or
the consent of the Borrower, notify the Banks of such draw, and the
Banks shall make available to the Agent in accordance with Section
2.7 their respective Letter of Credit Commitment Percentages of the
amount so paid by the Letter of Credit Issuer on or before 12:00
noon (Boston time) on the next Business Day; provided, however,
that the Letter of Credit Issuer shall automatically and without
further action be deemed to have advanced to itself on such
Business Day the amount of its Letter of Credit Commitment
Percentage of such draw without funding the same to the Agent.
Each Bank's obligation to make such payment to the Agent shall not
be limited or impaired by the occurrence or continuance of any
Default or Event of Default by Borrower, the failure to meet any
condition that otherwise must be met for the funding of any Loan,
or the failure of any other Bank to make any payment under this
Section 2.9(b), and each Bank further agrees that such payment
shall be made without any offset, abatement, withholding or
reduction whatsoever except as otherwise provided in any
intercreditor agreement among the Banks and Agent. The proceeds of
such funding by the Banks received by 12:00 noon (Boston time)
shall be paid by the Agent to the Letter of Credit Issuer on such
Business Day (or if received after such time, by the close of the
following Business Day) and all such amounts advanced by the Banks
hereunder (including, without limitation, the Letter of Credit
Issuer) shall be evidenced by the Notes. The amount so drawn shall
from the date of such advance by the Banks pursuant to this Section
2.9 be considered Loans for all purposes hereunder bearing interest
as provided in Section 2.5(a); provided, however, that the Borrower
shall pay the Letter of Credit Issuer interest at the rate and upon
the terms contained in the Reimbursement Agreement on the amount so
drawn from the date of such advance by the Letter of Credit Issuer
until the date of such advance by the Banks to Agent as provided
above. The Borrower irrevocably authorizes each Bank to make or
cause to be made such advances at such time notwithstanding the
fact that any other conditions to the obligations of the Banks to
make such advances to the Borrower under this Agreement may not
have been satisfied. At such time as the Banks shall fund or be
deemed to have funded a Loan pursuant to this Section 2.9(b), the
Borrower will be deemed to have reimbursed the Letter of Credit
Issuer under the Reimbursement Agreement for such amounts, and the
Borrower and Palomino Park therefore shall no longer be obligated
to reimburse such amounts pursuant to the Reimbursement Agreement,
and such obligation shall thereafter be evidenced by the Notes.
The provisions of Section 2.7 shall apply to any Banks failing or
refusing to fund its Letter of Credit Commitment Percentage with
respect to any such draw, and shall not affect the Borrower's and
Palomino Park's reimbursement obligations under the Reimbursement
Agreement and the Related Documents being deemed to have been
satisfied; provided, however, that the Borrower's and Palomino
Park's obligations under the Reimbursement Agreement and the
Related Documents with respect to a payment made under the Letter
of Credit shall not be deemed to have been reimbursed in the event
that all of the Banks fail or refuse to fund a Loan with respect
thereto pursuant to this Section 2.9(b) and none of such Banks
cures such failure or refusal within the time period permitted in
any intercreditor agreement among the Banks and Agent. If after
receipt of such funding from any Bank the Letter of Credit Issuer
receives payment from the Borrower or any other source on account
of the reimbursement obligation that was so funded, or the interest
accrued thereon, the Letter of Credit Issuer shall remit such
payment to the Agent for distribution to the Banks to the extent of
their participation therein.
(c) Provided that no Event of Default shall have occurred,
the Borrower may in connection with any prepayment of the
Obligations designate that any such prepayment be applied to reduce
the amount of Loans made pursuant to this Section 2.9 in order to
cause a reinstatement of the Letter of Credit in accordance with
its terms. Unless the amount of any "Liquidity Drawing" (as
defined in the Reimbursement Agreement) honored by Letter of Credit
Issuer is reimbursed by the Borrower or any other person to Letter
of Credit Issuer pursuant to Section 2.2 of the Reimbursement
Agreement in the manner and within the time period set forth in
Section 2.2 of the Reimbursement Agreement, no amount available to
be drawn under the Letter of Credit shall bc reinstated except as
provided in this Section 2.9(c).
(d) The Borrower acknowledges and agrees that the terms and
conditions of the Reimbursement Agreement and the Related Documents
are independent of the terms and provisions of this Agreement and
the other Loan Documents and shall not diminish, restrict or
otherwise limit the terms of this Agreement or any other of the
Loan Documents. The Reimbursement Agreement and the Related
Documents are not, and shall not be deemed to be, a novation,0
cancellation, satisfaction or substitution of this Agreement or any
other Loan Documents or the Obligations.
(e) Unless all of the Banks otherwise consent in writing, the
term of the Letter of Credit shall not be extended or renewed, nor
shall the terms of the Letter of Credit be amended, modified or
waived. The amount drawn under the Letter of Credit shall reduce
on a dollar for dollar basis the amount available to be drawn under
the Letter of Credit Commitment and the Total Commitment as a Loan;
provided, however, that the amount available to be drawn under the
Letter of Credit Commitment shall increase to the extent that
amounts available to be drawn under the Letter of Credit are
reinstated as provided in the first sentence of Section 2.9(c).
(f) Without duplication hereunder, the Borrower shall pay to
the Letter of Credit Issuer a non-refundable letter of credit
facing fee as provided in Section 2.8 of the Reimbursement
Agreement.
(g) The Borrower shall pay to the Agent for the account of
the Banks in accordance with their respective Letter of Credit
Commitment Percentages, a non-refundable letter of credit retention
fee calculated at the rate of one percent (1.0%) per annum of the
Stated Amount (without regard to reductions in the Stated Amount
subject to reinstatement, it being understood that reductions
effected by submission of a certificate in the form of Exhibit "D"
to the Letter of Credit are not subject to reinstatement). The
first payment of such fee shall be due January 1, 1996 for the
period from the date of issuance of the Letter of Credit through
December 31, 1995, and shall be payable quarterly in arrears
thereafter on the first (1st) day of each calendar quarter
thereafter for each quarter or portion thereafter, and on any
earlier date upon which the Letter of Credit shall expire or
terminate.
(h) On the LC Expiration Date, the Letter of Credit
Commitment shall be merged into the Revolver Commitment (which
shall then equal the Total Commitment) and the Borrower may borrow
(and repay and reborrow) such amounts as provided in this
Agreement, and each Bank's Commitment Percentage shall be
determined based upon the ratio that the sum of such Bank's
Commitment bears to the Total Commitment."
(i) By deleting the words "(including Letters of Credit
outstanding and accepted but unpaid)", appearing in the second (2nd) and
third (3rd) lines of Section 3.2 of the Credit Agreement, and inserting
in lieu thereof the words "(which for the purposes hereof shall include
the LC Exposure)";
(j) By inserting the following sentence at the end of Section
3.4 of the Credit Agreement:
"Notwithstanding the foregoing, except as otherwise provided
in Section 2.9(c) with respect to a reinstatement of the Letter of
Credit, each partial prepayment of the Loans shall be applied to
reduce the Loans made under Section 2.1 and the Loans made under
Section 2.9 on a pro rata basis based upon the aggregate amount of
each type of Loan Outstanding.";
(k) By deleting Section 4.4(c) of the Credit Agreement in its
entirety, and inserting in lieu thereof the following:
"(c) The obligations of the Borrower to the Banks under this
Agreement shall be absolute, unconditional and irrevocable, and
shall not be subject to any right of setoff or counterclaim against
any Bank, and shall be paid and performed strictly in accordance
with the terms of this Agreement, under all circumstances
whatsoever, including, without limitation, the following
circumstances: (i) any lack of validity or enforceability of this
Agreement, any other Loan Document or any Related Document; (ii)
any improper use which may be made of any Letter of Credit or any
improper acts or omissions of any beneficiary or transferee of any
Letter of Credit in connection therewith; (iii) any amendment or
waiver of, or any consent to departure from, all or any of the
Related Documents, this Agreement or any other Loan Document other
than, with respect to any particular obligation, the specific
waiver by the Banks of such particular obligation under this
Agreement, such Related Document or such Loan Document; (iv) the
existence of any claim, setoff, defense or any right which the
Borrower may have at any time against the Bond Trustee, any
beneficiary or any transferee of the Letter of Credit (or Persons
for whom the Bond Trustee, any such beneficiary or any such
transferee may be acting), the Banks (other than the defense of
payment to the Banks in accordance with the terms of this
Agreement) or any other Person, whether in connection with the
Letter of Credit, this Agreement, any other Loan Document, or any
other Related Document, the transactions contemplated herein or
therein or any unrelated transaction; (v) any statement,
certificate or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in
any respect whatsoever; (vi) any breach of any agreement or dispute
among or between Borrower and Bond Trustee, any beneficiary or
transferee of the Letter of Credit, Palomino Park or any other
Person; (vii) any irregularity in the transaction with respect to
which the Letter of Credit is issued, including any fraud by the
Bond Trustee or any beneficiary or transferee of the Letter of
Credit; (viii) any non-application or misapplication by the Bond
Trustee of the proceeds of any drawing under the Letter of Credit
or any other act or omission of the Bond Trustee or any other
Person in connection with the Letter of Credit; (ix) payment by the
Letter of Credit Issuer under the Letter of Credit against
presentation of a certificate which does not comply with the terms
of the Letter of Credit, (x) any extension of time for or delay,
renewal or compromise of or other indulgence or modification
granted or agreed to by the Banks with or without notice to or
approval by the Borrower with respect to the transactions
contemplated by this Agreement and the Reimbursement Agreement
other than, with respect to any particular obligation or cost, the
specific modification to the Borrower by the Banks of such
particular obligation or cost; and (xi) any other circumstance or
happening whatsoever, whether or not similar to any of the
foregoing. Nothing herein shall limit any rights which the Borrower
may have against the Letter of Credit Issuer pursuant to Section
8.1 of the Reimbursement Agreement.
(d) As among the Agent, the Banks and the Borrower, Borrower
assumes all risks of the acts or omissions of the Bond Trustee and
any transferee of the Letter of Credit with respect to its use of
the Letter of Credit. None of the Agent or the Banks nor any of
their respective officers or directors shall be liable or
responsible for: (i) the use which may be made of the Letter of
Credit or for any acts or omissions of the Bond Trustee and any
beneficiary or transferee in connection therewith; (ii) any
reference which may be made to this Agreement, the Reimbursement
Agreement or the Letter of Credit in any agreements, instruments or
other documents; (iii) the validity, sufficiency or genuineness of
any document, or of any endorsement(s) thereon, even if any such
document should in fact prove to be in any or all respects,
invalid, insufficient, fraudulent or forged or any statement
therein should in fact prove to be untrue or inaccurate in any
respect whatsoever; (iv) payment by Letter of Credit Issuer against
presentation of documents which do not comply with the terms of the
Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (v) any
other circumstances whatsoever in making or failing to make payment
under the Letter of Credit. Without limiting the foregoing, the
Letter of Credit Issuer may accept any document that appears on its
face to be in order, without responsibility for further
investigation. The determination of whether a drawing has been made
under the Letter of Credit prior to its expiration date or whether
a drawing made under the Letter of Credit is in proper and
sufficient form shall be made by the Letter of Credit Issuer in its
sole discretion, which determination shall be conclusive and
binding upon Borrower to the extent permitted by law. Borrower
hereby waives any right to object to any payment made under the
Letter of Credit with regard to a drawing that is in the form
provided in the Letter of Credit, but which varies with respect to
punctuation, capitalization, spelling or similar matters of form.
Notwithstanding the forgoing, the Letter of Credit Issuer (but not
Agent or any of the other Banks) shall be liable to Borrower for
acts or events described in subsections (i) through (v) above to
the extent, but only to the extent, of any direct, as opposed to
indirect or special or consequential, damages suffered by Borrower
which Borrower proves were caused by: (x) the gross negligence or
willful misconduct of the Letter of Credit Issuer in determining
whether any draft or demand presented under the Letter of Credit
complies with the terms and conditions therefor stated in the
Letter of Credit, or (y) the willful failure of the Letter of
Credit Issuer to pay any draft or demand presented under the Letter
of Credit strictly complying with the terms and conditions of the
Letter of Credit; provided, however, that the maximum amount of
damages recoverable by Borrower as provided above is expressly
limited as provided in the Reimbursement Agreement to the Stated
Amount of the Letter of Credit.";
(l) By deleting the words "(including Loans and other
outstanding Letters of Credit (including Letters of Credit accepted but
unpaid))" appearing in the fifth (5th), sixth (6th) and seventh (7th)
lines of Section 7.1 5(a)(i) of the Credit Agreement, and inserting in
lieu thereof the words: "(including Loans and the LC Exposure");
(m) By inserting the following paragraph as Section 12.1(q)
of the Credit Agreement, appearing on page 64 thereof:
"(q) The Borrower or Palomino Park shall fail to perform any
term, covenant or agreement contained in the Reimbursement
Agreement or any of the other Related Documents;";
(n) By deleting the words "amount of the outstanding Letters
of Credit (including Letters of Credit accepted but unpaid)" appearing
in the twenty-eighth (28th) and twenty-ninth (29th) lines of Section
12.3 of the Credit Agreement, and inserting in lieu thereof the words
"amount of the LC Exposure";
(o) By inserting the following clause following the words "be
made among the Bank's pro rata" appearing in the fourteenth (14th) line
of Section 12.4(b) of the Credit Agreement, appearing on page 66
thereof:
"(it being agreed that such amounts shall be applied pro rata
among the Banks between the aggregate Obligations relating to Loans
made pursuant to Section 2.1 and Loans made pursuant to Section
2.9)";
(p) By inserting the following clause prior to the words "in
each case including" appearing in the thirtieth (30th) line of Section
16 of the Credit Agreement, appearing on page 73 thereof:
"(h) any untrue statement or alleged untrue statement of
any material fact contained or incorporated by reference in
any private placement memorandum, official statement,
preliminary official statement or other agreement relating to
the Bonds or the Letter of Credit (other than information
relating to the Letter of Credit Issuer and provided by the
Letter of Credit Issuer for inclusion therein), or the
omission or alleged omission to state in any private placement
memorandum, official statement, preliminary official statement
or other agreement relating to the Bonds or the Letter of
Credit any material fact necessary to make such statements, in
light of the circumstances under which they are or were made,
not misleading, (i) the execution and delivery or transfer of,
or payment or failure to pay under, the Letter of Credit, (j)
the issuance and sale of the Bonds, or (k) the use of the
proceeds of the Bonds,";
(q) By inserting the following Section 32 to the Credit
Agreement:
"Section 32. Additional Waivers. Borrower hereby agrees that
its obligations under this Agreement and the Loan Documents shall
not be affected or impaired by, and hereby waives and agrees not to
assert or take advantage of any defense based on: (a) the
incapacity or lack of authority of Palomino Park or any other
Person, or the failure of Agent or Letter of Credit Issuer to file
or enforce a claim against the estate (either in administration,
bankruptcy or in any other proceeding) of Palomino Park or any
other Person; (b) the voluntary or involuntary liquidation, sale or
other disposition of all or substantially all of the assets of
Palomino Park; (c) the voluntary or involuntary receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, assignment, composition, or readjustment of, or any
similar proceeding affecting, Palomino Park or any other Person, or
any of Palomino Park's or such other Person's properties or assets;
(d) the failure of the Agent, Letter of Credit Issuer or any of the
Banks to give notice of the existence, creation or incurrence of
any new or additional Obligation or of any action or nonaction on
the part of any other Person whomsoever in connection with any
Obligation; (e) any failure or delay of the Agent or the Letter of
Credit Issuer to commence an action against Palomino Park, to
assert or enforce any remedies against Palomino Park under the
Reimbursement Agreement or any other of the Related Documents, or
to realize upon any security; (f) any failure of any duty on the
part of the Agent, Letter of Credit Issuer or any of the Banks to
disclose to Borrower any facts it may now or hereafter know
regarding Palomino Park or the Bonds, whether such facts materially
increase the risk to Borrower or not; (g) the invalidity or
unenforceability of the Bonds, the Reimbursement Agreement or the
other Related Documents; (h) the compromise, settlement, release or
termination of any or all of the obligations of Palomino Park under
the Reimbursement Agreement or the other Related Documents; or (i)
to the fullest extent permitted by law, any other legal, equitable
or surety defenses whatsoever to which Borrower might otherwise be
entitled, it being the intention that the obligations of Borrower
hereunder are absolute, unconditional and irrevocable Borrower
further expressly waives any and all rights of subrogation to
Agent, Letter of Credit Issuer and the Banks against any Person
having any liability with respect to the Bonds (including, without
limitation, Palomino Park), and Borrower hereby waives any rights
to enforce any remedy which Agent, Letter of Credit Issuer or the
Banks may have against any Person having any liability with respect
to the Bonds (including, without limitation, Palomino Park), and
any rights to participate in any collateral for such Person's
obligations.";
(r) By deleting Schedule 1 attached to the Credit Agreement
in its entirety, and inserting in lieu thereof Schedule 1 attached
hereto and made a part hereof;
(s) All references in the Credit Agreement to "Letters of
Credit" shall be deemed to refer to the Letter of Credit;
(t) All references in Credit Agreement to "Letters of Credit
accepted but unpaid" shall be deemed to refer to "any draws under the
Letter of Credit accepted but unpaid"; and
(u) Any amounts which may now or hereafter be owed by
Borrower to Letter of Credit Issuer under the Reimbursement Agreement or
the Related Documents shall in all circumstances be considered unsecured
Indebtedness of Borrower for the purposes of the Credit Agreement,
regardless of whether Letter of Credit Issuer may now or hereafter have
any collateral (such as pledged Bonds or a deed of trust) for such
obligations.
3. Notes. All references in the Notes to the Credit Agreement
shall be deemed a reference to the Credit Agreement as modified and
amended herein.
4. No Default. By execution hereof, the Borrower certifies that
the Borrower is and will be in compliance with all covenants under the
Loan Documents after the issuance of the Letter of Credit. Each of the
representations and warranties made by or on behalf of the Borrower and
its Subsidiaries in or in connection with this Amendment, the
Reimbursement Agreement or the other Related Documents is true and
correct and no Default or Event of Default has occurred and is
continuing.
5. Waiver of Claims. Borrower acknowledges, represents and
agrees that to the best of Borrower's knowledge and belief after
reasonable inquiry and investigation, Borrower has no defenses, setoffs,
claims, counterclaims or causes of action of any kind or nature
whatsoever with respect to the Loan Documents, the administration or
funding of the Loans or with respect to any acts or omissions of Agent
or any of the Banks, or any past or present officers, agents or
employees of Agent or any of the Banks.
6. Ratification. Except as hereinabove set forth, all terms,
covenants and provisions of the Credit Agreement remain unaltered and in
full force and effect, and the parties hereto do hereby expressly ratify
and confirm the Credit Agreement as modified and amended herein.
Nothing in this Amendment shall be deemed or construed to constitute,
and there has not otherwise occurred, a novation, cancellation,
satisfaction, release, extinguishment or substitution of the
indebtedness evidenced by the Notes or the other obligations of Borrower
under the Loan Documents.
7. Counterparts. This Amendment may be executed in any number of
counterparts which shall together constitute but one and the same
agreement.
8. Miscellaneous. This Amendment shall be construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts. This
Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective permitted successors,
successors-in-title and assigns as provided in the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have hereto set their hands
and affixed their seals as of the day and year first above written.
THE FIRST NATIONAL BANK OF BOSTON, individually and as Agent
By:/s/ Jeffrey Warwick
-----------------------
Vice President
(BANK SEAL)
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Gregory F. Hughes
------------------------
Title: Vice President
(CORPORATE SEAL)
BANK OF AMERICA ILLINOIS
By:/s/ Robert P. McKenny
---------------------------
Title: Vice President
(BANK SEAL)
BANK ONE, ARIZONA, NA
By:/s/ John W. Boyd
------------------
Title: Vice President
(BANK SEAL)
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ James D. Benko
----------------------
Title: Assistant Vice President
(BANK SEAL)
CORESTATES BANK, N.A.
By:/s/ Gary S. Kinn
-------------------
Title: Vice President
(BANK SEAL)
SHAWMUT BANK, N A.
By:/s/ Margaret A. Mulcahy
------------------------
Title: Vice President
(BANK SEAL)
DRESDNER BANK, AG New York Branch and Grand Cayman Branch
By:/s/ Richard W. Conroy
Title: Vice President
Attest:/s/ Andrew K. Mittag
Title: Vice President
(BANK SEAL)
KREDIETBANK N.V.
By:/s/ Francis Payne
Title: Assistant V.P.
By:/s/ Robert Snauffer
Title: Vice President
(BANK SEAL)
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
BANKS AND COMMITMENTS
Revolver Letter of Credit
Commitment Revolver Commitment Letter of Credit Commitment
Name and Address Commitment Percentage Commitment Percentage Commitment Percentage
- ---------------- ---------- ---------- ---------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
The First National Bank of $30,000,000.00 20.000% $28,000,000.00 21.052632% $2,000,000.00 11.764706%
Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Eurodollar Lending Office
Same as above
Bank of America Illinois $20,000,000.00 13.333% $18,800,000.00 14.135338% $1,200,000.00 7.058824%
231 South LaSalle Street
15th Floor
Chicago, Illinois 60697
Attn: Mr. Bob McKenny
Eurodollar Lending Office
Same as above
Bank One, Arizona, NA $20,000,000.00 13.333% $18,800,000.00 14.135338% $1,200,000.00 7.058824%
Real Estate Lending
Dept. A-387
241 North Central Avenue
Phoenix, Arizona 85004
Attn: Mr. John Boyd
Eurodollar Lending Office
Same as above
The First National Bank $20,000,000.00 13.3333% $18,800,000.00 14.135338% $1,200,000.00 7.058824%
of Chicago
One First National Plaza
Mail Suite 0151
Chicago, Illinois
60670-0577
Attn: Mr. James D. Benko
Eurodollar Lending Office
Same as above
Shawmut Bank, NA $20,000,000.00 13.333% $18,800,000.00 14.135338% $1,200,000.00 7.058824%
Commercial Real Estate
One Federal Street
OF 3003
Boston, Massachusetts
02211
Attn:
Ms. Margaret A. Mulcahy
Eurodollar Lending Office
Same as above
Dresdner Bank, AG New York $15,000,000.00 10.0% $ 6,500,000.00 4.887218% $8,500,000.00 50.000000%
Branch and Grand Cayman
Branch
75 Wall Street
New York, New York
10005-2889
Attn: Mr. Richard Conroy
Eurodollar Lending Office
Same as above
Kredietbank, N.V. $15,000,000.00 10.0% $14,000,000.00 10.526316% $1,000,000.00 5.882353%
125 West 55th Street
New York, New York 10019
Attn: Mr. Frank Payre
Eurodollar Lending Office
Same as above
CoreStates Bank, N.A. $10,000,000.00 10.0% $9,300,000.00 6.992481% $ 700,000.00 4.117647%
Real Estate and Construction
Finance
1339 Chestnut Street
Philadelphia, Pennsylvania 19107-7618
Attn: Mr. Gary S. Kinn
Eurodollar Lending Office
Same as above
Percentages may not equal
100% due to rounding.
</TABLE>
Exhibit 10.36
FIRST AMENDMENT TO OPERATING AGREEMENT
OF PARK AT HIGHLANDS LLC
THIS FIRST AMENDMENT TO OPERATING AGREEMENT OF PARK AT HIGHLANDS LLC
(this "First Amendment") is made as of the 29th day of December, 1995, by and
between AL FELD, an individual ("Feld") and WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation ("WPHC").
RECITALS
A. Feld and WPHC constitute all of the members (collectively, the
"Members") of Park at Highlands LLC, a Colorado limited liability company
(the "Company"), which is governed by that certain Operating Agreement of
Park at Highlands LLC (the "Operating Agreement") dated as of April 27, 1995.
B. The Members now desire to amend the Operating Agreement as set
forth herein.
C. Capitalized terms not otherwise defined herein shall have the
definitions set forth in the Operating Agreement.
NOW, THEREFORE, for and in consideration of the above recitals and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Feld and WPHC hereby agree to amend the Operating
Agreement as follows:
1. Construction Loan Outside Date. The Construction Loan Outside Date
as defined in Section 5.2.4 of the Operating Agreement is hereby postponed to
January 5, 1996
2. Cost Savings Fee. The first sentence of Section 7.4 of the
Operating Agreement is hereby deleted in its entirety and the following is
substituted therefor:
"The Company shall pay Feld at Final Closing a cost
savings fee equal to twenty-five percent (25%) of cost
savings, if any."
3. Attorneys Fees. The following paragraph is hereby added to the
Operating Agreement as new Section 19.17 thereof:
19.17 Attorneys Fees. Should any party hereto institute any legal
action or proceeding to enforce any provision of the Operating Agreement
or for damages by reason of any alleged breach of any provision of the
Operating Agreement or for any other judicial remedy, the prevailing
party shall be entitled to receive from the non-prevailing party all
reasonable attorneys' fees and all court costs in connection with said
action or proceeding, in addition to any other award.
4. Exhibits to Operating Agreement. The Members hereby agree that the
exhibits listed below, a copy of each of which is attached hereto and
incorporated herein, are hereby attached to and made a part of the Operating
Agreement to the same effect as if each had been fully set forth in the
Operating Agreement at the date it was executed by the Members and that each
of the exhibits attached to this First Amendment is hereby substituted for
and shall supersede the corresponding exhibit attached to the Operating
Agreement, if any:
Exhibit C Deposit and Contract Administration Agreement
Exhibit E Description of Infrastructure
Exhibit F Description of Infrastructure Land
Exhibit J Property Management Agreement
Exhibit L Pledge and Security Agreement - Feld to WPHC
Exhibit M Pledge and Security Agreement - WPHC to Feld
Exhibit N Description of Plans and Specifications
Exhibit O Final Project Budget
Exhibit U Substitution Agreement
5. Full Force and Effect. The Operating Agreement, as specifically
amended herein, is hereby ratified by the Members and shall remain in full
force and effect.
6. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall constitute one agreement binding on the
parties hereto, notwithstanding that all the parties may not have signed the
same counterpart. Signature pages from one counterpart may be removed and
attached to another counterpart to create one fully-executed document.
[SIGNATURE PAGE FOLLOWS]
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto, being all of the Members of the
Company, have executed this Amendment as of the date first written above.
By: /s/ Al Feld
____________________________________
Al Feld
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By: /s/ Donald D. MacKenzie
____________________________________
Donald D. MacKenzie, Vice President
<PAGE>
EXHIBIT C
DEPOSIT AND CONTRACT ADMINISTRATION AGREEMENT
This Deposit and Contract Administration Agreement ("Agreement") is made
as of the 2nd day of May, 1995, by and between THE FELD COMPANY, a Colorado
corporation, located at 4600 S. Ulster Street, Suite 350, Denver, Colorado
80237, and WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation, located at
370 17th Street, Suite 3100, Denver, Colorado 80202 (hereinafter called
"WPHC").
RECITALS
WHEREAS, The Feld Company and Mission Viejo Company, a California
corporation ("Mission"), previously entered into that certain Second Amended
and Restated Vacant Land Purchase and Sale Agreement on March 23, 1995 (the
"Purchase Agreement") for the purchase of approximately 182 acres of
unimproved real property in Douglas County, Colorado, being more particularly
described as Lots 1 through 5, Highlands Ranch Filing No. 126-A (the
"Property"); and
WHEREAS, by an Assignment and Assumption Agreement of even date
herewith, The Feld Company, in consideration of the sum of $300,000 paid to
it by WPHC, has assigned to WPHC all of its right, title and interest in (i)
the Purchase Agreement, and (ii) that certain earnest money deposit in the
amount of $300,000 (the "Deposit") previously paid to Mission in accordance
with the terms of the Purchase Agreement; and
WHEREAS, by an Assignment and Assumption Agreement of even date
herewith, WPHC has assigned all of its rights and obligations pursuant to the
terms and provisions of the Purchase Agreement with respect to the purchase
of "Phase I," as that term is defined in the Purcha se Agreement, to the Park
at Highlands LLC, a Colorado limited liability company ("PAH"); and
WHEREAS, The Feld Company and WPHC now desire to enter into a new
agreement to document the rights and obligations of The Feld Company and WPHC
with respect to the funds being deposited with WPHC pursuant to the terms of
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained, and respectively expressing the intention to be
legally bound hereby, covenant and agree as follows:
1. Receipt and Acknowledgement. WPHC hereby acknowledges the receipt
of the sum of $150,000 from The Feld Company, which will be held by WPHC, and
governed by the terms of this Agreement.
2. Reimbursement.
a. WPHC may sell or assign its interest in the Purchase
Agreement, with respect to the Property, or any part thereof, to an
entity jointly owned by Al Feld and/or The Feld Company and Wellsford
Residential Property Trust ("Wellsford") or an entity owned by Wellsford
("Approved Entity") for any reason whatsoever. If however, WPHC sells or
assigns its interest in the Purchase Agreement, with respect to the
Property or any part thereof, to any person or entity that does not
qualify as an Approved Entity, then WPHC shall, within five business
days from the execution of such sale or assignment, pay The Feld Company
the sum of $150,000.
b. If all or any portion of the Deposit is credited by Mission
towards the purchase price of all or any portion of the Property, then
WPHC shall pay 50% of the amount so credited by Mission, to The Feld
Company within five business days following the receipt of such credit
by WPHC.
c. If all or any portion of the Deposit is returned to WPHC by
Mission, for any reason whatsoever, then WPHC shall pay 50% of the
amount so returned to The Feld Company within five business days
following WPHC's receipt thereof.
d. If the Deposit is not returned or credited by Mission to WPHC,
then neither party shall be liable to the other for reimbursement of the
Deposit or any portion thereof, except as set forth in paragraph 2.a.
hereof.
3. Right of First Offer. If The Feld Company is not in default under
any agreements with WPHC or its affiliates, and if WPHC decides not to
purchase any of Phases II, III, IV or V, as defined in the Purchase
Agreement, WPHC agrees to notify The Feld Company at least 150 days before
the scheduled closing of such Phase, and The Feld Company shall have 90 days
to obtain another source of acquisition and development financing and to
present an offer to WPHC to acquire the subject parcel. If The Feld Company
fails to present an offer acceptable to WPHC in WPHC's sole discretion, WPHC
shall have no obligations to The Feld Company with respect to such parcel.
4. Entire Agreement. This is the entire agreement between the parties
and there are no other terms, obligations, covenants, representations,
statements or conditions, oral or otherwise, of any kind whatsoever. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement in whole or in part unless such
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or abandonment is sought.
5. No Further Obligations. The parties have no obligations or
liabilities of any nature or kind to the other party with respect to the
Deposit or the Purchase Agreement, except as expressly set forth in this
Agreement. WPHC shall have exclusive control over the Purchase Agreement, as
it relates to Phases II, III, IV and V, as described therein, and The Feld
Company has no interest whatsoever in the Purchase Agreement with respect to
Phases II, III, IV and V, except for any rights set forth in this Agreement.
None of the provisions of this Agreement constitute or create any agreement
or obligation by either party to (i) enter into a joint venture, partnership,
corporation, limited liability company or any other arrangement with the
other party, or to negotiate in good faith with respect to the same; (ii) to
enter into any agreements, or to negotiate in good faith with respect to the
same; (iii) to purchase or develop the Property, or any portion thereof; or
(iv) to act in any manner whatsoever, unless expressly provided for in this
Agreement or otherwise reduced to a definitive written agreement, executed by
the parties. The parties acknowledge and agree that they have no obligations
with respect to Phases II, III, IV and V, as described in the Purchase
Agreement.
6. Miscellaneous.
a. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, legal representatives,
successors and permitted assigns.
b. Governing Law. This Agreement shall be governed by and shall
be construed and interpreted in accordance with the laws of the State of
Colorado.
c. Notices. All notices, consents, approvals or other
communications which any of the parties to this Agreement may desire or
may be required to give hereunder shall be in writing and shall be given
by registered or certified mail, return receipt requested, postage
prepaid, or by personal delivery, delivery by courier, or by confirmed
telecopy or facsimile transmission, addressed as follows:
If to The Feld Company: The Feld Company
4600 South Ulster Street
Suite 350
Denver, Colorado 80237
Fax: 303-721-9418
and to: __________________________________
__________________________________
__________________________________
__________________________________
Fax: ____________________________
If to WPHC: Wellsford Park Highlands Corp.
370 17th Street, Suite 3100
Denver, Colorado 80202
Fax: 303-595-7799
Attn: Don MacKenzie
and to: Wayne H. Hykan, Esq.
Brownstein Hyatt Farber &
Strickland, P.C.
410 17th Street, Suite 2200
Denver, Colorado 80202
Fax: 303-623-1956
Any such notice to WPHC or The Feld Company shall be deemed to be given,
received, and effective three days after such notice has been deposited in
the United States mail, addressed as aforesaid, or when personally delivered
to and received by the specified parties. All addresses for notices under
this Agreement shall be located within the United States of America.
7. Counterparts. This Agreement may be executed in counterparts.
8. Costs of Legal Proceedings. In the event that either party
institutes legal proceedings with respect to this Agreement or the
transaction contemplated hereby, the prevailing party shall be entitled to
recover its costs and expenses incurred in connection with such legal
proceedings, including, without limitation, reasonable attorneys' fees. The
terms of this paragraph shall survive the termination of this Agreement.
9. Liability of WPHC. No officer, director or shareholder of WPHC
shall be bound by or have any personal liability hereunder or under any
document, agreement, understanding or arrangement relating to this
transaction. The parties to this Agreement shall look solely to the assets
of WPHC for satisfaction of any liability of WPHC in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this transaction and will not seek recourse or commence any
action against any of the directors, officers or shareholders of WPHC or any
of their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any and all
future documents, agreements, understandings, arrangements and transactions
between the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE FELD COMPANY:
THE FELD COMPANY, a Colorado corporation
By: /s/ Al Feld
___________________________________
Al Feld, President
WPHC:
WELLSFORD PARK HIGHLANDS CORP.,
a Colorado corporation
By: /s/ Donald D. MacKenzie
___________________________________
Donald D. MacKenzie
Vice President
<PAGE>
EXHIBIT E
DESCRIPTION OF INFRASTRUCTURE
The following Description of Infrastructure uses substantially the same
categories as those in the Infrastructure Improvement Agreement. The
Aggregate of these categories comprises the Infrastructure for the Master
Development.
1. Overlot Grading. This includes rough grading for the Infrastructure
Land and some of the fine grading for the park.
2. Willows Water Line. This category includes the engineering and physical
relocation of a 30 inch Willows Water District water line as well Quebec
Street paving associated with the relocation.
3. Main Recreational Center & Grounds. This is the main recreational
facility for the Master Development. All apartment phases will share
its use. The rec center building will contain approximately 30,000
square feet and house a gym with exercise equipment, basketball court,
racquet ball court(s) and leasing offices. The rec center grounds are
expected to feature a pool & spa, volleyball court, tennis court(s),
pond and parking.
4. Water and Sewer Systems, Temporary Access Road. Included here is the
main water and sewer system that will serve the Master Development.
Additional water and sewer systems will be constructed with each
apartment phase and are not part of the Infrastructure. This category
also includes building of a temporary road that will be used as
construction access.
5. Entryway/Guardhouse/Paving. The main access/entry for the Master
Development is from South Quebec Street. At this entry there will be
entry monuments, gates, walls and a guardhouse. Paving for the entry
and loop road (the entry and loop roads collectively comprise Tract A of
the Infrastructure Land) is also included as part of this category.
6. Public Utilities. A telephone distribution system will be installed
around the loop road which will be joint trenched with gas, electric and
cable TV facilities. Some or all of the above facilities may be
installed by parties unrelated to the Company.
7. Park Improvements. Tract B of the Infrastructure Land will be
landscaped and improved with a softball diamond, soccer field, golf
putting area and other similar improvements.
8. Glen Eagles Entry. A future entry for the Master Development may be
needed to provide with ingress/egress. It is contemplated that this
access would be from Glen Eagles Drive at the southern boundary of the
Master Development. This category will include entry monuments, gates
and associated road improvements.
9. Professional Services and Miscellaneous. This category includes various
professional services associated with the development all Infrastructure
components. It includes architectural design, interior design of the
Main Rec Center, landscape design, civil engineering, soils
engineering/testing, and legal services associated with closing the
Infrastructure Land and any ongoing document review. Field supervision,
general labor and other miscellaneous items, necessary for construction
of all Infrastructure components, are also included in this category.
This category also includes building the construction yard compound
which serves as a staging/storage area for the Master Development.
<PAGE>
EXHIBIT F
DESCRIPTION OF INFRASTRUCTURE LAND
Lot 1B, Tract A and Tract B, Highlands Ranch Filing No. 126-A, 1st Amendment
as recorded at Reception No. 9560621
in the records of the Douglas County Clerk and Recorder's Office,
County of Douglas, State of Colorado
Lot 1B is the land on which the main recreational center will be situated to
service the Master Development.
Tract B is the land on which the main park will be situated to service the
Master Development.
Tract A is the land on which both the main access road and loop road will be
constructed to provide ingress and egress to the Master Development. The
loop road will encircle Lot 1B and Tract B. The main access road will
directly adjoin South Quebec Street.
<PAGE>
EXHIBIT J
PARK AT HIGHLANDS, LLC
PROPERTY MANAGEMENT AGREEMENT
This agreement (the "Agreement") is executed on the ____ day of
December, 1995 by and between PARK AT HIGHLANDS, LLC ("Owner"), and THE FELD
COMPANY, a Colorado corporation ("Manager").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, Owner and Manager mutually agree as follows:
1. APPOINTMENT OF MANAGER
On and subject to the terms and conditions of this Agreement, Owner
hereby retains Manager commencing on January 1, 1996 (the "Commencement
Date") to manage and lease on behalf of Owner the following properties
(individually or collectively the "Property"): Blue Ridge at Palomino
Park, Highlands Ranch, Colorado.
2. TERM
This Agreement shall commence on the Commencement Date and, subject to
Section 8 below, shall expire on the "Termination Date" (as defined
below). "Termination Date" shall mean the earlier of Final Closing or
Removal of Feld as defined in the Operating Agreement of Park at
Highlands, LLC dated as of April 27, 1995 ("Operating Agreement").
3. MANAGEMENT FEES
In consideration of the performance by the Manager of its duties and
obligations hereunder, the Owner shall pay to the Manager a management
fee equal to 2.5 % of "Gross Operating Revenues" (as defined below)
payable the last day of each calendar month with respect to that
calendar month. Manager shall submit to Owner an invoice detailing the
calculation of the management fee each month. "Gross Operating Revenues"
means the actual monthly cash collections from the customary operations
of the Property consisting of rental and vending machine receipts,
forfeited deposits, late charges, rent claim settlements net of any
collection fees, lease termination or modification payments and other
operating receipts, excluding applicable sales tax and refundable
deposits; Gross Operating Revenues shall not include any revenues from
condemnation or casualty proceeds, from the sale of any personal or real
property of Owner or from any source other than the customary operations
of the Property. Manager shall submit to Owner's or Owner's accounting
agent an invoice detailing the calculation of the management fee each
month.
4. AUTHORITY AND RESPONSIBILITIES OF MANAGER
4.01 Independent Contractor. In the performance of its duties
hereunder, the Manager shall be and act as an independent contractor,
with the sole duty to supervise, manage, operate, control and direct
performance of the details of its duties incident to the specified
duties and obligations hereunder, subject to the rights of the Owner, as
described herein. Nothing contained in this Agreement shall be deemed or
construed to create a partnership, joint venture, employment
relationship, or otherwise to create any liability for one party with
respect to indebtedness, liabilities or obligations of the other party
except as otherwise may be expressly set forth herein.
4.02 Standard of Care. Manager shall perform its duties and obligations
in a professional, competent, businesslike and efficient Manager as
would a first class property manager of apartment projects similar to
the Property.
4.03 Depository Account. Manager shall open, for the benefit of Owner,
a special, separate, FDIC insured, interest bearing account in a savings
institution identified by Owner (the "Depository Account") upon which
the only persons with signatory authority shall be the following
employees of Owner: Jeffrey Lynford, Chairman; Ed Lowenthal, President;
and Gregory Hughes, Vice President. The Depository Account shall be the
sole and exclusive property of the Owner, and Manager shall have no
interest (legal or equitable) therein. Owner shall have the right to
change the signatories to the Depository Account in its sole discretion.
4.04 Business Plan.
(a) Manager shall prepare and present to Owner in the computer
model and word processing and spreadsheet software approved by Owner,
within thirty days of the Commencement Date and prior to November 15 of
each year thereafter during the term of this Agreement, an annual
business plan for the following calendar year, which once approved by
Owner shall be the business plan governing the management of the
Property (the "Business Plan").
(b) Manager shall include in the Business Plan the following:
(i) a twelve-month operating budget, using Owners' chart of
accounts (see Schedule B) for the following calendar
year, which once approved by Owner, shall be the budget
("Budget");
(ii) a 5-year budget for planned improvements based on a
detailed annual physical inspection of the Property
completed by Marlager;
(iii) a preventative maintenance plan for the Property
outlining the management plan to minimize long term
operating costs and to avoid deferred maintenance;
(iv) a marketing plan for the Property, including print and
other forms of advertising, use of apartment locators and
promotional activities and apartment pricing;
(v) market surveys;
(vi) tenant selection criteria to be used in the selection of
prospective tenants, including appropriate references,
income and credit history;
(vii) a copy of Manager's current policies and procedures which
shall include the following:
(x) an environmental compliance plan outlining policies
and procedures for managing the disposal or storage of
hazardous materials and toxic substances (such plan shall
require that the Property shall not be the source of a
release or dispose of any hazardous materials or toxic
substances except as may be incidental to the operation
of an apartment project (e.g. cleaning supplies,
fertilizers, paint); and
(y) a legal compliance plan of actions necessary to
comply with all "Applicable Laws" (as defined below).
"Applicable Laws" shall mean any and all statutes,
ordinances, laws, rules, regulations, orders and
requirements of any federal, state or municipal
government, and appropriate departments, commissions,
boards and officers having jurisdiction over the use,
maintenance or operation of the Property, including
without limitation (A) laws prohibiting discrimination
based on race, religion, national origin, color, gender,
disability, age, sexual preference or any other
classification, (B) employment laws of any kind or
description, (C) laws regarding tenant security deposits,
(D) laws regarding the storage, release, and disposal of
hazardous materials, petroleum products, and toxic
substances, (E) laws and orders relating to the use of
minority business enterprises, to the extent any such
laws and orders are applicable in the performance of work
or furnishing of services, materials, equipment or
supplies hereunder, and (F) all orders and requirements
of local board of fire underwriters, or any other body
which may hereafter exercise similar functions including
any and all forms, reports and returns required by law to
be filed with any governmental authority in connection
with the use, maintenance or operation of the Property;
and
(viii) any other information, plan, survey, policies or
procedures as Owner may request.
(c) The Business plan shall be approved by the Owner before
implementation. All actions outlined in the Business Plan shall be
implemented by Manager on behalf of and at the expense of Owner, subject
to the limitations on expenses enumerated in the Budget. The Budget
shall be Manager's guideline for Owner's expectations of rental rates;
however, Manager shall be expected to continually test new rental levels
and to make adjustments with prompt notification to Owner as the market
shall permit or require. The Business Plan in conjunction with the
Budget shall constitute a major control under which Manager shall
operate, and Manager shall submit a report to Owner setting forth the
reasons for any variance therefrom as required under Owner's policies
and procedures attached hereto, and made a part hereof, as Schedule B
("Owner's Policies and Procedures ").
4.05 Leasing. Collection of Rents. etc.
(a) Manager shall use its best efforts consistent with the
standard of care set forth herein to lease apartment units, retain
residents and maximize Gross Operating Revenues.
(b) Manager shall sign apartment leases on behalf of Owner in its
capacity as property manager hereunder. Manager shall only sign leases
in the form of lease approved by Owner and subject to Owner's Policies
and Procedures. Manager shall not enter into any lease which has a term
greater than 24 months. Manager shall attach as a rider to all leases
the text as presented in Schedule A. Manager shall investigate tenant
references and tenant credit histories and shall select tenants in
accordance with tenant selection criteria outlined in the Business Plan,
and shall apply resident selection criteria fairly to all prospective
tenants. Manager shall not discriminate against or segregate any person
or group of persons on account of race, color, religion, creed, sex,
national origin, age, or disability in leasing or managing the Property
nor shall Manager permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use, or occupancy of tenants. Manager shall assess the leasing
practices on a regular basis to assure that no such practices of
discrimination are occurring on the Property. Manager shall report any
such incidents or claims of discrimination to Owner immediately.
(c) Manager shall collect rents, security deposits and other
charges payable by tenants in accordance with the tenant leases, and
shall collect income due Owner with respect to the Property from all
other sources, and shall deposit all such income received immediately
upon receipt in the Depository Account for each Property
(d) Manager shall, at Owner's expense, subject to limits set
forth in the Budget and the Business Plan, terminate leases, evict
tenants, institute and settle suits for delinquent payments as Manager
deems advisable. In connection therewith, Manager may, at Owner's
expense and subject to the limitations on expenses enumerated in the
Budget, consult and retain legal counsel.
4.06 Repair. Maintenance and Service.
(a) Manager shall, at Owner's expense and subject to the
limitations set forth in the Budget and the Business Plan, maintain the
Property in good repair and condition.
(b) In name of Owner and subject to the other terms and
conditions of this Agreement, Manager in its capacity hereunder shall
execute contracts for water, electricity, gas, telephone, television,
vermin or pest extermination and any other services which are necessary
to properly maintain the Property. Manager shall include in any such
contracts the text in Schedule A. Manager shall, in Owner's name and at
Owner's expense, hire and discharge independent contractors for the
repair and maintenance of the Property and shall include in any such
contract the text as presented in Schedule A. Other than leases, Manager
shall not, without the prior written consent of the Owner, enter into
any contract in name of Owner which may not be terminated with 30 days
notice. Manager shall act at arms length with all contractors and shall
employ no affiliated entities without Owner's prior written consent.
Notwithstanding the foregoing, Owner shall have the right to require
Manager to use certain contractors and suppliers for any service,
supply, maintenance, repair or utility for the Property, including
cable, landscaping or security service.
4.07 Manager's Employees.
(a) Manager shall have in its employ at all times a sufficient
number of employees to enable it to professionally manage the Property
in accordance with the terms of this Agreement. Owner shall have the
right to require that Manager have a minimum or maximum number of
employees at the Property and to approve or require the removal or
replacement of any employee working at the Property. Manager shall
prepare, execute and file all forms, reports and returns required by
Applicable Laws. All payroll costs for on-site employees shall be at
Owner's expense. All matters pertaining to the employment and
supervision of such employees shall be the sole responsibility of the
Manager, which in all respects shall be the employer of such employees,
and Owner shall have no liability with respect to such matters.
Notwithstanding the foregoing, Manager shall not, without consent of
Owner, transfer any employee from the Property to a similar on-site
position at a property in the area managed by Manager on behalf of a
third party.
(b) Manager shall employ at its sole expense a regional manager
to oversee the operations of the Property who shall frequently, but not
less than bi-weekly, visit the Property performing inspections and
providing guidance and training to the on-site staff. The assignment of
this regional manager to oversee the Property shall be approved by
Owner. The regional manager's supervision of more than seven (7)
properties including the Property or other considerations may be cause
for Owner to withhold or rescind said approval.
(c) Manager shall maintain, at Owner's expense, workers
compensation (or other private insurance acceptable to Owner) for all
on-site employees at limits not less than the statutory amount. Manager
shall prepare, execute and file all forms, reports and returns required
by Applicable Laws.
4.08 Insurance.
(a) Manager shall, at its sole cost and expense, procure and
maintain in full force and effect, throughout the existence of this
Agreement, policies of insurance as detailed below in subsection (b), on
which Owner shall be named insured. These policies shall be issued by an
insurance company licensed to do business in the state in which the
Property is located with an AM Best rating of A-, V or better. Manager
shall be covered under such policies for its indemnity obligations
hereunder subject to the limits set forth below. Manager shall promptly
furnish to Owner certificates of insurance acceptable to Owner as
evidence of the insurance coverage required hereunder. Manager shall
obtain a written obligation on the part of each insurance carrier to
notify Owner at least 30 days prior to any cancellation or material
change of any such policy.
(b) The following policies of insurance shall be procured and
maintained by Manager:
1. Employer's liability insurance in an amount not less than
$250,000 per occurrence.
2. Blanket crime coverage, including employee dishonesty and
depositor's forgery endorsements, protecting Manager against
fraudulent or dishonest acts of its employees, whether acting alone
or with others, with limits of liability of not less than $25,000
per Property, not to exceed $100,000 in aggregate if more than one
Property is managed, on which Owner shall be loss payee.
3. Professional liability insurance covering the activities
of Manager written on a "claims made" basis with limits of at least
$1,000,000 with a maximum deductible of $10,000. Any loss within
the deductible shall be borne by Manager. Coverage shall be
maintained in effect during the period of the Agreement and for not
less than two (2) years after termination of the Agreement.
4.09 Reports. Manager shall prepare and send to Owner reports in
accordance with Owner's Policies and Procedures, including, i) monthly
status report (Owner's form); ii) monthly statements approved by Manager
showing all receipts and disbursements; iii) an accompanying letter
explaining any significant events at the Property, as well as any
variances from budget in excess of +/- 10% on any operating statement
detailed item; iv) planned improvement logs (Owner's form); v) market
study; vi) copies of significant incident reports; and vii) other
analyses as should from time to time be reasonably requested by Owner.
4.10 Operating Expenses.
(a) Manager shall cause the Property to incur proper operating
expenses in exercising its authority and performing all of its duties
and obligations hereunder. Manager shall use reasonable efforts to
minimize such expenses by obtaining competitive pricing on all services
and obtaining at least three bids on major expenditures. Manager shall
use reasonable efforts to comply with the limitations on expenditures
set forth in the Budget. Manager shall obtain Owner's prior written
consent before incurring on behalf of Owner any single expenditure in
excess of two thousand five hundred dollars ($2,500) excluding utility
bills and other normal and recurring expenses included in the Budget,
except in an emergency in which case Manager may incur expenses
reasonably necessary to protect life and property. Manager shall notify
Owner of any such emergency expenses as soon as practicable after they
are incurred.
(b) Manager shall timely request payment by Owner of all proper
costs and expenses incurred by the operation of the Property as
contemplated herein. All costs for which payment is requested shall be
coded by the on-site manager in accordance with Owner's standard chart
of accounts, attached in Schedule B. Manager shall not request payment
of invoices to itself other than for the following items: i) the cost of
sending Property related material by overnight courier at Owner's
request, ii) forms and other items ordered in bulk by Manager and used
by the Property, iii) third-party payroll processing, and iv) the
Management Fee. Manager shall not request payment of any invoices,
whether to itself or a third party, marked-up above cost. Manager is not
required to monitor or request payment for taxes, escrows or debt
service, which costs Owner will monitor and pay.
4.11 Legal Proceeding and Compliance with Applicable Laws.
(a) Manager shall promptly notify Owner in writing of the service
of any legal process upon Manager (although Manager is not authorized to
accept service of process on behalf of the Owner), or the occurrence of
any casualty loss, injury or damage on or about the Property;
(b) Manager shall fully comply with all Applicable Laws in
connection with this Agreement, the performance of its obligations
hereunder, its own operations and its hiring, discharge and retention of
employees. Manager shall perform, on behalf and upon approval of Owner
and at Owner's expense, all such acts in and about the Property which
shall be reasonably necessary to comply with Applicable Laws.
4.12 Policies and Procedures.
(a) Manager shall maintain files of all original documents
relating to leases, vendors and all other business of the Property in an
orderly fashion at the Property, which files shall be the property of
Owner and shall at all times be open to Owner's inspection.
(b) Manager shall comply with the policies and procedures
attached hereto as Schedule B. Owner may periodically make alterations
to these policies and procedures and will provide such updates to
Manager.
5. RESPONSIBILITIES OF OWNER
5.01 Accounting. Owner shall provide accounting services for the
payment of all proper expenses of the Property, and shall provide to
Manager all accounting reports necessary for Manager to discharge its
obligations hereunder by the 5th of each month or the next subsequent
business day.
5.02 Liability. Owner shall maintain sole and primary public liability
and property damage insurance with respect to occurrences on or about
the Property, with liability limits of not less than $1,000,000 per
person and per occurrence, and excess liability with limits of not less
than $10,000,000, and rental income insurance, and naming the Manager as
an additional insured. Owner shall maintain such fire, hazard and other
insurance in such amounts as are proper in judgment of Owner. The
maintenance of fire, hazard and other insurance shall be the sole
responsibility of Owner and not Manager.
6. INDEMNIFICATION
6.01 Indemnification of Owner. The Manager shall indemnify, defend and
hold harmless Owner against any and all liabilities, costs, expenses,
damages, penalties, interest, injuries and obligations, including
reasonable attorneys' fees ("Claims") incurred by Owner as a result of
(a) any act by Manager outside the scope of its authority hereunder, (b)
any act or failure to act constituting negligence, misconduct, fraud or
breach of this Agreement, (c) Claims made by current or former employees
or applicants for employment arising from hiring, supervising or firing
same, or (d) any act by Manager, its employees, agents or contractors in
violation of any Applicable Law.
6.02 Indemnification of Manager. Owner shall indemnify and hold
harmless Manager against any and all Claims incurred by Manager as a
result of acts of Manager made within the scope of its authorities,
excluding, however, (a) Claims which arise from the negligence,
misconduct, fraud or breach of this Agreement by Manager, (b) Claims
made by current or former employees or applicants for employment arising
from hiring, supervising or firing of same, or (c) any act by Manager,
its employees, agents or contractors in violation of any Applicable Law.
6.03 General Provisions. The provisions of this Section shall survive
the termination of this Agreement.
7. DEFAULTS
7.01 Manager's Event of Default. Manager shall be deemed to be in
default hereunder upon the happening of any of the following ("Manager's
Event of Default"):
(a) The failure by Manager to keep, observe or perform any
covenant, agreement, term or provision of this Agreement to be kept,
observed or performed by Manager relating to any of the Properties, and
such default shall continue, in full or in part, for a period of ten
(10) days after written notice thereof by Owner to Manager, including
without limitation, the following:
(i) failure to make any payment or perform any financial
obligation required hereby;
(ii) failure to prepare and present a complete Budget or
Business Plan as required hereby;
(iii) failure to collect Gross Operating Revenue as required
hereby;
(iv) failure to deposit Gross Operating Revenue due Owner as
required hereby;
(v) failure to maintain the Property as required hereby;
(vi) an act or omission of Manager in violation of any
Applicable Law; or
(vii) failure to comply with Owner's Policies and Procedures.
(b) Notwithstanding paragraph (a), the occurrence of any of
the following shall be a Manager's Event of Default and Manager shall
not have the right to cure such action:
(i) The request by Manager of payment of any invoice, whether
to itself or a third party, marked-up above cost as
prohibited herein.
(ii) The aggregate operating expenses excluding real estate
taxes and improvements as reported for any Property on an
accrual basis shall:
(x) in any consecutive three-month period exceed by 10%
or more the aggregate amount included in the Budget
for those same expenses for such three-month period;
or
(y) in any one-month period exceed by 20% or more the
amount included in the Budget for those same
expenses for such month.
(iii) The failure by Manager to meet the standard of care set
forth herein for the performance of its duties at any of
the Properties.
(c) The making of a general assignment by Manager for benefit of
its creditors, the filing by Manager with any bankruptcy court of
competent jurisdiction of a voluntary petition under Title 11 of U.S.
Code, as amended from time to time, the filing by Manager of any
petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
present or future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, Manager being the subject of
any order for relief issued under such Title 11 of the U.S. Code, as
amended from time to time, or the dissolution or liquidation of Manager;
and
(d) The misapplication or misappropriation of funds held by
Manager in trust for Owner.
(e) Any default of Al Feld under the Operating Agreement.
(f) Removal of Al Feld under the Operating Agreement.
7.02 Remedies of Owner. Upon the occurrence of a Manager's Event of
Default, Owner shall be entitled (i) to terminate in writing this
Agreement effective as of the dale designated by Owner (which may be the
date Upon which notice is given), and/or (ii) to pursue any remedy at
law or in equity, including without limitation, specific performance.
All of Owner's rights and remedies shall be cumulative.
7.03 Owner's Event of Default. Owner shall be deemed to be in default
hereunder (an "Owner's Event of Default") if Owner shall fail to keep,
observe or perform any covenant, agreement, term or provision of this
Agreement to be kept, observed or performed by Owner, and such default
shall continue for a period of thirty (30) days after written notice
thereof by Manager to Owner, or if such default cannot be cured within
such thirty (30) day period, then such additional period as shall be
reasonable, provided Owner commences to cure such default within such
thirty (30) day period and proceeds diligently to prosecute such cure to
completion.
7.04 Remedies of Manager. Upon the occurrence of an Owner's Event of
Default, Manager shall be entitled (i) to terminate in writing this
Agreement effective as of the date designated by Owner which is at least
10 days after receipt of such notice of termination by Owner, and/or
(ii) to pursue an action for the actual compensatory damages incurred by
Manager. Manager expressly agrees that termination and monetary damages
are its sole rights and remedies with respect to an Owner's Event of
Default and Owner expressly waives and releases the right to seek
equitable relief, including specific performance or injunctive relief,
and to sue for any consequential or punitive damages.
8. TERMINATION RIGHTS
8.01 Expiration of Term. If not sooner terminated, this Agreement shall
terminate on the expiration of its term set forth in Section 2 hereof.
8.02 Termination by Owner Upon Manager Event of Default. Upon a Manager
Event of Default, Owner may terminate this Agreement as specified in
Section 7.02 hereof.
8.03 Termination by Manager Upon Owner Event of Default. Upon an Owner
Event of Default, Manager may terminate this Agreement as specified in
Section 7.04 hereof.
8.04 Termination by Owner. Upon removal of Feld under the Operating
Agreement this agreement shall terminate.
8.05 Termination Upon Sale of the Property. If the Property is sold,
conveyed or transferred during the term hereof, this Agreement shall
terminate.
8.06 Termination After Initial Term. If the parties hereto agree to
continue this Agreement after the initial term hereof, Owner shall then
be entitled to terminate this Agreement upon thirty (30) days written
notice.
8.07 Effect of Termination Upon Payment of Fees. Upon the termination
of this Agreement for any reason, Manager shall be entitled to its
earned, but unpaid fees, for the period prior to the termination.
Manager shall not be entitled to any fees relating to the period after
the date of termination of this Agreement; provided that in the case of
termination by Owner pursuant to Section 8.04, Manager shall be entitled
to actual, compensatory damages as specified in Section 7.04.
8.08 Delivery of Property Upon Termination. Immediately after
termination of this Agreement for any reason, Manager shall deliver to
or as directed by Owner all funds, checks, keys, lease files, books and
records and other Confidential Information to Owner. Immediately after
termination, Manager shall leave the Property and cause its employees to
leave the Property without causing any damage thereto. Under no
circumstances shall any default by Owner give rise to any lien on the
Property or give rise to a right of Manager to stay on the Property
after the date of termination without the express consent of Owner.
8.09 Effect of Termination on Park at Highlands. LLC. The termination
of this Agreement shall not affect or impair the rights and remedies of
the parties to the Operating Agreement of Park at Highlands, LLC under
such Operating Agreement, including any right of a party to receive
fees, compensation or distributions under such Operating Agreement.
9. CONFIDENTIALITY
9.01 Preservation of Confidentiality. In connection with the
performance of obligations hereunder, Manager acknowledges that it will
have access to "Confidential Information" (as defined below). Manager
shall treat such Confidential Information as proprietary to Owner and
private, and shall preserve the confidentiality thereof and not
disclose, or cause or permit its employees, agents or contractors to
disclose, such Confidential Information. Notwithstanding the foregoing,
Manager shall have the right to disclose Confidential Information if and
to the extent it is required by legal process or by operation of law to
disclose any Confidential Information. "Confidential Information" shall
mean the books, records, business practices, methods of operations,
computer software, financial models, financial information, policies and
procedures, and other information relating to Owner and the Property
(including any such information relating to the Property generated by
the Manager) which are not available to the public.
9.02 Property Right in Confidential Information. All Confidential
Information shall remain the property of Owner and Manager shall have no
ownership interest therein.
10. SURVIVAL OF AGREEMENT
All indemnity obligations set forth herein, all obligations to pay
earned and accrued fees and expenses, all confidentiality obligations,
and all obligations to perform and duties accrued prior to the date of
termination shall survive the termination of this Agreement.
11. ENFORCEMENT OF AGREEMENT
This Agreement, its interpretation, performance and enforcement, and the
rights and remedies of the parties hereto, shall be governed and
construed by and in accordance with the law of the State in which the
Property is located. If any action at law or in equity is brought to
enforce or interpret the provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable costs, including
attorney's fees, incurred to maintain such action, from the prevailing
party.
12. ASSIGNMENT
Manager shall not sell, assign or otherwise transfer by operation of law
or otherwise all or any part of its rights or obligations under this
Agreement. Owner may assign this Agreement to a successor owner of the
Property.
13. NOTICES
Any notice required by this Agreement shall be deemed to be delivered
when delivered, if delivered by overnight courier, personal delivery or
registered or certified mail, return receipt requested, addressed to the
parties at the following addresses or such changed address as such party
may fix by notice thereof:
If to Owner: Park at Highlands, LLC
c/o Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, CO 80202
Attention: Gareth Y. Hudson
Vice President
If to Manager: The Feld Company
4600 S. Ulster Street Parkway, Suite 350
Denver, CO 80237
Attention: Mr. Al Feld - President
14. MISCELLANEOUS
14.01 Captions. The captions of this Agreement are inserted only
for the purpose of convenient reference and do not define, limit or
prescribe the scope or intent of this Agreement or any part hereof.
14.02 Schedules. Each schedule attached hereto forms a material
part of this Agreement and is incorporated herein by reference.
14.03 Modifications and Changes. This Agreement cannot be changed
or modified except by another agreement in writing, signed by the
parties sought to be charged therewith.
14.04 Entire Agreement. This Agreement embodies the entire
understanding of the parties, and there are no further agreements or
understandings, written or oral, in effect between the parties relating
to the subject matter hereof.
EXECUTED as of the date set forth above.
OWNER: MANAGER:
PARK AT HIGHLANDS, LLC THE FELD COMPANY
a Colorado corporation
By:_________________________________ By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
INDEX TO SCHEDULES
Schedule A - Attachment to All Contracts Executed by Manager on Behalf of
Owner
Schedule B - Owner's Policies and Procedures to be Followed by Manager.
<PAGE>
SCHEDULE A
This Agreement and all documents, agreements, understandings and arrangements
have been executed or entered into by ________________________________ as
agent of Wellsford Residential Property Trust (the "Company") which has been
formed as a Maryland real estate investment trust pursuant to a Declaration
of Trust dated as of July 10, 1992, as amended, and not individually, and
neither the trustees, officers or shareholders of the Company shall be bound
or have any personal liability hereunder or thereunder. All persons dealing
with the Company shall look solely to the assets of this Agreement and all
related documents, agreements, understandings and arrangements and will not
seek recourse or commence any action against any of the trustees, officers or
shareholders of the Company or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
<PAGE>
SCHEDULE B
OWNER'S POLICIES AND PROCEDURES TO BE FOLLOWED BY MANAGER
<PAGE>
EXHIBIT L
PLEDGE AND SECURITY AGREEMENT - FELD TO WPHC
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of the
27th day of April, 1995, by AL FELD, an individual, having an address of 4600
South Ulster Street, Suite 350, Denver, Colorado 80237 ("Pledgor"), for the
benefit of WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation, having an
office at 370 Seventeenth Street, Suite 3100, Denver, Colorado 80202
("Pledgee").
RECITALS
A. Pledgor is the Manager and a Member of Park at Highlands LLC, a
Colorado limited liability company (the "Limited Liability Company"), which
Limited Liability Company is governed by its Operating Agreement dated as of
April 27, 1995 (the "Operating Agreement"), by and between Pledgee and
Pledgor.
B. Pledgee is also a Member in the Limited Liability Company.
C. In order to secure the full payment and performance by Pledgor of
all of Pledgor's obligations under the Operating Agreement, as such Operating
Agreement may be now or hereafter amended, modified or restated (said
obligations under the Operating Agreement are hereinafter referred to as the
"Obligations"), Pledgor is entering into this Agreement for the benefit of
Pledgee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Definitions.
a. "Collateral" shall mean:
(i) All of Pledgor's right, title and interest in the
ownership interests of Pledgor in Limited Liability Company,
whether now owned or hereafter acquired, including, without
limitation, its Interest (as defined in the Operating Agreement) in
the Limited Liability Company, the right of Pledgor, if any, to any
benefits to which Pledgor may be entitled pursuant to the Operating
Agreement or the Colorado Limited Liability Company Act, Colo. Rev.
Statutes Sections 7-80-101 to 7-80-913, as amended from time to
time (the "Act"), and Pledgor's right to receive payments, fees,
distributions and allocations under or in connection with the
Operating Agreement (whether as Member or as Manager), as such
Operating Agreement may be modified or extended from time to time
with the consent of the Pledgee; and
(ii) All proceeds, whether cash proceeds or noncash
proceeds, and products of any and all of the foregoing.
b. "Event of Default" shall mean an event of default described
in Section 8 herein.
2. Pledge of Collateral and Grant of Security Interest. Pledgor does
hereby unconditionally and irrevocably assign, pledge, convey, transfer,
deliver, set over and grant unto Pledgee, its successors and assigns, as
security for Pledgor's complete and timely payment and performance of the
Obligations, a continuing first lien security interest under the Uniform
Commercial Code of the State of Colorado in the Collateral. Pledgor hereby
further grants to Pledgee all rights in the Collateral as are available to a
secured party of such collateral under the Uniform Commercial Code of the
State of Colorado (being the principal place of business of Pledgor and the
location of Pledgor's residence) and, concurrently herewith, shall deliver to
Pledgee duly executed UCC-1 financing statements suitable for filing in the
State of Colorado with respect to the Collateral.
3. Delivery to Pledgee.
a. Pledgor agrees to execute and to use its best efforts to
cause all other necessary parties, and any successors and assigns thereof, to
execute and deliver to Pledgee such other agreements, instruments and
documentation as Pledgee may reasonably request from time to time to effect
the conveyance, transfer, and grant to Pledgee of Pledgor's right, title and
interest in and to the Collateral as security for the Obligations.
b. Concurrently with the execution of this Agreement, Pledgor
has caused each of the Members of the Limited Liability Company, other than
Pledgee, to execute the Consent to Security Interest and Agreement in the
form attached hereto as Schedule A (the "Consent") evidencing the consent of
the Members to the assignment of Pledgor's Limited Liability Company
interests and their agreement to be bound by Section 4 of this Agreement, and
Pledgor covenants to execute, if required by Pledgee, an amendment to the
Operating Agreement in such form as Pledgee may reasonably require to reflect
the substitution of Pledgee in place of Pledgor as Manager of the Limited
Liability Company upon the occurrence of an Event of Default. Pledgor
further agrees to execute and to cause the other Members of the Limited
Liability Company to execute and deliver to the Pledgee such other
agreements, instruments and documentation as Pledgee may reasonably request
from time to time to effectuate the conveyance, transfer, assignment and
grant to Pledgee of all of Pledgor's right, title and interest in and to the
Collateral and to evidence the substitution of the Pledgee in place of
Pledgor as Manager in the Limited Liability Company.
4. Proceeds and Products of the Collateral.
a. Notwithstanding any of the foregoing, unless and until there
occurs an Event of Default, Pledgee agrees to forbear from exercising its
right to receive all benefits pertaining to the Collateral (except as
otherwise permitted under the Operating Agreement), and Pledgor shall be
permitted to exercise all rights and to receive all benefits of the
Collateral, including, without limitation, the right to exercise all voting,
approval, consent and similar rights of Pledgor pertaining to the Collateral,
payments due under, proceeds, whether cash proceeds or noncash proceeds, and
products of the Collateral and to retain and enjoy the same.
b. Pledgor acknowledges and agrees with Pledgee, that unless Pledgee
otherwise consents, in Pledgee's sole discretion, Pledgor shall not exercise
any voting, approval, consent or other rights with respect to the Collateral
at any time after (i) the occurrence of an Event of Default and (ii) receipt
of notice from Pledgee instructing Pledgor not to exercise any such voting,
approval, consent or other rights with respect to the Collateral, provided,
however, that Pledgor shall exercise any such right it may have under the
agreements comprising the Collateral with respect to the business affairs of
the Limited Liability Company as is reasonably necessary to protect and
preserve the Collateral.
c. Upon or at any time after the occurrence of an Event of Default,
Pledgee, at its option, to be exercised in its sole discretion by written
notice to Pledgor, may exercise all rights and remedies granted under this
Agreement, including, without limitation, the right to require the obligors
under the Collateral to make all payments due under and to pay all proceeds,
whether cash proceeds or noncash proceeds, and products of the Collateral to
Pledgee. Upon the giving of any such notice, the security constituted by
this Agreement shall become immediately enforceable by Pledgee, without any
presentment, further demand, protest or other notice of any kind, all of
which are hereby expressly and irrevocably waived by Pledgor. Pledgor hereby
authorizes and directs each respective obligor under the agreements
constituting the Collateral, that upon receipt of written notice from Pledgee
of an Event of Default by Pledgor hereunder, to assign, set over, transfer,
distribute, pay and deliver any and all Collateral or said payments, proceeds
or products of the Collateral to Pledgee, at such address as Pledgee may
direct, at such time and in such manner as Collateral and such payments,
proceeds and products of the Collateral would otherwise be distributed,
transferred, paid or delivered to Pledgor. The respective obligors under the
agreements constituting the Collateral shall be entitled to conclusively rely
on such notice and make all such assignments and transfers of the Collateral
and all such payments with respect to the Collateral and pay all such
proceeds and products of the Collateral to Pledgee and shall have no
liability to Pledgor for any loss or damage Pledgor may incur by reason of
said reliance.
5. No Assumption. Notwithstanding any of the foregoing, whether or
not an Event of Default shall have occurred, and whether or not Pledgee
elects to foreclose on its security interest in the Collateral as set forth
herein, neither the execution of this Agreement, receipt by Pledgee of any of
Pledgor's right, title and interest in and to the Collateral and the
payments, proceeds and products of the Collateral, now or hereafter due to
Pledgor from any obligor of the Collateral, nor Pledgee's foreclosure of its
security interest in the Collateral, shall in any way be deemed to obligate
Pledgee to assume any of Pledgor's obligations, duties or liabilities under
the Collateral or any agreements constituting the Collateral, as presently
existing or as hereafter amended, or under any and all other agreements now
existing or hereafter drafted or executed (collectively, the "Pledgor's
Liabilities"), unless Pledgee otherwise agrees to assume any or all of
Pledgor's Liabilities in writing. In the event of foreclosure by Pledgee of
its security interest in the Collateral, Pledgor shall remain bound and
obligated to perform the Pledgor's Liabilities to the extent required under
the Operating Agreement, and Pledgee shall not be deemed to have assumed any
of the Pledgor's Liabilities, except as provided in the preceding sentence.
In the event the entity or person acquiring the Collateral at a foreclosure
sale elects to assume the Pledgor's Liabilities, such assignee shall agree to
be bound by the terms and provisions of the applicable agreement.
6. Indemnification. Pledgor hereby agrees to indemnify, defend and
hold Pledgee, its successors and assigns harmless from and against any and
all damages, losses, claims, costs or expenses (including without limitation,
reasonable attorneys' fees) and any other liabilities whatsoever that Pledgee
or its successors or assigns may incur by reason of Pledgor's failure to
comply with the terms and conditions of this Agreement or by reason of any
unpermitted assignment of Pledgor's right, title and interest in and to any
or all of the Collateral.
7. Representations, Warranties and Covenants. In addition to the
representations made by Pledgor in the Operating Agreement, Pledgor makes the
following representations and warranties, and Pledgor covenants and agrees to
provide written notices to Pledgee within ten (10) days after Pledgor becomes
aware that any of the following is no longer true and correct and to perform
diligently all acts reasonably necessary to maintain or restore the truth and
correctness, in all material respects, of the following:
a. Pledgor acknowledges that the Operating Agreement and any
other agreements constituting the Collateral, currently are in full
force and effect and have not been amended or modified, except by
Pledgor and Pledgee in writing.
b. Pledgor has the full right and title to its interest in the
Collateral and has the full power, legal right and authority to pledge,
convey, transfer and assign such interest. None of the Collateral is
subject to any existing assignment, claim, lien, pledge, transfer or
other security interest of any character, or to any attachment, levy,
garnishment or other judicial process or to any claim for set-off,
counterclaim, deduction or discount. Pledgor shall not, without the
prior written consent of Pledgee, which consent may be granted or denied
in Pledgee's sole discretion, further convey, transfer, set over or
pledge to any party any of its interests in the Collateral. Pledgor
agrees to (i) warrant and defend its title to the Collateral and the
security interest created by this Agreement against all claims of all
persons, and (ii) maintain and preserve the Collateral and such security
interests.
c. The pledge of the Collateral pursuant to this Agreement
creates a valid first priority security interest in the Collateral,
securing the performance of the Obligations, which security interest
shall be perfected upon the filing of the UCC-1 Financing Statements
referred to in Paragraph 2 of this Agreement.
d. Pledgor's Social Security Number is: ###-##-####, and
Pledgor's principal residence is located at One Dexter Street, Denver,
Colorado 80220.
e. Pledgor agrees that it shall not, without at least thirty
(30) days' prior written notification to Pledgee, move or otherwise
change its place of residence.
f. To the best knowledge of Pledgor, neither the execution and
delivery of this Agreement by Pledgor nor the consummation of the
transactions herein contemplated nor the fulfillment of the terms hereof
(i) violate the terms of any agreement, indenture, mortgage, deed of
trust, equipment lease, instrument or other document to which Pledgor is
a party, or (ii) conflict with any law, order, rule or regulation
applicable to Pledgor or any court or any government, regulatory body or
administrative agency or other governmental body having jurisdiction
over Pledgor or its properties, or (iii) result in or require the
creation or imposition of any lien (other than the first priority lien
of Pledgee in the Collateral contemplated hereby).
g. No consent or approval which has not been obtained prior to
the date hereof of any other person or entity and no authorization,
approval or other action by, and no notice to or filing with any
governmental body, regulatory authority or securities exchange, was or
is necessary as a condition to the validity of the pledge hereunder of
the Collateral and such pledge is effective to vest in the Pledgee the
rights of Pledgee in the Collateral as set forth herein.
h. Pledgor shall comply in all material respects with all
requirements of law applicable to the Collateral or any part thereof.
i. Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Collateral prior to
delinquency thereof and shall keep all Collateral free of all unpaid
charges whatsoever.
8. Event of Default. Each of the following shall constitute an Event
of Default hereunder:
a. A breach of any representation, warranty, covenant or
obligation of Pledgor shall have occurred under the Operating Agreement
and such breach shall not have been cured within any applicable grace
period provided therein; or
b. Any warranty, representation or statement of the Pledgor in
this Agreement proves to have been false in any material respect when
made or furnished; or
c. There occurs the issuance of a writ, order of attachment or
garnishment with respect to any of the Collateral and such writ, order
of attachment or garnishment is not dismissed and removed within thirty
(30) days thereafter; or
d. A material breach or violation of any covenant or agreement
contained herein shall have occurred, which is not cured within thirty
(30) days after notice has been given to Pledgor by Pledgee.
Any Event of Default under this Agreement shall be an event of default
by Pledgor under the Operating Agreement.
9. Remedies.
a. Upon the occurrence of an Event of Default, Pledgee may by
giving notice of such Event of Default, at its option, do any one or more of
the following:
(i) Take control of the Collateral and thereafter exercise all
rights and powers of Pledgor with respect to the Collateral; and
(ii) Without notice to or demand upon Pledgor, make such payments
and do such acts as Pledgee may deem necessary to protect its
security interest in the Collateral, including, without limitation,
paying, purchasing, contesting or compromising any encumbrance,
charge or lien which is prior to or superior to the security
interest granted hereunder, and in exercising any such powers or
authority to pay all expenses incurred in connection therewith; and
(iii) Require Pledgor to take all actions necessary to deliver
such Collateral to Pledgee, or an agent or representative
designated by Pledgee; and
(iv) Foreclose upon this Agreement as herein provided or in any
commercially reasonable manner permitted by law, and exercise any
and all of the rights and remedies conferred upon Pledgee by the
Operating Agreement, or in any other document executed by Pledgor
in connection with the Obligations secured hereby; and sell or
cause to be sold the Collateral, without affecting in any way the
rights or remedies to which Pledgee may be entitled under the other
such instruments; and
(v) Sell or otherwise dispose of the Collateral at public sale,
without having the Collateral at the place of sale, and upon terms
and in such manner as is commercially reasonable, may determine.
Pledgee may be a purchaser at any sale; and
(vi) Exercise any remedies of a secured party under the Uniform
Commercial Code of the State of Colorado or any other applicable
law; and
(vii) Exercise any remedies available to Pledgee under the
Operating Agreement, including, but not limited to, the removal of
the Pledgor as the Manager and a Member of the Limited Liability
Company and exercise of any rights of offset in favor of Pledgee as
the Manager and a Member of the Limited Liability Company; and
(viii) Notwithstanding anything to the contrary contained in this
Agreement, at any time after an Event of Default Pledgee may, by
delivering written notice to the Limited Liability Company and to
the Pledgor, succeed, or designate its nominee or designee to
succeed, to all right, title and interest of Pledgor (including,
without limitation, the right, if any, to vote on or take any
action with respect to the matters of the Limited Liability
Company) as the Manager and/or a Member of the Limited Liability
Company in respect of the Collateral. Pledgor hereby irrevocably
authorizes and directs the Limited Liability Company on receipt of
any such notice (a) to deem and treat Pledgee or such nominee or
designee in all respects as the Manager and/or a Member (and not
merely an assignee of the Manager and/or a Member) of such Limited
Liability Company, entitled to exercise all the rights, powers and
privileges (including the right to vote on or take any action with
respect to Limited Liability Company matters pursuant to the
Operating Agreement, to receive all distributions, to be credited
with the capital account and to have all other rights, powers and
privileges appertaining to the Collateral to which Pledgor would
have been entitled had the Collateral not been transferred to
Pledgee or such nominee or designee), and (b) to file amended
Articles of Organization for such Limited Liability Company, if
required, admitting Pledgee or such nominee or designee as the
Manager and/or a Member of the Limited Liability Company in place
of Pledgor; and
(ix) The rights granted to Pledgee under this Agreement are of a
special, unique, unusual and extraordinary character. The loss of
any of such rights cannot be reasonably or adequately compensated
by way of damages in any action at law, and any material breach by
Pledgor of any of Pledgor's covenants, agreements, obligations
representations or warranties under this Agreement will cause
Pledgee irreparable injury and damage. In the event of any such
breach, Pledgee shall be entitled, as a matter of right, to
injunctive relief or other equitable relief in any court of
competent jurisdiction to prevent the violation or contravention of
any of the provisions of this Agreement or to compel compliance
with the terms of this Agreement by Pledgor. Pledgee is absolutely
and irrevocably authorized and empowered by Pledgor to demand
specific performance of each of the covenants, agreements,
representations and warranties of Pledgor in this Agreement.
Pledgor hereby irrevocably waives any defense based on the adequacy
of any remedy at law which might otherwise be asserted by Pledgor
as a bar to the remedy of specific performance in any action
brought by Pledgee against Pledgor to enforce any of the covenants
or agreements of Pledgor in this Agreement.
b. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Pledgee shall give Pledgor at least ten (10) days' prior written notice of
the time and place of any public sale of the Collateral subject to this
Agreement or other intended disposition thereof to be made. Such notice shall
be conclusively deemed to have been delivered to Pledgor at the address set
forth in subsection 7(d) of this Agreement, unless Pledgor shall notify
Pledgee in writing of any change of its place of residence and provide
Pledgee with the address of its new place of residence.
c. The proceeds of any sale under Subsections 9(a)(iv) and (v)
above shall be applied as follows:
(i) To the repayment of all reasonable costs and expenses of
retaking, holding and preparing for the sale and the selling of the
Collateral (including actual reasonable legal expenses and
attorneys' fees) and the discharge of all assessments,
encumbrances, charges or liens, if any, on the Collateral prior to
the lien hereof (except any taxes, assessments, encumbrances,
charges or liens subject to which such sale shall have been made);
(ii) To the payment of the whole amount, if any, of the
Obligations, as and when the same become due; and
(iii) The aggregate surplus, if any, shall be paid to Pledgor in a
lump sum, without recourse to Pledgee, or as a court of competent
jurisdiction may direct.
d. Pledgee shall have the right to enforce one or more remedies
under this Agreement and under the Operating Agreement, successively or
concurrently, and such action shall not operate to estop or prevent Pledgee
from pursuing any further remedy which it may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Pledgor until full payment of any deficiency has been made
in cash.
e. PLEDGOR ACKNOWLEDGES THAT PLEDGEE MAY BE UNABLE TO EFFECT A
PUBLIC SALE OF ALL OR ANY PART OF THE COLLATERAL AND MAY BE COMPELLED TO
RESORT TO ONE OR MORE PRIVATE SALES TO A RESTRICTED GROUP OF PURCHASERS WHO
WILL BE OBLIGATED TO AGREE, AMONG OTHER THINGS, TO ACQUIRE THE COLLATERAL FOR
ITS OWN ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR
RESALE THEREOF. PLEDGOR FURTHER ACKNOWLEDGES THAT ANY SUCH PRIVATE SALES MAY
BE AT PRICES AND ON TERMS LESS FAVORABLE THAN THOSE OF PUBLIC SALES, AND
AGREES THAT PROVIDED SUCH PRIVATE SALES ARE MADE IN A COMMERCIALLY REASONABLE
MANNER, PLEDGEE SHALL HAVE NO OBLIGATION TO DELAY SALE OF ANY COLLATERAL TO
PERMIT THE ISSUER THEREOF TO REGISTER IT FOR PUBLIC SALE UNDER THE SECURITIES
ACT OF 1933. PLEDGOR AGREES THAT PLEDGEE SHALL BE PERMITTED TO TAKE SUCH
ACTIONS AS PLEDGEE DEEMS REASONABLY NECESSARY IN DISPOSING OF THE COLLATERAL
TO AVOID CONDUCTING A PUBLIC DISTRIBUTION OF SECURITIES IN VIOLATION OF THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AS NOW ENACTED OR
AS THE SAME MAY IN THE FUTURE BE AMENDED, PROVIDED THAT ANY SUCH ACTIONS
SHALL BE COMMERCIALLY REASONABLE. IN ADDITION, PLEDGOR AGREES TO EXECUTE,
FROM TIME TO TIME, ANY AMENDMENT TO THIS AGREEMENT OR OTHER DOCUMENT AS
PLEDGEE MAY REASONABLY REQUIRE TO EVIDENCE THE ACKNOWLEDGEMENTS AND CONSENTS
OF PLEDGOR SET FORTH IN THIS SECTION.
10. Attorneys Fees. Pledgor agrees to pay to Pledgee, without demand,
reasonable attorneys' fees and all reasonable costs and other reasonable
expenses which Pledgee expends or incurs in collecting any amounts payable by
Pledgor with respect to an Event of Default, hereunder or in enforcing this
Agreement against Pledgor whether or not suit is filed.
11. Further Documentation. Pledgor hereby agrees to execute, from time
to time, one or more financing statements and such other instruments as may
be required to perfect the security interest created hereby, including any
continuation or amendments of such financing statements, and pay the cost of
filing or recording the same in the public records specified by Pledgee.
12. Waiver and Estoppel. Pledgor represents and acknowledges that it
knowingly waives each and every one of the following rights, and agrees that
it will be estopped from asserting any argument to the contrary: (a) any
promptness in making any claim or demand hereunder; (b) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
Pledgor; (c) any defense based upon an election of remedies by Pledgee which
destroys or otherwise impairs any or all of the Collateral; (d) the right of
Pledgor to proceed against Pledgee or any other person, for reimbursement;
and (e) all duty or obligation of the Pledgee to perfect, protect, retain or
enforce any security for the payment of amounts payable by Pledgor hereunder.
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY TO THIS AGREEMENT
SEVERALLY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM BROUGHT BY ANY
PARTY TO THIS AGREEMENT ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THIS AGREEMENT.
No delay or failure on the part of Pledgee in the exercise of any right
or remedy against Pledgor or any other party against whom Pledgee may have
any rights, shall operate as a waiver of any agreement or obligation
contained herein, and no single or partial exercise by Pledgee of any rights
or remedies hereunder shall preclude other or further exercise thereof or
other exercise of any other right or remedy whether contained in this
Agreement or in any of the other documents regarding the Obligations,
including without limitation the Operating Agreement. No waiver of the
rights of Pledgee hereunder or in connection herewith and no release of
Pledgor shall be effective unless executed in writing by Pledgee. No actions
of Pledgee permitted under this Agreement shall in any way impair or affect
the enforceability of any agreement or obligation contained herein.
13. Independent Obligations. The obligations of Pledgor are
independent of the obligations of any other party which may be initially or
otherwise responsible for performance or payment of the Obligations, and a
separate action or actions for payment, damages or performance may be brought
and prosecuted by Pledgee against Pledgor, individually, for the full amount
of the Obligations then due and payable, whether or not an action is brought
against any other party, whether or not Pledgee is involved in any
proceedings and whether or not Pledgee or Pledgor or other person is joined
in any action or proceedings.
14. No Offset Rights of Pledgor. No lawful act of commission or
omission of any kind or at any time upon the part of Pledgee shall in any way
affect or impair the rights of Pledgee to enforce any right, power or benefit
under this Agreement, and no set-off, recoupment, reduction or diminution of
any obligation which Pledgor has or may have against Pledgee or against any
other party shall be available against Pledgee in any suit or action brought
by Pledgee to enforce any right, power or benefit under this Agreement.
15. Power of Attorney. Pledgor hereby appoints Pledgee as his
attorney-in-fact to execute and file, effective upon the occurrence of an
Event of Default, on his behalf any financing statements, continuation
statements or other documentation required to perfect or continue the
security interest created hereby. This power, being coupled with an
interest, shall be irrevocable until all amounts secured hereby have been
paid, satisfied and discharged in full. Pledgor acknowledges and agrees that
the exercise by Pledgee of its rights under this Section 15 will not be
deemed a satisfaction of the amounts owed Pledgee unless Pledgee so elects in
writing.
16. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES
FURTHER AGREE THAT IN THE EVENT OF DEFAULT, THIS AGREEMENT MAY BE ENFORCED IN
THE DISTRICT COURT IN AND FOR THE CITY AND COUNTY OF DENVER, STATE OF
COLORADO AND THEY DO HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT
REGARDLESS OF THEIR RESIDENCE OR WHERE THIS AGREEMENT MAY BE EXECUTED.
17. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding
upon the respective heirs, personal representatives successors and assigns of
the parties hereto.
18. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service)
or mailed certified or registered mail, postage prepaid, return receipt
requested, or sent by telegram to the parties at the addresses shown
throughout this Agreement or such other addresses which the parties may
provide to one another in accordance herewith. If notice is sent to Pledgee,
a copy of such notice shall also be given to Wayne H. Hykan, Esq., Brownstein
Hyatt Farber & Strickland, P.C., 410 17th Street, Suite 2222, Denver,
Colorado 80202. If notice is sent to Pledgor, a copy of such notice shall
also be given to Alan B. Lottner, Esq., Haligman & Lottner, First Interstate
Tower North, 633 Seventeenth Street, Suite 2700, Denver, Colorado 80202-3635.
Notices delivered personally will be effective upon delivery to an authorized
representative of the party at the designated address; notices sent by mail
in accordance with the above paragraph will be effective upon execution of
the Return Receipt Requested.
19. Consent of Pledgor. Pledgor consents to the exercise by Pledgee of
any rights of Pledgor in accordance with the provisions of this Agreement.
20. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court
of competent jurisdiction to be illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the legality or validity of
the balance of the terms and provisions hereof, which terms and provisions
shall remain binding and enforceable.
21. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the
parties.
22. Termination. This Agreement shall terminate, and shall be of no
further force or effect, upon the earlier to occur of the following: (i) full
payment and performance of the Obligations of the Pledgor, (ii) acquisition
by Pledgor or an affiliate of Pledgor of 100% ownership interest in the
Limited Liability Company, or (iii) upon the mutual consent of Pledgor and
Pledgee.
23. Certain Matters with respect to Wellsford Residential Property
Trust. This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been executed by the
undersigned on behalf of Pledgee in his/her capacity as an officer or
director of Pledgee, and not individually, and neither the directors,
officers or shareholders of Pledgee shall be bound by or have any personal
liability hereunder or thereunder. The parties to this Agreement shall look
solely to the assets of Pledgee for satisfaction of any liability of Pledgee
in respect of this Agreement and all documents, agreements, understandings
and arrangements relating to this transaction and will not seek recourse or
commence any action against any of the directors, officers or shareholders of
Pledgee or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to all and
any future documents, agreements, understandings, arrangements and
transactions between the parties hereto with respect to the Collateral or
this Agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PLEDGOR: ______________________________________________
Al Feld
PLEDGEE: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:___________________________________________
Name:____________________________________
Title:___________________________________
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this __ day of
__________________, 1995, by Al Feld.
WITNESS my hand and official seal.
My commission expires: ______________________________________.
Address:
________________________________
(SEAL) Notary Public
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
__________, 199__, by _________________________ as _______________ of
Wellsford Park Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: _____________________________________.
Address:
_________________________________________
(SEAL) Notary Public
<PAGE>
EXHIBIT A
CONSENT TO SECURITY INTEREST AND AGREEMENT
OF THE MEMBERS
OF PARK AT HIGHLANDS LLC,
a Colorado Limited Liability Company
The undersigned, being all the members of PARK AT HIGHLANDS LLC, a
Colorado limited liability company (the "Limited Liability Company") hereby
represent and certify to Wellsford Park Highlands Corp., a Colorado
corporation (the "Secured Party") as follows:
1. The Limited Liability Company has received notice from the Secured
Party that the Secured Party has a security interest in the following
collateral ("Collateral") registered to Al Feld (the "Debtor"):
(i) All of the right, title and interest of the Debtor in the
Limited Liability Company, whether now owned or hereafter acquired,
including, without limitation, the Debtor's Interest (as defined in
the Operating Agreement) in the Limited Liability Company and its
right to receive payments, fees, distributions and allocations
under or in connection with the Operating Agreement (whether as
Member or as Manager), as such Operating Agreement may be modified
or extended from time to time with the consent of the Secured
Parties; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
2. Other than the notice from the Secured Party referred to above, the
Limited Liability Company has not received any notice from any entity or
person claiming an adverse claim against, lien on or security interest in the
Collateral.
3. The security interest of the Secured Party referred to above was
duly registered in the books and records of the Limited Liability Company
effective April 27, 1995.
4. Interests in the Limited Liability Company, whether as Member or as
Manager, are not represented in any certificate, instrument or document, and
such interest may be assigned, transferred or pledged without the party
receiving such assignment, transfer or pledge taking physical possession of
any certificate, instrument or document.
The Members hereby consent to the execution and delivery of the Pledge
and Security Agreement by the Debtor and agree hereby to be bound by Section
4 thereof to assign, set over, transfer, distribute, pay and deliver the
Collateral and any and all payments, proceeds or products due to Debtor under
the Collateral to the Secured Party.
The Members hereby consent to the admission of the Secured Party (or its
nominee, designee or any person acquiring its interest under the Pledge and
Security Agreement), as a Manager of the Limited Liability Company upon
receipt of notice by the Secured Party of an Event of Default by the Debtor
thereunder, and (ii) that the Secured Party or such nominees, designees or
persons acquiring the Secured Party's interest thereunder shall not be deemed
to have assumed any of Debtor's liability by virtue of such admission as the
Manager of the Limited Liability Company.
This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been executed by the
undersigned on behalf of the Secured Party in his/her capacity as an officer
or trustee of the Secured Party, and not individually, and neither the
directors, officers or shareholders of the Secured Party shall be bound by or
have any personal liability hereunder or thereunder. The parties to this
Agreement shall look solely to the assets of the Secured Party for
satisfaction of any liability of the Secured Party in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this transaction and will not seek recourse or commence any
action against any of the directors, officers or shareholders of the Secured
Party or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to all
and any future documents, agreements, understandings, arrangements and
transactions between the parties hereto with respect to the Collateral or
this Agreement.
EXECUTED as of the date set forth above.
MEMBERS: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:___________________________________________
Name:____________________________________
Title:___________________________________
______________________________________________
AL FELD, an individual
AGREED TO AND CONCURRED:
SOLE MANAGER
_______________________________
AL FELD
<PAGE>
EXHIBIT M
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of
the 27th day of April, 1995, by WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation, having an office at 370 Seventeenth Street, Suite 3100, Denver,
Colorado 80202 ("Pledgor"), for the benefit of AL FELD, an individual,
having an address of 4600 South Ulster Street, Suite 350, Denver, Colorado
80237 ("Pledgee").
RECITALS
A. Pledgor is a Member of Park at Highlands LLC, a Colorado limited
liability company (the "Limited Liability Company"), which Limited Liability
Company is governed by its Operating Agreement dated as of April 27, 1995
(the "Operating Agreement"), by and between Pledgor and Pledgee.
B. Pledgee also is a Member, as well as the Manager, in the Limited
Liability Company.
C. In order to secure the full payment and performance by Pledgor of
all of Pledgor's obligations under the Operating Agreement, as such Operating
Agreement may be now or hereafter amended, modified or restated (said
obligations under the Operating Agreement are hereinafter referred to as the
"Obligations"), Pledgor is entering into this Agreement for the benefit of
Pledgee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Definitions.
a. "Collateral" shall mean:
(i) All of Pledgor's right, title and interest in the
ownership interests of Pledgor in the Limited Liability Company,
whether now owned or hereafter acquired, including, without
limitation, its Interest (as defined in the Operating Agreement) in
the Limited Liability Company, the right of Pledgor, if any, to any
benefits to which Pledgor may be entitled pursuant to the Operating
Agreement or the Colorado Limited Liability Company Act, Colo. Rev.
Stat. Sections 7-80-101 to 7-80-913, as amended from time to time
(the "Act"), and Pledgor's right to receive payments, fees,
distributions and allocations under or in connection with the
Operating Agreement (whether as Member or as Manager), as such
Operating Agreement may be modified or extended from time to time
with the consent of the Pledgee; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
b. "Event of Default" shall mean an event of default described in
Section 8 herein.
2. Pledge of Collateral and Grant of Security Interest. Pledgor does
hereby unconditionally and irrevocably assign, pledge, convey, transfer,
deliver, set over and grant unto Pledgee, its successors and assigns, as
security for Pledgor's complete and timely payment and performance of the
Obligations, a continuing first lien security interest under the Uniform
Commercial Code of the State of Colorado in the Collateral. Pledgor hereby
further grants to Pledgee all rights in the Collateral as are available to a
secured party of such collateral under the Uniform Commercial Code of the
State of Colorado (being the principal place of business of Pledgor) and,
concurrently herewith, shall deliver to Pledgee duly executed UCC-1 financing
statements suitable for filing in the State of Colorado with respect to the
Collateral.
3. Delivery to Pledgee.
a. Pledgor agrees to execute and to use its best efforts to cause
all other necessary parties, and any successors and assigns thereof, to
execute and deliver to Pledgee such other agreements, instruments and
documentation as Pledgee may reasonably request from time to time to effect
the conveyance, transfer, and grant to Pledgee of Pledgor's right, title and
interest in and to the Collateral as security for the Obligations.
b. Concurrently with the execution of this Agreement, Pledgor has
caused each of the Members of the Limited Liability Company, other than
Pledgee, to execute the Consent to Security Interest and Agreement in the
form attached hereto as Schedule A (the "Consent") evidencing the consent of
the Members to the assignment of Pledgor's Limited Liability Company
interests and their agreement to be bound by Section 4 of this Agreement.
Pledgor further agrees to execute and to cause the other Members of the
Limited Liability Company to execute and deliver to Pledgee such other
agreements, instruments and documentation as Pledgee may reasonably request
from time to time to effectuate the conveyance, transfer, assignment and
grant to Pledgee of all of Pledgor's right, title and interest in and to the
Collateral.
4. Proceeds and Products of the Collateral.
a. Notwithstanding any of the foregoing, unless and until there
occurs an Event of Default, Pledgee agrees to forbear from exercising his
right to receive all benefits pertaining to the Collateral (except as
otherwise permitted under the Operating Agreement), and Pledgor shall be
permitted to exercise all rights and to receive all benefits of the
Collateral, including, without limitation, the right to exercise all voting,
approval, consent and similar rights of Pledgor pertaining to the Collateral,
payments due under, proceeds, whether cash proceeds or noncash proceeds, and
products of the Collateral and to retain and enjoy the same.
b. Pledgor acknowledges and agrees with Pledgee, that unless
Pledgee otherwise consents, in Pledgee's sole discretion, Pledgor shall not
exercise any voting, approval, consent or other rights with respect to the
Collateral at any time after (i) the occurrence of an Event of Default and
(ii) receipt of notice from Pledgee instructing Pledgor not to exercise any
such voting, approval, consent or other rights with respect to the
Collateral, provided, however, that Pledgor shall exercise any such right it
may have under the agreements comprising the Collateral with respect to the
business affairs of the Limited Liability Company as is reasonably necessary
to protect and preserve the Collateral.
c. Upon or at any time after the occurrence of an Event of
Default, Pledgee, at his option to be exercised in his sole discretion by
written notice to Pledgor, may exercise all rights and remedies granted under
this Agreement, including, without limitation, the right to require the
obligors under the Collateral to make all payments due under and to pay all
proceeds, whether cash proceeds or noncash proceeds, and products of the
Collateral to Pledgee. Upon the giving of any such notice, the security
constituted by this Agreement shall become immediately enforceable by
Pledgee, without any presentment, further demand, protest or other notice of
any kind, all of which are hereby expressly and irrevocably waived by
Pledgor. Pledgor hereby authorizes and directs each respective obligor under
the agreements constituting the Collateral, that upon receipt of written
notice from Pledgee of an Event of Default by Pledgor hereunder, to assign,
set over, transfer, distribute, pay and deliver any and all Collateral or
said payments, proceeds or products of the Collateral to Pledgee, at such
address as Pledgee may direct, at such time and in such manner as the
Collateral and such payments, proceeds and products of the Collateral would
otherwise be distributed, transferred, paid or delivered to Pledgor. The
respective obligors under the agreements constituting the Collateral shall be
entitled to conclusively rely on such notice and make all such assignments
and transfers of the Collateral and all such payments with respect to the
Collateral and pay all such proceeds and products of the Collateral to
Pledgee and shall have no liability to Pledgor for any loss or damage Pledgor
may incur by reason of said reliance.
5. No Assumption. Notwithstanding any of the foregoing, whether or
not an Event of Default shall have occurred, and whether or not Pledgee
elects to foreclose on his security interest in the Collateral as set forth
herein, neither the execution of this Agreement, receipt by Pledgee of any of
Pledgor's right, title and interest in and to the Collateral and the
payments, proceeds and products of the Collateral, now or hereafter due to
Pledgor from any obligor of the Collateral, nor Pledgee's foreclosure of his
security interest in the Collateral, shall in any way be deemed to obligate
Pledgee to assume any of Pledgor's obligations, duties or liabilities under
the Collateral or any agreements constituting the Collateral, as presently
existing or as hereafter amended, or under any and all other agreements now
existing or hereafter drafted or executed (collectively, the "Pledgor's
Liabilities"), unless Pledgee otherwise agrees to assume any or all of the
Pledgor's Liabilities in writing. In the event of foreclosure by Pledgee of
his security interest in the Collateral, Pledgor shall remain bound and
obligated to perform the Pledgor's Liabilities to the extent required under
the Operating Agreement and Pledgee shall not be deemed to have assumed any
of the Pledgor's Liabilities, except as provided in the preceding sentence.
In the event the entity or person acquiring the Collateral at a foreclosure
sale elects to assume the Pledgor's Liabilities, such assignee shall agree to
be bound by the terms and provisions of the applicable agreement.
6. Indemnification. Pledgor hereby agrees to indemnify, defend and
hold Pledgee, his successors and assigns harmless from and against any and
all damages, losses, claims, costs or expenses (including without limitation,
reasonable attorneys' fees) and any other liabilities whatsoever that Pledgee
or his successors or assigns may incur by reason of Pledgor's failure to
comply with the terms and conditions of this Agreement or by reason of any
unpermitted assignment of Pledgor's right, title and interest in and to any
or all of the Collateral.
7. Representations, Warranties and Covenants. In addition to the
representations made by Pledgor in the Operating Agreement, if any, Pledgor
makes the following representations and warranties, which shall be deemed to
be continuing representations and warranties, and Pledgor covenants and
agrees to provide written notice to Pledgee within ten (10) days after
Pledgor becomes aware that any of the following is no longer true and correct
and to perform diligently all acts reasonably necessary to maintain or
restore the truth and correctness, in all material respects, of the
following:
a. Pledgor acknowledges that the Operating Agreement and any
other agreements constituting the Collateral, currently are in full force and
effect and have not been amended or modified, except by Pledgor and Pledgee
in writing.
b. Pledgor has the full right and title to its interest in the
Collateral and has the full power, legal right and authority to pledge,
convey, transfer and assign such interest. None of the Collateral is subject
to any existing assignment, claim, lien, pledge, transfer or other security
interest of any character, or to any attachment, levy, garnishment or other
judicial process or to any claim for set-off, counterclaim, deduction or
discount. Pledgor shall not, without the prior written consent of Pledgee,
which consent may be granted or denied in Pledgee's sole discretion, further
convey, transfer, set over or pledge to any party any of its interests in the
Collateral. Pledgor agrees to (i) warrant and defend its title to the
Collateral and the security interest created by this Agreement against all
claims of all persons, and (ii) maintain and preserve the Collateral and such
security interests.
c. The pledge of the Collateral pursuant to this Agreement
creates a valid first priority security interest in the Collateral, securing
the performance of the Obligations, which security interest shall be
perfected upon the filing of the UCC-1 Financing Statements referred to in
Paragraph 2 of this Agreement.
d. Pledgor's Employer Identification number is: Applied For
. Pledgor's principal place of business is located at: 370 Seventeenth
Street, Suite 3100, Denver, Colorado 80202.
e. Pledgor agrees that it shall not, without at least thirty (30)
days' prior written notification to Pledgee, move or otherwise change its
principal place of business.
f. To the best knowledge of Pledgor, neither the execution and
delivery of this Agreement by Pledgor nor the consummation of the
transactions herein contemplated nor the fulfillment of the terms hereof (i)
violate the terms of any agreement, indenture, mortgage, deed of trust,
equipment lease, instrument or other document to which Pledgor is a party, or
(ii) conflict with any law, order, rule or regulation applicable to Pledgor
or any court or any government, regulatory body or administrative agency or
other governmental body having jurisdiction over Pledgor or its properties,
or (iii) result in or require the creation or imposition of any lien (other
than the first priority lien of Pledgee in the Collateral contemplated
hereby).
g. No consent or approval which has not been obtained prior to
the date hereof of any other person or entity and no authorization, approval
or other action by, and no notice to or filing with any governmental body,
regulatory authority or securities exchange, was or is necessary as a
condition to the validity of the pledge hereunder of the Collateral and such
pledge is effective to vest in the Pledgee the rights of the Pledgee in the
Collateral as set forth herein.
h. Pledgor shall comply in all material respects with all
requirements of law applicable to the Collateral or any part thereof.
i. Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Collateral prior to delinquency
thereof and shall keep all Collateral free of all unpaid charges whatsoever.
8. Event of Default. Each of the following shall constitute an Event
of Default hereunder:
a. A failure of Pledgor to make a Capital Contribution pursuant
to the Operating Agreement within thirty (30) days of receipt by Pledgor of
written demand from Pledgee, provided that the fact that such amount is due
and payable is not in dispute, or that any dispute has been finally
determined by a court having jurisdiction or through another means that is
mutually acceptable to the Pledgor and Pledgee; or
b. Any warranty, representation or statement of the Pledgor in
this Agreement proves to have been false in any material respect when made or
furnished; or
c. There occurs the issuance of a writ, order of attachment or
garnishment with respect to any of the Collateral and such writ, order of
attachment or garnishment is not dismissed and removed within thirty (30)
days thereafter.
d. A material breach or violation of any covenant or agreement
contained herein shall have occurred, which is not cured within thirty (30)
days after notice has been given to Pledgor by Pledgee.
Any Event of Default under this Agreement shall be an event of default
by Pledgor under the Operating Agreement.
9. Remedies.
a. Upon the occurrence of an Event of Default, Pledgee may, by
giving notice of such Event of Default, at his option, do any one or more of
the following:
(i) Take control of the Collateral, collect, and thereafter
exercise all rights and powers of Pledgor with respect to the
Collateral; and
(ii) Without notice to or demand upon Pledgor, make such
payments and do such acts as Pledgee may deem necessary to protect
his security interest in the Collateral, including, without
limitation, paying, purchasing, contesting or compromising any
encumbrance, charge or lien which is prior to or superior to the
security interest granted hereunder, and in exercising any such
powers or authority to pay all expenses incurred in connection
therewith; and
(iii) Require Pledgor to take all actions necessary to deliver
such Collateral to Pledgee, or an agent or representative
designated by Pledgee; and
(iv) Foreclose upon this Agreement as herein provided or in
any commercially reasonable manner permitted by law, and exercise
any and all of the rights and remedies conferred upon Pledgee by
the Operating Agreement, or in any other document executed by
Pledgor in connection with the Obligations secured hereby; and sell
or cause to be sold the Collateral, without affecting in any way
the rights or remedies to which Pledgee may be entitled under the
other such instruments; and
(v) Sell or otherwise dispose of the Collateral at public
sale, without having the Collateral at the place of sale, and upon
terms and in such manner as is commercially reasonable; Pledgee may
be a purchaser at any sale; and
(vi) Exercise any remedies of a secured party under the
Uniform Commercial Code of the State of Colorado or any other
applicable law; and
(vii) Exercise any remedies available to Pledgee under the
Operating Agreement; and
(viii) Notwithstanding anything to the contrary contained in
this Agreement, at any time after an Event of Default Pledgee may,
by delivering written notice to the Limited Liability Company and
to Pledgor, succeed, or designate its nominee or designee to
succeed, to all right, title and interest of Pledgor (including,
without limitation, the right, if any, to vote on or take any
action with respect to the matters of the Limited Liability
Company) as a Member of the Limited Liability Company in respect of
the Collateral. Pledgor hereby irrevocably authorizes and directs
the Limited Liability Company on receipt of any such notice (a) to
deem and treat Pledgee or such nominee or designee in all respects
as a Member (and not merely an assignee of a Member) of such
Limited Liability Company, entitled to exercise all the rights,
powers and privileges (including the right to vote on or take any
action with respect to Limited Liability Company matters pursuant
to the Operating Agreement, to receive all distributions, to be
credited with the capital account and to have all other rights,
powers and privileges appertaining to the Collateral to which
Pledgor would have been entitled had the Collateral not been
transferred to Pledgee or such nominee or designee), and (b) to
file amended Articles of Organization for such Limited Liability
Company, if required, admitting Pledgee or such nominee or designee
as a Member of the Limited Liability Company in place of Pledgor;
and
(ix) The rights granted to Pledgee under this Agreement are of
a special, unique, unusual and extraordinary character. The loss
of any of such rights cannot be reasonably or adequately
compensated by way of damages in any action at law, and any
material breach by Pledgor of any of Pledgor's covenants,
agreements, obligations, representations or warranties under this
Agreement will cause Pledgee irreparable injury and damage. In the
event of any such breach, Pledgee shall be entitled, as a matter of
right, to injunctive relief or other equitable relief in any court
of competent jurisdiction to prevent the violation or contravention
of any of the provisions of this Agreement or to compel compliance
with the terms of this Agreement by Pledgor. Pledgee is absolutely
and irrevocably authorized and empowered by Pledgor to demand
specific performance of each of the covenants, agreements,
representations and warranties of Pledgor in this Agreement.
Pledgor hereby irrevocably waives any defense based on the adequacy
of any remedy at law which might otherwise be asserted by Pledgor
as a bar to the remedy of specific performance in any action
brought by Pledgee against Pledgor to enforce any of the covenants
or agreements of Pledgor in this Agreement.
b. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Pledgee shall give Pledgor at least ten (10) days' prior written notice of
the time and place of any public sale of the Collateral subject to this
Agreement or other intended disposition thereof to be made. Such notice
shall be conclusively deemed to have been delivered to Pledgor at the address
set forth in subsection 7(d) of this Agreement, unless Pledgor shall notify
Pledgee in writing of any change of its principal place of business and
provide Pledgee with the address of its new place of business.
c. The proceeds of any sale under subsections 9(a)(iv) and (v)
above shall be applied as follows:
(i) To the repayment of all reasonable costs and expenses of
retaking, holding and preparing for the sale and the selling of the
Collateral (including actual reasonable legal expenses and
attorneys' fees) and the discharge of all assessments,
encumbrances, charges or liens, if any, on the Collateral prior to
the lien hereof (except any taxes, assessments, encumbrances,
charges or liens subject to which such sale shall have been made);
(ii) To the payment of the whole amount, if any, of the
Obligations, as and when the same become due; and
(iii) The aggregate surplus, if any, shall be paid to Pledgor
in a lump sum, without recourse to Pledgee, or as a court of
competent jurisdiction may direct.
d. Pledgee shall have the right to enforce one or more remedies
under this Agreement and under the Operating Agreement, successively or
concurrently, and such action shall not operate to estop or prevent Pledgee
from pursuing any further remedy which he may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Pledgor until full payment of any deficiency has been made
in cash.
e. PLEDGOR ACKNOWLEDGES THAT PLEDGEE MAY BE UNABLE TO EFFECT A
PUBLIC SALE OF ALL OR ANY PART OF THE COLLATERAL AND MAY BE COMPELLED TO
RESORT TO ONE OR MORE PRIVATE SALES TO A RESTRICTED GROUP OF PURCHASERS WHO
WILL BE OBLIGATED TO AGREE, AMONG OTHER THINGS, TO ACQUIRE THE COLLATERAL FOR
THEIR OWN ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR
RESALE THEREOF. PLEDGOR FURTHER ACKNOWLEDGES THAT ANY SUCH PRIVATE SALES MAY
BE AT PRICES AND ON TERMS LESS FAVORABLE THAN THOSE OF PUBLIC SALES, AND
AGREES THAT PROVIDED SUCH PRIVATE SALES ARE MADE IN A COMMERCIALLY REASONABLE
MANNER, PLEDGEE SHALL HAVE NO OBLIGATION TO DELAY SALE OF ANY COLLATERAL TO
PERMIT THE ISSUER THEREOF TO REGISTER IT FOR PUBLIC SALE UNDER THE SECURITIES
ACT OF 1933. PLEDGOR AGREES THAT PLEDGEE SHALL BE PERMITTED TO TAKE SUCH
ACTIONS AS PLEDGEE DEEMS REASONABLY NECESSARY IN DISPOSING OF THE COLLATERAL
TO AVOID CONDUCTING A PUBLIC DISTRIBUTION OF SECURITIES IN VIOLATION OF THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AS NOW ENACTED OR
AS THE SAME MAY IN THE FUTURE BE AMENDED, PROVIDED THAT ANY SUCH ACTIONS
SHALL BE COMMERCIALLY REASONABLE. IN ADDITION, PLEDGOR AGREES TO EXECUTE,
FROM TIME TO TIME, ANY AMENDMENT TO THIS AGREEMENT OR OTHER DOCUMENT AS
PLEDGEE MAY REASONABLY REQUIRE TO EVIDENCE THE ACKNOWLEDGEMENTS AND CONSENTS
OF PLEDGOR SET FORTH IN THIS SECTION.
10. Attorneys Fees. Pledgor agrees to pay to Pledgee, without demand,
reasonable attorneys' fees and all reasonable costs and other reasonable
expenses which Pledgee expends or incurs in collecting any amounts payable by
Pledgor with respect to an Event of Default hereunder or in enforcing this
Agreement against Pledgor, whether or not suit is filed.
11. Further Documentation. Pledgor hereby agrees to execute, from time
to time, one or more financing statements and such other instruments as may
be required to perfect the security interest created hereby, including any
continuation or amendments of such financing statements, and pay the cost of
filing or recording the same in the public records specified by Pledgee.
12. Waiver and Estoppel. Pledgor represents and acknowledges that it
knowingly waives each and every one of the following rights, and agrees that
it will be estopped from asserting any argument to the contrary: (a) any
promptness in making any claim or demand hereunder; (b) any defense that may
arise by reason of the incapacity or lack of authority of Pledgor; (c) any
defense based upon an election of remedies by Pledgee which destroys or
otherwise impairs any or all of the Collateral; (d) the right of Pledgor to
proceed against Pledgee or any other person, for reimbursement; and (e) all
duty or obligation of the Pledgee to perfect, protect, retain or enforce any
security for the payment of amounts payable by Pledgor hereunder.
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY TO THIS AGREEMENT
SEVERALLY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM BROUGHT BY ANY
PARTY TO THIS AGREEMENT ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THIS AGREEMENT.
No delay or failure on the part of Pledgee in the exercise of any right
or remedy against Pledgor or any other party against whom Pledgee may have
any rights, shall operate as a waiver of any agreement or obligation
contained herein, and no single or partial exercise by Pledgee of any rights
or remedies hereunder shall preclude other or further exercise thereof or
other exercise of any other right or remedy whether contained in this
Agreement or in any of the other documents regarding the Obligations,
including without limitation the Operating Agreement. No waiver of the
rights of Pledgee hereunder or in connection herewith and no release of
Pledgor shall be effective unless in writing executed by Pledgee. No actions
of Pledgee permitted under this Agreement shall in any way impair or affect
the enforceability of any agreement or obligation contained herein.
13. Independent Obligations. The obligations of Pledgor are
independent of the obligations of any other party which may be initially or
otherwise responsible for performance or payment of the Obligations, and a
separate action or actions for payment, damages or performance may be brought
and prosecuted by Pledgee against Pledgor, individually, for the full amount
of the Obligations then due and payable, whether or not an action is brought
against any other party, whether or not Pledgee is involved in any
proceedings and whether or not Pledgee or Pledgor or other person is joined
in any action or proceedings.
14. Lawful Acts of Pledgee. No lawful act of commission or omission of
any kind or at any time upon the part of Pledgee shall in any way affect or
impair the rights of Pledgee to enforce any right, power or benefit under
this Agreement.
15. Power of Attorney. Pledgor hereby appoints Pledgee as its
attorney-in-fact to execute and file, effective upon the occurrence of an
Event of Default, on its behalf any financing statements, continuation
statements or other documentation required to perfect or continue the
security interest created hereby. This power, being coupled with an
interest, shall be irrevocable until all amounts secured hereby have been
paid, satisfied and discharged in full. Pledgor acknowledges and agrees that
the exercise by Pledgee of his rights under this Section 15 will not be
deemed a satisfaction of the amounts owed Pledgee unless Pledgee so elects in
writing.
16. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES
FURTHER AGREE THAT IN THE EVENT OF DEFAULT, THIS AGREEMENT MAY BE ENFORCED IN
THE DISTRICT COURT IN AND FOR THE CITY AND COUNTY OF DENVER, STATE OF
COLORADO AND THEY DO HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT
REGARDLESS OF THEIR RESIDENCE OR WHERE THIS AGREEMENT MAY BE EXECUTED.
17. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding
upon the respective heirs, personal representatives, successors and assigns
of the parties hereto.
18. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service)
or mailed certified or registered mail, postage prepaid, return receipt
requested, or sent by telegram to the parties at the addresses shown
throughout this Agreement or such other addresses which the parties may
provide to one another in accordance herewith. If notice is sent to Pledgor,
a copy of such notice shall also be given to Wayne H. Hykan, Esq., Brownstein
Hyatt Farber & Strickland, P.C., 410 17th Street, Suite 2222, Denver,
Colorado 80202. If notice is sent to Pledgee, a copy of such notice shall
also be given to Alan B. Lottner, Esq., Haligman & Lottner, PC, 633 17th
Street, Suite 2700, Denver, Colorado 80202. Notices delivered personally
will be effective upon delivery to an authorized representative of the party
at the designated address; notices sent by mail in accordance with the above
paragraph will be effective upon execution of the Return Receipt Requested.
19. Consent of Pledgor. Pledgor consents to the exercise by Pledgee of
any rights of Pledgor in accordance with the provisions of this Agreement.
20. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court
of competent jurisdiction to be illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the legality or validity of
the balance of the terms and provisions hereof, which terms and provisions
shall remain binding and enforceable.
21. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the
parties.
22. Limitation of Liability. No officer, director or shareholder of
Pledgor shall be bound by or have any personal liability hereunder or under
any documents, agreements, understandings or arrangements relating to this
transaction. The parties to this Agreement shall look solely to the assets
of Pledgor for satisfaction of any liability of Pledgor in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this transaction and will not seek recourse or commence action
against any of the directors, officers or shareholders of Pledgor or any of
their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to all and any
future documents, agreements, understandings, arrangements and transactions
between the parties hereto with respect to the Obligations, the Collateral or
this Agreement.
23. Termination. This Agreement shall terminate, and shall be of no
further force or effect, upon the earlier to occur of the following: (i)
full payment and performance of the Obligations of the Pledgor, (ii)
acquisition by Pledgor or an affiliate of Pledgor of 100% ownership interest
in the Limited Liability Company, or (iii) upon the mutual consent of Pledgor
and Pledgee.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PLEDGOR: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:______________________________________
Name:_________________________________
Title:________________________________
PLEDGEE: _________________________________________
Al Feld
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ____ day of
_______________, 199__, by _________________________ as _______________ of
Wellsford Park Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: ___________________________________.
Address:
________________________________
(SEAL) Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this __ day of
__________, 199__, by Al Feld.
WITNESS my hand and official seal.
My commission expires: _____________________________________.
Address:
________________________________
(SEAL) Notary Public
<PAGE>
SCHEDULE A TO
EXHIBIT H-2
CONSENT TO SECURITY INTEREST AND AGREEMENT
OF THE MEMBERS
OF PARK AT HIGHLANDS LLC,
a Colorado Limited Liability Company
The undersigned, being all the members of PARK AT HIGHLANDS LLC, a
Colorado limited liability company (the "Limited Liability Company") hereby
represent and certify to Al Feld, an individual having an address at 4600
South Ulster Street, Suite 350, Denver, Colorado 80237 (the "Secured Party")
as follows:
1. The Limited Liability Company has received notice from the Secured
Party that the Secured Party has a security interest in the following
collateral (the "Collateral") registered to Wellsford Park Highlands Corp., a
Colorado corporation (the "Debtor"):
(i) All of the right, title and interest of the Debtor in the
Limited Liability Company, whether now owned or hereafter acquired,
including, without limitation, the Debtor's Interest (as defined in
the Operating Agreement) in the Limited Liability Company and its
right to receive payments and distributions from the Limited
Liability Company and allocations under or in connection with the
Operating Agreement, as such Operating Agreement may be modified or
extended from time to time with the written consent of the Secured
Party; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
2. Other than the notice from the Secured Party referred to above, the
Limited Liability Company has not received any notice from any entity or
person claiming an adverse claim against, lien on or security interest in the
Collateral.
3. The security interest of the Secured Party referred to above was
duly registered in the books and records of the Limited Liability Company
effective April 27, 1995.
4. Interests in the Limited Liability Company are not represented in
any certificate, instrument or document, and such Interests may be assigned,
transferred or pledged without the party receiving such assignment, transfer
or pledge taking physical possession of any certificate, instrument or
document.
5. The Members hereby consent to the execution and delivery of that
certain the Pledge and Security Agreement by the Debtor and agree hereby to
be bound by Section 4 thereof to assign, set over, transfer, distribute, pay
and deliver the Collateral and any and all payments, proceeds or products due
to Debtor under the Collateral to the Secured Party.
This agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been executed by the
undersigned on behalf of Wellsford Park Highlands Corp., a Colorado
corporation ("WPHC") in his/her capacity as an officer or director of WPHC,
and not individually, and neither the directors, officers or shareholders of
WPHC shall be bound by or have any personal liability hereunder or
thereunder. The parties to this agreement shall look solely to the assets of
WPHC for satisfaction of any liability of WPHC in respect of this agreement
and all documents, agreements, understandings and arrangements relating to
this transaction and will not seek recourse or commence any action against
any of the directors, officers or shareholders of WPHC or any of their
personal assets for the performance or payment of any obligation hereunder or
thereunder. The foregoing shall also apply to all and any future documents,
agreements, understandings, arrangements and transactions between the parties
hereto with respect to the Collateral or this Agreement.
EXECUTED as of the date set forth above.
MEMBERS: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By: __________________________________________
Name:______________________________________
Title: ____________________________________
______________________________________________
AL FELD, an individual
AGREED TO AND CONCURRED:
SOLE MANAGER
____________________________
Al Feld
<PAGE>
EXHIBIT N
DESCRIPTION OF PLANS/SPECIFICATIONS
<PAGE>
EXHIBIT O
FINAL PROJECT BUDGET
<PAGE>
EXHIBIT U
SUBSTITUTION AGREEMENT
THIS SUBSTITUTION AGREEMENT (this "Agreement") is made and entered into
as of the ____ day of December 1995, by and among Al Feld, an individual
("Feld"), Wellsford Park Highlands Corp., a Colorado corporation ("WPHC"),
and The Feld Company, a Colorado corporation (the "Company").
RECITALS
A. WPHC is a Member of Park at Highlands LLC, a Colorado limited
liability company (the "LLC"), which LLC is governed by its Operating
Agreement dated as of April 27, 1995 (the "Operating Agreement") by and
between WPHC and Feld.
B. Feld is also a Member, as well as the Manager, in the LLC and is
the principal officer and shareholder of the Company.
C. In order to facilitate WPHC's appointment of the Company as a
substitute Member and the Manager of the LLC upon the death or disability of
Feld in accordance with Section 12.13 of the Operating Agreement and to bind
the Company to the agreements set forth in said Section 12.13, the parties
hereto now desire to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the execution of the Operating
Agreement and of the recitals, covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
a. Request for Substitute Manager. In the event that Feld should die
or WPHC shall elect to remove Feld as manager due to disability (such an
event is hereinafter referred to as a "Triggering Event"), WPHC shall have
the right, at its sole option, to request in writing that: (a) the Company
shall acquire from Feld (or from his estate, if Feld is deceased) the entire
interest of Feld in the LLC; (b) the Company shall be admitted as a Member of
the LLC and substituted for Feld as Member and Manager under the Operating
Agreement; and (c) the Company shall assume, in writing, all of the
obligations of the Manager and of a Member under the Operating Agreement, as
the same may be amended from time to time. The foregoing actions under items
(a), (b) and (c) shall be effective upon the next business day after WPHC
delivers its written request to the Company and Feld. Notwithstanding
anything to the contrary contained herein or in the Operating Agreement, if
the Company is substituted for Feld as a Member and Manager, then Feld (or
his estate if Feld is deceased) shall remain liable for the performance of
the obligations of the Manager under the Operating Agreement, in accordance
with Section 12.12.3.2 thereof.
b. Failure to Request a Substitute Manager. If WPHC fails to exercise
its option under Section 12.13 of the Operating Agreement and this Agreement
to cause the Company to be substituted for Feld as the Manager within ninety
(90) days after the date of a Triggering Event, then such right shall
automatically terminate and Feld (and his estate) shall be released from all
responsibilities and obligations as Manager under the Operating Agreement
arising after the effective date of Feld's withdrawal or Removal (as said
term is defined in the Operating Agreement,) from the LLC in connection with
the Triggering Event.
c. Attorneys Fees. In the event any litigation or other legal
proceedings or alternative dispute resolution proceedings are brought for the
enforcement of or arise out of this Agreement, the prevailing party shall be
entitled to recover from the non-prevailing party all reasonable attorneys'
fees and costs and all other reasonable expenses, in addition to any other
relief or damages obtained.
d. Further Documentation. The parties hereby agree to execute, from
time to time, such other documents as may be reasonably necessary to
effectuate the intent of this Agreement and Section 12.13 of the Operating
Agreement.
e. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
COLORADO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES
FURTHER AGREE THAT THIS AGREEMENT MAY BE ENFORCED IN THE DISTRICT COURT IN
AND FOR THE CITY AND COUNTY OF DENVER, STATE OF COLORADO AND THEY DO HEREBY
SUBMIT TO THE JURISDICTION OF SUCH COURT REGARDLESS OF THEIR RESIDENCE OR
WHERE THIS AGREEMENT MAY BE EXECUTED.
f. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding
upon the respective heirs, personal representatives, successors and assigns
of the parties hereto.
g. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service)
or mailed certified or registered mail, postage prepaid, return receipt
requested, or sent by telegram to the parties at the addresses shown in the
Operating Agreement or such other addresses which the parties may provide to
one another in accordance therewith. The notice address for the Company
shall be the same as the notice address for Feld. If notice is sent to WPHC,
a copy of such notice shall also be given to Wayne H. Hykan, Esq., Brownstein
Hyatt Farber & Strickland, P.C., 410 17th Street, Suite 2222, Denver,
Colorado 80202. If notice is sent to Feld or the Company, a copy of such
notice shall also be given to Alan Lottner, Esq., Haligman and Lottner, First
Interstate Tower North, 633 Seventeenth Street, Suite 2700, Denver, Colorado
80202-3635. Notices delivered personally will be effective upon delivery to
an authorized representative of the party at the designated address; notices
sent by mail in accordance with the above paragraph will be effective upon
execution of the Return Receipt Requested.
h. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court
of competent jurisdiction to be illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the legality or validity of
the balance of the terms and provisions hereof, which terms and provisions
shall remain binding and enforceable.
i. Capitalized Terms. All capitalized terms not otherwise defined
herein shall have the meanings set forth in the Operating Agreement.
j. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the
parties.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
________________________________________
AL FELD, individually
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:_____________________________________
Its:____________________________________
THE FELD COMPANY, a Colorado corporation
By:_____________________________________
Its:____________________________________
Exhibit 10.37
TRI-PARTY AGREEMENT
THIS TRI-PARTY AGREEMENT ("Agreement") is executed this 29th day of
December, 1995, by and among NATIONSBANK OF TEXAS, N.A., a national banking
association ("Construction Lender" or "NationsBank"), PARK AT HIGHLANDS LLC, a
Colorado limited liability company ("Borrower"), WELLSFORD PARK HIGHLANDS
CORP., a Colorado corporation ("WPHC"), WELLSFORD RESIDENTIAL PROPERTY TRUST, a
Maryland real estate investment trust ("WRPT"), AL FELD, an individual resident
of Denver, Colorado ("Feld"), and THE FELD COMPANY, a Colorado corporation.
R E C I T A L S:
I. Feld and WPHC, as members, are parties to that certain Operating
Agreement of Park at Highlands LLC, a Colorado limited liability company, dated
as of April 27, 1995 (the "Operating Agreement") evidencing the organization
and formation of Borrower. The Operating Agreement contemplates the
development of a 456-unit apartment complex and related facilities and
amenities (the "Improvements") by Borrower on certain real property located in
Highlands Ranch, Douglas County, Colorado, as more particularly described on
Exhibit A attached hereto and made a part hereof (the "Land") (the Land and the
Improvements being referred to herein collectively as the "Property"). All
terms used herein with their initial letters capitalized, unless otherwise
defined herein, shall have the same meaning as ascribed thereto in the
Operating Agreement.
J. NationsBank has agreed, subject to compliance by Borrower with all of
the terms and conditions of the Construction Loan Agreement of even date
herewith (the "Loan Agreement") between NationsBank and Borrower, to make a
construction loan to Borrower (the "Loan") to provide funds for the acquisition
of the Land and the construction of the Improvements on the Land. In
connection with the Loan, Borrower has executed, among other instruments, a
Promissory Note of even date herewith (the "Note"), payable to the order of
NationsBank in the stated principal amount of $36,376,700 and a first lien
Construction Loan Deed of Trust, Assignment, Security Agreement and Financing
Statement of even date herewith (the "Mortgage"), encumbering the Property.
The Loan has been guaranteed by Feld and The Feld Company (collectively, the
"Guarantors") by separate Guaranty Agreements of even date herewith
(collectively, the "Guaranty Agreements") in favor of NationsBank. The Loan
Agreement, the Note, the Mortgage, and all other documents evidencing, securing
or otherwise pertaining to the Loan are referred to herein collectively as the
"Loan Documents."
K. The Operating Agreement contains a requirement that at the
Construction Loan Closing, Borrower, the Construction Lender and WRPT will
enter into an agreement providing, among other things, if the Loan has not been
paid in full by its maturity date, the Construction Lender shall have the right
to require that WRPT either purchase the Loan from the Construction Lender, or
at WRPT's option, cause the Loan to be repaid. The Loan Agreement also
contains a requirement that NationsBank, Borrower, WPHC and WRPT enter into an
agreement coordinating the payoff of the Loan by WRPT. This Agreement is being
entered into in compliance with the aforesaid requirements in the Operating
Agreement and the Loan Agreement.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Subject to the satisfaction or waiver (by WRPT) of the conditions and
requirements listed in Exhibit B attached hereto and made a part hereof, WRPT
agrees to pay to NationsBank, on or before the maturity date of the Note, the
lesser of (i) the outstanding balance of all principal, interest and other
amounts owing to NationsBank in connection with the Loan (the "Outstanding Loan
Balance"), or (ii) the total of the Final Project Budget (the lesser of the
Outstanding Loan Balance and the total of the Final Project Budget is referred
to herein as the "Loan Payoff"). The Final Project Budget is defined in
paragraph 3 below and is subject to possible adjustment as provided in
paragraph 3. Upon its receipt of the Loan Payoff, NationsBank shall, at the
option of WRPT, either (a) assign to WRPT the Note, the Mortgage and all other
Loan Documents, without recourse or representation, except as to
title/ownership of the Loan Documents being transferred, or (b) cause the
Mortgage and all other liens and security interests on and against the Property
and securing the Loan to be released; provided, however, in connection with its
receipt of the Loan Payoff and such assignment of the Loan Documents or release
of the Mortgage, NationsBank shall retain its right to recover the difference,
if any, between the Outstanding Loan Balance and the Loan Payoff from
Guarantors under the Guaranty Agreements and shall also retain all of it rights
and remedies against Guarantors under the Environmental Indemnity Agreement and
all other indemnifications contained in the Loan Documents. When the Loan
Payoff is made, Borrower and WPHC shall execute and deliver such documents and
instruments as may be necessary to conform to the terms of the Operating
Agreement, and shall perform and observe all of the requirements of the
Operating Agreement to be performed and observed by Borrower and WPHC,
respectively, in connection with the Final Closing. Notwithstanding anything
contained in the Operating Agreement to the contrary, but subject to the
satisfaction or waiver (by WRPT) of the conditions and requirements listed in
Exhibit B hereto, WRPT shall be obligated to make the Loan Payoff to
NationsBank regardless of whether or not there is any uncured default on the
part of Feld, any Affiliate of Feld, or Borrower under the Operating Agreement
or under any other contracts or agreements relating to the Project.
2. WPHC and WRPT advise NationsBank that they have approved and
accepted, or have waived, the following items and conditions:
(a) The Initial Closing was completed in a timely manner, all of the
requirements and conditions set forth in Section 5.1 of the Operating Agreement
have been satisfied or waived, and WPHC has no right to remove Feld as a Member
or Manager of Borrower for any reason related to the Initial Closing.
(b) The Construction Loan Closing has been completed in a timely
manner, all of the requirements and conditions listed in Section 5.2 of the
Operating Agreement have been satisfied or waived, WPHC has approved all of the
documents and other items it is required to approve under Section 5.2 of the
Operating Agreement, and WPHC has no right to remove Feld as a Member or
Manager of Borrower for any reason related to the Construction Loan Closing.
Without limiting the foregoing, it is specifically acknowledged and agreed that
WPHC has approved all terms and conditions applicable to the Loan and all of
the Loan Documents as listed in Exhibit D attached hereto and made a part
hereof.
(c) The Infrastructure Land Closing was completed in a timely manner
and all of the requirements and conditions set forth in Section 5.3.1 of the
Operating Agreement have been satisfied. WPHC has also approved the
Infrastructure Improvements Agreement as described in Section 5.3.3 of the
Operating Agreement.
3. It is understood and agreed that WRPT has approved the budget for the
Loan, a copy of which is attached hereto and made a part hereof as Exhibit C,
and that said budget constitutes the Final Project Budget for purposes of the
Operating Agreement and this Agreement. The Final Project Budget is subject to
possible adjustment in accordance with the following provisions:
(a) In the event WPHC determines at any time that it is necessary or
appropriate to make any cash contribution ("Cash Contribution") to Borrower,
WPHC shall deliver written notice thereof to NationsBank prior to making the
Cash Contribution. As used herein, the term "Cash Contribution" also includes
amounts funded to Borrower from the proceeds of the "Bonds" (as defined in the
Loan Agreement) and used for the construction of the Improvements but does not
include any amounts funded by WPHC or from the Bonds to pay for construction
costs in excess of the Final Project Budget ("Cost Overruns"). To the extent
any such Cash Contribution (including Bond proceeds) is approved in writing by
NationsBank, in its sole and absolute discretion, and is actually made to
Borrower, the amount thereof shall be deducted from the total of the Final
Project Budget for purposes of calculating the Loan Payoff. In no event shall
any Cash Contribution (including Bond proceeds) made to Borrower which is not
approved in advance in writing by NationsBank be deducted from the Final
Project Budget.
(b) NationsBank shall have the right to make reallocations and other
adjustments to the line items in the Final Project Budget from time to time
without the necessity of obtaining any consent or approval from WRPT, provided
that WRPT's prior written approval shall be required for (i) any increases to
the total amount of the Final Project Budget and (ii) any decreases to the
interest reserve line item in the Final Project Budget. As between NationsBank
and Borrower, any such reallocations or adjustments shall be subject to the
terms and conditions of the Loan Agreement.
4. NationsBank shall not have the right to seek recovery against WRPT or
WPHC for any amount in excess of the Loan Payoff and, after its receipt of the
Loan Payoff, NationsBank shall not have the right to seek recovery against
Borrower if the Loan Payoff is less than the Outstanding Loan Balance; provided
that the foregoing shall not (i) limit the rights of NationsBank (as described
in paragraph 1 hereof) against Guarantors under the Guaranty Agreements, the
other Loan Documents, or otherwise or (ii) preclude NationsBank from naming
Borrower as a party in any suit against Guarantors (although NationsBank may
not obtain any recovery from Borrower after its receipt of the Loan Payoff).
The provisions of this paragraph 4 shall survive the delivery of the Loan
Payoff to NationsBank and the closing of the transaction described in
paragraph 1.
5. WPHC and WRPT are aware that (i) the Property is subject to, among
other assessment agreements and liens related thereto, an Indemnification
Assessment and Lien (the "Indemnification Assessment Lien"), dated as of
December 1, 1995 and relating to certain indemnification obligations of
Palomino Park Public Improvements Corporation (the "Corporation") in favor of
Highlands Ranch Metropolitan District No. 2 in connection with the Bonds; and
(ii) the Indemnification Assessment Lien is prior to the lien of the Mortgage.
Notwithstanding anything contained herein to the contrary, it is agreed that
upon the occurrence of any default under the Indemnification Assessment Lien
WRPT shall be obligated to either, at its option, (i) pay all amounts necessary
to cure the default under the Indemnification Assessment Lien to the
Corporation or to NationsBank (if NationsBank has made the payment necessary to
cure such default, although NationsBank shall not be required to do so), or
(ii) pay the Loan Payoff to NationsBank in accordance with the provisions of
paragraph 1 hereof, even if not all of the conditions and requirements listed
in Exhibit B hereto are satisfied at such time (and if WRPT exercises the
option under this clause (ii) the Loan Payoff shall include all amounts paid by
NationsBank, if any, to cure such default). WRPT shall make its election under
either clause (i) or clause (ii) of the preceding sentence, and shall make the
appropriate payment to the Corporation or to NationsBank, no later than ten
(10) days after the commencement of any foreclosure or other enforcement
proceeding by the Corporation with respect to the Indemnification Assessment
Lien.
6. Borrower, WPHC and WRPT agree that the Operating Agreement will not
be modified or amended in any manner which could affect the security or
interests of NationsBank without the prior written consent of NationsBank. The
provisions of this paragraph 6 shall no longer apply after the Loan Payoff has
been made to NationsBank.
7. WPHC represents and warrants to NationsBank that, as of the date
hereof, to the best of WPHC's knowledge, there is no uncured default by Feld or
any Affiliate of Feld under the Operating Agreement or any of the Approved
Affiliate Agreements, and WPHC is not aware of any occurrence or condition
which, with the giving of notice or passage of time, or both, could constitute
a default by Feld or any Affiliate of Feld under the Operating Agreement or any
of the Approved Affiliate Agreements. As used herein, the phrase "to the best
of WPHC's knowledge" shall mean the current actual knowledge of WPHC and shall
not imply any inquiry or investigation other than a review of all relevant
files in the possession of WPHC.
8. All of the parties hereto acknowledge and agree that this Agreement
satisfies the requirements and conditions for a tri-party agreement under both
the Operating Agreement and the Loan Agreement.
9. (a) In the event any default occurs under the Loan Documents,
NationsBank agrees to deliver to WRPT a copy of any notice of default sent by
NationsBank to Borrower (the "Default Notice") and further agrees not to
accelerate the maturity of the Note if WRPT, within thirty (30) days after the
date of the Default Notice (the "Cure Period"), either (i) cures or causes to
be cured such default (it being agreed that WRPT shall have no obligation to
cure any such default), or (ii) notifies NationsBank of its willingness to pay
and satisfy or purchase the Loan from NationsBank by payment of the appropriate
"Default Payoff" (as hereinafter defined), within ten (10) days after the
expiration of the Cure Period and WRPT does so pay and satisfy or purchase the
Loan within ten (10) days after expiration of the Cure Period. Any Default
Notice delivered by NationsBank to WRPT pursuant to this paragraph 9 shall
include a written statement of the amount of the Default Payoff. Since the
final amount of accrued interest and actual costs incurred by NationsBank as a
result of the default may not be known at the time NationsBank delivers the
Default Notice, it is agreed that such payoff statement may include a per diem
amount for accrued interest and may include an estimate of costs, with
NationsBank reserving the right to collect the full amount of the Default
Payoff. If WRPT elects to purchase the Loan from NationsBank as aforesaid,
then the closing shall be held through the office of the same title company in
Denver, Colorado which handled the closing of the Loan on the date specified by
WRPT in its notice of election to purchase, which date shall not be later than
ten (10) days after expiration of the Cure Period. Notwithstanding anything
contained herein to the contrary, in no event shall NationsBank be obligated to
give a Default Notice to WRPT with respect to any default that NationsBank is
not required to give notice of to Borrower under the Loan Documents.
(b) The amount of the Default Payoff shall be determined as follows:
(i) If, at the time of delivery of the Default Notice, all of
the conditions and requirements listed in Exhibit B hereto have been satisfied,
then the Default Payoff shall be the same as the Loan Payoff (and shall not
include any Cost Overruns paid by NationsBank or any other costs incurred by
NationsBank as a result of the default). However, NationsBank reserves the
right to recover such Cost Overruns and other costs from the Guarantors.
(ii) If, at the time of delivery of the Default Notice, all of
the conditions and requirements listed in Exhibit B hereto have not been
satisfied, then the Default Payoff shall be equal to the Loan Payoff plus all
costs that have been incurred by NationsBank as a result of the default,
specifically including, without limitation, any Cost Overruns paid by
NationsBank.
10. Any notice or communication required or permitted to be given
hereunder shall be in writing and shall be deemed to be delivered when actually
received or, regardless of whether actually received or not, (a) one (1)
business day after deposited with Federal Express, Emery, DHL, UPS, or other
overnight air courier service, (b) twenty-four (24) hours after transmitted by
facsimile, with evidence of transmission attached and hard copy sent by United
States mail, or (c) three (3) days after deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the addressee as follows or to such other address or facsimile
number as shall hereafter be designated by written notice from the addressee
actually received by the other parties at least twenty (20) days prior to the
effective date of the change:
NationsBank: NationsBank of Texas, N.A.
Real Estate Banking Group
901 Main Street, 51st Floor
Dallas, Texas 75202
Attn: Real Estate Loan Administration
Facsimile No. 214/508-1571
with copy to: Michael A. Deahl
Powell & Coleman, L.L.P.
One NorthPark East, Suite 130
8950 North Central Expressway
Dallas, Texas 75231
Facsimile No. 214/373-8768
Borrower: c/o Mr. Al Feld
The Feld Company
4600 South Ulster Street, Suite 350
Denver, Colorado 80237
Facsimile No. 303/721-9418
with copy to: Alan B. Lottner
Haligman & Lottner, P.C.
633 17th Street, Suite 2700,
North Tower
Denver, Colorado 80202
Facsimile No. 303/292-1300
WPHC and WPRT: c/o Wellsford Residential Property
Trust
370 Seventeenth Street, Suite 3100
Denver, Colorado 80202
Attn: Donald D. MacKenzie
Facsimile No. 303/595-7799
with copies to: Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Attn: Jeffrey Lynford
Facsimile No. 212/333-2323
and to: Wayne H. Hykan
Brownstein Hyatt Farber &
Strickland, P.C.
410 Seventeenth Street, 22nd Floor
Denver, Colorado 80202
Facsimile No. 303/623-1956
11. With respect to the relationship among NationsBank, Borrower,
Guarantors, WPHC and WRPT, in the event of any conflict or inconsistency
between the terms, provisions or conditions of this Agreement, on the one hand,
and the terms, provisions or conditions of the Operating Agreement or the Loan
Agreement, on the other hand, this Agreement will govern. However, the terms
of the Operating Agreement will govern the relationship among the members of
Borrower and the relationship between Borrower and WRPT.
12. If any party shall be required to employ an attorney to enforce or
defend the rights of such party hereunder, the prevailing party or parties
shall be entitled to recover reasonable attorneys fees and costs.
13. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
14. This Agreement may be changed, terminated or modified only by
agreement in writing signed by all of the parties hereto.
15. The covenants, agreements and rights contained in this Agreement
shall be binding upon and shall inure to the benefit of the respective
successors and assigns of the parties hereto and all persons claiming by,
through or under any of them. Without limiting the foregoing, it is agreed
that any transfer or assignment of the Loan by NationsBank shall be expressly
made subject to this Agreement and that the transferee or assignee will also be
entitled to the rights and benefits of NationsBank under this Agreement. In
addition, NationsBank agrees to deliver written notice to WRPT within a
reasonable period of time after any such transfer or assignment of the Loan.
16. This Agreement has been executed by the undersigned signatory on
behalf of WRPT in his/her capacity as an officer or trustee of WRPT which has
been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of WRPT dated as of July 10, 1992, and not individually,
and neither the trustees, officers or shareholders of WRPT shall be bound by or
have any personal liability hereunder or thereunder. The other parties hereto
shall look solely to the assets of WRPT for satisfaction of any liability of
WRPT in respect of this Agreement and will not seek recourse or commence any
action against any of the trustees, officers or shareholders of WRPT
individually or against any of their personal assets for the performance or
payment of any obligation hereunder or thereunder. The foregoing shall also
apply to any and all future documents, agreements, understandings, arrangements
and transactions between the parties hereto with respect to the subject matter
of this Agreement.
17. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS.
18. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
CONSTRUCTION LENDER:
NATIONSBANK OF TEXAS, N.A., a national
banking association
By:/s/ Sondra E. Teilborg
_______________________________________
Sondra Teilborg
Vice President
BORROWER:
PARK AT HIGHLANDS LLC, a Colorado
limited liability company
By:/s/ Al Feld
_______________________________________
Al Feld, Manager
WPHC:
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:/s/ Donald D. MacKenzie
_______________________________________
Donald D. MacKenzie
Vice President
WRPT:
WELLSFORD RESIDENTIAL PROPERTY TRUST,
a Maryland real estate investment
trust
By:/s/ Donald D. MacKenzie
_______________________________________
Donald D. MacKenzie
Vice President
GUARANTORS:
/s/ Al Feld
_______________________________________
Al Feld
THE FELD COMPANY, a Colorado corporation
By:/s/ Al Feld
_______________________________________
Al Feld
President
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
Lot 1A, Highlands Ranch Filing No. 126-A, 1st Amendment, as filed on December
19, 1995 under Reception No. 9560621 in the Office of the Clerk and Recorder of
Douglas County, Colorado.
<PAGE>
EXHIBIT B
1. Delivery to WPHC of a payoff letter from NationsBank setting forth the
total of all principal, interest and other amounts owing to NationsBank in
connection with the Loan.
2. The Title Insurance Company shall be irrevocably committed to issue the
following endorsements to the Owner's Title Policy issued to Borrower in
connection with the Construction Loan Closing (said endorsements to be
issued at the time of the Loan Payoff):
(a) A "date down" endorsement to the Title Policy extending the effective
date of the Title Policy to the date of funding and showing no
exceptions to title other than the exceptions reflected on the
existing Title Policy and any other exceptions which are reasonably
acceptable to or have been previously approved in writing by WPHC.
(b) An endorsement increasing the amount of insurance by an amount equal
to the Final Closing Capital Contribution.
(c) Such other endorsements as WPHC may reasonably require and the Title
Insurance Company is willing to issue. Such additional endorsements
shall be at WPHC's sole cost and expense.
3. Delivery to WPHC of unconditional lien releases from all subcontractors,
materialmen and providers of labor, equipment, material and/or services to
the Property, as to all work performed and materials purchased in
connection with the construction of the Project (which by definition, does
not include the Infrastructure), in form reasonably satisfactory to WPHC
or, with respect to any liens not so released, Feld shall have provided
surety bonds to which any contested liens are transferred (and released
from the Property) and title insurance over any such liens.
4. Delivery to WPHC of a physical inspection report prepared by the
Construction Consultant under the Operating Agreement or, alternatively, a
copy of a physical inspection report prepared by the construction
inspector under the Loan Agreement and addressed to WPHC.
5. Delivery to WPHC of an as-built survey reasonably satisfactory to WPHC
dated no more than thirty (30) days prior to the date of funding, showing
no encroachments or other adverse matters affecting title to the Property,
except as shall be reasonably acceptable to or have been previously
approved in writing by WPHC. WPHC acknowledges that it has approved the
ALTA/ACSM Land Survey of the Property prepared by Kirkham, Michael and
Associates dated October 25, 1995, last revised __________ __, 1995, Job
No. M-950504.
6. Delivery to WPHC of a written document executed by Feld, the architect and
the general contractor certifying no material change to the approved "for-
construction" plans and specifications for the Project except any changes
stated therein that have previously been approved by WPHC.
7. Delivery to WPHC of a copy of the final and unconditional certificate or
certificates of occupancy issued by the appropriate governmental
authorities for the Project in its entirety and a copy of any permits and
licenses which are required for the operation and use of the Project.
8. Delivery to WPHC of an Architect's Certificate substantially in the form
attached hereto as Exhibit B-1. [Note: This will be the same form as
attached to the Operating Agreement as Exhibit S-1.]
9. Delivery to WPHC of an Engineer's Certificate substantially in the form
attached hereto as Exhibit B-2. [Note: This will be the same form as
attached to the Operating Agreement as Exhibit S-2.]
10. Delivery to WPHC of satisfactory evidence (which may be in the form of an
endorsement to the Title Policy described in item 2 above) that all real
property taxes and assessments for the Property which are due and payable
through the date of funding have been fully paid.
11. Delivery to WPHC of a Release and Waiver, substantially in the form
attached hereto as Exhibit B-3, from Feld and each Affiliate of Feld that
is a party to an Approved Affiliate Agreement [Note: This will be the
same form as attached to the Operating Agreement as Exhibit B-3].
<PAGE>
EXHIBIT B-l TO TRI-PARTY AGREEMENT
(EXHIBIT S-1 TO OPERATING AGREEMENT)
Form of Architect's Certificate
(Letterhead of Architect)
CERTIFICATE OF ARCHITECT
____________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, CO 80202
Reference: _______________________
_____________, Colorado
Ladies and Gentlemen:
Please refer to the final architectural plans and specifications reflecting all
field notes and field changes as built described in the attached Exhibit A (the
"Plans"). The undersigned understands that _____________________ or its
designee ("Wellsford") is acquiring an interest in or is causing the repayment
of the construction loan for a residential complex owned by Park at Highlands
LLC, a Colorado limited liability company ("Owner"), located on that certain
parcel of real property having an address of ___________________ in the City of
____________, County of ______________, State of Colorado and described on
Exhibit B attached hereto (the "Site"), on which Owner has constructed a
complex of _____ apartment units known as ___________________ (the "Project").
This Certificate is a condition precedent to Wellsford's acquiring the Project
or repaying such loan, and the undersigned acknowledges that Wellsford will be
relying upon this Certificate in consummating such transaction.
With such understanding, the undersigned has reviewed the Plans, the
construction of the Project in relationship to the Plans, and its conformity
and compliance with applicable laws and regulations (i.e., applicable federal,
state, county and municipal laws and regulations and ordinances, including
without limitation, governing building and fire codes, zoning, subdivision and
land use laws and regulations, environmental and safety statutes and
regulations, and the rules and regulations of other governmental agencies
having jurisdiction over the Site or the Project ("Applicable Laws"). Based
upon these reviews and upon due professional investigation, the undersigned
declares and certifies to and for the benefit of Owner and Wellsford that:
1. The undersigned is the architect who prepared the Plans and coordinated
and supervised the construction of the Project.
2. The Project commonly known as _________________ contains 456 apartment
units in ___ buildings, and ___ parking spaces, with related amenities and
facilities. The Site is zoned under the applicable ordinances of the City of
___________, Colorado.
3. We have examined all applicable materials relative to those types of
restrictions and requirements sometimes referred to as use, dimensional, bulk
and parking restrictions, jurisdictional wetlands requirements, setback and
buffering requirements, density restraints, landscaping and vegetation
preservation ordinances, laws, rules and regulations and environmental
restraints, which relate to the Site (hereinafter referred to as "Development
Constraints") and have determined that the Project is permitted as a matter of
right except for the following variances: ______________________________
______________________________________, and that the following restrictions and
requirements (the "Restrictions and Requirements") are applicable to the
Project:
Minimum Lot Area:
Height Limitation:
Maximum Floor Area Ratio (or other type of bulk restriction):
Limitation on Number of Dwelling Units (if any):
Front Yard Requirements:
Side and Rear Yard Requirements:
Parking Requirements:
4. The Project and the Site are in compliance with the Development
Constraints and the Restrictions and Requirements.
5. The improvements contemplated by the Plans have been completed in
substantial compliance with the Plans, except for the items in the attached
Exhibit C which are incomplete to the extent indicated and for which the
estimated cost to complete is indicated on said Exhibit C.
6. We are of the opinion that the Project has been designed in accordance
with the applicable provisions of Colorado law, the Americans with Disabilities
Act of 1990, 42 U.S.C. Section 12101, et seq., as amended, and any other
applicable law, rule or regulation of any kind or description relating to the
elimination of architectural barriers for the handicapped.
7. We certify that any and all amounts due and payable to us under or in
connection with the Standard Form of Agreement between Owner and Architect for
Housing Services (AIA-Document B181) dated _______________ with regard to the
Project have been paid in full.
8. The Project, the Plans and all improvements comply with Applicable Laws,
including without limitation, the applicable PUD, and with all necessary and
required notices, permits or license agreements in connection with the Plans,
and all permits, licenses and approvals required for the construction of the
improvements contemplated by the Plans and for the use and occupancy of the
Project (including, without limitation, all final certificates of occupancy)
have been obtained from the applicable governmental or quasi-governmental
agency having jurisdiction or any private party from whom any license is
required.
9. The improvements are ready for occupancy.
10. The improvements on the Property, contain a minimum of ______ square feet
of net rentable living area (as measured from inside face of exterior wall to
apartment side of corridor wall to centerline of tenant separation wall) for
the apartments.
11. The undersigned is a licensed architect and has the power and authority to
render this Certificate and to execute and deliver it on behalf of Feld Design,
Inc.
This Certificate may be relied upon only by Wellsford and the Owner.
Very truly yours,
By: Pamela J.L. English
Supervising Architect
Dated: ___________________________________
<PAGE>
EXHIBIT A TO
CERTIFICATE OF ARCHITECT
________________________________________
________________________________________________
_______________________________, Colorado
DRAWING LIST
ARCHITECTURAL: ____________________________________________
____________________________________________
____________________________________________
STRUCTURAL: ____________________________________________
____________________________________________
____________________________________________
FOUNDATION: ____________________________________________
____________________________________________
____________________________________________
MECHANICAL: ____________________________________________
____________________________________________
____________________________________________
PLUMBING: ____________________________________________
____________________________________________
____________________________________________
ELECTRICAL: ____________________________________________
____________________________________________
____________________________________________
LANDSCAPING: ____________________________________________
____________________________________________
____________________________________________
<PAGE>
EXHIBIT B TO
CERTIFICATE OF ARCHITECT
LEGAL DESCRIPTION<PAGE>
EXHIBIT C TO
CERTIFICATE OF ARCHITECT
Incomplete Items Cost of Completion
<PAGE>
EXHIBIT B-2 TO TRI-PARTY AGREEMENT
(EXHIBIT S-2 TO OPERATING AGREEMENT)
Form of Engineer's Certificate
(Letterhead of Project Engineer)
ENGINEER'S CERTIFICATE
_____________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, Colorado 80202
Reference: ______________________
______________, Colorado
Ladies and Gentlemen:
The undersigned understands that ______________________________ or its designee
("Wellsford") is acquiring an interest in or is causing the repayment of the
construction loan for a residential complex owned by Park at Highlands LLC, a
Colorado limited liability company ("Owner"), located on that certain parcel of
real property having an address of ___________________________ in the City of,
______________, County of _____________, State of Colorado and described on
Exhibit A attached hereto (the "Site"), on which Owner has constructed a
complex of ________ apartment units known as _________________ (the "Project").
This Certificate is a condition precedent to Wellsford's acquiring the Project
or repaying such loan, and the undersigned acknowledges that Wellaford will be
relying upon this Certificate in consummating such transaction.
With such understanding, the undersigned has reviewed those portions of the
plans and specifications for the Project that are listed on Exhibit B attached
hereto (the "Engineering Plant"), the construction of the Project in
relationship to the Engineering Plans, and its conformity and compliance with
certain applicable laws and regulations. Based upon these reviews and upon due
professional investigation, the undersigned declares and certifies to and for
the benefit of Owner and Wellsford that:
1. Satisfactory methods of access to and egress from the Site and the Project
and adjoining or nearby public ways are available and are sufficient to
meet the reasonable needs of the Project and all applicable requirements
of public authorities. Sanitary water supply and storm sewer and sanitary
sewer facilities and other required utilities (gas, electricity,
telephone, etc.) are likewise available and are sufficient to meet the
reasonable needs of the Project and all applicable requirements of public
authorities.
2. We are of the opinion that the Property is not located in a 100-Year Flood
Plain or in an identified "flood prone area," as defined by the U.S.
Department of Housing and Urban Development, pursuant to the Flood
Disaster Protection Act of 1973, as amended, and is not subject to any
federal, state or local "wetlands" rules, regulations, ordinances or
requirements.
3. We have reviewed and are familiar with all tests and analyses performed
and professional recommendations made by soil engineers and other
consultants regarding the condition of the soil of the Site. In our
professional opinion, the condition of the soil of the Site is adequate to
support the Project as completed.
4. We have reviewed the locations of all easements, rightsof-way, subsurface
rights or jurisdictional wetlands, and all rules and regulations
pertaining to the same in force relating to the Site, and the Plans are
prepared so that the Project does not encroach over, across or upon any
such easements, rights-of-way, subsurface rights or jurisdictional
wetlands and the like, and all necessary permits and approvals required
for the Project have been obtained.
5. We have reviewed all deeds, easements, covenants, restrictions and other
matters set forth in Schedule B of Title Commitment No. ____ issued by
Land Title Guaranty Company, and the Project satisfies and/or does not
violate any provisions concerning construction of improvements on the Site
set forth in such deeds, easements, covenants, restrictions and other
matters.
This Certificate may be relied upon only by Owner and Wellsford.
Very Truly yours,
[ENGINEER]
By:______________________________
Title:________________________
Dated:________________________<PAGE>
EXHIBIT A TO
CERTIFICATE OF ENGINEERING
LEGAL DESCRIPTION<PAGE>
EXHIBIT B TO
CERTIFICATE OF ENGINEERING
__________________
_____________________
_____________, Colorado
DRAWING LIST
CIVIL ENGINEERING
DRAWINGS: __________________________________
__________________________________
__________________________________
STRUCTURAL: __________________________________
__________________________________
__________________________________
FOUNDATION: __________________________________
MECHANICAL: __________________________________
__________________________________
__________________________________
PLUMBING: __________________________________
__________________________________
__________________________________
ELECTRICAL: __________________________________
__________________________________
__________________________________
LANDSCAPING: __________________________________
__________________________________
__________________________________<PAGE>
EXHIBIT B-3 TO TRI-PARTY AGREEMENT
(EXHIBIT B-3 TO OPERATING AGREEMENT)
RELEASE AND WAIVER - FINAL CLOSING
THIS RELEASE AND WAIVER is given this ___ day of _________, 19_, by
______________ ("Releasor") to and for the benefit of PARK AT HIGHLANDS LLC, a
Colorado limited liability company (the "Company"), WELLSFORD RESIDENTIAL
PROPERTY TRUST, a Maryland real estate investment trust ("WRPT"), and WELLSFORD
PARK HIGHLANDS CORP., a Colorado corporation ("WPHC"). The Company, WRPT and
WPHC are hereinafter collectively called the "Released Parties."
RECITALS
A. Releasor and one or more of the Released Parties are parties to that
certain [INSERT DESCRIPTION OF RELEVANT AGREEMENT, E.G., ARCHITECT'S AGREEMENT,
CONSTRUCTION MANAGEMENT AGREEMENT, ETC.] (the "Agreement").
B. Releasor has agreed to provide this Release and Waiver as a condition
of final payment under the Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Releasor declares and states to
and for the Released Parties as follows:
1. Releasor has been paid in full all compensation and
consideration payable to Releasor under or with respect to the Agreement.
2. Releasor hereby releases and agrees to defend, indemnify and
hold harmless the Released Parties from and against any and all claims,
demands, losses, costs, damages, suits, causes of action and liabilities of
whatever nature that may have been incurred by Releasor under or with respect
to the Agreement or the transactions described in the Agreement or contemplated
thereby.
3. Releasor hereby waives and releases any and all claims and
demands of any nature whatsoever that Releasor may have or may hereafter claim
or bring against the Released Parties or any of them with respect to the
Agreement or to any transaction described in or contemplated by the Agreement.
4. This Release and Waiver shall be binding upon and inure to the
benefit of Releasor and the Released Parties and their respective heirs,
successors and assigns.
EXECUTED as of the date set forth above.
RELEASOR:
______________________________
STATE OF __________ )
) ss
COUNTY OF__________ )
The foregoing instrument was acknowledged before me this ____ day of 1994,
by _______________________ as _______________________ of
_____________________________.
WITNESS my hand and official seal.
My commission expires:
______________________________
Notary Public
<PAGE>
EXHIBIT C
APPROVED BUDGET
<PAGE>
EXHIBIT D
SCHEDULE OF LOAN DOCUMENTS
[Unless indicated otherwise, all of the following Loan Documents are dated as
of _________ __, 1995.]
1. Construction Loan Commitment dated December __, 1995.
2. Construction Loan Agreement.
3. Promissory Note.
4. Guaranty Agreement of Al Feld.
5. Guaranty Agreement of The Feld Company.
6. Construction Loan Deed of Trust, Assignment, Security Agreement and
Financing Statement.
7. UCC-1 Financing Statements.
8. Assignment of Rents and Leases.
9. Environmental Indemnity Agreement.
10. Collateral Assignment of Management Agreement.
11. Manager's Agreement, Subordination and Consent to Assignment.
12. Assignment of Construction Contract.
13. Contractor's Subordination, Agreement and Consent to Assignment of
Construction Contract.
14. Assignment of Construction Documents.
15. Architect's Consent to Assignment, Agreement and Subordination of Lien.
16. Certification of Non-Foreign Status.
17. Notice by Disburser.
18. [Add any other documents, as appropriate.]
Exhibit 10.38
OPERATING AGREEMENT
OF
RED CANYON AT PALOMINO PARK LLC,
A COLORADO LIMITED LIABILITY COMPANY
AS OF APRIL 17, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 FORMATION OF COMPANY. . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Principal Place of Business . . . . . . . . . . . . . . . 13
2.4 Registered Office and Registered Agent. . . . . . . . . . 13
2.5 Articles of Organization. . . . . . . . . . . . . . . . . 14
2.6 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 BUSINESS OF COMPANY . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Permitted Businesses. . . . . . . . . . . . . . . . . . . 14
3.2 Other Activity or Business. . . . . . . . . . . . . . . . 14
ARTICLE 4 CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND LOANS TO THE COMPANY . . . . . . . . . . . . . . . . . . . . 14
4.1 Capital Contributions . . . . . . . . . . . . . . . . . . 14
4.2 Withdrawal or Reduction of Members'
Contributions to Capital . . . . . . . . . . . . . . . . 15
4.3 Development Deficit Payments. . . . . . . . . . . . . . . 15
4.4 Operating Deficit Payments. . . . . . . . . . . . . . . . 15
4.5 Additional Capital Contributions. . . . . . . . . . . . . 15
4.6 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5 INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;
CONSTRUCTION LOAN CLOSING. . . . . . . . . . . . . . . . . . . . 16
5.1 Initial Closing . . . . . . . . . . . . . . . . . . . . . 16
5.2 Construction . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Infrastructure Land Closing and Bond
Financing of Infrastructure. . . . . . . . . . . . . . . 20
5.4 Failure of Initial Closing or
Construction Loan Closing to Occur . . . . . . . . . . . 21
ARTICLE 6 DEVELOPMENT OF PROJECT; OPERATIONS PRIOR
TO THE FINAL CLOSING DATE. . . . . . . . . . . . . . . . . . . . 21
6.1 Duties of Feld. . . . . . . . . . . . . . . . . . . . . . 21
6.2 Construction Completion . . . . . . . . . . . . . . . . . 23
6.3 Development Deficit Guaranty. . . . . . . . . . . . . . . 23
6.4 Operating Deficit Guaranty. . . . . . . . . . . . . . . . 23
6.5 Liabilities of the Company. . . . . . . . . . . . . . . . 24
6.6 Construction Contracts. . . . . . . . . . . . . . . . . . 24
6.7 Administration of the Construction Loan . . . . . . . . . 24
6.8 Change Orders . . . . . . . . . . . . . . . . . . . . . . 24
6.9 Retainage . . . . . . . . . . . . . . . . . . . . . . . . 25
6.10 Agreements with Affiliates. . . . . . . . . . . . . . . . 25
6.11 Warranty by Feld. . . . . . . . . . . . . . . . . . . . . 25
6.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 26
6.13 Personal Obligation . . . . . . . . . . . . . . . . . . . 27
6.14 Force Majeure . . . . . . . . . . . . . . . . . . . . . . 27
6.15 Limitations of Feld's Authority . . . . . . . . . . . . . 27
6.16 Pre-Existing Environmental Condition. . . . . . . . . . . 28
ARTICLE 7 COMPENSATION TO FELD. . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Development Management Fee. . . . . . . . . . . . . . . . 28
7.2 Construction Management Fee . . . . . . . . . . . . . . . 28
7.3 Construction Loan Guarantee Fee . . . . . . . . . . . . . 28
7.4 Cost Savings Fee. . . . . . . . . . . . . . . . . . . . . 28
7.5 Incentive Fee . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Conditions to Payment of Fees;
Right of Offset. . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8 FINAL CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Conditions to Final Closing . . . . . . . . . . . . . . . 30
8.2 Initiation of Final Closing . . . . . . . . . . . . . . . 30
8.3 Actions at the Final Closing. . . . . . . . . . . . . . . 30
8.4 Certain Rights of Feld Upon
Satisfaction of Final Closing
Funding Conditions . . . . . . . . . . . . . . . . . . . 30
ARTICLE 9 ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Profits and Losses. . . . . . . . . . . . . . . . . . . . 31
9.2 General Provisions. . . . . . . . . . . . . . . . . . . . 31
9.3 Special Provisions. . . . . . . . . . . . . . . . . . . . 32
9.4 Code Section 704(c) Allocations . . . . . . . . . . . . . 33
9.5 Allocations Relating to Taxable
Issuance of Interest . . . . . . . . . . . . . . . . . . 33
ARTICLE 10 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2 Division Among Members. . . . . . . . . . . . . . . . . . 34
10.3 Special Distribution to WPHC. . . . . . . . . . . . . . . 34
ARTICLE 11 BOOKS, RECORDS, AND ACCOUNTING. . . . . . . . . . . . . . . . . . 34
11.1 Books and Records . . . . . . . . . . . . . . . . . . . . 34
11.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 35
11.4 Special Basis Adjustment. . . . . . . . . . . . . . . . . 35
11.5 Tax Matters Partner . . . . . . . . . . . . . . . . . . . 35
11.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 12 MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Management. . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Number, Tenure and Qualifications . . . . . . . . . . . . 36
12.3 Appointment of Feld as Manager. . . . . . . . . . . . . . 36
12.4 Certain Powers of Managers. . . . . . . . . . . . . . . . 36
12.5 Member Approval of Certain Acts . . . . . . . . . . . . . 37
12.6 Liability for Certain Acts. . . . . . . . . . . . . . . . 38
12.7 Indemnity of the Members and the Managers . . . . . . . . 38
12.8 Manner of Acting. . . . . . . . . . . . . . . . . . . . . 38
12.9 Informal Act by Managers. . . . . . . . . . . . . . . . . 38
12.10 Participation by Electronic Means. . . . . . . . . . . . . 39
12.11 Resignation. . . . . . . . . . . . . . . . . . . . . . . . 39
12.12 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.13 Death or Disability of Feld. . . . . . . . . . . . . . . . 40
12.14 Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . 41
12.15 Prohibition Against Publicly
Traded Partnership . . . . . . . . . . . . . . . . . . . 41
ARTICLE 13 REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . 41
13.1 Representations and Warranties of
Each Member. . . . . . . . . . . . . . . . . . . . . . . 41
13.2 Representations, Warranties and
Covenants of Feld. . . . . . . . . . . . . . . . . . . . 42
13.3 General Representation. . . . . . . . . . . . . . . . . . 45
13.4 Survival; Indemnity . . . . . . . . . . . . . . . . . . . 45
ARTICLE 14 RIGHTS AND OBLIGATIONS OF MEMBERS . . . . . . . . . . . . . . . . 45
14.1 Limitation of Liability . . . . . . . . . . . . . . . . . 45
14.2 Company Debt Liability. . . . . . . . . . . . . . . . . . 46
14.3 List of Members . . . . . . . . . . . . . . . . . . . . . 46
14.4 Company Books . . . . . . . . . . . . . . . . . . . . . . 46
14.5 Priority and Return of Capital. . . . . . . . . . . . . . 46
14.6 Outside Activity. . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 15 MEETINGS OF MEMBERS . . . . . . . . . . . . . . . . . . . . . . . 48
15.1 Annual Meeting. . . . . . . . . . . . . . . . . . . . . . 48
15.2 Special Meetings. . . . . . . . . . . . . . . . . . . . . 48
15.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . 48
15.4 Notice of Meetings. . . . . . . . . . . . . . . . . . . . 48
15.5 Meeting of all Members. . . . . . . . . . . . . . . . . . 48
15.6 Record Date . . . . . . . . . . . . . . . . . . . . . . . 48
15.7 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.8 Manner of Acting. . . . . . . . . . . . . . . . . . . . . 49
15.9 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 49
15.10 Action by Members Without a Meeting . . . . . . . . . . . 49
15.11 Voting by Ballot. . . . . . . . . . . . . . . . . . . . . 49
15.12 Waiver of Notice. . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 16 TRANSFERABILITY; PUT-CALL PROVISIONS. . . . . . . . . . . . . . . 49
16.1 Restrictions on Transferability . . . . . . . . . . . . . 49
16.2 Put-Call Rights . . . . . . . . . . . . . . . . . . . . . 50
16.3 Calculation of Option Price . . . . . . . . . . . . . . . 50
16.4 Right of Offset . . . . . . . . . . . . . . . . . . . . . 51
16.5 Restrictions on Resignation . . . . . . . . . . . . . . . 51
16.6 Permitted WPHC Transfer . . . . . . . . . . . . . . . . . 51
ARTICLE 17 ADMISSION OF ADDITIONAL MEMBERS . . . . . . . . . . . . . . . . . 52
ARTICLE 18 DISSOLUTION AND TERMINATION . . . . . . . . . . . . . . . . . . . 52
18.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . 52
18.2 Effect of Filing of Dissolving Statement. . . . . . . . . 53
18.3 Distribution of Assets Upon Dissolution . . . . . . . . . 53
18.4 Articles of Dissolution . . . . . . . . . . . . . . . . . 53
18.5 Filing of Articles of Dissolution . . . . . . . . . . . . 53
18.6 Winding Up. . . . . . . . . . . . . . . . . . . . . . . . 53
18.7 No Restoration of Deficit Capital Accounts. . . . . . . . 54
18.8 Deemed Liquidation. . . . . . . . . . . . . . . . . . . . 54
18.9 Permitted Withdrawal by Feld. . . . . . . . . . . . . . . 54
ARTICLE 19 MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . 54
19.1 Statement of Intent of Parties. . . . . . . . . . . . . . 54
19.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 55
19.3 Application of Colorado Law . . . . . . . . . . . . . . . 56
19.4 Waiver of Action for Partition. . . . . . . . . . . . . . 56
19.5 Amendments. . . . . . . . . . . . . . . . . . . . . . . . 56
19.6 Construction. . . . . . . . . . . . . . . . . . . . . . . 56
19.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 56
19.8 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 56
19.9 Time of the Essence . . . . . . . . . . . . . . . . . . . 56
19.10 Remedies for Default. . . . . . . . . . . . . . . . . . . 57
19.11 Rights and Remedies Cumulative. . . . . . . . . . . . . . 57
19.12 Severability. . . . . . . . . . . . . . . . . . . . . . . 57
19.13 Heirs, Successors and Assigns . . . . . . . . . . . . . . 57
19.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 57
19.15 Further Assurances. . . . . . . . . . . . . . . . . . . . 57
19.16 Entire Agreement. . . . . . . . . . . . . . . . . . . . . 57
<PAGE>
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT
UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE
MANAGERS OF THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR
THE SUBMISSION TO THE MANAGERS OF THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE MANAGERS TO THE EFFECT THAT ANY SUCH TRANSFER OR SALE WILL
NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
OPERATING AGREEMENT OF
RED CANYON AT PALOMINO PARK LLC,
A COLORADO LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made as of the 17th day of April, 1996 by and
among AL FELD, an individual ("Feld"), and WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation ("WPHC"), as the members of RED CANYON AT PALOMINO PARK
LLC, a Colorado limited liability company (the "Company").
NOW THEREFORE, pursuant to the Act, the following shall constitute the
Operating Agreement of RED CANYON AT PALOMINO PARK LLC, a Colorado limited
liability company.
ARTICLE 1
DEFINITIONS
The following terms used in this Operating Agreement shall have the
following meanings (unless otherwise expressly provided herein):
(a) "Accountants" means Ernst & Young or such other accountant engaged by
the Company with the unanimous consent of the Members.
(b) "Act" means the version of the Colorado Limited Liability Company Act
adopted by the State of Colorado, Colo. Rev. Stat. Section 7-80-101 to 7-80-
913, as amended from time to time.
(c) "Adjusted Capital Account Deficit" with respect to any Member means
the deficit balance, if any, in such Member's Capital Account as of the end of
any Fiscal Year after giving effect to the following adjustments: (i) credit
to such Capital Account the sum of (A) any amount which such Member is
obligated to restore to such Capital Account pursuant to any provision of this
Agreement, plus (B) an amount equal to such Member's share of Partnership
Minimum Gain as determined under Regulation Section 1.704-2(g)(1) and such
Member's share of Partner Nonrecourse Debt Minimum Gain as determined under
Regulation Section 1.704-2(i)(5), plus (C) any amounts which such Member is
deemed to be obligated to restore pursuant to Regulation Section 1.704-
1(b)(2)(ii)(c); and (ii) debit to such Capital Account the items described in
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
(d) "Affiliate" means any Person controlling the outstanding equity
interests or profits interests of any other Person, any Person whose
outstanding equity interests are controlled by any other Person, or any Person
controlling, controlled by, or under common control with any other Person.
(e) "Agreement" shall mean this Operating Agreement as originally
executed and as it may be amended from time to time.
(f) "Approved Affiliate Agreements" shall have the meaning set forth in
Section 5.2.6 hereof.
(g) "Architect's Agreement" means the agreement to be entered into
between the Company and Feld Design, Inc. ("Architect"), an Affiliate of Feld,
at or prior to the Construction Loan Closing.
(h) "Asset Value" with respect to any Company asset means:
(i) The fair market value, when contributed, of any asset
contributed to the Company by any Member;
(ii) The fair market value on the date of distribution of any asset
distributed by the Company to any Member as consideration for an Interest in
the Company;
(iii) The fair market value of all Property at the time of the
happening of any of the following events: (A) the admission of a Member to, or
the increase of an Interest of an existing Member in, the Company in exchange
for a Capital Contribution; or (B) the liquidation of the Company under
Regulation Section 1.704-1(b)(2)(ii)(g); or
(iv) The Basis of the asset in all other circumstances.
(i) "Bankruptcy Event" with respect to the Company or any Member means
any one of:
(A) Filing a voluntary petition in bankruptcy or for reorganization
or for adoption of an arrangement under the Bankruptcy Code;
(B) Making a general assignment for the benefit of creditors;
(C) The appointment by a court of a receiver for all or a portion of
the property of the Company or for all or a portion of a Member's property
having an aggregate value in excess of $500,000;
(D) The entry of an order for relief in the case of an involuntary
petition in bankruptcy; or
(E) The assumption of custody or sequestration by a court of
competent jurisdiction of all or substantially all of the Company's or such
Member's property, as appropriate.
(j) "Basis" with respect to an asset means the adjusted basis from time
to time of such asset for federal income tax purposes.
(k) "Call Option" means the call option of WPHC with respect to the
Interest of Feld as described in Section 16.2.1 hereof.
(l) "Capital Account" means an account maintained for each Member in
accordance with Regulation Sections 1.704-1(b) and 1.704-2 and to which the
following provisions apply to the extent not inconsistent with such
Regulations:
(i) There shall be credited to each Member's Capital Account (A)
such Member's Capital Contributions; (B) such Member's distributive share of
Profits; (C) any items of income or gain specially allocated to such Member
under Section 9.3 of this Agreement; and (D) the amount of any Company
liabilities (determined as provided in Code Section 752(c) and the Regulations
thereunder) assumed by such Member or to which Property distributed to such
Member is subject;
(ii) There shall be debited to each Member's Capital Account (A) the
amount of money and the Asset Value of any Property distributed to such Member
pursuant to this Agreement; (B) such Member's distributive share of Losses; (C)
any items of expense or loss which are specially allocated to such Member under
Section 9.3 of this Agreement, and (D) the amount of liabilities (determined as
provided in Code Section 752(c) and the Regulations thereunder) of such Member
assumed by the Company or to which Property contributed to the Company by such
Member is subject; and
(iii) The Capital Account of any transferee Member shall include the
appropriate portion of the Capital Account of the Member from whom the
transferee Member's Interest was obtained.
(m) "Capital Contribution" means the amount of money and the Asset Value
of any property other than money contributed to the Company by a Member with
respect to such Member's Interest in the Company.
(n) "Capital Contribution Balance" means with respect to any Member the
aggregate Capital Contributions made by such Member, plus an amount
corresponding to interest thereon at an annual rate of twelve percent (12%)
from the date(s) such Capital Contributions are made until the Option Closing
Date. The parties acknowledge that the definition of Capital Contribution
Balance is only used in connection with the determination of Fair Market Value
of Feld's Interest.
(o) "Cash Flow" means the Operating Cash Flow and Sales or Refinancing
Cash Flow for any given period.
(p) "Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
(q) "Company" means RED CANYON AT PALOMINO PARK LLC, a Colorado limited
liability company.
(r) "Construction Consultant" means the Construction Consultant selected
by WPHC to monitor construction on behalf of WPHC, or such other consultant as
may be selected by WPHC.
(s) "Construction Lender" means the maker of the Construction Loan, or
its successor and assigns in such capacity.
(t) "Construction Loan" means the Construction Loan in the anticipated
principal amount of $27,000,000 to be made to the Company by the Construction
Lender at the Construction Loan Closing.
(u) "Construction Loan Closing" means the closing of the transactions
described in Section 5.2 hereof.
(v) "Construction Loan Closing Date" means the date on which the
Construction Loan Closing occurs.
(w) "Construction Loan Outside Date" has the definition given it in
Section 5.2.4 hereof.
(x) "Construction Procedures" means the requirements regarding
construction procedures set forth on Exhibit B attached hereto.
(y) "Conversion Date" means the later of (A) the date on which
Substantial Completion has occurred, or (B) the date which is the earlier of
(i) nineteen (19) months from the Construction Loan Closing Date, or (ii) the
date upon which the construction period interest line item in the budget for
the Construction Loan has been exhausted.
(y) "Control" means the direct or indirect ownership of at least 50% of
the equity interests or profits interests of any other Person.
(z) "Cost Savings" means the positive amount, if any, by which the Total
Budgeted Development Costs exceed the actual Development Costs incurred through
the Final Closing Date.
(aa) "Deposit Agreement" means the Deposit and Contract Administration
Agreement between WPHC and The Feld Company regarding the Land Contract, which
Deposit and Contract Administration Agreement is attached hereto as Exhibit C.
(ab) "Depreciation" for any Fiscal Year or other period means the cost
recovery deduction with respect to an asset for such year or other period as
determined for federal income tax purposes, provided that if the Asset Value of
such asset differs from its Basis at the beginning of such year or other
period, depreciation shall be determined as provided in Regulation Section
1.704-1(b)(2)(iv)(g)(3).
(ac) "Development Costs" means the direct or indirect costs paid or
accrued by the Company related to the acquisition of the Project Land and the
development of the Project, including without limitation: (i) all costs of
construction and development of the Project; (ii) all costs of causing the
Project and its operations to comply with laws prior to the Conversion Date;
(iii) all real estate taxes, assessments and personal property taxes relating
to the period prior to the Conversion Date; (iv) all costs of insurance
incurred by or charged to the Company relating to the period prior to the
Conversion Date; (v) all fees paid to Feld or its Affiliates (excluding the
property management fee paid to The Feld Company after the Conversion Date);
(vi) all financing costs relating to the period prior to the Conversion Date,
including origination fees, reimbursement of expenses of the Construction
Lender and interest; (vii) all costs of administration of the Company,
including legal and accounting fees prior to or on the Final Closing Date;
(viii) all Operating Expenses incurred prior to the Conversion Date; and (ix)
costs of title insurance endorsements deleting the mechanic's lien exception
from the owner's title policy and bringing the date of the owner's title policy
down to the date of Final Closing.
(ad) "Development Deficits" means the positive amount, if any, by which
(a) Development Costs exceed (b) the sum of the Capital Contributions of the
Members required to be made at the Initial Closing, the Final Closing Capital
Contribution and the Net Operating Income for the period prior to the
Conversion Date.
(ae) "Development Deficit Payments" shall mean the Development Deficit
Payments to be paid by Feld pursuant to Section 6.3 of this Agreement.
(af) "Entity" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
cooperative or association, or any governmental or quasi-governmental agency or
body.
(ag) "Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.A. Section 9601, et. seq.; the
Hazardous Materials Transportation Act, 49 U.S.C.A. Section 1801, et. seq.; the
Resource Conversation and Recovery Act, 42 U.S.C.A. Section 6901, et. seq.; the
Toxic Substances Control Act, 15 U.S.C.A. Section 2601, et. seq.; the Federal
Water Pollution Control Act, 33 U.S.C.A. Section 1251, et. seq.; any Colorado
environmental laws; or any successor to such laws (in existence on the date any
relevant representation is made or updated), or any other federal, state or
local environmental, health or safety statute, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or
standards concerning or in connection with hazardous or toxic wastes,
substances, material, smoke, gas or particulate matter as now or at any time
hereafter in effect, or any common law theory based on nuisance or strict
liability.
(ah) "Environmental Reports" means the Environmental Site Assessment
prepared by ATEC Associates dated March 16, 1994, concerning the Land.
(ai) "Fair Market Value of Feld's Interest" means the following:
(i) one percent (1.0%) of the following: (A) the fair market value
of the Company's assets as determined by the Accountants based on the books and
records of the Company and on a current appraisal of the Project, minus (B) the
amount of the Company's debts and liabilities, including without limitation,
any debt encumbering the Project, trade payables, accrued expenses and
adjustments for any reasonably foreseeable contingent liabilities as determined
by the Accountants and accrued but unpaid Incentive Fees and any other fees
payable to Feld, minus (C) the Infrastructure Cost allocable to the Project
made on the same basis that such allocation of Infrastructure Cost is made in
connection with the calculation of the Incentive Fee; minus
(ii) the amount determined as of the Option Closing Date by which (A)
one percent (1.0%) of the aggregate Capital Contribution Balances of Feld and
WPHC exceeds (B) the Capital Contribution Balance of Feld.
(aj) "Final Closing" means the closing of the transactions described in
Article 8 hereof.
(ak) "Final Closing Date" means the date on which the Final Closing
occurs.
(al) "Final Closing Capital Contribution" means the Capital Contribution
to be made by WPHC pursuant to Section 4.1.2(b) hereof, when, as and if
required by this Agreement.
(am) "Final Closing Funding Conditions" means the conditions to the
obligations of WPHC to make the Final Closing Capital Contribution, which
conditions are set forth on Exhibit D attached hereto.
(an) "Final Completion" means the lien-free completion of construction of
the improvements in accordance with the Plans and Specifications (subject only
to minor and inconsequential field changes and other changes consented to by
WPHC), including without limitation, completion or correction of all punchlist
items and seasonal items such as landscaping to the reasonable satisfaction of
WPHC, payment and release of all liens of subcontractors, materialmen, and
other providers of labor, equipment, material and/or services to the Property
and the Project as evidenced by the receipt of all unconditional lien releases
from all such subcontractors, materialmen and all other providers of labor,
equipment, material and/or services to the Property and the Project, or in the
event a lien is being contested, the posting by Feld of collateral in an amount
and form reasonably satisfactory to WPHC, which may include providing a surety
bond to which the lien is transferred and providing title insurance coverage
against such liens.
(ao) "Fiscal Year" means the taxable year of the Company for federal
income tax purposes as determined under Code Section 706 and the Regulations
thereunder.
(ap) "Force Majeure" means acts of God, strikes, shortages of labor or
materials, weather conditions or other matters not reasonably within Feld's
control ("Force Majeure"), except that under no circumstances shall lack of
available funds be considered an event of Force Majeure.
(aq) "Gross Operating Revenues" shall mean, with respect to any given
period of time, all gross operating income and rental revenues actually
received by or paid to or for the account of the Company with respect to the
ownership, operation, leasing and occupancy of the Project, excluding tenant
security deposits paid under Leases but including, but not limited to, any and
all of the following: (i) rentals paid by tenants under leases of space in the
Project ("Leases"); (ii) late charges and interest paid by tenants under
Leases; (iii) rents and receipts from vending machines and similar items; (iv)
fees from parking garages or carports, if applicable; and (v) cable television
and telephone revenues.
(ar) "Hazardous Materials" means without limitation, (i) asbestos or any
material composed of or containing asbestos or urea formaldehyde in any form
and in any type; (ii) polychlorinated biphenyl compounds; (iii) oil
hydrocarbons, petroleum, petroleum products or products containing or derived
from petroleum; (iv) any hazardous or toxic waste, substance, material, smoke,
gas or particulate matter, as presently defined by or for purposes of
Environmental Laws.
(as) "Incentive Fee" has the meaning set forth in Section 7.5 hereof.
(at) "Infrastructure" means the interior street improvements, utilities,
landscaping, a perimeter wall and gate, a guardhouse, a recreational center and
amenities, and a park and recreational amenities to be constructed on the
Infrastructure Land, as more particularly described on Exhibit E attached
hereto.
(au) "Infrastructure Costs" means the actual cost of acquiring,
constructing and developing all of the Infrastructure, including without
limitation the cost of the Infrastructure Land, design and engineering costs,
construction management fees, general contractor fees, property taxes on the
Infrastructure Land prior to completion of the Infrastructure, interest expense
on the Infrastructure Land and the Infrastructure at an assumed nine percent
(9.0%) rate of interest for the period prior to the completion of each
applicable phase of the Infrastructure. Infrastructure shall not include the
cost of issuance of bonds to finance the Infrastructure. If all of the
Infrastructure has not been finally completed at the time of determination of
Infrastructure Costs due to phasing of the construction of Infrastructure or
for any other reason, then Infrastructure Costs shall include an amount equal
to the expected amount of Infrastructure Costs upon final completion of the
Infrastructure as reasonably determined by WPHC.
(av) "Infrastructure Land" means the parcel of land on which the
Infrastructure improvements shall be constructed, which parcel is described on
Exhibit F attached hereto.
(aw) "Infrastructure Improvements Agreement" has the meaning set forth in
Section 5.3.3 hereof.
(ax) "Initial Closing" means the closing of the transactions described in
Section 5.1 hereof.
(ay) "Initial Closing Date" means the date on which the Initial Closing
occurs.
(az) "Interest" means the ownership interest of a Member in the Company at
any particular time, including the right of such Member to any and all benefits
to which such member may be entitled as provided in this Agreement or the Act,
together with the obligations of such Member to comply with all the terms and
provisions of this Agreement and the Act. Such Interest of each Member shall,
except as specifically provided herein, be the percentage of the aggregate of
such benefits or obligations specified in this Agreement as such Member's
Percentage Interest.
(ba) "Land" means the parcel of land located in Douglas County, Colorado,
which parcel is described on Exhibit G attached hereto.
(bb) "Land Contract" means that certain Second Amended and Restated Vacant
Land Purchase and Sale Agreement dated March 23, 1995, between Mission Viejo
Company, as Seller, and The Feld Company, as Purchaser, as assigned to and
assumed by WPHC by that certain Assignment and Assumption Agreement - Purchase
Agreement dated May 2, 1995, and that portion of which relating to the Land
will be assigned to and assumed by the Company by that certain Assignment and
Assumption Agreement - Phase II dated May 1, 1996.
(bc) "Majority In Interest" shall mean Members holding a majority of the
Percentage Interests.
(bd) "Managers" shall mean one or more managers. Specifically, "Managers"
shall mean Feld or any other Persons that succeed such Manager in that
capacity. Managers need not be residents of the State of Colorado or Members of
the Company. References to the Manager in the singular or as him, her, it,
itself, or other like references shall also, where the context so requires, be
deemed to include the plural or the masculine or feminine reference, as the
case may be.
(be) "Master Development" means a five-phase, gated apartment community to
be constructed on the Master Development Land, including a central 23-acre park
containing a clubhouse, swimming pool and health club. The approximate
anticipated number of units in each phase of the Master Development is as
follows: Phase I - 456; Phase II - 304; Phase III - 332; Phase IV - 436; and
Phase V - 352, for a total of 1,880 units if fully developed.
(bf) "Master Development Land" means the Land described on Exhibit H
attached hereto, which land is all of the land to be sold and conveyed pursuant
to the Land Contract.
(bg) "Material Default" means a default by Feld in any of its obligations
hereunder which in the reasonable judgment of WPHC has caused or is likely to
cause damages to WPHC of $250,000 or more.
(bh) "Members" shall mean Feld and WPHC and each of the parties who may
hereafter become additional or substituted Members.
(bi) "Minimum Option Price" means $50,000.
(bj) "Multi-Family Project" shall mean an apartment project, condominium
project, town-home project or other multi-family residential project.
(bk) "Net Operating Income" means, with respect to any given period of
time, the aggregate Gross Operating Revenue for such period of time minus the
aggregate Operating Expenses for such period of time. Notwithstanding the
foregoing, in connection with the calculation of the Incentive Fee, Net
Operating Income shall be determined on an accrual basis for the relevant
period with the following additional adjustments: if property taxes do not
fully reflect the completion of the Project, then the property taxes shall be
increased to the amount of property taxes that would have been assessed had the
Project been completed and included in the calculation of the property taxes.
(bl) "Operating Cash Flow" means with respect to any given period the Net
Operating Income of the Company actually received and attributable to such
period reduced by all debt service charges and expenses related to such period
and by expenditures required to be capitalized for federal income tax purposes
incurred during such period (other than Development Costs).
(bm) "Operating Deficits" means, for any specified period beginning no
earlier than (i) six (6) months after the earlier of Substantial Completion of
the multifamily units on Lot 1A, Highlands Ranch Filing No. 126-A First
Amendment ("Phase I"), or (ii) Phase I being 85% leased, the greater of 0 or
the following: (A) the interest payments, accruals and periodic charges and
expenses on the Construction Loan for such period; plus (B) the aggregate
Operating Expenses for such period of time; minus (c) Gross Operating Revenue
for such period of time.
(bn) "Operating Deficit Payments" shall mean the Operating Deficit
Payments to be paid by Feld pursuant to Section 6.4 of this Agreement.
(bo) "Operating Expenses" shall mean with respect to any given period of
time all expenses of the Company in connection with the ownership, operation,
leasing and occupancy of buildings in the Project, which either are rent-ready
or all or any portion of which are occupied by tenants, attributable to such
period of time as determined on an accrual basis, excluding interest payments
and accruals on the Construction Loan but including, but not limited to, any
and all of the following: (i) general real estate taxes; (ii) special
assessments or similar charges; (iii) personal property taxes, if any; (iv)
sales and use taxes applicable to such operating expenses; (v) cost of
utilities for the Project; (vi) maintenance and repair costs of the Project;
(vii) operating and management expenses and fees; (viii) premiums of insurance
carried on or with respect to the Project; (ix) costs, including leasing
commissions, advertisement and promotional costs, to obtain leases and the cost
of work performed to ready space in the Project for occupancy under leases; (x)
accounting and auditing fees and costs, attorneys' fees and other
administrative and general expenses and disbursements of the Company in
connection with the ownership, operation, leasing and management of the
Project; (xi) expensed improvements in accordance with the accounting practices
of WRPT; (xii) an allocable share of the costs and expenses of operating and
maintaining the Infrastructure, excluding such costs and expenses that are paid
by the owner of any other phase of the Master Development or are paid from
operating reserves of the Infrastructure owner established in connection with
the financing of the Infrastructure (the method of allocation of such costs and
expenses shall be agreed upon by the Members at or prior to the Construction
Loan Closing); and (xiii) any other costs, charges or expenses incurred by the
Company which are not Development Costs.
(bp) "Option Closing Date" means the date on which the Call Option or the
Put Option shall close.
(bq) "Option Price" means the greater of the Fair Market Value of Feld's
Interest and the Minimum Option Price.
(br) "Outside Date" means the date that is twenty-eight (28) months
following the closing of the Construction Loan Closing Date. Such Outside Date
may be extended by Force Majeure, but in no event by more than 120 days.
(bs) "Percentage Interest" shall mean the following: (i) with respect to
Feld, one percent (1.0%); and (ii) with respect to WPHC, ninety-nine percent
(99.0%).
(bt) "Person" shall mean any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors, and assigns of
such Person where the context so admits.
(bu) "Plans and Specifications" means the for-construction plans and
specifications for the construction of the Project, which plans and
specifications are to be prepared and approved by the Members as described in
Section 5.2.2 hereof.
(bv) "Pre-Existing Environmental Condition" means the presence, if any, of
Hazardous Materials on or about the Project Land on the Initial Closing Date
which at any subsequent time constitutes a violation of Environmental Laws or
which subjects or is reasonably expected to subject the Company or its Members
or Managers to liability to any Person.
(bw) "Pre-Existing Environmental Condition Liability" means any liability,
loss, damage or cost incurred by the Company prior to the Final Closing Date
arising from a Pre-Existing Environmental Condition, including without
limitation, any increase in Development Costs or Operating Expenses arising
directly from a Pre-Existing Environmental Condition.
(bx) "Profits" and "Losses" for any Fiscal Year or other period means an
amount equal to the Company's taxable income or loss for such year or period
determined in accordance with Code Section 703(a) and the Regulations
thereunder with the following adjustments:
(i) All items of income, gain, loss and deduction of the Company
required to be stated separately shall be included in taxable income or loss;
(ii) Income of the Company exempt from federal income tax shall be
treated as taxable income;
(iii) Expenditures of the Company described in Code Section
705(a)(2)(B) or treated as such expenditures under Regulation Section 1.704-
1(b)(2)(iv)(i) shall be subtracted from taxable income;
(iv) The difference between Basis and Asset Value shall be treated as
gain or loss upon the happening of any event described in Article 1(h)(i), (ii)
or (iii);
(v) Gain or loss resulting from the disposition of Property from
which gain or loss is recognized for federal income tax purposes shall be
determined with reference to the Asset Value of such Property;
(vi) Depreciation shall be determined based upon Asset Value instead
of as determined for federal income tax purposes; and
(vii) Items which are specially allocated under Article 9 of this
Agreement shall not be taken into account.
(by) "Project" means the 304-unit apartment complex and related facilities
and amenities to be constructed on the Project Land in accordance with the
Plans and Specifications. Project does not include the Infrastructure.
(bz) "Project Budget" means the budget for construction and development of
the Project by the Company. An "Initial Project Budget is attached hereto as
Exhibit I. As described in Section 5.2.3 hereof, in connection with the
Construction Loan Closing, the Members shall agree upon the "Final Project
Budget."
(ca) "Project Land" means the Land, excluding the Infrastructure Land.
(cb) "Property" means all real and personal property, tangible and
intangible, owned by the Company.
(cc) "Property Management Agreement" means the Property Management
Agreement to be entered into between the Company and The Feld Company, an
Affiliate of Feld, in the form attached hereto as Exhibit J. The Property
Management Agreement provides that it shall terminate on the first to occur of
the following: (i) at the option of either party, upon the Removal of Feld;
and (ii) after the Final Closing Date, upon 30 days' written notice of
termination from one party to the other.
(cd) "Put Option" means the put option of Feld with respect to the
Interest of Feld as described in Section 16.2.2 hereof.
(ce) "Regulations" means the federal income tax regulations, including
temporary (but not proposed) regulations, promulgated under the Code.
(cf) "Removal" means the removal of Feld pursuant to Section 12.12 hereof.
(cg) "Removal Event" has the meaning set forth in Section 12.12 hereof.
(ch) "Restricted Party" has the meaning set forth in Section 14.6.4
hereof.
(ci) "Sales or Refinancing Cash Flow" means, for any given period, the
cash proceeds received from the Company from the sale, other disposition, or
refinancing of any or all of the Property (including payments of principal and
interest on obligations received by the Company in connection with such sale or
other disposition) in excess of amounts necessary to discharge Company
obligations with respect to such Property.
(cj) "Substantial Completion" means satisfaction of all of the following:
(i) completion of construction of the Project in compliance with the Plans and
Specifications (subject only to minor and inconsequential field changes and
other changes consented to by WPHC, punch list items and seasonal items such as
landscaping which do not interfere with the occupancy and use of the Project,
and liens of subcontractors, materialmen, and other providers of labor,
equipment, material and/or services to the Property and the Project not yet due
and payable or for which either a surety bond or title insurance reasonably
acceptable to WPHC is provided by Feld), as evidenced by temporary or permanent
certificate(s) of occupancy, or the equivalent, issued by the applicable
governmental authority for all buildings which are part of the Project, which
permit the occupancy and use of all the apartment units; and (ii) each unit in
the Project having been made rent-ready, including, without limitation, the
installation of all appliances (including, without limitation, refrigerators
and ranges), light fixtures, floor coverings and window coverings required by
the Plans and Specifications or otherwise required for the use, occupancy, and
operation of the units.
(ck) "Substitute Member" shall mean any Person who or which is admitted to
the Company as a substitute Member pursuant to Colo. Rev. Stat. Section 7-80-
702(2) (1991), as it may be amended.
(cl) "Total Budgeted Development Costs" means the Total Development Costs
as shown on the Final Project Budget.
(cm) "WRPT" means Wellsford Residential Property Trust, a Maryland real
estate investment trust, which is an Affiliate of WPHC.
(cn) "WPHC" means Wellsford Park Highlands Corp., a Colorado corporation.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. On April 17, 1996, the parties hereto organized the
Company as a Colorado limited liability company under and pursuant to the Act.
2.2 Name. The name of the Company is Red Canyon at Palomino Park LLC, a
Colorado limited liability company.
2.3 Principal Place of Business. The principal place of business of the
Company within the State of Colorado shall be 370 Seventeenth Street, Suite
3100, Denver, Colorado 80202. The Company may locate its places of business
and registered office at any other place or places as the Managers may from
time to time deem advisable.
2.4 Registered Office and Registered Agent. The Company's registered
office shall be at the office of its registered agent at 370 Seventeenth
Street, Suite 3100, Denver, Colorado 80202 and the name of its initial
registered agent at such address shall be Wellsford Park Highlands Corp., a
Colorado corporation. The registered agent shall provide promptly to the
Managers copies of all written notices, summonses and other documents received
by the registered agent on behalf of the corporation (other than general
advertising and promotional materials) and, in any event, such copies shall be
provided not more than ten (10) business days after receipt thereof by such
registered agent. The Managers shall have no liability for the effects of any
failure by the registered agent to timely deliver any such items to the
Managers except to the extent the Managers had actual notice of such items
prior to delivery by the registered agent. In any contracts, subcontracts,
loan agreements or other documents entered into by the Company, the Managers
shall provide that the addresses for notice to be given under any such
agreements shall include both the registered agent and the Managers.
2.5 Articles of Organization. The Articles of Organization are hereby
adopted and incorporated by reference into this Agreement. In the event of any
inconsistency between the Articles of Organization and this Agreement, the
terms of the Articles of Organization shall govern.
2.6 Term. The term of the Company shall be thirty (30) years from the
date of filing of Articles of Organization with the Secretary of State of the
State of Colorado, unless the Company is earlier dissolved in accordance with
either the provisions of this Agreement or the Act.
ARTICLE 3
BUSINESS OF COMPANY
3.1 Permitted Businesses. The business of the Company shall be:
3.1.1 To acquire the Land and to construct, develop, own,
operate, manage, lease, finance, improve and sell or otherwise dispose of the
Project; and
3.1.2 To engage in all activities necessary, customary,
convenient, or incidental to any of the foregoing.
3.2 Other Activity or Business. The Company shall not engage in any
other activity or business unless approved by all Members.
ARTICLE 4
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND LOANS TO THE COMPANY
4.1 Capital Contributions. Subject to the provisions of this Agreement,
the Members shall be obligated to make the following Capital Contributions to
the Company:
4.1.1 Capital Contributions by Feld. At the Initial Closing, Feld
shall make a Capital Contribution of $1,000.
4.1.2 Capital Contributions by WPHC. WPHC shall make the following
Capital Contributions:
(a) At the Initial Closing, WPHC shall make a Capital
Contribution in the amount of approximately $2,123,113, which the Company shall
use to fund the acquisition of the Land.
(b) At the Final Closing and contingent on satisfaction of all
of the Final Closing Funding Conditions, WPHC shall make the Final Closing
Capital Contribution in an amount equal to the following: (i) the Total
Budgeted Development Costs, minus (ii) any Capital Contributions made prior to
the Final Closing Date by WPHC, plus (iii) any distributions made to WPHC
pursuant to Section 10.3 hereof, minus (iv) an amount equal to twenty-five
percent (25%) of Cost Savings, if any.
WRPT shall guaranty the obligation of WPHC to make the Final Closing Capital
Contribution by executing the Guaranty attached hereto.
4.2 Withdrawal or Reduction of Members' Contributions to Capital.
4.2.1 A Member shall not receive out of the Company's Property any
part of such Member's Capital Contributions in violation of the Act.
4.2.2 A Member, irrespective of the nature of such Member's Capital
Contribution, has the right to demand and receive only cash in return for such
Member's Capital Contribution and then only in accordance with the terms of
this Agreement.
4.3 Development Deficit Payments. Feld shall have the obligation to make
Development Deficit Payments when and as required under Article 6 of this
Agreement.
4.4 Operating Deficit Payments. Feld shall have the obligation to make
Operating Deficit Payments when and as required under Article 6 of this
Agreement.
4.5 Additional Capital Contributions. Except as expressly described in
this Article 4, no Member has an obligation to make any Capital Contributions
or loans or advances to the Company.
4.6 Miscellaneous.
4.6.1 No Interest on Capital Contribution. No Member shall be
entitled to or shall receive interest on such Member's Capital Contribution.
4.6.2 No Withdrawal of Capital Contribution. No Member may withdraw
any capital from the capital of the Company except as expressly provided herein
or under the Act.
4.6.3 No Priority of Return of Capital Contribution. No Member
shall have any priority over any other Member with respect to the return of any
Capital Contribution, except as expressly provided herein.
4.6.4 No Third Party Beneficiaries. The provisions of this Article
4 are not intended to be for the benefit of and shall not confer any rights on
any creditor or other Person (other than a Member in such Member's capacity as
a Member) to whom any debts, liabilities or obligations are owed by the Company
or any of the Members.
ARTICLE 5
INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;
CONSTRUCTION LOAN CLOSING
5.1 Initial Closing. The Members of the Company shall cooperate to cause
an Initial Closing at which the following shall occur:
5.1.1 Land Closing. The Company shall acquire the Land pursuant to
the Land Contract to be partially assigned to the Company. The Company shall
obtain an Owner's Policy of Title Insurance from a title insurer acceptable to
the Members (the "Title Company") in accordance with the terms of the Land
Contract.
5.1.2 Reimbursement of Feld Expenses. At the Initial Closing, the
Company shall reimburse Feld and its Affiliates for those costs and expenses
incurred by Feld and its Affiliates as set forth on Exhibit A attached hereto
and for accrued pre-development costs incurred by Feld on or prior to the
Initial Closing for which Feld has not previously been billed ("Reimbursable
Expenses"). Feld represents and warrants that such Exhibit A and additional
invoices and schedules to be provided by Feld with respect to the balance of
the Reimbursable Expenses set forth and shall set forth the costs and expenses
actually incurred by Feld in connection with the Project. Notwithstanding
anything to the contrary herein, only those Reimbursable Expenses which
constitute actual, third party costs of Feld shall be paid at the Initial
Closing. Any Reimbursable Expenses for in-house architectural services or
other services provided by Feld or The Feld Company ("In House Reimbursable
Expenses") shall be paid only if and when a Construction Loan Closing occurs.
In connection with any request for the payment of In House Reimbursable
Expenses, Feld shall submit to WPHC for approval the following: (i) detailed
invoices setting forth the services performed and work delivered by Feld and
its Affiliates; and (ii) receipts, releases and documents of transfer and
conveyance in connection with the work performed and services provided as may
be reasonably requested by WPHC. The payment of any In House Reimbursable
Expenses shall be subject to the approval of WPHC, which approval shall not be
unreasonably withheld. If Feld is removed or withdraws as a Member and a
Construction Loan Closing has not occurred by the date of such removal or
withdrawal, then the Company shall have no obligation to pay Feld, The Feld
Company or their Affiliates for any In House Reimbursable Expenses. Except as
set forth in this Section 5.1.2, neither Feld nor The Feld Company shall have
any right of reimbursement from the Company with respect to any other costs and
expenses incurred in connection with the Project prior to the Initial Closing
Date.
5.1.3 Approval of Land Documents. The Company shall not proceed
with the Initial Closing unless and until the form of documents related to the
closing of the acquisition of the Land have been approved by all the Members.
5.1.4 Pledge of Interest.
5.1.4.1 As collateral for the performance by Feld of its
obligations under this Agreement, at the Initial Closing Feld shall execute a
Pledge and Security Agreement in the form of Exhibit L attached hereto, wherein
Feld grants WPHC a first lien security interest in Feld's Interest in the
Company and in Feld's right to receive all fees, payments and distributions
from the Company. Any uncured default under this Agreement shall constitute an
Event of Default (as such term is defined in said Pledge and Security
Agreement) under said Pledge and Security Agreement, and any Event of Default
under said Pledge and Security Agreement shall be a default under this
Agreement.
5.1.4.2 As collateral for the performance by WPHC of their
obligations to make Capital Contributions as required under this Agreement, at
the Initial Closing WPHC shall execute a Pledge and Security Agreement in the
form of Exhibit M attached hereto, wherein it grants Feld a first lien security
interest in its Interest in the Company and in its right to receive all fees,
payments and distributions from the Company. Any uncured default under this
Agreement shall constitute an Event of Default (as such term is defined in said
Pledge and Security Agreement) under said Pledge and Security Agreement, and
any Event of Default under said Pledge and Security Agreement shall be a
default under this Agreement.
5.2 Construction Procedures and Closing.
5.2.1 Predevelopment Activities.
5.2.1.1 Feld shall pursue, with reasonable diligence and
subject to the reasonable direction of WPHC, all approvals required to commence
construction of the Project. Subject to the input and approval of WPHC, Feld
shall develop appropriate site plans and other plans as may be required to
obtain such approvals. Feld shall not submit any proposed plans or other
materials to any governmental agency without the prior approval of WPHC. In
addition, Feld shall not incur any third party expense without the prior
approval of WPHC. WPHC agrees to reasonably cooperate with Feld in obtaining
the Approvals, which cooperation shall include, without limitation, prompt
review of any matters submitted to WPHC and prompt response to Feld in
connection with any matters submitted to WPHC. Copies of all reports, studies
and other information and material generated for or on behalf of Feld in
connection with its review and evaluation of the Property shall promptly be
delivered to WPHC, including, without limitation, the full text of all
drawings, reports and memoranda supplied by engineers and other consultants and
any memoranda of discussions with governmental officials and neighborhood
groups.
5.2.1.2 Feld shall prepare and submit to WPHC for a approval a
pre-development budget for the activities of the Company prior to the
Construction Loan Closing Date. If and when WPHC approves in writing a pre-
development budget, Feld shall be authorized to incur costs in accordance with
such pre-development budget and WPHC shall be obligated to fund such approved
pre-development budget.
5.2.2 Plans and Specifications. Prior to the Construction Loan
Closing and after consultation with WPHC, Feld shall cause to be prepared
detailed construction Plans and Specifications for the Project, and shall
submit such Plans and Specifications to WPHC for approval. If and when WPHC
approves the Plans and Specifications, the Members shall initial a description
of the Plans and Specifications and attach the description to this Agreement as
Exhibit N.
5.2.3 Project Budget. Prior to the Construction Loan Closing and
after consultation with WPHC, Feld shall cause to be prepared a revised Project
Budget based on the approved Plans and Specifications, and shall submit such
Project Budget to WPHC for approval. If and when WPHC approves the revised
Project Budget, the Members shall initial such Project Budget and attach it to
this Agreement as Exhibit O. Upon approval, such revised Project Budget shall
for all purposes be the "Final Project Budget."
5.2.4 Obtaining a Construction Loan. Feld shall use its best
efforts to cause the Company to obtain a Construction Loan for construction of
the Project on terms and from a Construction Lender acceptable to the Members,
including, but not limited to, the following: (a) the Construction Loan amount
must be sufficient to reimburse WPHC at the Construction Loan Closing for the
acquisition cost of the Project Land and any advances it made to the Company
for predevelopment activities; (b) the interest rate shall be a variable rate
equal to LIBOR plus a spread reasonably acceptable to the Members; (c) the
Construction Loan Closing must take place on or before October 31, 1996,
provided, however, such date shall be extended to a date not later than
December 31, 1996, if Feld is diligently pursuing his obligations and if the
delay is not attributable to a default by Feld (such date as it may be extended
is referred to herein as the "Construction Loan Outside Date"); (d) Feld shall
personally guarantee the Construction Loan if required by the Construction
Lender; (e) the Construction Loan shall have a maturity date of at least
twenty-eight (28) months from the date of the Construction Loan Closing; and
(f) the other terms shall be reasonably acceptable to WPHC.
5.2.5 Construction Loan Documents. The Company shall not proceed
with the Construction Loan Closing unless and until the form of documents
related to the Construction Loan and the Tri-Party Agreement (as defined in
Section 5.2.8 below) have been approved by all the Members. There shall be no
modification to the Construction Loan documents without the prior written
approval of all Members.
5.2.6 Approved Affiliate Agreements. On or prior to the
Construction Loan Closing Date and only with the approval of all of the
Members, the Company shall enter into (a) a construction management agreement
with Tricor Construction Company, an Affiliate of Feld ("Contractor"), (b) a
construction contract with Contractor, and (c) the Architect's Agreement with
Architect. Except for a reasonable fee to be paid pursuant to the Architect's
Agreement with the approval of WPHC, no fees or other compensation, profit or
cost savings shall be paid to Contractor under such agreements except the fees
provided for in Article 7 below. The Company hereby agrees that Contractor may
enter into a landscape design contract and an interior design contract with
Architect, and all subcontracts entered into by Contractor and/or Architect
shall be included in the Final Project Budget, but such subcontracts shall
provide for the subcontractor to look only to Contractor or Architect, as
applicable, for payment under the subcontracts. Fees or other profit,
compensation or sharing of cost savings under such subcontracts shall not
exceed the amount a prudent owner would pay in a bona fide arm's length
transaction after obtaining competitive bids. The agreements described in this
Section 5.2.6, together with the Property Management Agreement, are hereinafter
called the "Approved Affiliate Agreements." Neither Feld nor Contractor nor
Architect shall enter into any other agreements with parties affiliated with
Feld without specific disclosure to all Members in writing of such affiliation
and without prior written consent of all the Members in each instance. In the
event of any conflict between this Agreement and such Approved Affiliate
Agreements, this Agreement shall control. In the event of an uncured default
by Feld under this Agreement, the Approved Affiliate Agreements may be
terminated at the option of WPHC. Any default by Feld under any Approved
Affiliate Agreement which is not timely cured shall be a default hereunder.
There shall be no modification to the Approved Affiliate Agreements without the
prior written approval of all Members. Each Approved Affiliate Agreement shall
provide that the Company shall have the right to terminate such agreement upon
the Removal of Feld without such termination constituting a default.
5.2.7 Feld Guarantee. Feld shall personally guarantee to the
Construction Lender the payment and performance of all obligations of the
Company under the Construction Loan, subject to such limitations on liability
of Feld and guaranty termination provisions as are acceptable to the
Construction Lender.
5.2.8 Tri-Party Agreement. At the Construction Loan Closing, the
Company, the Construction Lender and WRPT shall enter into a Tri-Party
Agreement containing the following principal terms: (a) if the Construction
Loan has not been paid in full by its maturity date, the Construction Lender
shall have the right to require that WRPT purchase the Construction Loan from
the Lender, or at WRPT's option, cause the Construction Loan to be repaid; (b)
the obligation of WRPT under the Tri-Party Agreement shall be conditioned on
timely satisfaction of all of the Final Closing Funding Conditions; and (c) the
purchase price for the Construction Loan shall equal the lesser of the
outstanding balance of the Construction Loan, including accrued interest,
principal and other amounts due thereunder or the amount of the Final Closing
Capital Contribution.
5.2.9 Property Management Agreement. At the Construction Loan
Closing, the Company shall enter into the Property Management Agreement with
The Feld Company, an Affiliate of Feld.
5.3 Infrastructure Land Closing and Bond Financing of Infrastructure. It
is the intent of the Members that the Infrastructure Land be acquired and
developed by Palomino Park Public Improvements Corporation, a Colorado non-
profit corporation ("PPPIC"), which has financed acquisition and development
and certain land and Infrastructure improvements through the issuance of tax-
exempt bonds (the "Bonds").
5.3.1 Subdivision of the Land; Sale of the Infrastructure Land.
After the date hereof and prior to the Construction Loan Closing, unless WPHC
otherwise agrees, Feld shall cause the Company to use all reasonable efforts to
effect the legal subdivision of the Land into two legally separate parcels.
One parcel shall comprise the Infrastructure Land, and one parcel shall
comprise the Project Land. At or prior to the Construction Loan Closing, the
Company shall sell the Infrastructure Land and any improvements located thereon
to PPPIC for a purchase price designated by WPHC and on terms designated by
WPHC.
5.3.2 Control Over Matters Related to Infrastructure and Bonds.
Notwithstanding anything to the contrary herein, WPHC shall have sole and
exclusive control over all decisions of the Company relating to the Bonds, to
the subdivision and sale of the Infrastructure Land and to the financing,
construction, use and development of the Infrastructure. In order to procure
for the Project the benefits of the use and enjoyment of the Infrastructure to
be constructed by PPPIC, the Company shall enter into such agreements with
PPPIC as WPHC may require, in form and content acceptable to WPHC in its sole
discretion, providing, among other things, for the encumbering of the Land by
liens securing payment of the Bonds, operation and maintenance of the
Infrastructure and satisfaction of certain indemnification obligations
undertaken by PPPIC with respect to the Infrastructure.
5.3.3 Construction of Infrastructure. An Affiliate of Feld, has
entered into one or more agreements and may enter into additional agreements
(collectively, the "Infrastructure Improvements Agreement") with PPPIC (or its
contractor) to construct the Infrastructure for a guaranteed maximum price,
including a fee to Feld not to exceed three percent (3%) of the hard costs of
construction of the Infrastructure. A default by Feld in the performance of
its obligations under that contract not cured within any applicable cure period
shall constitute a default under this Agreement. WPHC may in its discretion
cause the phasing of the construction of the Infrastructure Improvements. An
initial budget for the costs of acquisition and development of the
Infrastructure is attached hereto as Exhibit T.
5.4 Failure of Initial Closing or Construction Loan Closing to Occur.
Feld covenants to cause the Initial Closing to occur by May 2, 1996 and the
Construction Loan Closing to occur by the Construction Loan Outside Date. If
for any reason the Initial Closing has not occurred by May 2, 1996, or the
Construction Loan Closing has not occurred by the Construction Loan Outside
Date, then WPHC shall have the right to remove Feld as a Member and Manager of
the Company in accordance with the provisions of Section 12.12.
ARTICLE 6
DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE
FINAL CLOSING DATE
6.1 Duties of Feld. Feld shall have the authority, duty and the
obligation to:
6.1.1 act on behalf of the Company in relation with any governmental
agency or authority, the Construction Lender, and all contractors and
subcontractors with respect to all matters relating to the construction and
development of the Project;
6.1.2 use its best efforts to cause the Company to obtain a
commitment for the Construction Loan on terms and conditions acceptable to all
the Members and satisfy the conditions for the Construction Loan Closing;
6.1.3 coordinate with Architect the preparation of the Plans and
Specifications, ensure that the Plans and Specifications are in compliance
with all applicable codes, laws, ordinances, rules and regulations, and
recommend alternative solutions whenever design details affect construction
feasibility or schedules;
6.1.4 negotiate all necessary contracts and subcontracts for the
construction of the Project and monitor disbursement and payment of amounts
owed the Architect, Contractor and subcontractors;
6.1.5 choose the products and materials necessary to equip the
Project in a manner which satisfies all requirements of the Construction Lender
and the Plans and Specifications;
6.1.6 secure all building code approvals and obtain certificates of
occupancy for all of the apartment units of the Project;
6.1.7 cause the Project to be commenced not more than thirty (30)
days after the Construction Loan Closing, or by such earlier date as may be
required under the Construction Loan documents, and completed in a prompt and
expeditious manner, consistent with good workmanship, and in compliance,
without any material deviation, with the following:
(a) the Plans and Specifications as they may be amended in
accordance with the terms of this Agreement;
(b) any and all zoning regulations, county ordinances,
including health, fire and safety regulations, and any other requirements of
federal, state and local laws, rules, regulations and ordinances applicable to
construction of the Project;
6.1.8 cause to be performed in a diligent and efficient manner the
following:
(a) construction of the Project pursuant to and in accordance,
without any material deviation, with the Plans and Specifications, free and
clear (except as otherwise permitted herein) of all mechanics and materialmen's
liens; and
(b) general administration and supervision of construction of
the Project, including but not limited to activities of subcontractors and
their employees and agents, and others employed as to the Project in a manner
which complies in all material respects with the Construction Loan, the Plans
and Specifications and the Construction Procedures;
6.1.9 keep, or cause to be kept, accounts and cost records as to the
construction of the Project and make available to WPHC, during normal business
hours copies of all material contracts and subcontracts;
6.1.10 provide regular monitoring, and periodically (at least
monthly, or more often if requested by any Member) update the Project
construction time schedule and summarize potential variances between scheduled
and probable completion dates, the schedule for work not started or incomplete;
6.1.11 revise and refine the approved estimate of Development Costs,
incorporate changes as they occur, and develop cash flow reports and forecasts
as needed;
6.1.12 develop and implement a system for review and processing of
change orders as to construction of the Project;
6.1.13 develop and implement a procedure for the review and
processing of applications by subcontractors for progress and final payments;
and
6.1.14 record the progress of the Project and submit written
progress reports to WPHC, including the percentage of completion and the number
and amounts of change orders.
6.2 Construction Completion. Feld hereby unconditionally covenants and
warrants as follows: (i) the Project shall be constructed in a good and
workmanlike manner and all work shall be performed in accordance with the terms
of Section 6.11 hereof; (ii) Feld shall fully and timely perform all of its
other obligations under this Agreement; and (iii) subject to Force Majeure, it
shall cause (a) Substantial Completion of the Project to occur within twenty-
one (21) months after the Construction Loan Closing Date; (b) Final Completion
to occur within twenty-four (24) months after the Construction Loan Closing
Date; and (c) all Final Closing Funding Conditions shall be satisfied prior to
the Outside Date.
6.3 Development Deficit Guaranty. Feld hereby guarantees Feld shall
advance to or for the account of the Company amounts equal to all Development
Deficits at such time as such Development Deficits occur ("Development Deficit
Payments"). Feld shall make Development Deficit Payments required of him by
the earlier of (A) the date required to avoid a default under Company
obligations, including without limitation the Construction Loan, and (B) the
date required to keep all sources of funding for the Project "in balance" as
adequate sources of funds to timely cause Final Completion of the Project and
satisfaction of other obligations of the Company. In any event, all
Development Deficits shall be paid by Feld in full prior to the Final Closing
Date. All Development Deficit Payments made to the Company shall be non-
reimbursable payments, and Feld shall not be entitled to any repayment from the
Company (unless advances of the Construction Loan are later available to
reimburse Feld for the same), and the Capital Account of Feld shall not be
affected by any Deficit Payments made by Feld. Without limiting the generality
of the foregoing, Feld shall not be entitled to reimburse himself for any
Development Deficits.
6.4 Operating Deficit Guaranty. Feld hereby guarantees Feld shall
advance to or for the account of the Company amounts equal to all Operating
Deficits, at such time as such Operating Deficits occur ("Operating Deficit
Payments"). Feld shall make Operating Deficit Payments required of him by the
date required to avoid a default under Company obligations, including without
limitation the Construction Loan and obligations to trade creditors. In any
event, all Operating Deficits shall be paid by Feld in full prior to the Final
Closing Date. All Operating Deficit Payments made to the Company shall be
non-reimbursable payments, except to the extent that, subsequent to the making
of any such Operating Deficit Payment by Feld, there is sufficient Net
Operating Income prior to the earliest of the Final Closing Date, the Outside
Date or the date of the Removal of Feld by WPHC to reimburse Feld for the same.
In no event, shall the Capital Account of Feld be affected by any Operating
Deficit Payments made by Feld. Notwithstanding anything to the contrary
herein, upon the Removal of Feld, Feld shall not have any obligation hereunder
to fund Operating Deficits incurred after the date of his Removal.
6.5 Liabilities of the Company. Feld covenants that by the earlier of
the Final Closing Date or the Outside Date, provided WPHC has satisfied its
obligation to make the Final Closing Capital Contribution, Feld shall cause the
Company to have no unsatisfied debts or liabilities other than obligations
under service contracts and other agreements relating to the Project permitted
by this Agreement related to the period after the Final Closing, or related to
the period prior to the Final Closing if adequate cash reserves are held by the
Company to pay such liabilities.
6.6 Construction Contracts. Feld shall obtain and the Company shall
enter into such contracts, agreements or obligations, as are necessary to
construct and develop the Project. Feld shall not, without the consent of
WPHC, which consent shall not be unreasonably withheld, do or permit to be done
any of the following:
6.6.1 Enter into or cause the Company to enter into any other
primary contract relating to the construction of the Project; and
6.6.2 Amend or modify any Approved Affiliate Agreements.
6.7 Administration of the Construction Loan. Feld shall administer the
Construction Loan on behalf of the Company and in accordance with the
Construction Procedures. The Company shall engage the Construction Consultant
to monitor the progress of construction of the Project and to review draw
requests on behalf of WPHC. Feld shall cooperate with the Construction
Consultant and shall provide access to the Construction Consultant for
inspection of the construction work of the Project as it progresses. Feld
shall approve and submit Construction Loan draw requests to the Construction
Lender on behalf of the Company, which requests shall be accompanied by those
items of information required by the Construction Lender and the Title Company.
Copies of all draw requests and of the monthly construction ledger shall be
delivered to WPHC simultaneously with delivery to the Construction Lender. If
the Construction Consultant determines that a draw request is not justified on
a percentage of completion basis and the draw would result in construction
funding being out of balance by an amount in excess of $250,000, WPHC shall
have the right to disapprove such draw request in its sole discretion unless
Feld modifies such draw request to correspond to percentage of completion
and/or makes a Development Deficit Payment such that the Construction Loan
shall not be out of balance by more than $250,000. After any such disapproval
of a draw request by WPHC, all subsequent draw requests shall require the prior
approval of WPHC unless and until such right to prior approval is waived in
writing by WPHC.
6.8 Change Orders. No change orders with respect to the Plans and
Specifications may be made without the prior written consent of WPHC, except
that Feld shall have the right to approve minor change orders which comply with
the Construction Procedures, do not have a material adverse effect on the
Project, do not increase Total Development Costs, do not reduce the amount
available from the Construction Loan for payment of interest on the
Construction Loan, and do not exceed $10,000 as to any one change order or
$250,000 in the aggregate. Unless expressly approved in writing by all
Members, no change order shall be permitted or approved that would cause total
Development Costs to exceed Total Budgeted Development Costs.
6.9 Retainage. Feld shall cause all agreements with contractors and
subcontractors to provide for retainages at levels acceptable to Construction
Lender and the release of retainages as set forth in the Construction Loan
documents as executed at the Construction Loan Closing.
6.10 Agreements with Affiliates. Feld shall cause the Company to enforce
each Approved Affiliate Agreement to which the Company is a party as would a
prudent manager of a limited liability company, and Feld shall cause each other
Approved Affiliate Agreement to be enforced in a prudent manner and for the
benefit of the Company. Feld hereby agrees, for himself and on behalf of each
Person affiliated with Feld that is a party to an Approved Affiliate Agreement:
(i) in the event of any conflict between this Agreement and any Approved
Affiliate Agreement, this Agreement shall control; (ii) in the event of any
uncured material default by Feld under this Agreement, the Company shall have
the right to terminate any or all of the Approved Affiliate Agreements; (iii)
an uncured default by Feld or any person affiliated with Feld under an Approved
Affiliate Agreement shall constitute a default by Feld under this Agreement;
and (iv) Feld shall defend, indemnify and hold the Company harmless with
respect to the effects of any default by any Person affiliated with Feld under
such Approved Affiliate Agreements, including, without limitation, any
mechanics liens with respect to claims under any Approved Affiliate Agreements.
6.11 Warranty by Feld. If, within one (1) year after the date of Final
Completion of the Project, any of the structural or non-structural work
performed to construct the Project is found to be materially defective or not
in accordance in all material respects with the Plans and Specifications and
with all applicable building codes, laws, rules and regulations, Feld shall
correct or shall cause the construction contractor to correct such defect
promptly after receipt of written notice from WPHC to do so, unless WPHC has
previously given Feld specific written acceptance of such defective condition.
With respect to portions of the work first performed after Final Completion,
this period of one (1) year shall be extended by the period of time between
Final Completion and the actual performance of the work. The obligation under
this Section shall survive acceptance of the work performed to construct the
Project. WPHC shall give such notice promptly after discovery of the
condition. In the event a material defect is discovered more than one (1) year
after the date of Final Completion, as such period may be extended under this
Section 6.11, and such defect was known to Feld or a Person affiliated with
Feld and was not disclosed to WPHC or was intentionally concealed by Feld or
such affiliated Person, then Feld shall promptly take such action as may be
necessary at Feld's sole expense to correct such defective work. WPHC shall
report to Feld within thirty (30) days after discovery any such defective
condition discovered more than one (1) year after Final Completion, as such
period may be extended under this Section 6.11. Nothing contained herein shall
require Feld to correct defective work that is discovered more than three (3)
years following Final Completion, as such period may be extended under this
Section 6.11.
6.12 Insurance. Feld shall at all times keep in force the following
policies of insurance naming the Company as the insured:
6.12.1 During the construction period (which ends on the date a
certificate of occupancy for each building comprising the Project is issued),
"Builder's Risk" insurance as required by the holder(s) of the Construction
Loan;
6.12.2 After issuance of a certificate of occupancy for each
building comprising the Project, all risk property and, if applicable, boiler
and machinery insurance against loss or damage to the Property or the Project
(including contents) including but not limited to fire and extended coverage
perils (but excluding flood and earthquake unless either or both are required
by the Construction Lender) as WPHC may from time to time require, but in no
event less than one hundred percent (100%) of the full replacement cost of the
Property or the Project without deduction for physical depreciation, or the
unpaid balance of any loans secured by the Property or the Project, whichever
is greater;
6.12.3 After issuance of a certificate of occupancy for each
building comprising the Project, insurance against the loss of "rental value"
of the improvements on a "rented or vacant basis" arising out of the perils
insured against pursuant to Section 6.12.2 above, in any reasonable amount
required by WPHC but in no event less than 100% of one year's gross "rental
value" of the improvements with co-insurance waived. "Rental value" as used
herein is defined as the sum of (A) the total anticipated gross rental income
from tenant occupancy of the Project, (B) the amount of all charges which are
the legal obligation of tenants, and (C) the fair rental value of any portion
of the Project occupied by the Company, if any; and
6.12.4 At all times, (i) commercial general liability insurance in
an amount of not less than Five Million Dollars ($5,000,000) against claims for
personal injury, death or property damage occurring on, in or about the
Property or the Project or arising from or connected with use, conduct or
operation of the Company's business in the amount from time to time required by
WPHC; (ii) automobile liability insurance with a combined single limit of One
Million Dollars ($1,000,000); and (iii) workers compensation coverage with
statutory limits and employers liability insurance with limits of One Million
Dollars ($1,000,000). Any workers compensation insurance shall be accompanied
by a waiver of subrogation from the insurer endorsed on the policy.
All insurance policies and renewals thereof shall be in a form and
issued by insurers acceptable to WPHC and shall provide for deductibles not to
exceed $2,500.00. WPHC and Feld (but only as long as Feld is a Manager and a
Member of the Company) shall each be additional named insureds on all such
policies and renewals. Feld hereby irrevocably appoints WPHC as Feld's
attorney in fact for purposes of endorsing payments, submitting claims and
otherwise dealing with all such insurance and the proceeds thereof in the name,
place and stead of Feld, such power of attorney to take effect immediately upon
withdrawal, Removal or resignation of Feld as Manager of the Company and member
of the LLC, and Feld agrees that such power shall be coupled with an interest
and shall survive the disability or death of Feld. Each policy shall provide
that it will not be modified or canceled without thirty (30) days prior written
notice to WPHC. Feld shall promptly furnish to WPHC all renewal notices and
all receipts of paid premiums. At least thirty (30) days prior to the
expiration date of a policy, Feld shall deliver to WPHC a renewal policy in
form satisfactory to WPHC, together with a receipt showing payment of annual
premiums. Any excess insurance proceeds or refunds of insurance premiums shall
be the property of the Company.
6.13 Personal Obligation. The obligations of Feld under this Agreement
are personal recourse obligations of Feld, as limited by Section 14.1.3 of this
Agreement, for which Feld shall be fully responsible to the Company and WPHC.
6.14 Force Majeure. Feld shall not be liable for delay in performance of
his obligations under this Agreement to the extent such failure or delay
results solely from an event of Force Majeure, and in no event shall any delay
for an event of Force Majeure exceed one hundred twenty (120) days.
6.15 Limitations of Feld's Authority. Anything to the contrary herein
notwithstanding, Feld shall not have the power or authority to do any of the
following without the prior written consent of all the other Members:
6.15.1 to commit any act contrary to the purpose of the Company;
6.15.2 to refinance the Project or incur any indebtedness other than
the Construction Loan;
6.15.3 to enter into any agreements with affiliates of Feld except
as specified above;
6.15.4 to modify the Construction Loan documents or any agreement
with any affiliate of Feld which previously was consented to by the other
Members; or
6.15.5 to sell or dispose of any portion of the Project.
6.16 Pre-Existing Environmental Condition Liability. Feld agrees to
promptly disclose to WPHC in writing if it becomes aware of any Pre-Existing
Environmental Condition Liability. If the Company incurs any Pre-Existing
Environmental Condition Liability, it shall use any available contingency in
the Project Budget or any Cost Savings to satisfy such Pre-Existing
Environmental Condition Liability. If such sources of funds are not adequate
to satisfy the Pre-Existing Environmental Condition Liability, then WPHC shall
make a Capital Contribution to the Company equal to one-half of the amount of
the Pre-Existing Environmental Condition Liability which is then due and Feld
shall make either a Development Deficit Payment or an Operating Deficit Payment
equal to one-half of the amount of such Pre-Existing Environmental Condition
Liability. This provision is solely for the benefit of the members and no
other Person shall have the right to rely on or enforce this provision. A Pre-
Existing Environmental Condition Liability shall not be satisfied from Net
Operating Income.
ARTICLE 7
COMPENSATION TO FELD
In consideration of the performance by Feld of his obligations under
Article 6 of this Agreement, the Company shall pay Feld or his designee the
fees described in this Article 7 at the time, in the manner and subject to the
conditions set forth herein.
7.1 Development Management Fee. Feld shall receive a development
management fee equal to $1,000 per unit. Such development management fee shall
be payable from monthly draws on the Construction Loan, on a percentage of
completion basis as certified by the Construction Consultant.
7.2 Construction Management Fee. Contractor shall receive a construction
management fee under the construction management agreement to be executed at or
before the Construction Loan Closing equal to $2,000 per unit, payable from
monthly draws on the Construction Loan based on percentage of completion as
certified by the Construction Consultant as certified by the Construction
Consultant, minus $49,000. All amounts paid to Contractor under the
construction management agreement described in Section 5.2.6 above shall be
applied against and reduce the amount due under this Section 7.2.
7.3 Construction Loan Guarantee Fee. Feld shall receive a construction
loan guarantee fee equal to 1.0% of the final committed loan amount of the
Construction Loan, payable at the Construction Loan Closing from a draw on the
Construction Loan.
7.4 Cost Savings Fee. The Company shall pay Feld at Final Closing a cost
savings fee equal to twenty-five percent (25%) of cost savings, if any. Feld
shall submit to WPHC a proposed calculation of the amount of the fee to be paid
under this Section 7.4. WPHC shall be entitled, at its sole discretion, to
submit such calculation to the Company's Accountants for verification or
auditing prior to approving such calculation. For a period of twelve (12)
months after the Final Closing Date, each Member shall have the right to cause
the recalculation of the Cost Savings Fee and the post-closing adjustment of
the amount of the Cost Savings Fee, if such Member pays the costs of the
Company's Accountants in making such recalculation and if the amount of the
adjustment is in excess of $5,000. No post-closing adjustment shall be made
for amounts of $5,000 or less or based on a recalculation made more than twelve
(12) months after the Final Closing Date.
7.5 Incentive Fee. Feld shall receive an incentive fee, to be calculated
and paid in accordance with Exhibit P attached hereto.
7.6 Conditions to Payment of Fees; Right of Offset. Each payment of fees
described in this Article 7 shall be conditioned upon there being no uncured
event of default by Feld under this Agreement or any Approved Affiliate
Agreement. In the event of nonpayment of fees due to an uncured default, if
such default is subsequently cured prior to withdrawal, resignation or removal
of Feld as a Member and Manager, then the unpaid fees shall be payable, subject
to all the terms and provisions of this Agreement. All fees except the
Incentive Fee will be included in the Final Project Budget to be approved by
WPHC. With respect to fees payable prior to Final Closing, if the Construction
Loan does not provide a source of funding for such fees, then payment of such
fees shall be deferred until the later of the date(s) the Construction Loan
permits such funding or until the Final Closing. All fees payable to Feld
shall be subject to a right of offset in favor of the Company and WPHC with
respect to any claims or damages they may have against Feld and for any
Development Deficits and Operating Deficits. In the event of the withdrawal,
resignation or Removal of Feld as a Member and Manager prior to the Final
Closing Date, except in the case of Removal of Feld due to Feld failing to
provide a Construction Loan acceptable to all the Members, in which case no
fees shall have been earned by or be due to Feld, Feld shall be entitled to
fees, except the Incentive Fee, fully earned and accrued through the date of
his Removal when and as such fees are otherwise payable pursuant to this
Agreement, subject to the foregoing right of offset and provided that WPHC has
been fully compensated for its out of pocket expenses with respect to the
Project. In no event shall the Removal of Feld accelerate the due date for any
fees earned by Feld during the period prior to his Removal.
ARTICLE 8
FINAL CLOSING
8.1 Conditions to Final Closing. The obligation of WPHC to participate
in the Final Closing shall be conditioned on all of the Final Closing Funding
Conditions being satisfied either prior to the Final Closing or concurrently
with the Final Closing. WPHC shall have the right, but not the obligation, to
waive one or more of the Final Closing Funding Conditions. Any Member shall
have the right to require an escrow closing to effect the Final Closing, and
the other Members shall cooperate with regard to such escrow closing.
8.2 Initiation of Final Closing. Upon ten (10) days prior written notice
from WPHC to Feld, the Final Closing shall be held on the date designated by
WPHC. If WPHC has not designated a date for the Final Closing by the Outside
Date, upon ten (10) days prior written notice from Feld to WPHC, the Final
Closing shall be held, the Final Closing shall be held on the date designated
by Feld, provided such date for the Final Closing designated by Feld shall be
not less than twenty-eight (28) months after the Construction Loan Closing
Date.
8.3 Actions at the Final Closing. Once the date for the Final Closing
has been designated as provided herein and provided that the Final Closing
Funding Conditions have been satisfied by Feld, the Members shall cooperate to
cause a Final Closing at which the following shall occur:
8.3.1 WPHC shall fund its Final Closing Capital Contribution.
8.3.2 The Company shall pay the Construction Loan in full or shall
effect a release of Feld from its guaranty of the Construction Loan.
8.3.3 Any accrued and unpaid fees due to Feld shall be paid,
excluding, however the Incentive Fee.
8.3.4 If either WPHC or Feld has exercised its (his) option under
the Put-Call provisions of Article 16 hereof, the closing of the transfer of
the Interest of Feld to WPHC shall occur.
8.3.5 At the election of WPHC, the responsibility for maintaining
insurance coverage on the Project or any portion thereof may be transferred to
WPHC.
8.4 Certain Rights of Feld Upon Satisfaction of Final Closing Funding
Conditions. At any time after Final Completion and satisfaction of all of the
other Final Closing Funding Conditions but prior to the Outside Date, Feld may
provide WPHC notice that all of the Final Closing Funding Conditions have been
satisfied and that it is prepared to proceed with the Final Closing, which
notice shall be accompanied by all documents necessary to verify that the Final
Closing Funding Conditions have been satisfied. Within fifteen (15) days of
its receipt of its notice, WPHC shall notify Feld of the election of WPHC to do
one of the following by the date that is within forty-five (45) days of WPHC's
receipt of notice from Feld: (the "Release Date"): (i) WPHC shall participate
in the Final Closing and make its Final Closing Capital Contribution; (ii) WPHC
shall cause Feld to be released from its guaranty of the Construction Loan; or
(iii) WPHC shall deliver to Feld an indemnity agreement executed by WRPT,
wherein WRPT agrees to indemnify Feld against any loss or liability it may
suffer as a guarantor of the Construction Loan, provided that such guaranty
shall be subject to a right of offset in favor of WRPT and WPHC with respect to
any liability of WRPT to WPHC arising under this Agreement (the form of such
indemnity agreement shall be reasonably acceptable to Feld). If all of the
Final Closing Funding Conditions have been and remain satisfied on the Release
Date, WPHC shall take the action specified in its notice to Feld.
ARTICLE 9
ALLOCATIONS
9.1 Profits and Losses. Subject to the special allocation provisions in
this Article 9, the Members' distributive shares of the Profits or Losses of
the Company for any Fiscal Year shall be as follows:
9.1.1 Profits. Profits shall be allocated to each Member pro rata
in proportion with such Member's respective Percentage Interest.
9.1.2 Losses. Losses shall be allocated to each Member pro rata in
proportion to such Member's respective Percentage Interest.
9.2 General Provisions.
9.2.1 Except as otherwise provided in this Agreement, the Members'
distributive shares of all items of Company income, gain, loss, and deduction
are the same as their distributive shares of Profits and Losses.
9.2.2 The Managers shall allocate Profits, Losses, and other items
properly allocable to any period using any method permitted by Code Section 706
and the Regulations thereunder.
9.2.3 To the extent permitted by Regulations Section 1.704-2(h) and
Section 1.704-2(i)(6), the Managers shall endeavor to avoid treating
distributions of Operating Cash Flow and of Sales and Refinancing Cash Flow as
being from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt (as defined in Regulation Sections 1.704-2(b)(3) and 1.704-2(b)(4),
respectively).
9.2.4 If there is a change in any Member's Interest in the Company
during a Fiscal Year, each Member's distributive share of Profits or Losses or
any item thereof for such Fiscal Year, shall be determined by any method
prescribed by Code Section 706(d) or the Regulations thereunder that takes into
account the varying Interests of the Members in the Company during such Fiscal
Year.
9.2.5 The Members agree to report their shares of income and loss
for federal income tax purposes in accordance with the provisions of this
Agreement.
9.3 Special Provisions.
9.3.1 Minimum Gain Chargeback. Notwithstanding any other provision
of this Article 9, if there is a net decrease in Partnership Minimum Gain (as
defined in Regulation Section 1.704-2(d)) during any Fiscal Year, then each
Member shall be allocated such amount of income and gain for such year (and
subsequent years, if necessary) determined under and in the manner required by
Regulation Section 1.704-2(f) as is necessary to meet the requirements for a
minimum gain chargeback as provided in that Regulation.
9.3.2 Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Article 9, except Section 9.3.1, if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain (as defined in
accordance with Regulation Section 1.704-2(i)(3)) attributable to a Partner
Nonrecourse Debt (as defined in Regulation Section 1.704-2(b)(4)) during any
Fiscal Year, any Member who has a share of the Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt determined in accordance
with Regulation Section 1.704-2(i)(5), shall be allocated such amount of income
and gain for such year (and subsequent years, if necessary) determined under
and in the manner required by Regulation Section 1.704-2(i)(4) as is necessary
to meet the requirements for a chargeback of Partner Nonrecourse Debt Minimum
Gain as is provided in that Regulation.
9.3.3 Qualified Income Offset. If a Member unexpectedly receives
any adjustment, allocation or distribution described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be
specifically allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 9.3.3 shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit after
all other allocations provided for in Section 9.1 and this Section 9.3 of this
Agreement tentatively have been made as if this Section 9.3.3 were not in this
Agreement.
9.3.4 Limitation on Losses. Notwithstanding anything else contained
in this Agreement, Losses allocated to any Member pursuant to Section 9.1 of
this Agreement shall not exceed the maximum amount of Losses that may be
allocated without causing such Member to have an Adjusted Capital Account
Deficit at the end of the Fiscal Year for which the allocation is made.
9.3.5 Code Section 754 Adjustment. To the extent that an adjustment
to the Basis of any asset pursuant to Code Section 734(b) or Code Section
743(b) is required to be taken into account in determining Capital Accounts as
provided in Regulation Section 1.704-1(b)(2)(iv)(m), the adjustment shall be
treated (if an increase) as an item of gain or (if a decrease) as an item of
loss, and such gain or loss shall be allocated to the Members consistent with
the allocation of the adjustment pursuant to such Regulation.
9.3.6 Nonrecourse Deductions. Nonrecourse Deductions (as determined
under Regulation Section 1.704-2(c)) for any Fiscal Year shall be allocated
among the Members in proportion to their Percentage Interests.
9.3.7 Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions (as defined under Regulation Section 1.704-2(i)(2)) shall be
allocated pursuant to Regulation Section 1.704-2(i) to the Member who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which it
is attributable.
9.3.8 Purpose and Application. The purpose and the intent of the
special allocations provided for in this Section 9.3 are to comply with the
provisions of Regulation Sections 1.704-1(b) and 1.704-2, and such special
allocations are to be made so as to accomplish that result. However, to the
extent possible, the Managers, in allocating items of income, gain, loss, or
deduction among the Members, shall take into account the special allocations in
such a manner that the net amount of allocations to each Member shall be the
same as such Member's distributive share of Profits and Losses would have been
had the events requiring the special allocations not taken place. The Managers
shall apply the provisions of this Section 9.3 in whatever order the Managers
reasonably believe will minimize any economic distortion that otherwise might
result from the application of the special allocations.
9.4 Code Section 704(c) Allocations. Solely for federal, state, and
local income tax purposes and not with respect to determining any Member's
Capital Account, distributive shares of Profits, Losses, other items, or
distributions, a Member's distributive share of income, gain, loss, or
deduction with respect to any Property (other than money) contributed to the
Company, or with respect to any Property the Asset Value of which was adjusted
as provided in Article 1(g)(iii) of this Agreement upon the acquisition of an
additional Interest in the Company by a new Member or existing Member in
exchange for a Capital Contribution, shall be determined in accordance with
Code Section 704(c) and the Regulations thereunder or with the principles of
such provisions.
9.5 Allocations Relating to Taxable Issuance of Interest. Any income,
gain, loss or deduction realized by the Company as a direct or indirect result
of the issuance of an Interest by the Company (the "Issuance Items") shall be
allocated among the Members so that, to the extent possible, the net amount of
such Issuance Items, together with all other allocations under this Agreement
to each Member, shall be equal to the net amount that would have been allocated
to each such Member if the Issuance Items had not been realized.
ARTICLE 10
DISTRIBUTIONS
10.1 Cash Flow. Except when the Company is in the process of dissolution
and winding up as provided in Article 18 of this Agreement and except as
otherwise provided in Section 10.3 hereof, the Managers shall determine and
distribute the Cash Flow on a quarterly basis, less reserves determined by the
Managers for future expenditures, to the Members in accordance with their
respective Percentage Interests. Notwithstanding the foregoing, no
distributions shall be made at or prior to the completion of the Final Closing
without the consent of WPHC.
10.2 Division Among Members. If there is a change in a Member's Interest
in the Company during a Fiscal Year, any distributions thereafter shall be made
so as to take into account the varying Interests of the Members during the
period to which the distribution relates in any manner chosen by the Managers
that is provided in Code Section 706(d) and the Regulations thereunder.
10.3 Special Distribution to WPHC.
10.3.1 Immediately after the Construction Loan Closing, the Company
shall make a distribution to WPHC as a return of its capital in the amount
allowed for such purpose under the terms of the Construction Loan.
10.3.2 Immediately after the closing of the sale of the
Infrastructure Land, the Company shall make a distribution to WPHC as a return
of its capital in the amount of the net proceeds from the sale of the
Infrastructure Land and any related improvements or property.
ARTICLE 11
BOOKS, RECORDS, AND ACCOUNTING
11.1 Books and Records. The Company shall maintain at its principal place
of business books of account that accurately record all items of income and
expenditure relating to the business of the Company and that accurately and
completely disclose the results of the operations of the Company. Such books
of account shall be maintained according to generally accepted accounting
principles consistently applied and, unless otherwise agreed by the Members, on
the basis of the Fiscal Year. Each Member shall have the right to inspect,
copy, and audit the Company's books and records at any time during normal
business hours without notice to any other Member.
11.2 Reports. Within thirty (30) days after the close of each Fiscal
Year, the Managers shall furnish to each Member a copy of the income and loss
statement and of the balance sheet of the Company for such Fiscal Year, and a
statement disclosing all allocations of income, gain, loss, or deduction among
the Members and distributions made by the Company to the Members during such
year. The statements of income and loss and balance sheets to be delivered
hereunder may be unaudited in the sole discretion of WPHC.
11.3 Tax Returns. The Managers shall cause independent certified public
accountants of the Company to prepare and timely file all income tax and other
tax returns of the Company. The Managers shall furnish to each Member a copy
of all such returns together with all schedules thereto and such other
information which each Member may request in connection with such Member's own
tax affairs.
11.4 Special Basis Adjustment. At the request of either the transferor or
transferee in connection with a transfer of an Interest in the Company approved
by the Members pursuant to Article 16 of this Agreement, the Managers shall
cause the Company to make the election provided for in Code Section 754 and
maintain a record of the adjustments to Basis of Property resulting from that
election. Any such transferee shall pay all costs incurred by the Company in
connection with such election and the maintenance of such records.
11.5 Tax Matters Partner.
11.5.1 WPHC is hereby designated the Tax Matters Partner (as defined
in the Code) on behalf of the Company.
11.5.2 Without the unanimous consent of the Members, the Tax Matters
Partner shall have no right to extend the statute of limitations for assessing
or computing any tax liability against the Company or the amount of any Company
tax item.
11.5.3 If the Tax Matters Partner elects to file a petition for
readjustment of any Company tax item (in accordance with Code Section 6226(a))
such petition shall be filed in the United States Tax Court unless the Members
unanimously agree otherwise.
11.5.4 The Tax Matters Partner shall, within ten (10) business days
of receipt thereof, forward to each Member a photocopy of any correspondence
relating to the Company received from the Internal Revenue Service. The Tax
Matters Partner shall, within ten (10) business days thereof, advise each
Member in writing of the substance of any conversation held with any
representative of the Internal Revenue Service and of any petition for
readjustment.
11.5.5 Any reasonable costs incurred by the Tax Matters Partner for
retaining accountants and/or lawyers on behalf of the Company in connection
with any Internal Revenue Service audit of the Company shall be expenses of the
Company. Any accountants and/or lawyers retained by the Company in connection
with any Internal Revenue Service audit of the Company shall be selected by the
Tax Matters Partner and the fees therefor shall be expenses of the Company.
11.6 Bank Accounts. The Managers shall establish and maintain one or more
separate accounts in the name of the Company in one or more federally insured
banking institutions acceptable to all the Members into which shall be
deposited all funds of the Company and from which all Company expenditures and
other disbursements shall be made. At least one such account shall be
maintained at First Interstate Bank. Unless otherwise decided by the Managers,
funds may be withdrawn from such accounts on the signatures of all of the
Managers, collectively and not individually, or such other Person or Persons
that the Managers shall determine, provided, however, that two signatures shall
be required on all checks.
ARTICLE 12
MANAGEMENT
12.1 Management. The business and affairs of the Company shall be managed
by the designated Managers. Subject to the terms and limitations of this
Agreement, the Managers shall direct, manage and control the business of the
Company to the best of such Managers' ability with reasonable diligence and
prudence and, subject to the terms and limitations of this Agreement, shall
have the authority, power and discretion to make any and all decisions and to
do any and all things which the Managers shall deem to be reasonably required
in light of the Company's business and objectives.
12.2 Number, Tenure and Qualifications. The number of Managers of the
Company and the length of the term of each Manager shall be fixed from time to
time by the Members who hold a Majority In Interest. Each Manager shall hold
office until removed pursuant to Section 12.12 hereof or until such Manager's
successor shall have been selected. Managers need not be residents of the
State of Colorado or Members of the Company.
12.3 Appointment of Feld as Manager. Feld is appointed as the Manager to
serve from the date hereof until the earliest to occur of (i) the Final Closing
Date, (ii) his withdrawal or Removal as a Member and Manager, or (iii) the
Outside Date. Notwithstanding the provisions of Section 12.2, Feld shall serve
as Manager for the duration of his initial term unless and until removed in
accordance with the terms of this Agreement.
12.4 Certain Powers of Managers. Without limiting the generality of
Section 12.1, the Managers shall have the power and authority, upon the
unanimous agreement of all Managers, on behalf of the Company:
12.4.1 To cause the Company to develop the Project in accordance
with the Plans and Specifications without any material deviation therefrom;
12.4.2 To purchase liability and other insurance to protect the
Company's Property and business;
12.4.3 To hold and own any and all Company Property on behalf of
and in the name of the Company;
12.4.4 To invest any Company funds temporarily in time deposits
with federally insured financial institutions or short-term United States
governmental obligations;
12.4.5 Subject to the provisions of this Agreement, to employ
accountants, legal counsel, managing agents or other experts to perform
services for the Company and to compensate them from Company funds; and
12.4.6 To do and perform all other acts as may be necessary or
appropriate to the conduct of the Company's ordinary course of business.
Unless authorized to do so by this Agreement or by the Managers of the
Company, no Member, agent, or employee of the Company shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable pecuniarily for any purpose. However, the Managers may act by a duly
authorized attorney-in-fact.
12.5 Member Approval of Certain Acts. The Managers shall have the power
and authority, but only upon the unanimous written consent of all Members, on
behalf of the Company:
12.5.1 to amend or modify any of the documents executed in
connection with the Construction Loan at the Construction Loan Closing or to
waive any rights under such documents;
12.5.2 to borrow money or incur any indebtedness (other than the
Construction Loan) or to grant any liens on any assets of the Company;
12.5.3 to enter into any agreements with affiliates of the
Managers other than the Approved Affiliate Agreements;
12.5.4 to amend or modify the Approved Affiliate Agreements or to
waive any rights thereunder;
12.5.5 except for the Management Agreement, to execute any
agreement which will impose any obligations on the Company which will survive
the Final Closing Date; and
12.5.6 to sell or dispose of any portion of the Project or any
other material assets of the Company.
12.6 Liability for Certain Acts. A Manager of the Company shall perform
such Manager's duties, including duties as a member of any committee upon which
such Manager may serve, in good faith, in a manner such Manager reasonably
believes to be in the best interests of the Company, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances. A Person who so performs such Person's duties shall not have
any liability by reason of being or having been a Manager of the Company except
as otherwise provided in this Agreement. Nothing in this Section 12.6 shall
limit Feld's liability to the other Members to perform its obligations with
respect to the development of the Project, to make Development Deficit Payments
and to perform its other obligations to the other Members arising under this
Agreement.
12.7 Indemnity of the Members and the Managers.
12.7.1 The Company shall indemnify every Member and Manager in
respect to the payments made and personal liabilities reasonably incurred by
that Member or Manager in the ordinary and proper conduct of the Company's
business or property. No indemnification shall be provided if and to the
extent that such liability was incurred based on the breach of this Agreement
by the Manager, his negligence (to the extent not reimbursed by insurance),
fraud or misconduct.
12.7.2 Provided that Feld has fully and timely performed his
obligations under this Agreement, the Company shall indemnify Feld against any
liability he may incur as a result of his guaranty of the Construction Loan;
the Company shall, nevertheless, have a right of offset with respect to all
damages incurred by the Company or any Member resulting from any breach by Feld
of his obligations hereunder, in addition to all other rights and remedies that
the Company and the other Members may have with respect to such breach by Feld.
12.7.3 The indemnification set forth in this Article 12 shall in no
event cause the Members to incur any liability, or result in any liability of
the Members to any third party, beyond those liabilities specifically
enumerated in the Articles of Organization, the Act or this Agreement.
12.8 Manner of Acting. In all actions to be taken by the Managers
pursuant to this Agreement, the unanimous act of the Managers shall be
required.
12.9 Informal Act by Managers. Any action required or permitted to be
taken at a meeting of the Managers or of any committee designated by said
Managers may be taken without a meeting if the action is evidenced by one or
more written consents describing the action taken, signed by each Manager or
committee member, and delivered to the Person having custody of the Company
records for inclusion in the minutes or for filing with the records. Action
taken under this Section 12.9 is effective when all Managers or committee
members have signed the consent, unless the consent specifies a different
effective date. Such consent has the same force and effect as an unanimous
vote of the Managers or committee members and may be stated as such in any
document.
12.10 Participation by Electronic Means. Any Manager or any committee
designated by the Managers may participate in a meeting of the Managers or
committee by means of telephone conference or similar communications equipment
by which all Persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
12.11 Resignation. Feld covenants and agrees to serve as the sole
Manager until the earlier of the Final Closing Date or the Outside Date.
Otherwise, any Manager of the Company may resign at any time by giving written
notice to the Members of the Company. The resignation of any Manager shall
take effect upon receipt of notice thereof or at such later time as shall be
specified in such notice.
12.12 Removal.
12.12.1 Causes for Removal. WPHC shall have the right to remove
Feld as the Manager and as a Member ("Removal") and substitute WPHC as Manager
or appoint a new Manager upon any of the following (a "Removal Event"):
12.12.1.1 If the Initial Closing has not occurred by May 2,
1996;
12.12.1.2 If the Construction Loan Closing has not occurred by
the Construction Loan Closing Outside Date;
12.12.1.3 Delays in construction not caused by Force Majeure
which result in the Project falling behind schedule by six (6) months or more
based on the Construction Schedule approved by the parties prior to the
Construction Loan Closing, or delays in construction, whether or not caused by
Force Majeure which cause WPHC to reasonably conclude that the Project will not
or cannot be completed by the Outside Date;
12.12.1.4 The Project having incurred Development Deficits in
excess of $250,000 which have not been funded by Development Deficit Payments
from Feld within thirty (30) days of notice from WPHC requiring such funding;
12.12.1.5 The Project having incurred any Operating Deficits
which have not been funded by Operating Deficit Payments from Feld within
thirty (30) days of notice from WPHC requiring such funding;
12.12.1.6 The death or disability of Feld;
12.12.1.7 If the Final Closing has not occurred by the Outside
Date;
12.12.1.8 If Feld shall be in Material Default Feld under this
Agreement, and such Material Default is not cured within thirty (30) days after
written notice thereof from WPHC or, if such Material Default cannot be cured
within such 30-day period, Feld does not commence within such thirty (30) days
and diligently proceed to cure such breach and actually completes such cure in
any event within ninety (90) days after such notice; or
12.12.1.9 If any breach or default under the Construction Loan,
which is not caused solely by the act or omission of WPHC, is not cured within
any applicable cure period provided for under the Construction Loan.
12.12.2 Documentation In Connection With Removal. Upon Removal of
Feld, Feld shall cease to have any interest in the Company and Feld shall cease
to be a Member of the Company. Such removal shall be effective without the
necessity of the execution of any documents by Feld. Nevertheless, Feld shall
promptly execute such assignment and transfer documents as WPHC may reasonably
request to evidence the Removal of Feld.
12.12.3 Effect of Removal on Certain Obligations of Feld.
12.12.3.1 If Feld is removed prior to the Construction Loan
Closing Date, he shall have no continuing obligations for the performance of
his obligations under Article 6 after the date of his Removal and no obligation
to perform any continuing covenants set forth in Article 13. Feld shall be
liable, however, for any breach of any representation or warranty which
occurred prior to his Removal.
12.12.3.2 If Feld is removed after the Construction Loan
Closing Date, Feld shall not be released from his ongoing performance
obligations under Sections 6.3 or 6.10 or Article 13 of this Agreement and Feld
shall be liable to WPHC for damages resulting from any breach by Feld of his
obligations arising under Sections 6.1, 6.2, 6.3, 6.6, 6.7, 6.10 or 6.11 or
Article 13 of this Agreement, including without limitation, damages relating to
the period after Feld's Removal, unless such damages arise solely from acts or
omissions of a party other than Feld. WPHC shall have the obligation to make
reasonable efforts to mitigate its damages following a Removal of Feld after
the Construction Loan Closing Date.
12.13 Death or Disability of Feld. Prior to the Construction Loan
Closing, Feld, WPHC and The Feld Company shall execute the "Substitution
Agreement" in the form attached hereto as Exhibit U. The Substitution
Agreement shall include the following principle terms: (i) upon the death or
disability of Feld, at the written request of WPHC, The Feld Company shall
acquire from Feld (or his estate) the entire interest of Feld in the Company,
The Feld Company shall be admitted as the Managing Member, and The Feld Company
shall assume in writing all of the obligations of the Managing Member
hereunder; (ii) Feld (or his estate) shall remain obligated for the performance
of all of the obligations of the Managing Member, whether relating to the
period before or after Feld's Removal; and (iii) if WPHC fails to exercise its
option under this Section 12.13 to cause The Feld Company to be substituted as
the Managing Member within ninety (90) days of the date of Removal, then such
option shall lapse and Feld (or his estate) shall be released from any
obligation hereunder related to the period after his withdrawal in connection
with his death or disability.
12.14 Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by WPHC or a Manager appointed by WPHC.
12.15 Prohibition Against Publicly Traded Partnership. The Manager shall
take all action necessary to prevent the Company from qualifying as a publicly
traded partnership within the meaning of Code Section 7704, including, without
limitation, limiting the number of Members to less than 500 in compliance with
the safe harbor under IRS Notice 88-75.
ARTICLE 13
REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 Representations and Warranties of Each Member. Each Member hereby
represents and warrants as of the date hereof as follows:
13.1.1 Such Member, if other than an individual, is a duly organized
entity under the laws of its state of organization and has the requisite power
and authority to enter into and carry out the terms of this Agreement, and all
required action has been taken to authorize such Member to execute and
consummate this Agreement.
13.1.2 Such Member has been duly authorized to enter into this
Agreement, and such Member is not a foreign person as defined under Code
Section 1445(f)(3).
13.1.3 To the best of such Member's knowledge, neither the execution
of nor the compliance with this Agreement has resulted or will result in a
default under, or will create, any encumbrance on the Property, and there is no
action pending or threatened which questions the validity or enforceability of
this Agreement as to such Member.
13.1.4 The Interests to be acquired hereunder are being acquired by
the Member for investment only and for such Member's own account; no Person
other than the Member has or shall have any beneficial interest in the
Interests; and the Member has no present intention of distributing, reselling
or assigning the Interests.
13.1.5 Such Member understands that the Interests have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), or
under the laws of any jurisdiction; that the Company does not intend and is
under no obligation to so register the Interests; that the Interests may not be
sold, assigned, pledged or otherwise transferred except upon delivery to the
Company of an opinion of counsel satisfactory to the Managers that registration
under the 1933 Act is not required for such transfer, or the submission to the
Managers of such other evidence as may be satisfactory to the Managers, to the
effect that any such transfer will not be in violation of the 1933 Act,
applicable state securities laws or any rule or regulation promulgated
thereunder; and that legends to the foregoing effect will be placed on all
documents evidencing the Interests. The Member understands that the foregoing
does not limit other restrictions regarding the transfer of its Interests set
forth in this Agreement or in the Act.
13.1.6 Such Member, either itself or through its shareholders,
partner or advisors, is sophisticated and experienced in investment matters,
and, as a result, is in a position to evaluate the merits and risks of an
investment in the Company.
13.1.7 Such Member is an "Accredited Investor" as defined in
Regulation D promulgated under the 1933 Act.
13.1.8 Except as may be disclosed in the Environmental Report, each
Member represents that it does not have current actual knowledge of any Pre-
existing Environmental Condition.
13.2 Representations, Warranties and Covenants of Feld. In addition to
the warranties provided for in Article 6 of this Agreement, as of the date
hereof and as of the date of Final Closing, Feld hereby represents, warrants
and covenants to the Company and the Members as follows:
13.2.1 To the best of Feld's knowledge, the Master Development Land
is zoned to permit its use as a matter of right for multi-family residential
use, subject to compliance with statutory requirements regarding obtaining
approval of a site development plan. Under the Land Contract and the closing
documents executed in connection therewith, Mission Viejo Company has
irrevocably allocated the right to build 1880 multi-family residential units on
the Master Development Land.
13.2.2 Feld shall use his best efforts to cause the approval by
Douglas County and any other governmental authority whose approval may be
required of a site development plan for the Land (the "Land Use Approval"),
which approval will permit as a matter of right the construction of a multi-
family project having not less than 304 units on the Project Land.
13.2.3 Feld shall use its best efforts to cause by the earlier of
the Construction Loan Closing Date and the Construction Loan Outside Date, the
County of Douglas to approve the Plans and Specifications for issuance of
building permits for construction of the Project (the "Building Permits") and
to issue all of the Building Permits necessary for construction of the Project.
13.2.4 Feld shall use its best efforts to cause the Company to
obtain prior to the earlier of the starting construction of the Project or the
Construction Loan Outside Date, such permits licenses, waivers, consents,
approvals and authorizations, and Feld will make such material registrations,
qualifications, designations, declarations and filings required (collectively,
the "Approvals") as determined or as may be determined necessary by Feld to the
best of his knowledge so that the Project may be constructed and, subject only
to the issuance of customary temporary or permanent certificates of occupancy
by the County of Douglas and any other necessary operating permits, operated as
a multi-family housing development with related facilities as depicted on the
Plans and Specifications. As of the date hereof, Feld has no reason to believe
such certificates of occupancy will not be issued in the ordinary course of
business following completion of construction of the Project substantially in
accordance with the Plans and Specifications. Feld shall use its best efforts
to cause all of the Approvals at the commencement of construction of the
Project to be in full force and effect. Feld shall, promptly upon receipt of
any Approvals, deliver to WPHC true, correct and complete copies of all such
Approvals.
13.2.5 The Land is, and at the Final Closing shall be, free from
delinquent water charges, sewer rents, taxes and assessments.
13.2.6 To the best knowledge of Feld, all utility services,
including but not limited to storm and sanitary sewer, water, gas, electric
power and telephone service will be prior to the earlier of Substantial
Completion of the Project or the Outside Date, available to the Project Land in
form and capacity sufficient for the useful enjoyment and operation of the
Project and there will be no unpaid assessments, impact fees, development fees,
tap-on fees or recapture costs payable in connection therewith except for
charges shown on the tax certificates and the usual and customary charges
involved in the ordinary course of business and specifically identified in the
Final Project Budget.
13.2.7 To the best of Feld's knowledge, when constructed
substantially in accordance with the Plans and Specifications, the Project
shall not violate in any material respects all applicable covenants, conditions
and restrictions, zoning ordinances and regulations, building codes,
environmental and all other federal, state and local laws, ordinances,
statutes, rules and regulations applicable to the Project. To the best of
Feld's knowledge, as of the date hereof, the Project is not subject to any
laws, rules, regulations, orders or requirements, which require the Company to
designate any of the Project as affordable housing, low income housing or
moderate income housing.
13.2.8 The construction and development of the Project shall be
undertaken and shall be completed in a timely and workmanlike manner in
substantial compliance with (a) all applicable requirements of the Construction
Loan, (b) to the best of Feld's knowledge, all applicable requirements of all
appropriate governmental entities, the violation of which would have, or would
be likely to have, an adverse effect on the Project or the Company, and (c) the
Plans and Specifications for the Project that have been or shall be hereafter
approved by the Construction Lender, WPHC, and if required, any applicable
governmental entities, as such Plans and Specifications may be changed from
time to time with the approval of the Construction Lender, WPHC, and any
applicable governmental entities, if such approval shall be required.
13.2.9 To the best of Feld's knowledge and based on Feld's review of
the Environmental Reports, copies of which have been provided to the, Land is
not designated by any governmental or quasi-governmental authority to be
subject to environmental, wetlands or other regulation that would materially
adversely affect the use of the Land for the Project as contemplated by this
Agreement, and at the Final Closing the Land and the Project shall be in
compliance with all Environmental Laws and free of Hazardous Materials except
for those necessary for and lawfully used in operation and maintenance of the
Project, and then only in reasonable amounts which shall be labeled, stored and
used in compliance with Environmental Laws.
13.2.10 To the best of Feld's knowledge, the Land is or will be
prior to Final Closing benefitted by such easements of unlimited duration as
are necessary for the operation of the Project. As of the Final Closing, no
additional easements will be required, subsequent to the Final Closing, for the
provision of utilities, access, egress and drainage to or for the benefit of
the Land or the Project in connection with the use and operation of the Land as
the Project contemplated by this Agreement.
13.2.11 Feld shall use his best efforts to cause the Company to
obtain, prior to the earlier of the date of Final Closing or the Outside Date,
all permanent certificates of occupancy and other consents and approvals
required from the County of Douglas and other governmental authorities and
associations and boards with jurisdiction over the Project and such consents,
approvals and certificates shall be in full force and effect without the
presence or existence of any unsatisfied conditions or requirements with
respect thereto, and true, correct and complete copies of such consents,
approvals and certificates of occupancy shall be delivered to WPHC upon
issuance thereof.
13.2.12 For the purpose of this Section 13.2, the terms "to the best
of Feld's knowledge," "to the best of his knowledge" and "to the best knowledge
of Feld" shall mean and include such information as is actually known to Feld
or should have been known to him upon diligent inquiry or of which Feld has
received constructive notice. If, prior to the Final Closing, any of the
foregoing representations, warranties or covenants become incorrect or
misleading in any material respect, Feld shall immediately notify WPHC in
writing and such representation, warranty or covenant shall be deemed remade by
Feld as of the date of such notification based upon such new information.
13.2.13 Feld, all Affiliates of Feld and all other parties related
to or affiliated with Feld or with such Affiliates shall receive no fees,
compensation or other profit or share of cost savings with respect to the
Project except the amounts set forth in Article 7 hereof or in any Approved
Affiliate Agreement. In the event of any breach of this Section 13.2.13, any
amount improperly received by such parties shall be immediately paid over to
the Company, together with interest thereon from the date received at twelve
percent (12%) per annum, compounded monthly.
13.2.14 Feld shall cause the Project to be at least 75% leased on
terms reasonably acceptable to WPHC within thirty-six (36) months after the
Construction Loan Closing. Failure to do so shall be a default under this
Agreement and shall give WPHC the right to cause the Removal of Feld.
13.3 General Representation. No representation, warranty or statement of
Feld in this Agreement or in any document, certificate or schedule furnished or
to be furnished by Feld or its agents or contractors to WPHC pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements or facts
contained therein not misleading.
13.4 Survival; Indemnity. All of the representations, warranties and
covenants of Feld contained in this Article 13 shall survive the resignation or
withdrawal of Feld as Manager and/or Member of the Company and shall survive
the Final Closing Date for a period of one (1) year after the Final Closing
Date except that, in the case of any material matter intentionally concealed or
intentionally not disclosed by Feld, such period shall be extended to three (3)
years after the Final Closing Date. Feld shall defend, indemnify and hold
harmless WPHC against a breach of any of the foregoing representations,
warranties and covenants and any damage, loss or claim caused thereby,
including reasonable attorneys' fees and costs and expenses of litigation and
collection.
ARTICLE 14
RIGHTS AND OBLIGATIONS OF MEMBERS
14.1 Limitation of Liability.
14.1.1 Each Member's liability to Persons other than the other
Members shall be limited as set forth in the Act and other applicable law.
14.1.2 No officer, director or shareholder of WPHC shall be bound by
or have any personal liability hereunder or under any document, agreement,
understanding or arrangement relating to this transaction. The parties to this
Agreement shall look solely to the assets of WPHC for satisfaction of any
liability of WPHC in respect of this Agreement and all documents, agreements,
understandings and arrangements relating to this transaction and will not seek
recourse or commence any action against any of the directors, officers or
shareholders of WPHC or any of their personal assets for the performance or
payment of any obligation hereunder or thereunder. The foregoing shall also
apply to any and all future documents, agreements, understandings, arrangements
and transactions between the parties hereto with respect to the Project or this
Agreement.
14.1.3 The Members acknowledge that Feld has made certain transfers
to the LES Trust and the LF Trust prior to November 4, 1991, and agree that no
Member will assert any right to recover against either of such trusts by reason
of any transfer made prior to November 4, 1991, regardless of the consideration
or lack of consideration for such transfer. Feld shall make no further
transfers to either of such trusts as long as all or any part of Feld's
obligations under this Agreement remain outstanding. In addition to the
foregoing, the Members hereby agree that the personal residence of Feld
located at One Dexter Street, Denver, Colorado is not available to support the
obligations of Feld under this Agreement and agree not to assert any right to
recover against such personal residence, and the Members hereby disclaim,
quitclaim, release and relinquish any right to proceed against such personal
residence for amounts owed by Feld under this Agreement. Upon submission by
Feld and written approval by WPHC of a financial statement of Feld certified by
Feld to be current and accurate, Feld's vacation home at 19 Creekside Drive in
Palm Springs, California shall be treated in the same manner as his residence
at One Dexter Street, Denver, Colorado, for purposes of this Agreement.
14.2 Company Debt Liability. A Member will not personally be liable for
any debts or losses of the Company, except as provided herein or in the Act.
14.3 List of Members. Upon written request of any Member, the Managers
shall provide a list showing the names, addresses and Percentage Interests of
all Members in the Company.
14.4 Company Books. The Managers shall maintain and preserve, during the
term of the Company, and for five (5) years thereafter, all accounts, books,
and other relevant Company documents. Upon reasonable request, each Member
shall have the right, during ordinary business hours, to inspect and copy such
Company documents at the Member's expense.
14.5 Priority and Return of Capital. Except as specifically provided
herein, no Member shall have priority over any other Member, either as to the
return of Capital Contributions or as to Profits, Losses or distributions;
provided that this Section shall not apply to loans (as distinguished from
Capital Contributions) which a Member may make to the Company.
14.6 Outside Activity.
14.6.1 Except for the limitations on the activities of Feld and
certain Affiliates set forth herein, each Member, including but not limited to
the Manager, may engage in any capacity (as owner, employee, consultant, or
otherwise) in any activity, whether or not such activity competes with or is
benefitted by the business of the Company, without being liable to the Company
or the other Members for any income or profit derived from such activity.
14.6.2 From the date hereof until the earlier of November 1, 1996
or the date that Feld ceases to be a Member of the Company, neither Feld nor
any other Restricted Party shall construct or commence construction of any
Multi-Family Project located in the Denver metropolitan area (including without
limitation Boulder). The restrictions under this Section 14.6.2 shall not
apply to the existing "Breakers" project, which is located in Denver, or to any
subsequent phases of the Breakers, or to the Village at the Bear project, which
is located in Jefferson County, Colorado, and is owned by Village At Bear Creek
LLC.
14.6.3 From the date hereof until the date that Feld ceases to be
a Member of the Company, neither Feld nor any other Restricted Party shall (i)
purchase, construct or commence construction of any Multi-Family Project any
part of which Multi-Family Project is located within three (3) miles of any
portion of the Land, or (ii) purchase, construct or commence construction of
any Multi-Family Project outside said three-mile area without giving prior
written notice to WPHC.
14.6.4 "Restricted Parties" shall mean Feld, The Feld Company and
any entity in which they individually or collectively, directly or indirectly,
have an ownership interest of in excess of 20 percent of any class of security.
Feld covenants that it shall cause each Restricted Party to comply with the
restrictions in this Section 14.6, and a failure of a Restricted Party to
comply with the terms of this Agreement shall constitute a breach of this
Agreement by Feld. Feld shall comply with the restrictions set forth in this
Section 14.6 in good faith and shall not employ any artifice or device to evade
the intent of this provision. The restrictions in Subsections 14.6.2 and
14.6.3 are cumulative, and shall apply to a Restricted Party as an owner for
its own account or as a developer, construction manager, general contractor or
partner of any other Person. This Section 14.6 shall not prohibit any
Restricted Party from conducting pre-development activities in connection with
a Multi-Family Project, provided that construction activity (including any
activity for which a building permit is required) has not commenced on such
Multi-Family Project.
ARTICLE 15
MEETINGS OF MEMBERS
15.1 Annual Meeting. The annual meeting of the Members shall be held on
the first business day of May or at such other time as shall be determined by
resolution of the Members, commencing with the year 1996, for the purpose of
the transaction of such business as may come before the meeting.
15.2 Special Meetings. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by any
Manager or by any Member or Members holding at least 1% of the Percentage
Interests.
15.3 Place of Meetings. The Members may designate any place, either
within or outside the State of Colorado, as the place of meeting for any
meeting of the Members. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal business office
of the Company in the State of Colorado.
15.4 Notice of Meetings. Except as otherwise provided for herein, written
notice stating the place, day and hour of the meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than ten
(10) nor more than fifty (50) days before the date of the meeting, either
personally or by mail, by or at the direction of the Managers or Person calling
the meeting, to each Member entitled to vote at such meeting.
15.5 Meeting of all Members. If all of the Members shall meet at any time
and place, either within or outside of the State of Colorado, and consent to
the holding of a meeting at such time and place, such meeting shall be valid
without call or notice, and at such meeting lawful action may be taken.
15.6 Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is sent or the date on which the resolution declaring such distribution
is adopted, as the case may be, shall be the record date for such determination
of Members. When a determination of Members entitled to vote at any meeting of
Members has been made as provided in this Section, such determination shall
apply to any adjournment thereof.
15.7 Quorum. Members holding at least a Majority In Interest, represented
in person or by proxy, shall constitute a quorum at any meeting of Members. In
the absence of a quorum at any such meeting, a majority of the Percentage
Interests so represented may adjourn the meeting from time to time for a period
not to exceed sixty (60) days without further notice. However, if the
adjournment is for more than sixty (60) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Member of record entitled to vote at the
meeting.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The Members present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal during such meeting of Members owning that number of Percentage
Interests whose absence would cause less than a quorum.
15.8 Manner of Acting. If a quorum is present, the affirmative vote of
Members holding at least a Majority In Interest and entitled to vote on the
subject matter shall be the act of the Members, unless the vote of a greater or
lesser proportion or number is otherwise required by the Act, by the Articles
of Organization, or by this Agreement.
15.9 Proxies. At all meetings of Members, a Member may vote in person or
by proxy executed in writing by the Member or by a duly authorized attorney-in-
fact. Such proxy shall be filed with the Managers of the Company before or at
the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
15.10 Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by each Member entitled to vote and delivered to the Managers of
the Company for inclusion in the minutes or for filing with the Company
records. Action taken under this Section 15.10 is effective when all Members
entitled to vote have signed the consent, unless the consent specifies a
different effective date.
The record date for determining Members entitled to take action without a
meeting shall be the date the first Member signs a written consent.
15.11 Voting by Ballot. Voting on any question or in any election may
be by voice vote unless the Managers or any Member shall demand that voting be
by ballot.
15.12 Waiver of Notice. When any notice is required to be given to
any Member, a waiver thereof in writing signed by the Person entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
ARTICLE 16
TRANSFERABILITY; PUT-CALL PROVISIONS
16.1 Restrictions on Transferability. Except as provided in Section 16.2
and Section 16.6, no transfer, pledge or assignment of all or any part of a
Member's Interest in the Company (including the transfer of any rights to
receive or share in profits, losses, income or the return of contributions)
shall be effective unless and until written notice (including the name and
address of the proposed purchaser, transferee, or assignee and the date of such
transfer) has been provided to the Company and the non-transferring Members
approve of the proposed sale, pledge or assignment of a selling, pledging or
assigning Member's Interest by unanimous written consent, which may be withheld
in their sole discretion.
16.2 Put-Call Rights.
16.2.1 WPHC shall have the option (the "Call Option") to acquire the
Interest of Feld in the Company, including his right to receive any
distributions related to any periods prior to and including the Option Closing
Date: (i) on and after the Final Closing for the Option Price, or (ii) on or
after the Construction Loan Outside Date, for $100.00 if the Construction Loan
Closing has not occurred by the Construction Loan Outside Date for any reason
whatsoever, or (iii) at any time for $100.00 if Feld fails to timely cure any
default by Feld under this Agreement. The exercise by WPHC of the Call Option
described in item (i) of this Section is conditioned on WPHC performing its
obligation to make the Final Closing Capital Contribution when and as required
under this Agreement. To exercise its Call Option, WPHC shall provide written
notice of exercise to Feld.
16.2.2 Feld shall have the right to cause WPHC to acquire the
Interest of Feld in the Company, including his right to receive any
distributions related to any periods prior to and including the Option Closing
Date, at Final Closing for the Option Price (the "Put Option") by providing
written notice to WPHC of Feld's intention to exercise the Put Option, provided
that all the Final Closing Funding Conditions have been satisfied.
16.2.3 If the Call Option or Put Option is exercised, Feld shall
forthwith upon request of WPHC execute an Assignment of Interest in the form of
Exhibit Q or Exhibit R, as applicable, attached hereto, wherein Feld shall
assign its Interest in the Company free and clear of all liens, security
interests and competing claims. Feld shall execute such other instruments of
transfer and of due authorization, execution and delivery and of the absence of
any such liens, security interests or competing claims as WPHC may reasonably
request. Feld shall have no duty, obligation or right to continue as Manager
of the Company after such transfer of its Interest.
16.3 Calculation of Option Price.
16.3.Y The Members shall use their respective, good faith efforts to
determine the Option Price prior to the Option Closing Date. For a period of
at least ten (10) business days prior to ordering an appraisal in connection
with the determination of the Option Price, WPHC and Feld shall attempt in good
faith to negotiate the fair market value of the Project to be used in such
determination. Each of WPHC and Feld shall be entitled to submit the
calculation of the Option Price to the Company's Accountants for verification
or auditing. If WPHC and Feld are unable to determine the Option Price by the
Option Closing Date, then WPHC shall pay Feld the Minimum Option Price as
estimated by WPHC in its good faith judgment. The parties shall make a
determination of the Option Price promptly after the Option Closing, and (i) if
the Option Price as so determined exceeds the estimated Minimum Option Price
paid at the Option Closing, then WPHC shall pay Feld such excess within five
(5) business days after the determination of the Option Price, or (ii) if the
Option Price as so determined is less than the estimated Minimum Option Price
paid at the Option Closing, then Feld shall pay the difference to WPHC within
five (5) business days after the determination of the Option Price. In
addition, for a period of twelve (12) months after the Final Closing Date, WPHC
and Feld shall each have the right to cause the recalculation of the Option
Price, if such Member pays the costs of the Company's Accountants in making
such recalculation. If the amount of the adjustment is in excess of $5,000,
then WPHC and Feld shall adjust the Option Price within five (5) business days
after the recalculation of the Option Price. No post-closing adjustment in the
Option Price shall be made for amounts of $5,000 or less or based on a
recalculation made more than twelve (12) months after the Option Closing Date.
Notwithstanding anything to the contrary herein, the appraised value of the
Project as determined shall be final and shall not be subject to challenge or
recalculation by any Member.
16.4 Right of Offset. Payment of the Option Price shall be subject to a
right of offset in favor of the Company and WPHC with respect to any claims or
damages they may have against Feld.
16.5 Restrictions on Resignation. Notwithstanding anything to the
contrary contained herein or under the Act, no Member shall have the right to
resign from the Company. In the event a Member does resign in violation of the
foregoing provision, (i) the Company shall not be obligated to pay any amounts
to the Member, nor to distribute any of the Property to the Member or any
interest therein, (ii) the Member shall be deemed to have forfeited any rights
to legal or beneficial ownership of its Interest, and (iii) the Company may
recover from the resigning Member damages for breach of this Agreement.
16.6 Permitted WPHC Transfer. WPHC shall have the right to transfer a
portion of WPHC's Interest in the Company (a "WPHC Permitted Transfer") to a
Person (a "WPHC Permitted Transferee"), provided that WPHC at all times during
the term of this Agreement shall retain an Interest in the Company of at least
twenty-one percent (21%) of the total Interests in capital, income, gain, loss,
deduction and credit. WPHC acknowledges that any transfer pursuant to this
Section 16.6 shall be solely from the Interest of WPHC and shall not result in
the dilution of the Interest of Feld. In the event of a Permitted WPHC
Transfer, (I) WPHC shall have the exclusive authority to communicate all
decisions, votes and elections ("Decisions") made by it and by the WPHC
Permitted Transferee with respect to the Interest of WPHC and such transferee
in the Company, (II) Feld shall be entitled to rely exclusively on
communications made by WPHC with respect to all such Decisions, and any
communications by a WPHC Permitted Transferee with respect to a Decision other
than through WPHC shall be invalid, and (III) prior to and as a condition to
the admission of a WPHC Permitted Transferee as a Member, the WPHC Permitted
Transferee shall execute an admission agreement wherein it agrees to be bound
by all the terms of this Agreement, including without limitation, this Section
16.6.
ARTICLE 17
ADMISSION OF ADDITIONAL MEMBERS
From the date of the formation of the Company, with the unanimous written
consent of the Members, any Person acceptable to the Members may, subject to
the terms and conditions of this Agreement: (i) become an additional Member in
this Company by the sale of new Interests for such consideration as the Members
by unanimous vote shall determine, or (ii) become a Substitute Member as a
transferee of a Member's Interest or any portion thereof.
ARTICLE 18
DISSOLUTION AND TERMINATION
18.1 Dissolution.
18.1.1 The Company shall be dissolved upon the occurrence of any of
the following events ("Dissolution Event"):
(a) When the period fixed for the duration of the Company shall
expire;
(b) by the unanimous written agreement of all Members; or
(c) upon the death, retirement, resignation, expulsion,
Removal, bankruptcy, dissolution of a Member or occurrence of any other event
which terminates the continued membership of a Member in the Company (a
"Withdrawal Event"), unless the business of the Company is continued by the
consent of a majority of the Interests of the remaining Members in the capital
and profits of the Company, as determined in accordance with Revenue Procedure
94-46 within ninety (90) days after the termination and there are at least two
remaining Members.
18.1.2 As soon as possible following the occurrence of any of the
events specified in this Section effecting the dissolution of the Company, the
appropriate representative of the Company shall execute a statement of intent
to dissolve in such form as shall be prescribed by the Colorado Secretary of
State and file duplicate originals of the same with the Colorado Secretary of
State's office.
18.2 Effect of Filing of Dissolving Statement. Upon the filing with the
Colorado Secretary of State of a statement of intent to dissolve, the Company
shall cease to carry on its business, except insofar as may be necessary for
the winding up of its business, but its separate existence shall continue until
articles of dissolution have been filed with the Secretary of State or until a
decree dissolving the Company has been entered by a court of competent
jurisdiction.
18.3 Distribution of Assets Upon Dissolution. In settling accounts after
dissolution, the liabilities of the Company shall be entitled to payment in the
following order:
18.3.1 to creditors, in the order of priority as provided by law
(except to Members on account of their Capital Contributions);
18.3.2 to Members and former Members in satisfaction of liabilities
for distributions under Section 7-80-601 or 7-80-603 of the Act; and
18.3.3 to Members pro rata in accordance with the positive balances
in their Capital Accounts after taking into account all adjustments to the
Capital Accounts for all periods.
18.4 Articles of Dissolution. When all debts, liabilities and obligations
have been paid and discharged or adequate provisions have been made therefor
and all of the remaining Property and assets have been distributed to the
Members, articles of dissolution shall be executed in duplicate and verified by
the Person signing the articles, which articles shall set forth the information
required by the Act.
18.5 Filing of Articles of Dissolution.
18.5.1 Duplicate originals of such articles of dissolution shall be
delivered to the Colorado Secretary of State.
18.5.2 Upon the filing of the articles of dissolution, the existence
of the Company shall cease, except for the purpose of suits, other proceedings
and appropriate action as provided in the Act. The Managers shall thereafter
be trustees for the Members and creditors of the Company and as such shall have
authority to distribute any Property of the Company discovered after
dissolution, convey real estate and take such other action as may be necessary
on behalf of and in the name of the Company.
18.6 Winding Up. If the Property of the Company remaining after the
payment or discharge of the debts and liabilities of the Company is
insufficient to return the Capital Contribution of each Member, such Member
shall have no recourse against any other Member. The winding up of the affairs
of the Company and the distribution of its assets shall be conducted
exclusively by the Managers, who are hereby authorized to take all actions
necessary to accomplish such distribution, including without limitation,
selling the assets of the Company. In the discretion of the Managers, a pro
rata portion of the amounts that otherwise would be distributed to the Members
under this Article 18 may be withheld to provide a reasonable reserve for
unknown or contingent liabilities of the Company.
18.7 No Restoration of Deficit Capital Accounts. If the Company is deemed
to be liquidated for federal income tax purposes within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), distributions under Section 14.3(c)
shall be made in compliance with Regulation Section 1.704-1 (b)(2)(ii)(b)(2) to
those Members who have positive Capital Accounts. If the Capital Account of
any Member has a deficit balance after such distributions (after giving effect
to all contributions, distributions, and allocations for all taxable years),
such Member shall have no obligation to make any contribution to the capital of
the Company with respect to such deficit and such deficit shall not be
considered a debt owed to the Company or any other Person for any purpose
whatsoever.
18.8 Deemed Liquidation. If no Dissolution Event has occurred, but the
Company is deemed liquidated for federal income tax purposes within the meaning
of Regulation Section 1.704-1 (b)(2)(ii)(g), the Company shall not be wound up
and dissolved but its assets and liabilities shall be deemed to have been
distributed to the Members and contributed to a new limited liability company
which shall operate and be governed by the terms of this Agreement.
18.9 Permitted Withdrawal by Feld. If the Construction Loan Closing has
not occurred by the Construction Loan Outside Date, upon not less than ten (10)
days prior written notice to WPHC, Feld may withdraw as the Manager and as a
Member without such withdrawal (a "Permitted Withdrawal") constituting a breach
of this Agreement. In the event of a Permitted Withdrawal, Feld shall not have
any obligation under the Development Deficit Guaranty or the Operating Deficit
Guaranty, and Feld shall be released from any obligation hereunder related to
the period after his Withdrawal. Upon a Permitted Withdrawal, Feld shall have
no right to any fees or payments from the Company or any interest in any
property of the Company. Feld shall execute such documents or instruments
evidencing his withdrawal as WPHC may reasonably request. Except for a
Permitted Withdrawal or a withdrawal upon the death or disability of Feld, any
withdrawal by Feld from the Company shall constitute a default by Feld under
this Agreement and WPHC shall be entitled to damages and any other legally
available relief based upon such default.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Statement of Intent of Parties. It is the present intent of WPHC and
Feld to jointly develop the Project as the second phase leading to the eventual
development of the Master Development. Due to the changes that may take place
in the capital and real estate markets and other events, unknown at this time,
which may alter either WPHC's or Feld's interest in or outlook on future
phases, no specific provision is made in this Agreement in regard to future
phases. It is the present intent of the parties to use the basic economic and
transaction structure of this Operating Agreement on future phases. However,
either party may require changes or elect not to participate in the joint
development of future phases. The Members acknowledge that Feld has diligently
pursued the purchase of the Land and the development plan of the Land for a
significant period and has agreed to WPHC's assumption of the Land Contract due
to and in consideration of WPHC's and WRPT's financial commitment to the
transaction. It is imperative to WPHC that it control the future of this
development in regard to all issues, including timing, cost, design, etc.
While this control is absolute, it is WRPT's and Feld's present intent that
Feld continue as development partner. Notwithstanding the foregoing statement
of intent, the provisions of this Agreement and related documents governing the
duties and relationships among the parties shall control over the foregoing
statement of intent and neither party shall have any obligation, express or
implied, to jointly develop another phase of the Master Development with the
other party.
19.2 Notices. Any notice or communication required or permitted to be
given by any provision of this Agreement, including but not limited to any
consents, shall be in writing and shall be deemed to have been given and
received by the Person to whom directed (a) when delivered personally to such
Person or to an officer or partner of the Member to which directed, (b) twenty-
four (24) hours after transmitted by facsimile, evidence of transmission
attached, to the facsimile number of such Person who has notified the Company
and all of the Members of its facsimile number, or (c) three (3) business days
after being posted in the United States mails if sent by registered or
certified mail, return receipt requested, postage and charges prepaid, or one
(1) business day after deposited with overnight courier, return receipt
requested, delivery charges prepaid, in either case addressed to the Person to
which directed at the address of such Person as it appears in this Agreement or
such other address of which such Person has notified the Company and all of the
Members.
WPHC: c/o Wellsford Residential Property Trust
370 Seventeenth Street, Suite 3100
Denver, Colorado 80202
Attention: Donald D. MacKenzie
Facsimile No. (303) 595-7799
with copies to:
Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Attention: Jeffrey Lynford
Facsimile No. (212) 333-2323
and to:
Wayne H. Hykan, Esq.
Brownstein Hyatt Farber & Strickland, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202
Facsimile No. (303) 623-1956
Feld: Mr. Al Feld
The Feld Company
4600 South Ulster Street, Suite 350
Denver, Colorado 80237
Facsimile No. (303) 721-9418
with a copy to:
Alan B. Lottner, Esq.
Haligman & Lottner, P.C.
633 17th Street, Suite 2700, North Tower
Denver, Colorado 80202
Facsimile No. (303) 292-1300
19.3 Application of Colorado Law. This Agreement, and the application or
interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Colorado, and specifically by the Act.
19.4 Waiver of Action for Partition. Each Member irrevocably waives
during the term of the Company any right that such Member may have to maintain
any action for partition with respect to the Property of the Company.
19.5 Amendments. This Agreement may be amended only upon the written
Agreement of all of the Members.
19.6 Construction. Whenever the singular number is used in this Agreement
and when required by the context, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders, and vice versa.
19.7 Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
19.8 Waivers. The failure of any party to seek redress for violation of
or to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
19.9 Time of the Essence. Time is of the essence in regard to the
obligations of the parties set forth in this Agreement.
19.10 Remedies for Default. If any party hereto fails to perform any
of its obligations under this Agreement, at the time and in the manner set
forth herein, and such failure continues uncured after any applicable notice
and cure period, then any other party may assert a claim against the defaulting
party for damages and, to the extent damages are not an adequate remedy, for
specific performance of this Agreement.
19.11 Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or
remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
19.12 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.
19.13 Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
19.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
19.15 Further Assurances. The Members and the Company agree that they
and each of them will take whatever action or actions as are reasonably
necessary or desirable from time to time to effectuate the provisions or intent
of this Agreement, and to that end, the Members and the Company agree that they
will execute, acknowledge, seal, and deliver any further instruments or
documents which may be necessary to give force and effect to this Agreement or
any of the provisions hereof, or to carry out the intent of this Agreement or
any of the provisions hereof.
19.16 Entire Agreement. This Agreement and each of the exhibits
attached hereto set forth all (and are intended by all parties hereto to be an
integration of all) of the promises, agreements, conditions, understandings,
warranties, and representations among the parties hereto with respect to the
formation and operations of the Company; and there are no promises, agreements,
conditions, understandings, warranties, or representations, oral or written,
express or implied, among them other than as set forth herein. The exhibits
attached hereto are incorporated herein by reference.
19.17 Attorneys Fees. Should any party hereto institute any legal
action or proceeding to enforce any provision of the Operating Agreement or for
damages by reason of any alleged breach of any provision of the Operating
Agreement or for any other judicial remedy, the prevailing party shall be
entitled to receive from the non-prevailing party all reasonable attorneys'
fees and all court costs in connection with said action or proceeding, in
addition to any other award.
<PAGE>
CERTIFICATE
The undersigned hereby agree, acknowledge and certify that the foregoing
Agreement constitutes the Operating Agreement of Red Canyon at Palomino Park
LLC adopted by the Members of the Company effective as of April 17, 1996.
/s/ Al Feld
------------------------------------------
Al Feld
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By: /s/ Donald D. MacKenzie
-------------------------------------
Name:
Title:
<PAGE>
GUARANTY
By its execution hereof, WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland
real estate investment trust ("WRPT"), hereby guarantees to Al Feld ("Feld")
that Wellsford Park Highlands Corp., a Colorado corporation, shall timely and
fully satisfy its obligation to fund the Final Closing Capital Contribution
when, as and if required by the foregoing Operating Agreement, as such
Agreement may be amended from time to time (the "Obligation").
This guaranty is a guaranty of payment and performance of the Obligations,
not merely of collection. Any amendment or modification of the Obligations
made by WPHC and Feld shall not release the duties and obligations of WRPT
hereunder, and this Guaranty shall extend to the Obligations as so amended or
modified. This Guaranty shall be continuing and irrevocable until the
Obligations have been satisfied in full. WRPT hereby waives notice of
acceptance of this Guaranty.
WRPT waives and agrees not to assert or take advantage of: (a) any right
to require Feld to proceed against any other person or to proceed against or
exhaust any security held by Feld at any time or to pursue any other remedy in
Feld's power before proceeding against WRPT; (b) any right to require Feld to
proceed against WPHC or any other person or to proceed against or exhaust any
security held by Feld at any time or to pursue any other remedy in Feld's power
before proceeding against WRPT; and (c) any requirement that notice be
provided to WRPT.
This Guaranty and all documents, agreements, understandings and
arrangements relating to this Guaranty have been executed by the undersigned on
behalf of WRPT in his/her capacity as an officer or trustee of WRPT which has
been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of WRPT dated as of July 10, 1992, and not individually,
and neither the trustees, officers or shareholders of WRPT shall be bound by or
have any personal liability hereunder or thereunder. The beneficiary of this
Guaranty shall look solely to the assets of WRPT for satisfaction of any
liability of WRPT in respect of this Agreement and all documents, agreements,
understandings and arrangements relating to this transaction and will not seek
recourse or commence any action against any of the trustees, officers or
shareholders of WRPT or any of their personal assets for the performance or
payment of any obligation hereunder or thereunder. The foregoing shall also
apply to all and any future documents, agreements, understandings, arrangements
and transactions between the parties hereto with respect to the this Guaranty
or any matter related thereto.
Should any one or more provisions of this Guaranty Agreement be determined
to be illegal or unenforceable, all other provisions nevertheless shall be
effective.
This Guaranty Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado.
EXECUTED as of April 17, 1996.
WELLSFORD RESIDENTIAL PROPERTY TRUST,
a Maryland real estate investment
trust
By: /s/ Donald D. MacKenzie
-------------------------------------
Name: Donald D. MacKenzie
Title: Vice President
<PAGE>
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
The foregoing operating agreement was acknowledged before me this _____
day of ______________, 1996 by Al Feld.
WITNESS my hand and official seal.
My commission expires:
___________________________________
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing operating agreement was acknowledged before me this _____
day of _____________, 1996 by Donald D. MacKenzie as Vice President of
Wellsford Park Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires:
-------------------------------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing guaranty was acknowledged before me this _____ day of
_____________, 1996 by __________________ as _____________ of Wellsford
Residential Property Trust, a Maryland real estate investment trust.
WITNESS my hand and official seal.
My commission expires:
-------------------------------------
Notary Public
<PAGE>
EXHIBITS
EXHIBIT A Feld Reimbursable Expenses
EXHIBIT B Construction Procedures
EXHIBIT C Deposit and Contract Administration Agreement
EXHIBIT D Final Closing Funding Conditions
EXHIBIT E Description of Infrastructure
EXHIBIT F Description of Infrastructure Land
EXHIBIT G Description of the Land
EXHIBIT H Description of the Master Development Land
EXHIBIT I Initial Project Budget
EXHIBIT J Property Management Agreement
EXHIBIT K Intentionally Omitted
EXHIBIT L Pledge and Security Agreement -- Feld to WPHC
EXHIBIT M Pledge and Security Agreement -- WPHC to Feld
EXHIBIT N Description of Plans and Specifications
EXHIBIT O Final Project Budget
EXHIBIT P Calculation of the Feld Incentive Fee
EXHIBIT Q Assignment of Interest -- Call Option
EXHIBIT R Assignment of Interest -- Put Option
EXHIBIT S-1 Architect's Certificate
EXHIBIT S-2 Engineer's Certificate
EXHIBIT T Infrastructure Budget
EXHIBIT U Substitution Agreement
<PAGE>
EXHIBIT A
FELD REIMBURSABLE EXPENSES
<PAGE>
EXHIBIT B
CONSTRUCTION PROCEDURES
1. Requests for advances by the Construction Lender for payment of costs of
labor, materials, and services supplied for the construction of the
improvements and other items shown in the Project Budget shall be
submitted by Feld, not more frequently then as specified in the
Construction Loan, after actual commencement of construction of the
improvements. WPHC, and the Construction Consultant shall be provided
with copies of the application for advance simultaneously with delivery to
the Construction Lender, except as otherwise provided in Section 6.6 of
the Operating Agreement.
2. WPHC and the Construction Consultant shall have the right and Feld shall
permit them to enter upon the Property and any location where materials
which are intended to be utilized in the construction of the improvements
are stored for purpose of inspection of the Property and such materials at
all reasonable times.
3. Feld shall timely comply with and promptly furnish to WPHC and
Construction Consultant a true and complete copy of any notice or claim by
any governmental authority pertaining to the Property and of any notice or
claim from the Construction Lender or any subcontractor or supplier with
respect to the Project.
4. Feld shall disburse all advances for payment of costs and expenses for
purposes specified in the Project Budget, and for no other purpose.
5. WPHC and Construction Consultant shall be advised, in advance of, and
shall have the right to attend all meetings pertaining to the construction
of the improvements. Feld agrees to use his best efforts to attempt to
notify WPHC and Construction Consultant reasonably in advance of such
meetings in order to allow attendance at such meeting by representatives
of WPHC and the Construction Consultant.
6. Feld shall not reallocate to other line items any portion of the line
items in the Project Budget that relate to Construction Loan interest or
loan fees.
7. Feld shall deliver copies of the monthly construction ledger to WPHC on or
before the 10th day of the following month.
8. Change orders shall be dealt with as provided in Section 6.7 of the
Operating Agreement.<PAGE>
EXHIBIT C
DEPOSIT AND CONTRACT ADMINISTRATION AGREEMENT
This Deposit and Contract Administration Agreement ("Agreement") is made
as of the 2nd day of May, 1995, by and between THE FELD COMPANY, a Colorado
corporation, located at 4600 S. Ulster Street, Suite 350, Denver, Colorado
80237, and WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation, located at
370 17th Street, Suite 3100, Denver, Colorado 80202 (hereinafter called
"WPHC").
RECITALS
WHEREAS, The Feld Company and Mission Viejo Company, a California
corporation ("Mission") previously entered into that certain Second Amended and
Restated Vacant Land Purchase and Sale Agreement on March 23, 1995 (the
"Purchase Agreement") for the purchase of approximately 182 acres of unimproved
real property in Douglas County, Colorado, being more particularly described as
Lots 1 through 5, Highlands Ranch Filing No. 126-A (the "Property"); and
WHEREAS, by an Assignment and Assumption Agreement of even date herewith,
The Feld Company, in consideration of the sum of $300,000 paid to it by WPHC,
has assigned to WPHC all of its right, title and interest in (i) the Purchase
Agreement, and (ii) that certain earnest money deposit in the amount of
$300,000 (the "Deposit") previously paid to Mission in accordance with the
terms of the Purchase Agreement; and
WHEREAS, by an Assignment and Assumption Agreement of even date herewith,
WPHC has assigned all of its rights and obligation pursuant to the terms and
provisions of the Purchase Agreement with respect to the purchase of "Phase I,"
as that term is defined in the Purchase Agreement, to the Park at Highlands
LLC, a Colorado limited liability company ("PAH"); and
WHEREAS, The Feld Company and WPHC now desire to enter into a new
agreement to document the rights and obligations of The Feld Company and WPHC
with respect to the funds being deposited with WPHC pursuant to the terms of
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained, and respectively expressing the intention to be
legally bound hereby, covenant and agree as follows:
1. Receipt and Acknowledgement. WPHC hereby acknowledges the receipt of
the sum of $150,000 from The Feld Company, which will be held by WPHC, and
governed by the terms of this Agreement.
2. Reimbursement.
a. WPHC may sell or assign its interest in the Purchase Agreement,
with respect to the Property, or any part thereof, to an entity jointly
owned by A1 Feld and/or The Feld Company and Wellsford Residential
Property Trust ("Wellsford") or an entity owned by Wellsford ("Approved
Entity") for any reason whatsoever. If however, WPHC sells or assigns its
interest in the Purchase Agreement, with respect to the Property, or any
part thereof, to any person or entity that does not qualify as an Approved
Entity, then WPHC shall, within five business days from the execution of
such sale or assignment, pay The Feld Company the sum of $150,000.
b. If all or any portion of the Deposit is credited by Mission
towards the purchase price of all or any portion of the Property, then
WPHC shall pay 50% of the amount so credited by Mission, to The Feld
Company within five business days following the receipt of such credit by
WPHC.
c. If all or any portion of the Deposit is returned to WPHC by
Mission, for any reason whatsoever, then WPHC shall pay 50% of the amount
so returned to The Feld Company within five business days following WPHC's
receipt thereof.
d. If the Deposit is not returned or credited by Mission to WPHC,
then neither party shall be liable to the other for reimbursement of the
Deposit or any portion thereof, except as set forth in paragraph 2.a.
hereof.
3. Right of First Offer. If The Feld Company is not in default under
any agreements with WPHC or its affiliates, and if WPHC decides not to purchase
any of Phases II, III, IV or V, as defined in the Purchase Agreement, WPHC
agrees to notify The Feld Company at least 150 days before the scheduled
closing of such Phase, and The Feld Company shall have 90 days to obtain
another source of acquisition and development financing and to present an offer
to WPHC to acquire the subject parcel. If The Feld Company fails to present an
offer acceptable to WPHC in WPHC's sole discretion, WPHC shall have no
obligations to The Feld Company with respect to such parcel.
4. Entire Agreement. This is the entire agreement between the parties
and there are no other terms, obligations, covenants, representations,
statements or conditions, oral or otherwise, of any kind whatsoever. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement in whole or in part unless such
agreement is in writing and signed by the party against whom enforcement of the
change, modification, discharge or abandonment is sought.
5. No Further Obligations. The parties have no obligations or
liabilities of any nature or kind to the other party with respect to the
Deposit or the Purchase Agreement, except as expressly set forth in this
Agreement. WPHC shall have exclusive control over the Purchase Agreement, as
it relates to Phases II, III, IV and V, as described therein, and The Feld
Company has no interest whatsoever in the Purchase Agreement with respect to
Phases II, III, IV and V, except for any rights set forth in this Agreement.
None of the provisions of this Agreement constitute or create any agreement or
obligation by either party to (i) enter into a joint venture, partnership,
corporation, limited liability company or any other arrangement with the other
party, or to negotiate in good faith with respect to the same; (ii) to enter
into any agreements, or to negotiate in good faith with respect to the same;
(iii) to purchase or develop the Property, or any portion thereof; or (iv) to
act in any manner whatsoever, unless expressly provided for in this Agreement
or otherwise reduced to a definitive written agreement, executed by the
parties. The parties acknowledge and agree that they have no obligations with
respect to Phases II, III, IV and V, as described in the Purchase Agreement.
6. Miscellaneous.
a. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
permitted assigns.
b. Governing Law. This Agreement shall be governed by and shall be
construed and interpreted in accordance with the laws of the State of
Colorado.
c. Notices. All notices, consents, approvals or other
communications which any of the parties to this Agreement may desire or
may be required to give hereunder shall be in writing and shall be given
by registered or certified mail, return receipt requested, postage
prepaid, or by personal delivery, delivery by courier, or by confirmed
telecopy or facsimile transmission, addressed as follows:
If to The Feld company:
The Feld Company
4600 South Ulster Street
Suite 350
Denver, Colorado 80237
Fax: 303-721-9418
and to:
_________________________
_________________________
_________________________
_________________________
Fax: ____________________
If to WPHC
Wellsford Park Highlands Corp.
370 17th Street, Suite 3100
Denver, Colorado 80202
Fax: 303-595-7799
Attn: Don MacKenzie
and to:
Wayne H. Hykan, Esq.
Brownstein Hyatt Farber &
Strickland, P.C.
410 17th Street, Suite 2200
Denver, Colorado 80202
Fax: 303-623-3956
Any such notice to WPHC or The Feld Company shall be deemed to be given,
received, and effective three days after such notice has been deposited in the
United States mail, addressed as aforesaid, or when personally delivered to and
received by the specified parties. All addresses for notices under this
Agreement shall be located within the United States of America.
7. Counterparts. This Agreement may be executed in counterparts.
8. Costs of Legal Proceedings. In the event that either party
institutes legal proceedings with respect to this Agreement or the transaction
contemplated hereby, the prevailing party shall be entitled to recover its
costs and expenses incurred in connection with such legal proceedings,
including, without limitation, reasonable attorney's fees. The terms of this
paragraph shall survive the termination of this Agreement.
9. Liability of WPHC. No officer, director or shareholder of WPHC shall
be bound by or have any personal liability hereunder or under any document,
agreement, understanding or arrangement relating to this transaction. The
parties to this Agreement shall look solely to the assets of WPHC for
satisfaction of any liability of WPHC in respect of this Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the directors, officers or shareholders of WPHC or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any and all future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE FELD COMPANY:
THE FELD COMPANY, a Colorado corporation
By: /s/ Al Feld
---------------------------------------
Al Feld, President
WPHC
WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By: /s/ Donald D. MacKenzie
---------------------------------------
Donald D. MacKenzie
Vice President
<PAGE>
EXHIBIT D
FINAL CLOSING FUNDING CONDITIONS
(a) No Default; Certificate From Feld. There shall be no uncured
default by Feld under this Agreement and no uncured default under the
Construction Loan, and WPHC shall have received a certificate from Feld that
the representations, warranties and covenants of Feld in Articles 6 and 13 are
materially true and accurate as of the date of the proposed Final Closing and
that Feld and the Company are not in default of any of their obligations
hereunder or under any contracts or agreements relating to the Project as of
the date of the proposed Final Closing.
(b) Construction Loan. Feld shall provide evidence satisfactory to
WPHC that the principal amount of the Construction Loan and all accrued
interest thereon have either been paid in full or will be paid in full from the
proceeds of the Final Closing Capital Contribution immediately upon the funding
of the Final Closing Capital Contribution. Such evidence may consist of a
payoff letter in form sufficient to allow the title insurer to insure over the
lien of the Construction Loan.
(c) Physical Inspection. The Construction Consultant shall have
prepared a physical inspection report reasonably satisfactory to WPHC.
(d) Final Completion; Development Deficits. Final Completion of the
Project shall have occurred, and all Development Deficit Payments shall have
been made by Feld.
(e) Lien Waivers. Feld shall obtain and provide copies to WPHC of
unconditional lien releases from all subcontractors, materialmen and providers
of labor, equipment, material and/or services to the Property and the Project,
as to all work performed and materials purchased in connection with the
construction of the Project, in form reasonably satisfactory to WPHC or, with
respect to any liens not so released, Feld shall have provided surety bonds to
which any contested liens are transferred (and released from the Property) and
title insurance over any such liens.
(f) Title Policy. The title insurance company shall have issued the
following endorsements to the Company's title policy: (1) an endorsement
indicating that the Company owns fee simple title to the Project Land and that
the Project Land will be free and clear of the Construction Loan upon payment
of the Final Closing Capital Contribution; (2) a "date down" endorsement to the
title policy extending the effective date of the title policy to the date of
Final Closing and showing no exceptions to title other than the exceptions
reflected on the title policy as of Initial Closing, except as shall be
acceptable to WPHC in its reasonable judgment; (3) an endorsement affording
mechanics lien coverage; (4) an endorsement increasing the amount of insurance
by an amount equal to the Final Closing Capital Contribution; and (5) such
other endorsements as WPHC may reasonably require, including without
limitation, the following: (i) 103.1 and 103.2 (Encroachments) to the extent
required and available; (ii) 103.7 (Property Abuts Open Street); (iii) 107.2
(Increase Policy Amount) for the amount of the Final Closing Capital
Contribution plus the Initial Closing Capital Contribution; (iv) 110.1
(Deleting Standard Exceptions) if not already provided; (v) 110.2 (Special
Exceptions) if any new exceptions appear that are not acceptable to WPHC in its
sole discretion; (vi) 115.2 (PUD); (vii) 116.1 (Survey); (viii) 123.2 (Zoning).
(g) Survey. WPHC shall have received and approved an updated and
recertified as-built survey reasonably satisfactory to WPHC dated no more than
thirty (30) days prior to the date of Final Closing, showing no encroachments
or other adverse matters affecting title to the Project, except as shall be
reasonably acceptable to or have been previously approved in writing by WPHC.
(h) As-Built Plans and Specifications. Feld shall have submitted to
WPHC a written document executed by Feld, the architect and the general
contractor certifying no material change to the approved "for-construction"
Plans and Specifications except any changes stated therein that have previously
been approved by WPHC.
(i) Permits, Licenses and Certificates of Occupancy. WPHC shall
have received a copy of the final and unconditional certificate or certificates
of occupancy issued by the appropriate governmental authorities for the Project
in its entirety and a copy of any permits and licenses which are required for
the operation and use of the Project.
(j) Architect's and Engineer's Certificates. Feld shall have
delivered to WPHC an architect's certificate in the form attached hereto as
Exhibit S-1 and an Engineer's Certificate in the form attached hereto as
Exhibit S-2.
(k) Payment of Taxes. WPHC shall have received satisfactory evidence
(which may be included in the title policy described in subsection (f) of these
Final Closing Funding Conditions) that all real property taxes and assessments
for the Project due and payable through the date of funding have been timely
and fully paid.
(l) Release and Waiver. Feld and each affiliate of Feld that is a
party to an Approved Affiliate Agreement shall have executed for the benefit of
the Members a Release and Waiver, substantially in the form attached hereto as
Exhibit B-3 with respect to all liabilities incurred by Feld during its period
of membership in the Company, including, without limitation, all liabilities
incurred by Feld under the Architect's Agreement, the construction contract for
the construction of the Project, and any contracts, agreements, or other
instruments entered into by Feld in connection with the construction of the
Project or the business of the Company.<PAGE>
EXHIBIT E
DESCRIPTION OF INFRASTRUCTURE
The following Description of Infrastructure uses substantially the same
categories as those in the Infrastructure Improvement Agreement. The aggregate
of these categories comprises the Infrastructure for the Master Development.
1. Overlot Grading. This includes rough grading for the Infrastructure Land
and some of the fine grading for the park.
2. Willows Water Line. This category includes the engineering and physical
relocation of a 30 inch Willows Water District water line as well as
Quebec Street paving associated with the relocation.
3. Main Recreational Center & Grounds. This is the main recreational
facility for the Master Development. All apartment phases will share its
use. The rec center building will contain approximately 30,000 square
feet and house a gym with exercise equipment, basketball court, racquet
ball court(s) and leasing offices The rec center grounds are expected to
feature a pool & spa, volleyball court, tennis court(s), pond and parking.
4. Water and Sewer Systems, Temporary Access Road. Included here is the main
water and sewer systems that will serve the Master Development.
Additional water and sewer systems will be constructed with each apartment
phase and are not part of the Infrastructure. This category also includes
building of a temporary road that will be used as construction access.
5. Entryway/Guardhouse/Paving. The main access/entry for the Master
Development is from South Quebec Street. At this entry there will be
entry monuments, gates, wall and a guardhouse. Paving for the entry and
loop road (the entry and loop roads collectively comprise Tract A of the
Infrastructure Land) is also included as part of this category.
6. Public Utilities. A telephone distribution system will be installed
around the loop road which will be joint trenched with gas, electric and
cable TV facilities. Some of all of the above facilities may be installed
by parties unrelated to the Company.
7. Park Improvements. Tract B of the Infrastructure Land will be landscaped
and improved with a softball diamond, soccer field, golf putting area and
other similar improvements.
8. Glen Eagles Entry. A future entry for the Master Development may be
needed to provide with ingress/egress. It is contemplated that this
access would be from Glen Eagles Drive at the southern boundary of the
Master Development. This category will include entry monuments, gates and
associated road improvements.
9. Professional Services and Miscellaneous. This category includes various
professional services associated with the development of all
Infrastructure components. It includes architectural design, interior
design of the Main Rec Center, landscape design, civil engineering, soils
engineering/
testing, and legal services associated with closing the Infrastructure
Land and any ongoing document review. Field supervision, general labor
and other misc. items, necessary for construction of all Infrastructure
components, are also included in this category. This category also
includes building the construction yard compound which serves as a
staging/storage area for the Master Development.
<PAGE>
EXHIBIT F
DESCRIPTION OF INFRASTRUCTURE LAND
Lot 1B, Tract A and Tract B, Highlands Ranch Filing No. 126-A, 1st Amendment as
recorded at Receipt No. 9560621 in the records of the Douglas County Clerk and
Recorder's Office, County of Douglas, State of Colorado
Lot 1B is the land on which the main recreational center will be situated to
service the Master Development.
Tract B is the land on which the main park will be situated to service the
Master Development.
Tract A is the land on which both the main access road and loop road will be
constructed to provide ingress and egress to the Master Development. The loop
road will encircle Lot 1B and Tract B. The main access road will directly
adjoin South Quebec Street.
<PAGE>
EXHIBIT G
DESCRIPTION OF THE LAND
PARCEL 1
LOT 2-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF DOUGLAS
COUNTY, COLORADO.
PARCEL 2
THAT CERTAIN PERPETUAL EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND
ALL RIGHTS AND PRIVILEGES IN CONNECTION THEREWITH, RESERVED BY PARK AT
HIGHLANDS LLC, A COLORADO LIMITED LIABILITY COMPANY, ITS SUCCESSORS, ASSIGNS
AND DESIGNEES, UNDER AND PURSUANT TO THE TERMS OF THAT CERTAIN SPECIAL WARRANTY
DEED, EXECUTED BY PARK AT HIGHLANDS LLC, GRANTOR, TO PALOMINO PARK PUBLIC
IMPROVEMENTS CORPORATION, A COLORADO NON-PROFIT CORPORATION, GRANTEE, RECORDED
JANUARY 3, 1996, UNDER RECEPTION NO. 9600509 IN THE OFFICE OF THE CLERK AND
RECORDER OF DOUGLAS COUNTY, COLORADO, COVERING THE REAL PROPERTY MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
TRACT A, HIGHLANDS RANCH FILING NO. 126-A, 1ST AMENDMENT, AS FILED ON
DECEMBER 19, 1995 UNDER RECEPTION NO. 9560621 IN THE OFFICE OF THE
CLERK AND RECORDER OF DOUGLAS COUNTY, COLORADO.
<PAGE>
EXHIBIT H
DESCRIPTION OF THE MASTER DEVELOPMENT LAND
LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF DOUGLAS
COUNTY, COLORADO.
LOTS 4 AND 5, HIGHLANDS RANCH FILING 126-A, DOUGLAS COUNTY, COLORADO
<PAGE>
EXHIBIT I
INITIAL PROJECT BUDGET<PAGE>
EXHIBIT J
PROPERTY MANAGEMENT AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
<PAGE>
EXHIBIT K
INTENTIONALLY OMITTED<PAGE>
EXHIBIT L
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of the
17th day of April, 1996, by AL FELD, an individual, having an address of 4600
South Ulster Street, Suite 350, Denver, Colorado 80237 ("Pledgor"), for the
benefit of WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation, having an
office at 370 Seventeenth Street, Suite 3100, Denver, Colorado 80202
("Pledgee").
RECITALS
A. Pledgor is the Manager and a Member of Red Canyon at Palomino Park
LLC, a Colorado limited liability company (the "Limited Liability Company"),
which Limited Liability Company is governed by its Operating Agreement dated as
of April 17, 1996 (the "Operating Agreement"), by and between Pledgee and
Pledgor.
B. Pledgee is also a Member in the Limited Liability Company.
C. In order to secure the full payment and performance by Pledgor of all
of Pledgor's obligations under the Operating Agreement, as such Operating
Agreement may be now or hereafter amended, modified or restated (said
obligations under the Operating Agreement are hereinafter referred to as the
"Obligations"), Pledgor is entering into this Agreement for the benefit of
Pledgee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
a. "Collateral" shall mean:
(i) All of Pledgor's right, title and interest in the ownership
interests of Pledgor in the Limited Liability Company, whether now
owned or hereafter acquired, including, without limitation, its
Interest (as defined in the Operating Agreement) in the Limited
Liability Company, the right of Pledgor, if any, to any benefits to
which Pledgor may be entitled pursuant to the Operating Agreement or
the Colorado Limited Liability Company Act, Colo. Rev. Statutes
Sections 7-80-101 to 7-80-913, as amended from time to time (the
"Act"), and Pledgor's right to receive payments, fees, distributions
and allocations under or in connection with the Operating Agreement
(whether as Member or as Manager), as such Operating Agreement may be
modified or extended from time to time with the consent of the
Pledgee; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
b. "Event of Default" shall mean an event of default described in
Section 8 herein.
2. Pledge of Collateral and Grant of Security Interest. Pledgor does
hereby unconditionally and irrevocably assign, pledge, convey, transfer,
deliver, set over and grant unto Pledgee, its successors and assigns, as
security for Pledgor's complete and timely payment and performance of the
Obligations, a continuing first lien security interest under the Uniform
Commercial Code of the State of Colorado in the Collateral. Pledgor hereby
further grants to Pledgee all rights in the Collateral as are available to a
secured party of such collateral under the Uniform Commercial Code of the State
of Colorado (being the principal place of business of Pledgor and the location
of Pledgor's residence) and, concurrently herewith, shall deliver to Pledgee
duly executed UCC-1 financing statements suitable for filing in the State of
Colorado with respect to the Collateral.
3. Delivery to Pledgee.
a. Pledgor agrees to execute and to use its best efforts to cause
all other necessary parties, and any successors and assigns thereof, to execute
and deliver to Pledgee such other agreements, instruments and documentation as
Pledgee may reasonably request from time to time to effect the conveyance,
transfer, and grant to Pledgee of Pledgor's right, title and interest in and
to the Collateral as security for the Obligations.
b. Concurrently with the execution of this Agreement, Pledgor has
caused each of the Members of the Limited Liability Company, other than
Pledgee, to execute the Consent to Security Interest and Agreement in the form
attached hereto as Schedule A (the "Consent") evidencing the consent of the
Members to the assignment of Pledgor's Limited Liability Company interests and
their agreement to be bound by Section 4 of this Agreement, and Pledgor
covenants to execute, if required by Pledgee, an amendment to the Operating
Agreement in such form as Pledgee may reasonably require to reflect the
substitution of Pledgee in place of Pledgor as Manager of the Limited Liability
Company upon the occurrence of an Event of Default. Pledgor further agrees to
execute and to cause the other Members of the Limited Liability Company to
execute and deliver to Pledgee such other agreements, instruments and
documentation as Pledgee may reasonably request from time to time to effectuate
the conveyance, transfer, assignment and grant to Pledgee of all of Pledgor's
right, title and interest in and to the Collateral and to evidence the
substitution of the Pledgee in place of Pledgor as Manager in the Limited
Liability Company.
4. Proceeds and Products of the Collateral.
a. Notwithstanding any of the foregoing, unless and until there
occurs an Event of Default, Pledgee agrees to forbear from exercising its right
to receive all benefits pertaining to the Collateral (except as otherwise
permitted under the Operating Agreement), and Pledgor shall be permitted to
exercise all rights and to receive all benefits of the Collateral, including,
without limitation, the right to exercise all voting, approval, consent and
similar rights of Pledgor pertaining to the Collateral, payments due under,
proceeds, whether cash proceeds or noncash proceeds, and products of the
Collateral and to retain and enjoy the same.
b. Pledgor acknowledges and agrees with Pledgee, that unless
Pledgee otherwise consents, in Pledgee's sole discretion, Pledgor shall not
exercise any voting, approval, consent or other rights with respect to the
Collateral at any time after (i) the occurrence of an Event of Default and (ii)
receipt of notice from Pledgee instructing Pledgor not to exercise any such
voting, approval, consent or other rights with respect to the Collateral,
provided, however, that Pledgor shall exercise any such right it may have under
the agreements comprising the Collateral with respect to the business affairs
of the Limited Liability Company as is reasonably necessary to protect and
preserve the Collateral.
c. Upon or at any time after the occurrence of an Event of Default,
Pledgee, at its option, to be exercised in its sole discretion by written
notice to Pledgor, may exercise all rights and remedies granted under this
Agreement, including, without limitation, the right to require the obligors
under the Collateral to make all payments due under and to pay all proceeds,
whether cash proceeds or noncash proceeds, and products of the Collateral to
Pledgee. Upon the giving of any such notice, the security constituted by this
Agreement shall become immediately enforceable by Pledgee, without any
presentment, further demand, protest or other notice of any kind, all of which
are hereby expressly and irrevocably waived by Pledgor. Pledgor hereby
authorizes and directs each respective obligor under the agreements
constituting the Collateral, that upon receipt of written notice from Pledgee
of an Event of Default by Pledgor hereunder, to assign, set over, transfer,
distribute, pay and deliver any and all Collateral or said payments, proceeds
or products of the Collateral to Pledgee, at such address as Pledgee may
direct, at such time and in such manner as the Collateral and such payments,
proceeds and products of the Collateral would otherwise be distributed,
transferred, paid or delivered to Pledgor. The respective obligors under the
agreements constituting the Collateral shall be entitled to conclusively rely
on such notice and make all such assignments and transfers of the Collateral
and all such payments with respect to the Collateral and pay all such proceeds
and products of the Collateral to Pledgee and shall have no liability to
Pledgor for any loss or damage Pledgor may incur by reason of said reliance.
5. No Assumption. Notwithstanding any of the foregoing, whether or not
an Event of Default shall have occurred, and whether or not Pledgee elects to
foreclose on its security interest in the Collateral as set forth herein,
neither the execution of this Agreement, receipt by Pledgee of any of Pledgor's
right, title and interest in and to the Collateral and the payments, proceeds
and products of the Collateral, now or hereafter due to Pledgor from any
obligor of the Collateral, nor Pledgee's foreclosure of its security interest
in the Collateral, shall in any way be deemed to obligate Pledgee to assume any
of Pledgor's obligations, duties or liabilities under the Collateral or any
agreements constituting the Collateral, as presently existing or as hereafter
amended, or under any and all other agreements now existing or hereafter
drafted or executed (collectively, the "Pledgor's Liabilities"), unless Pledgee
otherwise agrees to assume any or all of Pledgor's Liabilities in writing. In
the event of foreclosure by Pledgee of its security interest in the Collateral,
Pledgor shall remain bound and obligated to perform the Pledgor's Liabilities
to the extent required under the Operating Agreement, and Pledgee shall not be
deemed to have assumed any of the Pledgor's Liabilities, except as provided in
the preceding sentence. In the event the entity or person acquiring the
Collateral at a foreclosure sale elects to assume the Pledgor's Liabilities,
such assignee shall agree to be bound by the terms and provisions of the
applicable agreement.
6. Indemnification. Pledgor hereby agrees to indemnify, defend and hold
Pledgee, its successors and assigns harmless from and against any and all
damages, losses, claims, costs or expenses (including without limitation,
reasonable attorneys' fees) and any other liabilities whatsoever that Pledgee
or its successors or assigns may incur by reason of Pledgor's failure to comply
with the terms and conditions of this Agreement or by reason of any unpermitted
assignment of Pledgor's right, title and interest in and to any or all of the
Collateral.
7. Representations, Warranties and Covenants. In addition to the
representations made by Pledgor in the Operating Agreement, Pledgor makes the
following representations and warranties, and Pledgor covenants and agrees to
provide written notices to Pledgee within ten (10) days after Pledgor becomes
aware that any of the following is no longer true and correct and to perform
diligently all acts reasonably necessary to maintain or restore the truth and
correctness, in all material respects, of the following:
a. Pledgor acknowledges that the Operating Agreement and any other
agreements constituting the Collateral, currently are in full force and
effect and have not been amended or modified, except by Pledgor and
Pledgee in writing.
b. Pledgor has the full right and title to its interest in the
Collateral and has the full power, legal right and authority to pledge,
convey, transfer and assign such interest. None of the Collateral is
subject to any existing assignment, claim, lien, pledge, transfer or other
security interest of any character, or to any attachment, levy,
garnishment or other judicial process or to any claim for set-off,
counterclaim, deduction or discount. Pledgor shall not, without the prior
written consent of Pledgee, which consent may be granted or denied in
Pledgee's sole discretion, further convey, transfer, set over or pledge to
any party any of its interests in the Collateral. Pledgor agrees to (i)
warrant and defend its title to the Collateral and the security interest
created by this Agreement against all claims of all persons, and (ii)
maintain and preserve the Collateral and such security interests.
c. The pledge of the Collateral pursuant to this Agreement creates
a valid first priority security interest in the Collateral, securing the
performance of the Obligations, which security interest shall be perfected
upon the filing of the UCC-1 Financing Statements referred to in Paragraph
2 of this Agreement.
d. Pledgor's Social Security Number is: ###-##-####, and Pledgor's
principal residence is located at One Dexter Street, Denver, Colorado
80220.
e. Pledgor agrees that it shall not, without at least thirty (30)
days' prior written notification to Pledgee, move or otherwise change its
place of residence.
f. To the best knowledge of Pledgor, neither the execution and
delivery of this Agreement by Pledgor nor the consummation of the
transactions herein contemplated nor the fulfillment of the terms hereof
(i) violate the terms of any agreement, indenture, mortgage, deed of
trust, equipment lease, instrument or other document to which Pledgor is a
party, or (ii) conflict with any law, order, rule or regulation applicable
to Pledgor or any court or any government, regulatory body or
administrative agency or other governmental body having jurisdiction over
Pledgor or its properties, or (iii) result in or require the creation or
imposition of any lien (other than the first priority lien of Pledgee in
the Collateral contemplated hereby).
g. No consent or approval which has not been obtained prior to the
date hereof of any other person or entity and no authorization, approval
or other action by, and no notice to or filing with any governmental body,
regulatory authority or securities exchange, was or is necessary as a
condition to the validity of the pledge hereunder of the Collateral and
such pledge is effective to vest in the Pledgee the rights of Pledgee in
the Collateral as set forth herein.
h. Pledgor shall comply in all material respects with all
requirements of law applicable to the Collateral or any part thereof.
i. Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Collateral prior to delinquency
thereof and shall keep all Collateral free of all unpaid charges
whatsoever.
8. Event of Default. Each of the following shall constitute an Event of
Default hereunder:
a. A breach of any representation, warranty, covenant or obligation
of Pledgor shall have occurred under the Operating Agreement and such
breach shall not have been cured within any applicable grace period
provided therein; or
b. Any warranty, representation or statement of the Pledgor in this
Agreement proves to have been false in any material respect when made or
furnished; or
c. There occurs the issuance of a writ, order of attachment or
garnishment with respect to any of the Collateral and such writ, order of
attachment or garnishment is not dismissed and removed within thirty (30)
days thereafter; or
d. A material breach or violation of any covenant or agreement
contained herein shall have occurred, which is not cured within thirty
(30) days after notice has been given to Pledgor by Pledgee.
Any Event of Default under this Agreement shall be an event of default by
Pledgor under the Operating Agreement.
9. Remedies.
a. Upon the occurrence of an Event of Default, Pledgee may by
giving notice of such Event of Default, at its option, do any one or more of
the following:
(i) Take control of the Collateral and thereafter exercise all rights
and powers of Pledgor with respect to the Collateral; and
(ii) Without notice to or demand upon Pledgor, make such payments and
do such acts as Pledgee may deem necessary to protect its security
interest in the Collateral, including, without limitation, paying,
purchasing, contesting or compromising any encumbrance, charge or
lien which is prior to or superior to the security interest granted
hereunder, and in exercising any such powers or authority to pay all
expenses incurred in connection therewith; and
(iii) Require Pledgor to take all actions necessary to deliver such
Collateral to Pledgee, or an agent or representative designated by
Pledgee; and
(iv) Foreclose upon this Agreement as herein provided or in any
commercially reasonable manner permitted by law, and exercise any and
all of the rights and remedies conferred upon Pledgee by the
Operating Agreement, or in any other document executed by Pledgor in
connection with the Obligations secured hereby; and sell or cause to
be sold the Collateral, without affecting in any way the rights or
remedies to which Pledgee may be entitled under the other such
instruments; and
(v) Sell or otherwise dispose of the Collateral at public sale,
without having the Collateral at the place of sale, and upon terms
and in such manner as is commercially reasonable; Pledgee may be a
purchaser at any sale; and
(vi) Exercise any remedies of a secured party under the Uniform
Commercial Code of the State of Colorado or any other applicable law;
and
(vii) Exercise any remedies available to Pledgee under the Operating
Agreement, including, but not limited to, the removal of the Pledgor
as the Manager and a Member of the Limited Liability Company and
exercise of any rights of offset in favor of Pledgee as the Manager
and a Member of the Limited Liability Company; and
(viii) Notwithstanding anything to the contrary contained in this
Agreement, at any time after an Event of Default Pledgee may, by
delivering written notice to the Limited Liability Company and to
Pledgor, succeed, or designate its nominee or designee to succeed, to
all right, title and interest of Pledgor (including, without
limitation, the right, if any, to vote on or take any action with
respect to the matters of the Limited Liability Company) as the
Manager and/or a Member of the Limited Liability Company in respect
of the Collateral. Pledgor hereby irrevocably authorizes and directs
the Limited Liability Company on receipt of any such notice (a) to
deem and treat Pledgee or such nominee or designee in all respects as
the Manager and/or a Member (and not merely an assignee of the
Manager and/or a Member) of such Limited Liability Company, entitled
to exercise all the rights, powers and privileges (including the
right to vote on or take any action with respect to Limited Liability
Company matters pursuant to the Operating Agreement, to receive all
distributions, to be credited with the capital account and to have
all other rights, powers and privileges appertaining to the
Collateral to which Pledgor would have been entitled had the
Collateral not been transferred to Pledgee or such nominee or
designee), and (b) to file amended Articles of Organization for such
Limited Liability Company, if required, admitting Pledgee or such
nominee or designee as the Manager and/or a Member of the Limited
Liability Company in place of Pledgor; and
(ix) The rights granted to Pledgee under this Agreement are of a
special, unique, unusual and extraordinary character. The loss of
any of such rights cannot be reasonably or adequately compensated by
way of damages in any action at law, and any material breach by
Pledgor of any of Pledgor's covenants, agreements, obligations
representations or warranties under this Agreement will cause Pledgee
irreparable injury and damage. In the event of any such breach,
Pledgee shall be entitled, as a matter of right, to injunctive relief
or other equitable relief in any court of competent jurisdiction to
prevent the violation or contravention of any of the provisions of
this Agreement or to compel compliance with the terms of this
Agreement by Pledgor. Pledgee is absolutely and irrevocably
authorized and empowered by Pledgor to demand specific performance of
each of the covenants, agreements, representations and warranties of
Pledgor in this Agreement. Pledgor hereby irrevocably waives any
defense based on the adequacy of any remedy at law which might
otherwise be asserted by Pledgor as a bar to the remedy of specific
performance in any action brought by Pledgee against Pledgor to
enforce any of the covenants or agreements of Pledgor in this
Agreement.
b. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Pledgee shall give Pledgor at least ten (10) days' prior written notice of the
time and place of any public sale of the Collateral subject to this Agreement
or other intended disposition thereof to be made. Such notice shall be
conclusively deemed to have been delivered to Pledgor at the address set forth
in subsection 7(d) of this Agreement, unless Pledgor shall notify Pledgee in
writing of any change of its place of residence and provide Pledgee with the
address of its new place of residence.
c. The proceeds of any sale under Subsections 9(a)(iv) and (v)
above shall be applied as follows:
(i) To the repayment of all reasonable costs and expenses of
retaking, holding and preparing for the sale and the selling of the
Collateral (including actual reasonable legal expenses and attorneys'
fees) and the discharge of all assessments, encumbrances, charges or
liens, if any, on the Collateral prior to the lien hereof (except any
taxes, assessments, encumbrances, charges or liens subject to which
such sale shall have been made);
(ii) To the payment of the whole amount, if any, of the Obligations,
as and when the same become due; and
(iii) The aggregate surplus, if any, shall be paid to Pledgor in a
lump sum, without recourse to Pledgee, or as a court of competent
jurisdiction may direct.
d. Pledgee shall have the right to enforce one or more remedies
under this Agreement and under the Operating Agreement, successively or
concurrently, and such action shall not operate to estop or prevent Pledgee
from pursuing any further remedy which it may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Pledgor until full payment of any deficiency has been made
in cash.
e. PLEDGOR ACKNOWLEDGES THAT PLEDGEE MAY BE UNABLE TO EFFECT A
PUBLIC SALE OF ALL OR ANY PART OF THE COLLATERAL AND MAY BE COMPELLED TO RESORT
TO ONE OR MORE PRIVATE SALES TO A RESTRICTED GROUP OF PURCHASERS WHO WILL BE
OBLIGATED TO AGREE, AMONG OTHER THINGS, TO ACQUIRE THE COLLATERAL FOR ITS OWN
ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE
THEREOF. PLEDGOR FURTHER ACKNOWLEDGES THAT ANY SUCH PRIVATE SALES MAY BE AT
PRICES AND ON TERMS LESS FAVORABLE THAN THOSE OF PUBLIC SALES, AND AGREES THAT
PROVIDED SUCH PRIVATE SALES ARE MADE IN A COMMERCIALLY REASONABLE MANNER,
PLEDGEE SHALL HAVE NO OBLIGATION TO DELAY SALE OF ANY COLLATERAL TO PERMIT THE
ISSUER THEREOF TO REGISTER IT FOR PUBLIC SALE UNDER THE SECURITIES ACT OF 1933.
PLEDGOR AGREES THAT PLEDGEE SHALL BE PERMITTED TO TAKE SUCH ACTIONS AS PLEDGEE
DEEMS REASONABLY NECESSARY IN DISPOSING OF THE COLLATERAL TO AVOID CONDUCTING A
PUBLIC DISTRIBUTION OF SECURITIES IN VIOLATION OF THE SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE, AS NOW ENACTED OR AS THE SAME MAY IN THE
FUTURE BE AMENDED, PROVIDED THAT ANY SUCH ACTIONS SHALL BE COMMERCIALLY
REASONABLE. IN ADDITION, PLEDGOR AGREES TO EXECUTE, FROM TIME TO TIME, ANY
AMENDMENT TO THIS AGREEMENT OR OTHER DOCUMENT AS PLEDGEE MAY REASONABLY REQUIRE
TO EVIDENCE THE ACKNOWLEDGEMENTS AND CONSENTS OF PLEDGOR SET FORTH IN THIS
SECTION.
10. Attorneys Fees. Pledgor agrees to pay to Pledgee, without demand,
reasonable attorneys' fees and all reasonable costs and other reasonable
expenses which Pledgee expends or incurs in collecting any amounts payable by
Pledgor with respect to an Event of Default, hereunder or in enforcing this
Agreement against Pledgor whether or not suit is filed.
11. Further Documentation. Pledgor hereby agrees to execute, from time
to time, one or more financing statements and such other instruments as may be
required to perfect the security interest created hereby, including any
continuation or amendments of such financing statements, and pay the cost of
filing or recording the same in the public records specified by Pledgee.
12. Waiver and Estoppel. Pledgor represents and acknowledges that it
knowingly waives each and every one of the following rights, and agrees that it
will be estopped from asserting any argument to the contrary: (a) any
promptness in making any claim or demand hereunder; (b) any defense that may
arise by reason of the incapacity, lack of authority, death or disability of
Pledgor; (c) any defense based upon an election of remedies by Pledgee which
destroys or otherwise impairs any or all of the Collateral; (d) the right of
Pledgor to proceed against Pledgee or any other person, for reimbursement; and
(e) all duty or obligation of the Pledgee to perfect, protect, retain or
enforce any security for the payment of amounts payable by Pledgor hereunder.
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY TO THIS AGREEMENT SEVERALLY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM BROUGHT BY ANY PARTY TO THIS
AGREEMENT ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT.
No delay or failure on the part of Pledgee in the exercise of any right or
remedy against Pledgor or any other party against whom Pledgee may have any
rights, shall operate as a waiver of any agreement or obligation contained
herein, and no single or partial exercise by Pledgee of any rights or remedies
hereunder shall preclude other or further exercise thereof or other exercise of
any other right or remedy whether contained in this Agreement or in any of the
other documents regarding the Obligations, including without limitation the
Operating Agreement. No waiver of the rights of Pledgee hereunder or in
connection herewith and no release of Pledgor shall be effective unless
executed in writing by Pledgee. No actions of Pledgee permitted under this
Agreement shall in any way impair or affect the enforceability of any agreement
or obligation contained herein.
13. Independent Obligations. The obligations of Pledgor are independent
of the obligations of any other party which may be initially or otherwise
responsible for performance or payment of the Obligations, and a separate
action or actions for payment, damages or performance may be brought and
prosecuted by Pledgee against Pledgor, individually, for the full amount of the
Obligations then due and payable, whether or not an action is brought against
any other party, whether or not Pledgee is involved in any proceedings and
whether or not Pledgee or Pledgor or any other person is joined in any action
or proceedings.
14. No Offset Rights of Pledgor. No lawful act of commission or omission
of any kind or at any time upon the part of Pledgee shall in any way affect or
impair the rights of Pledgee to enforce any right, power or benefit under this
Agreement, and no set-off, recoupment, reduction or diminution of any
obligation which Pledgor has or may have against Pledgee or against any other
party shall be available against Pledgee in any suit or action brought by
Pledgee to enforce any right, power or benefit under this Agreement.
15. Power of Attorney. Pledgor hereby appoints Pledgee as his attorney-
in-fact to execute and file, effective upon the occurrence of an Event of
Default, on his behalf any financing statements, continuation statements or
other documentation required to perfect or continue the security interest
created hereby. This power, being coupled with an interest, shall be
irrevocable until all amounts secured hereby have been paid, satisfied and
discharged in full. Pledgor acknowledges and agrees that the exercise by
Pledgee of its rights under this Section 15 will not be deemed a satisfaction
of the amounts owed Pledgee unless Pledgee so elects in writing.
16. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES FURTHER AGREE
THAT IN THE EVENT OF DEFAULT, THIS AGREEMENT MAY BE ENFORCED IN THE DISTRICT
COURT IN AND FOR THE CITY AND COUNTY OF DENVER, STATE OF COLORADO AND THEY DO
HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT REGARDLESS OF THEIR RESIDENCE
OR WHERE THIS AGREEMENT MAY BE EXECUTED.
17. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective heirs, personal representatives, successors and assigns of the
parties hereto.
18. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service) or
mailed certified or registered mail, postage prepaid, return receipt requested,
or sent by telegram to the parties at the addresses shown throughout this
Agreement or such other addresses which the parties may provide to one another
in accordance herewith. If notice is sent to Pledgee, a copy of such notice
shall also be given to Wayne H. Hykan, Esq., Brownstein Hyatt Farber &
Strickland, P.C., 410 17th Street, Suite 2222, Denver, Colorado 80202. If
notice is sent to Pledgor, a copy of such notice shall also be given to Alan B.
Lottner, Esq., Haligman & Lottner, First Interstate Tower North, 633
Seventeenth Street, Suite 2700, Denver, Colorado 80202-3635. Notices delivered
personally will be effective upon delivery to an authorized representative of
the party at the designated address; notices sent by mail in accordance with
the above paragraph will be effective upon execution of the Return Receipt
Requested.
19. Consent of Pledgor. Pledgor consents to the exercise by Pledgee of
any rights of Pledgor in accordance with the provisions of this Agreement.
20. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the legality or validity of the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable.
21. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the parties.
22. Termination. This Agreement shall terminate, and shall be of no
further force or effect, upon the earlier to occur of the following: (i) full
payment and performance of the Obligations of the Pledgor, (ii) acquisition by
Pledgor or an affiliate of Pledgor of 100% ownership interest in the Limited
Liability Company, or (iii) upon the mutual consent of Pledgor and Pledgee.
23. Certain Matters With Respect to Pledgee. This Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction have been executed by the undersigned on behalf of Pledgee in
his/her capacity as an officer or director of Pledgee, and not individually,
and neither the directors, officers or shareholders of Pledgee shall be bound
by or have any personal liability hereunder or thereunder. The parties to this
Agreement shall look solely to the assets of Pledgee for satisfaction of any
liability of Pledgee in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this transaction and
will not seek recourse or commence any action against any of the directors,
officers or shareholders of Pledgee or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The foregoing
shall also apply to all and any future documents, agreements, understandings,
arrangements and transactions between the parties hereto with respect to the
Collateral or this Agreement.
[SIGNATURE PAGE FOLLOWS]<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PLEDGOR:
---------------------------------------
Al Feld
PLEDGEE: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:
---------------------------------------
Name:----------------------------------
Title:---------------------------------
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this __ day of
__________________, 1997, by Al Feld.
WITNESS my hand and official seal.
My commission expires: ______________________________________.
Address:
________________________________
(SEAL) Notary Public
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
__________, 1997, by _________________________ as _______________ of Wellsford
Park Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: ______________________________________.
Address:
________________________________
(SEAL) Notary Public
<PAGE>
SCHEDULE A
CONSENT TO SECURITY INTEREST AND AGREEMENT
OF THE MEMBERS
OF RED CANYON AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
The undersigned, being all the members of RED CANYON AT PALOMINO PARK LLC,
a Colorado limited liability company (the "Limited Liability Company") hereby
represent and certify to Wellsford Park Highlands Corp., a Colorado corporation
(the "Secured Party") as follows:
1. The Limited Liability Company has received notice from the Secured
Party that the Secured Party has a security interest in the following
collateral ("Collateral") registered to Al Feld (the "Debtor"):
(i) All of the right, title and interest of the Debtor in the
Limited Liability Company, whether now owned or hereafter acquired,
including, without limitation, the Debtor's Interest (as defined in
the Operating Agreement) in the Limited Liability Company and its
right to receive payments, fees, distributions and allocations under
or in connection with the Operating Agreement (whether as Member or
as Manager), as such Operating Agreement may be modified or extended
from time to time with the consent of the Secured Party; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
2. Other than the notice from the Secured Party referred to above, the
Limited Liability Company has not received any notice from any entity or person
claiming an adverse claim against, lien on or security interest in the
Collateral.
3. The security interest of the Secured Party referred to above was duly
registered in the books and records of the Limited Liability Company effective
April 17, 1996.
4. Interests in the Limited Liability Company, whether as Member or as
Manager, are not represented in any certificate, instrument or document, and
such interest may be assigned, transferred or pledged without the party
receiving such assignment, transfer or pledge taking physical possession of any
certificate, instrument or document.
The Members hereby consent to the execution and delivery of the Pledge and
Security Agreement by the Debtor and agree hereby to be bound by Section 4
thereof to assign, set over, transfer, distribute, pay and deliver the
Collateral and any and all payments, proceeds or products due to Debtor under
the Collateral to the Secured Party.
The Members hereby consent to the admission of the Secured Party (or its
nominee, designee or any person acquiring its interest under the Pledge and
Security Agreement), as a Manager of the Limited Liability Company upon receipt
of notice by the Secured Party of an Event of Default by the Debtor thereunder,
and (ii) that the Secured Party or such nominees, designees or persons
acquiring the Secured Party's interest thereunder shall not be deemed to have
assumed any of Debtor's liability by virtue of such admission as the Manager of
the Limited Liability Company.
This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been executed by the undersigned
on behalf of the Secured Party in his/her capacity as an officer or trustee of
the Secured Party, and not individually, and neither the directors, officers or
shareholders of the Secured Party shall be bound by or have any personal
liability hereunder or thereunder. The parties to this Agreement shall look
solely to the assets of the Secured Party for satisfaction of any liability of
the Secured Party in respect of this Agreement and all documents, agreements,
understandings and arrangements relating to this transaction and will not seek
recourse or commence any action against any of the directors, officers or
shareholders of the Secured Party or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to all and any future documents, agreements,
understandings, arrangements and transactions between the parties hereto with
respect to the Collateral or this Agreement.
EXECUTED as of the date set forth above.
MEMBERS: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:__________________________________
Name:___________________________
Title:__________________________
_____________________________________
AL FELD, an individual
AGREED TO AND CONCURRED:
SOLE MANAGER
_______________________________
AL FELD
<PAGE>
EXHIBIT M
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of
the 17th day of April, 1996, by WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation, having an office at 370 Seventeenth Street, Suite 3100, Denver,
Colorado 80202 ("Pledgor"), for the benefit of AL FELD, an individual, having
an address of 4600 South Ulster Street, Suite 350, Denver, Colorado 80237
("Pledgee").
RECITALS
A. Pledgor is a Member of Red Canyon at Palomino Park LLC, a Colorado
limited liability company (the "Limited Liability Company"), which Limited
Liability Company is governed by its Operating Agreement dated as of April 17,
1996 (the "Operating Agreement"), by and between Pledgor and Pledgee.
B. Pledgee also is a Member, as well as the Manager, in the Limited
Liability Company.
C. In order to secure the full payment and performance by Pledgor of all
of Pledgor's obligations under the Operating Agreement, as such Operating
Agreement may be now or hereafter amended, modified or restated (said
obligations under the Operating Agreement are hereinafter referred to as the
"Obligations"), Pledgor is entering into this Agreement for the benefit of
Pledgee.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Definitions.
a. "Collateral" shall mean:
(i) All of Pledgor's right, title and interest in the ownership
interests of Pledgor in the Limited Liability Company, whether now
owned or hereafter acquired, including, without limitation, its
Interest (as defined in the Operating Agreement) in the Limited
Liability Company, the right of Pledgor, if any, to any benefits to
which Pledgor may be entitled pursuant to the Operating Agreement or
the Colorado Limited Liability Company Act, Colo. Rev. Stat. Sections
7-80-101 to 7-80-913, as amended from time to time (the "Act"), and
Pledgor's right to receive payments, fees, distributions and
allocations under or in connection with the Operating Agreement
(whether as Member or as Manager), as such Operating Agreement may be
modified or extended from time to time with the consent of the
Pledgee; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
b. "Event of Default" shall mean an event of default described in
Section 8 herein.
2. Pledge of Collateral and Grant of Security Interest. Pledgor does
hereby unconditionally and irrevocably assign, pledge, convey, transfer,
deliver, set over and grant unto Pledgee, its successors and assigns, as
security for Pledgor's complete and timely payment and performance of the
Obligations, a continuing first lien security interest under the Uniform
Commercial Code of the State of Colorado in the Collateral. Pledgor hereby
further grants to Pledgee all rights in the Collateral as are available to a
secured party of such Collateral under the Uniform Commercial Code of the State
of Colorado (being the principal place of business of Pledgor) and,
concurrently herewith, shall deliver to Pledgee duly executed UCC-1 financing
statements suitable for filing in the State of Colorado with respect to the
Collateral.
3. Delivery to Pledgee.
a. Pledgor agrees to execute and to use its best efforts to cause
all other necessary parties, and any successors and assigns thereof, to execute
and deliver to Pledgee such other agreements, instruments and documentation as
Pledgee may reasonably request from time to time to effect the conveyance,
transfer, and grant to Pledgee of Pledgor's right, title and interest in and to
the Collateral as security for the Obligations.
b. Concurrently with the execution of this Agreement, Pledgor has
caused each of the Members of the Limited Liability Company, other than
Pledgee, to execute the Consent to Security Interest and Agreement in the form
attached hereto as Schedule A (the "Consent") evidencing the consent of the
Members to the assignment of Pledgor's Limited Liability Company interests and
their agreement to be bound by Section 4 of this Agreement. Pledgor further
agrees to execute and to cause the other Members of the Limited Liability
Company to execute and deliver to Pledgee such other agreements, instruments
and documentation as Pledgee may reasonably request from time to time to
effectuate the conveyance, transfer, assignment and grant to Pledgee of all of
Pledgor's right, title and interest in and to the Collateral.
4. Proceeds and Products of the Collateral.
a. Notwithstanding any of the foregoing, unless and until there
occurs an Event of Default, Pledgee agrees to forbear from exercising his right
to receive all benefits pertaining to the Collateral (except as otherwise
permitted under the Operating Agreement), and Pledgor shall be permitted to
exercise all rights and to receive all benefits of the Collateral, including,
without limitation, the right to exercise all voting, approval, consent and
similar rights of Pledgor pertaining to the Collateral, payments due under,
proceeds, whether cash proceeds or noncash proceeds, and products of the
Collateral and to retain and enjoy the same.
b. Pledgor acknowledges and agrees with Pledgee, that unless
Pledgee otherwise consents, in Pledgee's sole discretion, Pledgor shall not
exercise any voting, approval, consent or other rights with respect to the
Collateral at any time after (i) the occurrence of an Event of Default and (ii)
receipt of notice from Pledgee instructing Pledgor not to exercise any such
voting, approval, consent or other rights with respect to the Collateral,
provided, however, that Pledgor shall exercise any such right it may have under
the agreements comprising the Collateral with respect to the business affairs
of the Limited Liability Company as is reasonably necessary to protect and
preserve the Collateral.
c. Upon or at any time after the occurrence of an Event of Default,
Pledgee, at his option to be exercised in his sole discretion by written notice
to Pledgor, may exercise all rights and remedies granted under this Agreement,
including, without limitation, the right to require the obligors under the
Collateral to make all payments due under and to pay all proceeds, whether cash
proceeds or noncash proceeds, and products of the Collateral to Pledgee. Upon
the giving of any such notice, the security constituted by this Agreement shall
become immediately enforceable by Pledgee, without any presentment, further
demand, protest or other notice of any kind, all of which are hereby expressly
and irrevocably waived by Pledgor. Pledgor hereby authorizes and directs each
respective obligor under the agreements constituting the Collateral, that upon
receipt of written notice from Pledgee of an Event of Default by Pledgor
hereunder, to assign, set over, transfer, distribute, pay and deliver any and
all Collateral or said payments, proceeds or products of the Collateral to
Pledgee, at such address as Pledgee may direct, at such time and in such manner
as the Collateral and such payments, proceeds and products of the Collateral
would otherwise be distributed, transferred, paid or delivered to Pledgor. The
respective obligors under the agreements constituting the Collateral shall be
entitled to conclusively rely on such notice and make all such assignments and
transfers of the Collateral and all such payments with respect to the
Collateral and pay all such proceeds and products of the Collateral to Pledgee
and shall have no liability to Pledgor for any loss or damage Pledgor may incur
by reason of said reliance.
5. No Assumption. Notwithstanding any of the foregoing, whether or not
an Event of Default shall have occurred, and whether or not Pledgee elects to
foreclose on his security interest in the Collateral as set forth herein,
neither the execution of this Agreement, receipt by Pledgee of any of Pledgor's
right, title and interest in and to the Collateral and the payments, proceeds
and products of the Collateral, now or hereafter due to Pledgor from any
obligor of the Collateral, nor Pledgee's foreclosure of his security interest
in the Collateral, shall in any way be deemed to obligate Pledgee to assume any
of Pledgor's obligations, duties or liabilities under the Collateral or any
agreements constituting the Collateral, as presently existing or as hereafter
amended, or under any and all other agreements now existing or hereafter
drafted or executed (collectively, the "Pledgor's Liabilities"), unless Pledgee
otherwise agrees to assume any or all of the Pledgor's Liabilities in writing.
In the event of foreclosure by Pledgee of his security interest in the
Collateral, Pledgor shall remain bound and obligated to perform the Pledgor's
Liabilities to the extent required under the Operating Agreement and Pledgee
shall not be deemed to have assumed any of the Pledgor's Liabilities, except as
provided in the preceding sentence. In the event the entity or person
acquiring the Collateral at a foreclosure sale elects to assume the Pledgor's
Liabilities, such assignee shall agree to be bound by the terms and provisions
of the applicable agreement.
6. Indemnification. Pledgor hereby agrees to indemnify, defend and hold
Pledgee, his successors and assigns harmless from and against any and all
damages, losses, claims, costs or expenses (including without limitation,
reasonable attorneys' fees) and any other liabilities whatsoever that Pledgee
or his successors or assigns may incur by reason of Pledgor's failure to comply
with the terms and conditions of this Agreement or by reason of any unpermitted
assignment of Pledgor's right, title and interest in and to any or all of the
Collateral.
7. Representations, Warranties and Covenants. In addition to the
representations made by Pledgor in the Operating Agreement, if any, Pledgor
makes the following representations and warranties, which shall be deemed to be
continuing representations and warranties, and Pledgor covenants and agrees to
provide written notice to Pledgee within ten (10) days after Pledgor becomes
aware that any of the following is no longer true and correct and to perform
diligently all acts reasonably necessary to maintain or restore the truth and
correctness, in all material respects, of the following:
a. Pledgor acknowledges that the Operating Agreement and any other
agreements constituting the Collateral, currently are in full force and effect
and have not been amended or modified, except by Pledgor and Pledgee in
writing.
b. Pledgor has the full right and title to its interest in the
Collateral and has the full power, legal right and authority to pledge, convey,
transfer and assign such interest. None of the Collateral is subject to any
existing assignment, claim, lien, pledge, transfer or other security interest
of any character, or to any attachment, levy, garnishment or other judicial
process or to any claim for set-off, counterclaim, deduction or discount.
Pledgor shall not, without the prior written consent of Pledgee, which consent
may be granted or denied in Pledgee's sole discretion, further convey,
transfer, set over or pledge to any party any of its interests in the
Collateral. Pledgor agrees to (i) warrant and defend its title to the
Collateral and the security interest created by this Agreement against all
claims of all persons, and (ii) maintain and preserve the Collateral and such
security interests.
c. The pledge of the Collateral pursuant to this Agreement creates
a valid first priority security interest in the Collateral, securing the
performance of the Obligations, which security interest shall be perfected upon
the filing of the UCC-1 Financing Statements referred to in Paragraph 2 of this
Agreement.
d. Pledgor's Employer Identification number is: 84-1305872.
Pledgor's principal place of business is located at: 370 Seventeenth Street,
Suite 3100, Denver, Colorado 80202.
e. Pledgor agrees that it shall not, without at least thirty (30)
days' prior written notification to Pledgee, move or otherwise change its
principal place of business.
f. To the best knowledge of Pledgor, neither the execution and
delivery of this Agreement by Pledgor nor the consummation of the transactions
herein contemplated nor the fulfillment of the terms hereof (i) violate the
terms of any agreement, indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which Pledgor is a party, or (ii) conflict with
any law, order, rule or regulation applicable to Pledgor or any court or any
government, regulatory body or administrative agency or other governmental body
having jurisdiction over Pledgor or its properties, or (iii) result in or
require the creation or imposition of any lien (other than the first priority
lien of Pledgee in the Collateral contemplated hereby).
g. No consent or approval which has not been obtained prior to the
date hereof of any other person or entity and no authorization, approval or
other action by, and no notice to or filing with any governmental body,
regulatory authority or securities exchange, was or is necessary as a condition
to the validity of the pledge hereunder of the Collateral and such pledge is
effective to vest in the Pledgee the rights of the Pledgee in the Collateral as
set forth herein.
h. Pledgor shall comply in all material respects with all
requirements of law applicable to the Collateral or any part thereof.
i. Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Collateral prior to delinquency
thereof and shall keep all Collateral free of all unpaid charges whatsoever.
8. Event of Default. Each of the following shall constitute an Event of
Default hereunder:
a. A failure of Pledgor to make a Capital Contribution pursuant to
the Operating Agreement within thirty (30) days of receipt by Pledgor of
written demand from Pledgee, provided that the fact that such amount is due and
payable is not in dispute, or that any dispute has been finally determined by a
court having jurisdiction or through another means that is mutually acceptable
to Pledgor and Pledgee; or
b. Any warranty, representation or statement of Pledgor in this
Agreement proves to have been false in any material respect when made or
furnished; or
c. There occurs the issuance of a writ, order of attachment or
garnishment with respect to any of the Collateral and such writ, order of
attachment or garnishment is not dismissed and removed within thirty (30) days
thereafter.
d. A material breach or violation of any covenant or agreement
contained herein shall have occurred, which is not cured within thirty (30)
days after notice has been given to Pledgor by Pledgee.
Any Event of Default under this Agreement shall be an event of default by
Pledgor under the Operating Agreement.
9. Remedies.
a. Upon the occurrence of an Event of Default, Pledgee may, by
giving notice of such Event of Default, at his option, do any one or more of
the following:
(i) Take control of the Collateral, collect, and thereafter
exercise all rights and powers of Pledgor with respect to the
Collateral; and
(ii) Without notice to or demand upon Pledgor, make such
payments and do such acts as Pledgee may deem necessary to protect
his security interest in the Collateral, including, without
limitation, paying, purchasing, contesting or compromising any
encumbrance, charge or lien which is prior to or superior to the
security interest granted hereunder, and in exercising any such
powers or authority to pay all expenses incurred in connection
therewith; and
(iii) Require Pledgor to take all actions necessary to
deliver such Collateral to Pledgee, or an agent or representative
designated by Pledgee; and
(iv) Foreclose upon this Agreement as herein provided or in any
commercially reasonable manner permitted by law, and exercise any and
all of the rights and remedies conferred upon Pledgee by the
Operating Agreement, or in any other document executed by Pledgor in
connection with the Obligations secured hereby; and sell or cause to
be sold the Collateral, without affecting in any way the rights or
remedies to which Pledgee may be entitled under the other such
instruments; and
(v) Sell or otherwise dispose of the Collateral at public sale,
without having the Collateral at the place of sale, and upon terms
and in such manner as is commercially reasonable; Pledgee may be a
purchaser at any sale; and
(vi) Exercise any remedies of a secured party under the Uniform
Commercial Code of the State of Colorado or any other applicable law;
and
(vii) Exercise any remedies available to Pledgee under the
Operating Agreement; and
(viii) Notwithstanding anything to the contrary contained in
this Agreement, at any time after an Event of Default Pledgee may, by
delivering written notice to the Limited Liability Company and to
Pledgor, succeed, or designate its nominee or designee to succeed, to
all right, title and interest of Pledgor (including, without
limitation, the right, if any, to vote on or take any action with
respect to the matters of the Limited Liability Company) as a Member
of the Limited Liability Company in respect of the Collateral.
Pledgor hereby irrevocably authorizes and directs the Limited
Liability Company on receipt of any such notice (a) to deem and treat
Pledgee or such nominee or designee in all respects as a Member (and
not merely an assignee of a Member) of such Limited Liability
Company, entitled to exercise all the rights, powers and privileges
(including the right to vote on or take any action with respect to
Limited Liability Company matters pursuant to the Operating
Agreement, to receive all distributions, to be credited with the
capital account and to have all other rights, powers and privileges
appertaining to the Collateral to which Pledgor would have been
entitled had the Collateral not been transferred to Pledgee or such
nominee or designee), and (b) to file amended Articles of
Organization for such Limited Liability Company, if required,
admitting Pledgee or such nominee or designee as a Member of the
Limited Liability Company in place of Pledgor; and
(ix) The rights granted to Pledgee under this Agreement are of a
special, unique, unusual and extraordinary character. The loss of
any of such rights cannot be reasonably or adequately compensated by
way of damages in any action at law, and any material breach by
Pledgor of any of Pledgor's covenants, agreements, obligations,
representations or warranties under this Agreement will cause Pledgee
irreparable injury and damage. In the event of any such breach,
Pledgee shall be entitled, as a matter of right, to injunctive relief
or other equitable relief in any court of competent jurisdiction to
prevent the violation or contravention of any of the provisions of
this Agreement or to compel compliance with the terms of this
Agreement by Pledgor. Pledgee is absolutely and irrevocably
authorized and empowered by Pledgor to demand specific performance of
each of the covenants, agreements, representations and warranties of
Pledgor in this Agreement. Pledgor hereby irrevocably waives any
defense based on the adequacy of any remedy at law which might
otherwise be asserted by Pledgor as a bar to the remedy of specific
performance in any action brought by Pledgee against Pledgor to
enforce any of the covenants or agreements of Pledgor in this
Agreement.
b. Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Pledgee shall give Pledgor at least ten (10) days' prior written notice of the
time and place of any public sale of the Collateral subject to this Agreement
or other intended disposition thereof to be made. Such notice shall be
conclusively deemed to have been delivered to Pledgor at the address set forth
in subsection 7(d) of this Agreement, unless Pledgor shall notify Pledgee in
writing of any change of its principal place of business and provide Pledgee
with the address of its new place of business.
c. The proceeds of any sale under subsections 9(a)(iv) and (v)
above shall be applied as follows:
(i) To the repayment of all reasonable costs and expenses of
retaking, holding and preparing for the sale and the selling of the
Collateral (including actual reasonable legal expenses and attorneys'
fees) and the discharge of all assessments, encumbrances, charges or
liens, if any, on the Collateral prior to the lien hereof (except any
taxes, assessments, encumbrances, charges or liens subject to which
such sale shall have been made);
(ii) To the payment of the whole amount, if any, of the
Obligations, as and when the same become due; and
(iii) The aggregate surplus, if any, shall be paid to
Pledgor in a lump sum, without recourse to Pledgee, or as a court of
competent jurisdiction may direct.
d. Pledgee shall have the right to enforce one or more remedies
under this Agreement and under the Operating Agreement, successively or
concurrently, and such action shall not operate to estop or prevent Pledgee
from pursuing any further remedy which he may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Pledgor until full payment of any deficiency has been made
in cash.
e. PLEDGOR ACKNOWLEDGES THAT PLEDGEE MAY BE UNABLE TO EFFECT A
PUBLIC SALE OF ALL OR ANY PART OF THE COLLATERAL AND MAY BE COMPELLED TO RESORT
TO ONE OR MORE PRIVATE SALES TO A RESTRICTED GROUP OF PURCHASERS WHO WILL BE
OBLIGATED TO AGREE, AMONG OTHER THINGS, TO ACQUIRE THE COLLATERAL FOR THEIR OWN
ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE
THEREOF. PLEDGOR FURTHER ACKNOWLEDGES THAT ANY SUCH PRIVATE SALES MAY BE AT
PRICES AND ON TERMS LESS FAVORABLE THAN THOSE OF PUBLIC SALES, AND AGREES THAT
PROVIDED SUCH PRIVATE SALES ARE MADE IN A COMMERCIALLY REASONABLE MANNER,
PLEDGEE SHALL HAVE NO OBLIGATION TO DELAY SALE OF ANY COLLATERAL TO PERMIT THE
ISSUER THEREOF TO REGISTER IT FOR PUBLIC SALE UNDER THE SECURITIES ACT OF 1933.
PLEDGOR AGREES THAT PLEDGEE SHALL BE PERMITTED TO TAKE SUCH ACTIONS AS PLEDGEE
DEEMS REASONABLY NECESSARY IN DISPOSING OF THE COLLATERAL TO AVOID CONDUCTING A
PUBLIC DISTRIBUTION OF SECURITIES IN VIOLATION OF THE SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE, AS NOW ENACTED OR AS THE SAME MAY IN THE
FUTURE BE AMENDED, PROVIDED THAT ANY SUCH ACTIONS SHALL BE COMMERCIALLY
REASONABLE. IN ADDITION, PLEDGOR AGREES TO EXECUTE, FROM TIME TO TIME, ANY
AMENDMENT TO THIS AGREEMENT OR OTHER DOCUMENT AS PLEDGEE MAY REASONABLY REQUIRE
TO EVIDENCE THE ACKNOWLEDGEMENTS AND CONSENTS OF PLEDGOR SET FORTH IN THIS
SECTION.
10. Attorneys Fees. Pledgor agrees to pay to Pledgee, without demand,
reasonable attorneys' fees and all reasonable costs and other reasonable
expenses which Pledgee expends or incurs in collecting any amounts payable by
Pledgor with respect to an Event of Default hereunder or in enforcing this
Agreement against Pledgor, whether or not suit is filed.
11. Further Documentation. Pledgor hereby agrees to execute, from time
to time, one or more financing statements and such other instruments as may be
required to perfect the security interest created hereby, including any
continuation or amendments of such financing statements, and pay the cost of
filing or recording the same in the public records specified by Pledgee.
12. Waiver and Estoppel. Pledgor represents and acknowledges that it
knowingly waives each and every one of the following rights, and agrees that it
will be estopped from asserting any argument to the contrary: (a) any
promptness in making any claim or demand hereunder; (b) any defense that may
arise by reason of the incapacity or lack of authority of Pledgor; (c) any
defense based upon an election of remedies by Pledgee which destroys or
otherwise impairs any or all of the Collateral; (d) the right of Pledgor to
proceed against Pledgee or any other person for reimbursement; and (e) all duty
or obligation of Pledgee to perfect, protect, retain or enforce any security
for the payment of amounts payable by Pledgor hereunder.
TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY TO THIS AGREEMENT SEVERALLY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM BROUGHT BY ANY PARTY TO THIS
AGREEMENT ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT.
No delay or failure on the part of Pledgee in the exercise of any right or
remedy against Pledgor or any other party against whom Pledgee may have any
rights, shall operate as a waiver of any agreement or obligation contained
herein, and no single or partial exercise by Pledgee of any rights or remedies
hereunder shall preclude other or further exercise thereof or other exercise of
any other right or remedy whether contained in this Agreement or in any of the
other documents regarding the Obligations, including without limitation the
Operating Agreement. No waiver of the rights of Pledgee hereunder or in
connection herewith and no release of Pledgor shall be effective unless in
writing executed by Pledgee. No actions of Pledgee permitted under this
Agreement shall in any way impair or affect the enforceability of any agreement
or obligation contained herein.
13. Independent Obligations. The obligations of Pledgor are independent
of the obligations of any other party which may be initially or otherwise
responsible for performance or payment of the Obligations, and a separate
action or actions for payment, damages or performance may be brought and
prosecuted by Pledgee against Pledgor, individually, for the full amount of the
Obligations then due and payable, whether or not an action is brought against
any other party, whether or not Pledgee is involved in any proceedings and
whether or not Pledgee or Pledgor or any other person is joined in any action
or proceedings.
14. Lawful Acts of Pledgee. No lawful act of commission or omission of
any kind or at any time upon the part of Pledgee shall in any way affect or
impair the rights of Pledgee to enforce any right, power or benefit under this
Agreement.
15. Power of Attorney. Pledgor hereby appoints Pledgee as its attorney-
in-fact to execute and file, effective upon the occurrence of an Event of
Default, on its behalf any financing statements, continuation statements or
other documentation required to perfect or continue the security interest
created hereby. This power, being coupled with an interest, shall be
irrevocable until all amounts secured hereby have been paid, satisfied and
discharged in full. Pledgor acknowledges and agrees that the exercise by
Pledgee of his rights under this Section 15 will not be deemed a satisfaction
of the amounts owed Pledgee unless Pledgee so elects in writing.
16. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES FURTHER AGREE
THAT IN THE EVENT OF DEFAULT, THIS AGREEMENT MAY BE ENFORCED IN THE DISTRICT
COURT IN AND FOR THE CITY AND COUNTY OF DENVER, STATE OF COLORADO AND THEY DO
HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT REGARDLESS OF THEIR RESIDENCE
OR WHERE THIS AGREEMENT MAY BE EXECUTED.
17. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective heirs, personal representatives, successors and assigns of the
parties hereto.
18. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service) or
mailed certified or registered mail, postage prepaid, return receipt requested,
or sent by telegram to the parties at the addresses shown throughout this
Agreement or such other addresses which the parties may provide to one another
in accordance herewith. If notice is sent to Pledgor, a copy of such notice
shall also be given to Wayne H. Hykan, Esq., Brownstein Hyatt Farber &
Strickland, P.C., 410 17th Street, Suite 2222, Denver, Colorado 80202. If
notice is sent to Pledgee, a copy of such notice shall also be given to Alan B.
Lottner, Esq., Haligman & Lottner, PC, 633 17th Street, Suite 2700, Denver,
Colorado 80202. Notices delivered personally will be effective upon delivery
to an authorized representative of the party at the designated address; notices
sent by mail in accordance with the above paragraph will be effective upon
execution of the Return Receipt Requested.
19. Consent of Pledgor. Pledgor consents to the exercise by Pledgee of
any rights of Pledgor in accordance with the provisions of this Agreement.
20. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the legality or validity of the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable.
21. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the parties.
22. Limitation of Liability. No officer, director or shareholder of
Pledgor shall be bound by or have any personal liability hereunder or under any
documents, agreements, understandings or arrangements relating to this
transaction. The parties to this Agreement shall look solely to the assets of
Pledgor for satisfaction of any liability of Pledgor in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this transaction and will not seek recourse or commence action
against any of the directors, officers or shareholders of Pledgor or any of
their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to all and any future
documents, agreements, understandings, arrangements and transactions between
the parties hereto with respect to the Obligations, the Collateral or this
Agreement.
23. Termination. This Agreement shall terminate, and shall be of no
further force or effect, upon the earlier to occur of the following: (i) full
payment and performance of the Obligations of Pledgor, (ii) acquisition by
Pledgor or an affiliate of Pledgor of 100% ownership interest in the Limited
Liability Company, or (iii) upon the mutual consent of Pledgor and Pledgee.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PLEDGOR: WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By:__________________________________
Name:_____________________________
Title:____________________________
PLEDGEE: _____________________________________
Al Feld
STATE OF ____________ )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ____ day of
_______________, 1997, by _________________________ as _______________ of
Wellsford Park Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: ___________________________________.
Address:
________________________________
(SEAL) Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this __ day of
__________, 1997, by Al Feld.
WITNESS my hand and official seal.
My commission expires: _____________________________________.
Address:
________________________________
(SEAL) Notary Public
<PAGE>
SCHEDULE A
CONSENT TO SECURITY INTEREST AND AGREEMENT
OF THE MEMBERS
OF RED CANYON AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
The undersigned, being all the members of RED CANYON AT PALOMINO PARK LLC,
a Colorado limited liability company (the "Limited Liability Company") hereby
represent and certify to Al Feld, an individual having an address at 4600 South
Ulster Street, Suite 350, Denver, Colorado 80237 (the "Secured Party") as
follows:
1. The Limited Liability Company has received notice from the Secured
Party that the Secured Party has a security interest in the following
collateral (the "Collateral") registered to Wellsford Park Highlands Corp., a
Colorado corporation (the "Debtor"):
(i) All of the right, title and interest of the Debtor in the
Limited Liability Company, whether now owned or hereafter acquired,
including, without limitation, the Debtor's Interest (as defined in
the Operating Agreement) in the Limited Liability Company and its
right to receive payments and distributions from the Limited
Liability Company and allocations under or in connection with the
Operating Agreement, as such Operating Agreement may be modified or
extended from time to time with the written consent of the Secured
Party; and
(ii) All proceeds, whether cash proceeds or noncash proceeds,
and products of any and all of the foregoing.
2. Other than the notice from the Secured Party referred to above, the
Limited Liability Company has not received any notice from any entity or person
claiming an adverse claim against, lien on or security interest in the
Collateral.
3. The security interest of the Secured Party referred to above was duly
registered in the books and records of the Limited Liability Company effective
April 17, 1996.
4. Interests in the Limited Liability Company are not represented in any
certificate, instrument or document, and such Interests may be assigned,
transferred or pledged without the party receiving such assignment, transfer or
pledge taking physical possession of any certificate, instrument or document.
5. The Members hereby consent to the execution and delivery of that
certain the Pledge and Security Agreement by the Debtor and agree hereby to be
bound by Section 4 thereof to assign, set over, transfer, distribute, pay and
deliver the Collateral and any and all payments, proceeds or products due to
the Debtor under the Collateral to the Secured Party.
This agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been executed by the undersigned
on behalf of Wellsford Park Highlands Corp., a Colorado corporation ("WPHC") in
his/her capacity as an officer or director of WPHC, and not individually, and
neither the directors, officers or shareholders of WPHC shall be bound by or
have any personal liability hereunder or thereunder. The parties to this
agreement shall look solely to the assets of WPHC for satisfaction of any
liability of WPHC in respect of this agreement and all documents, agreements,
understandings and arrangements relating to this transaction and will not seek
recourse or commence any action against any of the directors, officers or
shareholders of WPHC or any of their personal assets for the performance or
payment of any obligation hereunder or thereunder. The foregoing shall also
apply to all and any future documents, agreements, understandings, arrangements
and transactions between the parties hereto with respect to the Collateral or
this Agreement.
EXECUTED as of the date set forth above.
MEMBERS: WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:__________________________________
Name:____________________________
Title:____________________________
_____________________________________
AL FELD, an individual
AGREED TO AND CONCURRED:
SOLE MANAGER
________________________________
Al Feld
<PAGE>
EXHIBIT N
PLANS AND SPECIFICATIONS
<PAGE>
EXHIBIT O
FINAL PROJECT BUDGET
<PAGE>
EXHIBIT P
CALCULATION AND PAYMENT OF THE INCENTIVE FEE
1. Definitions. The following definitions shall apply for the purpose
of calculation of the Incentive Fee:
a. "Cost Recovery" shall mean that (I) the sum of Disposition
Recovery, Land Recovery, and Ownership Recovery, exceeds (II) Infrastructure
Costs for any an all phases of the Infrastructure, plus interest on
Infrastructure Costs at an annual rate of nine percent, compounded monthly.
Cost Recovery shall be determined on a calendar year basis; such determination
shall be made by March 31 of each year for the preceding calendar year.
b. "Disposition Recovery" shall mean (I) the sale proceeds net of
all costs of closing and brokerage costs received by the Company from a sale of
the Project by the Company, plus (II) the sale proceeds net of all costs of
closing and brokerage costs received from the sale of Future Projects by the
initial owner(s) of such Future Projects, minus (III) Total Development Costs
for the Project (if sold by the Company) and Total Development Costs for all
Future Projects (which have been sold).
c. "Future Project" shall mean any apartment project constructed by
WPHC, WRPT or an Affiliate of them (provided that WPHC or WRPT directly or
indirectly owns 50% or more of such Affiliate), which project is constructed on
the Master Development Land. "Future Project" shall not include, however, the
Project which is the subject of the Operating Agreement.
d. "Incentive Cap" shall mean the lesser of $1,957,447.00 or the
product of $4,255.32 and the number of apartment units actually constructed in
Phase I. If subsequent phases are developed, each will have an Incentive Cap
based on the number of units in such phases and a per unit limit of $4,255,32.
In no event shall the Incentive Cap for all phases exceed an aggregate of
$8,000,000.
e. "Land Recovery" shall mean (I) the amount(s) received by WPHC in
connection with the sale(s) of all or a portion of its interest in the Land
Contract or in the Master Development Land acquired by it pursuant to the Land
Contract, minus (II) the purchase price paid by the WPHC or its Affiliates for
such Master Development Land, plus all closing costs and incidental holding and
carrying costs at an assumed annual interest rate of nine percent (9%), and the
earnest money deposit in connection with the Land Contract unless and until
such earnest money deposit is applied against the purchase price of Master
Development Land. Land Recovery shall not include any amounts received from
the sale of the Project or a Future Project.
f. "Ownership Recovery" shall mean (I) the Project Value for the
Project and any Future Projects, minus (II) Total Development Costs for the
Project and all such Future Projects. If the Project or a Future Project is
sold anytime during the calendar year preceding the date of determination of
Cost Recovery, such Project or Future Project shall not be included in the
calculation of Ownership Recovery for such calendar year.
g. "Project NOI" shall mean the Net Operating Income for the
Project or a Future Project for the calendar year preceding the date of
determination of Cost Recovery.
h. "Project Value" shall mean with respect to the Project or any
Future Project the Project NOI for such Project or Future Project divided by
ten percent (10.0%).
i. "Stabilized NOI" shall mean the Net Operating Income for Phase I
for the 12 month period following the Stabilization Date.
j. "Stabilization Date" shall mean the first day of the month
following the date on which any one of the following shall have occurred: (i)
93% occupancy in the operations of the Project at any point in time; (ii)
6 months after issuance of a certificate of occupancy for all of the apartments
comprising the Project; or (iii) forty-two (42) months after the Initial
Closing.
k. "Total Development Costs" with respect to the Project shall mean
Total Development Costs as set forth in the Operating Agreement, and with
respect to any Future Phase shall have an equivalent meaning. Total
Development Costs does not include an allocation of Infrastructure Costs.
l. "Target Fee" shall mean an amount equal to 3% of Total
Development Costs (including any Cost Saving Fee paid to Feld).
m. "Yield" shall mean (i) Stabilized NOI, divided by (ii) the sum
of (A) Total Development Costs (including any Cost Saving Fee paid to Feld),
(B) the Incentive Fee, (C) the Infrastructure Costs allocable to the Project
(i.e. for Phase I, 24.26% of total Infrastructure Cost), and (D) interest at
9%, compounded monthly, on the pro rata share of the Infrastructure Cost.
2. Calculation of Incentive Fee. The LLC's accountants shall calculate
the Incentive Fee promptly after they have sufficient information to accurately
calculate Stabilized NOI. The Incentive Fee shall equal the following,
provided that in no event shall the Incentive Fee exceed the Incentive Cap:
a. If the Yield is 9% or less, the Incentive Fee shall equal zero;
b. If the Yield is greater than 9% and less than or equal to 10%,
then the Incentive Fee shall equal (A) the Target Fee, multiplied by (B) the
Yield minus 9%, multiplied by (C) 100.
c. If the Yield is greater than 10% and less than or equal to
11.5%, then the Incentive Fee shall equal the following:
(i) the Target Fee, plus
(ii) (A) the Incentive Cap minus the Target Fee, multiplied by (B)
the Yield minus 10%, divided by (C) 1.5, multiplied by (D) 100.
d. If the Yield is greater than 11.5%, then the Incentive Fee shall
equal the Incentive Cap.
3. Payment of Incentive Fee. The Incentive Fee shall be deemed
earned at the time it is calculated but shall not be due or payable unless and
until Cost Recovery has occurred. The Incentive Fee shall accrue simple
interest at 9% per annum from the date it is deemed earned until paid.
4. Accelerated Payment of Incentive Fee. Notwithstanding anything to
the contrary in this Exhibit C, if WPHC, in its sole discretion, causes the
Final Closing to occur more than thirty (30) days prior to the Outside Date,
then the Incentive Fee shall equal the Target Fee and the Company shall pay 50
percent of such Incentive Fee at the Final Closing and 50 percent of such
Incentive Fee within two years of the date of Final Closing.
5. Allocation of Infrastructure Costs. The allocation of Infrastructure
Costs for purposes of the calculation of the Incentive Fee is solely for such
purpose and is distinct from and will not be modified by the actual allocation
of Infrastructure Costs per unit.
<PAGE>
EXHIBIT Q
EXERCISE OF CALL OPTION; ASSIGNMENT OF INTEREST
POWER OF ATTORNEY
THIS ASSIGNMENT OF INTEREST (this "Assignment") is made and entered into
as of the ____ day of ______________ 19__, by and between Al Feld, an
individual ("Assignor"), and Wellsford Park Highlands Corp., a Colorado
corporation ("Assignee").
RECITALS
a. Pursuant to that certain Operating Agreement (the "Operating
Agreement") of Red Canyon at Palomino Park LLC, a Colorado limited liability
company (the "Company") dated as of April 17, 1996, by and among Assignor and
Assignee, Assignee is the owner of an option (the "Call Option") to acquire the
ownership interest of Assignor in the Company as of the date hereof (including
the right of Assignor to receive any distributions related to any periods prior
to and including the date hereof), which ownership interest includes the right
of Assignor to any and all benefits to which Assignor may be entitled as a
Member and as a Manager (each as defined in the Operating Agreement), as
provided in the Operating Agreement or the version of the Colorado Limited
Liability Company Act adopted by the State of Colorado, Co. Rev. Stat. Section
7-80-101 to 7-80-913, as amended from time to time (the "Act"), together with
the unaccrued obligations of Assignor, in its capacity as a Member and Manager,
to comply with all the terms and provisions of the Operating Agreement and the
Act (collectively, the "Ownership Interest").
b. In accordance with Section 16.2.1 of the Operating Agreement,
Assignee, by its execution and delivery of this Assignment to Assignor, hereby
desires (i) to exercise the Call Option as contemplated therein and (ii) to
cause Assignor to resign as Member and Manager of the Company.
c. Assignor has agreed, concurrently with the exercise of the Call
Option by Assignee: (i) to assign and sell the Ownership Interest to Assignee
pursuant to the terms and conditions set forth in the Operating Agreement and
(ii) to appoint Assignee as its true and lawful attorney-in-fact, as set forth
herein.
d. Terms not otherwise defined herein shall have the meanings set forth
in the Operating Agreement.
AGREEMENT
In consideration of the receipt of Ten and no/100 Dollars ($10.00) and
other good and valuable consideration in hand paid by Assignee to Assignor, the
receipt and sufficiency of which are hereby acknowledged and confessed by
Assignor, Assignor and Assignee hereby agree as follows:
1. Assignment and Assumption. Concurrently with and conditioned
upon the satisfaction of all of the conditions and covenants of Section 16.2.1
of the Operating Agreement, Assignor hereby assigns, grants and conveys to
Assignee all of Assignor's right, title and interest in and to the Ownership
Interest. Assignee hereby assumes the Ownership Interest and agrees to be
bound by and comply with and perform all of the obligations of Assignor in its
capacity as a Member and as a Manager arising under the Operating Agreement
which accrue after the date hereof. Assignor shall remain obligated to perform
all of the obligations of Assignor under the Operating Agreement (i) which are
not expressly assumed hereunder or (ii) which have accrued on or prior to the
date hereof. Further, all benefits of the Operating Agreement relating to
Assignor, including, without limitation, the right to receive any distributions
related to any periods prior to and including the date hereof, shall inure to
the benefit of Assignee.
2. Representation and Warranty of Assignor. Assignor represents
and warrants that: (i) Assignor is the sole owner of the entire Ownership
Interest; (ii) Assignor is not in default under or in breach of any of the
terms, covenants or provisions of the Operating Agreement, and Assignor knows
of no event which, but for the passage of time or the giving of notice, or
both, would constitute an event of default under or a breach of the Operating
Agreement by Assignor; (iii) Assignor is duly authorized to execute and deliver
this Assignment; and (iv) the Ownership Interest is free and clear of any and
all liens, security interests, encumbrances, and competing claims.
3. Appointment of Assignee as Attorney-in-Fact. Effective as of
the date hereof, Assignor hereby irrevocably constitutes and appoints Assignee
to be its true and lawful attorney-in-fact to act for Assignor, in the name,
place and stead of Assignor, for the following purposes:
to endorse any check or other instrument payable to Assignor in
connection with the Project, to submit claims and otherwise deal with
all insurance and insurance proceeds with respect to the Project, to
execute and file with the appropriate governmental authority or
office any and all certificates, reports or other evidence of the
withdrawal of Assignor from the Company, and to perform such other
acts as may be necessary to carry out the purpose and intent of the
within assignment or to continue the business of the Company.
Assignor hereby ratifies, acknowledges and confirms all acts taken by Assignee,
as attorney-in-fact, pursuant to this appointment. Assignor hereby revokes,
annuls and cancels any and all powers of attorney, if any, previously executed
by Assignor with respect to such stated purposes, and the same shall be of no
further force or effect. Assignor hereby acknowledges that such power shall be
coupled with an interest and shall survive the disability or death of the
Assignor.
4. Indemnity. Assignor hereby agrees to indemnify and defend
Assignee and hold it harmless against any claim, loss or liability arising from
any of the following: (i) any breach of any representation or warranty
hereunder; or (ii) any assertion that Assignee is liable for any debts or
obligations of Assignor, whether based on any act or omission of Assignor which
occurs prior or subsequent to the date of this Assignment.
5. Governing Law. This Assignment shall be governed by and
construed under the laws of the State of Colorado.
6. Successors and Assigns. This Assignment shall inure to the
benefit and be binding upon the successors and assigns of Assignor and
Assignee.
7. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
This Assignment is executed to be effective as of the date first set forth
above.
ASSIGNOR:
_____________________________________
AL FELD, an individual
ASSIGNEE:
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:__________________________________
Name: __________________________
Title: _________________________
<PAGE>
CONSENT:
Pursuant to Section 18.1.1 of the Operating Agreement and Section 7-80-
801(1)(c) of the Act, Assignee hereby consents to the continuation of the
business of the Company, notwithstanding the withdrawal and resignation of
Assignor as a Member of the Company.
ASSIGNEE:
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By: _____________________________________
Name:________________________________
Title: ______________________________
[NOTE: Continuing Members to execute Unanimous Written Consent per Schedule
A attached hereto.]
STATE OF _____________________}
}ss
COUNTY OF ____________________}
The foregoing instrument was acknowledged before me on __________ __, 19__, by
AL FELD, an individual.
_____________________________ Commission expires: _________________
Notary Public
STATE OF _____________________}
}ss
COUNTY OF ____________________}
The foregoing instrument was acknowledged before me on ____________ __, ____,
by ________________________, as _____________________ of Wellsford Park
Highlands Corp., a Colorado corporation.
_______________________________ Commission expires: ____________
Notary Public
<PAGE>
SCHEDULE A TO
EXHIBIT Q
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
RED CANYON AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
__________________ ___, 19___
Section 7-80-711 of the Colorado Limited Liability Company Act, as amended
(the "Act") provides that any action required or permitted to be taken at a
meeting of the members of a limited liability company may be taken without a
meeting if a written consent, setting forth the action so taken, shall be
signed by all the members entitled to vote with respect to the subject matter
thereof and delivered to the limited liability company in the manner described
in the Act. Section 15.10 of that certain Operating Agreement ("Operating
Agreement") of Red Canyon at Palomino Park LLC (the "Company"), a Colorado
limited liability company, dated as of April 17, 1997, by and between Al Feld
and Wellsford Park Highlands Corp., a Colorado corporation ("WPHC"), provides
that action required or permitted to be taken at a meeting of Members of the
Company, may be taken without a meeting under similar circumstances.
The undersigned, which constitute all of the Remaining Members (defined below)
of the Company, by signing this document, waive any and all notice that may be
required for a meeting of the members of the Company and take the following
action:
WHEREAS, pursuant to Section 16.2.1 of the Operating Agreement, WPHC, by
executing the attached Exercise of Call Option, Assignment of Interest and
Power of Attorney attached hereto as Exhibit L-1, has given notice to the
Company of its desire (i) to exercise the Call Option as contemplated in the
Operating Agreement and (ii) to cause Al Feld to resign as Member and Manager
of the Company; and
WHEREAS, the Members other than Al Feld (the "Remaining Members") desire
(i) to accept the withdrawal and resignation of Al Feld as Member and Manager
of the Company, (ii) to consent to the transfer and assignment of the Ownership
Interest (as defined in the attached exhibit) of Al Feld to WPHC, (iii) to
appoint and elect WPHC as the successor Manager to Al Feld, to hold office
until removed pursuant to Section 12.12 of the Operating Agreement or until its
successor has been elected and qualified; and (iv) to consent to continue the
business of the Company after the resignation and termination of Al Feld as
Member and Manager of the Company;
RESOLVED, that the Remaining Members hereby accept the withdrawal and
resignation of Al Feld as Member and Manager of the Company; and
FURTHER RESOLVED, that the Remaining Members hereby (i) consent to the
transfer and assignment of the Ownership Interest (as defined in the attached
exhibit) of Al Feld to WPHC, (ii) appoint, elect and qualify WPHC as the
successor Manager to Al Feld, to hold office until removed pursuant to Section
12.12 of the Operating Agreement or until its successor has been elected and
qualified; (iii) consent to continue the business of the Company after the
resignation and termination of Al Feld as Member and Manager of the Company;
and (iv) authorize the Members to execute, deliver and take all action
necessary to effectuate the actions contemplated under the attached Exhibit L-
1.
This Consent, when signed by all of the Remaining Members of the Company
and delivered to the Company in the manner prescribed in the Act, shall have
the same force and effect as a unanimous vote, and may be stated as such in any
document.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of the
date above written.
WELLSFORD PARK HIGHLANDS CORP.,
a Colorado corporation, Member
By: ____________________________
Title:
<PAGE>
EXHIBIT R
EXERCISE OF PUT OPTION; ASSIGNMENT OF INTEREST
POWER OF ATTORNEY
This ASSIGNMENT OF INTEREST (this "Assignment") is made and entered into
as of the ____ day of ___________, 19__ by and between Al Feld, an individual
("Assignor"), and Wellsford Park Highlands Corp., a Colorado corporation
("Assignee").
RECITALS
A. Pursuant to that certain Operating Agreement (the "Operating
Agreement") of Red Canyon at Palomino Park LLC, a Colorado limited liability
company (the "Company") dated as of April 17, 1996, by and between Assignor and
Assignee, Assignor is the owner of an option (the "Put Option") to cause
Assignee to acquire the ownership interest of Assignor in the Company as of the
date hereof (including the right of Assignor to receive any distributions
related to any periods prior to and including the date hereof), which ownership
interest includes the right of Assignor to any and all benefits to which
Assignor may be entitled as a Member and as a Manager (each as defined in the
Operating Agreement), as provided in the Operating Agreement or the version of
the Colorado Limited Liability Company Act adopted by the State of Colorado,
Co. Rev. Stat. Section 7-80-101 to 7-80-913, as amended from time to time (the
"Act"), together with the unaccrued obligations of Assignor, in its capacity as
a Member and Manager, to comply with all the terms and provisions of the
Operating Agreement and the Act (collectively, the "Ownership Interest").
B. In accordance with Section 16.2.2 of the Operating Agreement,
Assignor, by its execution and delivery of this Assignment to Assignee, hereby
desires (i) to exercise the Put Option as contemplated therein and (ii) to
resign as Member and Manager of the Company.
C. At Final Closing (as defined in the Operating Agreement),
concurrently with the above exercise of the Put Option by Assignor, (i)
Assignee has agreed to acquire and buy the Ownership Interest from Assignor
pursuant to the terms and conditions set forth in the Operating Agreement,
provided that all of the Final Closing Funding Conditions have been satisfied
and (ii) Assignor has agreed to appoint Assignee as its true and lawful
attorney-in-fact, as set forth herein.
D. Terms not otherwise defined herein shall have the meanings set forth
in the Operating Agreement.
AGREEMENT
In consideration of the receipt of Ten and no/100 Dollars ($10.00) and
other good and valuable consideration in hand paid by Assignor to Assignee, the
receipt and sufficiency of which are hereby acknowledged and confessed by
Assignee, Assignor and Assignee hereby agree as follows:
1. Assignment and Assumption. At Final Closing (as defined in the
Operating Agreement), concurrently with and conditioned upon the satisfaction
of all of the conditions and covenants of Section 16.2.2 of the Operating
Agreement, (i) Assignor hereby assigns, grants and conveys to Assignee all of
Assignor's right, title and interest in and to the Ownership Interest and (ii)
Assignee hereby assumes the Ownership Interest and agrees to be bound by and
comply with and perform all of the obligations of Assignor in its capacity as a
Member and as Manager, arising under the Operating Agreement which accrue
after the date hereof. Assignor shall remain obligated to perform all of the
obligations of Assignor under the Operating Agreement (i) which are not
expressly assumed hereunder or (ii) which have accrued on or prior to the date
hereof. Further, all benefits of the Operating Agreement relating to
Assignor, including, without limitation, the right to receive any distributions
related to any periods prior to and including the date hereof, shall inure to
the benefit of Assignee.
2. Representation and Warranty of Assignor. Assignor represents
and warrants that: (i) Assignor is the sole owner of the entire Ownership
Interest; (ii) Assignor is not in default under or in breach of any of the
terms, covenants or provisions of the Operating Agreement, and Assignor knows
of no event which, but for the passage of time or the giving of notice, or
both, would constitute an event of default under or a breach of the Operating
Agreement by Assignor; (iii) Assignor is duly authorized to execute and deliver
this Assignment; and (iv) the Ownership Interest is free and clear of any and
all liens, security interests, encumbrances, and completing claims.
3. Appointment of Assignee as Attorney-in-Fact. Effective as of
the date hereof, Assignor hereby constitutes and appoints Assignee to be its
true and lawful attorney-in-fact to act for Assignor, in the name, place and
stead of Assignor, for the following purposes:
to endorse any check or other instrument payable to Assignor in
connection with the Project, to submit claims and otherwise deal with
all insurance and insurance proceeds with respect to the Project, to
execute and file with the appropriate governmental authority or
office any and all certificates, reports or other evidence of the
withdrawal of Assignor from the Company, and to perform such other
acts as may be necessary to carry out the purpose and intent of the
within assignment or to continue the business of the Company.
Assignor hereby ratifies, acknowledges and confirms all acts taken by Assignee,
as attorney-in-fact, pursuant to this appointment. Assignor hereby revokes,
annuls and cancels any and all powers of attorney, if any, previously executed
by Assignor with respect to such stated purposes, and the same shall be of no
further force or effect. Assignor hereby acknowledges that such power shall be
coupled with an interest and shall survive the disability or death of the
Assignor.
4. Indemnity. Assignor hereby agrees to indemnify and defend
Assignee and hold it harmless against any claim, loss or liability arising from
any of the following: (i) any breach of any representation or warranty
hereunder; or (ii) any assertion that Assignee is liable for any debts or
obligations of Assignor, whether based on any act or omission of Assignor which
occurs prior or subsequent to the date of this Assignment.
5. Governing Law. This Assignment shall be governed by and
construed under the laws of the State of Colorado.
6. Successors and Assigns. This Assignment shall inure to the
benefit and be binding upon the successors and assigns of Assignor and
Assignee.
7. Counterparts. This Assignment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
This Assignment is executed to be effective as of the date first set forth
above.
ASSIGNOR:
__________________________________________
AL FELD, an individual
ASSIGNEE:
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:_______________________________________
Name:________________________________
Title: ______________________________
CONSENT:
Pursuant to Section 18.1.1 of the Operating Agreement and Section 7-80-
801(1)(c) of the Act, Assignee hereby consents to the continuation of the
business of the Company, notwithstanding the withdrawal and resignation of
Assignor as a Member of the Company.
ASSIGNEE:
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By:_______________________________________
Name:________________________________
Title:_______________________________
[NOTE: Continuing Members to execute Unanimous Written Consent per Schedule
A attached hereto.]
STATE OF ________________}
}ss
COUNTY OF _______________}
The foregoing instrument was acknowledged before me on __________ ___, ____, by
AL FELD, an individual.
___________________________ Commission expires: _________________
Notary Public
STATE OF ________________}
}ss
COUNTY OF _______________}
The foregoing instrument was acknowledged before me on ___________, 199__,
by __________________________, as __________________________________ of
WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation.
___________________________ Commission expires: _________________
Notary Public
<PAGE>
SCHEDULE A
TO EXHIBIT R
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
RED CANYON AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
__________________ ___, 19__
Section 7-80-711 of the Colorado Limited Liability Company Act, as amended
(the "Act") provides that any action required or permitted to be taken at a
meeting of the members of a limited liability company may be taken without a
meeting if a written consent, setting forth the action so taken, shall be
signed by all the members entitled to vote with respect to the subject matter
thereof and delivered to the limited liability company in the manner described
in the Act. Section 15.10 of that certain Operating Agreement ("Operating
Agreement") of Red Canyon at Palomino Park LLC (the "Company"), a Colorado
limited liability company, dated as of __________, 1995 by and between Al Feld
and Wellsford Park Highlands Corp., a Colorado corporation ("WPHC"), provides
that action required or permitted to be taken at a meeting of Members of the
Company, may be taken without a meeting under similar circumstances.
The undersigned, which constitute all of the Remaining Members (defined below)
of the Company, by signing this document, waive any and all notice that may be
required for a meeting of the members of the Company and take the following
action:
WHEREAS, pursuant to Section 16.2.2 of the Operating Agreement, Al Feld,
by executing the attached Exercise of Put Option, Assignment of Interest and
Power of Attorney attached hereto as Exhibit L-2, has given notice to the
Company of its desire (i) to exercise the Put Option as contemplated in the
Operating Agreement and (ii) to resign as Member and Manager of the Company;
and
WHEREAS, the Members other than Al Feld (the "Remaining Members") desire
(i) to accept the withdrawal and resignation of Al Feld as Member and Manager
of the Company, (ii) to consent to the transfer and assignment of the Ownership
Interest (as defined in the attached exhibit) of Al Feld to WPHC, (iii) to
appoint and elect WPHC as the successor Manager to Al Feld, to hold office
until removed pursuant to Section 12.12 of the Operating Agreement or until its
successor has been elected and qualified; and (iv) to consent to continue the
business of the Company after the resignation and termination of Al Feld as
Member and Manager of the Company;
RESOLVED, that the Remaining Members hereby accept the withdrawal and
resignation of Al Feld as Member and Manager of the Company; and
FURTHER RESOLVED, that the Remaining Members hereby (i) consent to the
transfer and assignment of the Ownership Interest (as defined in the attached
exhibit) of Al Feld to WPHC, (ii) appoint, elect and qualify WPHC as the
successor Manager to Al Feld, to hold office until removed pursuant to Section
12.12 of the Operating Agreement or until its successor has been elected and
qualified; (iii) consent to continue the business of the Company after the
resignation and termination of Al Feld as Member and Manager of the Company;
and (iv) authorize the Members to execute, deliver and take all action
necessary to effectuate the actions contemplated under the attached Exhibit L-
2.
This Consent, when signed by all of the Remaining Members of the Company
and delivered to the Company in the manner prescribed in the Act, shall have
the same force and effect as a unanimous vote, and may be stated as such in any
document.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of the
date above written.
WELLSFORD PARK HIGHLANDS CORP.,
a Colorado Corporation, Member
By:_______________________________________
Title: ______________________________
<PAGE>
EXHIBIT S-1
Form of Architect's Certificate
(Letterhead of Architect)
CERTIFICATE OF ARCHITECT
______________, 1997
Red Canyon at Palomino Park LLC
Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, CO 80202
Reference: ______________________
____________, Colorado
Ladies and Gentlemen:
Please refer to the final architectural plans and specifications reflecting all
field notes and field changes as built described in the attached Exhibit A (the
"Plans"). The undersigned understands that ______________________________ or
its designee ("Wellsford") is acquiring an interest in or is causing the
repayment of the construction loan for a residential complex owned by Red
Canyon at Palomino Park LLC, a Colorado limited liability company ("Owner"),
located on that certain parcel of real property having an address of
___________________________ in the City of ______, County of ______, State of
Colorado and described on Exhibit B attached hereto (the "Site"), on which
Owner has constructed a complex of ______ apartment units known as
_______________________ (the "Project"). This Certificate is a condition
precedent to Wellsford's acquiring the Project or repaying such loan, and the
undersigned acknowledges that Wellsford will be relying upon this Certificate
in consummating such transaction.
With such understanding, the undersigned has reviewed the Plans, the
construction of the Project in relationship to the Plans, and its conformity
and compliance with applicable laws and regulations (i.e., applicable federal,
state, county and municipal laws and regulations and ordinances, including
without limitation, governing building and fire codes, zoning, subdivision and
land use laws and regulations, environmental and safety statutes and
regulations, and the rules and regulations of other governmental agencies
having jurisdiction over the Site or the Project ("Applicable Laws"). Based
upon these reviews and upon due professional investigation, the undersigned
declares and certifies to and for the benefit of Owner and Wellsford that:
1. The undersigned is the architect who prepared the Plans and
coordinated and supervised the construction of the Project.
2. The Project commonly known as ______________ contains 456 apartment
units in __ buildings, and _______ parking spaces, with related
amenities and facilities. The Site is zoned _______________ under
the applicable ordinances of the City of ____________, Colorado.
3. We have examined all applicable materials relative to those types of
restrictions and requirements sometimes referred to as use,
dimensional, bulk and parking restrictions, jurisdictional wetlands
requirements, setback and buffering requirements, density restraints,
landscaping and vegetation preservation ordinances, laws, rules and
regulations and environmental restraints, which relate to the Site
(hereinafter referred to as "Development Constraints") and have
determined that the Project is permitted as a matter of right except
for the following variances: __________
________________________________________________________, and that
the following restrictions and requirements (the "Restrictions and
Requirements") are applicable to the Project:
Minimum Lot Area:
Height Limitation:
Maximum Floor Area Ratio
(or other type of bulk
bulk restriction):
Limitation on Number of
Dwelling Units (if any):
Front Yard Requirements:
Side and Rear Yard
Requirements:
Parking Requirements:
4. The Project and the Site are in compliance with the Development
Constraints and the Restrictions and Requirements.
5. The improvements contemplated by the Plans have been completed in
substantial compliance with the Plans, except for the items in the
attached Exhibit C which are incomplete to the extent indicated and
for which the estimated cost to complete is indicated on said
Exhibit C.
6. We are of the opinion that the Project has been designed in
accordance with the applicable provisions of Colorado law, the
Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101, et
seq., as amended, and any other applicable law, rule or regulation of
any kind or description relating to the elimination of architectural
barriers for the handicapped.
7. We certify that any and all amounts due and payable to us under or in
connection with the Standard Form of Agreement between Owner and
Architect for Housing Services (AIA-Document B181) dated
______________ with regard to the Project have been paid in full.
8. The Project, the Plans and all improvements comply with Applicable
Laws, including without limitation, the applicable PUD, and with all
necessary and required notices, permits or license agreements in
connection with the Plans, and all permits, licenses and approvals
required for the construction of the improvements contemplated by the
Plans and for the use and occupancy of the Project (including,
without limitation, all final certificates of occupancy) have been
obtained from the applicable governmental or quasi-governmental
agency having jurisdiction or any private party from whom any license
is required.
9. The improvements are ready for occupancy.
10. The improvements on the Property, contain a minimum of _________
square feet of net rentable living area (as measured from inside face
of exterior wall to apartment side of corridor wall to centerline of
tenant separation wall) for the apartments.
11. The undersigned is a licensed architect and has the power and
authority to render this Certificate and to execute and deliver it on
behalf of Feld Design, Inc.
This Certificate may be relied upon only by Wellsford and the Owner.
Very truly yours,
By: Pamela J.L. English
Supervising Architect
Dated:________________________
<PAGE>
EXHIBIT A TO
CERTIFICATE OF ARCHITECT
______________
_______________________
____________, Colorado
DRAWING LIST
ARCHITECTURAL: ______________________________
______________________________
______________________________
STRUCTURAL: ______________________________
______________________________
______________________________
FOUNDATION: ______________________________
MECHANICAL: ______________________________
______________________________
______________________________
PLUMBING: ______________________________
______________________________
______________________________
ELECTRICAL: ______________________________
______________________________
______________________________
LANDSCAPING: ______________________________
______________________________
______________________________
<PAGE>
EXHIBIT B TO
CERTIFICATE OF ARCHITECT
LEGAL DESCRIPTION
<PAGE>
EXHIBIT C TO
CERTIFICATE OF ARCHITECT
Incomplete Items Cost of Completion
<PAGE>
EXHIBIT S-2
Form of Engineer's Certificate
(Letterhead of Project Engineer)
ENGINEER'S CERTIFICATE
__________________, 1997
Red Canyon at Palomino Park LLC
Wellsford Residential Property Trust
370 17th Street, Suite 3100
Denver, Colorado 80202
Reference: ______________
_________________, Colorado
Ladies and Gentlemen:
The undersigned understands that __________________________ or its designee
("Wellsford") is acquiring an interest in or is causing the repayment of the
construction loan for a residential complex owned by Red Canyon at Palomino
Park LLC, a Colorado limited liability company ("Owner"), located on that
certain parcel of real property having an address of ______________________ in
the City of ___________, County of __________, State of Colorado and described
on Exhibit A attached hereto (the "Site"), on which Owner has constructed a
complex of ______ apartment units known as ______________ (the "Project").
This Certificate is a condition precedent to Wellsford's acquiring the Project
or repaying such loan, and the undersigned acknowledges that Wellsford will be
relying upon this Certificate in consummating such transaction.
With such understanding, the undersigned has reviewed those portions of the
plans and specifications for the Project that are listed on Exhibit B attached
hereto (the "Engineering Plans"), the construction of the Project in
relationship to the Engineering Plans, and its conformity and compliance with
certain applicable laws and regulations. Based upon these reviews and upon due
professional investigation, the undersigned declares and certifies to and for
the benefit of Owner and Wellsford that:
1. Satisfactory methods of access to and egress from the Site and the
Project and adjoining or nearby public ways are available and are
sufficient to meet the reasonable needs of the Project and all
applicable requirements of public authorities. Sanitary water supply
and storm sewer and sanitary sewer facilities and other required
utilities (gas, electricity, telephone, etc.) are likewise available
and are sufficient to meet the reasonable needs of the Project and
all applicable requirements of public authorities.
2. We are of the opinion that the Property is not located in a 100-Year
Flood Plain or in an identified "flood prone area," as defined by the
U.S. Department of Housing and Urban Development, pursuant to the
Flood Disaster Protection Act of 1973, as amended, and is not subject
to any federal, state or local "wetlands" rules, regulations,
ordinances or requirements.
3. We have reviewed and are familiar with all tests and analyses
performed and professional recommendations made by soil engineers and
other consultants regarding the condition of the soil of the Site.
In our professional opinion, the condition of the soil of the Site is
adequate to support the Project as completed.
4. We have reviewed the locations of all easements, rights-of-way,
subsurface rights or jurisdictional wetlands, and all rules and
regulations pertaining to the same in force relating to the Site, and
the Plans are prepared so that the Project does not encroach over,
across or upon any such easements, rights-of-way, subsurface rights
or jurisdictional wetlands and the like, and all necessary permits
and approvals required for the Project have been obtained.
5. We have reviewed all deeds, easements, covenants, restrictions and
other matters set forth in Schedule B of Title Commitment No.
__________ issued by Land Title Guaranty Company, and the Project
satisfies and/or does not violate any provisions concerning
construction of improvements on the Site set forth in such deeds,
easements, covenants, restrictions and other matters.
This Certificate may be relied upon only by Owner and Wellsford.
Very Truly yours,
[ENGINEER]
- -------------------------
By:___________________________
Title:___________________
Dated:________________________
<PAGE>
EXHIBIT A TO
CERTIFICATE OF ENGINEERING
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B TO
CERTIFICATE OF ENGINEERING
______________
____________________
______________, Colorado
DRAWING LIST
CIVIL ENGINEERING
DRAWINGS: ______________________________
______________________________
______________________________
STRUCTURAL: ______________________________
______________________________
______________________________
FOUNDATION: ______________________________
MECHANICAL: ______________________________
______________________________
______________________________
PLUMBING: ______________________________
______________________________
______________________________
ELECTRICAL: ______________________________
______________________________
______________________________
LANDSCAPING: ______________________________
______________________________
______________________________
<PAGE>
EXHIBIT T
THE PARK at HIGHLANDS RANCH -
PRELIMINARY "TOTAL"INFRASTRUCTURE BUDGET
<PAGE>
EXHIBIT U
SUBSTITUTION AGREEMENT
THIS SUBSTITUTION AGREEMENT (this "Agreement") is made and entered into as
of the 17th day of April, 1996, by and among AL FELD, an individual ("Feld"),
WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation ("WPHC"), and THE FELD
COMPANY, a Colorado corporation (the "Company").
RECITALS
A. WPHC is a Member of Red Canyon at Palomino Park LLC, a Colorado
limited liability company (the "LLC"), which LLC is governed by its Operating
Agreement dated as of April 17, 1996 (the "Operating Agreement") by and between
WPHC and Feld.
B. Feld is also a Member, as well as the Manager, in the LLC and is the
principal officer and shareholder of the Company.
C. In order to facilitate WPHC's appointment of the Company as a
substitute Member and the Manager of the LLC upon the death or disability of
Feld in accordance with Section 12.13 of the Operating Agreement and to bind
the Company to the agreements set forth in said Section 12.13, the parties
hereto now desire to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the execution of the Operating
Agreement and of the recitals, covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Request for Substitute Manager. In the event that Feld should die or
WPHC shall elect to remove Feld as manager due to disability (such an event is
hereinafter referred to as a "Triggering Event"), WPHC shall have the right, at
its sole option, to request in writing that: (a) the Company shall acquire
from Feld (or from his estate, if Feld is deceased) the entire interest of Feld
in the LLC; (b) the Company shall be admitted as a Member of the LLC and
substituted for Feld as Member and Manager under the Operating Agreement; and
(c) the Company shall assume, in writing, all of the obligations of the Manager
and of a Member under the Operating Agreement, as the same may be amended from
time to time. The foregoing actions under items (a), (b) and (c) shall be
effective upon the next business day after WPHC delivers its written request to
the Company and Feld. Notwithstanding anything to the contrary contained
herein or in the Operating Agreement, if the Company is substituted for Feld as
a Member and Manager, then Feld (or his estate if Feld is deceased) shall
remain liable for the performance of the obligations of the Manager under the
Operating Agreement, in accordance with Section 12.12.3.2 thereof.
2. Failure to Request a Substitute Manager. If WPHC fails to exercise
its option under Section 12.13 of the Operating Agreement and this Agreement to
cause the Company to be substituted for Feld as the Manager within ninety (90)
days after the date of a Triggering Event, then such right shall automatically
terminate and Feld (and his estate) shall be released from all responsibilities
and obligations as Manager under the Operating Agreement arising after the
effective date of Feld's withdrawal or Removal (as said term is defined in the
Operating Agreement) from the LLC in connection with the Triggering Event.
3. Attorneys Fees. In the event any litigation or other legal
proceedings or alternative dispute resolution proceedings are brought for the
enforcement of or arise out of this Agreement, the prevailing party shall be
entitled to recover from the non-prevailing party all reasonable attorneys'
fees and costs and all other reasonable expenses, in addition to any other
relief or damages obtained.
4. Further Documentation. The parties hereby agree to execute, from
time to time, such other documents as may be reasonably necessary to effectuate
the intent of this Agreement and Section 12.13 of the Operating Agreement.
5. GOVERNING LAW. THE PARTIES HERETO AGREE THAT THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. SUCH PARTIES FURTHER AGREE
THAT THIS AGREEMENT MAY BE ENFORCED IN THE DISTRICT COURT IN AND FOR THE CITY
AND COUNTY OF DENVER, STATE OF COLORADO AND THEY DO HEREBY SUBMIT TO THE
JURISDICTION OF SUCH COURT REGARDLESS OF THEIR RESIDENCE OR WHERE THIS
AGREEMENT MAY BE EXECUTED.
6. Successors and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of and be binding upon
the respective heirs, personal representatives, successors and assigns of the
parties hereto.
7. Notices. Whenever any party hereto shall desire to, or be required
to, give or serve any notice, demand, request or other communication with
respect to this Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is delivered by
personal service (including, without limitation, courier or express service) or
mailed certified or registered mail, postage prepaid, return receipt requested,
or sent by telegram to the parties at the addresses shown in the Operating
Agreement or such other addresses which the parties may provide to one another
in accordance therewith. The notice address for the Company shall be the same
as the notice address for Feld. If notice is sent to WPHC, a copy of such
notice shall also be given to Wayne H. Hykan, Esq., Brownstein Hyatt Farber &
Strickland, P.C., 410 17th Street, Suite 2222, Denver, Colorado 80202. If
notice is sent to Feld or the Company, a copy of such notice shall also be
given to Alan Lottner, Esq., Haligman and Lottner, First Interstate Tower
North, 633 Seventeenth Street, Suite 2700, Denver, Colorado 80202-3635.
Notices delivered personally will be effective upon delivery to an authorized
representative of the party at the designated address; notices sent by mail in
accordance with the above paragraph will be effective upon execution of the
Return Receipt Requested.
8. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the legality or validity of the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable.
9. Capitalized Terms. All capitalized terms not otherwise defined
herein shall have the meanings set forth in the Operating Agreement.
10. Amendment. This Agreement may be modified or rescinded only by a
writing expressly relating to this Agreement and signed by all of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
__________________________________________
AL FELD, individually
WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation
By:_______________________________________
Its:______________________________________
THE FELD COMPANY, a Colorado corporation
By:_______________________________________
Its:______________________________________
Exhibit 10.39
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Between
MISSION VIEJO COMPANY,
a California corporation
("Mission")
and
THE FELD COMPANY,
a Colorado corporation
("Buyer")
Date: ____________, 1995
<PAGE>
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Table of Contents
(For Convenience Only-Not a Part of Agreement)
Page
1. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Purpose of Agreement . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Development Guide. . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. Interstate Land Sales Full Disclosures Act and Colorado
Subdivision Developers Act Exemptions. . . . . . . . . . . . . . 1
1.5. Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. PURCHASE AND SALE PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 2
2.1. Agreement for Purchase and Sale. . . . . . . . . . . . . . . . . 2
2.2. Base Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Computation of Purchase Escalation Amount. . . . . . . . . . . . 3
2.4. Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. PRE-CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Development and Phasing Plan . . . . . . . . . . . . . . . . . . 3
3.2. Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3. Environmental Assessments. . . . . . . . . . . . . . . . . . . . 4
3.4. Investigation Period . . . . . . . . . . . . . . . . . . . . . . 4
3.5. Entry Limitations. . . . . . . . . . . . . . . . . . . . . . . . 6
3.6. Minor Development Plan Approval. . . . . . . . . . . . . . . . . 6
3.7. Buyer's Site Plans . . . . . . . . . . . . . . . . . . . . . . . 7
3.8. Financial Information of Buyer . . . . . . . . . . . . . . . . . 8
3.9. No Recreation Facilities . . . . . . . . . . . . . . . . . . . . 9
3.10. Acceptance of Buyer's Signs. . . . . . . . . . . . . . . . . . . 9
3.11. Fencing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12. Assignment of Plans. . . . . . . . . . . . . . . . . . . . . . . 9
4. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1. Title Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2. Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . 10
4.3. Title Defects. . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4. Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5. Annexation of Property to Community Association. . . . . . . . . 12
4.6. Special District Disclosure. . . . . . . . . . . . . . . . . . . 12
4.7. Special District Formation . . . . . . . . . . . . . . . . . . . 13
4.8. Easements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1. Closing Dates and Place. . . . . . . . . . . . . . . . . . . . . 16
5.2. Documents at Closing . . . . . . . . . . . . . . . . . . . . . . 17
5.3. Closing Statement Adjustments and Prorations.. . . . . . . . . . 17
5.4. Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5. Building Permit Moratorium.. . . . . . . . . . . . . . . . . . . 17
6. MISSION'S POST-CLOSING OBLIGATIONS. . . . . . . . . . . . . . . . . . . 19
6.1. Directory Maps . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2. Directional Signs. . . . . . . . . . . . . . . . . . . . . . . . 19
6.3. Installation of Maps and Signs . . . . . . . . . . . . . . . . . 19
7. BUYER'S POST-CLOSING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . 20
7.1. Incorporation of Buyer's Obligations in Deed . . . . . . . . . . 20
7.2. Metropolitan District Requirements . . . . . . . . . . . . . . . 20
7.3. Additional Information . . . . . . . . . . . . . . . . . . . . . 20
7.4. Maintenance of Property. . . . . . . . . . . . . . . . . . . . . 20
7.5. Water, Soil, and Energy Conservation Measures. . . . . . . . . . 21
7.6. Compliance with Open Space Requirements. . . . . . . . . . . . . 21
7.7. Density Allocation . . . . . . . . . . . . . . . . . . . . . . . 22
7.8. Installation of Utilities. . . . . . . . . . . . . . . . . . . . 22
7.9. Off-Site Drainage. . . . . . . . . . . . . . . . . . . . . . . . 23
7.10. Willows Water Main . . . . . . . . . . . . . . . . . . . . . . . 24
8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 26
8.1. Representations and Warranties of Mission. . . . . . . . . . . . 26
8.2. Representations and Warranties of Buyer. . . . . . . . . . . . . 26
9. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1. Defaults by Mission. . . . . . . . . . . . . . . . . . . . . . . 26
9.2. Defaults by Buyer. . . . . . . . . . . . . . . . . . . . . . . . 27
9.3. Rights to Cure . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4. Defaults After Closing . . . . . . . . . . . . . . . . . . . . . 28
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1. Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2. Taking Prior to Closing. . . . . . . . . . . . . . . . . . . . . 28
10.3. Agreement Not to be Recorded . . . . . . . . . . . . . . . . . . 28
10.4. No Representations . . . . . . . . . . . . . . . . . . . . . . . 29
10.5. Indemnification; No Mechanic's Liens . . . . . . . . . . . . . . 29
10.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.7. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 30
10.8. No Oral Amendment or Modifications . . . . . . . . . . . . . . . 30
10.9. Nonseverability. . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10. Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.11. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.12. Captions for Convenience . . . . . . . . . . . . . . . . . . . . 31
10.13. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.14. Exhibits Incorporated. . . . . . . . . . . . . . . . . . . . . . 31
10.15. Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . 31
10.16. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.18. Costs of Legal Proceedings . . . . . . . . . . . . . . . . . . . 32
10.19. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . 32
10.20. General Cooperation. . . . . . . . . . . . . . . . . . . . . . . 32
10.21. Computation of Time. . . . . . . . . . . . . . . . . . . . . . . 32
10.22. Negotiated Provisions. . . . . . . . . . . . . . . . . . . . . . 32
10.23. The Foreign Investment In Real Property Tax Act and Colorado
Department of Revenue Form 1083. . . . . . . . . . . . . . . . . 33
10.24. No Implied Waiver. . . . . . . . . . . . . . . . . . . . . . . . 33
Table of Exhibits
(For Convenience Only-Not a Part of Agreement)
Exhibit A Development and Phasing Plan
Exhibit B First Parcel Site Plan
Exhibit C Fencing Plan
Exhibit D Permitted Exceptions
Exhibit E Relinquishment of Surface Rights
Exhibit F First Parcel Deed Form
Exhibit G Subsequent Parcels Deed Form
Exhibit H Supplemental Declaration Form
Exhibit I Easement and Development Agreement
Exhibit J Access Easement Agreement
Exhibit K Contiguous Area Report
Exhibit L Willows Water Agreement
<PAGE>
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
This Second Amended and Restated Vacant Land Purchase and Sale Agreement
("Agreement") is made as of this 23rd day of March, 1995 ("Execution Date"),
between MISSION VIEJO COMPANY, a California corporation ("Mission"), whose
address is 8822 South Ridgeline Boulevard, Highlands Ranch, Colorado 80126,
Attention: Residential Land Sales and Acquisitions, and THE FELD COMPANY, a
Colorado corporation ("Buyer"), whose address is 4600 S. Ulster St., Suite 350,
Denver, Colorado 80237.
1. GENERAL.
1.1. Purpose of Agreement. The parties desire to enter into this
Agreement to amend and restate, in its entirety, the terms and conditions by
which Mission agrees to sell and Buyer agrees to buy the Property, as
hereinafter defined. Pursuant to that certain Vacant Land Purchase and Sale
Agreement ("Original Agreement") dated as of July 14, 1993 between Mission and
Al Feld, as amended, Mission and Al Feld had contracted for the sale and
purchase of the Property. The Original Agreement was amended and restated in
its entirety by that certain Amended and Restated Vacant Land Purchase and Sale
Agreement ("Restated Agreement") dated as of the 11th day of February, 1994,
between Mission and Al Feld, as amended. Effective as of November 15, 1994, Al
Feld assigned all of Buyer's right, title and interest in and to the Original
Agreement and the Restated Agreement, including the Deposit held by Mission
thereunder, to Buyer and Buyer assumed all obligations of Al Feld thereunder.
This Agreement is intended to and shall amend, restate and supersede, in its
entirety, the terms and provisions of the Restated Agreement.
1.2. Property. The "Property" shall mean the tract of unimproved real
property containing approximately 181.803 acres located in Douglas County,
Colorado, more particularly described as Lots 1-5, Highlands Ranch Filing 126-
A, and which is generally depicted on the Development and Phasing Plan, as
hereinafter defined, attached hereto as Exhibit A.
1.3. Development Guide. The "Development Guide" shall mean the Devel-
opment Guide for the New Town of Highlands Ranch, approved September 17, 1979,
by the Board of County Commissioners of Douglas County, Colorado, recorded
October 25, 1979, in Book 373, beginning at Page 187, in the office of the
Clerk and Recorder of Douglas County, Colorado ("Douglas County Records"), as
the same has been and may be amended from time to time.
1.4. Interstate Land Sales Full Disclosures Act and Colorado Subdivision
Developers Act Exemptions. It is acknowledged and agreed by the parties that
the sale of the Property will be exempt from the provisions of the federal
Interstate Land Sales Full Disclosures Act under the exemption applicable to
sale or lease of property to any person who acquires such property for the
purpose of engaging in the business of constructing residential, commercial or
industrial buildings or for the purpose of resale of such property to persons
engaged in such business. Buyer hereby represents and warrants to Mission that
Buyer is acquiring the Property for such purposes. It is further acknowledged
by the parties that the sale of the Property will be exempt under the
provisions of the Colorado Subdivision Developers Act under the exemption
applicable to transfers between developers. Buyer represents and warrants to
Mission that Buyer is acquiring the Property for the purpose of participating
as the owner of the Property in the development, promotion, and/or sale of the
Property and portions thereof.
1.5. Parcel. "Parcel," as used herein, shall mean each portion of the
Property to be purchased by Buyer at a Closing, as hereafter provided. The
general location, approximate acreage and allocated density of each Parcel has
been agreed upon pursuant to the provisions of Section 3.1 hereof.
2. PURCHASE AND SALE PROVISIONS.
2.1. Agreement for Purchase and Sale. For good and valuable consider-
ation, Mission hereby agrees to sell, and Buyer hereby agrees to purchase, the
Property upon the terms and conditions set forth in this Agreement.
2.2. Base Purchase Price. The "Base Purchase Price" for the Property
has been computed based upon the assumption that the Property contains 181.803
acres and is being purchased for a Base Purchase Price of $73,500.00 per gross
acre, as increased in accordance with the provisions of Section 2.3 below. The
total Base Purchase Price shall be $13,362,520.50, subject to adjustment based
on the actual number of gross acres contained therein as set forth on the
Survey. The Property will be purchased in Parcels. The Purchase Price
attributable to each Parcel shall be computed based upon the number of gross
acres contained therein as depicted on the boundary certification of each such
Parcel, to be provided by Buyer to Mission as provided in Section 3.2 below, at
the Base Purchase Price per gross acre provided above, plus the Purchase
Escalation Amount, as hereinafter defined, based upon the date of Closing for
the particular Parcel. The Purchase Price for each Parcel, as so computed,
shall be payable at each Closing in the form of wire transfer of federal funds,
subject to prorations and adjustments in accordance with Section 5.3 below.
The Purchase Price attributable to the last Parcel to be purchased by Buyer
(the "Last Parcel") shall be payable in accordance with the following
provisions: (a) a credit against the purchase price payable by Buyer for the
Last Parcel purchased by Buyer for the amount of the Deposit, as hereinafter
provided; and (b) the remaining balance of the Purchase Price in the form of
wire transfer of federal funds at Closing, subject to prorations and
adjustments in accordance with Section 5.3 below.
2.3. Computation of Purchase Escalation Amount. The "Purchase
Escalation Amount" shall be an amount determined by multiplying the Base
Purchase Price for such Parcel being purchased by six percent (6%) and
multiplying the resulting product by a fraction, the numerator of which is the
number of days from and after November 30, 1994 until the date of Closing, as
hereinafter defined, for the Parcel whose purchase price is being determined,
and the denominator of which is 365.
2.4. Deposit. The "Deposit" shall be a total of $300,000.00. Mission
hereby acknowledges having previously received from Buyer the sum of
$50,000.00. The balance of the Deposit in the amount of $250,000.00 shall be
payable simultaneously with the execution of this Agreement. The Deposit shall
not accrue interest and any interest earned on the $50,000.00 previously paid
by Buyer under the Original Agreement or the Restated Agreement shall be deemed
paid by Buyer to Mission in consideration of the execution of this Agreement by
Mission. Buyer shall have no right to the return of the Deposit, except as
specifically set forth herein; provided, however, that $25,000.00 of the
Deposit shall be non-refundable in the event this Agreement is terminated for
any reason (the "Non-refundable Deposit").
3. PRE-CLOSING CONDITIONS.
3.1. Development and Phasing Plan. Buyer has prepared, at Buyer's sole
cost and expense, a development and phasing plan package for the Property
which includes: (i) a designation of the Property within Planning Areas 67 and
73 to be acquired by Buyer pursuant to this Agreement; (ii) the anticipated
phasing plan for the Parcels to be acquired by Buyer pursuant to this
Agreement, including the order in which they are to be acquired by Buyer and
the approximate number of Dwelling Units (as that term is defined in the Deed,
as hereinafter defined) allocated to each Parcel; and (iii) a general
conceptual development plan for the Property showing general location of
streets, open space, and recreation amenities, to be constructed on the
Property (collectively the "Development and Phasing Plan"). The Development
and Phasing Plan, as approved by Mission, is attached hereto as Exhibit A.
Buyer may, at Buyer's option ("Early Closing Option"), at any scheduled
Closing, elect to purchase the next Parcel to be acquired by Buyer hereunder as
provided in the Development and Phasing Plan in advance of the time Buyer is
otherwise obligated to purchase such Parcel hereunder. Buyer shall, if at all,
exercise the Early Closing Option by giving written notice of election to
Mission, which notice shall specify which portion of such Parcel Buyer desires
to purchase. Buyer shall be entitled to a credit against the number of
Dwelling Units and acreage of Property which Buyer is otherwise obligated to
purchase hereunder at the subsequent scheduled Closing for the number of
Dwelling Units and acreage of Property which Buyer has theretofore closed the
purchase of from Mission in excess of the cumulative number of Dwelling Units
and acreage of Property which Buyer has at that time been obligated hereunder
to acquire from Mission.
3.2. Survey. A boundary and improvement survey plat of the Property (the
"Survey") dated November 29, 1993 and prepared by Kirkham, Michael and
Associates has been delivered by Mission to Buyer, at Mission's cost and
expense, and Buyer hereby approves the same. Buyer agrees, not later than
fifteen (15) days prior to any Closing on a Parcel, to provide to Mission a
certification by a licensed land surveyor, setting forth the legal description
of such Parcel and the number of gross acres contained therein for the purposes
of computing the purchase price for such Parcel in accordance with the
provisions of Article 2 above ("Certifications"). Any recertification of the
Survey and any additional surveys of the Parcels shall be at Buyer's sole cost
and expense. For the purposes of this Agreement, the term "Survey" shall mean
and include all Certifications to the Survey made in accordance with the
provisions hereof.
3.3. Environmental Assessments. Buyer, at Buyer's sole cost and expense,
has previously engaged Buyer's own environmental engineer to undertake environ-
mental assessments or investigations of the Property ("Assessment"). Buyer
shall treat all information contained in the Assessment as strictly
confidential. The contract which Buyer and the environmental engineer selected
by Buyer have entered into contains confidentiality provisions consistent with
the confidentiality requirement set forth herein.
3.4. Investigation Period. Buyer has had the right pursuant to the
Original Agreement and the Restated Agreement to perform such Investigations,
Tests and Surveys, as hereinafter defined, as Buyer has deemed necessary. The
"Investigations, Tests and Surveys" which Buyer was permitted to make included,
without limitation, the following: (a) inspecting, making engineering,
environmental and architectural studies, including obtaining the Assessment,
testing the soil and otherwise determining the condition of the Property; (b)
reviewing subdivision, zoning and building code ordinances, rules and
regulations of the County of Douglas and the subdivision, zoning and building
code ordinances, rules and regulations of the State of Colorado relating to
construction of any improvements which Buyer intends to construct on the
Property, to determine that such matters do not prevent or unreasonably impair
the ability of Buyer to construct and use other improvements which Buyer
intends to construct; (c) determining that utilities, including, without
limitation, water, sewer, gas, electricity and telephone are adequate to serve
the Property; (d) determining that there is or shall be adequate access to
serve the improvements which Buyer intends to construct on the Property; (e)
determining the nature, magnitude, and times due of all taxes, fees, charges,
system development fees, tap fees, and other costs which are or may be imposed
upon the Property or Buyer by any utility company or government or quasi--
governmental agency; (f) obtaining and reviewing a Uniform Commercial Code
search or searches pertaining to the Property and Mission's interest therein
(the "UCC Searches"); and (g) determining all other matters regarding the
Property and the development thereof which Buyer deems appropriate. Mission
has previously provided to Buyer access to information and/or materials
requested by Buyer, which Mission may have in its files with respect to the
Property and Buyer hereby acknowledges having received such items. Mission
agrees to continue to cooperate with Buyer in providing additional information
and/or materials specifically requested by Buyer from Mission; provided,
however, that Mission may impose such reasonable limitations and conditions on
Buyer's use of such information and materials as it may deem appropriate.
Mission makes no representation or warranty whatsoever with respect to any
information or material so provided. Except as set forth in Section 7.10
hereof, Buyer acknowledges that Buyer is satisfied with the results of Buyer's
review of the Investigations, Tests and Surveys, or is otherwise satisfied to
the extent necessary to purchase the Property. Buyer hereby accepts the
Property and its condition as of the Execution Date on an "AS IS" basis. For
purposes of this Agreement, the term "AS IS" shall mean (without limitation
thereon, but subject to the warranties and representations set forth in Section
8.1 below) "AS IS" with respect to (a) the physical condition of the Property
(including defects seen and unseen and conditions natural and artificial); (b)
title to the Property as disclosed in the Title Commitment and subject to the
Permitted Exceptions, as hereinafter defined; (c) any other documents, agree-
ments or restrictions encumbering the Property and previously disclosed to
Buyer, including the Survey; and (d) all laws, ordinances, rules and regula-
tions to which the Property is subject under any applicable governmental or
regulatory jurisdiction. Mission's sole obligation with respect to the
physical condition of the Property shall be to deliver possession of the
Property to Buyer in substantially the same condition (excluding normal wear
and tear and casualty damage) as existed on the Execution Date and Buyer has
agreed to accept possession of the Property on the Date of Closing on an "AS
IS" basis. MISSION AND BUYER AGREE THAT THE PROPERTY SHALL BE SOLD "AS IS,
WHERE IS, WITH ALL FAULTS" WITH NO RIGHTS OF SET-OFF OR REDUCTION IN THE
PURCHASE PRICE, AND, EXCEPT AS SET FORTH IN SECTION 8.1 HEREOF, SUCH SALE SHALL
BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED
(INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL, OPERATING
EXPENSES, USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND BUYER
DOES HEREBY WAIVE, DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY.
3.5. Entry Limitations. Buyer, and Buyer's authorized agents, employees
and independent contractors, shall have the right, for Buyer's benefit, to
enter upon the Property for the purpose of making further Investigations, Tests
and Surveys, but only in accordance with the terms and provisions of a License
to Enter Upon Real Property to be entered into between Mission and Buyer (the
"License Agreement"). Any entry by or on behalf of Buyer shall be subject to
such reasonable rules, regulations, standards and conditions as are referred to
within the License Agreement and otherwise as Mission may impose. All such
Investigations, Tests and Surveys shall be at the sole cost and expense of
Buyer and shall not damage, destroy or harm the Property or any improvements
thereon and Buyer shall promptly repair and restore the Property to its origi-
nal condition at Buyer's sole cost and expense. Notwithstanding any other
provisions of this Agreement, the obligations of Buyer under this Section shall
survive any termination of this Agreement by either Buyer or Mission.
3.6. Minor Development Plan Approval. Buyer, for Buyer's sole benefit,
has applied for approval by the Douglas County Commissioners ("County
Commissioners") of a Minor Development Plan for the entire Property and certain
additional real property located east of the Property. The "Minor Development
Plan" consists of and is contained in the plat of Highlands Ranch Filing No.
126-A Planning Area 67 and a Portion of Area 73 A Minor Development of a part
of Section 5, Township 6 South, Range 67 West of the 6th P.M., Douglas County
Colorado 200.72 Acres, 6 Residential Lots, prepared by Kirkham, Michael and
Associates and dated 6/94. Mission and the County Commissioners have
previously accepted the Minor Development Plan prepared by Buyer. Buyer agrees
that no modifications to the Minor Development Plan, as accepted by Mission and
the County Commissioners, which would have a material adverse impact on the
Property or the development and use thereof by Buyer or Mission shall be made
without Mission's prior written acceptance. Any subdivision improvement
agreement(s) to be executed in connection with the Minor Development Plan shall
be subject to the review and acceptance of Mission, and shall be executed by
Buyer, and not by Mission. Buyer shall be required to deliver to Douglas
County, at Buyer's cost and expense, any security required by Douglas County to
secure the performance of Buyer under such subdivision improvements agreement,
including, at Buyer's cost, separate security if required by Douglas County to
secure the completion of the off-site drainage system and utility system as
required by this Agreement. Buyer agrees to indemnify, defend, and hold
Mission harmless from and against any and all liability, claims, loss, damage
or expense, including reasonable attorneys' fees, which may be incurred by or
asserted against Mission in connection with any such subdivision improvements
agreement, including those which relate to Buyer's completion of any off-site
improvements, but such indemnity shall apply only to the extent of any
improvements (on or off-site) required to be completed in connection with any
portion of the Property acquired by Buyer. Mission agrees that all consents,
acceptances, or approvals required of it pursuant to this Section 3.6 shall not
be unreasonably withheld.
3.7. Buyer's Site Plans. Buyer acknowledges that the Parcels shall be
conveyed to Buyer pursuant to a Deed, as hereinafter defined, which requires
Buyer, prior to the commencement of construction on a Parcel, to submit, for
acceptance by Mission, a site plan. Buyer has, for Buyer's sole benefit,
elected to submit the Site Plan, as hereinafter defined, to Mission for Lot 1
as shown on the Minor Development Plan ("First Parcel"). In addition, Buyer
desires for Buyer's sole benefit, to apply for and receive approval by Douglas
County of the site plan for the First Parcel as accepted by Mission, prior to
the First Parcel Closing, to confirm Douglas County's approval of Buyer's
intended use of the First Parcel.
(a) Mission Site Plan Acceptance. Buyer has prepared, at Buyer's sole
cost and expense, a site plan for the First Parcel consisting of those
materials more specifically described of Exhibit B, attached hereto ("First
Parcel Site Plan"). Mission has accepted the First Parcel Site Plan and Buyer
agrees that it shall not revise the First Parcel Site Plan in any material
respect without the prior written consent of Mission; provided, however, that
Buyer shall provide Mission with copies of all proposed changes to the Site
Plan prior to their submittal to Douglas County. In the event that Buyer
desires to revise the First Parcel Site Plan, Buyer shall submit Buyer's
proposed modifications to Mission. Mission shall give Buyer written notice of
its acceptance or rejection of the proposed modifications to the First Parcel
Site Plan on or before the 5th business day following its receipt of the
proposed modifications. If Mission has not given Buyer notice of Mission's
rejection or conditional acceptance of the proposed modifications by the
expiration of said 5 day period, Mission shall be deemed to have rejected the
proposed modifications to the First Parcel Site Plan as submitted by Buyer.
Acceptance or rejection of the proposed modifications to the First Parcel Site
Plan shall be in the reasonable discretion of Mission. If Mission rejects or
conditionally accepts the proposed modifications to the Site Plan, Buyer may
deliver to Mission additional modifications to Mission from time to time for
Mission's review. In any event, if Mission has not accepted the proposed
modifications to the First Parcel Site Plan on or before the date which is 30
days from the date Buyer initially submitted its proposed modifications to
Mission, Buyer may terminate this Agreement by written notice delivered to
Mission in which event the Deposit shall be retained by Mission and each party
shall be relieved from all further obligations under this Agreement except as
otherwise provided herein. Buyer shall, from time to time, prepare, at Buyer's
sole cost and expense, a site plan package for the remaining portions of the
Property which shall include: (i) a plan showing the location of the buildings
and other improvements to be constructed on the Property, including location of
mechanical equipment; (ii) building exterior elevations, including colors and
materials; (iii) a drainage plan; (iv) a landscape plan; and (v) a signage plan
(a "Site Plan", the "First Parcel Site Plan" or collectively as to Parcels
other than the First Parcel the "Future Parcel Site Plans"). The Future Parcel
Site Plans shall be prepared in accordance with the Development and Phasing
Plan. Mission shall give written notice to Buyer of its acceptance or
rejection of the Future Parcel Site Plans on or before 20 days following the
date of its receipt of the Future Parcel Site Plans. If Mission has not given
notice of rejection or conditional acceptance by the expiration of said 20-day
period, Mission shall be deemed to have rejected the Future Parcel Site Plans
as submitted by Buyer. Acceptance or rejection of the Future Parcel Site Plans
shall be in the reasonable discretion of Mission. If Mission expressly rejects
or conditionally accepts the Future Parcel Site Plans, Buyer may deliver to
Mission revised Future Parcel Site Plans, from time to time, for Mission's
review and approval in the manner and time periods provided above for the
review of proposed modifications to the First Parcel Site Plan.
(b) Douglas County Site Plan Approval. Mission shall provide to Buyer a
letter as required by Douglas County Site Plan processing procedures,
authorizing Buyer to submit the First Parcel Site Plan. If Future Parcel Site
Plans are accepted by Mission in accordance with subsection (a) above, Buyer
may submit the Future Parcel Site Plans to the Douglas County, from time to
time, as Buyer may desire. At such time, Mission shall provide to Buyer a
letter as required by Douglas County Site Plan processing procedures,
authorizing Buyer to submit the Future Parcel Site Plans. Buyer acknowledges
that Buyer shall have the sole responsibility to seek and obtain the approval
of Douglas County of the First Parcel Site Plan and all Future Parcel Site
Plans. Buyer agrees that no modifications requested by Douglas County or
desired by Buyer to the First Parcel Site Plan or the Future Parcel Site Plans
shall be made without Mission's prior written acceptance.
(c) Mission's Consent. Mission agrees that all consents, acceptances,
or approvals required of it pursuant to this Section 3.7 shall not be
unreasonably withheld.
3.8. Financial Information of Buyer. This Agreement imposes substantial
obligations upon Buyer. In order to evaluate the financial capability of Buyer
to meet Buyer's obligations under this Agreement, Buyer has delivered to
Mission Buyer's most current financial statement, and such other supplemental
information as Mission has requested, certified to be true and correct by
Buyer. Mission hereby acknowledges receipt of the above-referenced financial
information and that it has reviewed and accepted the same.
3.9. No Recreation Facilities. The parties have agreed that none of the
Property shall be a part of the Highlands Ranch Recreation Center, and Section
1.32 of the Deed is consistent with such agreement.
3.10. Acceptance of Buyer's Signs. Buyer agrees that all signs to be
constructed or installed by or on behalf of Buyer (a) upon the Property (the
"Property Signs"), (b) at any other location within Highlands Ranch (the
"Highlands Ranch Signs"), or (c) at any other location if the same relates to
or refers to Mission, the Property, or Highlands Ranch (the "Other Signs"),
shall, in each such case, be subject to the review and acceptance by Mission
prior to the time they are so constructed or installed and, in the case of the
Property Signs and the Highlands Ranch Signs only, shall also be subject to the
standards contained in the Development Guide. Review and acceptance by
Mission, in the case of the Property Signs and Highlands Ranch Signs, shall
include, without limitation, review and consent to the size, design, materials,
color, location, and copy and text of signs, but, in the case of the Other
Signs, shall be limited to review and consent by Mission to the content and
text thereof.
3.11. Fencing. Mission acknowledges and agrees that Buyer, at Buyer's
sole cost and expense, shall be entitled to install fencing within the Property
in accordance with the Fencing Plan attached hereto as Exhibit C upon the
Closing of each respective Parcel hereunder. In accordance with the foregoing,
Buyer, its authorized agents, employees and independent contractors shall have
the right, for Buyer's benefit, to enter upon those portions of the Property
necessary to install, maintain or repair fencing depicted on the Fencing Plan
but only in accordance with the terms and provisions of a License to Enter Upon
Real Property to be executed between Mission and Buyer (the "Fencing License
Agreement"). Any entry by or on behalf of Buyer shall be subject to such
reasonable rules, regulations, standards and conditions as are referred to
within the Fencing License Agreement and otherwise as Mission may impose.
Buyer shall keep in good condition and repair all fencing installed by Buyer on
the Property in accordance with the provisions hereof.
3.12. Assignment of Plans. After the Execution Date, and promptly after
preparation thereof, which shall be at Buyer's sole cost and expense, Buyer
shall submit to Mission a complete set, which may be retained by Mission, of
all plans and specifications prepared by or on behalf of Buyer in connection
with Buyer's development of the Property and the construction of improvements
thereon, including, but not limited to, all architectural plans, site plans,
landscaping plans, utility plans, water and sewer plans, fencing plans, and
street improvement plans ("Development Plans"). The parties hereby acknowledge
that the Development Plans shall be prepared from time to time during the term
of this Agreement, and Buyer hereby assigns to Mission, its successors and
assigns, the non-exclusive right to use the Development Plans in connection
with any development on the Property by Mission or its successors or assigns.
Buyer hereby agrees to execute such documents, from time to time, as Mission
may reasonably require to evidence such assignment. Buyer also agrees to
obtain all necessary consents to such assignments from its engineers, planners,
designers, architects, and similar contractors. Buyer agrees that in the event
of any default by Buyer hereunder, whether before or after any Closing, Buyer
shall pay for all such Development Plans, and Mission, its successors and
assigns, shall have the right, without any further cost or charge payable by
Mission, or Mission's successors or assigns, to use the Development Plans in
connection with any development on the Property by Mission, its successors or
assigns. MISSION HEREBY ACKNOWLEDGES AND AGREES THAT THE DEVELOPMENT PLANS
SHALL BE DELIVERED TO MISSION BY BUYER, "AS IS, WITH ALL FAULTS" AND WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, (INCLUDING, WITHOUT
LIMITATION, WARRANTY OF USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE) AND MISSION DOES HEREBY WAIVE, DISCLAIM AND RENOUNCE ANY SUCH
REPRESENTATION OR WARRANTY.
4. TITLE.
4.1. Title Insurance. Mission has previously delivered to Buyer a title
insurance commitment number P1030599-8 and dated February 2, 1995 for Planning
Areas 67 and 73 (the "Title Commitment") with respect to the Property, issued
by Land Title Guarantee Company ("Title Company"), committing to insure title
to the Property in Buyer, subject only to the Permitted Exceptions, as
hereinafter defined, in a face amount equal to the total Base Purchase Price.
The Title Commitment has been amended to reflect the legal description recited
on the Survey. Following the final execution of the Agreement, the Title
Commitment shall be revised to reflect the legal description of the Parcel(s),
as depicted on the Minor Development Plan, and the Purchase Price shall be
allocated between the Parcels based upon the number of gross acres contained
therein. As soon as possible after each Closing, Mission shall cause to be
delivered to Buyer, at Mission's cost and expense, an owner's title insurance
policy insuring the title of Buyer in the Parcel sold at such Closing, in
accordance with the Title Commitment, and the provisions of this Agreement, and
subject only to the Permitted Exceptions, in an amount equal to the Purchase
Price for the Parcel purchased. The Title Commitment shall provide for the
deletion of the standard printed exceptions, at Mission's cost and expense.
4.2. Permitted Exceptions. The "Permitted Exceptions" shall mean (a)
any easements, restrictions and conditions shown on the Survey or any
applicable Minor Development Plan; (b) real property taxes and assessments for
the year of the applicable Closing and subsequent years; (c) building, zoning
and other applicable ordinances and regulations of the County of Douglas, State
of Colorado; (d) any reservations, exceptions, easements, rights-of-way,
restrictive covenants, conditions and other matters set forth on Exhibit D
attached hereto, including, but not limited to, the exceptions of mineral and
water rights set forth on such Exhibit D, subject, however, to Mission's
delivery to Buyer at Closing of a Relinquishment of Surface Rights with respect
to the exceptions of mineral and water rights in the form attached hereto as
Exhibit E; (e) taxes, assessments, fees or charges, if any, resulting from the
inclusion of the Property in the Highlands Ranch Metropolitan District No. 2;
(f) the easements, covenants, conditions and restrictions contained in the Deed
attached hereto as Exhibit F; (g) the terms and provisions contained in the
Supplemental Declaration in the form attached hereto as Exhibit H; (h) the
easements, covenants, conditions and restrictions contained in the Easement and
Development Agreement attached hereto as Exhibit I; (i) the easements,
covenants, conditions and restrictions contained in the Access Easement
Agreement attached hereto as Exhibit J; (j) any defects in or objections to
title to the Property caused by Buyer or anyone claiming by, through or under
Buyer; and (k) any other reservations, exceptions, easements, rights-of-way or
other matters which are waived or deemed waived by Buyer pursuant to the
Section of this Agreement entitled "Title Defects."
4.3. Title Defects. Buyer hereby approves the Title Commitment and the
exceptions to title contained therein, including the Permitted Exceptions. If
Buyer learns of any lien, encumbrance, defect in or objection to title other
than a Permitted Exception listed in subsections (a) through (j) in the Section
above entitled "Permitted Exceptions" ("Defect"), Buyer shall give immediate
written notice thereof ("Notice of Defect") to Mission unless Buyer is willing
to waive the Defect. Buyer's failure to give Mission written Notice of Defect
within the 10 business days after learning of such Defect (whether by notice
from Mission or otherwise) shall constitute Buyer's waiver of such Defect.
Within 10 business days after Buyer's giving any written Notice of Defect,
Mission shall give notice to Buyer advising Buyer whether Mission intends to
cure any such Defect and, if so, shall thereupon promptly proceed to cure such
Defect. If Mission elects to cure any Defect, Mission may, by written notice
to Buyer, extend the date of the Closing in question for a period of up to 90
days in order to attempt a cure of such Defect in which case (a) the deadlines
and periods for the satisfaction of the performance of Mission's and Buyer's
post-closing obligations, as set forth in Articles 6 and 7 of this Agreement,
shall be extended for like periods, and (b) the calculation of the Purchase
Price Escalation Amount for the Parcel being purchased shall not include the
number of days by which Mission has extended the date of Closing to cure such
Defect. Mission shall give written notice to Buyer when the Defect is cured and
the Closing in question shall occur on the earlier to occur of the 10th
business day following the giving of such notice, the date on which the Closing
for the particular Parcel was otherwise scheduled to occur, or such other date
to which the parties may agree. If Mission declines to cure any such Defect,
or Mission fails to cure such defect within 90 days after the giving of the
original Notice of Defect by Buyer to Mission, Buyer may at Buyer's option, (a)
waive in writing such Defect and close as provided in this Agreement, or (b)
terminate any further effect of this Agreement in which case the Deposit shall
be returned to Buyer and each party shall thereupon be relieved of all further
obligations hereunder. Buyer agrees that any Defect shall be deemed cured if
Mission shall cause the Defect to be deleted from the Title Commitment and the
owner's title insurance policy to be delivered to Buyer or shall obtain
affirmative title insurance protection with respect thereto.
4.4. Deed. Mission shall at the Closing for the First Parcel convey the
First Parcel to Buyer by Special Warranty Deed ("Initial Deed") in the form
attached hereto as Exhibit F, free and clear of all liens, encumbrances,
easements and restrictions except the Permitted Exceptions. At each subsequent
Closing Mission shall convey the Parcel being conveyed at such Closing to Buyer
by Special Warranty Deed ("Subsequent Parcel Deed") in the form attached hereto
as Exhibit G, free and clear of all liens, encumbrances, easements and restric-
tions except the Permitted Exceptions. The Initial Deed and the Subsequent
Parcel Deeds are herein individually referred to as a "Deed." Each Deed shall,
however, contain an allocation of the Permitted Density, as hereafter defined,
to the Parcel being conveyed thereby. As provided in Section 1.31 of the
Initial Deed, the Property, and the owner thereof, shall not be entitled to
use, and shall not be subject to Recreation Function Common Assessments for,
any Recreation Cost Center established pursuant to the Community Declaration or
any Supplemental Declaration, including, but not limited to, the Highlands
Ranch Recreation Center.
4.5. Annexation of Property to Community Association. Mission shall at
each Closing cause the Parcel being purchased thereat to be subjected to the
Highlands Ranch Community Association in accordance with the terms and
provisions of the Supplemental Declaration, a copy of which is attached hereto
as Exhibit H.
4.6. Special District Disclosure. As required by Section 38-35.7-101,
C.R.S., the following disclosure statement is required to be made in every
contract for the purchase and sale of residential real property:
"Special Taxing Districts may be subject to general obligations
and indebtedness that is paid by revenues produced from annual tax
levies on the taxable property within the district. 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.
Buyers should investigate the debt financing requirements of the
authorized general obligation indebtedness of such districts,
existing mill taxes of such district servicing such indebtedness, and
the potential for an increase in such mill levies."
Buyer agrees to comply with such requirement in all contracts executed by
Buyer, which obligation shall survive Closing.
4.7. Special District Formation.
(a) Description of Special District. Mission acknowledges that Buyer
desires to form a special taxing district to finance some or all of those
infrastructure improvements which Buyer intends to construct upon the Property
including, but not limited to, streets, storm drainage systems, parks and
recreational facilities, and water and sewer facilities (the "Infrastructure
Improvements"). In accordance with the foregoing, Buyer intends to form a
limited purpose C.R.S. Title 32 Special District (the "Development District")
and a companion non-profit corporation (the "Development Corporation"). Buyer
intends that the Development District shall be formed for the limited purpose
of owning, operating and maintaining the Infrastructure Improvements and the
generation of revenue for such purposes. Buyer intends that the Development
Corporation shall be formed for the limited purpose of issuing bonds for the
purpose of funding the installation of the Infrastructure Improvements. In
accordance with the foregoing, Mission agrees to cooperate with Buyer in the
formation of the Development District and the Development Corporation subject
to the following terms and conditions and provided that the formation of such
entities does not adversely affect the Parcels remaining to be acquired by
Buyer under this Agreement, the development of Highlands Ranch generally or
the financial stability of any other special district located within Highlands
Ranch.
(b) Formation of Development District and Development Corporation.
Pursuant to Buyer's request, Mission has entered into that certain Installment
Land Contract dated February 23, 1995 (the "Installment Land Contract") by and
among Mission and Solomon H. Eichenbaum, Daniel B. Levin, Pamela J.L. English,
Linda M. Zonneveld and Eugene W. Richter (collectively, the "First Parcel
Electors") for the acquisition of the real property more particularly described
therein (the "Directors Parcel"). Subject to the terms and provisions of the
Installment Land Contract and this Agreement, Mission agrees that it shall
cooperate with Buyer in keeping the Installment Land Contract in effect for a
period of one year from the date of this Agreement. Buyer agrees that it shall
reimburse Mission for all costs and expenses incurred by Mission in connection
with such Installment Land Contract including, but not limited to, premiums
paid for a title insurance policy for the Directors Parcel. Buyer acknowledges
that the "Directors Parcel" is not located within the First Parcel and that
Mission agreed to enter into and obligate itself to convey the Directors Parcel
to the First Parcel Electors (as opposed to Buyer) as an accommodation to Buyer
in connection with the formation of the Development District and the
Development Corporation. In accordance with the foregoing and subject to the
terms and provisions hereof, Mission acknowledges and agrees that Buyer, by and
through the First Parcel Electors, shall be entitled to commence the formation
of the Development District and the Development Corporation.
(c) Development District and Development Corporation Documentation.
Mission and Buyer acknowledge that Buyer has (i) initiated preparation of
documentation associated with the formation of the Development District (the
"District Documentation") and documentation related to the formation of the
Development Corporation and the financing of the construction and maintenance
of the Infrastructure Improvements (collectively, the "Corporation
Documentation"); and (ii) submitted portions of the District Documentation and
the Corporation Documentation to various governmental and quasi-governmental
entities for review and comment. Notwithstanding the foregoing, Buyer
acknowledges that Mission has not approved the form of any District
Documentation or Corporation Documentation and Buyer agrees hereafter to submit
to Mission for its review and acceptance: (i) all District Documentation and
Corporation Documentation prior to the time that any such documentation is
submitted to any governmental or quasi-governmental entity for review, comment
or approval; (ii) such supplemental documentation as Mission may reasonably
request which is related to the formation of the Development District and/or
the Development Corporation in accordance with the provisions hereof. In
accordance with the foregoing, Buyer may submit District Documentation and
Corporation Documentation to Mission for its review at anytime and from time to
time subject to the following: Mission shall give written notice to Buyer of
its acceptance or rejection of any District Documentation or Corporation
Documentation submitted to it on or before the date which is 10 business days
following the date of Mission's receipt thereof. If Mission has not given
notice of rejection or conditional acceptance of such documentation by the
expiration of said 10 day period, Mission shall be deemed to have rejected such
documentation as submitted by Buyer. Acceptance or rejection of any District
Documentation or Corporation Documentation, including, but not limited to, the
Service Plan, as hereinafter defined, and the Petition, as hereinafter defined,
shall be in the reasonable discretion of Mission. If Mission rejects or
conditionally accepts the District Documentation or the Corporation
Documentation, Buyer may deliver to Mission revised documentation, from time to
time, for Mission's review. Buyer agrees that it shall not modify any District
Documentation or Corporation Documentation as submitted to and approved by
Mission without the prior written consent of Mission as provided above.
In connection with the formation of the Development District and the
Development Corporation, Buyer agrees that the name of the Development District
or the Development Corporation shall not include the name "Highlands Ranch" or
the "Park at Highlands Ranch." Buyer further acknowledges and agrees that the
District Documentation and the Corporation Documentation shall: (a) apply only
to the First Parcel and the Directors Parcel; provided that such documentation
may contemplate the annexation of the remaining Parcels within the Property to
the Development District subsequent to the time that Buyer has closed the
purchase of such Parcels; (b) that no bonds shall be issued by the Development
District and/or the Development Corporation prior to the date of Closing for
the First Parcel; and (c) provide that no liens or obligations shall be
incurred by the District or attach to any portion of the Property until such
time as Buyer has acquired such Property. Mission and Buyer acknowledge that
the formation of the Development District will require: (a) the submission of a
Service Plan for the Development District (the "Service Plan") to the County
Commissioners of Douglas County for review and approval; (b) assuming approval
of the Service Plan by the County Commissioners, the filing of a petition
("Petition") to organize the Development District with the District Court of
Douglas County; (c) the appearance before the District Court of Douglas County
regarding the formation of the Development District; and (d) an election
authorizing the formation of the Development District and the election of the
Board of Directors of the Development District. In accordance with the
foregoing and without limiting the generality of the review provisions
contained above, Buyer expressly acknowledges and agrees that Mission shall be
entitled to review and approve the form and content of the Service Plan, the
Petition, and the Order of the District Court forming the Development District
(the "Order"). Buyer agrees that Mission may require that the Order include
specific provisions of the Service Plan designated by Mission, including, but
not limited, provisions which prohibit the Development District from exercising
powers which impact properties outside of the Development District boundaries
(e.g. condemnation of property outside of the Development District or the
construction of improvements on property located outside of the Development
District boundaries).
(d) Termination of Agreement/Special District. In the event that this
Agreement is terminated by either party prior to the recording of the Order,
Buyer shall cooperate with Mission in terminating the Development District and
the Development Corporation. In furtherance of the foregoing, such cooperation
shall include, but shall not be limited to, the termination of the Installment
Land Contract upon demand by Mission. Buyer and all other parties reasonably
required by Mission, including but not limited to counsel for the Development
District, shall execute all documentation reasonably requested by Mission to
facilitate the transfer of control and termination of the Development District
and the Development Corporation (collectively, the "District Termination
Documents"). In addition to the foregoing, Buyer acknowledges and agrees that
it shall have one year from the date of this Agreement to (i) remove the
Directors Parcel from the boundaries of the Development District free and clear
of any Development District liens, obligations or encumbrances; and (ii)
resubdivide the First Parcel to provide for a substitute directors parcel
therein. Buyer agrees to indemnify, hold harmless and defend Mission from any
claim, liability, loss, damage, cost or expense, including attorneys' fees,
which Mission may incur or which may be asserted by reason of the formation
and/or termination of the Development District and the Development Corporation
or the failure of Buyer to remove the Directors Parcel from the Development
District in accordance with the provisions hereof.
4.8. Easements. Mission and Buyer agree that the following documents
pertaining to easements associated with the Property and other real property
shall be executed at the Initial Closing:
(a) Easement and Development Agreement. The Easement and Development
Agreement attached to this Agreement as Exhibit I shall be executed by Mission
and Buyer at the Closing of the First Parcel.
(b) Access Easement Agreement. The Access Easement Agreement attached
to this Agreement as Exhibit J shall be executed by Mission and Buyer at the
Closing of the First Parcel.
5. CLOSING.
5.1. Closing Dates and Place. It is acknowledged that there will be a
series of Closings, one for each Parcel. All references in this Agreement to
"Closing" shall mean and refer to the Closing for a particular Parcel.
"Closing" for each Parcel shall mean payment of the Purchase Price attributable
to the Parcel in question and delivery of the Deed, and other documents to be
delivered at Closing as hereinafter provided for such Parcel. Unless otherwise
agreed in writing by the parties, the Closing for the First Parcel shall take
place at 10:00 a.m. on May 1, 1995, or such later date to which such Closing
may be extended as provided in the Section of this Agreement entitled "Title
Defects." "Closing Date" or "Date of Closing" shall mean the day on which
Closing is accomplished. The Closing shall take place at the offices of Mis-
sion, or at such other place as the parties may mutually agree. Each
subsequent Closing shall occur not later than 12 months following the Closing
on the First Parcel as to the second Parcel and annually thereafter as to each
subsequent Closing, with the final Closing to occur not later than four (4)
years following the initial Closing. Except as otherwise provided in Section
4.3, each Closing shall occur on a date designated, in writing, by Mission to
Buyer not less than 30 days prior to the scheduled date therefor.
5.2. Documents at Closing. At each Closing, the following documents and
materials shall be delivered by the parties: (a) a Closing Statement, as
hereinafter provided; (b) a duly executed and acknowledged Deed by Mission in
the form attached as Exhibits F or G, as the case may be; (c) a Supplemental
Declaration executed by Mission in the form attached hereto as Exhibit H; (d)
the Purchase Price for the Parcel; (e) a duly executed and acknowledged Relin-
quishment of Surface Rights in the form attached hereto as Exhibit E; (f) a
duly executed and acknowledged Easement and Development Agreement in the form
attached hereto as Exhibit I, at the Initial Closing ; (g) a duly executed and
acknowledged Access Easement Agreement in the form attached hereto as Exhibit
J, at the Initial Closing ; (h) the affidavit referred to in the Section of
this Agreement entitled "The Foreign Investment in Real Property Tax Act"; and
(i) all other instruments and documents contemplated pursuant to this
Agreement.
5.3. Closing Statement Adjustments and Prorations. Each Closing State-
ment to be delivered by the parties at a Closing shall reflect the Purchase
Price for the Parcel, a credit against the Purchase Price for the Deposit for
the Last Parcel purchased only, and, except as provided in Section 4.7 hereof,
adjustment for proration as of the Closing Date of real property taxes and
assessments. The Closing Statement shall reflect the fact that Mission shall
be obligated to pay the premium for the owner's title insurance for the Parcel
pursuant to the Title Commitment; that Buyer shall be responsible for payment
of fees for recording or filing of the Deed, the Supplemental Declaration, any
Easement Agreement and the Relinquishment of Surface Rights, and any docu-
mentary or other fees payable in connection with such recording; and that the
parties shall equally split any closing fee payable to the Title Company.
Proration for real property taxes and assessments shall be based upon the then
most recently available amount of real property taxes and assessments with
respect to the Property, and said proration shall be final. In the event that
the Parcel is assessed or taxed as a part of a larger parcel, the tax for the
Parcel shall be determined by multiplying the assessment and tax for said
larger parcel by a fraction, the numerator of which shall be the land area
contained in the Parcel and the denominator of which shall be the land area
contained in said larger parcel.
5.4. Possession. Possession of a Parcel shall be delivered to Buyer as
of the Closing for such Parcel.
5.5. Building Permit Moratorium. In the event that any governmental or
quasi-governmental authority puts into effect, adopts, imposes or abides by a
moratorium or other similar restriction (a "Moratorium") with respect to
approval of electric, gas, sanitary sewer, water hook-ups or the issuance of a
building permit and the obtaining of a certificate of occupancy thereto, and
such Moratorium is in effect during the scheduled occurrence of the Closing or
a subsequent Closing or both, then Buyer shall not be required to purchase a
Parcel at such Closing or Closings. The Closing, if any, which has been
delayed due to such Moratorium, shall occur on the 10th business day after the
lifting of the Moratorium upon notice from Mission to Buyer. In the event a
Moratorium affects the dates for acceptance and approval of the Site Plan or
any Future Site Plan by Douglas County, the date of Closing for the Parcel
affected by such Moratorium shall be extended for a period of time equal to the
number of days during which such Moratorium is in effect. In accordance with
the foregoing, in the event that the Closing for any Parcel hereunder is
delayed due to a Moratorium, the date of Closing for all remaining Parcels to
be purchased by Buyer hereunder shall be extended by the period of any and all
such Moratoriums. In the event of the imposition of any Moratorium prior to
the occurrence of the Closing, or any subsequent Closing, the Purchase
Escalation Amount for any Parcel shall abate during the period of such
Moratorium. In addition, should any Moratorium or Moratoriums remain in effect
for more than any consecutive, noncollective, one year period during the term
of this Agreement, either Mission or Buyer shall have the option, in their sole
and absolute discretion, upon prior written notice to the other party, to
terminate this Agreement with respect to all portions of the Property not
previously purchased by Buyer hereunder, in which case one half of the Deposit
previously paid pursuant to this Agreement shall be returned to Buyer, one-half
of the Deposit previously paid pursuant to this Agreement shall be retained by
Mission and each party shall thereupon be relieved of all further obligations
with respect to, but only with respect to, the portions of the Property not
previously purchased under this Agreement.
Notwithstanding the foregoing, in the event that Mission elects to
terminate this Agreement pursuant to the provisions of this Section 5.5, Buyer
shall have the right to purchase any or all of the remaining Parcels not
previously purchased by Buyer hereunder in phase order, in accordance with the
terms and provisions of this Agreement, by delivering written notice to Mission
within thirty (30) days of Buyer's receipt of Mission's termination notice (the
"Option Notice"). In the event that Buyer elects to purchase all such portions
of the Property pursuant to the provisions hereof, the Closing for such
purchase shall occur on the date which is sixty (60) days after Mission's
receipt of the Option Notice, or such other date as the parties may mutually
agree.
6. MISSION'S POST-CLOSING OBLIGATIONS.
6.1. Directory Maps. Certain directory maps (the "Directory Maps") have
been installed by Mission, at its cost and expense, at various entry points
into Highlands Ranch, which are of a size, type, design, number, content and at
such locations as Mission has determined in its sole discretion may determine.
The Directory Maps show the locations of various projects in Highlands Ranch.
Directory Maps showing the location of projects shall include, at Mission's
cost and expense, either the name of Buyer or the name of Buyer's project to be
developed on the Property, whichever Buyer, at Buyer's option to be exercised
by written notice given to Mission prior to Closing (failing which exercise
Mission may make such selection in Buyer's discretion), shall elect.
6.2. Directional Signs. Mission agrees to install, at its cost and
expense, at least three directional signs (the "Directional Signs") at various
locations within Highlands Ranch, which shall be of a size, type, design,
number, content and at such locations as Mission in its sole discretion may
determine, which shall contain either the name of Buyer or the name of the
project of Buyer to be developed on the Property, whichever Buyer, at Buyer's
option to be exercised by written notice given to Mission prior to Closing
(failing which exercise Mission may make such selection in its discretion),
shall elect and may contain the name of any other project located within
Highlands Ranch and the developer thereof (including, if applicable, Mission).
6.3. Installation of Maps and Signs. Buyer agrees to give Mission
written notice advising Mission of the date anticipated by Buyer upon which
Buyer's leasing office or trailer shall be open for business with the public.
Mission agrees to cause the Directory Maps and Directional Signs (collectively
the "Maps and Signs") to be installed no later than the later of (a) 14 days
after the date upon which Mission receives such written notice, or (b) the date
anticipated by Buyer in such written notice as the date upon which such leasing
office or trailer shall so open, or (c) the actual date upon which such leasing
office or leasing trailer shall so open. The Maps and Signs shall be
maintained and repaired by Mission, at Mission's cost and expense, to a level
of quality as determined by Mission in its sole discretion, until two years
after the last Closing Date, at which time, or at any time thereafter, the Maps
and Signs may be removed. If after Mission initially installs the Maps and
Signs, Buyer desires to make any change with respect to the name of Buyer or
the name of Buyer's project, as the case may be, thereon, the cost of so doing
shall be at Buyer's expense.
7. BUYER'S POST-CLOSING OBLIGATIONS.
7.1. Incorporation of Buyer's Obligations in Deed. The Deeds attached
hereto as Exhibits F and G contain terms and provisions of certain obligations
of Buyer after the Closing. Buyer hereby agrees that Buyer shall be obligated
to comply with terms and provisions set forth in the Deeds.
7.2. Metropolitan District Requirements. The Property is located within
the boundaries of Highlands Ranch Metropolitan District No. 2 ("Metropolitan
District"). Buyer will satisfy himself with regard to the services performed
by, the rules and regulations of, and the systems development fees, tap fees
and other fees charged by the Metropolitan District, all of which shall be paid
by Buyer.
7.3. Additional Information. Buyer acknowledges that Buyer has
received, read and understands the provisions of (a) a Contiguous Area Report
for the Property (the "CAR") in the form attached hereto as Exhibit K, or in
such other form as may be designated by Mission in writing to Buyer from time
to time; (b) the Community Declaration for Highlands Ranch Community
Association, Inc. (the "Community Declaration"), dated September 1, 1981 and
recorded September 17, 1981 in Book 421 beginning at Page 924 of the Douglas
County Records, as it has been, or may be in the future, duly amended, and the
Articles of Incorporation and Bylaws of the Highlands Ranch Community
Association, Inc. ("Community Association"), attached as Exhibits thereto; (c)
the brochure entitled "Some Questions and Answers About the Highlands Ranch
Community Association"; and (d) a form of Supplemental Declaration, which has
been or will be used by Mission to annex the Property to the Community Asso-
ciation Area (the "Supplemental Declaration"). As more fully set forth in the
Initial Deed, Buyer agrees to be bound by and comply with the requirements and
restrictions contained in the Community Declaration, and the CAR in construct-
ing improvements on the Property.
7.4. Maintenance of Property. As is more particularly provided in the
Initial Deed, after the date of said Deed Buyer shall maintain, or cause to be
maintained, the portion of Property conveyed thereby in good, healthful and
sightly order, condition and repair. Additionally, and without limiting the
generality of the foregoing, Buyer agrees to obtain and maintain any and all
required permits, licenses and approvals from any governmental authority having
jurisdiction concerning stormwater runoff, sediment or erosion control, storm
drainage, or any other water or sediment discharge ("Stormwater Permit") which
relate to that portion of the Property, the Closing hereunder for which has
previously occurred (the "Transferred Portions"), and, with respect to the
Transferred Portions, to comply with any and all requirements, conditions,
restrictions or other terms contained in any such Stormwater Permit, whether it
has been obtained by Buyer or Mission, including, but not limited to, treatment
requirements and discharge limitations. Moreover, for any Stormwater Permit
obtained by Mission which covers all or a portion of the Property, Mission
shall have the option, at any time on or subsequent to the date upon which all
of the Property covered by such Stormwater Permit has been transferred to
Buyer, to require Buyer to accept a transfer of such Stormwater Permit. Buyer
further agrees to indemnify, hold harmless and defend Mission from any claim,
liability, loss, damage, cost or expense, including attorneys' fees, which
Mission may incur or which may be asserted by reason of any failure of Buyer to
comply with, or fulfill Buyer's obligations under, any such Stormwater Permit
required hereunder. Notwithstanding any other provision of this Agreement, the
obligations of Buyer under this Section shall survive each Closing, and any
termination of this Agreement by either Mission or Buyer.
7.5. Water, Soil, and Energy Conservation Measures. The "Development
Guide Preamble Obligations" shall mean the obligations of Mission, its succes-
sors and assigns, as set forth in Subsection C of the Preamble to the Develop-
ment Guide, entitled "Implementation of Water and Soil Conservation Measures,"
and in Subsection D of the Preamble to the Development Guide, entitled "Imple-
mentation of Energy Conservation Programs." Buyer agrees that in developing
the Property and in designing and constructing Dwelling Units and other
improvements thereon, Buyer shall comply with and perform the Development Guide
Preamble Obligations insofar as the same apply to the Property. Buyer agrees
from time to time and within 10 days after Mission shall deliver a written
notice to Buyer requesting Buyer to complete the same, to complete and deliver
to Mission a report on such a form as shall be designated by Mission from time
to time, setting forth what Buyer has done and in the future plans to do to
comply with the Development Guide Preamble Obligations.
7.6. Compliance with Open Space Requirements. Buyer covenants and
agrees that each portion of the Property, if any, which does not constitute a
lot upon which a Dwelling Unit is intended to be constructed shall be desig-
nated on the Minor Development Plan (or other appropriate document) as Open
Space pursuant to the Open Space Agreement, provided that such portion of the
Property otherwise qualifies as Open Space pursuant to the Open Space Agree-
ment. Any portion of the Property so designated on the Minor Development Plan
(or other appropriate document) as Open Space shall be subject to the Open
Space Agreement and Buyer agrees not to change the designation of such property
as Open Space without the prior written consent of Mission which shall be in
Mission's sole and absolute discretion. Buyer covenants and agrees to convey
or dedicate, as such terms are defined in Section 3.6 of the Open Space
Agreement, such Open Space to the Development District contemplated by Section
4.7 hereof, or, in the event that such Development District is not formed by
Buyer, a subassociation formed by Buyer pursuant to the terms and provisions of
the Supplemental Declaration, when and as directed by Mission and approved by
Douglas County; provided that Mission shall be entitled to direct the
conveyance of such Open Space as provided hereunder only if: (a) there is no
Excess Open Space available for conveyance within Highlands Ranch; and (b) such
conveyance is demanded by Douglas County pursuant to the terms and provisions
of the Open Space Agreement. Such conveyance shall be subject only to such
reservations and exceptions of easements for access, utilities and drainage
purposes as Buyer may deem necessary and desirable and as are accepted in
writing by Mission and Douglas County. Until such time as the Open Space is
conveyed or dedicated to the Development District or subassociation as provided
hereunder, Buyer shall be obligated to care for and maintain the same. Buyer
agrees and acknowledges that Mission shall have the sole right to deal with
Douglas County with respect to such Open Space. Buyer shall co-operate with
Mission in connection with all matters relating to the Open Space contained
within the Property.
7.7. Density Allocation. The parties hereby agree that a maximum of
1884 Dwelling Units shall be allocated to the Property and that each Parcel
shall be allocated the number of Dwelling Units as set forth on the Development
and Phasing Plan. Mission and Buyer acknowledge that Mission is selling the
Property to Buyer in accordance with Mission's overall plan for the development
of Highlands Ranch. In accordance with the foregoing, Mission covenants and
agrees that Mission shall not develop, sell, lease, transfer or otherwise
encumber other real property in Planning Areas 5, 54, 67 and 73 of the
Highlands Ranch or any other areas within Highlands Ranch in such a manner
which would prevent Buyer from obtaining Douglas County's approval of the
construction of the maximum number of Dwelling Units allocated to a Parcel
pursuant to the Minor Development Plan. Notwithstanding the foregoing, in no
event shall the terms and provisions of this paragraph be deemed to create any
rights of approval, or any other rights in Buyer, for the development of any
Parcel, the Property, Highlands Ranch or the development sale, leasing,
transfer or encumbrance of any property located therein except as specifically
set forth herein.
7.8. Installation of Utilities. Water, sanitary sewer, storm sewer,
electric, gas, telephone and cable television lines are currently located
within streets, public rights of way or easements in a location on or adjacent
to the Property. Except as set forth in Sections 7.9(b), with respect to
certain drainage improvements, and Section 7.10, with respect to the Willows
Water Main, as hereinafter defined, Buyer acknowledges that Mission shall have
no obligation whatsoever to install or extend any utility or service lines from
their present location to or within the Property. Subject to the provision of
Sections 7.9 and 7.10, Buyer acknowledges that it shall be Buyer's respon-
sibility, at Buyer's sole cost and expense, to arrange for the installation and
extension of all water, sanitary sewer, storm sewer, gas, electricity, cable
television and telephone facilities from their current locations to the
Property and thereafter within the Property. Buyer shall also be solely
responsible for the payment of the cost of any meters, tap fees, service fees
and other charges of any entities supplying water, sanitary sewer, storm sewer,
gas, electricity, cable television and telephone services. If as a result of
any such installation of utility main lines, Buyer is entitled to reimbursement
from third parties when such third parties connect to or commence using such
lines (in accordance with agreements provided by any utility companies relating
to such entitlement) Buyer shall have the right to such reimbursements.
7.9. Off-Site Drainage.
(a) Big Dry Creek Basin. Mission is the Declarant under that certain
Declaration of Covenants, Conditions and Restrictions for the Links at
Highlands Ranch dated September 29, 1992 recorded September 30, 1992 in Book
1089 at Page 628 in the records of the Clerk and Recorder of Douglas County,
Colorado (the "Golf Course Declaration"). The Golf Course Declaration
encumbers the property more particularly described therein, which property may
hereinafter be referred to as the Golf Course Property. Portions of the Golf
Course Property are adjacent to the Property. Pursuant to Section 4.2 of the
Golf Course Declaration, Mission, in its capacity as Declarant under the Golf
Course Declaration, has reserved the right to grant governmental authorities or
districts certain easements, licenses, rights and rights-of-way over and across
portions of the Golf Course Property which pertain to drainage and flood
control facilities. In accordance with the foregoing, Mission agrees to obtain
and/or convey such drainage and flood control easements, licenses, rights and
rights-of-way over and across the Golf Course Property which may be reasonably
necessary for Buyer to develop the Property in accordance with the Minor
Development Plan. Buyer acknowledges and agrees that any such easements,
licenses, rights and rights-of-way which relate to Mission's capacity as
Declarant under the Golf Course Declaration shall only be made or conveyed by
Mission in accordance with the terms and provisions of the Golf Course
Declaration. Buyer agrees to indemnify and hold Mission harmless from and
against any and all claims, liabilities, losses, damages, costs or expenses,
including attorneys' fees which Mission may incur as a result of Buyer's
violation of the Golf Course Declaration.
(b) Spring Creek Drainage Basin. Mission and Buyer acknowledge that
the Metropolitan District's currently existing master drainage plan (the
"Drainage Plan") anticipates the construction by the Metropolitan District of
certain drainage and flood control improvements for the Spring Creek Drainage
Basin (the "Drainage Improvements"). Buyer and Mission shall be responsible
for contacting the Metropolitan District to coordinate the construction of the
Drainage Improvements pursuant to the Drainage Plan. Buyer and Mission agree
to use good faith and due diligence in seeking the construction of the Drainage
Improvements by the Metropolitan District. In accordance with the foregoing:
(i) Mission shall cause the Metropolitan District to commence the construction
of the Drainage Improvements within 3 months from date of the Closing of the
First Parcel and complete the construction of the Drainage Improvements within
12 months from date of the Closing of the First Parcel, or (ii) if Mission is
unable to cause the Metropolitan District to commence the construction of the
Drainage Improvements within 3 months from date of the Closing of the First
Parcel and complete the construction of the Drainage Improvements within 12
months from date of the Closing of the First Parcel, Mission shall be obligated
to construct the Drainage Improvements itself, subject to delays resulting from
Force Majeure Causes, as hereinafter defined. Buyer acknowledges that Mission
has made no representation or warranty that Mission will be able to cause the
Metropolitan District to construct such Drainage Improvements. "Force Majeure
Causes" shall mean and refer to delays from causes beyond the reasonable
control of Mission, such as, but not limited to, acts of God, governmental
moratoriums, strikes, work stoppages, unavailability of or delay in receiving
labor or materials, defaults by contractors or subcontractors, weather
conditions, or fire or other casualty. For purposes of this Section 7.9 (b),
the term Drainage Improvements shall mean either temporary drainage
improvements located either on or off-site of the Property or permanent
drainage improvements located off-site of the Property; provided, however, if
temporary on-site drainage improvements are constructed on the Property such
improvements shall not unreasonably interfere with the development of the
Parcels acquired by Buyer hereunder. Buyer hereby acknowledges that Buyer has
received the Drainage Plan. Buyer agrees that the storm drainage discharge
associated with the construction of Dwelling Units on the Property will not
exceed the storm drainage discharge capacity of the Drainage Improvements as
contemplated by the Drainage Plan.
7.10. Willows Water Main. Buyer and Mission acknowledge that a portion
of the Property is affected by that certain thirty (30) foot wide easement
granted to the Willows Water District ("Willows District") by Easement Deed
dated April 22, 1975 and recorded April 24, 1975 in Book 275 and Page 538 of
the Douglas County Clerk and Recorders records ("Douglas County Records") as
amended by that certain Relinquishment of Easement and Grant of Easement dated
January 15, 1987 and recorded January 19, 1987 in Book 694 at Page 914 of the
Douglas County Records (collectively "Willows Water Easement"). Located within
the Willows Water Easement is a thirty (30) inch pressurized water main owned
and used by the Willows Water District (the "Willows Water Main"). In addition
to the terms and provisions of the Willows Water Easement, the Willows Water
Easement is affected by that certain Agreement dated April 3, 1981 between
Mission, Highlands Ranch Development Corporation, a Colorado Corporation and
the Willows District, a copy of which is attached hereto as Exhibit L (the
"Willows Water Agreement"). Missions acknowledges that in several areas along
the Willows Water Easement the earthen cover over the Willows Water Main is in
excess of the maximum cover limitations set forth in the Willows Water Easement
and that the correction of this problem must be remedied ("Water Main Cover
Correction"). In accordance with the foregoing, Mission and Buyer agree that
they shall jointly cooperate in obtaining from the Willows Water District the
specific documentation set forth below which provides for the relocation of the
Willows Water Main so as to permit Buyer to develop the Property in accordance
with the Development and Phasing Plan, the First Parcel Site Plan and the
Future Site Plans (collectively, the "Willows District Documentation"). The
Willows District Documentation shall be limited to: (a) approval of the plans
and specifications for the relocation of the Willows Water Main by the Willows
District engineer; (b) a document which terminates the existing Willows Water
Easement with respect to the Property; (c) a document which provides the
Willows District with an easement for the relocation of the existing Willows
Water Easement to a location jointly determined by Mission and the Willows
District; and (d) the approval of the Board of Directors of the Willows Water
District of (a), (b) and (c) above. The form and content of the Willows
District Documentation shall be subject to the prior written approval of both
Mission and Buyer prior to execution. In the event that the Willows District
Document is not approved by Mission and Buyer, and executed by the appropriate
parties, on or before the date which is fifteen (15) days prior to the Closing
for the First Parcel, then either party shall be entitled to terminate this
Agreement by delivery of written notice to the other party on or before such
date. In the event that the Agreement is terminated by either party in
accordance with the provisions hereof, the Deposit, other than the Non-
refundable Deposit, shall be returned to Buyer by Mission and each party shall
be relieved of all further obligations hereunder except as otherwise provided
herein. In the event that the Willows District Documentation is obtained from
the Willows District and Buyer closes the purchase of the First Parcel as
provided herein, Buyer shall be responsible for performing the relocation of
the Willows Water Line in accordance with the terms and provisions of the
Willows District Documentation. Mission agrees to provide Buyer with such
licenses and other documentation as is reasonably necessary for Buyer to
complete the Relocation of the Willows Water Line in accordance with the
Willows District Documentation. Mission agrees to reimburse Buyer for a
portion of the actual costs and expenses incurred by Buyer for the relocation
of the Willows Water Line in accordance with the provisions hereof, exclusive
of administrative costs and legal fees (the "Water Main Reimbursement Amount");
provided, however, that in no event shall Mission's reimbursement obligation
hereunder exceed $220,995.00. After completion of the relocation of the Willows
Water Main by Buyer in accordance with the provisions hereof, Mission shall pay
to Buyer the Water Main Reimbursement Amount within 30 days after Mission's
receipt of Buyer's invoice for such work, which invoice shall include such
backup documentation as Mission may reasonably require.
8. REPRESENTATIONS AND WARRANTIES.
8.1. Representations and Warranties of Mission. As an inducement to
Buyer to enter into this Agreement, Mission represents and warrants to, and
covenants with, Buyer as follows:
(a) This Agreement constitutes a legal, valid, and binding obligation of
Mission and (together with all documents contemplated hereby when executed and
delivered) is enforceable against Mission in accordance with its terms.
(b) Mission Viejo Company is a California corporation duly organized,
validly existing, and in good standing under the laws of the State of
California and qualified to transact business in the State of Colorado, and
individuals executing this Agreement and the documents contemplated by this
Agreement on its behalf are duly elected or appointed and validly authorized to
execute and deliver the same.
Should Mission learn of any fact, condition, development, or proposal
which is contrary to or inconsistent with the above, it will immediately so
advise Buyer in writing.
8.2. Representations and Warranties of Buyer. As an inducement to Mis-
sion to enter into this Agreement, Buyer represents and warrants to, and cove-
nants with, Mission as follows:
(a) That this Agreement constitutes a legal, valid, and binding obli-
gation of Buyer and (together with all documents contemplated hereby when
executed and delivered) is enforceable against Buyer in accordance with its
terms.
(b) Buyer is a Colorado corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado and the individuals
executing this Agreement and the documents contemplated by this Agreement are
or will be duly authorized to do so.
Should Buyer learn of any fact, condition, development, or proposal which
is contrary to or inconsistent with the above, he will immediately so advise
Mission in writing.
9. DEFAULTS.
9.1. Defaults by Mission. If there is any default by Mission under this
Agreement prior to the Last Closing, Buyer may at Buyer's option, (a) declare
this Agreement terminated in which case the Deposit shall be returned to Buyer
and each party shall thereupon be relieved of all further obligations
hereunder, (b) bring an action against Mission for damages, or (c) if the
default arises after the Closing for the First Parcel, elect to treat this
Agreement as being in full force and effect and Buyer shall have the right to
seek specific performance of this Agreement. These shall be the sole remedies
of Buyer and Buyer shall not be entitled to, and hereby waives all other rights
to seek, specific performance of this Agreement, to file any notice of lis
pendens, attachment, lien or encumbrance or to take any other action which
could impair the ability of Mission to sell, transfer and freely deal with any
portion of the Property not theretofore transferred to Buyer, except as
otherwise provided in the first sentence of this Section 9.1.
9.2. Defaults by Buyer. If there is any default by Buyer under this
Agreement prior to the last Closing or if Buyer fails to timely construct the
Access Improvements contemplated by the Access Easement Agreement in accordance
with the provisions of Section 4 thereof, then Mission may, at Mission's
option, (a) since damages may be difficult to ascertain, retain the Deposit as
liquidated damages, and declare this Agreement terminated in which case each
party shall be relieved of all further obligations hereunder, or (b) if such
default is the failure of Buyer to comply with any obligations of Buyer
hereunder (other than the obligation of Buyer to close hereunder, or the
obligations set forth in Section 3.6 with respect to submittal of documents or
obtaining approvals by set deadlines), including, without limitation, Buyer's
failure to comply with any of its obligations which survive the termination of
this Agreement, bring an action against Buyer for damages. In addition to any
default by Buyer hereunder resulting from any failure by Buyer to comply with
any of Buyer's obligations hereunder, Buyer shall be in default hereunder if
Buyer shall file a petition in bankruptcy or insolvency or for reorganization
or arrangement under the bankruptcy laws of the United States or under any
similar act of any state, or shall voluntarily take advantage of any such law
or act by answer or otherwise, or shall be dissolved or shall make an assign-
ment for the benefit of creditors or if involuntary proceedings under any such
bankruptcy or insolvency law or for the dissolution of Buyer shall be
instituted against Buyer or a receiver or trustee shall be appointed for the
interest of Buyer under this Agreement or for all or substantially all of the
property of Buyer, and such proceedings shall not be dismissed or such
receivership or trusteeship vacated within 60 days after such institution or
appointment. The foregoing shall be the sole remedies of Mission, and Mission
shall not be entitled to, and hereby waives all rights to seek, specific
performance of this Agreement.
9.3. Rights to Cure. Notwithstanding anything to the contrary hereunder
and prior to the commencement of any action on any default, the nondefaulting
party shall provide to the defaulting party written notice of such default.
The defaulting party shall have 5 business days after receipt of such notice to
cure the alleged default, or if said default cannot reasonably be cured within
said 5-day period, the defaulting party shall in good faith commence to cure
such failure within such 5-day period and shall diligently proceed therewith to
completion.
9.4. Defaults After Closing. Each of Mission and Buyer shall be enti-
tled to pursue any and all legal and equitable remedies available to it in the
event of a default by the other party after any Closing under this Agreement as
to the Parcel(s) theretofore acquired.
10. MISCELLANEOUS.
10.1. Press Releases. Buyer and Mission agree that neither party shall
make any statement or release to the media regarding this Agreement or the
terms and provisions hereof unless the content and timing of said statement or
release shall have been approved by the other party in writing, which approval
shall not be unreasonably withheld.
10.2. Taking Prior to Closing. Other than with respect to an "Immaterial
Taking," as hereinafter defined, if any of the Property is taken by the right
of, or is included in any pending action to exercise the right of, eminent
domain, prior to the date of the applicable Closing hereunder, at Buyer's
option: (a) this Agreement shall remain in effect, such Closing shall never-
theless occur and Buyer shall thereupon become entitled to the entire award or
proceeds received or receivable for the portion of the Property taken and Mis-
sion shall be entitled to any award or proceeds for severance or other damages
relating to other property owned by Mission; or (b) Buyer may terminate this
Agreement by written notice to Mission, in which case the Deposit shall be
returned to Buyer and each party shall be relieved of all further obligations
hereunder. If an Immaterial Taking occurs, Mission shall be relieved of its
duty to convey title to the portion of the Property so taken or condemned, and
Mission will be entitled to receive all proceeds of any such taking or
condemnation. Any taking or condemnation for any public or quasi-public
purpose or use which does not affect access, reduce the permitted number of
Dwelling Units, reduce the value of the Property, in Buyer's reasonable
opinion, shall be deemed an "Immaterial Taking."
10.3. Agreement Not to be Recorded. Each party agrees that it shall not
cause or permit this Agreement to be recorded; provided, however, that at the
Closing of the First Parcel, the parties agree to cause a memorandum of this
Agreement to be recorded in the land records of the Clerk and Recorder of the
County of Douglas, State of Colorado, which memorandum shall be in form and
substance mutually acceptable to the parties. Concurrently with the
recordation of such memorandum, Buyer shall deliver to Mission, a quitclaim
deed for each of Lots 2 through 5, Highlands Ranch Filing No. 126-A, Douglas
County, Colorado which deeds shall be held by Mission pursuant to mutually
agreeable instructions. Said instructions shall provide, among other
provisions, that (i) upon Buyer's purchase of each of Lots 2 through 5,
Highlands Ranch Filing No. 126-A, Douglas County, Colorado, the quitclaim deed
with respect to the applicable Lot being held by Mission shall be returned to
the Buyer at the Closing at which the applicable Lot is purchased; and (ii)
upon Mission delivering to Buyer written notice stating that (x) Buyer is in
default under this Agreement, and (y) Buyer has failed to cure such default
within the time period provided by Section 9.3 of this Agreement, Mission may
record the quitclaim deeds then being held by it pursuant to the terms of the
instructions.
10.4. No Representations. Mission and Buyer acknowledge and agree that,
except as provided in the Sections of this Agreement entitled "Interstate Land
Sales Act and Colorado Subdivision Developers Act Exemptions" and Article 8 and
as otherwise expressly provided for elsewhere in this Agreement, neither party
has made any representations, warranties, or agreements to or on behalf of the
other party as to any matter concerning the Property, the present use thereof
or the suitability for Buyer's intended use of the Property, including, without
limitation, any representations, warranties or agreements relating to
topography, climate, air, water, water rights, utilities, present and future
zoning, soil, subsoil, environmental conditions, the purposes to which the
Property is suited, the use of adjoining or nearby properties, drainage, access
to public roads, or proposed routes of roads, or extensions thereof, or the
effect of any state or federal environmental protection laws or regulations.
Buyer represents and warrants to Mission that Buyer has made or will make
Buyer's own independent inspection and investigation of the Property and, in
entering into this Agreement, Buyer intends to rely solely on such inspection
and investigation of the Property. No patent or latent physical condition of
the Property, whether or not now known or discovered, shall affect the rights
of either party hereto. No agreement, warranty or representation, unless
expressly contained or provided for herein, shall bind Mission. Buyer expressly
waives any right of rescission and all claims for damages by reason of any
statement, representation, warranty, promise, or agreement, if any, unless
contained in this Agreement.
10.5. Indemnification; No Mechanic's Liens. Buyer hereby acknowledges
that the making of Investigations, Tests and Surveys prior to Closing
hereunder, are for the benefit of and at the instance of Buyer. Buyer
expressly acknowledges that nothing in this Agreement shall authorize Buyer, or
any person dealing with, through or under Buyer to subject Mission's interest
in any portion of the Property to mechanic's liens prior to Closing for the
Property. Buyer agrees to indemnify, hold harmless and defend Mission from any
claim, liability, loss, damage, cost or expense, including attorneys' fees,
which Mission may incur or which may be asserted by reason of (a) any entry on
the Property through or under Buyer prior to Closing; (b) the making of
Investigations, Tests and Surveys ordered or conducted by Buyer; or (c) any
fencing installed on the Property by Buyer pursuant to the provisions of
Section 3.11 thereof. Buyer agrees not to permit or suffer and, to the extent
so permitted or suffered, to cause to be removed and released, any mechanic's,
materialman's or other lien on account of supplies, machinery, tools,
equipment, labor or materials furnished or used in connection with the
planning, design, inspection, construction, alteration, repair or surveying of
the Property as aforesaid through or under Buyer prior to Closing hereunder.
Mission may at its option, at Buyer's cost and expense, with the assistance of
attorneys of Mission's choosing, enter into, defend, prosecute or pursue any
effort or action (whether or not litigation is involved) which Mission deems
reasonably necessary to defend itself and the Property from and against all
claims or liability arising by, through or under Buyer as set forth herein.
Buyer acknowledges and agrees that Mission may, but shall not be required to,
post or serve a notice that Mission's interest in the Property shall not be
subject to any mechanics' liens pursuant to the provisions of C.R.S. Section
38-22-105, and to take such other actions as Mission deems necessary to comply
with the provisions of said statute. Notwithstanding any other provisions of
this Agreement, the obligations of Buyer under this Section shall survive any
termination of this Agreement by either Buyer or Mission.
10.6. Notices. All notices, consents or other instruments or communica-
tions provided for under this Agreement shall be in writing, signed by the
party giving the same, and shall be deemed properly given and received when
actually delivered and received or three business days after mailed, if sent by
registered or certified mail, postage prepaid, to the address for a party set
forth at the beginning of this Agreement, or as such party may designate by
written notice to the other party, with a copy, in the case of notices to
Mission, to Legal Department, Colorado Division, Mission Viejo Company, 8822
South Ridgeline Boulevard, Highlands Ranch, Colorado 80126.
10.7. Entire Agreement. This Agreement constitutes the entire under-
standing between the parties with respect to the subject matter hereof, and all
prior agreements or understandings shall be deemed merged in this Agreement and
therein.
10.8. No Oral Amendment or Modifications. No amendments, waivers or
modifications hereof shall be made or deemed to have been made unless in writ-
ing executed by the party to be bound thereby.
10.9. Nonseverability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, and any such provision is significant and
material, either party may, at any time prior to a Closing hereunder, at its
option, declare this Agreement null and void and of no effect, in which case
the Deposit shall be returned to Buyer and each party shall be relieved of all
further obligations hereunder. If any other provision of this Agreement shall
be invalid, illegal or unenforceable, it shall not affect or impair the valid-
ity, legality or enforceability of any other provision of this Agreement, and
there shall be substituted for the affected provision a valid and enforceable
provision as similar as possible to the affected provision.
10.10. Assignability. Buyer may not assign Buyer's rights or obligations
under this Agreement without the prior written consent of Mission, except to
Wellsford Residential Property Trust ("Wellsford"), an entity jointly owned by
Al Feld and/or The Feld Company with Wellsford (the Feld-Wellsford Entity") or
an entity owned by Wellsford (the "Wellsford Entity") and any such attempted
assignment shall be null and void. Prior to considering consent to any
assignment, except as specifically authorized above Mission shall be entitled
to receive and review financial and other information pertaining to the
prospective assignee's real property development capabilities, as reasonably
requested by Mission. Notwithstanding the foregoing, Mission hereby agrees
that Buyer shall have the right to assign Buyer's rights hereunder with respect
to the Property or any Parcel of the property, with the consent of Mission,
which consent shall not be unreasonably withheld or delayed to any corporation,
joint venture, general partnership, limited partnership, limited liability
company, trust or other legal entity in which (i) Buyer, Wellsford, the Feld-
Wellsford Entity or the Wellsford Entity has an ownership equity, beneficial or
financial interest, and/or (ii) Buyer, Wellsford, the Feld-Wellsford Entity or
the Wellsford Entity or an entity controlled by one of them acts as manager,
contractor or developer.
10.11. Binding Effect. Subject to the Section of this Agreement entitled
"Assignability," this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
10.12. Captions for Convenience. All headings and captions used herein
are for convenience only and are of no meaning in the interpretation or effect
of this Agreement.
10.13. Applicable Law. This Agreement shall be interpreted and enforced
according to the laws of the State of Colorado.
10.14. Exhibits Incorporated. All exhibits to this Agreement are
incorporated herein and made a part hereof as if fully set forth herein.
10.15. Time of the Essence. Time is of the essence with respect to
performance required under this Agreement.
<PAGE>
10.16. Brokers. Except as may be provided by separate written agreement,
each party warrants and certifies to the other party that such party has not
engaged or utilized the services of any broker in connection with this
transaction who shall be entitled to any com-mission as a result of this Agree-
ment or the transaction contemplated hereby. Each party agrees to defend,
indemnify and hold harmless the other from and against any claims for broker's
or finder's fees or commissions made by any party claiming to have dealt with
it. Not-withstanding any other provision of this Agreement, the obligations of
Buyer under this Section shall survive any termination of this Agreement by
either Mission or Buyer.
10.17. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one agreement.
10.18. Costs of Legal Proceedings. In the event that either party
institutes legal proceedings with respect to this Agreement or the transaction
contemplated hereby, including, but not limited to, appearing and participating
in any action initiated by or against the other party under the bankruptcy laws
of the United States, or similar laws of any state, the prevailing party shall
(or in the case of such a bankruptcy action by a party, the other party shall)
be entitled to recover, in addition to any other relief to which it is
entitled, its costs and expenses incurred in connection with such legal pro-
ceedings, including, without limitation, reasonable attorneys' fees. The
obligations of Buyer under this Section shall survive any termination of this
Agreement by either Mission or Buyer.
10.19. Survival of Provisions. Any provisions of this Agree-ment which
require observance or performance subsequent to the date of Closing shall con-
tinue in force and effect following the date of Closing.
10.20. General Cooperation. Notwithstanding any other provi-sion of this
Agreement to the contrary, and notwithstanding the Closing of the sale of the
Property to Buyer, Buyer and Mission agree in good faith before and after
Closing to execute such further or additional documents, and to take such other
actions, as may be reasonably necessary or appropriate to fully carry out the
intent and purposes of the parties as set forth in this Agreement.
10.21. Computation of Time. In computing any period of time under this
Agreement, the date of the act or event from which the designated period of
time begins to run shall not be included. The last day of the period so com-
puted shall be included unless it is a Saturday, Sunday, or federal legal hol-
iday, in which event the period shall run until the end of the next day which
is not a Saturday, Sunday, or federal legal holiday.
10.22. Negotiated Provisions. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of the fact
that it may have been prepared by counsel for one of the parties, it being
recognized that both Mission and Buyer have contributed substantially and
materially to the preparation of this Agreement.
10.23. The Foreign Investment In Real Property Tax Act and Colorado
Department of Revenue Form 1083. Mission shall deliver or cause to be
delivered to Buyer at Closing an affidavit executed by Mission under penalty of
perjury stating Mission's United States taxpayer identification number and that
Mission is not a foreign person in accordance with Internal Revenue Code
Section 1445(b)(2). Mission shall also deliver or cause to be delivered to
Buyer at Closing an affidavit executed by Mission under penalty of perjury
stating that Mission is a corporation qualified to do business in the State of
Colorado and that it maintains a permanent place of business in the State of
Colorado
10.24. No Implied Waiver. No failure by Mission to insist upon the
strict performance of any term, covenant, or provision contained in this
Agreement, no failure by Mission to exercise any right or remedy under this
Agreement, and no acceptance of full or partial payment owed to Mission during
the continuance of any default by Buyer, shall constitute a waiver of any such
term, covenant, or provision, or a waiver of any such right or remedy, or a
waiver of any such default unless such waiver is made in writing by Mission.
Any waiver of a breach of a term or a condition of this Agreement shall not
prevent a subsequent act, which would have originally constituted a default
under this Agreement, from having all the force and effect of a default.
IN WITNESS WHEREOF, the parties hereto have executed this Vacant Land
Purchase and Sale Agreement as of the day and year first above written.
MISSION:
MISSION VIEJO COMPANY, a
Attest: California corporation
By:______________________ By: /s/ F. Mark Reilly
Assistant Secretary ___________________________
Name: F. Mark Reilly
Title: Senior Vice President,
Colorado Division
ATTEST: BUYER:
By:/s/ Solomon H. Eichenbaum THE FELD COMPANY, a Colorado
____________________ corporation
__________ Secretary
By: /s/ Al Feld
______________________________
Name: Al Feld
Title: President<PAGE>
EXHIBIT A
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Development and Phasing Plan
[Depiction of Property Phases]
<PAGE>
EXHIBIT B
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
First Parcel Site Plan
Site Improvement Plan as prepared by Kirkham, Michael and Associates for The
Feld Company, Highlands Ranch Filing 126-A, Planning Area 67 and a Portion of
Planning Area 73, dated June 14, 1994, consisting of the following eleven
sheets:
SHEET 1: Legal Description with Vicinity Map and Subdivision Map
SHEET 2: Key Map
SHEETS 3 - 10
inclusive: Site Plan
SHEET 11: Details
Site Improvement Plan as prepared by Feld Design, Inc. for Highlands Ranch
Filing 126-A, Planning Area 67 and a Portion of Planning Area 73, dated June
14, 1994, as amended July 18, 1994, consisting of the following eighteen
sheets:
SHEET L1: Key Plan, General Notes, Plan List, Index
SHEET L2: Irrigation Master Tap Plan
SHEET L3 - L10
inclusive: Landscape Plan
SHEET L11 and
L12: Fencing/Landscape Detail
SHEET L13 and
L14: Signage/Landscape Detail
SHEET L15: Landscape Details
SHEET L16: Parcel One Lighting Plan
SHEET L17: Park and Loop Drive Lighting Plan
SHEET L18: Architectural Elevations<PAGE>
EXHIBIT C
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Fencing Plan
[Depictions of Fencing]
<PAGE>
EXHIBIT D
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Permitted Exceptions
1. Exception of water rights and ground water granted to Highlands Ranch De-
velopment Corporation by Mission Viejo Company in Quit Claim Deed and As-
signment dated September 26, 1980, recorded October 20, 1980, in Book 396
at Page 520, in Quit Claim Deed, Assignment and Bill of Sale dated Decem-
ber 27, 1988, recorded December 27, 1988, in Book 834 at Page 63, in Quit
Claim Deed and Assignment dated February 17, 1989, and recorded March 14,
1989, in Book 844 at Page 1139, and in Quit Claim Deed and Assignment
dated April 11, 1990, recorded April 25, 1990, in Book 908 at Page 1205, a
portion of which water rights and ground water were granted to Centennial
Water and Sanitation District by Highlands Ranch Development Corporation
in Special Warranty Deed, Assignment and Bill of Sale dated December 27,
1988, recorded December 27, 1988, in Book 834 at Page 84, Special Warranty
Deed and Assignment dated February 17, 1989, and recorded March 14, 1989,
in Book 844 at Page 1142, and Special Warranty Deed and Assignment dated
April 11, 1990, recorded May 18, 1990, in Book 912 at Page 613, and
subject to Relinquishment of Surface Rights dated December 27, 1988, by
Centennial Water and Sanitation District, recorded December 27, 1988, in
Book 834 at Page 119.
2. Minerals and mineral rights granted to Highlands Ranch Development Cor-
poration by Mission Viejo Company in Mineral Deed dated September 26,
1980, and recorded October 20, 1980, in Book 396 at Page 514 and mineral
substances in the "full mineral rights land" and coal in the "coal lands"
as granted to Highlands Ranch Development Corporation by Union Pacific
Land Resources Corporation in Mineral Deed dated May 1, 1981, recorded May
20, 1981, in Book 412 at Page 465, reserving to Union Pacific Land
Resources Corporation a 25 percent non- executory interest in and to such
mineral substances and coal.
3. The Planned Community District Development Guide for the New Town of
Highlands Ranch, as adopted by the Board of County Commissioners of
Douglas County, Colorado, on September 17, 1979, recorded October 25,
1979, in Book 373 at Page 187 as the same has been or may be amended from
time to time.
4. Community Declaration for Highlands Ranch Community Association, Inc.,
dated September 1, 1981, and recorded September 17, 1981, in Book 421 at
Page 924.
5. Supplemental Declaration for Annexed Property No. ________ dated
__________________, to be recorded immediately prior to the recording of
the Deed.
6. Right of Way Agreement as recorded March 12, 1985 in Book 565 at Page 119.
7. Grant of Easement(s) as recorded June 18, 1985 in Book 647 at page 181;
recorded January 4, 1988 in Book 769 at Page 272; recorded January 4, 1988
in Book 769 at Page 296; and recorded December 30, 1988 in Book 834 at
Page 765.
8. Easement Deed as recorded April 24, 1975 in Book 275 at Page 538 and
Modification recorded January 19, 1987 in Book 694 at Page 914.
9. Easement Deed as recorded May 23, 1975 in Book 276 at Page 453.
10. Easement Deed as recorded November 18, 1975 in Book 282 at Page 589 and
Page 594.
11. Easement Deed as granted to the Mountain States Telephone and Telegraph
Company as recorded October 1, 1975 in Book 280 at Page 829.
12. Barbed wire fence traversing throughout subject property; buried electric
and telephone and CATV lines and gas easements; water line with valve and
fire hydrants; and encroachment of improvements onto subject property all
as shown on survey plat by Kirkham, Michael and Associates, Job No.
M930805.
13. Notes as shown on survey by Kirkham, Michael and Associates, Job No.
M930805.
<PAGE>
EXHIBIT E
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Relinquishment of Surface Rights
(Note-See separate document attached)<PAGE>
RELINQUISHMENT OF SURFACE RIGHTS
THIS RELINQUISHMENT OF SURFACE RIGHTS ("Relinquishment") is made this
_____ day of _______________, 19__, by HIGHLANDS RANCH DEVELOPMENT CORPORATION,
a Colorado corporation ("Development Corp.") whose address is 8822 South Ridge-
line Boulevard, Highlands Ranch, Colorado 80126, to THE FELD COMPANY, a
Colorado corporation ("Surface Owner") 4600 S. Ulster Street, Suite 350,
Denver, Colorado 80237.
1. Purpose. The purpose of this Relinquishment is to relinquish rights
of Development Corp. to enter upon and use the surface of the Property, as
hereinafter defined, in connection with the development of mineral or water
resources.
2. Property. The "Property" shall mean that certain real property
located in Highlands Ranch more particularly described on Exhibit A [INSERT
LEGAL DESCRIPTION OF PARCEL BEING CONVEYED] hereto.
3. Highlands Ranch. "Highlands Ranch" shall mean the real property
located in Douglas County, Colorado, described on Exhibit A attached to the
Mineral Deed, as hereinafter defined, and also described in Exhibit A to the
Initial Water Deed, as hereinafter defined.
4. Mineral Deed. "Mineral Deed" shall mean the Mineral Deed dated
September 26, 1980, from Mission Viejo Company, a California corporation
("Mission") to Development Corp. recorded October 20, 1980, in Book 396 begin-
ning at Page 514 of the records in the office of the Clerk and Recorder of
Douglas County, Colorado ("Douglas County Records").
5. Initial Water Deed. "Initial Water Deed" shall mean the Quit Claim
Deed and Assignment dated September 26, 1980, from Mission to Development Corp.
recorded October 20, 1980, in Book 396 at Page 520 of the Douglas County
Records.
6. UP Mineral Deed. "UP Mineral Deed" shall mean the Mineral Deed
dated May 1, 1981, from Union Pacific Land Resources Corporation ("Union
Pacific") to Development Corp. recorded May 20, 1981, in Book 412 at Page 465
of the Douglas County Records.
7. Subsequent Water Deeds. "Subsequent Water Deeds" shall mean the
Quit Claim Deed, Assignment and Bill of Sale dated December 27, 1988, from
Mission to Development Corp. recorded December 27, 1988, in Book 834 at Page 63
of the Douglas County Records, the Quit Claim Deed and Assignment, dated
February 17, 1989, recorded March 14, 1989, in Book 844 at Page 1139 of the
Douglas County Records, and the Quit Claim Deed and Assignment, dated April 11,
1990, recorded April 25, 1990, in Book 908 at Page 1205.
8. Centennial Water Deeds. "Centennial Water Deeds" shall mean that
Special Warranty Deed, Assignment and Bill of Sale dated December 27, 1988,
from Development Corp. to Centennial Water and Sanitation District, a Colorado
quasi-municipal corporation ("Centennial"), recorded December 27, 1988, in Book
834 at Page 84 of the Douglas County Records, the Special Warranty Deed and
Assignment, dated February 17, 1989, and recorded March 14, 1989, in Book 844
at Page 1142 in the Douglas County Records, and the Special Warranty Deed and
Assignment, dated April 11, 1990, and recorded May 18, 1990, in Book 912 at
Page 613 in the Douglas County Records, and subject to Relinquishment of
Surface Rights dated December 27, 1988, by Centennial Water and Sanitation
District, recorded December 27, 1988, in Book 834 at Page 119.
9. Water Rights and Ground Water. "Water Rights and Ground Water"
shall mean all of the water rights and ground water acquired by Development
Corp. under the Initial Water Deed and Subsequent Water Deeds but excluding
those portions of such water rights and ground water which were granted to
Centennial by Development Corp. in the Centennial Water Deeds.
10. Relinquishment of Surface Rights. Development Corp., for itself,
its successors and assigns, hereby relinquishes and quit claims to Surface
Owner, its successors and assigns, for the period of time as hereinafter spec-
ified, all rights of Development Corp. to enter upon the surface of all or any
portion of the Property for any purpose in connection with the development or
utilization of any minerals or mineral rights or mineral substances or coal
acquired by Development Corp. under the Mineral Deed or the UP Mineral Deed or
for any purpose in connection with the development or utilization of any of the
Water Rights and Ground Water. Nothing herein contained shall limit the right
of Surface Owner or any subsequent owner of the Property, to at any time in the
future, authorize Development Corp., its successors and assigns, to utilize all
or any portion of the Property for the development and utilization of minerals
or mineral rights, mineral substances or coal, or Water Rights or Ground Water.
11. Continued Title to Minerals and Water. Development Corp.'s under-
lying title to minerals and mineral rights, mineral substances and coal and
Water Rights and Ground Water in connection with the Property shall in no way
be affected by this instrument. In addition, the Development Corp., for
itself, its successors and assigns, excepts and reserves and shall retain the
right to develop and remove any such minerals or mineral rights, mineral sub-
stances or coal, and Water Rights or Ground Water by slant drilling, subterra-
nean entry or other means or operations conducted on the surface of any parcel
as to which Development Corp. may then have rights of surface use or by any
other suitable means or methods, provided, however, that any such slant drill-
ing, subterranean entry or other operations conducted on the surface of any
such parcel or such other suitable means or methods can be employed without
entering upon or using the surface of all or any portion of the Property and
without impairing structures, improvements or appurtenances, or the use or
support thereof, located or to be located on the Property.
12. Term of Relinquishment. The relinquishment and quit claim of sur-
face rights by Development Corp. as contained in Section 10 hereof shall be
permanent.
IN WITNESS WHEREOF, Highlands Ranch Development Corporation has executed
this Relinquishment of Surface Rights as of the day and year first above
written.
HIGHLANDS RANCH DEVELOPMENT
CORPORATION, a Colorado corporation
By:________________________________
Vice President
STATE OF COLORADO )
) ss.
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this _____ day of
_________________, 19__, by Kevin P. Murphy, as Vice President of Highlands
Ranch Development Corporation, a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: _____________________.
___________________________________
(SEAL) Notary Public
<PAGE>
EXHIBIT F
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
First Parcel Deed Form
<PAGE>
EXHIBIT G
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Subsequent Parcels Deed Form
<PAGE>
EXHIBIT H
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Supplemental Declaration Form
<PAGE>
EXHIBIT I
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Easement and Development Agreement
<PAGE>
EXHIBIT J
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Access Easement Agreement
<PAGE>
EXHIBIT K
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Contiguous Area Report
<PAGE>
EXHIBIT L
TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(The Feld Company - PA 67 and PA 73)
Willows Water Agreement
<PAGE>
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED VACANT LAND
PURCHASE AND SALE AGREEMENT
(Feld/Wellsford - Lots 1-5, Filing No. 126-A)
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED VACANT LAND PURCHASE
AND SALE AGREEMENT (this "Amendment") is made as of the 1st day of May, 1996,
between MISSION VIEJO COMPANY, a California corporation ("Mission"), whose
address is 8822 South Ridgeline Boulevard, Highlands Ranch, Colorado 80126,
Attn: Land Sales Department, and WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation, whose address is 370 17th Street, Suite 3100, Denver, Colorado,
80202 ("Buyer").
1. GENERAL.
1.1 Purchase Agreement. The "Purchase Agreement" shall mean that
certain Second Amended and Restated Vacant Land Purchase and Sale Agreement
dated March 23, 1995, whereby Mission agreed to sell, and The Feld Company, a
Colorado corporation ("The Feld Company") agreed to buy, certain property
located in Douglas County, Colorado more particularly described therein, on the
terms and conditions more particularly set forth therein. The Feld Company
assigned its interest as "Buyer" under the Purchase Agreement to Buyer pursuant
to the terms and provisions of that Assignment and Assumption of Amended and
Restated Vacant Land Purchase and Sale Agreement dated May 2, 1995. Terms
defined in the Purchase Agreement shall have the same meaning in this Amendment
unless otherwise provided herein, or the context otherwise requires.
1.2 Purpose of Amendment. The parties desire to amend certain
provisions of the Purchase Agreement in conjunction with Buyer's or its
assignee's acquisition of Lot 2A, Highlands Ranch Filing 126-A, as described in
the Lot Line Adjustment Certificate recorded April 29, 1996 at Reception No.
9622585, in Book 1337 on Pages 324-326 in the records of the Clerk and Recorder
of Douglas County, Colorado ("Lot 2A"). The parties enter into this Amendment
to reflect their agreement with regard to the matters set forth herein.
1.3 Consideration. The parties enter into this Amendment in
consideration of the mutual covenants contained herein and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged.
1.4 Incorporation. The terms and provisions of this Amendment are
hereby incorporated into the Agreement, and, except for the amendments herein
contained, all of the terms and provisions of the Agreement shall remain in
full force and effect, unaltered and unchanged by this Amendment. To the
extent that the terms and provisions of this Amendment conflict with the terms
and provisions of the Purchase Agreement, the terms and provisions of this
Amendment shall control.
2. AMENDMENTS TO AGREEMENT.
2.1 Density Allocation. The Development and Phasing Plan attached to
the Purchase Agreement provides for the allocation of 316 Dwelling Units to Lot
2A. Mission and Buyer hereby amend the Development and Phasing Plan to provide
for the allocation of 304 Dwelling Units to Lot 2A. The remaining 12 Dwelling
Units previously allocated to Lot 2A pursuant to the Purchase Agreement may be
allocated by Buyer to the remaining three Parcels in the Property in any manner
Buyer deems fit in Buyer's reasonable discretion subject to Mission's right to
review the Site Plan for a particular Parcel under the Purchase Agreement and
the Deed applicable to such Parcel.
2.2 Amendments to Development Guide. Mission acknowledges and
agrees that Mission will provide Buyer with written notice of any proposed
amendment ("Amendment") to the Development Guide affecting the Property which
is initiated by Mission. Such notice shall be delivered to Pamela H. English,
Feld Design Group, Inc, 4600 S. Ulster Street, Suite 350, Denver, Co. 80237, or
to such other person or address as Buyer may direct. Buyer shall have the
right to comment upon, and object to, the proposed Amendment provided that such
comments and objections are received by Mission within fifteen (15) business
days of Buyer's receipt of the proposed Amendment. If Buyer reasonably
believes that the proposed Amendment will adversely affect the Property,
Mission shall use its best efforts to exclude the Property from the effect of
the proposed Amendment. Buyer acknowledges that Mission shall be entitled to
submit the proposed Amendment to Douglas County for its review during Buyer's
fifteen (15) day review period. Notwithstanding anything to the contrary
contained herein, in no event shall the terms and provisions of this paragraph
be deemed to: (a) create any rights of approval, or any other rights in Buyer,
for the development of any other property within Highlands Ranch other than the
Property, or the development, sale, leasing, transfer or encumbrance of any
property located therein except as specifically set forth herein; or (b)
prevent Mission from finalizing the proposed Amendment with respect to property
within Highlands Ranch other than the Property.
2.3 Boundary - Access Easement. Mission and Buyer have amended the
configuration of Lot 2A in accordance with the Subdivision Boundary (Lot Line)
Adjustment Map (the "Boundary Adjustment Map"), recorded April 29, 1996 at
Reception No. 9622585 in Book 1337, on Pages 324-326. In accordance with the
foregoing, the Base Purchase Price for Lot 2A shall be adjusted to reflect the
increased acreage of Lot 2A. In consideration of the foregoing, Buyer agrees
to grant to Mission an access easement over and across a portion of Lot 2A (the
"Access Easement"). The Access Easement granted to Mission hereunder shall be
in the form of the Access Easement Agreement attached hereto as Exhibit A (the
"Access Easement Agreement") and the location of the Access Easement shall be
as described on Exhibit A to the Access Easement Agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the parties as of
the day and year first above written.
MISSION VIEJO COMPANY, a California corporation
By: /s/ Jeffrey F. Kappes
___________________________________
Jeffrey F. Kappes, Vice President,
Sales and Marketing
WELLSFORD PARK HIGHLANDS CORP., a Colorado
corporation
By: /s/ Donald D. MacKenzie
___________________________________
Donald D. MacKenzie,
___________________________________
Vice President
<PAGE>
Exhibit A
Form of Access Easement Agreement
Exhibit 10.42
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of December 26, 1996, between WELLSFORD
RESIDENTIAL PROPERTY TRUST, a Maryland real estate investment trust with
offices at 610 Fifth Avenue, New York, New York 10020 (the "Company") and
Gareth Y. Hudson, residing at 4595 Drake Road, Cincinnati, Ohio 45243
("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant resigned as Vice President - Director of Property
Operations of the Company, effective as of September 30, 1996; and
WHEREAS, the Company desires to retain Consultant as a consultant to the
Company, and Consultant desires to be retained in such capacity by the Company,
upon the terms set forth in this Agreement.
IT IS AGREED:
1. Duties. Consultant agrees that from time to time during the term
hereof, he will consult with and advise the Company and its affiliates and
subsidiaries, with respect to matters relating to the business of the Company
and its subsidiaries and affiliates.
2. Term. This Agreement shall commence as of the date hereof and shall
continue in effect through March 31, 1996.
3. Compensation. (a) In consideration for the services rendered by
Consultant pursuant to this Agreement, in the event an agreement relating to a
change in control of the Company is executed on or prior to March 31, 1996 and
such change in control of the Company occurs within six (6) months thereafter,
the Company shall pay Consultant a fee of $45,000. Such fee shall be paid not
more than 10 days following the change in control of the Company. For purposes
of this Agreement, a "change in control of the Company" shall be deemed to
occur if:
(i) there shall have occurred a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date hereof, whether or not
the Company is then subject to such reporting requirement, provided, however,
that there shall not be deemed to be a "change in control of the Company" if
immediately prior to the occurrence of what would otherwise be a "change in
control of the Company" (x) the Consultant is the other party to the
transaction (a "Control Event") that would otherwise result in a "change in
control of the Company" or (y) the Consultant is an executive officer, trustee,
director or more than 5% equity holder of the other party to the Control Event
or of any entity, directly or indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or sells all or
substantially all of its assets to, another company (each, a "Transaction"),
provided, however, that a Transaction shall not be deemed to result in a
"change in control of the Company" if (x) immediately prior thereto the
circumstances in (i)(x) or (i)(y) above exist, or (y) (1) the shareholders of
the Company, immediately before such Transaction own, directly or indirectly,
immediately following such Transaction in excess of fifty percent (50%) of the
combined voting power of the outstanding voting securities of the corporation
or other entity resulting from such Transaction (the "Surviving Corporation")
in substantially the same proportion as their ownership of the voting
securities of the Company immediately before such Transaction and (2) the
individuals who were members of the Company's Board of Trustees immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of directors or the
board of trustees, as the case may be, of the Surviving Corporation, or of a
corporation or other entity beneficially directly or indirectly owning a
majority of the outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another company or a
subsidiary of the Company merges or consolidates with another company (each, an
"Other Transaction") and (x) the shareholders of the Company, immediately
before such Other Transaction own, directly or indirectly, immediately
following such Other Transaction 50% or less of the combined voting power of
the outstanding voting securities of the corporation or other entity resulting
from such Other Transaction (the "Other Surviving Corporation") in
substantially the same proportion as their ownership of the voting securities
of the Company immediately before such Other Transaction or (y) the individuals
who were members of the Company's Board of Trustees immediately prior to the
execution of the agreement providing for such Other Transaction constitute less
than a majority of the members of the board of directors or the board of
trustees, as the case may be, of the Other Surviving Corporation, or of a
corporation or other entity beneficially directly or indirectly owning a
majority of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall not be deemed
to result in a "change in control of the Company" if immediately prior thereto
the circumstances in (i)(x) or (i)(y) above exist.
(b) In consideration for the release described in Section 4 hereof,
the Company shall pay Consultant $5,000 on or before January 15, 1997.
4. Release. (a) The Consultant, on his behalf and on behalf of his
heirs, executors, administrators, receivers, successors and assigns
(collectively, "Releasor") hereby irrevocably, unconditionally and generally
releases the Company, its affiliates, subsidiaries and divisions, and their
respective partners, officers, trustees, directors, shareholders, agents,
attorneys and employees, and their respective heirs, executors, administrators,
receivers, successors and assigns (collectively, "Releasee"), from or in
connection with, and hereby waives and/or settles, any and all actions, causes
of action, suits, debts, dues, sums of money, accounts, controversies,
agreements, promises, damages, judgments, executions, or any liability, claims
or demands, known or unknown and of any nature whatsoever and which Releasor
ever had, now has, or hereafter can, shall or may have for, upon, or by reason
of any matter, cause or thing whatsoever from the beginning of the world to the
date of this Agreement, including, without limitation, arising directly or
indirectly pursuant to or out of the Consultant's employment with the Company
or any Releasee, the performance of services for the Company or any Releasee or
the termination of such employment or services and, specifically, without
limitation, any rights and/or claims (i) arising under any contract, express or
implied, written or oral; (ii) for wrongful dismissal or termination of
employment; (iii) arising under any federal, state, local or other statutes,
orders, laws, ordinances, regulations or the like that relate to the employment
relationship and/or, specifically, that prohibit discrimination based upon age,
race, religion, sex, national origin, disability, sexual orientation or any
other unlawful bases, including without limitation, the Civil Rights Act of
1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights
Act of 1966, as amended, the Age Discrimination in Employment Act of 1967, as
amended, the Americans with Disabilities Act of 1990, as amended, the Employee
Retirement Income Security Act of 1974, as amended, and any applicable
statutes, orders, laws, ordinances, regulations or the like of the States of
Washington, Colorado or New York or any political subdivision thereof, and any
applicable rules and regulations promulgated pursuant to or concerning any of
the foregoing statutes; (iv) based upon any other federal, state or local stat-
utes, orders, laws, ordinances, regulations or the like; (v) for tort, tortious
or harassing conduct, infliction of mental distress, interference with
contract, fraud, libel or slander; and (vi) for damages, including without
limitation, punitive or compensatory damages, or for attorneys' fees, expenses,
costs, wages, injunctive or equitable relief.
(b) Consultant represents and warrants that he has not filed,
commenced or participated in any way in any complaints, claims, actions or
proceedings of any kind against any Releasee with any federal, state or local
court, or any administrative, regulatory or arbitration agency or body, and he
agrees not to file, commence, or participate in any way in any complaint,
claim, action or proceeding of any kind against any Releasee with any federal,
state or local court or any administrative, regulatory or arbitration agency or
body, based upon events occurring on or prior to the date of this Agreement on
any basis, including without limitation, with respect to his employment with
the Company or any Releasee or the termination of such employment.
5. Confidential Information and Company Property - Past Employment. (a)
Consultant hereby acknowledges that during his employment with the Company he
acquired proprietary, private and/or otherwise confidential information of or
concerning (i) Releasee; (ii) customers of Releasee; and/or (iii) persons or
entities with which Releasee did business, including without limitation,
information relating to or concerning the business and/or finances of Releasee
and customers of Releasee ("Confidential Information"). Consultant hereby
represents and agrees that (i) he has returned to the Company, and has not
retained any copies of, all documents, records or materials of any kind,
whether written or electronically created or stored, which contain, relate to,
or refer to any Confidential Information ("Confidential Materials"); (ii) he
has not disclosed any Confidential Information or Confidential Materials to any
person or entity without the express authorization of the President of the
Company; and (iii) he shall not disclose any Confidential Information or
Confidential Materials, in any manner directly or indirectly, except as shall
be required by law.
(b) Consultant also represents and agrees that upon the execution of
this Agreement he has returned to the Company all other property of the
Company, including without limitation, any keys to the offices of the Company
and any Company identification cards.
6. Relationship. It is recognized and agreed that this Agreement does
not create the relationship of employer and employee between the Company and
the Consultant, but, rather, that the services to be performed hereunder shall
be performed by Consultant as an independent contractor. Accordingly, each of
the parties hereto agrees not to hold themselves out in any manner contrary to
the terms of this Agreement and neither of the parties hereto shall be or
become liable or bound by any representation, act, omission or agreement
whatsoever of the other party. Consultant shall not have the right to make any
contract or commitment on behalf of the Company or any affiliate or subsidiary
thereof or to bind the Company or any affiliate or subsidiary thereof.
7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without regard to
the State of New York's conflicts of law principles. Both the Company and the
Consultant hereby irrevocably and unconditionally consent to submit to the
jurisdiction of any federal, state or county court sitting in the State of New
York (the "New York Courts") for any litigation arising out of or relating to
this Agreement (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in the New York Courts and agrees not to plead or claim that such
litigation brought in any New York Courts has been brought in an inconvenient
forum. Both the Company and the Consultant agree that service of process or
notice in any action, suit or proceeding shall be effective if in writing and
sent by certified or registered mail, return receipt requested, prepared to the
address above set forth.
8. Waiver. No provision of this Agreement may be waived or changed,
except by a writing signed by the party to be charged with such waiver or
change.
9. Successors; Binding Agreement. This Agreement shall inure to the
benefit of, be enforceable by, and be binding upon, Consultant's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees, and the Company's successors and assigns.
10. Notices. All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when given by telex, telegram or mailgram, or
when mailed first class postage prepaid, by registered or certified mail,
return receipt requested, addressed to the party to receive the same at his or
its address above set forth, or such other address as the party to receive the
same shall have specified by written notice given in the manner provided for in
this Section 12. All notices shall be deemed to have been given as of the date
of personal delivery, transmittal or mailing thereof.
11. Severability. If any provision in this Agreement is determined to be
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
12. Exculpation. This Agreement and all documents, agreements,
understandings and arrangements relating to this Agreement have been executed
by the undersigned in his/her capacity as an officer or trustee of the Company
which has been formed as a Maryland real estate investment trust pursuant to an
Amended and Restated Declaration of Trust of the Company dated as of November
2, 1992, as amended, and not individually, and neither the trustees, officers
or shareholders of the Company shall be bound or have any personal liability
hereunder or thereunder. Consultant shall look solely to the assets of the
Company for satisfaction of any liability of the Company in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this Agreement and will not seek recourse or commence any action
against any of the trustees, officers or shareholders of the Company or any of
their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements and transactions between
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
WELLSFORD RESIDENTIAL PROPERTY TRUST
By:/s/ Edward Lowenthal
---------------------
Name: Edward Lowenthal
Title: President
CONSULTANT:
Name:/s/ Gareth Y. Hudson
----------------------
Gareth Y. Hudson
Exhibit 10.44
[FACE OF NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.(1)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(2)
REGISTERED CUSIP No.: 95024C AA3 PRINCIPAL AMOUNT:
$25,000,000.00
No. FLR-____ ______________________________
WELLSFORD RESIDENTIAL PROPERTY TRUST
MEDIUM-TERM NOTE
(Floating Rate)
INTEREST RATE BASIS ORIGINAL ISSUE DATE: STATED MATURITY DATE:
OR BASES: November 25, 1996 November 24, 1999
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate Page:
Page: If Telerate Page 7052:
[ ] Weekly Average
[ ] Monthly Average
Designated CMT Maturity Index:
[x] LIBOR Telerate
Page: 3750
INDEX CURRENCY: N/A
INDEX MATURITY: INITIAL INTEREST RATE: 5.82% INTEREST PAYMENT N/A
Quarterly on the
25th day of each
February, May, August
and November
SPREAD (PLUS OR SPREAD MULTIPLIER: INITIAL INTEREST RESET DATE:
MINUS): N/A February 25, 1997
+32 bps
MINIMUM INTEREST RATE: % MAXIMUM INTEREST RATE: % INTEREST RESET
N/A N/A DATE(S):
Quarterly on the 25th
of each February, May,
August and November
INITIAL REDEMPTION REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: 100% PERCENTAGE REDUCTION: %
Only on each Interest N/A
Payment Date with 30 days'
prior notice, commencing
November 25, 1997
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S): United States Trust Company
N/A of New York
INTEREST CATEGORY: DAY COUNT CONVENTION:
[x] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from to .
Fixed Rate Commencement Date: [x] Actual/360 for the period
Fixed Interest Rate: % from November 25, 1996
to November 24,1999.
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: % from to .
[ ] Original Issue Discount Note Applicable Interest Rate Basis:
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[x] United States dollars [x] $1,000 and integral multiples
[ ] Other: thereof
[ ] Other:
EXCHANGE RATE:
N/A
EXCHANGE RATE AGENT:
N/A
AMORTIZING SECURITY:
[ ] Yes
[x] No
AMORTIZATION FORMULA:
N/A
AMORTIZATION PAYMENT DATE(S):
N/A
DEFAULT RATE: %
N/A
ADDENDUM ATTACHED:
[ ] Yes
[x] No
OTHER/ADDITIONAL PROVISIONS: N/A
(1) This paragraph applies to global Notes only.
(2) This paragraph applies to global Notes only.
<PAGE>
Wellsford Residential Property Trust, a Maryland real estate investment
trust (the "Trust", which term includes any successor entity under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to ___________________________, or registered assigns, the principal sum of
___________________, on the Stated Maturity Date specified above (or any
Redemption Date or Repayment Date, each as defined below) (each such Stated
Maturity Date, Redemption Date or Repayment Date being hereinafter referred to
as the "Maturity Date" with respect to the principal repayable on such date)
and to pay interest thereon, at a rate per annum equal to the initial Interest
Rate specified above until the Initial Interest Reset Date specified above and
thereafter at a rate determined in accordance with the provisions specified
above and on the reverse hereof or in an Addendum hereto with respect to one or
more Interest Rate Bases specified above until the principal hereof is paid or
duly made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal, premium and/or interest, including any overdue
sinking fund or redemption payment. The Trust will pay interest in arrears on
each Interest Payment Date, if any, specified above (each, an "Interest Payment
Date"), commencing with the first Interest Payment Date next succeeding the
Original Issue Date specified above, and on the Maturity Date; provided,
however, that if the Original Issue Date occurs between a Record Date (as
defined below) and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date next succeeding the Original
Issue Date to the holder of this Note on the Record Date with respect to such
second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the Original Issue Date if no interest
has been paid or duly provided for) to, but excluding, the applicable Interest
Payment Date or the Maturity Date, as the case may be (each, an "Interest
Period"). The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined on the reverse hereof)
immediately preceding such Interest Payment Date (the "Record Date"); provided,
however, that interest payable on the Maturity Date will be payable to the
person to whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") will forthwith cease to be payable to the holder on any
Record Date, and shall be paid to the person in whose name this Note is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee hereinafter referred to, notice whereof shall be given to the holder of
this Note by the Trustee not more than 15 days and not less than 10 days prior
to such Special Record Date or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which this Note may be listed, and upon such notice as may be required by such
exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date, or any prior date on which the principal or an
installment of principal of this Note becomes due and payable, whether by the
declaration of acceleration or otherwise, will be made in immediately available
funds upon presentation and surrender of this Note (and, with respect to any
applicable repayment of this Note, upon presentation and surrender of this Note
and a duly completed election form as contemplated on the reverse hereof) at
the office or agency maintained by the Trust for that purpose in the Borough of
Manhattan, The City of New York, currently the office of the Trustee located at
114 West 47th Street, New York, New York 10036, or at such other paying agency
in the Borough of Manhattan, The City of New York, as the Trust may determine;
provided, however, that if the Specified Currency specified above is other than
United States dollars and such payment is to be made in the Specified Currency
in accordance with the provisions set forth below, such payment will be made by
wire transfer of immediately available funds to an account with a bank
designated by the holder hereof at least 15 calendar days prior to the Maturity
Date, provided that such bank has appropriate facilities therefor and that this
Note (and, if applicable, a duly completed repayment election form) is
presented and surrendered at the aforementioned office or agency maintained by
the Trust in time for the Trustee to make such payment in such funds in
accordance with its normal procedures. Payment of interest due on any Interest
Payment Date other than the Maturity Date will be made at the aforementioned
office of agency maintained by the Trust or, at the option of the Trust, by
check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register maintained by the Trustee; provided,
however, that a holder of U.S. $10,000,000 (or, if the Specified Currency is
other than United States dollars, the equivalent thereof in the Specified
Currency) or more in aggregate principal amount of Notes (whether having
identical or different terms and provisions) will be entitled to receive
interest payments on any Interest Payment Date other than the Maturity Date by
wire transfer of immediately available funds if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15
calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such holder.
If any Interest Payment Date other than the Maturity Date would otherwise
be a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and
effect as if made on the date such payment was due, and no interest shall
accrue with respect to such payment for the period from and after the Maturity
Date to the date of such payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
The City of New York; provided, however, that if the Specified Currency is
other than United States dollars, such day is also not a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, if the Specified Currency is European
Currency Units ("ECU"), such day is not a day that appears as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or a day so designated by the ECU Banking Association) or, if
ECU non-settlement days do not appear on that page (and are not so designated),
is not a day on which payments in ECU cannot be settled in the international
interbank market); provided, further, that if LIBOR is an applicable Interest
Rate Basis, such day is also a London Business Day (as defined below). "London
Business Day" means (i) if the Index Currency (as defined below) is other than
ECU, any day on which dealings in such Index Currency are transacted in the
London interbank market or (ii) if the Index Currency is ECU, any day that does
not appear as an ECU non-settlement day on the display designated as "ISDE" on
the Reuter Monitor Money Rates Service (or a day so designated by the ECU
Banking Association) or, if ECU non-settlement days do not appear on that page
(and are not so designated), is not a day on which payments in ECU cannot be
settled in the international interbank market. "Principal Financial Center"
means the capital city of the country issuing the Specified Currency, or solely
with respect to the calculation of LIBOR, the Index Currency, except that with
respect to United States dollars, Australian dollars, Deutsche marks, Dutch
guilders, Italian lire, Swiss francs and ECU, the Principal Financial Center
shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively.
The Trust is obligated to make payments of principal, premium, if any,
and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is
other than United States dollars, except as provided below, any such amounts so
payable by the Trust will be converted by the Exchange Rate Agent specified
above into United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the holder
of this Note may elect to receive such amounts in such Specified Currency. If
the holder of this Note shall not have duly made an election to receive all or
a specified portion of any payment of principal, premium, if any, and/or
interest in respect of this Note in the Specified Currency, any United States
dollar amount to be received by the holder of this Note will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of whom may be the Exchange Rate Agent) selected by the
Exchange Rate Agent and approved by the Trust for the purchase by the quoting
dealer of the Specified Currency for United States dollars for settlement on
such payment date in the aggregate amount of such Specified Currency payable to
all holders of Foreign Currency Notes scheduled to receive United States dollar
payments and at which the applicable dealer commits to execute a contract. All
currency exchange costs will be borne by the holder of this Note by deductions
from such payments. If three such bid quotations are not available, payments
on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder
of this Note may elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest in respect of this Note in the
Specified Currency by submitting a written request for such payment to the
Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least 15 calendar days prior to the Maturity
Date, as the case may be. Such written request may be mailed or hand delivered
or sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future
payments in the Specified Currency in respect of such principal, premium, if
any, and/or interest and need not file a separate election for each payment.
Such election will remain in effect until revoked by written notice to the
Trustee, but written notice of any such revocation must be received by the
Trustee on or prior to the applicable Record Date or at least 15 calendar days
prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the reasonable control of the Trust, the
Trust will be entitled to satisfy its obligations to the holder of this Note by
making such payment in United States dollars on the basis of the Market
Exchange Rate (as defined below) on the second Business Day prior to such
payment date or, if such Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate or as otherwise
specified on the face hereof. The "Market Exchange Rate" for the Specified
Currency means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York. Any payment made under such circumstances in United States dollars
will not constitute an Event of Default (as defined in the Indenture) with
respect to this Note.
If the Specified Currency is a composite currency and the holder of this
Note shall have duly made an election to receive all or a specified portion of
any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable
due to the imposition of exchange controls or other circumstances beyond the
reasonable control of the Trust, then the Trust will be entitled to satisfy its
obligations to the holder of this Note by making such payment in United States
dollars. The amount of each payment in United States dollars shall be computed
by the Exchange Rate Agent on the basis of the equivalent of the composite
currency in United States dollars. The component currencies of the composite
currency for this purpose (collectively, the "Component Currencies" and each, a
"Component Currency") shall be the currency amounts that were components of the
composite currency as of the last day on which the composite currency was used.
The equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof and, if so specified above on the face hereof, in the
Addendum hereto, which further provisions shall have the same force and effect
as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if the
face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply to this Note, this Note shall be subject to
the terms set forth in such Addendum or such "Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by the
Trustee or its Authenticating Agent by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
IN WITNESS WHEREOF, Wellsford Residential Property Trust has caused this
Note to be duly executed by one of its duly authorized officers.
WELLSFORD RESIDENTIAL PROPERTY
TRUST
By /s/ Edward Lowenthal
---------------------------
Title:
[SEAL]
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By /s/ Cynthia Chaney
--------------------------
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
WELLSFORD RESIDENTIAL PROPERTY TRUST
MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Securities (the
"Securities") of the Trust issued and to be issued under an Indenture, dated as
of October 25, 1996, as amended, modified or supplemented from time to time
(the "Indenture"), between the Trust and United States Trust Company of New
York, as Trustee (the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Trust, the
Trustee and the holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Note is one
of the series of Securities designated as "Medium-Term Notes Due Nine Months or
More from Date of Issue" (the "Notes"). All terms used but not defined in this
Note or in an Addendum hereto shall have the meanings assigned to such terms in
the Indenture or on the face hereof, as the case may be.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless
otherwise specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
This Note will be subject to redemption at the option of the Trust
on any date on and after the Initial Redemption Date, if any, specified on the
face hereof, in whole or from time to time in part in increments of U.S. $1,000
or the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S. $1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given not more than 60 nor less than 30 calendar days prior
to the Redemption Date and in accordance with the provisions of the Indenture.
The "Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of the unpaid principal amount to be redeemed. In the event of redemption
of this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall be issued in the
name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Trust at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S. $1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S. $1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, the Trustee must
receive at its office in the Borough of Manhattan, The City of New York,
referred to on the face hereof, at least 30 days but not more than 60 days
prior to the Repayment Date (i) this Note and the form hereon entitled "Option
to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile
transmission, or a letter from a member of a national securities exchange or
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States setting forth the name of the holder hereof,
the principal amount of this Note, the principal amount of this Note to be
repaid, the certificate number or a description of the tenor and terms of this
Note, a statement that the option to elect repayment is being exercised
thereby, and a guarantee that this Note, together with the form hereon entitled
"Option to Elect Repayment" duly completed, will be received by the Trustee not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter, provided that such telegram, telex, facsimile
transmission or letter shall only be effective if this Note and duly completed
form are received by the Trustee by such fifth Business Day. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (i) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued
as of any Redemption Date, Repayment Date or date of acceleration of maturity
of this Note, such Discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment
Dates (with ratable accruals within a compounding period), a coupon rate equal
to the initial coupon rate applicable to this Note and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this Note, a proportionate amount of
the yield for an entire compounding period will be accrued. If the Initial
Period is longer than the compounding period, then such period will be divided
into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on
the face hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse
Floating Rate Note" or as otherwise specified as Other/Additional
Provisions on the face hereof or in an Addendum hereto, this Note
shall be designated as a "Regular Floating Rate Note" and, except as
set forth below or specified on the face hereof or in an Addendum
hereto, shall bear interest at the rate determined by reference to
the applicable Interest Rate Basis or Bases (a) plus or minus the
Spread, if any, and/or (b) multiplied by the Spread Multiplier, if
any, in each case as specified on the face hereof. Commencing on
the Initial Interest Reset Date, the rate at which interest on this
Note shall be payable shall be reset as of each Interest Reset Date
specified on the face hereof; provided, however, that the interest
rate in effect for the period, if any, from the Original Issue Date
to the Initial Interest Reset Date shall be the Initial Interest
Rate.
(ii) If the Interest Category of this Note is specified on the
face hereof as a "Floating Rate/Fixed Rate Note", then, except as
set forth below or specified on the face hereof or in an Addendum
hereto, this Note shall bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or
minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any. Commencing on the Initial Interest Reset Date,
the rate at which interest on this Note shall be payable shall be
reset as of each Interest Reset Date; provided, however, that (y)
the interest rate in effect for the period, if any, from the
Original Issue Date to the Initial Interest Reset Date shall be the
Initial Interest Rate and (z) the interest rate in effect for the
period commencing on the Fixed Rate Commencement Date specified on
the face hereof to the Maturity Date shall be the Fixed Interest
Rate specified on the face hereof or, if no such Fixed Interest Rate
is specified, the interest rate in effect hereon on the day
immediately preceding the Fixed Rate Commencement Date.
(iii) If the Interest Category of this Note is specified on
the face hereof as an "Inverse Floating Rate Note", then, except as
set forth below or specified on the face hereof or in an Addendum
hereto, this Note shall bear interest at the Fixed Interest Rate
minus the rate determined by reference to the applicable Interest
Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b)
multiplied by the Spread Multiplier, if any; provided, however,
that, unless otherwise specified on the face hereof or in an
Addendum hereto, the interest rate hereon shall not be less than
zero. Commencing on the Initial Interest Reset Date, the rate at
which interest on this Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate
in effect for the period, if any, from the Original Issue Date to
the Initial Interest Reset Date shall be the Initial Interest Rate.
Except as set forth above or specified on the face hereof or in an
Addendum hereto, the interest rate in effect on each day shall be (i) if such
day is an Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (ii) if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding the most
recent Interest Reset Date. If any Interest Reset Date would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding Business Day, except that if LIBOR is an applicable
Interest Rate Basis and such Business Day falls in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business
Day. In addition, if the Treasury Rate is an applicable Interest Rate Basis
and the Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date will be postponed to the next succeeding
Business Day.
The interest rate applicable to each Interest Reset Period
commencing on the related Interest Reset Date will be determined by the
Calculation Agent as of the applicable Interest Determination Date and will be
calculated by the Calculation Agent on or prior to the Calculation Date (as
defined below), except with respect to LIBOR and the Eleventh District Cost of
Funds Rate, which will be calculated on such Interest Determination Date. The
"Interest Determination Date" with respect to the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will be the
second Business Day immediately preceding the applicable Interest Reset Date;
the "Interest Determination Date" with respect to the Eleventh District Cost of
Funds Rate shall be the last business day of the month immediately preceding
the applicable Interest Reset Date on which the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") publishes the Index (as defined below);
and the "Interest Determination Date" with respect to LIBOR shall be the second
London Business Day immediately preceding the applicable Interest Reset Date,
unless the Index Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate shall be the
day in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at an auction held on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
shall be such preceding Friday. If the interest rate of this Note is
determined with reference to two or more Interest Rate Bases specified on the
face hereof, the "Interest Determination Date" pertaining to this Note shall be
the most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date on which each Interest Rate Basis is
determinable. Each Interest Rate Basis shall be determined as of such date, and
the applicable interest rate shall take effect on the applicable Interest Reset
Date.
Unless otherwise specified on the face hereof or in an Addendum
hereto, the rate with respect to each Interest Rate Basis will be determined in
accordance with the following provisions.
CD Rate. If an Interest Rate Basis for this Note is specified on
the face hereof as the CD Rate, the CD Rate shall be determined as of the
applicable Interest Determination Date (a "CD Rate Interest Determination
Date") as the rate on such date for negotiable United States dollar
certificates of deposit having the Index Maturity specified on the face hereof
as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("H.15(519)") under the heading "CDs (Secondary Market)", or, if
not published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such CD Rate Interest Determination Date for negotiable
United States dollar certificates of deposit of the Index Maturity as published
by the Federal Reserve Bank of New York in its daily statistical release
"Composite 3:30 P.M. Quotations for United States Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the CD Rate on such CD Rate Interest Determination Date
will be calculated by the Calculation Agent specified on the face hereof and
will be the arithmetic mean of the secondary market offered rates as of 10:00
A.M., New York City time, on such CD Rate Interest Determination Date, of three
leading nonbank dealers in negotiable United States dollar certificates of
deposit in The City of New York selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major United States
money center banks in the market for negotiable United States dollar
certificates of deposit with a remaining maturity closest to the Index Maturity
in an amount that is representative for a single transaction in that market at
that time; provided, however, that if the dealers so selected by the Calcula-
tion Agent are not quoting as mentioned in this sentence, the CD Rate
determined as of such CD Rate Interest Determination Date will be the CD Rate
in effect on such CD Rate Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified on
the face hereof as the CMT rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date
and (ii) if the Designated CMT Telerate Page is 7052, the weekly or monthly
average, as specified on the face hereof, for the week or month, as applicable,
ended immediately preceding the week or month, as applicable, in which the
related CMT Rate Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page or is not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in H.15(519). If such rate is
no longer published or is not published by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate on such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date
with respect to such Interest Reset Date as may then be published by either the
Board of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in H.15(519). If such information is not provided by 3:00 P.M.,
New York City time, on the related Calculation Date, then the CMT Rate on the
CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side prices
as of approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity and will use such quotations to calculate the CMT Rate as set forth
above.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on that service (or any
successor service) for the purpose of displaying Treasury Constant Maturities
as reported in H.15(519)). If no such page is specified on the face hereof,
the Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to
maturity of the United States Treasury securities (either one, two, three,
five, seven, 10, 20 or 30 years) specified on the face hereof with respect to
which the CMT Rate will be calculated. If no such maturity is specified on the
face hereof, the Designated CMT Maturity Index shall be two years.
Commercial Paper Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial Paper
Rate shall be determined as of the applicable Interest Determination Date (a
"Commercial Paper Rate Interest Determination Date") as the Money Market Yield
(as defined below) on such date of the rate for commercial paper having the
Index Maturity as published in H.15(519) under the heading "Commercial Paper".
In the event that such rate is not published by 3:00 P.M., New York City time,
on the related Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be the Money Market
Yield of the rate for commercial paper having the Index Maturity as published
in Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on such Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper having the Index Maturity placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally recognized
statistical rating organization; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Commercial Paper Rate determined as of such Commercial Paper Rate
Interest Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
--------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. If an Interest Rate Basis for
this Note is specified on the face hereof as the Eleventh District Cost of
Funds Rate, the Eleventh District Cost of Funds Rate shall be determined as of
the applicable Interest Determination Date (an "Eleventh District Cost of Funds
Rate Interest Determination Date") as the rate equal to the monthly weighted
average cost of funds for the calendar month immediately preceding the month in
which such Eleventh District Cost of Funds Rate Interest Determination Date
falls, as set forth under the caption "11th District" on Telerate Page 7058 as
of 11:00 A.M., San Francisco time, on such Eleventh District Cost of Funds Rate
Interest Determination Date. If such rate does not appear on Telerate Page
7058 on such Eleventh District Cost of Funds Rate Interest Determination Date,
then the Eleventh District Cost of Funds Rate on such Eleventh District Cost of
Funds Rate Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan
Bank District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds Rate
shall be determined as of the applicable Interest Determination Date (a
"Federal Funds Rate Interest Determination Date") as the rate on such date for
United States dollar federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, if not published by 3:00 P.M., New York City
time, on the Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Interest Determination Date shall be calculated by the Calculation Agent and
will be the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of federal
funds transactions in The City of New York selected by the Calculation Agent,
prior to 9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Federal Funds Rate Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. If an Interest Rate Basis for this Note is specified on the
face hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of
the applicable Interest Determination Date (a "LIBOR Interest Determination
Date") in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case such
single rate will be used) for deposits in the Index Currency having the Index
Maturity, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified on the face hereof, or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof
as the method for calculating LIBOR, the rate for deposits in the Index
Currency having the Index Maturity, commencing on such Interest Reset Date,
that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date. If fewer than two such offered rates
appear, or if no such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date shall be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent shall request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the Calculation
Agent, to provide the Calculation Agent with its offered quotation for deposits
in the Index Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market
at approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a single transaction
in such Index Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., in the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to leading
European banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in such Index Currency in such market
at such time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in
effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified
on the face hereof as to which LIBOR shall be calculated. If no such currency
or composite currency is specified on the face hereof, the Index Currency shall
be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service (or any successor service)), for the
purpose of displaying the London interbank rates of major banks for the Index
Currency, or (b) if "LIBOR Telerate" is specified on the face hereof or neither
"LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof as the
method for calculating LIBOR, the display on the Dow Jones Telerate Service (or
any successor service) on the page specified on the face hereof (or any other
page as may replace such page on such service (or any successor service)), for
the purpose of displaying the London interbank rates of major banks for the
Index Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified on
the face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under
the heading "Bank Prime Loan." If such rate is not published prior to 3:00
P.M., New York City time, on the related Calculation Date, then the Prime Rate
shall be the arithmetic mean of the rates of interest publicly announced by
each bank that appears on the Reuters Screen USPRIME1 Page (as defined below)
as such bank's prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date. If fewer than four such rates appear on the
Reuters Screen USPRIME1 Page for such Prime Rate Interest Determination Date,
then the Prime Rate shall be the arithmetic mean of the prime rates quoted on
the basis of the actual number of days in the year divided by a 360-day year as
of the close of business on such Prime Rate Interest Determination Date by four
major money center banks in The City of New York selected by the Calculation
Agent. If fewer than four such quotations are so provided, the Prime Rate
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least U.S.$500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor service)
(or such other page as may replace the USPRIME1 page on such service (or any
successor service) for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate. If an Interest Rate Basis for this Note is specified
on the face hereof as the Treasury Rate, the Treasury Rate shall be determined
as of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)"
or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, the auction average rate of such Treasury Bills (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the Auction of
Treasury Bills having the Index Maturity are not reported as provided above by
3:00 P.M., New York City time, on such Calculation Date, or if no such Auction
is held, then the Treasury Rate shall be calculated by the Calculation Agent
and shall be a yield to maturity (expressed as a bond equivalent on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Treasury Rate Interest Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent, for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The "Calculation Date", if applicable, pertaining to any Interest
Determination Date shall be the earlier of (i) the tenth calendar day after
such Interest Determination Date or, if such day is not a Business Day, the
next succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be. At
the request of the Holder hereof, the Calculation Agent will provide to the
Holder hereof the interest rate hereon then in effect and, if determined, the
interest rate that will become effective as a result of a determination made
for the next succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued inter-
est factor shall be computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for each such date
shall be computed by dividing the interest rate applicable to such day by 360
if the CD Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds
Rate, the Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest
Rate Basis or by the actual number of days in the year if the CMT Rate or the
Treasury Rate is an applicable Interest Rate Basis. Unless otherwise specified
as the Day Count Convention on the face hereof, the interest factor for this
Note, if the interest rate is calculated with reference to two or more Interest
Rate Bases, shall be calculated in each period in the same manner as if only
the Applicable Interest Rate Basis specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in
or resulting from such calculation on this Note shall be rounded, in the case
of United States dollars, to the nearest cent or, in the case of a Specified
Currency other than United States dollars or a composite currency, to the
nearest unit (with one-half cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and
be continuing, the principal of the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Trust and the rights of the holders of the Securities at any time by the Trust
and the Trustee with the consent of the holders of not less than a majority of
the aggregate principal amount of all Securities at the time outstanding and
affected thereby. The Indenture also contains provisions permitting the
holders of not less than a majority of the aggregate principal amount of the
outstanding Securities of any series, on behalf of the holders of all such
Securities, to waive compliance by the Trust with certain provisions of the
Indenture. Furthermore, provisions in the Indenture permit the holders of not
less than a majority of the aggregate principal amount of the outstanding
Securities of any series, in certain instances, to waive, on behalf of all of
the holders of Securities of such series, certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and other Notes issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Trust, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, the transfer of this Note is registrable in the
Security Register of the Trust upon surrender of this Note for registration of
transfer at the office or agency of the Trust in any place where the principal
hereof and any premium or interest hereon are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trust and the Security Registrar, duly executed by, the holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denominations but otherwise
having the same terms and conditions, as requested by the holder hereof
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Trust may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Trust, the Trustee and any agent of the Trust or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Trust, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note and all documents, agreements, understandings and
arrangements relating to any transaction contemplated hereby or thereby have
been executed or entered into by the undersigned in his/her capacity as an
officer or trustee of the Trust which has been formed as a Maryland real estate
investment trust pursuant to the Declaration of Trust of the Trust, dated as of
July 20, 1992, as amended, and not individually, and neither the trustees,
officers, employees or shareholders of the Trust shall be bound or have any
personal liability hereunder or thereunder. The holder of this Note by
accepting this Note waives and releases all such liability. This waiver and
release are part of the consideration for the issue of this Note. Each party
hereto shall look solely to the assets of the Trust for satisfaction of any
liability of the Trust in respect of this Note and all documents, agreements,
understandings and arrangements relating to any transaction contemplated hereby
or thereby and will not seek recourse or commence any action against any of the
trustees, officers or shareholders of the Trust or any of their personal assets
for the performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements, understandings,
arrangements and transactions between the parties hereto.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ______ Custodian _____
(Cust) (Minor)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of under Uniform Gifts
survivorship and not as tenants to Minors
in common Act__________________
(State)
Additional abbreviations may also be used though not in the above
list.
__________________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
|______________________________|_______________________________________________
_____________________________________________________________________________(P
lease print or typewrite name and address including postal zip code of
assignee)
______________________________________________________________________________
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
_______________________________________
Notice: The signature(s) on this
Assignment must correspond with the
name(s) as written upon the face of
this Note in every particular, without
alteration or enlargement or any
change whatsoever.<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Trust to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at _______________________
_________________________________________________________________ (Please
print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its
corporate trust office in the Borough of Manhattan, The City of New York,
currently located at 114 West 47th Street, New York, New York 10036, this Note
with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be
repaid, specify the portion hereof (which shall be increments of U.S.$1,000
(or, if the Specified Currency is other than United States dollars, the minimum
Authorized Denomination specified on the face hereof)) which the holder elects
to have repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the
portion of this Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $____________ ____________________________ Notice: The
signature(s) on Date:_______________________ this Option to Elect
Repayment
must correspond with the name(s) as
written upon the face of this Note in
every particular, without alteration
or enlargement or any change
whatsoever.
Exhibit 10.45
- ----------------------------------------------------------------
LOAN AGREEMENT
BETWEEN
THE CITY OF ENGLEWOOD, COLORADO
AND
WELLSFORD MARKS WEST CORP.
Pertaining To
$11,200,000
CITY OF ENGLEWOOD, COLORADO
MULTIFAMILY HOUSING REVENUE REFUNDING BONDS
(MARKS APARTMENTS PROJECT)
SERIES 1996
Dated as of October 1, 1996
- ---------------------------------------------------------------- <PAGE>
TABLE OF CONTENTS
Page
ARTICLE IDEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . .4
SECTION 1.02. Interpretation. . . . . . . . . . . . . . . . . .9
SECTION 1.03. Recitals, Titles and Headings . . . . . . . . . 10
ARTICLE IIREPRESENTATIONS, WARRANTIES AND SPECIAL TAX COVENANTS
SECTION 2.01. Representations and Warranties of the City. . . 11
SECTION 2.02. Representations, and Warranties and Covenants
of Owner. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.03. Compliance with Laws and Documents
Governing Operations. . . . . . . . . . . . . . . . . . . 13
SECTION 2.04. Tax-Exempt Status of the Bonds. . . . . . . . . 15
SECTION 2.05. Eligible Tenants. . . . . . . . . . . . . . . . 17
SECTION 2.06. Sale of Project . . . . . . . . . . . . . . . . 19
ARTICLE IIITHE BONDS, BOND PROCEEDS, THE INDENTURE
SECTION 3.01. Issuance of Bonds . . . . . . . . . . . . . . . 20
SECTION 3.02. Bond Proceeds; Investments. . . . . . . . . . . 20
SECTION 3.03. Indenture Approval and Requirements . . . . . . 20
ARTICLE IVTHE LOAN, PREPAYMENTS, ASSIGNMENTS
SECTION 4.01. Loan by City. . . . . . . . . . . . . . . . . . 21
SECTION 4.02. Loan Payments . . . . . . . . . . . . . . . . . 21
SECTION 4.03. Credits on Loan . . . . . . . . . . . . . . . . 22
SECTION 4.04. Prepayment Generally. . . . . . . . . . . . . . 22
SECTION 4.05. Optional Prepayment of Loan; Concurrent Bond
Redemption. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.06. Extraordinary Optional Prepayment . . . . . . . 23
SECTION 4.07. Provision of Alternate Security, Extraordinary
Mandatory Prepayment of Loan. . . . . . . . . . . . . . . 23
SECTION 4.08. Usury . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.09. Assignments to Trustee. . . . . . . . . . . . . 24
SECTION 4.10. Release of Owner from Covenants Hereunder . . . 25
SECTION 4.11. Assignment of Agreement by Owner. . . . . . . . 25
ARTICLE VADDITIONAL COVENANTS
SECTION 5.01. Permits and Licenses. . . . . . . . . . . . . . 26
SECTION 5.02. Payment for Extraordinary Services. . . . . . . 26
SECTION 5.03. Taxes and Other Governmental Charges. . . . . . 26
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . 27
SECTION 5.05. Application of Insurance and Condemnation
Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.06. General Tax Covenant. . . . . . . . . . . . . . 29
ARTICLE VIINDEMNIFICATION OF CITY AND TRUSTEE
SECTION 6.01. Indemnification of City and Trustee . . . . . . 31
ARTICLE VIIBREACH OF COVENANTS, REMEDIES
SECTION 7.01. Event of Default. . . . . . . . . . . . . . . . 32
SECTION 7.02. Remedies for Failure to Perform . . . . . . . . 33
SECTION 7.03. Discontinuance of Proceedings . . . . . . . . . 34
SECTION 7.04. Remedies Cumulative . . . . . . . . . . . . . . 34
SECTION 7.05. Waiver of Event of Default. . . . . . . . . . . 34
ARTICLE VIIIMISCELLANEOUS
SECTION 8.01. Amounts Remaining in Funds and Accounts . . . . 35
SECTION 8.02. Limited Obligation of City. . . . . . . . . . . 35
SECTION 8.03. Payments by Guarantor . . . . . . . . . . . . . 35
SECTION 8.04. Amendments, Changes or Modifications to Loan
Agreement . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.05. Rights of the Guarantor; References to the
Guarantor . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.06. Payment . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.07. Counterparts. . . . . . . . . . . . . . . . . . 36
SECTION 8.08. Severability. . . . . . . . . . . . . . . . . . 36
SECTION 8.09. Term of Agreement . . . . . . . . . . . . . . . 36
SECTION 8.10. Notice of Changes in Fact . . . . . . . . . . . 37
SECTION 8.11. Notices . . . . . . . . . . . . . . . . . . . . 37
SECTION 8.12. Provision of Alternate Security . . . . . . . . 37
SECTION 8.13. Guarantor Debt; Mandatory Provision of
Alternate Security. . . . . . . . . . . . . . . . . . . . 38
SECTION 8.14. Applicable Law. . . . . . . . . . . . . . . . . 38
<PAGE>
THIS AGREEMENT (this "Agreement") is made and entered into as
of October 1, 1996, between the City of Englewood, Colorado, a
municipal corporation and political subdivision of the State of
Colorado (the "City") and Wellsford Marks West Corp. (the "Owner"),
a Colorado corporation.
W I T N E S S E T H:
WHEREAS, the City is authorized by the County and Municipality
Development Revenue Bond Act, constituting Article 3, Title 29,
Colorado Revised Statutes (the "Act"), to finance one or more
projects, including any land, building, or other improvement, and
all real and personal properties, whether or not in existence,
which shall be suitable for residential facilities for low- and
middle-income families or persons and intended for use as the sole
place of residence by the owners or intended occupants to the end
that more adequate residential housing facilities for low- and
middle-income families and persons may be provided, which promote
the public health, welfare, safety, convenience and prosperity; and
WHEREAS, the Act authorizes the City (a) to issue its revenue
bonds for the purpose of defraying the cost of financing any
project and all incidental expenses incurred in connection with the
issuance of such bonds, (b) to enter into financing agreements with
others for the purpose of providing revenues to pay the bonds
authorized to be issued under the Act and upon such terms and
conditions as the City Council of the City may deem advisable, and
(c) to secure the payment of the principal of, premium, if any, and
interest on such bonds as provided in the Act; and
WHEREAS, Section 103(b)(4)(A) of the Internal Revenue Code of
1954, as amended (the "1954 Code"), provides that the interest on
fully registered obligations issued by or on behalf of a state or
a political subdivision thereof substantially all of the proceeds
of which are to be used to provide projects for residential rental
property shall be exempt from federal income taxation if, among
other requirements, at least 20% of the dwelling units in each
project (15% of the dwelling units in a project which is a
"targeted area" project, as defined in Treasury Regulation Section 1.103-
8(b)(8)(iii)) are to be occupied by individuals of low or moderate
income within the meaning of and for the period required by Section
103(b)(12) of the 1954 Code; and
WHEREAS, the City has previously issued and delivered its City
of Englewood, Colorado, Variable Rate Demand Multifamily Housing
Revenue Bonds (The Marks Apartments) 1985 Series A, in the
aggregate principal amount of $12,200,000 (the "Prior Bonds"), to
obtain moneys to provide financing to HG Venture, a Texas limited
partnership (the "Original Owner") for the acquisition,
construction and installation of a multifamily rental housing
project (the "Project") which is located within the City, which is
occupied by persons of low and middle income, as defined by the
City, and which is occupied partially by individuals of low or
moderate income within the meaning of and for the period required
by Section 103(b)(12) of the 1954 Code, all for the public purpose
of providing more adequate residential housing facilities for low
and middle-income families and persons; and
WHEREAS, in order to provide such financing, the City and the
Original Owner executed and delivered a Loan Agreement dated as
December 1, 1985 (the "Original Agreement") pursuant to which (a)
the City loaned to the Original Owner the proceeds of the Prior
Bonds (the "1985 Loan") and (b) the Original Owner agreed to
acquire, construct, install, operate and maintain the Project in
accordance with the requirements of the Act and Section
103(b)(4)(A) of the 1954 Code; and
WHEREAS, the City, the Trustee and the Original Owner have
executed and delivered a Land Use Restriction Agreement dated as of
December 1, 1985 (the "Original Regulatory Agreement"), pursuant to
which the Original Owner has agreed to use and operate the Project
in accordance with the requirements of Section 103(b)(4)(A) of the
1954 Code; and
WHEREAS, Wellsford Marks West Corp., a Colorado corporation
(the "Owner") has assumed all of the Original Owner's obligations
under the Original Agreement and the Original Regulatory Agreement;
and
WHEREAS, the Owner has requested that the City issue, sell and
deliver its City of Englewood, Colorado, Multifamily Housing
Revenue Refunding Bonds (Marks Apartments Project) Series 1996 (the
"Bonds") in the aggregate principal amount of $11,200,000 for the
purpose of refunding all of the Prior Bonds and refinancing the
1985 Loan as permitted pursuant to the Internal Revenue Code of
1986, as amended; and
WHEREAS, Wellsford Residential Property Trust (the
"Guarantor") has agreed to guarantee all of the Owner's payment
obligations under this Agreement, including payment of principal of
and interest on the Bonds when due, pursuant to the terms of a
Guaranty Agreement dated as of October 1, 1996 (the "Guaranty
Agreement") executed by the Guarantor for the benefit of the
Trustee; and
WHEREAS, the Owner is obligated to reimburse the Guarantor
after the Guarantor makes payment under the Guaranty Agreement for
any amounts owing by the Owner to the Guarantor pursuant to the
Reimbursement Agreement, dated as of October 1, 1996 between the
Guarantor and the Owner and to secure such reimbursement obligation
of the Owner; and
WHEREAS, the City Council of the City has expressly determined
and hereby confirms that the issuance of the Bonds and the
refinancing of the Project will accomplish a valid public purpose
of the City by continuing to provide more adequate residential
housing facilities for low- and middle-income families and persons,
which promote the public health, welfare, safety, convenience and
prosperity; and
WHEREAS, the Bonds will be secured by (a) a pledge of this
Agreement, (b) a pledge of the revenues and receipts derived by the
City pursuant to this Agreement, and (c) the Guaranty Agreement;
and
WHEREAS, the City, the Trustee, and the Owner have executed
and delivered an Amended and Restated Regulatory Agreement dated as
of October 1, 1996 (the "Regulatory Agreement"), pursuant to which
the Owner has agreed to use and operate the Project in accordance
with the requirements of Section 103(b)(4)(A) of the 1954 Code.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and undertakings set forth herein, the parties
hereto agree as follows:<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires, capitalized terms used herein shall
have the following meanings:
"Act" - The County and Municipality Development Revenue Bond
Act, constituting Article 3, Title 29, Colorado Revised Statutes.
"Adjusted Gross Income" - With respect to a person, the
adjusted gross income of such person as set forth on such person's
federal income tax return for the immediately preceding taxable
year, as evidenced by a copy of such return or by a sworn statement
of such persons.
"Agreement" - This Loan Agreement, dated as of October 1,
1996, between the Owner, as borrower, and the City, as lender,
together with any amendments or supplements hereto.
"Alternate Security" - Any guaranty agreement, letter of
credit, surety bond, bond insurance policy or other security, or
any combination of the foregoing, with a term ending on the
maturity of the Bonds substituted for the Guaranty Agreement and
providing for the payment of (i) the principal of and interest on
the Bonds when due, together with amounts sufficient to pay the
Purchase Price thereof upon mandatory redemption of the Bonds
pursuant to the Indenture and (ii) all amounts under the Agreement
when due on or prior to the payment dates provided by the Guaranty
Agreement which will result in the Bonds being assigned an
investment grade credit rating available by a nationally recognized
rating agency (e.g., rated "AAA," "AA," "A" or "BBB" by S&P, or a
comparable rating category assigned by another nationally
recognized rating agency).
"Authorized Representative" - A person or persons at the time
designated to act on behalf of the Owner by written certificate
furnished to the Trustee containing the specimen signature of such
person or persons and signed on behalf of the Owner by its
President, which certificate may designate an alternate or
alternates, and may designate more than one person to act
collectively, as the Authorized Representative for one or more
purposes.
"Bond" or "Bonds" - Any one or more or all, as the case may
be, of the Bonds issued pursuant to the Indenture, entitled "City
of Englewood, Colorado, Multifamily Housing Revenue Refunding
Bonds, (Marks Apartments Project) Series 1996," in the aggregate
principal amount of $11,200,000, and fully described in the
Indenture.
"Bond Counsel" - A firm or firms of nationally recognized
attorneys at law, approved by the Trustee, the City, the Owner and
the Guarantor, such approval not to be unreasonably withheld, and
experienced in the financing of facilities for non-exempt persons
through the issuance of tax-exempt revenue bonds under the
exemptions provided under Section 103 of the Code.
"Business Day" - A day on which banks in the cities in which
the principal offices of the Trustee and the Guarantor are located
are not required or authorized by law to remain closed and on which
The New York Stock Exchange is not closed.
"City" - The City of Englewood, Colorado, a municipal
corporation and political subdivision organized and existing under
the Charter and the laws and Constitution of the State of Colorado,
the issuer of the Bonds, and its successors and assigns.
"Code" - The Internal Revenue Code of 1986, as amended,
together with corresponding and applicable final, temporary or
proposed regulations and revenue rulings issued or amended with
respect thereto by the Treasury Department or Internal Revenue
Service of the United States.
"Completion Date" - The date upon which the Project was
completed, January 1, 1987.
"Counsel for the Trustee" - An attorney at law or firm of
attorneys at law selected by the Trustee as its counsel, which may
include the in-house counsel of the Trustee or its banking
associates.
"Development Costs" - To the extent authorized by the 1954
Code and the Act, any and all costs incurred by the City or the
Owner with respect to the acquisition, construction, and equipping,
as the case may be, of the Project, including, without limitation,
costs for site preparation, the planning of housing and related
facilities and improvements, the acquisition of property, the
removal or demolition of existing structures, the construction of
housing, related facilities and improvements, and all other work in
connection therewith, and all costs of financing, including,
without limitation, the cost of consultant, accounting and legal
services, other expenses necessary or incident to determining the
feasibility of the Project, contractors' and Owner's overhead and
supervisors' fees and costs directly allocable to the Project and
the financing thereof (including reimbursements to any
municipality, city or entity for expenditures made, with the
approval of the City, for the Project), interest prior to the
Completion Date, and all other costs approved by Bond Counsel.
"Determination of Taxability" - A final judgment or order of
a court of competent jurisdiction, or a final ruling or decision of
the Internal Revenue Service, to the effect that the interest on
any of the Bonds (other than interest on any Bond for any period
during which such Bond is held by a "substantial user" of any
facility financed with the proceeds of the Bonds or a "related
person," as such terms are used in Section 103(b) of the 1954 Code)
is includable for federal income tax purposes in the gross incomes
of the recipients thereof as a result of any action or failure to
act on the part of the Owner in violation of the Regulatory
Agreement. A Determination of Taxability shall not be deemed to
have occurred by reason of the issuance of any assessment described
in this definition unless (i) such taxpayer is neither a
"substantial user" of the Project or a "related person" within the
meaning of Section 103(b)(13) of the 1954 Code, and (ii) (A) no
later than sixty (60) days prior to the last to occur of the last
day on which said taxpayer may contest such assessment before
either the Internal Revenue Service or the Tax Court or any other
court of competent jurisdiction, or after payment by such taxpayer
of the taxes so assessed, the last day on which such taxpayer may
sue for a refund of such taxes before either the Court of Claims or
any District Court of the United States or any other court of
competent jurisdiction, such taxpayer gives notice to the Owner of
such assessment and/or payment, together with a copy of said
statutory notice of deficiency, and gives the Owner his power of
attorney, in form and substance reasonably satisfactory to the
Owner, to contest such assessment or sue for such refund, as the
case may be, at its own cost and in the name of such taxpayer, (B)
such taxpayer cooperates in every reasonable way with the Owner in
prosecuting such contest or suit, and (C) the Owner nonetheless
fails to obtain a final determination from which no timely appeal
shall have been filed whereunder such assessment is withdrawn or
overturned insofar as it relates to such inclusion or such refund
is obtained insofar as it relates to such inclusion.
"Eligible Tenants" - Any person whose Adjusted Gross Income,
together with the Adjusted Gross Income of all persons who intend
to reside with such person in one dwelling unit, did not, for the
immediately preceding taxable year, immediately preceding their
initial occupancy of such dwelling unit, exceed an amount equal to
175% of the Median Gross Income for the Area, adjusted for the
number of persons who intend to reside in such dwelling unit in a
manner consistent with making adjustments for family size for
purposes of determining "lower income families" under Section
8(f)(3) of the Housing Act, or such greater percentage of Median
Gross Income for the Area as may be established from time to time
by the City Council of the City, in accordance with the Act, as the
maximum amount constituting middle income within the meaning of the
Act.
"Event of Default" - Any Event of Default specified in Section
7.01 of this Agreement.
"Guarantor" - Wellsford Residential Property Trust, a Maryland
real estate investment trust, and its successors and assigns, and,
after substitution of Alternate Security in accordance with this
Agreement and the Indenture, any provider of Alternate Security.
"Guaranty Agreement" - The Guaranty Agreement, dated as of
October 1, 1996 executed by the Guarantor for the benefit of the
Trustee, its successors and assigns including any amendments and
supplements thereto pursuant to which certain of the Owner's
payment obligations under this Agreement are unconditionally and
irrevocably guaranteed, and, after substitution in accordance with
this Agreement and the Indenture, any Alternate Security.
"Housing Act" - means the United States Housing Act of 1937,
as amended, codified as 42 U.S.C. Section 1401 et seq.
"Income Certification" - With respect to Lower-Income and all
other Eligible Tenants, an income certification substantially in
the form attached to the Regulatory Agreement as Exhibit B, as such
form may be revised by the City from time to time.
"Indenture" - The Indenture of Trust dated as of October 1,
1996, by and between the City and the Trustee, pursuant to which
the Bonds are issued and secured, together with any amendments or
supplements thereto.
"Interest Payment Date" - June 1 and December 1 of each year,
commencing June 1, 1997, until the maturity or redemption of all
Bonds.
"Land" - The tract of land on which the Project is
constructed.
"Loan" - The loan from the City to the Owner made pursuant to
this Agreement, as evidenced by the Note.
"Lower-Income Tenants" - Individuals of low or moderate income
within the meaning of Section 103(b)(12)(C) of the 1954 Code and
Section 1.103-8(b) of the regulations promulgated thereunder, as
the same may be amended from time to time, which include
individuals and families whose aggregate adjusted income (computed
in the manner prescribed in Treasury Regulation Section 1.167k-3(b)(3))
does not exceed 80% of the Median Gross Income for the Area with
adjustments downward from such 80% of Median Gross Income for the
Area for the number of persons who intend to reside in such
dwelling unit in a manner consistent with making adjustments for
family size for purposes of determining "lower income families"
under Section 8(f)(3) of the Housing Act.
"Median Gross Income for the Area" - The median income for the
area where the Project is located as determined by the Secretary of
Housing and Urban Development under Section 8(f)(3) of the Housing
Act, or if programs under Section 8(f) are terminated, median
income determined under the method used by said Secretary prior to
such termination.
"Moderate Income Tenants" - Any person whose Adjusted Gross
Income, together with the Adjusted Gross Income of all persons who
intend to reside with such person in one dwelling unit, for the
taxable year immediately preceding their initial occupancy of such
dwelling unit, exceeded an amount equal to 80% of Median Gross
Income for the Area with adjustments downward from such 80% of
Median Gross Income for the Area for the number of persons who
intend to reside in such dwelling unit in a manner consistent with
making adjustments for family size for purposes of determining
"lower income families" under Section 8(f)(3) of the Housing Act
but did not exceed an amount equal to 130% of the Median Gross
Income for the Area, adjusted for the number of persons who intend
to reside in such dwelling unit in a manner consistent with making
adjustments for family size for purposes of determining "lower
income families" under Section 8(f)(3) of the Housing Act.
"1954 Code" - The Internal Revenue Code of 1954, as amended,
together with corresponding and applicable final, temporary or
proposed regulations and revenue rulings issued or amended with
respect thereto by the Treasury Department or Internal Revenue
Service of the United States.
"Note" - The promissory note from the Owner to the City
evidencing the payment obligations of the Owner under this
Agreement, substantially in the form attached hereto as Exhibit A,
and any and all amendments and supplements thereto.
"Official Statement" - The Official Statement delivered in
connection with the original issue and sale of the Bonds.
"Original Loan Agreement" - The Loan Agreement dated as of
December 1, 1985 between the Original Owner and the City.
"Original Owner" - HG Venture, a Texas limited partnership.
"Original Regulatory Agreement" - The Land Use Restriction
Agreement dated as of December 1, 1985 among the City, the Original
Owner, Mellon Bank, N.A., as trustee, and Citicorp Real Estate,
Inc.
"Owner" - Wellsford Marks West Corp., a Colorado corporation,
its successors and assigns, including any surviving, resulting or
transferee entity permitted under this Agreement or the Regulatory
Agreement.
"Prior Bonds" - The City of Englewood, Colorado, Variable Rate
Demand Multifamily Housing Revenue Bonds (The Marks Apartments)
1985 Series A.
"Prior Trustee" - Mellon Bank, N.A., pursuant to the terms of
an Indenture of Trust dated as of December 1, 1985, between the
City and Mellon Bank, N.A.
"Project" - The multifamily rental housing project known as
Marks West Apartments, consisting of those facilities, including
real property, structures, buildings, fixtures or equipment,
described in Exhibit B hereto, as they may at any time exist, which
facilities are to be refinanced, in whole or in part, from the
proceeds of the sale of the Bonds or the proceeds of any payment by
the Owner, and any real property, structures, buildings, fixtures
or equipment acquired in substitution for, as a renewal or
replacement of, or a modification or improvement to, all or any
part of the facilities described in Exhibit B.
"Purchase Date" - A date on which Bonds are purchased in lieu
of redemption or acceleration pursuant to Section 4.04 of the
Indenture.
"Qualified Project Period" - That period, beginning on the
later of (i) the first day on which at least 10% of the units in
the Project were first occupied or (ii) the date of issuance of the
Bonds, and ending on the later of (a) the date which is ten years
after the date on which at least 50% of the units in the Project
were first occupied, (b) the date which is a "qualified number of
days" after the date of initial occupancy of any unit in the
Project (for this purpose a "qualified number of days" means 50% of
the total number of days from the date of issuance of the Bonds
until the date such Bonds are no longer outstanding plus 50% of the
total number of days from the date of issuance of any bonds
refunding the Bonds to the maturity date of such refunding bonds
with the longest maturity, including any subsequent refunding
obligations), or (c) the date on which any assistance provided with
respect to the Project under Section 8 of the United States Housing
Act of 1937, as amended, terminates.
"Refunding Project" - The refunding of all of the City's
outstanding Variable Rate Demand Multifamily Housing Revenue Bonds
(The Marks Apartments) 1985 Series A.
"Registered Owner" or "owner" - The person in whose name any
Bond is registered on the Bond registration books of the City kept
by the Trustee as bond registrar.
"Regulatory Agreement" - The Amended and Restated Land Use
Restriction Agreement, dated as of October 1, 1996, among the City,
the Trustee and the Owner, as originally executed or as it may from
time to time be supplemented, modified or amended.
"Reimbursement Agreement" - Any Reimbursement Agreement
between the Owner and the Guarantor and any amendments or
supplements thereto pursuant to which the Owner agrees to reimburse
the Guarantor for any and all amounts paid by the Guarantor
pursuant to the Guaranty Agreement or, after provision of any
Alternate Security, any agreement between the Owner and the
provider of such Alternate Security which provides for the
reimbursement of the provider of Alternate Security by the Owner
for payments made by such provider of Alternate Security under such
Alternate Security.
"S & P" - Standard & Poor's Rating Services, a Division of the
McGraw-Hill Companies, its successors and their assigns, and, if
such corporation shall for any reason no longer perform the
functions of a securities rating agency, "S & P" shall be deemed to
refer to any other nationally recognized securities rating agency
designated by the City with the approval of the Owner and the
Guarantor.
"State" - The State of Colorado.
"Tax Certificate" - The Federal Tax Exemption Certificate or
Certificates, dated as of the delivery date of the Bonds, executed
and delivered by the City and the Owner, as amended, supplemented
or otherwise modified from time to time.
"Trustee" - American National Bank and Trust Company of
Chicago, Chicago, Illinois, as trustee under the Indenture, and its
successors in trust thereunder.
"Underwriter" - First Chicago Capital Markets, Inc.
Such terms as are not defined herein shall have the meanings
assigned to them in the Indenture.
SECTION 1.2. Interpretation. Unless the context clearly
requires otherwise, words of masculine gender shall be construed to
include correlative words of the feminine and neuter genders and
vice versa, and words of the singular number shall be construed to
include correlative words of the plural number and vice versa.
This Agreement and all the terms and provisions hereof shall be
construed to effectuate the purpose set forth herein and to sustain
the validity hereof.
SECTION 1.3. Recitals, Titles and Headings. The terms and
phrases used in the recitals of this Agreement have been included
for convenience of reference only, and the meaning, construction
and interpretation of all such terms and phrases for purposes of
this Agreement shall be determined by references to Section 1.01
hereof. The titles and headings of the articles and sections of
this Agreement have been inserted for convenience of reference only
and are not to be considered a part hereof, and shall not in any
way modify or restrict any of the terms or provisions hereof and
shall never be considered or given any effect in construing this
Agreement or any provision hereof or in ascertaining intent, if any
question of intent should arise.
(End of Article I)
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND SPECIAL TAX COVENANTS
SECTION 2.1. Representations and Warranties of the City.
The City makes the following representations and warranties as the
basis for the undertakings on the part of the Owner herein
contained:
(a) The City is a municipal corporation and
political subdivision duly organized and existing under
the laws and Constitution of the State.
(b) The City has full legal right, power and
authority under the laws of the State of Colorado and has
taken all official actions necessary (i) to enter into
this Agreement, the Regulatory Agreement and the
Indenture, (ii) to issue, execute and deliver the Bonds,
(iii) to perform its obligations hereunder and
thereunder, and (iv) to consummate all other transactions
contemplated by this Agreement and such other documents,
including, without limitation, the loaning of a portion
of the proceeds of the Bonds to the Owner.
(c) By proper action the City has duly authorized
(i) the execution and delivery of this Agreement, the
Regulatory Agreement and the Indenture, (ii) the
performance by the City of its obligations hereunder and
thereunder, and (iii) the consummation of the
transactions contemplated hereunder and thereunder.
(d) The execution and delivery of this Agreement,
the Regulatory Agreement and the Indenture, the issuance,
execution and delivery of the Bonds, the performance by
the City of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby
and thereby, including, without limitation, the loaning
of the proceeds of the Bonds to the Owner, do not
violate, conflict with or constitute a breach of or a
default under the Act or, to the best knowledge of the
City, any other law or regulation applicable to the City,
or under the terms and conditions of any agreement,
instrument or commitment to which the City is a party or
by which the City or any of its property is bound.
(e) The City has determined that the financing of
the Project and the issuance of the Bonds to obtain
moneys to carry out the financing of the Project will
serve the public interest and will further the purposes
of the Act, including, among other purposes, the
provision of more adequate residential housing facilities
for low- and middle-income families and persons.
(f) The City makes no other warranties, either
express or implied, as to the Project or the financing
thereof, of any nature or kind.
SECTION 2.2. Representations, and Warranties and Covenants
of Owner. The Owner hereby represents, warrants and agrees as
follows:
(a) The Owner (i) is a Colorado corporation validly
existing under the laws of the State; (ii) is organized
and operated for the purpose, among others, of acquiring,
constructing, owning and operating the Project; (iii) has
full power and authority under its organizational
documents and the laws of the State to execute and
deliver this Agreement and the Regulatory Agreement, to
be bound by the terms of the Indenture and to perform its
obligations hereunder and thereunder; and (iv) by proper
action has duly authorized the execution and delivery of
this Agreement and the Regulatory Agreement, and when
validly executed and delivered by the other parties
thereto, such documents will constitute legal and valid
agreements of the Owner.
(b) The execution, delivery and performance of this
Agreement and the Regulatory Agreement, and the
consummation of the transactions herein and therein
contemplated, (i) will not violate any law, regulation,
ordinance, judgment or court order of any federal, state
or local government, and (ii) do not conflict in any
material respect with or constitute a material breach of
or a material default under the Owner's Articles of
Incorporation or Bylaws or under the terms and conditions
of any instrument, document, agreement, commitment,
indenture, security agreement, mortgage, lease or other
writing to which the Owner is a party or by which the
Owner, or a substantial portion of its assets, is bound.
(c) There are no actions, suits or proceedings
pending or, to the knowledge of the Owner, threatened
against or affecting the Owner or the Project, or
involving the validity or enforceability of the Bonds,
this Agreement, the Regulatory Agreement, the Guaranty
Agreement or the Indenture, at law or in equity, or
before or by any governmental authority, except actions
which, if adversely determined, would not materially
impair the ability of the Owner to perform the Owner's
obligations under this Agreement and the Regulatory
Agreement, and to cause to be paid any amounts which may
become payable under this Agreement. The Owner is not in
default in any material respect under any mortgage, deed
of trust, lease, loan or credit agreement, corporate
agreement or other instrument to which the Owner is a
party or by which it is bound.
(d) Any certificate signed by an Authorized
Representative and delivered pursuant to the Indenture or
this Agreement and the Regulatory Agreement shall be
deemed a representation and warranty by the Owner as to
the statements made therein.
(e) Concurrently with the execution of this
Agreement, the Owner will cause to be delivered to the
Trustee, for the benefit of the owners of the Bonds, the
Guaranty Agreement, and to the knowledge of the Owner the
Guaranty Agreement shall be in full force and effect and
shall secure the payment of the principal and interest on
the Bonds in accordance with its terms.
(f) The Indenture has been submitted to the Owner
for its examination; and the Owner acknowledges, by
execution of this Agreement, that it has approved the
Indenture and agrees that it will be bound by the terms
thereof.
(g) The information and estimates with respect to
the development and the financing of the Project
heretofore furnished to Sherman & Howard L.L.C., Bond
Counsel, are true and correct to the best of the
information and belief of the Owner and do not omit any
statement the omission of which would render any of the
statements made therein misleading in the circumstances
in which they are made.
SECTION 2.3. Compliance with Laws and Documents Governing
Operations. The Owner hereby represents, warrants and agrees as
follows:
(a) The Owner has complied with all applicable laws
and requirements of governmental authorities relating to
the use and operation of the Project, except as disclosed
to the City in writing on the date of the execution of
this Agreement.
(b) (1) Since its acquisition of the Project on
April 11, 1996, the Owner has been in continuous
compliance and is in full compliance in all material
respects with the terms and conditions of the Original
Loan Agreement, as in effect prior to the date hereof,
the Original Regulatory Agreement and this Agreement; (2)
to he date hereof, the Original Loan Agreement and the
Original Regulatory Agreement were in full force and
effect; (3) all fees, expenses and cost reimbursements
owed to the City and Mellon Bank, N.A., as trustee,
including but not limited to amounts accrued but not yet
payable, have been paid or provided for; and (4) to the
best of our knowledge, the Project has been in continuous
compliance and is in compliance in all material respects
with the other material terms and conditions of the
Original Loan Agreement and the Original Regulatory
Agreement.
(c) The Owner has filed all federal, state and
local income tax returns, which are required at this time
to be filed by it, and has paid all taxes as shown on
said returns and all assessments received by the Owner to
the extent that such taxes have become due and payable by
it.
(d) The Owner has good and indefeasible title to
the Project, and such properties are free and clear of
all liens and encumbrances, except for (i) liens for
taxes and assessments not yet due, (ii) the lien of the
Regulatory Agreement and (iii) the liens created under
the Original Loan Agreement, the Original Regulatory
Agreement and the related deeds of trust which secure
such instruments, which the liens the Owner hereby
covenants will be released upon the payment in full of
the Prior Bonds on December 3, 1996.
(e) No substantial loss, damage, destruction or
taking of any of the real or personal property of the
Owner, constituting all or a portion of the Project, has
occurred which has not been fully restored or replaced or
which is not fully covered by insurance, less applicable
deductibles.
(f) (1) The Owner has not received any notice that
it is not in compliance with all provisions of the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended; the Resource
Conservation and Recovery Act; the Superfund Amendments
and Reauthorization Act of 1986; the Toxic Substances
Control Act and all environmental laws of the State (the
"Environmental Laws"), or with any rules, regulations and
administrative orders of any governmental agency, or with
any judgments, decrees or orders of any court of
competent jurisdiction with respect thereto; and (2) the
Owner has not received any assessment, notice of (primary
or secondary) liability or notice of financial
responsibility and no notice of any action, claim or
proceeding to determine such liability or responsibility,
or the amount thereof, or to impose civil penalties with
respect to the Project under any Environmental Law, nor
has the Owner received notification that any hazardous
substances (as defined under CERCLA) that it has disposed
of have been found in any site at which any governmental
agency is conducting an investigation or other proceeding
under any Environmental Law.
(g) The Owner has not received any notice that it
is not in full compliance with all provisions of the Fair
Labor Standards Act, as amended, and regulations
promulgated thereunder.
(h) The Owner has paid or made provision for the
payment of all applicable federal, state and local
employees' income, social security and unemployment
taxes.
(i) The Owner has not received any notice that it
is not in full compliance with ERISA and Department of
Labor regulations thereunder, with the Code and Treasury
Regulations thereunder and with the terms of such plan or
plans with respect to each pension or welfare benefit
plan to which the Owner is a party or makes any employer
contributions with respect to its employees, for the
current or prior plan years of such plans.
(j) The Project provides and will provide adequate,
safe and sanitary residential facilities within the
City's jurisdiction, for low and middle income families
and persons (as defined in the Act) intended for use as
the sole place of residence by the owners or occupants
thereof.
(k) The Owner has operated and intends to operate
or cause to be operated the Project as a "project" within
the meaning of the Act, so long as the Bonds remain
outstanding, shall in good faith and with due diligence
use its best efforts to rent units in the Project to
Eligible Tenants and shall otherwise comply with the
additional requirements hereof.
(l) The Project is located wholly within the
boundaries of the City.
(m) The Owner has been and is in compliance with
those conditions contained in the Original Loan Agreement
and the Original Regulatory Agreement, including, without
limitation, those provisions set forth therein which are
necessary to preserve the exclusion from gross income for
Federal income tax purposes of interest on the Bonds.
SECTION 2.4. Tax-Exempt Status of the Bonds. The Owner
hereby represents, warrants and agrees for the benefit of the City
and the owners of the Bonds from time to time that:
(a) It will not take any action or omit to take any
action with respect to the Bonds, the proceeds thereof or
the Project if such action or omission (i) would cause
the interest on the Bonds to lose its exclusion from
gross income for federal income tax purposes under
Section 103 of the Code, except for interest on any Bond
for any period during which it is held by a "substantial
user" of the Project or a "related person" as such terms
are used in Section 103(b)(13) of the 1954 Code. The
foregoing covenant shall remain in full force and effect
notwithstanding the payment in full or defeasance of the
Bonds until the date on which all obligations of the
Owner in fulfilling the above covenant under the Code and
the 1954 Code have been met.
(b) Throughout the Qualified Project Period at
least 20% of completed dwelling units in the Project (15%
of the dwelling units in the Project if it is or becomes
a "targeted area" project as defined in Treasury
Regulation Section 1.103-8(b)(8)(iii)) will be continuously
occupied by Lower-Income Tenants. For the purpose of
complying with this requirement, a unit occupied by an
individual or family who at the commencement of the
occupancy qualifies as a Lower-Income Tenant is treated
as occupied by such an individual or family during their
tenancy in such unit, even though they subsequently cease
to be of low or moderate income. Moreover, if a unit is
vacated by an individual or family who qualified as
Lower-Income Tenants, such unit shall be treated as
occupied by Lower-Income Tenants until reoccupied (other
than for a temporary period of not more than 31 days) at
which time the character of the unit shall be
redetermined. The dwelling units required to be rented
to, or held available for, occupancy by Lower-Income
Tenants shall be distributed among the different types of
dwelling units, by number of bedrooms, in approximately
the same proportions as each type of dwelling unit is to
the total number of dwelling units.
(c) It will take such action or actions as may be
necessary, in the opinion of Bond Counsel, including,
without limitation, consenting to the amendment of this
Agreement, the Indenture or the Regulatory Agreement to
comply fully with all applicable rules, rulings,
policies, procedures, regulations or other official
statements promulgated, proposed or made by the
Department of the Treasury or the Internal Revenue
Service pertaining to obligations issued under
Section 103(b)(4)(A) of the 1954 Code which are necessary
in the opinion of Bond Counsel to maintain the exclusion
from gross income for federal income tax purposes of
interest on the Bonds.
(d) It will execute and file of record appropriate
amendments to the Regulatory Agreement and assure the
recording of such document and take any other steps as
are necessary, in the opinion of Bond Counsel, in order
to insure that the requirements and restrictions of this
Article II will be binding upon all owners of the
Project. The Owner hereby covenants to include such
requirements and restrictions in any documents
transferring any interest in the Project to another to
the end that such transferee has notice of, and is bound
by such restrictions to the extent and for the period
provided therein and to obtain the agreement from any
transferee to so abide.
(e) That the Owner shall not discriminate on the
basis of race, color, religion, sex, age, national
origin, handicap, marital or familial status in the
lease, use, or occupancy of the Project or in connection
with the employment or application for employment of
persons for the operation and management of the Project.
(f) That none of the dwelling units in the Project
shall at any time be utilized on a transient basis, shall
ever be leased or rented for a period of less than thirty
days, and shall ever be used as a hotel, motel,
dormitory, fraternity house, sorority house, rooming
house, hospital, sanitarium, nursing home, rest home,
trailer court or park.
(g) That the Project is located on a single tract
of land or on two or more contiguous tracts of land, and
that all of the buildings, structures and facilities
which are part of the Project comprise a single
geographically and functionally integrated project for
residential rental property, as evidenced by the
ownership, management, accounting and operation of the
Project.
(h) That the Owner intends to hold the Project for
its own account, has no current plan to sell and has not
entered into any agreement to sell any of the Project,
and, until payment in full of all the Bonds, will not
sell or contract to sell the Project without having first
delivered to the Trustee an opinion of Bond Counsel to
the effect that such sale will not affect the exclusion
from gross income for federal or Colorado income tax
purposes; provided that no such opinion shall be required
in connection with a foreclosure sale or a transfer by
deed in lieu of foreclosure or comparable conversion of
the Project.
(i) The average maturity of the Bonds does not
exceed 120% of the average reasonably expected life of
the facilities of the Project financed with the original
net proceeds of the Prior Bonds.
(j) The Bonds are not and shall not be "federally
guaranteed" as defined in Section 149(b) of the Code.
SECTION 2.5. Eligible Tenants.
(a) In addition to, and not in limitation of the
provisions of the 1954 Code, the Owner declares its
understanding, intent and agreement that the Project is to be
owned, managed and operated to provide residential facilities
for low- and middle-income families or persons in accordance
with the Act for a period beginning on the date of issuance of
the Bonds and ending on the last day any Bonds remain
outstanding.
(b) The City hereby represents, covenants and agrees as
follows:
(1) the City Council of the City, in accordance
with the provisions of the Act, has determined that, for
purposes of the Project, "low-and middle-income persons and
families" within the meaning of the Act shall include any
person whose adjusted gross income as set forth on such
person's federal income tax return for the immediately
preceding taxable year ("Adjusted Gross Income"), together
with the Adjusted Gross Income of all persons who intend to
reside with such person in one dwelling unit, did not, for the
immediately preceding taxable year, exceed an amount equal to
175% of the Median Gross Income for the Area, adjusted for the
number of persons who intend to reside in such dwelling unit
in a manner consistent with making adjustments for family size
for purposes of determining "low income families" under
Section 8(f)(3) of the United States Housing Act of 1937, or
such other amount as may be established from time to time by
the City Council of the City, in accordance with the Act and
this Section as the maximum amount constituting middle income
within the meaning of the Act; and
(2) in the event that the Median Gross Income for
the Area for any year is less than the Median Gross Income for
the Area for the immediately preceding year, the City Council
may review the percentage of Median Gross Income for the Area
which shall be the maximum amount constituting middle income
within the meaning of the Act and may make such upward
adjustments of such percentage as it shall deem reasonable and
necessary and shall advise the Owner in writing of any such
adjustments; provided, however, that the City shall provide
the Owner and the Trustee with an opinion of Bond Counsel
acceptable to the City, the Trustee and the Owner
substantially to the effect that the adjusted amount will not
adversely affect the validity of the Bonds or the exclusion
from gross income for federal income tax purposes of the
interest on the Bonds.
(c) The Owner hereby represents, covenants and agrees as
follows:
(1) all of the occupied dwelling units in the
Project shall be occupied by Eligible Tenants;
(2) the dwelling units in the Project which are to
be occupied by Lower-Income Tenants, or held available during
temporary periods for such occupancy, as required pursuant to
the Regulatory Agreement and this Agreement, shall be
distributed among the different types of dwelling units, by
number of bedrooms, in approximately the same proportion as
each type of dwelling unit bears to the total number of
dwelling units in the Project;
(3) the Owner shall obtain and maintain on file
with respect to each Eligible Tenant who resides in the
Project, a statement evidencing that such tenant's income for
the taxable year immediately preceding such Eligible Tenant's
initial occupancy did not exceed such amount as the City has
determined to be the maximum amount constituting middle income
within the meaning of the Act; provided, however, the Owner
shall not be required to obtain a federal income tax return
with respect to each such Eligible Tenant;
(4) the Owner shall permit any duly authorized
representative of the City or the Trustee to inspect the books
and records of the Owner pertaining to the incomes of the
persons residing in the Project;
(5) the Owner shall prepare and submit to the City
and the Trustee, within fifteen days after each three month
period ending March 31, June 30, September 30 or December 31,
a certificate (in the form attached as Exhibit B to the
Regulatory Agreement) executed by an Authorized Representative
stating as of such March 31, June 30, September 30 or
December 31, as appropriate, the number of dwelling units in
the Project which are or have been occupied, the number of
units in the Project which were occupied by Lower-Income
Tenants (or previously occupied by, and held available for
rent to, Lower-Income Tenants), the number of units which were
occupied by Eligible Tenants, the number of vacant units and
such other information as is required by the form of
certificate attached to the Regulatory Agreement as Exhibit B,
as of the end of such three month period preceding the date of
such certificate, upon request, leases, for each dwelling unit
for which occupancy commenced by a Lower-Income Tenant during
such three-month period and copies of the Income Computation
Certificates (in the form attached as Exhibit C to the
Regulatory Agreement);
(6) the Owner shall not discriminate on the basis
of race, color, religion, sex, age, national origin, handicap,
marital or familial status in the lease, use, or occupancy of
the Project or in connection with the employment or
application for employment of persons for the operation and
management of the Project; and
(7) the Owner shall not discriminate against any
tenant because he or she is a participant in a Section 8 rent
subsidy program under the United States Housing Act of 1937,
as amended.
All determinations as to the status of Eligible Tenants shall
be made as of the time of such Eligible Tenant's application and
shall not be affected by subsequent changes in such Eligible
Tenant's income; provided, however, all determinations as to the
status of Lower-Income Tenants shall be made as of the time of such
Lower-Income Tenant's initial occupancy.
SECTION 2.6. Sale of Project. Owner shall not, without the
prior written consent of the City (which consent shall not be
unreasonably witheld) voluntarily sell, lease, exchange, assign,
convey, transfer or otherwise dispose of all or substantially all
of the Project and shall cause the release of all liens created
under the Original Loan Agreement, the Original Regulatory
Agreement and the deeds of trust related thereto on December 3,
1996.
(End of Article II)<PAGE>
ARTICLE III
THE BONDS, BOND PROCEEDS, THE INDENTURE
SECTION 3.1. Issuance of Bonds. Subject to the satisfaction
of and compliance with all of the provisions, covenants and
requirements of this Agreement, in order to provide funds for the
payment of the costs of the Refunding Project, the City has caused
the proceeds of the Bonds to be deposited with the Prior Trustee
for the purpose of paying a portion of the redemption price for the
Prior Bonds on December 3, 1996.
SECTION 3.2. Bond Proceeds; Investments. The proceeds of
the Bonds and any earnings from any investments thereof, will be
held, invested and reinvested solely for the purposes and expended
for the purpose of paying a portion of the redemption price of the
Prior Bonds on December 3, 1996.
SECTION 3.3. Indenture Approval and Requirements. The
execution of this Agreement concurrently with execution of the
Indenture by the City shall constitute conclusive evidence of
approval of the Indenture by the Owner. Additionally, the Owner
agrees that whenever the Indenture is executed and by its terms
imposes a duty or obligation upon the Owner, such duty or
obligation shall be binding upon the Owner to the same extent as if
the Owner were an express party to the Indenture, and the Owner
hereby agrees to carry out and perform all of its obligations
thereunder. No amendments to the Indenture may be made without the
prior written consent of the City, the Trustee, the Owner and of
the Guarantor.
(End of Article III)<PAGE>
ARTICLE IV
THE LOAN, PREPAYMENTS, ASSIGNMENTS
SECTION 4.1. Loan by City. (a) The City, pursuant to the
terms of this Agreement, agrees to loan to the Owner the Loan in
the amount equal to the principal amount of the Bonds. Upon
issuance of the Bonds, the full amount of the Loan hereunder shall
be deemed to be advanced to the Owner, shall be deposited under the
Indenture and shall be disbursed as provided in the Indenture.
Concurrently with the issuance of the Bonds, and against deposit
and application of the proceeds of the Loan as authorized by the
Indenture, the Owner has executed and delivered this Agreement and
the Note to evidence the Owner's obligation to pay the amounts
specified under this Agreement and the Note.
(b) Concurrently with the execution and delivery of this
Agreement, the Owner shall cause the Guaranty Agreement to be
executed and delivered to the Trustee.
(c) The Owner agrees to make payments required under this
Agreement and the Note and to be liable therefor in such amounts,
and at such times, sufficient to pay, after applying all amounts
otherwise available for making such payments, all amounts required
to pay the principal of, premium, if any, and interest on the Bonds
when and as due and payable, whether at maturity, by optional or
mandatory redemption or by acceleration, all amounts required to be
paid pursuant to the Reimbursement Agreement, if any, and any and
all documentary stamp taxes or other taxes due and payable in
connection with the Loan and the Regulatory Agreement.
(d) The Owner agrees to pay all reasonable fees and expenses
(including reasonable counsel fees at all tribunal levels) of the
City, the Registrar (as defined in the Indenture), Bond Counsel and
the Trustee provided for herein or in the Indenture and to pay all
Cost of Issuance of the Bonds.
SECTION 4.2. Loan Payments. (a) The Owner covenants and
agrees to make payments hereunder directly to the Trustee, for
deposit to the Revenue Fund on the dates and in the amounts set
forth in the Note (except amounts to be paid pursuant to Sections
4.05, 4.06, 4.07 and 4.08 hereof, as to which different dates and
times for payment may be established by such Sections). If the
Owner does not make the foregoing payments on the Loan in the
amounts and at the times referred to above (whether or not such
failure to pay has become an Event of Default under Section 7.01
hereof), the Trustee is required under Section 5.01 of the
Indenture to notify the Guarantor and make claim for such payment
under the Guaranty Agreement in the manner prescribed therein.
(b) Notwithstanding any provisions to the contrary in this
Agreement, in the event the day on which any payment or other
performance on the part of the Owner is scheduled to occur under
this Agreement is not a Business Day, then such payment or other
performance shall be required to occur at the same time on the next
preceding Business Day.
SECTION 4.3. Credits on Loan. Notwithstanding any provision
contained in this Agreement or in the Indenture to the contrary:
(a) Moneys on deposit in the Revenue Fund, Interest Account
and Principal Account shall be credited against the obligations of
the Owner to make the payments required hereunder on the Loan as
the same become due; and
(b) The principal amount of Bonds purchased by the Owner and
delivered to the Trustee for cancellation, or purchased by the
Trustee and cancelled, shall be credited against the obligation of
the Owner to pay the principal of the Loan corresponding to the
principal amount of the Bonds delivered to the Trustee and
cancelled.
SECTION 4.4. Prepayment Generally. No prepayment of the
Loan may be made except to the extent and in the manner expressly
permitted by this Agreement. Upon receipt of written notice from
the Owner that a deposit is being made by the Owner for the purpose
of prepaying the Loan and hereby effecting the redemption of the
Bonds, the Trustee shall take such steps as may be required under
the Indenture to accomplish the redemption of the Bonds under the
redemption provisions of the Indenture.
The Owner shall give written notice to the Trustee of its
election to prepay all or a portion of the Loan pursuant to
Sections 4.05 or 4.06 hereof, and the Owner shall be obligated to
make such prepayment after any notice of redemption of Bonds with
respect to such prepayment has been given by the Trustee.
SECTION 4.5. Optional Prepayment of Loan; Concurrent Bond
Redemption.
(a) The Owner shall have, and is hereby granted, the right and
option to prepay the Loan as a whole or in part on any date upon
payment to the Trustee, for deposit to the Revenue Fund prior to
the date established for redemption or prepayment of the Bonds, in
addition to amounts otherwise payable hereunder, an amount
sufficient to pay the interest on, premium, if any, and principal
of the Bonds so prepaid on such redemption date, or in the event
such redemption is not scheduled to occur on or prior to the next
Interest Payment Date, on each interest and principal payment date
for such Bonds on and prior to the redemption date. There shall be
deemed to be such payment when there is placed in trust an amount
sufficient (including the known minimum yield available without
reinvestment for such purpose from Government Securities in which
such amount wholly or in part may be initially invested) to meet
all debt service requirements on such Bonds in the manner provided
in Article XII of the Indenture.
(b) The Owner shall cause such prepayments to be on deposit
with the Trustee not later than one Business Day prior to the
redemption date established by the Trustee with respect to the
Bonds.
SECTION 4.6. Extraordinary Optional Prepayment. The Loan is
subject to extraordinary optional prepayment, and the Owner shall
have the right to prepay the same upon the occurrence of any of the
following events, with respect to the Project, for a prepayment
price equal to the principal balance of the Loan then Outstanding
so prepaid, plus interest accrued to the date fixed for redemption
of the Bonds from such prepayment:
(a) The Loan then outstanding may be prepaid in
whole if the Project is so demolished, destroyed or
damaged that, in the judgment of the Owner, it cannot be
restored or rebuilt with available funds to a profitable
condition within a reasonable period of time as
determined in accordance with Section 5.05 of this
Agreement; or
(b) The Loan then outstanding may be prepaid in
whole or in part if insurance proceeds or proceeds of any
condemnation award with respect to the Project are not
applied to restoration of the Project in accordance with
Section 5.05 hereof.
The Owner must exercise the option reserved in this Section
within six months following the date that a condition has occurred
which gives rise to a right of prepayment under this Section. The
Owner shall cause such prepayments to be on deposit with the
Trustee not later than one Business Day prior to the date of
redemption established by the Trustee with respect to the Bonds.
SECTION 4.7. Provision of Alternate Security, Extraordinary
Mandatory Prepayment of Loan.
(a) Within 60 days after the occurrence of any of the events
set forth in Section 7.01(e) or (f) hereof which have occurred and
are continuing, the Owner shall cause Alternate Security to be
provided to the Trustee, together with (i) an opinion of counsel to
the provider of such Alternate Security acceptable to the Trustee,
addressed to the Trustee and the City, stating that such Alternate
Security constitutes a legal, valid and binding obligation of such
provider and is enforceable in accordance with its terms (except to
the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by general principles of
equity which permit the exercise of judicial discretion and to the
extent that the enforceability of indemnification provisions
therein or to which such Alternate Security relates shall be
limited by applicable securities laws or public policy, (ii) an
opinion of counsel reasonably acceptable to the Trustee, addressed
to the Trustee and the City, stating that the provision of such
Alternate Security will not subject the Bonds or such Alternate
Security to the registration requirements of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, or the Indenture to qualification under the Trust
Indenture Act of 1939, as amended, (iii) an amount sufficient to
pay all costs incurred by the City and the Trustee in connection
with the provision of such Alternate Security, (iv) written
evidence from the rating agency or agencies whose rating on the
Bonds is then in effect that the credit rating assigned to the
Bonds after such provision is at least equal to the credit rating
assigned to the Bonds immediately prior to the occurrence of the
events set forth in Section 7.01(e) or (f) hereof, and (v) an
opinion of Bond Counsel, addressed to the City and the Trustee,
stating that the provision of Alternate Security is permitted under
this Agreement, the Indenture and the Act, and that such provision
will not have an adverse effect upon the exclusion from gross
income for federal income tax purposes of interest on the Bonds.
(b) If the Owner does not provide Alternate Security for the
Guaranty Agreement within the time prescribed hereby, the Owner
shall be required to prepay the Loan as a whole at a price equal to
the principal balance thereof, plus interest accrued thereon to the
date fixed for redemption of Bonds from such prepayment. In such
event, the Bonds shall be called for redemption on such date as
shall be selected by the Trustee, after consultation with the
Owner, but in no event later than 60 days following the failure to
provide Alternate Security, and the Owner shall cause sufficient
moneys to be on deposit with the Trustee at least one Business Day
prior to such date.
(c) The Loan is also subject to mandatory prepayment in whole
on the earliest practicable date selected by the Trustee within 180
days following the occurrence of a Determination of Taxability. In
such event, the Bonds shall be redeemed at a redemption price equal
to 100% of the principal amount of the Bonds to be redeemed then
outstanding at the time of the Determination of Taxability plus
accrued interest to the redemption date.
SECTION 4.8. Usury. (a) Notwithstanding any provision of
this Agreement to the contrary, it is hereby agreed by and between
the City and the Owner that in no event shall the interest
contracted for, charged or received in connection with the Loan
made hereunder (including any other costs or considerations that
constitute interest under the laws of the State which are
contracted for, charged or received pursuant to this Agreement)
exceed the maximum rate of nonusurious interest allowed under the
laws of the State as presently in effect and to the extent an
increase is allowable by such laws, but in no event shall any
amount ever be paid or payable by the Owner greater than the amount
contracted for herein; and in the event the maturity of the Loan is
accelerated pursuant to Article VII hereof, or prepaid in
accordance with the provisions hereof requiring mandatory
prepayment, then such amounts that constitute payments of interest
on the Loan, together with any costs or considerations which
constitute interest under the laws of the State, may never exceed
an amount which would result in payment of interest at a rate in
excess of the nonusurious interest allowed by the laws of the State
or the United States to the extent applicable, as presently in
effect and to the extent an increase is allowable by such laws; and
excess interest, if any, provided for in this Agreement, or
otherwise, shall be cancelled automatically as of the date of such
acceleration or, if theretofore paid, shall be credited on the
Loan.
(b) To the extent permitted by law, interest contracted for,
charged or received on the Loan shall be allocated over the entire
term of the Loan to the end that interest paid on the Loan does not
exceed the maximum amount permitted to be paid thereon by law.
SECTION 4.9. Assignments to Trustee. It is understood and
agreed that all right, title and interest of the City in and to
this Agreement (excepting the amounts payable to the City directly
for its own purposes under Sections 4.01(c), 5.02 and Section 6.01
hereof) are to be pledged and assigned by the City to the Trustee
as security for the Bonds under and pursuant to the Indenture. The
Owner consents to such pledge and assignment. The City directs the
Owner, and the Owner agrees, to pay or cause to be paid to the
Trustee at its principal corporate trust office all payments on the
Loan pursuant to this Agreement, and Trustee's Expenses (as defined
in the Indenture).
SECTION 4.10. Release of Owner from Covenants Hereunder.
Notwithstanding anything to the contrary contained herein, in the
Regulatory Agreement or the Indenture, upon the sale, transfer or
disposition by the Owner of all of the Owner's interest in the
Project in accordance with the provisions of Section 2.06 hereof
and Section 10 of the Regulatory Agreement, the Owner shall be
released from its covenants and obligations hereunder with respect
to matters arising after such date of sale, transfer or
disposition.
SECTION 4.11. Assignment of Agreement by Owner. This
Agreement may be assigned as a whole or in part, with the consent
of the City and the Guarantor, by the Owner subject, however, to
each of the following conditions:
(a) No assignment (other than pursuant to this
Section) shall relieve the Owner from primary liability
for any of its obligations hereunder, and, in the event
of any such assignment, the Owner shall remain primarily
liable for payments of the Loan payments pursuant to
Section 4.02 of this Agreement and for performance and
observance of the other agreements on its part herein
provided to be performed and observed to the same extent
as though no assignment had been made;
(b) In the event that this Agreement is assigned,
as a whole or in part, the assignee shall agree to
perform the obligations of the Owner hereunder to the
extent of the interest assigned;
(c) The Owner shall within ten days prior to the
making of any assignment furnish or cause to be furnished
to the City and to the Trustee a true and complete copy
of each such assignment and agreement to perform; and
(d) Upon the assignment of this Agreement as a
whole by the Owner pursuant to and in accordance with
Section 10 of the Regulatory Agreement, the Owner shall
be relieved from all liability for any of its obligations
hereunder with respect to matters arising after the date
of assignment of this Agreement by the Owner.
(End of Article IV)<PAGE>
ARTICLE V
ADDITIONAL COVENANTS
SECTION 5.1. Permits and Licenses. The Owner covenants and
agrees that in the operation of the Project it will use its best
efforts to comply with all federal, state and local statutes, laws,
lawful ordinances, building codes, regulations and rulings known by
it to apply to the Project.
SECTION 5.2. Payment for Extraordinary Services. (a) The
Owner hereby covenants and agrees to pay all reasonable fees of
Bond Counsel in connection with rendering opinions after the
issuance of the Bonds which are contemplated by the Indenture and
this Agreement.
(b) If, upon or after the occurrence of any default
hereunder, the City shall employ attorneys or incur other expenses
for the enforcement of performance or observance of any obligation
or agreement on the part of the Owner contained herein, the Owner
will on demand therefor reimburse the City for reasonable fees of
such attorneys and such other reasonable expenses so incurred
subject to the right of the Owner, here retained, to contest in
good faith, the necessity for and reasonableness of such fees and
expenses.
(c) The Owner hereby covenants and agrees to pay all
reasonable Trustee's Expenses (as defined in the Indenture) due and
payable pursuant to the Indenture and this Agreement, and assumes
all obligations of the City to pay all such reasonable Trustee's
Expenses.
(d) The Owner may prosecute or defend any action or
proceeding or take any other action involving any defaulting
supplier, contractor, subcontractor or surety thereof which the
Owner deems to be reasonably necessary, and in such event the City
agrees to cooperate fully with the Owner to the extent it may
lawfully do so, in any such action or proceeding. Except as
provided in Section 6.01 hereof, all moneys recovered by way of
damages, refunds, adjustments or otherwise in connection with the
foregoing shall belong to the Owner.
SECTION 5.3. Taxes and Other Governmental Charges. Owner
shall pay when due and before delinquency, all personal and real
property taxes and assessments, withholding and sales taxes, and
all other taxes and impositions of any kind or nature levied,
assessed or imposed upon the Project (collectively, "Taxes"). If
Owner, in good faith, disputes the amount or validity of any of
such Taxes, the Owner may contest the same by any lawful means at
no expense to the Trustee and the City, provided all of the
following conditions are satisfied: (i) the Owner gives to the
Trustee and the City prior written notice of such contest; (b) the
Owner deposits with the Trustee an amount sufficient to pay the
contested amount together with funds reasonably satisfactory to
Trustee to assure the payment of any penalties and interest
thereon; (iii) the Owner's interest in the Project, in the
Trustee's sole determination, is not jeopardized by such contest;
(iv) the Owner pays promptly from amounts held by the Trustee for
such purpose and any other monies provided by the Owner all amounts
ultimately determined or adjudged to be payable; and (v) said
contest is prosecuted with due diligence and dispatch.
SECTION 5.4. Insurance. Throughout the term of this
Agreement, the Owner agrees to keep the Project continuously
insured against the following risks, paying as the same become due
and payable all premiums with respect thereto:
(i) Insurance against loss or damage to the Project by
fire, lightning, vandalism and malicious mischief, with
uniform standard extended coverage endorsement limited only as
may be provided in the standard form of extended coverage
endorsement at the time in use in the State of Colorado, in an
amount at least equal to 100% of the full insurable value
thereof, but with deductible clauses in such amounts as are
customary for facilities of similar size and character within
the State of Colorado.
(ii) Comprehensive general accident and public liability
insurance (including coverage for all losses arising from the
ownership or use of any vehicle) providing coverage limits
(including deductible clauses) in an amount not less than
$1,000,000.
(iii) During any period of renovation or alteration
of the Project, so called "Builder's All-Risk Completed Value"
or "Course of Construction" insurance policy and worker's
compensation insurance covering all persons engaged in such
construction, renovation or alteration.
(iv) Fidelity insurance or bonds on those of its officers
and employees who handle funds of the Owner, both in such
amounts and to such extent as are customarily carried by
organizations similar to the Owner and operating properties
similar in size and character to the facilities of the Owner.
(v) Worker's compensation insurance, disability benefits
insurance and such other forms of insurance as the Owner is
required by law to provide with respect to the property of the
Owner.
All policies maintained by the Owner pursuant to this section
shall be taken out and maintained in generally recognized,
responsible insurance companies selected by the Owner and with
respect to the insurance policies required by subsections (i), (ii)
and (iii) of this Section shall name the Trustee as insured as its
interest may appear, provided that all insurance proceeds for
losses, except for workmen's compensation, fidelity insurance and
public liability insurance, shall be paid directly to the Trustee.
Such policies or certificates of insurance shall provide that no
cancellation, reduction in amount, or material change in coverage
thereof shall be effective until at least 30 days after receipt of
written notice thereof by the Trustee. Any such policies of
insurance may be provided by blanket policies maintained by the
Owner.
The Owner shall deliver to the Trustee (i) upon the
commencement of the term of this Agreement, the originals or
certified copies thereof of all insurance policies (or certificates
thereof) which the Owner is required to maintain pursuant to this
Section, together with evidence as to the payment of all premiums
then due thereon and (ii) at least 30 days after the renewal of any
such policies evidence as to the renewal thereof, if then required
by this Section, and the payment of all premiums then due with
respect thereto.
SECTION 5.5. Application of Insurance and Condemnation
Proceeds. All insurance proceeds received by the Owner pursuant to
Section 5.04(i) or (ii) of this Agreement and all condemnation
proceeds received by the Owner as the result of the condemnation of
all or any portion of the Project shall be applied by the Owner to
the restoration of the Project or for prepayment of the Loan as
provided in this Agreement. If any portion of the Project is
condemned or destroyed or damaged by fire or other casualty to such
extent that proceeds from such condemnation or the claim for loss
under the insurance policies required to be carried pursuant to
subsection (i) or (ii) of Section 5.04 hereof resulting from such
destruction or damage is $50,000 or less, the net proceeds of such
condemnation or insurance proceeds resulting from such claims for
losses shall be paid to the Owner and shall be used by the Owner to
either redeem Bonds or to repair, rebuild, or restore the property
damaged in the manner provided below in this Section.
Unless the Owner shall have exercised its option to prepay the
Bonds in full pursuant to Section 4.06 hereof, if all or any
portion of the Project is condemned, destroyed or damaged (in whole
or in part) by fire or other casualty to such extent that such
condemnation proceeds or the claim for loss under the insurance
policies required to be carried pursuant to subsection (i) or (ii)
of Section 5.04 hereof resulting from such destruction or damage is
greater than $50,000, the Owner shall promptly give written notice
thereof to the Trustee. All net condemnation proceeds or insurance
proceeds resulting from claims for losses of more than $50,000
(including the amount up to $50,000), shall, at the option of the
Owner, either be used to redeem or pay Bonds in the manner provided
in this Section or be held by the Trustee in a separate trust
account, whereupon (i) the Owner will promptly repair, rebuild, or
restore the property damaged or destroyed to substantially the same
utility and condition as it existed prior to such condemnation,
damage or destruction, with such changes, alterations, and
modifications (including the substitution and addition of other
property) as may be desired by the Owner and as will not impair the
Owner's ability to operate the Project in an efficient manner or
the utility of the Project, and (ii) the Trustee, upon receipt of
a consulting architect's certificate that such payment is required
for such purpose, will apply so much as may be necessary of the net
condemnation or insurance proceeds to payment of the costs of such
repair, rebuilding, or restoration as the work progresses.
Notwithstanding the foregoing, the Trustee shall not disburse
condemnation or insurance proceeds for reconstruction of the
Project until the Owner shall have delivered to the Trustee a
written certification demonstrating that during the period of
reconstruction the Owner has reserved, or will otherwise have
condemnation or insurance proceeds available, in an amount
sufficient to accrue monthly payments to the Revenue Fund
sufficient to cover the principal and interest accruing on all
outstanding Bonds during such period. Any balance of such net
proceeds remaining after payment of all the costs of such repair,
rebuilding, or restoration shall be transferred, to the Interest
Fund and applied to the payment of interest on Bonds on the next
payment date or dates thereof. In the event such net proceeds are
not sufficient to pay in full the costs of such repair, rebuilding,
or restoration, the Owner will nonetheless complete the work
thereof and will pay any costs thereof in excess of the amount of
said net proceeds. The Owner shall not by reason of the payment of
such excess costs be entitled to any reimbursement from the
Trustee, or the owners of the Bonds or any postponement, abatement,
or diminution of the payments required to be made under the
Indenture.
All net proceeds of condemnation or insurance resulting from
claims for losses specified in the first sentences of the two
preceding paragraphs may be used to redeem or pay Bonds; provided
(i) all of the Bonds are to be redeemed in accordance with the
Indenture upon exercise of the option to prepay the Bonds in full
provided for in Article IV hereof or (ii) in the event that less
than all of the Bonds are to be redeemed, the Owner shall furnish
to the Trustee a consulting architect's certificate stating (i)
that the property forming a part of the Project damaged or
destroyed is not essential to the Owner's use or occupancy of the
Project, or (ii) that Project has been restored to a condition
substantially equivalent to its utility and condition prior to the
damage or destruction, or (iii) that improvements have been
acquired which are suitable for operation as a low-income rental
housing project on the Project Site. Such other improvements shall
together with the remaining improvements after the damage and
destruction be of substantially the same utility as the Project
prior to the damage and destruction.
The Owner shall notify S&P in writing within 10 business days
of any condemnation action instituted against any portion of the
Project or any casualty loss, which notice shall describe the
nature of the condemnation action or the extent of the damage to
the Project.
Notwithstanding any other provision of this Agreement to the
contrary, the Owner shall certify to the Trustee within 120 days of
receipt of any condemnation or insurance proceeds with respect to
the Project whether it will proceed to repair, rebuild or restore
the Project or apply such proceeds to the redemption of the Bonds.
SECTION 5.6. General Tax Covenant. The Owner covenants that
it will comply with the requirements and conditions of the Tax
Certificate and the Regulatory Agreement. Without limiting the
foregoing, the Owner covenants that, notwithstanding any provision
of this Agreement or the rights of the Owner hereunder, it will not
take, or permit to be taken on its behalf, any action which would
cause interest on the Bonds not to be excluded from gross income
for federal income tax purposes and that it will take such
reasonable action as may be necessary to continue such exclusion
from gross income, including, without limitation, (a) compliance
with the requirements contained in Section 2.04 hereof; (b) the
preparation and filing of any statements required to be filed by it
in order to maintain such exclusions; and (c) the payment to the
United States of any amount required to be paid by the City or the
Owner pursuant to Section 148(f) of the Code and the regulations
thereunder, including, to the extent applicable, Section 1.148-3 of
the Treasury Regulations on Income Tax or subsequent applicable
Treasury Regulations, at the times, in the amounts and at the
places required thereby in order to maintain the exclusion from
gross income of interest on the Bonds for federal income tax
purposes; and the Owner hereby irrevocably authorizes and directs
the City and the Trustee (and any other agent designated by the
City) to make payment of such amounts from funds of the Owner, if
any, held by the City, the Trustee (under the Indenture), or any
agent of the City or the Trustee. The Owner hereby covenants to
deposit all amounts required to be deposited to the Rebate Fund
necessary to continue the exclusion from gross income of interest
on the Bonds and hereby agrees to direct the Trustee's deposit of
such moneys as provided in Section 5.07 of the Indenture.
(End of Article V)<PAGE>
ARTICLE VI
INDEMNIFICATION OF CITY AND TRUSTEE
SECTION 6.1. Indemnification of City and Trustee. The Owner
releases the City from, and covenants and agrees that the City
shall not be liable for, and covenants and agrees, to the extent
permitted by law, to indemnify and hold harmless the City and its
officers, employees and agents from and against, any and all
losses, claims, damages, liabilities or expenses, of every
conceivable kind, character and nature whatsoever arising out of,
resulting from or in any way connected with (a) the Project, or the
conditions, occupancy, use, possession, conduct or management of,
or work done in or about, or from the planning, design or
improvement of the Project or any part thereof; (b) the issuance of
any Bonds or any certifications or representations made in
connection therewith and the carrying out of any of the
transactions contemplated by the Bonds and this Agreement; (c) the
Trustee's acceptance or administration of the trusts under the
Indenture, or the exercise or performance of any of its powers or
duties under the Indenture; or (d) any untrue statement or alleged
untrue statement of any material fact or omission or alleged
omission to state a material fact necessary to make the statements
made, in light of the circumstances under which they were made, not
misleading, in any official statement or other offering circular
utilized by the City or any underwriter or placement agent in
connection with the sale of any Bonds or in connection with any
future remarketing thereof; provided that such indemnity shall not
be required for damages that result from gross negligence or
willful misconduct on the part of the City. Further, the Owner
agrees to indemnify and hold harmless the Trustee, its officers,
employees and agents, against any loss, liability or expenses
incurred without negligence or bad faith on its part, arising out
of or in connection with any act or omission of the Owner. The
indemnity required by this Section 6.01 shall be only to the extent
that any loss sustained by the City or the Trustee exceeds the net
proceeds the City or the Trustee receives from any insurance
carried with respect to the loss sustained. In the event that any
action or proceeding is brought against the City, the Trustee or
any of their officers, employees, attorneys or agents with respect
to which indemnity may be sought hereunder, the Owner, upon written
notice from the indemnified party, shall assume the investigation
and defense thereof, including the employment of counsel
(reasonably acceptable to the indemnified party) and the payment of
all expenses. Each indemnified party shall have the right to
employ separate counsel in any such action or proceedings and to
participate in the investigation and defense thereof, and the Owner
shall pay the reasonable fees and expenses of such separate
counsel, provided, however, that unless such separate counsel is
employed with the approval and consent of the Owner, the Owner
shall not be required to pay the fees and expenses of such separate
counsel. The Owner shall not unreasonably withhold such approval
and consent. The provisions of this Section 6.01 shall survive the
retirement of the Bonds.
(End of Article VI)<PAGE>
ARTICLE VII
BREACH OF COVENANTS, REMEDIES
SECTION 7.1. Event of Default. An "Event of Default" shall
be deemed to have occurred under this Agreement if:
(a) Any amount required to be paid by Section
4.02(a) hereof (taking into account any credits described
in Section 4.03 hereof) is not paid to the Trustee
(either by the Owner or the Guarantor) when due and such
amount remains unpaid at 5:00 p.m., New York time, on
such Interest Payment Date or Purchase Date; or
(b) Any amount required to be paid by Sections
4.05, 4.06 or 4.07 hereof (taking into account any
credits described in Section 4.03 hereof) is not paid to
the Trustee (either by the Owner or the Guarantor) on the
date and at the time required for payment thereof in the
applicable Section hereof and such amounts remain unpaid
at 5:00 p.m., New York time, on the date required to be
applied to make payments of principal of, premium, if
any, and interest on the Bonds under the Indenture; or
(c) Failure by the Owner to observe any other of
its covenants hereunder or under the Regulatory Agreement
for a period of 30 days after written notice has been
given to the Owner by the City or the Trustee; provided,
that if such failure is of such nature that it can be
corrected within a reasonable time (as agreed to by the
Trustee), but not within such period, the same shall not
constitute an Event of Default so long as, in the
judgment of the Trustee, the Owner institutes prompt
corrective action and is diligently pursuing same; or
(d) The failure of the Guarantor to make payments
under the Guaranty Agreement within the time provided for
therein; or
(e) The Guarantor shall file a voluntary petition
in bankruptcy, or shall be adjudicated bankrupt or
insolvent, or shall file any petition or agreement
seeking any reorganization, composition, readjustment,
liquidation or similar relief for itself under any
present or future statutes, laws or regulations or shall
seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of the Guarantor or of
all or any substantial part of its properties, or shall
make any general assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts
generally as they become due; or
(f) A petition shall be filed against the Guarantor
seeking any reorganization, composition, readjustment,
liquidation or similar relief under any present or future
statute, law or regulation and shall remain undismissed
or unstayed for an aggregate of ninety days, or if any
trustee, receiver or liquidator of the Guarantor or of
all or any substantial part of its properties shall be
appointed without the consent or acquiescence of the
Guarantor and such appointment shall remain undismissed
or unstayed for an aggregate of ninety days (whether or
not consecutive); or
(g) Any "Event of Default" occurs under the
Indenture and is not cured prior to a declaration of
acceleration under Section 8.01 thereof; or
(h) Any Event of Default (as defined therein)
occurs under the Reimbursement Agreement, and the
Guarantor in its sole discretion notifies the Trustee
thereof and instructs the Trustee to declare an Event of
Default hereunder.
The occurrences set forth in Section 7.01(e) and (f) above
shall not constitute Events of Default hereunder if the Owner
provides Alternate Security for the Guaranty Agreement within 60
days subsequent to the happening of such occurrence pursuant to
Section 4.07 hereof. In the event the Owner fails to provide such
Alternate Security, no declaration of acceleration shall be made by
the Trustee, and the Loan shall be prepaid mandatorily as provided
in Section 4.07 hereof.
SECTION 7.2. Remedies for Failure to Perform. (a) Upon the
occurrence of an Event of Default as provided in Section 7.01(a),
(b), (c), (d) and (g) above, all amounts due under this Agreement
shall be immediately due and payable and the date of payment
thereof shall be as specified in a notice of acceleration which
shall be given promptly by the Trustee to the Owner. A copy of
such notice of acceleration shall be given to the Guarantor
simultaneously with such notice to the Owner, and a demand for
payment shall be made by the Trustee under the Guaranty Agreement
in an amount sufficient to pay principal of and interest on the
Bonds to the date of payment thereof.
(b) Upon the occurrence of an Event of Default as provided in
Section 7.01(h) above, all amounts due under this Agreement shall
be immediately due and payable if the Trustee receives written
direction from the Guarantor to accelerate such amounts, and the
date of payment thereof shall be as specified in a notice of
acceleration which shall be given promptly by the Trustee to the
Owner. A copy of such notice of acceleration shall be given to the
Guarantor simultaneously with such notice to the Owner, and a
demand for payment shall be made by the Trustee under the Guaranty
Agreement in an amount sufficient to pay principal of and interest
on the Bonds to the date of payment thereof.
(c) Upon the occurrence of an Event of Default specified in
Section 7.01(c), (g) or (h) hereof, if the action or non-action
which resulted in such Event of Default is cured by or on behalf of
the Owner prior to the time the notice of acceleration of the Bonds
is given by the Trustee, and if, as to Section 7.01(c), the Trustee
receives an opinion of Bond Counsel to the effect that, following
such cure and assuming no recurrence of such default, no material
risk exists that interest on the Bonds will be subject to federal
income taxation, then the acceleration of all amounts due under
this Agreement shall be rescinded, the demand on the Guarantor
shall be deemed to be null and void and the parties shall be
restored to the same position as though no such Event of Default
had occurred; provided, that any acceleration caused by the Event
of Default specified in Section 7.01(h) above shall not be
rescinded except upon receipt by the Trustee of written
instructions to such effect from the Guarantor.
(d) Upon the occurrence of an Event of Default specified in
paragraphs (a), (b) and (d) above, if there is paid to or deposited
with the Trustee, prior to the time the notice of acceleration of
the Bonds is given by the Trustee under the Indenture, a sum
sufficient to pay all overdue amounts which resulted in such Event
of Default and Trustee's Expenses, if any, then the acceleration of
all amounts due under this Agreement shall be rescinded, the demand
on the Guarantor shall be deemed to be null and void and the
parties shall be restored to the same position as though no such
Event of Default had occurred.
SECTION 7.3. Discontinuance of Proceedings. In case any
proceeding taken by the City or its assigns on account of any
failure to perform under this Agreement shall have been
discontinued or determined adversely to the City or its assigns,
then and in every case the City or its assigns and the Owner shall
be restored to their former positions and rights hereunder,
respectively, and all rights, remedies and powers of the City or
its assigns shall continue as though no such proceeding had been
taken.
SECTION 7.4. Remedies Cumulative. No remedy conferred upon
or reserved to the City or the Trustee by this Agreement is
intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or the
Indenture or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any
failure to perform under this Article shall impair any such right
or power or shall be construed to be a waiver thereof. In order to
entitle the City or the Trustee to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice
other than as otherwise specified in this Agreement.
SECTION 7.5. Waiver of Event of Default. In case of the
occurrence of an Event of Default and either prior to giving notice
of acceleration of the maturity of the Bonds by the Trustee or
annulment of a declaration of acceleration pursuant to the
Indenture, the Owner shall have paid or caused to be paid all
amounts then due and payable under this Agreement and the Note and
shall perform all other obligations in respect of which it is in
default under this Agreement, and shall have paid the reasonable
charges and expenses of the City and the Trustee, and if as to the
Event of Default specified in paragraph (c) of Section 7.01 hereof,
the Trustee receives the opinion of Bond Counsel to the effect
that, following such cure, and assuming no recurrence of such
default, interest on the Bonds will not be subject to federal
income taxation as the result of such default, then such event of
default shall be waived and annulled, and the remedies invoked
under this Agreement shall be rescinded, but no such waiver or
annulment shall extend to or affect any subsequent event of default
or impair any right or remedy consequent thereon.
(End of Article VII)<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Amounts Remaining in Funds and Accounts. Any
amounts remaining in any fund or account established under the
Indenture after payment of the Bonds in full including interest and
premium, if any, thereon, or provision for payment thereof having
been made in accordance with the provisions of the Indenture, and
payment of all other reasonable and necessary obligations owing to
the City, the Registrar and the Trustee under this Agreement or the
Indenture, shall be paid by the Trustee in accordance with Section
12.01 of the Indenture.
SECTION 8.2. Limited Obligation of City. The City shall not
be obligated to pay the principal of, or premium, if any, or
interest on the Bonds, except from revenues arising from the pledge
and assignment of the Loan and the other funds held or set aside in
trust under the Indenture. The Owner hereby acknowledges that the
City's sole source of moneys to repay the Bonds and to refund the
Prior Bonds will be provided by the proceeds of the Bonds and
payments made by the Owner pursuant to this Agreement, together
with other revenues, including any drawings under the Guaranty
Agreement or investment income on certain funds and accounts held
by the Trustee under the Indenture, and hereby confirms that
amounts available to pay all principal of, and premium, if any, and
interest on the Bonds as the same shall become due (whether by
maturity, redemption, acceleration or otherwise), have been
calculated to be at all times sufficient for such purpose.
Any obligation or liability of the City created by or arising
out of this Agreement (including without limitation any liability
created by or arising out of the representations, warranties or
covenants set forth herein or otherwise) shall not impose a debt or
pecuniary liability upon the City or a charge upon its general
credit or taxing powers, but shall be payable solely out of the
above-described revenues. Neither the issuance of the Bonds nor
the delivery of this Agreement shall, directly or indirectly or
contingently, obligate the City to levy any form of taxation
therefor or to make any appropriation for their payment. Nothing
in the Bonds or in the Indenture or this Agreement or the
proceedings of the City authorizing the Bonds or in the Act or in
any other related document shall be construed to authorize the City
to create a debt of the City within the meaning of any
constitutional or statutory provision of the State. No breach of
any pledge, obligation or agreement of the City hereunder may
impose any pecuniary liability upon the City or any charge upon its
general credit or against its taxing power.
SECTION 8.3. Payments by Guarantor. The Guarantor shall, to
the extent of any payments made by it pursuant to the Guaranty
Agreement, be subrogated to all rights of the City or its assigns
(including, without limitation, the Trustee) as to all obligations
of the Owner with respect to which such payments shall be made by
the Guarantor, but, so long as any of the Bonds remain Outstanding
under the terms of the Indenture, such right of subrogation on the
part of the Guarantor shall be in all respects subordinate to all
rights and claims of the Registered Owners, the Trustee and the
City for all payments which shall be or become due and payable
under the Indenture or otherwise arising under this Agreement, the
Indenture, the Note, the Regulatory Agreement or the Bonds. The
Trustee will, upon request, execute and deliver any instrument
reasonably requested by the Guarantor to evidence such subrogation
and the Trustee shall assign its rights in any obligations of the
Owner with respect to which payment of the entire principal balance
and accrued interest thereon shall be made by the Guarantor,
provided such amounts are sufficient to cause defeasance of the
Indenture in accordance with Section 12.01 thereof.
SECTION 8.4. Amendments, Changes or Modifications to Loan
Agreement. This Agreement may be amended, changed or modified only
subject to the requirements for and limitations on such amendments,
changes or modifications set forth in the Indenture.
SECTION 8.5. Rights of the Guarantor; References to the
Guarantor. Notwithstanding anything contained herein to the
contrary, all provisions hereof regarding consents, approvals,
directions, waivers, appointments, requests or other actions by the
Guarantor shall be deemed not to require or permit such consents,
approvals, directions, waivers, appointments, requests or other
actions and shall be read as if the Guarantor were not mentioned
herein (a) during any period during which there is a payment
default under the Guaranty Agreement, or (b) after the Guaranty
Agreement shall at any time for any reason cease to be valid and
binding on the Guarantor, or shall be declared to be null and void
by final judgment of a court of competent jurisdiction; provided,
however, that the payment of amounts due to the Guarantor pursuant
to the terms hereof shall continue in full force and effect. The
foregoing shall not affect any other rights of the Guarantor.
SECTION 8.6. Payment. At such time as the principal of,
premium, if any, and interest on all Bonds outstanding under the
Indenture shall have been paid, or shall be deemed to be paid in
accordance with the Indenture, and all other sums payable by the
Owner under this Agreement and the Indenture shall have been paid,
the Loan shall be deemed to be fully paid and the Owner upon
request is entitled to receive acknowledgment of such payment in
full from the Trustee.
SECTION 8.7. Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Agreement, and, in making
proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
SECTION 8.8. Severability. If any clause, provision or
section of this Agreement shall be held illegal or invalid by any
court, the invalidity of such provisions or sections shall not
affect any other provisions or sections hereof, and this Agreement
shall be construed and enforced to the end that the transactions
contemplated hereby be effected and the obligations contemplated
hereby be enforced, as if such illegal or invalid clause, provision
or section had not been contained herein.
SECTION 8.9. Term of Agreement. This Agreement shall be in
full force and effect from the date hereof and shall continue in
effect (i) so long as any Bonds are outstanding, or (ii) until 365
days have elapsed after the Owner has made any payments under this
Agreement during which no petition in bankruptcy is filed by or
against the Owner under Title 11 of the United States Code during
such 365 day period, or (iii) so long as Trustee holds any moneys
under the Indenture, whichever is later. All representations and
certifications by the Owner set forth in Article II hereof and all
provisions relating to the payment of any amounts due hereunder
(including any amounts due pursuant to Article VI hereof) shall
survive the termination of this Agreement.
SECTION 8.10. Notice of Changes in Fact. Promptly after the
Owner becomes aware of the same, the Owner will notify the Trustee
of (i) any change in any material fact or circumstance represented
or warranted by the Owner in this Agreement or in connection with
the issuance of the Bonds, and (ii) any default or event which,
with notice or lapse of time or both, could become a default under
this Agreement, or the Indenture, specifying in each case the
nature thereof and what action the Owner has taken, is taking,
and/or proposes to take with respect thereto.
SECTION 8.11. Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
delivered personally or sent registered or certified mail, postage
prepaid, to Owner, Wellsford Marks West Corp., c/o Wellsford
Residential Property Trust, 610 Fifth Avenue, New York, New York
10020, Attention: President, with a copy to Wellsford Marks West
Corp., 370 17th Street, Suite 3100, Denver, Colorado, Attention:
President; to the Guarantor, Wellsford Residential Property Trust,
610 Fifth Avenue, New York, New York 10020, Attention: Chief
Financial Officer; to the City, City of Englewood, Colorado, 3400
South Elati, Englewood, Colorado 80110, Attention: City Attorney;
to the Trustee, American National Bank and Trust Company of
Chicago, 33 North LaSalle Street, 13th Floor, Chicago, Illinois
60690, Attention: Corporate Trust Department; or at such other
address as shall be furnished in writing by any such party to the
others, and shall be deemed to have been given as of the date so
delivered or deposited in the United States mail.
SECTION 8.12. Provision of Alternate Security. The Owner
hereby is authorized to provide Alternate Security for the Guaranty
Agreement or for Alternate Security previously provided at any time
after providing the City and the Trustee with the following: (i) an
opinion of counsel to the provider of such Alternate Security
acceptable to the Trustee, addressed to the Trustee and the City,
stating that such Alternate Security constitutes a legal, valid and
binding obligation of such provider and is enforceable in
accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors'
rights generally and by general principles of equity which permit
the exercise of judicial discretion and to the extent that the
enforceability of indemnification provisions therein or to which
such Alternate Security relates shall be limited by applicable
securities laws or public policy), (ii) an opinion of counsel
reasonably acceptable to the Trustee, addressed to the Trustee and
the City, stating that the provision of such Alternate Security
will not subject the Bonds or such Alternate Security to the
registration requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or the
Indenture to qualification under the Trust Indenture Act of 1939,
as amended, (iii) an amount sufficient to pay all costs incurred by
the City and the Trustee in connection with the provision of such
Alternate Security (including without limitations, reasonable
counsels' fees and expenses), (iv) written confirmation from the
rating agency or agencies whose rating on the Bonds is then in
effect, that the rating on the Bonds on the date immediately
succeeding the substitution will be at least equal to the rating in
effect immediately prior to such substitution, but in no event
shall such rating be less than investment grade (e.g., rated "AAA,"
"AA," "A" or "BBB" by S&P, or the equivalent rating category
assigned by another nationally recognized rating agency, and (v) an
opinion of Bond Counsel, addressed to the City and the Trustee,
stating that the provision of the Alternate Security is permitted
under this Agreement, the Indenture and the Act, and that such
provision will not have an adverse effect upon the tax exempt
status of the interest on the Bonds.
SECTION 8.13. Guarantor Debt; Mandatory Provision of
Alternate Security. In the event the original Guarantor (Wellsford
Residential Property Trust) shall fail to comply with the debt
covenants set forth in Section 1.10 of the Guaranty, the Guarantor
shall, or the Owner shall if the Guarantor does not, promptly
report such event to the Trustee in writing. In such event the
Owner may cause Alternate Security to be delivered to the Trustee.
Such Alternate Security shall be delivered not later than 60 days
after the receipt of such written notice together with (i) an
opinion of counsel to the provider of such Alternate Security
acceptable to the Trustee, addressed to the Trustee and the City,
stating that such Alternate Security constitutes a legal, valid and
binding obligation of such provider and is enforceable in
accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors'
rights generally and by general principles of equity which permit
the exercise of judicial discretion and to the extent that the
enforceability of indemnification provisions therein or to which
such Alternate Security relates shall be limited by applicable
securities laws or public policy, (ii) an opinion of counsel
reasonably acceptable to the Trustee, addressed to the Trustee and
the City, stating that the provision of such Alternate Security
will not subject the Bonds or such Alternate Security to the
registration requirements of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or the
Indenture to qualification under the Trust Indenture Act of 1939,
as amended, (iii) an amount sufficient to pay all costs incurred by
the City and the Trustee in connection with the provision of such
Alternate Security, (iv) written evidence from the rating agency or
agencies whose rating on the Bonds is then in effect that the
credit rating assigned to the Bonds after such provision is at
least equal to the credit rating assigned to the Bonds immediately
prior to the occurrence of the Guarantor's failure to meet the debt
tests set forth in Section __ of the Guaranty, but in no event
shall such rating be less than investment grade (e.g., rated "AAA,"
"AA," "A" or "BBB" by S&P), or the equivalent rating category
assigned by another nationally recognized rating agency, and (v) an
opinion of Bond Counsel, addressed to the City and the Trustee,
stating that the provision of Alternate Security is permitted under
this Agreement, the Indenture and the Act, and that such provision
will not have an adverse effect upon the exclusion from gross
income for federal income tax purposes of interest on the Bonds.
In the event such Alternate Security is not delivered to the
Trustee within such 60 day period or the Guarantor shall certify it
then complies with the tests set forth in Section 1.10 of the
Guaranty, the Trustee shall treat such event as a covenant default
under this Agreement and shall take such action as is permitted
under Article VII hereof.
SECTION 8.14. Applicable Law. The substantive laws of the
State shall govern this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of October 1, 1996.
CITY OF ENGLEWOOD, COLORADO
By:/s/ Thomas J. Burns
---------------------
Mayor
Thomas J. Burns
(SEAL)
Attest:
/s/ Loucrishia A. Ellis
City Clerk
WELLSFORD MARKS WEST CORP.
By:/s/ David M. Strong
Vice President
<PAGE>
ACKNOWLEDGMENTS
STATE OF COLORADO )
) SS.
CITY OF ENGLEWOOD )
The foregoing instrument was acknowledged before me this 23rd
day of October, 1996, by Thomas J. Burns, as Mayor of the CITY OF
ENGLEWOOD, COLORADO, a municipal corporation, and by Loucrishia A.
Ellis, as City Clerk of the CITY OF ENGLEWOOD, COLORADO, a
municipal corporation.
WITNESS my hand and official seal.
/s/ Brenda J. Castle
-------------------------
Notary Public for the State
of Colorado
My commission expires 1-3-00.
STATE OF COLORADO )
) SS.
CITY OF ENGLEWOOD )
The foregoing instrument was acknowledged before me this 25th
day of October, 1996, by David M. Strong, as Vice President of
WELLSFORD MARKS WEST CORP., a Colorado corporation, and by
_________________, as Secretary of WELLSFORD MARKS WEST CORP., a
Colorado corporation.
WITNESS my hand and official seal.
(SEAL)
/s/ Roberta Kay Peterson
-----------------------
Notary Public for the State
of Colorado
My commission expires 6-21-98.
<PAGE>
EXHIBIT A
FORM OF NOTE
October 25, 1996
FOR VALUE RECEIVED, Wellsford Marks West Corp., a Colorado
corporation (the "Owner"), does hereby promise to pay to the order
of the City of Englewood, Colorado (the "City") at the principal
corporate trust office of American National Bank and Trust Company
of Chicago, Chicago, Illinois, or any successor trustee (the
"Trustee") acting as such under that certain Indenture of Trust
dated as of October 1, 1996, by and between the City and the
Trustee (the "Indenture"), in lawful money of the United States of
America, the principal sum of Eleven Million Two Hundred Thousand
and No/100 Dollars ($11,200,000) on November 1, 2026, and to pay
interest on the unpaid principal amount hereof, in like money, from
October 1, 1996 at such office at the rate, and to the funds and
accounts specified in Sections 4.01 and 4.02 of that certain Loan
Agreement dated as of October 1, 1996 between the City and the
Owner (hereinafter referred to as the "Agreement"). The Owner
agrees to pay interest on the outstanding principal amount hereof
in semi-annual installments on the business day preceding each June
1 and December 1 (each an "Interest Payment Date"), commencing on
June 1, 1997, until the maturity hereof; provided, however, that
the installment due and payable on June 1, 1997 shall be reduced by
the interest paid by the original purchasers of the Bonds on the
date hereof; and provided further, however, that each installment
due and payable shall be reduced by the amount of investment
earnings in the Revenue Fund (as defined in the Indenture) the
available for payment of interest on the Bonds. In addition, the
Owner shall pay semiannually on each June 1 and December 1,
commencing on June 1, 1997, an amount equal to 1/2 of the annual
fee payable to the Trustee, or to the fees of the City, if any, in
full satisfaction of its obligations to the Trustee and to the City
for such fees. In addition the Owner shall pay all additional
amounts set forth in Section 4.01(c) of the Agreement as they shall
arise upon written notice to the Owner.
ANYTHING HEREIN or in the Agreement to the contrary
notwithstanding, it is hereby agreed by and between the City and
the Owner that in no event shall the interest contracted for,
charged or received in connection with the loan made hereunder
(including any other costs or considerations that constitute
interest under the laws of the State of Colorado (the "State")
which are contracted for, charged or received pursuant hereto and
pursuant to the Agreement) exceed the maximum rate of nonusurious
interest allowed under the laws of the State as presently in effect
and to the extent an increase is allowable by such laws, but in no
event shall any amount ever be paid or payable by the Owner greater
than the amount contracted for herein; and in the event the
maturity of the loan is accelerated pursuant to Article VII of the
Agreement, or prepaid in accordance with the provisions thereof
requiring mandatory prepayment, then such amounts that constitute
payments of interest on the loan, together with any costs or
considerations which constitute interest under the laws of the
State, may never exceed an amount which would result in payment of
interest at a rate in excess of the nonusurious interest allowed by
the laws of the State or the United States to the extent
applicable, as presently in effect and to the extent an increase is
allowable by such laws; and excess interest, if any, provided for
herein and in the Agreement, or otherwise, shall be cancelled
automatically as of the date of such acceleration or, if
theretofore paid, shall be credited on the loan.
ALL SUMS paid hereon shall be applied, as applicable, first to
the satisfaction of unpaid accrued interest and the balance to the
unpaid principal and premium, if any.
THIS NOTE is subject to all of the terms, conditions, and
provisions of the Agreement, including those respecting prepayment
and the acceleration of maturity and is further subject to all of
the terms, conditions, and provisions of the Indenture, all as
provided in the Agreement. The outstanding principal hereof is
subject to acceleration at the same time or times and under the
same terms and conditions, and with the same notice, if any, as
provided under the Indenture for the acceleration of payment of the
bonds designated City of Englewood, Colorado, Multifamily Housing
Revenue Refunding Bonds, (Marks Apartments Project) Series 1996"
(the "Bonds"). Notwithstanding anything to the contrary contained
herein or in the Agreement, the payments in respect of the Loan
shall be sufficient to pay, when due (whether at stated maturity,
upon redemption prior to maturity, upon acceleration of stated
maturity, or otherwise), the principal of, premium, if any, and
interest on the Bonds at any time outstanding, and, to the extent
permitted by law, interest on any overdue payments.
THE OWNER hereby acknowledges that, pursuant to the Indenture,
the City is collaterally assigning to the Trustee all of the City's
right, title, and interest in and to this Note.
THIS NOTE is a contract made under and shall be construed in
accordance with and governed by the laws of the State of Colorado
entered into as of October 25, 1996.
WELLSFORD MARKS WEST CORP.
By:_____________________
President
By:_____________________
President<PAGE>
EXHIBIT B
The multifamily housing project located on the real property
described below, consisting of 12 apartment buildings which contain
in aggregate 280 units. The street address of the project is 1701
East Hampden Avenue, Englewood, Colorado.
Lot 1, Block 1, The Marks Subdivision, Filing
No. 2, County of Arapahoe, State of Colorado
However, Together with Beneficial Easement
rights for ingress and egress as contained in
Agreement recorded August 20, 1973, in
Book 2160 at Page 242.
Exhibit 10.46
GUARANTY AGREEMENT
------------------
THIS GUARANTY AGREEMENT, made and entered into as of October
__, 1996 (this "Guaranty"), by WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland
real estate investment trust (the "Guarantor"), for the benefit of AMERICAN
NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as trustee (the "Trustee") under
that certain Indenture of Trust, dated as of October 1, 1996 (the "Indenture")
between the Trustee and the City of Englewood, Colorado (the "City").
W I T N E S S E T H:
WHEREAS, the City previously issued and sold its Variable Rate
Demand Multifamily Rental Housing Revenue Bonds (The Marks Apartments) 1985
Series A, in the aggregate principal amount of $12,200,000 (the "Prior Bonds"),
in order to provide financing to HG Venture, a Texas limited partnership, which
subsequently assigned its interest in the Project (as defined herein) to
Wellsford Marks West Corp., a Colorado corporation (the "Developer"), for the
acquisition, construction and installation of a multifamily rental housing
project (the "Project") located within the City;
WHEREAS, the Developer has requested that the City refund the
Prior Bonds;
WHEREAS, the City intends to issue its City of Englewood,
Colorado, Multifamily Housing Revenue Refunding Bonds (Marks Apartments
Project) Series 1996 in the aggregate principal amount of $11,200,000 (the
"Bonds") under and pursuant to the Indenture, in order to refund the Prior
Bonds and to refinance the existing loan to the Developer for the Project;
WHEREAS, the Developer and the City are entering into a Loan
Agreement (the "Loan Agreement") of even date herewith pursuant to which the
City will loan to the Developer the proceeds of the Bonds (the "Loan");
WHEREAS, the Developer has requested that the Guarantor
guarantee the payment obligations of the Developer under the Loan Agreement;
WHEREAS, the Guarantor is willing to enter into this Guaranty
in order to induce the City to issue the Bonds and to enhance the marketability
of the Bonds and thereby achieve interest cost and other savings to the
Developer and as an inducement to the purchase of the Bonds by all who shall at
anytime become owners of the Bonds; and
WHEREAS, the rights, title and interest of the City in the
Loan, the Loan Agreement (other than as specifically therein provided) and this
Guaranty have been assigned by the City to the Trustee pursuant to the
Indenture;
WHEREAS, the Guarantor, the sole shareholder of the Developer,
will derive substantial benefit from the making of the Loan to the Developer.
NOW, THEREFORE, in consideration of the premises and in order
to enhance the marketability of the Bonds and thereby achieve interest cost and
other savings to the Developer and as an inducement to the purchase of the
Bonds by all who shall at any time become owners of the Bonds and for other
good and valuable consideration, the Guarantor does hereby, subject to the
terms hereof, covenant and agree with the City as follows:
ARTICLE I
COVENANT AND AGREEMENTS
Section 1.1 The Guarantor hereby unconditionally guarantees to
the Trustee, its successors and assigns, for the benefit of the registered
owners of the Bonds from time to time and the City, to satisfy the Developer's
payment obligations under the Loan Agreement (whether regularly scheduled, by
acceleration, prepayment or otherwise, including Developer's payment
obligations under 6.01 of the Loan Agreement) prior to the Termination Time (as
hereinafter defined).
Section 1.2 The obligations of the Guarantor under this
Guaranty shall be absolute, irrevocable and unconditional and, subject to
Section 1.7 below, shall remain in full force and effect until the earliest of
(such earliest time being the "Termination Time"):
(a) the date by which all of the payment obligations of
Developer due under the Loan Agreement (whether regularly scheduled, upon
acceleration, prepayment or otherwise) have been satisfied, or
(b) the time at which any Alternate Security (as defined in the
Loan Agreement) is substituted for this Guaranty (in accordance with the
terms and provision of the Loan Agreement and the Indenture).
Section 1.3 In the event the Developer fails to make any payment due
under the Loan Agreement, the Trustee or its successors or assigns shall
provide telephonic or telegraphic notice to the Guarantor of the Developer's
failure to make such payment by the close of business on the date such payment
was due; provided, however, that in no event shall the failure to provide such
notice to the Guarantor at such time constitute a waiver by the Trustee of its
right to demand such payment under this Guaranty so long as such demand is made
prior to the Termination Date. The Trustee shall not be required to proceed
against or to exhaust any other remedies which it may have against the
Developer, and, without resorting to any other security held by it, the Trustee
may make demand under this Guaranty and be entitled to payment hereunder. If
such notice is telephonic, the Trustee or its successors or assigns shall also
give written notice to the Guarantor at Wellsford Residential Property Trust,
610 Fifth Avenue, 7th Floor, New York, New York, 10020, Attention: President,
with a copy to Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of
the Americas, New York, New York 10104, Attention: Steven G. Scheinfeld (or
such other addresses of which the Guarantor has previously notified the Trustee
in writing), not later than one business day thereafter. The Guarantor shall
make any payment required hereunder as directed by the Trustee, in immediately
available funds (i) in the case of the payment of principal of, premium, if
any, and interest on the Bonds, not later than 2:00 p.m., New York time, on the
date by which such moneys are required to be applied to make payment of the
principal of, premium, if any, and interest on the Bonds under the Indenture
and (ii) in the case of any other payment obligation, on the third business day
after the Guarantor receives notice from the Trustee.
Section 1.4 This Guaranty is entered into by the Guarantor for the
benefit of the Trustee and the City and their successors and assigns, all of
whom shall be entitled to enforce performance and observance of this Guaranty
to the same extent as if they were parties signatory hereto.
Section 1.5 Until the Termination Time, the Guarantor covenants that
it will maintain its legal existence and will not voluntarily dissolve or
otherwise voluntarily dispose of all or substantially all of its assets;
except, however, that the Guarantor may consolidate with or merge into a
corporation or other entity or sell or transfer all or substantially all of its
assets and thereafter dissolve, provided that the following conditions are met:
(a) the successor corporation or other entity ("Successor
Entity") formed by or resulting from such consolidation, transfer or
merger shall be a corporation or other entity organized under the
laws of any state of the United States;
(b) the Successor Entity is financially capable of fulfilling,
and shall expressly assume in a written agreement (the "Assumption
Agreement"), the full and faithful performance of the Guarantor's
duties and obligations hereunder to the same extent as if such
Successor Entity had been the original Guarantor under this Guaranty;
(c) immediately after such consolidation, transfer or merger,
the Guarantor, or such Successor Entity, shall not be in default in
the performance or observance of any duties, obligations or covenants
of the Guarantor under this Guaranty or under any other agreement,
court order or regulation which may be applicable to it as confirmed
by a certificate of authorized officers of the Successor Entity in
form and substance reasonably satisfactory to the City and the
Trustee;
(d) the City and the Trustee shall have received an opinion of
counsel of recognized standing on the subject of municipal bonds
reasonably satisfactory in form and substance to the City and the
Trustee that the exclusion from gross income of interest on the Bonds
for Federal income tax purposes will not be adversely affected by
such merger, transfer or consolidation;
(e) the City and the Trustee shall have received an opinion of
counsel for such Successor Entity in form reasonably satisfactory to
the City and the Trustee as to enforceability of the Guaranty against
such Successor Entity; and
(f) there shall not directly result from such consolidation,
transfer or merger, a reduction in the rating of the Bonds to a
rating by "S&P" (as defined in the Indenture) of below that of "BBB".
Section 1.6 In the event that the Guarantor is required to fund this
Guaranty, the Guarantor shall be subrogated to all rights of the Trustee in, to
and under the Loan Agreement, and the Trustee, by its acceptance of this
Guaranty, agree to such subrogation.
Section 1.7 In the event that any payment made by or on behalf of
the Developer under the Loan Agreement prior to the Termination Time (whether
regularly scheduled, by acceleration, prepayment or otherwise) shall be deemed
to be a preference under Title 11 of the United States Code, as amended as from
time to time, or any other similar state insolvency statute, and as a result
thereof any payment of principal, premium, if any, or interest on the Bonds is
required by an unappealable order of a court of competent jurisdiction to be
refunded by an owner of a Bond to the trustee in bankruptcy or other
representative of the estate of the owner, the Guarantor shall pay on behalf of
such owner the amount so required to be refunded; provided, however, that the
foregoing shall apply only with respect to payments made by or on behalf of the
Developer to satisfy the Developer's payment obligations under the Loan
Agreement (whether regularly scheduled, by acceleration, prepayment or
otherwise) which become due prior to the Termination Time.
Section 1.8 Until the Termination Time, the Guarantor is and will
remain qualified to do business in the State of Colorado until the Termination
Date.
Section 1.9 The Guarantor has reviewed and acknowledges the terms of
the Loan Agreement.
Section 1.10 Until the Termination Time, the Guarantor covenants that
it will notify the Trustee in the event that it is in violation of Section
1004(a) or 1004(b) of the Indenture, dated as of August 21, 1995, between the
Guarantor and United States Trust Company of New York, as in effect on the date
of this Guaranty.
Section 1.11 In the event that any action or proceeding is brought
against the City, the Trustee or any of their officers, employees or agents
(each an "Indemnified Party") with respect to which any Indemnified Party is
entitled to indemnification under Section 6.01 of the Loan Agreement, and the
Developer fails to make any payment thereunder, the Guarantor, upon written
notice from the Indemnified Party to Wellsford Residential Property Trust, 610
Fifth Avenue, 7th Floor, New York, New York, 10020, Attention: President, with
a copy to Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the
Americas, New York, New York 10104, Attention: Steven G. Scheinfeld (or such
other addresses of which the Guarantor has previously notified the Trustee in
writing), shall assume such payment obligation of the Developer under such
Section 6.01.
ARTICLE II
REPRESENTATION AND WARRANTIES
Section 2.1 The Guarantor hereby represents and warrants to the
Trustee and the City as follows:
(a) The Guarantor has been duly organized and is validly
existing as a trust in good standing under the laws of the State of
Maryland with full power and authority to own its properties and
conduct its business as the same is now being conducted. The
Guarantor is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions (domestic and foreign),
including the State of Colorado, where such qualification is required
if the failure so to qualify would have material adverse effect upon
the business or properties of the Guarantor.
(b) The Guarantor has full right, power and authority to enter
into and perform this Guaranty.
(c) The execution, delivery and performance by the Guarantor of
this Guaranty has been duly authorized by all required trust action
on the part of the Guarantor.
(d) This Guaranty has been duly authorized, executed and
delivered by the Guarantor and is the legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms,
except as limited by bankruptcy, moratorium, reorganization and other
laws relating to or affecting enforcement of creditors' rights
generally and by general principles of equity.
(e) The execution, delivery and performance by the Guarantor of
this Guaranty does not and will not (i) conflict with the Amended and
Restated Declaration of Trust or the Amended and Restated Bylaws of
the Guarantor or (ii) constitute a material breach of, or material
default under, (A) any commitment, agreement or other instrument to
which the Guarantor is a party or by which the Guarantor is bound,
(B) to Guarantor's actual knowledge, any existing law, rule,
regulation or ordinance or (C) any judgment, order or decree to which
the Guarantor is subject.
ARTICLE III
MISCELLANEOUS
Section 4.1 The obligation of the Guarantor hereunder shall arise
absolutely, unconditionally and irrevocably when the Bonds shall have been
issued, sold and delivered by the City. Subsequent thereto this Guaranty may
not be amended, changed, modified, altered, or terminated except with the
written consent of the Guarantor, the City and the Trustee in accordance with
the Indenture.
Section 4.2 This Guaranty constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof.
Section 4.3 The invalidity or unenforceability of any one or more
phrases, sentences, clauses or Sections in this Guaranty shall not affect the
validity or enforceability of the remaining portions of this Guaranty, or any
part thereof.
Section 4.4 This Guaranty shall be governed by the substantive laws
of the State of New York.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of
the date first above written.
WELLSFORD RESIDENTIAL PROPERTY TRUST
/s/ Gregory F. Hughes
--------------------------
By:
Title: CFO
(SEAL)
Attest:
__________________________
Title:____________________
Exhibit 10.47
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is made as of the 28th day of
June, 1996, by and between WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland
Real Estate investment trust ("Lender"), whose address is 370 17th Street,
Suite 3100, Denver, Colorado 80202, Attention: Donald D. MacKenzie and
SPECIFIED PROPERTIES VIII, L.P., a Texas limited partnership ("Borrower"),
whose address is 5950 Berkshire Lane, Suite 500, Dallas, Texas 75225,
Attention: John R. Carmichael and Tom Teague.
W I T N E S S E T H:
WHEREAS, Borrower is the owner of a 344-unit apartment project located
in Tucson, Arizona and commonly known as Sonterra at Williams Centre (the
"Project").
WHEREAS, Borrower has applied to Lender for a loan in the amount of
$17,800,000.00 (the "Loan"), the proceeds of which are to be used by Borrower
to repay in full the construction loan for the Project, to repay a portion of
the equity investment in Borrower by its partners, and for the payment of
certain third-party expenses of Borrower as set forth herein; and
WHEREAS, Lender is willing to make the Loan to Borrower on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements herein contained, the sufficiency of which is hereby
acknowledged, Lender and Borrower hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS
The following terms shall have the meanings indicated whenever used
herein:
"Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with such Person and, in addition, in the case of the Borrower, each
general partner of the Borrower and each general partner of such general
partner.
"Business Day" shall mean every day except a Saturday, Sunday or public
holiday under the laws of the United States or the State of Arizona.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning ascribed to such term in the Deed of
Trust.
"Deed of Trust" shall mean that certain Deed of Trust, Security
Agreement and Fixture Filing dated as of the date hereof and given by
Borrower to secure the Obligations.
"Default" shall mean any event which if continued uncured would, with
notice or lapse of time or both, constitute an Event of Default.
"Default Interest Rate" shall mean an annual rate equal to the lesser of
fifteen percent (15%) or the highest rate permitted by law.
"Event of Default" shall mean any Event of Default described in Article
6 hereof.
"Fiscal Year" shall mean the annual period on the basis of which
Borrower computes its income in keeping its books. Borrower's Fiscal Year
shall be January 1 through December 31.
"GAAP" shall mean generally accepted accounting principles consistently
applied and maintained throughout the period indicated. Whenever any
accounting term is used herein which is not otherwise defined, it shall be
interpreted in accordance with GAAP.
"Guarantor" shall mean John R. Carmichael.
"Guaranty" shall mean that certain Guaranty Agreement of even date
herewith executed by Guarantor pursuant to which Guarantor has guaranteed
payment and performance of certain of the obligations of Borrower under the
Loan Documents in accordance with the terms and provisions set forth therein.
"Indebtedness" of any Person at any time shall mean: (a) indebtedness
for borrowed money or for the deferred purchase price of property or services
but excluding accounts payable arising in the ordinary course of business;
(b) capitalized lease obligations; (c) obligations under direct or indirect
guaranties of Indebtedness of others; and (d) any Indebtedness secured by any
Security Interest on the property of such Person.
"Loan Documents" shall have the meaning ascribed to such term in the
Deed of Trust.
"Loan Expenses" shall mean all reasonable and actual fees, charges,
costs and expenses incurred by Lender on or before the Closing Date (as
defined in Section 2.2) (including reasonable legal fees and expenses not to
exceed $5,000.00) with respect to preparation and negotiation of this
Agreement and the other Loan Documents and funding the Loan, but only to the
extent set forth on the closing statement to be signed by Borrower.
"Material Adverse Occurrence" shall mean any occurrence of whatsoever
nature (including, without limitation, any adverse determination in any
litigation, arbitration or governmental investigation or proceeding) which
materially adversely affects the present or prospective business, operations,
assets or condition, financial or otherwise, of the Borrower or impairs the
ability of the Borrower to perform its obligations under the Loan Documents
to which it is a party.
"Maturity Date" shall mean the earlier of: (a) the date upon which the
Note, is declared by Lender to be due and payable (or automatically becomes
due and payable) upon the occurrence of an Event of Default as provided in
Article 6 or (b) July 1, 1999.
"Note" shall mean that certain Promissory Note in the stated principal
amount of $17,800,000.00 evidencing the Loan, executed simultaneously
herewith by Borrower and payable to the order of Lender.
"Obligations" shall mean, collectively, all obligations of Borrower to
Lender under the Loan Documents, whether now existing or hereafter arising.
"Option Agreement" shall mean that certain Option Agreement dated as of
the date hereof between Borrower, as the Seller, and Lender or an Affiliate
of Lender as the Buyer, pursuant to which Borrower has granted an option to
purchase the Project.
"Person" shall mean any natural person, corporation, firm, association,
partnership, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Security Interest(s)" shall mean any constitutional, statutory, Uniform
Commercial Code, common-law, real property or other interest, in law or
equity giving one Person a right, for security purposes, in or to the
property of another Person.
ARTICLE 2
THE LOAN; DISBURSEMENT OF THE LOAN
Section 2.1. Agreement to Borrow and Lend. Subject to all of the
terms, provisions, conditions, covenants and agreements contained in this
Agreement and in reliance upon the representations and warranties set forth
herein, Borrower hereby agrees to borrow from Lender, and Lender agrees to
lend to Borrower, the Loan. The Loan shall be repaid by the Borrower in full
on the Maturity Date. The Loan is to be used for the repayment in full by
the Borrower of the outstanding construction loan encumbering the Project,
the repayment of a portion of the equity investment in Borrower by its
partners and the payment of certain other third-party expenses of Borrower as
set forth herein.
Section 2.2. Conditions Precedent to Disbursement. Lender shall have
no obligation to make any disbursement of the proceeds of the Loan unless and
until all of the following conditions precedent are satisfied (unless waived
in writing by Lender as Lender shall, in its sole discretion, determine) and
Loan Expenses incurred to the date of disbursement (the "Closing Date") have
been paid by Borrower:
(a) Opinions of Counsel. Lender shall have received an opinion of
Borrower's and Guarantor's counsels, which opinions shall be satisfactory to
Lender and Lender's counsel, stating, among other things, (A) that each of
Borrower, its general partner, and the general partner of its general partner
is validly formed and in good standing and duly existing under the laws of
the state of its formation; (B) that Borrower has the full partnership power
and authority to execute and deliver the Loan Documents to which it is a
party and to perform all of its obligations thereunder; (C) that Borrower's
general partner and the general partner of such general partner are each duly
authorized and have full partnership or corporate power and authority, as
applicable, to execute and deliver the Loan Documents on behalf of Borrower
or such general partner, as applicable; ; (D) that, to the best of said
counsel's knowledge and except as otherwise noted in said opinion, there are
no judicial proceedings pending or threatened against or affecting Borrower
or the Guarantor which would materially impair either Borrower's or the
Guarantor's ability to perform their respective covenants or obligations
required to be performed under the Loan Documents; and (E) such other matters
as Lender may require.
(b) Bankruptcy. Neither Borrower nor the Guarantor shall be the
subject of any bankruptcy or insolvency proceeding nor shall Borrower or the
Guarantor have made an assignment for the benefit of their respective
creditors. There shall not have been any adverse change from the date of
Lender's determination to make the Loan in the financial condition of
Borrower or the Guarantor which would materially impair the capacity of
Borrower or the Guarantor to perform their respective obligations under the
Loan Documents.
(c) Lender's Approval. All instruments and documents required
hereby or relating to Borrower's capacity and authority to execute the Loan
Documents to which it is a party and such other documents, instruments,
opinions and assurances as Lender may reasonably request, and all procedures
in connection herewith, shall have been received and approved, as to form and
substance, by Lender and by Lender's counsel.
(d) Evidence of Authority; Governing Documents. Borrower shall
have furnished Lender with evidence satisfactory to Lender that Borrower is
validly formed and existing and in good standing in all relevant
jurisdictions. Furthermore, Borrower shall have submitted to Lender the
documents governing and creating Borrower. Borrower and its general partner
and the general partner of such general partner shall each have delivered to
Lender a grant of authority executed by the appropriate parties and
satisfactory to Lender, authorizing Borrower to enter into the loan
transaction contemplated hereby and authorizing the execution, delivery and
performance under the Loan Documents and authorizing the general partner of
Borrower and the general partner of such general partner to act in such
capacity with respect to such partnerships and to the execution and delivery
of the Loan Documents.
(e) Loan Fee. Borrower shall have paid to Lender on the date of
this Agreement a fee in the amount of $178,000.00 in consideration for Lender
agreeing to make the Loan, which fee is nonrefundable.
(f) Loan Documents; Further Documentation. Borrower and the
Guarantor shall have executed and delivered to Lender the Loan Documents to
which each is a party and shall have provided Lender at Borrower's expense,
with such other documents or instruments as Lender shall reasonably require
in order to make the Loan or to evidence or secure the obligations of
Borrower and the Guarantor under the Loan Documents, including without
limitation the following:
(i) an ALTA Mortgagee's Policy of Title Insurance insuring
the lien of the Deed of Trust as a first and prior lien on the Project,
subject only to liens for taxes, assessments or governmental charges or
levies not yet due and payable and to such other matters as are acceptable to
Lender in its sole discretion and including such endorsements and reinsurance
agreements as Lender may require;
(ii) a survey certified to Lender satisfying all the
requirements set forth in the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly adopted in 1992 by ALTA and ACSM and
including items 1 through 4, 6 through 11 and 13 on Table A thereof and
prepared and certified in accordance with the Accuracy Standards of an Urban
Survey as adopted by ALTA and ACSM at the date of such certification.
(iii) a UCC lien search acceptable to Lender showing no
prior liens affecting any of the Collateral (except liens securing the
construction loan that are to be discharged from proceeds of the Loan);
(iv) current financial statements of Borrower and the
Guarantor in form and substance acceptable to Lender in its sole discretion;
(v) tax certificates, certificates of insurance, certificates
of occupancy, as-built plans and specifications and such other information
concerning the Project and its operations as Lender may reasonably require;
(vi) a current certified rent roll, current operating
statements and a budget for the current year, each in form and content
acceptable to Lender in its sole discretion;
(vii) evidence satisfactory to Lender that the Project is
in compliance with all applicable laws, ordinances, rules, regulations and
orders of any governmental authority, including, without limitation, safety
and fire codes and the Americans with Disabilities Act;
(viii) copies of any notices, correspondence, licenses or
agreements (including without limitation subdivision and similar agreements)
with, to or from any governmental or quasi-governmental authority having
jurisdiction over the Project;
(ix) any soils reports, environmental studies and building
plans and specifications for the Project which are in the possession of
Borrower or its agents or contractors; and
(x) any and all additional data, plans, geological and
engineering studies or reports, zoning information, water and sewer studies,
topographic maps, platting and other materials, and all other information and
agreements relating to the Project or any portion thereof which are in the
possession of Borrower or its agents.
(g) Representations and Warranties. All representations and
warranties of Borrower made herein or in the Loan Documents or in the Option
Agreement shall be true and complete on the Closing Date, and Borrower shall
be in compliance with all covenants of Borrower under this Agreement, the
Loan Documents and the Option Agreement in all material respects.
(h) Satisfaction of Condition. Borrower shall have satisfied the
condition described in Section 2.6 and shall provide Lender with a written
waiver of such condition.
Section 2.3. Disbursement of Loan Proceeds.
(a) Disbursement. Proceeds of the Loan in the amount of
$17,800,000.00 shall be fully disbursed upon satisfaction of all of the
conditions precedent set forth above, and provided that no Default or Event
of Default has occurred and is continuing on the Closing Date. Out of such
proceeds, the amount of $100,000.00 (the "Improvement Escrow Funds") shall be
deposited into escrow as provided under Section 2.3(d) below.
(b) Note. The Loan shall be evidenced by, and be payable in
accordance with the terms of, this Agreement and the Note.
(c) Interest on the Note.
(i) Borrower agrees to pay interest on the outstanding
principal amount of the Note from the date of disbursement of the Loan
proceeds until the Maturity Date at the rate of nine percent (9%) per annum.
(ii) Borrower agrees to pay interest on any overdue
installment payment of principal or interest, from the due date thereof until
paid, at the Default Interest Rate.
(iii) Interest accrued on the Note through the Maturity Date
shall be payable on the first day of each calendar month commencing August 1,
1996.
(iv) No provision of this Agreement or the Note shall
require the payment or allow the collection of interest in excess of the rate
permitted by applicable law.
(d) Release of Improvement of Escrow Funds. The Improvement
Escrow Fund shall be deposited with an escrow agent acceptable to both Lender
and Borrower and shall be released to Borrower after the Closing Date upon
satisfaction of the following conditions:
(i) At any time when there is no uncured Event of Default,
Borrower may make written requests, not more often than monthly, for
disbursement of a portion of the Improvement Escrow Funds to be used solely
for the following purposes: replacement or repair of concrete or asphalt
pavement within the Project, replacement or improvement of landscaping,
exterior painting and other improvements or repairs to the exterior of the
improvements in the Project. Each such request shall be made to the escrow
agent, with a copy to Lender, and shall include a detailed description of the
work done, specifications therefor, samples of materials used, photographs of
the areas repaired or improved, and paid invoices for the work.
(ii) Upon receipt by the escrow agent of such evidence,
unless the escrow agent has received from Lender written notice of an uncured
Event of Default, the escrow agent shall disburse the amount of the
Improvement Escrow Funds requested for such work.
Section 2.4. No Prepayment. Except as provided in this Section 2.4,
prepayment of the Loan shall be prohibited and shall be subject to the
prepayment premium set forth in the Note (the "Prepayment Premium").
Notwithstanding the foregoing, a prepayment that occurs solely as the result
of one of the following shall be exempt from the Prepayment Premium:
(a) closing of the transaction contemplated under the Option
Agreement;
(b) prepayment in full after January 1, 1999, if and only if the
option granted under the Option Agreement has not been timely exercised; or
(c) application of casualty insurance proceeds or condemnation
proceeds.
Section 2.5. Payments. Any other provision of this Agreement to the
contrary notwithstanding, the Borrower shall make all payments of interest on
and principal of the Loan and fees due under this Agreement in immediately
available funds to the Lender. If not sooner paid or terminated, full
payment of the outstanding balance of principal and accrued and unpaid
interest shall be due and payable on the Maturity Date.
Section 2.6. Borrower's Condition. Notwithstanding any
representation, warranty or covenant in this Agreement to the contrary,
Borrower's obligations under this Agreement are conditioned upon approval of
this Agreement by the limited partner of Borrower.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants to Lender as follows:
Section 3.1. Organization, Etc. Borrower is a limited partnership
validly organized, and existing under the laws of the state of its formation,
has full power and authority to own its property and conduct its business
substantially as presently conducted by it and is duly qualified to do
business and is in good standing as a foreign entity in each jurisdiction
where the nature of its business makes such qualification necessary. Each
Guarantor is an individual residing in the State of Texas.
Section 3.2. Authority and Enforceability. Each of the Borrower and
the Guarantor has full power and authority to enter into and to perform its
obligations under the Loan Documents to which it is a party and in the case
of Borrower, to grant a Security Interest in its property pursuant to the
Loan Documents to which it is a party and to obtain the Loan hereunder. The
execution and delivery of this Agreement and the other Loan Documents and the
performance and observance of the Obligations hereunder and thereunder have
been duly authorized by all necessary action on the part of Borrower and the
Guarantor. This Agreement and the other Loan Documents will constitute, when
executed and delivered to Lender by Borrower or the Guarantor, legal, valid
and binding obligations of Borrower or the Guarantor (whichever is a party
thereto) enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency and similar laws affecting the enforcement of secured
creditors' rights generally.
Section 3.3. No Conflict. The execution and delivery by Borrower and
each of the Guarantor of the Loan Documents to which it is a party and
consummation of all the transactions contemplated hereby and thereby, do not
and will not conflict with, or contravene any law, order, rule or regulation
applicable to Borrower or the Guarantor or any material agreement or
instrument to which Borrower or the Guarantor is a party or by which any of
their respective properties or assets are bound, and will not result in the
creation of any lien, charge or encumbrance of any nature upon the assets or
properties of Borrower or the Guarantor other than those contemplated hereby
and by the other Loan Documents.
Section 3.4. Financial Condition. All balance sheets, income
statements, financial statements, operating statements and other financial
data required pursuant to the terms of the Loan Documents that have been
delivered (or will be delivered) to Lender by Borrower: (a) are (or will be)
accurate and complete in all material respects; and (b) accurately present
(or will present) the financial condition of the person or entity to which
they pertain as of the dates thereof, and the results of its operations for
the periods for which the same have been (or will be) furnished, and all
balance sheets disclose (or will disclose) all liabilities, direct and
contingent, as of their respective dates to the extent such liabilities are
required to be disclosed under GAAP. No additional material liabilities have
been incurred by Borrower (except for further advances on the construction
loan disclosed in Borrower's financial statements) since the date of its most
recent financial statements delivered to Lender other than as disclosed to
Lender in writing.
Section 3.5. Litigation. There is no action, suit, legal proceeding
or other proceeding pending or threatened against Borrower or the Guarantor
that, if decided adversely to Borrower or the Guarantor, as applicable, would
have a material adverse affect on the properties or assets of Borrower or on
the ability of the Guarantor to perform under the Guarantee, or involving the
validity or enforceability of this Agreement or the other Loan Documents.
Neither Borrower nor any Guarantor is in default with respect to any order of
any court, arbitrator or governmental body and neither Borrower nor any
Guarantor is subject to or a party to any order of any court or governmental
body arising out of any action, suit or proceeding. For the purposes of this
Section, the term "governmental body" includes any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and the term "order" includes any
order, writ, injunction, decree, judgment, award, determination, direction or
demand.
Section 3.6. No Default. There is no Default on the part of Borrower
or the Guarantor under this Agreement or any of the other Loan Documents to
which it is a party and, to the knowledge of Borrower and the Guarantor, no
event has occurred that with notice or the passage of time or both would
constitute an Event of Default hereunder or thereunder.
Section 3.7. Information Correct. None of the representations and
warranties in this Agreement or the other Loan Documents to which Borrower or
the Guarantor is a party, contains (or will contain) any untrue statement of
a material fact.
Section 3.8. No Other Financing. As of the Closing Date, except for
liens to be paid in full from the proceeds of the Loan, there shall be no
other financing secured by the Collateral.
ARTICLE 4
CERTAIN AFFIRMATIVE COVENANTS
The Borrower agrees with the Lender that, as long as the Loan shall be
outstanding, unless the Lender shall otherwise consent in writing:
Section 4.1. Financial Information, Etc. The Borrower will furnish
to the Lender copies of the following financial statements, reports and
information:
(a) (i) as soon as available and in any event within ninety (90)
calendar days after the end of each Fiscal Year, a copy of the Borrower's
annual financial reports, including balance sheet, related statements of
earnings, partners' equity and cash flow statement, for such Fiscal Year,
with comparative figures for the preceding Fiscal Year, prepared in
accordance with accounting principles consistent with those applied in the
preceding Fiscal Year, certified by Borrower to be in accordance with Section
3.4 of this Agreement; (ii) as soon as available and in any event within
fifteen (15) calendar days after the end of each calendar month: (A) a copy
of the unaudited statement of income and expenses of the Project for such
month with comparative information from the beginning of such Fiscal Year to
the end of such month, (B) a rent roll for such month, and (C) a monthly and
year-to-date budget variance report, accompanied by a certificate signed by
Borrower stating that, to its knowledge, such unaudited statements and
reports fairly present the results of operations of Borrower and the Project
for the period covered, subject, however, to year-end adjustments which will
not be materially adverse, and have been prepared on the same basis as the
most recent annual statement delivered to the Lender pursuant to Section
4.1(a)(i);
(b) with each annual financial statement or report required by
Section 4.1(a)(i), a compliance certificate of Borrower stating that, to the
best knowledge of Borrower, no Default or Event of Default has occurred and
is continuing, or if a Default or an Event of Default has occurred and is
continuing, a statement of the nature thereof and the action which the
Borrower proposes to take with respect thereto; and
(c) by the last day of each Fiscal Year, Borrower-prepared
financial projections by month for the next Fiscal Year.
Section 4.2. Maintenance of Existence, Etc. Borrower shall cause to
be done at all times all things necessary to maintain and preserve its
existence as a limited partnership in good standing in all relevant
jurisdictions.
Section 4.3. Payment of Taxes, Etc. Unless being contested as
permitted in the Loan Documents, Borrower shall pay and discharge, as the
same may become due and payable, all taxes, assessments and other
governmental charges or levies against or on any of its property, as well as
claims of any kind which, if unpaid, might become a lien upon any of its
properties. If Borrower has any employees, Borrower shall make all required
payroll tax withholding deposits.
Section 4.4. Notices. Borrower shall give prompt written notice to
the Lender of:
(a) any action, suit, proceeding, or investigation instituted by
or against Borrower in any federal or state court or before any arbitrator,
commission or other regulatory body (federal, state or local, domestic or
foreign) or any such act or proceeding threatened against Borrower which, if
determined adversely to Borrower, would constitute a Material Adverse
Occurrence, in a writing that contains the details thereof;
(b) the commencement of any uninsured (except for deductible
amounts) litigation relating to Borrower in which the damages claimed exceed
$100,000 or questioning the validity of the transactions contemplated by this
Agreement;
(c) the filing, recording or assessment of any federal, state or
local tax lien against Borrower or any of its assets, other than ad valorem
taxes not yet due and payable;
(d) the occurrence of any Event of Default under this Agreement;
and
(e) the suspension, revocation or termination of any of
Borrower's material rights, franchises, permits, certificates of compliance
or grants of authority required in the conduct of its business.
Section 4.5. Compliance with Laws. Borrower shall carry on its
business activities in compliance with all applicable federal or state laws
and all applicable rules, regulations and orders of all governmental bodies
and offices having power to regulate or supervise its business activities.
Borrower shall maintain all material rights, franchises, permits,
certificates of compliance or grants of authority required in the conduct of
its business.
Section 4.6. Books and Records, Periodic Audits. Borrower shall keep
books and records reflecting all of its business affairs and transactions and
permit Lender, and its respective representatives and agents, at reasonable
times and intervals and upon reasonable notice to Borrower, to visit all of
its offices, discuss its financial matters with representatives of Borrower
and its property manager for the Project (and by this provision the Borrower
authorizes its property manager for the Project to participate in such
discussions) and examine any of its books and other records relating to
operation of the Project.
Section 4.7. Conduct of Business. Borrower shall maintain and keep
its assets, property and equipment in good repair, working order and
condition and from time to time make or cause to be made all needed renewals,
replacements and repairs.
Section 4.8. Option Agreement. Borrower shall fully and timely
perform all obligations of the Seller under the Option Agreement.
ARTICLE 5
CERTAIN NEGATIVE COVENANTS
Borrower agrees with Lender that, as long as the Loan shall be
outstanding, unless Lender shall otherwise consent in writing:
Section 5.1. Consolidation, Merger, Sale of Assets, Etc. Without the
prior written consent of Lender, Borrower shall not do any of the following:
(a) consolidate with or merge into or with any other Person or
change its entity structure; or
(b) sell or dispose of or make any other distribution of the
Property (as defined in the Deed of Trust), except as otherwise permitted in
the Loan Documents with respect to eminent domain and replacement of worn,
damaged or obsolete components.
Section 5.2. Security Interest. Borrower will not create, incur,
assume or suffer to exist any Security Interest on any of its property, real
or personal, except: (a) Security Interests in favor of the Lender created
by the Loan Documents; (b) liens or encumbrances permitted under the Loan
Documents or specifically consented to in advance and in writing by Lender.
Section 5.3. Additional Indebtedness. Borrower shall not create,
incur, assume or suffer to exist any Indebtedness except: (a) the
Indebtedness under this Agreement; and (b) current liabilities (other than
for borrowed money) incurred in the ordinary course of business.
Section 5.4. Inconsistent Agreements. Borrower shall not enter into
any agreement containing any provision which would be violated or breached by
Borrower under any Loan Document or the Option Agreement or by the
performance by Borrower of its obligations under any Loan Document or the
Option Agreement.
Section 5.5. Guaranties. Borrower shall not, without Lender's
consent, incur, assume or enter into any guaranty except endorsements of
negotiable instruments for deposit or collection in the regular course of
business.
Section 5.6. Distributions, Etc. During any period when an Event of
Default exists, Borrower shall not, without the prior written consent of
Lender, declare or make any distributions (whether cash or property),
purchase, redeem, retire, or otherwise acquire for value any of its
partnership interests now or hereafter outstanding, return any capital to its
partners as such, or make any distribution of assets to its partners as such
except for payment of customary salaries and employee benefits.
Section 5.7. Transactions with Affiliates. Without the prior written
consent of Lender, Borrower shall not: (a) permit the direct or indirect
transfer, distribution or payment of any of its funds, assets or property to
any Affiliate, except that Borrower may pay: (i) bona fide compensation to
Affiliates for services actually rendered to Borrower; (ii) expenses incurred
by an Affiliate in rendering services to Borrower in the ordinary course of
Borrower's business; (iii) expenses for services or property allocated or
leased by an Affiliate to Borrower in the ordinary course of Borrower's
business; (iv) distributions to partners if, at the time of the distribution,
no Event of Default exists; and (v) indemnification of Affiliates as required
by the Borrower's partnership agreement; (b) lend or advance money, credit or
property to any Affiliate; (c) invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any assets
or properties, of any Affiliate, or (d) guarantee, assume, endorse or
otherwise become responsible for, or enter into any agreement or instrument
for the purpose of discharging or assuming (directly or indirectly, through
the purchase of goods, supplies or services or otherwise) the indebtedness,
performance, obligations, dividends or agreements for the furnishing of funds
of any Affiliate or employee thereof.
Section 5.8. Acquisitions. Borrower shall not acquire the stock or
substantially all the assets of any other entity or Person.
Section 5.9. Changes in Ownership. Except for the partnership
interests of Borrower presently outstanding, Borrower shall not issue any
general partnership interests nor shall it permit the transfer of any of its
outstanding general partnership interests except by operation of law.
Section 5.10. No Other Business. Borrower shall not engage in any
business or activity other than (i) the ownership, management, finance and
maintenance of the Project, and (ii) taking all actions that are reasonably
necessary or desirable in connection with the foregoing.
Section 5.11. Change in Management. Borrower shall not cause or
permit any change in the property manager for the Project without the prior
written consent of Lender. Any management agreement for the Project shall
provide for cancellation by owner on not more than thirty (30) days' notice.
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. The occurrence of any one or more of
the following events or the existence of one or more of the following
conditions shall constitute an event of default ("Event of Default") under
this Agreement:
(a) There shall occur an Event of Default under the terms of any
of the Loan Documents (unless cured within any applicable cure period as
therein provided); or
(b) Any representation or warranty set forth herein or in any of
the other Loan Documents is materially false in any respect at the time made;
or
(c) Borrower fails to perform any covenant, agreement,
obligation, term or condition set forth herein, and such default is not cured
by Borrower within 30 days after written notice to Borrower from Lender of
such default or, if Borrower is unable to cure such default within said 30
days, Borrower fails to begin or to diligently pursue the cure of such
default or to complete such cure in any event within 60 days after such
written notice; or
(d) Any default shall occur under the terms applicable to any
Indebtedness (other than the Note and the Obligations) of Borrower in an
aggregate principal amount that exceeds $50,000, and such default shall cause
the holder(s) of the Indebtedness to accelerate the maturity thereof or shall
continue unremedied for a period of time sufficient to permit acceleration;
or
(e) Borrower shall become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due as such
terms are defined in the United States Bankruptcy Code, as amended; or shall
apply for, consent to, or acquiesce in, the appointment of a trustee,
receiver or other custodian for Borrower or for any of Borrower's property,
or make a general assignment for the benefit of creditors; or, in the absence
of such application, consent or acquiescence, a trustee, receiver or other
custodian shall be appointed for Borrower or for a substantial part of
Borrower's property; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding shall be commenced in respect of
Borrower and shall not be dismissed within 90 days, or shall be consented to
or acquiesced in by Borrower; or Borrower shall take any action which
authorizes or in furtherance of any of the foregoing; or
(f) Any judgments, writs, warrants of attachment, executions or
similar process issued or levied against Borrower's assets, in the aggregate
shall constitute a Material Adverse Occurrence upon enforcement; or
(g) The occurrence of a Material Adverse Occurrence; or
(h) Any default by Borrower under the Option Agreement which has
not been cured within 30 days after written notice thereof or, if Borrower is
unable to cure such default within said 30 days, Borrower fails to begin or
to diligently pursue the cure of such default or to complete such cure in any
event within 45 days after such written notice; or
(i) The removal of, or the institution of removal proceedings to
effect the removal of, Westwood Residential No. 9 Limited Partnership as
general partner of Borrower or of Westwood Residential General Partner No. 9,
Inc. as general partner of such general partner.
Section 6.2. Remedies.
(a) Upon the occurrence of any Event of Default hereunder which
has not been cured within any applicable cure period, the Loan, with all
accrued interest thereon and other amounts payable hereunder, under the Note
and under the other Loan Documents, shall, at the option of Lender, become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are expressly waived by Borrower. Lender
may proceed with every remedy available at law or in equity or provided for
herein or in the other Loan Documents, and all reasonable expenses incurred
by Lender in connection with any remedy shall be deemed indebtedness of
Borrower to Lender, shall be added to the outstanding principal balance of
the Note, shall bear interest thereafter at the Default Interest Rate and
shall be secured by the Deed of Trust and any other Loan Documents securing
the Loan. Lender may apply the proceeds from any Collateral for the Loan
against any of the Obligations, as and in the order set forth in the Deed of
Trust.
Subject to the limitations set forth in the Note, this
Agreement and the other Loan Documents, each and every right, remedy and
power granted to Lender hereunder or under the other Loan Documents shall be
cumulative and in addition to any other right, remedy or power herein or in
the other Loan Documents specifically granted or now or hereafter existing in
equity, at law, or by virtue of statute or otherwise and may be exercised by
Lender from time to time concurrently or independently and as often and in
such order as Lender may deem expedient. Any failure or delay on the part of
Lender in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Lender's right thereafter to exercise the same.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Amendments. No provision or term of this Agreement may
be amended, modified, revoked, supplemented, waived or otherwise changed
except by a written instrument duly executed by Borrower and Lender. No
failure or delay on the part of Lender or the holder of the Note in
exercising any power or right under this Agreement, the Note, or any Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand
on Borrower in any case shall entitle it to any notice or demand in similar
or other circumstances.
Section 7.2. Notices. All notices, demands and requests or other
communication to be sent by one party to the other hereunder or required by
law shall be in writing and shall be deemed to have been validly given or
served by delivery of same in person to the addressee or by depositing same
with a carrier in the business of making guaranteed overnight deliveries for
next business day delivery or by depositing same in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed as set forth on the first page of this Agreement:
With, If Sent to Wayne H. Hykan, Esq.
Lender, Copy to: Brownstein Hyatt Farber & Strickland, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202
With, If Sent to Michael K. Ording, Esq.
Borrower, Copy to: Jones Day Reavis & Pogue
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201
All notices, demands and requests shall be effective upon such personal
delivery or upon being deposited with the above-referenced overnight carrier
or in the United States mail as required above. However, with respect to
notices, demands or requests so deposited with the above-referenced overnight
carrier or in the United States mail, the time period within which a response
to any such notice, demand or request must be given shall commence to run
from the next business day following any such deposit with the above-
referenced overnight carrier or, in the case of a deposit in the United
States mail as provided above, the date on the return receipt of the notice,
demand or request reflecting the date of delivery or rejection of the same by
the addressee thereof. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request sent.
By giving to the other party hereto at least 15 days' written notice thereof
in accordance with the provisions hereof, the parties hereto shall have the
right from time to time to change their respective addresses and each shall
have the right to specify as its address any other or additional address
within the United States of America.
Section 7.3. Counterparts. This Agreement may be executed in any
number of counterparts and this Agreement shall be deemed effective upon
delivery of all such counterparts. Each counterpart of this Agreement shall
be deemed an original and all such counterparts shall be taken to be one and
the same instrument, for the same effect as if all parties hereto had signed
the same signature page.
Section 7.4. Headings. The article and section headings herein are
for convenience only and shall not affect the construction hereof.
Section 7.5. Payment of Expenses. Borrower agrees to pay, and Lender
shall have no obligation for the payment of, the Loan Expenses and any other
expenses of Lender required to be paid under the other Loan Documents. All
Loan Expenses known as of the Closing Date shall be paid by Borrower at the
Closing Date. Any expenses incurred by Lender after the Closing Date that
Borrower is required to pay under the Loan Documents shall be paid within 30
days after receipt by Borrower of a statement therefor, and, if the same are
not so paid, shall be added to the outstanding principal balance of the Note
and shall thereafter bear interest from the date of expenditure by Lender
until paid at the Default Interest Rate.
Section 7.6. Entire Agreement. This Agreement and the other Loan
Documents constitute and incorporate the entire agreement between Lender and
Borrower concerning the subject matter of this Agreement, and supersede and
cancel any prior understandings and agreements between Lender and Borrower
concerning the subject matter hereof.
Section 7.7. Conflict. If any provision of any other Loan Document
shall conflict with any provision of this Agreement, this Agreement shall
control.
Section 7.8. Severability. If any provision in this Agreement shall
be held invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions of this Agreement
shall not be impaired thereby, nor shall the validity, legality or
enforceability of any such defective provision be in any way affected or
impaired in any other jurisdiction.
Section 7.9. Time of Essence. Time is of the essence hereof.
Section 7.10. Survival. The representations, warranties and covenants
herein shall survive the disbursement of the Loan and shall remain in full
force and effect.
Section 7.11. No Third Party Benefits. This Agreement is made for the
sole benefit of Borrower and Lender, their successors and assigns, and,
unless otherwise provided by law, no other person or persons shall have any
rights or remedies under or by reason of this Agreement. Borrower shall have
no right to assign this Agreement or any of Borrower's rights or obligations
hereunder and any attempt to make such an assignment shall be a Default
hereunder.
Section 7.12. Governing Law. The terms of the Loan Documents and the
terms and provisions of this Agreement will be governed by and construed in
accordance with the laws of the State of Colorado, except to the extent that
any of such laws may now or hereafter be preempted by Federal law, in which
case such Federal law shall so govern and be controlling, and except with
respect to enforcement of liens and security interests on Collateral located
in the State of Arizona, which shall be governed by the laws of the State of
Arizona.
Section 7.13. Limitation on Personal Liability. Except as hereinafter
provided, Lender's sole recourse shall be to the Collateral and Lender shall
not enforce any deficiency judgment or other amount due under any Loan
Document or any covenant, obligation, undertaking, representation or warranty
contained in any Loan Document (except enforcement against the Guarantor
under the Guaranty) against Borrower or any person who holds a direct or
indirect ownership interest in Borrower (hereinafter together with Borrower
collectively referred to as the "Exculpated Parties"); provided, however,
that nothing contained herein or in any Loan Document shall:
(a) limit Lender's rights and remedies against the Guarantor
under the Guaranty;
(b) limit the enforceability of any lien, security interest or
other right or remedy of Lender against any Collateral consistent with
nonrecourse liability as provided in this Section 7.13, including,
without limitation, the right to name any Exculpated Party in any
proceeding for enforcement thereof; or
(c) relieve the Exculpated Parties from personal liability or
responsibility for:
(i) any casualty or rental insurance proceeds or
condemnation awards received by any of the Exculpated Parties in
respect of the Project and not turned over to Lender or used for
restoration or repair of the Project;
(ii) any rents and other income from the Project received by
any of the Exculpated Parties after an Event of Default under the
Loan Documents and not otherwise applied to the expenses of
operating and maintaining the Project or to the Indebtedness
evidenced by the Loan Documents;
(iii) any fraud or intentional misrepresentation by any
of the Exculpated Parties in connection with the Project, the Loan
Documents, or any other aspect of the Loan; or
(iv) any default under the Hazardous Substances Remediation
and Indemnification Agreement, unless prior to the expiration of
any cure period relating to such default: (x) such default shall
have been duly and completely cured, and (y) any claims by any
party arising out of or relating to such default, which are
pending, threatened, or reasonably anticipated against Borrower,
Lender, or the Project, shall have been duly paid, settled, or
waived.
7.14. Non-Usurious Loan. It is the intent of Lender and Borrower
in this Agreement and all other Loan Documents now or hereafter securing the
Loan to contract in strict compliance with applicable usury law. In
furtherance thereof, Lender and Borrower stipulate and agree that none of the
terms and provisions contained in this Agreement, the Note, or in any other
instrument executed in connection herewith including but not limited to the
Loan Documents, shall ever be construed to create a contract to pay for the
use, forbearance or detention of money, interest at a rate in excess of the
maximum interest rate permitted to be charged by applicable law. Neither
Borrower nor any guarantors, endorsers or other parties now or hereafter
becoming liable for payment of the Loan shall ever be required to pay
interest on the Loan at a rate in excess of the maximum interest that may be
lawfully charged under applicable law, and the provisions of this paragraph
shall control over all other provisions of the Loan Documents and any other
instruments now or hereafter executed in connection herewith which may be in
apparent conflict herewith. Lender expressly disavows any intention to
charge or collect excessive unearned interest or finance charges in the event
the maturity of the Loan is accelerated. If the maturity of the Loan is
accelerated for any reason or if the principal of the Loan is paid prior to
the end of the term of the Loan, and as a result thereof the interest
received for the actual period of existence of the Loan exceeds the
applicable maximum lawful rate, Lender shall, at its option, either refund
the amount of such excess or credit the amount of such excess against the
principal balance of the Loan then outstanding and thereby shall render
inapplicable any and all penalties of any kind provided by applicable law as
a result of such excess interest. In the event that Lender collects monies
which are deemed to constitute interest which would increase the effective
interest rate on the Loan to a rate in excess of that permitted to be charged
by applicable law, all such sums deemed to constitute interest in excess of
the lawful rate shall, upon such determination, at the option of Lender, be
either immediately returned or credited against the principal balance of the
Loan then outstanding, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By
execution of this Agreement Borrower acknowledges that it believes the Loan
and all interest and fees paid pursuant to the Loan, to be non-usurious. The
term "applicable law" as used in this Section 7.14 shall mean the laws of the
State of Colorado or the laws of the United States, whichever allows the
greater rate of interest, as such laws now exist or may be changed or amended
or come into effect in the future.
7.15. Nonliability of Certain Persons. This Agreement and all
documents, agreements, understandings and arrangements relating to this
transaction have been executed by the undersigned in his/her capacity as an
officer or trustee of Lender which has been formed as a Maryland real estate
investment trust pursuant to a Declaration of Trust of Lender dated as of
July 10, 1992, and not individually, and neither the trustees, officers or
shareholders of Lender shall be bound or have any personal liability
hereunder or thereunder. Borrower shall look solely to the assets of Lender
for satisfaction of any liability of the Lender in respect of this Agreement
and all documents, agreements, understandings and arrangements relating to
this transaction and will not seek recourse or commence any action against
any of the trustees, officers or shareholders of Lender or any of their
personal assets for the performance or payment of any obligation hereunder or
thereunder. The foregoing shall also apply to any future documents,
agreements, understandings, arrangements and transactions between the parties
hereto.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BORROWER:
SPECIFIED PROPERTIES VIII, L.P.,
a Texas limited partnership
By: Westwood Residential No. 9 Limited
Partnership, its general partner
By: Westwood Residential General
Partner No. 9, Inc., its general
partner
By:/s/ John R. Carmichael
________________________________
Name: John R. Carmichael
Title: President
LENDER:
WELLSFORD RESIDENTIAL PROPERTY TRUST, a
Maryland Real Estate investment trust
By:/s/ Donald D. MacKenzie
_________________________________________
Name: Donald D. MacKenzie
Title: Vice President
Exhibit 10.48
OPTION AGREEMENT
This Option Agreement (this "Agreement") made as of the 28th day of June
1996, by and between SPECIFIED PROPERTIES VIII, L.P., a Texas limited
partnership, having an address at 5950 Berkshire Lane, Suite 500, Dallas,
Texas 75225, Attention: John R. Carmichael or Tom Teague (hereinafter called
"Seller"), and WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland real estate
investment trust, having an address at 370 17th Street, Suite 3100, Denver,
Colorado 80202, Attention: Donald D. MacKenzie (hereinafter called "Buyer").
RECITALS
WHEREAS, Seller is the owner in fee simple of the land (the "Land")
which is more fully described on Exhibit A attached hereto and made a part
hereof, together with the buildings and improvements thereon erected, known
as Sonterra at Williams Centre, an apartment property located in the City of
Tucson, County of Pima, State of Arizona (the "Improvements") (the Land and
the Improvements are collectively referred to herein as the "Premises"); and
WHEREAS, Seller desires to grant to Buyer and Buyer desires to obtain an
option to purchase the Premises, for the price and other considerations and
upon the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and of the Option Payment provided for herein, and
respectively expressing the intention to be legally bound hereby, covenant
and agree as follows:
1. Option. In consideration of the payment to Seller of $178,000.00
(the "Option Payment"), the receipt and sufficiency of which is hereby
acknowledged, Seller hereby grants to Buyer the right and option (the
"Option") for a term ending December 31, 1998 (the "Term") to purchase all of
the following (collectively herein referred to as the "Property"), free and
clear of liens and encumbrances except Permitted Exceptions (as hereinafter
defined) and subject to additions and removals in accordance with Paragraph
9(e):
(a) The Land;
(b) The Improvements;
(c) Easements, rights of way, privileges, appurtenances and rights
belonging to and inuring to the benefit of the Premises;
(d) All of Seller's interests in any land lying in the bed of any
street, road or avenue, open or proposed, in front of or adjoining said
Premises to the center line thereof;
(e) All fixtures, machinery, computers, equipment, furnishings,
appliances, supplies, operational records and other tangible personal
property owned by Seller and now or hereafter located on the Premises,
including without limitation, all fittings, heating, air cooling, air
conditioning, freezing, lighting, laundry, incinerating and power equipment
and apparatus; all engines, pipes, pumps, tanks, motors, conduits, switch
boards, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
refrigerating equipment and apparatus; all furnaces, oil burners or units
thereof; all appliances, vacuum cleaning systems, awnings, signs, screens,
storm doors and windows, cabinets, partitions, ducts and compressors,
furniture and furnishings, hot water heaters, garbage receptacles and
containers above and below ground, janitorial supplies, landscaping
materials, lawn mowers, tools, and articles of a nature similar to the
foregoing; all snow removal equipment; and all future additions to or
substitutions for the foregoing, or any part thereof, between the date hereof
and the date of closing hereunder; and all warranties and guarantees to and
rights of action of Seller therefor, if any. (The property described in this
subparagraph 1(e), when referred to separately from the Premises, is
hereinafter sometimes called "Personalty");
(f) All strips, gores, riparian rights and littoral rights, if
any, belonging to or inuring to the benefit of the Land and/or the
Improvements; and
(g) All of Seller's right, title and interest in and to the
following (collectively, "Other Interests"):
i) Any and all catalogs, booklets, manuals, tenant files,
maintenance and operation logs, files and records, leasing records,
correspondence relating to maintenance, operations or leasing, purchaser
prospect list, tenant lists, tenant prospect lists and other mailing
lists, sales brochures and material, leasing brochures and materials,
advertising materials and, to the extent prepared for Seller by third
parties, title information, soil, engineering and environmental
inspections, studies and reports, market studies, and similar materials
with respect to the sale, management, leasing, promotion, ownership,
maintenance, use, occupancy and operation of the Premises;
ii) The name "Sonterra at Williams Centre" (the "Name");
iii) All tenant security deposits, together with any interest
thereon accrued or deemed accrued as of the Closing Date which the
landlord is required by law or by the Tenant Leases to refund to tenants
(collectively, the "Security Deposits");
iv) Any transferable bond, guaranty, warranty or repair
agreements (the "Warranties") concerning the Premises or any part
thereof, including without limitation, any bond, guaranty or warranty
(including any fidelity bonds) relating to construction, use,
maintenance, occupancy or operation of the Improvements and the
Personalty, but only to the extent such bond, guaranty, warranty or
agreement is an obligation of a person not affiliated with Seller or its
partners, and in all cases subject to any limitation contained in each
such bond, guaranty and warranty;
v) Any transferable licenses, permits, approvals and
certificates issued by any governmental authorities required or used in
or relating to the ownership, use, maintenance, occupancy or operation
of any part of the Premises;
vi) Any surveys of, and plans and specifications relating to,
the Premises;
vii) Any unrecorded utility agreements including any deposits
made thereunder;
viii) The Service Agreements (as hereinafter defined);
ix) The Tenant Leases listed on the Rent Roll (as both terms
are hereinafter defined);
x) Any unpaid awards for any taking by condemnation or any
damage to the Premises by reason of a change of grade of any street or
highway, or any award paid to Seller and not used or applied by Seller
to the restoration of the Premises or applied to the Loan (as such term
is defined in Section 20);
xi) Any unpaid proceeds for any damage to the Premises by
reason of fire or other casualty, or any proceeds paid to Seller and not
used or applied by Seller to the restoration of the Premises or applied
to the Loan (as such term is defined in Section 20);
xii) Any transferable development rights with respect to the
Land, excluding any cash deposits or letters of credit delivered to any
governmental authority in connection with the past, present or future
development of the Land (it being acknowledged that Seller may withdraw
or cause to be withdrawn any such cash or letters of credit); and
xiii) Any water and water rights of any kind or description
appurtenant to or owned by Seller in connection with the Land or the
Improvements.
2. Option Payment; Exercise of Option; Purchase Price.
(a) The Option Payment is nonrefundable and shall be credited
against the amounts due from Buyer at the Closing.
(b) Buyer may exercise the Option at any time prior to the end of
the Term by written notice (the "Exercise Notice") given to Seller in
accordance with Paragraph 20 below. If Buyer gives the Exercise Notice, the
date of closing of the purchase and sale of the Property (the "Closing Date")
shall be on a date specified by Buyer which shall be not more than ninety
(90) nor less than twenty (20) days after the date of the Exercise Notice or
on such other date as Buyer and Seller may agree.
(c) The purchase price for the Property shall be $20,178,000.00 if
the Closing Date is on or before December 31, 1997, and $20,678,000.00 if the
the Closing Date is January 1, 1998 or later (in either case, the "Purchase
Price"), which Buyer shall pay by wire transfer of immediately available
funds through the Federal Reserve System to Chicago Title Insurance Company,
7616 LBJ Freeway, Dallas, Texas 75230 (the "Title Company") for disbursement
to Seller.
3. Seller's Condition. Notwithstanding any representation, warranty
or covenant in this Agreement to the contrary, Seller's obligations and
exercise of the Option under this Agreement are conditioned on approval of
this Agreement by the limited partner of Seller.
4. Survey. Prior to the date of this Agreement, Seller has delivered
to Buyer, at Seller's sole cost and expense, a current ALTA/ACSM Land Title
Survey of the Property prepared and certified (i) in accordance with the
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys"
jointly established and adopted ALTA and ACSM in 1992, and including Items 1
through 4, 6 through 11, and 13 of Table A thereof, and (ii) pursuant to the
Accuracy Standards (as adopted by the ALTA and ACSM and in effect on the date
of the certification of such survey) of an Urban Survey (the "Initial
Survey"). The Initial Survey contains a certificate from the surveyor to
Buyer and the Title Company in form acceptable to Buyer. Seller shall have
the survey updated and recertified prior to Closing to a date not more than
thirty (30) days before the Closing Date. The updated survey (the "Final
Survey") shall be in a form acceptable to the Title Company for the deletion
of the standard survey exceptions without the addition of further exceptions
to title and shall disclose no title defects, encroachments or other matters
not shown on the Initial Survey, unless the same are acceptable to Buyer in
its sole and absolute discretion. Any matters shown on the Final Survey that
are not on the Initial Survey and are objected to by Buyer shall be corrected
at Seller's sole cost prior to the Closing Date, except that Seller shall not
be obligated to correct survey matters arising solely from changes enacted by
governmental authorities after the date of the Initial Survey (e.g. changes
in setback requirements).
5. Title Insurance and Lien Search.
(a) Prior to the date hereof, a current title insurance commitment
covering the Property issued by the Title Company (the "Initial Title
Commitment"), together with complete and legible copies of all documents
referred to therein, has been delivered to Buyer at Seller's sole cost and
expense. The Initial Title Commitment commits to insure Buyer as owner of
the Property in the amount of $20,178,000.00, and commits the Title Company
to issue its standard ALTA Owner's Policy on the Closing Date, with standard
preprinted exceptions deleted, insuring good and marketable title in fee
simple to the Property in Buyer subject only to (i) current non-delinquent
general real property taxes, and (ii) title exceptions approved by Buyer
prior to the date hereof. If the Initial Title Commitment contains any
exception for mineral rights, Seller shall pay at Closing for an endorsement
to the title insurance coverage insuring against any loss to Improvements as
a result of such exception. Seller shall cause the Initial Title Commitment
to be updated prior to Closing to a date not more than thirty (30) days
before the Closing Date. If such updated title insurance commitment (the
"Closing Title Commitment") contains any exceptions from coverage which Buyer
deems to be unacceptable and which are not on the Initial Title Commitment,
and if Seller does not remove (or, in the case of mechanic's liens, bond
over) such exceptions by Closing, Buyer, at its option, may exercise its
remedies under Paragraph 16 of this Agreement. If Buyer does not deliver
written notice of objection to title to Seller before the end of ten (10)
business days after delivery of the Closing Title Commitment, Buyer shall be
deemed to have accepted the condition of title as shown therein. Any
exceptions on the Closing Title Commitment to which Buyer does not timely
object, or to which Buyer objects but later waives its objection in writing,
shall be deemed to be "Permitted Exceptions."
(b) Seller shall obtain and shall deliver to Buyer within ten (10)
days after the Closing Date, at its sole cost and expense, a standard ALTA
Owner's Policy, covering the Property in the amount of the applicable
Purchase Price, effective as of the date and time of the Closing, subject
only to the Permitted Exceptions, and including the endorsements required
pursuant to the preceding subparagraph (a). The standard preprinted
exceptions regarding parties in possession, surveys, and mechanic's liens
shall be deleted, at Seller's sole cost and expense. Seller shall deliver to
the Title Company any instruments, documents, payments, indemnities, releases
and agreements as the Title Insurance Company shall require in order to
issue, the title insurance policy as herein provided. At Closing, Seller
shall cause the Title Company to deliver to Buyer such assurances as Buyer
may reasonably request that the Title Company is irrevocably committed and
prepared to issue its ALTA Owner's Policy to Buyer in accordance with the
foregoing requirements.
(c) If the Title Company uses the escrow and closing services of
an agent in connection with this transaction, Seller shall cause Title
Company to issue to Buyer an insured closing letter, in form and substance
reasonably satisfactory to Buyer, which insured closing letter shall, subject
to applicable regulatory restrictions, protect Buyer from fraud or dishonesty
of the Title Company's agent in handling Buyer's funds or documents in
connection with the Closing and against the failure of the Title Company's
agent to comply with written closing instructions of Buyer or its counsel.
(d) Prior to the date of this Agreement, Seller, at its sole
expense, has delivered to Buyer a current certificate from the appropriate
governmental authorities or from a Uniform Commercial Code lien search
service acceptable to Buyer, reporting the results of a Uniform Commercial
Code lien search of all appropriate records for security interests and
financing statements against any personal property constituting a part of the
Property. Seller shall cause such report to be updated and recertified to
Buyer within ten (10) days prior to the Closing Date, and shall make
arrangements on or before the Closing Date to have all liens shown thereon
fully discharged or bonded.
6. Inspection by Buyer; Maintenance.
(a) Subject to the rights of the tenants under the Tenant Leases,
Buyer and Buyer's authorized agents and representatives may, from time to
time during the Term, during regular business hours and on reasonable prior
notice to Buyer and the managing agent of the Property, inspect all areas of
the Premises and conduct such tests and observations as Buyer may deem
appropriate. Any tests involving extraction of samples of materials, soil or
water other than for asbestos shall require prior approval of Seller. No
such inspection, however, shall constitute a waiver or relinquishment on the
part of Buyer of its right to rely upon the covenants, representations,
warranties or agreements made by Seller under this Agreement. Buyer shall
pay when due all fees and expenses incurred in the performance of any such
inspections, tests or observations and shall indemnify, defend, and save
Seller harmless from any loss from mechanic's liens, claims for nonpayment of
such charges or for damages (including damages associated with personal
injury or death or damage to property) arising out of the acts or omissions
of the parties performing such inspections, tests, or observations.
(b) Seller shall permit Buyer's accountants and authorized
representatives to examine Seller's books, financial records and tenant files
pertaining to the operation of the Property, from time to time during the
Term during regular business hours and upon reasonable prior notice. Seller
acknowledges that Buyer may include the Property as a part of a public
offering, and Seller consents to the disclosure of information regarding the
Property, including financial information, in any such public offering so
long as the offering material states that Seller is not a participant in the
offering or responsible for the offering materials. Upon request by Buyer,
Seller shall provide Buyer with such information as Seller may have with
respect to actual expenditures made on all repairs, maintenance, operation
and upkeep of the Property, including, without limitation, all taxes and
utility payments, within three years prior to the Closing, and dates of
construction, installation and major repairs to the Property.
7. Closing. The closing of the transaction contemplated hereby (the
"Closing") shall take place at the offices of Chicago Title Insurance
Company, 7616 LBJ Freeway, Dallas, Texas 75230, at 10:00 a.m. on the Closing
Date specified in Paragraph 2(b) above.
8. Representations of Seller.
(a) Seller, to induce Buyer to enter into this Agreement and to
purchase the Property, represents to Buyer that the following matters are
true as of the date hereof:
i) Exhibit B hereto (the "Rent Roll") is a true, complete
and correct listing of all existing leases (including all amendments or
side agreements) at the Property in effect as of the date hereof (the
"Tenant Leases") (the form of which leases is attached hereto as Exhibit
C), which Exhibit B correctly sets forth: (i) the total number of
apartments at the Property, (ii) the name of each existing tenant named
in the lease for each apartment, (iii) apartment number designation,
(iv) apartment type, (v) the expiration date or status of the term of
the lease (including all rights or options to renew), (vi) the current
rent (the "Standard Rental") and other payments which the tenant is
obligated to make under the lease, (vii) the current outstanding balance
of all security deposits held thereunder, and (viii) the information
required pursuant to Paragraphs 8(a)(ii) hereof.
ii) There are no leases, tenancies, licenses or other rights
of occupancy or use for any portion of the Property other than as set
forth in Exhibit B or Exhibit F. A true, correct and complete copy of
the form of Tenant Lease has been submitted by Seller to Buyer and is
attached hereto as Exhibit C. Seller represents to Buyer that such form
of Tenant Lease is being used by Seller in all material respects in
connection with Seller's leasing of the Property. Except as otherwise
noted on Exhibit B, (i) each of the Tenant Leases is, to Seller's
knowledge, valid and subsisting and in full force and effect and has not
been amended, modified or supplemented, and the tenant, licensee or
occupant thereunder is in actual possession, (ii) no tenant has asserted
any claim, offset or defense which would in any way affect the
collection of rent from such tenant, (iii) there are no pending summary
proceedings or other legal action for eviction of any tenant, and (iv)
no written notice of default or breach on the part of the landlord under
any of the Tenant Leases has been received by Seller or its agents from
the tenant, licensee or occupant thereunder. No tenant, licensee or
other occupant under any of the Tenant Leases has any right or option to
acquire the Property, or any part thereof or interest therein. The
copies of the Tenant Leases delivered to Buyer, if any, constitute the
sole agreements binding upon the owner of the Property and the
respective tenants of the Property with respect to the Property.
iii) No brokerage or leasing commission or other compensation
is or will be due or payable on or after the Closing to any person,
firm, corporation or other entity (including Seller or any affiliate of
Seller) with respect to or on account of any of the Tenant Leases or any
extensions or renewals thereof.
iv) To the best knowledge of Seller and except as set forth
in any Exhibit hereto, Seller has performed all obligations (including
the payment of all sums due to third parties) which obligations have
accrued as of the date hereof under the Tenant Leases and under all
other agreements relating to the Property.
v) Within ten (10) business days after Buyer gives the
Exercise Notice, Seller shall deliver to Buyer a complete and correct
list of all existing management, service, equipment, supply,
maintenance, union or collective bargaining agreements with respect to
or affecting the Property to which Seller is a party or which will
affect the Property after Closing (the "Service Agreements"). Subject
to Section 8(c), effective as of the Closing Date, Seller will represent
and warrant to Buyer that no written notice of default or breach by
Seller or its agents in the terms of any such Service Agreements has
been received by Seller or its respective agentsand that Seller has
performed all payment obligations which it has under the Service
Agreements.
vi) Subject to Section 8(c), effective as of the Closing
Date, Seller will represent and warrant to Buyer that to the best
knowledge of Seller, all persons who are employed by Seller or its
agents in connection with the management, operation and maintenance of
the Property (A) are non-union employees and (B) have been paid with
respect to all benefits properly accrued and currently due.
vii) All charges for services or material related to operation
of the Property, including, without limitation, water, sewer, gas and
electric bills, have been paid or will be paid as of the Closing Date,
or appropriate adjustment made therefor in accordance with the terms
hereof.
viii) Seller has not received any notices from any
governmental authority requiring any public improvements or
installations on or in connection with the Property, or asserting any
violation of any applicable law, regulation or other governmental
requirement, and Seller is not otherwise aware of any such violations or
requirements of public improvements or installations. In the event any
such notices are served or received prior to the Closing. Seller shall
promptly forward copies of such notices to Buyer.
ix) With respect to environmental matters:
a) to the best knowledge of Seller: (i) no Hazardous
Substances are present in, on or under the Property, and (ii) there is
no present Release or threatened Release of any Hazardous Substances in
violation of Environmental Laws, from, in, on or under the Property;
b) to the best knowledge of Seller, no written notices,
written complaints or orders of violation or non-compliance with
Environmental Laws addressed to Seller or the owner of the Property have
been received by or are in the possession of Seller and no federal,
state or local environmental investigation is pending or has been
threatened against Seller with regard to (A) the Property or any use
thereof; (B) any alleged violation of Environmental Laws with regard to
the Property; (C) any failure by Seller to have any environmental
permit, certificate, approval, registration or authorization required
for the conduct of its business; (D) the generation, treatment, storage,
recycling, transportation, disposal or Release (each a "Regulated
Activity") of any Hazardous Substances on, at or under the Property; or
(E) the existence on nearby real property of Hazardous Substances that
could migrate to the Property. For purposes of this Agreement,
"Release" shall have the meaning given to that term in 42 U.S.C. Section
9601(22);
c) the Property has not been used by Seller for the
conduct of any Regulated Activity other than in compliance in all
material respects with Environmental Laws;
d) to the best of Seller's knowledge, there exists no
petroleum contamination to the Property in violation of applicable
Environmental Laws, and to the best of Seller's knowledge, there exist
no underground storage tanks or surface impoundments, active or
abandoned, at, on or under the Property in violation of applicable
Environmental Laws; and
e) to the best of Seller's knowledge, it has not caused
a Release of any Hazardous Substances, nor is there any friable
asbestos, polychlorinated biphenyls, formaldehyde or lead at, on or
under the Property, the removal of which is currently required by any
Environmental Law or the continued existence of which constitutes a
violation of any Environmental Law.
As used in this Agreement, (a) "Environmental Laws" shall mean and include
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq., as amended by the Hazardous and Solid Waste Amendments of 1984, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act of
1975,
49 U.S.C. Section 1801 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the
Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, et seq., the
Clean Water Act, 33 U.S.C. Section 1251 et seq., the National Environmental
Policy
Act, 42 U.S.C. Section 4321 et seq., and the Occupational Safety and Health
Act,
29 U.S.C. Section 651 et seq., and all similar federal, state and local
environmental laws, ordinances, rules, codes and regulations, as any of the
foregoing may have been from time to time amended, supplemented or
supplanted, which relate to protection of the environment or the regulation
or control of or imposing liability or standards of conduct concerning
Hazardous Substances (as hereinafter defined), and (b) "Hazardous Substances"
shall mean any substance which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenicor mutagenic or is designated as toxic
or hazardous under any applicable federal, state or local law, and petroleum,
its derivatives, by-products and other hydrocarbons; provided, however, that
Hazardous Substances shall not include material used or stored in reasonable
amounts in the ordinary course of business for the operation or maintenance
of the Property and in compliance in all material respects with all
Environmental Laws.
x) Seller presently causes to be maintained policies of
insurance with respect to the Property as listed on Exhibit H.
xi) To the knowledge of Seller, there is no action, suit,
investigation or proceeding pending or threatened against or affecting
the Property or any portion thereof by any person or government agency,
board or bureau except as set forth on Exhibit E hereto.
xii) Seller has no knowledge of any pending or threatened
condemnation or eminent domain proceedings against the Property or which
would affect access to the Property, except as set forth on Exhibit E
hereto.
xiii) Seller has delivered to Buyer current tax
certificates with respect to the Property and shall promptly forward to
Buyer copies of all tax bills received during the Term. There are no
proceedings presently pending for the reduction of the assessed value of
the Property. All taxes becoming due during the Term shall be paid by
Seller prior to delinquency.
xiv) The persons signing this Agreement on behalf of Seller
have the requisite power and authority to execute and deliver this
Agreement in the name of Seller and to create thereby a binding
obligation of Seller, and the execution, delivery and performance of
this Agreement will not constitute a default under any material
agreement of Seller, require consent under any such agreement of any
person or give any person any right to terminate any Tenant Lease or
other material agreement relating to the Property.
xv) Except as noted on Exhibit F, Seller has not entered into
any contract for goods and/or services relating to operation of the
Property which may not be cancelled without charge to Buyer upon not
more than thirty (30) days without written notice. Seller has not
entered into any management agreement for the Property which will be in
effect on the Closing Date.
xvi) Utility services to the Property, including but not
limited to water, sewer, telephone, cable TV, electric and gas, are
being provided by the utility suppliers listed on Exhibit G hereto, in
sufficient quantities to permit the use and occupation of the Property
for the intended use.
xvii) To the best of Seller's knowledge the Property is
free from infestation by termites and any damage from previous termite
infestation.
xviii) Seller has delivered to Buyer true, correct and
complete financial statements for the Property for the calendar year
1996 through May 31, including notes, comments, schedules, and
supplemental data therein (collectively, "Financial Statements"), all of
which have been prepared from the books and records of Seller.
xix) Regardless of whether Seller would otherwise be obligated
under Arizona law, Seller has paid, has caused to be paid or will pay
any and all taxes incurred by it as a result of the transactions
contemplated by this Agreement, including, but not limited to transfer
taxes, gains taxes, sales and use taxes and bulk sales taxes.
xx) To the best of Seller's knowledge, the Property, the use
of the Property and the transfer of the Property pursuant to this
Agreement does not and will not violate any applicable subdivision,
zoning, land-use or other similar law, code, ordinance or regulation
relating to the Property.
xxi) Seller has not received any written notice from the
insurance companies insuring the Property requiring Seller to perform
any work at the Property.
xxii) To Seller's knowledge, no person has objected to
Seller's use of the name "Sonterra at Williams Centre" or any logo or
mark used by Seller in connection with the Property.
(b) The representations contained in this Paragraph 8 shall
survive the Closing hereunder, subject to the provisions of Section 18.
(c) On the Closing Date, Seller shall execute and deliver to Buyer
a certificate stating (i) that to Seller's knowledge each of the warranties
and representations set forth in this Paragraph 8 are true and correct in all
material respects as of the Closing Date except for any specific facts set
forth with particularity in such certificate that constitute exceptions not
known to Seller on the date of this Agreement or required by changed
circumstances, and (ii) that there exists no material non-performance or
breach in respect of any of the agreements, covenants, representations or
warranties on the part of Seller contained in this Agreement.
(d) Seller agrees to indemnify, defend and hold Buyer harmless
from and against any and all loss, cost, expense, damage or liability
suffered or incurred by Buyer as a result of any of the warranties and
representations set forth in this Paragraph 8 or in the certificate to be
delivered by Seller to Buyer pursuant to Paragraph 8(c) above, not being true
and correct in all material respects.
(e) As used in this Agreement, the phrases "to Seller's knowledge"
or "to the best knowledge of Seller" and similar phrases mean the actual
knowledge of John R. Carmichael and Tom Teague, without any investigation and
without any imputation of the knowledge of any other person, even if the
knowledge of such other person would otherwise be imputed to one or both of
them as a matter of law.
(f) BUYER ACKNOWLEDGES THAT, EXCEPT FOR THE REPRESENTATIONS,
WARRANTIES AND COVENANTS OF SELLER SET FORTH IN THIS AGREEMENT, THE PROPERTY
IS BEING PURCHASED ON AN "AS IS" BASIS, AND THAT NO REPRESENTATIONS OR
WARRANTIES HAVE BEEN MADE BY SELLER EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT.
9. Termination by Buyer. Buyer shall have no obligation to consummate
the transaction described herein and upon written notice to Seller stating
Buyer's intention not to proceed with the transaction contemplated by this
Agreement, this Agreement shall terminate and the parties shall have no
further liability hereunder.
10. Operations Prior to Settlement. Between the date of the execution
of this Agreement and the Closing Date:
(a) Seller shall continue to maintain and to make all repairs and
replacements to the Property and the Personalty so as to keep the Property
and the Personalty in substantially its present condition, subject to
ordinary wear and tear and to the provisions of Paragraphs 13 and 15 hereof,
and Seller shall operate and manage the Property and the Personalty in the
same manner as it has operated the Property prior to the date hereof. All
vacant apartment units shall be made ready for occupancy by Closing;
provided, however, that units becoming vacant fourteen (14) days or less
before Closing shall be made ready by Seller within fifteen (15) days after
Closing. Any carpet installed on or after the date of this Agreement shall
comply with the carpet specifications delivered to Seller by Buyer prior to
the date of this Agreement, and described on Exhibit D attached hereto.
(b) Seller shall use its best efforts from the date hereof to the
date of the Closing to (i) continue to rent the Property and to achieve and
maintain full occupancy thereof and (ii) modify, renew or extend any Tenant
Lease on an as-needed basis.
(c) Seller will not, without the prior written consent of Buyer,
enter into any Service Agreements or amend or extend any current Service
Agreements such that any Service Agreements that survive Closing are not
cancelable on 30 days' notice at no cost to the owner. Seller shall not
cause or permit any change in the property manager without prior written
consent of Buyer.
(d) Seller shall cause all certificates of occupancy to be
observed and to be kept in full force and effect. Seller shall cause all
material obligations of Seller under the Service Agreements to be timely
performed. Seller shall carry on and conduct the operation of the Property
in substantially the same manner as such business is now and has heretofore
been conducted, including (but not limited to) maintenance of and compliance
with the insurance policies. Seller shall operate the Property in accordance
with all applicable laws, rules, regulations, ordinances, licenses and
permits.
(e) Seller shall not remove any Personalty, fixtures or equipment
located on the Property except as may be required for maintenance, repair
and/or replacement or where such removal is commercially reasonable. All
replacements shall be (i) completed free and clear of any liens and
encumbrances, (ii) of quality at least equal to the replaced items and (iii)
deemed included in the sale of the Property, without cost or expense to
Buyer. Items removed in accordance with this subparagraph (e) will cease to
be part of the Property.
(f) Seller will deliver to Buyer, as soon as available to Seller,
any new monthly operating statements and leasing reports with respect to the
Property for each calendar month which elapses between the date of execution
hereof and the Closing Date.
(g) Seller shall cause all debts and liabilities for labor,
material and equipment incurred by Seller prior to the Closing Date, which
could result in a lien against the Property, to be promptly paid in full or
bonded over.
(h) Seller shall cause to be paid before the same become due all
taxes and all installments of assessments levied or assessed against the
Property or any part thereof on or before the Closing Date. If Seller or any
entity affiliated with Seller or with any of Seller's partners shall
undertake any action, including, without limitation, any development on
property that is within the area subject to the instrument recorded in
Docket 7335 at Page 842, as the same may be amended or supplemented, (the
"Declaration"), then Seller shall be solely liable for payment of any
increase in the assessments against the Property pursuant to the Declaration
resulting from such action and shall indemnify and defend Buyer against such
increase.
(i) Seller shall, immediately upon obtaining knowledge of (i) any
proposed new assessment against the Property by any governmental or quasi-
governmental authority; (ii) the institution of any proceedings for the
condemnation of the Property or any portion thereof; (iii) any material
injury or damage to or upon the Property or any portion thereof; (iv) any
violation of the applicable laws, ordinances, rules or regulations regarding
the Property or any portion thereof; or (v) any proceeding which could affect
or cloud title to or ownership of the Property, or any part thereof, notify
Buyer of the pendency of such proposal, proceeding or violation. Buyer shall
have the right, but no obligation, at Buyer's expense and at its sole
discretion, to join in or participate in any such proceedings or other
matters. No such participation by Buyer shall relieve Seller of any of its
obligations under this Agreement. In the event item (i) in this subparagraph
occurs, Seller shall oppose such assessment in a commercially reasonable
manner unless Buyer approves it in writing.
(j) Between the date of this Agreement and the Closing, Seller
shall not, in violation of any Environmental Laws, intentionally, knowingly
or willfully use, produce, process, manufacture, generate, treat, handle,
store or dispose of any Hazardous Substances in, on or under the Property, or
use the Property for any such purposes, or Release any Hazardous Substances
into any air, soil, surface water or groundwater comprising the Property.
Between the date of this Agreement and the Closing, Seller shall use
reasonable efforts to comply with all Environmental Laws applicable to the
Property, or its use or occupancy thereof. Between the date of this
Agreement and the Closing, Seller shall use reasonable efforts to obtain all
permits, licenses and approvals required by all applicable Environmental Laws
for the use and occupancy of, and all operations and activities in, the
Property, comply and use reasonable efforts to cause the tenants to comply
with all Environmental Laws applicable to the Property and with all such
permits, licenses and approvals, and use reasonable efforts to keep all such
permits, licenses and approvals in full force and effect. Immediately after
Seller obtains any information indicating that any Hazardous Substances may
be present at the Property in violation of any Environmental Law or that any
Release or threatened Release of Hazardous Substances may have occurred in
violation of any Environmental Law between the date of this Agreement and
Closing in, on or under the Property (or any nearby real property which could
migrate to the Property) or that any violation of any Environmental Laws may
have occurred between the date of this Agreement and Closing at the Property,
Seller shall give written notice thereof to Buyer with a reasonably detailed
description of the event, occurrence or condition in question. Seller shall
immediately furnish to Buyer copies of all written communications received
between the date of this Agreement and Closing by Seller from any person
(including notices, complaints, claims or citations that any Release or
threatened Release of any Hazardous Substances or any violation of any
Environmental Laws has actually or allegedly occurred) or given between the
date of this Agreement and Closing by Seller to any person concerning any
past or present Release or threatened Release of any Hazardous Substances in,
on or under the Property (or any nearby real property which could migrate to
the Property) or any past or present violation of any Environmental Laws at
or in connection with the Property.
(k) During the Term, Seller shall not, and shall cause any
affiliates of Seller that are controlled directly or indirectly by any person
(except Seller's limited partner and its affiliate(s) that directly or
indirectly owns an interest in Seller (hereinafter called "Related Parties")
not to acquire any interest in or develop any multifamily residential
property within a three-mile radius of the Land without first giving written
notice to Buyer of its intent to do so and if Buyer indicates a desire to
participate in such acquisition or development, negotiating in good faith
with Buyer to allow such participation; provided that, if agreement with
Buyer is not reached within 45 days after such good faith negotiations are
commenced by Seller, Seller shall have no further obligation to Buyer under
this Paragraph 10(k).
11. Provisions with Respect to Closing. At the Closing, Seller shall
deliver to Buyer the following:
(a) Deed. Special warranty deed conveying the Land and the
Improvements, subject only to the Permitted Exceptions, duly executed and
acknowledged and in proper form for recording.
(b) Bill of Sale. A valid bill of sale for the Personalty (with
warranties of title against claims by, through or under Seller, but not
otherwise) in form and substance reasonably satisfactory to Buyer, duly
executed and acknowledged by Seller.
(c) Assignment of Leases. A valid assignment of the Tenant
Leases, in form and substance reasonably satisfactory to Buyer, duly executed
and acknowledged by Seller assigning to Buyer the interests of Seller in the
Tenant Leases; together with the original executed copy of each Tenant Lease,
and letters prepared by Buyer (and approved by Seller, which approval shall
not be unreasonably withheld) and addressed to each of the tenants informing
them of the sale and assignment and directing them to make future payments of
rents to Buyer or its nominee or assignee, as Buyer may elect; together with
lease files containing all lease guarantees, notices from tenants, general
correspondence and the like. Buyer shall assume, and indemnify Seller with
respect to, all of the obligations of Seller with respect to the proper
application of any tenant security deposit, and all interest thereon payable
to any tenant, for which Buyer received a credit (or which was transferred to
Buyer) at the Closing and shall assume, and indemnify Seller with respect to,
all of the obligations of the landlord under the Tenant Leases attributable
to the period from and after the Closing Date. Seller shall indemnify Buyer
with respect to all obligations of the landlord under the Tenant Leases
attributable to the period prior to the Closing and with respect to all
obligations of the landlord under any leases affecting the Property that were
terminated prior to the Closing. Seller shall also notify any bank in which
Seller maintains a lockbox account for the receipt of rents from the Property
that all amounts received by such bank after the Closing Date shall be
delivered to Buyer.
(d) Assignment of Name. A valid assignment in recordable form
(without warranty except as set forth in Paragraph 8(xxv) above), duly
executed and acknowledged by Seller, assigning to Buyer all of the right,
title and interest of Seller in and to the name Sonterra at Williams Centre
in connection with the Property, together with such documents as shall be
necessary for proper termination of the use of said name by Seller.
(e) Assignment of Service Agreements and Warranties. A valid
assignment duly executed and acknowledged by Seller, in form and substance
reasonably satisfactory to Buyer, of the rights of Seller under (i) each of
the Service Agreements, and (ii) each of the Warranties, together with
original copies or duly executed counterparts thereof; and if any such
agreement requires the approval of the other party thereto prior to
assignment thereof to a third party, then Seller shall use reasonable efforts
to obtain such written approval. If Seller is unable to obtain such approval
after reasonable efforts, Seller shall not be obligated to assign those
agreements for which approval is not obtained. Seller shall perform, and
shall indemnify Buyer with respect to, all of the obligations of Seller
attributable to the period prior to the Closing under the Service Agreements;
Buyer shall assume, and shall indemnify Seller with respect to, all of the
obligations of Seller attributable to the period from and after the Closing
under the Service Agreements.
(f) Assignment of Other Interests. An assignment duly executed
and acknowledged by Seller, in form and substance reasonably satisfactory to
Buyer, of the rights of Seller in and to the Other Interests not transferred
pursuant to subparagraphs (c), (d) or (e) above.
(g) Updated Rent Roll and Tenant Schedule. An updated Rent Roll
and schedule of Tenant Leases supplied by Seller which contains all
information required to be set forth in Exhibit B, which schedule is correct
and complete as of a date not more than five (5) days before the Closing Date.
(h) FIRPTA Affidavit. The affidavit referred to in Section 1445
of the Internal Revenue Code with all pertinent information confirming that
Seller is not a foreign person, trust, estate, corporation or partnership.
(i) Property Records. All records, documents, information and
data in the possession of Seller or its agents concerning operation, leasing
and maintenance of the Property. If the Buyer retains Seller's managing
agent, then delivery of documents herein prescribed need not occur with
respect to those documents already in the possession or control of such
managing agent.
(j) Transfer Tax Return. If required, all transfer and gains tax
returns fully executed and completed by Seller.
(k) Indemnification. An indemnification from Seller for any
brokerage commissions payable or which will become payable in connection with
any Tenant Lease.
(l) Evidence of Payment and Discharge of Liens and Encumbrances.
Evidence satisfactory to the Title Company and sufficient for deletion of any
exceptions that all liens, encumbrances and assessments against the Property,
except the lien of current taxes not yet due, have been paid and discharged
or that either such liens, encumbrances and assessments will be fully paid
and discharged by the Title Company on the Closing Date using Seller's
proceeds of sale or bonded by Buyer so that they do not constitute liens
against the Property.
(m) Possession. Possession of the Property shall be delivered by
Seller to Buyer on the Closing Date, subject to the Tenant Leases and Service
Contracts.
At the Closing, Buyer shall deliver to Seller (i) written indemnity
agreements as contemplated by Paragraphs 11(c) and 11(e), and (ii) if
required to comply with applicable statutes, execution of each letter to
tenants contemplated by Paragraph 11(c).
12. Prorations and Credits.
(a) The following items shall be prorated as of 11:59 p.m. of the
day immediately preceding the Closing Date. To the extent that the amounts
of the items to be prorated are ascertainable as of the Closing Date, they
shall be prorated at the Closing. To the extent that the amounts of the
items to be prorated are not reasonably ascertainable as of the Closing Date,
they shall be adjusted as promptly after the Closing as the amounts thereof
are ascertained. Any errors or omissions in computing the prorations at the
Closing shall be promptly corrected and this obligation shall survive the
Closing hereunder for a period of twelve (12) months from the Closing Date.
i) Water, sewer, fire protection, inspection services,
electric, telephone and all other utility charges.
ii) Prepaid rents (including tax and similar participations),
utility deposits, and income from cable television and telephone
providers, vending machines and other sources.
iii) Prepaid service, maintenance and other similar items with
respect to the Service Contracts.
iv) Such other items of income and expenses as are
customarily prorated in real estate transactions.
v) Rents (including furniture, carport, garage and all other
rental amounts payable by tenants of the Property) for the month of
Closing shall be prorated. Unpaid rents from tenants shall not be
prorated at the Closing. In the event that on the Closing Date any
tenant is in arrears in the payment of rent for the month of the Closing
and/or any months prior thereto, Buyer shall hold any rents (net of the
reasonable costs of collection) collected after the Closing Date from
such tenant in trust for the benefit of Seller, and shall promptly remit
such rents (net of reasonable costs of collection) to Seller for
application in reduction of such arrearage; provided, however, that no
sums received by Buyer shall be so held or paid to Seller for
application to rents in arrears unless and until such rent and other
charges due for the periods subsequent to the Closing shall have been
received and retained by Buyer. Buyer agrees to use reasonable efforts
to collect rent arrearages due Seller from tenants, provided that Buyer
shall not be obligated to commence any litigation against such tenants,
incur any expense in collecting such arrearages (other than the expense
of routine billing) or terminate a Tenant Lease.
vi) Real estate taxes, special assessments and assessments
under the Declaration. Notwithstanding anything to the contrary
contained herein, (i) real estate taxes shall be prorated on the basis
of the latest valuations and mill levies and shall be subject to
readjustment as soon as the actual valuation and mill levies for the
year during which Closing takes place are conclusively determined, and
(ii) Seller shall pay in full at or prior to Closing any installments of
special assessments which may be a lien on the Property and that are due
prior to Closing.
(b) Seller shall furnish readings of the water, gas and electric
meters at the Property to the Closing Date. Seller shall cooperate with
Buyer to provide, as of the Closing Date, for a cancellation of electricity
and other utility services in Seller's name and a continuation thereof
without interruption in Buyer's name. To the extent such a timely
cancellation and continuation occurs, there shall be no proration of utility
charges as provided in Paragraph 12(a)i).
(c) All transfer taxes and all sales and use taxes imposed on or
in connection with this transaction shall be paid by Seller, regardless of
whether Seller would otherwise be obligated under Arizona law.
(d) The Security Deposits shall be transferred to Buyer or
credited against the Purchase Price.
(e) Buyer may elect to satisfy a portion of the Purchase Price by
taking title to the Property subject to the outstanding balance of any lien
or encumbrance against the Property, provided that (1) credit shall not be
allowed for any liens that are bonded over by Seller, and (2) if Buyer elects
to take title subject to the Loan, such election shall be conditioned on
Buyer releasing Seller and the Related Parties from all further liability
under the Loan, including all liability under any warranty, guaranty,
indemnity or other agreement given in connection with the Loan.
13. Casualty Loss. Seller shall cause the insurance policies now in
effect with respect to the Property to be maintained until the Closing. If
at any time prior to the Closing Date, any portion of the Property is
destroyed or damaged as a result of fire or any other casualty whatsoever,
Seller shall promptly give written notice thereof to Buyer and, subject to
the rights of the holder of any first priority mortgage on the Property,
Seller shall promptly restore and repair the Property to a condition at least
as good as that existing prior to the damage. If such restoration cannot
reasonably be completed prior to the Closing Date, Buyer shall be entitled to
(i) terminate this Agreement, (ii) postpone the Closing until such
restoration is complete or (iii) close on the Closing Date and receive all
casualty insurance proceeds available to complete such restoration (less the
portion thereof claimed by any first priority mortgage lender or applied
toward restoration or repair of the Property) and, unless all deductible
amounts have been fully paid by Seller with respect to such insurance prior
to Closing, Buyer shall receive a credit for such amounts at Closing.
14. Brokerage. Seller shall pay at closing all amounts due to Steven
Karpf and to Karpf, Zarilli & Co., Inc. (collectively, "Broker") with respect
to the transactions contemplated in this Agreement. Seller and Buyer each
represent and warrant to the other that the party making such representation
has not dealt with any broker or other intermediary other than Broker in
connection with or relating to the transactions that are the subject of this
Agreement. Seller and Buyer shall defend, indemnify and hold the other
harmless from and against any and all liability, claim, charges or damages,
including without limitation, counsel fees and court costs, incurred by the
other as a result of any breach by the indemnitor of the foregoing
representation.
15. Eminent Domain.
(a) If at any time prior to the Closing Date, there shall be a
taking by eminent domain proceedings or the commencement of any such
proceedings, with respect to all or any part of the Property, Seller shall
give written notice thereof to Buyer promptly upon learning of the same, and,
if Buyer elects to close this transaction, the purchase price for the
Property shall be reduced by the total of any awards or other proceeds
received by Seller (directly or indirectly) with respect to any such taking
at or prior to Closing, and at the Closing Seller shall assign to Buyer all
rights of Seller in and to any further awards or other proceeds payable by
reason of any taking.
(b) Until such time as the Closing has occurred, or this Agreement
terminates, any negotiation for or agreement to, and all contests of, any
offers and awards relating to eminent domain proceedings shall be conducted
only with the joint approval and consent of Seller and Buyer.
16. Remedies. If any obligation of Seller hereunder is not fully and
timely performed as herein provided, Buyer shall have the following remedies
(which shall be Buyer's sole and exclusive remedies except where otherwise
provided herein):
(a) Buyer may elect to treat this Agreement as terminated, in
which case all payments and things of value provided by Buyer hereunder shall
be returned to Buyer;
(b) Buyer may elect to treat this Agreement as being in full force
and effect, and Buyer shall have the right to an action for specific
performance, provided, however, that specific performance shall not be
available as to obligations (other than conveyance of title as provided for
in this Agreement) that are not within the reasonable control of Seller; and
(c) Buyer shall be entitled to payment of its reasonable
attorneys' fees and costs of enforcement of its remedies.
17. Entire Agreement. This is the entire agreement between the parties
relating to the subject matter hereof and there are no other terms,
obligations, covenants, representations, statements or conditions, oral or
otherwise, of any kind whatsoever relating to the subject matter hereof. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement in whole or in part unless such
agreement is in writing and signed by.the party against whom enforcement of
the change, modification, discharge or abandonment is sought.
18. Survival. Except as otherwise provided herein, all agreements,
warranties and representations contained herein shall survive Closing, and
shall not be deemed to have merged into the deed, but such survival shall
extend for only twelve (12) months, after which no action, claim or other
proceeding may be brought upon or to enforce any such agreement, warranty or
representation.
19. Notices. All notices, demands and requests or other communication
to be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery
of same in person to the addressee or by depositing same with a carrier in
the business of making guaranteed overnight deliveries for next business day
delivery or by depositing same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, to the following
addresses:
If intended for Seller:
Specified Properties VIII, L.P.
5950 Berkshire Lane, Suite 500
Dallas, Texas 75225
Attn: John R. Carmichael or Tom Teague
Phone No.: (214)369-9433
Fax No.: (214)369-0908
with a copy to:
Michael K. Ording, Esq.
Jones Day Reavis & Pogue
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201
Phone No.: (214)220-3939
Fax No.: (214)969-5100
If intended for Buyer:
Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Attn: Edward Lowenthal
Phone No.: (212)333-2300
Fax No.: (212)333-2323
With a copy to:
Brownstein Hyatt Farber & Strickland, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202
Attn: Wayne H. Hykan, Esq.
Phone No.: (303)534-6335
Fax No.: (303)623-1956
All notices, demands and requests shall be effective upon such personal
delivery or upon being deposited with the above-referenced overnight carrier
or in the United States mail as required above. However, with respect to
notices, demands or requests so deposited with the above-referenced overnight
carrier or in the United States mail, the time period within which a response
to any such notice, demand or request must be given shall commence to run
from the next business day following any such deposit with the above-
referenced overnight carrier or, in the case of a deposit in the United
States mail as provided above, the date on the return receipt of the notice,
demand or request reflecting the date of delivery or rejection of the same by
the addressee thereof. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand or request sent.
By giving to the other party hereto at least 15 days' written notice thereof
in accordance with the provisions hereof, the parties hereto shall have the
right from time to time to change their respective addresses and each shall
have the right to specify as its address any other or additional address
within the United States of America.
20. No Joint Venture; No Merger. Seller and Buyer acknowledge that
concurrently with execution of this Agreement Buyer or an affiliate of Buyer
has made a loan to Seller in the principal amount of $17,800,000.00, secured
by the Property (the "Loan"). Notwithstanding anything in this Agreement or
in the documents delivered in connection with the Loan, it is the express
intent of the parties that (i) nothing in the relationship between Seller and
Buyer is intended to or shall constitute Seller and Buyer as partners or
joint venturers with respect to the Property or to any other matter; (ii) the
relationship of the parties hereunder shall be strictly that of optionor and
optionee under the Option granted herein; (iii) the rights of Buyer hereunder
shall survive any foreclosure or other exercise of remedies under the Loan
and shall not be merged therein, nor shall any rights of the holder of the
Loan be merged into any document delivered in connection with the Option.
21. Miscellaneous.
(a) The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of
this Agreement or any of the provisions hereof.
(b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
(c) This Agreement shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Arizona.
(d) This Agreement and all documents, agreements, understandings
and arrangements relating to this transaction have been executed by the
undersigned in his/her capacity as an officer or trustee of Buyer which has
been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of Buyer dated as of July 10, 1992, and not
individually, and neither the trustees, officers or shareholders of Buyer
shall be bound or have any personal liability hereunder or thereunder.
Seller shall look solely to the assets of Buyer for satisfaction of any
liability of the Buyer in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this transaction and
will not seek recourse or commence any action against any of the trustees,
officers or shareholders of Buyer or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
(e) The parties hereto acknowledge that the transfer of the
Property must be reported to the Internal Revenue Service as required by
Section 6045(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), unless Section 6045(e) provides an exemption to such reporting
requirement. Accordingly, on or before the Closing Date, Seller, Buyer and
the Title Company shall enter into written "designation agreement" as defined
in and in accordance with Regulation Section 1.6045-4 of the Code, which
designation agreement shall designate the Title Company as the "real estate
reporting person" responsible for reporting the respective transfers to the
Internal Revenue Service.
(f) Subject to the last sentence of this Section, the parties
hereto agree that neither party shall make an announcement of the transaction
contemplated herein to third parties without the prior written consent of the
other party hereto. Buyer shall have the right to approve any public
announcement. Subject to the last sentence of this Section and except as
required by court order or by operation of law, the contents of this
Agreement shall remain confidential and shall only be disclosed to those
third parties necessary to facilitate the consummation of the transaction
contemplated hereby. Notwithstanding the foregoing, Buyer may disclose this
Agreement as it deems necessary or appropriate to comply with securities or
other laws or to fulfill its corporate or fiduciary obligations to its
investors.
(g) The Exhibits attached hereto and made a part hereof are:
Exhibit A: Legal Description
Exhibit B: Rent Roll
Exhibit C: Form of Tenant Lease
Exhibit D: Description of Carpet Specifications
Exhibit E: Description of Pending Claims
Exhibit F: List of Nonterminable Contracts
Exhibit G: Utility Suppliers
Exhibit H: Insurance<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLER:
SPECIFIED PROPERTIES VIII, L.P., a Texas
limited partnership
By: Westwood Residential No. 9
Limited Partnership, its general
partner
By: Westwood Residential
General Partner No. 9,
Inc., its general partner
By:/s/ John R. Carmichael
_____________________________
Name: John R. Carmichael
Title: President
BUYER:
WELLSFORD RESIDENTIAL PROPERTY TRUST, a
Maryland real estate investment trust
By:/s/ Donald D. MacKenzie
______________________________________
Name: Donald D. MacKenzie
Title: Vice President
<PAGE>
EXHIBIT A
(Legal Description)
BLOCKS 19, 21, 22, 23 OF THE RESUBDIVISION OF WILLIAMS CENTRE, PIMA COUNTY,
ARIZONA ACCORDING TO THE PLAT OF RECORD IN THE OFFICE OF THE PIMA COUNTY
RECORDER IN BOOK 39 OF MAPS AT PAGE 28.<PAGE>
EXHIBIT B
(Rent Roll)<PAGE>
EXHIBIT C
(Form of Tenant Lease)<PAGE>
EXHIBIT D
(Description of Carpet Specifications)<PAGE>
EXHIBIT E
(Description of Pending Claims)
NONE<PAGE>
EXHIBIT F
(List of Nonterminable Contracts)
Vendor Type Cancellation
Haas Publishing Company Apt. Guide Between 4th &
5th Issue or
2/1/97
Web Service Co. Washers/Dryers 9/1/2005
Interactive Cable Systems, Inc. Cable Television Serv. April, 2010
Interactive Cable Systems, Inc. Telephone Service April, 2010
Interactive Cable Systems, Inc. Alarm Service
April, 2010
<PAGE>
EXHIBIT G
(Utility Suppliers)
_________________________________________________________________
| | |
| Telephone | Interactive Cable Systems, Inc. |
|______________________|_______________________________________|
| | |
| Cable Television | Interactive Cable Systems, Inc. |
|______________________|_______________________________________|
| | |
| Electric | Tucson Electric Power Company |
|______________________|_______________________________________|
| | |
| Water | City of Tucson |
|______________________|_______________________________________|
| | |
| Sewer | City of Tucson |
|______________________|_______________________________________|
| | |
| Gas | Southwest Gas Corporation |
|______________________|_______________________________________|
<PAGE>
EXHIBIT H
(Insurance)
(See attached two (2) Certificates of Insurance)
Exhibit 10.49
REAL ESTATE PURCHASE AND SALE AGREEMENT
This REAL ESTATE PURCHASE AND SALE AGREEMENT is entered into by and between Roy
Street Associates, a Washington general partnership, as "Seller", and JOSEF F.
STANZL, an unmarried Washington resident, as "Purchaser". Seller and Purchaser
agree as follows:
1. Definitions. For purposes of this Agreement:
"Agreement" means this Agreement, including all Exhibits and
Schedules hereto;
"Closing" means the completion of the transactions contemplated by
this Agreement in accordance with the provisions of this Agreement;
"Closing Date" means that date of which Seller is notified by
Purchaser three (3) business days prior thereto, but in all circumstances no
later than December 20, 1996;
"Deed" means that certain Statutory Warranty Deed conveying title to
the Real Property subject to the Permitted Exceptions.
"Due Diligence Contingency" means Purchaser's approval, in
Purchaser's sole discretion, of (1) the condition of the Property, (2) the
results of Purchaser's investigation and analysis of soils and engineering
reports, Hazardous Materials environmental assessment, governmental
regulations, economic and marketing factors, and that (3) the Property
Information and Purchaser's inspection of the Property are acceptable to
Purchaser.
"Due Diligence Period" means that period expiring October 21, 1996.
"Earnest Money" means the amount of $200,000 to be deposited by
Purchaser in accordance with the provisions of Section 4.
"Effective Date" means October 3, 1996 and is the date of this
Agreement;
"Escrow" means that certain escrow established with Title Company,
No. 38819 JF;
"Hazardous Materials" means and includes asbestos or any substance
containing asbestos, the group of organic compounds known as polychlorinated
biphenyls, flammable explosives, radioactive materials, chemicals known to
cause cancer or reproductive toxicity, pollutants, effluents, contaminants,
emissions or related materials and any items included in the definition of
hazardous or toxic waste, materials or substances under any Hazardous Material
Law. "Hazardous Material Laws" collectively means and includes any present and
future local, state and federal law relating to the environment and
environmental conditions, including without limitation the Resource
Conservation and Recovery Act of 1976 ("RCRA"),.42 U.S.C. Section 6901 et seq.,
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA") , 42 U.S.C. Section 9601-9657, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S. C. Section 6901 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Sections 1251 et seq., the Clean-Air Act, 42
U.S.C. Section 741 et seq., the Clean Water Act, 33 U.S.C. Section 7401 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601-2629, the Safe
Drinking Water Act, 42 U.S.C. Section 300f-300j, the Hazardous Waste Management
Statute, RCW Chapter 70.95, the Hazardous Waste Fee Statute, RCW Chapter
70.105A, any "mini-superfund" or other statutes enacted by the Washington
Legislature, including without limitation, RCW Chapter 70.105B, and all the
regulations, orders and decrees. now or hereafter promulgated thereunder.
"Improvements" means all improvements any portion of which is located
on the Land;
"Land" means the land described in Exhibit A hereto;
"Leases" means those certain leases, rental and occupancy agreements
of the Improvements specified on Exhibit B attached hereto and incorporated
herein by this reference, adjusted from time to time during the term of this
Agreement to reflect the deletion of terminated Lease and inclusion of new
Leases.
"Permitted Exceptions" means the exceptions to title attached hereto
as Exhibit C and incorporated herein by this reference;
"Personal Property" means all that personal property owned by Seller
in connection with the use, occupancy and operation of the Improvements and
identified on Exhibit D attached hereto and incorporated herein by this
reference.;
"Property" means the Real Property and the Personal Property;
"Property Information" means the information in Seller's Possession
regarding the Property as described on Exhibit E, attached hereto and
incorporated herein by this reference.
"Purchase Price" has the meaning assigned thereto in Section 3.1
hereof;
"Real Property" means the Land and all Improvements, and Seller's
interest in any easements, covenants and other rights appurtenant to the Land;
"Seller's Possession" means in the possession of Seller, or any of
Seller's partners or the partners of Seller's partners, Seller's architects,
engineers, consultants or agents.
"Service Contracts and Operating Agreements" means those certain
service contracts, operating agreements, maintenance agreements and property
management agreements set forth in Exhibit F attached hereto adjusted from time
to time during the term of this Agreement to reflect current such agreements.
"Title Company" means First American Title Insurance Company in
Seattle, Washington;
"Title Commitment" means that certain preliminary commitment for
issuance of the Title Policy given by Title Company, Order No. 331074-5 dated
September 23, 1996;
"Title Policy" means that certain ALTA extended owner's coverage
policy of title insurance covering the Real Property and; and
2. Purchase and Sale. Purchaser shall purchase and Seller shall sell
the Property under the terms and subject to the conditions set forth in this
Agreement.
3. Purchase Price; Payment Terms.
3.1 Purchase Price. Purchaser shall pay Seller NINE MILLION NINE
HUNDRED FORTY SEVEN THOUSAND Dollars ($9,947, 000) (the "Purchase Price") for
the Property at Closing.
3.2 Payment Terms. The Purchase Price shall be paid all in cash at
Closing, in cash, via cashier's check, wire transfer, or other immediately
available funds.
4. Earnest Money.
4.1 Deposit of Earnest Money. The Earnest Money shall be deposited
in cash, via wire transfer in immediately available funds, to Escrow, on or
before noon Seattle time, five (5) days after the Effective Date. Upon
Purchaser's determination of satisfaction with the Due Diligence Contingency,
the Earnest Money (and interest accrued thereon) shall be non-refundable to
Purchaser, except in the event of Seller's breach of its obligations hereunder.
4.2 Interest Bearing; Applicable to Purchase Price. The Earnest
Money shall be held by Title Company in Escrow an interest-bearing account for
the benefit of the party entitled to receive the Earnest Money. In the event
of Closing, Purchaser shall receive a credit against the Purchase Price for the
amount of the Earnest Money plus accrued interest thereon.
5. Due Diligence Contingency. 5.1 Determination of Due Diligence
Contingency. Purchaser's obligation to purchase the Property is contingent
upon Purchaser's determination, in Purchaser's sole and absolute discretion,
that the Due Diligence Contingency is approved, waived, removed or satisfied,
on or before expiration of the Due Diligence Period. Purchaser may, in
Purchaser's sole and absolute discretion, terminate this Agreement at any time
by written notice to Seller if Purchaser determines that the Due Diligence
Contingency will not be satisfied by the expiration of the Due Diligence
Period; whereupon in the event of such termination, the Earnest Money and all
interest accrued thereon shall be returned to Purchaser. The Due Diligence
Contingency shall be deemed not to be satisfied unless Purchaser, by the
expiration of the Due Diligence Period, notifies Seller that the Due Diligence
Contingency has been satisfied. If the Due Diligence Contingency is deemed not
satisfied, this Agreement shall automatically terminate and the Earnest Money,
and all interest accrued thereon, shall be promptly returned to Purchaser.5.2
Seller to Provide Property Information. Within five (5) business days after
the Effective Date, Seller, at its sole cost and expense, shall provide or make
available to Purchaser the Property Information. During the Due Diligence
Periods, Seller agrees to cooperate with Purchaser and deliver to Purchaser all
such other documents and reports reasonably requested by Purchaser, to the
extent such Property Information is in Seller's Possession. Such Property
Information is provided to Purchaser as a courtesy, without warranty or
guarantee of completeness or accuracy, for purposes of Purchaser's Due
Diligence Contingency determination and use in investigating the Property.
5.3 Access. During the term of this Agreement, Seller shall provide Purchaser
and its agents with reasonable access to the Property at reasonable times and
upon reasonable notice. Purchaser shall be entitled to conduct such
engineering and economic feasibility studies relating to the Real Property,
including, without limitation, a Phase I Environmental Assessment, structural
analysis, life safety, energy audit, mechanical and electrical inspection, ADA
compliance review, space planning and zoning/land-use/permitting review. 5.3
Purchaser Indemnity. Purchaser shall indemnify and hold Seller harmless from
any and all expense, liens or claims (including attorneys' fees) arising from
third party claims occurring as a result of Purchaser's entry in and upon the
Building for purposes of determining the Due Diligence Contingency.
Purchaser's indemnity in this Section 5.3 shall survive termination of this
Agreement, or Closing hereunder. 5.4 Delivery to Seller Upon Termination.
Upon termination of this Agreement without Closing, Purchaser shall deliver to
Purchaser copies of the results of such studies or reports as conducted by
Purchaser under this Section 5.
6. Closing; Escrow Requirements.
6.1 Time and Place. The Closing of the purchase and sale of the
Property shall occur on the Closing Date. Closing shall take place through
Escrow at the offices of the Title Company.
6.2 Escrow. On or before December 5, 1996 (unless Closing has
earlier occurred), each of the parties shall execute and deliver to Escrow such
documents, instruments, opinions and agreements as may be required in order to
complete the transaction contemplated hereunder pursuant to the terms hereof,
including, but not limited to, the following:
6.2.1 Deed. Seller shall execute and deliver the Deed.
6.2.2 FIRPTA. Seller shall execute and deliver to Purchaser
at Closing a non-foreign affidavit as required by the Foreign Investment and
Real Property Tax Act, IRS Section 1445 (b) (2), as amended.
6.2.3 Assignment of Leases. Seller and Purchaser shall
execute duplicate originals of the Assignment and Assumption of Leases in the
form attached hereto as Exhibit H, (with the Leases identified therein being
brought current to those Leases in existence as of the Closing Date) and one
original of each shall be delivered to Seller and Purchaser.
6.2.4 Assignment Service Contracts and Operating Agreements.
Seller and Purchaser shall execute duplicate originals of the Assignment of
Service Contracts and Operating Agreements in the form attached hereto as
Exhibit I (with the Service Contracts and Operating Agreements identified
therein being brought current to those Service Contracts and Operating
Agreements in existence as of the Closing Date),and one original of each shall
be delivered to Seller and Purchaser.
6.2.5 Assignment of Warranties. Seller and Purchaser shall
execute duplicate originals of the Assignment of Warranties in the form
attached hereto as Exhibit J, to the extent any warranties with respect to the
Property shall be in effect as of the Closing Date; and one original of each
shall be delivered to the other.
6.2.6 Bill of Sale. Seller shall execute and deliver to
Purchaser at Closing, a Bill of Sale in the form attached hereto as Exhibit K,
conveying title to the Personal Property, free and clear of any encumbrances or
claims.
6.3 At Closing. At Closing, each party shall take such actions as
are required and execute and deliver such documents as are required to effect
the Closing, including but not limited to, the following:
6.3.1 Purchase Price. Purchaser shall deliver the Purchase
Price to Escrow, less the Earnest Money and all interest accrued thereon, which
shall be applied as a credit against the Purchase Price;
6.3.2 Title Policy. As soon after Closing as Title Company
deems reasonably practical, the Title Policy shall be delivered to Purchaser,
with a copy to Seller.
6.4 Closing Costs. Seller shall be responsible for the cost of the
Title Policy to the extent of the premium for standard owner's coverage; real
estate excise taxes; and one-half (1/2) the Escrow fee and sales tax thereon.
Purchaser shall be responsible for the cost of the Title Policy to the extent
in excess of the premium for standard owner's coverage together with all
endorsements to the Title Policy requested by Purchaser and any required
surveys, the cost of recording the Deed, one-half (1/2) the Escrow fee and sale
tax thereon; and retail sales or use taxes on the Personal Property. Each
party shall bear its own fees and expenses of counsel in connection with the
negotiation and execution of this Agreement and the Closing of the purchase of
the Property.
6.5 Proration of Income and Expenses. The following items shall be
adjusted or prorated between Seller and Purchaser at Closing, as of the Closing
Date:
6.5.1 Taxes. Real and personal property taxes for the Land
and Improvements shall be prorated.
6.5.2 Assessments. All unpaid assessments shall be
prorated.
6.5.3 Proration of Rents; Security Deposits; Service
Contracts and Operating Agreements. Rents and any other income from the
operation of the Property during the month of Closing and actually collected on
or prior to the Closing Date shall be prorated to the Closing Date. After the
Closing, if any such rents and other income are actually received by Purchaser,
all such amount shall first be applied by Purchaser to currently due rents,
then to past due rents in the order such amounts became due. Purchaser shall
promptly deliver any such amounts owed to Seller after receipt. Purchaser
shall exert its best efforts to collect any such past due rent amounts owed to
Seller, or other income not apportioned at the Closing which is for the benefit
of Seller, and Purchaser shall be required to turn over to Seller its share of
the same, if, as and when received by Purchaser. At and upon Closing, security
deposits and advance rentals shall be credited to Purchaser. Charges or
prepaid fees due on Service Contracts and Operating Agreements shall be
prorated as of the Closing Date.
6.5.4 Utilities. Seller shall pay all utility charges,
insurance premiums and other operating expenses attributable to the
Improvements to the Closing Date. Purchaser shall be responsible for all such
utility charges, insurance premiums and other operating expenses on and after
the Closing Date.
6.5.5 Post-Closing Adjustments. To the extent items are
prorated or adjusted at the Closing on the basis of estimates or are not
prorated or adjusted at the Closing pending actual receipt of information upon
which such prorations or adjustments are to be based, Purchaser and Seller
will, upon a proper accounting, pay to the other such amounts as may be
necessary such that Seller will pay all expenses of the Property prior to the
Closing Date and Purchaser will pay all expenses of the Property after the
Closing Date to the extent required by Section 6.4. If Purchaser receives a
bill or invoice which relates to periods prior to the Closing, Purchaser will
refer such bill to Seller and Seller agrees to pay, promptly upon receipt, such
a portion of the bill or invoice as relates to the period prior to the Closing
Date for which it is responsible. If Seller does not pay such bill in a timely
manner, Purchaser may, at its option, pay such bill or invoice and Seller shall
become liable to Purchaser for the full amount of such payment.
6.6 Allocation of Purchase Price at Closing. Purchaser and Seller
agree that the Purchase Price shall be allocated between Real Property and
Personal Property as follows: Real Property shall constitute $9,786,639.69 of
the Purchase Price and Personal Property shall constitute $160,360.31 of the
Purchase Price.
6.7 Possession. Full possession of the Property, subject to the
rights of existing tenants, shall be delivered to Purchaser by Seller at
Closing.
6.8 Condition of Title at Closing. On the Closing, title to the
Property shall be good and marketable title in fee simple, free and clear of
all liens and encumbrances, easements, restrictions, conditions, covenants,
rights, rights-of-way and other matters, subject only to the Permitted
Exceptions.
7. Acceptance of As Is Condition. seller and purchaser agree the
property shall be sold and that purchaser shall accept possession of the
property on the closing date "as is, where is, with all faults" and that such
sale shall be without representation or warranty of any kind, express or
implied, including without limitation, warranty of income, potential, operating
expenses, uses, merchantability or fitness for a particular purpose, and seller
disclaims and renounces any such representation or warranty. Purchaser is not
relying on any representation or warranties of any kind whatsoever, express or
implied, from seller or agents or brokers, as to any matter concerning or
related to the property, including without limitation (1) the condition or
safety of the property or any improvements, including, but not limited to,
plumbing, sewer, heating and electrical systems, roofing, air conditioning, if
any foundations, soils and geology including hazardous materials, lot size,
condominiumization, or suitability of the property or improvements for a
particular purpose; (2) whether the appliances plumbing or utilities are in
working order, (3) the habitability or suitability for occupancy of any
structure and the quality of its construction; (4) the fitness of any personal
property; (5) whether the improvements are structurally sound, in good
condition, or in compliance with applicable city, county, state or federal
statues, codes or ordinance; or (6) matters relating to the leases or the
tenants. Purchaser further acknowledges and agrees, on his own behalf and for
his successors and assigns, that he is being and has been afforded a reasonable
opportunity to inspect and investigate the property, improvements and all
aspects relating thereto, that he is relying solely upon his own inspection of
the property, review of the leases and investigations concerning the tenants
and not upon any representations made to him by seller, its partners, officers,
directors, contractors, managers or employees nor any person whomsoever. the
provisions of this Section 7 shall survive closing and shall not be merged
therein.
8. Damage, Destruction or Condemnation. In the event of a
condemnation action or casualty damaging the Property before the Closing Date
which constitutes substantial damage to the Property, Purchaser shall have the
option to terminate this Agreement by giving Seller written notice of
termination within 10 days after Purchaser is notified of the condemnation
action or casualty. As used herein, "substantial damage" shall mean damage
resulting in costs in excess of $500,000 to restore or repair as determined by
a licensed general contractor acceptable to Seller. If written notice of
termination, signed by Purchaser, is given to Seller within the 10 day period,
this Agreement shall terminate, the Purchaser and Seller shall be relieved of
any further obligations and responsibilities under this Agreement; and the
Earnest Money and all interest accrued thereon shall be returned to Purchaser.
If written notice of termination, signed by Purchaser, is not received by the
Seller within the 10 day period, (1) in the event of a condemnation action,
Seller shall transfer the Property, together with any rights of Seller in any
condemnation award or any action against the condemning authority, less any
portion of the Property taken by condemnation, and the Purchase Price shall not
be reduced, and (2) in the event of a casualty damaging the Property, Purchaser
shall accept the Property as-is and the Purchase Price shall not be reduced,
provided that, upon completion of the repair and restoration of the Property by
Purchaser, if Seller receives any insurance proceeds for such damage from any
unrelated third party, Seller shall pay such proceeds to Purchaser to the
extent of the costs incurred by Purchaser in connection with such repair and
restoration. Purchaser agrees that Seller shall have the exclusive right to
proceed against Seller's insurer in connection with recovery of such proceeds
and shall exert its diligent efforts to do so if subparagarph (2) herein in
applicable. In the event of a condemnation action or casualty damaging the
Property before the Closing Date, Seller shall either repair the damage on or
before the Closing Date; or if such repair and restoration cannot be achieved
by the Closing Date, then Seller's obligation hereunder shall survive the
Closing Date and shall be completed as soon as reasonably possible thereafter.
Risk of loss to the Property from fire or other casualty shall be borne by
Seller until Closing.9. Commission. At and in the event of Closing of the
transaction contemplated by this Agreement, Purchaser has an agreement with
Dwight Turinski at Apartment Sales Corporation for payment of a commission in
the amount of $152,250 (the "Turinski Commission"); and Seller has an agreement
with Pinnacle Management for payment of a commission in the amount of $50,750
(the "Pinnacle Commission"). Purchaser and Seller agree that at and in the
event of Closing, the Turinski and Pinnacle Commissions shall be paid by
Purchaser and Seller shall have no responsibility or liability for payment of
the Turinski and Pinnacle Commissions. In addition, at and in the event of
Closing of the transaction contemplated by this Agreement, Seller has agreed to
pay a commission in the amount of 1% of the Purchase Price to The Quadrant
Corporation, and a commission in the amount of 1% of the Purchase Price to
Wellsford Holly Residential Properties, Inc., which commissions to The Quadrant
Corporation and Wellsford Holly Residential Properties, Inc. shall be paid by
Seller. Each of Seller and Purchaser represents and warrants to the other
that, other than the Turinski and Pinnacle Commissions, neither has agreed to,
entered into, authorized or taken any other action to create an obligation to
pay any other finder's fee, commission or other similar compensation in
connection with this Agreement, and agrees to indemnify the other party and
hold the other party harmless from and against any and all loss, cost,
liability, damage or expense (including attorneys' fees) whatsoever that may
arise from the untruth of such representation and warranty. Purchaser agrees
to hold Seller harmless from and against any and all loss, cost, liability,
damage or expense (including attorneys' fees) with respect to payment of the
Turinski and Pinnacle Commissions.
10. Notices. All notices consents, approvals and other communications
provided for herein or given in connection herewith shall be validly given,
made, delivered or served if in writing and delivered personally or sent by
registered, certified mail, or receipted overnight service, postage prepaid, or
by facsimile to:
PURCHASER AT: JOSEF F. STANZL
7312 57th N.E.
Seattle, WA
Fax: (206) 328-3556
SELLER AT: ROY STREET ASSOCIATES
c/o The Quadrant Corporation
11100 N.E. 8th Street, Suite 500
P.O. Box 130
Bellevue, WA 98009
Fax: (206) 646-8300
Attn: Mr. Wayne Ullman
or to such other addresses as either party hereto may from time to time
designate in writing and deliver in a like manner. Notices, consents,
approvals and communications given by mail shall be deemed delivered upon
receipt. Notices, consents, approvals and communications given by facsimile
shall be deemed delivered upon the receipt by sender of a confirmed received
statement as printed by the sender's facsimile machine. Originals of the
facsimile transmittals shall, on the same day as the facsimile transmittal was
sent, be mailed or personally delivered to the recipient of the facsimile
transmittal. 11. Default. If the Earnest Money or any other payment due
under this Agreement is not paid, honored, or tendered when due, or if any
other obligation under this Agreement is not performed or waived as provided in
this Agreement, there shall be the following remedies:
11.1 Seller's Default. If Seller fails to perform any of the
material covenants or agreements contained herein which are to be performed by
Seller, Purchaser may, at its option and as its exclusive remedy, either (i)
terminate this Agreement by giving notice of termination to Seller whereupon
the Title Company shall return the Earnest Money (and interest accrued thereon)
to Purchaser and both Purchaser and Seller shall be relieved of any further
obligations or liabilities hereunder; or (ii) Purchaser may seek specific
performance of this Agreement.
11.2 Purchaser's Default. If Purchaser fails to perform any of the
material covenants or agreements contained herein which are to be performed by
Purchaser; Seller, may, as its exclusive remedy, terminate this Agreement by
giving notice of termination to Purchaser whereupon the Title Company shall pay
the Earnest Money, together with all interest thereon, to Seller as liquidated
damages and both Purchaser and Seller shall be relieved of any further
obligations or liabilities hereunder.
11.3 Attorneys' Fees. In the event either party hereto finds it
necessary to bring any action at law or other proceeding against the other
party to enforce any of the terms, covenants or conditions hereof or any
instrument executed in pursuance of this Agreement, or by reason of any breach
or default hereunder or thereunder, the party prevailing in any such action or
proceeding, including, without limitation, any appeal or supplemental
collection proceedings thereupon shall be paid all costs and reasonable
attorneys' fees incurred by the other party; and in the event any judgment is
secured by such prevailing party, all such costs and attorneys' fees shall be
included in any such judgment, attorneys' fees to be set by the court and not
by the jury, and attorneys' fees to be in addition to any liquidated damage
remedy set forth in Sections 11.3 above.
11.4 Waiver. No delay in exercising any right or remedy shall
constitute a waiver thereof, and no waiver by Seller or Purchaser of the breach
of any covenant of this Agreement shall be construed as a waiver of any
preceding or succeeding breach of the same or any other covenant or condition
of this Agreement.
12. Deferred Exchange; Purchaser's Right To Terminate. Purchaser may, at
its option, structure its acquisition of the Property as a part of a 1031 tax-
deferred exchange involving this Property exchanged for other real property.
Seller shall cooperate with Purchaser to effect such tax-deferred exchange,
which cooperation shall include Seller's execution of required documentation in
connection therewith; provided, however, that: (1) Seller shall incur no
additional cost or expense other than those costs or expenses Seller would
incur under this Agreement, (2) Seller shall not take or hold title to any real
property, and (3) the Closing Date shall not be extended or delayed as a result
of structuring this transaction as part of a 1031 tax deferred exchange.
Notwithstanding the foregoing, if, after expiration of the Due Diligence
Period, Purchaser is unable to structure its acquisition of the Property as a
part of a 1031 tax deferred exchange, or if, notwithstanding Purchaser's
diligent efforts, Purchaser is unable to obtain financing for the portion of
the Purchase Price which is not payable pursuant to such 1031 exchange, then
Purchaser shall be entitled to terminate this Agreement by written notice to
Seller; whereupon the Earnest Money and all interest accrued thereon shall be
disbursed from Escrow by Title Company to Seller.
13. Disclosure of Litigation and Representation of Seller. Seller hereby
advises Purchaser that as of the Effective Date, that certain King County
Superior Court Cause No. 95-2-11832-1, Harold C. Holmberg v. Roy Street
Associates, et.al, is pending against Seller and affects the Property and that
Seller is also aware of the potential claim or complaint of Delores Kaczor.
Except for the foregoing, there are no investigations, actions, suits,
proceedings or claims pending or threatened against or affecting Seller, or, to
the best of Seller's actual knowledge, the Property, at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, agency, or instrumentality, domestic or foreign.
14. General
14.1 Time. Time is of the essence in the performance of the
respective obligations of the parties contained in this Agreement.
14.2 Successors and Assigns. Except as herein otherwise provided,
this Agreement and all of the terms and provisions hereof shall inure to the
benefit of and be binding upon the successors and assigns of the parties
hereto.
14.3 Entire Agreement; Amendment Only By Writing. This Agreement,
together with the Exhibits hereto, represents the entire agreement between the
parties covering everything agreed upon or understood in this transaction.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof or in effect between the parties, except as may otherwise be
provided herein. No change or addition is to be made to this Agreement except
by a written agreement executed by the parties.
14.4 Jurisdiction. This Agreement and the rights of the parties
hereto shall be governed and construed in accordance with the laws of the State
of Washington.
14.5 Assignment. Neither party may assign its interest in this
Agreement, including its rights and obligations hereunder without first
obtaining the prior written approval of the other. Notwithstanding the
foregoing, upon any such assignment occurring, neither Purchaser nor Seller
shall be relieved or released from its obligations hereunder.
14.6 Headings. The descriptive headings of the Articles of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
14.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.8 Construction. The parties acknowledged that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or Exhibits hereto.
14.9 Continued Marketing. Purchaser understands, acknowledges and
agrees that until Purchaser's waiver and determination of his satisfaction with
the Due Diligence Contingency on or prior to expiration of the Due Diligence
Period, Seller shall be free to continue to market the Property for sale and to
negotiate, accept and enter into any contracts and agreement for sale of the
Property, which contracts and agreements shall be subject to this Agreement,
unless or in the event of the termination of this Agreement as set forth
herein.
14.10 REIT. No partner of Seller nor any officer, director or
shareholder thereof shall be bound by or have any personal liability hereunder
or under any document, agreement, understanding or arrangement relating to this
transaction. The parties to this Agreement shall look solely to the assets of
Seller for satisfaction of any liability of Seller in regard to this Agreement
and all documents, agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action against any of
the partners of Seller or their officers, directors or shareholders or any of
their personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any and all future
documents, agreements, understandings, arrangements and transactions between
the parties hereto with respect to the Property or this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
ROY STREET ASSOCIATES,
Washington general partnership
By WELLSFORD HOLLY RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation, Its General Partner
By:/s/ Edward Lowenthal
----------------------
Edward Lowenthal
Its: President
By THE QUADRANT CORPORATION,
a Washington corporation, Its General Partner
By:/s/ Wayne Ullman
--------------------
Wayne Ullman
Its: Senior Vice President
PURCHASER:
/s/ Dwight Turinski
- -------------------
JOSEF F. STANZL
By Dwight Turinski as his Attorney-in-Fact
Pursuant to that Special Power of Attorney
dated September 23, 1996
EXHIBITS
A Legal Description of Land
B Leases
C Permitted Exceptions
D Personal Property
E Property Information
F Service Contracts and Operating Agreements
G [INTENTIONALLY OMITTED]
H Assignment of Leases
I Assignment of Service Contracts
J Assignment of Warranties
K Bill of Sale
<PAGE>
EXHIBIT A
All units of 200 Roy Street Condominium, a Condominium, according to
Declaration thereof recorded under King County Recording No. 9309081423; Said
units are located on Survey Map and Plans filed in Volume 115 of Condominium
Plats, at Pages 75 thorough 82, in King County, Washington;
Appurtenances to said units include an undivided 100% interest in the Common
Elements;
Situate in the County of King, State of Washington.
<PAGE>
EXHIBIT B
LEASES<PAGE>
EXHIBIT C
PERMITTED EXCEPTIONS
1. Easement under Recording No. 3514239.
2. Commercial Easement and Right of Entry Agreement by and between Roy
Street Associates and Viacom Cablevision, Recording No. 9104030635.
3. Terms, Covenants, Conditions, and/or Provisions contained in an
Underground Tie-Backs Easement, Recording No. 9204081382.
4. Public Place Indemnity Agreement, Recording No. 9204282374.
5. Memorandum of Drainage Control Plan, Recording No. 9207291678.
6. Grade Release, Recording No. 9211241392.
7. Terms, provisions, requirements and limitations contained in the
Washington Condominium Act, Chapters 43 and 428, Laws of 1989 (R.C.W. 64.34)
and as it may hereafter be amended.
8. Terms, Provisions, Covenants, Conditions, Definitions, Options,
Obligations and Restrictions contained in Condominium Declaration and as may be
contained in the Bylaws adopted pursuant to said Declaration, Recording No.
9309081423.
9. Any assessment now or hereafter levied under the Provisions of the
Condominium Declaration of 200 Roy Street Condominium, or any Amendment
Thereto, or under the Bylaws adopted pursuant to said Declaration, to the
extent provided for by R.C.W. 64.34.
10. Commercial Leasehold interests held by Ace International, McMenamin's
Brew Pub, Inc., The Virtual Commons L.L.C.[COMPLETE WITH REMAINING TENANTS.]
11. Financing Statement given by McMenamin's Brew Pub, Inc. to secure
United States National Bank of Oregon, Recording No. 9503160784.
<PAGE>
EXHIBIT D
PERSONAL PROPERTY<PAGE>
EXHIBIT E
PROPERTY INFORMATION
1. The Leases as of the Effective Date as defined on Exhibit B.
2. ALTA Survey of the Property dated 8/27/93 by C&C Surveying, Inc.
3. Service Contracts and Operating Agreement as of the Effective Date as
defined in Exhibit F.
4. 1996 Operating Statements.
<PAGE>
EXHIBIT F
SERVICE CONTRACTS AND OPERATING AGREEMENTS
1. Merit Mechanical - Preventative Maintenance Agreement for the Common Area
Ventilation.
2. The Pure Water Corporation.
3. Pagenet - Paging Network of Seattle.
4. ABS Communications, Inc.
5. The Safety Team, Inc.
6. Serco Landscape Maintenance.
7. Sound Elevator.
<PAGE>
EXHIBIT H
ASSIGNMENT OF LEASES<PAGE>
EXHIBIT I
ASSIGNMENT OF SERVICE CONTRACTS
<PAGE>
EXHIBIT J
ASSIGNMENT OF WARRANTIES<PAGE>
EXHIBIT K
BILL OF SALE<PAGE>
FIRST AMENDMENT
to
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO REAL ESTATE PURCHASE AND SALE AGREEMENT is entered into
as of this 21st day of October, 1996 by and between Roy Street Associates, a
Washington general partnership, as "Seller", and JOSEF F. STANZL, an unmarried
Washington resident, as "Purchaser".
R E C I T A L S
A. Purchaser and Seller entered into that certain Real Estate Purchase and
Sale Agreement regarding the purchase and sale of certain real property
described therein with an Effective Date of (the "Agreement").
B. Purchaser and Seller are desirous of amending the Agreement in accordance
with the terms of this Amendment No. 1 To Real Estate Purchase and Sale
Agreement.NOW, THEREFORE, in consideration of the mutual promises of the
parties hereto, and other good and valuable consideration, the receipt of which
is hereby acknowledged, Purchaser and Seller hereby agree as follows.
1. Purchaser acknowledges and agrees that the Due Diligence Contingency is
hereby approved, waived and satisfied. Purchaser further acknowledges and
agrees that as of the date of the First Amendment, $50,000 of the Earnest Money
is non-refundable to Purchaser in accordance with the provisions of Section 4.1
as amended by this First Amendment.
2. Section 4.1 of the Agreement shall be amended to read as follows:
4.1 Deposit of Earnest Money. The Earnest Money shall be deposited in cash,
via wire transfer in immediately available funds, to Escrow, on or before noon
Seattle time, five (5) days after the Effective Date. Upon Purchaser's
determination of satisfaction with the Due Diligence Contingency, Fifty
Thousand Dollars ($50,000) of the Earnest Money shall be non-refundable to
Purchaser, except in the event of Seller's breach of its obligations hereunder.
The remaining One Hundred Fifty Thousand Dollars ($150,000) of the Earnest
Money (and all interest accrued thereon) shall be non-refundable to Purchaser,
except in the event of Seller's breach of its obligations hereunder, upon
Purchaser's giving the Additional Contingency Notice to Seller in accordance
with Section 5.5, as amended by this First Amendment.
3. There shall be added to Section 5, an additional Section 5.5.
5.5 Additional Contingency. On or before October 31, 1996, Purchaser shall
determine, to its reasonable satisfaction, that Purchaser's intended buyer of
other real property owned by Purchaser in connection with the tax deferred
exchange contemplated by Purchaser under Section 12 has removed all
contingencies to such buyer's obligation to close its purchase of Purchaser's
other real property (the "Additional Contingency"). Purchaser shall issue to
Seller written notice of its satisfaction with the Additional Contingency (the
"Additional Contingency Notice"). If said Additional Contingency Notice is not
issued by Purchaser on or before October 31, 1996, then, this Agreement shall
automatically terminate and $150,000 of the Earnest Money, and all interest
accrued thereon, shall be promptly returned to Purchaser; and $50,000 of the
Earnest Money shall be paid to Seller.
4. Except as amended herein, the provisions of the Agreement shall be
reaffirmed, reinstated and remain in full force and effect.
5. This First Amendment may be executed in counterpart, each counterpart
original constituting the entirety of this First Amendment.
SELLER:
ROY STREET ASSOCIATES,
Washington general partnership
By WELLSFORD HOLLY RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation, Its General Partner
By:/s/ Edward Lowenthal
----------------------
Edward Lowenthal
Its: President
By THE QUADRANT CORPORATION,
a Washington corporation, Its General Partner
By:/s/ Wayne Ullman
----------------------
Wayne Ullman
Its: Senior Vice President
PURCHASER:
/s/ Josef F. Stanzl
- ------------------------
JOSEF F. STANZL
<PAGE>
SECOND AMENDMENT
to
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS SECOND AMENDMENT TO REAL ESTATE
PURCHASE AND SALE AGREEMENT is entered into as of this 31st day of October,
1996 by and between Roy Street Associates, a Washington general partnership, as
"Seller", and JOSEF F. STANZL, an unmarried Washington resident, as
"Purchaser".
R E C I T A L S
A. Purchaser and Seller entered into that
certain Real Estate Purchase and Sale Agreement regarding the purchase and sale
of certain real property described therein with an Effective Date of October 3,
1996 and First Amendment thereto dated October 21, 1996 (the "Agreement").
B. Purchaser and Seller are desirous of
amending the Agreement in accordance with the terms of this Amendment No. 1 To
Real Estate Purchase and Sale Agreement.
NOW, THEREFORE, in consideration of the
mutual promises of the parties hereto, and other good and valuable
consideration, the receipt of which is hereby acknowledged, Purchaser and
Seller hereby agree as follows.
1. Section 13 of the Agreement shall be
deleted in its entirety and amended to read as follows:
13. Disclosure of Litigation;
Representation and Indemnity of Seller.
Seller hereby advises Purchaser that as of
the Effective Date, that certain King County
Superior Court Cause No. 95-2-11832-1,
Harold C. Holmberg and Joy L. Holmberg v.
Roy Street Associates, et.al, is pending
against Seller and affects the Property and
that Harold C. Holmberg has made certain
claims thereunder, including claims under
the Settlement Agreement (the "Holmberg
Claims"); and that Seller is also aware of
the potential claim or complaint of Delores
Kaczor (the "Kaczor Claims"). Seller shall
indemnify, defend and hold Purchaser
harmless from any and all cost, expense,
loss or liability occurring as a result of
the Holmberg Claims or Kaczor Claims.
Except for the foregoing, there are no
investigations, actions, suits, proceedings
or claims pending or threatened against or
affecting Seller, or, to the best of
Seller's actual knowledge, the Property, at
law or in equity or before or by any
federal, state, municipal or other
governmental department, commission, board,
agency, or instrumentality, domestic or
foreign.
2. The Permitted Exceptions shall include
that certain Settlement Agreement by and
between Harold C. Holmberg and Joy L.
Holmberg and Seller dated December 18, 1990
(the "Settlement Agreement"), which has been
provided to Purchaser and the terms of which
are acceptable to Purchaser. At Closing,
Purchaser shall agree to comply with and
assume the obligations of Seller under the
Settlement Agreement arising after the
Closing Date, including the maintenance of
the permanent retaining wall described
therein, subject to the indemnities and
warranties provided by Seller to Purchaser
under the Agreement.
3. There shall be added an additional
Section 14.11 to the Agreement which shall read as follows:
14.11 Warranty of Retaining Wall.
Pursuant to the provisions of the Settlement
Agreement, Seller constructed a "permanent
retaining wall" on the Property. Seller
hereby warrants and represents to Purchaser
that the permanent retaining wall was
constructed in accordance with the
requirements of the Settlement Agreement,
free from structural defects and defects in
workmanship and materials. The warranty and
representation made by Seller hereunder
shall survive the Closing for a period of
five (5) years after the Closing Date.
4. Additional Contingency Notice.
Purchaser hereby waives and approves the Additional Contingency stated in
Section 5.5 to the Agreement, which shall constitute the Additional Contingency
Notice. Purchaser further acknowledges and agrees that as of the date of the
Second Amendment, $200,000 of the Earnest Money is non-refundable to Purchaser
in accordance with the provisions of Section 4.1 of the Agreement.
5. Except as amended herein, the
provisions of the Agreement shall be reaffirmed, reinstated and remain in full
force and effect.
6. This Second Amendment may be executed
in counterpart, each counterpart original constituting the entirety of this
Second Amendment.
SELLER: ROY STREET ASSOCIATES, a Washington general partnership
By: WELLSFORD HOLLY RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation, Its General Partner
By:/s/ Daniel M. Kelley
----------------------------
Daniel M. Kelley
Its:President
By: THE QUADRANT CORPORATION,
a Washington corporation, Its General Partner
By: /s/ Wayne Ullman
--------------------------
Wayne Ullman, Senior Vice President/Finance
PURCHASER: /s/ Josef F. Stanzl
--------------------------
JOSEF F. STANZL
<PAGE>
THIRD AMENDMENT
TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS THIRD AMENDMENT TO REAL ESTATE PURCHASE AND SALE AGREEMENT is entered
into as of this ____ day of December, 1996 by and between Roy Street
Associates, a Washington general partnership, as "Seller", and JOSEF F. STANZL,
an unmarried Washington resident, as "Purchaser".
A. Purchaser and Seller entered into that certain Real Estate Purchase
and Sale Agreement regarding the purchase and sale of certain real property
described therein with an Effective Date of October 3, 1996 and First Amendment
thereto dated October 21, 1996 and Second Amendment thereto dated October 31,
1996 (the "Agreement").
B. Purchaser and Seller are desirous of amending the Agreement in
accordance with the terms of this Third Amendment To Real Estate Purchase and
Sale Agreement.
C. Purchaser and Seller agree that the fair market value of the personal
property conveyed by Seller to Purchaser, as described in Exhibit A to the Bill
of Sale, is $50,000.00.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, and other good and valuable consideration, the receipt of which is
hereby acknowledged, Purchaser and Seller hereby agree as follows.
1. Section 6.6 of the Agreement shall be deleted in its entirety and
amended to read as follows:
Allocation of Purchase Price at Closing. Purchaser and Seller agree that
the Purchase Price shall be allocated between Real Property and Personal
Property as follows: Real Property shall constitute $9,897,000.00 of the
Purchase Price and Personal Property shall constitute $50,000.00 of the
Purchase Price.
2. Except as amended herein, the provisions of the Agreement shall be
reaffirmed, reinstated and remain in full force and effect.
3. This Third Amendment may be executed in counterpart, each counterpart
original constituting the entirety of this Third Amendment.
SELLER: ROY STREET ASSOCIATES, a Washington general partnership
By WELLSFORD HOLLY RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation, Its General Partner
By:/s/ Daniel M. Kelley
---------------------------
Daniel M. Kelley
Its: President
By: THE QUADRANT CORPORATION,
a Washington corporation, Its General Partner
By: /s/ Wayne Ullman
--------------------------
Wayne Ullman, Senior Vice President/Finance
PURCHASER: /s/ Josef F. Stanzl
------------------------
JOSEF F. STANZL
Exhibit 10.50
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of the 30th day of April, 1996, by and
between the Derby-Heinze Partnership, an Oregon general partnership comprised
of Double D Development, Inc., an Oregon corporation, and Shelburne Company,
Inc., an Oregon corporation ("Seller"), and Wellsford Residential Property
Trust, a Maryland Real Estate Investment Trust ("Buyer").
RECITALS
A. Seller is the holder of an option to purchase certain land pursuant
to the terms and conditions of that certain Option Agreement and Contract of
Sale dated December 23, 1993, between Lincoln Memorial Park, Inc. ("LMP"), an
Oregon corporation, as "Optionor," and Seller, as the "Optionee," which has
been amended and extended by agreement dated December 22, 1995 (the "Option
Agreement").
B. Seller is the owner of an 11-acre tract of land west of and
contiguous to the Option Land formerly owned by Jim and Barbara Hoyt (the "Hoyt
Property").
C. Seller has obtained an approval from Clackamas County (the "County")
for a Planned Unit Development (the "PUD") known as "Altamont," subject to
certain conditions. The County and Seller have entered into a Memorandum of
Understanding to facilitate the land acquisition, construction, and financing
of a minor arterial to serve the Altamont development and region and to
implement the County's Comprehensive Plan.
D. A portion of the Altamont PUD includes approximately 24.5 acres
approved and zoned for multi-family units. The zone designation is "MR-2" and
the approved density is 18 units per acre. The approved number of units for
this site is 441, and there may be additional units available through the
"density bonus" zoning code provisions of the County.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms not otherwise defined herein
shall have the following definitions:
1.1 "Access Road" is the minor arterial road extending Johnson Creek
Boulevard from its intersection at 92nd Avenue up through the site to the final
on-site intersection.
1.2 "Closing Date" means the date of closing of this transaction, which
shall be September 15, 1996, or sooner, provided the conditions set forth in
Section 6 have been satisfied or waived. The Closing Date may be extended
beyond September 15, 1996, at Buyer's option, if the conditions set forth in
Section 6 have not yet been satisfied or waived.
1.3 "County" means Clackamas County, Oregon.
1.4 "Escrow" means the escrow with Escrow Holder for the consummation of
the transaction described in this Agreement.
1.5 "Escrow Holder" means Chicago Title Insurance Company of Oregon.
1.6 "Land" means the 24.5 acres to be transferred by the terms of this
Agreement as more fully defined in Exhibits A and B, incorporated herein by
this reference. Approximately 22 acres is from the LMP part of the PUD land
and approximately 2.5 acres is from the Hoyt Property part of the PUD land.
1.7 "Project" means the 441 (or more) multi-family units to be
constructed upon the Land.
1.8 "PUD" means the Altamont Planned Unit Development.
1.9 "Title Company" means Chicago Title Insurance Company of Oregon.
1.10 "Utilities" means Sanitary and Storm Water facilities, Water,
Electric Power, Natural Gas, Telephone and Cable TV Service. Public and
Private Utility requirements for the PUD and the Land are defined in the County
PUD approval.
Section 2. Purchase and Sale. Seller agrees to sell to Buyer the Land
(24.5 acres) and to provide the Utilities to the property line adequate to
service the Project and Buyer agrees to purchase from Seller the Land upon the
terms and conditions set forth in this Agreement.
2.1 The purchase price for the Land (the "Purchase Price") shall be
$2,646,000.00. To the extent Buyer actually constructs more than 441 units on
the Land in accordance with the "density bonus" zoning provisions of the
County, then the Purchase Price shall be increased by an amount equal to
$6,000.00 multiplied by the number of units in excess of 441 actually
constructed (the "Bonus Density Payment").
2.2 The Purchase Price shall be payable as follows:
2.2.1 Earnest money in the amount of $100,000.00 cash, plus any
interest thereon (the "Earnest Money"). An initial amount of $50,000.00 shall
be deposited in Escrow within three (3) business days of the execution of this
Agreement. An additional amount of $25,000.00 shall be deposited in Escrow on
or before May 5, 1996. An additional amount of $25,000.00 shall be deposited
in Escrow on or before June 5, 1996. Of the initial deposit of $50,000.00,
$25,000.00 shall be nonrefundable, unless Seller defaults under this Agreement.
On May 5, 1996, and on the 5th day of each month thereafter, an additional
$5,000.00 of the Earnest Money, up to a maximum of $75,000.00 inclusive of the
$25,000.00 portion of the original $50,000.00 initial deposit of Earnest Money
shall become nonrefundable. The Earnest Money shall be held in an interest-
bearing escrow account and any interest shall be applied toward the Purchase
Price.
2.2.2 The balance of the Purchase Price in immediately available
funds at closing.
2.2.3 The Bonus Density Payment attributable to construction of
more than 441 units in the Project shall be paid upon issuance of building
permits for the additional units.
Section 3. Existing and Future Encumbrances.
3.1 Obligation to Pay. Upon closing of the Option Agreement between
Seller and LMP, a portion of the Land will be subject to a trust deed with LMP,
as beneficiary, dated __________________, 19__, to be recorded
__________________, 199__, in Book ___, Page ____, Clackamas County Records,
Clackamas County, Oregon (the "Prior Lien"). Seller covenants to Buyer (a)
that no default exists under the Option Agreement and Contract of Sale; and,
(b) that Seller will make all payments under the Option Agreement and Contract
of Sale when due and will obey and observe all of the terms of such instrument,
except as to those matters that are to be performed by Buyer under the terms of
this Agreement. If either Seller or Buyer receives notice from or on behalf of
the holder of the Prior Lien of breach of any of the terms of the Prior Lien,
the party receiving the notice shall immediately forward a copy of such notice
to the other party. Contemporaneously with the close of Escrow, Escrow Agent
shall satisfy the pro rata portion of the Prior Lien required to obtain a full
release of the LMP portion of the Land.
3.2 LID. Shortly after completion of construction of the Access Road,
the Land shall be assessed a proportionate share of the cost of constructing
the Access Road through a local improvement district ("LID") in an amount not
to exceed $700,000.00 (the "LID Assessment"). Buyer shall pay the LID
Assessment in full within thirty (30) days of assessment by the County. The
amount of the assessment pursuant to the LID shall be credited against the
Purchase Price for the purchase of the Property. In the event the LID
Assessment has not occurred prior to the close of Escrow, Escrow Agent shall
retain $700,000.00 in Escrow until such time as the LID Assessment is made.
Once the LID Assessment is made, Escrow Agent shall release to Seller the
difference between the actual assessment and the $700,000.00 and shall pay to
the County the amount of the actual assessment.
3.3 Failure to Pay. In the event Seller fails to perform any obligation
or fails to make any payment required by the Prior Lien, Buyer shall have the
right to correct the default or to make any part or all of the payment payable
to Seller under this Agreement directly to the holder of the Prior Lien or
third party to whom such payment is required to be made under the Prior Lien
until Seller's obligation is satisfied. Buyer's reasonable costs in performing
Seller's obligation with interest at the rate of eighteen percent (18%) per
annum from the date of expenditure shall be credited to the next installments
coming due under this Agreement as though paid directly to Seller.
3.4 Obligations of Buyer. Buyer shall not cause or suffer any act or
failure to act within the reasonable control of Buyer that if attributed to
Seller might cause a default under any of the provisions of the Prior Lien or
the LID.
3.5 Homeowner's Association. Buyer acknowledges that the Property is
subject to the terms and conditions of the County's PUD approval, as modified.
As such, Buyer understands that it must participate in the Altamont Homeowner's
Association, including the payment of appropriate association dues and
obligations. The parties agree to cooperate in the development of an
assessment formula for the association dues collectable from the Project and
agree to cooperate on mutually acceptable provisions in the homeowner's
association documentation, including the terms and conditions attached hereto
as Exhibit C.
3.6 Easements, Sewer, Off-Site Storm Water Retention Facility, and
Emergency Access Road. Buyer and Seller agree to cooperate in the granting of
cross-easements for sewer and storm water lines and emergency access road
across the PUD and Land. Buyer agrees to participate in the pro rata cost of
the construction of an off-site storm water retention facility, either on or
off of the Land. The cost shall be prorated based upon the projected usage of
the storm water retention facility by the affected areas of the Altamont
Development and of the Project as more fully set forth in Exhibit E-2. Seller
shall participate in the cost of a sewer line either across or adjacent to the
Land if applicable sewer agency regulation would permit the installation by
Buyer of a small capacity line. In such event, Seller shall pay all costs
attributable to the installation of a larger capacity sewer line. All budgets,
contracts for construction of such sanitary sewer line and off-site storm water
retention facilities shall be subject to approval by Buyer, which approval
shall not be unreasonably withheld.
Section 4. Conditions of Title. Upon closing, Seller shall convey to
Buyer marketable and insurable fee-simple title to the Land by execution and
delivery of a statutory warranty deed. Evidence of the delivery of marketable,
insurable, fee-simple title shall be the issuance by Chicago Title Insurance
Company of an ALTA extended coverage policy of title insurance in the amount of
the Purchase Price, insuring fee-simply title to the Land in Buyer's name,
subject only to the LID, the condition of the PUD approval for the County, the
Conditions, Covenants, and Restrictions (CC&R's) and other related homeowners
association documentation, to-be-granted easements for the fill and the storm
water and sewer facilities, and any other exceptions as Buyer shall approve
pursuant to this Agreement.
Section 5. Escrow.
5.1 Opening of Escrow. With the deposit by Buyer of the sum of
$50,000.00, Escrow shall be opened for consummating this transaction. Buyer
and Seller shall deliver a fully-executed copy of this Agreement to Escrow
Holder. Buyer and Seller hereby authorize their respective attorneys to
execute and deliver into Escrow any additional or supplemental instructions as
may be necessary or convenient to implement the terms of this Agreement and to
close this transaction.
5.2 Indemnification of Escrow Holder. If this Agreement or any matter
relating to it becomes the subject of any litigation or controversy, Buyer and
Seller agree, jointly and severally, to hold Escrow Holder free and harmless
from any loss or expense, including attorney fees, that may be suffered by it
by reason thereof, except if by reason of Escrow Holder's own gross negligence.
In the event conflicting demands are made or notices are served on Escrow
Holder with respect to this Agreement, Buyer and Seller expressly agree that
Escrow Holder shall be entitled to file suit in interpleader and obtain an
order from the court requiring Buyer and Seller to interplead and litigate
their several claims and rights among themselves. Upon filing the action in
interpleader, Escrow Holder shall be fully released and discharged from any
obligations imposed on it by this Agreement.
5.3 Nonliability of Escrow Holder. Escrow Holder shall not be liable for
the sufficiency or correctness as to form, manner, execution, or validity of
any instrument deposited with it, nor as to the identity, authority, or rights
of any person executing such instrument, nor for failure to comply with any of
the provisions of any agreement, contract, or other instrument filed with
Escrow Holder or referred to here, except Escrow Holder's own performance
pursuant to this Agreement or any other escrow instructions or if by reason of
Escrow Holder's own gross negligence. Escrow Holder's duties under this
Agreement shall be limited to safekeeping the money, instruments, or other
documents received by it as Escrow Holder, and for depositing them in
accordance with the terms of this Agreement. Notwithstanding the foregoing,
nothing in this Section 5.3 shall limit the liability of Escrow Holder as the
title insurer under the title policy.
Section 6. Contingencies and Conditions to Closing.
6.1 Conditions Precedent to Buyer's Obligations. The close of Escrow and
Buyer's obligations with respect to the transaction contemplated by this
Agreement are subject to the satisfaction, not later than the Closing Date
(unless otherwise provided), of the following conditions, and the obligations
of the parties with respect to such conditions are as follows:
6.1.1 Title. At closing, and as set forth in Section 4, Seller
shall convey fee simple title to the Land by statutory warranty deed, subject
only to the items set forth in Section 4, nondelinquent real property taxes,
items 1 through 11 of the preliminary title report prepared by Escrow Holder,
Order No. 136043, dated February 15, 1996 (the "Preliminary Commitment"), a
copy of which is attached as Exhibit D, and other matters that may be approved
in writing by Buyer; or
6.1.2 Preliminary Title Report Issuance. Within twenty (20) days
of the execution of this Agreement, Seller, at Seller's cost and expense, shall
cause Title Company to issue to Buyer its preliminary title report on the Land
(the "Preliminary Commitment"), along with copies of all documents that give
rise to exceptions listed in the report (the "Underlying Documents"). Within
twenty (20) days of receiving the Preliminary Commitment and the Underlying
Documents, Buyer shall give Seller written notice setting forth the exceptions
that are not acceptable to Buyer (the "Unacceptable Exceptions"). All other
exceptions shall be deemed acceptable to Buyer. Seller shall have thirty (30)
days after receiving Buyer's notice within which to give Buyer its written
notice agreeing to eliminate the Unacceptable Exceptions or electing to
terminate this Agreement. If Seller agrees to eliminate the Unacceptable
Exceptions, Seller shall be obligated to do so at its cost and as of the
Closing Date. In the event an updated preliminary title report identifies
additional exceptions, the same process shall be utilized to either accept or
eliminate additional Unacceptable Exceptions.
6.1.3 Seller's Deliveries. Seller shall have timely delivered
each and every item to be delivered by Seller pursuant to this Agreement.
6.1.4 Title Insurance. As of the close of escrow, Title Company
shall have issued or shall have committed to issue the title policy to Buyer.
6.1.5 Buyer's Due Diligence. Buyer's obligation to close shall
be contingent upon completion of Buyer's due diligence investigation of the
Land and Buyer's study of the feasibility of developing the Project on the
Land. Buyer's due diligence may include, without limitation, the following:
(i) Inspection of the Land by Buyer or Buyer's agents;
(ii) Review and approval of all existing plans, specifications, soils
reports, environmental reports, engineering reports, and other
reports and information relating to the Land and the plans and
specifications for the entrance to the PUD, including signage at
the entrance; and
(iii) Buyer's receipt and acceptance of an environmental assessment by
a qualified environmental consulting firm selected and paid for
by Buyer. The assessment is to indicate that there is no
evidence that hazardous materials are present on, under, or so
near the Land or in the fill to be placed upon the Land, in such
form and quantities as to expose Buyer to liability for clean
up, the cost thereof, or other legal environmental liability.
Buyer shall complete all due diligence by April 30, 1996. If Buyer elects to
cancel this transaction, at the end of this time, Buyer shall provide Seller
with written notice of Buyer's intent to cancel the transaction. In the event
Buyer fails to provide the written notice, this contingency shall be deemed
satisfied.
6.1.6 Local Improvement District. Within ninety (90) days of the
execution of this Agreement, Seller shall deliver to Buyer all existing
documentation for the LID for the construction of the Access Road. In the
event the LID is not approved within ninety (90) days of the execution of this
Agreement, Buyer may cancel this transaction and receive a full refund of all
Earnest Money.
6.1.7 Consent to Assignment of Right to Purchase. Within ninety
(90) days of the execution of this Agreement, Seller shall have obtained from
LMP a consent to the assignment of the right to purchase that portion of the
Land which is subject to the Option.
6.1.8 Land Division. The County approves the pending and any
other necessary land division or lot line adjustments to subdivide the Land
into a saleable parcel.
6.1.9 Seller's Construction Activities and Government Approvals.
The following work has been completed on the Property or in connection with the
development of the PUD and the following approvals and permits have been
obtained with respect to the PUD and the Project:
6.1.9.1 The Access Road has been completed to the satisfaction
of the County to allow adequate road access for construction of the Project;
6.1.9.2 Seller has completed placement and engineered
compaction of the fill to be placed on the Property in a manner satisfactory
to, and approved by, Buyer. Seller contemplates using as fill some or all, of
the soil resulting from the cuts necessary to construct the Access Road;
6.1.9.3 Seller has caused to be constructed water lines with
sufficient flow for fire purposes as required by governmental authorities have
been completed to the Property line;
6.1.9.4 Seller has caused to be constructed all other
Utilities including sanitary sewer, storm sewer, gas, and electricity as are
necessary to enable Buyer to construct the Project, obtain a certificate of
occupancy for the Project and occupy the Project;
6.1.9.5 Seller has obtained all zoning and land use approvals
and permits required for development of the single-family development known as
Phase 1 of the Altamont Planned Unit Development and for the development of the
site for the Project (to include at least 441 multi-family units) and such
approvals are final and non-appealable. The parties acknowledge that it shall
be Buyer's responsibility and obligation to obtain all necessary design
approvals, grading permits, and building permits for the construction of the
multi-family units, and that such approvals are not a condition of closing.
6.1.10 Buyer shall have obtained design approval and site
plan approval for the Project, subject to such conditions and limitations as
may be acceptable to Buyer; provided, however, that if Buyer has not obtained
such approval by August 31, 1996, due to Buyer's failure to apply for such
approval by June 30, 1996, then such approval shall be deemed to have been
obtained by Buyer.
The conditions set forth in this Section 6.1 are solely for the
benefit of Buyer and may be waived only by Buyer. Buyer shall at all times
have the right to waive any condition. Such waiver or waivers shall be in
writing to Seller. The waiver by Buyer of any condition shall not relieve
Seller of any liability or obligation with respect to any representation,
warranty, covenant, or agreement of Seller. Neither Seller nor Buyer shall act
or fail to act for the purpose of permitting or causing any condition to fail
(except to the extent Buyer, in its own discretion, exercises its right to
disapprove any such items or matters).
6.2 Conditions Precedent to Seller's Obligations. The close of Escrow
and Seller's obligations with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Closing Date
(unless otherwise provided), of the following conditions, and the obligation of
the parties with respect to such conditions are as follows:
6.2.1 Buyer's delivery to Escrow Holder on or before the Closing
Date, for disbursement as provided herein, of the Purchase Price and the
documents and materials described herein.
6.2.2 Buyer shall have funded the gap loan set forth in
Section 17 of this Agreement.
6.2.3 The County shall have approved any necessary land divisions
to create a saleable parcel.
6.2.4 Seller shall have received a commitment for the loan for
the purpose of developing Phase 1 as described in Section 2(j) of the Loan
Agreement attached hereto as Exhibit I-1.
The conditions set forth in this Section 6.2 are solely for the
benefit of Seller and may be waived only by Seller. Seller shall at all times
have the right to waive any condition. Such waiver or waivers shall be in
writing to Buyer. The waiver by Seller of any condition shall not relieve
Buyer of any liability or obligation with respect to any representation,
warranty, covenant, or agreement of Buyer. Neither Buyer nor Seller shall act
or fail to act for the purpose of permitting or causing any condition to fail
(except to the extent Seller, in its own discretion, exercises its right to
disapprove any such items or matters).
6.3. Failure of Conditions to Closing. In the event any of the conditions
set forth in Sections 6.1 or 6.2 are not timely satisfied or waived, for a
reason other than the default of Buyer or Seller under this Agreement:
6.3.1 This Agreement, the Escrow, and the rights and obligations
of Buyer and Seller shall terminate, except as otherwise provided herein; and,
6.3.2 Escrow Holder is hereby instructed to promptly return to
Seller and Buyer all funds and documents deposited by them, respectively, in
Escrow that are held by Escrow Holder on the date of the termination (minus, in
the case of the party otherwise entitled to such funds, however, the amount of
any cancellation charges required to be paid by that party under Section 6.4).
6.4 Cancellation Fees and Expenses. In the event this Escrow terminates
because of the nonsatisfaction of any condition for a reason other than the
default of Seller under this Agreement, the cancellation charges required to be
paid by and to Escrow Holder shall be borne by Buyer. In the event this Escrow
terminates because of Seller's default, the cancellation charges required to be
paid by and to Escrow Holder shall be borne by Seller. The obligations set
forth in this Section 6.4 are in addition to the remedies provided in
Section 22.
6.5 Contingencies To Closing. Seller's obligation to sell the Land to
Buyer and Buyer's obligation to purchase the Land from Seller shall be
contingent upon mutual agreement between Seller and Buyer on, and approval by
Seller and Buyer of, the following:
(a) A preliminary fill plan to be attached to this Agreement as
Exhibit E-1;
(b) A plan for the monument sign at the entry to the Altamont
Planned Unit Development described in Section 13.3.3 of this Agreement;
(c) A proportionate share of, or limit on, the homeowners' dues to
be imposed by the Altamont Homeowners Association on the Land and paid by Buyer
as owner of the Land; and,
(d) An Approved Building Materials List to be attached to this
Agreement as Exhibit H.
Seller and Buyer shall have until 5:00 p.m. on April 30, 1996, to
satisfy or waive the contingencies set forth in this Section 6.5 and to give
the other party notice that such contingencies have been satisfied or waived.
If Seller and Buyer shall not both satisfy or waive such contingencies and give
the other party such notice on or before 5:00 p.m. on April 30, 1996, then this
Agreement shall be automatically terminated.
Section 7. Deliveries to Escrow Holder.
7.1 By Seller. On or before the Closing Date, Seller shall deliver the
following in escrow to Escrow Holder:
7.1.1 Deed. A statutory warranty deed, substantially in the form
attached as Exhibit F, duly executed and acknowledged in recordable form by
Seller, conveying all of the Property to Buyer subject only to the items set
forth in Section 4, and other matters that may be approved in writing by Buyer.
7.1.2 General Assignment. Seller shall assign to Buyer all of
Seller's interests in or related to the Property, including without limitation:
7.1.2.1 All approvals, permits, and agreements involving or
relating to the Land as more particularly defined in Exhibit G.
7.1.2.2 All plans, specifications, reports, as-built drawings,
maps and the like relating to the utilities to be constructed by Seller to or
on the Land and the fill to be placed by Seller on the Land; and,
7.1.2.3 Any warranties or guaranties arising out of
construction, consulting, architectural, and engineering contracts relating to
the construction of utilities to be constructed by Seller to or on the Land and
the fill to be placed on the Land by Seller.
7.1.3 Nonforeign Certification. Seller represents and warrants
that it is not a "foreign person" as defined in IRC Section 1445. Seller will
give an affidavit to Buyer to this effect in the form required by that statute
and related regulations.
7.1.4 Changes of Address. Written notices executed by Seller to
taxing authorities having jurisdiction over the Property changing the address
for service of notice and delivery of statements and bills.
7.1.5 Proof of Authority. Such proof of Seller's authority and
authorization to enter into this Agreement and to consummate the transaction
contemplated by it, and such proof of the power and authority of the persons
executing and/or delivering any instruments, documents, or certificates on
behalf of Seller to act for and bind Seller, as may be reasonably required by
Escrow Holder and/or Buyer.
7.2 By Buyer. On or before the Closing Date, Buyer shall deliver the
following in escrow to Escrow Holder:
7.2.1 Purchase Price. The Purchase Price in accordance with
Section 2 above;
7.2.2 Prorations. The amount due Seller, if any, after the
prorations are computed in accordance with Section 11 below; and,
7.2.3 Proof of Authority. Such proof of Buyer's authority and
authorization to enter into this Agreement and to consummate the transaction
contemplated by it, and such proof of the power and authority of the persons
executing and/or delivering any instruments, documents, or certificates on
behalf of Buyer to act for and bind Buyer, as may be reasonably required by
Escrow Holder and/or Seller.
Section 8. Deliveries to Buyer at Closing. Seller shall deliver
possession of the Land to Buyer at close of Escrow.
Section 9. Title Insurance. At Closing, Seller shall provide, at its
expense, a standard owner's title insurance policy in the amount of the
Purchase Price specified above, insuring title vested in Buyer or its nominees,
subject only to the items set forth in Section 4, and other matters that may be
approved in writing by Buyer. Buyer shall pay the additional premium for an
ALTA extended coverage title insurance policy.
Section 10. Adjustments. Seller shall pay for the standard coverage
title insurance policy, all transfer fees or taxes, one-half of all escrow fees
and costs, survey costs, and Seller's share of prorations pursuant to
Section 11 below. Buyer shall pay the additional premium for an ALTA extended
coverage policy of title insurance, if such policy is desired by Buyer, one-
half of the escrow fees and costs, its own engineering and inspection fees, and
Buyer's share of prorations pursuant to Section 11 below. Buyer and Seller
shall each pay their own legal fees. All other costs and expenses shall be
allocated between Buyer and Seller in accordance with the customary practice in
Clackamas County, Oregon. At closing, Buyer shall contribute any funds
necessary to pay its share of adjustments.
Section 11. Prorations. Presently existing taxes, assessments, improve-
ment bonds, and other expenses, if any, affecting the Land shall be prorated as
of the day following the Closing Date. For the purpose of calculating
prorations, Buyer shall be deemed to be in title to the Land and, therefore,
responsible for the expenses for the entire day following the Closing Date.
Section 12. Disbursements and Other Actions by Escrow Holder. At closing,
Escrow Holder shall do the following:
12.1 Funds. Disburse all funds deposited with Escrow Holder by Buyer in
payment of the Purchase Price as follows:
12.1.1 Deduct all items chargeable to the account of Seller
pursuant to Section 11 above.
12.1.2 Disburse the balance of the Purchase Price to Seller
promptly upon closing.
12.1.3 Disburse the remaining balance of the funds, if any, to
Buyer promptly upon closing.
12.2 Recording. Cause the deed and any other documents that the parties
may mutually direct to be recorded in the official records and obtain conformed
copies for distribution to Buyer and Seller.
12.3 Title Policy. Issue the title policy to Buyer.
12.4 Disbursement of Documents to Buyer. Disburse to Buyer the FIRPTA
certificate and any other documents (or copies thereof) deposited into escrow
by Seller pursuant hereto.
Section 13. Seller's Representations, Warranties, and Covenants. In
addition to any express agreements of Seller contained herein, the following
constitute representations and warranties of Seller to Buyer:
13.1 Representations Regarding Seller's Authority.
13.1.1 Seller has the legal power, right, and authority to enter
into this Agreement and the instruments referred to here and to consummate the
transactions contemplated herein, subject to the completion of a pending land
division.
13.1.2 All requisite action (corporate, trust, partnership, or
otherwise) has been taken by Seller in connection with entering into this
Agreement, the instruments referred to here, and the consummation of the
transactions contemplated here.
13.1.3 The persons executing this Agreement and the instruments
referred to here on behalf of Seller and the partners, officers, or trustees of
Seller, if any, have the legal power, right, and actual authority to bind
Seller to the terms and conditions of this Agreement.
13.1.4 This Agreement and all documents required to be executed by
Seller are and shall be valid, legally binding obligations of and enforceable
against Seller in accordance with their terms.
13.1.5 Neither the execution and delivery of this Agreement and
documents referred to here, nor the incurring of the obligations set forth
here, nor the consummation of the transactions here contemplated, nor
compliance with the terms of this Agreement and the documents referred to here
conflict with or result in the material breach of any terms, conditions, or
provisions of, or constitute a default under any bond, note, or other evidence
of indebtedness, or any contract, indenture, mortgage, deed of trust, loan,
partnership agreement, lease, or other agreements or instruments to which
Seller is a party or affecting the Property.
13.2 Warranties and Representations Pertaining to Real Estate and Legal
Matters.
13.2.1 The information contained in the recitals is true and
correct in every material respect as of the date of this Agreement.
13.2.2 Except as disclosed to Buyer in writing, Seller knows of no
litigation, claim, or arbitration, pending or threatened, with regard to the
Land or its operation.
13.2.3 No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization, or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, nor are any such proceedings contemplated by Seller.
13.2.4 To the best of Seller's knowledge after due inquiry, the
construction, occupancy, and operation of the Land materially conform to and
comply with all applicable city, county, state, and federal law, statutes,
ordinances, and regulations, subject to a pending land division. Seller has
obtained all zoning and land use approvals and will diligently pursue obtaining
permits required for development of the single-family development known as
Phase I of the Altamont PUD and for the development of the Project on the Land
(other than design approvals, grading permits and building permits relating to
the Project) and such zoning and land use approvals are final and non-
appealable.
13.2.5 Seller has not entered into any other contracts for the
sale of the Land, nor do there exist any rights of first refusal or options to
purchase the Land.
13.2.6 Seller has not received any notices from any insurance
company or from any consultant engaged by Seller of any defects or inadequacies
in the Land.
13.2.7 To the best of Seller's knowledge, the Land is materially
in compliance with applicable state and federal environmental standards and
requirements affecting it.
13.2.8 Seller has not received any notices of violation or
advisory action by regulatory agencies regarding environmental control matters
or permit compliance with respect to the Land. To the best of Seller's
knowledge, no part of the Land constitutes wetlands subject to the jurisdiction
of the United States Army Corp. of Engineers.
13.2.9 Seller has not transferred hazardous waste from the Land to
another location that is not in compliance with applicable environmental laws,
regulations, or permit requirements. To the best of Seller's knowledge, no
other person has transferred hazardous waste from the Land to another location
that is not in compliance with applicable environmental laws, regulations, or
permit requirements.
13.2.10 There are no proceedings, governmental administrative
actions, or judicial proceedings pending or, to the best of Seller's knowledge,
contemplated under any federal, state, or local laws regulating the discharge
of hazardous or toxic materials or substances into the environment.
13.2.11 To the best of Seller's knowledge, Seller or others have not,
during its control of the Property, stored, produced, or disposed of any
hazardous substance, including asbestos, on the Land.
13.3 Covenants Pertaining To Real Estate and Legal Matters.
13.3.1 Seller covenants and agrees to use its best efforts to
fulfill the conditions precedent to the close of Escrow set forth in
Sections 6.1.6, 6.1.7, 6.1.8, 6.1.9, and all subsections thereof.
13.3.2 Sellers covenants and agrees to make any necessary payments
to the County required under the Memorandum of Understanding between Seller and
the County.
13.3.3 Seller covenants and agrees to construct a monument sign at
the entry to the Altamont Planned Unit Development, which sign shall be subject
to approval by Buyer, which approval shall not be unreasonably withheld. Such
monument sign may include separate signage for the Project. Seller will
cooperate with Buyer in Buyer's efforts to obtain approval from the County for
such separate signage.
13.3.4 Seller covenants and agrees to comply with and fulfill all of
the conditions of the land use approvals and permits required for development
of the single-family development known as Phase I of Altamont Planned Unit
Development and for the development of the Project on the Land (other than
design approvals, grading permits, and building permits relating to the
Project).
13.3.5 Seller covenants and agrees to form a Homeowner's Association
("HOA") for the PUD. The Declaration of Covenants, Conditions, and
Restrictions for the PUD (the "Declaration") and the Articles of Incorporation,
Bylaws, and other documents relating to the HOA shall be reasonably
satisfactory to Buyer. Buyer, as owner of the Land, shall be entitled to
representation on the Board of Directors of the HOA pursuant to the terms of
the Declaration, Articles of Incorporation, and Bylaws of the HOA.
Section 14. As Is. Other than Seller's representations and warranties
contained in this Agreement and those contained in any instrument delivered to
Buyer at closing, Buyer acknowledges that it is purchasing the Property "AS
IS."
Section 15. Buyer's Representations, Warranties, and Covenants. In
addition to any express agreements of Buyer contained here, the following
constitute representations and warranties of Buyer to Seller:
15.1 Buyer has the legal power, right, and authority to enter into
this Agreement and the instruments referred to here and to consummate the
transactions contemplated here.
15.2 All requisite action (corporate, trust, partnership, or
otherwise) has been taken by Buyer in connection with entering into this
Agreement and the instruments referred to here and the consummation of the
transactions contemplated here. No further consent of any partner,
shareholder, creditor, investor, judicial or administrative body, governmental
authority, or other party is required.
15.3 The persons executing this Agreement and the instruments
referred to here on behalf of Buyer have the legal power, right, and actual
authority to bind Buyer to the terms and conditions of this Agreement.
15.4 This Agreement and all documents required by it to be executed
by Buyer are and shall be valid, legally binding obligations of, and
enforceable against Buyer in accordance with their terms.
15.5 Neither the execution and delivery of this Agreement and
documents referred to here, nor the incurring of the obligations set forth
here, nor the consummation of the transactions contemplated, nor compliance
with the terms of this Agreement and the documents referred to here conflicts
with or results in the material breach of any terms, conditions, or provisions
of or constitute a default under any bond, note, or other evidence of
indebtedness, or any contract, indenture, mortgage, deed of trust, loan,
partnership agreement, lease, or other agreements or instruments to which Buyer
is a party.
15.6 Buyer shall pay when due, all payments required of Buyer under
the terms of this Agreement. Buyer shall perform any term, condition, and
provision of this Agreement in a timely manner with time being of the essence.
Buyer's failure to perform under this Agreement shall constitute a default
giving rise to the remedies set forth in Section 22.2.2 of this Agreement.
15.7 Buyer shall construct the multi-family units to a high standard
using building materials from the material list attached hereto as Exhibit H.
Section 16. Damage or Destruction; Condemnation. Until close of Escrow,
the risk of loss shall be retained by Seller. Seller shall keep the Land fully
insured until close of Escrow. If all or any part of the Land is damaged,
destroyed, or condemned or if condemnation proceedings are instituted before
close of Escrow, then Buyer may elect to either (i) terminate this Agreement,
in which event Escrow Holder shall promptly the Earnest Money and accrued
interest thereon to Buyer, this Agreement shall have no further force and
effect, and both Seller and Buyer shall be relieved and released of and from
any and all further liability under this Agreement; or, (ii) proceed to close
Escrow without an adjustment in price, in which event Seller shall assign to
Buyer all its right to any insurance proceeds or condemnation award, including
the sole right to settle or approve the settlement of any insurance claim or
condemnation action. Buyer shall have thirty (30) days after notice of any
such damage, destruction, or condemnation within which to notify Seller as to
whether Buyer elects to terminate this Agreement or proceed to close Escrow.
During such thirty (30) day period, Seller shall cooperate and use its best
efforts to provide Buyer with all information reasonably necessary to evaluate
the extent of such damage or destruction or the scope of such condemnation.
Section 17. Gap Loan. Buyer will loan Seller up to $800,000.00 for a
term of two years from the date of closing of the loan transaction. The loan
transaction shall close on or before May 15, 1996. Notwithstanding the
foregoing, if Seller is unable or unwilling to close the purchase and sale
transaction contemplated by this Agreement on or before September 15, 1996, or
such other extended Closing Date set forth in Section 1.2, then the loan will
be accelerated and become due and payable on December 14, 1996. The loan shall
bear interest at an annual rate equal to that rate announced by the Bank of
Boston from time to time as its prime rate plus two percent (2%). Interest
only shall be payable quarterly. Seller will pay a loan fee of two percent
(2%) of the principal amount to Buyer and Lender's legal fees not to exceed one
percent (1%) of the actual loan amount. Loan documentation is appended hereto
as Exhibit I.
Section 18. Notices. All notices or other communications required or
permitted under this Agreement shall be in writing, and shall be personally
delivered (including by means of professional messenger service) or sent by
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received three (3) days after deposit in the United States
mail:
To Buyer: Wellsford Residential Property Trust
Attention: Daniel M. Kelley
101 East 26th Street, Suite 301
Tacoma, Washington 98421
With a Copy to: Wellsford Residential Property Trust
610 Fifth Avenue, 7th Floor
New York, New York 10020
Attn: Chief Financial Officer
With a Copy to: Richard D. Thaler, Esq.
Williams, Kastner, Gibbs
601 Union Street, Suite 4100
Seattle, Washington 98101
To Seller: Derby-Heinze Partnership
c/o Double D Development, Inc.
Mr. Dennis L. Derby, President
6655 S.W. Hampton Street, Suite 100
Portland, Oregon 97223
With a Copy to: Mr. Gregory Heinze
Shelburne Company, Inc.
7008 S.W. Nyberg Road
Tualatin, Oregon 97062
and a Copy to: Stuart K. Cohen, Esq.
Cohen & Wu
41st Floor
111 S.W. 5th Avenue
Portland, Oregon 97204
To Escrow Holder: Chicago Title Insurance Company of Oregon
Attention: Nancy LaFontaine
10001 S.E. Sunnyside Road
Clackamas, Oregon 97015
Notice of change of address shall be given by written notice in the manner
detailed in this paragraph.
Section 19. Broker. At the close of Escrow, Buyer shall pay a Buyer's
brokerage commission and fees owed to the brokerage firms of George N. Diamond
of Real Estate Investment Group and Ted E. Johnson, Broker, which represented
Buyer in the transaction, in the approximate amount of $176,400.00 in
connection with the transactions contemplated by this Agreement as set forth in
the January 9, 1996 letter agreement attached hereto as Exhibit J. Seller
represents and warrants to Buyer, and Buyer represents and warrants to Seller,
that no other broker or finder has been engaged by it, respectively, in
connection with any of the transactions contemplated by this Agreement, or to
its knowledge is in any way connected with any of such transactions. In the
event of any claims for additional brokers' or finders' fees or commissions in
connection with the negotiation, execution, or consummation of this Agreement,
then Buyer shall indemnify, hold harmless, and defend Seller from and against
such claims if such claims are based on any statement or representation or
agreement by Buyer, and Seller shall indemnify, hold harmless, and defend Buyer
if such claims are based on any statement, representation, or agreement made by
Seller.
Section 20. Required Actions of Buyer and Seller. Buyer and Seller agree
to execute all such instruments and documents and to take all actions pursuant
to the provisions of this Agreement in order to consummate the purchase and
sale contemplated and shall use their best efforts to accomplish the close of
Escrow in accordance with the provisions here.
Section 21. Entry. Buyer, its agents, and designees shall have
reasonable access to the Land. Buyer shall indemnify and hold Seller harmless
from any loss, damage, or claim arising out of Buyer's access to the Property.
Section 22. Legal and Equitable Enforcement of This Agreement.
22.1 Default By Seller. In the event the close of Escrow and the
consummation of the transaction here contemplated do not occur by reason of any
default by Seller, Buyer shall have the right to either (i) obtain liquidated
damages as hereinafter set forth as Buyer's sole remedy, or (ii) institute an
action for specific performance to enforce Seller's obligations under this
Agreement to convey title to the Land to Buyer and to fulfill Seller's other
obligations under this Agreement. If and only of Buyer elects to obtain
liquidated damages, Buyer and Seller agree that it would be impractical and
extremely difficult to estimate the damages that Buyer may suffer. Therefore,
Seller and Buyer agree that a reasonable estimate of the total net detriment
that Buyer would suffer in the event that Seller defaults and fails to convey
the Land to Buyer is an amount equal to the Earnest Money and accrued interest
thereon and Buyer's predevelopment costs and expenses, including without
limitation, architectural, consultant, engineering, and legal fees and related
costs not to exceed One Hundred Thousand and No/100 Dollars ($100,000.00),
which amount shall be the full, agreed, and liquidated damages for the breach
of this Agreement., all other claims to damage or other remedies being herein
expressly waived by Buyer, and shall be Buyer's sole and exclusive remedy for
the breach of this Agreement (whether at law or in equity) unless Buyer elects
to institute an action for specific performance as set forth in this Section.
The payment of this amount as liquidated damages is not intended as a
forfeiture or penalty, but is intended to constitute liquidated damages to
Buyer. Upon default by Seller, this Agreement shall be terminated and neither
party shall have any further rights or obligations under this Agreement, each
to the other, except that Escrow Holder shall promptly return the Earnest Money
and accrued interest thereon to Buyer and except for the right of Buyer to
collect such predevelopment costs and expenses as liquidated damage from
Seller.
22.2 Default By Buyer.
22.2.1 Prior to Close of Escrow. In the event the close of Escrow
and the consummation of the transaction here contemplated do not occur by
reason of any default by Buyer, Buyer and Seller agree that it would be
impractical and extremely difficult to estimate the damages that Seller may
suffer. Therefore, Buyer and Seller agree that a reasonable estimate of the
total net detriment that Seller would suffer in the event that Buyer defaults
and fails to complete the purchase of the property is and shall be, and
Seller's sole and exclusive remedy (whether at law or in equity), an amount
equal to the Earnest Money actually paid by Buyer. This amount shall be the
full, agreed, and liquidated damages for the breach of this Agreement by Buyer,
all other claims to damage or other remedies being herein expressly waived by
Seller. The payment of this amount as liquidated damages is not intended as a
forfeiture or penalty, but is intended to constitute liquidated damages to
Seller. Upon default by Buyer, this Agreement shall be terminated and neither
party shall have any further rights or obligations under it, each to the other,
except for the right of Seller to collect such liquidated damages from Buyer
and Escrow Holder. In the event Seller has delivered all items as required by
Section 7.1 above and has performed all of its obligations under this
Agreement, and Buyer fails to pay the Purchase Price in full into Escrow,
Escrow Holder shall immediately pay the Earnest Money of $100,000.00 to Seller,
upon receipt of a signed statement from Seller that it has complied in all
respects with the terms of this Agreement and has performed all obligations
under this Agreement that are conditions precedent to Buyer's obligations as
set forth in Section 6.1. Escrow Holder shall not require Buyer's written
approval as a condition precedent to the disbursement of the Earnest Money to
Seller.
22.2.2 Post Closing. In the event of a default after Closing,
Seller may take any one or more of the following steps:
22.2.2.1 Seller may specifically enforce the terms of this
Agreement by suit in equity.
22.2.2.2 Seller may set off against any obligation due to
Buyer any sums due Buyer from Seller.
22.2.2.3 In the event Buyer fails to make any payment for
(i) sewer; (ii) storm water retention facilities; or (iii) the Bonus Density
Payment within thirty (30) days after receipt of a documented payment request,
the unpaid obligation shall bear interest at the rate of eighteen percent (18%)
per annum from the due date, in addition to and not in lieu of any and all
other rights and remedies available to Seller.
Section 23. Assignment.
23.1 Buyer's Right to Assign. Buyer shall have the right to assign
its rights and obligations under this Agreement, upon giving prior written
notice to Seller, to any affiliated person or entity, provided that the
assignee expressly assumes the obligations of Buyer and the assignee
demonstrates to Seller's satisfaction that it has the financial ability to
perform. Buyer shall not assign any of its rights or obligations hereunder to
any third party which is not an affiliate of Buyer without the prior written
consent of Seller, which consent shall not be unreasonably withheld. Any
assignee shall succeed to all the rights and remedies under this Agreement,
including but not limited to the specific performance of this Agreement.
Notwithstanding the foregoing, no such assignment shall relieve Buyer from its
liability under this Agreement up to and through the close of escrow, whereupon
Buyer shall be fully relieved from any further liability under this Agreement.
23.2 Seller's Right to Assign. Seller shall have the right to assign
its rights and obligations under this Agreement, upon giving prior written
notice to Buyer, to any entity controlled by Seller, provided that the assignee
expressly assumes the obligations of Seller and the assignee demonstrates to
Buyer's satisfaction that it has the financial ability to perform. No such
assignment shall relieve Seller of any obligation under this Agreement.
Section 24. Real Estate Licensee. Seller hereby discloses to Buyer that
the principals of the two corporate partners of Seller are Oregon real estate
licensees acting on their own behalf.
Section 25. Miscellaneous.
25.1 Partial Invalidity. If any term or provision of this Agreement
or the application to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
25.2 Waivers. No waiver of any breach of any covenant or provision
contained here shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision here contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.
25.3 Survival of Representations. The covenants, agreements,
representations, and warranties made here shall survive the close of escrow and
shall not merge into the deed and the recordation of it in the official
records.
25.4 Successors and Assigns. This Agreement shall be binding on and
shall inure to the benefit of the permitted successors and assigns of the
parties to it.
25.5 Attorney Fees. In the event a party to this Agreement brings
any action or suit against another party to this Agreement by reason of any
breach of any of the covenants, agreements, or provisions on the part of the
other party arising out of this Agreement, then in that event the prevailing
party shall be entitled to have and recover from the other party all costs and
expenses of the action or suit, including reasonable attorney fees, at trial,
on appeal, and in any bankruptcy proceeding.
25.6 Entire Agreement. This Agreement (including any exhibits
attached to it) is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter of the Agreement and
supersedes all prior understandings with respect to it. This Agreement may not
be modified, changed, supplemented, or terminated, nor may any obligations
under it be waived, except by written instrument signed by the party to be
charged or by its agent duly authorized in writing or as otherwise expressly
permitted here. The parties do not intend to confer any benefit on any person,
firm, or corporation other than the parties hereto.
25.7 Time of Essence. Seller and Buyer hereby acknowledge and agree
that time is strictly of the essence with respect to each and every term,
condition, obligation, and provision.
25.8 Construction. Headings at the beginning of each section,
paragraph and subparagraph are solely for the convenience of the parties and
are not a part of this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural, and the masculine shall
include the feminine, and vice versa. This Agreement shall not be construed as
if it had been prepared by one of the parties, but rather as if both parties
had prepared it. Unless otherwise indicated, all references to sections,
paragraphs and subparagraphs are to this Agreement. All exhibits referred to
in this Agreement are attached and incorporated by this reference. In the
event the date on which Buyer or Seller is required to take any action under
the terms of this Agreement is not a business day, the action shall be taken on
the next succeeding business day.
Section 26. Governing Law; Venue. The parties acknowledge that this
Agreement has been negotiated and entered into in the state of Oregon. The
parties expressly agree that this Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
Oregon. Any proceeding to interpret or enforce this Agreement shall be
commenced and prosecuted in a court of appropriate jurisdiction in Portland,
Oregon. The parties hereto irrevocably submit to the jurisdiction of such
court.
Section 27. Capacity; No Personal Liability. This Agreement and all
documents, agreements, understandings, and arrangements relating to this
transaction have been executed or entered into by an officer of Buyer in
his/her capacity as an officer of Buyer which has been formed as Maryland Real
Estate Investment Trust pursuant to a Declaration of Trust dated July 10, 1992,
as amended, and not individually, and neither the trustees, officers, or
shareholders of Buyer shall be bound or have any personal liability hereunder
or thereunder. All persons dealing with Buyer shall look solely to the assets
of Buyer for satisfaction of any liability of Buyer in respect of this
Agreement and all documents, agreements, understandings, arrangements relating
to this transaction and will not seek recourse or commence any action against
any of the trustees, officers, or shareholders of Buyer or any of their
personal assets for the performance or payment of any obligation hereunder or
thereunder. The foregoing shall also apply to any future documents,
agreements, understandings, arrangements, and transactions between the parties
hereto.
THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE
PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE
LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE
CONSTRUCTION OR SITING OF A RESIDENCE. BEFORE SIGNING OR ACCEPTING THIS
INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH
THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND
EXISTENCE OF FIRE PROTECTION FOR STRUCTURES.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written above.
SELLER: BUYER:
DERBY-HEINZE PARTNERSHIP WELLSFORD RESIDENTIAL
an Oregon General Partnership PROPERTY TRUST
By: DOUBLE D DEVELOPMENT, INC.
an Oregon corporation By: /s/ Daniel M. Kelley
- ---------------------
Title: Vice Chairman
---------------------
By: /s/ Dennis L. Derby
---------------------
Dennis L. Derby
President
SHELBURNE COMPANY, INC.
an Oregon corporation
By: /s/ Gregory Heinze
-------------------
Gregory Heinze
President
CHICAGO TITLE INSURANCE COMPANY OF OREGON, Escrow Holder, by its duly
authorized signature below, agrees to accept this escrow on the terms and
conditions of, and to comply with the instructions contained in, the foregoing
Agreement.
CHICAGO TITLE INSURANCE COMPANY
OF OREGON
By: /s/ Nancy LaFontaine
----------------------
Title: Escrow Officer
--------------------<PAGE>
EXHIBIT A
Legal Description of Lincoln Memorial Park Land<PAGE>
EXHIBIT B
Legal Description of Hoyt Property<PAGE>
EXHIBIT C
Homeowners Association Documentation<PAGE>
EXHIBIT D
Preliminary Commitment<PAGE>
EXHIBIT E
Preliminary Fill Plan/Storm Facility Allocation Formulas
<PAGE>
EXHIBIT E-1
FILL SPECIFICATIONS
Seller shall place and compact, or cause to be placed and compacted, fill
on the Property in accordance with the following provisions. All such fill
shall be placed on the Property in a manner satisfactory to, and approved by,
Buyer. Buyer shall accept not less than 100,000 cubic yards of fill material
generated from the construction of the Johnson Creek Boulevard Extension.
Buyer shall provide Seller with a mass grading and fill plan on or before
May 24, 1996. Seller shall pay all costs associated with normal supervision or
inspection of the fill placement. Buyer shall pay all costs associated with
Buyer's requested supervision or inspections of the fill placement.
1) Prior to commencement of any site work, a detailed geotechnical
evaluation of the Property, particularly those areas with slopes
exceeding 20%, shall be completed by Geotechnical Resources, Inc., or
some other mutually acceptable geotechnical engineer (the
"Geotechnical Engineer"). This evaluation should be based upon more
detailed site and building plans and further site investigations and
shall include an analysis by the Geotechnical Engineer verifying that
the proposed fills on the Property and/or on sites adjacent to the
Property and the proposed cuts and trenching on the Property and/or
sites adjacent to the Property will have no potential of de-
stabilizing the soils.
2) Over excavation based on the recommendation of the Geotechnical
Engineer may be necessary.
3) Mass grading and fill placement operations should be monitored onsite
by the Geotechnical Engineer.
4) Cut/Fill Process:
a. Provide cut and fill to grades on mutually acceptable plans.
The ground surface of the Property should be stripped of all
vegetation, surface organics, and loose surface soils.
Stripping will be required to a minimum 6" to 12" depth,
however, additional stripping depth may be required. Strippings
will be hauled offsite.
b. Fine-grained soils cannot be used to construct compacted
structural fills during wet weather. Silty clay soils will
require aeration and drying to lower the moisture content to
permit adequate compaction. Alternatively, the wet soils can be
treated with admixtures, such as lime or cement.
c. As required by the Geotechnical Engineer, subdrains, such as
french drains, shall be placed in all existing drainages and
swales prior to fill placement. Depending on the final location
of fills and the steepness of the slopes, it may also be
necessary to install drainage/working blankets of pit-run rock
at the base of the fills to facilitate construction of the
remainder of the fill. The necessity of these procedures will
be determined by the Geotechnical Engineer based upon site
observations during the construction process.
d. All fill should be placed in thin lifts and compacted with
suitable equipment to at least 95% of the maximum dry density as
determined by ASTM D 698. Thickness of lifts will be determined
by Geotechnical Engineer. All fill shall be tested as required
by the Geotechnical Engineer.
e. Fills constructed on existing slopes steeper than 5H:1V should
be benched into the slope at the toe of the fill. Unless
approved by the Geotechnical Engineer, cut and fill slopes,
including the slope between the Property and the adjacent school
should be constructed no steeper than 2H:1V.
f. Erosion control measures, reviewed by Otak and approved by
Clackamas County, will be put in place prior to commencement of
work and maintained as required by the County. These measures
will include, without limitation, silt fencing, hay bales, hydro
seeding, and other measures required to maintain and protect the
Property and downslope areas and minimize erosion of the
Property and downslope areas.
5) Upon completion of the mass grading and fill placement operations, the
Geotechnical Engineer shall provide Buyer with a letter substantially in
the form attached hereto as Exhibit 1.<PAGE>
EXHIBIT E-2
STORM DRAINAGE ALLOCATION FORMULA
The allocation is based upon the impervious area generated on the multi-
family and single-family sites serviced by the off-site detention facility.
The following assumptions were utilized in calculating the allocation between
the multi-family and single-family sites:
Multi-family:
24.5 acres x 65% impervious = 15.93 acres of impervious surface.
Single-family:
31.7 acres x 45 impervious - 14.26 acres of impervious surface.
Cost share to multi-family:
15.93
--------------
(15.93 + 14.27) = 53%
Cost share to single-family:
14.27
---------------
(15.93 + 14.27) = 47%
<PAGE>
EXHIBIT F
Statutory Warranty Deed<PAGE>
EXHIBIT G
Approvals, Permits, and Agreements Involving the Land<PAGE>
EXHIBIT H
Approved Building Materials
-Double Wall Construction
-Siding (No synthetic wood materials permitted)
-Lap
-Stucco
-Masonry
-Vinyl (high quality)
-Windows
-Vinyl
-Wood
-Roofing materials
-Tile
-Architectural Composition Asphalt Shingles (35 year grade or better
with built up ridges), including Tanko shingles
-Chimney flues to have architectural tops, if permitted by Code
<PAGE>
EXHIBIT I
Loan Documentation<PAGE>
EXHIBIT J
January 9, 1996 Letter Agreement
Exhibit 10.51
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT is made as of the 6th day of December, 1995 (the
"Effective Date"), by and between HG VENTURE, a Texas limited partnership,
having an address of 3200 Trammell Crow Center, 2001 Ross Avenue, Dallas,
Texas 75201 (hereinafter called "Seller") and WELLSFORD RESIDENTIAL PROPERTY
TRUST, a Maryland real estate investment trust, having an address at 370
Seventeenth Street, Denver, Colorado 80202, its assignee or nominee
(hereinafter called "Buyer").
RECITALS
WHEREAS, Seller is the owner in fee simple of the land (the "Land")
which is more fully described on Exhibit "A" attached hereto and made a part
hereof, together with the buildings and improvements thereon erected, known
as The Marks West Apartments, an apartment property located in the City of
Englewood, County of Arapahoe, State of Colorado, and having an address at
1528 Girard Place, Englewood, Colorado 80110 (the "Improvements") (the Land
and the Improvements are hereinafter collectively referred to herein as the
"Premises"); and
WHEREAS, the Premises are financed by a loan (the "Existing
Encumbrance") secured by deeds of trust currently encumbering the Premises,
in favor a trustee for the holders of certain tax-exempt bonds issued by the
City of Englewood (the "Bonds"); and
WHEREAS, Seller desires to sell and Buyer desires to buy the Property
(as hereinafter defined), for the price and other considerations and upon the
terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained, and respectively expressing the intention to be
legally bound hereby, covenant and agree as follows:
1. Sale. Seller agrees to sell and convey to Buyer, and Buyer agrees
to purchase and take from Seller, all of the following (hereinafter
collectively referred to as the "Property"), free and clear of all liens and
encumbrances, except Permitted Exceptions (as hereinafter defined):
A. The Land;
B. The Improvements;
C. Easements, rights of way, privileges, appurtenances, and
rights to the same belonging to and inuring to the benefit of the Premises;
D. All right, title and interest of Seller in and to any land
lying in the beds of any street, road or avenue, open or proposed, in front
of or adjoining said Premises to the center line thereof;
E. All fixtures, machinery, automobiles, computers, equipment,
furnishings, furniture, office equipment, appliances, supplies, operational
records and other personal property owned by Seller and now or hereafter
located on the Premises, including without limitation, all fittings, heating,
air cooling, air conditioning, freezing, lighting, laundry, incinerating and
power equipment and apparatus; all engines, pipes, pumps, tanks, motors,
conduits, switch boards, plumbing, lifting, cleaning, fire prevention, fire
extinguishing and refrigerating equipment and apparatus; all furnaces, oil
burners or units thereof; all appliances, vacuum cleaning systems, awnings,
signs, screens, storm doors and windows, cabinets, partitions, ducts and
compressors, hot water heaters, garbage receptacles and containers above and
below ground, janitorial supplies, landscaping materials, lawn mowers, tools,
and articles of a nature similar to the foregoing; all snow removal
equipment; and all future additions to or substitutions for the foregoing, or
any part thereof, between the date hereof and the date of closing hereunder;
and all other personal property now upon or hereafter placed on the Premises
which is used in connection with the operation of the Premises and owned by
Seller, and all warranties and guarantees to and rights of action of Seller
therefor, if any. (The property described in this Section 1E, when referred
to separately from the Premises, is hereinafter called "Personalty");
F. All right, title and interest of Seller in and to all strips,
gores, riparian rights and littoral rights, if any, belonging to or inuring
to the benefit of the Land and/or the Improvements;
G. Any other interest of Seller in and to the Premises or
pertaining thereto including, without limitation, all of Seller's right,
title and interest in and to the following (collectively, "Other Interests"):
(i) Any and all catalogs, booklets, manuals, files, logs,
records, correspondence, purchaser prospect list, tenant lists, tenant
prospect lists and other mailing lists, sales brochures and material, leasing
brochures and materials, advertising materials and other items, including
without limitation, title information, soil, engineering and environmental
inspections, studies and reports, market studies, and similar inspections
with respect to the sale, management, leasing, promotion, ownership,
maintenance, use, occupancy and operation of the Premises;
(ii) The right to use any name, trade name, trademark, service
mark or logo by which the Premises or any part thereof may be known or which
may be used in connection with the Premises, including without limitation,
the name "The Marks West Apartments" and all other fictitious names used on
the date hereof or which Seller has the right to use in connection with the
ownership, use, occupancy or operation of the Premises, and any logos or
marks associated with any such name (collectively, "Names") together with all
registrations, if any, for such Names;
(iii) All tenant security deposits, including any bank or other
depository accounts relating to the tenant security deposits;
(iv) Any bond, guaranty, warranty or repair agreements now
existing and outstanding concerning the Premises or any part thereof,
including without limitation, any bond, guaranty or warranty (including any
fidelity bonds) relating to construction, use, maintenance, occupancy or
operation of the Improvements and the Personalty, subject to any limitation
contained in each such bond, guaranty and warranty;
(v) Any licenses, permits, approvals and certificates issued
by any governmental authorities required or used in or relating to the
ownership, use, maintenance, occupancy or operation of any part of the
Premises;
(vi) Any surveys of, and plans and specifications relating to,
the Premises;
(vii) Any unrecorded utility agreements including any deposits
made thereunder;
(viii) The Service Agreements (as hereinafter defined);
(ix) The Tenant Leases listed on the Rent Roll (as both terms
are hereinafter defined);
(x) Any unpaid awards for any taking by condemnation or any
damage to the Premises by reason of a change of grade of any street or
highway, or any award paid to Seller and not used or applied by Seller to the
restoration of the Premises;
(xi) Any unpaid proceeds for any damage to the Premises by
reason of fire or other casualty, or any proceeds paid to Seller and not used
or applied by Seller to the restoration of the Premises;
(xii) Any development rights with respect to the Land; and
(xiii) Any water or water rights of any kind or description
appurtenant to or owned by Seller in connection with the Land or the
Improvements, including any ditch company stock.
2. Earnest Money Deposit; Purchase Price.
A. Within three business days after Buyer receives notice of
Seller's execution of this Agreement, Buyer shall deposit $200,000 with
Stewart Title Guaranty Company at 50 South Steele Street, Suite 600, Denver,
Colorado 80209 (the "Title Company") by check or wire transfer of immediately
available funds. Such funds and all interest earned thereon shall constitute
the "Earnest Money Deposit" under this Agreement and shall be held and
disbursed by the Title Company in accordance with the terms of this
Agreement. The Earnest Money Deposit shall be invested in an interest-
bearing account in a federally insured institution, and all interest earned
on the Earnest Money Deposit shall be added to and comprise a part of the
Earnest Money Deposit. Buyer and Seller shall execute such escrow
instructions as the Title Company may reasonably require, provided that such
instructions are consistent with the terms of this Agreement.
B. The purchase price for the Property is Seventeen Million Three
Hundred Thousand and no/100 dollars ($17,300,000.00) (the "Purchase Price"),
which Buyer shall pay as follows:
(i) Buyer shall pay approximately $200,000 by causing the
Title Company to apply all of the Earnest Money Deposit against the Purchase
Price;
(ii) Buyer shall pay approximately Eleven Million Four
Hundred Thousand and No/100 Dollars ($11,400,000.00) by the assumption of the
Existing Encumbrance, in the manner and as more fully described in Section 6D
of this Agreement;
(iii) Buyer shall pay the balance of the Purchase Price
(approximately $5,700,000.00) by wire transfer of immediately available funds
through the Federal Reserve System. Any closing prorations and adjustments
provided for herein (the "Adjustments") shall increase or decrease (as the
case may be) the cash portion of the Purchase Price to be paid pursuant to
this Section 2A(iii).
C. Seller and Buyer agree to negotiate in good faith to allocate
the purchase price among the various property comprising the Property as
follows: (i) that portion of the Property consisting of the apartment
complex, and (ii) that portion of the Property consisting of the Personalty.
Seller and Buyer shall determine such allocation and execute a letter
agreement evidencing such allocation on or before the expiration of the
Inspection Period.
3. Delivery of Documents. On or before ten (10) days after the
Effective Date of this Agreement (except as otherwise provided), Seller shall
deliver to Buyer, at Seller's sole cost and expense, copies of all of the
following items:
A. Any notices, correspondence or licenses or any agreements
(including without limitation subdivision and similar agreements) with, to or
from any governmental or quasi-governmental authority having jurisdiction
over the Property;
B. Any soils reports, environmental studies and building plans
and specifications for the Property which are in the possession of Seller or
its agents;
C. All tax statements and operating statements for the Property
for the last three years;
D. Current Rent Roll for the Property, certified by Seller;
E. Pursuant to C.R.S. Section 38-25.5-02(3)(b)(II), Seller at
its expense agrees to request a certificate of taxes due from each of the
Colorado Department of Revenue, the County of Arapahoe and the City of
Englewood. Seller's request for certificates of taxes due shall apply to all
categories of taxes which may give rise to a lien against the Property.
Seller shall deliver the original certificates of taxes due to the Buyer not
less than 10 days prior to the Closing Date, as defined hereafter. On or
prior to the Closing Date, Seller shall cause all taxes which are due, as
evidenced by such certificates, to be paid in full and provide proof of
payment to Buyer; and
F. Copies of the note evidencing the Existing Encumbrance, the
deeds of trust securing the Existing Encumbrance and all other loan documents
executed in connection therewith (collectively, the "Existing Encumbrance
Documents"), and all documents relating to the issuance of the Bonds to which
Seller is a party or which affect the Property;
G. Any and all additional data, plans, geological and engineering
studies or reports, zoning information, water and sewer studies, topographic
maps, platting information, catalogs, booklets, manuals, warranties,
guaranties or repair agreements, tenant lists, lease files, tenant prospect
lists and other mailing lists, market studies, and similar information with
respect to the management, leasing, promotion, ownership, maintenance, use,
occupancy and operation of the Premises which is in the possession of Seller
or its agents.
4. Survey. On or before twenty (20) days after the Effective Date
hereof, Seller shall deliver to Buyer, at Seller's sole cost and expense, a
current ALTA/ASCM Land Title Survey of the Property prepared and certified
(i) in accordance with the "Minimum Standard Detail Requirements for
ALTA/ASCM Land Title Surveys" jointly established and adopted ALTA and ASCM
in 1992, and including Items 1 through 4, 6 through 11, and 13 of Table A
thereof, and (ii) pursuant to the Accuracy Standards (as adopted by the ALTA
and ACSM and in effect on the date of the certification of such survey) of an
Urban Survey. The survey shall contain a certificate from the surveyor to
Buyer, the Title Company and any lender(s) designated by Buyer from time to
time in form acceptable to the Buyer. The survey shall be in a form
acceptable to the Title Company for the deletion of the standard survey
exception relating to boundaries, without the addition of further exceptions
unless same are acceptable to Buyer, in its sole and absolute discretion.
Buyer shall have until the end of the Inspection Period, as hereinafter
defined, to examine the survey delivered to it as provided herein. If Buyer
does not approve of the survey provided hereunder, Buyer, at its sole option,
may elect either (i) to terminate this Agreement, in which event the Earnest
Money Deposit shall be returned to Buyer upon written notice by the Buyer to
the Title Company, and this Agreement shall be of no further force or effect,
or (ii) to waive the objections and to proceed to close this purchase and
sale transaction in accordance with the terms of the remainder of this
Agreement. Buyer's election shall be made within five (5) days after Buyer's
receipt of written notice from Seller that any specified objectionable matter
will not be corrected, and Buyer's failure to deliver notice of its election
shall be deemed a waiver of such objectionable matters.
5. Title Insurance and Lien Search.
A. A current title insurance commitment covering the Property
issued by the Title Company, together with clear and legible copies of all
documents referred to therein, shall be delivered to Buyer, at Seller's sole
cost and expense, within twenty (20) days after the Effective Date of this
Agreement. The title insurance commitment shall be in the amount of the
Purchase Price, and shall commit the Title Company to issue its 1992 ALTA
Owner's Policy, with standard preprinted exceptions deleted, insuring good
and marketable title in fee simple to the Property in Buyer subject only to
(i) current non-delinquent general real property taxes, and (ii) such other
easements, restrictions and rights-of-way as Buyer shall deem, in its sole
discretion, not to adversely affect the value of or Buyer's intended use of
the Property. If the title insurance commitment shall contain any exception
for mineral rights, Seller shall pay for an endorsement to the title
insurance coverage insuring against any loss to improvements. Such title
insurance commitment shall include a gap endorsement pursuant to which Title
Company shall agree to insure against loss or damage by reason of there being
recorded any instrument first appearing in the public records subsequent to
the effective date of such commitment but prior to the effective date of the
title insurance policy and a Colorado Endorsement Form 100. If the title
insurance commitment delivered to Buyer shall contain any exceptions from
coverage which Buyer deems to be unacceptable, Buyer, at its option, may
elect either (i) to permit the Seller to secure, at its expense, affirmative
title insurance coverage with respect to the matters objected to, or (ii) to
terminate this Agreement, in which event the Earnest Money Deposit shall be
returned to Buyer upon written notice to the Title Company and this Agreement
shall be of no further force or effect, or (iii) to waive such objections and
proceed to close this purchase and sale transaction in accordance with this
Agreement. If Buyer does not deliver written notice of objection to title to
Seller as provided herein before the end of the Inspection Period, Buyer
shall be deemed to have waived this condition precedent. Any exceptions on
the title insurance commitment to which Buyer does not object or to which
Buyer objects but waives such objection pursuant to this Section shall be
deemed to be "Permitted Exceptions." Seller shall deliver at the Closing an
updated title insurance commitment, effective as of the date and hour of the
Closing, subject only to the Permitted Exceptions.
B. Seller shall cause the Title Company to deliver to Buyer
within ten (10) days after the Closing Date, at Seller's sole cost and
expense, a 1992 ALTA Owner's Policy, covering the Property in the amount of
the Purchase Price of the Property, effective as of the date and time of the
Closing, subject only to the Permitted Exceptions, and including such other
endorsements as Seller may have agreed to provide pursuant to Section 5A
above. The standard preprinted exceptions regarding parties in possession,
surveys, and mechanic's liens shall be deleted, at Seller's sole cost and
expense. Seller shall deliver to the Title Company any instruments,
documents, payments, indemnities, releases and agreements as the Title
Company shall require in order to issue, amend or update the title insurance
commitment as herein provided. At Closing, Seller shall obtain and deliver
to Buyer such assurances as Buyer may reasonably request that the Title
Company is irrevocably committed and prepared to issue its ALTA owner's
policy to Seller in accordance with the foregoing requirements.
C. If Title Company uses the escrow and closing services of an
agent in connection with this transaction, Seller shall cause Title Company
to issue to Buyer an insured closing letter, in form and substance reasonably
satisfactory to Buyer, which insured closing letter shall protect Buyer from
fraud or dishonesty of Title Company's agent in handling Buyer's funds or
documents in connection with the Closing and against the failure of the Title
Company's agent to comply with written closing instructions of Buyer or its
counsel.
D. During the Inspection Period, Buyer, at Seller's sole expense,
shall obtain from Title Company or from a Uniform Commercial Code lien search
service reasonably acceptable to Buyer, a current certificate reporting the
results of a Uniform Commercial Code lien search of all appropriate records
for security interests, financing statements, judgment liens, tax liens and
all other liens against any personal property associated with or constituting
a part of the Property. Buyer may cause such report to be updated and
recertified to Buyer within five (5) days prior to the Closing Date, at
Seller's sole expense. Buyer shall promptly deliver a copy of any such
certificate and update to Seller, and Seller shall make arrangements on or
before the Closing Date to have all liens against any personal property
associated with or constituting a part of the Property shown thereon fully
discharged.
6. Inspection by Buyer; Termination Rights; Bond Objectives.
A. Inspection by Buyer. Subject to the rights of the tenants
under the Tenant Leases, Buyer and Buyer's authorized agents and
representatives may, from time to time, during regular business hours and on
reasonable prior notice to Buyer and the managing agent of the Property,
inspect all areas of the Premises for the purpose of making inspections
thereof and conducting such tests and observations and compiling such
information as Buyer may deem appropriate. No such inspection, however,
shall constitute a waiver or relinquishment on the part of Buyer of its right
to rely upon the covenants, representations, warranties or agreements made by
Seller under this Agreement. Buyer shall pay when due all fees and expenses
incurred in the performance of any such inspections, tests or observations
and shall indemnify, defend, and save Seller harmless from any loss from
mechanic's liens, claims for nonpayment of such charges or for damages
arising out of the acts or omissions of the parties performing such
inspections, tests, or observations.
B. Examination of Records. Seller shall permit Buyer's
accountants and authorized representatives to examine Seller's books,
financial records and tenant files pertaining to the operation of the
Premises prior to the Closing. Buyer's accountants and representatives shall
be permitted access to such records during regular business hours. Seller
acknowledges that Buyer intends to include the Property as a part of a public
offering, and Seller consents to the disclosure of information regarding the
Property, including financial information, in any such public offering.
Seller further agrees to allow Buyer or its agents to audit Seller's
statements of operations or perform procedures as considered necessary to
comply with Securities and Exchange Commission regulations. Additionally, to
the extent that a subsequent interim period(s) statement of operations is
required to be included by Buyer in a public offering document, Seller agrees
to allow Buyer's auditors access to the books and records of the Property
necessary to complete procedures as required by securities laws or
regulations. Seller shall provide Buyer with such information as Seller may
have with respect to actual expenditures made on all repairs, maintenance,
operation and upkeep of the Premises, including, without limitation, all
taxes and utility payments within three years prior to the Closing, and dates
of construction, installation and major repairs to the Premises.
C. Inspection Period; Notice of Termination. Buyer's obligation
to purchase the Property pursuant to the terms of this Agreement is
specifically conditioned upon Buyer's approval of the Property, in Buyer's
sole discretion. At any time on or prior to 11:59 pm on January 15, 1996
(the "Inspection Period"), Buyer may, for any reason in Buyer's sole
discretion, terminate this Agreement by giving notice to Seller of Buyer's
election to terminate this Agreement, and in such event, this Agreement shall
terminate, and the Earnest Money Deposit, and all interest accrued thereon,
shall be delivered by the Title Company to Buyer upon notice to the Title
Company. If Buyer does not give such notice within the Inspection Period,
Buyer's right to terminate under this Section 6C shall expire and this
Agreement shall remain in full force and effect. Notwithstanding the
foregoing, the Inspection Period shall be extended one day for each day of
delay in providing all of the documents referred to in Section 3, the survey
referenced in Section 4, and the title insurance commitment and copies of all
documents or items referred to therein as provided in Section 5. Upon
expiration of the Inspection Period (and any additional period provided in
either Section 4 or Section 5 to correct any deficiencies in either the
survey or the title insurance commitment delivered pursuant to such
Sections), if this Agreement has not been terminated by Buyer as provided in
this Section 6C or in Section 4 or Section 5, the Earnest Money Deposit shall
continue to be held by the Title Company, but shall then be nonrefundable to
Buyer, except in the event of a default by Seller, or a failure of a
condition of Buyer to Closing pursuant to Section 9, or except as otherwise
specifically provided herein.
D. Bond Objectives.
(i) In connection with the acquisition of the Property, Buyer
intends and desires to accomplish the following (the "Bond Objectives"):
a. Amendments to the Existing Encumbrance Documents and
the Bond Documents (the "Amendments") which shall effect the following: (i)
approval by all necessary parties of ownership of the Bonds by Buyer without
any requirement for having the Bonds rated, and for resale of the Bonds by
Buyer to another party, provided that at the time of such sale the Bonds are
rated "A" or better by Standard & Poor's Corporation; (ii) approval by all
necessary parties of sale of the Property to Buyer, including without
limitation the City of Englewood; (iii) approval by all necessary parties of
the release of the letter of credit issued by Citibank, N.A., which letter of
credit now secures the Bonds (the "Citibank Letter of Credit") as
contemplated by Section 6D(i)(b) below; (iv) extending the maturity date of
the Bonds to a date acceptable to the Buyer effective as soon as possible
following the Closing; (v) providing the owner of the Property an option to
fix the interest rate on the Existing Encumbrance and the Bonds as soon as
possible following the Closing Date; and (vi) such other changes as Buyer may
reasonably require consistent with the foregoing.
b. The negotiation and approval by Buyer of a form of
an assumption agreement (the "Assumption Agreement"), wherein the Buyer is
substituted for Seller as the borrower in connection with the Existing
Encumbrance, the Regulatory Agreement and related documents (as such
documents have been modified in connection with the Amendments); provided
that under the terms of the Assumption Agreement Buyer shall not assume any
liability in connection with the Citibank Letter of Credit or otherwise to
Citibank, N.A. except to the extent set forth in the Tri-Party Agreement (as
hereinafter defined).
c. The negotiation and approval by Buyer of a tri-party
agreement among Buyer, Seller and Citibank, N.A. (the "Tri-Party Agreement"),
wherein (i) Buyer agrees to either cause the return of the Citibank Letter of
Credit at Closing or post cash collateral or other collateral acceptable to
Buyer and Citibank, N.A. (the "Buyer Collateral") with Citibank, N.A. in the
principal amount of the indebtedness being assumed by Buyer pursuant to the
Assumption Agreement and such additional amount as may be necessary to
provide collateral for interest that will accrue through ______________, (ii)
Citibank, N.A. agrees to release the lien of its deed of trust on the
Premises and any other lien or encumbrance it may have on the Property, and
(iii) the parties agree that if the Citibank Letter of Credit has not been
returned by then, on or about ______________, (A) a draw shall be permitted
on the Citibank Letter of Credit in the amount up to the principal amount of
the Bonds and accrued but unpaid interest thereon, (B) Citibank, N.A. shall
reimburse itself from the Buyer Collateral for the full amount of such draw,
and (C) the Citibank Letter of Credit shall be returned to Citibank, N.A. and
Citibank, N.A. shall return to Buyer any unused portion of the Buyer
Collateral.
(ii) Seller hereby agrees to cooperate with Buyer in
connection with the achievement of the Bond Objectives. The cooperation of
Seller shall include the execution of documents and certificates reasonably
necessary to accomplish the Bond Objectives to the extent that Seller
participation is necessary, as well as customary warranties and
representations and other actions as may be necessary of Seller to accomplish
the Bond Objectives. Buyer shall be responsible for causing bond counsel to
be retained and paying the costs of bond counsel and the other costs and
expenses Buyer deems necessary to accomplish the Bond Objectives.
7. Closing.
A. Initial Closing Date. The closing of the transaction
contemplated hereby (the "Closing") shall take place at the offices of
Brownstein Hyatt Farber & Strickland, P.C., 410 Seventeenth Street, Suite
2222, Denver, Colorado 80202, at 10:00 a.m., on February 20, 1996 (the
"Initial Closing Date").
B. Extension of Initial Closing Date. Notwithstanding the
foregoing, Buyer shall have the right, upon payment to Seller of an
additional earnest money deposit in the amount of Fifty Thousand and no/100
Dollars ($50,000.00) (the "Additional Earnest Money Deposit"), to extend the
Initial Closing date to April 23, 1996 (the "Extended Closing Date"). Such
election to extend the Initial Closing Date shall be exercised by written
notice delivered to Seller on or before the Initial Closing Date, accompanied
by the Additional Earnest Money Deposit in immediately available funds. At
the Closing, the Additional Earnest Money Deposit shall be credited against
and reduce the cash portion of the purchase price for the Property. The
Additional Earnest Money Deposit shall be nonrefundable to Buyer, except in
the event of a default by Seller, or a failure of a condition of Buyer to
Closing pursuant to Section 9, or except as otherwise specifically provided
herein.
As used herein, the term "Closing Date" shall refer to the Initial Closing
Date or the Extended Closing Date, as applicable.
8. Representations of Seller.
A. Seller, to induce Buyer to enter into this Agreement and to
purchase the Property, represents to Buyer that the following matters are
true as of the date hereof and shall be true as of the Closing Date:
(i) Exhibit "B" hereto (the "Rent Roll") is a true, complete
and correct listing of all existing leases (including all amendments or side
agreements) at the Premises in effect as of the date hereof (the "Tenant
Leases"), which Exhibit "B" correctly sets forth: (i) the total number of
apartments at the Premises, (ii) the name of each existing tenant residing in
each apartment, (iii) apartment number designation, (iv) apartment type
showing number of bedrooms and bathrooms in each apartment, (v) rent actually
being collected, (vi) the expiration date or status of the term of the lease
(including all rights or options to renew), (vii) the current rent (the
"Standard Rental") and other payments actually being collected and which the
tenant is obligated to make under the lease, (viii) the current outstanding
balance of all security deposits held thereunder and (viii) the information
required pursuant to Section 8A (ii), (iii) and (iv) hereof.
(ii) There are no leases, tenancies, licenses or other rights
of occupancy or use for any portion of the Premises other than as set forth
in Exhibit "B". True, correct and complete copies of the form of Tenant
Lease(s) have been submitted by Seller to Buyer as attached hereto as Exhibit
"C". Seller represents to Buyer that such form of Tenant Lease(s) is being
used by Seller in all material respects in connection with Seller's leasing
of the Premises. Except as otherwise noted on Exhibit "B", (i) each of the
Tenant Leases is valid and subsisting and in full force and effect, has not
been amended, modified or supplemented and the tenant, licensee or occupant
thereunder is in actual possession, (ii) no tenant has asserted any claim,
offset or defense which would in any way affect the collection of rent from
such tenant, (iii) there are no pending summary proceedings or other legal
action for eviction of any tenant, and (iv) no written notice of default or
breach on the part of the landlord under any of the Tenant Leases has been
received by Seller or its agents from the tenant, licensee or occupant
thereunder. Except as noted on Exhibit "B", no tenants are in arrears for
the payment of rent for any month preceding the month of the date of this
Agreement, and Seller has not received any notice from any existing tenant of
an intention to vacate. No tenant, licensee or other occupant under any of
the Tenant Leases has any right or option to acquire the Premises, or any
part thereof or interest therein. The copies of the Tenant Leases delivered
to Buyer constitute the sole agreements binding upon the owner of the
Premises and the respective tenants of the Premises with respect to the
Premises.
(iii) The rents set forth on Exhibit "B" are the actual rents
presently being collected by Seller under the Tenant Leases and, Seller has
no knowledge of any default by any tenant under its lease. Except as
otherwise set forth on Exhibit "B", no tenant, licensee or occupant under any
of the Tenant Leases is entitled to any concessions, rent-free occupancy,
allowances, rebates or refunds, or has prepaid any rents or other charges for
more than the current month. No security deposits have been paid by any
present tenants of the Premises which have not heretofore been returned,
except as set forth on Exhibit "B" hereto.
(iv) Seller has not collected and, without Buyer's prior
written consent, will not collect or accept payment of rent (other than
security deposits) more than one month in advance, except as shown on Exhibit
"B".
(v) No brokerage or leasing commission or other compensation
is or will be due or payable on or after the Closing to any person, firm,
corporation or other entity (including Seller or any affiliate of Seller)
with respect to or on account of any of the Tenant Leases or any extensions
or renewals thereof.
(vi) To the best of Seller's knowledge, Seller has performed
all obligations (including the payment of all sums due to third parties)
which obligations have accrued as of the date hereof under the Tenant Leases
and under all other agreements relating to the Premises.
(vii) Exhibit "D" attached hereto is a complete and correct
list of all existing management, service, equipment, supply, maintenance,
union or collective bargaining agreements with respect to or affecting the
Premises (the "Service Agreements") and each of such agreements has not been
amended, modified or supplemented, except as set forth on Exhibit "D". No
written notice of default or breach by Seller in the terms of any such
Service Agreements has been received by Seller or its respective agents.
Seller has performed, and at Closing shall have performed, all obligations
which it has under said Service Agreements.
(viii) To the best of Seller's knowledge, all persons who are
employed in connection with the management, operation and maintenance of the
Premises (i) are non-union employees and (ii) have been paid with respect to
all benefits properly accrued.
(ix) All charges for services or material related to the
Property, including, without limitation, water, sewer, gas and electric
bills, have been paid or will be paid as of the Closing Date, or appropriate
adjustment made therefor in accordance with the terms hereof.
(x) Seller has not received any notices from any governmental
authority requiring any public improvements or installations on or in
connection with the Premises, or asserting any violation of any applicable
law, regulation or other governmental requirement, and Seller is not
otherwise aware of any such violations or requirements of public improvements
or installations. In the event any such notices are served or received prior
to the Closing (excluding any notices of violation which are the obligation
of any of the tenants under the Tenant Leases) (the "Excluded Violations"),
Seller shall effect full compliance therewith prior to the Closing.
(xi) With respect to environmental matters:
a. to the best knowledge of Seller, no Hazardous
Substances are present in, on or under the Property and there is no present
Release or threatened Release of any Hazardous Substances in violation of
Environmental Laws, which is of material respect, in, on or under the
Property;
b. to the best knowledge of Seller, no written notices,
written complaints or orders of violation or non-compliance with
Environmental Laws addressed to Seller, or the owner of the Property have
been received by or are in the possession of Seller and no federal, state or
local environmental investigation is pending or has been threatened against
Seller, which is of material respect, with regard to (A) the Property or any
use thereof; (B) any alleged violation of Environmental Laws with regard to
the Property; (C) any failure by Seller to have any environmental permit,
certificate, approval, registration or authorization required for the conduct
of its business; (D) the generation, treatment, storage, recycling
transportation, disposal or Release (each a "Regulated Activity") of any
Hazardous Substances on, at or under the Property; or (E) the existence on
nearby real property of Hazardous Substances that could migrate to the
Property. For purposes of this Agreement, "Release" shall have the meaning
given to that term in 42 U.S.C. Section 9601(22);
c. to the best knowledge of Seller, the Property has
not been used by Seller for the conduct of any Regulated Activity other than
in compliance in all material respects with Environmental Laws;
d. to the best of Seller's knowledge, there exists no
petroleum contamination to the Property in violation of applicable
Environmental Laws which originated on the Property, and to the best of
Seller's knowledge, there exists no underground storage tanks or surface
impoundments, active or abandoned, at, on or under the Property in violation
of applicable Environmental Laws; and
e. to the best of Seller's knowledge, it has not caused
a Release which is of a material respect of any Hazardous Substances, nor is
there any friable asbestos, polychlorinated biphenyls, formaldehyde or lead
at, on or under the Property, the removal of which is currently required by
any Environmental Law or the maintenance of which constitutes a violation of
any material respect of any Environmental Law.
As used in this Agreement, (A) (Environmental Laws" shall mean and include
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et
seq., as amended by the Hazardous and Solid Waste Amendments of 1984, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act of
1975,
49 U.S.C. Section 1801 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the
Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136, et seq., the
Clean Water Act, 33 U.S.C. Section 1251 et seq., the National Environmental
Policy
Act, 42 U.S.C. Section 4321 et seq., and the Occupational Safety and Health
Act,
29 U.S.C. Section 651 et seq., and all similar federal, state and local
environmental laws, ordinances, rules, codes and regulations, as any of the
foregoing may have been from time to time amended, supplemented or supplanted
which relate to the environment or the regulation or control of imposing
liability or standards of conduct concerning Hazardous Substances (as
hereinafter defined), and (B) "Hazardous Substances" shall mean any substance
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous, including petroleum, its
derivatives, by-products and other hydrocarbons and is regulated by any
governmental authority, including any agency, department, commission, board
or instrumentality of the United States, the state, or any political
subdivision thereof, where the Property is located; provided, however, that
Hazardous Substances shall not include material used or stored in the
ordinary course of business in connection with the operation or maintenance
of the Property in compliance in all material respects with all Environmental
Laws.
(xii) Seller presently causes to be maintained policies of
insurance with respect to the Premises which policies insure the Premises in
amounts deemed adequate by Seller in the exercise of reasonable commercial
judgment against all risks usually insured against by persons operating
similar properties and underwriting similar operations in the locality where
the Premises are located.
(xiii) To the best of Seller's knowledge, there is no action,
suit, investigation or proceeding pending or threatened against or affecting
the Property or any portion thereof by any person or government agency, board
or bureau, except as set forth on Exhibit "E" hereto.
(xiv) Seller has no knowledge of any pending or threatened
condemnation or eminent domain proceedings which would affect the Premises,
except as set forth on Exhibit "E" hereto.
(xv) Seller has delivered to Buyer a copy of the latest real
estate tax bill with respect to the Premises. There are no proceedings
presently pending for the reduction of the assessed value of the Premises
which have been initiated by or on behalf of Seller.
(xvi) The persons signing this Agreement on behalf of Seller
have the requisite power and authority to execute and deliver this Agreement
in the name of Seller and to create thereby a binding obligation of Seller,
and the execution, delivery and performance of this Agreement will not
constitute a default under any agreement of Seller, require the consent under
any such agreement or of any person or give any person any right to terminate
any Tenant Lease or other agreement relating to the Premises.
Notwithstanding the above, Buyer acknowledges that as of the Effective Date,
Seller is soliciting approval from its constituent partners but has not yet
received the required number of approval votes. Seller shall exercise
reasonable efforts to obtain such approval. In the event that Seller is
unable to obtain such approval within ten (10) days from the Effective Date,
Seller will promptly so notify Buyer in writing, whereupon this Agreement
shall terminate and the Earnest Money Deposit shall be forthwith returned to
Buyer. Seller's failure to notify Buyer in writing on or before ten (10)
days from the Effective Date that it has not received such approval shall
constitute Seller's waiver of the foregoing condition.
(xvii) To the best of Seller's knowledge there are no material
(i) interior or exterior structural defects in the Improvements or mechanical
systems of the Improvements, (ii) defects in the plumbing, electrical,
mechanical, heating, ventilating or air-conditioning systems, or (iii)
defects in the parking areas of the Premises, and all hot water heaters,
refrigerators, ranges, dishwashers, disposals, package heating and air-
conditioning units, personalty, and other equipment now located in or on the
Improvements are in good working order and/or shall be on the Closing Date.
To the best of Seller's knowledge, the roof of each building is watertight
and free of leaks.
(xviii) Except as noted on Exhibit "F", Seller has not entered
into any contract for goods and/or services relating to the Premises which
may not be cancelled without charge to Buyer upon not more than thirty (30)
days written notice. Seller has not entered into any management agreement
for the Premises which will be in effect on the Closing Date.
(xix) Utility services to the Premises, including but not
limited to water, sewer, telephone, cable TV, electric and gas, are being
provided in sufficient quantities to permit the use and occupation of the
Premises for the intended use.
(xx) To the best of Seller's knowledge the Premises are free
from infestation by termites and any damage from previous termite
infestation.
(xxi) Seller has delivered or shall deliver to Buyer in the
time periods required hereby true, correct and complete financial statements
for the Premises for the calendar years 1993 and 1994, including notes,
comments, schedules, and supplemental data therein (collectively, "Financial
Statements"), all of which have been prepared from the books and records of
Seller.
(xxii) Regardless of whether Seller would otherwise be obligated
under Colorado law, Seller has paid, has caused to be paid or will pay any
and all taxes incurred by it as a result of the transactions contemplated by
this Agreement, including, but not limited to transfer taxes, gains taxes,
sales and use taxes and bulk sales taxes.
(xxiii) To the best of Seller's knowledge, the Property, the use
of the Property and the transfer of the Property pursuant to this Agreement
does not and will not violate any applicable subdivision, zoning, land-use or
other similar law, code, ordinance or regulation relating to the Property.
(xxiv) Except for any default that will be fully cured on or
before the Closing Date, Seller is not in default in the payment of principal
or interest or other amounts due under the Existing Encumbrance, and to the
knowledge of Seller there are no other defaults, and no facts exist which,
with the giving of notice and/or the passage of time, would constitute a
default, under the Existing Encumbrance, any regulatory agreement executed in
connection therewith, or any other documents relating to or executed in
connection with the Existing Encumbrance.
B. Seller has not knowingly failed to disclose anything material
in connection with the Premises.
C. Seller has not received any written notice from the insurance
companies insuring the Premises requiring Seller to perform any work at the
Premises.
D. The representations contained in this Section 8 shall survive
the Closing hereunder.
E. On the Closing Date, Seller shall execute and deliver to Buyer
a certificate stating that each of the warranties and representations set
forth in this Section 8 is true and correct as of the Closing Date and that
there exists no non-performance or breach in respect of any of the
agreements, covenants, representations or warranties on the part of Seller
contained in this Agreement.
F. Seller agrees to indemnify, defend and hold Buyer harmless
from and against any and all loss, cost, expense, damage or liability
suffered or incurred by Buyer as a result of any of the warranties and
representations set forth in this Section 8 or in the certificate to be
delivered by Seller to Buyer pursuant to Section 8F above, not being true and
correct in all material respects.
G. As used in this Agreement, the phrase "to the best of Seller's
knowledge" means the actual knowledge of Thomas H. Burleson and Timothy J.
Hogan, without inquiry, investigation, or further review of Seller's records,
except for discussions with Seller's asset managers, property managers and
maintenance personnel directly responsible for the use, operation and
management of the Property, and without imputation of the knowledge of
specific laws, rules and regulations or their impact.
9. Conditions to the Obligations of Buyer. The obligation of Buyer
under this Agreement to purchase the Property from Seller is subject to the
satisfaction of each of the following conditions (any one or more of which
may be waived in whole or in part by Buyer at or prior to the Closing):
A. The representations set forth in this Agreement shall be true
and correct as of the date of this Agreement and at the Closing in all
material respects and the covenants of the Seller set forth herein shall have
been performed at or before the Closing, except as otherwise specified
herein.
B. Seller shall have performed all of its covenants and
obligations and complied in all respects with all conditions required by this
Agreement, including without limitation the obligation to make any payments
required by Section 2 hereof.
C. The Amendments shall have been executed by the appropriate
parties, including the City of Englewood.
D. The Assumption Agreement shall have been executed by the
parties thereto, and the closing of the transactions described therein shall
occur concurrently with the closing of the sale of the Property on the
Closing Date pursuant to this Agreement.
E. Buyer shall have received an estoppel certificate from the
trustee of the bond issue relating to the Property and the holder of the
Existing Encumbrance, certifying that no default exists under the Existing
Encumbrance Documents, any regulatory agreement related thereto, or any
documents executed in connection therewith, all in form reasonably acceptable
to Buyer.
F. The Tri-Party Agreement shall have been executed by the
parties thereto, and the transactions required by the Tri-Party Agreement
shall close on the Closing Date.
G. Buyer shall have received all third party approvals it
reasonably deems necessary in connection with the Amendments, the Assumption
Agreement and the Tri-Party Agreement to avoid violation of any applicable
law or agreement affecting the Property or the Bonds. Such approval shall
include such opinions of counsel as may be required by Buyer or under the
Existing Encumbrance Documents, including, without limitation, an opinion of
bond counsel that the transfer will not affect the exclusion of interest from
such Bonds from income for Federal tax purposes (subject to the customary
exclusions to such opinion).
If any of the conditions set forth in herein are not fulfilled or otherwise
waived by Buyer, then Buyer shall have no obligation to consummate the
transaction described herein and upon written notice to Seller stating
Buyer's intention not to proceed with the transaction contemplated by this
Agreement, the Earnest Money Deposit (and, if applicable, the Additional
Earnest Money Deposit) shall be returned to Buyer, and the parties shall have
no further liability hereunder. All conditions of the Closing hereunder
shall be deemed satisfied upon consummation of the Closing.
10. Operations Prior to Settlement. Between the date of the execution
of this Agreement and the Closing Date:
A. Seller, in accordance with its normal practices and
procedures, will continue to maintain and to make all repairs and
replacements to the Premises and the Personalty so as to keep the Premises
and the Personalty in substantially its present condition, subject to the
provisions of Section 13 hereof, and Seller shall operate and manage the
Premises and the Personalty in the same manner as it has operated the
Premises prior to the date hereof. Without limiting the above, Seller shall
take all actions necessary to make apartment units ready for new tenants
within five (5) days after vacation thereof by the previous tenant.
B. Seller will use commercially reasonable efforts from the date
hereof through the date of the Closing to (i) continue to rent the Premises,
(ii) modify, renew or extend any Tenant Lease on an as needed basis and (iii)
enter into any agreement to complete work for any tenant for a period
extending beyond the Closing Date, provided such work is in the ordinary
course of managing the Premises or in fulfillment of Seller's obligation as
Landlord.
C. Seller will not enter into or accept the surrender of any of
the Service Agreements, Tenant Leases or grant any concession, rebate,
allowance or free rent at the Premises unless (i) such Service Agreement is
commercially reasonable, (ii) such Service Agreement is terminable upon
thirty (30) days notice, and (iii) Seller shall give Buyer prior notice that
such Service Agreement is to be executed. Prior to the end of the Inspection
Period, Buyer shall determine which of the Service Agreements that are
terminable that Buyer elects to have terminated by the Closing Date, and
shall give Seller notice thereof. At the Closing, Seller shall terminate all
Service Agreements specified in such notice, and as provided elsewhere
herein, in connection with the Closing, Buyer shall assume all other Service
Agreements (the "Assumed Service Agreements").
D. Seller shall cause all certificates of occupancy to be
observed and to be kept in full force and effect. Seller shall cause all
obligations under the Service Agreements to be performed. Seller shall not
permit any Service Agreement to be voluntarily renewed, amended or
terminated, unless such renewal, amendment or termination is commercially
reasonable. Seller shall carry on and conduct the operation of the Property
in substantially the same manner as such business is now and has heretofore
been conducted to the extent same is commercially reasonable, including (but
not limited to) maintenance of and compliance with the insurance policies.
Seller shall maintain insurance at the Premises and operate the Premises in
accordance with all applicable laws, rules, regulations, ordinances, licenses
and permits.
E. Seller shall not remove any personal property, personalty,
fixtures or equipment located in the Premises except as may be required for
maintenance, repair and/or replacement or where such removal is commercially
reasonable. All replacements shall be (i) completed free and clear of any
liens and encumbrances, (ii) of quality at least equal to the replaced items
and (iii) deemed included in the sale, without cost or expense to Buyer.
F. Seller shall carry on or cause to be carried on, the operation
of the Premises in the ordinary course of business between the date hereof
and the Closing Date. Except as Buyer may otherwise request, and without
making any commitment on its behalf, Seller will utilize reasonable efforts
to keep its business organization intact and to keep available to Buyer the
services of its present material (i.e., key) employees.
G. No contract for or on behalf of or affecting the Premises
shall be negotiated or entered into which cannot be terminated on not more
than 30 days' notice as of or after Closing without charge, cost, penalty or
premium, without the prior written consent of Buyer, which consent shall not
be unreasonably withheld.
H. Seller will deliver to Buyer, as soon as available to Seller,
any new monthly operating statements and leasing reports with respect to the
Premises for each calendar month which elapses between the date of execution
hereof and the Closing Date. Seller will also deliver to Buyer, as soon as
available to Seller, any new leasing reports with respect to the Premises for
each week which elapses between the date of execution hereof and the Closing
Date, which leasing reports shall show all new leases, with the information
relating thereto which is set forth in the Rent Roll.
I. Seller shall cause all debts and liabilities for labor,
material and equipment incurred by Seller prior to the Closing Date, which
could result in a lien against the Property, to be promptly paid in full.
J. Seller shall cause to be paid all taxes and assessments levied
or assessed against the Property or any part thereof on or before the Closing
Date, other than real property taxes not yet due.
K. Seller shall, immediately upon obtaining knowledge of (i) the
institution of any proceedings for the condemnation of the Property, or any
portion thereof; (ii) any other proceedings arising out of injury or damage
to or upon the Property or any portion thereof; (iii) any violation of the
applicable laws, ordinances, rules or regulations regarding the Property or
any portion thereof; or (iv) any proceeding which could affect or cloud title
to or ownership of the Property, or any part thereof, notify Buyer of the
pendency of such proceeding or violation. If any of such proceedings or
violation materially and adversely affects the Property, or any portion
thereof, upon such notification, Buyer shall have a period of ten (10) days
from such notification (but not beyond the Closing Date) to terminate this
Agreement by written notice to Seller, and upon such termination the Earnest
Money Deposit (and the Additional Earnest Money Deposit, if applicable) shall
be promptly returned to Buyer.
L. Between the date of this Agreement and the Closing, Seller
shall not, in violation of any Environmental Laws in any material respect,
intentionally, knowingly and willfully use, produce, process, manufacture,
generate, treat, handle, store or dispose of any Hazardous Substances in, on
or under the Property, or use the Property for any such purposes, or Release
any Hazardous Substances into any air, soil, surface water or groundwater
comprising the Property. Between the date of this Agreement and the Closing,
Seller shall use reasonable efforts to comply with all Environmental Laws
applicable to the Property, or its use or occupancy thereof. Between the
date of this Agreement and the Closing, Seller shall use reasonable efforts
to obtain all permits, licenses and approvals required by all applicable
Environmental Laws for the use and occupancy of, and all operations and
activities in, the Property, comply and use its best efforts to cause the
tenants to comply with all Environmental Laws and with all such permits,
licenses and approvals, and to keep all such permits, licenses and approvals
in full force and effect. Immediately after Seller obtains any information
indicating that any Hazardous Substances may be present or any Release or
threatened Release of Hazardous Substances may have occurred between the date
of this Agreement and Closing in, on or under the Property (or any nearby
real property which could migrate to the Property) or that any violation of
any Environmental Laws may have occurred between the date of this Agreement
and Closing at the Property, Seller shall give written notice thereof to
Buyer with a reasonably detailed description of the event, occurrence or
condition in question. Seller shall immediately furnish to Buyer copies of
all written communications received between the date of this Agreement and
Closing by Seller from any person (including notices, complaints, claims or
citations that any Release or threatened Release of any Hazardous Substances
or any violation of any Environmental Laws has actually or allegedly
occurred) or given between the date of this Agreement and Closing by Seller
to any person concerning any past or present Release or threatened Release of
any Hazardous Substances in, on or under the Property (or any nearby real
property which could migrate to the Property) or any past or present
violation of any Environmental Laws at or in connection with the Property.
11. Provisions with Respect to Closing. At the Closing, Seller shall
deliver to Buyer the following:
A. Deed. Special warranty deed, subject only to the Permitted
Exceptions, duly executed and acknowledged and in proper form for recording.
B. Bill of Sale. A valid bill of sale or valid bills of sale for
the Personalty in form and substance reasonably satisfactory to Buyer, duly
executed and acknowledged by Seller.
C. Assignment of Leases. A valid assignment or valid assignments
of the Tenant Leases, in form and substance reasonably satisfactory to Buyer,
duly executed and acknowledged by Seller assigning to Buyer the interests of
Seller in the Tenant Leases, together with the original executed copy of each
Tenant Lease; and letters prepared by Buyer (and approved by Seller, which
approval shall not be unreasonably withheld) and addressed to each of the
tenants informing them of the sale and assignment and directing them to make
future payments of rents to Buyer or its nominee or assignee, as Buyer may
elect; together with lease files containing all lease guarantees, notices
from tenants, general correspondence and the like. Buyer shall assume, and
indemnify Seller with respect to, all of the obligations of Seller with
respect to the proper application of any tenant security deposit, and all
interest thereon payable to any tenant, for which Buyer received a credit (or
which was transferred to Buyer) at the Closing and shall assume, and
indemnify Seller with respect to, all of the obligations of the landlord
under the Tenant Leases accruing or arising from and after the Closing Date.
Seller shall also notify any bank in which Seller maintains a lockbox account
for the receipt of rents from the Premises that all amounts received by such
bank after the Closing Date shall be delivered to Buyer.
D. Assignment of Name. A valid assignment in recordable form,
duly executed and acknowledged by Seller, assigning to Buyer all of the
right, title and interest of Seller in and to the name The Marks Apartments
in connection with the Premises, together with such documents as shall be
necessary to transfer any logos, trademarks or service marks associated with
such names and for proper termination of the use of said name by Seller.
E. Assignment of Service Agreements and Warranties. A valid
assignment duly executed and acknowledged by Seller, in form and substance
reasonably satisfactory to Buyer, of the rights of Seller under (i) each of
the Service Agreements, and (ii) each of the Warranties, together with
original copies or duly executed counterparts thereof; provided, however,
that if any such agreement requires the approval of the other party thereto
prior to assignment thereof to a third party, then the assignment of such
agreement shall be accompanied by such written approval. Seller shall
perform, and shall indemnify Buyer with respect to, all of the obligations of
Seller accruing or arising prior to the Closing under the Service Agreements.
Buyer shall assume, and shall indemnify Seller with respect to, all of the
obligations of Seller accruing or arising from and after the Closing under
the Service Agreements.
F. Assignment of Other Interests. An assignment duly executed
and acknowledged by Seller, in form and substance reasonably satisfactory to
Buyer, of the rights of Seller in and to the Other Interests.
G. Updated Rent Roll and Tenant Schedule. An updated Rent Roll
and schedule of Tenant Leases supplied by Seller which contains all
information required to be set forth in Exhibit "B", which schedule is
correct and complete as of the Closing Date.
H. FIRPTA Affidavit. The affidavit referred to in Section 1445
of the Internal Revenue Code with all pertinent information confirming that
Seller is not a foreign person, trust, estate, corporation or partnership.
I. Property Records. All records (including tax certiorari
filings), documents, information and data in the possession of Seller or its
agents concerning the Property. If the Buyer retains Seller's managing
agent, then delivery of documents herein prescribed need not occur with
respect to those documents already in the possession or control of such
managing agent.
J. Transfer Tax Return. If required, all transfer and gains tax
returns fully executed and completed by Seller.
K. Indemnification. An indemnification from Seller, on behalf of
Seller and its affiliates, for any brokerage commissions payable or which
will become payable in connection with any Tenant Lease.
L. Security Deposits. All security deposits relating to the
Property which have not been forfeited or applied, shall be credited against
the Purchase Price of the Property.
M. Evidence of Payment and Discharge of Liens and Encumbrances.
Evidence satisfactory to the Title Company and reasonably satisfactory to
Buyer that all liens, encumbrances and assessments against the Property,
except the lien of current taxes, have been paid and discharged or that such
liens, encumbrances and assessments will be fully paid and discharged by
Title Company on the Closing Date using Seller's proceeds of sale.
12. Prorations and Credits.
A. The items listed below shall be prorated as of 11:59 p.m. of
the day immediately preceding the Closing Date. To the extent that the
amounts of the items to be prorated are ascertainable as of the Closing Date,
they shall be prorated at the Closing. To the extent that the amounts of the
items to be prorated are not reasonably ascertainable as of the date of
closing, they shall be adjusted as promptly after the Closing as the amounts
thereof are ascertained. Any errors or omissions in computing the prorations
at the Closing shall be promptly corrected and this obligation shall survive
the Closing hereunder for a period of six (6) months from the Closing Date.
(i) Water, sewer, fire protection inspection services,
electric, telephone and all other utility charges.
(ii) Prepaid rents (including tax and similar participations),
utility deposits.
(iii) Prepaid service, maintenance and other similar contracts
with respect to the Service Agreements.
(iv) Buyer shall receive a credit against the Purchase Price
in an amount equal to the outstanding security deposit liability to which it
will be subject with respect to Tenant Leases as evidenced by the Rent Roll
delivered by Seller at the Closing.
(v) a. Rents (including furniture, carport, garage and all
other rental amounts payable by tenant of the Premises) for the month of
Closing shall be prorated. Unpaid rents from tenants shall not be prorated
at the Closing. In the event that on the Closing Date, any tenant is in
arrears in the payment of rent for the month of the Closing and/or any months
prior thereto, Buyer shall hold any rents (net of the reasonable costs of
collection) collected after the Closing Date from such tenant in trust for
the benefit of Seller, and shall promptly remit such rents (net of reasonable
costs of collection) to Seller for application in reduction of such
arrearage; provided, however, that no sums received by Buyer shall be so paid
to Seller for application to rents in arrears unless and until such rent and
other charges due for the periods subsequent to the Closing shall have been
received and retained by Buyer.
b. Buyer agrees to bill tenants, and to send Seller
copies of all rent bills within a reasonable time, for all charges payable by
them, and other charges due under the Tenant Leases and for which charges
Buyer is entitled to payment of all or a portion thereof, and Buyer shall
promptly remit to Seller Seller's share of such sums up to the Closing Date,
after collection. Subject to subsection (v)a above, Buyer shall have the
right, in good faith, to settle or adjust any amount of such rents or charges
due from any tenant without Seller's prior consent, provided that such
settlement or adjustment applies ratably to all amounts of such charges due
from such tenant.
c. Buyer agrees to use reasonable efforts to collect
rent arrearages due Seller from tenants, provided that Buyer shall not be
obligated to commence any litigation against such tenants, incur any expense
in collecting such arrearages (other than the expense of routine billing) or
terminate a Tenant Lease.
(vi) Real Estate Taxes and Special Assessments.
Notwithstanding anything to the contrary contained herein, (i) real estate
taxes shall be prorated on the basis of the latest valuations and mill
levies, and shall be subject to readjustment as soon as the actual valuation
and mill levies for the year of Closing are conclusively determined, (ii)
Seller shall be responsible to pay in full at or prior to Closing any special
assessments which may be a lien on the Property for improvements to the
Property such as, but not limited to, curb and gutter, sidewalk, street and
alley improvements, and (iii) assessments on the Property by special
districts that impose periodic assessments to provide the Property with
services such as fire protection and water and sanitation facilities shall be
prorated as of the Closing Date.
(vii) Such other items of income and expenses as are
customarily prorated in real estate transactions.
B. Seller shall furnish readings of the water, gas and electric
meters at the Premises to the Closing Date. Seller shall cooperate with
Buyer to provide, as of the Closing Date, for a cancellation of electricity
and other utility services in Seller's name and a resumption thereof in
Buyer's name. If such a timely cancellation and resumption occurs, there
shall be no proration of water, gas and electric charges as provided in
Section 12A(i).
C. All transfer taxes and all sales and use taxes imposed on or
in connection with this transaction shall be paid by Seller, regardless of
whether Seller would otherwise be obligated under Colorado law. Seller and
Buyer shall each execute and swear to the returns in connection with the
aforesaid taxes.
D. If in connection with the assumption by Buyer of Seller's
obligations under the Existing Encumbrance Documents, Seller transfers to
Buyer the interest of Seller in any deposits, escrows or funds held by the
holder of the Existing Encumbrance, then Seller shall receive a credit for
the actual amount of such deposits, escrows or funds so transferred. In
addition, Buyer shall receive a credit for any accrued, but unpaid interest
on the Existing Encumbrance attributable to the period prior to the Closing
Date. If and to the extent the terms of this Section 12D conflict with the
Assumption Agreement to which Buyer and Seller are a party, the terms of the
Assumption Agreement shall control.
13. Casualty Loss.
A. Seller shall cause the insurance policies now in effect with
respect to the Premises to be maintained until the Closing. If at any time
prior to the Closing Date, any portion of the Premises is destroyed or
damaged as a result of fire or any other casualty whatsoever, Seller shall
promptly give written notice thereof to Buyer and, within ten (10) days
thereafter, shall provide Buyer with an estimate of the cost of restoring the
Premises to the condition it was in immediately before such damage or
destruction.
B. If the cost of restoring and repairing the portion of the
Premises so damaged to substantially its present condition is not more than
Two Hundred Fifty Thousand and 00/100 ($250,000.00) Dollars, as reasonably
estimated by a general contractor selected by Seller and reasonably approved
by Buyer, then Buyer shall have no right to terminate this Agreement and
shall purchase the Premises in its damaged condition and be fully responsible
for repair thereto, but without reduction of the Purchase Price or any other
claim or offset. Seller shall assign to Buyer the right to receive all
insurance proceeds payable to Seller as a result of such fire or other
casualty, provided that Seller shall be entitled to retain, to the extent
theretofore paid, and shall not be obligated to assign the right to receive,
to the extent not theretofore paid, an amount of such insurance proceeds
equal to Seller's expenses incurred in collecting such proceeds and any sums
expended by Seller in connection with the repair of such damage or
destruction. Seller shall pay to or credit Buyer with the amount of the
deductible under the insurance policy covering the Premises.
C. If the cost of restoring and repairing the portion of the
Premises so damaged to substantially its present condition is more than Two
Hundred Fifty Thousand and 00/100 ($250,000.00) Dollars, as reasonably
estimated by a general contractor selected by Seller and reasonably approved
by Buyer, then Buyer shall have the option, to be exercised within five (5)
business days from the date of Buyer's receipt of such estimate, to terminate
this Agreement, in which case the Earnest Money Deposit (and the Additional
Earnest Money Deposit, if applicable) shall be returned to Buyer and neither
party hereto shall have any further duties, obligations or liabilities to the
other. If Buyer shall not elect to terminate this Agreement as provided
above, then this Agreement shall remain in full force and effect and the
provisions of Section 13B hereof shall apply to such damage and any insurance
proceeds payable in connection therewith.
14. Brokerage. Seller and Buyer each represent and warrant to each
other that it has not dealt with any broker or other intermediary, in
connection with or relating to the sale and purchase which is the subject of
this Agreement. Seller and Buyer shall defend, indemnify and hold the other
harmless from and against any and all liability, claim, charge or damages,
including without limitation, counsel fees and court costs, incurred by the
other as a result of any breach by the indemnitor of the foregoing
representation.
15. Eminent Domain.
A. If at any time prior to the Closing Date, there shall be a
taking by eminent domain proceedings or the commencement of any such
proceedings, with respect to all or any "material part" of the Premises,
Seller shall promptly give written notice thereof to Buyer, and Buyer shall
have the right, at Buyer's sole option, to terminate this Agreement by giving
written notice to Seller before the earlier to occur of (i) thirty (30) days
after Buyer receives written notice of such proceedings or (ii) the Closing
Date, in which event the Earnest Money Deposit (and the Additional Earnest
Money Deposit, if applicable) shall be returned to Buyer. If Buyer does not
so terminate this Agreement, the purchase price for the Premises shall be
reduced by the total of any awards or other proceeds received by Seller
(directly or indirectly) with respect to any such taking, and at the Closing
Seller shall assign to Buyer all rights of Seller in and to any awards or
other proceeds payable by reason of any taking. For purposes of this Section
15A, a taking by eminent domain or condemnation proceedings that results in a
diminution in value of the Premises by $250,000.00 or more or an award of
$250,000.00 or more shall be deemed to be a taking of a "material part" of
the Premises.
B. Until such time as the Closing has occurred, or this Agreement
terminates, any negotiation for or agreement to, and all contests of, any
offers and awards relating to eminent domain proceedings shall be conducted
with the joint approval and consent of Seller and Buyer.
16. Acceptance of Property "As Is". Buyer acknowledges and agrees
that, prior to Closing it will have had full opportunity to inspect and
investigate every aspect of the Property, including all matters related to
legal status or requirements, physical condition, zoning, environmental
condition, title, leasing, contracts and all other matters of significance.
Buyer specifically acknowledges and agrees that the Property is being sold in
an "AS IS" condition and "WITH ALL FAULTS" as of the date of the Closing.
Except as otherwise expressly set forth in this Agreement and in the
documents to be delivered by Seller to Buyer at the Closing, no statements,
representations or warranties have been made or are made, and no
responsibility has been or is assumed, by Seller, or by any partner, officer,
person, firm, agent or representative acting or purporting to act on behalf
of Seller, as to any matters concerning or that might in any manner affect
the Property, including the condition or repair of the Property or the value,
expense of operation, or income potential thereof, and Buyer is not relying
upon any such statement, representation or warranty.
Further, to the extent that Seller has provided to Buyer
information or reports regarding any inspection, engineering, environmental
or other matters regarding any aspect of the Property, Seller makes no
representations or warranties with respect to the accuracy, completeness,
methodology of preparation or otherwise concerning the contents of such
reports.
17. Statutory Compliance. 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. (C.R.S.
SECTION 38-35.7-101).
18. Further Assurances. Buyer and Seller shall execute and deliver
each to the other such documents and instruments and take such further
actions as may be reasonably necessary or required to consummate the
transactions contemplated by this Agreement.
19. Entire Agreement. This is the entire agreement between the parties
and there are no other terms, obligations, covenants, representations,
statements or conditions, oral or otherwise, of any kind whatsoever. Any
agreement hereafter made shall be ineffective to change, modify, discharge or
effect an abandonment of this Agreement in whole or in part unless such
agreement is in writing and signed by the party against whom enforcement of
the change, modification, discharge or abandonment is sought.
20. Survival. Except as otherwise provided herein, all agreements,
warranties and representations contained herein shall survive Closing, and
shall not be deemed to have merged into the deed.
21. Notices. All notices, requests and other communications under this
Agreement shall be in writing and shall be sent by certified or registered
mail, return receipt requested, or by overnight courier or may be personally
delivered to the following addresses:
If intended for Buyer:
WELLSFORD RESIDENTIAL PROPERTY TRUST
370 Seventeenth Street, Suite 3100
Denver, CO 80202
Attn: Donald MacKenzie
Phone Number: 303/595-7750
Facsimile: 303/595-7799
With a copy to:
BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
410 Seventeenth Street, Suite 2222
Denver, CO 80202
Attn: Wayne H. Hykan, Esq.
Phone Number: 303/534-6335
Facsimile: 303/623-1956
If intended for Seller:
HG VENTURE
3200 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Attn: Timothy J. Hogan
Phone Number: ________________
Facsimile: _______________
With copies to:
POLLOCK FINANCIAL GROUP
150 Portola Road
Portola Valley, CA 94028-7613
Attn: Lincoln Wescott
Phone Number: 415/529-0500
Facsimile: 415/529-2131
FARELLA, BRAUN & MARTEL
235 Montgomery Street, Suite 3000
San Francisco, CA 94104
Attn: Jon F. Hartung
Phone Number: 415/954-4400
Facsimile: 415/954-4480
or such other address of which Seller or Buyer shall have given notice as
herein provided. All such notices, requests and other communications shall
be deemed to have been sufficiently given for all purposes hereof on the date
of receipt.
22. Remedies. If any obligation hereunder is not performed as herein
provided, there shall be the following remedies:
A. If Buyer defaults in its obligation to purchase the Property
when and as required hereby, then it shall forfeit the Earnest Money Deposit
and the Additional Earnest Money Deposit, if applicable, except as herein
provided to the contrary, and both parties shall thereafter be released from
all obligations hereunder. It is agreed that the forfeiture of the Earnest
Money Deposit and the Additional Earnest Money Deposit, if applicable,
constitutes liquidated damages and is Seller's sole and exclusive remedy for
Buyer's failure to perform its obligations to purchase the Property as
required hereby. Seller expressly waives the remedies of specific
performance and additional damages.
B. If Seller is in default, (i) Buyer may elect to treat this
Agreement as terminated, in which case the Earnest Money Deposit and all
other payments and things of value provided by Buyer hereunder, including the
Additional Earnest Money Deposit, if applicable, shall be returned to Buyer
and Buyer may recover such damages as may be proper, and/or (ii) Buyer may
elect to treat this Agreement as being in full force and effect, and Buyer
shall have the right to an action for specific performance or damages, or
both.
23. Miscellaneous.
A. The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope of intent of
this Agreement or any of the provisions hereof.
B. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
C. This Agreement shall be governed by and shall be construed and
interpreted in accordance with the laws of the State of Colorado.
D. This Agreement and all documents, agreements, understandings
and arrangements relating to this transaction have been executed by the
undersigned in his/her capacity as an officer or trustee of Buyer which has
been formed as a Maryland real estate investment trust pursuant to a
Declaration of Trust of Buyer dated as of July 10, 1992, and not
individually, and neither the trustees, officers or shareholders of Buyer
shall be bound or have any personal liability hereunder or thereunder.
Seller shall look solely to the assets of Buyer for satisfaction of any
liability of the Buyer in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this transaction and
will not seek recourse or commence any action against any of the trustees,
officers or shareholders of Buyer or any of their personal assets for the
performance or payment of any obligation hereunder or thereunder. The
foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties hereto.
E. Buyer acknowledges and agrees that in the event of any default
hereunder by Seller, neither Seller nor any of the trustees, directors,
officers, employees, shareholders or partners of Seller or any of them, shall
have any personal liability, and Purchaser agrees to look solely to the
Property for satisfaction of any claim or liability of Seller under this
Agreement and agrees not to seek recourse against any other assets of Seller
or against the trustees, directors, officers, employees, shareholders or
partners of Seller, or any of them, or any of their personal assets for such
satisfaction.
F. The parties hereto acknowledge that the transfer of the
Property must be reported to the Internal Revenue Service as required by
Section 6045(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), unless Section 6045(e) provides an exemption to such reporting
requirement. Accordingly, on or before the Closing Date, Seller, Buyer and
the Title Company shall enter into a written "designation agreement" as
defined in and in accordance with Regulation Section 1.6045-4 of the Code,
which designation agreement shall designate the Title Company as the "real
estate reporting person" responsible for reporting the respective transfers
to the Internal Revenue Service.
G. Subject to the last sentence of this Section, the parties
hereto agree that neither party shall make an announcement of the transaction
contemplated herein to third parties without the prior written consent of the
other party hereto. The Buyer shall have the right to approve any public
announcement. Subject to the last sentence of this Section and except as
required by court order or by operation of law, the contents of this
Agreement shall remain confidential, shall only be disclosed to those third
parties necessary to facilitate the consummation of the transaction
contemplated hereby. Notwithstanding the foregoing, Buyer may disclose this
Agreement as it deems necessary or appropriate to comply with securities or
other laws or to fulfill their corporate or fiduciary obligations to their
investors.
H. The Exhibits attached hereto and made a part hereof are:
Exhibit A: Legal Description of the Land
Exhibit B: Certified Rent Roll
Exhibit C: Form of Tenant Lease
Exhibit D: Service Agreements
Exhibit E: Description of Pending Claims
Exhibit F: Nonterminable Contracts
I. Buyer shall have the right to assign its interest in this
Agreement to a wholly owned subsidiary of Buyer. No assignment of Buyer's
interest in this Agreement shall release it of its obligations and duties
hereunder.
J. This Agreement may be executed in more than one counterpart,
each of which shall be deemed an original and all of which, when taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HG VENTURE, a Texas limited
partnership
By: HAMPDEN I, LIMITED, a
Texas limited partnership,
Its Managing General Partner
By: /s/ Trammell S. Crow
----------------------------
Trammell S. Crow
Its General Partner
By: POLLOCK MARKS INVESTORS, a
California limited partnership,
Its General Partner
By: POLLOCK PARTNERS II, a
California limited
partnership, Its General
Partner
By: POLLOCK REALTY
CORPORATION, Its
General Partner
By:/s/ James M. Pollock
____________________________
James M. Pollock
Its President
WELLSFORD RESIDENTIAL PROPERTY
TRUST, a Maryland real estate
investment trust
By:/s/ Donald D. MacKenzie
_________________________________
Name: Donald D. MacKenzie
Title: Vice President
<PAGE>
EXHIBIT A
(Legal Description)
LOT 1, THE MARKS SUBDIVISION 2ND FILING, County of Arapahoe, State of
Colorado.
<PAGE>
[Depiction of Property]
<PAGE>
EXHIBIT B
(Rent Roll)
<PAGE>
EXHIBIT C
(Form of Tenant Leases)
<PAGE>
EXHIBIT D
(Service Agreements)
<PAGE>
SERVICE AGREEMENTS
Moore Pest Control
Todd Landscaping
Rocky Mountain Turf & Tree (Snow Removal)
Data Vision (Security Alarms)
Waste Management
Fikes (air fresheners)
For Rent Magazine
Globe Furniture
Agreements that Cannot Be Terminated in 30 Days
Automatic Laundry - Laundry Room Lease (expires 9/16/96)
Data Vision - Alarm monitoring for 116 units (expires 2/19/97)
No pending claims against the property at this time
<PAGE>
EXHIBIT E
(Description of Pending Claims)
See Exhibit D
<PAGE>
EXHIBIT F
(List of Nonterminable Contracts)
See Exhibit D
<PAGE>
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
THIS AMENDMENT TO AGREEMENT OF PURCHASE AND SALE ("Amendment") is made
as of February 1, 1996, by and between HG VENTURE, a Texas limited
partnership ("Seller"), and WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland
real estate investment trust ("Buyer").
WHEREAS, Seller and Buyer entered into that certain Agreement of
Purchase and Sale (the "Agreement") dated as of the 6th day of December, 1995
for the purchase and sale of property, together with the buildings and
improvements thereon erected, known as The Marks West Apartments, 1528 Girard
Place, Englewood, Colorado 80110, as amended by a letter agreement dated
January 12, 1996 (capitalized terms not otherwise defined herein shall have
the definitions given them in the Agreement); and
WHEREAS, Seller and Buyer desire to amend the Agreement as hereinafter
provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as
follows:
(i) Closing Date. Section 7 is amended and restated in its entirety as
follows:
Closing. The closing of the transaction contemplated hereby
(the "Closing") shall take place at the offices of Brownstein Hyatt
Farber & Strickland, P.C., 410 Seventeenth Street, Suite 2222,
Denver, Colorado 80202, at 10:00 a.m., on the earlier of March 18,
1996 or the date designated for closing by Buyer upon not less than
three days prior written notice to Seller (the "Closing Date").
(ii) Purchase Price.
a. The Purchase Price shall mean the following: (i) if the
Closing occurs on or before February 20, 1996, then seventeen million two
hundred thousand and no/100 dollars ($17,200,000.00); (ii) if the Closing
occurs after February 20, 1996, but on or before March 1, 1996, then
seventeen million two hundred twenty-five thousand and no/100 dollars
($17,225,000.00); and (iii) if the Closing occurs after March 1, 1996, then
seventeen million two hundred fifty thousand and no/100 dollars
($17,250,000.00).
b. Section 2C of the Agreement is amended and restated as
follows:
The Purchase Price is allocated as follows: (i) $40,000 of the
Purchase Price is allocated to Personalty; (ii) the balance of the
Purchase Price is allocated to real property.
4. The Agreement, as amended hereby, remains in full force and effect.
This Amendment may be executed in counterparts by each party separately.
When Seller and Buyer have executed a copy hereof, such copies taken together
shall be deemed to be a full and complete Amendment to the Agreement between
Seller and Buyer.
IN WITNESS WHEREOF, Seller and Buyer have executed this First Amendment
as of the date set forth below, to be effective as of the date first above
written.
HG VENTURE, a Texas limited partnership
By: POLLOCK MARKS INVESTORS, a
California limited partnership,
Its General Partner
By: POLLOCK PARTNERS II, a
California limited partnership,
Its General Partner
By: POLLOCK REALTY
CORPORATION, Its General
Partner
By: /s/ James M. Pollock
___________________________
James M. Pollock,
Its President
By: HAMPDEN I, LIMITED, a Texas limited
partnership, its Managing General
Partner
By: /s/ Trammell S. Crow
------------------------------
Trammell S. Crow, Its General Partner
WELLSFORD RESIDENTIAL PROPERTY
TRUST, a Maryland real estate
investment trust
By: /s/ Donald D. MacKenzie
______________________________________
Donald D. MacKenzie, Vice President
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
THIS SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE ("Amendment") is
made as of February 29, 1996, by and between HG VENTURE, a Texas limited
partnership ("Seller"), and WELLSFORD MARKS WEST CORP., a Colorado
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Wellsford Residential Property Trust, a Maryland
real estate investment trust ("Wellsford REIT"), have entered into that
certain Agreement of Purchase and Sale dated as of December 6, 1995, as
amended (collectively, the "Agreement"), for the purchase and sale of
property, together with the buildings and improvements thereon erected, known
as The Marks West Apartments, 1528 Girard Place, Englewood, Colorado 80110
(capitalized terms not otherwise defined herein shall have the definitions
given them in the Agreement); and
WHEREAS, by Assignment and Assumption of Agreement of Purchase and Sale
dated February __, 1996, Wellsford REIT has assigned the Agreement to Buyer
and Buyer has assumed the obligations of Wellsford REIT under the Agreement;
and
WHEREAS, Seller and Buyer desire to amend the Agreement as hereinafter
provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer hereby amend
the Agreement as follows:
(iii) Closing Date. Section 7 is amended and restated in its
entirety as follows:
Closing. The closing of the transaction contemplated hereby
(the"Closing") shall take place at the offices of Brownstein Hyatt
Farber & Strickland, P.C., 410 Seventeenth Street, Suite 2222,
Denver, Colorado 80202. The Closing is presently scheduled for
March 6, 7 and 8, 1996, but in any event will occur on or before
March 18, 1996 (the "Closing Date").
(iv) Purchase Price. Section 2.a. is amended and restated in its
entirety as follows:
a. The Purchase Price shall mean the following: (i) if the
Closing occurs on or before March 8, 1996, then seventeen million two hundred
twenty-five thousand and no/100 dollars ($17,225,000.00); and (ii) if the
Closing occurs after March 8, 1996, then seventeen million two hundred fifty
thousand and no/100 dollars ($17,250,000.00).
(v) The Agreement, as amended hereby, remains in full force and effect.
This Amendment may be executed in counterparts by each party separately.
When Seller and Buyer have executed a copy hereof, such copies taken together
shall be deemed to be a full and complete Amendment to the Agreement between
Seller and Buyer.
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of
the date first above written.
HG VENTURE, a Texas limited partnership
By: POLLOCK MARKS INVESTORS, a
California limited partnership,
Its General Partner
By: POLLOCK PARTNERS II, a
California limited partnership,
Its General Partner
By: POLLOCK REALTY
CORPORATION, Its General
Partner
By: /s/ James M. Pollock
____________________________
James M. Pollock,
Its President
By: HAMPDEN I, LIMITED, a Texas limited
partnership, its Managing General
Partner
By: /s/ Trammell S. Crow
------------------------------
Trammell S. Crow, Its General Partner
WELLSFORD MARKS WEST CORP., a
Colorado corporation
By: /s/ Donald D. MacKenzie
______________________________________
Donald D. MacKenzie, Vice President
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
THIS THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE ("Amendment") is
made as of March 8, 1996, by and between HG VENTURE, a Texas limited
partnership ("Seller"), and WELLSFORD MARKS WEST CORP., a Colorado
corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Wellsford Residential Property Trust, a Maryland
real estate investment trust ("Wellsford REIT"), have entered into that
certain Agreement of Purchase and Sale dated as of December 6, 1995, as
amended (collectively, the "Agreement"), for the purchase and sale of certain
real property, together with the buildings and improvements thereon erected,
known as The Marks West Apartments, 1528 Girard Place, Englewood, Colorado
80110 (capitalized terms not otherwise defined herein shall have the
definitions given them in the Agreement); and
WHEREAS, by Assignment and Assumption of Agreement of Purchase and Sale
dated February 27, 1996, Wellsford REIT has assigned the Agreement to Buyer
and Buyer has assumed the obligations of Wellsford REIT under the Agreement;
and
WHEREAS, the Buyer and the Seller have requested that the remarketing
agent acquire the Bonds on a voluntary basis from the current holders to
facilitate the Closing; and
WHEREAS, as of the date of this Agreement, the remarking agent has not
repurchased the Bonds; and
WHEREAS, Seller and Buyer desire to amend the Agreement as hereinafter
provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer hereby amend
the Agreement as follows:
(vi) Closing Date. Section 7 is amended and restated in its entirety as
follows:
Closing. The closing of the transaction contemplated hereby
(the"Closing") shall take place at the offices of Brownstein Hyatt
Farber & Strickland, P.C., 410 Seventeenth Street, Suite 2222, Denver,
Colorado 80202. The parties agree to mutually cooperate to close this
transaction as soon as reasonably practical after the remarketing agent
has repurchased the Bonds, but in any event on or before March 18, 1996
(the "Closing Date").
(vii) Purchase Price. The first three lines of Section 2.B. are
amended and restated as follows:
B. The Purchase Price shall mean the following: (i) if the
Closing occurs on or before March 15, 1996, then seventeen million two
hundred twenty-five thousand and no/100 dollars ($17,225,000.00); and
(ii) if the Closing occurs after March 15, 1996, then seventeen million
two hundred fifty thousand and no/100 dollars ($17,250,000.00).
(viii) The Agreement, as amended hereby, remains in full force and
effect. This Amendment may be executed in counterparts by each party
separately. When Seller and Buyer have executed a copy hereof, such copies
taken together shall be deemed to be a full and complete Amendment to the
Agreement between Seller and Buyer.
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of
the date first above written.
HG VENTURE, a Texas limited partnership
By: POLLOCK MARKS INVESTORS, a
California limited partnership,
Its General Partner
By: POLLOCK PARTNERS II, a
California limited partnership,
Its General Partner
By: POLLOCK REALTY
CORPORATION, Its General
Partner
By:
____________________________
James M. Pollock, President
By: HAMPDEN I, LIMITED, a Texas limited
partnership, its Managing General Partner
By:/s/ Trammell S. Crow
--------------------------------
Trammell S. Crow, General Partner
WELLSFORD MARKS WEST CORP., a
Colorado corporation
By: /s/ Donald D. MacKenzie
______________________________________
Donald D. MacKenzie, Vice President
Exhibit 10.52
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into this 9th day of October,
1996, by and between Holly Property Holdings, Inc., a Washington corporation
and subsidiary of Wellsford Residential Property Trust, a Delaware-corporation
(the "Seller"), and Jerry W. and Diane E. Thompson (the "Purchaser").
A. Seller is the owner of the Land and Improvements (as defined
below), including an apartment project known as the Silver Ridge Apartments
located in Tacoma, Washington.
B. Seller desires to sell and Purchaser desires to purchase the
apartment project and related real and personal property upon the terms and
conditions hereinafter set forth.
Seller and Purchaser agree as follows:
1. Definitions. For purposes of this Agreement:
"Agreement" means this Agreement and all Exhibits and Schedules
thereto.
"Escrow Agent" means Pierce County Escrow.
"Improvements" means all improvements any portion of which are
located on the Land;
"Land" means the land described in Schedule 1 hereto;
"Leases" means those leases, rental agreements and tenancies
affecting the Land or Improvements which are listed in Schedule 9.2, all
leases, rental agreements and tenancies affecting the Land or the Improvements
entered into after the date hereof in compliance with this Agreement, and all
refundable tenant deposits thereunder;
"Personal Property" means (i) all of Seller's interest in the Leases;
(ii) all supplies, tools, decorations, furniture, furnishings, fixtures,
equipment, machinery, landscaping and other tangible personal property, except
for any on-site computer and any related software, owned by Seller and used by
it in connection with the management, operation, maintenance and repair of the
Property; and (iii) Seller's interest, if any, in all trade names, telephone
numbers and telephone listings used by Seller exclusively in connection with
the Property;
"Property" means the Real Property and the Personal Property;
"Real Property" means the Land and all Improvements, Seller's
interest in any easements, covenants and other rights appurtenant to the Land,
and Seller's interest in any land lying in the right-of-way of any street or
highway in front of or adjoining the Land to the center line thereof and in any
award for any taking by condemnation or for any damage to the Land by reason of
any change of grade of any street or highway; and
"Title Company" means Puget Sound Title Company.
2. Contract of Sale. On the Closing Date, Seller shall sell and
Purchaser shall purchase the Property at the price and upon the terms and
conditions set forth in this Agreement.
3. Purchase Price; Payment Terms.
3.1 Purchase Price. The purchase price (the "Purchase Price")
shall be One Million Four Hundred and Sixty Thousand Dollars ($1,460,000.00)
and shall be paid in cash at closing.
3.2 Payment Terms. The portion of the Purchase Price payable in
cash at Closing shall be paid by (a) Purchaser's delivery to Escrow Agent of a
certified check payable to the order of Escrow Agent's Trust Account and drawn
on a bank or savings and loan association having a banking office in the State
of Washington or (b) wire transfer of immediately available federal funds to
Escrow Agent's Trust Account.
4. Allocation of Purchase Price. The Purchase Price shall be allocated
among the items comprising the Property in the manner set forth in Exhibit A
hereto.
5. Contingencies.
5.1 Inspection Contingencies. The offer to purchase by Purchaser
contained in this Agreement and Purchaser's obligation to close title under
this Agreement are contingent upon completion of each of the following due
diligence items: (a) Purchaser's physical inspection of the Property and each
space therein by consultants of Purchaser's choice; (b) Purchaser's
confirmation that the Property is properly licensed with all federal, state and
local governmental authorities; (c) Purchaser's confirmation that all required
certificates of occupancy have been issued for the use of the Property as a
residential apartment complex; (d) Purchaser's confirmation that the Property
is in compliance with zoning laws of Pierce County, Washington and review of
any zoning opinions in Seller's possession, custody or control; (e) Purchaser's
review of any hazardous waste inspection reports in Seller's possession,
custody or control; (f) Purchaser's conduct, at Purchaser's option and sole
expense, of a hazardous waste inspection of the Property and each apartment and
space therein by consultants of Purchaser's choice; (g) Purchaser's review of
all leases, options to purchase, warranties, occupancy agreements and any and
all applications to lease submitted prior to the date of this Agreement,
currently affecting the tenancy of each apartment and space in the Property,
and verification of the payment history of all tenants currently occupying the
apartments and spaces in the Property, and (h) Purchaser's review of any and
all real estate and other tax bills relating to the Property in Seller's
possession, custody or control. All of such inspections, confirmations, and
reviews shall be satisfactory to Purchaser in its sole and uncontrolled
discretion.
Purchaser shall have until 5:00 P.M. on the day thirty (30) days
after the date of execution of this Agreement by both parties (the "Inspection
Contingency Date") to satisfy or waive the inspection contingencies set forth
in this Section 5.1 and to give Seller notice that such inspection
contingencies have been satisfied or waived. If Purchaser shall not satisfy or
waive such inspection contingencies and give Seller such notice on or before
the Inspection Contingency Date, then this Agreement shall be automatically
terminated.
Purchaser shall pay all costs of its inspection and testing.
Purchaser shall repair any damage to the Property caused by Purchaser's
inspection of the physical condition of the Property. Purchaser shall defend,
indemnify and hold Seller harmless from and against any and all damages,
expenses, claims or liabilities for personal injury or property damage caused
by Purchaser's inspection of the physical condition of the Property and all
obligations to and liens of any contractor, agent or representative employed by
Purchaser. The provisions of this Section shall survive the Closing or
termination of this Agreement by either party for any reason.
5.2 Financing Contingency. The offer to purchase by Purchaser
contained in this Agreement and Purchaser's obligation to close title under
this Agreement are contingent upon Purchaser obtaining a written loan
commitment which shall include terms and conditions with respect to interest
rate, loan fees, and loan to value ratios that are within normal industry
standards and market rates for loans on similar type properties utilizing FNMAE
DUS underwriting criteria. Within three (3) business days after the
Purchaser's notification to Seller that all inspection contingencies have been
satisfied or waived, Purchaser shall submit a written application to a lender
and, thereafter, shall use reasonable efforts to obtain such written approval
prior to the Closing Date. If Purchaser is unable to obtain from lender and
supply to Seller such written approval within sixty (60) days following the
satisfaction and waiver of Purchaser's inspection contingencies (the "Financing
Contingency Date"), then this Agreement shall be automatically terminated.
6. Earnest Money. Purchaser has deposited with Seller or Title Company
as earnest money the sum of Fifteen Thousand Dollars ($15,000.00) (the "Earnest
Money") in the form of an Earnest Money promissory note in favor of the Seller
due in full in cash or cashier's check upon the Purchaser's notification to
Seller that all inspection contingencies have been satisfied or waived, subject
to removal of contingencies by Purchaser. Upon Purchaser's payment of the cash
or cashier's check Earnest Money, Purchaser shall give Pierce County Escrow
instructions to place said Earnest Money into a federally insured, individual,
interest bearing account in a Tacoma or Seattle bank of Purchaser's choice.
The Earnest Money, together with any interest earned thereon, shall be credited
against the Purchase Price at Closing, except in the event of termination of
this Agreement or a default, in which event the interest shall be paid to the
party entitled to receive the Earnest Money.
7. Closing; Seller's Deliveries at Closing.
7.1 Time and Place. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at 10:00 A.M. on the first
business day thirty (30) days from the removal of Purchaser's financing
contingencies, but in any event, not later than one hundred and twenty (120)
days from the date of execution of this Agreement. The actual date of Closing
is hereinafter referred to as the "Closing Date". Closing shall take place
through an escrow at the offices of Escrow Agent.
7.2 Seller's Deliveries at Closing. At Closing, Seller shall
deliver to Purchaser the following items:
(a) a bargain and sale warranty deed complying with RCW
64.04.040, conveying the Real Property free and clear of all liens,
encumbrances, covenants, restrictions, conditions and adverse claims affecting
title, except the Permitted Exceptions;
(b) an assignment of leases, in the form of Exhibit B hereto,
transferring to Purchaser all of Seller's right, title and interest in and to
the Leases;
(c) a bill of sale, in the form of Exhibit C hereto,
transferring to Purchaser good and marketable title to all tangible Personal
Property (other than the Leases);
(d) a general assignment, in the form of Exhibit D hereto,
transferring to Purchaser all of Seller's right, title and interest in and to
those service contracts, warranties, guaranties, licenses, permits and other
intangible personal property, that Purchaser elects to have assigned, if
permitted by the terms thereof;
(e) a certification as to Seller's non-foreign status that
complies with the provisions of Section 1445(b)(2) of the Internal Revenue Code
of 1986, as amended, and any regulations promulgated thereunder;
(f) all original Leases, assigned service contracts, plans and
specifications, certificates, licenses, permits, and authorizations relating to
the Property, and copies of such other records and files in Seller's possession
and relating to the Property as Purchaser may reasonably request;
(g) any necessary resolutions or authorizations of Seller
authorizing the sale of the Property to Purchaser and the execution and
delivery of the deed and all other documents and instruments to be executed by
Seller pursuant to this Agreement; and
(h) Any other documents required by this Agreement to be
delivered by Seller.
7.3 Purchaser's Deliveries at Closing. At Closing, Purchaser shall
deliver to Seller the Purchase Price, in the manner described in Section 3, and
any documents required by this Agreement to be delivered by Purchaser.
7.4 Possession. Purchaser shall be entitled to possession of the
Property at Closing, subject only to the rights of tenants under the Leases.
7.5 Prorations and Assessments. At Closing the following items
shall be prorated between the Seller and Purchaser as of 12:01 A.M. on the
Closing Date:
(a) paid rents;
(b) real estate taxes;
(c) charges for water, sewer, steam, gas, electricity and other
utility services, if any, on the basis of the fiscal period for which assessed
or charged, except that if any of such utility services are metered,
apportionment at Closing shall be based on the last available reading, subject
to adjustment after Closing when the next reading is available; and
(d) charges under service contracts actually transferred to
Purchaser hereunder or permitted renewals or replacements thereof.
Seller agrees to pay all assessments, local improvement district
(LID) assessments and bonds related thereto effecting the Real Property at the
time of Closing.
7.6 Accounting for Late Payment of Rents. If any tenant is in
arrears in the payment of rent on the Closing Date, rents received from such
tenant shall be applied in the following order of priority: (i) first to the
period prior to the month in which Closing occurred; (ii) then to the month in
which Closing occurred; and (iii) then to any month or months following the
month in which Closing occurred. If rents or any portion thereof received by
Seller or Purchaser after Closing are payable to the other party by reason of
this allocation, the appropriate sum, less a proportionate share of any
reasonable attorney's fees, costs and expenses of collection thereof, shall be
promptly paid to the other party, which obligation shall survive Closing.
7.7 Closing Costs. Seller shall pay all real estate excise taxes
applicable to the sale of the Property and the conveyance of title to
Purchaser, the title insurance premium for a standard coverage owner's policy
of title insurance, and the recording fees for the recordation of the deed and
the assignment of leases. Purchaser shall pay all sales taxes with respect to
the Personal Property. Purchaser and Seller shall each pay one-half of the
escrow fees. Each party shall bear its own attorneys' fees.
8. Title Examination.
8.1 Title Report. As soon as possible, and in any event within ten
(10) calendar days after this Agreement has been executed by both Seller and
Purchaser, Seller shall obtain from the Title Company a current preliminary
commitment for a standard coverage owner's policy of title insurance (the
"Title Report") covering the Real Property (showing Seller as the owner of the
Property) and a copy of all instruments referred to in said Title Report. The
Title Report and instruments shall be delivered to Purchaser by Seller
immediately upon receipt.
8.2 Purchaser's Review. Purchaser shall have twenty (20) calendar
days after its receipt of the Title Report to give notice to Seller of its
approval of any exceptions listed on the Title Report. Exceptions specifically
approved by Purchaser shall be deemed to be Permitted Exceptions (as that term
is defined in Section 8.3). All exceptions as to which Purchaser does not give
notice of approval within such twenty (20) day period shall be deemed to have
been rejected by Purchaser. If Seller does not, within ten (10) days after the
expiration of such twenty (20) day period, give notice to Purchaser that Seller
shall remove all exceptions rejected or deemed rejected by Purchaser (other
than exceptions evidencing or securing liquidated obligations to pay money
which Purchaser is entitled to remove at Closing pursuant to Section 8.3
hereof), then this Agreement shall automatically be terminated and Seller or
Title Company, as the case may be, shall immediately return the Earnest Money
Note to Purchaser. In the event that, at any time after delivery of the Title
Report, the Title Report is amended to include any liens, encumbrances,
easements, restrictions, conditions, covenants, rights, rights-of-way or other
matters affecting title to the Property not listed as exceptions in the Title
Report, as theretofore amended, Seller shall deliver to Purchaser a copy of
such amendment and a copy of all instruments relating to additional exceptions
referred to in such amendment. In the event Purchaser does not give notice of
Purchaser's approval of any such additional exception within ten (10) days from
its receipt of such amendment, such additional exception shall be deemed to
have been rejected by Purchaser. If Seller does not, within five (5) days
after the expiration of such ten (10) day period, give notice to Purchaser that
Seller shall remove any new exception rejected or deemed rejected by Purchaser
(other than exceptions evidencing or securing liquidated obligations to pay
money which Purchaser is entitled to remove at Closing pursuant to Section 8.3
hereof, then this Agreement shall automatically terminate.
8.3 Condition of Title at Closing. Seller shall convey and
Purchaser shall accept a good and marketable title in fee simple, free and
clear of all liens and encumbrances, easements, restrictions, conditions,
covenants, rights, rights-of-way and other matters, subject only to the
following (Permitted Exceptions"): (a) the rights and reservations expressed in
the U.S. Patent to the Land; (b) the lien of current real estate taxes not yet
due and payable; (c) usual and ordinary public utility easements for gas,
electric, water, sewer and other utility lines to the Buildings, except to the
extent Purchaser in its reasonable judgment determines such easements to be
inconsistent with the current use of the Property, (d) zoning regulations and
ordinances general to the district in which the Property is located which are
not violated by the existing structures or present use thereof, (e) the Leases,
(f) such other title exceptions as may be approved by Purchaser in accordance
with Section 8.2. In the event that Seller shall have failed as of Closing to
remove any title exception, other than a Permitted Exception, evidencing or
securing a liquidated obligation to pay money, Purchaser may either (i) cause
such obligation (including any prepayment penalty, yield maintenance premium or
similar charge, if any) to be paid, in which event the amount of such payment
shall be credited against the Purchase Price, or (ii) elect to take title
subject to such exception, in which event the outstanding balance of such
payment obligation as of the Closing Date, plus any prepayment premium, yield
maintenance premium or similar charge, if any, that would be payable in the
event such obligation were paid at Closing, shall be credited against the
Purchase Price and such exception shall be deemed a "Permitted Exception."
9. Seller's Representations and Warranties. As a material inducement to
Purchaser entering into this Agreement, Seller represents and warrants to
Purchaser as follows:
9.1 Authority. Seller is a corporation, duly organized, validly
existing under the laws of the Stare of Washington, and has the power to own
all of its properties and assets and to carry on its business as presently
conducted. The execution, delivery and performance of this Agreement has been
duly and validly authorized by all necessary action of Seller and this
Agreement is a valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.
9.2 Leases. A complete list of all current leases, rental
agreements and tenancies affecting any portion of the Land or the Improvements,
including the name of the tenant, the size of the premises, monthly rent,
expiration date, number and terms of any renewal options, if any, and the
amount of any security deposit, is set forth in the rent roll attached as
Schedule 9.2 hereto. Seller agrees to supplement such schedule in the event
that any such lease is renewed or modified or any further leases are entered
into after the date hereof. Except for the leases set forth in Schedule 9.2,
there are no other leases, rental agreements, tenancies, licenses or other
agreements affecting the occupancy of the Property which would become an
obligation of the Purchaser after Closing.
9.3 No Default in Other Agreements. To the best of Seller's
knowledge, Seller is not in default under any agreement affecting the Property,
and no event exists which, with the passage of time or the giving of notice or
both, will become a default thereunder on the part of Seller or (to the best of
Seller's knowledge) any other party thereto.
9.4 No Breach. To the best of Seller's knowledge, the execution,
delivery and performance of this Agreement by Seller does not and will not
conflict with or result in a breach of or default under any mortgage or
agreement which affects or purports to affect the Property.
9.5 No Litigation or Adverse Events. To the best of Seller's
knowledge, there are no investigations, actions, suits, proceedings or claims
pending or threatened against or affecting Seller or the Property, at law or in
equity, before or by any governmental authority.
9.6 Licenses, Permits and Zoning. To the best of Seller's
knowledge Seller has received no notices of violation of any building, zoning
or land use codes applicable to the Property.
9.7 Non-Foreign Person. Seller is not a "foreign person" as such
term is defined in Section 1445(f) of the Internal Revenue Code of 1986, as
amended.
9.8 Definitions. The term "Seller's knowledge" means and includes
only the actual knowledge of Daniel M. Kelley, Vice-Chairman of Seller, without
giving effect to any principles of imputed or constructive knowledge and
without any duty of inquiry.
10. Seller's Covenants. From and after the date of this Agreement and
continuing through Closing, Seller agrees with Purchaser as follows:
10.1 Access to Records. Seller shall grant Purchaser, its
employees, engineers, attorneys, accountants and other representatives, full
and complete access during normal business hours to the Property and to all of
Seller's records, files and operating statements (including working papers)
concerning the Property, including all information in Seller's possession which
Purchaser desires to inspect in order to satisfy itself in all respects
concerning its purchase of the Property. Purchaser shall be entitled to
duplicate or make abstracts of such records, files or financial statements.
10.2 Risk of Loss. Seller shall retain the risk of loss to the
Property by fire or other casualty until the deed of conveyance is delivered to
Purchaser. If a loss occurs, Purchaser may elect to proceed with Closing, in
which event Seller shall assign to Purchaser all of Seller's rights to
insurance proceeds payable in respect of such loss, including the sole right to
settle or approve the settlement of any insurance claim, and the Purchase Price
shall be reduced by the amount of any deductible and by the amount of any
proceeds paid to Seller that are not used for repair and restoration of the
Property in a manner approved by Purchaser. Purchaser shall have twenty (20)
days after notice of the event to notify Seller as to whether Purchaser elects
to proceed with Closing. During such twenty (20) day period, Seller shall
cooperate and use its best efforts to provide Purchaser with all information
reasonably necessary to evaluate the loss.
10.3 Eminent Domain. If all or any part of the Property is
condemned or if condemnation proceedings are instituted, Purchaser may elect to
proceed with Closing without an adjustment in price, in which event Seller
shall assign to Purchaser all its rights to the condemnation proceeds,
including the sole right to settle or approve the settlement of any
condemnation award. Purchaser shall have twenty (20) days after notice of the
institution of condemnation proceedings to notify Seller as to whether
Purchaser elects to proceed with Closing. During such twenty (20) day period,
Seller shall cooperate and use its best efforts to provide Purchaser with all
information reasonably necessary to evaluate the scope of the condemnation
proceedings.
10.4 Operation of Property. Seller shall manage and operate the
Property in the ordinary and usual manner and preserve its relations with all
tenants, suppliers and others having business dealings with it. Seller shall
maintain the Property in its present order and condition, reasonable wear and
tear excepted.
10.5 Leases. Without Purchaser's prior written consent, which
consent shall not be unreasonably withheld, Seller shall not change the terms
and conditions on which Seller rents or leases apartments or other space in the
Property, including without limitation, the lease form currently utilized by
Seller, Seller's existing requirements as to tenant credit-worthiness, prepaid
rent, security deposits and fees and charges payable to Seller by its tenants,
except that Seller may, without the consent of Purchaser, increase (but not
decrease) the rents to new and renewing tenants and continue any existing rent
concession program.
10.6 Insurance. Seller shall maintain the existing fire and
extended coverage insurance on the Property until the day after the Closing
Date. Seller may cancel all such insurance as of the day after the Closing
Date. Any return premiums shall be paid to Seller.
11. Purchaser's Representations and Warranties.
11.1 Purchaser's Authority. As a material inducement to Seller
entering into this Agreement Purchaser represents and warrants to Seller that
Purchaser is two individuals in good standing under the laws of the State of
Washington, and have the power to own all of their properties and assets and to
carry on their business as presently conducted. The execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action of Purchaser and this Agreement is a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms.
11.2 Purchaser's Inspection. During the period prior to the
Inspection Contingency Date Purchaser will have the opportunity to inspect the
Property and to become fully familiar with the physical condition and repair
thereof. If Purchaser satisfies or waives the contingencies set forth in
Section 5, then Purchaser shall be conclusively deemed to have accepted the
Property "AS IS", with all faults.
11.3 No Reliance. Before purchasing the Property pursuant to this
Agreement, Purchaser will make such inspections and investigations of (i) the
physical condition of the Property, (ii) applicable building, land use, zoning
or other laws or regulations and compliance of the Property therewith, (iii)
the availability or existence of water, sewer or other utilities, any rights
thereto, or the area of service of any water, sewer, or other utility
districts, (iv) access to any public or private sanitary sewer systems, (v) the
presence of any Hazardous Materials (as defined below) on or under the
Property, and (vi) all other matters affecting or relating to this transaction
as purchaser deems necessary or advisable. In entering into this transaction
and this Agreement, Purchaser has not been induced by and has not relied upon
any representations, warranties or statements, whether express or implied, made
by Seller, or any agent, employee or other representative of Seller, or by any
broker or any other person representing or purporting to represent Seller,
which are not expressly set forth in this Agreement, whether or not any such
representations, warranties or statements were made in writing or orally.
Purchaser agrees that, by closing escrow and purchasing the Property from
Seller, Purchaser will thereby confirm that Purchaser has had the opportunity
to fully inspect the Property and Purchaser assumes the responsibility and
risks of all defects and conditions, including such defects and conditions, if
any, that cannot be observed by casual inspection.
11.4 No Representations. Except as specifically otherwise provided
in Section 9 of this Agreement, Seller makes no representations or warranties
with respect to and shall have no liability for the condition of, or any
conditions affecting, the Property or the suitability of the Property for the
Purchaser's intended use, including without limitation: (i) the physical
condition of the Property; (ii) any applicable building, land use, zoning or
other laws or regulations affecting the Property or with respect to compliance
therewith; (iii) the availability or existence of water, sewer or other
utilities to the Property, any rights hereto, or the area of service of any
water, sewer, or utility districts; (iv) access to any public or private
sanitary sewer systems; or (v) the presence of any Hazardous Materials (as
defined below) on or under the Property. Without limiting the generality of the
foregoing, Seller shall have no liability to Purchaser with respect to the
condition of the Property under common law, or any federal, state, or local
laws or regulations, including without limitation, the presence or absence of
Hazardous Materials (as defined below) on the Property, and Purchaser hereby
releases and waives any and all claims which Purchaser has or may have against
the Seller with respect to the condition of the Property.
11.5 Definition. The term "Hazardous Materials" means and includes
asbestos containing materials, polychlorinated biphenyls, flammable explosives,
radioactive materials, gasoline, oil, chemicals known to cause cancer or
reproductive toxicity, pollutants, effluents, contaminants, emissions and any
items included in the definition of hazardous or toxic waste, materials or
substances under any local, state and federal law relating to the environment
or environmental conditions.
12. Conditions to Purchaser's Obligation to Close. In addition to any
contingencies listed in Section 5 above, the obligation of Purchaser to close
hereunder shall be subject to the satisfaction of the following conditions (all
or any of which may be waived, in whole or in part, by Purchaser in writing):
12.1 Representations and Warranties True at Closing. The
representations and warranties made by Seller in this Agreement shall be true
in all material respects as of Closing with the same force and effect as though
such representations and warranties had been made or given on and as of the
date of Closing.
12.2 Compliance with Agreement. Seller shall have performed and
complied with all its obligations under this Agreement which are to be
performed or complied with by it prior to or at Closing.
13. Conditions to Seller's Obligation to Close. The obligation of Seller
to close hereunder shall be subject to satisfaction of the following conditions
(all or any of which may be waived, in whole or in part, by Seller in writing):
13.1 Representations and Warranties True at Closing. The
representations and warranties made by Purchaser in this Agreement shall be
true in all material respects as of Closing with the same force and effect as
though such representations and warranties had been made or given on and as of
the date of the
Closing.
13.2 Compliance with Agreement. Purchaser shall have performed and
complied in all material respects with all its obligations under this Agreement
which are to be performed or complied with by it prior to or at Closing.
14. Broker. Seller and Purchaser each represent to the other that
neither is represented by any broker, agent or finder in connection with this
transaction, except Cain and Scott, Inc. (the "Broker"). Craig F. Knowlton,
CCIM of Cain and Scott, Inc. hereby discloses that he is a licensed real estate
agent in the State of Washington and that he and Cain and Scott, Inc. represent
the Seller in this transaction. Seller shall pay a commission to the Broker
pursuant to a separate agreement. Each party agrees to indemnify and hold the
other party harmless from and against any and all liability, costs, damages,
causes of action or other proceedings instituted by any broker, agent or
finder, licensed or otherwise, claiming through, under or by reason of the
conduct of the indemnifying party in the purchase and sale of the Property or
in any manner whatsoever in connection with this transaction.
15. Failure of Seller or Purchaser to Perform.
15.1 Purchaser's Remedies. If Seller shall default in the
performance of its obligation under this Agreement to sell the Property to
Purchaser, then Purchaser may elect to either (i) obtain a refund of the
Earnest Money, and, if Purchaser so elects, Escrow Agent shall immediately pay
the Earnest Money to Purchaser as Purchaser's sole and exclusive remedy, or
(ii) institute an action for specific performance to enforce Seller's
obligations under this Agreement to convey title to the Property to Purchaser.
15.2 Seller's Remedies. If Purchaser shall default in the
performance of its obligation under this Agreement to purchase the Property
from Seller, then Escrow Agent shall immediately pay the Earnest Money to
Seller as liquidated damages for all damages suffered by Seller, including
without limitation, the loss of its bargain, which shall be Seller's sole and
exclusive remedy.
16. Termination. This Agreement may be terminated only by the mutual
written consent of the parties or by reason of default or otherwise as
expressly provided in this Agreement. In the event of such termination, all
obligations of the parties to each other shall terminate; both parties shall be
relieved and released of and from any and all further liability under this
Agreement, and, except in the event Purchaser shall default in the performance
of its obligation under this Agreement to purchase the Property from Seller,
the Earnest Money shall be promptly paid to Purchaser.
17. Indemnification.
17.1 Indemnification by Seller. Seller shall defend, indemnify and
hold Purchaser harmless from and against, and reimburse Purchaser on demand
for, any and all obligations, losses, liabilities, claims, cost or expense
(including reasonable attorneys' fees), whether direct, contingent or
consequential, resulting from claims asserted against Purchaser by any third
party relating to the Property and arising out of actions or circumstances
occurring before Closing, other than claims arising from any misrepresentation,
breach of warranty or non-fulfillment of any covenant or agreement on the part
of Purchaser under this Agreement.
17.2 Indemnification by Purchaser. Purchaser shall defend,
indemnify and hold Seller harmless from and against, and reimburse Seller on
demand for, any and all obligations, losses, liabilities, claims, cost or
expense (including reasonable attorneys' fees), whether direct, contingent or
consequential, resulting from claims asserted against Seller by any third party
relating to the Property and arising out of actions or circumstances occurring
on or after Closing, other than closing arising from any misrepresentation,
breach of warranty or non-fulfillment of any covenant or agreement on the part
of Seller under this Agreement.
18. Tax-Deferred Exchange. Seller acknowledges that Purchaser may seek
to structure this transaction as a tax-deferred exchange pursuant to the
provisions of Section 1031 of the Internal Revenue Code of 1986. Seller agrees
to cooperate with Purchaser in so structuring this transaction provided that
any such cooperation shall not result in Seller incurring any additional
liability or cost in addition to those costs otherwise provided for in this
Agreement and that Seller shall not be required to take title to any exchange
parcel. Any assignee or successor in interest shall be bound by this
Agreement. Purchaser shall defend, indemnify and hold Seller harmless from and
against all liability, claims, costs, damages and expenses, including, but not
limited to, reasonable attorneys' fees, arising from or related to the Section
1031 exchange and not otherwise part of this Agreement.
19. Capacity; No Personal Liability. This Agreement and all documents,
agreements, understandings and arrangements relating to this transaction have
been executed or entered into by an officer of the Seller in his/her capacity
as an officer of the Seller, which is a subsidiary of Wellsford Residential
Property Trust ("Wellsford") which has been formed as Maryland Real Estate
Investment Trust pursuant to a Declaration of Trust dated as of July 10, 1992,
as amended, and not individually, and neither the trustees, officers or
shareholders of the Seller or Wellsford shall be bound or have any personal
liability hereunder or thereunder. All persons dealing with the Seller and
Wellsford shall look solely to the assets of the Seller and Wellsford for
satisfaction of any liability of the Seller or Wellsford in respect of this
Agreement and all documents, agreements, understandings and arrangements
relating to this transaction and will not seek recourse or commence any action
against any of the trustees, officers or shareholders of the Seller or
Wellsford or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements and transactions
between the parties hereto.
20. Miscellaneous Provisions.
20.1 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20.2 Time of the Essence. Time is of the essence of this Agreement.
20.3 Attorneys' Fees. In the event of a dispute arising out of the
interpretation or enforcement of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees.
20.4 Entire Agreement: Amendment. This Agreement sets forth the
entire agreement of the parties as to the subject matter hereof and supersedes
all prior discussions and understandings between them. This Agreement may not
be amended or rescinded in any manner except by an instrument in writing signed
by a duly authorized officer or representative of each party hereto.
20.5 Severability. Should any of the provisions of this Agreement
be found to be invalid, illegal or unenforceable by any court of competent
jurisdiction, such provision shall be stricken and the remainder of this
Agreement shall nonetheless remain in full force and effect unless striking
such provision shall materially alter the intention of the parties.
20.6 No Waiver. No waiver of any right under this Agreement shall
be effective unless contained in a writing signed by a duly authorized officer
or representative of the party sought to be charged with the waiver and no
waiver of any right arising from any breach or failure to perform shall be
deemed to be a waiver of any future right or of any other right arising under
this Agreement.
20.7 Heading. Section headings contained in this Agreement are
included for convenience only and form no part of the agreement between the
parties.
20.8 Notices. All notices or requests required or permitted under
this Agreement shall be in writing; shall be personally delivered, delivered by
a reputable express delivery service or sent by certified mail, return receipt
requested, postage prepaid; shall be deemed given when so delivered or mailed,
irrespective of whether such notice or request is actually received by the
addressee, and shall be sent to the parties at the following addresses:
If to Seller: Wellsford Residential Property Trust
101 East 26th Street, Suite 301
Tacoma, Washington 98421
Attention: Daniel M. Kelley, Vice-Chairman
and
Wellsford Residential Property Trust
610 Fifth Avenue, Seventh Floor
New York, New York 10020
Attention: Edward Lowenthal
and
Williams Kastner & Gibbs LLP
601 Union Street, Suite 4100
Seattle, Washington 98101
Attention: Richard D. Thaler
If to Purchaser: Jerry W. and Diane E. Thompson
Post Office Box 507
Los Alamos, California 93440
Either party may change the address to which notice shall be sent by
notice to the other party.
20.9 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. Purchaser shall have an absolute right to assign its rights and
responsibilities under this Agreement to an exchange facilitator acting on
behalf of Purchaser. The term "Purchaser" as used in this Agreement shall be
deemed to include the assignee under any such permitted assignment.
20.10 Execution. This Agreement shall not be binding or effective
until properly executed and delivered by Seller and Purchaser.
20.11 Interpretation. As used in this Agreement, the masculine shall
include the feminine and neuter, the feminine shall include the masculine and
neuter, the neuter shall include the masculine and feminine, the singular shall
include the plural and the plural shall include the singular, as the context
may require.
20.12 Jurisdiction and Venue. In the event any action is brought to
enforce this Agreement, the parties agree to be subject to exclusive in
personam jurisdiction in the Superior Court for the State of Washington or in
the United States District Court for the Western District of Washington and
agree that in any such action venue shall be exclusively at Seattle,
Washington.
20.13 Governing Law. This Agreement shall bc governed by, and
construed and enforced in accordance with, the laws of the State of Washington.
DATED the date first above written.
SELLER:
HOLLY PROPERTY HOLDINGS, INC.
By: /s/ Daniel M. Kelley
___________________________
Daniel M. Kelley
Its: Vice President
PURCHASER:
By: /s/ Jerry W. Thompson
___________________________
Jerry W. Thompson
By: /s/ Diane E. Thompson
___________________________
Diane E. Thompson
<PAGE>
Schedule 1 - Land
(Legal Description)
Beginning at the Northeast corner of the Southwest quarter of the Northeast
quarter of Section 6, Township 19 North, Range 3 East of the Willamette
Meridian; thence running West 329.5 feet; thence South 265.675 feet; thence
East 329.5 feet; thence North 266 feet to the place of beginning, being Tract
No. 4 of the unrecorded Plat of N.A. JONES ADDITION TO TACOMA, WASHINGTON, in
Pierce County, Washington.
ALSO
That part of the East half of the following described tract lying Easterly of
Sales-Seven Mile County Road:
Beginning at a point 659 feet West of the Northeast corner of the Southwest
quarter of the Northeast quarter of section 6, Township 19 North, Range 3 East
of the Willamette Meridian thence South 265.35 feet; thence East 329.25 feet;
thence North 265.675 feet; thence West 329.5 feet to the point of beginning, in
Pierce County, Washington.
Situate in the County of Pierce, State of Washington.
<PAGE>
Schedule 9.2
"Complete List of Current Leases, Rental
Agreements and Tenancies"
<PAGE>
Exhibit A
"Allocation of Purchase Price for Personal Property"
<PAGE>
Exhibit B
"Assignment of Leases"
<PAGE>
Exhibit C
"Bill of Sale"
<PAGE>
Exhibit D
"General Assignment"
Exhibit 21.1
Wellsford Residential Property Trust
------------------------------------
Subsidiaries
Wellsford Warwick Corporation
Wellsford Ironwood Corporation
Wellsford Marks B Corporation
Wellsford San Tropez Corporation
WOP Limited Partnership
Wellsford Oklahoma, Incorporated
Wellsford Holly Residential Properties, Incorporated
Wellsford Property Management, Corporation
Holly Property Holdings, Incorporated
Wellsford Development Corporation
Wellsford Bear Creek II Corporation
Wellsford Holly Management, Incorporated
Village at Bear Creek L.L.C.
Park at Highlands L.L.C.
Wellsford Park Highlands Corporation
Palomino Park Public Improvements Corporation
Wellsford Marks West Corp.
Red Canyon at Palomino Park L.L.C.
Wellsford Real Properties, Inc.
Wellsford Chatham Corp.
Wellsford Wayne Corp.
North American Medical Research Corp.
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in Registration Statements No. 33-
84522 (Form S-3), 33-73948 (Form S-3), 33-63348 (Form S-8), 33-91192 (Form S-
3), 33-95364 (Form S-8), and 333-8077 (Form S-3) and in the related
Prospectuses of our report dated February 10, 1997 (except for Note 13, as to
which the date is February 28, 1997), with respect to the consolidated
financial statements and schedule of Wellsford Residential Property Trust and
subsidiaries included in this Annual Report (Form 10-K) for the year ended
December 31, 1996.
ERNST & YOUNG LLP
/s/ Ernst & Young LLP
___________________________
New York, New York
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This Schedule contains summary financial information extracted from
the consolidated balance sheets and consolidated statements of operation and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 18,478,103
<SECURITIES> 0
<RECEIVABLES> 858,713
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,473,957
<PP&E> 795,579,786
<DEPRECIATION> 83,965,956
<TOTAL-ASSETS> 756,288,574
<CURRENT-LIABILITIES> 30,300,670
<BONDS> 349,301,678
<COMMON> 171,018
0
62,998
<OTHER-SE> 376,452,210
<TOTAL-LIABILITY-AND-EQUITY> 756,288,574
<SALES> 0
<TOTAL-REVENUES> 131,821,403
<CGS> 0
<TOTAL-COSTS> 58,871,203
<OTHER-EXPENSES> 26,688,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,599,368
<INCOME-PRETAX> 22,662,390
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,662,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,662,390
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
