EXHIBIT 10.3
OPERATING AGREEMENT
OF
PARK AT HIGHLANDS LLC,
A COLORADO LIMITED LIABILITY COMPANY
AS OF APRIL 27, 1995
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 - FORMATION OF COMPANY . . . . . . . . . . . . . . . 14
2.1 Formation . . . . . . . . . . . . . . . . . . . . 14
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . 14
2.3 Principal Place of Business . . . . . . . . . . . 14
2.4 Registered Office and Registered Agent. . . . . . 14
2.5 Articles of Organization. . . . . . . . . . . . . 15
2.6 Term. . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 3 - BUSINESS OF COMPANY. . . . . . . . . . . . . . . . 15
3.1 Permitted Businesses. . . . . . . . . . . . . . . 15
3.2 Other Activity or Business. . . . . . . . . . . . 15
ARTICLE 4 - CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND LOANS TO
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Capital Contributions . . . . . . . . . . . . . . 15
4.2 Withdrawal or Reduction of Members'
Contributions to Capital. . . . . . . . . . . . . 16
4.3 Development Deficit Payments. . . . . . . . . . . 16
4.4 Operating Deficit Payments. . . . . . . . . . . . 16
4.5 Additional Capital Contributions. . . . . . . . . 16
4.6 Miscellaneous . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 - INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;
CONSTRUCTION LOAN CLOSING . . . . . . . . . . . . . . . . 17
5.1 Initial Closing . . . . . . . . . . . . . . . . . 17
5.2 Construction . . . . . . . . . . . . . . . . . . 18
5.3 Infrastructure Land Closing and Bond Financing
of Infrastructure . . . . . . . . . . . . . . . . 21
5.4 Failure of Initial Closing or Construction Loan
Closing to Occur. . . . . . . . . . . . . . . . . 22
ARTICLE 6 - DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE FINAL
CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . 22
6.1 Duties of ▇▇▇▇. . . . . . . . . . . . . . . . . . 22
6.2 Construction Completion . . . . . . . . . . . . . 24
6.3 Development Deficit Guaranty. . . . . . . . . . . 24
6.4 Operating Deficit Guaranty. . . . . . . . . . . . 25
6.5 Liabilities of the Company. . . . . . . . . . . . 25
6.6 Construction Contracts. . . . . . . . . . . . . . 25
6.7 Administration of the Construction Loan . . . . . 25
6.8 Change Orders . . . . . . . . . . . . . . . . . . 26
6.9 Retainage . . . . . . . . . . . . . . . . . . . . 26
6.10 Agreements with Affiliates. . . . . . . . . . . . 26
6.11 Warranty by ▇▇▇▇. . . . . . . . . . . . . . . . . 27
6.12 Insurance . . . . . . . . . . . . . . . . . . . . 27
6.13 Personal Obligation . . . . . . . . . . . . . . . 29
6.14 Force Majeure . . . . . . . . . . . . . . . . . . 29
6.15 Limitations of ▇▇▇▇'▇ Authority . . . . . . . . . 29
6.16 Pre-Existing Environmental Condition. . . . . . . 29
ARTICLE 7 - COMPENSATION TO ▇▇▇▇ . . . . . . . . . . . . . . . 30
7.1 Development Management Fee. . . . . . . . . . . . 30
7.2 Construction Management Fee . . . . . . . . . . . 30
7.3 Construction Loan Guarantee Fee . . . . . . . . . 30
7.4 Cost Savings Fee. . . . . . . . . . . . . . . . . 30
7.5 Incentive Fee . . . . . . . . . . . . . . . . . . 30
7.6 Conditions to Payment of Fees; Right of Offset. . 30
ARTICLE 8 - FINAL CLOSING. . . . . . . . . . . . . . . . . . . 31
8.1 Conditions to Final Closing . . . . . . . . . . . 31
8.2 Initiation of Final Closing . . . . . . . . . . . 31
8.3 Actions at the Final Closing. . . . . . . . . . . 31
8.4 Certain Rights of ▇▇▇▇ Upon Satisfaction of
Final Closing Funding Conditions. . . . . . . . . 32
ARTICLE 9 - ALLOCATIONS. . . . . . . . . . . . . . . . . . . . 33
9.1 Profits and Losses. . . . . . . . . . . . . . . . 33
9.2 General Provisions. . . . . . . . . . . . . . . . 33
9.3 Special Provisions. . . . . . . . . . . . . . . . 33
9.4 Code Section 704(c) Allocations . . . . . . . . . 35
9.5 Allocations Relating to Taxable Issuance of
Interest. . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 10 - DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 35
10.1 Cash Flow . . . . . . . . . . . . . . . . . . . . 36
10.2 Division Among Members. . . . . . . . . . . . . . 36
10.3 Special Distributions to WPHC . . . . . . . . . . 36
ARTICLE 11 - BOOKS, RECORDS, AND ACCOUNTING. . . . . . . . . . 36
11.1 Books and Records . . . . . . . . . . . . . . . . 36
11.2 Reports . . . . . . . . . . . . . . . . . . . . . 36
11.3 Tax Returns . . . . . . . . . . . . . . . . . . . 37
11.4 Special Basis Adjustment. . . . . . . . . . . . . 37
11.5 Tax Matters Partner . . . . . . . . . . . . . . . 37
11.6 Bank Accounts . . . . . . . . . . . . . . . . . . 38
ARTICLE 12 - MANAGEMENT. . . . . . . . . . . . . . . . . . . . 38
12.1 Management. . . . . . . . . . . . . . . . . . . . 38
12.2 Number, Tenure and Qualifications . . . . . . . . 38
12.3 Appointment of ▇▇▇▇ as Manager. . . . . . . . . . 38
12.4 Certain Powers of Managers. . . . . . . . . . . . 38
12.5 Member Approval of Certain Acts . . . . . . . . . 39
12.6 Liability for Certain Acts. . . . . . . . . . . . 40
12.7 Indemnity of the Members and the Managers . . . . 40
12.8 Manner of Acting. . . . . . . . . . . . . . . . . 40
12.9 Informal Act by Managers. . . . . . . . . . . . . 40
12.10 Participation by Electronic Means . . . . . . . . 41
12.11 Resignation . . . . . . . . . . . . . . . . . . . 41
12.12 Removal . . . . . . . . . . . . . . . . . . . . . 41
12.13 Death or Disability of ▇▇▇▇ . . . . . . . . . . . 43
12.14 Vacancies . . . . . . . . . . . . . . . . . . . . 43
12.15 Prohibition Against Publicly Traded
Partnership . . . . . . . . . . . . . . . . . . . 43
ARTICLE 13 - REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . 43
13.1 Representations and Warranties of Each Member . . 43
13.2 Representations, Warranties and Covenants of
▇▇▇▇. . . . . . . . . . . . . . . . . . . . . . . 44
13.3 General Representation. . . . . . . . . . . . . . 47
13.4 Survival; Indemnity . . . . . . . . . . . . . . . 47
ARTICLE 14 - RIGHTS AND OBLIGATIONS OF MEMBERS . . . . . . . . 48
14.1 Limitation of Liability . . . . . . . . . . . . . 48
14.2 Company Debt Liability. . . . . . . . . . . . . . 49
14.3 List of Members . . . . . . . . . . . . . . . . . 49
14.4 Company Books . . . . . . . . . . . . . . . . . . 49
14.5 Priority and Return of Capital. . . . . . . . . . 49
14.6 Outside Activity. . . . . . . . . . . . . . . . . 49
ARTICLE 15 - MEETINGS OF MEMBERS . . . . . . . . . . . . . . . 50
15.1 Annual Meeting. . . . . . . . . . . . . . . . . . 50
15.2 Special Meetings. . . . . . . . . . . . . . . . . 50
15.3 Place of Meetings . . . . . . . . . . . . . . . . 50
15.4 Notice of Meetings. . . . . . . . . . . . . . . . 50
15.5 Meeting of all Members. . . . . . . . . . . . . . 50
15.6 Record Date . . . . . . . . . . . . . . . . . . . 51
15.7 Quorum. . . . . . . . . . . . . . . . . . . . . . 51
15.8 Manner of Acting. . . . . . . . . . . . . . . . . 51
15.9 Proxies . . . . . . . . . . . . . . . . . . . . . 51
15.10 Action by Members Without a Meeting . . . . . . . 51
15.11 Voting by Ballot. . . . . . . . . . . . . . . . . 52
15.12 Waiver of Notice. . . . . . . . . . . . . . . . . 52
ARTICLE 16 - TRANSFERABILITY; PUT-CALL PROVISIONS. . . . . . . 52
16.1 Restrictions on Transferability . . . . . . . . . 52
16.2 Put-Call Rights . . . . . . . . . . . . . . . . . 52
16.3 Calculation of Option Price . . . . . . . . . . . 53
16.4 Right of Offset . . . . . . . . . . . . . . . . . 54
16.5 Restrictions on Resignation . . . . . . . . . . . 54
16.6 Permitted WPHC Transfer . . . . . . . . . . . . . 54
ARTICLE 17 - ADMISSION OF ADDITIONAL MEMBERS . . . . . . . . . 54
ARTICLE 18 - DISSOLUTION AND TERMINATION . . . . . . . . . . . 55
18.1 Dissolution . . . . . . . . . . . . . . . . . . . 55
18.2 Effect of Filing of Dissolving Statement. . . . . 55
18.3 Distribution of Assets Upon Dissolution . . . . . 55
18.4 Articles of Dissolution . . . . . . . . . . . . . 56
18.5 Filing of Articles of Dissolution . . . . . . . . 56
18.6 Winding Up. . . . . . . . . . . . . . . . . . . . 56
18.7 No Restoration of Deficit Capital Accounts. . . . 56
18.8 Deemed Liquidation. . . . . . . . . . . . . . . . 57
18.9 Permitted Withdrawal by ▇▇▇▇. . . . . . . . . . . 57
ARTICLE 19 - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . 57
19.1 Statement of Intent of Parties. . . . . . . . . . 57
19.2 Notices . . . . . . . . . . . . . . . . . . . . . 58
19.3 Application of Colorado Law . . . . . . . . . . . 59
19.4 Waiver of Action for Partition. . . . . . . . . . 59
19.5 Amendments. . . . . . . . . . . . . . . . . . . . 59
19.6 Construction. . . . . . . . . . . . . . . . . . . 59
19.7 Headings. . . . . . . . . . . . . . . . . . . . . 59
19.8 Waivers . . . . . . . . . . . . . . . . . . . . . 59
19.9 Time of the Essence . . . . . . . . . . . . . . . 59
19.10 Remedies for Default. . . . . . . . . . . . . . . 59
19.11 Rights and Remedies Cumulative. . . . . . . . . . 59
19.12 Severability. . . . . . . . . . . . . . . . . . . 60
19.13 Heirs, Successors and Assigns . . . . . . . . . . 60
19.14 Counterparts. . . . . . . . . . . . . . . . . . . 60
19.15 Further Assurances. . . . . . . . . . . . . . . . 60
19.16 Entire Agreement. . . . . . . . . . . . . . . . . 60
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT UPON DELIVERY
TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE
MANAGERS OF THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR
SUCH TRANSFER OR THE SUBMISSION TO THE MANAGERS OF THE COMPANY OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE MANAGERS TO THE
EFFECT THAT ANY SUCH TRANSFER OR SALE WILL NOT BE IN VIOLATION OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
OPERATING AGREEMENT OF
PARK AT HIGHLANDS LLC,
A COLORADO LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made as of the 27th day of
April, 1995 by and among ▇▇ ▇▇▇▇, an individual ("▇▇▇▇"), and
WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation ("WPHC"),
as the members of PARK AT HIGHLANDS LLC, a Colorado limited
liability company (the "Company").
NOW THEREFORE, pursuant to the Act, the following shall
constitute the Operating Agreement of PARK AT HIGHLANDS LLC, a
Colorado limited liability company.
ARTICLE 1
DEFINITIONS
The following terms used in this Operating Agreement shall
have the following meanings (unless otherwise expressly provided
herein):
(a) "Accountants" means Ernst & Young or such other
accountant engaged by the Company with the unanimous consent of
the Members.
(b) "Act" means the version of the Colorado Limited
Liability Company Act adopted by the State of Colorado, Colo.
Rev. Stat. Sections7-80-101 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 ▇▇▇▇ Design, Inc.
("Architect"), an Affiliate of ▇▇▇▇, at or prior to the
Construction Loan Closing.
(h) "Asset Value" with respect to any Company asset means:
(i) The fair market value, when contributed, of any
asset contributed to the Company by any Member;
(ii) The fair market value on the date of distribution
of any asset distributed by the Company to any Member as
consideration for an Interest in the Company;
(iii) The fair market value of all Property at the time
of the happening of any of the following events: (A) the
admission of a Member to, or the increase of an Interest of an
existing Member in, the Company in exchange for a Capital
Contribution; or (B) the liquidation of the Company under
Regulation Section 1.704-1(b)(2)(ii)(g); or
(iv) The Basis of the asset in all other circumstances.
(i) "Bankruptcy Event" with respect to the Company or any
Member means any one of:
(A) Filing a voluntary petition in bankruptcy or for
reorganization or for adoption of an arrangement under the
Bankruptcy Code;
(B) Making a general assignment for the benefit of
creditors;
(C) The appointment by a court of a receiver for all
or a portion of the property of the Company or for all or a
portion of a Member's property having an aggregate value in
excess of $500,000;
(D) The entry of an order for relief in the case of an
involuntary petition in bankruptcy; or
(E) The assumption of custody or sequestration by a
court of competent jurisdiction of all or substantially all of
the Company's or such Member's property, as appropriate.
(j) "Basis" with respect to an asset means the adjusted
basis from time to time of such asset for federal income tax
purposes.
(k) "Call Option" means the call option of WPHC with
respect to the Interest of ▇▇▇▇ as described in Section 16.2.1
hereof.
(l) "Capital Account" means an account maintained for each
Member in accordance with Regulation Sections 1.704-1(b) and
1.704-2 and to which the following provisions apply to the extent
not inconsistent with such Regulations:
(i) There shall be credited to each Member's Capital
Account (A) such Member's Capital Contributions; (B) such
Member's distributive share of Profits; (C) any items of income
or gain specially allocated to such Member under Section 9.3 of
this Agreement; and (D) the amount of any Company liabilities
(determined as provided in Code Section 752(c) and the
Regulations thereunder) assumed by such Member or to which
Property distributed to such Member is subject;
(ii) There shall be debited to each Member's Capital
Account (A) the amount of money and the Asset Value of any
Property distributed to such Member pursuant to this Agreement;
(B) such Member's distributive share of Losses; (C) any items of
expense or loss which are specially allocated to such Member
under Section 9.3 of this Agreement, and (D) the amount of
liabilities (determined as provided in Code Section 752(c) and
the Regulations thereunder) of such Member assumed by the Company
or to which Property contributed to the Company by such Member is
subject; and
(iii) The Capital Account of any transferee Member
shall include the appropriate portion of the Capital Account of
the Member from whom the transferee Member's Interest was
obtained.
(m) "Capital Contribution" means the amount of money and
the Asset Value of any property other than money contributed to
the Company by a Member with respect to such Member's Interest in
the Company.
(n) "Capital Contribution Balance" means with respect to
any Member the aggregate Capital Contributions made by such
Member, plus an amount corresponding to interest thereon at an
annual rate of twelve percent (12%) from the date(s) such Capital
Contributions are made until the Option Closing Date. The
parties acknowledge that the definition of Capital Contribution
Balance is only used in connection with the determination of Fair
Market Value of ▇▇▇▇'▇ Interest.
(o) "Cash Flow" means the Operating Cash Flow and Sales or
Refinancing Cash Flow for any given period.
(p) "Code" means the Internal Revenue Code of 1986, as
amended, or corresponding provisions of subsequent superseding
federal revenue laws.
(q) "Company" means PARK AT HIGHLANDS LLC, a Colorado
limited liability company.
(r) "Construction Consultant" means the Construction
Consultant selected by WPHC to monitor construction on behalf of
WPHC, or such other consultant as may be selected by WPHC.
(s) "Construction Lender" means the maker of the
Construction Loan, or its successor and assigns in such capacity.
(t) "Construction Loan" means the Construction Loan in the
anticipated principal amount of $35,000,000 to be made to the
Company by the Construction Lender at the Construction Loan
Closing.
(u) "Construction Loan Closing" means the closing of the
transactions described in Section 5.2 hereof.
(v) "Construction Loan Closing Date" means the date on
which the Construction Loan Closing occurs.
(w) "Construction Loan Outside Date" has the definition
given it in Section 5.2.4 hereof.
(x) "Construction Procedures" means the requirements
regarding construction procedures set forth on Exhibit B attached
hereto.
(y) "Conversion Date" means the later of (A) the date on
which Substantial Completion has occurred, or (B) the date which
is the earlier of (i) twenty-eight (28) months from the
Construction Loan Closing Date, or (ii) the date upon which the
construction period interest line item in the budget for the
Construction Loan has been exhausted.
(y) "Control" means the direct or indirect ownership of at
least 50% of the equity interests or profits interests of any
other Person.
(z) "Cost Savings" means the positive amount, if any, by
which the Total Budgeted Development Costs exceed the actual
Development Costs incurred through the Final Closing Date.
(aa) "Deposit Agreement" means the Deposit and Contract
Administration Agreement between WPHC and The ▇▇▇▇ Company
regarding the Land Contract, which Deposit and Contract
Administration Agreement is attached hereto as Exhibit C.
(ab) "Depreciation" for any Fiscal Year or other period
means the cost recovery deduction with respect to an asset for
such year or other period as determined for federal income tax
purposes, provided that if the Asset Value of such asset differs
from its Basis at the beginning of such year or other period,
depreciation shall be determined as provided in Regulation
Section 1.704-1(b)(2)(iv)(g)(3).
(ac) "Development Costs" means the direct or indirect costs
paid or accrued by the Company related to the acquisition of the
Project Land and the development of the Project, including
without limitation: (i) all costs of construction and development
of the Project; (ii) all costs of causing the Project and its
operations to comply with laws prior to the Conversion Date;
(iii) all real estate taxes, assessments and personal property
taxes relating to the period prior to the Conversion Date; (iv)
all costs of insurance incurred by or charged to the Company
relating to the period prior to the Conversion Date; (v) all fees
paid to ▇▇▇▇ or its Affiliates (excluding the property management
fee paid to The ▇▇▇▇ Company after the Conversion Date); (vi) all
financing costs relating to the period prior to the Conversion
Date, including origination fees, reimbursement of expenses of
the Construction Lender and interest; (vii) all costs of
administration of the Company, including legal and accounting
fees prior to or on the Final Closing Date; (viii) all Operating
Expenses incurred prior to the Conversion Date; and (ix) costs of
title insurance endorsements deleting the mechanic's lien
exception from the owner's title policy and bringing the date of
the owner's title policy down to the date of Final Closing.
(ad) "Development Deficits" means the positive amount, if
any, by which (a) Development Costs exceed (b) the sum of the
Capital Contributions of the Members required to be made at the
Initial Closing, the Final Closing Capital Contribution and the
Net Operating Income for the period prior to the Conversion Date.
(ae) "Development Deficit Payments" shall mean the
Development Deficit Payments to be paid by ▇▇▇▇ pursuant to
Section 6.3 of this Agreement.
(af) "Entity" means any general partnership, limited
partnership, limited liability company, corporation, joint
venture, trust, business trust, cooperative or association, or
any governmental or quasi-governmental agency or body.
(ag) "Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C.A. Section 9601, et. seq.; the Hazardous Materials
Transportation Act, 49 U.S.C.A. Section 1801, et. seq.; the
Resource Conversation and Recovery Act, 42 U.S.C.A. Section 6901,
et. seq.; the Toxic Substances Control Act, 15 U.S.C.A. Section
2601, et. seq.; the Federal Water Pollution Control Act, 33
U.S.C.A. Section 1251, et. seq.; any Colorado environmental laws;
or any successor to such laws (in existence on the date any
relevant representation is made or updated), or any other
federal, state or local environmental, health or safety statute,
ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards concerning or in
connection with hazardous or toxic wastes, substances, material,
smoke, gas or particulate matter as now or at any time hereafter
in effect, or any common law theory based on nuisance or strict
liability.
(ah) "Environmental Reports" means the Environmental Site
Assessment prepared by ATEC Associates dated March 16, 1994,
concerning the Land.
(ai) "Fair Market Value of ▇▇▇▇'▇ Interest" means the
following:
(i) one percent (1.0%) of the following: (A) the fair
market value of the Partnership's assets as determined by the
Accountants based on the books and records of the Company and on
a current appraisal of the Project, minus (B) the amount of the
Company's debts and liabilities, including without limitation,
any debt encumbering the Project, trade payables, accrued
expenses and adjustments for any reasonably foreseeable
contingent liabilities as determined by the Accountants and
accrued but unpaid Incentive Fees and any other fees payable to
▇▇▇▇, 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 ▇▇▇▇ and WPHC exceeds (B) the Capital
Contribution Balance of ▇▇▇▇.
(aj) "Final Closing" means the closing of the transactions
described in Article 8 hereof.
(ak) "Final Closing Date" means the date on which the Final
Closing occurs.
(al) "Final Closing Capital Contribution" means the Capital
Contribution to be made by WPHC pursuant to Section 4.1.2(b)
hereof, when, as and if required by this Agreement.
(am) "Final Closing Funding Conditions" means the conditions
to the obligations of WPHC to make the Final Closing Capital
Contribution, which conditions are set forth on Exhibit D
attached hereto.
(an) "Final Completion" means the lien-free completion of
construction of the improvements in accordance with the Plans and
Specifications (subject only to minor and inconsequential field
changes and other changes consented to by WPHC), including
without limitation, completion or correction of all punchlist
items and seasonal items such as landscaping to the reasonable
satisfaction of WPHC, payment and release of all liens of
subcontractors, materialmen, and other providers of labor,
equipment, material and/or services to the Property and the
Project as evidenced by the receipt of all unconditional lien
releases from all such subcontractors, materialmen and all other
providers of labor, equipment, material and/or services to the
Property and the Project, or in the event a lien is being
contested, the posting by ▇▇▇▇ of collateral in an amount and
form reasonably satisfactory to WPHC, which may include providing
a surety bond to which the lien is transferred and providing
title insurance coverage against such liens.
(ao) "Fiscal Year" means the taxable year of the Company for
federal income tax purposes as determined under Code Section 706
and the Regulations thereunder.
(ap) "Force Majeure" means acts of God, strikes, shortages
of labor or materials, weather conditions or other matters not
reasonably within ▇▇▇▇'▇ control ("Force Majeure"), except that
under no circumstances shall lack of available funds be
considered an event of Force Majeure.
(aq) "Gross Operating Revenues" shall mean, with respect to
any given period of time, all gross operating income and rental
revenues actually received by or paid to or for the account of
the Company with respect to the ownership, operation, leasing and
occupancy of the Project, excluding tenant security deposits paid
under Leases but including, but not limited to, any and all of
the following: (i) rentals paid by tenants under leases of space
in the Project ("Leases"); (ii) late charges and interest paid by
tenants under Leases; (iii) rents and receipts from vending
machines and similar items; (iv) fees from parking garages or
carports, if applicable; and (v) cable television and telephone
revenues.
(ar) "Hazardous Materials" means without limitation,
(i) asbestos or any material composed of or containing asbestos
or urea formaldehyde in any form and in any type; (ii)
polychlorinated biphenyl compounds; (iii) oil hydrocarbons,
petroleum, petroleum products or products containing or derived
from petroleum; (iv) any hazardous or toxic waste, substance,
material, smoke, gas or particulate matter, as presently defined
by or for purposes of Environmental Laws.
(as) "Incentive Fee" has the meaning set forth in Section
7.5 hereof.
(at) "Infrastructure" means the interior street
improvements, utilities, landscaping, a perimeter wall and gate,
a guardhouse, a recreational center and amenities, and a park and
recreational amenities to be constructed on the Infrastructure
Land, as more particularly described on Exhibit E attached
hereto.
(au) "Infrastructure Costs" means the actual cost of
acquiring, constructing and developing all of the Infrastructure,
including without limitation the cost of the Infrastructure Land,
design and engineering costs, construction management fees,
general contractor fees, property taxes on the Infrastructure
Land prior to completion of the Infrastructure, interest expense
on the Infrastructure Land and the Infrastructure at an assumed
nine percent (9.0%) rate of interest for the period prior to the
completion of each applicable phase of the Infrastructure.
Infrastructure shall not include the cost of issuance of bonds to
finance the Infrastructure. If all of the Infrastructure has not
been finally completed at the time of determination of
Infrastructure Costs due to phasing of the construction of
Infrastructure or for any other reason, then Infrastructure Costs
shall include an amount equal to the expected amount of
Infrastructure Costs upon final completion of the Infrastructure
as reasonably determined by WPHC.
(av) "Infrastructure Land" means an approximately thirty
(30) acre parcel of the Land on which the Infrastructure
improvements shall be constructed, which parcel is described on
Exhibit F attached hereto.
(aw) "Infrastructure Improvements Agreement" has the meaning
set forth in Section 5.3.3 hereof.
(ax) "Initial Closing" means the closing of the transactions
described in Section 5.1 hereof.
(ay) "Initial Closing Date" means the date on which the
Initial Closing occurs.
(az) "Interest" means the ownership interest of a Member in
the Company at any particular time, including the right of such
Member to any and all benefits to which such member may be
entitled as provided in this Agreement or the Act, together with
the obligations of such Member to comply with all the terms and
provisions of this Agreement and the Act. Such Interest of each
Member shall, except as specifically provided herein, be the
percentage of the aggregate of such benefits or obligations
specified in this Agreement as such Member's Percentage Interest.
(ba) "Land" means the parcel of land located in ▇▇▇▇▇▇▇
County, Colorado, which parcel is described on Exhibit G attached
hereto.
(bb) "Land Contract" means that certain Second Amended and
Restated Vacant Land Purchase and Sale Agreement dated March 23,
1995, between Mission Viejo Company, as Seller, and The ▇▇▇▇
Company, as Purchaser, as assigned to and assumed by WPHC by that
certain Assignment and Assumption Agreement - Purchase Agreement
dated May 2, 1995, and that portion of which relating to the Land
will be assigned to and assumed by the Company by that certain
Assignment and Assumption Agreement - Phase I dated May 2, 1995.
(bc) "Majority In Interest" shall mean Members holding a
majority of the Percentage Interests.
(bd) "Managers" shall mean one or more managers.
Specifically, "Managers" shall mean ▇▇▇▇ or any other Persons
that succeed such Manager in that capacity. Managers need not be
residents of the State of Colorado or Members of the Company.
References to the Manager in the singular or as him, her, it,
itself, or other like references shall also, where the context so
requires, be deemed to include the plural or the masculine or
feminine reference, as the case may be.
(be) "Master Development" means a five-phase, gated
apartment community to be constructed on the Master Development
Land, including a central 23-acre park containing a clubhouse,
swimming pool and health club. The approximate anticipated
number of units in each phase of the Master Development is as
follows: Phase I - 456; Phase II - 316; Phase III - 320; Phase
IV - 436; and Phase V - 352, for a total of 1,880 units if fully
developed.
(bf) "Master Development Land" means the Land described on
Exhibit H attached hereto, which land is all of the land to be
sold and conveyed pursuant to the Land Contract.
(bg) "Material Default" means a default by ▇▇▇▇ in any of
its obligations hereunder which in the reasonable judgment of
WPHC has caused or is likely to cause damages to WPHC of $250,000
or more.
(bh) "Members" shall mean ▇▇▇▇ and WPHC and each of the
parties who may hereafter become additional or substituted
Members.
(bi) "Minimum Option Price" means $50,000.
(bj) "Multi-Family Project" shall mean an apartment project,
condominium project, town-home project or other multi-family
residential project.
(bk) "Net Operating Income" means, with respect to any given
period of time, the aggregate Gross Operating Revenue for such
period of time minus the aggregate Operating Expenses for such
period of time. Notwithstanding the foregoing, in connection
with the calculation of the Incentive Fee, Net Operating Income
shall be determined on an accrual basis for the relevant period
with the following additional adjustments: if property taxes do
not fully reflect the completion of the Project, then the
property taxes shall be increased to the amount of property taxes
that would have been assessed had the Project been completed and
included in the calculation of the property taxes.
(bl) "Operating Cash Flow" means with respect to any given
period the Net Operating Income of the Company actually received
and attributable to such period reduced by all debt service
charges and expenses related to such period and by expenditures
required to be capitalized for federal income tax purposes
incurred during such period (other than Development Costs).
(bm) "Operating Deficits" means, for any specified period,
the greater of 0 or the following: (A) the interest payments,
accruals and periodic charges and expenses on the Construction
Loan for such period; plus (B) the aggregate Operating Expenses
for such period of time; minus (c) Gross Operating Revenue for
such period of time.
(bn) "Operating Deficit Payments" shall mean the Operating
Deficit Payments to be paid by ▇▇▇▇ pursuant to Section 6.4 of
this Agreement.
(bo) "Operating Expenses" shall mean with respect to any
given period of time all expenses of the Company in connection
with the ownership, operation, leasing and occupancy of buildings
in the Project, which either are rent-ready or all or any portion
of which are occupied by tenants, attributable to such period of
time as determined on an accrual basis, excluding interest
payments and accruals on the Construction Loan but including, but
not limited to, any and all of the following: (i) general real
estate taxes; (ii) special assessments or similar charges; (iii)
personal property taxes, if any; (iv) sales and use taxes
applicable to such operating expenses; (v) cost of utilities for
the Project; (vi) maintenance and repair costs of the Project;
(vii) operating and management expenses and fees; (viii) premiums
of insurance carried on or with respect to the Project; (ix)
costs, including leasing commissions, advertisement and
promotional costs, to obtain leases and the cost of work
performed to ready space in the Project for occupancy under
leases; (x) accounting and auditing fees and costs, attorneys'
fees and other administrative and general expenses and
disbursements of the Company in connection with the ownership,
operation, leasing and management of the Project; (xi) expensed
improvements in accordance with the accounting practices of WRPT;
(xii) an allocable share of the costs and expenses of operating
and maintaining the Infrastructure, excluding such costs and
expenses that are paid by the owner of any other phase of the
Master Development or are paid from operating reserves of the
Infrastructure owner established in connection with the financing
of the Infrastructure (the method of allocation of such costs and
expenses shall be agreed upon by the Members at or prior to the
Construction Loan Closing); and (xiii) any other costs, charges
or expenses incurred by the Company which are not Development
Costs.
(bp) "Option Closing Date" means the date on which the Call
Option or the Put Option shall close.
(bq) "Option Price" means the greater of the Fair Market
Value of ▇▇▇▇'▇ Interest and the Minimum Option Price.
(br) "Outside Date" means the date that is thirty-six (36)
months following the closing of the Construction Loan Closing
Date. Such Outside Date may be extended by Force Majeure, but in
no event by more than 120 days.
(bs) "Percentage Interest" shall mean the following: (i)
with respect to ▇▇▇▇, one percent (1.0%); and (ii) with respect
to WPHC, ninety-nine percent (99.0%).
(bt) "Person" shall mean any individual or Entity, and the
heirs, executors, administrators, legal representatives,
successors, and assigns of such Person where the context so
admits.
(bu) "Plans and Specifications" means the for-construction
plans and specifications for the construction of the Project,
which plans and specifications are to be prepared and approved by
the Members as described in Section 5.2.2 hereof.
(bv) "Pre-Existing Environmental Condition" means the
presence, if any, of Hazardous Materials on or about the Project
Land on the Initial Closing Date which at any subsequent time
constitutes a violation of Environmental Laws or which subjects
or is reasonably expected to subject the Company or its Members
or Managers to liability to any Person.
(bw) "Pre-Existing Environmental Condition Liability" means
any liability, loss, damage or cost incurred by the Company prior
to the Final Closing Date arising from a Pre-Existing
Environmental Condition, including without limitation, any
increase in Development Costs or Operating Expenses arising
directly from a Pre-Existing Environmental Condition.
(bx) "Profits" and "Losses" for any Fiscal Year or other
period means an amount equal to the Company's taxable income or
loss for such year or period determined in accordance with Code
Section 703(a) and the Regulations thereunder with the following
adjustments:
(i) All items of income, gain, loss and deduction of
the Company required to be stated separately shall be included in
taxable income or loss;
(ii) Income of the Company exempt from federal income
tax shall be treated as taxable income;
(iii) Expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as such expenditures under
Regulation Section 1.704-1(b)(2)(iv)(i) shall be subtracted from
taxable income;
(iv) The difference between Basis and Asset Value shall
be treated as gain or loss upon the happening of any event
described in Article 1(h)(i), (ii) or (iii);
(v) Gain or loss resulting from the disposition of
Property from which gain or loss is recognized for federal income
tax purposes shall be determined with reference to the Asset
Value of such Property;
(vi) Depreciation shall be determined based upon Asset
Value instead of as determined for federal income tax purposes;
and
(vii) Items which are specially allocated under Article
9 of this Agreement shall not be taken into account.
(by) "Project" means the 456-unit apartment complex and
related facilities and amenities to be constructed on the Project
Land in accordance with the Plans and Specifications. Project
does not include the Infrastructure.
(bz) "Project Budget" means the budget for construction and
development of the Project by the Company. An "Initial Project
Budget is attached hereto as Exhibit I. As described in Section
5.2.3 hereof, in connection with the Construction Loan Closing,
the Members shall agree upon the "Final Project Budget."
(ca) "Project Land" means the Land excluding the
Infrastructure Land.
(cb) "Property" means all real and personal property,
tangible and intangible, owned by the Company.
(cc) "Property Management Agreement" means the Property
Management Agreement to be entered into between the Company and
The ▇▇▇▇ Company, an Affiliate of ▇▇▇▇, 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 ▇▇▇▇; and
(ii) after the Final Closing Date, upon 30 days' written notice
of termination from one party to the other.
(cd) "Put Option" means the put option of ▇▇▇▇ with respect
to the Interest of ▇▇▇▇ as described in Section 16.2.2 hereof.
(ce) "Regulations" means the federal income tax regulations,
including temporary (but not proposed) regulations, promulgated
under the Code.
(cf) "Removal" means the removal of ▇▇▇▇ pursuant to Section
12.12 hereof.
(cg) "Removal Event" has the meaning set forth in
Section 12.12 hereof.
(ch) "Restricted Party" has the meaning set forth in Section
14.6.4 hereof.
(ci) "Sales or Refinancing Cash Flow" means, for any given
period, the cash proceeds received from the Company from the
sale, other disposition, or refinancing of any or all of the
Property (including payments of principal and interest on
obligations received by the Company in connection with such sale
or other disposition) in excess of amounts necessary to discharge
Company obligations with respect to such Property.
(cj) "Substantial Completion" means satisfaction of all of
the following: (i) completion of construction of the Project in
compliance with the Plans and Specifications (subject only to
minor and inconsequential field changes and other changes
consented to by WPHC, punch list items and seasonal items such as
landscaping which do not interfere with the occupancy and use of
the Project, and liens of subcontractors, materialmen, and other
providers of labor, equipment, material and/or services to the
Property and the Project not yet due and payable or for which
either a surety bond or title insurance reasonably acceptable to
WPHC is provided by ▇▇▇▇), as evidenced by temporary or permanent
certificate(s) of occupancy, or the equivalent, issued by the
applicable governmental authority for all buildings which are
part of the Project, which permit the occupancy and use of all
the apartment units; and (ii) each unit in the Project having
been made rent-ready, including, without limitation, the
installation of all appliances (including, without limitation,
refrigerators and ranges), light fixtures, floor coverings and
window coverings required by the Plans and Specifications or
otherwise required for the use, occupancy, and operation of the
units.
(ck) "Substitute Member" shall mean any Person who or which
is admitted to the Company as a substitute Member pursuant to
Colo. Rev. Stat. Section 7-80-702(2) (1991), as it may be
amended.
(cl) "Total Budgeted Development Costs" means the Total
Development Costs as shown on the Final Project Budget.
(cm) "WRPT" means Wellsford Residential Property Trust, a
Maryland real estate investment trust, which is an Affiliate of
WPHC.
(cn) "WPHC" means Wellsford Park Highlands Corp., a Colorado
corporation.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. On April 27, 1995, the parties hereto
organized the Company as a Colorado limited liability company
under and pursuant to the Act.
2.2 Name. The name of the Company is Park at Highlands
LLC, a Colorado limited liability company.
2.3 Principal Place of Business. The principal place of
business of the Company within the State of Colorado shall be
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. 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 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
the name of its initial registered agent at such address shall be
Wellsford Park Highlands Corp., a Colorado corporation. The
registered agent shall provide promptly to the Managers copies of
all written notices, summonses and other documents received by
the registered agent on behalf of the corporation (other than
general advertising and promotional materials) and, in any event,
such copies shall be provided not more than ten (10) business
days after receipt thereof by such registered agent. The
Managers shall have no liability for the effects of any failure
by the registered agent to timely deliver any such items to the
Managers except to the extent the Managers had actual notice of
such items prior to delivery by the registered agent. In any
contracts, subcontracts, loan agreements or other documents
entered into by the Company, the Managers shall provide that the
addresses for notice to be given under any such agreements shall
include both the registered agent and the Managers.
2.5 Articles of Organization. The Articles of Organization
are hereby adopted and incorporated by reference into this
Agreement. In the event of any inconsistency between the
Articles of Organization and this Agreement, the terms of the
Articles of Organization shall govern.
2.6 Term. The term of the Company shall be thirty (30)
years from the date of filing of Articles of Organization with
the Secretary of State of the State of Colorado, unless the
Company is earlier dissolved in accordance with either the
provisions of this Agreement or the Act.
ARTICLE 3
BUSINESS OF COMPANY
3.1 Permitted Businesses. The business of the Company
shall be:
3.1.1 To acquire the Land and to construct,
develop, own, operate, manage, lease, finance, improve and sell
or otherwise dispose of the Project; and
3.1.2 To engage in all activities necessary,
customary, convenient, or incidental to any of the foregoing.
3.2 Other Activity or Business. The Company shall not
engage in any other activity or business unless approved by all
Members.
ARTICLE 4
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND LOANS TO THE COMPANY
4.1 Capital Contributions. Subject to the provisions of
this Agreement, the Members shall be obligated to make the
following Capital Contributions to the Company:
4.1.1 Capital Contributions by ▇▇▇▇. At the Initial
Closing, ▇▇▇▇ shall make a Capital Contribution of $1,000.
4.1.2 Capital Contributions by WPHC. WPHC shall make
the following Capital Contributions:
(a) At the Initial Closing, WPHC shall make a
Capital Contribution in the amount of approximately $5,118,024,
which the Company shall use as follows: (i) approximately
$4,834,016 shall be used to fund the acquisition of the Land; and
(ii) approximately $284,008 shall be used to reimburse ▇▇▇▇ as
described in Section 5.1.2. hereof.
(b) At the Final Closing and contingent on
satisfaction of all of the Final Closing Funding Conditions, WPHC
shall make the Final Closing Capital Contribution in an amount
equal to the following: (i) the Total Budgeted Development
Costs, minus (ii) any Capital Contributions made prior to the
Final Closing Date by WPHC, plus (iii) any distributions made to
WPHC pursuant to Section 10.3 hereof, minus (iv) an amount equal
to fifty percent (50%) of Cost Savings.
WRPT shall guaranty the obligation of WPHC to make the Final
Closing Capital Contribution by executing the Guaranty attached
hereto.
4.2 Withdrawal or Reduction of Members' Contributions to
Capital.
4.2.1 A Member shall not receive out of the Company's
Property any part of such Member's Capital Contributions in
violation of the Act.
4.2.2 A Member, irrespective of the nature of such
Member's Capital Contribution, has the right to demand and
receive only cash in return for such Member's Capital
Contribution and then only in accordance with the terms of this
Agreement.
4.3 Development Deficit Payments. ▇▇▇▇ shall have the
obligation to make Development Deficit Payments when and as
required under Article 6 of this Agreement.
4.4 Operating Deficit Payments. ▇▇▇▇ shall have the
obligation to make Operating Deficit Payments when and as
required under Article 6 of this Agreement.
4.5 Additional Capital Contributions. Except as expressly
described in this Article 4, no Member has an obligation to make
any Capital Contributions or loans or advances to the Company.
4.6 Miscellaneous.
4.6.1 No Interest on Capital Contribution. No Member
shall be entitled to or shall receive interest on such Member's
Capital Contribution.
4.6.2 No Withdrawal of Capital Contribution. No
Member may withdraw any capital from the capital of the Company
except as expressly provided herein or under the Act.
4.6.3 No Priority of Return of Capital Contribution.
No Member shall have any priority over any other Member with
respect to the return of any Capital Contribution, except as
expressly provided herein.
4.6.4 No Third Party Beneficiaries. The provisions of
this Article 4 are not intended to be for the benefit of and
shall not confer any rights on any creditor or other Person
(other than a Member in such Member's capacity as a Member) to
whom any debts, liabilities or obligations are owed by the
Company or any of the Members.
ARTICLE 5
INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;
CONSTRUCTION LOAN CLOSING
5.1 Initial Closing. The Members of the Company shall
cooperate to cause an Initial Closing at which the following
shall occur:
5.1.1 Land Closing. The Company shall acquire the
Land pursuant to the Land Contract to be partially assigned to
the Company. The Company shall obtain an Owner's Policy of Title
Insurance from a title insurer acceptable to the Members (the
"Title Company") in accordance with the terms of the Land
Contract.
5.1.2 Reimbursement of ▇▇▇▇ Expenses. At the Initial
Closing, the Company shall reimburse ▇▇▇▇ and its Affiliates for
those costs and expenses incurred by ▇▇▇▇ and its Affiliates as
set forth on Exhibit A attached hereto and for accrued pre-
development costs incurred by ▇▇▇▇ on or prior to the Initial
Closing for which ▇▇▇▇ has not previously been billed
("Reimbursable Expenses"). ▇▇▇▇ represents and warrants that
such Exhibit A and additional invoices and schedules to be
provided by ▇▇▇▇ with respect to the balance of the Reimbursable
Expenses set forth and shall set forth the costs and expenses
actually incurred by ▇▇▇▇ in connection with the Project.
Notwithstanding anything to the contrary herein, only those
Reimbursable Expenses which constitute actual, third party costs
of ▇▇▇▇ shall be paid at the Initial Closing. Any Reimbursable
Expenses for in-house architectural services or other services
provided by ▇▇▇▇ or The ▇▇▇▇ Company ("In House Reimbursable
Expenses") shall be paid as follows: (i) if and when a bond
financing of the Infrastructure occurs, then proceeds of such
bond financing shall be used to pay In House Reimbursable
Expenses relating to the Infrastructure only; and (ii) if and
when a Construction Loan Closing occurs, the Company shall pay
the In House Reimbursable Expenses, including any In House
Reimbursable Expenses related to the Infrastructure which were
not previously paid. In connection with any request for the
payment of In House Reimbursable Expenses, ▇▇▇▇ shall submit to
WPHC for approval the following: (i) detailed invoices setting
forth the services performed and work delivered by ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇, The ▇▇▇▇ Company or their Affiliates for any In
House Reimbursable Expenses. Except as set forth in this Section
5.1.2, neither ▇▇▇▇ nor The ▇▇▇▇ Company shall have any right of
reimbursement from the Company with respect to any other costs
and expenses incurred in connection with the Project prior to the
Initial Closing Date.
5.1.3 Approval of Land Documents. The Company shall
not proceed with the Initial Closing unless and until the form of
documents related to the closing of the acquisition of the Land
have been approved by all the Members.
5.1.4 Pledge of Interest.
5.1.4.1 As collateral for the performance by
▇▇▇▇ of its obligations under this Agreement, at the Initial
Closing ▇▇▇▇ shall execute a Pledge and Security Agreement in the
form of Exhibit L attached hereto, wherein ▇▇▇▇ grants WPHC a
first lien security interest in ▇▇▇▇'▇ Interest in the Company
and in ▇▇▇▇'▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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, ▇▇▇▇ shall develop
appropriate site plans and other plans as may be required to
obtain such approvals. ▇▇▇▇ shall not submit any proposed plans
or other materials to any governmental agency without the prior
approval of WPHC. In addition, ▇▇▇▇ shall not incur any third
party expense without the prior approval of WPHC. WPHC agrees to
reasonably cooperate with ▇▇▇▇ in obtaining the Approvals, which
cooperation shall include, without limitation, prompt review of
any matters submitted to WPHC and prompt response to ▇▇▇▇ in
connection with any matters submitted to WPHC. Copies of all
reports, studies and other information and material generated for
or on behalf of ▇▇▇▇ 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 ▇▇▇▇ 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, ▇▇▇▇ 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, ▇▇▇▇
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, ▇▇▇▇ 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. ▇▇▇▇ shall use
its best efforts to cause the Company to obtain a Construction
Loan for construction of the Project on terms and from a
Construction Lender acceptable to the Members, including, but not
limited to, the following: (a) the Construction Loan amount must
be sufficient to reimburse WPHC at the Construction Loan Closing
for the acquisition cost of the Project Land and any advances it
made to the Company for predevelopment activities; (b) the
interest rate shall be a variable rate equal to LIBOR plus a
spread reasonably acceptable to the Members; (c) the
Construction Loan Closing must take place on or before October
31, 1995, provided, however, such date shall be extended to a
date not later than December 31, 1995, if ▇▇▇▇ is diligently
pursuing his obligations and if the delay is not attributable to
a default by ▇▇▇▇ (such date as it may be extended is referred to
herein as the "Construction Loan Outside Date"); (d) ▇▇▇▇ shall
personally guarantee the Construction Loan if required by the
Construction Lender; (e) the Construction Loan shall have a
maturity date of at least thirty-six (36) months from the date of
the Construction Loan Closing; and (f) the other terms shall be
reasonably acceptable to WPHC.
5.2.5 Construction Loan Documents. The Company shall
not proceed with the Construction Loan Closing unless and until
the form of documents related to the Construction Loan and the
Tri-Party Agreement have been approved by all the Members. There
shall be no modification to the Construction Loan documents
without the prior written approval of all Members.
5.2.6 Approved Affiliate Agreements. On or prior to
the Construction Loan Closing Date and only with the approval of
all of the Members, the Company shall enter into (a) a
construction management agreement with Tricor Construction
Company, an Affiliate of ▇▇▇▇ ("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
▇▇▇▇ nor Contractor nor Architect shall enter into any other
agreements with parties affiliated with ▇▇▇▇ 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 ▇▇▇▇ under this
Agreement, the Approved Affiliate Agreements shall be terminated
at the option of WPHC. An uncured default by ▇▇▇▇ under any
Approved Affiliate Agreement shall be a default hereunder. There
shall be no modification to the Approved Affiliate Agreements
without the prior written approval of all Members. Each Approved
Affiliate Agreement shall provide that the Company shall have the
right to terminate such agreement upon the Removal of ▇▇▇▇
without such termination constituting a default.
5.2.7 ▇▇▇▇ Guarantee. ▇▇▇▇ 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 ▇▇▇▇ and guaranty termination
provisions that are acceptable to the Construction Lender.
5.2.8 Tri-Party Agreement. At the Construction Loan
Closing, the Company, the Construction Lender and WRPT shall
enter into a Tri-Party Agreement containing the following
principal terms: (a) if the Construction Loan has not been paid
in full by its maturity date, the Construction Lender shall have
the right to require that WRPT purchase the Construction Loan
from the Lender, or at WRPT's option, cause the Construction Loan
to be repaid; (b) the obligation of WRPT under the Tri-Party
Agreement shall be conditioned on timely satisfaction of all of
the Final Closing Funding Conditions; and (c) the purchase price
for the Construction Loan shall equal the lesser of the
outstanding balance of the Construction Loan, including accrued
interest, principal and other amounts due thereunder or the
amount of the Final Closing Capital Contribution.
5.2.9 Property Management Agreement. At the
Construction Loan Closing, the Company shall enter into the
Property Management Agreement with The ▇▇▇▇ Company, an Affiliate
of ▇▇▇▇.
5.3 Infrastructure Land Closing and Bond Financing of
Infrastructure. It is the intent of the Members that the
Infrastructure be acquired and developed by an entity that will
enable the financing of the Infrastructure to be accomplished by
the issuance of tax-exempt bonds.
5.3.1 Subdivision of the Land; Sale of the
Infrastructure Land. After the date hereof and prior to the
Construction Loan Closing, unless WPHC otherwise agrees, ▇▇▇▇
shall cause the Company to effect the legal subdivision of the
Land into not fewer than two legally separate parcels. At least
one or more parcels shall comprise the Infrastructure Land, and
at least one or more parcels shall comprise the Project Land. At
or prior to the Construction Loan Closing, the Company shall sell
the Infrastructure Land and any improvements located thereon to
an entity designated by WPHC for a purchase price designated by
WPHC and on terms designated by WPHC.
5.3.2 Control Over Matters Related to Infrastructure.
Notwithstanding anything to the contrary herein, WPHC shall have
sole and exclusive control over all decisions of the Company
relating to the sale, financing, construction and development of
the Infrastructure. In connection with the financing of the
Infrastructure and as directed by WPHC, the Company shall cause
the Land to be included within a special assessment district or
similar district in connection with the financing of the
Infrastructure and/or shall cause the Project to be subject to
special assessments, general assessments and/or consensual liens.
In addition, the Company shall enter into such agreements as WPHC
may require, which agreements obligate the Company to pay or
reimburse the costs of operating and maintaining the
Infrastructure.
5.3.3 Construction of Infrastructure. After the date
hereof and at or prior to the Construction Loan Closing, an
Affiliate of ▇▇▇▇ shall enter into one or more agreements
(collectively, the "Infrastructure Improvements Agreement") with
the owner of the Infrastructure Land (or its contractor) to
construct the Infrastructure for a guaranteed maximum price,
including a fee to ▇▇▇▇ not to exceed three percent (3%) of the
hard costs of construction of the Infrastructure. A default by
▇▇▇▇ in the performance of its obligations under that contract
not cured within any applicable cure period shall constitute a
default under this Agreement. WPHC may in its discretion cause
the phasing of the construction of the Infrastructure
Improvements. An initial budget for the costs of acquisition and
development of the Infrastructure is attached hereto as Exhibit
T.
5.4 Failure of Initial Closing or Construction Loan Closing
to Occur. ▇▇▇▇ covenants to cause the Initial Closing to occur
by May 15, 1995 and the Construction Loan Closing to occur by the
Construction Loan Outside Date. If for any reason the Initial
Closing has not occurred by May 15, 1995, or the Construction
Loan Closing has not occurred by the Construction Loan Outside
Date, then WPHC shall have the right to remove ▇▇▇▇ as a Member
and Manager of the Company in accordance with the provisions of
Section 12.12.
ARTICLE 6
DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE
FINAL CLOSING DATE
6.1 Duties of ▇▇▇▇. ▇▇▇▇ shall have the authority, duty
and the obligation to:
6.1.1 act on behalf of the Company in relation with
any governmental agency or authority, the Construction Lender,
and all contractors and subcontractors with respect to all
matters relating to the construction and development of the
Project;
6.1.2 use its best efforts to cause the Company to
obtain a commitment for the Construction Loan on terms and
conditions acceptable to all the Members and satisfy the
conditions for the Construction Loan Closing;
6.1.3 coordinate with Architect the preparation of the
Plans and Specifications, ensure that the Plans and
Specifications are in compliance with all applicable codes, laws,
ordinances, rules and regulations, and recommend alternative
solutions whenever design details affect construction feasibility
or schedules;
6.1.4 negotiate all necessary contracts and
subcontracts for the construction of the Project and monitor
disbursement and payment of amounts owed the Architect,
Contractor and subcontractors;
6.1.5 choose the products and materials necessary to
equip the Project in a manner which satisfies all requirements of
the Construction Lender and the Plans and Specifications;
6.1.6 secure all building code approvals and obtain
certificates of occupancy for all of the apartment units of the
Project;
6.1.7 cause the Project to be commenced not more than
thirty (30) days after the Construction Loan Closing, or by such
earlier date as may be required under the Construction Loan
documents, and completed in a prompt and expeditious manner,
consistent with good workmanship, and in compliance with the
following:
(a) the Plans and Specifications as they may be
amended in accordance with the terms of this Agreement;
(b) any and all zoning regulations, county
ordinances, including health, fire and safety regulations, and
any other requirements of federal, state and local laws, rules,
regulations and ordinances applicable to construction of the
Project;
6.1.8 cause to be performed in a diligent and
efficient manner the following:
(a) construction of the Project pursuant to and
in substantial accordance with the Plans and Specifications, free
and clear (except as otherwise permitted herein) of all mechanics
and materialmen's liens; and
(b) general administration and supervision of
construction of the Project, including but not limited to
activities of subcontractors and their employees and agents, and
others employed as to the Project in a manner which complies in
all respects with the Construction Loan, the Plans and
Specifications and the Construction Procedures;
6.1.9 keep, or cause to be kept, accounts and cost
records as to the construction of the Project and make available
to WPHC, during normal business hours copies of all material
contracts and subcontracts;
6.1.10 provide regular monitoring, and periodically
(at least monthly, or more often if requested by any Member)
update the Project construction time schedule and summarize
potential variances between scheduled and probable completion
dates, the schedule for work not started or incomplete;
6.1.11 revise and refine the approved estimate of
Development Costs, incorporate changes as they occur, and develop
cash flow reports and forecasts as needed;
6.1.12 develop and implement a system for review and
processing of change orders as to construction of the Project;
6.1.13 develop and implement a procedure for the
review and processing of applications by subcontractors for
progress and final payments; and
6.1.14 record the progress of the Project and submit
written progress reports to WPHC, including the percentage of
completion and the number and amounts of change orders.
6.2 Construction Completion. ▇▇▇▇ 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) ▇▇▇▇ shall fully and timely perform all of its other
obligations under this Agreement; and (iii) subject to Force
Majeure, it shall cause (a) Substantial Completion of the Project
to occur within twenty-eight (28) months after the Construction
Loan Closing Date; (b) Final Completion to occur within thirty
(30) months after the Construction Loan Closing Date; (c) all
Final Closing Funding Conditions shall be satisfied prior to the
Outside Date; and (d) completion of the Infrastructure by the
date set forth and in accordance with the Infrastructure
Improvements Agreement.
6.3 Development Deficit Guaranty. ▇▇▇▇ hereby guarantees
▇▇▇▇ 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").
▇▇▇▇ 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 ▇▇▇▇ in full prior to
the Final Closing Date. All Development Deficit Payments made to
the Company shall be non-reimbursable payments, and ▇▇▇▇ shall
not be entitled to any repayment from the Company (unless
advances of the Construction Loan are later available to
reimburse ▇▇▇▇ for the same), and the Capital Account of ▇▇▇▇
shall not be affected by any Deficit Payments made by ▇▇▇▇.
Without limiting the generality of the foregoing, ▇▇▇▇ shall not
be entitled to reimburse himself for any Development Deficits.
6.4 Operating Deficit Guaranty. ▇▇▇▇ hereby guarantees
▇▇▇▇ shall advance to or for the account of the Company amounts
equal to all Operating Deficits, at such time as such Operating
Deficits occur ("Operating Deficit Payments"). ▇▇▇▇ shall make
Operating Deficit Payments required of him by the date required
to avoid a default under Company obligations, including without
limitation the Construction Loan and obligations to trade
creditors. In any event, all Operating Deficits shall be paid by
▇▇▇▇ in full prior to the Final Closing Date. All Operating
Deficit Payments made to the Company shall be non-reimbursable
payments, except to the extent that, subsequent to the making of
any such Operating Deficit Payment by ▇▇▇▇, there is sufficient
Net Operating Income prior to the earliest of the Final Closing
Date, the Outside Date or the date of the Removal of ▇▇▇▇ by WPHC
to reimburse ▇▇▇▇ for the same. In no event, shall the Capital
Account of ▇▇▇▇ be affected by any Operating Deficit Payments
made by ▇▇▇▇. Notwithstanding anything to the contrary herein,
upon the Removal of ▇▇▇▇, ▇▇▇▇ shall not have any obligation
hereunder to fund Operating Deficits incurred after the date of
his Removal.
6.5 Liabilities of the Company. ▇▇▇▇ 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, ▇▇▇▇ 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. ▇▇▇▇ shall obtain and the
Company shall enter into such contracts, agreements or
obligations, as are necessary to construct and develop the
Project. ▇▇▇▇ 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. ▇▇▇▇ 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. ▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ shall have the right to approve
minor change orders which comply with the Construction
Procedures, do not have a material adverse effect on the Project,
do not increase Total Development Costs, do not reduce the amount
available from the Construction Loan for payment of interest on
the Construction Loan, and do not exceed $10,000 as to any one
change order or $350,000 in the aggregate. Unless expressly
approved in writing by all Members, no change order shall be
permitted or approved that would cause total Development Costs to
exceed Total Budgeted Development Costs.
6.9 Retainage. ▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇ shall cause each other Approved
Affiliate Agreement to be enforced in a prudent manner and for
the benefit of the Company. ▇▇▇▇ hereby agrees, for himself and
on behalf of each Person affiliated with ▇▇▇▇ 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 ▇▇▇▇ under this Agreement, the
Company shall have the right to terminate any or all of the
Approved Affiliate Agreements; (iii) an uncured default by ▇▇▇▇
or any person affiliated with ▇▇▇▇ under an Approved Affiliate
Agreement shall constitute a default by ▇▇▇▇ under this
Agreement; and (iv) ▇▇▇▇ shall defend, indemnify and hold the
Company harmless with respect to the effects of any default by
any Person affiliated with ▇▇▇▇ under such Approved Affiliate
Agreements, including, without limitation, any mechanics liens
with respect to claims under any Approved Affiliate Agreements.
6.11 Warranty by ▇▇▇▇. 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, ▇▇▇▇
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 ▇▇▇▇ 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 ▇▇▇▇ or a Person
affiliated with ▇▇▇▇ and was not disclosed to WPHC or was
intentionally concealed by ▇▇▇▇ or such affiliated Person, then
▇▇▇▇ shall promptly take such action as may be necessary at
▇▇▇▇'▇ sole expense to correct such defective work. WPHC shall
report to ▇▇▇▇ 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 ▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇
(but only as long as ▇▇▇▇ is a Manager and a Member of the
Company) shall each be additional named insureds on all such
policies and renewals. ▇▇▇▇ hereby irrevocably appoints WPHC as
▇▇▇▇'▇ 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 ▇▇▇▇,
such power of attorney to take effect immediately upon
withdrawal, Removal or resignation of ▇▇▇▇ as Manager of the
Company and member of the LLC, and ▇▇▇▇ agrees that such power
shall be coupled with an interest and shall survive the
disability or death of ▇▇▇▇. Each policy shall provide that it
will not be modified or canceled without thirty (30) days prior
written notice to WPHC. ▇▇▇▇ 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, ▇▇▇▇
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 ▇▇▇▇ under
this Agreement are personal recourse obligations of ▇▇▇▇, as
limited by Section 14.1.3 of this Agreement, for which ▇▇▇▇ shall
be fully responsible to the Company and WPHC.
6.14 Force Majeure. ▇▇▇▇ shall not be liable for delay in
performance of his obligations under this Agreement to the extent
such failure or delay results solely from an event of Force
Majeure, and in no event shall any delay for an event of Force
Majeure exceed one hundred twenty (120).
6.15 Limitations of ▇▇▇▇'▇ Authority. Anything to the
contrary herein notwithstanding, ▇▇▇▇ 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
▇▇▇▇ except as specified above;
6.15.4 to modify the Construction Loan documents or
any agreement with any affiliate of ▇▇▇▇ 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. ▇▇▇▇
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 ▇▇▇▇
shall make either a Development Deficit Payment or an Operating
Deficit Payment equal to one-half of the amount of such Pre-
Existing Environmental Condition Liability. This provision is
solely for the benefit of the members and no other Person shall
have the right to rely on or enforce this provision. A Pre-
Existing Environmental Condition Liability shall not be satisfied
from Net Operating Income.
ARTICLE 7
COMPENSATION TO ▇▇▇▇
In consideration of the performance by ▇▇▇▇ of his
obligations under Article 6 of this Agreement, the Company shall
pay ▇▇▇▇ 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. ▇▇▇▇ shall receive a
development management fee equal to $1,000 per unit. Such
development management fee shall be payable from monthly draws on
the Construction Loan, on a percentage of completion basis as
certified by the Construction Consultant.
7.2 Construction Management Fee. Contractor shall receive
a construction management fee under the construction management
agreement to be executed at or before the Construction Loan
Closing equal to $2,000 per unit, payable from monthly draws on
the Construction Loan based on percentage of completion as
certified by the Construction Consultant as certified by the
Construction Consultant, minus $49,000. All amounts paid to
Contractor under the construction management agreement described
in Section 5.2.6 above shall be applied against and reduce the
amount due under this Section 7.2.
7.3 Construction Loan Guarantee Fee. ▇▇▇▇ shall receive a
construction loan guarantee fee equal to 1.5% of the final
committed loan amount of the Construction Loan, payable at the
Construction Loan Closing from a draw on the Construction Loan.
7.4 Cost Savings Fee. The Partnership shall pay ▇▇▇▇ at
Final Closing a cost savings fee equal to fifty percent (50%) of
Cost Savings, if any. ▇▇▇▇ 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. ▇▇▇▇ shall receive an incentive fee, to
be calculated and paid in accordance with Exhibit P attached
hereto.
7.6 Conditions to Payment of Fees; Right of Offset. Each
payment of fees described in this Article 7 shall be conditioned
upon there being no uncured event of default by ▇▇▇▇ under this
Agreement or any Approved Affiliate Agreement. All fees except
the Incentive Fee and any fees paid pursuant to the
Infrastructure Improvements Agreement(s) will be included in the
Final Project Budget to be approved by WPHC. With respect to
fees payable prior to Final Closing, if the Construction Loan
does not provide a source of funding for such fees, then payment
of such fees shall be deferred until the later of the date(s) the
Construction Loan permits such funding or until the Final
Closing. All fees payable to ▇▇▇▇ 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 ▇▇▇▇ and for any
Development Deficits and Operating Deficits. In the event of the
withdrawal, resignation or Removal of ▇▇▇▇ as a Member and
Manager prior to the Final Closing Date, except in the case of
Removal of ▇▇▇▇ due to ▇▇▇▇ 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 ▇▇▇▇, ▇▇▇▇ shall be entitled to
fees, except the Incentive Fee, fully earned and accrued through
the date of his Removal when and as such fees are otherwise
payable pursuant to this Agreement, subject to the foregoing
right of offset and provided that WPHC has been fully compensated
for its out of pocket expenses with respect to the Project. In
no event shall the Removal of ▇▇▇▇ accelerate the due date for
any fees earned by ▇▇▇▇ during the period prior to his Removal.
ARTICLE 8
FINAL CLOSING
8.1 Conditions to Final Closing. The obligation of WPHC to
participate in the Final Closing shall be conditioned on all of
the Final Closing Funding Conditions being satisfied either prior
to the Final Closing or concurrently with the Final Closing.
WPHC shall have the right, but not the obligation, to waive one
or more of the Final Closing Funding Conditions. Any Member
shall have the right to require an escrow closing to effect the
Final Closing, and the other Members shall cooperate with regard
to such escrow closing.
8.2 Initiation of Final Closing. Upon ten (10) days prior
written notice from WPHC to ▇▇▇▇, 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 ▇▇▇▇ to WPHC, the Final Closing
shall be held, the Final Closing shall be held on the date
designated by ▇▇▇▇, provided such date for the Final Closing
designated by ▇▇▇▇ shall be not less than thirty-six (36) months
after the Construction Loan Closing Date.
8.3 Actions at the Final Closing. Once the date for the
Final Closing has been designated as provided herein and provided
that the Final Closing Funding Conditions have been satisfied by
▇▇▇▇, the Members shall cooperate to cause a Final Closing at
which the following shall occur:
8.3.1 WPHC shall fund its Final Closing Capital
Contribution.
8.3.2 The Company shall pay the Construction Loan in
full or shall effect a release of ▇▇▇▇ from its guaranty of the
Construction Loan.
8.3.3 Any accrued and unpaid fees due to ▇▇▇▇ shall be
paid, excluding, however the Incentive Fee.
8.3.4 If either WPHC or ▇▇▇▇ has exercised its (his)
option under the Put-Call provisions of Article 16 hereof, the
closing of the transfer of the Interest of ▇▇▇▇ 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 ▇▇▇▇ 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, ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇: (the "Release
Date"): (i) WPHC shall participate in the Final Closing and make
its Final Closing Capital Contribution; (ii) WPHC shall cause
▇▇▇▇ to be released from its guaranty of the Construction Loan;
or (iii) WPHC shall deliver to ▇▇▇▇ an indemnity agreement
executed by WRPT, wherein WRPT agrees to indemnify ▇▇▇▇ against
any loss or liability it may suffer as a guarantor of the
Construction Loan, provided that such guaranty shall be subject
to a right of offset in favor of WRPT and WPHC with respect to
any liability of WRPT to WPHC arising under this Agreement (the
form of such indemnity agreement shall be reasonably acceptable
to ▇▇▇▇). 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 ▇▇▇▇.
ARTICLE 9
ALLOCATIONS
9.1 Profits and Losses. Subject to the special allocation
provisions in this Article 9, the Members' distributive shares of
the Profits or Losses of the Company for any Fiscal Year shall be
as follows:
9.1.1 Profits. Profits shall be allocated to each
Member pro rata in proportion with such Member's respective
Percentage Interest.
9.1.2 Losses. Losses shall be allocated to each
Member pro rata in proportion to such Member's respective
Percentage Interest.
9.2 General Provisions.
9.2.1 Except as otherwise provided in this Agreement,
the Members' distributive shares of all items of Company income,
gain, loss, and deduction are the same as their distributive
shares of Profits and Losses.
9.2.2 The Managers shall allocate Profits, Losses, and
other items properly allocable to any period using any method
permitted by Code Section 706 and the Regulations thereunder.
9.2.3 To the extent permitted by Regulations Section
1.704-2(h) and Section 1.704-2(i)(6), the Managers shall endeavor
to avoid treating distributions of Operating Cash Flow and of
Sales and Refinancing Cash Flow as being from the proceeds of a
Nonrecourse Liability or a Partner Nonrecourse Debt (as defined
in Regulation Sections 1.704-2(b)(3) and 1.704-2(b)(4),
respectively).
9.2.4 If there is a change in any Member's Interest in
the Company during a Fiscal Year, each Member's distributive
share of Profits or Losses or any item thereof for such Fiscal
Year, shall be determined by any method prescribed by Code
Section 706(d) or the Regulations thereunder that takes into
account the varying Interests of the Members in the Company
during such Fiscal Year.
9.2.5 The Members agree to report their shares of
income and loss for federal income tax purposes in accordance
with the provisions of this Agreement.
9.3 Special Provisions.
9.3.1 Minimum Gain Chargeback. Notwithstanding any
other provision of this Article 9, if there is a net decrease in
Partnership Minimum Gain (as defined in Regulation Section
1.704-2(d)) during any Fiscal Year, then each Member shall be
allocated such amount of income and gain for such year (and
subsequent years, if necessary) determined under and in the
manner required by Regulation Section 1.704-2(f) as is necessary
to meet the requirements for a minimum gain chargeback as
provided in that Regulation.
9.3.2 Partner Nonrecourse Debt Minimum Gain
Chargeback. Notwithstanding any other provision of this Article
9, except Section 9.3.1, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain (as defined in accordance with
Regulation Section 1.704-2(i)(3)) attributable to a Partner
Nonrecourse Debt (as defined in Regulation Section 1.704-2(b)(4))
during any Fiscal Year, any Member who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt determined in accordance with Regulation Section
1.704-2(i)(5), shall be allocated such amount of income and gain
for such year (and subsequent years, if necessary) determined
under and in the manner required by Regulation Section 1.704-
2(i)(4) as is necessary to meet the requirements for a chargeback
of Partner Nonrecourse Debt Minimum Gain as is provided in that
Regulation.
9.3.3 Qualified Income Offset. If a Member
unexpectedly receives any adjustment, allocation or distribution
described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), items of Company income and gain shall be specifically
allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to this Section
9.3.3 shall be made only if and to the extent that such Member
would have an Adjusted Capital Account Deficit after all other
allocations provided for in Section 9.1 and this Section 9.3 of
this Agreement tentatively have been made as if this Section
9.3.3 were not in this Agreement.
9.3.4 Limitation on Losses. Notwithstanding anything
else contained in this Agreement, Losses allocated to any Member
pursuant to Section 9.1 of this Agreement shall not exceed the
maximum amount of Losses that may be allocated without causing
such Member to have an Adjusted Capital Account Deficit at the
end of the Fiscal Year for which the allocation is made.
9.3.5 Code Section 754 Adjustment. To the extent that
an adjustment to the Basis of any asset pursuant to Code Section
734(b) or Code Section 743(b) is required to be taken into
account in determining Capital Accounts as provided in Regulation
Section 1.704-1(b)(2)(iv)(m), the adjustment shall be treated (if
an increase) as an item of gain or (if a decrease) as an item of
loss, and such gain or loss shall be allocated to the Members
consistent with the allocation of the adjustment pursuant to such
Regulation.
9.3.6 Nonrecourse Deductions. Nonrecourse Deductions
(as determined under Regulation Section 1.704-2(c)) for any
Fiscal Year shall be allocated among the Members in proportion to
their Percentage Interests.
9.3.7 Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions (as defined under Regulation Section
1.704-2(i)(2)) shall be allocated pursuant to Regulation Section
1.704-2(i) to the Member who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which it is
attributable.
9.3.8 Purpose and Application. The purpose and the
intent of the special allocations provided for in this Section
9.3 are to comply with the provisions of Regulation Sections
1.704-1(b) and 1.704-2, and such special allocations are to be
made so as to accomplish that result. However, to the extent
possible, the Managers, in allocating items of income, gain,
loss, or deduction among the Members, shall take into account the
special allocations in such a manner that the net amount of
allocations to each Member shall be the same as such Member's
distributive share of Profits and Losses would have been had the
events requiring the special allocations not taken place. The
Managers shall apply the provisions of this Section 9.3 in
whatever order the Managers reasonably believe will minimize any
economic distortion that otherwise might result from the
application of the special allocations.
9.4 Code Section 704(c) Allocations. Solely for federal,
state, and local income tax purposes and not with respect to
determining any Member's Capital Account, distributive shares of
Profits, Losses, other items, or distributions, a Member's
distributive share of income, gain, loss, or deduction with
respect to any Property (other than money) contributed to the
Company, or with respect to any Property the Asset Value of which
was adjusted as provided in Article 1(g)(iii) of this Agreement
upon the acquisition of an additional Interest in the Company by
a new Member or existing Member in exchange for a Capital
Contribution, shall be determined in accordance with Code Section
704(c) and the Regulations thereunder or with the principles of
such provisions.
9.5 Allocations Relating to Taxable Issuance of Interest.
Any income, gain, loss or deduction realized by the Company as a
direct or indirect result of the issuance of an Interest by the
Company (the "Issuance Items") shall be allocated among the
Members so that, to the extent possible, the net amount of such
Issuance Items, together with all other allocations under this
Agreement to each Member, shall be equal to the net amount that
would have been allocated to each such Member if the Issuance
Items had not been realized.
ARTICLE 10
DISTRIBUTIONS
10.1 Cash Flow. Except when the Company is in the process
of dissolution and winding up as provided in Article 18 of this
Agreement and except as otherwise provided in Section 10.3
hereof, the Managers shall determine and distribute the Cash Flow
on a quarterly basis, less reserves determined by the Managers
for future expenditures, to the Members in accordance with their
respective Percentage Interests. Notwithstanding the foregoing,
no distributions shall be made at or prior to the completion of
the Final Closing without the consent of WPHC.
10.2 Division Among Members. If there is a change in a
Member's Interest in the Company during a Fiscal Year, any
distributions thereafter shall be made so as to take into account
the varying Interests of the Members during the period to which
the distribution relates in any manner chosen by the Managers
that is provided in Code Section 706(d) and the Regulations
thereunder.
10.3 Special Distributions to WPHC.
10.3.1 Immediately after the Construction Loan
Closing, the Company shall make a distribution to WPHC as a
return of its capital in the amount allowed for such purpose
under the terms of the Construction Loan.
10.3.2 Immediately after the closing of the sale of
the Infrastructure Land, the Company shall make a distribution to
WPHC as a return of its capital in the amount of the net proceeds
from the sale of the Infrastructure Land and any related
improvements or property.
ARTICLE 11
BOOKS, RECORDS, AND ACCOUNTING
11.1 Books and Records. The Company shall maintain at its
principal place of business books of account that accurately
record all items of income and expenditure relating to the
business of the Company and that accurately and completely
disclose the results of the operations of the Company. Such
books of account shall be maintained according to generally
accepted accounting principles consistently applied and, unless
otherwise agreed by the Members, on the basis of the Fiscal Year.
Each Member shall have the right to inspect, copy, and audit the
Company's books and records at any time during normal business
hours without notice to any other Member.
11.2 Reports. Within thirty (30) days after the close of
each Fiscal Year, the Managers shall furnish to each Member a
copy of the income and loss statement and of the balance sheet of
the Company for such Fiscal Year, and a statement disclosing all
allocations of income, gain, loss, or deduction among the
Members and distributions made by the Company to the Members
during such year. The statements of income and loss and balance
sheets to be delivered hereunder may be unaudited in the sole
discretion of WPHC.
11.3 Tax Returns. The Managers shall cause independent
certified public accountants of the Company to prepare and timely
file all income tax and other tax returns of the Company. The
Managers shall furnish to each Member a copy of all such returns
together with all schedules thereto and such other information
which each Member may request in connection with such Member's
own tax affairs.
11.4 Special Basis Adjustment. At the request of either the
transferor or transferee in connection with a transfer of an
Interest in the Company approved by the Members pursuant to
Article 16 of this Agreement, the Managers shall cause the
Company to make the election provided for in Code Section 754 and
maintain a record of the adjustments to Basis of Property
resulting from that election. Any such transferee shall pay all
costs incurred by the Company in connection with such election
and the maintenance of such records.
11.5 Tax Matters Partner.
11.5.1 WPHC is hereby designated the Tax Matters
Partner (as defined in the Code) on behalf of the Company.
11.5.2 Without the unanimous consent of the Members,
the Tax Matters Partner shall have no right to extend the statute
of limitations for assessing or computing any tax liability
against the Company or the amount of any Company tax item.
11.5.3 If the Tax Matters Partner elects to file a
petition for readjustment of any Company tax item (in accordance
with Code Section 6226(a)) such petition shall be filed in the
United States Tax Court unless the Members unanimously agree
otherwise.
11.5.4 The Tax Matters Partner shall, within ten (10)
business days of receipt thereof, forward to each Member a
photocopy of any correspondence relating to the Company received
from the Internal Revenue Service. The Tax Matters Partner
shall, within ten (10) business days thereof, advise each Member
in writing of the substance of any conversation held with any
representative of the Internal Revenue Service and of any
petition for readjustment.
11.5.5 Any reasonable costs incurred by the Tax
Matters Partner for retaining accountants and/or lawyers on
behalf of the Company in connection with any Internal Revenue
Service audit of the Company shall be expenses of the Company.
Any accountants and/or lawyers retained by the Company in
connection with any Internal Revenue Service audit of the Company
shall be selected by the Tax Matters Partner and the fees
therefor shall be expenses of the Company.
11.6 Bank Accounts. The Managers shall establish and
maintain one or more separate accounts in the name of the Company
in one or more federally insured banking institutions acceptable
to all the Members into which shall be deposited all funds of the
Company and from which all Company expenditures and other
disbursements shall be made. At least one such account shall be
maintained at First Interstate Bank. Unless otherwise decided by
the Managers, funds may be withdrawn from such accounts on the
signatures of all of the Managers, collectively and not
individually, or such other Person or Persons that the Managers
shall determine, provided, however, that two signatures shall be
required on all checks.
ARTICLE 12
MANAGEMENT
12.1 Management. The business and affairs of the Company
shall be managed by the designated Managers. Subject to the
terms and limitations of this Agreement, the Managers shall
direct, manage and control the business of the Company to the
best of such Managers' ability with reasonable diligence and
prudence and, subject to the terms and limitations of this
Agreement, shall have the authority, power and discretion to make
any and all decisions and to do any and all things which the
Managers shall deem to be reasonably required in light of the
Company's business and objectives.
12.2 Number, Tenure and Qualifications. The number of
Managers of the Company and the length of the term of each
Manager shall be fixed from time to time by the Members who hold
a Majority In Interest. Each Manager shall hold office until
removed pursuant to Section 12.12 hereof or until such Manager's
successor shall have been selected. Managers need not be
residents of the State of Colorado or Members of the Company.
12.3 Appointment of ▇▇▇▇ as Manager. ▇▇▇▇ 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, ▇▇▇▇ shall serve
as Manager for the duration of his initial term unless and until
removed in accordance with the terms of this Agreement.
12.4 Certain Powers of Managers. Without limiting the
generality of Section 12.1, the Managers shall have the power and
authority, upon the unanimous agreement of all Managers, on
behalf of the Company:
12.4.1 To cause the Company to develop the Project
in accordance with the Plans and Specifications;
12.4.2 To purchase liability and other insurance to
protect the Company's Property and business;
12.4.3 To hold and own any and all Company Property
on behalf of and in the name of the Company;
12.4.4 To invest any Company funds temporarily in
time deposits with federally insured financial institutions or
short-term United States governmental obligations;
12.4.5 Subject to the provisions of this Agreement,
to employ accountants, legal counsel, managing agents or other
experts to perform services for the Company and to compensate
them from Company funds; and
12.4.6 To do and perform all other acts as may be
necessary or appropriate to the conduct of the Company's ordinary
course of business.
Unless authorized to do so by this Agreement or by the
Managers of the Company, no Member, agent, or employee of the
Company shall have any power or authority to bind the Company in
any way, to pledge its credit or to render it liable pecuniarily
for any purpose. However, the Managers may act by a duly
authorized attorney-in-fact.
12.5 Member Approval of Certain Acts. The Managers shall
have the power and authority, but only upon the unanimous written
consent of all Members, on behalf of the Company:
12.5.1 to amend or modify any of the documents
executed in connection with the Construction Loan at the
Construction Loan Closing or to waive any rights under such
documents;
12.5.2 to borrow money or incur any indebtedness
(other than the Construction Loan) or to grant any liens on any
assets of the Company;
12.5.3 to enter into any agreements with affiliates
of the Managers other than the Approved Affiliate Agreements;
12.5.4 to amend or modify the Approved Affiliate
Agreements or to waive any rights thereunder;
12.5.5 except for the Management Agreement, to
execute any agreement which will impose any obligations on the
Company which will survive the Final Closing Date; and
12.5.6 to sell or dispose of any portion of the
Project or any other material assets of the Company.
12.6 Liability for Certain Acts. A Manager of the Company
shall perform such Manager's duties, including duties as a member
of any committee upon which such Manager may serve, in good
faith, in a manner such Manager reasonably believes to be in the
best interests of the Company, and with such care as an
ordinarily prudent person in a like position would use under
similar circumstances. A Person who so performs such Person's
duties shall not have any liability by reason of being or having
been a Manager of the Company except as otherwise provided in
this Agreement. Nothing in this Section 12.6 shall limit ▇▇▇▇'▇
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 ▇▇▇▇ has fully and timely
performed his obligations under this Agreement, the Company shall
indemnify ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇.
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. ▇▇▇▇ 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 ▇▇▇▇ as the Manager and as a Member ("Removal") and
substitute WPHC as Manager or appoint a new Manager upon any of
the following (a "Removal Event"):
12.12.1.1 If the Initial Closing has not occurred
by May 15, 1995;
12.12.1.2 If the Construction Loan Closing has not
occurred by the Construction Loan Closing Outside Date;
12.12.1.3 Delays in construction not caused by
Force Majeure which result in the Project falling behind schedule
by six (6) months or more based on the Construction Schedule
approved by the parties prior to the Construction Loan Closing,
or delays in construction, whether or not caused by Force Majeure
which cause WPHC to reasonably conclude that the Project will not
or cannot be completed by the Outside Date;
12.12.1.4 The Project having incurred Development
Deficits in excess of $250,000 which have not been funded by
Development Deficit Payments from ▇▇▇▇ within thirty (30) days of
notice from WPHC requiring such funding;
12.12.1.5 The Project having incurred any
Operating Deficits which have not been funded by Operating
Deficit Payments from ▇▇▇▇ within thirty (30) days of notice from
WPHC requiring such funding;
12.12.1.6 The death or disability of ▇▇▇▇;
12.12.1.7 If the Final Closing has not occurred by
the Outside Date;
12.12.1.8 If ▇▇▇▇ shall be in Material Default
▇▇▇▇ 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, ▇▇▇▇ does not commence within such thirty (30) days and
diligently proceed to cure such breach and actually completes
such cure in any event within ninety (90) days after such notice;
or
12.12.1.9 If any breach or default under the
Construction Loan is not cured within any applicable cure period
provided for under the Construction Loan.
12.12.2 Documentation In Connection With Removal.
Upon Removal of ▇▇▇▇, ▇▇▇▇ shall cease to have any interest in
the Company and ▇▇▇▇ shall cease to be a Member of the Company.
Such removal shall be effective without the necessity of the
execution of any documents by ▇▇▇▇. Nevertheless, ▇▇▇▇ shall
promptly execute such assignment and transfer documents as WPHC
may reasonably request to evidence the Removal of ▇▇▇▇.
12.12.3 Effect of Removal on Certain Obligations of
▇▇▇▇.
12.12.3.1 If ▇▇▇▇ 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. ▇▇▇▇ shall be
liable, however, for any breach of any representation or warranty
which occurred prior to his Removal.
12.12.3.2 If ▇▇▇▇ is removed after the
Construction Loan Closing Date, ▇▇▇▇ shall not be released from
his ongoing performance obligations under Sections 6.3 or 6.10 or
Article 13 of this Agreement and ▇▇▇▇ shall be liable to WPHC for
damages resulting from any breach of his obligations arising
under Sections 6.1, 6.2, 6.3, 6.6, 6.7, 6.10 or 6.11 or Article
13 of this Agreement, including without limitation, damages
relating to the period after ▇▇▇▇'▇ Removal. WPHC shall have the
obligation to make reasonable efforts to mitigate its damages
following a Removal of ▇▇▇▇ after the Construction Loan Closing
Date.
12.13 Death or Disability of ▇▇▇▇. Prior to the
Construction Loan Closing, ▇▇▇▇, WPHC and The ▇▇▇▇ 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
▇▇▇▇, at the written request of WPHC, The ▇▇▇▇ Company shall
acquire from ▇▇▇▇ (or his estate) the entire interest of ▇▇▇▇ in
the Company, The ▇▇▇▇ Company shall be admitted as the Managing
Member, and The ▇▇▇▇ Company shall assume in writing all of the
obligations of the Managing Member hereunder; (ii) ▇▇▇▇ (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 ▇▇▇▇'▇ Removal; and (iii) if WPHC fails to
exercise its option under this Section 12.13 to cause The ▇▇▇▇
Company to be substituted as the Managing Member within ninety
(90) days of the date of Removal, then such option shall lapse
and ▇▇▇▇ (or his estate) shall be released from any obligation
hereunder related to the period after his withdrawal in
connection with his death or disability.
12.14 Vacancies. Any vacancy occurring for any reason in
the number of Managers of the Company may be filled by WPHC or a
Manager appointed by WPHC.
12.15 Prohibition Against Publicly Traded Partnership. The
Manager shall take all action necessary to prevent the Company
from qualifying as a publicly traded partnership within the
meaning of Code Section 7704, including, without limitation,
limiting the number of Members to less than 500 in compliance
with the safe harbor under IRS Notice 88-75.
ARTICLE 13
REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 Representations and Warranties of Each Member. Each
Member hereby represents and warrants as of the date hereof as
follows:
13.1.1 Such Member, if other than an individual, is a
duly organized entity under the laws of its state of organization
and has the requisite power and authority to enter into and carry
out the terms of this Agreement, and all required action has been
taken to authorize such Member to execute and consummate this
Agreement.
13.1.2 Such Member has been duly authorized to enter
into this Agreement, and such Member is not a foreign person as
defined under Code Section 1445(f)(3).
13.1.3 To the best of such Member's knowledge, neither
the execution of nor the compliance with this Agreement has
resulted or will result in a default under, or will create, any
encumbrance on the Property, and there is no action pending or
threatened which questions the validity or enforceability of this
Agreement as to such Member.
13.1.4 The Interests to be acquired hereunder are
being acquired by the Member for investment only and for such
Member's own account; no Person other than the Member has or
shall have any beneficial interest in the Interests; and the
Member has no present intention of distributing, reselling or
assigning the Interests.
13.1.5 Such Member understands that the Interests have
not been registered under the Securities Act of 1933, as amended
(the "1933 Act"), or under the laws of any jurisdiction; that the
Company does not intend and is under no obligation to so register
the Interests; that the Interests may not be sold, assigned,
pledged or otherwise transferred except upon delivery to the
Company of an opinion of counsel satisfactory to the Managers
that registration under the 1933 Act is not required for such
transfer, or the submission to the Managers of such other
evidence as may be satisfactory to the Managers, to the effect
that any such transfer will not be in violation of the 1933 Act,
applicable state securities laws or any rule or regulation
promulgated thereunder; and that legends to the foregoing effect
will be placed on all documents evidencing the Interests. The
Member understands that the foregoing does not limit other
restrictions regarding the transfer of its Interests set forth in
this Agreement or in the Act.
13.1.6 Such Member, either itself or through its
shareholders, partner or advisors, is sophisticated and
experienced in investment matters, and, as a result, is in a
position to evaluate the merits and risks of an investment in the
Company.
13.1.7 Such Member is an "Accredited Investor" as
defined in Regulation D promulgated under the 1933 Act.
13.1.8 Except as may be disclosed in the Environmental
Report, each Member represents that it does not have current
actual knowledge of any Pre-existing Environmental Condition.
13.2 Representations, Warranties and Covenants of ▇▇▇▇. 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, ▇▇▇▇ hereby represents, warrants and covenants to the
Company and the Members as follows:
13.2.1 To the best of ▇▇▇▇'▇ 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 ▇▇▇▇ shall use his best efforts to cause the
approval by ▇▇▇▇▇▇▇ County and any other governmental authority
whose approval may be required of a site development plan for the
Land (the "Land Use Approval"), which approval will permit as a
matter of right the construction of a multi-family project having
not less than 456 units on the Project Land and the construction
of the Infrastructure pursuant to the Infrastructure
Agreement(s).
13.2.3 ▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ has made such material registrations,
qualifications, designations, declarations and filings required
(collectively, the "Approvals") as determined or as may be
determined necessary by ▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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, ▇▇▇▇ 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.
▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇, 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 ▇▇▇▇'▇ 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 ▇▇▇▇'▇ 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 ▇▇▇▇'▇ 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 ▇▇▇▇'▇ knowledge and based on
▇▇▇▇'▇ 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 ▇▇▇▇'▇ knowledge, the Land is
or will be prior to Final Closing benefitted by such easements of
unlimited duration as are necessary for the operation of the
Project. No additional easements will, subsequent to the Final
Closing, be required for the provision of utilities, access,
egress and drainage to or for the benefit of the Land or the
Project in connection with the use and operation of the Land as
the Project contemplated by this Agreement.
13.2.11 ▇▇▇▇ 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 ▇▇▇▇▇▇▇ 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 ▇▇▇▇'▇ knowledge," "to the best of his
knowledge" and "to the best knowledge of ▇▇▇▇" shall mean and
include such information as is actually known to ▇▇▇▇ or should
have been known to him upon diligent inquiry or of which ▇▇▇▇ 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, ▇▇▇▇
shall immediately notify WPHC in writing and such representation,
warranty or covenant shall be deemed remade by ▇▇▇▇ as of the
date of such notification based upon such new information.
13.2.13 ▇▇▇▇, all Affiliates of ▇▇▇▇ and all other
parties related to or affiliated with ▇▇▇▇ or with such
Affiliates shall receive no fees, compensation or other profit or
share of cost savings with respect to the Project except the
amounts set forth in Article 7 hereof or in any Approved
Affiliate Agreement. In the event of any breach of this Section
13.2.14, any amount improperly received by such parties shall be
immediately paid over to the Company, together with interest
thereon from the date received at twelve percent (12%) per annum,
compounded monthly.
13.2.14 ▇▇▇▇ 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 ▇▇▇▇.
13.3 General Representation. No representation, warranty or
statement of ▇▇▇▇ in this Agreement or in any document,
certificate or schedule furnished or to be furnished by ▇▇▇▇ 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 ▇▇▇▇ contained in this Article 13
shall survive the resignation or withdrawal of ▇▇▇▇ 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 ▇▇▇▇, such period
shall be extended to three (3) years after the Final Closing
Date. ▇▇▇▇ shall defend, indemnify and hold harmless WPHC
against a breach of any of the foregoing representations,
warranties and covenants and any damage, loss or claim caused
thereby, including reasonable attorneys' fees and costs and
expenses of litigation and collection.
ARTICLE 14
RIGHTS AND OBLIGATIONS OF MEMBERS
14.1 Limitation of Liability.
14.1.1 Each Member's liability to Persons other than
the other Members shall be limited as set forth in the Act and
other applicable law.
14.1.2 No officer, director or shareholder of WPHC
shall be bound by or have any personal liability hereunder or
under any document, agreement, understanding or arrangement
relating to this transaction. The parties to this Agreement
shall look solely to the assets of WPHC for satisfaction of any
liability of WPHC in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to this
transaction and will not seek recourse or commence any action
against any of the directors, officers or shareholders of WPHC or
any of their personal assets for the performance or payment of
any obligation hereunder or thereunder. The foregoing shall also
apply to any and all future documents, agreements,
understandings, arrangements and transactions between the parties
hereto with respect to the Project or this Agreement.
14.1.3 The Members acknowledge that ▇▇▇▇ 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. ▇▇▇▇
shall make no further transfers to either of such trusts as long
as all or any part of ▇▇▇▇'▇ obligations under this Agreement
remain outstanding. In addition to the foregoing, the Members
hereby agree that the personal residence of ▇▇▇▇ located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ is not available to support the
obligations of ▇▇▇▇ under this Agreement and agree not to assert
any right to recover against such personal residence, and the
Members hereby disclaim, quitclaim, release and relinquish any
right to proceed against such personal residence for amounts owed
by ▇▇▇▇ under this Agreement.
14.2 Company Debt Liability. A Member will not personally
be liable for any debts or losses of the Company, except as
provided herein or in the Act.
14.3 List of Members. Upon written request of any Member,
the Managers shall provide a list showing the names, addresses
and Percentage Interests of all Members in the Company.
14.4 Company Books. The Managers shall maintain and
preserve, during the term of the Company, and for five (5) years
thereafter, all accounts, books, and other relevant Company
documents. Upon reasonable request, each Member shall have the
right, during ordinary business hours, to inspect and copy such
Company documents at the Member's expense.
14.5 Priority and Return of Capital. Except as specifically
provided herein, no Member shall have priority over any other
Member, either as to the return of Capital Contributions or as to
Profits, Losses or distributions; provided that this Section
shall not apply to loans (as distinguished from Capital
Contributions) which a Member may make to the Company.
14.6 Outside Activity.
14.6.1 Except for the limitations on the activities
of ▇▇▇▇ and certain Affiliates set forth herein, each Member,
including but not limited to the Manager, may engage in any
capacity (as owner, employee, consultant, or otherwise) in any
activity, whether or not such activity competes with or is
benefitted by the business of the Company, without being liable
to the Company or the other Members for any income or profit
derived from such activity.
14.6.2 From the date hereof until the earlier of
November 1, 1996 or the date that ▇▇▇▇ ceases to be a Member of
the Company, neither ▇▇▇▇ nor any other Restricted Party shall
construct or commence construction of any Multi-Family Project
located in the Denver metropolitan area (including without
limitation Boulder). The restrictions under this Section 14.6.2
shall not apply to the existing "Breakers" project, which is
located in Denver, or to any subsequent phases of the Breakers,
or to the Village at the Bear project, which is located in
Jefferson County, Colorado, and is owned by Village At Bear Creek
LLC.
14.6.3 From the date hereof until the date that ▇▇▇▇
ceases to be a Member of the Company, neither ▇▇▇▇ nor any other
Restricted Party shall purchase, construct or commence
construction of any Multi-Family Project any part of which Multi-
Family Project is located within 3 miles of any portion of the
Land.
14.6.4 "Restricted Parties" shall mean ▇▇▇▇, The
▇▇▇▇ 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. ▇▇▇▇
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 ▇▇▇▇. ▇▇▇▇ shall comply
with the restrictions set forth in this Section 14.6 in good
faith and shall not employ any artifice or device to evade the
intent of this provision. The restrictions in Subsections 14.6.2
and 14.6.3 are cumulative, and shall apply to a Restricted Party
as an owner for its own account or as a developer, construction
manager, general contractor or partner of any other Person. This
Section 14.6 shall not prohibit any Restricted Party from
conducting pre-development activities in connection with a Multi-
Family Project, provided that construction activity (including
any activity for which a building permit is required) has not
commenced on such Multi-Family Project.
ARTICLE 15
MEETINGS OF MEMBERS
15.1 Annual Meeting. The annual meeting of the Members
shall be held on the first business day of May or at such other
time as shall be determined by resolution of the Members,
commencing with the year 1996, for the purpose of the
transaction of such business as may come before the meeting.
15.2 Special Meetings. Special meetings of the Members, for
any purpose or purposes, unless otherwise prescribed by statute,
may be called by any Manager or by any Member or Members holding
at least 1% of the Percentage Interests.
15.3 Place of Meetings. The Members may designate any
place, either within or outside the State of Colorado, as the
place of meeting for any meeting of the Members. If no
designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal business office of
the Company in the State of Colorado.
15.4 Notice of Meetings. Except as otherwise provided for
herein, written notice stating the place, day and hour of the
meeting and the purpose or purposes for which the meeting is
called shall be delivered not less than ten (10) nor more than
fifty (50) days before the date of the meeting, either personally
or by mail, by or at the direction of the Managers or Person
calling the meeting, to each Member entitled to vote at such
meeting.
15.5 Meeting of all Members. If all of the Members shall
meet at any time and place, either within or outside of the State
of Colorado, and consent to the holding of a meeting at such time
and place, such meeting shall be valid without call or notice,
and at such meeting lawful action may be taken.
15.6 Record Date. For the purpose of determining Members
entitled to notice of or to vote at any meeting of Members or any
adjournment thereof, or Members entitled to receive payment of
any distribution, or in order to make a determination of Members
for any other purpose, the date on which notice of the meeting is
sent or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record
date for such determination of Members. When a determination of
Members entitled to vote at any meeting of Members has been made
as provided in this Section, such determination shall apply to
any adjournment thereof.
15.7 Quorum. Members holding at least a Majority In
Interest, represented in person or by proxy, shall constitute a
quorum at any meeting of Members. In the absence of a quorum at
any such meeting, a majority of the Percentage Interests so
represented may adjourn the meeting from time to time for a
period not to exceed sixty (60) days without further notice.
However, if the adjournment is for more than sixty (60) days, or
if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be
given to each Member of record entitled to vote at the meeting.
At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. The
Members present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal during such meeting of Members owning that number of
Percentage Interests whose absence would cause less than a
quorum.
15.8 Manner of Acting. If a quorum is present, the
affirmative vote of Members holding at least a Majority In
Interest and entitled to vote on the subject matter shall be the
act of the Members, unless the vote of a greater or lesser
proportion or number is otherwise required by the Act, by the
Articles of Organization, or by this Agreement.
15.9 Proxies. At all meetings of Members, a Member may vote
in person or by proxy executed in writing by the Member or by a
duly authorized attorney-in-fact. Such proxy shall be filed with
the Managers of the Company before or at the time of the meeting.
No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
15.10 Action by Members Without a Meeting. Action required
or permitted to be taken at a meeting of Members may be taken
without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by each
Member entitled to vote and delivered to the Managers of the
Company for inclusion in the minutes or for filing with the
Company records. Action taken under this Section 15.10 is
effective when all Members entitled to vote have signed the
consent, unless the consent specifies a different effective date.
The record date for determining Members entitled to take
action without a meeting shall be the date the first Member signs
a written consent.
15.11 Voting by Ballot. Voting on any question or in any
election may be by voice vote unless the Managers or any Member
shall demand that voting be by ballot.
15.12 Waiver of Notice. When any notice is required to be
given to any Member, a waiver thereof in writing signed by the
Person entitled to such notice, whether before, at, or after the
time stated therein, shall be equivalent to the giving of such
notice.
ARTICLE 16
TRANSFERABILITY; PUT-CALL PROVISIONS
16.1 Restrictions on Transferability. Except as provided in
Section 16.2 and Section 16.6, no transfer, pledge or assignment
of all or any part of a Member's Interest in the Company
(including the transfer of any rights to receive or share in
profits, losses, income or the return of contributions) shall be
effective unless and until written notice (including the name and
address of the proposed purchaser, transferee, or assignee and
the date of such transfer) has been provided to the Company and
the non-transferring Members approve of the proposed sale, pledge
or assignment of a selling, pledging or assigning Member's
Interest by unanimous written consent, which may be withheld in
their sole discretion.
16.2 Put-Call Rights.
16.2.1 WPHC shall have the option (the "Call Option")
to acquire the Interest of ▇▇▇▇ 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 ▇▇▇▇ fails to timely cure any default by ▇▇▇▇ under this
Agreement. The exercise by WPHC of the Call Option described in
item (i) of this Section is conditioned on WPHC performing its
obligation to make the Final Closing Capital Contribution when
and as required under this Agreement. To exercise its Call
Option, WPHC shall provide written notice of exercise to ▇▇▇▇.
16.2.2 ▇▇▇▇ shall have the right to cause WPHC to
acquire the Interest of ▇▇▇▇ 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 ▇▇▇▇'▇ 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,
▇▇▇▇ 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 ▇▇▇▇ shall assign its Interest in the
Company free and clear of all liens, security interests and
competing claims. ▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇ shall attempt in
good faith to negotiate the fair market value of the Project to
be used in such determination. Each of WPHC and ▇▇▇▇ shall be
entitled to submit the calculation of the Option Price to the
Company's Accountants for verification or auditing. If WPHC and
▇▇▇▇ are unable to determine the Option Price by the Option
Closing Date, then WPHC shall pay ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ shall adjust the Option Price with five (5) business
days after the recalculation of the Option Price. No post-
closing adjustment in the Option Price shall be made for amounts
of $5,000 or less or based on a recalculation made more than
twelve (12) months after the Option Closing Date.
Notwithstanding anything to the contrary herein, the appraised
value of the Project as determined shall be final and shall not
be subject to challenge or recalculation by any Member.
16.4 Right of Offset. Payment of the Option Price shall be
subject to a right of offset in favor of the Company and WPHC
with respect to any claims or damages they may have against ▇▇▇▇.
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
▇▇▇▇. 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) ▇▇▇▇ shall be entitled to rely
exclusively on communications made by WPHC with respect to all
such Decisions, and any communications by a WPHC Permitted
Transferee with respect to a Decision other than through WPHC
shall be invalid, and (III) prior to and as a condition to the
admission of a WPHC Permitted Transferee as a Member, the WPHC
Permitted Transferee shall execute an admission agreement wherein
it agrees to be bound by all the terms of this Agreement,
including without limitation, this Section 16.6.
ARTICLE 17
ADMISSION OF ADDITIONAL MEMBERS
From the date of the formation of the Company, with the
unanimous written consent of the Members, any Person acceptable
to the Members may, subject to the terms and conditions of this
Agreement: (i) become an additional Member in this Company by
the sale of new Interests for such consideration as the Members
by unanimous vote shall determine, or (ii) become a Substitute
Member as a transferee of a Member's Interest or any portion
thereof.
ARTICLE 18
DISSOLUTION AND TERMINATION
18.1 Dissolution.
18.1.1 The Company shall be dissolved upon the
occurrence of any of the following events ("Dissolution Event"):
(a) When the period fixed for the duration of the
Company shall expire;
(b) by the unanimous written agreement of all
Members; or
(c) upon the death, retirement, resignation,
expulsion, removal, bankruptcy, dissolution of a Member or
occurrence of any other event which terminates the continued
membership of a Member in the Company (a "Withdrawal Event"),
unless the business of the Company is continued by the consent of
a majority of the Interests of the remaining Members in the
capital and profits of the Company, as determined in accordance
with Revenue Procedure 94-46 within ninety (90) days after the
termination and there are at least two remaining Members.
18.1.2 As soon as possible following the occurrence of
any of the events specified in this Section effecting the
dissolution of the Company, the appropriate representative of the
Company shall execute a statement of intent to dissolve in such
form as shall be prescribed by the Colorado Secretary of State
and file duplicate originals of the same with the Colorado
Secretary of State's office.
18.2 Effect of Filing of Dissolving Statement. Upon the
filing with the Colorado Secretary of State of a statement of
intent to dissolve, the Company shall cease to carry on its
business, except insofar as may be necessary for the winding up
of its business, but its separate existence shall continue until
articles of dissolution have been filed with the Secretary of
State or until a decree dissolving the Company has been entered
by a court of competent jurisdiction.
18.3 Distribution of Assets Upon Dissolution. In settling
accounts after dissolution, the liabilities of the Company shall
be entitled to payment in the following order:
18.3.1 to creditors, in the order of priority as
provided by law (except to Members on account of their Capital
Contributions);
18.3.2 to Members and former Members in satisfaction
of liabilities for distributions under Section 7-80-601 or 7-80-
603 of the Act; and
18.3.3 to Members pro rata in accordance with the
positive balances in their Capital Accounts after taking into
account all adjustments to the Capital Accounts for all periods.
18.4 Articles of Dissolution. When all debts, liabilities
and obligations have been paid and discharged or adequate
provisions have been made therefor and all of the remaining
Property and assets have been distributed to the Members,
articles of dissolution shall be executed in duplicate and
verified by the Person signing the articles, which articles shall
set forth the information required by the Act.
18.5 Filing of Articles of Dissolution.
18.5.1 Duplicate originals of such articles of
dissolution shall be delivered to the Colorado Secretary of
State.
18.5.2 Upon the filing of the articles of dissolution,
the existence of the Company shall cease, except for the purpose
of suits, other proceedings and appropriate action as provided in
the Act. The Managers shall thereafter be trustees for the
Members and creditors of the Company and as such shall have
authority to distribute any Property of the Company discovered
after dissolution, convey real estate and take such other action
as may be necessary on behalf of and in the name of the Company.
18.6 Winding Up. If the Property of the Company remaining
after the payment or discharge of the debts and liabilities of
the Company is insufficient to return the Capital Contribution of
each Member, such Member shall have no recourse against any other
Member. The winding up of the affairs of the Company and the
distribution of its assets shall be conducted exclusively by the
Managers, who are hereby authorized to take all actions necessary
to accomplish such distribution, including without limitation,
selling the assets of the Company. In the discretion of the
Managers, a pro rata portion of the amounts that otherwise would
be distributed to the Members under this Article 18 may be
withheld to provide a reasonable reserve for unknown or
contingent liabilities of the Company.
18.7 No Restoration of Deficit Capital Accounts. If the
Company is deemed to be liquidated for federal income tax
purposes within the meaning of Regulation Section 1.704-
1(b)(2)(ii)(g), distributions under Section 14.3(c) shall be
made in compliance with Regulation Section 1.704-1
(b)(2)(ii)(b)(2) to those Members who have positive Capital
Accounts. If the Capital Account of any Member has a deficit
balance after such distributions (after giving effect to all
contributions, distributions, and allocations for all taxable
years), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such
deficit and such deficit shall not be considered a debt owed to
the Company or any other Person for any purpose whatsoever.
18.8 Deemed Liquidation. If no Dissolution Event has
occurred, but the Company is deemed liquidated for federal income
tax purposes within the meaning of Regulation Section 1.704-1
(b)(2)(ii)(g), the Company shall not be wound up and dissolved
but its assets and liabilities shall be deemed to have been
distributed to the Members and contributed to a new limited
liability company which shall operate and be governed by the
terms of this Agreement.
18.9 Permitted Withdrawal by ▇▇▇▇. 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,
▇▇▇▇ 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, ▇▇▇▇
shall not have any obligation under the Development Deficit
Guaranty or the Operating Deficit Guaranty, and ▇▇▇▇ shall be
released from any obligation hereunder related to the period
after his Withdrawal. Upon a Permitted Withdrawal, ▇▇▇▇ shall
have no right to any fees or payments from the Company or any
interest in any property of the Company. ▇▇▇▇ 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 ▇▇▇▇, any withdrawal
by ▇▇▇▇ from the Company shall constitute a default by ▇▇▇▇ under
this Agreement and WPHC shall be entitled to damages and any
other legally available relief based upon such default.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Statement of Intent of Parties. It is the present
intent of WPHC and ▇▇▇▇ to jointly develop the Project and the
Infrastructure as an initial phase leading to the eventual
development of the Master Development. Due to the changes that
may take place in the capital and real estate markets and other
events, unknown at this time, which may alter either WPHC's or
▇▇▇▇'▇ interest in or outlook on future phases, no specific
provision is made in this Agreement in regard to future phases.
It is the present intent of the parties to use the basic economic
and transaction structure of this operating agreement on future
phases. However, either party may require changes or elect not
to participate in the joint development of future phases. The
Members acknowledge that ▇▇▇▇ has diligently pursued the purchase
of the Land and the development plan of the Land for a
significant period and has agreed to WPHC's assumption of the
Land Contract due to and in consideration of WPHC's and WRPT's
financial commitment to the transaction. It is imperative to
WPHC that it control the future of this development in regard to
all issues, including timing, cost, design, etc. While this
control is absolute, it is WRPT's and ▇▇▇▇'▇ present intent that
▇▇▇▇ 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: ▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Property Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Wellsford Residential Property Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇: ▇▇. ▇▇ ▇▇▇▇
The ▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Haligman & Lottner, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
19.3 Application of Colorado Law. This Agreement, and the
application or interpretation hereof, shall be governed
exclusively by its terms and by the laws of the State of
Colorado, and specifically by the Act.
19.4 Waiver of Action for Partition. Each Member
irrevocably waives during the term of the Company any right that
such Member may have to maintain any action for partition with
respect to the Property of the Company.
19.5 Amendments. This Agreement may be amended only upon
the written Agreement of all of the Members.
19.6 Construction. Whenever the singular number is used in
this Agreement and when required by the context, the same shall
include the plural, and the masculine gender shall include the
feminine and neuter genders, and vice versa.
19.7 Headings. The headings in this Agreement are inserted
for convenience only and are in no way intended to describe,
interpret, define, or limit the scope, extent or intent of this
Agreement or any provision hereof.
19.8 Waivers. The failure of any party to seek redress for
violation of or to insist upon the strict performance of any
covenant or condition of this Agreement shall not prevent a
subsequent act, which would have originally constituted a
violation, from having the effect of an original violation.
19.9 Time of the Essence. Time is of the essence in regard
to the obligations of the parties set forth in this Agreement.
19.10 Remedies for Default. If any party hereto fails
to perform any of its obligations under this Agreement, at the
time and in the manner set forth herein, and such failure
continues uncured after any applicable notice and cure period,
then any other party may assert a claim against the defaulting
party for damages and, to the extent damages are not an adequate
remedy, for specific performance of this Agreement.
19.11 Rights and Remedies Cumulative. The rights and
remedies provided by this Agreement are cumulative and the use of
any one right or remedy by any party shall not preclude or waive
the right to use any or all other remedies. Said rights and
remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
19.12 Severability. If any provision of this Agreement or
the application thereof to any Person or circumstance shall be
invalid, illegal or unenforceable to any extent, the remainder of
this Agreement and the application thereof shall not be affected
and shall be enforceable to the fullest extent permitted by law.
19.13 Heirs, Successors and Assigns. Each and all of the
covenants, terms, provisions and agreements herein contained
shall be binding upon and inure to the benefit of the parties
hereto and, to the extent permitted by this Agreement, their
respective heirs, legal representatives, successors and assigns.
19.14 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all
of which shall constitute one and the same instrument.
19.15 Further Assurances. The Members and the Company
agree that they and each of them will take whatever action or
actions as are reasonably necessary or desirable from time to
time to effectuate the provisions or intent of this Agreement,
and to that end, the Members and the Company agree that they will
execute, acknowledge, seal, and deliver any further instruments
or documents which may be necessary to give force and effect to
this Agreement or any of the provisions hereof, or to carry out
the intent of this Agreement or any of the provisions hereof.
19.16 Entire Agreement. This Agreement and each of the
exhibits attached hereto set forth all (and are intended by all
parties hereto to be an integration of all) of the promises,
agreements, conditions, understandings, warranties, and
representations among the parties hereto with respect to the
formation and operations of the Company; and there are no
promises, agreements, conditions, understandings, warranties, or
representations, oral or written, express or implied, among them
other than as set forth herein. The exhibits attached hereto are
incorporated herein by reference.
CERTIFICATE
The undersigned hereby agree, acknowledge and certify that
the foregoing Agreement constitutes the Operating Agreement of
Park at Highlands LLC adopted by the Members of the Company
effective as of April 27, 1995.
/s/ ▇▇ ▇▇▇▇
---------------------------------
▇▇ ▇▇▇▇
WELLSFORD PARK HIGHLANDS CORP., a
Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
GUARANTY
By its execution hereof, WELLSFORD RESIDENTIAL PROPERTY
TRUST, a Maryland real estate investment trust ("WRPT"), hereby
guarantees to ▇▇ ▇▇▇▇ ("▇▇▇▇") that Wellsford Park Highlands
Corp., a Colorado corporation, shall timely and fully satisfy its
obligation to fund the Final Closing Capital Contribution when,
as and if required by the foregoing Operating Agreement, as such
Agreement may be amended from time to time (the "Obligation").
This guaranty is a guaranty of payment and performance of
the Obligations, not merely of collection. Any amendment or
modification of the Obligations made by WPHC and ▇▇▇▇ shall not
release the duties and obligations of WRPT hereunder, and this
Guaranty shall extend to the Obligations as so amended or
modified. This Guaranty shall be continuing and irrevocable
until the Obligations have been satisfied in full. WRPT hereby
waives notice of acceptance of this Guaranty.
WRPT waives and agrees not to assert or take advantage of:
(a) any right to require ▇▇▇▇ to proceed against any other
person or to proceed against or exhaust any security held by ▇▇▇▇
at any time or to pursue any other remedy in ▇▇▇▇'▇ power before
proceeding against WRPT; (b) any right to require ▇▇▇▇ to
proceed against WPHC or any other person or to proceed against or
exhaust any security held by ▇▇▇▇ at any time or to pursue any
other remedy in ▇▇▇▇'▇ power before proceeding against WRPT; and
(c) any requirement that notice be provided to WRPT.
This Guaranty and all documents, agreements, understandings
and arrangements relating to this Guaranty have been executed by
the undersigned on behalf of WRPT in his/her capacity as an
officer or trustee of WRPT which has been formed as a Maryland
real estate investment trust pursuant to a Declaration of Trust
of WRPT dated as of July 10, 1992, and not individually, and
neither the trustees, officers or shareholders of WRPT shall be
bound by or have any personal liability hereunder or thereunder.
The beneficiary of this Guaranty shall look solely to the assets
of WRPT for satisfaction of any liability of WRPT in respect of
this Agreement and all documents, agreements, understandings and
arrangements relating to this transaction and will not seek
recourse or commence any action against any of the trustees,
officers or shareholders of WRPT or any of their personal assets
for the performance or payment of any obligation hereunder or
thereunder. The foregoing shall also apply to all and any future
documents, agreements, understandings, arrangements and
transactions between the parties hereto with respect to the this
Guaranty or any matter related thereto.
Should any one or more provisions of this Guaranty Agreement
be determined to be illegal or unenforceable, all other
provisions nevertheless shall be effective.
This Guaranty Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado.
EXECUTED as of April 27, 1995.
WELLSFORD RESIDENTIAL PROPERTY TRUST,
a Maryland real estate investment
trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name:
Title:
STATE OF ___________________ )
) ss.
COUNTY OF __________________ )
The foregoing operating agreement was acknowledged before me
this _____ day of ______________, 1995 by ▇▇ ▇▇▇▇.
WITNESS my hand and official seal.
My commission expires:
___________________________________
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing operating agreement was acknowledged before me
this _____ day of _____________, 1995 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as
Vice President of Wellsford Park Highlands Corp., a Colorado
corporation.
WITNESS my hand and official seal.
My commission expires:
________________________________
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing guaranty was acknowledged before me this _____
day of _____________, 1995 by __________________ as _____________
of Wellsford Residential Property Trust, a Maryland real estate
investment trust.
WITNESS my hand and official seal.
My commission expires:
________________________________
Notary Public
EXHIBITS
EXHIBIT A ▇▇▇▇ Reimbursable Expenses
EXHIBIT B Construction Procedures
EXHIBIT C Deposit and Contract Administration Agreement
EXHIBIT D Final Closing Funding Conditions
EXHIBIT E Description of Infrastructure
EXHIBIT F Description of Infrastructure Land
EXHIBIT G Description of the Land
EXHIBIT H Description of the Master Development Land
EXHIBIT I Initial Project Budget
EXHIBIT J Property Management Agreement
EXHIBIT K Intentionally Omitted
EXHIBIT L Pledge and Security Agreement -- ▇▇▇▇ to WPHC
EXHIBIT M Pledge and Security Agreement -- WPHC to ▇▇▇▇
EXHIBIT N Description of Plan and Specifications
EXHIBIT O Final Project Budget
EXHIBIT P Calculation of the ▇▇▇▇ Incentive Fee
EXHIBIT Q Assignment of Interest -- Call Option
EXHIBIT R Assignment of Interest -- Put Option
EXHIBIT S-1 Architect's Certificate
EXHIBIT S-2 Engineer's Certificate
EXHIBIT T Infrastructure Budget
EXHIBIT U Substitution Agreement
EXHIBIT A
▇▇▇▇ REIMBURSABLE EXPENSES
EXHIBIT B
CONSTRUCTION PROCEDURES
1. Requests for advances by the Construction Lender for payment
of costs of labor, materials, and services supplied for the
construction of the improvements and other items shown in
the Project Budget shall be submitted by ▇▇▇▇, 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 ▇▇▇▇ 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. ▇▇▇▇ 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. ▇▇▇▇ 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. ▇▇▇▇
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. ▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇. There shall be
no uncured default by ▇▇▇▇ under this Agreement and no uncured
default under the Construction Loan, and WPHC shall have received
a certificate from ▇▇▇▇ that the representations, warranties and
covenants of ▇▇▇▇ in Articles 6 and 13 are materially true and
accurate as of the date of the proposed Final Closing and that
▇▇▇▇ 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. ▇▇▇▇ 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 ▇▇▇▇.
(e) Lien Waivers. ▇▇▇▇ 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, ▇▇▇▇ 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. ▇▇▇▇ shall
have submitted to WPHC a written document executed by ▇▇▇▇, 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. ▇▇▇▇
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. ▇▇▇▇ and each affiliate of
▇▇▇▇ that is a party to an Approved Affiliate Agreement shall
have executed for the benefit of the Members a Release and
Waiver, substantially in the form attached hereto as Exhibit B-3
with respect to all liabilities incurred by ▇▇▇▇ during its
period of membership in the Company, including, without
limitation, all liabilities incurred by ▇▇▇▇ under the
Architect's Agreement, the construction contract for the
construction of the Project, and any contracts, agreements, or
other instruments entered into by ▇▇▇▇ in connection with the
construction of the Project or the business of the Company.
EXHIBIT E
DESCRIPTION OF INFRASTRUCTURE
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT F
DESCRIPTION OF INFRASTRUCTURE LAND
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT G
DESCRIPTION OF THE LAND
▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, COLORADO.
EXHIBIT H
DESCRIPTION OF THE MASTER DEVELOPMENT LAND
LOTS 2 THROUGH 5, INCLUSIVE, HIGHLANDS RANCH FILING 126-A,
▇▇▇▇▇▇▇ COUNTY, COLORADO
EXHIBIT I
INITIAL PROJECT BUDGET
EXHIBIT J
PROPERTY MANAGEMENT AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT K
INTENTIONALLY OMITTED
EXHIBIT L
PLEDGE AND SECURITY AGREEMENT BY ▇▇▇▇
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT M
PLEDGE AND SECURITY AGREEMENT BY WPHC
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT N
PLANS AND SPECIFICATIONS
(to be approved by all Members prior to the closing of
the Construction Loan and a description thereof to be
attached hereto at or before Construction Loan Closing)
EXHIBIT O
FINAL PROJECT BUDGET
EXHIBIT P
CALCULATION AND PAYMENT OF THE INCENTIVE FEE
1. Definitions. The following definitions shall apply for
the purpose of calculation of the Incentive Fee:
a. "Cost Recovery" shall mean that (I) the sum of
Disposition Recovery, Land Recovery, and Ownership Recovery,
exceeds (II) Infrastructure Costs for any an all phases of the
Infrastructure, plus interest on Infrastructure Costs at an
annual rate of nine percent, compounded monthly. Cost Recovery
shall be determined on a calendar year basis; such determination
shall be made by March 31 of each year for the preceding calendar
year.
b. "Disposition Recovery" shall mean (I) the sale
proceeds net of all costs of closing and brokerage costs received
by the Company from a sale of the Project by the Company, plus
(II) the sale proceeds net of all costs of closing and brokerage
costs received from the sale of Future Projects by the initial
owner(s) of such Future Projects, minus (III) Total Development
Costs for the Project (if sold by the Company) and Total
Development Costs for all Future Projects (which have been sold).
c. "Future Project" shall mean any apartment project
constructed by WPHC, WRPT or an Affiliate of them (provided that
WPHC or WRPT directly or indirectly owns 50% or more of such
Affiliate), which project is constructed on the Master
Development Land. "Future Project" shall not include, however,
the Project which is the subject of the Operating Agreement.
d. "Incentive Cap" shall mean the lesser of
$1,957,447.00 or the product of $4,255.32 and the number of
apartment units actually constructed in Phase I. If subsequent
phases are developed, each will have an Incentive Cap based on
the number of units in such phases and a per unit limit of
$4,255,32. In no event shall the Incentive Cap for all phases
exceed an aggregate of $8,000,000.
e. "Land Recovery" shall mean (I) the amount(s)
received by WPHC in connection with the sale(s) of all or a
portion of its interest in the Land Contract or in the Master
Development Land acquired by it pursuant to the Land Contract,
minus (II) the purchase price paid by the WPHC or its Affiliates
for such Master Development Land, plus all closing costs and
incidental holding and carrying costs at an assumed annual
interest rate of nine percent (9%), and the ▇▇▇▇▇▇▇ money deposit
in connection with the Land Contract unless and until such
▇▇▇▇▇▇▇ money deposit is applied against the purchase price of
Master Development Land. Land Recovery shall not include any
amounts received from the sale of the Project or a Future
Project.
f. "Ownership Recovery" shall mean (I) the Project
Value for the Project and any Future Projects, minus (II) Total
Development Costs for the Project and all such Future Projects.
If the Project or a Future Project is sold anytime during the
calendar year preceding the date of determination of Cost
Recovery, such Project or Future Project shall not be included in
the calculation of Ownership Recovery for such calendar year.
g. "Project NOI" shall mean the Net Operating Income
for the Project or a Future Project for the calendar year
preceding the date of determination of Cost Recovery.
h. "Project Value" shall mean with respect to the
Project or any Future Project the Project NOI for such Project or
Future Project divided by ten percent (10.0%).
i. "Stabilized NOI" shall mean the Net Operating
Income for Phase I for the 12 month period following the
Stabilization Date.
j. "Stabilization Date" shall mean the first day of
the month following the date on which any one of the following
shall have occurred: (i) 93% occupancy in the operations of the
Project at any point in time; (ii) 6 months after issuance of a
certificate of occupancy for all of the apartments comprising the
Project; or (iii) forty-two (42) months after the Initial
Closing.
k. "Total Development Costs" with respect to the
Project shall mean Total Development Costs as set forth in the
Operating Agreement, and with respect to any Future Phase shall
have an equivalent meaning. Total Development Costs does not
include an allocation of Infrastructure Costs.
l. "Target Fee" shall mean an amount equal to 3% of
Total Development Costs (including any Cost Saving Fee paid to
▇▇▇▇).
m. "Yield" shall mean (i) Stabilized NOI, divided by
(ii) the sum of (A) Total Development Costs (including any Cost
Saving Fee paid to ▇▇▇▇), (B) the Incentive Fee, (C) the
Infrastructure Costs allocable to the Project (i.e. for Phase I,
24.26% of total Infrastructure Cost), and (D) interest at 9%,
compounded monthly, on the pro rata share of the Infrastructure
Cost.
2. Calculation of Incentive Fee. The LLC's accountants
shall calculate the Incentive Fee promptly after they have
sufficient information to accurately calculate Stabilized NOI.
The Incentive Fee shall equal the following, provided that in no
event shall the Incentive Fee exceed the Incentive Cap:
a. If the Yield is 9% or less, the Incentive Fee
shall equal zero;
b. If the Yield is greater than 9% and less than or
equal to 10%, then the Incentive Fee shall equal (A) the Target
Fee, multiplied by (B) the Yield minus 9%, multiplied by (C) 100.
c. If the Yield is greater than 10% and less than or
equal to 11.5%, then the Incentive Fee shall equal the following:
(i) the Target Fee, plus
(ii) (A) the Incentive Cap minus the Target Fee,
multiplied by (B) the Yield minus 10%, divided by (C)
1.5, multiplied by (D) 100.
d. If the Yield is greater than 11.5%, then the
Incentive Fee shall equal the Incentive Cap.
3. Payment of Incentive Fee. The Incentive Fee shall
be deemed earned at the time it is calculated but shall not be
due or payable unless and until Cost Recovery has occurred. The
Incentive Fee shall accrue simple interest at 9% per annum from
the date it is deemed earned until paid.
4. Accelerated Payment of Incentive Fee. Notwithstanding
anything to the contrary in this Exhibit C, if WPHC, in its sole
discretion, causes the Final Closing to occur more than thirty
(30) days prior to the Outside Date, then the Incentive Fee shall
equal the Target Fee and the Company shall pay 50 percent of such
Incentive Fee at the Final Closing and 50 percent of such
Incentive Fee within two years of the date of Final Closing.
5. Allocation of Infrastructure Costs. The allocation of
Infrastructure Costs for purposes of the calculation of the
Incentive Fee is solely for such purpose and is distinct from and
will not be modified by the actual allocation of Infrastructure
Costs per unit.
EXHIBIT Q
EXERCISE OF CALL OPTION; ASSIGNMENT OF INTEREST
POWER OF ATTORNEY
THIS ASSIGNMENT OF INTEREST (this "Assignment") is made and
entered into as of the ____ day of ______________ 19__, by and
between ▇▇ ▇▇▇▇, an individual ("Assignor"), and Wellsford Park
Highlands Corp., a Colorado corporation ("Assignee").
RECITALS
a. Pursuant to that certain Operating Agreement (the
"Operating Agreement") of Park at Highlands LLC, a Colorado
limited liability company (the "Company") dated as of
______________, 1995, by and 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. Sections7-80-101 to 7-
80-913, as amended from time to time (the "Act"), together with
the unaccrued obligations of Assignor, in its capacity as a
Member and Manager, to comply with all the terms and provisions
of the Operating Agreement and the Act (collectively, the
"Ownership Interest").
b. In accordance with Section 16.2.1 of the Operating
Agreement, Assignee, by its execution and delivery of this
Assignment to Assignor, hereby desires (i) to exercise the Call
Option as contemplated therein and (ii) to cause Assignor to
resign as Member and Manager of the Company.
c. Assignor has agreed, concurrently with the exercise of
the Call Option by Assignee: (i) to assign and sell the Ownership
Interest to Assignee pursuant to the terms and conditions set
forth in the Operating Agreement and (ii) to appoint Assignee as
its true and lawful attorney-in-fact, as set forth herein.
d. Terms not otherwise defined herein shall have the
meanings set forth in the Operating Agreement.
AGREEMENT
In consideration of the receipt of Ten and no/100 Dollars
($10.00) and other good and valuable consideration in hand paid
by Assignee to Assignor, the receipt and sufficiency of which are
hereby acknowledged and confessed by Assignor, Assignor and
Assignee hereby agree as follows:
1. Assignment and Assumption. Concurrently with and
conditioned upon the satisfaction of all of the conditions and
covenants of Section 16.2.1 of the Operating Agreement, Assignor
hereby assigns, grants and conveys to Assignee all of Assignor's
right, title and interest in and to the Ownership Interest.
Assignee hereby assumes the Ownership Interest and agrees to be
bound by and comply with and perform all of the obligations of
Assignor in its capacity as a Member and as a Manager arising
under the Operating Agreement which accrue after the date hereof.
Assignor shall remain obligated to perform all of the obligations
of Assignor under the Operating Agreement (i) which are not
expressly assumed hereunder or (ii) which have accrued on or
prior to the date hereof. Further, all benefits of the
Operating Agreement relating to Assignor, including, without
limitation, the right to receive any distributions related to any
periods prior to and including the date hereof, shall inure to
the benefit of Assignee.
2. Representation and Warranty of Assignor. Assignor
represents and warrants that: (i) Assignor is the sole owner of
the entire Ownership Interest; (ii) Assignor is not in default
under or in breach of any of the terms, covenants or provisions
of the Operating Agreement, and Assignor knows of no event which,
but for the passage of time or the giving of notice, or both,
would constitute an event of default under or a breach of the
Operating Agreement by Assignor; (iii) Assignor is duly
authorized to execute and deliver this Assignment; and (iv) the
Ownership Interest is free and clear of any and all liens,
security interests, encumbrances, and competing claims.
3. Appointment of Assignee as Attorney-in-Fact.
Effective as of the date hereof, Assignor hereby irrevocably
constitutes and appoints Assignee to be its true and lawful
attorney-in-fact to act for Assignor, in the name, place and
stead of Assignor, for the following purposes:
to endorse any check or other instrument payable to
Assignor in connection with the Project, to submit
claims and otherwise deal with all insurance and
insurance proceeds with respect to the Project, to
execute and file with the appropriate governmental
authority or office any and all certificates, reports
or other evidence of the withdrawal of Assignor from
the Company, and to perform such other acts as may be
necessary to carry out the purpose and intent of the
within assignment or to continue the business of the
Company.
Assignor hereby ratifies, acknowledges and confirms all acts
taken by Assignee, as attorney-in-fact, pursuant to this
appointment. Assignor hereby revokes, annuls and cancels any and
all powers of attorney, if any, previously executed by Assignor
with respect to such stated purposes, and the same shall be of no
further force or effect. Assignor hereby acknowledges that such
power shall be coupled with an interest and shall survive the
disability or death of the Assignor.
4. Indemnity. Assignor hereby agrees to indemnify
and defend Assignee and hold it harmless against any claim, loss
or liability arising from any of the following: (i) any breach
of any representation or warranty hereunder; or (ii) any
assertion that Assignee is liable for any debts or obligations of
Assignor, whether based on any act or omission of Assignor which
occurs prior or subsequent to the date of this Assignment.
5. Governing Law. This Assignment shall be governed
by and construed under the laws of the State of Colorado.
6. Successors and Assigns. This Assignment shall
inure to the benefit and be binding upon the successors and
assigns of Assignor and Assignee.
7. Counterparts. This Assignment may be executed in
any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
This Assignment is executed to be effective as of the date
first set forth above.
ASSIGNOR:
________________________________
▇▇ ▇▇▇▇, 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 ▇▇ ▇▇▇▇, an individual.
________________________________ Commission expires:___________
Notary Public
STATE OF _____________________}
}ss
COUNTY OF ____________________}
The foregoing instrument was acknowledged before me on __________
__, ____, by __________________________________________, as
____________ of Wellsford Park Highlands Corp., a Colorado
corporation.
________________________________ Commission expires:___________
Notary Public
SCHEDULE A TO
EXHIBIT Q
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
PARK AT HIGHLANDS LLC,
a Colorado Limited Liability Company
__________________ ___, 19___
Section 7-80-711 of the Colorado Limited Liability Company
Act, as amended (the "Act") provides that any action required or
permitted to be taken at a meeting of the members of a limited
liability company may be taken without a meeting if a written
consent, setting forth the action so taken, shall be signed by
all the members entitled to vote with respect to the subject
matter thereof and delivered to the limited liability company in
the manner described in the Act. Section 15.10 of that certain
Operating Agreement ("Operating Agreement") of Park at Highlands
LLC (the "Company"), a Colorado limited liability company, dated
as of _______________, 1995 by and between ▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇ to resign as Member
and Manager of the Company; and
WHEREAS, the Members other than ▇▇ ▇▇▇▇ (the "Remaining
Members") desire (i) to accept the withdrawal and resignation of
▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇ to WPHC, (iii) to appoint and
elect WPHC as the successor Manager to ▇▇ ▇▇▇▇, 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 ▇▇ ▇▇▇▇ as Member and Manager
of the Company;
RESOLVED, that the Remaining Members hereby accept the
withdrawal and resignation of ▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇ to WPHC, (ii)
appoint, elect and qualify WPHC as the successor Manager to ▇▇
▇▇▇▇, 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 ▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇, an individual ("Assignor"), and Wellsford Park
Highlands Corp., a Colorado corporation ("Assignee").
RECITALS
A. Pursuant to that certain Operating Agreement (the
"Operating Agreement") of Park at Highlands LLC, a Colorado
limited liability company (the "Company") dated as of _________,
1995, by and between Assignor and Assignee, Assignor is the owner
of an option (the "Put Option") to cause Assignee to acquire the
ownership interest of Assignor in the Company as of the date
hereof (including the right of Assignor to receive any
distributions related to any periods prior to and including the
date hereof), which ownership interest includes the right of
Assignor to any and all benefits to which Assignor may be
entitled as a Member and as a Manager (each as defined in the
Operating Agreement), as provided in the Operating Agreement or
the version of the Colorado Limited Liability Company Act adopted
by the State of Colorado, Co. Rev. Stat. Sections 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:
__________________________________
▇▇ ▇▇▇▇, 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 ▇▇ ▇▇▇▇, an individual.
____________________________ Commission expires: ______________
Notary Public
STATE OF ________________}
}ss
COUNTY OF _______________}
The foregoing instrument was acknowledged before me on
___________, 199__, by ________________________________, as
__________________________________ of WELLSFORD PARK HIGHLANDS
CORP., a Colorado corporation.
_____________________________ Commission expires: ____________
Notary Public
SCHEDULE A
TO EXHIBIT R
UNANIMOUS WRITTEN CONSENT
IN LIEU OF MEETING
BY
THE MEMBERS OF
PARK AT HIGHLANDS LLC,
a Colorado Limited Liability Company
__________________ ___, 19__
Section 7-80-711 of the Colorado Limited Liability Company
Act, as amended (the "Act") provides that any action required or
permitted to be taken at a meeting of the members of a limited
liability company may be taken without a meeting if a written
consent, setting forth the action so taken, shall be signed by
all the members entitled to vote with respect to the subject
matter thereof and delivered to the limited liability company in
the manner described in the Act. Section 15.10 of that certain
Operating Agreement ("Operating Agreement") of Park at Highlands
LLC (the "Company"), a Colorado limited liability company, dated
as of __________, 1995 by and between ▇▇ ▇▇▇▇ 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, ▇▇ ▇▇▇▇, 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 ▇▇ ▇▇▇▇ (the "Remaining
Members") desire (i) to accept the withdrawal and resignation of
▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇ to WPHC, (iii) to appoint and
elect WPHC as the successor Manager to ▇▇ ▇▇▇▇, 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 ▇▇ ▇▇▇▇ as Member and Manager
of the Company;
RESOLVED, that the Remaining Members hereby accept the
withdrawal and resignation of ▇▇ ▇▇▇▇ 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 ▇▇ ▇▇▇▇ to WPHC, (ii)
appoint, elect and qualify WPHC as the successor Manager to ▇▇
▇▇▇▇, 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 ▇▇ ▇▇▇▇ as
Member and Manager of the Company; and (iv) authorize the Members
to execute, deliver and take all action necessary to effectuate
the actions contemplated under the attached Exhibit L-2.
This Consent, when signed by all of the Remaining Members of
the Company and delivered to the Company in the manner prescribed
in the Act, shall have the same force and effect as a unanimous
vote, and may be stated as such in any document.
IN WITNESS WHEREOF, the undersigned have executed this
Consent as of the date above written.
WELLSFORD PARK HIGHLANDS CORP.,
a Colorado Corporation, Member
By:______________________________
Title:______________________
EXHIBIT S-1
Form of Architect's Certificate
(Letterhead of Architect)
CERTIFICATE OF ARCHITECT
______________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: ______________________
____________, Colorado
Ladies and Gentlemen:
Please refer to the final architectural plans and specifications
reflecting all field notes and field changes as built described
in the attached Exhibit A (the "Plans"). The undersigned
understands that ______________________________ or its designee
("Wellsford") is acquiring an interest in or is causing the
repayment of the construction loan for a residential complex
owned by Park at Highlands LLC, a Colorado limited liability
company ("Owner"), located on that certain parcel of real
property having an address of ___________________________ in the
City of ______, County of ______, State of Colorado and described
on Exhibit B attached hereto (the "Site"), on which Owner has
constructed a complex of ______ apartment units known as
_______________________ (the "Project"). This Certificate is a
condition precedent to Wellsford's acquiring the Project or
repaying such loan, and the undersigned acknowledges that
Wellsford will be relying upon this Certificate in consummating
such transaction.
With such understanding, the undersigned has reviewed the Plans,
the construction of the Project in relationship to the Plans, and
its conformity and compliance with applicable laws and
regulations (i.e., applicable federal, state, county and
municipal laws and regulations and ordinances, including without
limitation, governing building and fire codes, zoning,
subdivision and land use laws and regulations, environmental and
safety statutes and regulations, and the rules and regulations of
other governmental agencies having jurisdiction over the Site or
the Project ("Applicable Laws"). Based upon these reviews and
upon due professional investigation, the undersigned declares and
certifies to and for the benefit of Owner and Wellsford that:
1. The undersigned is the architect who prepared the Plans
and coordinated and supervised the construction of the
Project.
2. The Project commonly known as ______________ contains
456 apartment units in __ buildings, and _______
parking spaces, with related amenities and facilities.
The Site is zoned _______________ under the applicable
ordinances of the City of ____________, Colorado.
3. We have examined all applicable materials relative to
those types of restrictions and requirements sometimes
referred to as use, dimensional, bulk and parking
restrictions, jurisdictional wetlands requirements,
setback and buffering requirements, density restraints,
landscaping and vegetation preservation ordinances,
laws, rules and regulations and environmental
restraints, which relate to the Site (hereinafter
referred to as "Development Constraints") and have
determined that the Project is permitted as a matter of
right except for the following variances: ____________
______________________________________________________
, and that the following restrictions and requirements
(the "Restrictions and Requirements") are applicable to
the Project:
Minimum Lot Area:
Height Limitation:
Maximum Floor Area Ratio
(or other type of bulk
bulk restriction):
Limitation on Number of
Dwelling Units (if any):
Front Yard Requirements:
Side and Rear Yard
Requirements:
Parking Requirements:
4. The Project and the Site are in compliance with the
Development Constraints and the Restrictions and
Requirements.
5. The improvements contemplated by the Plans have been
completed in substantial compliance with the Plans,
except for the items in the attached Exhibit C which
are incomplete to the extent indicated and for which
the estimated cost to complete is indicated on said
Exhibit C.
6. We are of the opinion that the Project has been
designed in accordance with the applicable provisions
of Colorado law, the Americans with Disabilities Act of
1990, 42 U.S.C. Section 12101, et seq., as amended, and
any other applicable law, rule or regulation of any
kind or description relating to the elimination of
architectural barriers for the handicapped.
7. We certify that any and all amounts due and payable to
us under or in connection with the Standard Form of
Agreement between Owner and Architect for Housing
Services (AIA-Document B181) dated ______________ with
regard to the Project have been paid in full.
8. The Project, the Plans and all improvements comply with
Applicable Laws, including without limitation, the
applicable PUD, and with all necessary and required
notices, permits or license agreements in connection
with the Plans, and all permits, licenses and approvals
required for the construction of the improvements
contemplated by the Plans and for the use and occupancy
of the Project (including, without limitation, all
final certificates of occupancy) have been obtained
from the applicable governmental or quasi-governmental
agency having jurisdiction or any private party from
whom any license is required.
9. The improvements are ready for occupancy.
10. The improvements on the Property, contain a minimum of
_________ square feet of net rentable living area (as
measured from inside face of exterior wall to apartment
side of corridor wall to centerline of tenant
separation wall) for the apartments.
11. The undersigned is a licensed architect and has the
power and authority to render this Certificate and to
execute and deliver it on behalf of ▇▇▇▇ Design, Inc.
This Certificate may be relied upon only by Wellsford and
the Owner.
Very truly yours,
By: ▇▇▇▇▇▇ ▇.▇. English
Supervising Architect
Dated:________________________
EXHIBIT A TO
CERTIFICATE OF ARCHITECT
______________
_______________________
____________, Colorado
DRAWING LIST
ARCHITECTURAL: ______________________________
______________________________
______________________________
STRUCTURAL: ______________________________
______________________________
______________________________
FOUNDATION: ______________________________
MECHANICAL: ______________________________
______________________________
______________________________
PLUMBING: ______________________________
______________________________
______________________________
ELECTRICAL: ______________________________
______________________________
______________________________
LANDSCAPING: ______________________________
______________________________
______________________________
EXHIBIT B TO
CERTIFICATE OF ARCHITECT
LEGAL DESCRIPTION
EXHIBIT C TO
CERTIFICATE OF ARCHITECT
Incomplete Items Cost of Completion
---------------- ------------------
EXHIBIT S-2
Form of Engineer's Certificate
(Letterhead of Project Engineer)
ENGINEER'S CERTIFICATE
__________________, 1996
Park at Highlands LLC
Wellsford Residential Property Trust
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Reference: ______________
_________________, Colorado
Ladies and Gentlemen:
The undersigned understands that __________________________ or
its designee ("Wellsford") is acquiring an interest in or is
causing the repayment of the construction loan for a residential
complex owned by Park at Highlands LLC, a Colorado limited
liability company ("Owner"), located on that certain parcel of
real property having an address of ______________________ in the
City of ___________, County of __________, State of Colorado and
described on Exhibit A attached hereto (the "Site"), on which
Owner has constructed a complex of ______ apartment units known
as ______________ (the "Project"). This Certificate is a
condition precedent to Wellsford's acquiring the Project or
repaying such loan, and the undersigned acknowledges that
Wellsford will be relying upon this Certificate in consummating
such transaction.
With such understanding, the undersigned has reviewed those
portions of the plans and specifications for the Project that are
listed on Exhibit B attached hereto (the "Engineering Plans"),
the construction of the Project in relationship to the
Engineering Plans, and its conformity and compliance with certain
applicable laws and regulations. Based upon these reviews and
upon due professional investigation, the undersigned declares and
certifies to and for the benefit of Owner and Wellsford that:
1. Satisfactory methods of access to and egress from the
Site and the Project and adjoining or nearby public
ways are available and are sufficient to meet the
reasonable needs of the Project and all applicable
requirements of public authorities. Sanitary water
supply and storm sewer and sanitary sewer facilities
and other required utilities (gas, electricity,
telephone, etc.) are likewise available and are
sufficient to meet the reasonable needs of the Project
and all applicable requirements of public authorities.
2. We are of the opinion that the Property is not located
in a 100-Year Flood Plain or in an identified "flood
prone area," as defined by the U.S. Department of
Housing and Urban Development, pursuant to the Flood
Disaster Protection Act of 1973, as amended, and is not
subject to any federal, state or local "wetlands"
rules, regulations, ordinances or requirements.
3. We have reviewed and are familiar with all tests and
analyses performed and professional recommendations
made by soil engineers and other consultants regarding
the condition of the soil of the Site. In our
professional opinion, the condition of the soil of the
Site is adequate to support the Project as completed.
4. We have reviewed the locations of all easements,
rights-of-way, subsurface rights or jurisdictional
wetlands, and all rules and regulations pertaining to
the same in force relating to the Site, and the Plans
are prepared so that the Project does not encroach
over, across or upon any such easements, rights-of-way,
subsurface rights or jurisdictional wetlands and the
like, and all necessary permits and approvals required
for the Project have been obtained.
5. We have reviewed all deeds, easements, covenants,
restrictions and other matters set forth in Schedule B
of Title Commitment No. __________ issued by Land Title
Guaranty Company, and the Project satisfies and/or does
not violate any provisions concerning construction of
improvements on the Site set forth in such deeds,
easements, covenants, restrictions and other matters.
This Certificate may be relied upon only by Owner and Wellsford.
Very Truly yours,
[ENGINEER]
_______________________________
By:____________________________
Title:____________________
Dated:_________________________
EXHIBIT A TO
CERTIFICATE OF ENGINEERING
LEGAL DESCRIPTION
EXHIBIT B TO
CERTIFICATE OF ENGINEERING
______________
____________________
______________, Colorado
DRAWING LIST
CIVIL ENGINEERING
DRAWINGS: ______________________________
______________________________
______________________________
STRUCTURAL: ______________________________
______________________________
______________________________
FOUNDATION: ______________________________
MECHANICAL: ______________________________
______________________________
______________________________
PLUMBING: ______________________________
______________________________
______________________________
ELECTRICAL: ______________________________
______________________________
______________________________
LANDSCAPING: ______________________________
______________________________
______________________________
EXHIBIT T
INFRASTRUCTURE BUDGET
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING
EXHIBIT U
SUBSTITUTION AGREEMENT
TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING