OPERATING AGREEMENT
OF
PARK AT HIGHLANDS LLC,
A COLORADO LIMITED LIABILITY COMPANY
AS OF APRIL 27, 1995
TABLE OF CONTENTS
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Page
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ARTICLE 1 - DEFINITIONS..................................................... 1
ARTICLE 2 - FORMATION OF COMPANY............................................ 14
2.1 Formation............................................ 14
2.2 Name................................................. 14
2.3 Principal Place of Business.......................... 14
2.4 Registered Office and Registered Agent............... 14
2.5 Articles of Organization............................. 15
2.6 Term................................................. 15
ARTICLE 3 - BUSINESS OF COMPANY............................................. 15
3.1 Permitted Businesses................................. 15
3.2 Other Activity or Business........................... 15
ARTICLE 4 - CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND LOANS TO
THE COMPANY........................................................ 15
4.1 Capital Contributions................................ 15
4.2 Withdrawal or Reduction of Members'
Contributions to Capital............................. 16
4.3 Development Deficit Payments......................... 16
4.4 Operating Deficit Payments........................... 16
4.5 Additional Capital Contributions..................... 16
4.6 Miscellaneous........................................ 16
ARTICLE 5 - INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;
CONSTRUCTION LOAN CLOSING.......................................... 17
5.1 Initial Closing...................................... 17
5.2 Construction ........................................ 18
5.3 Infrastructure Land Closing and Bond Financing
of Infrastructure.................................... 21
5.4 Failure of Initial Closing or Construction Loan
Closing to Occur..................................... 22
ARTICLE 6 - DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE FINAL
CLOSING DATE....................................................... 22
6.1 Duties of Xxxx....................................... 22
6.2 Construction Completion.............................. 24
6.3 Development Deficit Guaranty......................... 24
6.4 Operating Deficit Guaranty........................... 25
6.5 Liabilities of the Company........................... 25
6.6 Construction Contracts............................... 25
6.7 Administration of the Construction Loan.............. 25
6.8 Change Orders........................................ 26
6.9 Retainage............................................ 26
6.10 Agreements with Affiliates........................... 26
6.11 Warranty by Xxxx..................................... 27
6.12 Insurance............................................ 27
6.13 Personal Obligation.................................. 29
6.14 Force Majeure........................................ 29
6.15 Limitations of Xxxx'x Authority...................... 29
6.16 Pre-Existing Environmental Condition................. 29
ARTICLE 7 - COMPENSATION TO XXXX............................................ 30
7.1 Development Management Fee........................... 30
7.2 Construction Management Fee.......................... 30
7.3 Construction Loan Guarantee Fee...................... 30
7.4 Cost Savings Fee..................................... 30
7.5 Incentive Fee........................................ 30
7.6 Conditions to Payment of Fees; Right of Offset....... 30
ARTICLE 8 - FINAL CLOSING................................................... 31
8.1 Conditions to Final Closing.......................... 31
8.2 Initiation of Final Closing.......................... 31
8.3 Actions at the Final Closing......................... 31
8.4 Certain Rights of Xxxx Upon Satisfaction of
Final Closing Funding Conditions..................... 32
ARTICLE 9 - ALLOCATIONS..................................................... 33
9.1 Profits and Losses................................... 33
9.2 General Provisions................................... 33
9.3 Special Provisions................................... 33
9.4 Code Section 704(c) Allocations...................... 35
9.5 Allocations Relating to Taxable Issuance of
Interest............................................. 35
ARTICLE 10 - DISTRIBUTIONS.................................................. 35
10.1 Cash Flow............................................ 36
10.2 Division Among Members............................... 36
10.3 Special Distributions to WPHC........................ 36
ARTICLE 11 - BOOKS, RECORDS, AND ACCOUNTING................................. 36
11.1 Books and Records.................................... 36
11.2 Reports.............................................. 36
11.3 Tax Returns.......................................... 37
11.4 Special Basis Adjustment............................. 37
11.5 Tax Matters Partner.................................. 37
11.6 Bank Accounts........................................ 38
ARTICLE 12 - MANAGEMENT..................................................... 38
12.1 Management........................................... 38
12.2 Number, Tenure and Qualifications.................... 38
12.3 Appointment of Xxxx as Manager....................... 38
12.4 Certain Powers of Managers........................... 38
12.5 Member Approval of Certain Acts...................... 39
12.6 Liability for Certain Acts........................... 40
12.7 Indemnity of the Members and the Managers............ 40
12.8 Manner of Acting..................................... 40
12.9 Informal Act by Managers............................. 40
12.10 Participation by Electronic Means.................... 41
12.11 Resignation.......................................... 41
12.12 Removal.............................................. 41
12.13 Death or Disability of Xxxx.......................... 43
12.14 Vacancies............................................ 43
12.15 Prohibition Against Publicly Traded Partnership
.................................................... 43
ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS...................... 43
13.1 Representations and Warranties of Each Member........ 43
13.2 Representations, Warranties and Covenants of
Xxxx................................................. 44
13.3 General Representation............................... 47
13.4 Survival; Indemnity.................................. 47
ARTICLE 14 - RIGHTS AND OBLIGATIONS OF MEMBERS.............................. 48
14.1 Limitation of Liability.............................. 48
14.2 Company Debt Liability............................... 49
14.3 List of Members...................................... 49
14.4 Company Books........................................ 49
14.5 Priority and Return of Capital....................... 49
14.6 Outside Activity..................................... 49
ARTICLE 15 - MEETINGS OF MEMBERS............................................ 50
15.1 Annual Meeting....................................... 50
15.2 Special Meetings..................................... 50
15.3 Place of Meetings.................................... 50
15.4 Notice of Meetings................................... 50
15.5 Meeting of all Members............................... 50
15.6 Record Date.......................................... 51
15.7 Quorum............................................... 51
15.8 Manner of Acting..................................... 51
15.9 Proxies.............................................. 51
15.10 Action by Members Without a Meeting.................. 51
15.11 Voting by Ballot..................................... 52
15.12 Waiver of Notice..................................... 52
ARTICLE 16 - TRANSFERABILITY; PUT-CALL PROVISIONS........................... 52
16.1 Restrictions on Transferability...................... 52
16.2 Put-Call Rights...................................... 52
16.3 Calculation of Option Price.......................... 53
16.4 Right of Offset...................................... 54
16.5 Restrictions on Resignation.......................... 54
16.6 Permitted WPHC Transfer.............................. 54
ARTICLE 17 - ADMISSION OF ADDITIONAL MEMBERS................................ 54
ARTICLE 18 - DISSOLUTION AND TERMINATION.................................... 55
18.1 Dissolution.......................................... 55
18.2 Effect of Filing of Dissolving Statement............. 55
18.3 Distribution of Assets Upon Dissolution.............. 55
18.4 Articles of Dissolution.............................. 56
18.5 Filing of Articles of Dissolution.................... 56
18.6 Winding Up........................................... 56
18.7 No Restoration of Deficit Capital Accounts........... 56
18.8 Deemed Liquidation................................... 57
18.9 Permitted Withdrawal by Xxxx......................... 57
ARTICLE 19 - MISCELLANEOUS PROVISIONS....................................... 57
19.1 Statement of Intent of Parties....................... 57
19.2 Notices.............................................. 58
19.3 Application of Colorado Law.......................... 59
19.4 Waiver of Action for Partition....................... 59
19.5 Amendments........................................... 59
19.6 Construction......................................... 59
19.7 Headings............................................. 59
19.8 Waivers.............................................. 59
19.9 Time of the Essence.................................. 59
19.10 Remedies for Default................................. 59
19.11 Rights and Remedies Cumulative....................... 59
19.12 Severability......................................... 60
19.13 Heirs, Successors and Assigns........................ 60
19.14 Counterparts......................................... 60
19.15 Further Assurances................................... 60
19.16 Entire Agreement..................................... 60
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
PARK AT HIGHLANDS LLC,
A COLORADO LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made as of the 27th day of April, 1995 by and
among XX XXXX, an individual ("Xxxx"), and WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation ("WPHC"), as the members of PARK AT HIGHLANDS LLC, a
Colorado limited liability company (the "Company").
NOW THEREFORE, pursuant to the Act, the following shall constitute the
Operating Agreement of PARK AT HIGHLANDS 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. ss.ss.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 Xxxx Design, Inc. ("Architect"), an Affiliate of Xxxx,
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 Xxxx 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 Xxxx'x
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 PARK AT HIGHLANDS 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 $35,000,000 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)
twenty-eight (28) 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 Xxxx 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 Xxxx or its Affiliates (excluding the property management
fee paid to The Xxxx 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 Xxxx 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 Xxxx'x Interest" means the following:
(i) one percent (1.0%) of the following: (A) the fair market value of the
Partnership'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
Xxxx, 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 Xxxx and WPHC
exceeds (B) the Capital Contribution Balance of Xxxx.
(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 Xxxx 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 Xxxx'x
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 an approximately thirty (30) acre parcel
of the 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 Xxxxxxx 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 Xxxx 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 I dated May 2, 1995.
(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 Xxxx 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 -- 316; Phase III -- 320; 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 Xxxx 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 Xxxx 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, 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 Xxxx 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 Xxxx'x
Interest and the Minimum Option Price.
(br) "Outside Date" means the date that is thirty-six (36) 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
Xxxx, 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 456-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 Xxxx Company, an
Affiliate of Xxxx, 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 Xxxx; 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 Xxxx with respect to the Interest
of Xxxx 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 Xxxx 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 Xxxx), 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.ss.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 27, 1995, 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 Park at Highlands 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 000 Xxxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000. 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 000 Xxxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000 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 XXXX. At the Initial Closing, Xxxx 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 $5,118,024, which the Company shall use as follows: (i)
approximately $4,834,016 shall be used to fund the acquisition of the Land; and
(ii) approximately $284,008 shall be used to reimburse Xxxx as described in
Section 5.1.2. hereof.
(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 fifty percent (50%) of Cost
Savings.
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. Xxxx shall have the obligation to make
Development Deficit Payments when and as required under Article 6 of this
Agreement.
4.4 OPERATING DEFICIT PAYMENTS. Xxxx 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 XXXX EXPENSES. At the Initial Closing, the Company
shall reimburse Xxxx and its Affiliates for those costs and expenses incurred by
Xxxx and its Affiliates as set forth on Exhibit A attached hereto and for
accrued pre-development costs incurred by Xxxx on or prior to the Initial
Closing for which Xxxx has not previously been billed ("Reimbursable Expenses").
Xxxx represents and warrants that such Exhibit A and additional invoices and
schedules to be provided by Xxxx with respect to the balance of the Reimbursable
Expenses set forth and shall set forth the costs and expenses actually incurred
by Xxxx in connection with the Project. Notwithstanding anything to the contrary
herein, only those Reimbursable Expenses which constitute actual, third party
costs of Xxxx shall be paid at the Initial Closing. Any Reimbursable Expenses
for in-house architectural services or other services provided by Xxxx or The
Xxxx Company ("In House Reimbursable Expenses") shall be paid as follows: (i) if
and when a bond financing of the Infrastructure occurs, then proceeds of such
bond financing shall be used to pay In House Reimbursable Expenses relating to
the Infrastructure only; and (ii) if and when a Construction Loan Closing
occurs, the Company shall pay the In House Reimbursable Expenses, including any
In House Reimbursable Expenses related to the Infrastructure which were not
previously paid. In connection with any request for the payment of In House
Reimbursable Expenses, Xxxx shall submit to WPHC for approval the
following: (i) detailed invoices setting forth the services performed and work
delivered by Xxxx 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 Xxxx 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 Xxxx, The Xxxx
Company or their Affiliates for any In House Reimbursable Expenses. Except as
set forth in this Section 5.1.2, neither Xxxx nor The Xxxx 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 Xxxx of its obligations under
this Agreement, at the Initial Closing Xxxx shall execute a Pledge and Security
Agreement in the form of Exhibit L attached hereto, wherein Xxxx grants WPHC a
first lien security interest in Xxxx'x Interest in the Company and in Xxxx'x
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 Xxxx 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 Xxxx 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, Xxxx shall develop
appropriate site plans and other plans as may be required to obtain such
approvals. Xxxx shall not submit any proposed plans or other materials to any
governmental agency without the prior approval of WPHC. In addition, Xxxx shall
not incur any third party expense without the prior approval of WPHC. WPHC
agrees to reasonably cooperate with Xxxx in obtaining the Approvals, which
cooperation shall include, without limitation, prompt review of any matters
submitted to WPHC and prompt response to Xxxx in connection with any matters
submitted to WPHC. Copies of all reports, studies and other information and
material generated for or on behalf of Xxxx 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 Xxxx 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, Xxxx 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, Xxxx 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, Xxxx 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. Xxxx 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, 1995, provided, however, such date
shall be extended to a date not later than December 31, 1995, if Xxxx is
diligently pursuing his obligations and if the delay is not attributable to a
default by Xxxx (such date as it may be extended is referred to herein as the
"Construction Loan Outside Date"); (d) Xxxx shall personally guarantee the
Construction Loan if required by the Construction Lender; (e) the Construction
Loan shall have a maturity date of at least thirty-six (36) 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 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 Xxxx ("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 Xxxx nor Contractor nor Architect shall enter into any
other agreements with parties affiliated with Xxxx 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
Xxxx under this Agreement, the Approved Affiliate Agreements shall be terminated
at the option of WPHC. An uncured default by Xxxx under any Approved Affiliate
Agreement 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 Xxxx without such
termination constituting a default.
5.2.7 XXXX GUARANTEE. Xxxx 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 Xxxx and guaranty
termination provisions that 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 Xxxx
Company, an Affiliate of Xxxx.
5.3 INFRASTRUCTURE LAND CLOSING AND BOND FINANCING OF INFRASTRUCTURE. It is
the intent of the Members that the Infrastructure be acquired and developed by
an entity that will enable the financing of the Infrastructure to be
accomplished by the issuance of tax-exempt 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, Xxxx shall cause the Company to effect the legal subdivision of the Land
into not fewer than two legally separate parcels. At least one or more parcels
shall comprise the Infrastructure Land, and at least one or more parcels 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 an
entity designated by WPHC for a purchase price designated by WPHC and on terms
designated by WPHC.
5.3.2 CONTROL OVER MATTERS RELATED TO INFRASTRUCTURE. Notwithstanding
anything to the contrary herein, WPHC shall have sole and exclusive control over
all decisions of the Company relating to the sale, financing, construction and
development of the Infrastructure. In connection with the financing of the
Infrastructure and as directed by WPHC, the Company shall cause the Land to be
included within a special assessment district or similar district in connection
with the financing of the Infrastructure and/or shall cause the Project to be
subject to special assessments, general assessments and/or consensual liens. In
addition, the Company shall enter into such agreements as WPHC may require,
which agreements obligate the Company to pay or reimburse the costs of operating
and maintaining the Infrastructure.
5.3.3 CONSTRUCTION OF INFRASTRUCTURE. After the date hereof and at or prior
to the Construction Loan Closing, an Affiliate of Xxxx shall enter into one or
more agreements (collectively, the "Infrastructure Improvements Agreement") with
the owner of the Infrastructure Land (or its contractor) to construct the
Infrastructure for a guaranteed maximum price, including a fee to Xxxx not to
exceed three percent (3%) of the hard costs of construction of the
Infrastructure. A default by Xxxx 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. Xxxx
covenants to cause the Initial Closing to occur by May 15, 1995 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 15, 1995, or the
Construction Loan Closing has not occurred by the Construction Loan Outside
Date, then WPHC shall have the right to remove Xxxx 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 XXXX. Xxxx 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 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 substantial accordance
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 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. Xxxx 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) Xxxx 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-eight (28) months after the Construction Loan Closing Date; (b) Final
Completion to occur within thirty (30) months after the Construction Loan
Closing Date; (c) all Final Closing Funding Conditions shall be satisfied prior
to the Outside Date; and (d) completion of the Infrastructure by the date set
forth and in accordance with the Infrastructure Improvements Agreement.
6.3 DEVELOPMENT DEFICIT GUARANTY. Xxxx hereby guarantees Xxxx 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"). Xxxx 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 Xxxx in full prior to the Final Closing Date. All Development Deficit
Payments made to the Company shall be non-reimbursable payments, and Xxxx shall
not be entitled to any repayment from the Company (unless advances of the
Construction Loan are later available to reimburse Xxxx for the same), and the
Capital Account of Xxxx shall not be affected by any Deficit Payments made by
Xxxx. Without limiting the generality of the foregoing, Xxxx shall not be
entitled to reimburse himself for any Development Deficits.
6.4 OPERATING DEFICIT GUARANTY. Xxxx hereby guarantees Xxxx 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"). Xxxx
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 Xxxx 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 Xxxx, 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 Xxxx by WPHC to reimburse Xxxx for the same. In no event,
shall the Capital Account of Xxxx be affected by any Operating Deficit Payments
made by Xxxx. Notwithstanding anything to the contrary herein, upon the Removal
of Xxxx, Xxxx shall not have any obligation hereunder to fund Operating Deficits
incurred after the date of his Removal.
6.5 LIABILITIES OF THE COMPANY. Xxxx 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, Xxxx 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. Xxxx shall obtain and the Company shall enter
into such contracts, agreements or obligations, as are necessary to construct
and develop the Project. Xxxx 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. Xxxx 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. Xxxx 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. Xxxx 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 Xxxx 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 Xxxx 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 $350,000 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. Xxxx 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. Xxxx 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 Xxxx shall cause each other
Approved Affiliate Agreement to be enforced in a prudent manner and for the
benefit of the Company. Xxxx hereby agrees, for himself and on behalf of each
Person affiliated with Xxxx 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 Xxxx under this Agreement, the Company shall have
the right to terminate any or all of the Approved Affiliate Agreements; (iii) an
uncured default by Xxxx or any person affiliated with Xxxx under an Approved
Affiliate Agreement shall constitute a default by Xxxx under this Agreement; and
(iv) Xxxx shall defend, indemnify and hold the Company harmless with respect to
the effects of any default by any Person affiliated with Xxxx under such
Approved Affiliate Agreements, including, without limitation, any mechanics
liens with respect to claims under any Approved Affiliate Agreements.
6.11 WARRANTY BY XXXX. 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, Xxxx 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
Xxxx 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 Xxxx or a Person affiliated with Xxxx and was not disclosed
to WPHC or was intentionally concealed by Xxxx or such affiliated Person, then
Xxxx shall promptly take such action as may
be necessary at Xxxx'x sole expense to correct such defective work. WPHC shall
report to Xxxx 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 Xxxx 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. Xxxx 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 Xxxx (but only as long as Xxxx is a Manager and a Member of
the Company) shall each be additional named insureds on all such policies and
renewals. Xxxx hereby irrevocably appoints WPHC as Xxxx'x 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 Xxxx,
such power of attorney to take effect immediately upon withdrawal, Removal or
resignation of Xxxx as Manager of the Company and member of the LLC, and Xxxx
agrees that such power shall be coupled with an interest and shall survive the
disability or death of Xxxx. Each policy shall provide that it will not be
modified or canceled without thirty (30) days prior written notice to WPHC. Xxxx
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,
Xxxx 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 Xxxx under this Agreement are
personal recourse obligations of Xxxx, as limited by Section 14.1.3 of this
Agreement, for which Xxxx shall be fully responsible to the Company and WPHC.
6.14 FORCE MAJEURE. Xxxx 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).
6.15 LIMITATIONS OF XXXX'X AUTHORITY. Anything to the contrary herein
notwithstanding, Xxxx 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 Xxxx except as
specified above;
6.15.4 to modify the Construction Loan documents or any agreement with any
affiliate of Xxxx 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. Xxxx 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 Xxxx 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 XXXX
In consideration of the performance by Xxxx of his obligations under
Article 6 of this Agreement, the Company shall pay Xxxx 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. Xxxx 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. Xxxx shall receive a construction loan
guarantee fee equal to 1.5% 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 Partnership shall pay Xxxx at Final Closing a
cost savings fee equal to fifty percent (50%) of Cost Savings, if any. Xxxx
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. Xxxx 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 Xxxx under this Agreement or any Approved Affiliate
Agreement. All fees except the Incentive Fee and any fees paid pursuant to the
Infrastructure Improvements Agreement(s) 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 Xxxx 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 Xxxx and
for any Development Deficits and Operating Deficits. In the event of the
withdrawal, resignation or Removal of Xxxx as a Member and Manager prior to the
Final Closing Date, except in the case of Removal of Xxxx due to Xxxx 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 Xxxx, Xxxx 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 Xxxx accelerate the due
date for any fees earned by Xxxx 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 Xxxx, 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 Xxxx to WPHC, the Final
Closing shall be held, the Final Closing shall be held on the date designated by
Xxxx, provided such date for the Final Closing designated by Xxxx shall be not
less than thirty-six (36) 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 Xxxx, 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 Xxxx from its guaranty of the Construction Loan.
8.3.3 Any accrued and unpaid fees due to Xxxx shall be paid, excluding,
however the Incentive Fee.
8.3.4 If either WPHC or Xxxx has exercised its (his) option under the
Put-Call provisions of Article 16 hereof, the closing of the transfer of the
Interest of Xxxx 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 XXXX 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, Xxxx 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 Xxxx 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 Xxxx: (the "Release Date"): (i) WPHC shall participate in
the Final Closing and make its Final Closing Capital Contribution; (ii) WPHC
shall cause Xxxx to be released from its guaranty of the Construction Loan; or
(iii) WPHC shall deliver to Xxxx an indemnity agreement executed by WRPT,
wherein WRPT agrees to indemnify Xxxx 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 Xxxx). 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 Xxxx.
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 DISTRIBUTIONS 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 XXXX AS MANAGER. Xxxx 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, Xxxx 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;
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
Xxxx'x 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 Xxxx has fully and timely performed his obligations
under this Agreement, the Company shall indemnify Xxxx 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 Xxxx 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 Xxxx.
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. Xxxx 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 Xxxx 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 15, 1995;
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 Xxxx
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 Xxxx within thirty (30) days of
notice from WPHC requiring such funding;
12.12.1.6 The death or disability of Xxxx;
12.12.1.7 If the Final Closing has not occurred by the Outside Date;
12.12.1.8 If Xxxx shall be in Material Default Xxxx 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, Xxxx 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 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 Xxxx,
Xxxx shall cease to have any interest in the Company and Xxxx shall cease to be
a Member of the Company. Such removal shall be effective without the necessity
of the execution of any documents by Xxxx. Nevertheless, Xxxx shall promptly
execute such assignment and transfer documents as WPHC may reasonably request to
evidence the Removal of Xxxx.
12.12.3 EFFECT OF REMOVAL ON CERTAIN OBLIGATIONS OF XXXX.
12.12.3.1 If Xxxx 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. Xxxx shall be liable, however, for
any breach of any representation or warranty which occurred prior to his
Removal.
12.12.3.2 If Xxxx is removed after the Construction Loan Closing Date, Xxxx
shall not be released from his ongoing performance obligations under Sections
6.3 or 6.10 or Article 13 of this Agreement and Xxxx shall be liable to WPHC for
damages resulting from any breach 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 Xxxx'x Removal. WPHC
shall have the obligation to make reasonable efforts to mitigate its damages
following a Removal of Xxxx after the Construction Loan Closing Date.
12.13 DEATH OR DISABILITY OF XXXX. Prior to the Construction Loan Closing,
Xxxx, WPHC and The Xxxx 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 Xxxx, at the
written request of WPHC, The Xxxx Company shall acquire from Xxxx (or his
estate) the entire interest of Xxxx in the Company, The Xxxx Company shall be
admitted as the Managing Member, and The Xxxx Company shall assume in writing
all of the obligations of the Managing Member hereunder; (ii) Xxxx (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 Xxxx'x
Removal; and (iii) if WPHC fails to exercise its option under this Section 12.13
to cause The Xxxx Company to be substituted as the Managing Member within ninety
(90) days of the date of Removal, then such option shall lapse and Xxxx (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 XXXX. 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, Xxxx hereby represents, warrants and
covenants to the Company and the Members as follows:
13.2.1 To the best of Xxxx'x 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 Xxxx shall use his best efforts to cause the approval by Xxxxxxx
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 456 units on the Project Land and the construction of the
Infrastructure pursuant to the Infrastructure Agreement(s).
13.2.3 Xxxx 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 Xxxxxxx 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 Xxxx 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 Xxxx has made such material registrations, qualifications,
designations, declarations and filings required (collectively, the "Approvals")
as determined or as may be determined necessary by Xxxx 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 Xxxxxxx 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, Xxxx 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. Xxxx 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. Xxxx 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 Xxxx, 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 Xxxx'x 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 Xxxx'x 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 Xxxx'x 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 Xxxx'x knowledge and based on Xxxx'x 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 Xxxx'x 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. No additional easements will,
subsequent to the Final Closing, be required 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 Xxxx 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 Xxxxxxx 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
Xxxx'x knowledge," "to the best of his knowledge" and "to the best knowledge of
Xxxx" shall mean and include such information as is actually known to Xxxx or
should have been known to him upon diligent inquiry or of which Xxxx 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, Xxxx shall immediately notify WPHC in
writing and such representation, warranty or covenant shall be deemed remade by
Xxxx as of the date of such notification based upon such new information.
13.2.13 Xxxx, all Affiliates of Xxxx and all other parties related to or
affiliated with Xxxx 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 13.2.14, 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 Xxxx 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 Xxxx.
13.3 GENERAL REPRESENTATION. No representation, warranty or statement of
Xxxx in this Agreement or in any document, certificate or schedule furnished or
to be furnished by Xxxx 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 Xxxx contained in this Article 13 shall survive the resignation or
withdrawal of Xxxx 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 Xxxx, such period shall be extended to three (3)
years after the Final Closing Date. Xxxx 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 Xxxx 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. Xxxx shall make no further transfers to
either of such trusts as long as all or any part of Xxxx'x obligations under
this Agreement remain outstanding. In addition to the foregoing, the Members
hereby agree that the personal residence of Xxxx located at Xxx Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx is not available to support the obligations of Xxxx 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 Xxxx
under 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 Xxxx 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 Xxxx ceases to be a Member of the Company, neither Xxxx 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 Xxxx ceases to be a Member
of the Company, neither Xxxx nor any other Restricted Party shall purchase,
construct or commence construction of any Multi-Family Project any part of which
Multi-Family Project is located within 3 miles of any portion of the Land.
14.6.4 "Restricted Parties" shall mean Xxxx, The Xxxx 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. Xxxx
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
Xxxx. Xxxx 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 Xxxx 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 Xxxx fails to timely cure any
default by Xxxx 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 Xxxx.
16.2.2 Xxxx shall have the right to cause WPHC to acquire the Interest of
Xxxx 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
Xxxx'x 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, Xxxx 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 Xxxx shall assign its
Interest in the Company free and clear of all liens, security interests and
competing claims. Xxxx 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. Xxxx
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.
16.3.1 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 Xxxx shall attempt in good faith
to negotiate the fair market value of the Project to be used in such
determination. Each of WPHC and Xxxx shall be entitled to submit the calculation
of the Option Price to the Company's Accountants for verification or auditing.
If WPHC and Xxxx are unable to determine the Option Price by the Option Closing
Date, then WPHC shall pay Xxxx 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 Xxxx 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 Xxxx 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 Xxxx 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 Xxxx shall adjust
the Option Price with 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 Xxxx.
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 Xxxx. 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) Xxxx
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 XXXX. 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, Xxxx 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, Xxxx shall not have any
obligation under the Development Deficit Guaranty or the Operating Deficit
Guaranty, and Xxxx shall be released from any obligation hereunder related to
the period after his Withdrawal. Upon a Permitted Withdrawal, Xxxx shall have no
right to any fees or payments from the Company or any interest in any property
of the Company. Xxxx 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 Xxxx, any withdrawal by Xxxx from
the Company shall constitute a default by Xxxx 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
Xxxx to jointly develop the Project and the Infrastructure as an initial 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 Xxxx'x 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 Xxxx 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 Xxxx'x present intent that Xxxx 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: x/x Xxxxxxxxx Xxxxxxxxxxx Property Trust
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxxXxxxxx
Facsimile No. (000) 000-0000
with copies to:
Wellsford Residential Property Trust
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No. (000) 000-0000
and to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
Xxxx: Xx. Xx Xxxx
The Xxxx Company
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Haligman & Lottner, P.C.
000 00xx Xxxxxx, Xxxxx 0000, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
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.
CERTIFICATE
The undersigned hereby agree, acknowledge and certify that the foregoing
Agreement constitutes the Operating Agreement of Park at Highlands LLC adopted
by the Members of the Company effective as of May 17, 1995.
/s/ Xx Xxxx
-----------------------------------
Xx Xxxx
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By: /s/ Xxxxxx X. XxxXxxxxx
------------------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Vice President
GUARANTY
By its execution hereof, WELLSFORD RESIDENTIAL PROPERTY TRUST, a Maryland
real estate investment trust ("WRPT"), hereby guarantees to Xx Xxxx ("Xxxx")
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 Xxxx 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 Xxxx to proceed against any other person or to proceed against or
exhaust any security held by Xxxx at any time or to pursue any other remedy in
Xxxx'x power before proceeding against WRPT; (b) any right to require Xxxx to
proceed against WPHC or any other person or to proceed against or exhaust any
security held by Xxxx at any time or to pursue any other remedy in Xxxx'x 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 ______________, 1995.
WELLSFORD RESIDENTIAL PROPERTY TRUST,
a Maryland real estate investment trust
By:________________________________
Name:
Title:
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing operating agreement was acknowledged before me this 27th day
of April, 1995 by Xx Xxxx.
WITNESS my hand and official seal.
My commission expires:
/s/ Notary Public
-----------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing operating agreement was acknowledged before me this 27th day
of April, 1995 by Xxxxxx X. XxxXxxxxx as Vice President of Wellsford Park
Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires:
/s/ Notary Public
-----------------
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing guaranty was acknowledged before me this 27th day of April,
1995 by __________________ as _____________ of Wellsford Residential Property
Trust, a Maryland real estate investment trust.
WITNESS my hand and official seal.
My commission expires:
/s/ Notary Public
-----------------
Notary Public
EXHIBITS
EXHIBIT A Xxxx 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 -- Xxxx to WPHC
EXHIBIT M Pledge and Security Agreement -- WPHC to Xxxx
EXHIBIT N Description of Plan and Specifications
EXHIBIT O Final Project Budget
EXHIBIT P Calculation of the Xxxx 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
EXHIBIT A
XXXX REIMBURSABLE EXPENSES
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 Xxxx, 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 Xxxx 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. Xxxx 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. Xxxx 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. Xxxx 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. Xxxx 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. Xxxx 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.
EXHIBIT C
DEPOSIT AND CONTRACT ADMINISTRATION AGREEMENT
EXHIBIT D
FINAL CLOSING FUNDING CONDITIONS
(a) No Default; Certificate From Xxxx. There shall be no uncured default by
Xxxx under this Agreement and no uncured default under the Construction Loan,
and WPHC shall have received a certificate from Xxxx that the representations,
warranties and covenants of Xxxx in Articles 6 and 13 are materially true and
accurate as of the date of the proposed Final Closing and that Xxxx 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. Xxxx 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 Xxxx.
(e) Lien Waivers. Xxxx 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, Xxxx 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. Xxxx shall have submitted to WPHC a
written document executed by Xxxx, 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. Xxxx 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. Xxxx and each affiliate of Xxxx 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 Xxxx during its period
of membership in the Company, including, without limitation, all
liabilities incurred by Xxxx under the Architect's Agreement, the construction
contract for the construction of the Project, and any contracts, agreements, or
other instruments entered into by Xxxx in connection with the construction of
the Project or the business of the Company.
EXHIBIT E
DESCRIPTION OF INFRASTRUCTURE
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT F
DESCRIPTION OF INFRASTRUCTURE LAND
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT G
DESCRIPTION OF THE LAND
XXX 0, XXXXXXXXX XXXXX XXXXXX 000-X, XXXXXXX XXXXXX, COLORADO.
EXHIBIT H
DESCRIPTION OF THE MASTER DEVELOPMENT LAND
LOTS 2 THROUGH 5, INCLUSIVE, HIGHLANDS RANCH FILING 126-A, XXXXXXX COUNTY,
COLORADO
EXHIBIT I
INITIAL PROJECT BUDGET
EXHIBIT J
PROPERTY MANAGEMENT AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT K
INTENTIONALLY OMITTED
EXHIBIT L
PLEDGE AND SECURITY AGREEMENT BY XXXX
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT M
PLEDGE AND SECURITY AGREEMENT BY WPHC
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT N
PLANS AND SPECIFICATIONS
(to be approved by all Members prior to the closing of the Construction Loan and
a description thereof to be attached hereto at or before Construction Loan
Closing)
EXHIBIT O
FINAL PROJECT BUDGET
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
xxxxxxx money deposit in connection with the Land Contract unless and until such
xxxxxxx 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 Xxxx).
m. "Yield" shall mean (i) Stabilized NOI, divided by (ii) the sum of (A)
Total Development Costs (including any Cost Saving Fee paid to Xxxx), (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.
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 Xx Xxxx, an individual
("Assignor"), and Wellsford Park Highlands Corp., a Colorado corporation
("Assignee").
RECITALS
b. Pursuant to that certain Operating Agreement (the "Operating Agreement")
of Park at Highlands LLC, a Colorado limited liability company (the "Company")
dated as of ______________, 1995, 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. ss.ss.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").
c. 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.
d. 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.
e. 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:
XX XXXX, 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 __________ __, 19__, by
XX XXXX, 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
SCHEDULE A TO
EXHIBIT Q
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
PARK AT HIGHLANDS 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 Park at Highlands LLC (the "Company"), a Colorado limited liability company,
dated as of _______________, 1995 by and between Xx Xxxx 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 Xx Xxxx to resign as Member and Manager of the
Company; and
WHEREAS, the Members other than Xx Xxxx (the "Remaining Members") desire
(i) to accept the withdrawal and resignation of Xx Xxxx 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 Xx Xxxx to WPHC, (iii) to
appoint and elect WPHC as the successor Manager to Xx Xxxx, 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 Xx Xxxx as
Member and Manager of the Company;
RESOLVED, that the Remaining Members hereby accept the withdrawal and
resignation of Xx Xxxx 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 Xx Xxxx to WPHC, (ii) appoint, elect and qualify WPHC as the
successor Manager to Xx Xxxx, 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 Xx Xxxx 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:
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 Xx Xxxx, an individual ("Assignor"), and
Wellsford Park Highlands Corp., a Colorado corporation ("Assignee").
RECITALS
A. Pursuant to that certain Operating Agreement (the "Operating Agreement")
of Park at Highlands LLC, a Colorado limited liability company (the "Company")
dated as of _________, 1995, 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.
ss.ss.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:
XX XXXX, 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 XX XXXX, 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
SCHEDULE A
TO EXHIBIT R
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
PARK AT HIGHLANDS 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 Park at Highlands LLC (the "Company"), a Colorado limited liability company,
dated as of __________, 1995 by and between Xx Xxxx 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, Xx Xxxx, 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 Xx Xxxx (the "Remaining Members") desire
(i) to accept the withdrawal and resignation of Xx Xxxx 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 Xx Xxxx to WPHC, (iii) to
appoint and elect WPHC as the successor Manager to Xx Xxxx, 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 Xx Xxxx as
Member and Manager of the Company;
RESOLVED, that the Remaining Members hereby accept the withdrawal and
resignation of Xx Xxxx 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 Xx Xxxx to WPHC, (ii) appoint, elect and qualify WPHC as the
successor Manager to Xx Xxxx, 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 Xx Xxxx 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:
EXHIBIT S-1
FORM OF ARCHITECT'S CERTIFICATE
(Letterhead of Architect)
CERTIFICATE OF ARCHITECT
______________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
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 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 Xxxx
Design, Inc.
This Certificate may be relied upon only by Wellsford and the Owner.
Very truly yours,
By: Xxxxxx X.X. English
Supervising Architect
Dated:________________________
EXHIBIT A TO
CERTIFICATE OF ARCHITECT
____________, Colorado
DRAWING LIST
ARCHITECTURAL:
STRUCTURAL:
FOUNDATION:
MECHANICAL:
PLUMBING:
ELECTRICAL:
LANDSCAPING:
EXHIBIT B TO
CERTIFICATE OF ARCHITECT
LEGAL DESCRIPTION
EXHIBIT C TO
CERTIFICATE OF ARCHITECT
Incomplete Items Cost of Completion
EXHIBIT S-2
FORM OF ENGINEER'S CERTIFICATE
(Letterhead of Project Engineer)
ENGINEER'S CERTIFICATE
__________________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
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 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:
EXHIBIT A TO
CERTIFICATE OF ENGINEERING
LEGAL DESCRIPTION
EXHIBIT B TO
CERTIFICATE OF ENGINEERING
______________, Colorado
DRAWING LIST
CIVIL ENGINEERING
DRAWINGS:
STRUCTURAL:
FOUNDATION:
MECHANICAL:
PLUMBING:
ELECTRICAL:
LANDSCAPING:
EXHIBIT T
INFRASTRUCTURE BUDGET
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT U
SUBSTITUTION AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
