0001008878-01-500027.txt : 20011026
0001008878-01-500027.hdr.sgml : 20011026
ACCESSION NUMBER: 0001008878-01-500027
CONFORMED SUBMISSION TYPE: 10KSB/A
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20011018
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: WESTLAND DEVELOPMENT CO INC
CENTRAL INDEX KEY: 0000106423
STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552]
IRS NUMBER: 850165021
STATE OF INCORPORATION: NM
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10KSB/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-07775
FILM NUMBER: 1761717
BUSINESS ADDRESS:
STREET 1: 401 COORS BOULEVARD S W
CITY: ALBUQUERQUE
STATE: NM
ZIP: 87121
BUSINESS PHONE: 5058319600
MAIL ADDRESS:
STREET 1: 401 COORS BLVD S W
CITY: ALBUQUERQUE
STATE: NM
ZIP: 87121
10KSB/A
1
form10ka01.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 0-7775
WESTLAND DEVELOPMENT CO., INC.
(Exact name of Westland as specified in its charter)
New Mexico 85-0165021
(State or other jurisdiction of (I.R.S. Employer
incorporation or other organization) Identification No.)
401 Coors Boulevard, N.W., Albuquerque, New Mexico, 87121
(Address of principal executive offices) (Zip Code)
Westland's telephone number, including area code: 505-831-9600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
No Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that Westland was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of Westland's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $ 3,129,167
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.
On September 15, 2001, there were 704,838 No Par Value Common shares and 31,700
Class B shares owned by non-affiliates. The stock was sold on September 1, 2001
for $22 per share. Thus the aggregate market value of the voting stock held by
non-affiliates was $16,203,836.
The number of shares outstanding of each of Westland's classes of common stock,
as of September 15, 2000, was:
No Par Value Common: 714,841 shares.
Class B $1.00 Par Value: 86,100 shares.
PART I
ITEM 1: DESCRIPTION OF BUSINESS
I. General Development of Business
Westland Development Co., Inc., a New Mexico for-profit corporation
("Westland"), is the successor to a community land grant corporation named Town
of Atrisco, which itself was a successor to a Spanish community land grant named
the Atrisco Land Grant. Information concerning the historical background of
these predecessor organizations and the conversion in 1967 from a community land
grant corporation into a business corporation can be found in Westland's Form 10
and its Form 10-K for the fiscal year ended June 30, 1974. With limited
exceptions, only lineal descendants of the incorporators of the Town of Atrisco
may own shares of Westland's Common Stock.
Westland's executive offices are located in its own building at 401 Coors
Boulevard, NW, Albuquerque, New Mexico, 87121, telephone (505) 831-9600, on land
which was originally part of the Atrisco Land Grant.
Westland is the owner of approximately 56,000 acres of land located on the west
side of Albuquerque, New Mexico. Most of its property is held for long term
investment and is leased for cattle grazing. Westland derives revenues through
commercial and land leases, partnerships formed for various development
projects, lot development sales to homebuilders and bulk land sales to other
land developers.
In 1998 the City of Albuquerque and the County of Bernalillo finalized the
approval of a 6,400 acre master plan. For Westland to begin developing or
selling land within this planned area (Master Plan), the City must make
available the required utilities. In 2000, the City annexed an initial 1,665
acres per the terms of a Pre-Annexation Agreement executed by the Company and
the City of Albuquerque in November 1998. Westland is to furnish sewer and water
utilities to the initial 1,665 acres within the Master Plan area. Westland has
segregated the lands within the master plan area for development.
Utilities do not presently exist on any of the Master Planned lands. Per the
Pre-Annexation Agreement, Westland has agreed that it will finance or bear the
initial cost of the major water and sewer infrastructure to the initial 1,665
acres, which are now estimated to be as much as $10,000,000. When completed,
Westland will convey the utilities to the City. Although for the initial phase
Westland must advance the cost of the utilities, it will recover those costs
through a "hook-up" fee that will be charged to each lot sold in the annexed
area. An additional $5,000,000 to $10,000,000 will also be financed or borne by
Westland for additional water and sewer distribution and collection lines and
roads with no reimbursement. Depending upon the growth of development in this
area, it may take 10 to 15 years for Westland to recover these costs.
Westland has put the major water system out to bid and is currently soliciting
financing for the construction of the initial phase of the Master Plan
infrastructure. The method being pursued is the recently legislated Public
Improvement District that allows bond financing at favorable rates. Although no
commitments have yet been received, Management believes that Westland will
obtain the required financing and begin construction of improvements within the
next fiscal year.
Management remains committed to begin the construction of residential,
industrial and commercial developments for lease or sale. Westland's long term
business philosophy is to create revenues by enhancing the value of Westland's
land through careful planning and development, while retaining ownership of a
major portion of the land in perpetuity and to provide dividends for its
shareholders, when consistent with Westland's need for a sufficient cash flow to
meet current operating expenses.
II. Status of Westland's Business
Over the past 20 years, Westland developed six master plans and sold all of the
acreage included in them. Those master plans are identified as Atrisco Urban
Center and El Rancho Atrisco, Phases I through V. These lands, except for the
Phase V master plan which was abandoned due the introduction of the Petroglyph
National Monument, have now been substantially developed and sold. As discussed
above, the new Master Plan encompasses approximately 6,400 acres in an area
located north of I-40, between Unser and Paseo del Volcan. Initial utility
development of Phase I of the Master Planned area should begin in the next
fiscal year, depending upon available funding.
A. Oil and Gas and Grazing Leases
Approximately 54,300 acres of Westland's land is not planned for current
development and 55,063 acres are leased to non-affiliated people for cattle
grazing. The leases provided revenue of approximately $22,059 in fiscal 2001.
Because of the extreme drought in the area, Westland has granted rent abatements
to the tenant in each of the last three fiscal years.
On June 6, 2000, Westland granted an oil and gas lease on approximately 6,365
acres to an exploration corporation. The lessee paid Westland a rental bonus of
$9,547 in consideration of the lease for the first year's rent. Management is
not aware of any drilling or other activities having been conducted on the
property by the lessee since the date of the lease.
Westland also owns and leases certain commercial buildings at an aggregate
annual rental of $1,229,108. (See "Revenue Producing Properties".)
B. Development Properties
As of June 30, 2001, Westland continued to own approximately 150 acres of
developed and unsold land. The effort of Westland and its staff is being devoted
to the implementation of the new Master Plan at the earliest possible date. A
summary of Westland Master Plan is as follows:
C. Westland Master Plan
Westland's new Master Plan covers approximately 6,400 acres located north of
Interstate 40 and south of the Petroglyph National Monument, west of Unser
Boulevard. Westland will begin introducing water and sewer utilities to a 1,665
acre portion of the Master Plan area that will be initially developed. As
discussed above, Westland has agreed to pay the cost of major water and sewer
utilities to the land with said cost being recovered over time through hook-up
fees. Westland anticipates paying the costs incurred to furnish these utilities
through a combination of borrowing and use of portions of its income. In
addition, per the Pre-Annexation Agreement with the City of Albuquerque,
Westland has agreed that any water rights now owned or subsequently acquired by
Westland related to the 6,400 acres of the master planned area must be assigned
to the City for use only in the 1,665 acres of the master planned area to which
the City supplies water and sewer service.
It is anticipated that there are no insurmountable obstacles remaining,
including acquiring the necessary financing, to begin the implementation of the
Master Plan. Management expects that the first sale of lands in the master
planned area will occur in the next one or two fiscal years, barring unforeseen
delays such as a major downturn in the U. S. economy.
D. Other Projects
1. Volcano Business Park
Volcano Business Park consists of approximately 22 acres zoned for industrial
park uses, which were platted and developed into 14 lots. Westland, through a
partnership arrangement, owns 50% of a 172-unit self-storage facility on
approximately 1.7 acres of this property. As of August 1, 2000, the facility was
substantially occupied. During fiscal 2000, the facility was expanded to provide
outdoor storage for motor vehicles and boats. At the end of fiscal 2001, the
facility was approximately 85% occupied.
2. Project Development
(a) Westland Master Plan
The Company is currently preparing marketing information and considering
financial options and the optimum timing for initiating development, marketing,
and sales of land which currently has water and sewer service in the Master Plan
area. The Company has undertaken the subdivision planning, design and approval
process for 280 single-family lots in a six-phase project named the Painted Sky
Subdivision. Construction was started on Phases 1 and 2 on June 11, 2001. KB
Homes and Raylee Homes have executed letters of intent to purchase the 106 lots
in Phases 1 and 2 of Painted Sky.
The Company is also developing two other subdivisions in an area west of Unser
Blvd. and north of I-40 east of the Master Plan area. These are Tierra Oeste
Units I and II and the Crossings Units I and II. Tierra Oeste Unit I is
completed and is nearly all sold. Sales of lots in one or more of these two
newly developing areas are anticipated to continue during the current fiscal
year.
The Company obtained approval for a 27 hole golf course on approximately 250
acres adjoining the Petroglyph National Monument within the Master Plan area
from the City of Albuquerque's Environmental Planning Commission.
(b) South Tract
During fiscal 2000 the Company sold 100 acres of land located near the proposed
extension of Rio Bravo Blvd. to a manufactured housing community developer. This
community called "Paakweree" is near completion on the 100 acre tract. During
fiscal year 2001, Bernalillo County completed construction of the connection of
Rio Bravo Blvd. from Coors S.W. to Paseo del Volcan S.W.
3. Recreation Complex
Westland previously reported that in 1994 it entered into a lease/option
arrangement related to approximately 100 acres located one mile north of I-40 on
Paseo del Volcan. Westland took possession and ownership of the facility in 1997
as a result of default in the terms of the lease/option. The Park contains a
fully developed recreation and softball complex. The property is leased to City
of Albuquerque for $5,000 per year through February, 2004.
4. Education and Community Projects
Westland has a continuing corporate program of donating land or otherwise
assisting in projects that its management believes have a long term beneficial
effect to the development and furtherance of the educational and health of the
community and citizens. As previously reported, Westland has agreed to donate
lands for the purpose of building schools, churches, and healthcare facilities.
During fiscal 1999, Westland donated approximately fifty acres to YES Housing,
Inc., a nonprofit corporation, for the purpose of construction of a facility
devoted to the housing and employment of mentally ill citizens. The site of the
facility has been moved to within City limits and closer to utilities and City
services, and YES Housing, Inc. has conveyed the 50 acres back to the Company.
During fiscal 2001, Westland received requests for assistance through the grant
of land.
5. Land Sales
Westland has, in the last year, completed 54 transactions (52 of which were
residential lots) totaling approximately 63 acres.
6. Reinvestment Properties
As part of Westland's plans to defer the tax burden arising from the sale of its
lands to the National Park Service under threat of condemnation for inclusion in
the Petroglyph National Monument, it reinvested the sale proceeds in the
properties discussed below and two vacant land parcels. As a result of these
purchases, Westland believes that it has deferred payment of taxes on the gain
on sales of land to the National Park Service.
The Commercial properties are the following:
a) A commercial building at Coors Boulevard and Sequoia Road in Albuquerque at a
cost of $2,630,000, $1,673,491 of which is subject to a Mortgage upon which
Westland must pay monthly payments of $17,970. This building has been leased to
Walgreen Co. for 20 years at a fixed rent of $19,173 per month plus additional
rent based upon a formula of gross sales up to a maximum rent of $460,161 in any
one year.
b) A commercial building in Albuquerque's Midway Industrial Park at a cost of
$1,074,000, $670,405 of which is subject to a Mortgage upon which Westland must
make monthly payments of $6,893. This building has been leased to Circuit City
Stores for a term of 10 years at an escalating rental beginning at $4.25 per
square foot the first year and increasing in stages to $5.55 per square foot in
the tenth year. The lessee has also been granted the right to extend the lease
for two additional 5 year terms at escalating rental rates during each of the
years of any extended term. The current rent is $10,091 per month.
c) A commercial building located at Coors Boulevard and Central Avenue at a cost
of $3,593,000, which is subject to a mortgage of $2,537,296 requiring payments
of $24,682 per month. The building has been leased to Walgreen Co. on a minimum
20 year lease at a fixed rent of $26,122 per month plus a percentage of gross
sales, with the maximum annual rent being capped at $626,922. Walgreen Co. may
continue the term of the lease for an additional 40 years.
d) A commercial building located at the SE corner of Eubank and Spain, N.E., at
a cost of approximately $1,331,000, which is subject to a mortgage of $878,804
requiring payments of $9,079 per month. The building has been leased to Marie
Callender Pie Shops, Inc., on a minimum 10-year lease at a fixed rent of
$11,000, plus a Percentage Rent in the amount of 6% of Annual Gross Sales in
excess of $132,000. The tenant has the right to renew the lease for as many as
three 5 year terms.
e) A commercial building located in El Paso, Texas at cost of approximately
$3,907,000, which is subject to a mortgage of $3,004,347 requiring payments of
$25,403 per month. The building is leased to Walgreen Company on a minimum 20
year lease at a fixed rent of $28,167 per month, plus a percentage of gross
sales with a maximum annual rent of $676,000.
Current Real Estate Market Conditions
The market conditions for the development and sale of properties in Albuquerque
have slowed but remain positive at the present time. Westland has been able to
sell the residential properties it has developed and is hopeful that these sales
will increase next year due to the introduction of Painted Sky and additional
Tierra Oeste subdivisions. Management believes that for the foreseeable future,
residential, commercial and industrial construction will continue at a moderate
pace.
Competition
Westland's industrial parks - The Atrisco Urban Center, Volcano Business Park
and Ladera Industrial Park compete with other business and industrial parks in
the Albuquerque area, including some that are more established and some that are
located nearer the major population centers of Albuquerque.
Residential subdivisions on Westland's land compete with other areas in the
Albuquerque housing market (essentially Bernalillo County and portions of
Sandoval County and Valencia County), as well as with other subdivisions on the
western side of the City of Albuquerque. A number of large subdivisions to the
north of Westland's land are not fully sold. These include Rio Rancho (about six
miles north of Westland's land), Paradise Hills and Ventana Ranch (about five
miles north of Westland's land), and Taylor Ranch (about two to three miles
north of Westland's land).
The implementation of certain mandated impact fees may have an as yet
undetermined effect on Westland's ability to sell property in competition with
developers of land located in neighboring counties. (See "Governmental
Regulations".)
Employees
As of September 15, 2001, Westland had nine full-time and five part-time
employees. Westland's president, who is also a director, is a full time
employee. Westland also had contractual relationships with other individuals,
including two of Westland's officers and directors, who provided various
services to the Company.
Government Regulations
Westland's ability to undertake an active program of development of its land and
management of its rental properties (whether such development is performed by
Westland itself or by sale of Westland's land to others for development) is
dependent on Westland's ability to comply with laws and regulations of the State
of New Mexico, Bernalillo County, and the City of Albuquerque, applicable to
general environmental protection, land-use planning, annexation, zoning and
subdivisions. Both County and City regulate the subdivision of land and impose
zoning and building permit requirements. The subdivision regulations of both
Bernalillo County and the City of Albuquerque require, as a condition of
approval of proposed subdivisions, that adequate provision be made by the
developer for land use planning, water (both to quantity and quality), liquid
waste disposal, solid waste disposal, sufficient and adequate roads and storm
drain management.
Although the compliance with federal, state, and local provisions relating to
the protection of the environment, including laws regulating subdivisions and
land-use planning and endangered species, has in recent years had no material
effect upon the capital expenditures, earnings and competitive position of
Westland, no assurance can be given that this situation will continue. Requests
relating to drainage, traffic flow and similar matters from the City of
Albuquerque have occasionally delayed the receipt of necessary approvals and
required modification of development proposals. The opening of the Double Eagle
II Municipal Airport by the City of Albuquerque to the north of Westland's land
on Paseo del Volcan may have an impact on the use of and planning for Westland's
land in the vicinity of the airport as well as the creation of the Petroglyph
National Monument, although Management believes both facilities will favorably
impact the Company's lands.
At Westland's request, the City of Albuquerque created Special Assessment
Districts affecting the Atrisco Urban Center and the El Rancho Atrisco areas for
the financing of water, sewer, paving and other street improvements, and levied
assessment liens on them. This has provided a mechanism for financing these
improvements, and SAD's may be available for future development of Westland's
property.
A mandate by the State Legislature for implementation of Impact Fees may result
in Westland's lands being disadvantaged because the fees that surrounding
counties charge may be less than those that will be charged by Albuquerque and
Bernalillo County. Bernalillo County began the assessment of such fees on
January 1, 1996, but Albuquerque has not yet implemented the fees. Westland does
not believe that these fees will fees adversely impact its business in any
material way.
Availability of Water and Municipal Services
The unavailability of sufficient water has often been a major inhibiting factor
in the land development business in the Southwest. The extent of Westland's
water rights has not been determined, however, Westland has retained the
services of a water law specialist to investigate the existence of any Westland
water rights and to otherwise consult with Westland on matters involving
availability of water. As a result of these services, Westland has declared a
certain amount of water rights but said declared rights have not been
adjudicated to fully determine their validity. However, lack of ownership of
water rights by Westland would not be an inhibiting factor to the development of
Westland's land if adequate water were to be made available through the City of
Albuquerque, Bernalillo County and/or other water sources or by purchase by
Westland or by a developer that might purchase and develop land. For example,
Tierra West Mobile Home Park sold by Westland near Nine Mile Hill and the
recreation complex leased or purchased water rights and drilled wells to meet
their water needs.
Under present annexation policies of the City of Albuquerque, annexation to the
City of Albuquerque is a requirement by the City before it will extend water and
sewer services within a reasonable period of time after annexation. However, the
cost of water distribution and sewer lines would have to be borne by the
developer, or by subsequent purchasers of the annexed portions. The City and
Westland have now reached the agreement discussed above relating to provisions
for utility services to a portion of the Master Plan lands and annexation by the
City.
Most of Westland's land lies outside the municipal limits of the City of
Albuquerque and are not furnished with City water or other City services.
Westland experienced little difficulty in having its other Master Plan area
furnished with services, but the same cannot be assumed for other areas of
Westland's land.
Other Factors Affecting Development of Westland's Land
Various activist groups, as well as neighborhood organizations occasionally take
actions that have, to some extent, delayed Westland's plans for the development
of some of its lands.
ITEM 2: DESCRIPTION OF PROPERTIES
The major physical assets owned by Westland are its land which is owned in fee
simple. The land is mostly comprised of approximately 56,000 acres of
undeveloped land held for long-term investment. Approximately 6,400 acres are
located in Westland's Master Plan area.
Westland also owns the Atrisco Urban Center office building, comprising
approximately 11,097 square feet, 4,166 of which is leased to Bank of America at
a monthly rental of $5,022, while the remainder is used by Westland for its
executive offices. This building is not mortgaged. Westland also owns five
commercial buildings that are leased to others and is a 50% owner of a self
storage facility. (See "Item 1. Business - Reinvestment Properties.")
Westland's land is crossed by Interstate Highway I-40, the main east-west
highway through Albuquerque. Access to Westland's land from Interstate 40 is
provided by the Coors Boulevard interchange near the eastern edge of Westland's
land, by the Unser Boulevard interchange at the western edge of the Atrisco
Urban Center, by the 98th Street interchange to the west of the Atrisco Urban
Center and by the Paseo del Volcan interchange where I-40, Paseo del Volcan and
Central Avenue meet. Running north from the I-40 interchange, Paseo del Volcan
transverses about 4 1/2 miles of Westland's land to the Double Eagle II Airport.
Bernalillo County has extended Paseo del Volcan south of the I-40 interchange to
the point at which it intersects Dennis Chavez Blvd. (aka Rio Bravo) to form an
inner loop for the City's southwest quadrant.
Westland and other landowners and developers (the Northwest Loop Association)
dedicated land and have paid a portion of the design costs for the Northwest
Loop, which has been approved by the New Mexico State Highway Commission. The
Northwest Loop will extend for approximately 39 miles and will connect I-40 and
1-25, through New Mexico State Highway 44, and will cross the western portion of
Westland's land within the Rio Puerco Valley. In 1995 Westland donated 169 acres
for development of the Northwest Loop. Completion of the Northwest Loop is not
expected for 15 to 20 years. Most of Westland's land is remote and not readily
accessible, not serviced by utilities, and Westland believes that the bulk of
its land will not be available for development in the foreseeable future.
A large portion of the undeveloped land is leased for agricultural uses.
(See "Item 1. Business."). The bulk of Westland's undeveloped land is held
for long term investment.
In the opinion of the Company's Management, its developed property is adequately
covered by insurance.
ITEM 3: LEGAL PROCEEDINGS
Other than ordinary routine litigation incidental to the Company's business,
neither the Company nor any member of management is the subject of any pending
or threatened legal proceedings:
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 30, 2001.
PART II
ITEM 5: MARKET FOR WESTLAND'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Because ownership of Westland's stock is restricted in the manner
discussed below, no established public trading market exists for Westland's
outstanding shares and, to the best of Westland's knowledge, no dealer has made,
is making, or is attempting to create such a market from which to determine an
aggregate market value of any of Westland's stock. In 1989, Westland entered
into an arrangement with an independent stockbroker to broker transactions in
Westland's stock between shareholders. The broker has informed Westland that the
price at which Westland's common stock had been bought and sold by Westland's
shareholders during the ninety (90) days preceding this date of this report has
been $22 per share.
Since 1982, the outstanding shares have been subject to restrictions
imposed by a majority of Westland's shareholders who amended Westland's Articles
of Incorporation. Those Articles prohibit (with certain limited exceptions)
transfer of Westland stock to persons other than lineal descendants of the
original incorporators of the Town of Atrisco (a New Mexico Community Land Grant
Corporation).
The following table sets forth the approximate number of holders of
record of each class of Westland's common stock as of September 15, 2001:
Number of
Title of Class Record Holders
No Par Value Common 5731
$1.00 Par Value Common Class A 0
$1.00 Par Value Common Class B 26
Dividends: During each of the two (2) fiscal years ended June 30, 2000 and June
30, 2001, Westland paid cash dividends to shareholders, aggregating a total
during those two years of $1,806,331.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
During fiscal 2001, Albuquerque continued a significant pattern of growth and
continues to be one of the fastest growing cities in the Southwest. Because of
certain geographical and other limitations on its growth, Westland's lands lie
directly in the path of future predictable growth patterns of Albuquerque.
Westland's future revenues will continue to be largely dependent upon the sale
of land. The Company's assets are illiquid, comprising principally undeveloped
land. Sales are dependent upon the market conditions in Albuquerque, New Mexico.
Westland anticipates making capital commitments for land development projects
over the next few years as the economy and opportunities dictate that such
expenditures would be warranted. Capital commitments may include special
assessment districts for roads and water and sewer lines on its land. In some
cases infrastructure improvements are paid for by assessments, which increase
the value of Westland's land and make further development possible. Westland
intends to incur capital expenditures when management determines such
investments will increase the value of the land and generate future revenue.
Land is Westland's principal capital resource, and is valued, for financial
accounting purposes, at its 1907 value plus the cost of improvements. Westland's
balance sheet does not reflect the actual current value of this asset. The
Company has no current appraisals of the land and, therefore, the actual value
of the land is not known. The carrying value of the land was increased during
both fiscal years ended June 30, 2001 and 2000, primarily reflecting increased
investment. The carrying value will be increased or decreased regularly as
Westland acquires, sells or develops parcels of land. Management believes the
June 30, 2001 carrying value of the land is substantially less than its current
market value. Westland's balance sheet also segregates income-producing
properties which consist of commercial real estate and improvements. The actual
value of Westland's land varies depending on national and local market
conditions and the amount and proximity of roads, utilities and other amenities
to the land under development. As Albuquerque continues to grow, the land value
of both developed and undeveloped land should increase.
As reported last year, after some delay, Westland received approval of its
Master Plan by both the City of Albuquerque and Bernalillo County. The Master
Planned land includes the area north of Interstate 40 and south of the area
designated for the Petroglyph National Monument between Unser Boulevard and
Paseo del Volcan Road. The Master Plan area encompasses approximately 6,400
acres, but does not include any land located within the Monument and will have
no adverse impact on the Monument. During the fiscal year the City of
Albuquerque annexed the initial 1,600 acres of the master planned area, which
will permit sewer and water services to be extended in an orderly manner to that
number of acres as they are developed. Westland has agreed with the City that it
will pay the cost of the infrastructure normally paid for by the city for new
development in the master planned area and will recover those costs through a
fee charged by the city as each lot is connected to the services. Management
still anticipates that development and sale of the initial parcels of land
within the Master Planned area will occur in the year 2002, however, foreseeable
delays in getting utilities to the lands may cause this period to be extended
beyond that anticipated date.
Westland is currently preparing marketing information and considering financial
options and the optimum timing for initiating development, marketing, and sales
of land in the Sector Plan area. The Company and Mesa Golf of Dallas, Texas,
during fiscal 2000 obtained approval for a 27 hole golf course community located
on 500 acres adjoining the Petroglyph National Monument within the Sector Plan
area from the City of Albuquerque's Environmental Planning Commission. The
project was delayed because an appeal was filed by Mr. Jaime Chavez on behalf of
Water Information Network, a local group, which was subsequently denied.
Management remains committed to begin the construction of residential,
industrial and commercial developments for lease or sale. Westland's long term
business philosophy is to enhance the value of Westland's land through careful
planning and development, while retaining ownership of a major portion of the
land in perpetuity and simultaneously increasing the value of Westland's stock
and to provide dividends for its shareholders, when consistent with Westland's
need for a sufficient cash flow to meet current operating expenses.
Financial Condition, Liquidity and Capital Resources
During fiscal 2001, total assets increased to $23,865,926 from $20,237,662, and
liabilities increased from $12,060,545 to $17,086,310. The increase in assets is
occurred primarily in Land and improvements and Income producing properties,
which increased by $4,861,392 together, and Cash and equivalents, which
decreased by $3,118,559. This is the effect of increased investment in current
projects and the addition of the El Paso Walgreens store. Receivables increased
by $463,692 because of a year-end land sale the proceeds of which were not
received in 2001. The increase in liabilities is the result of the added
mortgage in the amount of $3,004,348 for the new Walgreens property and
increases in revolving lines of credit of $2,309,681, drawn primarily to fund
increased property investment.
In fiscal 2001, the Company maintained lines of credit with local banks
aggregating approximately $3,600,000, collateralized by certain real property.
The purpose of these lines is to provide funds necessary for its continued
expansion. At June 30, 2001, the lines had outstanding balances of $2,309,681.
During fiscal 2002, the Company will be obligated to pay income tax of
approximately $800,000 should replacement properties totaling $2,007,000 for the
involuntary conversion of land by the National Park Service not be acquired.
Management diligently seeks income producing properties for acquisition as
replacement properties and fully expects to offset this tax obligation. Because
the Company has deferred gains of approximately $15,700,000 for tax reporting,
deferred income tax liabilities of approximately $6,100,000 are recorded in the
Company's financial statements. In the event replacement properties are sold,
deferred income taxes will become currently payable.
Management is not certain that the uncommitted balance of cash, cash
equivalents, investments and its borrowing capacity are sufficient to meet all
of the Company's obligations during 2002 without considering additional revenues
that may be generated during that period.
Results of Operations
In fiscal 2001, land revenues decreased by $4,490,929 from $6,511,919 in 2000 to
$2,020,990. The related cost of land revenues decreased to $831,029, or $422,841
from $1,253,870 in fiscal 2000. Rental revenue increased from $843,105 to
$1,108,177 and the related costs increased from $258,572 to $293,727. These
increases are expected to continue as the Company expands its activities in this
area.
In the past fiscal year, land sales were less than the prior year as the Company
experienced diminished sales of improved residential lots and fewer large parcel
sales. Sales of improved residential lots in fiscal 2000 were approximately
$1,148,000, and large parcel sales were approximately $4,810,000. In fiscal
2001, the Company's sales of improved lots declined to $1,102,000 and large
parcel sales decreased to $830,000, primarily because the Company's sales effort
for the year included several large parcels which did not close in 2001.Gross
profits on land revenues decreased from 81% in 2000 to 59% in 2001, because of
the decreased amount of large parcel sales, which have a higher gross profit
ratio, in 2001. Gross profits on rental operations increased slightly in 2001,
from 69% to 73%, primarily from the addition of the new Walgreens unit in El
Paso.
General and administrative expenses remained relatively constant from 2000 to
2001, but interest income decreased from $234,872 to $141,122, as the Company
reduced its holdings of interest bearing investments, and interest expense
increased from $605,277 to $816,357 from added debt incurred in 2001.
Cash Flow
During fiscal 2001 Westland invested $5,291,417 in income producing and other
assets and had net borrowing of $4,978,715. Including these uses of cash and
payment of cash dividends of $1,003,623, cash equivalents and short-term
investments decreased by $3,118,559, as operations used $1,806,668. In 2000,
operating and investing activities provided $2,407,033 and $2,183,749,
respectively, while financing activities used $2,008,404, including net debt
repayment of $1,161,221, resulting in an increase in cash and equivalents of
$2,582,378.
ITEM 7: FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants
Stockholders
Westland Development Co., Inc.
We have audited the accompanying balance sheet of Westland Development Co.,
Inc., as of June 30, 2001, and the related statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended June 30, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westland Development Co., Inc.,
as of June 30, 2001, and the results of its operations and its cash flows for
each of the two years in the period ended June 30, 2001 in conformity with
accounting principles generally accepted in the United States of America.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
August 24, 2001
Westland Development Co., Inc.
BALANCE SHEET
June 30, 2001
ASSETS
Cash and cash equivalents .......................... $ 764,001
Short-term investments ............................. 1,497,275
Receivables
Real estate contracts (note B) ................. $ 475,114
Note receivable - related party (note L) ....... 99,707
Other receivables .............................. 152,399 727,220
-----------
Land and improvements held for future
development (notes C and E) ...................... 8,191,471
Income-producing properties, net (notes D and E) ... 11,843,922
Property and equipment, net of accumulated
depreciation of $583,957 (note E) ................ 337,855
Investments in partnerships and joint ventures ..... 228,452
Income taxes receivable ............................ 14,257
Other assets ....................................... 261,473
-----------
$23,865,926
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses and
other liabilities ................................ $ 475,742
Deferred income taxes (note F) ..................... 5,416,423
Notes, mortgages and assessments
payable (note E) ................................. 11,194,145
-----------
Total liabilities ................ 17,086,310
Commitments and contingencies (notes E and K) ...... --
Stockholders' equity (note G)
Common stock - no par value; authorized,
736,668 shares; issued and
outstanding, 714,841 shares .................. $ 8,500
Class B common stock - $1 par value;
authorized, 491,112 shares;
issued and outstanding, 86,100 shares ........ 86,100
Additional paid-in capital ..................... 591,811
Retained earnings .............................. 6,093,205 6,779,616
----------- -----------
$23,865,926
===========
The accompanying notes are an integral part of this statement.
Westland Development Co., Inc.
STATEMENTS OF OPERATIONS
Year ended June 30,
2001 2000
----------- -----------
Revenues
Land ..................................... $ 2,020,990 $ 6,511,919
Rentals .................................. 1,108,177 843,105
----------- -----------
3,129,167 7,355,024
Costs and expenses
Cost of land revenues .................... 831,029 1,253,870
Cost of rentals .......................... 293,727 258,572
Other general, administrative
and operating .......................... 1,835,303 1,802,016
----------- -----------
2,960,059 3,314,458
----------- -----------
Operating income ........... 169,108 4,040,566
Other (income) expense
Interest income .......................... (141,122) (234,872)
Gain on sale or disposition of
property and equipment ................. (100) (280)
Other income ............................. (26,993) (16,223)
Interest expense ......................... 816,357 605,277
----------- -----------
648,142 353,902
----------- -----------
Earnings (loss)
before income taxes ...... (479,034) 3,686,664
Income tax expense (benefit) (note F) ........ (80,722) 1,354,464
----------- -----------
NET EARNINGS (LOSS) ........ $ (398,312) $ 2,332,200
=========== ===========
Weighted average common shares
outstanding, basic and diluted ............. 801,116 802,626
=========== ===========
Earnings (loss) per common share,
basic and diluted .......................... $ (.50) $ 2.91
=========== ===========
The accompanying notes are an integral part of these statements.
Westland Development Co., Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
Years ended June 30, 2001 and 2000
Class B
Common stock Common stock
no par value $1 par value Additional
-------------------------- ------------------------- paid-in Retained
Shares Amount Shares Amount capital earnings Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances at July 1, 1999 ...... 716,608 $ 8,500 86,100 $ 86,100 $ 581,527 $ 6,015,973 $ 6,692,100
Net earnings .................. -- -- -- -- -- 2,332,200 2,332,200
Cash dividends paid -
$1 per share ................ -- -- -- -- -- (802,708) (802,708)
Purchase/retirement
of common stock ............. (1,315) -- -- -- -- (44,475) (44,475)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances at June 30, 2000 ..... 715,293 8,500 86,100 86,100 581,527 7,500,990 8,177,117
Net loss ...................... -- -- -- -- -- (398,312) (398,312)
Cash dividends paid -
$1.25 per share ............ -- -- -- -- -- (1,003,623) (1,003,623)
Purchase/retirement
of common stock ............. (452) -- -- -- -- (5,850) (5,850)
Insurance reimbursement for
common stock purchases ...... -- -- -- -- 10,284 -- 10,284
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances at June 30, 2001 ..... 714,841 $ 8,500 86,100 $ 86,100 $ 591,811 $ 6,093,205 $ 6,779,616
=========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this statement.
Westland Development Co., Inc.
STATEMENTS OF CASH FLOWS
Year ended June 30,
2001 2000
----------- ------------
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Cash received from land sales and collections on real estate
contracts receivable .......................................... $ 1,464,566 $ 6,415,088
Development and closing costs paid ............................... (2,051,178) (1,179,963)
Cash received from rental operations ............................. 1,089,983 915,206
Cash paid for rental operations .................................. (28,299) (70,535)
Cash paid for property taxes ..................................... (20,303) (135,736)
Interest received ................................................ 140,382 234,872
Interest paid .................................................... (765,429) (604,029)
Income tax refunds (paid) ........................................ 136,424 (1,315,000)
Other general and administrative costs paid ...................... (1,799,707) (1,871,536)
Other ............................................................ 26,893 18,666
----------- -----------
Net cash provided by (used in) operating activities (1,806,668) 2,407,033
Cash flows from investing activities
Capital expenditures ............................................. (3,913,681) (238,281)
Investments in partnerships and joint ventures ................... 6,257 (2,808)
Change in short-term investments ................................. (1,387,361) 2,468,105
Change in note receivable - related party ........................ 3,368 (43,267)
----------- -----------
Net cash provided by (used in) investing activities (5,291,417) 2,183,749
Cash flows from financing activities
Borrowings on notes, mortgages and assessments payable ........... 5,625,062 990,698
Repayments of notes, mortgages and assessments payable ........... (646,347) (2,151,919)
Payment of dividends ............................................. (1,003,623) (802,708)
Purchase of common stock ......................................... (5,850) (44,475)
Insurance reimbursement for common stock purchases ............... 10,284 --
----------- -----------
Net cash provided by (used in) financing activities 3,979,526 (2,008,404)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,118,559) 2,582,378
Cash and cash equivalents at beginning of year ....................... 3,882,560 1,300,182
----------- -----------
Cash and cash equivalents at end of year ............................. $ 764,001 $ 3,882,560
=========== ===========
Westland Development Co., Inc.
STATEMENTS OF CASH FLOWS - CONTINUED
Year ended June 30,
2001 2000
----------- ------------
Reconciliation of Net Earnings (Loss) to Net Cash Provided by
(Used in) Operating Activities
Net earnings (loss) ................................................. $ (398,312) $ 2,332,200
Adjustments to reconcile net earnings (loss) to net cash provided by
(used in) operating activities
Depreciation ................................................. 323,257 259,253
Gain on sale of property and equipment ....................... (100) (280)
Deferred income taxes ........................................ 47,374 57,049
Proceeds from sale of property and equipment ................. -- 280
Change in
Income taxes recoverable/payable ......................... 8,328 (17,585)
Other receivables ........................................ (58,803) (54,265)
Land and improvements held for future development ........ (1,220,149) (73,907)
Other assets ............................................. (99,682) (9,744)
Accounts payable, accrued expenses and other liabilities . (51,252) (44,649)
Accrued interest payable ................................. 50,928 1,247
Real estate contracts receivable ......................... (408,257) (42,566)
----------- -----------
Net cash provided by (used in) operating activities $(1,806,668) $ 2,407,033
=========== ===========
The accompanying notes are an integral part of these statements.
Westland Development Co., Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 2001 and 2000
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
1. History of Company and Beginning Basis of Financial Reporting
-------------------------------------------------------------
In 1892, the descendants of the owners of a land grant deeded in 1692 by the
Kingdom of Spain became incorporators of a land grant corporation named Town
of Atrisco. Ownership of the Town of Atrisco was based on proportionate
ownership of the land grant. In 1967, the Town of Atrisco was reorganized
and became Westland Development Co., Inc. (the "Company"), with the heirs
receiving shares in the Company in proportion to their ancestors' interests
in the Town of Atrisco corporation. The net assets of $232,582 at the date
of reorganization were assigned as follows:
Value of no par common stock as
stated in the Articles of Incorporation $ 8,500
Additional paid-in capital 224,082
--------
$232,582
========
The Company estimated that it owned approximately 49,000 acres of land at
the date of incorporation as Westland Development Co., Inc. Such acreage was
used as the beginning cost basis for financial reporting purposes and was
valued at $127,400 ($2.60 per acre) based on an appraisal in 1973 which
determined the approximate value of the land in 1907. This date approximates
the date that the Patent of Confirmation covering the land comprising the
Atrisco Land Grant was given to the Town of Atrisco by the United States of
America. Since the date of the Patent of Confirmation, the Company's acreage
has increased in market value, but a full determination of such value has
not been made.
2. Nature of Operations
--------------------
The Company develops, sells or leases its real estate holdings, most of
which are located near Albuquerque, New Mexico. The Company may use joint
ventures or participation in limited partnerships to accomplish these
activities. Revenue sources for the years ended June 30, 2001 and 2000
consist primarily of proceeds from land sales and rentals from developed
properties, such as single-tenant retail stores and office space. Land sales
are primarily to commercial developers and others in the Albuquerque area
and certain governmental agencies, and the terms of sale include both cash
and internal financing by the Company. Such sales are collateralized by the
land. The Company has relied primarily upon cash land sales over the past
several years due to the collection risk associated with real estate
contracts.
3. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents are considered to include highly liquid
investments with maturities of three months or less and money market funds.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits and in certain other funds which are not
federally insured. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED
4. Investments
-----------
Short-term investments include treasury bills carried at fair value. Such
investments generally have maturities of more than three months and less
than one year.
Investments in partnerships and joint ventures owned 20% to 50% are
accounted for by the equity method. Accordingly, the financial statements
include the Company's share of the investees' net earnings.
5. Land and Improvements Held for Future Development
-------------------------------------------------
Land and improvements held for future development are recorded at cost not
to exceed net realizable value. Improvements consist of abstracts, surveys,
legal fees, master and sector plans, infrastructure improvements and other
costs related to land held by the Company which are allocated to respective
tracts primarily by specific identification of costs.
6. Income-Producing Properties and Property and Equipment
------------------------------------------------------
Income-producing properties and property and equipment are stated at cost,
less accumulated depreciation, computed on a straight-line basis over their
estimated lives of three to 30 years. The cost of the building in which the
Company has its offices, a portion of which is rented to others, has been
allocated to income-producing properties and property and equipment based
upon square footage.
7. Recognition of Income on Real Estate Transactions and Rentals
-------------------------------------------------------------
The Company recognizes the entire gross profit on sales where the down
payment is sufficient to meet the requirements for the full-accrual method.
Transactions where the down payment is not sufficient to meet the
requirements for the full-accrual method are recorded using the deposit or
installment method. Under the deposit method, cash received is recorded as a
deposit on land sale. Under the installment method, the Company records the
entire contract price and the related costs at the time the transaction is
recognized as a sale. Concurrently, the gross profit on the sale is deferred
and is subsequently recognized as revenue in the statements of operations as
payments of principal are received on the related contract receivable.
Rental income is recognized when earned under lease agreements. Rents
received in advance are deferred until earned. Revenue from leases with
escalating rental payments are recognized on a straight-line basis over the
minimum lease term. For leases with provisions for additional rental
payments based on percentages of annual sales, contingent rental income is
recognized when the lessee provides an accounting which reflects the
contingent rental income has been earned under the terms of the lease
agreements.
8. Income Taxes
------------
Deferred income tax assets or liabilities are determined based on the
difference between financial statement and tax bases of certain assets and
liabilities as measured by the enacted tax rates in effect using the
liability method.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED
9. Earnings (Loss) Per Common Share
--------------------------------
Earnings (loss) per common share are based upon the weighted average number
of common shares outstanding during the year, including the number of no par
value common shares which may be issued in connection with eliminating
fractional shares (which resulted from the determination made by the Court
in the heirship case) and the number of no par value common shares for which
the Court ruled that no incorporator or heirs existed. The Company has no
potential common stock items.
10. Use of Estimates
----------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect certain reported amounts and disclosures;
accordingly, actual results could differ from those estimates.
11. Long-Lived Assets
-----------------
Long-lived assets to be held and used are reviewed for impairment, generally
on a property-by-property basis, whenever events or changes in circumstances
indicate that the related carrying amount may not be recoverable. When
required, impairment losses are recognized based upon the estimated fair
value of the asset.
NOTE B - REAL ESTATE CONTRACTS RECEIVABLE
Real estate contracts receivable at June 30, 2001 consist of three
contracts, one payable in monthly installments of principal and interest and
two due in lump sum payments of principal and interest at maturity with
interest rates from 8% to 9.5%, and are collateralized by land.
Principal collections due on real estate contracts receivable for the years
ending June 30 are as follows:
2002 $455,308
2003 9,806
2004 -
2005 -
2006 10,000
-------
$475,114
=======
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE C - LAND AND IMPROVEMENTS HELD FOR FUTURE DEVELOPMENT
The Company estimates that it presently owns in excess of 59,000 acres of
land, primarily including land located within the boundaries of the Town of
Atrisco Land Grant and land located elsewhere which the Company has acquired
since incorporation. Plans for ultimate development of the properties have
not been finalized.
Land and improvements consist of the following at June 30, 2001:
Land $1,058,283
Improvements 7,133,188
---------
$8,191,471
=========
NOTE D - INCOME-PRODUCING PROPERTIES
Income-producing properties consist primarily of five single-tenant retail
store buildings and a portion of the Company's office building and are
summarized as follows at June 30, 2001:
Buildings and equipment $ 8,787,426
Less accumulated depreciation 1,145,219
----------
7,642,207
Land 4,201,715
----------
$11,843,922
==========
The Company's rentals from income-producing properties are principally
obtained from tenants through rental payments as provided for under
noncancelable operating leases. The lease terms range from one to 20 years
and typically provide for guaranteed minimum rent, five-year renewals at
tenants' options, percentage rent and other charges to cover certain
operating costs.
Minimum future rentals from income-producing properties on noncancelable
tenant operating leases as of June 30, 2001 are as follows:
Year ending June 30
2002 $ 1,229,103
2003 1,210,947
2004 1,213,930
2005 1,144,675
2006 1,041,581
Thereafter 10,248,121
----------
$16,088,357
==========
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE E - NOTES, MORTGAGES AND ASSESSMENTS PAYABLE
Notes, mortgages and assessments payable are summarized as follows at June
30, 2001:
Promissory note, due in monthly installments
of $17,970 through May 2015, including interest at
9.37%; collateralized by income-producing properties $ 1,673,491
Promissory note, due in monthly installments of $9,079
through July 2014, including interest at 8%;
collateralized by income-producing properties 878,804
Note payable, due in monthly installments of $6,893
through September 2015, including interest at 8.75%;
collateralized by income-producing properties 670,405
Mortgage note, due in monthly installments of $24,682,
including interest at 8.52%, due November 1, 2016;
collateralized by income-producing properties 2,537,296
Mortgage note, due in monthly installments of $25,403,
including interest at 7.8%, due April 15, 2020;
collateralized by income-producing properties 3,004,348
Note payable, due in monthly installments of $5,140
through February 2002, including interest at 9%;
collateralized by specific tracts of land; paid off
in July 2001 34,876
Balloon note, interest due quarterly at 9%,
principal due March 2003; collateralized by specific
tracts of land; paid off in July 2001 83,048
Revolving line of credit with a bank, variable
interest payable quarterly (7% at June 30, 2001),
principal due September 29, 2001; collateralized
by real estate with borrowings up to $2,000,000 800,000
Revolving line of credit with a bank, interest payable
quarterly at 8.25%, principal due April 25, 2002;
collateralized by real estate with borrowings up to
$1,600,000 1,509,681
Assessments payable 2,196
-----------
$11,194,145
===========
Aggregate required principal payments on the notes, mortgages and
assessments payable as of June 30, 2001 are as follows:
Year ending June 30
2002 $ 2,703,673
2003 298,045
2004 324,363
2005 353,016
2006 384,213
Thereafter 7,130,835
----------
$11,194,145
==========
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE F - INCOME TAXES
An analysis of the deferred income tax assets and liabilities as of June 30,
2001 is as follows:
Deferred tax assets
Improvements held for future development $ 129,728
Property, equipment and land 553,397
Investments 24,192
Other 122,346
Valuation allowance (121,216)
---------
708,447
Deferred tax liabilities
Deferred tax gain on involuntary
conversion of land 6,124,870
---------
Net deferred tax liability $5,416,423
=========
Income tax expense (benefit) consists of the following:
Year ended June 30,
--------------------------
2001 2000
--------- ----------
Current
Federal $(111,429) $1,015,805
State (16,668) 281,610
--------- ----------
(128,097) 1,297,415
Deferred
Federal 35,257 44,497
State 12,118 12,552
--------- ----------
47,375 57,049
--------- ----------
$ (80,722) $1,354,464
========== ==========
The income tax provision is reconciled to the tax computed at statutory
rates as follows:
Year ended June 30,
-------------------------
2001 2000
-------- ---------
Tax expense (benefit) at statutory rates $(162,872) $1,253,466
State income taxes at statutory rates (36,407) 280,186
Change in valuation allowance - (194,784)
Nondeductible expenses 21,459 19,926
Other 1,195 (4,330)
Revision of prior year estimates 95,903 -
-------- ---------
Total expense (benefit) $ (80,722) $1,354,464
======== =========
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE F - INCOME TAXES - CONTINUED
A valuation allowance of approximately $121,000 has been recognized at June
30, 2001 based on estimates of tax assets which are not likely to be
realized in the future. Significant changes in assumptions concerning future
taxable income and deductions may cause changes in the valuation allowance.
NOTE G - COMMON STOCK
Under its original Articles of Incorporation (the "Articles"), the Company
was authorized to issue 1,964,448 shares of common stock. During 1999, the
Articles were amended to eliminate the authority to issue 736,668 shares of
Class A common stock for $1.45 a share. The remaining authorized stock is as
follows:
(a) 736,668 shares of no par value common stock to represent $8,500
estimated value of land held by the Town of Atrisco;
(b) 491,112 shares to be sold for a price to be determined by the Board
of Directors, designated as Class B, $1 par value, common stock. The
holders of no par value common stock have no preemptive rights to
purchase Class B stock.
At June 30, 2001, the 5,047 shares of no par value common stock, upon
judicial determination, can be distributed to stockholders of record as of
the date of incorporation.
There is no established market for the Company's common stock. At June 30,
2001, 714,841 shares of the Company's no par value common stock were issued
and outstanding. Of the 5,047 shares of no par value common stock issuable,
1,872 shares may be issued in connection with eliminating fractional shares
which resulted from the determinations made by the Court in the heirship
case and 3,175 shares represent shares for which the Court in the heirship
case ruled that no incorporator or heirs existed. The Company also has
reacquired and canceled 16,780 shares of no par value common stock which
have been constructively retired. These shares have not been formally
retired and, as such, may be issuable to stockholders of record as of the
date of incorporation.
During the year ended June 30, 1999, the Board of Directors approved
protection against takeover measures whereby a threat of change of three or
more directors in any one year would result in directors threatened with
replacement being granted an immediate Class B stock bonus of 5,000 shares
if in office as a director ten years or more, and 2,500 shares of Class B
stock if in office as a director for less than ten years. The maximum number
of shares which could be issued under this agreement at June 30, 2001 is
40,000 shares.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE H - SEGMENT INFORMATION
The Company operates primarily in two industry segments. They are as
follows:
Land - Operations involve the development and sale of tracts,
both residential and commercial. In addition, included
are incidental revenues from leasing of grazing rights.
Rentals - Operations involve rentalsfrom five single-tenant retail
store buildings and a portion of the Company's office
building.
Financial information for each industry segment is summarized as follows:
2000 2001
----------------------------------------------------- --------------------------------------------------
General General
Land Rentals corporate Total Land Rentals corporate Total
----------- ----------- ----------- ----------- ----------- --------- ----------- -----------
Revenues ............. $ 2,020,990 $ 1,108,177 $ -- $ 3,129,167 $ 6,511,919 $ 843,105 $ -- $ 7,355,024
Operating income ..... 471,768 728,473 (1,031,133) 169,108 4,658,425 508,774 (1,126,633) 4,040,566
Interest income ...... -- -- 141,122 141,122 -- -- 234,872 234,872
Interest expense ..... (109,256) (668,699) (38,402) (816,357) (20,106) (536,240) (48,931) (605,277)
Income tax expense
(benefit) .......... -- -- (80,722) (80,722) -- -- 1,354,464 1,354,464
Identifiable assets .. 8,913,781 12,061,614 2,890,531 23,865,926 7,141,245 8,426,628 4,669,789 20,237,662
Capital expenditures . -- 3,906,671 7,010 3,913,681 -- 169,624 68,657 238,281
Depreciation ......... -- 265,528 57,729 323,257 -- 188,037 71,216 259,253
General corporate assets consist primarily of cash, furniture, equipment and
a portion of an office building, of which the remaining portion is included
in rentals.
NOTE I - BENEFIT PLANS
The Company has certain defined contribution employee retirement plans that
provide for employee and employer contributions. The Company's contribution
expense for these plans was $107,000 and $95,000 for 2001 and 2000,
respectively.
NOTE J - SALES TO MAJOR CUSTOMERS
Sales to major customers are summarized as follows:
During the year ended June 30, 2001, land sales to two customers
individually accounted for 35% and 19% of total revenues.
During the year ended June 30, 2000, land sales to three customers
individually accounted for 12%, 29% and 16% of total revenues.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE K - COMMITMENTS AND CONTINGENCIES
The Company is engaged in various lawsuits either as plaintiff or defendant
which have arisen in the conduct of its business which, in the opinion of
management, based upon advice of counsel, would not have a material effect
on the Company's financial position or operations.
The Company has entered into employment contracts with eight of its key
officers and employees for periods from one to five years which are
automatically renewed for one additional period. In the event of involuntary
employee termination, these employees may receive from one to six times
annual compensation. The remaining terms under the agreements range from one
to nine-and-one-half years and the maximum salaries to be paid under the
remaining contract periods are approximately $1,283,000.
NOTE L - RELATED PARTY TRANSACTIONS
The Company purchases its directors' and officers' liability insurance
through a corporation controlled by a member of the Board of Directors.
Total premiums for these policies paid in 2000 were $92,500.
The note receivable - related party is from a joint venture partner, is
payable in monthly installments of $1,000, including interest at 8.5%, and
is collateralized by developed property. The note matures November 2014.
NOTE M - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value information, which
pertains to the Company's financial instruments, and does not purport to
represent the aggregate net fair value of the Company. The carrying amounts
in the table are the amounts at which the financial instruments are reported
in the financial statements.
All of the Company's financial instruments are held for purposes other than
trading.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
1. Cash and Cash Equivalents
-------------------------
The carrying amount approximates fair value because either the Company has
the contractual right to receive immediate payment or because of short
maturities.
2. Short-Term Investments
----------------------
Short-term investments represent investments in treasury bills and are
carried at fair value.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2001 and 2000
NOTE M - FINANCIAL INSTRUMENTS - CONTINUED
3. Real Estate Contracts Receivable
--------------------------------
These notes receivable are generally collateralized by real estate and
accrue interest at 8% to 9.5%. The fair value of real estate notes is based
upon the present value of future cash flows using current interest rates.
4. Note Receivable - Related Party
-------------------------------
Note receivable - related party is valued at the present value of future
cash flows based on the cur-rent rates at which similar loans would be made
to borrowers with similar credit ratings.
5. Notes, Mortgages and Assessments Payable
----------------------------------------
The discounted amount of future cash flows using the Company's current
incremental rate of bor-rowing for similar liabilities is used to estimate
fair value.
The carrying amounts and estimated fair values of the Company's financial
instruments at June 30, 2001 are as follows:
Carrying Estimated
amount fair value
----------- -----------
Financial assets
Cash and cash equivalents $ 764,001 $ 764,001
Short-term investments 1,497,275 1,497,275
Real estate contracts receivable 475,114 475,114
Note receivable - related party 99,707 111,830
Other receivables 152,399 152,399
Financial liabilities
Notes, mortgages and assessments
payable 11,194,145 11,579,135
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with Accountants of the kind
described by Item 304 of Regulation S-B at any time during Westland's two (2)
most recent fiscal years.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Background Information for Officers and Directors
Directors
Barbara Page, age 67, has been a Director, a member of the Executive Committee
and the Registrant's President and Chief Executive and Chief Financial Officer
since 1989. Ms. Page is a member of the Albuquerque Economic Forum, is a member
of National Association of Industrial and Office Properties, is on the board of
Albuquerque Economic Development Inc., is also a member of the Albuquerque
Chamber of Commerce, the Albuquerque West Side Association, the Albuquerque
Hispano Chamber of Commerce and New Mexico Home Builders Association.
Polecarpio (Lee) Anaya, age 70, has been a Director, the Company's Executive
Vice President and Assistant Secretary/Treasurer. Mr. Anaya has served as
Chairman of the Executive Committee since 1989. Mr. Anaya served as a member of
the Town of Atrisco Board of Trustees from 1954 through 1959. From 1958 until
his retirement in March of 1996, Mr. Anaya owned and operated Lee's Conoco
and Lee's American Parts in Albuquerque.
Charles V. Pena, age 50, has been a Director since 1996. He is a member of the
board of directors of El Campo Santo, Inc., and a member of the Company's
Disclaimer Committee. Mr. Pena retired from Safeway stores after 19 years in
that employment. During part of that time, he was a member of the Retail Clerk's
Union where he sat on two negotiating committees and twice ran for the
Presidency of the Union. Mr. Pena attended the University of New Mexico and the
University of Albuquerque, majoring in business courses. Since 1993, Mr. Pena
has owned and operated CJ's New Mexican Food Restaurant in Albuquerque,
New Mexico.
Sosimo Sanchez Padilla, age 71, is Chairman of the Board of Directors. Mr.
Padilla has served as a Director since 1971 and has been the Chairman of the
Board of Directors for the last nine years and is a member of the Company's
Executive Committee. Mr. Padilla has been retired from Albuquerque Publishing
Company for more than the past 13 years. Mr. Padilla has served on the State of
New Mexico Border Research Institute Support Council and National Association of
Industrial and Office Properties; was Chairman of the New Mexico Highway
Commission from 1982 to 1986; served as a Trustee for the University of
Albuquerque; also served as a Director of the Westside Albuquerque Chamber of
Commerce; the Greater Albuquerque Chamber of Commerce, and the Albuquerque
Hispano Chamber of Commerce. Mr. Padilla was a founder of and for more than 20
years served as a Director of the Bank of New Mexico. In March of 1995, he
became a Director of Rancher's State Bank. From 1996 to the present, he has
served as a Director of the Hispano Chamber of Commerce in Albuquerque.
Joe S. Chavez, age 64, has served as a Director since 1995. He is a member of
the Company's Disclaimer Committee. Mr. Chavez served on the Petroglyph National
Monument Advisory Committee. For more than the past 5 years, Mr. Chavez has
been a co-owner of Regina's Dance Studio, a business specializing in the sale of
gymnastics equipment, costume and ballet apparel and coordination of dance
performances and other functions. Mr. Chavez was employed as a Sales Consultant
with Casey Luna Ford and for more than the past three years has been employed
by with Galles Chevrolet. Mr. Chavez was employed for 20 years by Kimbell Co.,
OBA Foodway, as Manager Director of store operations. Mr. Chavez served in the
Naval Reserve as Front Line Operations, Hydraulics Structural-Line Trouble
Shooter.
Carlos Saavedra, age 75, has served as a Director since 1989. Dr. Saavedra
is the Chairman of the Company's Disclaimer Committee and was a member of the
Historic Research Committee for the Petroglyph National Monument, the National
Advisory Board on Child Nutrition, the Ethnic Heritage Studies Task Force,
the Board of Directors of the La Compania de Teatro de Alburquerque and the
Albuquerque Westside Coalition of Businesses. He holds degrees as follows:
B.S. in Education, M.A. in School Administration, Ed.S. in Bilingual
Education, and Ed.D. in linguistics. Until his retirement in 1985, he was
employed as a teacher, administrator and consultant for school systems in
New Mexico, Colorado and California, and served as a consultant to the
Ministries of Education in Caracas, Venezuela and Cochabamba, Bolivia.
Dr. Saavedra received a Presidential Citation for Service Beyond the Call of
Duty and is listed in the Who's Who of American Education. From 1989 to 2000
Dr. Saavedra owned and operated Aspen Country Florist in Albuquerque.
David C. Armijo, age 84, has been a Director since 1976 and Secretary and
Treasurer since 1989. Mr. Armijo is President and Chairman of the Board of
California All Risk Insurance Agency, Inc., in Los Angeles, California.
He is a member of the Board of Directors of the Lockheed Martin Aircraft
Overseas Association, the San Gabriel Valley Medical Center, Planning
Commissioner for the City of San Gabriel, California, and Chairman of the
Finance and Insurance Committee of the Garibaldina Society of California.
Mr. Armijo holds a Bachelor of Arts Degree in Business Administration from the
University of California at Berkeley. During World War II, Mr. Armijo
was assigned as Civilian Technician to the Eighth Air Force in Europe, and
subsequently as Eastern Representative for Lockheed. Mr. Armijo is a
licensed pilot. Mr. Armijo holds A&E Licenses as well as an Air Craft Radio
Telephone License.
Josie G. Castillo, age 69, has been a Director since 1984, and served as the
Company's Treasurer from 1985 to 1989. She is the Chairman of the board of
directors of El Campo Santo, Inc. and is a member of the Company's Disclaimer
Committee. Mrs. Castillo is a member of the Company's Executive Committee. From
1983 until her retirement in 1995, she was employed by the Human Services
Department of the State of New Mexico in Albuquerque, New Mexico.
Carmel Chavez, age 82, has been a Director since 1967, the time of
conversion of the Town of Atrisco to Westland. He is one of the signers of the
Proposal for Conversion of Town of Atrisco to Westland Development
Co., Inc. and was one of the Company's incorporators. He is the
Vice-Chairman of El Campo Santo, Inc. and is a member of the Company's
Executive Committee and Disclaimer Committee. Until his retirement in 1983,
Mr. Chavez had been employed for 27 years by the Albuquerque Public
Schools as head custodian.
Officers
As stated above, Mr. Sosimo S. Padilla is the Chairman of the Board of
Directors, Ms. Barbara Page is the President, Chief Executive Officer
and Chief Financial Officer, Mr. Lee Anaya is the Executive Vice President
and Assistant Secretary/Treasurer, and Mr. David C. Armijo is the
Secretary/Treasurer for the Company. Other officers of the Company are the
following:
Leroy J. Chavez, age 40 was appointed to the position of Vice President of
Development on April 26, 1996. Mr. Chavez has been employed by the Company
since August, 1984, with his primary responsibility being the supervision
of engineering and development related to the Company's properties.
Mr. Chavez' responsibilities include the development of the Company's
projects as well as the planning and zoning of its land holdings.
Mr. Chavez holds a B.S. degree from the University of New Mexico in Civil
Engineering. He is also the qualifying party for the Company's General
Contractor's License.
Brent Lesley, age 41 was appointed to the position of Vice President of
Marketing on April 26, 1996. Mr. Lesley has been employed by the Company since
May of 1986. Mr. Lesley's responsibilities are centered on the sale of real
property, from raw land to developed lots. Mr. Lesley's responsibilities
also include overseeing the acquisition of property for the Company's property
portfolio and the procurement of project financing on both a construction
and permanent basis. Mr. Lesley holds a B.S. degree from Iowa State
University and an MBA degree from the University of New Mexico.
Fred Ambrogi, age 50, was appointed to the position of Vice President in the
Development Division on December 30, 1999. Mr. Ambrogi has been a Company
employee since February 1993. Mr. Ambrogi's responsibilities primarily focus
on the planning, design, oversight and coordination of specific Company
development projects, including the negotiation, oversight and coordination
of project related engineering and construction contracts. Mr. Ambrogi holds
a B.F.A. degree from the University of New Mexico in Architecture. He has
more than 23 years of experience in land development.
Family relationships
None of the Directors, nominees or other Officers of the Company are
related (as first cousins or closer) by blood, marriage or adoption to any other
Director, nominee, or Officer.
Meetings of the Board
The Board holds regular meetings monthly and special meetings as the
business of the Company requires. During the past fiscal year the Board held 12
regular meetings, and no special meetings. All Board members attended at least
85% of the meetings.
The Board has no audit, nominating or compensation committees, but does
have an Executive Committee consisting of Sosimo Sanchez Padilla, Polecarpio
(Lee) Anaya, Barbara Page, Josie Castillo and Carmel Chavez, with an alternate
being Carlos Saavedra. Pursuant to the Company's Bylaws, the Executive Committee
performs those functions delegated to it by the Board. The Executive Committee
did not meet during the past fiscal year.
Josie Castillo, Carmel Chavez and Charles Pena also serve as Directors
and Dr. Saavedra serves as an alternate Director of El Campo Santo, Inc.,
a wholly owned non-profit corporation that manages and operates 3 cemeteries
maintained by the Company. Ms. Castillo and Mr. Chavez also serve as Chairman
and Vice Chairman, respectively. These Directors held four meetings during
the year, which were attended by all Board members.
Beneficial Ownership Reporting Requirements
All reports required by Section 16(a) of the Exchange Act to be filed
during the fiscal year were filed.
ITEM 10: EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal year
ended June 30, 2001, 2000 and 1999, including bonuses and deferred cash
compensation (if any), of the certain Directors, the Company's Chief Executive
Officer and the three other highest paid executive officers:
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
(a) (b) (c) (d) (e)
Other
Name and Annual
Principal Salary Bonus Compensation
Position Year ($) ($)(1) ($)
-------- ---- ------- ------ ------------
Barbara Page (1) ................... 2001 110,000 -- 13,967
President, CEO and Director ....... 1999 110,000 -- 13,951
1999 138,555(4) -- 13,967
Polecarpio (Lee) Anaya (1)(2) ...... 2001 -- -- 47,776
Executive Vice President .......... 2000 -- -- 47,756
and Director ................... 1999 -- -- 47,776
Sosimo S. Padilla(1)(2) ........... 2001 -- -- 47,776
Chairman of the Board ........... 2000 -- -- 47,756
of Directors .................. 1999 -- -- 47,776
David C. Armijo(1)(3)............... 2001 -- -- 18,276
Secretary and Director ............ 2000 -- -- 20,556
1999 -- -- 18,876
-----------------
1) Mr. Padilla, Mr. Anaya, Mr. Armijo and Dr. Saavedra are each paid a
Directors fee of $1,400 per month. Ms. Page and each of the Company's
other Directors are paid a Directors fee of $1,100 per month.
2) Mr. Padilla and Mr. Anaya are each paid $30,000 per year pursuant to
consulting agreements.
3) Does not include payments made to Mr. Armijo's insurance agency, if
any, by the insurance carrieras commossions form policies owned by the
Company.
4) No executive officer except Ms. Page received $100,000 or more in
total annual compensation and bonuses during the fiscal year.
There were no options issued or outstanding at any time during the
fiscal year relating to the purchase of shares of any Class of the Company's
securities by members of the Board of Directors.
The Company has no long term compensation arrangements with its
directors other than those discussed herein.
Employment and Consulting Arrangements with Current Officers
Since December of 1991 Ms. Page has been employed as the Company's
President under a renewable five year employment agreement. If Ms. Page is
involuntarily terminated during the term of the agreement she shall be paid, in
addition to any salary earned to the date of such termination, an amount of cash
equal to six times the amount of her annual salary on the date of termination.
Mr. Padilla, the Company's Chairman, and Mr. Anaya, the Company's
Executive Vice President, are each paid $30,000 per year for their services to
the Company under renewable five year consulting agreements. If either Mr.
Padilla's or Mr. Anaya's consulting agreement is involuntarily terminated
during the term of the agreement, the person so terminated shall be paid an
amount of cash equal to six times the annual compensation rate then in effect
under the contract.
Pension Plan
Effective January 1, 1997, the Company established a Money Purchase
Profit Sharing Deferred Compensation Plan (the "97 Plan") and abandoned the
SEP-IRA plan, which it had established in 1991. No payments were made to the
abandoned plan after fiscal 1997. Under the `97 Plan, the Company contributes up
to 15% of the aggregate earnings of participating employees. During fiscal 1999,
2000 and 2001 $121,197, $88,831 and $107,078, respectively, were contributed by
the Company pursuant to the `97 Plan.
Ms. Page, Mr. Leroy J. Chavez, Mr. Lesley and Mr. Ambrogi participate
in all employee benefit plans and Mr. Chavez, Mr.Lesley and Mr. Ambrogi
participate in any bonuses, which may be declared by the Board of Directors.
Each of Westland's Vice Presidents also have one year agreements with
the Company providing that if they are involuntarily terminated each of them
will be paid an amount equal to one year's salary.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 15, 2001, the
beneficial ownership of No Par Value Stock and Class B Stock by Director of the
Company and by all officers and Directors as a group. The information as to
beneficial stock ownership is based on data furnished by each person. Each
person has sole voting and investment power as to all shares unless otherwise
indicated. No person is known by the Company to own beneficially 5% or more of
its issued and outstanding equity securities.
NO PAR SHARES CLASS B SHARES
Amount Percent Amount Percent
and of and of
Nature of Class Nature of Class
Beneficial Beneficially Beneficial Beneficially
Ownership Owned Ownership Owned (1)(2)
---------- ------------ ---------- ------------
CLASS "A" DIRECTORS
Barbara Page ................ 2,647 * 11,300 13.12
401 Coors Blvd., N.W ........
Albuquerque, N.M. 87121
Polecarpio (Lee) Anaya ...... 70 * 1,000 1.16
1815 Sunset Gardens Rd., S.W
Albuquerque, N.M. 87105
Charles V. Pena ............. 100 * 500 *
2312 Britt St., N.E .........
Albuquerque, N.M. 87112
CLASS "B" DIRECTORS
Sosimo S. Padilla ........... 2,308(3) * 20,700 24.04
401 Coors Blvd., N.W ........
Albuquerque, N.M. 87121
Joe S. Chavez ............... 250 * 200 *
3901 Donald Rd., S.W ........
Albuquerque, N.M. 87105
Carlos Saavedra ............. 141 * * *
220 Tohatchi, N.W ...........
Albuquerque, N.M. 87104
CLASS "C" DIRECTORS
David C. Armijo ............. 3,132 * 5,000 5.81
401 Coors Blvd., N.W ........
Albuquerque, N.M. 87121
Josie Castillo .............. 738 * 10,000 11.61
401 Coors Blvd., N.W ........
Albuquerque, N.M. 87121
Carmel Chavez ............... 617 * 5,700 6.62
401 Coors Blvd., N.W ........
Albuquerque, N.M. 87121
OFFICERS
Leroy J. Chavez (4) ......... * * * *
401 Coors Blvd., N.W ........
Albuquerque, New Mexico 87121
Brent Lesley (4) ............ * * * *
401 Coors Blvd., N.W ........
Albuquerque, New Mexico 87121
Fred Ambrogi (4) ............ * * * *
401 Coors Blvd., N.W ........
Albuquerque, New Mexico 87121
Directors and Officers
as a group (11 people) .... 10,003(1-3) 1.3 (1-3) 54,400 63.18
-------------
1) Each of the classs B Directors is a Management's nominee for Director at
the Annual Meeting of Shareholders.
2) In July of 2001, Ms. Page purchased 1,000 Class B shares from Mr. Anaya.
3) Of which, 46 shares are owned by Mr. Padilla's wife.
4) These officers are not lineal descendants of an incorporator of the Town
of Atrisco, New Mexico, and cannot own Company's shares.
* Represents less than 1% of the issued No Par Value common shares. The total
of the No Par Shares and Class B Shares owned by the Company's Officers and
Directors is approximately 8.12% of all such shares that might be voted at
the Annual Meeting of Shareholders.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1990, the Company appointed Mr. David C. Armijo's
California all-risk agency as its broker to obtain all of the Company's
insurance. Mr. Armijo has held a non-resident broker's license to sell insurance
in the State of New Mexico since 1962. That agency received a total of $9,250 in
commissions for the placement of the Company's insurance in fiscal 2000 and $-0-
in 2001.
During fiscal 2000 and 2001, the Company compensated Dr. Carlos
Saavedra for lobbying before the New Mexico Legislature on behalf of the
Company. The total compensation to Dr. Saavedra for this work was $3,500 in 2000
and $-0- in 2001.
Mr. Padilla, Mr. Anaya, Dr. Saavedra and Mr. Armijo were paid
Director's fees of $1,400 per month and each other Director received a
Director's fee of $1,100 per month.
PART IV
ITEM 13: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. Financial Statements:
Report of Independent Certified Public Accountants
Balance Sheet
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
2. Exhibits:
(3) Articles of Incorporation and Bylaws:
(3)(I) Articles of Incorporation filed as an exhibit to Westland's Registration
Statement on Form 10-K on September 28, 1982 and incorporated herein by
reference.
(3)(ii) Restated Bylaws filed as an exhibit with Westland's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1993.
(10) Material Contracts:
(10.1) Consulting Agreement with Sosimo Padilla, dated December 18, 1992, as
filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1993, and incorporated herein by reference.
(10.2) Consulting Agreement with Polecarpio (Lee) Anaya, dated December 18,
1992, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1993, and incorporated herein by reference.
(10.3) Employment Agreement with Barbara Page, dated December 18, 1992, as filed
with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1993, and incorporated herein by reference.
(10.4) Lease Agreement dated April 25, 1994, between Central Avenue Partners and
Walgreen Co., as filed with Westland's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1998, and incorporated herein by reference.
(10.5) Assignment of Lease dated April 20, 1995, from Central Avenue Partners to
Westland, as filed with Westland's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1995, and incorporated herein by reference.
(10.6) Lease Agreement dated March 14, 1995, between George Brunacini and
Jeannette Brunacini and Circuit City Stores, Inc., as filed with Westland's
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995, and
incorporated herein by reference.
(10.7) Assignment of Lease dated June 28, 1995, from George Brunacini and
Jeannette Brunacini to Westland, as filed with Westland's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1995, and incorporated herein by
reference.
(10.8) Lease Agreement dated March 19, 1996, between C.A.P. II, a New Mexico
general partnership, and Walgreen Co., as filed with Westland's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1996, and incorporated herein by
reference.
(10.9) Assignment of Lease dated June 21, 1996, from C.A.P. II, a New Mexico
general partnership, to Westland, as filed with Westland's Annual Report on Form
10-KSB for the fiscal year ended June 30, 1996, and incorporated herein by
reference.
(10.10) Lease Agreement dated June 29, 1999, between Marie Callender Restaurant
and Pie Shop, a California corporation, as filed with Westland's Annual Report
on Form 10-KSB for the fiscal year ended June 30, 1999.
Exhibits filed with this Form 10-KSB.
(10.11) Lease Agreement dated April 21, 1999 between C.A.P. II, a New Mexico
general partnership and Walgreen, Co., an Illinois corporation.
(11) Statement regarding computation of per share earnings is incorporated by
reference to Note A(9) to the Financial Statements incorporated herein by
reference to Westland's Annual Report to Shareholders for the Fiscal year ended
June 30, 2000.
Subsidiaries of Westland:
Westland has the following subsidiaries:
Name State of Incorporation
El Campo Santo, Inc New Mexico - non-profit
Westland Community Services, Inc New Mexico - non-profit
All other exhibits required by Item 601 of Regulation S-B are inapplicable to
this filing.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, Westland filed no
reports on Form 8-K:
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, Westland caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
WESTLAND DEVELOPMENT CO., INC.
By: Barbara Page
-------------------------
Barbara Page, President, Chief Executive Officer, Chief Financial Officer
and Director
Date: October 16, 2001
----------------
In accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of Westland and in the capacities and on the dates
indicated.
By: David C. Armijo
-------------------------
David C. Armijo, Secretary-Treasurer and Principal Financial Officer
Date: October 16, 2001
----------------
In accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of Westland and in capacities and on the dates
indicated.
By: David C. Armijo
-------------------------
David C. Armijo, Director
Date: October 16, 2001
----------------
By: Polecarpio (Lee) Anaya
-------------------------
Polecarpio (Lee) Anaya, Executive Vice President and Director
Date: October 16, 2001
----------------
By: Sosimo S. Padilla
-------------------------
Sosimo S. Padilla, Director and Chairman of the Board
Date: October 16, 2001
----------------
By: Josie G. Castillo
-------------------------
Josie G. Castillo, Director
Date: October 16, 2001
----------------
By: Carmel T. Chavez
-------------------------
Carmel T. Chavez, Director
Date: October 16, 2001
----------------
By: Joe S. Chavez
-------------------------
Joe S. Chavez, Director
Date: October 16, 2001
----------------
By: Charles V. Pena
-------------------------
Charles V. Pena, Director
Date: October 16, 2001
----------------
By: Carlos Saavedra
-------------------------
Carlos Saavedra, Director
Date: October 16, 2001
----------------
By: Barbara Page
-------------------------
Barbara Page, Director
Date: October 16, 2001
----------------
EX-10
2
ex101101.txt
LEASE
By this Lease, made in multiple copies the 21 day of
April, 1999, between CAP II, a New Mexico General
Partnership, hereinafter called "Landlord," and WALGREEN CO., an Illinois
corporation, hereinafter called "Tenant";
Landlord hereby leases to Tenant, and Tenant hereby rents from
Landlord, for the term commencing June l' 2000, and continuing to and
including May 31, 2060, subject to adjustment pursuant to Article 3 herein and
subject to prior commencement and to prior termination as hereinafter provided,
the premises to include both a building and other improvements and certain real
estate located at the northeast corner of Avenue of the Americas (Loop 375) and
Alameda Avenue in the City of El Paso, County of El Paso, State of Texas,
together with all improvements, appurtenances, easements and privileges
belonging thereto. The building to be erected and completed by Landlord shall
include not less than 112 feet of frontage facing Alameda Avenue and not less
than 135 feet of depth, being an area containing approximately 15,120 square
feet of first floor area (the "Building"). All of the foregoing shall be as
shown onthe plan attached hereto and made apart hereof as Exhibit "A," and as
legallydescribed in Exhibit "8" attached hereto and made apart hereof and the
Building, real estate and other improvements to be constructed thereon are
hereinafter collectively referred to as the "Leased Premises."
The Adjoining Property is shown on Exhibit "A" and is legally described
on Exhibit "8-1" attached hereto (hereinafter called "Adjoining Property").
THE TERMS, COVENANTS AND CONDITIONS OF SAID LETTING ARE AS FOLLOWS:
USE
1. Subject to Article 13 of this Lease and so long as Tenant shall operate in
the Leased Promises, Tenant shall operate a store similar in nature to a
majority of its other stores in the State of Texas, with the right to sell such
merchandise and provide such services, as Tenant may, from time to time, sell
and provide in a majority of its other stores in the State of Texas. Nothing
contained herein shall be construed so as to prohibit Tenant from expanding or
eliminating any department(s) or from expanding or eliminating any line(s) of
merchandise in the Leased Premises.
RENT
2. Tenant shall pay rent for the Leased Premises, as follows:
(a) A fixed rent of $28,166.66 per month, commencing on the Rent Commencement
Date (as defined in Article 6 hereof and continuing thereafter for the remainder
of the Term (as defined in Article 3[b] hereof). Fixed rent shall be payable on
the first day of each and every month in advance and shall be properly
apportioned for any period less then a full calendar month.
(b) If a sum equal to ----
2.0% of the Gross Sales, as hereinbelow defined, except from the sale of food
items and prescription items, if any, 0.5% of the Gross Sales from the sale of
food items and prescription items. if any, except prescriptions filled pursuant
to third party prescriptions plans defined below made by Tenant in the operation
of Tenant's store in the Leased Premises in any lease year (as defined in
Section [c] of Article 3) shall exceed the total fixed rent for such lease year,
then and in such event, and within forty-five (45) days after the end of each
lease year, Tenant shall pay to Landlord the amount of such excess as additional
percentage rent, However, in no event shall the total of fixed rent plus
additional percentage rent (if any) payable by Tenant in any lease year exceed
$676,000.00, which amount shall be proportionately decreased for any lease year
that is not comprised of a full twelve (12) months. Within forty- five (45) days
after the end of each lease year Tenant shall furnish to Landlord a statement of
the total amount of such Gross Sales for such lease year. The aforesaid
amount(s) shall be proportionately adjusted in the case of a lease year of more
or less than a full twelve (12) calendar months.
(c) The term "Gross Sales" as used herein is defined as the total amount of all
receipts, whether for cash or on credit (loss returns and refunds) from sales of
drugs, food, drinks, goods, wares and merchandise of every sort whatsoever, made
by Tenant in the operation of Tenant's store on the Leased Premises, or made by
any concessionaire on the Leased @remises. The following shall be specifically
excluded from Gross Sale": receipts' from sales of milk and all other
non-alcoholic beverages-, receipts from sales of tobacco products: receipts from
the sale of prescription items pursuant to third party
2
prescription plans, as defined below; receipts and commissions from the
operation of public telephones; license and transaction fees received from the
operation of automatic teller machines and any other electronic consumer service
apparatus to the extent such fees do not exceed five percent (5%) of fixed rent
paid in any lease year; credit card processing fees; intercorporate and
interstore sales or transfers; sales of government bonds, savings stamps and
other government securities; sales of postage stamps and ready stamped postcards
and envelopes; sales of government lottery tickets; sales at a discount to
employees', sales at a discount to doctors, dentists, hospitals, nurses, drug
stores or wholesale drug or supply houses; accounts receivable written off as
uncollectible, Tenant shall also have the right to deduct and exclude from Gross
Sales a sum equal to any approximate amounts which may be paid by Tenant or
which Tenant may add to or include in its selling prices of various articles by
reason of any sales taxes, use taxes, retailers' occupation taxes, excise taxes
at the retail level and the like, now or hereafter imposed and however entitled,
and which are based upon the amounts of sales or the units of sales.
Third party prescription plans shall be deemed to be those health benefit plans
wherein all or any portion of the cost of pharmaceuticals and any other items
obtained by a prescription are paid or reimbursed by an organization such as a
governmental agency, an entity created by state or federal law, an insurance
carrier, a health maintenance organization, a union, a trust or benefit
organization or an employer or employer group pursuant to an agreement between
Tenant (or Tenant's parent or any other corporation or entity that is a
subsidiary of or affiliated with Tenant or Tenant's parent) and such
organization.
(d) Tenant shall cause to be kept, in accordance with its customary accounting
procedure, records of the Gross Sales made by Tenant in the operation of
Tenant's store on the Leased Premises, Landlord and Landlord's duly authorized
representative, at reasonable times during business hours, shall have access to
such records at the place where the same are kept, for the purpose of inspecting
and auditing the same, provided that any such inspection and audit be made by
Landlord within six (6) months after the expiration of any lease year. If
Landlord does not object in writing to an statement above mentioned within said
time period, such statement shall be conclusively presumed to be correct and
final, and thereafter Tenant shall not be required to preserve the records from
which such statement was compiled. Landlord agrees not to divulge to any person
or entity Information obtained by Landlord and Landlord's representative from
such records or from the statements above mentioned, except to any mortgages or
prospective purchaser of the Leased Premises and except as may be necessary to
enforce of Landlord's rights under this Lease. Nothing herein contained,
however, shall be deemed to confer upon Landlord any interest in the business of
Tenant on the Leased Premises.
(e) Until further notice by Landlord to Tenant, rent checks shall be payable to
and mailed to:
CAP 11
c/o Peterson Properties
2325 San Pedro, N.E., Suits 2-A
Albuquerque, New Mexico IB71 10 Attention.- James A, Peterson
(f) Landlord shell, prior to the Rent Commencement Date, provide Tenant (Attn.
Fixed Assets Department, 300 Wilmot Road, Deerfield, IL
3
6001 5) with a completed IRS Form W-9, Any successor to Landlord shall likewise
provide Tenant with such completed IRS Form W-9 as a condition precedent to any
rent or other payment from Tenant, however rent and other required payments
shall accrue and shall be paid by Tenant upon receipt of the completed IRS Form
W-9.
INITIAL TERM, TERM, LEASE YEAR, OPTIONS
3. (a) The initial term of this Lease shall commence an the date that Tenant
accepts possession of the Leased Promises and shall continue to and include the
day immediately preceding the date that the term of this Lease commences as
below provided (the "Initial Term'). Tenant shall have no obligation to pay
rents or other charges during the Initial Term nor shall any of the same
accrue-, all rents and other charges specified in this Lease shall commence as
of the date that the term commences, unless otherwise expressly provided herein.
(b) The term shall commence on the Rent Commencement Date (as defined in Article
6) and shall continue for sixty (60) years thereafter (the "Term"); provided,
however, that if the Rent Commencement Date be other than the first day of the
calendar month, then the Term shall continue to and include the last day of the
same calendar month of the sixtieth (60th) year thereafter,
(c) The first lease year shall commence on the Rent Commencement Date and, if
such data be on the first day of a calendar month, shall end twelve (12) months
thereafter, or, if such date be other than the first day of the calendar month,
shall and on the last day of the same calendar month of the first year
thereafter, and each succeeding loses year shall be each succeeding twelve (12)
month period.
(d) Tenant shall have the right and option, at Tenants election, to terminate
this Lease effective as of the last day of the two hundred fortieth (240th) full
calendar month of the Term, effective as of the last day of the three hundredth
(300th) full calendar month of the Term, effective as of the last day of the
three hundred sixtieth (360th) full calendar month of the Term, effective as of
the last day of the four hundred twentieth (420th) full calendar month of the
Term, effective as of the last day of the four hundred eightieth (480th) full
calendar month of the Term, effective as of the last day of the five hundred
fortieth (540th) full calendar month of the Term, effective as of the last day
of the six hundredth (600th) full calendar month of the Term and effective as of
the last day of the six hundred sixtieth (660th) full calendar month of the
Term. if Tenant shall elect to exercise arty such option, Tenant shall send
notice thereof to Landlord, at least six (6) months prior to the date this Lease
shall so terminate, but no notice shall be required to terminate this Lease upon
the expiration of the Term.
DELIVERY OF POSSESSIC)N
-------------------------
4. (a) Landlord shall put Tenant Into exclusive physical possession of the
Leased Premises on or before April 1, 2000 or as soon as possible thereafter,
and in any case not later than November 1. 2001, and at the same time deliver to
Tenant a full set of keys to the Building. Tenant may, but shall not be required
to accept possession of the Leased Promises between November I and January 1. If
Tenant accepts physical possession of the Leased Premises during this period
Rent Commencement shall occur as set forth in Article 6.
4.
Landlord shall send written notice to Tenant, Attention: Director of
Construction, with a copy to the Law Department, at least forty-five (45) days
(but not more than sixty (60) days) before such possession is to be delivered.
Such notice shall set forth the date of delivery of possession, which shall be
an a Monday (unless such date is a legal holiday, in which case possession shall
be delivered the next business day), Additionally, as a condition precedent to
'the delivery of possession of the Leased Promises to Tenant, Landlord shall
send written notice to Tenant which shall be certified by Landlord's architect,
at least seven (7) but not more than twenty-one (21) days prior to the date of
delivery of possession, which notice shall confirm the date that possession
shall be delivered and that the Leased Promises is (or in the architect's
judgment will be as of the date of delivery of possession) substantially
complete and ready for occupancy- If possession is not delivered by November 1,
2001, Tenant, in addition to Tenant's remedies at law, equity or under this
Lease, may cancel this Lease by notice to Landlord. The Leased Promises upon
delivery shall be In good condition and repair, free of Hazardous Substances (as
defined below) whether or not disclosed by the study and report referred to in
Section (b) below, and shall fully comply with all lawful requirements and shall
be constructed in accordance with Article 5 hereof. In the event that there are
punchlist Items as of the date of delivery of possession of the Leased Premises
to Tenant, Landlord shall promptly and properly complete, the same. For purposes
hereof "punchlist items" shall be those minor item, the lncompletion of which
shall not impair Tenant's ability to fixture and/or merchandise and operate the
Leased Premises in the normal course. None of the items listed on Exhibit "D'
(Walgreens Now Store Requirements), shall be considered punchlist items and all
of the same must be satisfactorily completed prior to-the date of delivery of
possession of the Leased Premises to Tenant. Tenant shall have the right,
without being deemed to have accepted possession, to enter upon the Leased
Premises as soon hereafter as practical, to take measurements and install its
fixtures and exterior signs (including, but not limited to, the installation of
permanent and temporary signs), but such entry or the opening for business shall
not constitute a waiver as to the condition of the Leased Promises or as to any
work to be done or changes to be made by Landlord, or as to any other
obligations of Landlord hereunder. If available from appropriate governmental
authorities, Landlord shall secure from the appropriate governmental authority
and provide to Tenant prior to the delivery of possession of the Leased
Premises, a Certificate of Occupancy (or a Temporary Certificate of Occupancy
permitting occupancy pending the issuance of a Certificate of Occupancy in which
event the delivery to Tenant of a Certificate of Occupancy shall be deemed a
condition subsequent) subject only to those items to be completed by Tenant.
(b) (1) Landlord represents that other than as disclosed in that certain report
dated November 17, 1998 prepared by Sunbelt Laboratories, Inc. and entitled
"Phase I Environmental Site Assessment for Commercial Property, Northeast comer
of Intersection of Americas Avenue & Alameda Avenue, El Paso, El Paso County,
Texas 798313" (the "Report"), Landlord has no knowledge concerning any current
or previous use of the land and/or Building comprising the Leased Premises which
would lead a reasonable person to suspect that Hazardous Substances (as defined
below) were deposited, stored, disposed of or placed upon, about or under the
Leased Premises. The Report shall be certified to Tenant prior to delivery of
possession of the Leased Premises. In order to make the foregoing
representation, Landlord states that it has made due inquiry or Investigation as
appropriate. Landlord has provided to Tenant, at Landlord's solo cost and
expense, a copy of a Phase 1. Environmental Report. In the event the Report
discloses the existence of any Hazardous Substances in, on or under the Leased
Premises, Including, but not limited to,
5
the existence of any underground storage tanks and/or petroleum or petroleum
by-products, Landlord, at Landlord's sole cost and expense, prior to the date
Landlord delivers possession of the Leased Premises to Tenant, as provided in
Article 4, shall properly remove, and dispose of any such underground storage
tanks and shall properly remove and dispose of any Hazardous Substances and/or
petroleum or petroleum by-products. All such disposal and removal shall be
conducted in accordance with all federal, state and local laws, ordinances, and
rules or regulations, or other binding determinations of any federal, state,
local, or other governmental entity exercising executive, legislative, judicial,
regulatory, or administrative functions (whether now or hereafter existing). In
the event of any such removal and disposal by Landlord hereunder, upon
completion of the same the Leased Premises shall again be tested by the
environmental engineer and/or contractor and the results delivered to Tenant;
Landlord shall also deliver in such event all necessary governmental inspections
and approvals with respect to the removal, remediation and disposal work. Tenant
shall have no obligation to accept delivery of possession of the Leased Premises
until Landlord has complied with the provisions of this Section; provided,
however, that Tenant may, at Tenant's option, accept possession of the Leased
Premises prior to the completion of any remediation if Landlord provides Tenant
with final remediation plans and Tenant determines that the effectuation of said
remediation will not adversely Impact Tenants full use and enjoyment of the
Leased Premises.
(ii) "Hazardous Substances" shall mean any hazardous or toxic chemical, waste,
byproduct, pollutant, contaminant, compound, product or substance, including,
without limitation, asbestos, polychlorinated byphenyls, petroleum (including
crude oil or any fraction or byproduct thereof, and any material the exposure
to, or manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of which Is prohibited, controlled or regulated by any
Environmental Law.
(iii) "Environmental Law" shall mean any federal, state, regional, county or
local governmental statute, low, regulation, ordinance, order or code or any
consent decree, judgment, permit, license, code, covenant, deed restriction,
common law, or other requirement pertaining to protection of the environment,
health or safety of persons, natural resources, conservation, wildlife, waste
management, and pollution (including, without limitation, regulation of releases
and disposals to air, land, water and ground water), including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1 980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Solid and Hazardous Waste
Amendments of 1954, 42 U.S.C. 6901 et seq., Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, 33 U.S.C. 1251 et seq., Clean Air Act
of I 965, as amended, 42 U.S.C. 7401 et seq., Toxic Substances Control Act of
1976, 15 U.S.C. 2601 et seq., Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. 651 et seq., Emergency Planning and Community Right-to-Know
Act of 1986, 42 U,S.C. 11001 et seq., National Environrnental Policy Act of
1976, 42 U-S,C. 300(f) et seq., and all amendments as well as any similar state
or local statute or code and replacements of any of the same and rules,
regulations, guidance documents and publications promulgated thereunder.
(c) It shall be a condition precedent to the delivery of possession of the
Leased Premises, to Tenant that Landlord shall have first
6.
delivered to Tenant not later then seven (7) business days prior to the date for
delivery of possession as described in Section (a) of this Article 4
satisfactory evidence of Landlord's title together with each instrument, if any,
required by Section (b) of Article I 8. Tenants acceptance of possession of the
Leased Premises in the absence of full satisfaction of said condition precedent
shall in no manner be doomed a waiver thereof or of any of the requirements of
Article 18.
(d) Landlord shall, prior to the delivery of possession of the Leased Premises
to Tenant, cause Landlord's architect to certify to Tenant the square foot floor
area contained in the Building.
CONSTRUCTION BY LANDLORD
5. (a) Before delivering possession of the Leased Premises to Tenant, Landlord
shall obtain all required zoning and permits (other than Tenant's business
licenses) for the construction and operation of the Leased Premises. The
Building shall be of such exterior and structural design and character as is
acceptable to Tenant and as will also meet Tenant's requirements for its
permanent exterior signs, which may extend above the Building and shall be at
locations and of a size permitted by appropriate governmental authorities and
reasonably acceptable to Tenant. If local statute, ordinance, rule or regulation
prohibits or requires modifications to Tenant's sign drawings, as set forth in
the below described Plans, Landlord or its architect shall (i) so advise Tenant
(ii) revise the Plans as necessary to comply with governmental requirements and
(iii) submit the revised Plans to Tenant for its review and approval. The Leased
Premises and Building shall be erected and completed by Landlord, in accordance
with the plans and specifications described below, and shall contain Tenant's
specific requirements for the operation of Tenant's business, which requirements
will Include, among other things, the items and installations listed in the
Criteria Specifications for Self- Serve Walgreen Store prepared by Walgreen Co.,
revised July 1998, and Criteria Plans, including the drawings referenced on
Exhibit "C" attached hereto, heretofore delivered to Landlord and incorporated
herein by reference and made a part hereof (including but not limited to a
double lane drive-through window with a canopy). All such work by Landlord shall
be done by contractors selected by Landlord and acceptable to Tenant. Such work
shall comply with the requirements of public authorities and shall be done in a
first-class, good, and workmanlike manner, free and clear of all liens and
encumbrances for labor and materials furnished to Landlord. Except as otherwise
shown on Exhibit "A" or in the Plans, the Leased Premises shall contain no grade
elevation changes in excess of five percent (5%); them shall be no steps or
ramps (excepting ramps to serve the handicapped) in any exterior portion of the
Leased Promises. Landlord shall secure the manufacturer's warranties as required
by the Criteria Specifications described above and shall assign to Tenant each
such warranty that pertains to any item or component thereof which Tenant is
responsible to maintain or repair under this Lease.
(b) Within one (1) month after the execution and delivery of this Lease,
Tenant shall furnish to Landlord a fixture plan and base sheets relative
to the Building, so that Landlord may be enabled to prepare and furnish to
Tenant plans and specifications covering Tenant's specific requirements,
The plans (which shall be on mylar or vellum) and specifications
(collectively the "Plans") prepared by Landlord shall be furnished to
Tenant for Tenant's approval within forty-five (45) days after the
execution and delivery of this Lease or the receipt of said fixture plan
and bass sheets from Tenant, whichever is later. All areas of
7.
design and engineering must be certified by and under the direct supervision of
architects and engineers licensed and registered in the State of Texas, Tenant
agrees to approve or reject said Plans, within thirty (30) days of Tenant's
receipt thereof, and if not approved or rejected within said period, said Plans
shall be deemed approved, In the event Tenant shall reject such Plans within the
period provided above, Tenant shall return said Plans to Landlord indicating the
items so rejected. Landlord shall then have thirty (30) days to resubmit the
Plans to Tenant, and Tenant shall have thirty (30) days after resubmittal to
approve or reject the same. If not approved or rejected within said period, saw
Plans shall be deemed approved-, provided, however, that in no event shall the
standards of quality of approved Plans, or of those deemed approved, be less
than those required by the Criteria Plans and Criteria Specifications above
described, which shall control. If said Plans are rejected after being
resubmitted to Tenant, and the parties are unable to agree on approved Plans
within thirty (30) days thereafter, then either party may cancel this Lease upon
thirty (30) days written notice to the other. Any such cancellation notice shall
be null and void if the plans are approved during the thirty (30) day notice
period.
After approval of Plans, Tenant, at Tenants sole cost and expense, shall have
the right to make changes, substitutions and eliminations in said Plans
provided, however, that Tenant shall pay all costs and expenses an account of
any such changes, substitutions and eliminations, In addition, Tenant shall be
solely responsible for paying all costs and expenses for changes, substitutions
and additional requirements in the Plans which deviate from the Criteria Plans
dated July 1998 and further detailed on Exhibit "C" attached hereto. Landlord
and Tenant agree to cooperate with each other and to diligently and in good
faith make all reasonable modifications to keep the cost of the Building and
improvements as economical as is reasonably practicable. Landlord shall, at
Landlord's sole cost and expense, obtain all of the necessary approvals required
under the Declaration required to construct the Leased Premises in accordance
with the terms and provisions of this Lease,
(c) As soon as the final Plans are available to Landlord from Architect after
Tenant has returned the final set of Plans to Landlord stamped "approved as
noted" pursuant to Section (b) of this Article but in any event prior to the
delivery of possession of the Leased Promises to Tenant. Landlord shall provide
to Tenant a mylar sepia of the final Plans prepared by Landlord as provided
above.
(d) All Plans shall be deemed to be owned by Tenant regardless of by whom
prepared,, Landlord shall take all actions as may be appropriate or necessary at
any time and from time to time in order to evidence such ownership in Tenant.
Such Plans may be used by Tenant in their approved form or as modified by Tenant
In connection with any alteration or renovation of the Leased Premises. Landlord
may use the Plans only in connection with a Walgreens Drug State.
(e) Should a survey or title commitment reveal any utility easements or setback
lines that must be released or relocated in order for Landlord to construct the
Leased Premises, it shall be an express condition of this Lease that such
utility easements or setback lines be released or relocated in a manner
reasonably acceptable to Tenant. Landlord shall provide to Tenant copies of all
documents relative thereto, and Tenant shall have no obligation to accept
delivery of possession of the Leased Promises until Landlord shall have complied
with the provisions of this Section.
8.
RENT COMMENCEMENT
6. Tenant shall commence paying fixed rents pursuant to Article 2 hereof as of
the date that is two (2) months after Landlord has completed all construction
and has delivered possession as above provided (the "Rent Commencement Date").
The Rent Commencement Onto shall be subject to extension equal to any delays
occasioned by strikes, casualties, governmental restrictions, priorities or
allocations, inability to obtain materials or labor, denial of licenses to
operate a pharmacy and/or to conduct ft business. any cause the fault of
Landlord or other causes beyond Tenant's control. Anything to the contrary in
this Lease notwithstanding, Tenant shall have no obligation to pay rent or other
charges until Landlord has provided all of the information and instruments
required by Article 18 of this Lease and after such event, Tenant shall remit to
Landlord all monies withheld. Nothing contained in this Lease shall be construed
to obligate Tenant to open for business nor to obligate Tenant (or its
successors or assigns) to continue to operate its business in the Leased
Premises.
PARKING
7. (a) During the Term of this Lease, Tenant, at Tenant's cost and expense,
shall maintain the landscaping at the Leased Premises and the contiguous right
of way area shown on Exhibit 'A' between the Leased Premises and Alameda Avenue
and Loop 375, if any, and only If the Landlord is obligated by the public
authorities to maintain and repair said right of way area, and maintain and
repair the parking areas located within the Leased Premises. During the Term of
this Lease, Tenant, at Tenant's cost and expense, shall maintain and repair the
Access Driveway Area shown on Exhibit "A' located on the Adjoining Property
until the commencement of construction of improvements on the Adjoining
Property. However, Tenant shall have no obligation to perform nor pay any costs
in connection with the following. (I) any replacements of the landscaping, light
poles, parking areas or other improvements thereon,, (II) any other item which
under generally accepted accounting principles are classified as a capital
expense; (iii) any repair for which the need for repair is a result of the acts
or negligence of Landlord or b agents, employees or licensees; (iv) any items
for which Landlord is reimbursed by insurance, warranty or otherwise; (v) any
item which is Landlord's obligation under Article 5, 10, and/or 14 hereof; and
(vi) any defects in the construction of the Leased Promises by Landlord
discovered during the first twelve (12) months of the Lease Term.! The foregoing
items (i) through (vi) shall remain Landlord's responsibility to perform. The
parking spaces located on the Leased Promises shall be for the exclusive use of
Tenant and Tenant's customers, employees, invitees, successors, assigns and
sublessees. Upon the commencement of construction of Improvements on the
Adjoining Property, Tenant shag no longer be responsible to maintain and repair
the Access Driveway Area.
(b) Prior to delivering possession of the Leased Premises to Tenant, Landlord
shall enter into a certain Declaration of Covenants, Conditions and Restrictions
and Reservation of Easements (in form approved by tenant, hereinafter referred
to as "the Declaration" in which Tenant, its customers, employees, agents,
invitees, successors and assigns have been granted the non-exclusive easement
and right to use the driveway partially located on the Adjoining Property (as
defined below) within the area striped on the attached Exhibit 'A' (hereinafter
called 'Access Driveway Area). Tenant acknowledges that the Leased Premises and
that certain property (the "Adjoining Property") located adjacent to the Leased
Premises which Is legally described on Exhibit
9.
"B-l' attached hereto and incorporated herein shall be subject to the provisions
of the Declaration. The Declaration shall provide for reciprocal ingress and
egress rights over and across the Leased Premises and the Adjoining Property all
as more particularly described in the Declaration, Landlord hereby agrees that
It shall not enter into any agreement or modification of the Declaration which
interferes with Tenant's use and enjoyment of the Access Driveway Area and the
Leased Promises without Tenant's prior written consent thereto. Landlord
covenants that Landlord will, upon Tenant's request, cooperate with Tenant who
shall have the right, at Tenant's cost and expense, to enforce all rights,
covenants and agreements granted Landlord and Tenant pursuant to the
Declaration.
(c) Tenant hereby indemnifies and holds harmless Landlord from any claim, damage
or liability arising out of Tenant's use of the ingress and egress rights
provided for in the Declaration over the Adjoining Property.
(d) Tenant shall be responsible for any maintenance or repairs of the Adjoining
Property resulting from the use of the Adjoining Property by Tenant.
(e) That portion of the Access Driveway Area located on the Adjoining Property
shall be improved by Landlord concurrently with the construction of the Leased
Premises, and shall be completed prior to Landlord's delivery of possession of
the Leased Premises to Tenant.
EXCLUSIVES
8. (a) Landlord covenants and agrees that, during the Term and any extensions or
renewals thereof no additional property which Landlord, directly or indirectly,
may now or hereafter own or control, and which is contiguous to, or within five
hundred (500) feet of any boundary of the Leased Premises will be used for any
one or combination of the following: (i) the operation of a drug store -or a
so-called prescription pharmacy or for any other purpose requiring a qualified
pharmacist or other person authorized by law to dispense medicinal drugs,
directly or indirectly, for a fee or remuneration of any kind; (ii) the
operation of a medical diagnostic tab and/or the provision of treatment
services; (iii) the sale of so called health and/or beauty aids and/or drug
sundries; (iv) the operation of a business in which photofinishing services
and/or photographic film are offered for sale, (v) the operation of a business
in which food items are sold for consumption off the premises (other than a
restaurant selling take-out food items) and/or (vi) the operation of a business
in which greeting cards or wrapping paper are offered for sale.. For purposes
hereof "contiguous' shall mean property that is either adjoining the Leased
Promises or separated from the Leased Promises only by a public or private
street, alley or right-of-way. In the event that Tenant files suit against any
party to enforce the foregoing restrictions Landlord agrees to cooperate fully
with Tenant in the prosecution of any such suit.
Notwithstanding ft foregoing, if Tenant closes its store to the public for six
(6) months or more, then all of the foregoing exclusive use restrictions shall
terminate, except in the event that Tenant discontinues business as a result of
fire or other casually beyond Tenant's control so long as Tenant reopens its
business within sixty (60) days after the Leased Promises have been restored or
the cause for such discontinuance has ceased. In no event shall said
restrictions terminate in the event that Tenant discontinues business and a
permitted assignee or subleases of Tenant commences business operations in
10.
the Leased Premises within six (6) months after taking possession of the Leased
Premises, selling any such Item or items so restricted as a material part of
such assignee's or sublessee's business.
(b) Unless otherwise restricted by the documents set forth in Exhibit "E'
(Permitted Title Exceptions), in the event that any action, claim or suit is
brought by any party against Tenant alleging that Tenant's operations in the
Leased Premises are in violation of any use restriction contained in any
instrument executed by Landlord or recorded against the Leased Premises prior to
the delivery of possession of the Leased Premises to Tenant and in the event
that a court of competent jurisdiction shall hold that Tenant's operations in
the Leased Premises are in violation of any use restriction. Tenant, at Tenant's
option shall have the right to terminate this Lease upon thirty (30) days
written notice thereof to Landlord.
UTILITIES
9. Tenant shall pay when due all bills for water, trash removal, sewer rents,
sewer charges, heat, gas and electricity and other utilities and services used
in or serving the Building or the Leased Premises from the commencement of the
Initial Term and until the expiration of the Term. The source of supply and
vendor of each such commodity shall be the local public utility company or
municipality commonly serving the area, provided that If more than one utility
vendor serves the area Landlord shall cause the vendor selected by Tenant to
serve the Leased Promises. Landlord shall furnish to said Building and to the
Leased Premises at all times sufficient gas and water service lines, also sewer
lines and sewer connections, all of the capacity Initially specified by Tenant,
and electric service lines of the voltage and amperage initially specified by
Tenant, all connected to an adequate source of supply or disposal. In addition,
Landlord shall furnish to said Building conduit for telephone lines of a
capacity specified by Tenant. If Tenant shall require additional service line
capacity of any of such utilities and if same are available on the Leased
Premises, Tenant, at Tenant's expense, shall have the right to the use of the
some.
REPAIRS, CONFORMITY WITH THE LAW
10. (a) Except as provided below, Tenant, at Tenants sole cost and expense,
shall, (i) repair and replace heating and cooling equipment and doors and door
equipment serving the Building, (ii) make plate glass replacements unless
required by fault of Landlord or its agents, and (iii) make repairs to the
interior of the Building. Tenant shall also paint the exterior of the Building
and make minor repairs (i.e. patching) to the exterior. Landlord,. at Landlord's
sole cost and expense, shall maintain and make all repairs to the exterior and
structural portions of the Building, root, and all utility lines, including but
not limited to sewers, sewer connections, pipes, ducts, wires and conduits
leading to and from the Leased Premises and/or the Building. Landlord shall make
all repairs required by the fault of Landlord or its agents, or by fire or other
insured casualty (as provided in Paragraph 14 below unless Tenant, at Tenant's
sole option, chooses to make repairs necessitated by casualty) or the elements.
In the event that any Hazardous Substance or any underground storage tank is
discovered at any time in, under or about the Leased Promises and/or the
Building (unless introduced by Tenant, or Tenants agents, employees or licensees
acting within the scope of their respective agency, employment or license),
Landlord shall, at Landlord's expense, remove and dispose of the same in the
manner described In and provide all documentation required by Section (b) of
Article 4. Landlord hereby indemnifies and saves and holds Tenant harmless
11.
from and against any liability, obligation, damage or cost, including, without
limitations attorneys' fees and costs, resulting directly or indirectly from the
presence, removal or disposal of any such Hazardous Substance (unless introduced
by Tenant, or Tenants agents, employees or licensees acting within the scope of
their respective agency, employment or license) or any underground storage tank,
Tenant hereby indemnifies and saves and holds Landlord harmless from and against
any liability, obligation, damage or cost, including, without limitation,
attorneys' fees and costs, resulting directly or indirectly from the presence,
removal or disposal of any such Hazardous Substance introduced on, in or under
the Leased Premises by Tenant, or Tenant's agents, employees or licensees acting
within the scope of their respective agency, employment or license. These
Indemnification's shall survive the termination or expiration of this Lease for
any reason. The provisions of this Section shall be complied with as required
from time to time.
(b) If in an emergency situation, a repair to the Leased Promises and/or the
Building which Landlord is obligated to perform is required, Tenant shall make
all reasonable efforts to contact Landlord or Landlord's managing agent by
telephone and for facsimile to advise Landlord of the need for the repair. If
after making reasonable efforts to contact Landlord, either Tenant is unable to
contact Landlord or Landlord's managing agent, or Tenant succeeds in contacting
Landlord or Landlord's managing agent and Landlord fails to undertake action to
correct the emergency situation within one business day, Tenant may perform the
repair, in such manner as Tenant deems reasonably necessary, on account of
Landlord. Upon completion of the repair, Landlord shall be required to reimburse
Tenant for the actual cost of the repair. Landlord's payment shall be due Within
thirty (30) days after receipt of Tenant's bill accompanied by reasonable
evidence that Tenant has paid for the repair, In the event Landlord fails to
make payment to Tenant for said repair within said thirty (30) days, such
failure shall be deemed a default under this Lease and Tenant shall have all
remedies set forth In Article 17 and those available at law or in equity,
provided however, Tenant shall not have the right to cancel this Lease as a
result of Landlord's failure to make such payment as herein provided.
For the purpose of this Section, an emergency situation means a condition or
state of facts which if not corrected would result in further damage to the
Leased Premises, the Building or its contents or which would prevent Tenant from
conducting its business at the Leased Premises in a reasonable manner.
(c) Tenant shall make all changes and installations necessary to comply with the
valid requirements of public authorities regarding the conduct of Tenant's
particular business in the Building and the Leased Premises. Except as required
above, Landlord shall make all changes and/or installations and pay the cost, if
any, of all inspections required to comply with valid requirements of public
authorities as they apply to the Leased Premises or the Building.
SIGNS. TENANTS FIXTURES
------------------------
11. (a) Subject to the provisions of the Declaration, Tenant may, at Tenant's
sole cost and expense, Install and operate interior and exterior electric and
other signs, and in so doing shall comply with all lawful requirements. Subject
to governmental regulations and any other restrictions which apply to the Leased
Premises, Tenant shall have the right to install mechanical equipment, including
satellite dishes or other antennae for telecommunications affixed to the roof or
other portions of the Build[N or other portions of the Leased Premises, but
shall indemnify Landlord from any costs and expenses (including without
12.
limitation the costs for repairs and improvements) relating thereto. Subject to
compliance with any and all lawful requirements or restrictions, Tenant may, at
Tenant's option install within the Leased Premises pay telephones, automatic
teller machines and other electronic consumer service apparatus.
(b) Tenant shall at all times have the right to remove all fixtures, machinery,
equipment, appurtenances and other property furnished or installed by Tenant or
by Landlord at Tenants expense, It being expressly understood and agreed that
said property shall not become part of the Building or the Leased Premises but
shall at all times be and remain the personal property of Tenant and shall not
be subject to any Landlord's lion.
(c) If permitted by applicable governmental rules and regulations, Landlord
shall, as soon as is possible after the date hereof, install a sign foundation
with conduit (per A5.1 as shown on Exhibit "C') at the location shown on Exhibit
'A", upon which Tenant may Install its readerboard and sign panel. Such pylon
sign shall be electrified by Landlord as soon as is practical. Tenant may
install the same prior to the date that it accepts possession of the Leased
Premises and such Installation of said readerboard and sign panel shall be
deemed neither acceptance of possession of the Leased Premises nor a waiver of
any condition precedent to the delivery of possession of the Leased Premises,
ALTERATIONS
12. (a) Subject to governmental rules and regulations and any restrictions which
apply to the Leased Premises, including without limitation the Declaration, at
any time and from time to time, Tenant, at Tenant's cost and expense, may make
alterations and additions to the Building including, but not limited to,
structural changes necessary to conform the Leased Promises to Tenant's then
current prototype (provided that the structural integrity of the Building is not
thereby impaired). Tenant shall obtain Landlord's consent, which shall not be
unreasonably withheld or delayed, before making any other structural changes to
the Building. Tenant may, without Landlord's consent, however, make changes to
storefronts, partitions, floors, electric, plumbing and heating, ventilating and
cooling systems or components thereof. Tenant, at Tenant's sole cost, in
compliance with applicable restrictions and governmental requirements, if any,
shall have the right to reconfigure or otherwise modify the parking areas on the
Leased Promises (including without limitation, curb cuts, entrances arid exits)
as Tenant deems necessary or desirable. Landlord shall cooperate in securing
necessary permits and approvals. Tenant shall not permit any mechanics' or other
liens to stand against the Leased Promises for work or material furnished Tenant
and shall Indemnify Landlord from any costs or expenses relating to any repairs
or alterations completed by Tenant.
(b) Landlord covenants and agrees that Landlord shall not, without Tenant's
written consent, make any alterations or additions to the Leased Premises,
including, but not limited to, any modifications to the storefront, signband or
fascia of the Building or to the Parking Areas. Landlord shall not permit any
mechanics' or other liens to stand against the property for work or material
furnished by or on behalf of Landlord and shall Indemnify Tenant from any costs
or expenses relating to any repairs or alterations completed by Landlord.
13.
AS51GNMENT AND SUBLETTING
13. (a) At any time and from time to time, Tenant may discontinue the
operation of its store in the Leased Premises and/or Building.
(b) At any time and from time to time, Tenant's interest under this Lease may be
assigned and re-assigned, without Landlord's consent, provided that any such
assignment or reassignment be only to a corporation which is subsidiary to or
affiliated with Tenant, or to a corporation resulting from any consolidation,
reorganization or merger to which Tenant, or any of its subsidiaries, parent or
affiliates, may be a party. At any time and from time to time, Tenant may also
sublet or license or permit a portion or portions of the Building to be used for
concessions, leased or licensed departments and demonstrations in connection
with and as part of the operation of Tenant's store, the Gross Sales therefrom
to be included in the Gross Sales of Tenant. Tenant shall deliver written notice
to Landlord in the event of. any assignment or subletting under this Section
(b).
(e) At any time and from time to time, without Landlord's consent, Tenant may
sublet a portion of the Leased Promises and/or Building, to any person, firm or
corporation, other than a corporation described in Section (b) hereof, for any
lawful purpose. In such case, the Gross Sales of such subtenant (but not the
subrentals paid by such subtenant) shall be included in the Gross Sales of
Tenant.
(d) (1) At any time and from time to time, without Landlord's consent except as
set forth below, Tenant may assign this Lease or Tenant may sublet all of the
Leased Premises and/or Building to any person, firm or corporation, other than a
corporation described in Section (b) above, for any lawful purpose which does
not violate the provisions of this Lease. In the event of any subletting, Tenant
shall pay to Landlord the rent provided in Article 2 of this Lease. Tenant shall
notify Landlord in writing of any proposed sublease or assignment, together with
the name, address, phone number, any financial information regarding the
proposed subleases or assignee that Tenant may have in its possession, and the
nature of the business of the proposed subleases or assignee. Within forty-five
(45) days after Landlord's receipt of Tenant's notice of a proposed assignee or
subleases, Landlord may terminate this Lease by written notice to Tenant. Such
termination shall be effective as of the earlier of the following to occur; (x)
thirty (30) days after Tenant closes Its store on the Leased Premises, or (y)
two (2) years after the date Landlord delivers the termination notice required
by this Section In any event, Tenant shall deliver to Landlord at least ninety
(90) days' prior written notice of the date on which possession of the Leased
Premises will be delivered to Landlord. If Landlord so elects to terminate this
I-ease, neither party shall have any further or unaccrued obligation or
liability to the other as of the termination date of the Lease. If Landlord
fails to notify Tenant of termination within said forty-five (45) day period,
such termination right shall be deemed waived but only as to such subletting or
assignment- Notwithstanding the above, if such sublease or assignment is in
connection with Tenant's sublease or assignment of three (3) or more of Tenant's
other stores in the State of Arizona to a single or related entity, Landlord
shall have no such right to terminate.
(ii) In the event of a subletting pursuant to Section (c)(i) above, then at
any time thereafter, Landlord may, by written notice to Tenant,
terminate this Lease provided, however, Landlord shall concurrently
with such termination agree to attorn to and be bound by the terms of
any such sublease.
14.
Upon such termination, neither Landlord nor Tenant shall have any further or
unaccrued obligation or liability to the other. Prior to such termination,
Landlord shall reimburse Tenant the unamortized cost of any leasehold
improvements made by Tenant to the Leased Premises in connection with said
subletting, together with all third party out-of-pocket costs and all brokerage
fees incurred by Tenant as a result of such subletting, prorated over the
unexpired sublease term.
(e) If Tenant shall cease the conduct of business on the Leased Premises for a
continuous period in excess of six (6) months (except by reason of strikes,
fire, casualty or other causes beyond reasonable control of Tenant, except by
reason of repairs or remodeling and except by reason of assignment or subletting
as above provided) and the Leased Premises; remain continuously vacant during
such period, Landlord shall have the right and option to terminate this Lease
upon written notice to Tenant, effective on the last day of the next succeeding
calendar month following receipt of such notice; provided, however, that if
Tenant shall send written notice to Landlord of Tenant's intent to sublet the
Leased Premises during such period when Landlord shall have the option, pursuant
to this Section to terminate this Lease, Landlord shall have the right within
thirty (30) days after receipt of such notice from Tenant to terminate this
Lease upon written notice to Tenant effective on the last day of the next
succeeding calendar month following Tenant's receipt of such notice and from and
after such date, neither party shall have any liability or further obligation to
the other under this Lease. If Landlord shall not so notify Tenant within thirty
(30) days of receipt of Tenant's notice that Landlord has exercised its option
to cancel this Lease, the termination options contained in this Section shall be
void and of no further force and effect.
Notwithstanding any assignment of this Lease, Walgreen Co., an Illinois
corporation shall not be released from liability, However, in the event of a
default by any such assignee, Landlord shall give Walgreen Co. notice of such
default, shall accept cure of such default by Walgreen Co. within thirty (30)
days after such notice and shall permit Walgreen Co. to re-enter and repossess
the Leased Premises for the then unalapsed portion of the Term of this Lease
upon all of the provisions of this Lease.
CASUALTY
14. (a) If the Building and/or Leased Premises and/or any improvements thereon
shall be damaged or destroyed by fire or other casualty, then Tenant, shall,
within thirty (30) days after such casualty, elect to either (i) repair and
restore the Building and/or Leased Premises and/or improvements thereon to their
condition immediately prior to such damage or destruction or (ii) notify
Landlord that Landlord shall effectuate such repair and restoration but only to
the extent possible based upon the insurance proceeds available to Landlord. If
Landlord is effectuating such repair and restoration, unless the Building and/or
Leased Premises is completely restored to such condition within twelve (I 2)
months of the date of such casualty, the rent and all other charges shall abate
proportionately according to the extent of such damage or destruction from and
after the first day of the thirteenth (13th) month after such casualty until
such restoration is completed. Landlord shall commence such restoration as soon
as is possible after Tenants election to require Landlord to do so, but in any
event not later than sixty (60) days thereafter and shall diligently pursue such
repair or restoration to completion. In the event that such repair or
restoration by Landlord is not completed within two hundred seventy (270) days
after such occurrence Tenant may, at Tenant's option, cancel this Lease, Subject
to the payment of proceeds by Tenant as expressly sot forth in Section (b)
below,
15.
under no circumstances shall Tenant be liable for any loss or damage including,
but not limited to, damage to the Building or Leased Promises resulting from
fire or other casualty.
(b) In the event the Building and/or improvements on the Leased Premises are
damaged to. the extent of twenty-five percent (25%) or more thereof, or
destroyed by fire or other casualty, and such casualty occurs after the first
day of the 216th month of the Term, Tenant may, cancel this Lease by notice to
Landlord. If Tenant has so canceled this Lease and the fire or other casualty is
an insurable casualty under Tenant's special form coverage insurance, Tenant
shall provide Landlord with the proceeds of such insurance in an amount required
by Article 20 of this Lease and such other proceeds which are necessary to
enable Landlord to reconstruct or repair the building and improvements as
required herein. Any proceeds payable by Tenant to Landlord under this Section
(b) shall be exclusive of the cost of improvements made on or an behalf of
Tenant to the Leased Premises and/or Building.
(c) In the event Tenant shall elect not to cancel this Lease under this Article
14 and Landlord is effectuating such reconstruction or repair, Landlord and
Tenant shall enter into a construction escrow agreement satisfactory to Tenant
and Landlord appointing either Tenant or third party as escrow agent to disburse
such proceeds as Landlord's repair and reconstruction work progresses and to
monitor repair and reconstruction of the Building and improvements by Landlord.
(d) If the fire or casualty is not an insurable casualty under Tenant's fire and
extended coverage Insurance, Landlord or Tenant may cancel this Lease upon
notice to the other. Tenant may void Landlord's notice of termination by
notifying Landlord within thirty (30) days after receipt of such notice of
termination that Tenant shall provide Landlord with a sufficient amount of money
necessary for Landlord to reconstruct or repair the Building and/or improvements
on the Leased Promises, as required by this Article 14. Landlord may void
Tenants notice of termination by notifying Tenant within thirty (30) days after
receipt of such notice of termination that Landlord intends to reconstruct or
repair the Building and/or L2ndiord's improvements on the Leased Premises as
required by this Article 14, at Landlord's own cost and expense.
(e) Landlord, at Landlord's expense, shall install a fire alarm system and/or
sprinkler system to serve the Leased Promises and if required by statute,
ordinance, governmental rule or regulation, cause the fire alarm and sprinkler
system serving the Building to be monitored and maintained by a reputable alarm
service company and/or the local fire department. Landlord shall (i) provide
Tenant with a copy of the above service contract, and (ii) notify Tenant's
Construction Department that such monitoring Is required (as of the date that
Landlord notifies Tenant of delivery of possession pursuant to Article 4 of this
Lease). Provided that Tenant has approved alarm service company selected by
Landlord, and provided that Landlord arranges to have the approved alarm service
company bill Tenant directly, Tenant shall pay for governmentally required
monitoring and maintenance services. Landlord shall be responsible for any costs
incurred for permits, inspections and false alarms (if caused by the fault of
the Landlord). Tenant shall, at Tenant's expense, install and maintain any phone
line(s) required in connection with such fire alarm and sprinkler system.
16.
LANDLORD'S RIGHT TO INSPECT
15. Landlord may at reasonable times during Tenant's business hours, and after
so advising Tenant, enter the Building for the purpose of examining and of
making repairs required of Landlord under this Lease and during the last six (6)
months of the Term may place the usual "For Rent" signs in the Leased Premises,
but not so as to interfere with Tenant's business.
SURRENDER
16. At the expiration or termination of this Lease, Tenant shall surrender
immediate possession of the Leased Premises In good condition, subject to
reasonable wear and tear, changes and alteration, damage by fire, casualty and
the elements, and other repairs which are Landlord's obligation. Any holding
over by Tenant shall not operate, except by written agreement, to extend or
renew this Lease or to imply or create a new lease, but in such case Landlord's
rights shall be limited to either the immediate termination of Tenant's
occupancy or the treatment of Tenant's occupancy as a month to month tenancy,
any custom or law to the contrary notwithstanding. Tenant shall repair damage
caused by the removal of Tenant's fixtures and equipment.
DEFAULT AND REMEDIES
17. (a) If any rent is due and remains unpaid for ten (I 0) days after receipt
of notice from Landlord, or if Tenant breaches any of the other covenants of
this Lease and if such other breach continues for thirty (30) days after receipt
of notice from Landlord, Landlord shall then but not until then, as its sole
legal remedies but in addition to ft remedies In equity, if available, have the
tight (a) to sue for rent, (b) to re-enter without terminating this Lease,
provided that Landlord shall use its best efforts to relet the Leased Premises
for Tenant's account and otherwise to mitigate its damaged (it being expressly
understood that Tenant shall remain liable on a monthly basis for the difference
between what Tenant's obligations under this Lease are and what Landlord
actually collects, and further provided that if Landlord elects to re-enter
without terminating this Lease, this Lease shall nonetheless expire as of the
next optional termination date as set forth in Article 3(d)), or (c) to
terminate this Lease and re-enter the Leased Premises; but if Tenant shall pay
said rent within said ten (10) days, or in good faith within said thirty (30)
days commence to correct such other breach, and diligently proceed therewith,
then Tenant shall not be considered in default (b) If Landlord shall from time
to time fail to pay any sum or sums due to Tenant and If such failure continues
for thirty (30) days after receipt of notice from Tenant, Tenant shall have the
right and Is hereby irrevocably authorized and directed to deduct such sum or
sums from fixed and percentage rent and other sums due Landlord, together with
interest thereon at the so-called prime rate charged from time to time by The
First National Bank of Chicago, or its successor, plus two per cent until fully
reimbursed. If Landlord shall from time to time fail to perform any act or acts
required of Landlord by this Lease and if such failure continues for thirty (30)
days after receipt of notice from Tenant, Tenant shall then have the right, at
Tenant's option, to perform such act or acts, in such manner as Tenant deems
reasonably necessary, and the full amount of the cost and expense so Incurred
shall Immediately be owing by Landlord to Tenant, and Tenant shall have the
right and is hereby irrevocably authorized and directed to deduct such amount
from fixed and percentage rent and other sums due Landlord, together with
interest thereon at the so-called prime rate charged
17.
from time to time by The First National Bank of Chicago, or its successor, plus
two per cent until fully reimbursed, If Landlord shall in good faith within said
thirty (30) days commence to correct such breach, and diligently proceed
therewith to completion, then Landlord shall not he considered in default
(c) No delay on the part of either party enforcing any of the provisions of this
Lease shall be considered as a waiver thereof. Any consent or approval granted
by either party under this Lease must be in writing and shall not be deemed to
waive or render unnecessary the obtaining of consent or approval with respect to
any subsequent not or omission for which consent is required or sought.
TITLE AND POSSESSION
18. (a) Landlord covenants, represents and warrants that Landlord has entered
into a contract to acquire fee simple legal title to the Leased Premises and has
the right to enter into this Lease, that said entire property is now and shall
be as of ft date of Tenant's recording of a Memorandum of this Lease and a
Ratification Agreement as below defined free and clear of all liens.
encumbrances and restrictions, except for those items set forth on Exhibit "E"
attached hereto and made a part hereof, none of which shall interfere with any
of Tenant's rights under this Lease, and that upon paying the rents and keeping
the agreements of this Lease on its part to be kept and performed, Tenant shall
have peaceful and uninterrupted possession during the continuance of this Lease.
Upon acquisition of fee tittle, Landlord shall execute an agreement in the form
attached hereto as Exhibit 'F", ratifying and adopting this Lease ("Ratification
Agreement'). Landlord shall deliver to Tenant, at Landlord's cost and expense,
not later than fourteen (14) days prior to the Initial Term, a current ALTA
leasehold policy of title insurance, together with such endorsements that Tenant
may reasonably require, issued by a title insurance company of Tenant's choice
insuring Landlord's fee ownership, Tenant's leasehold estate and the easements
referenced in Article 7 hereof, in an amount not less then $1,000,000.00, unless
the title insurance guidelines for the State of Texas require a higher amount in
the Leased Premises, subject only to this Lease and such other covenants,
restrictions and encumbrances as Tenant may approve. Such title insurance policy
shall be effective as of the recordation date of a Memorandum of Lease and
Ratification Agreement. Landlord shall also provide Tenant with an as-built
survey of the Leased Premises drawn per ALTA standards and certified to Tenant.
(b) If at the date of the recording of the Memorandum of this Lease or the
Ratification Agreement, whichever is later, the Leased Premises, or any part
thereof is subject to any mortgage, deed of trust or other encumbrance in the
nature of a mortgage, which is prior and superior to this Lease, ft is a further
express condition hereof that Landlord shall thereupon furnish and deliver to
Tenant, in form and substance reasonably acceptable to Tenant, an agreement
executed by such mortgages or trustee, either (i) making such mortgage, dead of
trust or other encumbrance In the nature of a mortgage subject and subordinate
to this Lease and to the leasehold estate created hereby and to all of Tenant's
rights hereunder, or (ii) obligating such mortgagee or trustee and any successor
thereto to be bound by this Lease and by all of Tenant's rights hereunder,
provided that Tenant Is not then in continued default, after notice, in the
payment of rents or otherwise under the terms of this Lease.
(c) If as of the date of the recordation of the Declaration, the Leased
Premises, or the Adjoining Property, or any part thereof is I subject to any
18.
mortgage, dead of trust or other encumbrance in the nature of a mortgage, which
is prior and superior to the Declaration, it is a further express condition
hereof that Landlord shall thereupon furnish and deliver to Tenant, in form and
substance acceptable to Tenant, an agreement executed by such mortgagee or
trustee, either (i) making such mortgage, deed of trust or other encumbrance in
the nature of a mortgage subject and subordinate to the Declaration and to all
of Tenant's rights thereunder, or (ii) obligating such mortgagee or trustee and
any successor thereto to be bound by the Declaration and by all of Tenant's
Lights thereunder.
(d) (I) If required by Landlord's institutional lender, Tenant shall subordinate
the lien of this Lease to the lien of such mortgage encumbering the Leased
Premises. so long as such lender simultaneously with such subordination and as a
condition of the same, executes In recordable form a Subordination,
Non-Disturbance and Attornment Agreement in form and substance acceptable to
Tenant and agrees to be bound by all of the terms and conditions of this Lease.
In the event of a conflict between the terms of such mortgage and the terms of
this Lease, the terms of this Lease shall prevail.
(ii) Landlord and Tenant agree to execute and deliver to the other within twenty
(20) days from receipt of either party's written request, estoppel certificates
in a form acceptable to the party to whom such request is made, which
certificates shall include information as to any modification of this Lease, and
to the best of Tenant's or Landlord's knowledge, whether or not the other party
is in default of this Lease,
(e) It is understood and agreed that Tenant shall, in no event,
be obligated to accept possession of the Leased Promises until the Landlord has
complied with the provisions of this Article.
REAL ESTATE TAXES
19. (a) Landlord, prior to the Rent Commencement Date, shall make a mailing
address change on the property flex records so that as of the Rent Commencement
Date the tax bill and tax notices for only the Leased Premises will be mailed to
Tenant at the following address: Walgreen Co., 300 Wilmot Road, Deerfield,
Illinois 80015, Attention: Tax Department. Prior to the date that the tax bill
is mailed directly to Tenant pursuant hereto, Landlord, prior to delinquency,
shall send to Tenant a copy of the tax bill for the Leased Premises if Tenant is
obligated to pay for such taxes, In no event shall Tenant be required to pay
real estate taxes pertaining to any period prior to the Rent Commencement Date
or subsequent to the expiration or earlier termination of the Lease,
(b) Upon receipt of the aforesaid tax bills, Tenant shall pay, when due and
before delinquency, the ad valorem real estate taxes (including all special
benefit taxes and special assessments but excluding so.-Called impact fees)
levied and assessed against the Leased Premises, commencing with the Rent
Commencement Date and continuing for the remainder of the Term. However, the ad
valorem taxes levied or assessed for the year in which Tenant commences paying
fixed rent shall be prorated between Landlord and Tenant so that Tenant shall
pay only such part thereof as pertains to the period commencing on the Rent
Commencement Date and ending December 31st bears to such entire tax year, and
the ad valorem taxes levied or assessed for the year during which this Lease
expires or is terminated shall be prorated between Landlord and Tenant so that
Tenant shall pay only such part thereof as
19.
the period commencing on January 1st and ending on the date this Lease expires
or is terminated. Within thirty (30) days after payment of any such taxes, or as
soon thereafter as receipt bills are available, Tenant shall furnish to Landlord
photocopies of bills indicating such payments.
If Landlord is required to pay to its lender a monthly escrow for taxes levied
and assessed against the Leased Premises, Tenant shall pay to Landlord its pro
rata share of such taxes on a monthly basis. At the end of each tax year for
which said taxes are levied, Landlord shall furnish to Tenant a statement from
its lender and a copy of the paid tax bill as furnished to Landlord by its
lender, and any overage paid by Tenant to Landlord shall be reimbursed to Tenant
and any shortage shall be paid to Landlord.
(c) Tenant shall have the right, and is hereby irrevocably authorized and
directed to deduct and retain amounts payable under the provisions of this
Article from additional percentage rents payable under Section (b) of Article 2
for such tax year, or in the alternative, if such taxes for any tax year are
payable after percentage rents under Section (b) of Article 2 for such tax year
are payable, then Tenant shall have no liability under this Article to the
extent of such percentage rents paid for such tax year. In such event, Landlord
shall refund to Tenant the amount of such overpayment of percentage rent.
(d) All special benefit taxes and special assessments shall be spread over the
longest time permitted and Tenant's liability for installments of such special
benefit taxes and special assessments not yet due shall cease upon the
expiration or termination of this Lease. In no event shall Tenant be obligated
to pay any impact fees whether or not billed by the taxing authority as a
special benefit tax or a special assessment.
(e) (i) Tenant shall have the right to contest the validity or the amount of any
tax or assessment levied against the Leased Premises or any improvements
thereon, provided that Tenant shall not take any action which will cause or
allow the institution of foreclosure proceedings against the Leased Premises,
Landlord shall cooperate in the institution of any such proceedings to contest
the validity or amount of real estate taxes and will execute any documents
required therefore
(II) Landlord covenants and agrees that if there shall be any refunds or rebates
on account of any tax, governmental imposition or levy paid by Tenant under the
provisions of this Lease, such refund or rebate shall belong to Tenant. Any such
refunds or rebates which shall be received by Landlord shall be held in trust
for the benefit of Tenant and shall be forthwith paid to Tenant, Landlord shall,
on request of Tenant, sign any receipt which may be necessary to secure the
payment of any such refund or rebate, and shall pay over to Tenant such refund
or rebate *is received by Landlord.
INSURANCE
20. Commencing with the Initial Term and continuing until the last day of the
240th month of the Term, Tenant shall carry " an all risk fire and
extended special form coverage insurance (which shall include all risk
and extended coverage) covering the Building and the other improvements
on the Leased Premises to the extent of not less than I 00% of
replacement value, less foundations with companies which are authorized
to do business in the State of Texas and are governed by the regulatory
authority which establishes maximum rates in the vicinity. Tenant, if
requested by Landiord'5 lender, shall also carry (or
20.
reimburse Landlord for the cost thereof) earthquake and/or flood insurance to
the extent as may be reasonably required and as customary for like projects.
Commencing with the first day of the 241st month of the Term, such coverage
shall be on an actual cash value basis. Tenant shall also procure and continue
in effect public liability and property damage Insurance with respect to the
operation of the Leased Premises. Such public liability insurance shall cover
liability for death or bodily injury in any one accident, mishap or casualty in
a sum of not less than $1,000,000.00, and shall cover liability for property
damage in one accident, mishap or casualty in the amount of not less than
$100,000.00. The proceeds from Tenant's casualty insurance hereunder shall be
paid and applied only as set forth in Article 14 hereof. Any insurance carried
or required to be carried by Tenant pursuant to this Lease . at Tenant's option
may, be carried under an insurance policy(ies), self-insurance (provided that
Tenant or Tenant's parent company maintains a not worth of $300,000,000.00) or
pursuant to a master policy of insurance or so-called blanket policy of
insurance covering other locations of Tenant or its corporate affiliates, or any
combination thereof; provided, however, that in the event Tenant carries any of
such insurance under any policy, Tenant shall have the right and Is hereby
Irrevocably authorized and directed to deduct and retain the amounts of said
premiums in any lease year from percentage rents payable under Section (b) of
Article 2 for such lease year. Any requests for insurance certificates shall be
sent to Tenant at 300 Wilmot Road, Insurance Department, Deerfield, IL 6001 S.
MUTUAL INDEMNITY
21. Except for loss, cost and expense caused by fire or other casualty, Landlord
and Tenant shall each indemnify and hold harmless the other against and from any
and all loss, cost and expense resulting from their own respective negligent
acts and omissions or the negligent acts and omissions of their respective
employees in the course of their employment.
CONDEMNATION
22. If the entire Leased Premises shall be taken by reason of condemnation or
under eminent domain proceedings, Landlord or Tenant may terminate this Lease as
of the date when possession of the Leased Promises is taken. If a portion of the
Leased Premises shall be taken under eminent domain or by reason of condemnation
and if in the opinion of Tenant, reasonably exercised, the remainder of the
Leased Premises are no longer suitable for Tenant's business, this Lease, at
Tenant's option, to be exercised by notice to Landlord within sixty (60) clays
of such taking, shall terminate; any unearned rents paid or credited in advance
shall be refunded to Tenant, If this Lease is not so terminated, Landlord
forthwith and with due diligence, shall restore the Leased Premises. Until so
restored, fixed rent shall abate to the extent that Tenant shall not be able to
conduct business, and thereafter fixed rent for the remaining portion of the
Term shall be proportionately reduced.
Tenant shall be entitled to the award in connection with any condemnation
insofar as the same represents compensation for or damage to Tenant's fixtures,
equipment, leasehold improvements or other property, moving expenses as well as
the loss of leasehold (i.e. the unexpired balance of the lease Term immediately
prior to such taking), Landlord shall be entitled to the award insofar as same
represents compensation for or damage to the fee remainder. Any mortgagee of
Landlord shall be compensated out of Landlord's award.
21.
For the purposes of this Article, the term "condemnation or under eminent domain
proceedings" shall include conveyances and grants made in anticipation of or in
lieu of such proceedings.
BROKERAGE .
23. Landlord and Tenant represent that they have dealt with no broker or agent
with respect to this Lease, Landlord hereby indemnities and saves and holds
Tenant harmless against any claims for brokerage commissions or compensation or
other claims of any kind (including reasonable attorney's fees and costs)
arising out of the negotiation and execution of this Lease or Tenant's interest
or involvement with respect to the Leased Promises.
PREVAILING PARTY
24. In the event of litigation between Landlord and Tenant in connection with
this Lease, the reasonable attorneys' fees and court costs incurred by the party
prevailing in such litigation shall be borne by the non- prevailing party.
NOTICES
25. All notices hereunder shall be in writing and sent by United States
certified or registered mail, postage prepaid, or by overnight delivery service
providing proof of receipt, addressed if to Landlord, to the place where rent
checks are to be mailed, and if to Tenant, to 200 Wilmot Road, Deerfield,
Illinois 60015, Attention: Law Department, and a duplicate to the Leased
Premises, provided that each party by like notice may designate any future or
different addresses to which subsequent notices shall be sent. Notices shall be
deemed given upon receipt or upon refusal to accept delivery.
RIGHT OF FIRST REFUSAL
26, (a) From and after the date that is two (2) years after the date of this
Lease, in the event that Landlord shall receive a Bona Fide Offer to purchase
the Leased Promises at any time and from time to time during the Term of this
Lease or any extensions thereof from any person or entity, Landlord shall so
notify Tenant (Attn.:. Law Department with a duplicate notice to the Real Estate
Department) together with a true and correct copy of said Bona Fide Offer- For
purposes hereof, a "Bona Fide Offer" shall be deemed to be one made in writing
by a person or entity that is not related or affiliated with Landlord (or any of
Landlord's Partners or principal owners) in which Landlord intends to accept
(subject to this Article) otherwise known as a letter of intent. Tenant may, at
Tenant's option and within ten (10) working days after receipt of Landlord's
notice of said Bona Fide Offer and receipt of a copy thereof, offer to purchase
the Leased Premises at the price and upon the terms and conditions as are
contained in said Bona Fide Offer. In which event, Landlord shall sell the
Leased Premises to Tenant upon said terms and conditions and that said price;
furthermore, in such event, Landlord shall convey the Lofted Premises to Tenant
by warranty deed. Notwithstanding the foregoing, the price that Tenant shall pay
for the Leased Premises shall be reduced by an amount equal to broker's fees or
commissions (if any) that would have been payable by either the purchaser or
Landlord if the Leased Promises were sold pursuant to the said Bona Fide Offer.
Landlord shall provide Tenant evidence of the amount of broker's fees or
commissions payable in connection with any such Bona Fide Offer. Landlord
covenants that it shall accept no such Bona Fide Offer or convey
22.
the premises until h has complied with the terms of this Article, Any conveyance
of the Leased Promises mode in the absence of full satisfaction of this Article
shall be void. Tenant may enforce this Article, without limitation, by
injunction, specific performance or other equitable relief,
(b) Tenants election not to exercise any right of first refusal as provided for
in this Article 26 shall not prejudice Tenants rights hereunder as to any future
Bona Fide Offer. The terms and conditions contained in this Article 26 shall be
binding upon the heirs, successors and/or assigns of Landlord.
TRANSFER OF TITLE
27. (a) In the event that Landlord convoys b interest in the Leased Premises to
any other person or entity, Tenant shall have no obligation to pay rents or any
other charges under this Lease to any such transferee until Tenant has been
notified of such conveyance and has received satisfactory evidence of such
conveyance together with a written direction from such transferee as to the name
and address of the now payee of rents and other charges. It is understood and
agreed that Tenant's withholding of rent and other charges until its receipt of
such satisfactory evidence shall not be deemed a default under this Lease.
(b) In the event Landlord sells Its interest In the Leased Premises, Landlord
shall be relieved of any and all liability under any of Landlord's covenants and
obligations contained In or derived from this Lease arising out of any art,
occurrence, or omission occurring thereafter, and the assignee or purchaser at
any such sale or any subsequent sale of the Leased Premises or assignment of
this Lease, shall be deemed without any further agreement between the parties
and any such assignee or purchaser, to have assumed and agreed to carry out any
and all of the covenants and obligations of Landlord under this Lease.
RENT TAX
28. In the event that any governmental authority imposes a tax, charge,
assessment or other Imposition upon tenants in general which is based upon the
rents payable under this Lease, Tenant shall pay the same to said governmental
authority or to Landlord If Landlord is responsible to collect the same (in
which case Landlord shall remit the same in a timely manner and, upon request of
Tenant, evidence to Tenant said remittance). Tenant is hereby authorized and
directed to deduct the amount of such taxes, charges, assessments or impositions
from additional percentage rents payable under Section (b) of Article 2 for such
lease year or, in the alternative, in the event that such imposition or a
portion thereof is due after percentage rents, payable under Section (b) of
Article 2 have been paid, Tenant shall have no liability under this Article to
the extent that percentage rents for said lease year have been paid, Nothing
contained herein shall be deemed to obligate Tenant with respect to any income,
inheritance or successor tax or Imposition.
MISCELLANEOUS
29. (a) Captions of the several Articles contained in this Lease are for
convenience only and do not constitute a part of this Lease and do not limit,
affect or construe the contents of such Articles.
23.
(b) If any provision of this Lease shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
(c) If the Landlord is comprised of more than one person or entity, the
obligations imposed on Landlord under this Lease shall be joint and several.
(d) All provisions of this Lease have been negotiated by both parties at arm's
length and neither party shall be deemed the scrivener of this Lease. This Lease
shall not be construed for or against either party by reason of the authorship
or alleged authorship of any provision hereof.
(e) This instrument shall merge all undertakings, representations,
understandings, and agreements whether oral or written, between the par-ties
hereto with respect to the Leased Premises and the provisions of this Lease and
shall constitute the entire Lease unless otherwise hereafter modified by both
parties in writing.
(f) This instrument shall also bind and benefit, as the case may require, the
heirs, legal representatives, assigns and successors of the respective parties,
and all covenants, conditions and agreements herein contained shall be construed
as covenants running with the land. This instrument shall not become binding
upon the parties until it shall have been executed and delivered by both
Landlord and Tenant.
(g) Landlord has been afforded a full and fair opportunity to seek advice from
legal counsel and Landlord acknowledges that Tenant's attorney represents Tenant
and not Landlord.
(h) Notwithstanding any provision of this Lease to the contrary, the Term shall
commence, if at all, not later than twenty-one (21) years after the date of this
Lease,
24.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease, under seal, as
of the day and year first above written.
WALGREEN CO. CAP 11,
an Illinois corporation a New Mexico General Partnership
By: Peterson Properties Real
Estate Services, Inc.,
managing General Partner
Allan M. Resnick James A. Peterson
------------------ -------------------
Allan M. Resnick James A. Peterson,
Vice President President
By: Steven Johnson Development
Ltd. Liability Co., General Partner
Steven J. Johnson
--------------------
Steven J. Johnson
General Partner
Witnesses: Witnesses:
Terry Keenan Clare Peterson
------------ --------------
Loren M. Ments Colleen McGrath
-------------- ---------------
STATE OF ILLINOIS )
)SS
COUNTY OF LAKE )
On this 22nd day of April, 1999, before me appeared Allan M. Resnick, to me
personally known, who, being by me duly sworn, did say that he is the Vice
President of WALGREEN GO., an Illinois corporation, and that the seal affixed to
said Instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by authority of
its board of directors and said corporation, acknowledged said instrument to be
the free act and deed of said corporation.
SEAL
Hilary Junge
------------
(Signature)
(My commission expires: September 5, 2002)
(Notary Seal)
25.
STATE OF NEW MEXICO )
)SS
COUNTY OF BERNALILLO )
On this 3rd day of April, 1999, before me appeared James A. Peterson, President
of Peterson Properties Real Estate Services, Inc., Managing General Partner of
CAP 11, a New Mexico General Partnership, and signed said Instrument on behalf
of said General Partnership and said General Partner acknowledged said
instrument to be the free act and deed of said General Partnership.
Betty L. Peterson
-----------------
Seal (Signature)
Official Seal
Betty L. Peterson
Notary Public - New Mexico
Notary Bond filed with Secretary of State
(My commission expires 2-16-2001)
STATE OF NEW MEXICO )
)SS
COUNTY OF BERNALILLO )
On this 3rd day of April, 1999, before me appeared Steven J. Johnson, Managing
Member of Steve Johnson Development Ltd. Liability Co., General Partner of CAP
II, a New Mexico General Partnership, and signed said Instrument on behalf of
said General Partnership and said General Partner acknowledged said instrument
to be the free act and deed of said General Partnership.
Betty L. Peterson
-----------------
Seal (Signature)
Official Seal
Betty L. Peterson
Notary Public - New Mexico
Notary Bond filed with Secretary of State
(My commission expires 2-16-2001)
26.