EXHIBIT 2.1
PURCHASE AGREEMENT
DATE: October 22, 1996 (the "Agreement Date")
SELLER: ▇▇▇▇▇▇ REALTY HOLDING COMPANY, INCORPORATED, a Delaware
corporation ("TRHCI"); and LME CAPITAL CORPORATION, a
Delaware corporation ("LMECC")
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
BUYER: PIVOTAL GROUP, INC., an Arizona corporation
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
ESCROW AGENT: SECURITY TITLE AGENCY
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Escrow Officer: ▇▇▇▇▇ ▇▇▇▇▇
Escrow Number: 268604
PROPERTY: The property being purchased by Buyer pursuant to this
Agreement consists of the following (collectively, the
"Property"):
1. The various parcels of real property described on
Exhibit A, together with all improvements thereon
and all easements, hereditaments, water rights,
mineral rights, development rights, and
appurtenances belonging to or inuring to the
benefit of Seller and pertaining to any of such
real property parcels, including the rights, if
any, of Seller in any street or road abutting any
of such real property parcels to the centerline
thereof (collectively, the "Real Property");
2. The tangible personal property described on Exhibit B
(the "Tangible Personal Property");
3. All of the right, title, and interest of Seller in
the trade marks and other intellectual property
described on Exhibit C (the "Trademarks") (with the
Tangible Personal Property and the Trademarks being
referred to in this Agreement as the "Personalty");
4. All of the right, title, and interest of Seller in
the leasehold interest of LMECC, as tenant (the
"Jamul Leasehold"), pursuant to the Lease (the
"Jamul Lease"), dated February 1, 1995, by and
between ▇▇▇▇ ▇. ▇▇▇▇▇ and Sun Valley Apartments
Partnership dba Jamul Shopping Village, and LME
Investors, as predecessor in interest to LMECC;
5. All of the right, title, and interest of Seller in
all consents, authorizations, dedications,
subdivision maps, plans, entitlements, variances or
waivers, licenses, permits, and approvals from or
to any governmental or quasi-governmental agency,
department, board, commission, bureau or other
entity or instrumentality solely in respect of any
of the Real Property (the "Approvals"); and
6. All of the right, title, and interest of Seller in
the Seller Leases (as defined in Section
4.1(c)(iv)), in the Contracts (as defined in
Section 4.1(c)(iv)), in the Pending Sales (as
defined in Section 4.1(c)(vi)), and in any Notes
and Receivables Security Documents (as defined in
Section 4.1(c)(vi)).
ARTICLE 1
AGREEMENT OF THE PARTIES
1.1 Agreement. In consideration of the mutual promises and
covenants set forth in this Agreement, Seller agrees to sell and Buyer
agrees to buy the Property on the terms and conditions set forth in this
Agreement.
ARTICLE 2
SALES PRICE AND PAYMENT TERMS
2.1 Sales Price. The total sales price which Buyer agrees to pay
for the Property is $20,000,000 (the "Sales Price"), subject, however,
to adjustment as provided in Section 2.3 and in Sections 4.5, 5.2,
8.2(b), and 8.2(c). The Sales Price is payable as follows:
(a) ▇▇▇▇▇▇▇ Money Deposits. Concurrently with the execution
of this Agreement by Buyer, Buyer shall deposit into Escrow as an
▇▇▇▇▇▇▇ money deposit the sum of $1,000,000. The ▇▇▇▇▇▇▇ money
deposit shall be absolutely non-refundable, except as otherwise
provided in Sections 5.1, 5.2 and 11.2.
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(b) Assessments.
(i) At the Closing, Buyer shall acquire the East Valley
Commerce Center Property (as defined on Exhibit A) subject to
the Town of ▇▇▇▇▇▇▇ assessment for Improvement District No. 11
(the "East Valley Assessment"). The Town of ▇▇▇▇▇▇▇ has not
finally determined the exact and final amount of the East
Valley Assessment; however, prior to Closing, Seller will
obtain an estimate from the Town of ▇▇▇▇▇▇▇ of the amount of
such assessment as of the Closing (the "Estimated East Valley
Assessment Amount"). As of the Closing, an amount equal to
the Estimated East Valley Assessment Amount shall be deemed a
payment by Buyer on account of the Sales Price. Within ten
(10) days following determination by the Town of ▇▇▇▇▇▇▇ of
the exact amount of the East Valley Assessment, taking into
account all adjustments and recapitulations (regardless of
whether or not Buyer then owns all or any portion of the East
Valley Commerce Center Property) (the amount so determined,
after taking into account all recapitulations or other
adjustments being referred to as the "Final East Valley
Assessment"), Buyer shall notify Seller of such amount and
shall make a cash payment to Seller in amount equal to the
amount, if any, by which the Estimated East Valley Assessment
Amount exceeds the Final East Valley Assessment. However, if
the Final East Valley Assessment is more than the Estimated
East Valley Assessment Amount, within ten (10) days of receipt
of such notice, Seller shall pay to Buyer an amount equal to
the excess of the Final East Valley Assessment over the
Estimated East Valley Assessment Amount.
(ii) At the Closing, Buyer shall acquire the Fortune
Center Property (as defined on Exhibit A) subject to the Town
of ▇▇▇▇▇▇▇ assessment for Improvement District No. 11(the
"Fortune Center Assessment"). The Town of ▇▇▇▇▇▇▇ has not
finally determined the exact and final amount of the Fortune
Center Assessment; however, prior to Closing, Seller will
obtain an estimate from the Town of ▇▇▇▇▇▇▇ of the amount of
such assessment as of the Closing (the "Estimated Fortune
Center Assessment Amount"). As of the Closing, an amount
equal to the Estimated Fortune Center Assessment Amount shall
be deemed a payment by Buyer on account of the Sales Price.
Within ten (10) days following determination by the Town of
▇▇▇▇▇▇▇ of the exact amount of the Fortune Center Assessment,
taking into account all adjustments and recapitulations
(regardless of whether or not Buyer then owns all or any
portion of the Fortune Center Commerce Center Property) (the
amount so determined, after taking into account all
recapitulations or other adjustments being referred to as the
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"Final Fortune Center Assessment"), Buyer shall notify Seller
of such amount and shall make a cash payment to Seller in
amount equal to the amount, if any, by which the Estimated
Fortune Center Assessment Amount exceeds the Final Fortune
Center Assessment. However, if the Final Fortune Center
Assessment is more than the Estimated Fortune Center
Assessment Amount, within ten (10) days of receipt of such
notice, Seller shall pay to Buyer an amount equal to the
excess of the Final Fortune Center Assessment over the
Estimated Fortune Center Assessment Amount.
(iii) Assessments. Buyer acknowledges that Seller
has not made any payments, other than interest, with respect
to the East Valley Assessment and the Fortune Center
Assessment and that such assessments may technically be in
default; however, Buyer is nevertheless acquiring the East
Valley Commerce Center Property and the Fortune Center
Property, respectively, subject to such assessments and
existing defaults, if any.
(c) Cash Payable at Closing. On or before the Closing, Buyer
will wire transfer ready funds to the account of Escrow Agent in an
amount equal to the total Sales Price, less the amounts paid by
Buyer pursuant to Sections 2.1(a) and 2.1(b), and less any credits
to which Buyer is entitled pursuant to Sections 2.2, 2.3, 7.3, and
8.2.
2.2 ▇▇▇▇▇▇▇ Money Provisions.
(a) Deposit and Disposition. All ▇▇▇▇▇▇▇ money deposits will
be made by wire transfer of ready funds to the account of Escrow
Agent. Unless otherwise instructed by Buyer and Seller, Escrow
Agent will deposit all such payments in federally-insured money
market or other similar accounts, subject to immediate withdrawal,
at a banking institution located in Phoenix, Arizona. If this
transaction closes, all ▇▇▇▇▇▇▇ money deposits will be credited
against the total Sales Price. Any earned interest will also be
credited against the total Sales Price. If the ▇▇▇▇▇▇▇ money
deposits are forfeited to Seller as provided by this Agreement, the
▇▇▇▇▇▇▇ money deposits, with any earned interest, will be paid
immediately to Seller. If Buyer is entitled at any time to a return
of the ▇▇▇▇▇▇▇ money deposits, any earned interest will be paid to
Buyer.
(b) Alternative Investments. Subject to the prior written
consent of Seller, which will not be unreasonably withheld or
delayed, Buyer may direct Escrow Agent to invest the ▇▇▇▇▇▇▇ money
deposit in other than federally-insured money market accounts,
provided, however, that all investment risk with respect to any such
investments shall be borne 100% by Buyer.
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2.3 Pending Sales.
(a) Closings of Pending Sales During Escrow. If a Pending
Sale (as defined in Section 4.1(c)(vi)) has already closed (i.e.,
on or after July 4, 1996) or closes prior to the Closing, the
portion of the Real Property subject to that particular Pending Sale
shall be deleted from the Real Property, Seller will be entitled to
all of the Net Proceeds from the sale, except that if the sale
includes a carry-back purchase money note (a "Carry-Back Note")
secured by the portion of the Real Property sold, Buyer shall
acquire the interest of Seller in such Carry-Back Note (all such
Carry-Back Notes being referred to in this Agreement as the
"Receivables"). If a Pending Sale closes prior to the Closing, the
Sales Price shall be reduced by an amount equal to the Net Proceeds
of the Pending Sale less the original principal balance of any
Carry-Back Note included as a Receivable. As used in this
Agreement, the "Net Proceeds" means the gross sales price of the
portion of the Real Property sold, expressed in dollars, less only
the costs of sale, including title insurance and escrow fees,
recording fees, real estate transfer taxes, documentary taxes, and
other usual and customary closing costs charged to a seller of real
property in the locale where the property is located, and less any
real estate commissions paid to independent third-party real estate
brokers in connection with such sale. Costs of sale will not
include any tax and assessment prorations and the like. Net
Proceeds will be calculated from actual closing statements as
finally approved by the parties to the Pending Sale, and copies of
such actual closing statements will be furnished to Buyer and Escrow
Agent prior to Closing.
(b) Credits for Amounts Released. With respect to any
Pending Sale that has not closed prior to the Closing, an amount
equal to the aggregate of all ▇▇▇▇▇▇▇ money or other amounts that
have been paid by the purchaser(s) under such Pending Sales on
account of the purchase price either directly to Seller or released
from escrow and paid to Seller shall be credited against the Sales
Price, and Seller shall be entitled to retain all such amounts as
have been released from escrow or paid to Seller.
(c) Post-Closing Obligations. To the extent that Seller or
any of its affiliates has, with respect to a Pending Sale that
closes prior to the Closing, any continuing obligations following
the closing of such Pending Sale, such as to construct any
improvements and so forth (the "Post-Closing Obligations"), Buyer
agrees that Buyer will assume and indemnify Seller and Seller's
affiliates from any liability with respect to such Post-Closing
Obligations at the Closing.
2.4 Sales Price Allocations. Buyer and Seller agree to the
allocation of the Sales Price among the various components of the
Property as set forth on Exhibit D.
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2.5 Late Payments. If a party fails to make any payment when
required under any provision of this Agreement on or before the date due,
the payment shall bear interest from the due date until paid at the rate
of 10% per annum, and such interest shall be paid in addition to the
payment amount.
2.6 Tax Allocations. Not later than three (3) business days prior
to Closing, Buyer may submit to Seller, for approval, an allocation of
the Sales Price among the various components of the Property for tax
basis purposes. However, it is not a condition precedent to the
obligations of either Buyer or Seller that an agreement be reached by
Buyer and Seller as to any tax basis allocations proposed by Buyer, and
if the parties fail to agree on such tax basis allocations, for any
reason, neither party shall be deemed to have committed a breach of this
Agreement, and the parties may file their own tax returns based on their
own allocations. In no event will any allocations agreed upon pursuant
to this Section 2.6 modify any of the allocations pursuant to Section 2.4
and Exhibit D or affect any of the rights of the parties pursuant to
Sections 4.5, 5.2, or 8.2.
ARTICLE 3
ESCROW
3.1 Establishment of the Escrow. An escrow for this transaction
(the "Escrow") is established with Escrow Agent, and Escrow Agent is
engaged to administer the Escrow.
3.2 Opening of Escrow. Concurrently with the execution of this
Agreement by both Buyer and Seller, Buyer shall deposit the ▇▇▇▇▇▇▇ money
payment required by Section 2.1(a) into Escrow and Seller and Buyer will
deliver an executed copy of this Agreement to Escrow Agent.
3.3 Acceptance of Escrow. By accepting this Escrow, Escrow Agent
agrees to the terms of this Agreement as they relate to the duties of
Escrow Agent.
3.4 Escrow Instructions. This Agreement constitutes escrow
instructions to Escrow Agent.
3.5 Escrow Cancellation Charges. If the Escrow fails to close
because of Seller's default, Seller will pay all customary escrow
cancellation charges. If the Escrow fails to close because of Buyer's
default, Buyer will pay all customary escrow cancellation charges. If
the Escrow fails to close for any other reason, Seller and Buyer will
each pay one-half of all customary escrow cancellation charges.
3.6 Insured Closing Letter. If Escrow Agent does not issue its
own title insurance policies, but acts as an agent for an underwriter,
Escrow Agent will cause its underwriter to issue to the parties, a
closing protection letter or insured closing service in written form
satisfactory to Buyer, within five (5) days following the Agreement Date.
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ARTICLE 4
INFORMATION
4.1 Information and Other Items Provided to Buyer.
(a) Arizona Information. On or before October 25, 1996 (the
"Arizona Information Deadline") and except as otherwise provided for
in Section 4.5, Seller shall have provided Buyer or Buyer's legal
counsel, at no cost to Buyer, with the information described in
Section 4.1(c), as such information relates to Real Property located
in the State of Arizona.
(b) California/Texas Information. On or before November 6,
1996 (the "California/Texas Information Deadline") and except as
otherwise provided for in Section 4.5, Seller shall have provided
Buyer or Buyer's legal counsel, at no cost to Buyer, with the
information described in Section 4.1(c), as such information relates
to Real Property located in the States of California and Texas.
(c) Information to be Provided. The information to be
provided by Seller pursuant to Sections 4.1(a) and 4.1(b) is as
follows:
(i) Survey and Plats. The surveys and plats of the
various parcels of Real Property as described on Exhibit E
(the "Surveys"). If Buyer desires any certifications not
otherwise included on the Surveys described on Exhibit E,
including a certification in favor of Buyer, or any other
changes to the Surveys, Buyer shall be responsible for
obtaining any such certifications and changes at Buyer's
expense, and Seller agrees to cooperate with Buyer in
obtaining such certifications; however, it is expressly agreed
that obtaining such certifications or other changes is not a
condition precedent to Buyer's obligations under this
Agreement.
(ii) Preliminary Title Reports. A current preliminary
title report or commitment for title insurance (the "Title
Reports") on each parcel of the Real Property prepared by
Escrow Agent, with respect to properties located in the State
of Arizona, by Lawyer's Title Insurance Company, with respect
to properties located in the State of California, and by Alamo
Title Company, with respect to properties located in the State
of Texas, accompanied by legible copies of all documents
referred to in the Title Reports, to the extent the same are
reasonably available.
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(iii) Environmental Site Assessment. The
environmental site assessments and updates of the various
parcels of Real Property described on Exhibit E (the
"Environmental Assessments"). If the most current
Environmental Assessments are not addressed to Buyer, Seller
will obtain letters from the consultants preparing those
Environmental Assessments addressed to Buyer and agreeing that
Buyer may rely on such Environmental Assessments.
(iv) Jamul Lease; Operations Contracts; and Seller
Leases. To the extent not included in the materials delivered
pursuant to Section 4.1(c)(ii), copies of all operating
agreements and contracts relating to the Real Property and
which will continue in effect following the Closing (the
"Contracts"), such Contracts being listed or otherwise
identified on Exhibit F, a copy of the Jamul Lease, and copies
of all leases affecting any of the Real Property where Seller
is the landlord or lessor (the "Seller Leases"), such Seller
Leases being listed on Exhibit G.
(v) Approvals. Copies of the Approvals listed on
Exhibit H.
(vi) Pending Sales; Receivables. Copies of all purchase
and sale agreements, escrow instructions, or other contracts
with third parties relating to the sale of any portion of the
Real Property from and after July 4, 1996 (such agreements as
exist on July 4, 1996, any such agreements entered into after
July 4, 1996 to the Agreement Date, and any such agreements
approved by Buyer pursuant to Section 8.6(a) being referred to
as the "Pending Sales"), all of the Pending Sales as of July
4, 1996 and any entered into from July 4, 1996 to the
Agreement Date being listed on Exhibit I. With respect to any
new Pending Sales approved under Section 8.6(a), Seller shall
also provide Buyer with copies of all agreements and other
relevant documentation relating to such Pending Sales. To the
extent of the existence or creation prior to Closing of any
Receivables with respect to Pending Sales, Seller shall also
provide Buyer with copies of each of the notes representing
Receivables (collectively, the "Notes"), any and all lien
instruments, security agreements, guarantees, or other
documents evidencing or securing the Notes (the "Receivables
Security Documents"), and any title policies issued to Seller
in connection with the Receivables (the "Receivables Title
Policies").
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(vii) West Wing Development Agreement. The most
current draft of the proposed development agreement for the
West Wing Property described on Exhibit A (the "Development
Agreement"). Buyer acknowledges that a final Development
Agreement is important to the future development of the West
Wing Property but that the final Development Agreement will
not have been agreed upon prior to Closing and that Buyer
bears the risk of negotiating and finalizing the Development
Agreement.
(viii) Association Information. Copies of the
articles of incorporation and bylaws of each of the
Associations referred to in Section 6.1(j) (the "Articles and
Bylaws"), such Articles and Bylaws being described on Exhibit M.
4.2 Information Made Available to Buyer. Buyer acknowledges that
Buyer has been, and will continue to be, provided access to Seller's
relevant non-privileged files and records in Phoenix, Arizona and San
Diego, California with respect to the Real Property, the Jamul Leasehold,
the Receivables, the Personalty, the Approvals, and the Associations (as
defined in Section 6.1(j), including the Articles and Bylaws, minutes,
and other books, records, and agreements relating to the Associations or
by which the Associations are bound); provided, however, Seller makes no
representation or warranty with respect to such information, except as
provided in Section 9.3(i). If Buyer desires copies of any of the
information contained in Seller's files and not otherwise provided to
Buyer pursuant to this Agreement, Buyer may copy such information at
Buyer's expense.
4.3 Confidentiality; Retention or Return of Information.
(a) Confidentiality. Buyer acknowledges and agrees to be
bound by all of the terms and conditions of the Non-Disclosure of
Proprietary Information Agreement (the "Confidentiality Agreement"),
dated July 30, 1996, between Buyer and Seller.
(b) Retention and Return of Information. If Buyer
consummates the purchase of the Property, all information provided
to Buyer or Buyer's legal counsel in accordance with this Agreement
may be retained by Buyer; otherwise upon a cancellation of this
Agreement, all such information will be returned to Seller.
(c) Historical Information. All non-privileged books,
records and other non-privileged information relating to the
Property will be retained by Seller for a period of at least seven
(7) years following the Closing, and Seller agrees to provide Buyer
and its agents with reasonable access to all such information, upon
reasonable notice to Seller; provided, however, that Seller may
destroy information otherwise subject to the foregoing provisions
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prior to expiration of the 7-year retention period upon giving Buyer
at least 120 days prior written notice specifying in reasonable
detail the information proposed to be destroyed. During such 120-
day period, Buyer may elect, by written notice to Seller, to have
the materials and information that Seller proposes to destroy
shipped to Buyer, at Buyer's expense, whereupon Seller will ship
such materials and information to Buyer.
4.4 Buyer's Information. If this Agreement is terminated, Buyer
agrees, upon reimbursement by Seller to Buyer of 50% of Buyer's actual
third party out-of-pocket costs for such information, to give Seller
copies of any and all non-privileged studies, appraisals, test results,
and other non-privileged information relating to any of the Property
prepared by or on behalf of Buyer prior to Closing.
4.5 Delivery of Certain Information after Information Deadlines.
(a) Buyer's Rights with Respect to Delayed Information. If
any of the Surveys, Title Reports, or Environmental Assessments
relating to Real Property in the State of Arizona have not been
delivered to Buyer prior to the Arizona Information Deadline or if
any of the Surveys, Title Reports, or Environmental Assessments
relating to Real Property in the State of Arizona and delivered to
Buyer prior to the Arizona Information Deadline should be amended
or supplemented, Seller will deliver such items to Buyer as soon as
possible thereafter and Buyer's rights with respect to such
information shall be as provided in this Section 4.5. If any of the
Surveys, Title Reports, or Environmental Assessments relating to
Real Property in the States of California or Texas have not been
delivered to Buyer prior to the California/Texas Information
Deadline or if any of the Surveys, Title Reports, or Environmental
Assessments relating to Real Property in the States of California
or Texas and delivered to Buyer prior to the California/Texas
Information Deadline should be amended or supplemented, Seller will
deliver such items to Buyer as soon as possible thereafter and
Buyer's rights with respect to such information shall be as provided
in this Section 4.5. Any and all information delivered pursuant to
this Section 4.5 is referred to as "Delayed Information"; provided,
however, that Delayed Information will not be deemed to include any
information, items or other matters included in any of the
information and other materials delivered prior to either the
Arizona Information Deadline or the California/Texas Information
Deadline, or any other information, items or other matters of which,
as of either the Arizona Parcel Deletion Deadline or the
California/Texas Parcel Deletion Deadline, Buyer has actual
knowledge, nor will Delayed Information include anything otherwise
permitted pursuant to Section 8.6. Within five (5) days of receipt
of any item of Delayed Information, Buyer shall notify Seller in
writing if Buyer reasonably objects to such item (with Buyer only
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being entitled to object if the matter would affect the
marketability, financeability, developability, or value of the
Property), indicating with particularity the nature of the objection
(a "Defect") and the item of Property to which such Defect relates
(the "Affected Property"), which Affected Property must include all
of the Property which Buyer has knowledge is affected by the Defect
and to which a separate Sales Price amount has been allocated
pursuant to Section 2.4. For example, if the Defect relates to a
lot in East Valley Commerce Center (as defined on Exhibit A) with
a separate allocated value, the Affected Property would be such lot,
rather than all of East Valley Commerce Center. If Buyer does not
object to a particular item of Delayed Information within the 5-day
period referred to above, then such item will conclusively be deemed
to be acceptable to Buyer.
(b) Minor Defects. If Buyer properly gives notice of a
Defect as permitted in Section 4.5(a) and if such Defect is a Minor
Defect, Seller, at Seller's option, may elect, by written notice to
Buyer given within five (5) days of receipt of Buyer's notice of
objection, to either (i) delete the Affected Property from the
purchase or (ii) undertake to resolve the objection. If Seller
elects to delete the Affected Property from the purchase, the
Affected Property shall no longer be included in the Property and
the Sales Price shall be reduced by the amount allocated to such
Affected Property pursuant to Section 2.4 unless, within two (2)
days of receipt of Seller's notice electing to exclude the Affected
Property, Buyer advises Seller in writing that Buyer waives the
Minor Defect, in which case, the Affected Property shall not be
excluded, the Sales Price shall not be reduced and the transaction
will close as otherwise scheduled, with Buyer acquiring the Property
subject to the Minor Defect. If Seller elects to resolve the Minor
Defect, Seller shall promptly undertake and complete the cure of the
Minor Defect with due diligence, at Seller's expense, and Buyer
shall be obligated to close the purchase of the Property, including
the Affected Property, even though, on the Closing, Seller has not
completed the cure of the Minor Defect. If within six (6) months
following the Closing, the Defect has still not been resolved, Buyer
may undertake to complete the cure and charge Seller with the
reasonable out-of-pocket expenses and costs actually incurred by
Buyer to effect the cure, such amounts to be paid to Buyer by Seller
within fifteen (15) days of receipt of reasonably satisfactory
evidence of such costs and expenses. Buyer agrees that, with
respect to any Minor Defect relating to a Title Report or a Survey,
such Minor Defect will be deemed satisfactorily resolved if Seller
provides a title policy endorsement to Buyer insuring over such
Minor Defect.
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(c) Major Defects. If Buyer properly gives notice of a
Defect as permitted in Section 4.5(a) and if the Defect is a Major
Defect, Seller, at Seller's option, may elect, by written notice to
Buyer given within five (5) days of receipt of Buyer's notice of
objection, to either (i) delete the Affected Property from the
purchase or (ii) undertake to resolve the objection. If Seller
elects to delete the Affected Property from the purchase, the
Affected Property shall no longer be included in the Property and
the Sales Price shall be reduced by the amount allocated to such
Affected Property pursuant to Section 2.4 unless, within two (2)
days of receipt of Seller's notice electing to exclude the Affected
Property, Buyer advises Seller in writing that Buyer waives the
Major Defect, in which case, the Affected Property shall not be
excluded, the Sales Price shall not be reduced and the transaction
will close as otherwise scheduled, with Buyer acquiring the Property
subject to the Major Defect. If Seller elects to resolve the Major
Defect, Seller shall promptly undertake and complete the cure of the
Major Defect with due diligence, at Seller's expense. However, if
the Major Defect has not been resolved by the Closing, Buyer, at
Buyer's option, may elect by written notice to Seller and as Buyer's
sole option, to delete the Affected Property from the purchase,
whereupon the Affected Property shall no longer be included in the
Property and the Sales Price shall be reduced by the amount
allocated to such Affected Property pursuant to Section 2.4. If
Buyer does not elect to delete the Affected Property from the
purchase, then, the transaction shall close with no adjustment to
the Sales Price and Seller will proceed to cure the Major Defect as
if the Major Defect were within the coverage of Section 4.5(b),
subject to Buyer's rights under Section 4.5(b) to complete the cure
if Seller should fail to do so within the time period permitted
under Section 4.5(b). Buyer agrees that, with respect to any Major
Defect relating to a Title Report or Survey, such Major Defect will
be deemed satisfactorily resolved if Seller provides a title policy
endorsement to Buyer insuring over such Major Defect.
(d) Certain Definitions. As used in this Agreement, the
following capitalized terms are defined as follows:
(i) "Major Defect" means any Defect where (A) the
reasonable cost to remedy such Default would exceed $250,000,
(B) the reasonable time estimated to remedy such Defect would
exceed six (6) months; or (C) where either the cost or time to
remedy such Default is not reasonably ascertainable; provided,
however, that if a Defect otherwise within the coverage of
this Section 4.5(d)(i) does not materially and adversely
affect either the marketability, financeability,
developability, or value of the Affected Property, the Defect
shall be a Minor Defect.
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(ii) "Minor Defect" means any Defect that is not a Major
Defect and includes any Defect that, pursuant to any provision
of this Agreement, is stated to be a Minor Defect.
(e) Aggregation. During any period of time when the
aggregate total reasonable costs to remedy all Minor Defects with
respect to a particular Affected Property equal or exceed $250,000,
Buyer may treat all such Minor Defects as Major Defects.
4.6 Estoppel Certificates. Prior to the Closing, Seller will use
reasonable efforts to obtain estoppel certificates, in form and substance
reasonably satisfactory to Buyer, from the landlord under the Jamul Lease
and the obligors under any Receivables. However, receipt of such
estoppel certificates shall not be a condition precedent to Buyer's
obligations under this Agreement.
ARTICLE 5
CONDITIONS TO CLOSING
5.1 Conditions to Buyer's Obligation to Close. Buyer's
obligations to close this transaction are subject to the satisfaction,
in Buyer's sole and absolute discretion (or waiver by Buyer in writing),
of the following conditions on and as of the Closing, unless an earlier
date is specified:
(a) Truthfulness of Representations. Seller's
representations and warranties set forth in this Agreement are true,
complete and correct in all material respects on and as of the
Closing. If Buyer or Buyer's Related Parties (as "Related Parties"
are defined in Section 12.1) has actual knowledge that any
representation or warranty of Seller is not true, complete and
correct in any material respect as of the Closing and does not elect
to cancel the Agreement as permitted by this Section 5.1, then the
representation or warranty will be deemed to have been amended to
conform to the knowledge of Buyer.
(b) Full Compliance. Seller has fully performed all of its
obligations to be performed by Seller on or before Closing.
(c) Release of Liens. All monetary liens and encumbrances
on any of the Property, including any improvement liens on any of
the Real Property, other than the lien for current real and personal
property taxes and assessments (other than for improvement liens),
the East Valley Assessment the Fortune Center Assessment (excluding
interest on those assessments accrued through the Closing, subject
to the provisions of Section 7.2(g)(ii)), and liens for past years
real property taxes that are subject to Seller's indemnification
pursuant to Section 8.8, shall have been discharged and released.
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If any of the foregoing conditions is not fulfilled to the satisfaction
of Buyer, in Buyer's sole and absolute discretion (or otherwise waived
by Buyer in writing), on or before the date by which such contingency is
to have been satisfied, but subject to Seller's cure rights under Section
11.2, Buyer may, in addition to any right or remedy otherwise available
to Buyer, by written notice to Seller given at any time prior to Closing,
cancel this Agreement. If this Agreement is cancelled as permitted by
this Section 5.1, all ▇▇▇▇▇▇▇ money deposits will be returned to Buyer.
If Buyer does not elect to cancel the Agreement as permitted by this
Section 5.1, Buyer shall be deemed to have waived its right so to cancel.
5.2 Conditions to Buyer's Obligations to Purchase Specific Items
of Real Property; Seller's Right to Cancel.
(a) Obligations as to Separate Parcels. Buyer's obligation
to purchase a particular item of Real Property for which a portion
of the Sales Price has been separately allocated pursuant to Section
2.4 (a "Separate Parcel") is subject to the satisfaction, in Buyer's
reasonable discretion (or waiver by Buyer in writing), of the
following conditions:
(i) Buyer is satisfied with Buyer's investigations and
inspections with respect to title, survey, and environmental
matters relating to Separate Parcels located in the State of
Arizona (an "Arizona Parcel"). In that regard, for a period
ending at 5:00 o'clock p.m. (local Phoenix time) on October
31, 1996 (the "Arizona Parcel Deletion Deadline"), Buyer will
have the right to delete an Arizona Parcel from the Property,
subject to the provisions of Section 5.2(a)(iii), if Buyer is
reasonably and in good faith dissatisfied, based on Buyer's
inspections and investigations with respect to title, survey
or environmental matters relating to the Arizona Parcel. If
Buyer elects to delete an Arizona Parcel from the purchase,
Buyer shall give notice to Seller of that election prior to
the Arizona Parcel Deletion Deadline and, subject to the
provisions of Section 5.2(a)(iii), the Arizona Parcel shall no
longer be included in the Property and the Sales Price shall
be reduced by the amount allocated to such Arizona Parcel
pursuant to Section 2.4. Unless Buyer gives written notice of
deletion as to a particular Arizona Parcel prior to the
Arizona Parcel Deletion Deadline, then Buyer will be deemed to
have elected not to delete such Arizona Parcel under this
provision.
(ii) Buyer is satisfied with Buyer's investigations and
inspections with respect to title, survey, and environmental
matters relating to Separate Parcels located in the States of
California and Texas (a "California Parcel" or a "Texas
Parcel", as the case may be). In that regard, for a period
ending at 5:00 o'clock p.m. (local Phoenix time) on November
12, 1996 (the "California/Texas Parcel Deletion Deadline"),
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Buyer will have the right to delete a California Parcel or a
Texas Parcel from the Property, subject to the provisions of
Section 5.2(a)(iii), if Buyer is reasonably and in good faith
dissatisfied, based on Buyer's inspections and investigations
with respect to title, survey or environmental matters
relating to the Texas Parcel or the California Parcel (other
than the Las Montanas Property) or with respect to title,
survey, environmental, feasibility, or Bond matters relating
to the California Parcel consisting of the Las Montanas
Property. If Buyer elects to delete a California Parcel or a
Texas Parcel from the purchase, Buyer shall give notice to
Seller of that election prior to the California/Texas Parcel
Deletion Deadline and, subject to the provisions of Section
5.2(a)(iii), the California Parcel or the Texas Parcel, as the
case may be, shall no longer be included in the Property and
the Sales Price shall be reduced by the amount allocated to
such California Parcel or Texas Parcel pursuant to Section
2.4. Unless Buyer gives written notice of deletion as to
a particular California Parcel or Texas Parcel prior to the
California/Texas Parcel Deletion Deadline, then Buyer will be
deemed to have elected not to delete such California Parcel or
Texas Parcel.
(iii) If Buyer elects to delete a Separate Parcel
pursuant to the provisions of this Section 5.2(a), Buyer's
notice of deletion (a "Deletion Notice") shall specifically
and in detail list each of Buyer's objections and reasons for
deletion. Within three (3) days following receipt of a
Deletion Notice, Seller may elect by written notice to Buyer
given within such time period either to (A) accept such
Deletion Notice, or (B) provisionally suspend such Deletion
Notice, subject to Seller's rights to cure the objections
raised in the Deletion Notice, with Seller's failure to give
notice of election of either option (A) or option (B) within
the foregoing time period to be deemed to be an election of
option (A). If Seller elects to accept the Deletion Notice
under option (A), then the Separate Parcel shall be deleted as
otherwise provided in this Section 5.2. If Seller elects
option (B), then Seller shall have the right to attempt to
cure such objections prior to the Closing. However, if Seller
does not cure such objections on or prior to the Closing and
Buyer does not otherwise waive its objections, then at the
time otherwise designated for Closing, the Deletion Notice
shall be effective, and the Separate Parcel shall be deleted
from this Agreement as otherwise provided in this Section 5.2.
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(b) Seller's Right to Cancel.
(i) If the aggregate total of the Sales Price allocated
to Separate Parcels that will otherwise be deleted under this
Section 5.2, together with the aggregate total of the Sales
price allocated to Affected Parcels that otherwise will be
deleted under Section 4.5 and Section 8.2(b)(iii) exceeds the
Threshold Amount, then, Seller may elect, by written notice to
Buyer within 3 business days following the California/Texas
Parcel Deletion Deadline, as to all properties proposed for
deletion on or prior to the California/Texas Parcel Deletion
Deadline, and within 3 business days after any proposed
deletion under Sections 4.5 or 8.2 occurring after the
California/Texas Parcel Deletion Deadline (if the aggregate of
all proposed deletions under this Agreement then exceeds the
Threshold Amount), to cancel this Agreement as to all of the
Property. Upon such a cancellation, Buyer shall be entitled
to a return of the ▇▇▇▇▇▇▇ money deposit made pursuant to
Section 2.1(a).
(ii) If Buyer proposes to delete the Las Montanas
Property pursuant to Section 5.2(a)(ii), Buyer may, in its
sole discretion, by giving Seller written notice prior to the
expiration of the California/Texas Parcel Deletion Deadline,
decrease the Section 2.4 allocation to the Las Montanas
Property to not less than $1,000,000 and reallocate the amount
of the reduction to the other Property.
(iii) As used in this Agreement, the "Threshold
Amount" is $1,000,000, unless the Las Montanas Property is a
Separate Parcel proposed for deletion, in which case the
Threshold Amount will be $2,000,000.
(c) Provisions Relating to Deleted Property. If, pursuant
to any provision of this Agreement, Affected Property or a Separate
Parcel is deleted from the Property, all other Property, such as
tradenames, Contracts, Leases, and so forth, and all obligations of
Buyer with respect thereto (e.g., Bonds permits, and assumptions),
other than obligations under Section 8.3, if any, relating to such
Affected Property or Separate Parcel shall also be deleted from this
transaction.
5.3 Conditions to Seller's Obligation to Close. Seller's
obligation to close this transaction is subject to the satisfaction, in
Seller's sole and absolute discretion (or waiver by Seller in writing),
of the following conditions on and as of the Closing, unless an earlier
date is specified:
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(a) Buyer's Solvency. Buyer shall not be subject to any
bankruptcy, receivership, or other similar action or proceeding of
any kind under any provision of the Federal Bankruptcy Act.
(b) Release of Bonds. Buyer shall have secured the release
of Seller from any further liability or obligation with respect to
the bonds listed on Exhibit J (the "Bonds") and shall have provided
such substitute bonds or security as may be required by the bond
holders as is necessary to secure the release of Seller and
otherwise satisfy the requirements of the bond holders.
(c) Truthfulness of Representations. Buyer's representations
and warranties set forth in this Agreement are true, complete and
correct in all material respects on and as of the Closing. If
Seller or any of Seller's Related Parties has actual knowledge that
any representation or warranty of Buyer is not true, complete and
correct in any material respect as of the Closing and does not elect
to cancel the Agreement as permitted by this Section 5.3, then the
representation or warranty will be deemed to have been amended to
conform to the knowledge of Seller.
(d) Full Compliance. Buyer has fully performed all of its
obligations to be performed by Buyer on or before Closing.
(e) NPDES Permit. Buyer has secured the release of Seller
from the existing NPDES permit (the "NPDES Permit") relating to the
Las Montanas Property.
IF ANY OF THE FOREGOING CONDITIONS IS NOT FULFILLED TO THE SATISFACTION
OF SELLER, IN SELLER'S SOLE AND ABSOLUTE DISCRETION (OR OTHERWISE WAIVED
BY SELLER IN WRITING), ON OR BEFORE THE DATE BY WHICH SUCH CONTINGENCY
IS TO HAVE BEEN SATISFIED, BUT SUBJECT TO BUYER'S CURE RIGHTS UNDER
SECTION 11.1, SELLER MAY, AS SELLER'S SOLE REMEDY, BY WRITTEN NOTICE TO
BUYER, CANCEL THIS AGREEMENT AND RETAIN THE ▇▇▇▇▇▇▇ MONEY AS LIQUIDATED
DAMAGES AND NOT AS A PENALTY, THE PARTIES HEREBY AGREEING THAT THE
▇▇▇▇▇▇▇ MONEY IS A REASONABLE FORECAST OF THE JUST COMPENSATION FOR THE
HARM THAT MAY BE CAUSED SELLER AS A RESULT OF BUYER'S FAILURE TO
CONSUMMATE THE TRANSACTIONS HEREUNDER OR THE FAILURE OF THE CONDITIONS
SET FORTH HEREIN. IF SELLER DOES NOT ELECT TO CANCEL THE AGREEMENT AS
PERMITTED BY THIS SECTION 5.3, SELLER SHALL BE DEEMED TO HAVE WAIVED ITS
RIGHT SO TO CANCEL.
INITIALS: SELLER CJF BUYER FN
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ARTICLE 6
CLOSING DOCUMENTS; TITLE POLICIES
6.1 Seller's Closing Documents. On or before the Closing, Seller
will deposit the following documents into the Escrow for delivery to
Buyer at the Closing, each of which will have been duly executed and,
where appropriate, acknowledged:
(a) Deeds. Deeds (the "Deeds") conveying the Real Property
to Buyer. Real Property in the State of Arizona and the State of
Texas will be conveyed by special warranty deed and Real Property
in the State of California will be conveyed by grant deed, in all
cases subject to the following (as they relate to specified parcels
of the Real Property):
(i) Current real and personal property taxes and
assessments (other than for improvement liens);
(ii) All patent reservations, easements, rights-of-way,
covenants, conditions, restrictions, and other items of record
(other than matters that Seller is obligated to remove
pursuant to Section 7.8), oil and gas leases, mining and other
mineral interests, leases, contracts and other agreements
affecting or otherwise relating to any of the Real Property;
(iii) The East Valley Assessment and the Fortune
Center Assessment;
(iv) Rights of parties in possession not shown by the
public records;
(v) Water rights and claims or title to water, whether
or not shown by the public records;
(vi) Discrepancies, conflicts in boundary lines,
shortages in area, encroachments, and any state of facts which
a physical inspection or an accurate survey of the Real
Property would disclose and which are not shown by the public
records;
(vii) Easements or claims of easements not shown by
the public records; and
(viii) Governmental laws, codes, ordinances and
restrictions now or hereafter in effect so far as these affect
the Real Property or any part thereof, including without
limitation zoning ordinances (and amendments and additions
relating thereto), the Approvals and all of the terms,
conditions, limitations, restrictions, and obligations
relating to the Approvals, and the Americans with Disabilities
Act (including comparable provisions of applicable state and
local law).
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All of the foregoing are referred to herein collectively as the
"Permitted Encumbrances". Notwithstanding the foregoing, Seller's
interest in any and all mining and mineral rights and water rights
associated with the Real Property, including the water rights
described on Exhibit K, will be transferred to Buyer in the Deeds
without warranty.
(b) Affidavit of Value; Other Governmental Filings. Such
affidavits of value, real estate transfer tax statements, and
similar documents, as may be required by law, including, any utility
district notices with current information, with respect to Real
Property in the State of Texas, as required by Texas Water Code
Section 49.452. Buyer acknowledges that prior to the Agreement
Date, Buyer has received the disclosure form required by Texas law
with respect to utility districts.
(c) Receivables Endorsements and Assignments. Endorsements
of each of the Receivables to Buyer, without recourse (the
"Endorsements"), and assignments of all of Seller's interest in each
of the Receivables Security Documents (the "Receivables
Assignments"), free and clear of any and all liens or other
encumbrances, and appropriate UCC-2 assignments, where necessary or
advisable.
(d) ▇▇▇▇ of Sale. A ▇▇▇▇ of Sale and Assignment (the "▇▇▇▇
of Sale") transferring the Personalty to Buyer, AS IS, WHERE IS,
free and clear of any and all liens or other encumbrances, other
than the trade name challenge identified on Exhibit L.
(e) Assignment of Jamul Leasehold. An Assignment and
Assumption with respect to the Jamul Leasehold (the "Jamul Lease
Assignment"). Unless the Las Montanas Property is deleted from this
Agreement, Seller and Buyer agree to work together to obtain a
consent from the landlord under the Jamul Lease to the assignment
of the Jamul Leasehold to Buyer (the "Landlord Consent") and to
obtain a release (the "Landlord Release") from the landlord under
the Jamul Lease releasing Seller from further liability with respect
to the Jamul Lease; provided, however, that obtaining the Landlord
Consent and the Landlord Release is not a condition precedent to
Seller's or Buyer's obligations under this Agreement, with Buyer
agreeing to acquire the Jamul Leasehold subject to the risks
attendant to any default under the Jamul Lease resulting from the
failure to obtain the Landlord Consent and to indemnify Seller with
respect thereto.
(f) Assignment of Seller Leases. An Assignment and
Assumption of Leases (the "Seller Lease Assignment") in which Seller
assigns to Buyer all of Seller's right, title and interest in all
Seller Leases, rentals, tenant security deposits and advance rental
deposits relating to the Property.
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(g) Assignment of Contracts. An Assignment and Assumption
of Contracts (the "Contracts Assignment") in which Seller assigns
to Buyer all of Seller's right, title and interest in all Contracts.
(h) Assignment of Pending Sales. An Assignment and
Assumption of Pending Sales (the "Pending Sales Assignment") in
which Seller assigns to Buyer all of Seller's right, title and
interest in all Pending Sales that, as of the Closing, have not
closed, including, without limitation, escrow agreements and ▇▇▇▇▇▇▇
money deposits that are held in escrow.
(i) Assignment of Rights. An Assignment of Rights (the
"Assignment of Rights") assigning to Buyer all of Seller's interest
in the Approvals.
(j) Assignment of Declarant's Rights; Resignations. An
Assignment of Declarant's Rights (each, an "Assignment of
Declarant's Rights") with respect to those property owners'
associations relating to Real Property in which Seller has declarant
or similar rights (the "Associations"). A list of each such
Association is attached as Exhibit M. At the Closing, Seller shall
also deliver to Buyer resignations of all of the officers and
directors of the Associations who are officers, directors,
employees, or agents of Seller or any affiliate of Seller, as well
as of the existing statutory agents for such associations.
(k) FIRPTA Affidavit. An affidavit (each, a "FIRPTA
Affidavit"), signed and acknowledged by each of the entities
comprising Seller under penalties of perjury, certifying that such
entity is not a nonresident alien, foreign corporation, foreign
partnership, foreign trust, foreign estate, or other foreign person
within the meaning of Section 1445 and 7701 of the Internal Revenue
Code of 1986 and the associated Treasury Regulations.
(l) Seller's Resolution. A certified copy of resolution of
the board of directors of each entity comprising Seller, which
resolutions will be in full force and effect, approving this
transaction and designating the person or persons authorized to sign
documents on behalf of each Seller.
(m) Additional Documents. Such other documents as may be
necessary or appropriate to transfer and convey all of the Property
to Buyer and to otherwise consummate this transaction in accordance
with the terms of this Agreement.
6.2 Buyer's Closing Documents. On or before the Closing, Buyer
will deposit into the Escrow the following documents for delivery to
Seller at the Closing, each of which will have been duly executed and,
where appropriate, acknowledged:
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(a) Affidavit of Value; Other Governmental Filings. Such
affidavits of value, real estate transfer tax statements, and
similar documents, as may be required by law.
(b) Assumption of Jamul Leasehold. A counterpart of the
Jamul Assignment in which Buyer assumes the obligations of Seller
with respect to the Jamul Leasehold from and after the Closing.
(c) Assumption of Seller Leases. A counterpart of the Seller
Lease Assignment in which Buyer assumes the obligations of Seller
under the Seller Leases from and after the Closing.
(d) Assumption of Contracts. A counterpart of the Contracts
Assignment in which Buyer assumes the obligations of Seller under
the Contracts from and after the Closing.
(e) Assumption of Pending Sales. A counterpart of the
Pending Sales Assignment in which Buyer assumes all of the
obligations of Seller under the Pending Sales from and after the
Closing (including, without limitation, the obligation to pay all
brokerage commissions payable with respect to such Pending Sales)
and assumes all Post-Closing Obligations.
(f) Assumption of Approval Obligations. A counterpart of the
Assignment of Rights pursuant to which Buyer assumes any and all
obligations with respect to the Approvals.
(g) Appointment of New Officers and Directors. Appropriate
corporate actions appointing designees of Buyer to fill the officers
and directors positions in the Associations vacated pursuant to the
resignations provided for in Section 6.1(j) and appointing new
statutory agents for the Associations.
(h) Buyer's Resolution. A certified copy of resolution of
Buyer, which resolution will be in full force and effect, approving
this transaction and designating the person or persons authorized
to sign documents on behalf of Buyer.
(i) Additional Documents. Such other documents as may be
necessary or appropriate to consummate this transaction in
accordance with the terms of this Agreement.
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6.3 Form of Closing Documents. Concurrently with the execution of
this Agreement, Seller and Buyer have agreed, in a separate Schedule of
Closing Documents (the "Closing Documents Schedule"), on the form of the
following closing documents (the "Closing Documents"):
Deeds
Endorsements
Receivables Assignments
▇▇▇▇ of Sale
Jamul Lease Assignment
Seller Lease Assignment
Contracts Assignment
Pending Sales Assignment
Assignment of Rights
Assignment of Declarant's Rights
FIRPTA Affidavit
6.4 Delivery of Originals of Certain Items. At the Closing,
Seller will deliver to Buyer the executed originals of all Carry-Back
Notes and Receivables Security Documents.
6.5 Title Policies.
(a) Real Property Title Policies. At the Closing, Seller
will provide Buyer with extended coverage owner's policies of title
insurance (Form B-1970, in Arizona) issued by First American Title
Insurance Company, as to the Real Property in the State of Arizona
and Lawyers Title Insurance Company, with respect to the Real
Property located in the State of California, and will provide Buyer
with standard coverage owners policies of title insurance issued by
Chicago Title Company, with respect to the Real Property located in
the State of Texas (collectively, the "Title Policies"), in the full
amount of the portion of the Sales Price allocated to each
particular parcel of the Real Property, as set forth on Exhibit D.
The Title Policies shall be effective as of the Closing and shall
insure Buyer that fee simple title to the Real Property is vested
in Buyer, subject only to the usual printed exceptions and
exclusions contained in such title insurance policies and to the
matters disclosed in the Title Reports and on the Surveys, to the
Permitted Encumbrances, and to any other matters which Buyer has
accepted or is deemed to have accepted pursuant to this Agreement.
Notwithstanding the foregoing, the standard exclusion for
discrepancies or conflicts in area or boundary lines or any
encroachments or protrusions or any overlapping of improvements, in
the case of the Title Policies for Property in Texas, shall be
reduced to the standard exception for any shortages in area. To the
extent that Buyer desires any endorsements to the Title Policies
that Seller has not agreed to provide pursuant to this Agreement,
Buyer may arrange for such endorsements, at Buyer's expense, subject
to Buyer satisfying any and all requirements, also at Buyer's
expense, for the issuance of such endorsements and provided that the
obtaining of such endorsements will not delay, or be a condition to,
the Closing.
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(b) Receivables Title Policies. At the Closing, Seller will
provide Buyer, at Seller's expense, with endorsements to each of the
Receivables Title Policies held by Seller reflecting the assignment
of the insured Receivable to Buyer. Seller will not be obligated
to obtain any new title policies on Receivables, if any, where a
Receivables Title Policy does not currently exist or to provide date
down or similar endorsements to any of the Receivables Title
Policies.
ARTICLE 7
CLOSING THE TRANSACTION
7.1 Deadline for Closing. The closing of this transaction and the
Escrow (the "Closing") will occur at 9:00 a.m. (local Phoenix time) on
December 3, 1996, in the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇ located at One Arizona
Center, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
7.2 Closing Costs and Prorations.
(a) Escrow Fees. Buyer and Seller will each pay 50% of the
Escrow fee.
(b) Title Insurance Fees. Seller will pay portion of the
premium for Title Policies equal to the amount that would constitute
the premium if the Title Policies were standard coverage title
insurance policies, with no separate endorsements. Buyer will pay
the entire premium for the Title Policies (including any and all
endorsement fees) less only the amount paid by Seller as provided
in the preceding sentence.
(c) Documentary Taxes and Transfer Taxes. Seller will pay
any documentary transfer tax, stamp tax, real estate conveyance tax
or similar tax or fee due and payable in connection with this
transaction.
(d) Recording Fees. Recording fees for the documents
transferring interests to Buyer, such as a deed, will be paid by
Seller.
(e) Utility and Other Deposits. At the Closing, Buyer shall
reimburse Seller for all utility or similar deposits relating to the
Property and for any deposits with municipalities or other
government entities. All such deposits are listed on Exhibit N.
(f) Jamul Leasehold Deposits. The amount of any refundable
prepaid rent and refundable security deposits under the Jamul Lease
will be charged to Buyer and credited to Seller at the Closing.
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(g) Prorations.
(i) Taxes and Assessments.
(A) Except as provided in subsection (B) below,
current year real estate and personal property ad
valorem taxes, property owners' association assessments,
and other assessments (other than for improvement liens)
will be prorated in the Escrow as of the Closing, based
upon the most current information then available to
Escrow Agent. Real estate and personal property taxes
relating to Property owned by LMECC for the years 1985-
1992 have not been paid, will not be prorated but are
included in the coverage of the indemnification
provisions of Section 8.8. If, at the Closing, actual
tax or assessment information is not available or if,
following the Closing, any such taxes are adjusted by
the taxing authority, then, except as provided in
subsection (B) below, following the Closing and within
fifteen (15) days of receipt by either Buyer or Seller
of the actual tax or assessment information or
adjustment information, as the case may be, Buyer and
Seller will re-prorate real estate taxes and assessments
among themselves and make any necessary adjusting
payments.
(B) Real estate and personal property taxes
relating to Property owned by LMECC for the second half
of 1996 ("1996 Second Half LMECC Taxes") have not been
paid and will not be paid prior to Closing. 1996 Second
Half LMECC Taxes will, however, be prorated in the
Escrow as of the Closing, based upon the existing tax
assessment information. Buyer acknowledges that Seller
has appealed the 1996 LMECC real property taxes and that
the tax proration required by this subsection (B) does
not reflect the results of any such appeal. Buyer
agrees that 1996 Second Half LMECC Taxes will not be
reprorated based on the appeal results, and Seller
agrees that Seller will indemnify Buyer with respect to
any Claims with respect to the 1996 LMECC real property
taxes.
(ii) Interest, Rent and Operational Expenses. Rents
payable under the Seller Leases and the Jamul Lease, interest
on the Receivables, interest on the East Valley Assessment and
on the Fortune Center Assessment, utility charges, payments on
Contracts, and other expenses relating to the Real Property
will be prorated in the Escrow as of the Closing; except that
payments with respect to the Tax Protest Contracts will not be
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prorated in Escrow but will be prorated by the parties as such
payments are required to be made with respect to such
contracts, with the proration to be based on the tax savings
to Buyer and Seller resulting from the actions to which the
payment relates. Prior to Closing, Seller agrees to provide
the necessary information to Escrow Agent and Buyer to permit
Escrow Agent to make the necessary prorations. As used in
this Section 7.2(g)(ii), the "Tax Protest Contracts" mean
those Contracts designated on Exhibit F as Tax Protest
Contracts. If, following the Closing, interest on either the
East Valley Assessment or the Fortune Center Assessment is
recomputed by the Town of ▇▇▇▇▇▇▇ in connection with the
finalization of the assessments for Improvement District No.
11, then, following the Closing and within fifteen (15) days
of receipt by either Buyer or Seller of the actual interest
information, as the case may be, Buyer and Seller will
re-prorate such interest among themselves and make any
necessary adjusting payments, based on such final information.
(iii) Basis of Prorations. All prorations and/or
adjustments called for in this Agreement will be made on the
basis of a 30-day month unless otherwise specifically
instructed in writing by Seller and Buyer.
(h) Miscellaneous Closing Costs. Any other closing costs not
provided for above will be paid by Buyer and Seller in accordance
with the customary practice in the county in which the Real Property
to which the cost relates is located.
(i) Insurance. All insurance maintained by Seller on the
Property shall be cancelled effective on the Closing Date and Buyer
shall be responsible for insuring the Property from and after the
Closing Date.
7.3 Principal Payments on Receivables. Buyer shall receive a
credit against the Sales Price for any principal payments due on or after
July 4, 1996 with respect to the Receivables which are paid to Seller
prior to Closing and for any prepayments made with respect to principal
due on or after July 4, 1996. As a consequence of this provision and the
proration of interest on the Receivables required by Section 7.2(g)(ii),
Seller shall be entitled to retain all payments made with respect to the
receivables prior to the Closing, and Buyer shall be entitled to retain
all payments made with respect to the Receivables following the Closing
even though such payments may relate to periods prior to the Closing.
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7.4 Payments and Disbursements to Be Handled through the Escrow.
The various charges, credits and prorations contemplated by this
Agreement will be handled by Escrow Agent through the Escrow by
appropriate charges and credits to Buyer and Seller. All amounts payable
pursuant to this Agreement will be paid to Escrow Agent for disposition
through the Escrow. Escrow Agent is authorized to make all disbursements
to the parties and to third parties contemplated by this Agreement from
funds deposited for those purposes, as necessary or appropriate to close
this transaction.
7.5 Final Disbursement to Seller. Upon the Closing, all amounts
paid according to Sections 2.1(a) and 2.1(b), less any closing costs,
commissions and other amounts payable by or chargeable to Seller, will
be disbursed to Seller.
7.6 Buyer's Obligation to Deposit Additional Funds. On or before
the Closing, Buyer will deposit with Escrow Agent cash in an amount
sufficient to pay all closing costs and other amounts payable by or
otherwise chargeable to Buyer.
7.7 IRS Reporting at Closing. Escrow Agent agrees to be the
designated "reporting person" under Section 6045(e) of the U.S. Internal
Revenue Code with respect to the real estate transaction described in
this Agreement and to prepare, file and deliver such information, returns
and statements as the Treasury Department may require, including Form
1099-B.
7.8 Payment of Monetary Liens at Closing. Title to the Property
will be delivered to Buyer at the Closing free and clear of all monetary
liens and encumbrances (other than the lien for current real and personal
property taxes and assessments (other than for improvement liens) not yet
due and payable, the East Valley Assessment and the Fortune Center
Assessment, and the lien for past years taxes that are subject to
Seller's indemnification pursuant to Section 8.8). Seller agrees that
all such monetary liens and encumbrances will be released from the
Property by Seller at Seller's sole expense on or before the Closing.
7.9 Release and Replacement of Bonds. At or prior to Closing,
Buyer shall secure the release of Seller from any further liability or
obligation with respect to the Bonds and shall provide such substitute
bonds or security as may be required by the bond holders as is necessary
to secure the release of Seller and otherwise satisfy the requirements
of the bond holders.
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ARTICLE 8
ADDITIONAL COVENANTS
8.1 Possession. Possession of the Property will be delivered to
Buyer upon the Closing subject to the matters specified in, and otherwise
in accordance with the requirements of, this Agreement.
8.2 Risk of Loss.
(a) Risk of Loss Generally. Except as provided in this
Section and in Section 8.3, the risk of loss or damage to the Real
Property and Personalty and all liability to third persons until the
Closing shall be borne by Seller.
(b) Loss to Real Property. In case of loss or damage prior
to the Closing to any of the Real Property (other than brush fires
on unimproved Real Property, which shall not be considered a loss
for purposes of this Agreement):
(i) In the case of loss or damage resulting from
casualty to any of the Real Property where either (1) the
reasonable cost to repair or restore is less than $250,000
(regardless of the time required for completion of the
repairs) or (2) the restoration and repair may reasonably be
completed within 6 months following occurrence of the loss or
damage and is not reasonably expected to cost in excess of
$500,000, or in the case of any loss or damage resulting from
casualty to the building located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, Buyer shall nevertheless proceed with the
Closing, and Seller may, at Seller's option, either (A) repair
the damage or replace the damaged item, as appropriate (with
Seller having the right to come on the Real Property following
the Closing as necessary to complete such repair and
restoration work); (B) credit Buyer at Closing against the
Sales Price for the estimated cost of such repair or
replacement, such credit to be based on bids for the necessary
materials and labor received by Seller from independent
contractors; or (C) if the loss was covered by Seller's
insurance, assign Seller's rights to insurance to Buyer, in
which case Buyer shall be entitled to a credit against the
Sales Price equal to the deductible amount payable under
Seller's insurance with respect to the loss (with Seller being
deemed to have elected to proceed under this clause (C) unless
Seller otherwise notifies Buyer prior to Closing);
(ii) In the case of loss resulting from the exercise of
the right of eminent domain, Buyer shall nevertheless proceed
with the Closing without any adjustment to the Sales Price,
and Buyer shall receive all awards or payments made by the
condemning authority to which Seller would otherwise be
entitled; and
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(iii) In all other cases, Seller shall have the
right to repair or replace the damage or loss prior to the
Closing; however, if Seller is unable or unwilling to repair
or replace the damage or loss prior to the Closing (with
Seller having no obligation to do so), Seller shall notify
Buyer of such election within 5 days following the occurrence
of such loss or damage and Buyer shall thereupon be entitled
either to (A) delete the Affected Property that includes the
parcel of Real Property so damaged or destroyed (with Affected
Property being determined on the same basis as provided in
Section 4.5) from the Property being purchased, in which case
the Sales Price shall be reduced by the amount allocated to
such Affected Property pursuant to Section 2.4; or (B) elect
to treat the damage or loss as damage or loss coming within
the coverage of Section 8.2(b)(i), in which case the
provisions of that Section shall apply notwithstanding that
the dollar or time limitations of Section 8.2(b)(i) may
otherwise be applicable (with Buyer being deemed to have
elected to proceed under this clause (B) unless Buyer
otherwise notifies Seller within 5 days of the giving of
Seller's notice as provided above in this Section 8.2(b)(iii),
or prior to Closing, whichever is the shorter period).
The determinations under this Section 8.2(b) shall be made, and the
provisions of this Section 8.2(b) applied, on an Affected Property
by Affected Property basis, with Affected Property being defined as
set forth in Section 4.5.
(c) In case of loss or damage to any of the Personalty prior
to the Closing, Buyer shall nevertheless proceed with the Closing,
and Seller may, at Seller's option, either (i) repair the damage or
replace the damaged item, as appropriate (with Seller having the
right to come on the Property following the Closing as necessary to
complete such repair and restoration work); (ii) credit Buyer at
Closing against the Sales Price for the estimated cost of such
repair or replacement, such credit to be based on bids for the
necessary materials and labor received by Seller from independent
contractors; or (iii) if the loss was covered by Seller's insurance,
assign Seller's rights to insurance to Buyer, in which case Buyer
shall be entitled to a credit against the Sales Price equal to the
deductible amount payable under Seller's insurance with respect to
the loss (with Seller being deemed to have elected to proceed under
this clause (iii) unless Seller otherwise notifies Buyer prior to
Closing).
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8.3 Right to Enter and Inspect the Real Property. From time to
time prior to the Closing, Buyer may enter the Real Property with Buyer's
representatives, contractors, and agents, subject to the terms of the
Seller Leases, to examine the Real Property, conduct soil tests,
environmental studies, engineering feasibility studies, and other tests
and studies, and to plan the proposed development of the Real Property,
provided that Buyer coordinates with Seller and gives reasonable prior
notice to Seller and to any affected tenants under the Seller Leases
prior to entering the Real Property for such purposes. Buyer will
indemnify and hold harmless Seller and Seller's Related Parties for,
from, and against any Claims arising out of Buyer's exercise of the
rights granted by this Section (unless resulting from Seller's gross
negligence). If this Agreement is cancelled for any reason, Buyer shall
promptly repair any damage caused to the Property by Buyer's entry, such
that the Property is restored to its prior condition.
8.4 Brokerage.
(a) Commission Payable by Seller. Seller has dealt with ▇▇▇
& Associates, Investment Realty Corporation and ▇▇▇▇▇▇▇▇ ▇▇▇▇
(collectively, "Broker") in connection with the transactions
contemplated by this Agreement. Seller will indemnify and hold
harmless Buyer and Buyer's Related Parties from any Claims of Broker
with respect to this transaction. Buyer warrants that Buyer has not
dealt with any broker in connection with this transaction other than
Broker. Seller warrants that Seller has not dealt with any broker
in connection with this transaction other than Broker.
(b) Brokerage Indemnification. If any other person asserts
a claim to a finder's fee, brokerage commission or other
compensation on account of alleged employment as a finder or broker
or performance of services as a finder or broker in connection with
this transaction, the party under whom the finder or broker is
claiming will indemnify and hold the other party and the other
party's Related Parties harmless for, from, and against any Claims
related thereto.
8.5 General Stream Adjudication. Buyer is aware that there is
pending in Maricopa County Superior Court a general stream adjudication
of all rights to use water in and from the Lower Gila and Santa ▇▇▇▇
river systems and sources and that such adjudication may involve rights
to use water on and from the Property. Buyer will seek counsel of
Buyer's own choosing in determining what actions, if any, Buyer should
take with respect to filing or other actions in regard to such general
adjudication of water rights, and Seller shall have no liability or
responsibility therefor.
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8.6 Activities Following the Agreement Date.
(a) Sales of Property. Following the Agreement Date, Seller
will not enter into any agreement, escrow, or other contract to sell
any portion of the Real Property which Seller intends to be a
Pending Sale without the prior written consent of Buyer, which
consent Buyer shall not unreasonably withhold and which shall be
deemed to have been given if Buyer does not reject a proposed sale
within five (5) days of the date Seller gives Buyer written notice
of the proposed sale accompanied by a complete copy of the proposed
sales contract and/or escrow. Only those sales approved or deemed
approved pursuant to this Section 8.6(a) will, upon such approval,
be deemed to be Pending Sales, subject to the terms and conditions
of this Agreement as they relate to Pending Sales. Seller may
proceed to close Pending Sales during the period prior to the
Closing.
(b) Leases of Property. Following the Agreement Date, Seller
will not enter into, modify, extend or renew, or terminate (other
than upon expiration of the term of a Seller Lease) any Seller Lease
without the prior written consent of Buyer, which consent Buyer
shall not unreasonably withhold and which shall be deemed to have
been given if Buyer does not reject a proposal within five (5) days
of the date Seller gives Buyer written notice of the proposal
accompanied by reasonable detail as to the proposal. Seller will
not enter into any amendment or extension of the Jamul Lease prior
to Closing without the prior written consent of Buyer.
(c) Operations. Following the Agreement Date, Seller will
continue to operate and maintain the Real Property in the ordinary
course of business and in a manner consistent with past business
practices of Seller. Seller will, and will use its reasonable best
efforts to cause the Associations, to (i) refrain from entering into
any contract, agreement or commitment or any modification or
amendment of any contract, agreement or commitment by which the
Property or the Association are bound or to which the Property or
any assets of the Associations are subject, without in each case
first securing the consent and approval of Buyer, such consent not
to be unreasonably withheld or delayed; or (ii) neither act nor fail
to act in such a manner as to cause an event which creates, or with
the giving of notice and/or the passage of time would create, a
material default under any material representation, warranty or
covenant contained in this Agreement or under any other material
contract, agreement or commitment by which Seller or the
Associations are bound or to which the Property or the Associations
are subject.
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(d) Additional Title Encumbrances. Following the Agreement
Date, Seller will not knowingly place or permit to be placed any
further liens, encumbrances, easements, covenants, conditions,
restrictions, or other matters against any of the Real Property
other than the lien for current real property taxes and assessments,
matters undertaken pursuant to any of the Pending Sales that have
been approved (or deemed approved) by Buyer, and matters approved
in writing by Buyer, which approval Buyer shall not unreasonably
withhold and which shall be deemed to have been given if Buyer does
not reject a proposed title matter within five (5) days of the date
Seller gives Buyer written notice of the proposed matter; provided,
however, that Seller may institute quiet title proceedings with
respect to the boundary dispute affecting the Las Montanas Property
(the "Quiet Title Action") and shall have the right to pursue such
action, at Seller's expense following the Closing. Buyer agrees to
cooperate with Seller with respect to the Quiet Title Action.
Seller does not warrant, however, that such Quiet Title Action will
be successful.
(e) Negotiations with Others. Following the Agreement Date,
Seller may negotiate with other persons with respect to potential
sales of the Property or portions thereof; however, except as
permitted by Section 8.6(a) with respect to sales proposed by Seller
as Pending Sales, Seller will not enter into any agreements with
respect to any of the Property unless the rights of the purchaser
under any such agreement are expressly conditioned upon Buyer not
purchasing such portion of the Property pursuant to this Agreement.
(f) Taxes. Seller agrees to assume liability for and to pay
all sales, transfer, stamp, real property transfer or similar Taxes,
if any, incurred as a result of the transactions contemplated by
this Agreement. Seller agrees to indemnify Buyer for, from and
against any and all Claims incurred by Buyer arising out of Seller's
failure to make timely or full payments of such Taxes. Seller
agrees to file all required tax returns and reports due in
connection with the Taxes assumed under this provision. "Taxes"
shall mean any federal, state, local, foreign and other license,
service, service use, real property, personal property, sales, use,
transaction privilege, excise, severance, transfer, stamp,
occupation, and other taxes, assessments, fees or charges of any
kind whatsoever, including any interest, penalties or additions on
or to the foregoing, whether disputed or not. Taxes do not include
any income taxes of Buyer nor any "roll back" taxes that may be
assessed against the Property in the State of Texas, even though
such "roll back" taxes relate to periods prior to the Closing.
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8.7 Use of ▇▇▇▇▇▇ Name. Buyer is not acquiring any right, title,
or interest whatsoever in the name "▇▇▇▇▇▇" or any trademark or tradename
in which "▇▇▇▇▇▇" is used, and Buyer will not use the name "▇▇▇▇▇▇",
alone or in combination with any other words or phrases, in any of its
business operations or dealings.
8.8 Indemnification Provisions.
(a) Seller's Indemnification. Seller agrees to indemnify and
hold harmless Buyer and Buyer's Related Parties for, from and
against all Claims attributable, directly or indirectly, to any of
the following, unless arising from the breach by Buyer of any of its
obligations, representations, or warranties in this Agreement and
the agreements and other documents executed and delivered by Buyer
as contemplated by this Agreement:
(i) Except as limited by Section 11.2, breach by Seller
of any obligation of Seller under this Agreement or under any
other agreement or instrument entered into by Seller pursuant
to this Agreement or in connection with the transactions
contemplated by this Agreement;
(ii) The material inaccuracy of any express, written
representation or warranty made by Seller in this Agreement or
in any other agreement or instrument entered into by Seller
pursuant to this Agreement;
(iii) Any breach by Seller of any of the
obligations of Seller under or with respect to the
Receivables, the Receivables Security Documents, the Jamul
Lease, the Seller Leases, the Contracts, or the Pending Sales
or, except to the extent, if any, specifically assumed by
Buyer pursuant to this Agreement, any liabilities or
obligations connected therewith and existing or accruing prior
to the Closing or any other state of facts relating thereto
and existing or occurring prior to the Closing;
(iv) Any state of facts relating to the Associations and
existing or occurring prior to the Closing;
(v) Real or personal property taxes assessed on any
item of the Property and that relate to periods prior to the
Closing, and the 1996 LMECC real property taxes; and
(vi) Any other matter with respect to which Seller has
agreed to indemnify Buyer under this Agreement or any
agreement or instrument entered into by Seller pursuant to
this Agreement.
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Notwithstanding the foregoing, Seller shall not be liable to Buyer
with respect to a single Claim otherwise within the coverage of the
indemnity provisions of this Section 8.8 or any other indemnity
provision of this Agreement that does not exceed $50,000; provided,
however, that when the aggregate amount of such excluded Claims
reaches $250,000, Seller shall thereafter be liable in full for all
such Claims.
(b) Buyer's Indemnification. Buyer agrees to indemnify and
hold harmless Seller and Seller's Related Parties for, from and
against all Claims attributable, directly or indirectly, to any of
the following, unless arising from the breach by Seller of any of
its obligations, representations, or warranties in this Agreement
and the agreements and other documents executed and delivered by
Seller as contemplated by this Agreement:
(i) Except as limited by Section 11.1, breach by Buyer
of any obligation of Buyer under this Agreement or under any
other agreement or instrument entered into by Buyer pursuant
to this Agreement or in connection with the transactions
contemplated by this Agreement;
(ii) The material inaccuracy of any express, written
representation or warranty made by Buyer in this Agreement or
in any other agreement or instrument entered into by Buyer
pursuant to this Agreement;
(iii) Any breach by Buyer of any of the obligations
of Seller that have been assumed by Buyer under or with
respect to the Receivables, the Receivables Security
Documents, the Jamul Lease, the Seller Leases, the Contracts,
or the Pending Sales, or any liabilities or obligations
connected therewith and first occurring or accruing from and
after the Closing or any other state of facts relating thereto
and first accruing or occurring from and after the Closing;
(iv) Any state of facts relating to the Associations and
first accruing or occurring from and after the Closing;
(v) Real or personal property taxes assessed on any
item of the Property and that relate to periods from and after
the Closing;
(vi) The Post-Closing Obligations;
(vii) The Bonds and the NPDES Permit;
(viii) The Approvals and all obligations,
undertakings, requirements, and stipulations relating thereto;
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(ix) Any liability or obligation arising from or out of
the ownership or operation of, or otherwise relating to, the
Property, or any portion or aspect thereof, after the Closing,
except to the extent that pursuant to this Agreement or any
other agreement entered into pursuant hereto, Seller is liable
to Buyer with respect thereto or except to the extent any such
liability or obligation arises from an act or omission of
Seller or any state of facts existing prior to the Closing;
(x) Any other matter with respect to which Buyer has
agreed to indemnify Seller under this Agreement or any
agreement or instrument entered into by Buyer pursuant to this
Agreement; and
(xi) Any and all other obligations and liabilities which
Buyer, pursuant to this Agreement or any other agreement
entered into pursuant hereto, or otherwise, has expressly
agreed to assume.
Notwithstanding the foregoing, Buyer shall not be liable to Seller
with respect to a single Claim otherwise within the coverage of the
indemnity provisions of this Section 8.8 or any other indemnity
provision of this Agreement that does not exceed $50,000; provided,
however, that when the aggregate amount of such excluded Claims
reaches $250,000, Buyer shall thereafter be liable in full for all
such Claims.
(c) Indemnity Proceedings. If a Claim shall be asserted
against an indemnified party (an "Indemnitee") in respect of which
indemnification may be sought under this Agreement from an
indemnifying party (an "Indemnitor"), Indemnitee shall cause prompt
written notice of such Claim to be given to Indemnitor, describing
in reasonable detail the nature of the Claim, the name of the
claimant, and such other information as is appropriate to an
understanding of the Claim. Thirty (30) days after giving such
notice, Indemnitee may, at its option, resist, settle, or otherwise
compromise or pay such Claim in accordance with the provisions of
Section 8.8(d) (and Indemnitor shall pay all reasonable costs
incurred by Indemnitee in connection therewith, within twenty (20)
days of written demand from Indemnitee, detailing such costs) unless
Indemnitee has received notice from Indemnitor that Indemnitor
intends, at Indemnitor's sole cost and expense, to contest or
otherwise resolve the Claim, in which case Indemnitee shall have the
right, at no cost or expense to Indemnitor, to monitor the Claim or
otherwise participate in such proceedings. If Indemnitee conducts
such monitoring or otherwise participates in such proceedings,
Indemnitor shall nevertheless have full authority to determine all
action to be taken with respect thereto, subject, however, to the
requirements of Section 8.8(d). If requested by Indemnitor,
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Indemnitee agrees to cooperate with Indemnitor and its counsel and
consultants in contesting any Claim which Indemnitor elects to
contest or, if appropriate, in making any counterclaim against the
person asserting the Claim, or any cross-complaint against any
person, but Indemnitor will reimburse Indemnitee for any reasonable
out-of-pocket costs incurred by Indemnitee in so cooperating, such
reimbursement to be made within twenty (20) days of written demand
from Indemnitee, detailing such costs. Indemnitee also agrees to
afford Indemnitor and its counsel and consultants the opportunity
to be present at, and to participate in, any conference with any
persons, including governmental authorities, asserting any Claim
against Indemnitee and in any conference with any representatives
of or counsel for or consultants to such persons.
(d) Settlements. If Indemnitor has not, within the 30-day
period referred to in Section 8.8(c), given notice to Indemnitee of
Indemnitor's intent to contest or otherwise resolve a Claim,
Indemnitee shall have full authority with respect to the disposition
of any such Claim (including choosing its own counsel and
consultants, which shall be reasonably acceptable to Indemnitor),
provided that Indemnitee shall at all times act in good faith as if
it were ultimately liable with respect thereof and provided further
that Indemnitor shall have the right, at its option and its own
expense, to be represented by counsel and consultants of its choice
and with whom counsel and consultants to Indemnitee shall confer to
the extent consistent with such counsel's professional
responsibility in connection with the defense of such Claim. No
settlement shall be made without the prior written consent of
Indemnitor, which consent shall not be unreasonably withheld. If
any person asserting a Claim against Indemnitee shall make a bona
fide written offer to Indemnitee to settle such Claim upon payment
of a dollar sum as stated in such offer and upon receipt thereof
provide to Indemnitee a general release and if Indemnitor shall have
stated in writing that it is ready, willing and able to pay such sum
on behalf of Indemnitee in settlement of such Claim, the liability
of Indemnitor with respect to such Claim shall be limited to the sum
stated in such offer if Indemnitee shall have refused to settle such
Claim in accordance with such offer of settlement. Indemnitee shall
promptly furnish to Indemnitor copies of all such bona fide written
offers.
8.9 License to Use Space. ▇▇▇▇▇▇ Industries, Inc., and certain of
its affiliates, including one or more of the entities comprising Seller
(collectively in this Section 8.9, "▇▇▇▇▇▇"), are currently storing
documents and other materials in the building located on the parcel of
Real Property located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
Following the Closing and for no additional consideration to Buyer, Buyer
agrees that ▇▇▇▇▇▇ has a license to continue to store such documents and
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other materials in that building through December 31, 1996. Buyer agrees
that Seller will have full access to all such documents and other
materials during such time. Seller agrees to indemnify and hold Buyer
harmless for, from, and against any liability or other expense that may
arise as a result of the exercise by ▇▇▇▇▇▇ of its rights under this
Section 8.9 (unless arising as a result of Buyer's gross negligence).
At all times while ▇▇▇▇▇▇ is exercising its rights under this Section
8.9, ▇▇▇▇▇▇ agrees to maintain public liability insurance with respect
to its activities under this Section 8.9, with commercially reasonable
limits and naming Buyer as an additional insured.
8.10 Fiesta Ranch; Tax Classifications.
(a) SRP Turn-out Facility. Buyer acknowledges that Seller
has disclosed to Buyer that, in Seller's opinion, in order to retain
the existing agricultural property tax classification of the Fiesta
Ranch Property (as defined on Exhibit A), it will be necessary to
install a Salt River Project ("SRP") water turn-out pipe on ▇▇▇▇▇
Road, adjacent to the Fiesta Ranch Property. Such work has not been
done. Following the Agreement Date, Seller anticipates entering into
an agreement with SRP for such work, such agreement (the "SRP
Contract") being referenced on described on Exhibit F as one of the
Contracts. At the Closing, Buyer shall assume the SRP Contract as
one of the Contracts and reimburse Seller for the costs actually
incurred by Seller pursuant to the SRP Contract as of the Closing.
(b) Continuation of Agricultural Tax Classifications. Buyer
acknowledges that certain other parcels of Property have an
agricultural property tax classification or similar classification
and that Buyer may be required to take certain actions to preserve
or continue such classifications, such as entering into or renewing
farming leases. Buyer has reviewed the property tax classifications
on the Property and assumes all risk of any change in any such
classifications.
8.11 Maintenance of Existence.
(a) TRHCI. Throughout the Survival Period (as defined in
Section 12.15), TRHCI agrees that it will maintain its existence as
a Delaware corporation and that throughout the Survival Period, it
shall maintain Tangible Net Worth equal to at least the Minimum
TRHCI Net Worth Amount. As used in this Section 8.11, "Minimum
TRHCI Net Worth Amount" means the greater of (i) $1,000,000 or (ii)
$500,000 plus (A) the amount reasonably necessary to complete the
remedy of all Defects that Seller is obligated to remedy pursuant
to Section 4.5 as of the date of determination of Minimum TRHCI Net
Worth Amount and (B) the reasonable remaining cost to resolve any
claims made by Buyer with respect to any alleged breach of
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representations or warranties of Seller under Article 9. Following
expiration of the Survival Period, TRHCI will maintain its existence
as a Delaware corporation until all Defects that Seller is obligated
to remedy have been remedied and any claims made by Buyer with
respect to any alleged breach of representations or warranties of
Seller under Article 9 that have properly been raised within the
Survival Period have been resolved (an "Extended Period"). During
the Extended Period, TRHCI agrees that it will maintain Tangible Net
Worth in an amount equal to the sum of (x) the reasonable amount
necessary to complete the remedy of all Defects that Seller is
obligated to remedy pursuant to Section 4.5, as of the date of
determination, and (y) the reasonable remaining cost to resolve any
outstanding claims under Article 9, as of the date of determination.
On or before the Closing, Seller agrees to provide Buyer with an
agreement from ▇▇▇▇▇▇ Industries, Inc. ("TII"), in the form of
Exhibit Q, pursuant to which TII agrees to cause TRHCI to agree to
comply with the provisions of this Section 8.11, as they relate to
TRHCI.
(b) Definitions. As used in this Section 8.11, the following
capitalized terms are defined as follows:
(i) "Contingent Liabilities" of any person or entity
means all "contingencies" of such person or entity required to
be recorded in accordance with Financial Accounting Standards
Board Statement of Financial Accounting Standards Number 5 (or
any successor thereto) as in existence as of any date of
determination.
(ii) "Indebtedness" means, as to any person or entity
(A) indebtedness created, issued, incurred or assumed by such
person or entity for borrowed money or evidenced by bonds,
debentures, notes or similar instruments; (B) all obligations
of such person or entity to pay the deferred purchase price of
property or services; (C) all indebtedness secured by a lien
on any asset of such person or entity whether or not such
indebtedness is assumed by such person or entity; (D) all
obligations, contingent or otherwise, of such person or entity
directly or indirectly guaranteeing any indebtedness or other
obligation of any other person or entity or in any manner
providing for the payment of any indebtedness or other
obligation of any other person or entity or otherwise
protecting the holder of such indebtedness against loss
(excluding endorsements for collection or deposit in the
ordinary course of business); (E) the amount of all
reimbursement obligations and other obligations of such person
or entity (whether due or to become due, contingent or
otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds; (F) all obligations under
leases capitalized in accordance with GAAP; and (G) all other
obligations that would be included as liabilities on a balance
sheet prepared in accordance with GAAP.
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(iii) "Intangible Assets" means all intangible
assets of a person or entity under GAAP, including, without
limitation, copyrights, franchises, goodwill, licenses, loan
origination fees, non-competition covenants, organization or
formation expenses, patents, service marks, service names,
trademarks, trade names, write-up in the book value of any
asset in excess of the acquisition cost of the asset, any
amount, however designated on the balance sheet, representing
the excess of the purchase price paid for assets or stock
acquired over the book value assigned thereto, loans and
advances to partners, members, and officers, employees,
directors of such person or entity (or members of their
immediate families), unamortized leasehold improvement expense
not recoverable at the end of the lease term, unamortized debt
discount, and deferred discount.
(iv) "Tangible Net Worth" means, as of any date,
(A) Total Tangible Assets less (B) Total Debt.
(v) "Total Debt" means, at the applicable date of
determination, all Indebtedness and Contingent Liabilities of
a person or entity (including, without limitation, any
subordinated liabilities).
(vi) "Total Tangible Assets" means, at the applicable
date of determination, all assets of a person or entity,
excluding Intangible Assets, the value of which shall be
determined in accordance with GAAP; provided, however, that
Total Tangible Assets shall not include any portion of the
Property deleted from the purchase pursuant to the relevant
provisions of this Agreement.
ARTICLE 9
SELLER'S REPRESENTATIONS AND WARRANTIES
9.1 Nature of Seller's Representations. Each of the
representations and warranties of Seller contained in this Article 9
constitutes a material part of the consideration to Buyer and Buyer is
relying on the correctness and completeness of these representations and
warranties in entering into this transaction. Each of the
representations and warranties is true and accurate as of the date of
execution of this Agreement by Seller, will be true and accurate as of
the Closing, and will survive the Closing; subject, however, to the
provisions of Section 5.1(a) and Section 12.15. Any other provision of
this Agreement to the contrary notwithstanding, to the extent that Buyer
has actual knowledge on the Agreement Date as to the inaccuracy or
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incompleteness of any representation or warranty in this Article 9, the
representation or warranty shall be deemed to be qualified by and subject
to such actual knowledge. The representations and warranties of Seller
in this Article 9 are in addition to any representations and warranties
of Seller contained in any document or instrument executed and delivered
by Seller in connection with the transactions contemplated by this
Agreement.
9.2 Representations and Warranties as to Seller and the
Transaction. Seller represents and warrants to Buyer as follows:
(a) Organizational Status. TRHCI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, is qualified to do business in the States of
Arizona, California, and Texas, and has full power and authority to
enter into and to perform its obligations under this Agreement.
LMECC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, is qualified to
do business in the States of Arizona and California, and has full
power and authority to enter into and to perform its obligations
under this Agreement. The persons executing this Agreement on
behalf of Seller have full power and authority to do so and to
perform every act and to execute and deliver every document and
instrument necessary or appropriate to consummate the transactions
contemplated by this Agreement. Seller has all necessary power and
authority to own its properties and to conduct its business as now
owned and conducted by Seller.
(b) Entity Action. All corporate action on the part of
Seller and its shareholders which is required for the execution,
delivery and performance by Seller of this Agreement and each of the
documents and agreements to be delivered by Seller at the Closing
has been duly and effectively taken.
(c) Enforceable Nature of Agreement. This Agreement and each
of the documents and agreements to be delivered by Seller at the
Closing, constitute legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective
terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, or similar laws affecting the enforcement of creditors'
rights generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought
in a court of law or equity).
(d) Violations; Consents; Defaults. Neither the execution
of this Agreement nor the performance by Seller of its obligations
under this Agreement will result in any breach or violation of the
terms of any law, rule, ordinance, or regulation or of any decree,
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judgment or order to which Seller or any officer, director or
shareholder of Seller is a party now in effect from any court or
governmental body. Other than the releases required by this
Agreement with respect to Liens to be Assumed and the Bonds and
except for consents and approvals from governmental and quasi-
governmental agencies with respect to the transfer of Approvals and
consents and approvals for transfer of the Jamul Leasehold, Seller
Leases, and Contracts (the obtaining of which consents and approvals
is agreed to be the responsibility, and at the risk, of Buyer),
there are no consents, waivers, authorizations or approvals from any
third party necessary to be obtained by Seller in order to carry out
the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and performance by Seller of its
obligations under this Agreement will not conflict with or result
in a breach or default (or constitute an event which, with the
giving of notice or the passage of time, or both, would constitute
a default) under Seller's articles of incorporation or bylaws or any
indenture, mortgage, lease, agreement, or other instrument to which
Seller is a party or by which Seller or any of its assets may be
bound, except for the Approvals, Jamul Lease, Seller Leases,
Contracts, and Bonds where consent is required for the transfer,
release, and/or assumption of Seller's rights, interests, and
obligations thereunder.
(e) Litigation. Except as set forth on Exhibits L and O and
other than property tax appeals pursuant to the Tax Protest
Contracts, the matter disclosed in Section 8.5, and the Quiet Title
Action, neither Seller nor any of its officers, directors or
shareholders is a party, nor is the Property or any portion thereof
subject to, any pending or, to the best of Seller's knowledge,
threatened action, suit, proceeding or investigation, at law or in
equity or otherwise, in, for or by any court or governmental board,
commission, agency, department or officer arising from or relating
to this transaction, the Property or to the past or present
operations and activities of Seller upon or relating to the Real
Property and which, if adversely determined, would have a material
and adverse effect on either the marketability, financeability,
developability, or value of any portion of the Property which has
allocated to it a separate portion of the Sales Price pursuant to
Section 2.4.
(f) Non-Foreign Status. None of the entities comprising
Seller is a "foreign person", as such term is defined in Section
1445(f) of the U.S. Internal Revenue Code of 1986, as amended.
(g) No Bankruptcy. Other than as disclosed on Exhibit O, no
attachments, execution proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy or similar legal proceedings are
pending or threatened against Seller, nor are any such proceedings
contemplated by Seller.
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9.3 Representations and Warranties with Respect to the Property.
Seller represents and warrants to Buyer as follows:
(a) Contracts. The documents delivered to Buyer pursuant to
Section 4.1(c)(iv) and listed on Exhibit F with respect to the
Contracts constitute correct and complete copies of all of the
Contracts. Seller is not in default with respect to any of the
Contracts nor, to Seller's actual knowledge, has any event or
circumstance occurred that, with the giving of notice or the passage
of time, or both, would constitute a default by Seller with respect
to any of the Contracts. To Seller's actual knowledge, as of the
Agreement Date, none of the other parties to any of the Contracts
is in default with respect to any of the Contracts nor has any event
or circumstance occurred that, with the giving of notice or the
passage of time, or both, would constitute a default by any of such
other parties with respect to any of the Contracts.
(b) Seller Leases. The documents delivered to Buyer pursuant
to Section 4.1(c)(iv) and listed on Exhibit G with respect to the
Seller Leases constitute correct and complete copies of all of the
Seller Leases. Seller is not in default with respect to any of the
Seller Leases nor, to Seller's actual knowledge, has any event or
circumstance occurred that, with the giving of notice or the passage
of time, or both, would constitute a default by Seller with respect
to any of the Seller Leases. To Seller's actual knowledge, as of
the Agreement Date, none of the other parties to any of the Seller
Leases is in default with respect to any of the Seller Leases nor
has any event or circumstance occurred that, with the giving of
notice or the passage of time, or both, would constitute a default
by any of such other parties with respect to any of the Seller
Leases. Seller has not received any security or other deposits with
respect to any of the Seller Leases.
(c) Jamul Lease. The documents delivered to Buyer pursuant
to Section 4.1(c)(iv) with respect to the Jamul Lease constitute
correct and complete copies of the Jamul Lease. Subject to the
provisions of Section 6.2(b), Seller is not in default with respect
to the Jamul Lease nor, to Seller's actual knowledge, has any event
or circumstance occurred that, with the giving of notice or the
passage of time, or both, would constitute a default by Seller with
respect to the Jamul Lease. To Seller's actual knowledge, as of the
Agreement Date, the landlord under the Jamul Lease is not in default
with respect to the Jamul Lease nor has any event or circumstance
occurred that, with the giving of notice or the passage of time, or
both, would constitute a default by the landlord with respect to the
Jamul Lease.
(d) Articles and Bylaws. The Articles and Bylaws constitute
correct and complete copies of the articles of incorporation and
bylaws of each of the Associations, together with any and all
amendments thereto. To Seller's actual knowledge, Seller is not in
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default with respect to any of any of Seller's obligations as
"declarant" under the covenants, conditions, and restrictions
relating to Arizona Corporate Park North, East Valley Commerce
Center, or Fiesta Ranch nor, to Seller's actual knowledge, has any
event or circumstance occurred that, with the giving of notice or
the passage of time, or both, would constitute such a default by
Seller.
(e) Pending Sales Documents. The documents delivered to
Buyer pursuant to Section 4.1(c)(vi) with respect to the Pending
Sales constitute correct and complete copies of all of the
agreements relating to the Pending Sales (collectively, the "Pending
Sales Documents"). Seller has provided Buyer with access to
Seller's files with respect to the Pending Sales. Seller is not in
default with respect to any of the Pending Sales or Pending Sales
Documents nor, to Seller's actual knowledge, has any event or
circumstance occurred that, with the giving of notice or the passage
of time, or both, would constitute a default by Seller with respect
to any of the Pending Sales or Pending Sales Documents. To Seller's
actual knowledge, as of the Agreement Date, none of the other
parties to the Pending Sales Documents are in default with respect
to the Pending Sales Documents nor has any event or circumstance
occurred that, with the giving of notice or the passage of time, or
both, would constitute a default by any such party with respect to
the Pending Sales Documents.
(f) No Other Agreements. As of the Closing, other than the
matters disclosed in the Surveys, the Title Reports, the
Environmental Reports (including the information, if any, disclosed
pursuant to Section 4.5), and in this Agreement, including the
Exhibits to this Agreement, and other than the Contracts, the Jamul
Lease, the Seller Leases, the Receivables and documents relating
thereto, the Pending Sales Documents, the Bonds, the Approvals (and
all requirements, stipulations, conditions, agreements, and other
obligations associated with such Approvals (the "Approval
Obligations"), the Development Agreement, this Agreement and
agreements entered into pursuant to this Agreement, to the best of
Seller's knowledge, there will be no other agreements, contracts,
understandings, or commitments (written or oral) to which any of the
Property is bound or subject.
(g) Eminent Domain. To the best of Seller's knowledge and
except as otherwise disclosed in the information provided pursuant
to Sections 4.1 and 4.5, there is currently no existing or
threatened eminent domain or similar proceeding, or private purchase
in lieu of such a proceeding, that would affect the Property in any
material way.
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(h) Environmental Compliance. To the actual knowledge of
Seller and except as otherwise disclosed to Buyer in the
Environmental Reports and other materials provided pursuant to
Sections 4.1 and 4.5, and except for the use of pesticides,
herbicides, fertilizers and other similar items in connection with
farming activities on certain of the Property:
(i) The Real Property is free from Hazardous
Substances, and is not now in violation of any Environmental
Law. Seller has not caused or allowed the use, generation,
manufacture, production, treatment, storage, release,
discharge, or disposal of any Hazardous Substances on, under,
or about the Real Property, and has not caused or allowed the
transportation to or from the Property of any Hazardous
Substance.
(ii) There are no buried or partially buried storage
tanks located on the Real Property.
(iii) Seller has received no warning, notice of
violation, administrative complaint, judicial complaint, or
other formal or informal notice alleging that conditions on
the Real Property or adjacent property are or have been in
violation of any Environmental Law, or informing Seller that
the Real Property is subject to investigation or inquiry
regarding the presence of Hazardous Substances on or about the
Real Property or the potential violation of any Environmental
Law.
(iv) No environmental lien in favor of any governmental
entity has attached to any of the Real Property.
As used in this Agreement:
(1) "Environmental Law" means any federal, state or
local law, statute, ordinance, or regulation pertaining to
health, industrial hygiene, or environmental conditions,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601, et seq.; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Section 6901, et seq.; the Toxic
Substances Control Act of 1976, 15 U.S.C. Section 2601, et
seq.; the Superfund Amendments and Reauthorization Act of
1986, Title III, 42 U.S.C. Section 11001, et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Clean Air Act, 42 U.S.C.
Section 7401, et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251, et seq.; the Safe Drinking Water
Act, 42 U.S.C. Section 300f, et seq.; the Solid Waste Disposal
Act, 42 U.S.C. Section 3251, et seq.; and any other
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federal, state or local law, statute, ordinance, or regulation
now in effect or hereafter enacted which pertains to health,
industrial hygiene, or the regulation or protection of the
environment, including, without limitation, ambient air, soil,
groundwater, surface water, and/or land use.
(2) "Hazardous Substance" means any material, waste,
substance, pollutant, or contaminant which may or could pose
a risk of injury or threat to health of the environment,
including, without limitation:
(A) Those substances included within the
definitions of "hazardous substance", "hazardous waste",
"hazardous material", "toxic substance", "solid waste",
or "pollutant or contaminant" in, or otherwise regulated
by any Environmental Law;
(B) Those substances listed in the United States
Department of Transportation Hazardous Materials Table
(49 CFR 172.101, including appendices and amendments
thereto), or by the Environmental Protection Agency (or
any successor agency) as hazardous substances (40 CFR
Part 302 and amendments thereto);
(C) Such other substances, materials, or wastes
which are or become regulated or classified as hazardous
or toxic under federal, state, or local laws or
regulations; and
(D) Any material, waste, or substance which is
(i) petroleum or refined petroleum products; (ii)
asbestos in any form; (iii) polychlorinated biphenyls;
(iv) flammable explosives; or (v) radioactive materials.
(i) Information. To the best of Seller's actual knowledge,
Seller has not withheld from Buyer any material information with
respect to any of the Property; however, Buyer acknowledges that
Seller is not representing and warranting that the files and records
of Seller with respect to the Property are complete.
9.4 Qualifications on Knowledge. Whenever in this Article 9, a
representation or warranty is qualified based on the knowledge of Seller,
such knowledge shall be limited to that of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇, in
his capacity as president of each of the entities comprising Seller.
9.5 Release. Except for the express warranties and
representations set forth in this Article 9 and in any closing documents
delivered by Seller (including any statutorily implied warranties in any
of the deeds), Seller and Seller's Related Parties are hereby released
from all responsibility and liability regarding (a) the Receivables,
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their collectability and enforceability, and the creditworthiness of the
obligors under the Receivables; and (b) the Real Property, the Jamul
Leasehold, the Contracts, the Pending Sales, the Seller Leases, the
Personalty, and the Approvals and the Approval Obligations, including the
effectiveness, completeness, transferability, or adequacy of any of the
Approvals, the development potential, operation, condition, valuation or
utility of the Real Property and Personalty, or its suitability for any
purpose whatsoever, title and survey matters with respect to the Real
Property, and any responsibility or liability with respect to the
presence in the soil, air, structures, and surface and subsurface waters,
of materials or substances that have been or may in the future be
determined to be toxic, hazardous, undesirable or subject to regulation
and that may need to be specially treated, handled and/or removed from
the Real Property under current or future federal, state and local laws
and regulations. Except for the express warranties and representations
set forth in this Article 9 or in any of the documents and agreements
delivered pursuant to this Agreement (including any statutorily implied
warranties in any of the deeds), Buyer expressly acknowledges that Buyer
has not relied on any warranties, promises, understandings or
representations, express or implied, oral or written, of Seller or any
of Seller's Related Parties, relating to the Receivables, the Personalty,
the Real Property, the Jamul Leasehold, the Approvals or any other aspect
of the transactions contemplated by this Agreement and that Buyer is
acquiring the Property in its present condition and, with respect to the
Real Property and Personalty, state of repair, "AS IS", with all defects
and liabilities, latent or apparent. Buyer acknowledges that any
information of any type which Buyer has received or may receive from
Seller or Seller's agents is being furnished without any representation
or warranty whatsoever except as set forth in Section 9.3(i). Subject
to review of any information Buyer may receive pursuant to Section 4.5,
Buyer has inspected and investigated, or prior to the Arizona Parcel
Deletion Deadline, with respect to Property in the State of Arizona, and
prior to the California/Texas Parcel Deletion Deadline, with respect to
Property in the States of California and Texas, will have had the
opportunity to investigate, the Receivables, the Personalty, the Jamul
Leasehold, the Approvals, and the Real Property to Buyer's complete
satisfaction and has observed the physical characteristics and existing
conditions of the Real Property, the operations thereon and on adjacent
areas. Except as arising from the express warranties and representations
of Seller, Buyer hereby waives any and all objections to, complaints
about, or claims regarding the Real Property and its physical
characteristics and existing conditions, including, without limitation,
objections to, complaints about, or claims regarding subsurface soil and
water conditions, solid and hazardous waste and hazardous substances, and
endangered or protected plant or animal species on, under or adjacent to
the Real Property (including, but not limited to, federal, state or
common law based actions and any private right of action under state
and federal law, including, but not limited to, the Comprehensive
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Environmental Response, Compensation and Liability Act, and any state or
local equivalent). Buyer further hereby assumes the risk of changes in
applicable laws and regulations relating to past, present and future
environmental conditions on the Real Property and, except as arising from
the express warranties and representations of Seller, the risk that
adverse physical characteristics and conditions, including, without
limitation, the presence of hazardous substances or other contaminants,
may not have been revealed by its investigation.
ARTICLE 10
BUYER'S REPRESENTATIONS AND WARRANTIES
10.1 Nature of Buyer's Representations. Each of the
representations and warranties of Buyer contained in this Article 10
constitutes a material part of the consideration to Seller and Seller is
relying on the correctness and completeness of these representations and
warranties in entering into this transaction. Each of the
representations and warranties is true and accurate as of the date of
execution of this Agreement by Buyer, will be true and accurate as of the
Closing, and will survive the Closing and regardless of any investigation
or inspection by Seller; subject, however, to the provisions of Section
5.3(c) and Section 12.15. Any other provision of this Agreement to the
contrary notwithstanding, to the extent that Seller has actual knowledge
on the Agreement Date as to the inaccuracy or incompleteness of any
representation or warranty in this Article 10, the representation or
warranty shall be deemed to be qualified by and subject to such actual
knowledge. The representations and warranties of Buyer in this Article
10 are in addition to any representations and warranties of Buyer
contained in any document or instrument executed and delivered by Buyer
in connection with the transactions contemplated by this Agreement.
10.2 Representations and Warranties as to Buyer and the
Transaction. Buyer represents and warrants to Seller as follows:
(a) Organizational Status. Buyer is a corporation, duly
organized and validly existing under the laws of the State of
Arizona, is qualified to do business as a corporation in the States
of Arizona, Texas, and California, and has full power and authority
to enter into and to perform its obligations under this Agreement.
The persons executing this Agreement on behalf of Buyer have full
power and authority to do so and to perform every act and to execute
and deliver every document and instrument necessary or appropriate
to consummate the transactions contemplated hereby. Buyer has all
necessary power and authority to own its properties and to conduct
its business as now owned and conducted by Buyer. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇, individually and/or beneficially, are the sole
shareholders of Buyer.
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(b) Entity Action. All corporate action on the part of Buyer
and the shareholders of Buyer which is required for the execution,
delivery and performance by Buyer of this Agreement and each of the
documents and agreements to be delivered by Buyer at the Closing has
been duly and effectively taken.
(c) Enforceable Nature of Agreement. This Agreement and each
of the documents and agreements to be delivered by Buyer at the
Closing, constitute legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms,
except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, or similar laws affecting the enforcement of creditors'
rights generally, and subject, as to enforceability, to the general
principles of equity (regardless of whether enforcement is sought
in a court of law or equity).
(d) Violations; Consents; Defaults. Neither the execution
of this Agreement nor the performance by Buyer of its obligations
under this Agreement will result in any breach or violation of the
terms of any law, rule, ordinance, or regulation or of any decree,
judgment or order to which Buyer or any shareholder in Buyer is a
party now in effect from any court or governmental body. There are
no consents, waivers, authorizations or approvals from any third
party necessary to be obtained by Buyer in order to carry out the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement and performance by Buyer of its
obligations under this Agreement will not conflict with or result
in a breach or default (or constitute an event which, with the
giving of notice or the passage of time, or both, would constitute
a default) under Buyer's articles of incorporation or bylaws or any
indenture, mortgage, lease, agreement, or other instrument to which
Buyer is a party or by which Buyer or any of its assets may be
bound.
(e) MUD Disclosure. Prior to the execution of this Agreement
by Buyer, Buyer received from Seller and executed the municipal
utility district disclosure form signed by Seller, a copy of which
is attached to this Agreement as Exhibit P.
10.3 Disclaimer. Except for the express warranties and
representations set forth in this Article 10 or in any of the documents
and agreements delivered pursuant to this Agreement, Seller expressly
acknowledges that Seller has not relied on any warranties, promises,
understandings or representations, express or implied, oral or written,
of Buyer or any of Buyer's Related Parties.
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ARTICLE 11
REMEDIES
11.1 Seller's Remedies.
(a) Prior to Closing. If Buyer fails to deposit the
remainder of the Sales Price in the time and manner set forth in
this Agreement, or fails, within ten (10) days of written notice of
default, to perform when due any other act required by this
Agreement, or otherwise breaches this Agreement, including any
representation or warranty, Seller's sole and exclusive remedy will
be to cancel this Agreement and the Escrow, such cancellation to be
effective immediately upon Seller giving written notice of
cancellation to Buyer and Escrow Agent; provided, however, that the
foregoing limitation shall not apply to a breach of any of the
indemnification obligations or confidentiality obligations of Buyer
under this Agreement. UPON SUCH CANCELLATION, SELLER WILL BE
ENTITLED TO RECEIVE ALL ▇▇▇▇▇▇▇ MONEY DEPOSITS IN THE ESCROW (AND
ESCROW AGENT IS HEREBY INSTRUCTED TO DELIVER SUCH DEPOSITS TO
SELLER), ALL AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, THE PARTIES
AGREEING AND STIPULATING THAT THE EXACT AMOUNT OF DAMAGES WOULD BE
EXTREMELY DIFFICULT TO ASCERTAIN AND THAT THE ▇▇▇▇▇▇▇ MONEY DEPOSITS
CONSTITUTE A REASONABLE AND FAIR APPROXIMATION OF SUCH DAMAGES.
INITIALS: SELLER CJF BUYER FN
------ -----
(b) After Closing. With respect to any breach by Buyer of
any of its obligations, representations, and warranties following
the Closing, subject to Section 8.8 and Section 12.14, Seller shall
be entitled to exercise any rights and remedies available to Seller
therefor; provided, however, that Seller shall only be entitled to
seek recovery of actual damages which directly result from Buyer's
breach, Seller hereby waiving any right to seek or obtain lost
profits or other speculative, consequential, or exemplary damages;
and provided, further that Seller waives any right to rescind the
sale and purchase transaction except for fraud or intentional
misrepresentation of a material matter.
11.2 Buyer's Remedies.
(a) Prior to Closing. If Seller fails to perform any act
required to be performed by Seller at the Closing (other than to
cure a Major Defect under Section 4.5(c), the sole remedy therefor
being as set forth in Section 4.5(c)), or fails, within ten (10)
days of written notice of default, to perform when due any other act
required by this Agreement, or otherwise breaches this Agreement,
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including any representation or warranty, Buyer may elect as its
sole remedy hereunder either to (i) cancel this Agreement and the
escrow and receive the return of all ▇▇▇▇▇▇▇ money deposits, such
cancellation to be effective immediately upon Buyer giving written
notice of cancellation to Seller and Escrow Agent, or (ii) seek
specific performance of this Agreement; provided, that if Buyer
seeks and obtains specific performance, Buyer shall also be entitled
to recover its actual damages directly resulting from such breach.
(b) After Closing. With respect to any breach by Seller of
any of its obligations, representations, and warranties following
the Closing, subject to Section 8.8 and Section 12.14, and to
Section Buyer shall be entitled to exercise any rights and remedies
available to Buyer therefor; provided, however, that Buyer shall
only be entitled to seek recovery of actual damages which directly
result from Seller's breach, Buyer hereby waiving any right to seek
or obtain lost profits or other speculative, consequential, or
exemplary damages; and provided, further that Buyer waives any right
to rescind the sale and purchase transaction except for fraud or
intentional misrepresentation of a material matter.
11.3 Dispute Resolution. With the exception of the failure of
Buyer to deposit the remainder of the Sales Price in the time and manner
set forth in this Agreement, the provisions of Sections 11.1 and 11.2 are
subject to the provisions of Section 12.14.
ARTICLE 12
GENERAL PROVISIONS
12.1 Certain Definitions. As used in this Agreement, certain
capitalized terms are defined as follows:
(a) "Claims" means any and all obligations, debts, covenants,
conditions, representations, costs, and liabilities and any and all
demands, causes of action, and claims, of every type, kind, nature
or character, direct or indirect, known or unknown, absolute or
contingent, determined or speculative, at law, in equity or
otherwise, including attorneys' fees and litigation and court costs.
(b) "Related Parties" means, with respect to any person or
entity, the officers, directors, shareholders, partners, members,
employees, agents, attorneys, successors, personal representatives,
heirs, executors, or assigns of any such person or entity.
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12.2 Assignment; Binding Effect. Buyer may not assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of Seller, which consent will not be unreasonably withheld or
delayed. However, Buyer may designate one or more affiliates of Buyer
to take title to various of the assets being purchased by Buyer
hereunder, provided each such designee assumes in writing the obligations
of Buyer under this Agreement with respect to the assets being conveyed
to such designee and such designee makes substantially the same
representations and warranties as contained in Article 10. No such
designation shall release Buyer from any of its obligations under this
Agreement. Except as limited by the provisions of this Section 12.2,
this Agreement is binding upon and shall inure to the benefit of the
parties and their respective heirs, personal representatives, successors
and assigns. Any assignment or designation permitted under this
Agreement shall be made prior to November 15, 1996.
12.3 Cooperation. Seller will cooperate fully with Buyer in
obtaining any necessary governmental approvals to the transfer of any
item of property being sold to Buyer in this Agreement.
12.4 Attorneys' Fees. Subject to the provisions of Section 12.14,
if any action is brought by either party in respect to its rights under
this Agreement, the prevailing party will be entitled to reasonable
attorneys' fees and court costs as determined by the court.
12.5 Waivers. No waiver of any of the provisions of this Agreement
will constitute a waiver of any other provision, whether or not similar,
nor will any waiver be a continuing waiver. No waiver will be binding
unless executed in writing by the party making the waiver. Either party
may waive any provision of this Agreement intended for its benefit;
provided, however, such waiver will in no way excuse the other party from
the performance of any of its other obligations under this Agreement.
12.6 Construction. This Agreement will be construed according to
the laws of the State of Arizona, without giving effect to its conflict
of laws principles. References in this Agreement to "Sections" or
"Articles" are to the Sections and Articles in this Agreement, unless
otherwise noted.
12.7 Time. Time is of the essence of this Agreement.
12.8 Notices.
(a) Notices will be in writing and will be given by personal
delivery, by deposit in the United States mail, certified mail,
return receipt requested, postage prepaid, by facsimile
transmission, or by express delivery service, freight prepaid.
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Notices will be delivered or addressed to Seller and Buyer at the
addresses or facsimile numbers set forth on the first page of this
Agreement or at such other address or number as a party may
designate in writing. The date notice is deemed to have been given,
received and become effective will be (i) the date on which the
notice is delivered, if notice is given by personal delivery, (ii)
the date of actual receipt, if the notice is sent through the United
States mail or by express delivery service, or (iii) if notice is
sent by facsimile transmission, on the date of transmission, if the
transmission is commenced prior to 4:00 o'clock p.m. (local time at
the place of receipt) and continuously transmitted thereafter until
complete, otherwise on the day following the date of transmission.
(b) Copies of all notices to Seller shall also be given to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇
400 East Van Buren
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Copies of all notices to Buyer shall also be given to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇'▇▇▇▇▇▇, Cavanagh, Anderson,
▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
12.9 Further Documentation. Each party agrees in good faith to
execute such further or additional documents as may be necessary or
appropriate to fully carry out the intent and purpose of this Agreement.
12.10 Time Periods. Except as expressly provided for in this
Agreement, the time for performance of any obligation or taking any
action under this Agreement will be deemed to expire at 5:00 o'clock p.m.
(local Phoenix time) on the last day of the applicable time period
provided for in this Agreement. If the time for the performance of any
obligation or taking any action under this Agreement expires on a
Saturday, Sunday or legal holiday, the time for performance or taking
such action will be extended to the next succeeding day which is not a
Saturday, Sunday or legal holiday.
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12.11 Headings and Counterparts. The headings of this
Agreement are for purposes of reference only and will not limit or define
the meaning of any provision of this Agreement. This Agreement may be
executed in any number of counterparts, each of which will be an original
but all of which will constitute one and the same instrument.
12.12 Publicity. Except as may be required by law or any
governmental authority or by the rules of the New York Stock Exchange,
or to obtain any consents or approvals required by this Agreement, Seller
and Buyer will not, without the consent of the other party or as
otherwise permitted by the terms of the Confidentiality Agreement, make
any public disclosure of the existence of this Agreement, the parties to
this Agreement, the terms of this Agreement or any other matter related
to the transactions contemplated by this Agreement. Buyer and Seller
will use their best efforts to avoid such publicity in any newspaper or
magazine, or on any radio or television station, or through any other
medium of publication. Buyer acknowledges that, immediately following
the Agreement Date, Seller will make such disclosures of this Agreement
as are required under applicable securities laws and the rules of the New
York Stock Exchange.
12.13 Provisions Relating to Seller. As used in this
Agreement, the term "Seller" means each of TRHCI and LMECC, according to
their respective interests in the Property and, as the context requires
refers to any, each or all of the entities comprising Seller. Whenever
Seller is granted any rights and benefits or may take any actions
(including, without limitation, approving or disapproving any matter) or
has assumed any liabilities or obligations under this Agreement, then,
unless the context otherwise requires, such rights and benefits,
obligations, and liabilities may be duly and validly exercised and
enjoyed and actions taken by any one or more of Seller, on behalf of all
of the entities comprising Seller, and such rights and benefits,
obligations and liabilities may be allocated among one or more of the
Seller entities as such entitles shall determine in their sole and
absolute discretion. Notwithstanding the foregoing, TRHCI shall be
jointly and severally liable for all of the obligations of Seller under
this Agreement.
12.14 Dispute Resolution Provisions.
(a) Negotiation Between Executives. Seller and Buyer shall
attempt in good faith to resolve any dispute arising out of or
relating to this Agreement promptly by negotiations between
executives including in-house counsel who have authority to settle
the controversy (subject to board of directors or equivalent
approval, if required). Each party shall promptly give the other
party written notice of any dispute not resolved in the normal
course of business (the "Dispute Notice"). Within 10 business days
after delivery of the Dispute Notice, executives of both parties
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shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to exchange relevant
information and to attempt to resolve the dispute. If the matter
has not been resolved within 45 business days of the Dispute Notice,
or if the parties fail to meet within 10 business days, any of the
parties may initiate further dispute resolution procedures as
provided hereinafter. If a party intends to be accompanied at a
meeting by an attorney other than in-house counsel, the other party
shall be given at least three business days' notice of such
intention and may also be accompanied by an attorney. All
negotiations pursuant to this Section 12.14(a) are confidential and
shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of
evidence.
(b) Appointment of Neutral. If, within 45 business days
after the Dispute Notice, the parties have not succeeded in
negotiating a written resolution of the dispute (or if the parties
fail to meet within 10 business days after the Dispute Notice), upon
written request by any party to the other party, both parties will
promptly negotiate in good faith to jointly appoint a mutually
acceptable neutral person not affiliated with any of the parties
(the "Neutral"). If all parties so agree in writing, a panel of two
or more individuals (such panel also being referred to as the
"Neutral") may be selected by the parties, or in the absence of an
agreement in selecting the Neutral within sixty (60) days of the
written request for a Neutral, the Neutral shall be an individual
selected by the parties with the assistance of a dispute resolution
service if they have been unable to agree upon such appointment
within 60 days after the Dispute Notice. The fees and costs of the
Neutral and of any such assistance shall be shared equally between
the parties.
(c) Selection of Procedure. In consultation with the
Neutral, the parties will negotiate in good faith to select or
devise a nonbinding, or, if the parties agree, a binding,
alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to
be held, with the Neutral (at the written request of any party to
the other parties) making the decision as to the procedure,
(including allowable discovery procedures, if any), and/or place and
time if the parties have been unable to agree on any of such matters
in writing within 10 days after selection of the Neutral.
(d) Termination of Procedure. The parties agree to
participate in good faith in the ADR to its conclusion; provided,
however, that no party shall be obligated to continue to participate
in the ADR if the parties have not resolved the dispute in writing
within 120 days after the Dispute Notice and any party shall have
terminated the ADR by delivery of written notice of termination to
the other parties following expiration of said 120-day period.
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Following any such termination notice after the expiration of the
120-day period, and if any party so requests in writing to the
Neutral (with a copy to the other parties), then the Neutral shall
make a recommended resolution of the dispute in writing to each
party, which recommendation shall not be binding upon the parties;
provided, however, that the parties shall give good faith
consideration to the settlement of the dispute on the basis of such
recommendation, and if any party thereafter pursues any other
judicial or non-judicial remedy to conclusion, such party shall pay
the reasonable attorneys' fees, costs and other expenses (including
expert witness fees) of the other parties incurred in connection
with the pursuant and achievement of (and defense against) such
remedy, if any, if the result thereof is less favorable to such
pursuant party than the recommendation of the Neutral.
(e) Provisional Remedies. Notwithstanding anything herein
to the contrary, any party may seek a temporary restraining order,
preliminary injunction or other interim or provisional judicial
relief if, in its judgment, such action is necessary to avoid
irreparable damage or to preserve the status quo. Despite such
action the parties will continue to participate in good faith in the
procedures specified in this Section. The provisions of this
Section shall be specifically enforceable.
(f) Secrecy of ADR Proceedings. At the request of any party,
ADR proceedings shall be conducted in the utmost secrecy. In such
case, all documents, testimony and records shall be received, heard
and maintained by the parties and the Neutral in secrecy, available
for advance and in writing, to receive all such information in
secrecy, to use such information only for the purpose of the ADR
proceedings, and not to disclose such information to third parties
for any other purpose.
12.15 Survival. All covenants, agreements, representations,
and warranties set forth in this Agreement shall survive the Closing
(including, without limitation, the covenants, agreements,
representations, and warranties in Sections 4.3, 8.3, 8.4, 8.7, 8.8, 8.9,
8.11, and Articles 9 and 10) and shall not merge into the Deeds or any
other instrument executed or delivered in connection with the
transactions contemplated hereby; provided, however, that the
representations and warranties in Articles 9 and 10 and in any documents
and instruments delivered pursuant to this Agreement (other than
representations and warranties as to title) shall survive the Closing for
a period (the "Survival Period") commencing on the Closing and
terminating on the second (2nd) anniversary of the Closing, and any claim
under such representations and warranties must be made within the
Survival Period.
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12.16 Entire Agreement. This Agreement, which includes the
Closing Documents Schedule and the following Exhibits:
Exhibit A Legal Descriptions of the Real Property
Exhibit B Tangible Personal Property Description
Exhibit C Description of Trademarks
Exhibit D Sales Price Allocation
Exhibit E Items to Be Provided
Exhibit F Contracts
Exhibit G Seller Leases
Exhibit H Certain Approvals
Exhibit I Pending Sales
Exhibit J Bonds
Exhibit K Water Rights
Exhibit L Trade Name Litigation
Exhibit M Property Owners Associations
Exhibit N Utility and Other Deposits
Exhibit O Litigation
Exhibit P MUD Disclosure
Exhibit Q ▇▇▇▇▇▇ Industries, Inc. Agreement
constitutes the entire agreement between the parties pertaining to the
subject matter contained in this Agreement. All prior and
contemporaneous agreements, representations and understandings of the
parties, oral or written, are superseded by and merged in this Agreement.
No supplement, modification or amendment of this Agreement will be
binding unless in writing and executed by Buyer and Seller.
SELLER:
▇▇▇▇▇▇ REALTY HOLDING COMPANY,
INCORPORATED, a Delaware corporation
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
Time of Signing: October 23, 1996, 11:45 o'clock a.m.
LME CAPITAL CORPORATION,
a Delaware corporation
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
President
Time of Signing: October 23, 1996, 11:45 o'clock a.m.
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BUYER:
PIVOTAL GROUP, INC.,
an Arizona corporation
By F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its President
Time of Signing: October 23, 1996, 11:48 o'clock a.m.
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