SETTLEMENT AGREEMENT
DATED: May 21, 1996
AMONG: PORTLAND LOFTS ASSOCIATES, L.P. ("PLA")
AND: EAST BANK ANGEL JOINT VERDURE ("East Bank")
AND: EAST BANK DEVELOPMENT, INC. ("EBDI")
AND: XXXXXX X. XXXXX, XX ("Angel")
AND: KEARNY STREET REAL ESTATE
COMPANY, L.P. ("Kearny Street")
AND: KEARNY STREET II REAL ESTATE
COMPANY, L.P. ("Kearny II")
AND: BANK OF AMERICA OREGON ("Bank")
AND: BANKAMERICA CORPORATION
("BAC")
AND: XXXXXXX XXXXX ASSET
MANAGEMENT COMPANY ("Xxxxxxx Xxxxx"
Recitals:
A. Kearny Street has filed an action against PLA, East
Bank, EBDI and Angel (collectively, "Defendants"), captioned as
Kearnv Street Real Estate Company. L.P.. V. Portland Lofts
Associates Limited Partnership. et al., Multnomah County Circuit
Court Case No. 9411-07780 (the "Lawsuit), and Defendants have
brought counterclaims in the Lawsuit.
B. In the Lawsuit, Kearny Street sought to collect on (a)
a note by East Bank dated November 3, 1989, originally stated in
the amount of $800,000, and guaranteed by EBDI, Angel and East
Bank and (b) a note by PLA dated March 31, 1992, originally
stated in the amount of $6,800,000, and guaranteed by EBDI, Angel
and East Bank (collectively, the "Notes").
C. Kearny Street received the Notes, guaranties, and
collateral described in paragraph l.A. (ii) and (iii) in an
assignment from the Bank, and Kearny Street has assigned the
Notes, guaranties, and the collateral described in Paragraph lA.
(ii) and (iii) below to Kearny II.
D. The parties to this Settlement Agreement (the
"Agreement", which includes the attached Exhibits 1 - 8 and 11 -
12, which are incorporated by reference as if fully set forth
herein,) wish to settle the claims and counterclaims in the
Lawsuit, and certain other claims or potential claims to the
extent specifically provided in this Agreement.
Agreements:
In order to fully and finally compromise and settle the
claims and counterclaims in the Lawsuit, and certain other claims
and disputes or potential claims or disputes, to the extent
specifically described below, and in consideration of the
foregoing recitals and the mutual covenants, agreements and
representations set forth herein, the Parties agree as follows:
1. Payment. In full satisfaction of the Notes, PLA
shall cause the delivery to the escrow agent selected by the
parties of $5.4 million by 5:00 p.m. on July 31, 1996, except as
provided in Paragraph 2 below. After this payment by PLA, Kearny
II shall deliver to the escrow agent:
A. The original Notes, marked CANCELED";
B. Any and all documents evidencing an interest,
or necessary to release such an interest, that Kearny or Kearny
II or their assignees or transferees may have in all collateral
securing the Notes, including but not limited to the Deed of
Trust dated March 31, 1992 to Security Pacific Bank for the
property at issue; the property pledged pursuant to the Pledge
Agreement between Angel and Security Pacific Bank dated April 25,
1991; a Security Agreement dated March 31, 1992; an Assignment of
Leases recorded on April 6, 1992 in the records of Multnomah
County at Book 2526, Page 227; a Conditional Assignment of Rents
recorded on April 6, 1992 in the records of Multnomah County at
Book 2526, Page 221; a UCC Fixture Filing dated March 30, 1992
recorded in the records of Multnomah County at Book 2526, Page
2233; and a UCC-l Financing Statement filed with the Oregon
Secretary of State's Office on April 9, 1992 as File No. R01179;
and
C. All guaranties given for the Notes, including
the Guaranties executed by EBDI, East Bank, and/or Angel on May
23, 1989 and March 31, 1992.
Upon receipt of both the payment and the documents
described above, the escrow agent (1) shall release the $5.4
million to Fleet Real Estate Capital, Inc, as agent for Kearny
II, (2) shall release the Notes, collateral, the releases of
security described in paragraph 1.B above, and guaranties
described in paragraph l.C above to PLA, and (3) shall provide
the releases described in Paragraphs 4 and S below to the
respective counsel for each party being released.
2. Loan by Bank of America. The Bank has committed
to fund a loan to PLA sufficient for the payment in Paragraph 1
above (the "Loan"), pursuant to a commitment letter to PAL dated
April 18, 1996 (the "Commitment"). When the Bank funds the Loan
to PAL, PAL shall cause the escrow agent to pay $5.4 million of
the Loan proceeds to Fleet Real Estate Capital, Inc., as agent
for Kearny II. If the Bank fails to fund the Loan on or before
May 31, 1996, due to no fault or unreasonable conduct by
Defendants, (a) Defendants shall have such additional time as is
reasonably necessary to obtain financing from another source, but
in no event later than October 1, 1996, and (b) the date for
payment in Paragraph 1 shall be accordingly extended.
3. Failure to Pay. When they execute this Agreement,
defendants shall tender into escrow an executed confession of
judgment on the Note dated November 3, 1989, in the form of
Exhibit 12 hereto. If Defendants fail to make the $5.4 million
payment by the time required by Paragraph 1 or by any additional
time permitted by Paragraph 2, the confession of judgment shall
be released to Kearny II, and the Note dated March 31, 1992 shall
remain due and payable. If the payment required by Paragraph 1
is made by the time required by Paragraph 1 or any additional
time permitted by Paragraph 2, the confession of judgment shall
be void and shall be destroyed.
4. Releases. Concurrent with the execution of this
Settlement Agreement, the parties shall sign and deliver into
escrow the releases attached hereto as Exhibits 1 - 8. Any
releases by and of the Bank and BAC found among Exhibits 1-10,
including Exhibits 2, 3, 4, and 6, shall become effective only if
the Bank funds the Loan. The releases by and of parties other
than the Bank and BAC in Exhibits 1, 5, 7, and 8 shall become
effective upon execution of this Agreement and those releases.
5. Additional Releases. If Xxxxxx Xxxxxxx Real
Estate Fund, L.P. (`Xxxxxx Xxxxxxx") provides the release of
Defendants as provided in Exhibit 9 hereto, Defendants shall
provide the release of Xxxxxx Xxxxxxx as provided in Exhibit 10,
or in such other format as defendants and Xxxxxx Xxxxxxx may
agree. The settlement is not contingent upon obtaining the
releases in Exhibits 9 and 10.
6. Monthly Payments. Pending the payment required by
Paragraph 1, Defendants shall continue to make the monthly
payments to Kearny II required by the March 31, 1992 Note, and
shall continue to make monthly payments of the monthly interest
due on the November 3, 1989 note. In the month that the payment
under Paragraph 1 is made, these payments on the Notes shall
still be due, and any excess payment shall be refunded to PAL on
a prorated basis.
7. Dismissal of Claims. Immediately after (1) this
Agreement has been executed, (2) the payments under Paragraphs 1
and 6 have been timely made, and (3) signed releases as provided
in Paragraph 4 have been received in escrow, Kearny Street and
Defendants will move to dismiss the claims and counterclaims in
the Lawsuit with prejudice, and without costs or fees to any
party, using the form of Judgment of Dismissal attached as
Exhibit 11.
8. Confidential Settlement. The terms of this
Settlement shall be confidential and shall not disclosed, except
as required by law or to partners of the Parties to this
Agreement and the Commitment, their attorneys, their accountants,
their investors or potential investors, their lenders or
potential lenders, officers, directors, employees, rating
agencies, bank regulators, and other applicable governmental
agencies.
9. ED. Defendants represent and warrant that ED was
administratively dissolved on or about April 17, 1992, that ED
did not file a proceeding under the bankruptcy laws, that ED has
no claims against any of the parties to this Agreement, that ED
has not assigned or otherwise transferred any such claim as more
fully indicated in Paragraph 19 below, and that to the extent
that ED has ever had any such claims, any such claims shall be
released pursuant to the terms of this Agreement and the releases
attached as Exhibits 1 - 8. Defendants agree to defend indemnify
and hold harmless Kearny Street, Kearny II, Bank of America
Oregon and BankAmerica Corporation from any reasonable costs,
expenses, losses, damages, suits, actions, claims or causes of
action, including but not limited to any outside or in-house
attorneys fees, resulting from any breach of the representations
and/or warranties in this Paragraph 9.
10. Mutual Representations. Covenants and Warranties.
Each of the Parties represents, warrants and agrees as follows:
A. Each party has, to the extent such party has
deemed necessary, received independent legal advice from his,
her, or its attorney(s) with respect to the advisability of
making this settlement, the form of this Agreement, and the form
of the Exhibits hereto.
B. No party (nor any officer, director, partner,
agent, employee, representative, or attorney of or for any party)
has made any statement or representation to any other party
regarding any fact relied upon in entering into this Agreement1
and no party (nor any officer, director, partner, agent,
employee, representative, or attorney of or for any party) is
relying upon any statement, representation or promise of any
other party (nor any officer, director, partner, agent, employee,
representative, or attorney of or for any party) in executing
this Agreement or in making the settlement provided for herein,
except as expressly stated in this Agreement, or as stated in the
Bank's Commitment, to PAL dated April 18, 1996, or in any loan
application, loan documents, deeds of trust, or guaranties
entered into in connection with the Bank's Loan to PAL referenced
in Paragraph 2 above.
C. Each party to this Agreement has made such
investigation of the facts pertaining to this settlement, this
Agreement, and the Exhibits hereto, and of all matters pertaining
thereto as it, he or she deems necessary.
D. Each party has read this Agreement and
understands the contents hereof.
11. Binding Effect. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Parties and
their respective successors, predecessors, attorneys-in-fact,
attorneys-at-law, officers, directors, shareholders, partners,
limited partners, joint venturers, employees, agents, parent
corporations, subsidiary and affiliated corporations, affiliates,
insurers, heirs, personal representatives, executors and
administrators of the estate of the parties to this Agreement.
12. Amendment. This Agreement may not be modified or
amended except by the written agreement of the Parties. No
modification or amendment of any provision of this Agreement or
the Exhibits hereto shall be binding unless in writing and signed
by the party to be bound. This Agreement may not be modified or
amended orally. No waiver of any of the provisions of this
Agreement shall be binding unless executed in writing by the
party making the waiver. No waiver of any of the provisions of
this Agreement shall be deemed to constitute a waiver of any
other provisions, regardless of whether such provisions are
similar to the provision being waived, nor shall any waiver
constitute a continuing waiver unless so indicated in writing by
the party making the waiver.
13. Entire Agreement. This Agreement and the attached
exhibits 1 - 8, 11 and 12, which are incorporated herein by
reference, contain the entire agreement and understanding of the
Parties with respect to the matters described herein, and
supersede all prior and contemporaneous agreements between them
with respect to such matters. Notwithstanding anything contained
herein to the contrary, this Agreement does not supersede or
modify the terms of the Bank's Commitment, nor does this
Agreement supersede or modify the terms of any loan application,
loan documents, deeds of trust or guaranties to be executed in
connection with the Bank's Loan to PAL referenced in Paragraph 2
above.
14. Governing Law. This Agreement shall be governed
by and construed under the laws of the State of Oregon to whose
jurisdiction the parties submit, provided, however, that in the
event that any law or laws of the State of Oregon shall require
or otherwise dictate that the laws of another state or
jurisdiction shall be applied in any proceeding, such Oregon law
or laws shall be superseded by this paragraph and the remaining
laws of the State of Oregon shall nonetheless be applied in such
proceeding. In the event that any action is instituted in
connection with this Agreement, it shall be commenced and
maintained in Multnomah County Circuit Court, Multnomah County,
Oregon.
15. Arbitration of Claims. Any controversy or claim
arising out of or relating to this Agreement shall, at the
request of any party to this Agreement, be determined by
arbitration in accordance with Oregon arbitration procedure and
under the auspices and rules of the American Arbitration
Association. Judgment upon the award of the arbitrator may be
entered in any court having jurisdiction. The institution and
maintenance of a civil action shall not constitute a waiver of
this provision.
16. Attorneys' Fees and Costs. Any party breaching
this Agreement shall be liable for reasonable in-house and
outside counsel's attorneys' fees and costs actually incurred by
the injured party in enforcing this Agreement, remedying the
breach, seeking its interpretation, or in recovering damages for
any such breach, in arbitration, trial, and on appeal.
17. Captions. The captions appearing at the
commencement of the paragraphs hereof are descriptive only and
for convenience of reference. Should there be any conflict
between such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and
govern in the construction of this Agreement.
18. Joint Preparation. Counsel for each of the
Parties has cooperated and participated in the negotiation of the
terms of this Agreement. Accordingly, the Parties hereby
acknowledge and agree that this Agreement shall not be construed
or interpreted in favor of or against any party(ies) by virtue of
the identity of its preparer.
19. Non-Assignment of Claims. Each of the Parties
represents and warrants that, except as described in Recital C
above and paragraph 20 below, there has been no assignment, sale
or transfer, by operation of law, subrogation or otherwise, of
any claim, right, cause of action, demand, obligation, liability
or interest released by any of them as provided herein or in the
Releases.
20. Kearny II As Owner. Kearny and Kearny II
represent and warrant that Kearny II owns the Notes, all
guaranties, and all collateral described in paragraph 1 above,
but that Kearny II has pledged the Notes, guaranties and
collateral to a third party. Kearny and Kearny II represent and
warrant that they have the power and authority to enter into this
Agreement and the attached Releases, and that Kearny II has the
power and authority to make the modifications to the Notes
contemplated by this Agreement. Kearny and Kearny II represent
and warrant that Kearny II has the right and ability to obtain
the return of the Notes, guaranties and collateral, free of any
such pledge or encumbrance, and Kearny II represents, warrants
and agrees that it will do so. Kearny and Kearny II agree to
defend indemnify and hold harmless all parties that are or will
be released by Kearny and Kearny II in Exhibits 1-8 from any
reasonable costs, expenses, losses, damages, suits, actions,
claims or causes of action, including but not limited to any
outside or in-house attorneys' fees, resulting from any breach of
the representations or warranties in paragraphs 19 and 20, so
long as the title or interest of the party bringing such a claim
derived from or was transferred or assigned to that party by
Kearny or Kearny II or an affiliated partnership or corporation.
21. No Admission of Liability. This Agreement is a
settlement of disputed actual and potential claims,
counterclaims, crossclaims and third party claims. Neither the
terms of this Agreement nor the fact that a settlement is being
effected by this Agreement is to be construed as an admission of
liability or wrongdoing by any party to this Agreement.
22. Execution in Counterparts. This Agreement may be
executed in counterparts. When each party has signed and
delivered to the escrow agent at least one such executed
counterpart of this Agreement and the pertinent Releases in
Exhibits 1 - 8, then each such counterpart shall be deemed an
original, and, when taken together with all other signed
counterparts, shall constitute one agreement which shall be
binding upon and effective as to all Parties, to the extent
provided in this Agreement. A faxed counterpart shall be treated
as an original.
23. Severability. If any term or provision of this
Agreement, including the attached exhibits, or its application to
any circumstance shall to any extent be invalid or unenforceable
the remainder of this Agreement or exhibit and the application of
such term or provision to persons other than those as to which it
is held invalid or unenforceable shall not be affected thereby
and each term or provision of this Agreement or exhibit shall be
valid and enforceable to the fullest extent permitted by law.
24. Additional Documents. The parties agree to act in
good faith and cooperate in the execution of additional documents
necessary to effect the intent of this Agreement, but this
Agreement constitutes a binding contract between the parties.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
KEARNY STREET REAL ESTATE COMPANY, L.P
By: XXXXXXX X.XXXXXX,
PRESIDENT
Date: 5/28/96
HANFORMD/XXXXX ASSET MANAGEMENT COMPANY
A California general partnership
by: Hanford/Xxxxx Resources One, Inc.
a Calofornia corporation, General
Partner:
by: Xxxxxxxxx X. Xxxxx
President
date: 5/29/96
BANK OF AMERCIA OREGON
BY:
ITS:
DATE:
BANKAMERICA CORPORATION
BY:
ITS:
DATE:
PORTLAND LOFTS ASSOCIATES, L.P.
BY: Xxxxxx X. Xxxxx XX
ITS: General Partner
DATE: 5/21/96
EAST BANK ANGEL JOINT VENTURE
BY: Xxxxxx X. Xxxxx XX
ITS: General Partner
DATE: 5/21/96
EAST BANK DEVELOPMENT, INC.
XXXXXX X. XXXXX XX
