OPERATING AGREEMENT
OF
SILVER MESA AT PALOMINO PARK LLC,
A COLORADO LIMITED LIABILITY COMPANY
as of December 10, 1998
TABLE OF CONTENTS
Page
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ARTICLE 1- DEFINITIONS.........................................................1
ARTICLE 2-FORMATION OF COMPANY................................................13
2.1 Formation.........................................................13
2.2 Name..............................................................13
2.3 Principal Place of Business.......................................13
2.4 Registered Office and Registered Agent............................14
2.5 Articles of Organization..........................................14
2.6 Term..............................................................14
ARTICLE 3-BUSINESS OF COMPANY.................................................14
3.1 Permitted Businesses..............................................14
3.2 Other Activity or Business........................................14
ARTICLE 4-CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND LOANS TO THE COMPANY......................................................14
4.1 Capital Contributions.............................................15
4.2 Withdrawal or Reduction of Members' Contributions to Capital......15
4.3 Development Deficit Payments......................................15
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.....................................................16
5.1 Initial Closing...................................................16
5.2 Construction Procedures and Closing...............................17
5.3 Infrastructure Land Closing and Bond Financing of Infrastructure..20
5.4 Failure of Initial Closing or Construction Loan Closing to Occur..20
ARTICLE 6-DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE
FINAL CLOSING DATE............................................................20
6.1 Duties of Xxxx....................................................20
6.2 Construction Completion...........................................22
6.3 Development Deficit Guaranty......................................22
6.4 Operating Deficit Guaranty........................................23
6.5 Liabilities of the Company........................................23
6.6 Construction Contracts............................................23
6.7 Administration of the Construction Loan...........................23
6.8 Change Orders.....................................................24
6.9 Retainage.........................................................24
6.10 Agreements with Affiliates........................................24
6.11 Warranty by Xxxx..................................................24
6.12 Insurance.........................................................25
6.13 Personal Obligation...............................................26
6.14 Force Majeure.....................................................26
6.15 Limitations of Xxxx'x Authority...................................26
6.16 Pre-Existing Environmental Condition Liability....................27
ARTICLE 7-COMPENSATION TO XXXX................................................27
7.1 Development Management Fee........................................27
7.2 Construction Management Fee.......................................27
7.3 Construction Loan Guarantee Fee...................................27
7.4 Cost Savings Fee..................................................28
7.5 Incentive Fee.....................................................28
7.6 Completion Fee....................................................28
7.7 Conditions to Payment of Fees; Right of Offset....................28
ARTICLE 8-FINAL CLOSING.......................................................29
8.1 Conditions to Final Closing.......................................29
8.2 Initiation of Final Closing.......................................29
8.3 Actions at the Final Closing......................................29
8.4 Certain Rights of Xxxx Upon Satisfaction of
Final Closing Funding Conditions .................................30
ARTICLE 9-ALLOCATIONS.........................................................30
9.1 Profits and Losses................................................30
9.2 General Provisions................................................30
9.3 Special Provisions................................................31
9.4 Code Section 704(c) Allocations...................................32
9.5 Allocations Relating to Taxable Issuance of Interest..............32
ARTICLE 10-DISTRIBUTIONS......................................................33
10.1 Cash Flow.........................................................33
10.2 Division Among Members............................................33
10.3 Special Distribution to WPHC......................................33
ARTICLE 11-BOOKS, RECORDS, AND ACCOUNTING.....................................33
11.1 Books and Records.................................................33
11.2 Reports...........................................................33
11.3 Tax Returns.......................................................34
11.4 Special Basis Adjustment..........................................34
11.5 Tax Matters Partner...............................................34
11.6 Bank Accounts.....................................................34
ARTICLE 12-MANAGEMENT.........................................................35
12.1 Management........................................................35
12.2 Number, Tenure and Qualifications.................................35
12.3 Appointment of Xxxx as Manager....................................35
12.4 Certain Powers of Managers........................................35
12.5 Member Approval of Certain Acts...................................36
12.6 Liability for Certain Acts........................................36
12.7 Indemnity of the Members and the Managers.........................37
12.8 Manner of Acting..................................................37
12.9 Informal Act by Managers..........................................37
12.10 Participation by Electronic Means.................................37
12.11 Resignation.......................................................37
12.12 Removal...........................................................38
12.13 Vacancies.........................................................39
12.14 Prohibition Against Publicly Traded Partnership...................39
ARTICLE 13-REPRESENTATIONS, WARRANTIES AND COVENANTS..........................40
13.1 Representations and Warranties of Each Member.....................40
13.2 Representations, Warranties and Covenants of Xxxx.................41
13.3 General Representation............................................43
13.4 Survival; Indemnity...............................................43
ARTICLE 14-RIGHTS AND OBLIGATIONS OF MEMBERS..................................44
14.1 Limitation of Liability...........................................44
14.2 Company Debt Liability............................................44
14.3 List of Members...................................................44
14.4 Company Books.....................................................45
14.5 Priority and Return of Capital....................................45
14.6 Outside Activity..................................................45
ARTICLE 15-MEETINGS OF MEMBERS................................................45
15.1 Annual Meeting....................................................46
15.2 Special Meetings..................................................46
15.3 Place of Meeting..................................................46
15.4 Notice of Meetings................................................46
15.5 Meeting of all Members............................................46
15.6 Record Date.......................................................46
15.7 Quorum............................................................46
15.8 Manner of Acting..................................................47
15.9 Proxies...........................................................47
15.10 Action by Members Without a Meeting...............................47
15.11 Voting by Ballot..................................................47
15.12 Waiver of Notice..................................................47
ARTICLE 16-TRANSFERABILITY; PUT-CALL PROVISIONS...............................47
16.1 Restrictions on Transferability...................................47
16.2 Put-Call Rights...................................................48
16.3 Calculation of Option Price.......................................48
16.4 Right of Offset...................................................49
16.5 Restrictions on Resignation.......................................49
16.6 Permitted WPHC Transfer...........................................49
ARTICLE 17-ADMISSION OF ADDITIONAL MEMBERS....................................49
ARTICLE 18-DISSOLUTION AND TERMINATION........................................50
18.1 Dissolution.......................................................50
18.2 Effect of Filing of Dissolving Statement..........................50
18.3 Distribution of Assets Upon Dissolution...........................50
18.4 Articles of Dissolution...........................................51
18.5 Filing of Articles of Dissolution.................................51
18.6 Winding Up........................................................51
18.7 No Restoration of Deficit Capital Accounts........................51
18.8 Deemed Liquidation................................................51
18.9 Permitted Withdrawal by Xxxx......................................52
ARTICLE 19-MISCELLANEOUS PROVISIONS...........................................52
19.1 Statement of Intent of Parties....................................52
19.2 Notices...........................................................52
19.3 Application of Colorado Law.......................................53
19.4 Waiver of Action for Partition....................................53
19.5 Amendments........................................................54
19.6 Construction......................................................54
19.7 Headings..........................................................54
19.8 Waivers...........................................................54
19.9 Time of the Essence...............................................54
19.10 Remedies for Default..............................................54
19.11 Rights and Remedies Cumulative....................................54
19.12 Severability......................................................54
19.13 Heirs, Successors and Assigns.....................................54
19.14 Counterparts......................................................54
19.15 Further Assurances................................................55
19.16 Entire Agreement..................................................55
19.17 Attorneys Fees....................................................55
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
SILVER MESA AT PALOMINO PARK LLC,
A COLORADO LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made as of the 10th day of December, 1998, by
and among XX XXXX, an individual ("Xxxx"), and WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation ("WPHC"), as the members of SILVER MESA AT PALOMINO PARK
LLC, a Colorado limited liability company (the "Company").
NOW THEREFORE, pursuant to the Act, the following shall constitute the
Operating Agreement of SILVER MESA AT PALOMINO PARK LLC, a Colorado limited
liability company.
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) "Budgeted Construction Loan Interest" means that amount which appears
in the line item of the Final Project Budget (attached hereto as Exhibit O)
denoted as "CONSTR. LOAN INTEREST.
(l) "Call Option" means the call option of WPHC with respect to the
Interest of Xxxx as described in Section 16.2.1 hereof.
(m) "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.
(n) "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.
(o) "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.
(p) "Cash Flow" means the Operating Cash Flow and Sales or Refinancing Cash
Flow for any given period.
(q) "Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
(r) "Company" means SILVER MESA AT PALOMINO PARK LLC, a Colorado limited
liability company.
(s) "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.
(t) "Construction Lender" means the maker of the Construction Loan, or its
successor and assigns in such capacity.
(u) "Construction Loan" means the Construction Loan in a principal amount
not to exceed $29,000,000.00 to be made to the Company by the Construction
Lender at the Construction Loan Closing.
(v) "Construction Loan Closing" means the closing of the transactions
described in Section 5.2 hereof.
(w) "Construction Loan Closing Date" means the date on which the
Construction Loan Closing occurs.
(x) "Construction Loan Outside Date" has the definition given it in Section
5.2.4 hereof.
(y) "Construction Procedures" means the requirements regarding construction
procedures set forth on Exhibit B attached hereto.
(z) "Conversion Date" means the date on which Substantial Completion has
occurred.
(aa) "Control" means the direct or indirect ownership of at least 50% of
the equity interests or profits interests of any other Person.
(bb) "Cost Savings" means the positive amount, if any, equal to: Total
Budgeted Development Costs, minus (i) the undisbursed amount, if any, of
Budgeted Construction Loan Interest through Substantial Completion and minus
(ii) the actual Development Costs incurred through the Final Closing Date."
(cc) "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.
(dd) "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).
(ee) "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 date of Substantial
Completion; (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); (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; and (viii) 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.
(ff) "Development Deficits" means the positive amount, if any, by which
Development Costs exceed the sum of: (a) the Capital Contributions of the
Members required to be made at the Initial Closing, (b) the Final Closing
Capital Contribution, and (c) the aggregate NOI Construction Loan Interest
Payments, less any undisbursed Budgeted Construction Loan Interest, for the
period prior to the date of Substantial Completion.
(gg) "Development Deficit Payments" shall mean the Development Deficit
Payments to be paid by Xxxx pursuant to Section 6.3 of this Agreement.
(hh) "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.
(ii) "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.
(jj) "Environmental Reports" means the Environmental Site Assessment
prepared by ATC Associates dated March 16, 1994, concerning the Land, and the
Phase I Environmental Site Assessment Update dated November ___, 1998, prepared
by ATC Associates.
(kk) "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
Company's assets as determined by the Accountants based on the books and records
of the Company and on a current appraisal of the Project, minus (B) the amount
of the Company's debts and liabilities, including without limitation, any debt
encumbering the Project, trade payables, accrued expenses and adjustments for
any reasonably foreseeable contingent liabilities as determined by the
Accountants and 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.
(ll) "Final Closing" means the closing of the transactions described in
Article 8 hereof.
(mm) "Final Closing Date" means the date on which the Final Closing occurs.
(nn) "Final Closing Capital Contribution" means the Capital Contribution to
be made by WPHC pursuant to Section 4.1.2(c) hereof, when, as and if required by
this Agreement.
(oo) "Final Closing Funding Conditions" means the conditions to the
obligations of WPHC to make the Final Closing Capital Contribution, or otherwise
to satisfy its obligation under Section 8.3.1 hereof, which conditions are set
forth on Exhibit D attached hereto.
(pp) "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.
(qq) "Fiscal Year" means the taxable year of the Company for federal income
tax purposes as determined under Code Section 706 and the Regulations
thereunder.
(rr) "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.
(ss) "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.
(tt) "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.
(uu) "Incentive Fee" has the meaning set forth in Exhibit P hereof.
(vv) "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.
(ww) "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.
(xx) "Infrastructure Land" means the parcel of land on which the
Infrastructure improvements shall be constructed, which parcel is described on
Exhibit F attached hereto.
(yy) "Infrastructure Improvements Agreement" has the meaning set forth in
Section 5.3.3 hereof.
(zz) "Initial Closing" means the closing of the transactions described in
Section 5.1 hereof.
(aaa) "Initial Closing Date" means the date on which the Initial Closing
occurs.
(bbb) "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.
(ccc) "Land" means the parcel of land located in Xxxxxxx County, Colorado,
which parcel is described on Exhibit G attached hereto.
(ddd) "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.
(eee) "Majority In Interest" shall mean Members holding a majority of the
Percentage Interests.
(fff) "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.
(ggg) "Master Development" means a five-phase, gated apartment community to
be constructed on the Master Development Land, including a central 23-acre park
containing a clubhouse, swimming pool and health club. The approximate
anticipated number of units in each phase of the Master Development is as
follows: Phase I -- 456; Phase II -- 304; Phase III -- 264; Phase IV -- 424; and
Phase V -- 352, plus 80 units unallocated, for a total of 1,880 units if fully
developed.
(hhh) "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.
(iii) "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.
(jjj) "Members" shall mean Xxxx and WPHC and each of the parties who may
hereafter become additional or substituted Members.
(kkk) "Minimum Option Price" means $50,000.
(lll) "Multi-Family Project" shall mean an apartment project, condominium
project, town- home project or other multi-family residential project.
(mmm) "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 Completion 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.
With respect to calculating the Completion Fee only, such fully-assessed tax
estimate shall be applied on a per-building basis beginning only upon receipt of
a certificate of occupancy for each building.
(nnn) "NOI Construction Loan Interest Payments" has the definition given it
in Section 6.3 hereof.
(ooo) "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).
(ppp) "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 to the extent each of the
foregoing exceeds the amount available for such item under the Construction
Loan; plus (B) the aggregate Operating Expenses for such period of time; minus
(C) Gross Operating Revenue for such period of time.
(qqq) [INTENTIONALLY DELETED].
(rrr) "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 WPHC; (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.
(sss) "Option Closing Date" means the date on which the Call Option or the
Put Option shall close.
(ttt) "Option Price" means the greater of the Fair Market Value of Xxxx'x
Interest and the Minimum Option Price.
(uuu) "Outside Date" means the date that is twenty-eight (28) months
following the Construction Loan Closing Date. Such Outside Date may be extended
by Force Majeure, but in no event by more than 120 days.
(vvv) "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%).
(www) "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.
(xxx) "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.
(yyy) "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.
(zzz) "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.
(aaaa) "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.
(bbbb) "Project" means the 264-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.
(cccc) "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."
(dddd) "Project Land" means the Land, excluding the Infrastructure Land.
(eeee) "Property" means all real and personal property, tangible and
intangible, owned by the Company.
(ffff) "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.
(gggg) "Put Option" means the put option of Xxxx with respect to the
Interest of Xxxx as described in Section 16.2.2 hereof.
(hhhh) "Regulations" means the federal income tax regulations, including
temporary (but not proposed) regulations, promulgated under the Code.
(iiii) "Removal" means the removal of Xxxx pursuant to Section 12.12
hereof.
(jjjj) "Removal Event" has the meaning set forth in Section 12.12 hereof.
(kkkk) "Restricted Party" has the meaning set forth in Section 14.6.4
hereof.
(llll) "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.
(mmmm) "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.
(nnnn) "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.
(oooo) "Total Budgeted Development Costs" means the Total Development Costs
as shown on the Final Project Budget.
(pppp) "WRP" shall mean Wellsford Real Properties, Inc., a Delaware
corporation.
(qqqq) "WPHC" means Wellsford Park Highlands Corp., a Colorado corporation.
2 FORMATION OF COMPANY
2.1 FORMATION. On May 13, 1998, the parties hereto caused the Company to be
organized as a Colorado limited liability company under and pursuant to the Act.
2.2 NAME. The name of the Company is Silver Mesa at Palomino Park LLC, a
Colorado limited liability company.
2.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Company within the State of Colorado shall be 0000 Xxxxx Xxxxxx, Xxxxx 000,
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 Corporation Service Company,
0000 Xxxxxxxx, Xxxxxx, Xxxxxxxx 00000 and the name of its initial registered
agent at such address shall be Corporation Service Company. 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 filed for the
Company with the Secretary of State of the State of Colorado (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.
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.
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 by
conveying the Land to the Company, which Capital Contribution the parties agree
shall be valued at $2,127,999 for the Land purchase price plus pre-development
costs and carrying costs of $1,305,759, for a total of $3,433,758.
(b) WPHC shall have the right, but not the obligation, to make Capital
Contributions from time to time in its sole and absolute discretion to fund
Operating Deficits or other expenses incurred by the Company. Notwithstanding
the foregoing, so long as: (i) Xxxx is not in material default under this
Agreement, and (ii) Xxxx has personally guaranteed the Construction Loan
pursuant to Section 5.2.4 and is not in material default under such guaranty,
then WPHC shall be obligated to make Capital Contributions to fund: (y) prior to
Substantial Completion, the amount (if any) by which Operating Expenses exceed
Gross Operating Revenue, and (z) Operating Deficits which were incurred during
the period between Substantial Completion and payment in full of the
Construction Loan.
(c) 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, if any; or WPHC shall otherwise satisfy its obligations under Section
8.3.1 hereof.
WRP 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. [INTENTIONALLY DELETED].
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 3 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.
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 from WPHC. The
Company shall obtain an Owner's Policy of Title Insurance from a title insurer
acceptable to the Members (the "Title Company").
5.1.2 REIMBURSEMENT OF XXXX EXPENSES. 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 only if and when a Construction
Loan Closing occurs. 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 by the Company 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
acceptable to WPHC and 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 December 31, 1998, provided, however,
such date shall be extended to a date not later than January 31, 1999, 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 and shall guarantee Operating Deficits, all to the extent
required by the Construction Lender; (e) the Construction Loan shall have a
maturity date of at least twenty-eight (28) months from the date of the
Construction Loan Closing; and (f) the other terms shall be reasonably
acceptable to WPHC.
5.2.5 CONSTRUCTION LOAN DOCUMENTS. The Company shall not proceed with the
Construction Loan Closing unless and until the form of documents related to the
Construction Loan 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 may be terminated at the option of WPHC. Any default by
Xxxx under any Approved Affiliate Agreement which is not timely cured shall be a
default hereunder. There shall be no modification to the Approved Affiliate
Agreements without the prior written approval of all Members. Each Approved
Affiliate Agreement shall provide that the Company shall have the right to
terminate such agreement upon the Removal of 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 as are acceptable
to the Construction Lender. Subject to the requirements of the Construction
Lender, Xxxx'x obligation to the Company and to WPHC to guarantee interest
payments on the Construction Loan applies to payments which are due and payable
through Substantial Completion; Xxxx shall not be responsible for guaranteeing
payments which come due after Substantial Completion. Nothing in this Section
5.2.7 shall relieve Xxxx of any other obligations which accrue prior to Final
Completion.
5.2.8 [INTENTIONALLY DELETED]
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 Land be acquired and developed
by Palomino Park Public Improvements Corporation, a Colorado non-profit
corporation ("PPPIC"), which has financed acquisition and development and
certain land and Infrastructure improvements through the issuance of tax-exempt
bonds (the "Bonds").
5.3.1 [INTENTIONALLY DELETED].
5.3.2 CONTROL OVER MATTERS RELATED TO INFRASTRUCTURE AND BONDS.
Notwithstanding anything to the contrary herein, WPHC shall have sole and
exclusive control over all decisions of the Company relating to the Bonds, to
the subdivision and sale of the Infrastructure Land and to the financing,
construction, use and development of the Infrastructure. In order to procure for
the Project the benefits of the use and enjoyment of the Infrastructure to be
constructed by PPPIC, the Company shall enter into such agreements with PPPIC as
WPHC may require, in form and content acceptable to WPHC in its sole discretion,
providing, among other things, for the encumbering of the Land by liens securing
payment of the Bonds, operation and maintenance of the Infrastructure and
satisfaction of certain indemnification obligations undertaken by PPPIC with
respect to the Infrastructure.
5.3.3 CONSTRUCTION OF INFRASTRUCTURE. An Affiliate of Xxxx, has entered
into one or more agreements and may enter into additional agreements
(collectively, the "Infrastructure Improvements Agreement") with PPPIC (or its
contractor) to construct the Infrastructure for a guaranteed maximum price,
including a fee to 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.
5.4 FAILURE OF CONSTRUCTION LOAN CLOSING TO OCCUR. Xxxx covenants to cause
the Construction Loan Closing to occur by the Construction Loan Outside Date. If
for any reason 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.
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, without any
material deviation, with the following:
(a) the Plans and Specifications as they may be amended in accordance with
the terms of this Agreement;
(b) any and all zoning regulations, county ordinances, including health,
fire and safety regulations, and any other requirements of federal, state and
local laws, rules, regulations and ordinances applicable to construction of the
Project;
6.1.8 cause to be performed in a diligent and efficient manner the
following:
(a) construction of the Project pursuant to and in accordance, without any
material deviation, with the Plans and Specifications, free and clear (except as
otherwise permitted herein) of all mechanics and materialmen's liens; and
(b) general administration and supervision of construction of the Project,
including but not limited to activities of subcontractors and their employees
and agents, and others employed as to the Project in a manner which complies in
all material respects with the Construction Loan, the Plans and Specifications
and the Construction Procedures;
6.1.9 keep, or cause to be kept, accounts and cost records as to the
construction of the Project and make available to WPHC, during normal business
hours copies of all material contracts and subcontracts;
6.1.10 provide regular monitoring, and periodically (at least monthly, or
more often if requested by any Member) update the Project construction time
schedule and summarize potential variances between scheduled and probable
completion dates, the schedule for work not started or incomplete;
6.1.11 revise and refine the approved estimate of Development Costs,
incorporate changes as they occur, and develop cash flow reports and forecasts
as needed;
6.1.12 develop and implement a system for review and processing of change
orders as to construction of the Project;
6.1.13 develop and implement a procedure for the review and processing of
applications by subcontractors for progress and final payments; and
6.1.14 record the progress of the Project and submit written progress
reports to WPHC, including the percentage of completion and the number and
amounts of change orders.
6.2 CONSTRUCTION COMPLETION. 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-one
(21) months after the Construction Loan Closing Date; (b) Final Completion to
occur within twenty-four (24) months after the Construction Loan Closing Date;
and (c) all Final Closing Funding Conditions shall be satisfied prior to the
Outside Date.
6.3 DEVELOPMENT DEFICIT GUARANTY. 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. Notwithstanding anything to the contrary in this
Agreement, the Members agree that, prior to Substantial Completion, all debt
service expenses shall be paid only from the funds reserved for Budgeted
Construction Loan Interest and from Development Deficit Payments, not from any
other funds of the Company (including, without limitation, Net Operating
Income); provided, however, that Net Operating Income shall be used to pay debt
service expenses if so requested by the Construction Lender (such payments are
herein referred to as "NOI Construction Loan Interest Payments"). If any such
payments are requested by the Construction Lender, such payments will be
included in the calculation of the Completion Fee to the extent any Budgeted
Construction Loan Interest remains undisbursed. Without the prior written
consent of WPHC, the funds reserved as Budgeted Construction Loan Interest will
be used for the sole purpose of debt service expenses on the Construction Loan
and for no other purpose (including, without limitation, the payment of
Development Deficits). Any funds remaining after the payment of debt service on
the Construction Loan will be treated as net Cash Flow.
6.4 OPERATING DEFICIT GUARANTY. [INTENTIONALLY DELETED].
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, or has otherwise
satisfied its obligation under Section 8.3.1 hereof, 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 $250,000 in the
aggregate. Unless expressly approved in writing by all Members, no change order
shall be permitted or approved that would cause total Development Costs to
exceed Total Budgeted Development Costs.
6.9 RETAINAGE. 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) days.
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 a
Development 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.
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 $2,000 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 1.0% of the final committed loan amount of the
Construction Loan, payable at the Construction Loan Closing from a draw on the
Construction Loan.
7.4 COST SAVINGS FEE. The Company shall pay 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. [INTENTIONALLY DELETED].
7.6 COMPLETION FEE. The Company shall pay Xxxx at Final Closing a fee (the
"Completion Fee") equal to 100% of Net Operating Income for the period beginning
with the Construction Loan Closing and ending with Substantial Completion, less
(i) an amount equal to all interest accrued or paid on the Construction Loan
from the date on which Budgeted Construction Loan Interest is exhausted to the
date of Substantial Completion; and less (ii) an amount equal to interest at the
rate of seven and one half percent (7 1/2%) per annum on the total Capital
Contributions made by WPHC, such interest to be calculated for the period
described in (i) above; provided, however, that in no event shall the Completion
Fee exceed $500,000.
7.7 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. In the event of nonpayment of fees due to an uncured default, if such
default is subsequently cured prior to withdrawal, resignation or removal of
Xxxx as a Member and Manager, then the unpaid fees shall be payable, subject to
all the terms and provisions of this Agreement. All fees 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. 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
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.
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 on the date designated by Xxxx, provided such date for the
Final Closing designated by Xxxx shall be not less than twenty-eight (28) months
after the Construction Loan Closing Date.
8.3 ACTIONS AT THE FINAL CLOSING. Once the date for the Final Closing has
been designated as provided herein and provided that the Final Closing Funding
Conditions have been satisfied by Xxxx, the Members shall cooperate to cause a
Final Closing at which the following shall occur:
8.3.1 WPHC shall either (i) fund its Final Closing Capital Contribution,
(ii) obtain a release from the Construction Lender of Xxxx'x obligation to
guarantee the Construction Loan, or (iii) provide to Xxxx a written indemnity
from WPHC, secured by the guaranty of WRP and by WPHC's interest in the Company,
indemnifying and holding Xxxx harmless from any further liability under his
guarantee of the Construction Loan, provided that such indemnity shall be
subject to a right of offset in favor of WRP and WPHC with respect to any
liability of Xxxx to WPHC or the Company arising under this Agreement. Such
indemnity shall expire upon payment in full of the Construction Loan. The form
of such indemnity agreement shall be reasonably acceptable to Xxxx.
8.3.2 The Company shall pay the Construction Loan in full or shall provide
one of the items in 8.3.1(ii) or (iii) above.
8.3.3 Any accrued and unpaid fees due to Xxxx under this Agreement shall be
paid.
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 WRP, wherein
WRP agrees to indemnify Xxxx against any loss or liability it may suffer as a
guarantor of the Construction Loan, provided that such indemnity shall be
subject to a right of offset in favor of WRP and WPHC with respect to any
liability of Xxxx to WPHC or the Company 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.
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.
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 as follows: (i) first, to WPHC,
until it has received aggregate distributions equal to the amount of Capital
Contributions made by it pursuant to Section 4.1.2(b), (ii) then, to the Members
in accordance with their respective Percentage Interests. Notwithstanding the
foregoing, no distributions shall be made at or prior to the completion of the
Final Closing without the consent of WPHC.
10.2 DIVISION AMONG MEMBERS. If there is a change in a Member's Interest in
the Company during a Fiscal Year, any distributions thereafter shall be made so
as to take into account the varying Interests of the Members during the period
to which the distribution relates in any manner chosen by the Managers that is
provided in Code Section 706(d) and the Regulations thereunder.
10.3 SPECIAL DISTRIBUTION TO WPHC. 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.
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.
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 without any material deviation therefrom;
12.4.2 To purchase liability and other insurance to protect the Company's
Property and business;
12.4.3 To hold and own any and all Company Property on behalf of and in the
name of the Company;
12.4.4 To invest any Company funds temporarily in time deposits with
federally insured financial institutions or short-term United States
governmental obligations;
12.4.5 Subject to the provisions of this Agreement, to employ accountants,
legal counsel, managing agents or other experts to perform services for the
Company and to compensate them from Company funds; and
12.4.6 To do and perform all other acts as may be necessary or appropriate
to the conduct of the Company's ordinary course of business.
Unless authorized to do so by this Agreement or by the Managers of the
Company, no Member, agent, or employee of the Company shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable pecuniarily for any purpose. However, the Managers may act by a duly
authorized attorney-in-fact.
12.5 MEMBER APPROVAL OF CERTAIN ACTS. The Managers shall have the power and
authority, but only upon the unanimous written consent of all Members, on behalf
of the Company:
12.5.1 to amend or modify any of the documents executed in connection with
the Construction Loan at the Construction Loan Closing or to waive any rights
under such documents;
12.5.2 to borrow money or incur any indebtedness (other than the
Construction Loan) or to grant any liens on any assets of the Company;
12.5.3 to enter into any agreements with affiliates of the Managers other
than the Approved Affiliate Agreements;
12.5.4 to amend or modify the Approved Affiliate Agreements or to waive any
rights thereunder;
12.5.5 except for the Management Agreement, to execute any agreement which
will impose any obligations on the Company which will survive the Final Closing
Date; and
12.5.6 to sell or dispose of any portion of the Project or any other
material assets of the Company.
12.6 LIABILITY FOR CERTAIN ACTS. A Manager of the Company shall perform
such Manager's duties, including duties as a member of any committee upon which
such Manager may serve, in good faith, in a manner such Manager reasonably
believes to be in the best interests of the Company, and with such care as an
ordinarily prudent person in a like position would use under
similar circumstances. A Person who so performs such Person's duties shall not
have any liability by reason of being or having been a Manager of the Company
except as otherwise provided in this Agreement. Nothing in this Section 12.6
shall limit 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 [INTENTIONALLY DELETED.]
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 [INTENTIONALLY DELETED.]
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, which is
not caused solely by the act or omission of WPHC, is not cured within any
applicable cure period provided for under the Construction Loan.
12.12.2 DOCUMENTATION IN CONNECTION WITH REMOVAL. Upon Removal of 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 by Xxxx 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, unless such damages arise solely from acts or omissions of a party
other than Xxxx. WPHC shall have the obligation to make reasonable efforts to
mitigate its damages following a Removal of Xxxx after the Construction Loan
Closing Date.
12.12.4 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.
12.13 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.
12.14 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.
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 264 units on the Project Land.
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 will make 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. As of the Final Closing, no
additional easements will be required, subsequent to the Final Closing, for the
provision of utilities, access, egress and drainage to or for the benefit of the
Land
or the Project in connection with the use and operation of the Land as the
Project contemplated by this Agreement.
13.2.11 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 13.2.13, any amount improperly received
by such parties shall be immediately paid over to the Company, together with
interest thereon from the date received at twelve percent (12%) per annum,
compounded monthly.
13.2.14 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.
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 to be located at 000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx and Xxxx'x vacation home at 00 Xxxxxxxxx Xxxxx
xx Xxxx Xxxxxxx, Xxxxxxxxxx (the "Palm Springs Residence"), are not available to
support the obligations of Xxxx under this Agreement and agree not to assert any
right to recover against such personal residence or the Palm Springs Residence,
and the Members hereby disclaim, quitclaim, release and relinquish any right to
proceed against such personal residence or the Palm Springs Residence for
amounts owed by Xxxx under this Agreement. It is understood and acknowledged
that Xxxx intends to replace his secondary residence in Palm Springs with a
residence located at 101 Wanish in Palm Desert, California, and upon Xxxx'x
acquisition of the residence located at 101 Xxxxxx in Palm Desert, the same will
be automatically substituted as the Palm Springs Residence hereunder.
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 [INTENTIONALLY DELETED.]
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 (i) purchase,
construct or commence construction of any Multi-Family Project any part of which
Multi-Family Project is located within three (3) miles of any portion of the
Land, or (ii) purchase, construct or commence construction of any Multi-Family
Project outside said three-mile area without giving prior written notice to
WPHC.
14.6.4 "Restricted Parties" shall mean 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.
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 1999, 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.
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 under Section 8.3.1 hereof 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 within five (5) business days after the recalculation of
the Option Price. No post-closing adjustment in the Option Price shall be made
for amounts of $5,000 or less or based on a recalculation made more than twelve
(12) months after the Option Closing Date. Notwithstanding anything to the
contrary herein, the appraised value of the Project as determined shall be final
and shall not be subject to challenge or recalculation by any Member.
16.4 RIGHT OF OFFSET. Payment of the Option Price shall be subject to a
right of offset in favor of the Company and WPHC with respect to any claims or
damages they may have against 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.
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.
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.
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, 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.
19 MISCELLANEOUS PROVISIONS
19.1 STATEMENT OF INTENT OF PARTIES. It is the present intent of WPHC and
Xxxx to jointly develop the Project as the third 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. 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 WRP'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: c/o Wellsford Real Properties, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
with copies to:
Xxxxx X. XxXxxxx, Esq.
Xxxxxxxxxx Xxxxx 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.
19.17 ATTORNEYS FEES. Should any party hereto institute any legal action or
proceeding to enforce any provision of the Operating Agreement or for damages by
reason of any alleged breach of any provision of the Operating Agreement or for
any other judicial remedy, the prevailing party shall be entitled to receive
from the non-prevailing party all reasonable attorneys' fees and all court costs
in connection with said action or proceeding, in addition to any other award.
CERTIFICATE
The undersigned hereby agree, acknowledge and certify that the foregoing
Agreement constitutes the Operating Agreement of Silver Mesa at Palomino Park
LLC adopted by the Members of the Company effective as of December 10, 1998.
/s/ Xx Xxxx
-----------------------------------------
Xx Xxxx
WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx, Vice President
STATE OF COLORADO )
) ss.
COUNTY OF Denver )
The foregoing operating agreement was acknowledged before me this 17th day
of December, 1998 by Xx Xxxx.
WITNESS my hand and official seal.
My commission expires: 9/14/99
/s/
------------------------------------------
Notary Public
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing operating agreement was acknowledged before me this 16th day
of December, 1998 by Xxxxx X. Xxxxxx as Vice President of Wellsford Park
Highlands Corp., a Colorado corporation.
WITNESS my hand and official seal.
My commission expires: 11/25/2001
/s/
------------------------------------------
Notary Public
GUARANTY
By its execution hereof, WELLSFORD REAL PROPERTIES, INC., a Colorado
corporation ("WRP"), 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 or otherwise to
satisfy its obligation under Section 8.3.1 of the foregoing Operating Agreement
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 WRP 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. WRP hereby waives notice of acceptance of this Guaranty.
WRP 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 WRP; (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 WRP; and (c) any requirement that notice be provided
to WRP.
This Guaranty and all documents, agreements, understandings and
arrangements relating to this Guaranty have been executed by the undersigned on
behalf of WRP in his/her capacity as an officer of WRP, and not individually,
and neither the officers or shareholders of WRP shall be bound by or have any
personal liability hereunder or thereunder. The beneficiary of this Guaranty
shall look solely to the assets of WRP for satisfaction of any liability of WRP
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 officers or shareholders of WRP 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 be determined to be
illegal or unenforceable, all other provisions nevertheless shall be effective.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of Colorado.
EXECUTED as of December 16, 1998.
WELLSFORD REAL PROPERTIES, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx, Vice President
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
The foregoing guaranty was acknowledged before me this 16th day of
December, 1998 by Xxxxx X. Xxxxxx, as Vice President of Wellsford Real
Properties, Inc., a Delaware corporation.
WITNESS my hand and official seal.
My commission expires: 11/25/01
/s/
------------------------------------------
Notary Public
EXHIBITS
EXHIBIT A [INTENTIONALLY OMITTED]
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 [INTENTIONALLY OMITTED]
EXHIBIT J Property Management Agreement
EXHIBIT K Release and Waiver
EXHIBIT L Pledge and Security Agreement -- Xxxx to WPHC
EXHIBIT M Pledge and Security Agreement -- WPHC to Xxxx
EXHIBIT N Description of Plans 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 [INTENTIONALLY OMITTED]
EXHIBIT U Substitution Agreement
EXHIBIT A
[INTENTIONALLY OMITTED]
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 K 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
EXHIBIT F
DESCRIPTION OF INFRASTRUCTURE LAND
EXHIBIT G
DESCRIPTION OF THE LAND
PARCEL 1
LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF XXXXXXX COUNTY,
COLORADO.
PARCEL 2
THAT CERTAIN PERPETUAL EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND
ALL RIGHTS AND PRIVILEGES IN CONNECTION THEREWITH, RESERVED BY PARK AT HIGHLANDS
LLC, A COLORADO LIMITED LIABILITY COMPANY, ITS SUCCESSORS, ASSIGNS AND
DESIGNEES, UNDER AND PURSUANT TO THE TERMS OF THAT CERTAIN SPECIAL WARRANTY
DEED, EXECUTED BY PARK AT HIGHLANDS LLC, GRANTOR, TO PALOMINO PARK PUBLIC
IMPROVEMENTS CORPORATION, A COLORADO NON-PROFIT CORPORATION, GRANTEE, RECORDED
JANUARY 3, 1996, UNDER RECEPTION NO. 9600509 IN THE OFFICE OF THE CLERK AND
RECORDER OF XXXXXXX COUNTY, COLORADO, COVERING THE REAL PROPERTY MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
TRACT A, HIGHLANDS RANCH FILING NO. 126-A, 1ST AMENDMENT, AS FILED ON
DECEMBER 19, 1995 UNDER RECEPTION NO. 9560621 IN THE OFFICE OF THE CLERK
AND RECORDER OF XXXXXXX COUNTY, COLORADO.
EXHIBIT H
DESCRIPTION OF THE MASTER DEVELOPMENT LAND
XXXX 0 XXX 0, XXXXXXXXX XXXXX FILING 126-A, XXXXXXX COUNTY, COLORADO
EXHIBIT I
[INTENTIONALLY OMITTED]
EXHIBIT J
PROPERTY MANAGEMENT AGREEMENT
EXHIBIT K
RELEASE AND WAIVER
EXHIBIT L
PLEDGE AND SECURITY AGREEMENT BY XXXX
EXHIBIT M
PLEDGE AND SECURITY AGREEMENT BY WPHC
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
NOTE:This Exhibit is retained solely for the purpose of calculating the
allocation of Infrastructure costs. No Incentive Fee shall be due or
payable under this Agreement.
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,
WRP or an Affiliate of them (provided that WPHC or WRP 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 II 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 P, 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 Silver Mesa at Palomino Park LLC, a Colorado limited liability company (the
"Company") dated as of _______________, 1998, 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.
My 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.
My Commission expires:
------------------------------------------
Notary Public
SCHEDULE A TO
EXHIBIT Q
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
SILVER MESA AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
__________________ ___, 19___
Section 7-80-711 of the Colorado Limited Liability Company Act, as amended
(the "Act") provides that any action required or permitted to be taken at a
meeting of the members of a limited liability company may be taken without a
meeting if a written consent, setting forth the action so taken, shall be signed
by all the members entitled to vote with respect to the subject matter thereof
and delivered to the limited liability company in the manner described in the
Act. Section 15.10 of that certain Operating Agreement ("Operating Agreement")
of Silver Mesa at Palomino Park LLC (the "Company"), a Colorado limited
liability company, dated as of ___________, 1998, 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 Silver Mesa at Palomino Park LLC, a Colorado limited liability company (the
"Company") dated as of __________, 1998, 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.
My 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.
My Commission expires:
-----------
------------------------------------------
Notary Public
SCHEDULE A
TO EXHIBIT R
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
SILVER MESA AT PALOMINO PARK LLC,
a Colorado Limited Liability Company
__________________ ___, 19__
Section 7-80-711 of the Colorado Limited Liability Company Act, as amended
(the "Act") provides that any action required or permitted to be taken at a
meeting of the members of a limited liability company may be taken without a
meeting if a written consent, setting forth the action so taken, shall be signed
by all the members entitled to vote with respect to the subject matter thereof
and delivered to the limited liability company in the manner described in the
Act. Section 15.10 of that certain Operating Agreement ("Operating Agreement")
of Silver Mesa at Palomino Park LLC (the "Company"), a Colorado limited
liability company, dated as of __________, 1998 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
______________, 1998
Silver Mesa at Palomino Park LLC
Wellsford Real Properties, Inc.
Wellsford Park Highlands Corp.
x000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Reference: ______________________
____________, Colorado
Ladies and Gentlemen:
Please refer to the final architectural plans, specifications and Architectural
Supplemental Instructions (the "Plans") described in the attached Exhibit A. The
undersigned understands that Wellsford Real Properties, Inc. or its designee
("Wellsford") is acquiring an interest in a residential project owned by Silver
Mesa at Palomino Park LLC, a Colorado limited liability company ("Owner"),
located on a parcel of real property in the County of Xxxxxxx, State of
Colorado, and described on Exhibit B attached hereto (the "Site"), on which
Owner has constructed a complex of 264 apartment units known as Silver Mesa at
Palomino Park (the "Project"). This Certificate is a condition precedent to
Wellsford acquiring the Project, 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 on its
behalf and certifies to and for the benefit of only 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 contains 264 apartment units in __ buildings with a total of
approx. 478,824 square feet of gross leasable living area ("GLA"), and
_______ parking spaces (including ____ detached garage spaces), with
related amenities and facilities. The GLA is calculated from the Plans and
the square footage includes the outside face of frame and the interior
stairs, but excludes the interior storage space and any non-usable space.
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, to the best of our
knowledge, that the Project and Site are in compliance with the Development
Constraints and are permitted as a matter of right.
4. The Site is zoned Highlands Ranch Planned Development - Planning areas 73
(Town Center) and 67 (High Density Residential) under the applicable
regulations of the County of Xxxxxxx, Colorado.
5. The improvements contemplated by the Plans have been completed in
substantial compliance therewith with no material changes, except for
Architectural Supplemental Instructions ____________________________; and
except for Change Orders _____________________ which have been approved by
Wellsford; and except for the items in the attached Exhibit C and estimated
cost-to-complete as shown.
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. All amounts due and payable to us under or in connection with the Standard
form of Agreement between Owner and Architect for Housing Services dated
_________, 19__, and all amendments thereto, with regard to the Project
have been paid in full.
8. The Project, the Plans and all improvements comply with known Applicable
Laws, including without limitation, the applicable Plat, and all necessary
and required notices, permits or license agreements in connection with the
Plans. To the best of our knowledge, 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 undersigned is a licensed architect and has the power and authority to
render this Certificate and to execute and deliver it on behalf of
_______________.
For the purposes of this Certificate, the terms "known" and "to the best of our
knowledge" shall mean and include information actually known to the undersigned
or should have been known to it upon diligent inquiry or of which the
undersigned has received constructive notice.
Very truly yours,
By:
----------------------------------------------
Supervising Architect
Dated:________________________
EXHIBIT A TO
CERTIFICATE OF ARCHITECT
DRAWING LIST
ARCHITECTURAL:
STRUCTURAL:
FOUNDATION:
MECHANICAL:
PLUMBING:
ELECTRICAL:
LANDSCAPING:
EXHIBIT B TO
CERTIFICATE OF ARCHITECT
LEGAL DESCRIPTION
LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF XXXXXXX
COUNTY, COLORADO.
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
__________________, 1997
Silver Mesa at Palomino Park LLC
Wellsford Real Properties, Inc.
Wellsford Park Highlands Corp.
x000 Xxxxx Xxxxxx, Xxxxx 000
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 Silver Mesa at Palomino
Park LLC, a Colorado limited liability company ("Owner"), located on that
certain parcel of real property having an address of ______________________ in
the City of ___________, County of __________, State of Colorado and described
on Exhibit A attached hereto (the "Site"), on which Owner has constructed a
complex of ______ apartment units known as ______________ (the "Project"). This
Certificate is a condition precedent to Wellsford's acquiring the Project or
repaying such loan, and the undersigned acknowledges that Wellsford will be
relying upon this Certificate in consummating such transaction.
With such understanding, the undersigned has reviewed those portions of the
plans and specifications for the Project that are listed on Exhibit B attached
hereto (the "Engineering Plans"), the construction of the Project in
relationship to the Engineering Plans, and its conformity and compliance with
certain applicable laws and regulations. Based upon these reviews and upon due
professional investigation, the undersigned declares and certifies to and for
the benefit of Owner and Wellsford that:
1. Satisfactory methods of access to and egress from the Site and the Project
and adjoining or nearby public ways are available and are sufficient to
meet the reasonable needs of the Project and all applicable requirements of
public authorities.
Sanitary water supply and storm sewer and sanitary sewer facilities and
other required utilities (gas, electricity, telephone, etc.) are likewise
available and are sufficient to meet the reasonable needs of the Project
and all applicable requirements of public authorities.
2. We are of the opinion that the Property is not located in a 100-Year Flood
Plain or in an identified "flood prone area," as defined by the U.S.
Department of Housing and Urban Development, pursuant to the Flood Disaster
Protection Act of 1973, as amended, and is not subject to any federal,
state or local "wetlands" rules, regulations, ordinances or requirements.
3. We have reviewed and are familiar with all tests and analyses performed and
professional recommendations made by soil engineers and other consultants
regarding the condition of the soil of the Site. In our professional
opinion, the condition of the soil of the Site is adequate to support the
Project as completed.
4. We have reviewed the locations of all easements, rights-of-way, subsurface
rights or jurisdictional wetlands, and all rules and regulations pertaining
to the same in force relating to the Site, and the Plans are prepared so
that the Project does not encroach over, across or upon any such easements,
rights-of-way, subsurface rights or jurisdictional wetlands and the like,
and all necessary permits and approvals required for the Project have been
obtained.
5. We have reviewed all deeds, easements, covenants, restrictions and other
matters set forth in Schedule B of Title Commitment No. __________ issued
by Land Title Guaranty Company, and the Project satisfies and/or does not
violate any provisions concerning construction of improvements on the Site
set forth in such deeds, easements, covenants, restrictions and other
matters.
This Certificate may be relied upon only by Owner and Wellsford.
Very Truly yours,
[ENGINEER]
By:
-----------------------------------------
Title:
-----------------------------
Dated:
------------------------------
EXHIBIT A TO
CERTIFICATE OF ENGINEERING
LEGAL DESCRIPTION
LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF XXXXXXX
COUNTY, COLORADO.
EXHIBIT B TO
CERTIFICATE OF ENGINEERING
______________, Colorado
DRAWING LIST
CIVIL ENGINEERING
DRAWINGS:
STRUCTURAL:
FOUNDATION:
MECHANICAL:
PLUMBING:
ELECTRICAL:
LANDSCAPING:
EXHIBIT T
[INTENTIONALLY DELETED]
EXHIBIT U
SUBSTITUTION AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
