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HomeMy WebLinkAbout1995-05-22 95-239 ORDER_ COUNCIL ACTION Date: May 22 1995 Item No. 95-239 Item/Subject: AUTHORIZING E%ECUTION OF OPTION AGREEMENT WITH REALTY RESOURCES CHARTER® - FORMER PREBSE'S BUILDING Responsible Department: Community and Economic Development Commentary: The Option Agreement, as drafted, requires a purchase price of $250,000; development of 34 units of housing in the easterly 1/3 of the building at a cost of not less than $1.9 Million for acquisition, surveys, demolition, site work, building improvements, environmental remediation, interior fit up, purchase and installation of equipment, appraisal fees, architectural fees, engineering fees, legal fees,unting fees, financing fees, permit fees and preopening expenses; an Option period ending 12/31/95 with provision to extend for an additional 6 months; an option fee of $1,000 and $100 per month for any extension; application of the Option fee at Developer's option to building stabilization or repairs; submission of preliminary plans for City approval by 8/31/95 and final plans by 11/15/95; construction start within 3 months of conveyance of title but not later than 6/30/96 ynd coq$( ction completion by 12/31/96. y ///� partment Head "11111 IFr a 11 d 01., 1. ; Associated Information: Finance Director Legal Approval: W/ / kwp/iy Gllan fa thuf ds(~Il 140A 62"Okof VA .ff V1$; city solid Ltroduced For X Passage _ First Reading Page 1 ofL _ Referral co-fxee 95-239 Aedpmdto Coundoe Popper May 22, 1995 CITY OF BANGOR (TITLE.) (Orberp.... ......AOTHORIEING BEBCUTION OF OPTION AGREEMENT WITH RBALPY RESOURCES CHARTERED - FORNER FREESE'S BUILDING By as city ca"aw Of do city ofBanown, ORDERED¢ THAT the City Manager is hereby authorized, on behalf of the City of Bangor, to execute an Option Agreement, a copy of which i on file in the Office of the City Clerk, with Realty Resources Chartered for the purchase and redevelopment of a portion of the former-Freese's Building", located at 79-96 Main Street. IN CITY COUNCIL 95-239 May 222, 1995 O R D E R e Title, Authorizing Execution of Option Agreement CITY ERI( with Realty Resources Chattered - Former Freese's Building .............�...... �........................ � Asigmed to 95-239 OPTION AGREEMENT FOR PURCHASE OF A PORTION OF FORMER FREEZE'S BUILDING TABLE OF CONTENTS Draft of Mav 15. 1995 Section A. GRANT OF OPTION . . . . . . . . . . Page 1 of 23 1. .rant of Option . . . . . . . . . . . . Page 1 of 23 2. Premises . . . . . . . . Page 2 of 23 3. N rchase Price of Premises . . . . . . . Page 2 of 23 4. Term and Price of Option . . . . Page 2 of 23 S. Extension of Ootid . . . . . . . . . . Page 2 of 23 6. Application of option Fees . . . . . . . Page 3 of 23 7. Exercise of Option . . . . . . . . . . . Page 3 of 23 8. Right of Entry . . . . . . . Page 3 of 23 9. Evidence and Conveyance of Title Page 4 of 23 30. Effect of DEVELOPER'sAccentance of Title . . Page 9 of Page 5 of 23 Section B CQDD1T1fSeS ME PREMISES To THE DEVELOPER . . . Page 5 of 23 1. Submission of Plans . . . . . . . . . . . Page 5 of 23 2. Annroval of Plans . . . . . . . . Page 5 of 23 3. Amandment to Final Plane . . . . Page 8 of 23 4. Construction Progreae Schedule . . . . . Page 8 of 23 5. Permit Requirement . . . . . . . . . Page 8 of 23 6. Evidence ofFinancing . . . . . . . . . Page 9 of 23 7. construction contract . . . . . . . . . . Page 9 of 23 Section C. CONDITIONS EUBSEOI�NT TO JHS-Clj�� 1 PRRMTSFS TD THR nV17VWPER . . . Page 9 of 23 1. Deed Covenants . . . . . . . . . . . Page 10 of 23 2. Raa Reatri.('t io . . . . . . . . . . . Page 10 of 23 3. Anti -discrimination Page 10 of 23 4. Property Taxes . . . . . . . . . Page 11 of 23 S. Subdivision Reatrirtion . . . . . . . Page 11 of 23 6. Land Speculation Reetrictiov . . . . Page 12 of 23 7. Q111'a Appromal of Transfer Prior to completion. .. . Page 12 of 23 a. Mortgages iriol to Completion of Porrovempnea Page 14 of 23 9. Notice of Default to Mortgagee . . . Page 15 of 23 10. Title Reversion Prior to Completion . . Page 18 of 23 11. _i Snaitinn LWQn Reversion . . . . . . . Page 20 of 23 12. Certificate of Completion. . . . . . . . Page 21 of 23 13. geverability . . . . . . . . . . . . . . Page 21 of 23 14. Ijotire . . . . . . Page 21 of 23 15. Memorandum of option . . . Page 22 of 23 95-239 OPTION AGREEMENT FOR PURCHASE OF A PORTION OF FORMER FREEZE'S BUILDING THIS AGREEMENT is made this _ day of 1995, by Red between the CITY OF BANGOR, a municipal corporation located in the County of Penobscot, State of Maine (hereinafter "CITY'), and REALTY RESOURCES CHARTERED (hereinafter "DEVELOPER"), a Maine corporation whose President1Joseph M. Cloutier, having principal place of business in Rockport, County of Lincoln, State of Maine. W I T N E S S E T H' WHEREAS, the CITY has received the DEVELOPER's proposal for the development of a portion of the real property known as the former FREEZE'S building, located at 74-96 Main Street in Bangor (hereinafter "the Premises'); and WHEREAS, the CITY has determined that the private development of the Premises in sordance with the provisions of this Option Agreement would bestserve the interests of the citizens of the CITY; and WHEREAS, the CITY has determined that the DEVELOPER's proposal will serve the interests of the citizens of Bangor; NOW, THEREFORE, in consideration of the option fee paid to the CITY by the DEVELOPER in accordance with Section A.4. below and of the mutual conditions and covenants contained herein, the parties agree as follows; 132SEEPTIMTKOTWOF MW 1. era ni na Oot io The CITY grants and the DEVELOPER accepts an exclusive option to purchase the Premises for development of 34 units of housing (hereinafter sometimes referred to as "the DEVELOPMELT"), at a minimum direct DEVELOPER cost, which Page 1 of 23 95-239 may include acquisition cost of the Premises, surveys, demolition, site work, building improvements, environmental remediation, interior fit up, purchase and installation of equipment, appraisal fees, architectural fees, engineering fees, legal fees, accounting fees, financing fees, permit fees and preopening expenses of not less than One Million Nine Hundred Thousand Dollars ($1,900,000.00). Said DEVELOPMENT shall be ina ccordance with the terms and conditions of this Option Agreement. 2. Promises. The Premises made subject of this Option consists of a portion of the ^Freese's Building", so called, located at 74-96 Main Street, Bangor, Penobscot County, Maine, and further described as -Parcel One" and "Parcel Two" in the deed from Bangor Maine Associates t0 Charles Fitzgerald dated June 3, 1985 and recorded in Book 3669, Page 1, Penobscot Registry of Deeds, being the rear or easterly one - third, more or less, of said "Freese's Building- as depicted in the conceptual plan entitled Conceptual Floor Layout - Typical Upper Floor / Freese Building Renovations / Realty Resources Chartered prepared by Curtis Walter Stewart Architects of Portland, Maine dated 10/12/94, a copy of which is attached hereto as Attachment "A". A full Legal description of said Premises shall be supplied by the CITY in accordance with the CITY's title obligations under paragraph 9 of this Section. 3,M1Price of Premiaea. The purchase priceof the Premises shall be $250,000, said amount to be paid to theCITY i cash or by check at the time of closing on the sale of the Premises, less any amounts paid by the DEVELOPER to the CITY pursuant to this Option Agreement. 4. Term and Price of Option. This Option Agree ent shall remain in effect from the date hereof until December 30, 1995. The non-refundable option fee for this period is One Thousand Dollars ($1,000.00). 5. Extension of Option. The City Council shall extend this Option Agreement, upon the DEVELOPER's written request stating the reasons therefor, for a period not to exceed an additional six (6) months, if the Developer is pursuing the development in good faith. The fee for an extension, which shall be payable in full, before o at the time the extension is executed, shall be One Hundred Dollars ($100.00) per month. Page 2 of 23 95-239 6. Application of Option Fees. Insideration Of DEVELOPER'S purchase and redevelopment of the Premises, in accordance with this Option Agreement and the DEVELOPERRIs proposal, the CITY expressly agrees that the option fee specified in this Agreement be returned to the DEVELOPER to be applied toward necessary stabilization and repairs to the existing buildings and site. CITY shall return to the DEVELOPER the option fee paid to the CITY upon the CITY's issuance of the Certificate of Completion under Section C.12, below; provided, however, that the option fee shall be forfeited to the CITY if the DEveLOPER does not purchase the Premises in accordance with the terms and conditions of this Agreement. 9. Exercise of Option. To exercise its right to purchase the Premises, the DEVELOPER shall so notify the CITY in writing thirty (30) days before the expiration of this Option Agreement and any extension hereof. Provided, that no notice of DEVELOPER's intent to exercise the option granted herein shall be effective s as to require the CITY to deliver title to the Premises to the DEVELOPER unless the DEVELOPER has first fully complied with all "conditions precedent to the CITY's conveyance of the Premises to the DEVELOPER" as set out in Sectlon,B. of this Agreement, below. a. Richt of Entry. During the option period the DEVELOPER shall have the right, on reasonable notice to and consent by the CITY's City Engineer, to enter upon the Premises with persons and machines for the preparation of surveys, feasibility studies and construction plans. This right of entry shall include the right to enter into the Premises for the purpose of making structural repairs to the Premises and abatement of environmental hazards. In addition, during the option period the DEVELOPER shall have the right to enter upon the Premises with persons and machines to erect and maintain signage on the Premises, provided, however, that the location, size and content of any such sign shall be subject to the approval of the CITY's City Manager and so long as said signage i n compliance with the CITY's sign ordinance. Such entry shall be at the DEVELOPER'S sole risk and expense, and the DEVELOPER covenants and agrees to indemnify, defend, and hold the CITY harmless from any claims for personal injury or property damage suffered by reason of entry upon the Premises by the DEVELOPER, its agents or employees, or anyone acting on the DEVELOPER's behalf. For thispurpose, DEVELOPER hereby expressly waives any and all immunity it may have under Maine's Workers Compensation Act in Page 3 of 23 95-239 regard to such claims made or asserted by DEVELOPER's agents, Servants or employees. Prior to any entry hereunder, the DEVELOPER shall first obtain liability insurance for this purpose in such amount (a) of coverage satisfactory to CITY with the CITY as a additional named insured, and shall provide the CITY with written evidence thereof. All work shall be done in amr that causes the least possible disturbance to the Premises, and DEVELOPER covenants and agrees that any work done pursuant to DEVELOPER's entry under this paragraph shall be done in a workmanlike maner and that the DEVELOPER shall repair any damage to the Premises resulting from the exercise of these rights. 9. Em dente and_^_ s -_ Within 30 days, or such other time as the parties may agree upon, of the CITY's receipt of the DEVELOPER's notice under Section A.7. above, the CITY shall convey good and marketable title to the Premises, free and clear of all liens and encumbrances, except easements of record or required by the CITY, to the DEVELOPER by Municipal Quitclaim Deed, subject however to the conditions, restrictions, and therants contained in Sections E. and C. below. Within 30 days of date of this Option Agreement, or such other time as the parties may agree, the CITY will furnish to the DEVELOPER evidence of its titlen n the form of abstract of title prepared in accordance withthe Maine TitleStandards, or a title insurance s commitment issued by a title insurance company licensed to do business in the State of Maine, that it will issue a title insurance policy insuring marketable title, free and clear of all liens and encumbrances, except as set forth above. Said commitment shall be in aamount not lees than the purchase price of the Premises plus the DE"LOPER'a estimated coats of the improvements thereto contemplated by this Agreement. If the CITY is unable to tender marketable title after reasonable efforts to do so, the CITY shall refund to the DEVELOPER the fees paid under this Option Agreement, if the DEVELOPER so requests, or the DEVELOPER may choose to accept the CITY's Municipal Quitclaim Deed, in which case the DEVELOPER shall assume any risks associated with the title. Within 30 days of the date of this Option Agreement, or such other time as the parties may agree the City shall also provide a boundary survey of the Premisesprepared by a duly registered land surveyor or duly registered professional engineer, as each is defined by Title 32 of the Maine Revised Statutes Annotated, which survey shall also contain the easements excepted above. Page 4 of 23 95-239 10. DEVELOPER'¢ acceptance of the CITY's Municipal Quitclaim Deed conveying title to the Premises, tendered in accordance with Section A.9. above, shall relieve the CITY of any and all further obligation to supply evidence of title or to take other steps to perfect the title delivered. In no event shall the CITY's obligations to tender marketable title,and to use reasonable efforts to determine the source of title, extend beyond the term of this Option and any duly executed extension thereof as set forth in Sections A.4. and A.S. above. Provided, however, that City shall cooperate with DEVELOPER to cure any title defects discovered subsequent to the conveyance. Section B. CONDITIONS PRECEDENT TO THE CITY -8 CONVEYANCE THE PREMISES TO THE DEVELOPER Before the CITY's conveyance of the Premises the DEVELOPER shall complete the following: 1. Submission of Plana. The DEVELOPER shall submit preliminary and final plans for use of the Premises for review and approval by the CITY. DEVELOPER's plans submitted in accordance with this paragraph shall in all respects comply with all applicable Codes and Ordinances of the City of Bangor, and in particular with the requirements of the CITY's Land Development Code and Historic Preservation Ordinance. Plans shall additionally conform to and be submitted in accordance with the provisions of paragraph 2 of this Section, below. 2. Aon vei cr mane. No construction or renovation will be allowed without the prior submission and approval of preliminary plans, final plans, and specifications. All plans will be submitted to the City Manager, c/o the Director of Community and Economic Development. All plans and revisions to plans shall be reviewed by City staff designated by the City Manager after which the City Manager shall submit the plans along with his recommenidations to the City Council Community and Economic Development Committee. Said plans shall be reviewed and approved by the City Council Community and Economic Development Committee. No plans shall be approved unless said plans have been prepared by Page 5 of 23 95-239 a duly registered architect, as defined by Title 32 of the Maine Revised Statutes Annotated, unless otherwise accepted by the City. The following submissions shall be required: a. Pr 31minary c]_a_ - The intent of the Preliminary Plans shall be to outline the general scope of development or redevelopment, and to convey to the CITY sufficient information to determine the character of the work to be performed. The Preliminary Plans shall contain: (1) Site Plan - The site plan shall be drawn to a tale of one (1) inch equals twenty (20) feet wherever practical. The site plan shall otherwiseonform to the requirements of Article 1]C Section 4 of the CITY's Land Development Code. (2) Plooz elan - The scale of the floor plan shall be left to the discretion of the architect. This plan shall show general room layouts and including entrances o and exits. Dimensions may be approximate and the overall floor area for each floor shall be indicated. The elevation of each floor shall be indicated. (3) Elevations - A -suitable ose-Section or elevation of the building shall be provided either in the form of an artist's rendering of the building or a erose -section of the Wilding. Where site grade plays an important Part in the layout of multilevel structures, the CITY shall reserve the right to request cutaway elevations Showing the relationship of floors to surrounding grades. Materials to be used for u exterior treatment shall be indicated. b. final Plans and Specifications - After approval of the preliminary plans, the DEVELOPER shall then proceed with the preparation of final plans and specifications. Said plans and specifications Page 6 of 23 95-239 shall show sufficient details necessary to inure Proper construction. All dimensions and elevations shall be accurate and all materials to be used in the structural or architectural treatment of the facility shall be outlined in complete detail. if, in the opinion of the CITY, there is a doubt regarding the structural adequacy of any facility, the DEVELOPER shall provide all required back-up data, including structural computations, boring loge or material guarantees. Preliminary/FinalTimerah1p far Approval of No later than_AU,mst 31 1994, the DEVELOPER shall submit to the CITY Is City Manager, in care of the CITY's Director of Community and Economic Development, for approval of preliminary plans a specified in Section B.S. above. If the DEVELOPER proposes revisions, or if the City Manager or the Director of Community and Economic Development deems revisions to the preliminary plana necessary or appropriate, the r shall be Submitted to the Community and Economic a Development Committee for its approval not later than Seetvmher 30 1995. The DEVELOPER is hereby advised that any time the DEVELOPER proposes revisions to plans previously approved or submitted, the proposed r should be submitted as e s possible to theCity Manager, in e of the Director of Community and Economic Development, forwand approval before the DEVELOPER proceeds with the preparation of final plans and specifications. Concurrently with submission of preliminary plans, and no later than gap mnc_ nar_3n_tcog, the DEVELOPER shall submit complete applications for all plan approvals required by the City of Bangor (for site plan and subdivision approval), the Maine Historic Preservation Commission, and the City of Bangor Historic Preservation Commission.The DEVELOPER shall take all stepsssary to obtain local view and approval of site plan, subdivision and historic preservation applications no later than October an. 399 Page 7 of 23 95-239 No later than November 15,1995, the DEVELOPER shall meet with the City Council Community and Economic Development Committee and submit for its approval final plans and related drawings, specifications, and documents in the form specified in Section B.2. above. If the City Council Community and Economic Development Committee deems revisions to the final plans to be necessary or appropriate, the plans must be so revised and submitted to the City Council Community and Economic Development Committee for its approval no later than December 1994. 3. Lmrndmrni to Final Plane. If the DEVELOPER desires to make any substantial alterations in the final plans after their approval by the City Council Community and Economic Development Committee, the DEVELOPER Shall Submit the proposed change in writing to the City Council Community and Economic Development Committee for its approval. If the final plans, as modified by the proposed change, still conform to the requirements of Section B.1. hereof, the City Council Community and Economic Development Committee shall not unreasonably withhold approval of the proposed change. The City Council Community and Economic Development Committee shall either approve or disapprove the proposed change within ten (10) days after its submission and notify the DEVELOPER of its decision. No final plan approval by the Community and Economic Development Committee shall override any requirements for City of Bangor Planning Board and Historic Preservation Commission approval. 9.ln Prna Schedule. Concurrently with the submission of the final plans, the DEVELOPER shall submit a anticipated construction progress schedule to the City Council• o The progress schedule shall provide for the.encement of construction within three (3) months after closingbuti no event later than June 30, 1996 and shall provide for completion of construction no later than December 31, 1996, provided that nothing herein shall be construed to extend, limit, or otherwise affect the time limits prescribed in any building permit or Planning Board approval. 5. Permit Requirement. DEVELOPER shall obtain, and shall provide satisfactory evidence thereof to the CITY, every permit, Page 8 of 23 95-239 license, and governmental approval necessary for commencement and completion of the development described in Section A.1. above. Except in accordance with Section A.S. above, no term or deadline specifiedrthis Agreement shall be extended by reason of DEVELOPER's failure to obtain or of an approving authority to issue any required permit in a timely turner. Provided, however, that CITY agrees to act in good faith and to give due consideration to a request by DEVELOPER for such an extension where the failure to obtain such approval or permit is due to circumstances beyond the control of DEVELOPER. 6. Evidence of Pinancina. The DEVELOPER shall provide the CITY with written, legally binding commitments, in a form satisfactory to the CITY's City Solicitor, from acceptable lending institutions, governmental agencies, or other sources for both interim construction financing and long-term financing of the DEVELOPERa One Million Nine hundred Thousand Dollars ($1,900,000) share of total proposed development coat as detailed in the plans referred to and approved under Sections B.1. and B.2, above. The DEVEWPER Or DEVEWPER's general contractor shall past with said financing entity both a performance bond and a labor and materials payment bond issued by a corporate surety licensed to do business in the State of Maine, each in a penal sum equal to the total estimated cost of the total proposed development, to secure performance of the obligations set forth in Sections 8.1, B.2., B.3. and 8.9 above. The DEVELOPER or the DEVELOPER's general contractor shall submit to the CITY a copy of said bonds and written evidence of payment of the required premiums. The bonds must remain in effect until the CITY's issuance of the Certificate of Completion under Section C.12. below.8 7. Construction Contract. The DEVELOPER shall provide the CITY with a certificate executed by the DEVELOPER and its general contractor, certifying the existence of a contract or contracts for construction of the total developmentin ordance with the provisions of Sections B.1., B.2., B.3. and Ba9e above. Section C. C�ITIM SUBSEQUENT TO TEE CITY -S CONVEYANCE QF THE PREMISES To TEE DEVELOPER Except as otherwise specified herein, the following express conditions, covenants, and restrictions shall be expressly Page 9 of 23 95-239 incorporated into the CITY's Deed to the DEVELOPER, and shall run with the land: 1. Deed Covenants, It is intended and agreed, and the Deed shall so expressly provide, that the express conditions, covenants, and restrictions provided in Section C. hereof shall be covenants 'running with the land° and that they shall be binding, the fullest extent permitted by law and equity, for the benefit and i favor of, and enforceable by, the CITY and any successor in interest to the Premises or any part thereof for the time periods specifically prescribed herein for each. None of the provisions and remedies below, including the Reversion specified in Section C.10., shall be construed so as to limit the DEVELOPER's liability t0 the CITY for the DEVELOPER's breach of any of its obligations under this Option Agreement and the Deed. 2. Use Restriction. The DEVELOPER agrees for itself, and very successor in interest to the Premises, or any part thereof, and theDeed shall contain express covenants on the part of the DEVELOPER for itself, and its successors s and assigns, that the Premises and any improvements which may be or may become located thereon shall be used, constructed, developed, occupied and maintained in accordance with the laws, ordinances, or regulations of the State of Maine and the City of Bangor, as the am.may now or hereafter be in effect. In the event that both the State and the City have law(s) governing the same subject matter, DEVELOPER agrees that the Premises and any improvements which may be or may become located thereon shall be governed by the most restrictive of these law(s). The DEVELOPER further agrees that any structure, or the occupancy thereof, constructed on the Premises shall not unreasonably interfere in any way with the operation, maintenance, repair or replacement of all existing sewer lines on the Premises which are depicted on the survey to be furnished by CITY to DEVELOPER under Section A.9above. In addition to other requirements herein, the DEVELOPER shall not construct any structure on the Premises without receiving prior written certification by the City Engineer that said structure shall not unreasonably interfere with said sewer lines. 3. =i -discrimination. The DEVELOPER agrees for itself, and every successor in interest to the Premises, or any part thereof, and the Deed shall contain express covenants on the part of the DEVELOPER for itself, and its successors and assigns, that Page 10 of 23 95-239 the DEVELOPER, and its successors and assigns, shall not discriminate upon the basis of race, calor, creed, national origin, xphysical o ental handicap o any other basis prohibited bylaw now or in the future,rn the sale, lease, or rental, or use or occupancy of the Premises o any improvements thereon. This covenant shallrun res perpetuity. This ant against discrimination shall be binding for the benefit and rein favor of, and enforceable by the CITY and the United States of America against the DEVELOPER and every successor in interest to the Premises or any part thereof. 9. Property Taxes. The DEVELOPER agrees for itself, and every successor in interest to the Premises, or any part thereof, and the Deed shall contain express covenants on the part of the DEVELOPER for itself, and its successors and assigns, that the Premises shall be subject to all taxes and assessments asmay be imposed by any governmental authority upon the Premises and any buildings, structures, or improvements which may be or may become located thereon. At the CITY's discretion, the deed tendered i accordance with Section A.9. above may contain a provision effecting a reverter of title to the Premises to the CITY, if any breach of this covenant shall reuncured for a period of 90 days following written notice. It isthe intent of the parties hereto, and DEVELOPER hereby agrees that it does hereby waive, for itself and any successors in interest, all right or privilege of exemption from u municipal taxation of the Premises and any buildings, structures, or improvements which may be or may become located thereon, as may he available by reason of DEVELOPER's o such successors' legal status, or for any other r whatsoever, s at the oCi taxon and that the City of Bangor,i its capacity as a taxing authority, may a asall taxes a would otherwise be applicable to the premises, buildings, structures orimprovements which may be o may become located thereon, as if eachremption did not exist. DEVELOPER further agrees, for itself and any successors in interest, to pay any assessments on or before the date upon which they become due and payable. The CITY agrees that DEVELOPER, o its successors interest, shall have the right to contest the amount of such taxes or assessments in the manner prescribed by law. 5. Subdivision Restriction. The DEVELOPER agrees for itself, and every successor in interest to the Premises, or any part thereof, and the Deed shall contain express covenants on the Page 11 of 23 95-239 part of the DEVELOPER for itself, and its successors and assigns, that the Premises shall not be subdivided without the CITY's express written consent, which consent shall not be unreasonably withheld. For the purpose of this paragraph, the following alone shall not be deemed to constitute a subdivision: a. Development of the project as a condominium pursuant to the Maine Condominium Act (33 M.R.S.A. Sec. 1601-101 at seq.). b. Leases of portions of the development. c. Construction of separate buildings or structures on the Premises. 6. Land Soecnlatioa Restriction. The DEVELOPER represents and agrees that its purchase of the Premises and its other undertakings pursuant to this Option Agreement are and will be used for the purpose of development of the Premises in accordance with Section A.1. above, and not for speculation in land holdings. This covenant shall terminate upon the CITY'ean ce of the Certificate of Completion under Section C.12. below. . The DEVELOPER recognizes that the qualifications and identity of the DEVELOPER, and its principals or any successors in interest, are of particular concern to the CITY. The DEVELOPER further recognizes that it is because of such qualifications and identity that the CITY is em entering into this Option Agreement and r willing to accept and rely on the obligations of the DEVELOPER for the faithful performance of all undertakings and covenants to be performed by the DEVELOPER. Therefore, the DEVELOPER represents and agrees for itself, its successors and assigns, that, except only by way of security for thea purpose of obtaining financing necessary to enable the DEVELOPER or any approved successor in interest to perform .the obligations under Section R. hereof, the DEVELOPER has not made o created and, until the CITY issues the Certificate of Completion under Section C.12. below, will not make or create, or suffer to be made or created, any total or partial sale assignment, conveyance, lease, trust, power, or transfer in any other mode or form, of, o with respect to, this Option Agreement, the Premises, or any part Page 12 of 23 95-239 thereof, or interest therein, nor shall any contract or agreement to do any of the same be entered into without the CITY's prior written approval. The foregoing provisions shall not apply to the lease of the premises or the improvements to be constructed thereon to prospective tenants, provided that said leases are made subject to the provisions of this Agreement. The CITY shall be entitled to require as conditions to any such approval that: a. Any proposed transferee shall have the qualifications and financial responsibility, determined by the CITY by written evidence submitted to it, to be necessary and adequate to fulfill the obligations undertaken under Section B. hereof; b. Any proposed transferee, by instrument in writing satisfactory to the CITY and in a form recordable in the Penobscot Registry OfDeeds, shall for itself and itssuand signs, and expressly for the benefit s of the CITY, have expressly assumed all of the obligations of the DEVELOPER under this Option Agreement and agrees to be subject to all of the conditions and astrictions to which the DEVELOPER 1s subject under Section C. hereof; and C. The consideration payable for the transfer by the transferee or on its behalf shall no[eXeed a amount representing the actual cost to the DEVELOPER of the Premises and the improvements, if any, theretofore made thereon by it; the intent of this provision being to preclude assignment of the agreement, or transfer of the Premises, for profit prior to the CITY's issuance of the Certificate of Completion under section C.12., and to provide that if any such assignment or transfer is made the CITY shall be entitled to increase the purchase price to the DEVELOPER by the amount that the consideration payable for the assignment or transfer is in excess of the amount that may be authorized pursuant to this subparagraph c. and such consideration shall, Page 13 of 23 93-239 to the extent that it is in excess of the amount so authorized, belong and forthwith be paid to the CITY. The foregoing provisions of this section C.Y. notwithstanding, the DEVELOPER may assign this Option Agreement and all rights and duties herein, subject to the terms and conditions hereof, t0 a development entity hereafter organized and qualified by DEVELOPER under the laws of the State of Maine; provided, however, that DEVELOPER shall retain an active involvement in the entity and the entity shall a in writing satisfactory to the CITY, the obligation to complete nthe manner provided for in this Option Agreement, the contemplated improvements on the Premises. Furthermore, the entity must submit evidence satisfactory to the CITY that it has the qualifications and financial responsibility necessary to perform such obligation. All covenants contained in this Section C.Y. shall terminate upon the CITY's issuance of the Certificate of Completion under Section C.12. below. a. Prior to the completion of the improvements as certified by the CITY, neither the DEVELOPER nor any successor in interest to the Premises or any part thereof shall engage in any financing o any o other transaction eatingany mortgage or any other encumbrance lien upon the Premises, whether by express agreement or operation of law, or permit any encumbrance of lien to b, made on or attached to the Premises, except for the purpose of obtaining funds necessary for making improvements provided herein plus the purchase price of the Premises paid by the DEVELOPER to the CITY. The DEVELOPER shall notify the CITY in advance of any mortgage financing it proposes to enter into with respect to the Premises, and of any encumbrance or lien that has been created on or attached to the Premixes, whether by voluntary act of the DEVELOPER or otherwise. Page 14 of 23 95-239 The holder of any mortgage authorized by this Option Agreement, including any such holder who obtains title to the Premises or any part thereof as a result of foreclosure proceedings or action i lieu thereof, shall not be obligated by the provisions of this Option Agreement to construct or complete the improvementso to guarantee such construction or completion.NOeant any other provision i any deed shall be construed so to obligate any such holder. However, neither such holder nor its successors or assigns shall be authorized to devote the Premises or any part thereof to anYto construct any improvements thereon, esother than those uses or improvements provided or authorized in this Option Agreement. All covenants contained in this Section C.B. shall terminate upon the CITY's issuance of the Certificate of Completion under Section C.12. below. Whenever the CITY shall deliver or make any notice r demand to the DEVELOPER with respect to any breach or default by the DEVELOPERrits obligations covenants under this Option Agreement, the CITY shall at the same time deliver to each holder of record of any mortgage authorized by this agreement a copy of such notice or demand. Each such holder shall, insofar as the rights of the CITY are concerned, have the right at its option to cure such breach or default and to add the cost thereof to the mortgage debt and the lien of its mortgage. However, if the breach or default is with respect to construction of the improvements such holder may not undertakeor [ontinue the construction or completion of the improvements beyond the extent necessary to conserve or protect improvements or construction already made without first having expressly medwriting the obligations to the CITY to complete, n the manner provided in this Option Agreement, theimprovements Page 15 of 23 95-239 n the Premises or the part thereof to which the lien or title of such holder relates, and having submitted evidence satisfactory to the CITY that it has the qualifications and financial responsibility necessary to perform such obligation. Any such holder who shall properly complete the improvements relating to the Premises or applicable part thereof shall be entitled, upon written request made to the CITY, to a certification by the CITY to such effect in a manner providedSection C.12. of this Option Agreement. Such certification shall, if s requested by such holder, provide that any remedy of the CITY's with respect to revesting of title to the Premises because of failure of the DEVELOPER to r any default with respect to the construction ofthe improvements on other parts of parcels of the Premises, or because of any other default in or breach of this Option Agreement by the DEVELOPER, shall not apply to the part or parcel of the Premises to which such certification relates. b. If after the DEVELOPER's default under this Option Agreement, the holder of any mortgage on the Premises or part thereof does notexercise the .option to construct or complete the improvements relating to the Premises or part thereof covered by its mortgage or to which it has obtained title within 60 days after the holder has been notified of the default or undertakes completion of the improvements but does not complete construction within the period as agreed upon by the CITY and such holder, the CITY shall have the option of paying to the holder the amount of the mortgage debt and securing an assignment of such debt and of the mortgage. If ownership of the Premises or part thereof has estedsuch holder by way of foreclosure or action in lieu thereof, the CITY shall be entitled, at its option, to a conveyance to it of the Premises or part thereof upon payment to such holder of an amount equal to the sum of the mortgage debt at the time of foreclosure or action in lieu thereof less all appropriate credits, including those resulting from collection and Page 16 of 23 95-239 application of rentals received during foreclosure proceedings; all expenses with respect to the foreclosure; the net expenses, exclusive of general overhead, incurred by such holder in and as a direct result of the subsequent management of the Premises; the cost of any improvements made by such holder; and an aunt equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the mortgage debt and such debt had continued in existence until such acquisition by the CITY. In the event of the DEVELOPER's default in its obligations under any mortgage or other instrument eating an encumbrance upon the Premises or part thereof priorto completion of improvements, the CITY may at its option cure such default or breach. In such case the CITY shall be entitled, in addition to and without limitation upon any other remedy to which it shall be entitled by this Option Agreement, operation of law, or otherwise, to reimbursement from the DEVELOPER or successor in interest of all costs and expenses incurred by the CITY in curing such default or breach, and to a lien upon the Premises or part thereof to which the mortgage, encumbrance, or lien relates, to secure such reimbursement_ d. For the purposes of this and other Paragraphs of this Option Agreement, the term "holder reference to am ortgage shall be deemed to include any insurer or guarantor of any obligation or condition secured by such mortgage, including but not limitedto the Federal Housing Commissioner, the Administrator of Veterans Affairs, and any successor in office of either such official. All covenants contained in this Paragraph 9. shall terminate upon the CITY'S issuance of the Certificate of Completion under Section C.12, below. Page 17 of 23 95-239 10. Title Reversion Prior to Cnm lep tion. In the event that prior to the CITY's issuance of the Certificate of Completion under Section C.12. below: The DEVELOPER, or its successor in interest o sign, shall default in or violate its obligations with respect to the construction of the improvements (including the nature and the dates for the beginning and completion thereof), or shall abandon or substantially suspend co nstruction work, and any such default, violation,abandonment, or suspension is not cured, ended, o remedied within three (3) months (or six (6) months, if the default is with respect to the date for completion of the improvements) after written demand by the CITY to do so; or b. The DEVELOPER, or itssuccessor in interest o sign, shall fail to pay real estate taxes or assessments on the Premises or any part thereof when due, or shall place thereon any encumbrance or lien unauthorized by Section C. hereof, or shall suffer any levy or attachment to be made, or any materialmen's or mechanic's lien, or any other unauthorized encumbrance or lien to attach, and such taxes or assessments shall not have been paid, or the encumbrance or lien removed or discharged o provision made, satisfactory to the CITY, for such payment, removal, or discharge, within thirty 130) days after the CITY's written demand to do so, or C. The DEVELOPER, or its successor in interest or assign, shall make any assignment for the benefit of creditors, or a receiveror smilar officer shall be appointed to take chargeof all orany substantial part of the DEVELOPER's property, and such assignment or appointment is not dismissed o released within thirty (30) days of the date the assignment or appointment i6 made; or d. There is, nviolation of Section C. hereof, any transfer of the Premises or any part thereof, o any change in ownership of the DEVELOPER, except as Page 18 of 23 95-239 expressly permitted in Section C.7. above, and such violation shall not be cured within thirty (30) days after written demand by the CITY to the DEVELOPER; then the CITY shall have the right to re-enter and take possession of the Premises and to terminate and revest in the CITY the entire estate conveyed by the Deed to the DEVELOPER as if no Deed bad ever been given; it being the intent of this provision, together with other provisions of Section C. hereof, that the conveyance of the Premises to the DEVELOPER shall be made upon, and that the Deed shall contain, a condition subsequent to the effect that in the ant of any default, failure, violation, or other action or action by the DEVELOPER specified in subparagraphs a., b., c and d. of Section C.10. hereof, and failure on the part of the DEVELOPER to remedy, end, or abrogate such default, failure, violation, or other action or inaction, within the period and in the manstated in such subparagraphs, the CITY at its option may declare artermination in favor of the CITY of the title, and of all the rights and interest in and to the Premises, and that such title and all rights and interest of the DEVEIAPER, and any assigns o successorsinterest to and in the Premises shall revert to the CITY; provided, however, that such condition subsequent and revesLing of title in the CITY shall always be subject to and limited by, and shall not defeat, render invalid or limit in any way; (1) the lien of any mortgage authorized by Section C. hereof, and (2) any rights or interests provided in Section C. for the protection of the holders of such mortgages. The CITY shall have the right to institute such actions or proceedings as it may deem desirable for effectuating the purposes of this Section C.10. including also the right to execute and record or file among the public land records in the office i which the Deed is recorded a written declaration of the termination of all the right,title and interest of the DEVELOPER, its successorsr ; interest and signs, in the Premises and the revesting oftitle in the CITY;provided, however, that any delay by the CITY in nstituting or prosecuting any such actions or proceedings or otherwise asserting its rights under Section C. hereof shall not operate a;waiver of such rights or to deprive it of or limit such rights in any way. Page 19 of 23 95-239 The express conditions,Vants, and restrictions contained in this Section C.10. shall terminate upon the CITY's issuance of the Certificate of Completion under Section 0.12. below. 11. Disposition Upon Reversion. Upon the revesting in the CITY of title to the Premises or any part thereof as provided i Section C.10., the CITY shall in accordance with State law use its best efforts to resell the Premises or part thereof, subject to any existing mortgage liens,s soon and in uch manner as the CITY shall find feasible and consistent with the objectives of developing the Premises to a qualified and responsible party or parties, as determined by the CITY, who will assume the obligation of making or completing the improvements or such other improvements in their stead as shall be satisfactory to the CITY. Upon the resale of the Premises, the proceeds thereof shall be applied: First, to reimburse the CITY for: all costs and expenses incurred by the CITY including but not limited to salaries of personnel is connection with the capture, management, andsale of the Promiseer part thereof (but less anyincome derived bythe CITY from the Premises or part thereof); all taxes, assessments, water, sewer and other utility charges with respect to the Premises or part thereof; any payments made or necessary to be made to discharge any encumbrances or liens existing on the Premises or part thereof at the time of revesting of title thereto in the CITY o to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations, defaults or acts of the DEVELOPER, its a signs; any expenditures made o successors or as r obligations red with respect to the making or completion of the improvements or any part thereof t n the Premises or part thereof; and any amounts otherwise owing to the CITY by the DEVEIAPER and its successor or assign; and b. Second, to reimburse the DEVELOPER, its successors or assigns, up to the amount equal to: (1) the sum Page 20 of 23 95-239 of the purchase price paid by it for the Premises ir part thereof and the cash actually invested by t in making any of the improvements on the Premises or part thereof; leas (2) any gains or income withdrawn or made by it. The CITY shall retain as its property any balance remaining after such reimbursement. The express conditions, covenants, and restrictions contained in this Section C.11. shall terminate upon the CITY's issuance of the Certificate of Completion under Section C.12. below. 12.Ceres fi cafe of rom lei_ t=on. Promptly after completion of the improvements in accordance with the provisions of this Option Agreement, the CITY will furnish the DEVELOPER with an appropriate instrument so certifying, which instrument shall not be unrsonably withheld. Such certification shall be in such form a will enable it to be recorded in the Penobscot County Registry of Deeds. The CITY's issuance of the Certificate of Completion will constitute conclusive proof of the satisfaction and termination of the express conditions, covenants, and restrictions contained in Sections C.6., C.9., C.e., C.9., C.lo., and C.11. above. If the CITY shall refuser fail to provide such certification, the CITY shall, within thirty (30) days after written request by the DEVELOPER, provide the DEVELOPER with a written statement indicating in adequate detail in what respects the DEVELOPER has failed to complete the improvements in accordance with the provisions of this Option Agreement and what measures will be necessary to obtain such certification. 13.e .. ranilir. If any provision of this Option Agreement is determinedto be invalid or unenforceable under law, it shall not affect the validity or enforcement of the remaining obligations r portions hereof. 14. Hoeice. Any notice under this Option Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally, and Page 21 of 23 95-239 a. in the case of the DEVELOPER, is addressed to or delivered personally to the DEVELOPER, U.S. Route kl, Box 515-5, Rockport, ME 04856. b in thecase of the CITY, addressed to deliveredpersonally to the CITY, c/o City Manager, City Hall, 73 Harlow Street, Bangor, Maine 09901. or to such other persons or addresses as the parties may designate in writing to the other. 15. Mem andum r,f tmtio Upon request of either, the parties agree to prepare and execute a Memorandum of Option in recordable e form, which Memorandum may be recorded by either party in the Penobscot County Registry of Deeds. IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first written above. Witness CITY OF BANGOR By Edward A. Barrett Its City Manager REALTY RESOURCES CHARTERED By witness Joseph M. Cloutier Its President STATE OF MAINE Penobscot, as. 1995 Then personally appeared the above-named Edward A. Barrett, in his capacity as the City Manager of the City of Bangor, and Page 22 of 23 95-239 acknowledged the foregoing instrument to be his free act and deed in such capacity and the free act and deed of the City of Bangor. Before me, Printed Name: Notary Public Attorney at Law STATE OF MAINE Penobscot, ss. 1995 Then personally appeared the above-named Joseph M. Cloutier, n his capacity as President of Realty Resources Chartered and acknowledged the foregoing instrument to be his free act and deed in such capacity and the free act and deed of the Corporation. Before me, Printed Name: Notary Public Attorney at Law Page 23 of 23