Transaction No.: 22
Builder: Monterey Homes
Locations: Phoenix, AZ
Tucson, AZ
REVOLVING MODEL HOME LEASE BACK AGREEMENT
This Revolving Model Home Lease Back Agreement is made and entered into
by and between AMHM-1, L.P., a California limited partnership ("AMH"), and
MONTEREY HOMES ARIZONA II, INC., an Arizona corporation, ("Builder").
TABLE OF CONTENTS
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Page
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1. Recitals Incorporated by Reference . . . 2
2. Multiple Models in Multiple Projects . . 2
3. Models . . . . . . 2
3.1 Security Deposit. . . . . 2
4. Lease Rate . . . . . 3
4.1 Variable Lease Rate . . . 3
4.2 Generally . . . . 3
5. Lease Term . . . . . 3
5.1 Length of Lease . . . . 3
5.2 Early Termination by Builder During Lease Term 4
5.3 Rent . . . . . 5
5.4 Payment Agent. . . . . 5
6. Conversion of Model . . . . 6
6.1 Conversion Prior to Expiration Date. . 6
6.2 Definition of Conversion . . . 6
6.3 Acceptable Condition . . . 6
7. Additional Options . . . . 7
8. Sales of Models . . . . . 7
8.1 Marketing Efforts . . . . 7
8.2 Request by AMH for Builder's Assistance . 7
8.3 Early Sales . . . . 8
8.4 Unrestricted Sales . . . 8
9. Offset Rights . . . . . 8
10. Customer Service and Warranty by Builder Following Sales 8
11. Absolute Obligation to Pay Rent . . . 9
12. AMH's Voluntary Expenses . . . . 9
(i)
13. Taxation . . . . . . 10
13.1 Payment of Real Property Taxes . . 10
13.2 Joint Assessment . . . . 10
13.3 Definition of Taxes . . . 10
14. Use . . . . . . 11
15. Utilities . . . . . 11
16. Maintenance and Repairs . . . . 11
17. AMH's Right to Maintain . . . . 11
18. Entry for Inspection . . . . 12
19. Sales Reports . . . . . 12
19.1 Frequency . . . . 12
19.2 Confidentiality . . . . 12
19.3 Supplemental Reports . . 12
20. Liens . . . . . . 12
20.1 Generally . . . . 12
20.2 Builder's Right to Challenge . . 13
20.3 Notices of Non-Responsibility . . 13
21. Indemnity of AMH and Property by Builder . . 13
22. Insurance . . . . . 14
22.1 Liability Insurance . . . 14
22.2 Property Insurance . . . 15
22.3 Waiver of Subrogation . . . 15
23. Damage or Destruction . . . . 15
24. Assignment & Subletting . . . . 15
24.1 AMH's Consent Required . . . 15
24.2 No Release of Builder . . . 16
24.3 Collateral Assignment by AMH . . 16
25. Subordination . . . . 16
25.1 Generally . . . . 16
25.2 Subordination Agreements/Non-Disturbance 17
25.3 Quiet Enjoyment . . . . 17
25.4 Covenant to Pay . . . . 17
(ii)
26. Default; Remedies . . . . . 17
26.1 Default . . . . . 17
26.2 Remedies . . . . . 18
26.3 Late Charges . . . . 19
26.4 Default by AMH . . . . 19
26.5 No Waiver of Remedies . . . 20
27. Guaranty . . . . . . 20
28. Miscellaneous . . . . 20
28.1 Estoppel Certificate . . . 20
28.2 Entire Agreement . . . . 21
28.3 Severability . . . . 21
28.4 Costs of Suit . . . . 21
28.5 Binding Effect; Choice of Law . . 21
28.6 Surrender of Models . . . 21
28.7 Holding Over . . . . 21
28.8 Recording . . . . 22
28.9 Notices . . . . . 22
28.10 Time . . . . . 23
28.11 Reasonableness . . . . 23
List of Exhibits
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Exhibit "A" Model Chart and Purchase Price Schedule
Exhibit "B" Early Termination Release Prices
Exhibit "C" Form of Sales Report
Exhibit "D" Form of Acknowledgment of Lease Term Expiration
Exhibit "E" Buyer's Addendum #1 to Real Estate Purchase Contract
Exhibit "F" Guarantee
Exhibit "G" Minimum Lease Term and Termination Schedule
Exhibit "H" Hazardous Materials Laws and Hazardous Materials Definition
(iii)
REVOLVING MODEL HOME LEASE BACK AGREEMENT
This Revolving Model Home Lease Back Agreement (the "Lease") is dated
for reference purposes only as of the 18th day of December, 1996 and is entered
into by and between AMHM-1, L.P., a California limited partnership ("AMH") and
MONTEREY HOMES ARIZONA II, INC., an Arizona corporation ("Builder").
RECITALS
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A. Builder and AMH have previously entered into that Revolving Model
Home Purchase Agreement (the "Purchase Agreement") whereby AMH has purchased
certain model homes identified on the "Model Chart" attached hereto as Exhibit
"A", as the same may be revised from time to time, (the "Models") located in one
or more housing projects (the "Projects"). The related Purchase Agreement and
this Lease have the same "Transaction Number" as assigned by AMH, for accounting
purposes, and shown on the cover of both the Purchase and Lease Agreements. All
initial-capitalized terms not otherwise defined herein shall have the same
meaning ascribed to them in the Purchase Agreement. The terms of the Purchase
Agreement are incorporated herein by this reference.
B. AMH has purchased the Models and AMH now desires to lease back the
Models to Builder. Under the Purchase Agreement, additional Models not shown on
the Model Chart may yet become subject to the Purchase Agreement and may yet be
purchased by AMH after the conduct of AMH's Feasibility Review (as defined
below) for such additional Models. Upon the Settlement of any such additional
Model, such Model shall become subject to this Lease by a modification of the
Model Chart by the parties. This Lease shall become effective for each
respective Model as of the Settlement Date for such Model, which is also the
"Lease Commencement Date" for such Model.
C. The Lease Term (as hereinafter defined) may expire with respect to
certain Models while remaining in effect for other Models until the date of
expiration of the Lease Term (the "Lease Expiration Date") for such other
Models. The terms of this Lease may vary with respect to different Models as
further described herein.
D. This Lease governs and affects only those Models which are described
on the Model Chart, as the same may be revised from time to time by the parties.
A default under this Lease (taking into account all applicable grace and cure
periods) with respect to any Model now or hereafter described on the Model
Chart, constitutes a default with respect to all Models described on the Model
Chart.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, AMH hereby leases the Models to
the Builder upon the following terms and conditions.
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1. Recitals Incorporated by Reference.
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AMH and Builder acknowledge that the recitals are true and correct
representations, warranties, covenants and agreements by and between the
parties. Such recitals are incorporated herein by this reference.
2. Multiple Models in Multiple Projects.
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Certain terms of this Lease with respect to each Model are set forth in
the Model Chart, as the same may be revised from time to time by mutual
agreement. This Lease is applicable to each Model described on the Model Chart,
as the same may be revised from time to time, the same as if each of the Models,
respectively were the only property subject to this Lease. A Model may be
"Converted" (as defined in Paragraph 6.2 below) and sold without affecting the
validity and enforceability of this Lease with respect to remaining Models in
other Projects.
3. Models.
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The term "Models" includes (i) with respect to free-standing homes, the
underlying realty and all the improvements located thereon, including without
limitation, the landscaping, irrigation equipment, sidewalks, walls and the
house, and (ii) with respect to condominiums, an undivided interest in the
underlying realty and all common improvements located thereon, plus title to the
subject individual dwelling unit as defined in the governing documents
applicable thereto. Fixtures located within the house or condominium which
cannot be removed without damage to the Models, the draperies and drapery
hardware, built-in home entertainment systems excluding televisions, the
built-in appliances located in the Models as of the Lease Commencement Date,
pools and pool equipment and built-in or custom cabinetry or woodworking are
deemed to be a part of the Models. The term "Models" does not include furniture
(unless built-in), accessories such as vases, paintings, and other art and
decorating objects; office furniture and equipment, or office fixtures located
in the Models (unless otherwise specified on the Exhibit A Model Chart).
3.1 Security Deposit: Builder shall deposit with AMH, cash or an
acceptable Letter of Credit, in the amount of one month's rent, which shall be
held as a security deposit by AMH until such time as the proposed merger between
Builder and Homeplex is completed or prorated until all the units on the Model
Chart have been resold by AMH and Builder pursuant to the Purchase and Lease
Agreement. Failure by Builder to replace any Letter of Credit within 10 business
days of the expiration of the Letter of Credit will constitute an Event of
Default under this Lease Agreement.
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4. Lease Rate.
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4.1 Variable Lease Rate. Builder shall pay to AMH as monthly
installments of "Rent" under this Lease, for each of the Models subject hereto,
variable amounts which are calculated by determining the "Lease Rate" for each
month of the Lease Term. In this connection, the monthly Lease Rate for all
Models subject to this Lease for each calendar month of the Lease Term shall be
equal to the amount determined by the following calculation: one-twelfth of the
product of (i) the 3-month LIBOR Rate as published by the Wall Street Journal on
the first business day of the prior month, plus 650 basis points, multiplied by
(ii) the Purchase Price of all Models then covered by this Lease (as set forth
in the Model Chart as same may be revised from time to time) on the date such
Rent is due. With respect to any Model for which the Lease has terminated or
expired on any day other than the first day of a calendar month, the installment
of Rent which is due on the first day of the following calendar month shall be
prorated to take into account such Lease termination or expiration.
4.2 Generally. Builder shall pay to AMH, as Rent for the Models, IN
ADVANCE ON THE FIRST DAY OF EACH CALENDAR MONTH OF THE LEASE TERM without
deduction, offset, prior notice or demand, in lawful money of the United States,
the amount of monthly Rent calculated pursuant to the formula set forth in
Paragraph 4.1 above. Rent shall be paid commencing on the Lease Commencement
Date and until the Lease Expiration Date for the respective Models. If the Lease
Commencement Date for the Models in a Project is not the first day of a month,
Builder shall pay a prorated portion of the Rent for that month. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH HEREIN, THERE IS NO GRACE PERIOD FOR THE PAYMENT
OF RENT. The first full monthly installment of Rent payable by Builder pursuant
to this Lease shall be paid to AMH on January 1, 1997.
5. Lease Term.
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5.1 Length of Lease. The term of this Lease (the "Lease Term") for each
of the Models covered respectively by this Lease (including Models subsequently
added to the Model Chart by addendum as Additional Model(s)) shall commence on
the Settlement Date (as defined in the Purchase Agreement) for such Model, and
shall expire, subject to the provisions of Paragraph 6 below, on the six (6)
month or first (1st) anniversary thereof pursuant to the scheduled maximum
mandatory lease term date on Exhibit "G", unless sooner terminated pursuant to
the provisions hereof. Notwithstanding the foregoing, Builder shall have the
right to cause early termination of the Lease Term for individual Models covered
by the Lease pursuant to the terms of Paragraphs 5.2.1, 5.2.2 and 5.2.3 below.
In its exercise of any such early termination rights, however, Builder may not
terminate the Lease if, as a result of such proposed termination and taking into
account any previous instances where Builder may have exercised any of its early
termination rights, more than four (4) Models may remain unsold within a given
Development (the "Inventory Restriction"). As to Additional Models, in its
exercise of any such early termination rights, Builder may not terminate the
Lease for a particular Model or group of Models within a specific master planned
community or subdivision ("Development") under any circumstance, if,
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as a result of such proposed termination and taking into account any previous
instances where Builder may have exercised any of its early termination rights,
more than four (4) Models may remain unsold within a three (3) mile radius of a
given Development (the "Inventory Restriction"), unless mutually modified by
both parties. Builder shall have the right to extend the term of this Lease for
each model, prior to the initial lease term expiration date, on a month to month
basis or, if builder, at builder's option, elects to extend the lease for a
minimum of six (6) months, for a maximum of two (2) six (6) month extensions.
The builder shall have the option to extend the lease on each unit on a month to
month basis, after either the expiration of the lease term or expiration of any
six (6) month options previously exercised.
5.2 Early Termination by Builder During Lease Term. Builder is hereby
provided three separate methods (set forth, respectively, in Sections 5.2.1,
5.2.2 and 5.2.3) by which Builder may cause early termination of the Lease Term
for a particular Model. Each method of termination is independent of the others
but may be exercised in conjunction with other termination methods so long as
there is no violation of the Inventory Restriction. Furthermore, the exercise of
any termination right described herein requires at least ninety (90) days prior
notice from Builder to AMH of Builder's intent to exercise such early
termination right (the "Termination Notice"), and no Lease for a particular
Model shall be deemed to have terminated unless such Model has been "Converted"
as provided in Paragraph 6 below. However, notwithstanding that the Builder has
given such Termination Notice, the Expiration Date of the Lease Term shall be
the later to occur of (a) 90 days following receipt of such written notice from
Builder, or 30 days from the completion of Conversion of the Models.
5.2.1 Lease Termination: At Builder's option, Builder may
elect to terminate the Lease with respect to a Model described in the Model
Chart pursuant to the schedule shown on Exhibit "G" which allows for the
termination of those Models on the date(s) prescribed per the notice described
in Section 5.2 above. Should Builder elect not to cancel a lease with respect to
a particular unit per Schedule "G" or, if Builder cancels or rescinds a
Termination Notice previously given to AMH, Builder may elect to extend the
lease for that unit on a month to month basis, provided however that Builder
repeats to the 90 day notice provision described in Section 5.2 above. If
Additional Model(s) are added to the Model Chart by addendum, Builder may
release said Additional Models at any time beginning at one (1) year after the
Lease Commencement Date for that Additional Model(s) so long as the aggregate
releases for all Additional Model(s) in any one month complies with the
inventory restriction as defined in Paragraph 5.1.
5.2.2 Early Termination. Notwithstanding Section 5.2.1, with
respect to each Model or Additional Models leased hereunder, at any time
beginning before the date which is six (6) months or one (1) year after the
Lease Commencement Date for that Model Builder may elect to terminate the Lease
prior to expiration of the Lease Term of that Model or Additional Models if
circumstances change such that there is no longer any business purpose served by
the continued use of such Model or Additional Models as a model home. Builder
may discontinue such use upon providing the applicable Termination Notice to AMH
specifying the change in circumstances. Irrespective of the number of models
released under 5.2.1 above, Builder agrees to give AMH such Early Termination
Notice immediately upon Builder's determination that it no
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longer intends to use the Model as a model home with a date that the use as a
Model shall be discontinued. The purpose of the Early Termination Notice shall
be to give AMH and Builder an opportunity to sell the Model while marketing
traffic is still visiting the Model. For that reason, Builder shall give such
Early Termination Notice as soon as possible, and maintain current marketing
efforts, including using furnished and decorated models, similar sales hours and
advertising. Within sixty (60) days of sending such Early Termination Notice,
Builder shall begin to Convert the Model. On behalf of AMH, Builder shall
attempt to obtain an agreement to sell such Model at a price equal to or greater
than the price established solely by AMH within ten (10) days after its receipt
of the Early Termination Notice(s), at which price Builder shall offer the said
Model for sale (the "Early Termination Price") substantially as scheduled on
Exhibit "B", and Builder shall continuously thereafter offer the Model for sale
to the buying public at such price for a period of sixty (60) days or less, as
determined by AMH. Builder's right to terminate the Lease pursuant to the
foregoing is expressly conditioned upon Builder obtaining a purchase price which
equals or exceeds the Early Termination Price.
5.2.3 Minimum Sale Price: Provided, however, that if such
sixty (60) day period referenced in 5.2.2 above shall expire without Builder
having sold the Model in question at a price equal to or greater than the Early
Termination Price, Builder shall have a continuing right to elect to terminate
the Lease as to such Model by (i) obtaining an agreement, previously approved by
AMH, to sell such Model for a price which, equals or exceeds the price for such
Model specified in Exhibit "B" attached hereto (such price is referred to herein
as the "Minimum Sales Price") or (ii) obtains an agreement, previously approved
by AMH, to sell such Model for a price less than the Minimum Sales Price, but
pays into the sale escrow the difference between such sales price and the
Minimum Sales Price prior to close of escrow for such sale, with such amount to
be paid to AMH at close of escrow. Notwithstanding any other provision of this
paragraph or Section 5.2.2, no Lease shall terminate under this paragraph or
Section 5.2.2 until the closing of the sale of that Model for a price equal to
or greater than the Early Termination Price or, after the initial sixty (60) day
sale period, during the subsequent sales period described in paragraph 5.23, for
a price equal to or greater than the Minimum Sales Price. Until such termination
of the Lease occurs, however, all the provisions of the Lease shall continue to
be effective with respect to such Model, including all the maintenance
requirements, payments of Rent and Conversion requirements set forth in the
Lease.
5.3 Rent. Each and every obligation of Builder to pay money to or for
the benefit of AMH under this Lease is hereby deemed to be included within the
term "Rent". Rent due for any partial month shall be based on a thirty (30) day
month, regardless of the actual days in such month.
5.4 Payment Agent. AMH may enter into an arrangement whereby Rent is
paid by Builder to a payment agent (the "Custodial Account") for disbursement to
secured parties, and then to AMH. AMH shall provide notice to Builder of the
name, address and method by which Rent payments are to be sent to the Custodial
Account. Builder shall have no liability for the acts or failures to act of the
Custodial Account agent so long as Builder makes the payments directed by AMH as
and when required.
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6. Conversion of Model.
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6.1 Conversion Prior to Expiration Date. Prior to the Lease Expiration
Date for each Model, Builder shall "Convert" (as defined below) each Model to a
single family residence ready for sale to the public and immediate occupancy. In
no event shall the Lease Expiration Date for any Model occur prior to the
Conversion of such Model.
6.2 Definition of Conversion. As used herein, the term "Convert" (and
its derivations) means (a) the obtaining by Builder of a certificate of
occupancy (or its equivalent in the subject jurisdiction) for the Model, (b)
restoring the Model to the "Acceptable Condition" (as defined below), (c)
completing any other work required to remove special improvements installed for
marketing purposes, and (d) generally transforming the Model and applicable
portions of the model complex to an ordinary, habitable home. Without limiting
the generality of the foregoing, Conversion includes removing and properly
disposing of all asphalt from the applicable model lot used as a parking lot;
transforming all garages used as offices into garages; and removing all
railings, fencing, walls, sidewalks and other devices which were installed to
direct sales traffic to said Model; removing all sales signs and other sales
equipment and fixtures; removing all of Builder's property from the Model;
repainting, cleaning, replacing or repairing, as appropriate, all damages caused
by marketing traffic, Builder's activities or other conversion activities to
bring the Model to the Acceptable Condition (as hereafter defined) and
performing all repairs, retrofits and other work required to make the Model a
fully functioning and occupiable home.
6.3 Acceptable Condition.
6.3.1. Generally, the Acceptable Condition of all mechanical
equipment, appliances and structural components shall be their clean, used,
properly functioning condition with all repairs and maintenance performed to
date and without obvious physical blemish or other signs of deferred maintenance
or physical damage. Such items as fans, air conditioning units, toilets and
plumbing fixtures, ranges, ovens, and lighting fixtures are subject to this
standard.
6.3.2. The Acceptable Condition of all painted items, such as
walls, where the paint is still intact and in good condition is thoroughly
cleaned without visible smudges or other soiling; if there are any areas where
the paint has been removed through abrasion or collision, such areas shall be
repaired and painted with matching paint. The Acceptable Condition of wall
papered surfaces is clean without any obvious physical damage or sagging; areas
of physical damage or sagging shall be replaced with matching wallpaper. The
Acceptable Condition of carpeting is thoroughly cleaned without physical damage
or noticeably worn areas. The Acceptable Condition of all other flooring shall
be thoroughly cleaned. The Acceptable Condition of all brick work and concrete
work shall be clean and without visible physical damage; all physical damage
shall be properly repaired. The Acceptable Condition of drapes, curtains,
blinds, tinting and mirroring and other window coverings and treatments is
thoroughly cleaned and in good mechanical condition. The Acceptable Condition of
any option item or
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upgrades installed in the Models shall be the acceptable condition for similar
features, appliances or surfaces, minimal wear and tear excepted. The buyers of
each model home shall sign an Addendum to the Purchase Agreement (attached as
Exhibit "E") relating to the model home condition.
7. Additional Options.
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At the request of AMH, and upon reasonable notice, Builder shall
install any of those options available, such as home theater equipment and
non-built-in appliances, for a similar production unit which are offered to the
public. AMH shall pay Builder's cost for such options
8. Sales of Models.
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8.1 Marketing Efforts. Subject to Paragraph 5.2 above, Builder shall
use its reasonable efforts to sell each Model on behalf of AMH beginning ninety
(90) days prior to expiration or early termination of the Lease Term. However,
if Builder is unable to sell the Model within sixty (60) days after it commences
its marketing efforts, AMH shall have the right to market the Model at any time
after expiration of such sixty (60) day period upon notice to Builder, and the
right to utilize any marketing methods and techniques commonly utilized in the
same general area and Builder shall discontinue its marketing efforts. This
includes, but is not limited to, (a) listing the Model with a multiple listing
service, (b) listing the Model with a local realtor, (c) placing advertisements
in local media, which advertising is allowed to use the Builder's name, with
Builder's prior written approval, not to be unreasonably withheld and the name
of the Project, and (d) engaging other brokers or sales persons to market the
Model. Notwithstanding the foregoing, in the event Builder elects to exercise
any of its termination rights under Section 5.2 above, any time after five (5)
days after Builder has delivered the applicable Termination Notice to AMH, and
not until, AMH may also place a "For Sale" sign on the front yard of the Model's
lot, and conduct open houses in the Model. Until five (5) days after receipt of
the Termination Notice, AMH shall not place signs on any part of the Model lots
or within the Models. Each party shall conduct its activities in a reasonable
and courteous manner which avoids unnecessary interference with the activities
of the other party. In no event shall the sales price of the units during the
initial ninety (90) day marketing period described above, be less than AMH's
purchase price of the units, as shown in Exhibit "A" plus sales closing costs
not to exceed five (5%) percent.
8.2 Request by AMH for Builder's Assistance. In connection with
Builder's assistance to AMH in selling each Model as provided in Paragraph 8.1
above, Builder shall undertake to sell the Models at a sales price established
by AMH in its sole and absolute discretion (the "Sales Price"). The parties
acknowledge that Builder may have other production homes to market, the sale of
which may directly compete with the sale of the Models. AMH acknowledges the
existence of such conflict of interest and waives any right to object to
Builder's efforts to market its production units at any price it elects. AMH
shall pay Builder a broker's commission equal to three percent (3%) of the Sales
Price as full compensation to Builder for its efforts in selling such Model,
provided Builder sells each unit for the amounts equal to or greater than shown
on Exhibit "B", however, if a cooperating broker is used and
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procures the buyer, Builder shall be entitled to one and one half percent (1.5%)
of the Sales Price. AMH shall be responsible for the payment of a commission to
any cooperating broker not affiliated with Builder.
8.3 Early Sales. If AMH sells the Model(s) prior to the expiration of
the Lease Term in accordance with Paragraph 8.1 above, any purchaser of the
Model(s) shall take title thereto subject to the terms of the Lease. AMH shall
notify Builder of any such sale and shall continue to manage the Lease,
interface with Builder to the exclusion of such purchaser, and shall be liable
for the performance of all obligations of the landlord thereunder
notwithstanding the sale of the Model.
8.4. Unrestricted Sales. Builder shall take all necessary actions to
maintain all units subject to this agreement as fully entitled and title is
transferable to a third party purchaser without any further legislative,
administrative or judicial review or action.
9. Offset Rights.
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If Builder is in default of this Lease, taking into account all
applicable grace and cure periods, AMH shall have the right, but not the
obligation, to offset any amounts owed by AMH to Builder by the amount in
default (or, if applicable, the reasonable amount to cure such default).
10. Customer Service and Warranty by Builder Following Sales.
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Subject to the terms of this paragraph, Builder shall provide customer
service and warranty coverage for a one year period to each purchaser of a Model
the same as if the Model were a production unit and the same as if Builder had
always been the owner of the Model or a one year third party resale warranty.
Without limiting the foregoing, the Builder shall provide the purchaser of a
Model the same warranty as Builder provided to other purchasers in the same
Project or a residential resale warranty paid for by Builder at settlement,
which provides a similar level of coverage described in this paragraph. The
customer service period and warranty coverage shall commence upon the sale of
the Model to a consumer (the "Warranty Commencement Date"). On such date a
warranty or warranties shall be issued to the purchaser/consumer for the Model.
Notwithstanding that components (including but not limited to appliances,
mechanical equipment options and upgrades) of the Model may be used as described
above in this Lease, the Builder's warranty or warranties shall apply to such
components for the longer of one year or the remaining portion of the
manufacturer's original warranty.
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11. Absolute Obligation to Pay Rent.
--------------------------------
This Lease is an "Absolutely Net Lease" and Builder's liability and
obligation to pay the Rent until the termination of the Lease Term of any
Model(s) as prescribed within this Lease is a separate, absolute, unconditional
and independent covenant to be performed notwithstanding any other conditions.
The Builder shall have no right to terminate this Lease except as provided
herein, or to be relieved of any obligation to pay the Rent for any reason
whatsoever not expressly set forth herein, including without limitation, (a) any
set off, counterclaim, defense or other right which the Builder may have against
AMH, (b) any defect in the condition, design, operation or fitness for use of,
or any damage or loss or destruction of the Models or any portion thereof
(including any environmental condition or contamination even if the Builder is
not responsible or liable under this Lease for such condition or contamination),
(c) any interruption or cessation in the use or possession of the Models by the
Builder for any reason whatsoever, (d) the existence of any liens, charges,
security interests or other encumbrances against the Models, (e) any insolvency,
bankruptcy, reorganization or similar proceedings by or against AMH or Builder,
(f) any default by AMH under this Lease or under any instrument to which AMH may
be a party, (g) any change in tax or other laws of the United States, or any
state thereof, or any political subdivision of any of them, (h) any title defect
or encumbrance or any eviction from the Models or any part thereof by title
paramount or otherwise, (i) any change, waiver, extension, indulgence or failure
to perform or comply with, or other action or omission in respect of, any
obligation or liability of AMH contained in this Lease, or (j) any other event
or circumstance whatsoever, whether or not similar or dissimilar to any of the
foregoing and whether or not Builder shall have notice or knowledge of any of
the foregoing. Builder hereby waives, to the extent permitted by applicable law,
any and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Lease except in accordance with the express terms hereof. Except
for any overpayments of Rent (which overpayments shall be credited against the
next installment of Rent then becoming due), each payment of the Rent shall be
final, and Builder shall have no right to seek to recover all or any part of
such payment from AMH for any reason whatsoever, except for prorated rent which
shall be credited to the following month's rent. It is the purpose and intent of
the parties that the Rent paid shall be net to AMH and that all costs and
expenses and charges related to the Models, except for debt service and general
overhead of AMH, shall be paid by Builder.
12. AMH's Voluntary Expenses.
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Builder's obligation to pay those costs, expenses, and charges provided
for in this Lease does not include the obligation to pay any cost, expense or
charge voluntarily incurred by AMH. However, if AMH incurs any cost, expense or
charge which is the obligation of Builder because Builder has failed to pay the
same and has done so in order to protect its interest in the Model(s), upon
fifteen (15) days written notice therefor to Builder, Builder shall be in
default, after expiration of all applicable grace and cure periods, and shall
reimburse AMH immediately upon Builder's receipt of an invoice from AMH
therefor.
9
13. Taxation.
---------
13.1 Payment of Real Property Taxes. Builder shall pay prior to
delinquency all "Real Property Taxes" (as defined below) and "Personal Property
Taxes" (as defined below) levied against the Models and property contained
therein during the term of this Lease and shall, upon request, provide AMH with
evidence of payment satisfactory to AMH. If Builder fails to pay any such taxes,
AMH shall have the right, but not the obligation, to pay the same after delivery
to Builder within thirty (30) days notice, in which case Builder shall repay
such amount to AMH with Builder's next Rent installment together with interest
on such delinquent tax installment at the rate of eighteen percent (18%) per
annum, (the "Interest Rate"). Real Property Taxes for any tax year during which
the Lease Term expires or is terminated shall be prorated.
13.2 Joint Assessment. In the event the Models are not separately
assessed, Builder's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by AMH from the respective
valuations assigned in the Assessor's work sheets or such other information as
may be reasonably available to AMH, with AMH's reasonable and good faith
determination thereof being conclusive.
13.3 Definition of Taxes. As used in this Lease, the term "Real
Property Tax" shall include any form of assessment, levy, penalty or tax (other
than inheritance, estate, net income or franchise taxes) imposed by any
authority having the direct or indirect power to tax, including any city,
county, state or federal government or any school, agricultural, lighting,
drainage or other improvement district thereof, whether such tax is (a) upon,
allocable to or measured by the area or value of the Model or the rental payable
hereunder, including without limitation any gross income tax or excise tax
levied by the state, city or federal government or any political subdivision
thereof, being assessed with respect to the receipt of such rental; or (b) upon
or with respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Builder of the Model(s) or any portion
thereof; or (c) upon or measured by the value of Builder's personal property,
equipment or fixtures located in the Model(s); or (d) upon this transaction or
any document to which Builder is a party creating or transferring an interest or
an estate in the Models; and (e) whether or not any such tax is now customary or
within the contemplation of the parties. As used herein, the term "Personal
Property Tax" shall include all taxes assessed against and levied upon trade
fixtures, furnishings, equipment and all other personal property of Builder
contained in the Models. When possible, Builder shall cause said trade fixtures,
furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of AMH. Builder shall have no obligation to
pay corporate or personal income taxes imposed on AMH or its officers,
directors, employees or shareholders which may become a lien on the Model(s).
10
14. Use.
----
The Models shall be used and occupied by Builder only as model homes
and/or as sales offices for the marketing of other homes in the respective
Projects in compliance with applicable laws and ordinances and for no other
purpose. Builder is the party which designed and constructed the Models and
agrees that they are in every way suitable for the use which Builder intends to
make of them.
15. Utilities.
----------
Builder shall pay, prior to delinquency, bills for all water, gas,
heat, light, power, telephone, sewage, air conditioning and ventilating,
scavenger, janitorial, landscaping and all other materials, services and all
other utilities of every kind and nature supplied to the Models.
16. Maintenance and Repairs.
------------------------
During the Lease Term, the Models shall be kept in good condition with
no deferred maintenance on landscaping, equipment or fixtures. Builder, at
Builder's expense, shall keep in good order, condition and repair the
foundations, exterior walls and the exterior roof of the Models. The Builder
shall also maintain the exterior and the interior surfaces of the Models and
maintain all walls, floors, windows, doors and plate glass, and maintain all
plumbing, heating, air conditioning, ventilating, electrical and lighting
facilities and equipment within the Models and all sidewalks, driveways, parking
lots, fences and signs located in the areas which are adjacent to and included
with the Models. Builder, at its sole cost and expense, agrees to repair any
damage to the Models caused by or in connection with the removal of any articles
of personal property, business or trade fixtures, machinery, equipment, or
furniture.
17. AMH's Right to Maintain.
------------------------
If Builder fails to perform Builder's maintenance obligations as set
forth in Paragraph 16 above, AMH may give Builder written notice to do such acts
as are reasonably required to properly maintain the Models. If Builder fails to
do the work and diligently prosecute it to completion, then AMH shall have the
right (but not the obligation) to do such acts and expend such funds as are
reasonably required to perform such work at the expense of Builder. Any amount
so expended by AMH shall be paid by Builder within five (5) business days after
written demand with interest at the Interest Rate of 3-month LIBOR Rate as
published by the Wall Street Journal on the first business day of the prior
month, plus 650 basis points from the date of such work. AMH shall have no
liability to Builder for any inconvenience or interference with the use of the
Models by Builder as a result of performing any such work.
11
18. Entry for Inspection.
---------------------
AMH and AMH's agents shall have the right during regular business hours
to enter the Models to inspect the same or to maintain or repair the Models or
to show the Models to prospective purchasers or lenders in accordance with the
terms of this Lease. If Builder is in breach of its repair and maintenance
obligations and AMH elects to perform the same, Builder hereby waives any claim
for abatement of Rent or for damages for any injury or inconvenience to or
interference with Builder's business, any loss of occupancy or quiet enjoyment
of the Models, and any other loss occasioned thereby.
19. Sales Reports.
--------------
19.1 Frequency. Builder shall deliver the "Sales Reports" (as defined
in the Purchase Agreement) to AMH once a month. The Sales Report shall be faxed
and then mailed to AMH promptly following its tabulation. However, at any time
demanded in writing and in good faith by AMH, Builder shall provide AMH with
additional sales reports, if required by AMH. Such additional sales reports are
required to disclose only the same type of information as is found in, repeated
in, or summarized in the Sales Reports.
19.2 Confidentiality. AMH shall keep confidential all sales information
and Sales Reports obtained from Builder and shall disclose it only to those who
(a) legitimately and for a valid purpose require such information from AMH as a
condition to doing business with AMH, and (b) who likewise enter into written
agreements covenanting to keep such information confidential unless the prior
written consent of Builder to disclose same is first obtained. Under no
circumstances shall AMH disclose sales information to any home builder or
developer.
19.3 Supplemental Reports. Promptly upon request, Builder shall deliver
to AMH copies of all escrow closing statements and marketing reports (including
without limitation pricing studies) which relate to the Models, which are
prepared in the ordinary course of Builder's business and which relate to the
sales and marketing of homes or condominiums within a given subdivision
designated in the Model Chart, as revised from time to time, in which there is
then one or more Models then covered hereunder.
20. Liens.
------
20.1 Generally. Builder shall keep each Model free from any liens
arising out of work performed, materials furnished or obligations incurred by or
on behalf of Builder. Builder shall indemnify, defend and hold AMH and each
Model harmless from any liens and encumbrances arising out of any work performed
or materials furnished by or at the direction of Builder. If Builder fails to
obtain the release of any lien within twenty (20) days of its imposition AMH may
require Builder to post a bond equal to the greater of (a) one hundred twenty
percent (120%) of the amount of the lien or encumbrance or (b) such security as
may be required by local law in order to dispute the imposition of the lien, and
AMH shall have the right (if Builder fails
12
to post the bond), but not the obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise
to such lien notwithstanding the fault or relative fault of the parties. All
such sums paid by AMH and all expenses incurred by it in connection therewith
including attorney's fees and costs shall be payable to AMH by Builder on demand
with interest at the Interest Rate.
20.2 Builder's Right to Challenge. Notwithstanding the provisions of
Paragraph 20.1 above, so long as Builder has posted security as is required by
local law to challenge the imposition of a lien of the type described in
Paragraph 20.1 above and so long as Builder is processing its challenge in a
diligent manner which does not create a risk that the lien shall be foreclosed
or which prevents AMH from selling the Model(s) in question, AMH shall allow
Builder to prosecute such challenge. However, AMH's cooperation with Builder's
challenge shall not constitute a waiver or release of any right of AMH against
Builder. Builder shall be responsible in all respects for any and all damages
suffered by AMH as a result of Builder's challenge. AMH shall be entitled to
proceed directly against Builder to recover such damages; AMH is not required to
rely upon the posted security to make it whole in such matter.
20.3 Notices of Non-Responsibility. AMH shall have the right at all
times to post and keep posted on the Models any notices of non-responsibility or
other notices permitted or required by law for the protection of AMH, the Models
and other parties having an interest therein, from liability for mechanics' and
materialmen's liens.
21. Indemnity of AMH and Property by Builder.
-----------------------------------------
Builder shall indemnify and hold AMH, its shareholders, officers,
directors, employees, financial partners, and lenders ("AMH and Related
Persons") and the Models harmless from and against any and all claims of
liability for any injury or damage to any person or property arising from
Builder's prior ownership and/or use of the Models, or from the conduct of
Builder's business, or from any activity, work or thing done, permitted or
suffered by Builder in or about the Models, the Project or elsewhere. Builder
shall further indemnify and hold AMH and Related Persons and the Models harmless
from and against any and all claims arising from any breach or default in the
performance of any obligation of Builder to be performed under this Lease, or
arising from any negligence of Builder or Builder's agents, contractors or
employees, and from and against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon. In the event any action or proceeding is brought
against AMH or Related Persons by reason of any such claim, Builder, upon notice
from AMH or Related Persons, shall defend same at Builder's expense by counsel
reasonably satisfactory to AMH or Related Persons. Builder, as a material part
of the consideration to AMH and Related Persons, hereby assumes all risk of
damage to property or injury to persons, in, upon or about the Models arising
from any cause. Except for the negligence or intentional misconduct of AMH and
Related Persons or its contractors or employees, Builder hereby waives all
claims in respect thereof against AMH and Related Persons. Other than as set
forth above, Builder hereby indemnifies, defends and agrees to hold AMH and
Related Persons harmless from any and all liability arising out of the ownership
of the Models during the Lease Term. In addition to the foregoing, Builder shall
indemnify and hold
13
AMH and Related persons and their successors and assigns harmless from and
against any and all claims, demands, causes of action, damages, costs, expenses,
lawsuits and liabilities, at law or in equity, of every kind or nature
whatsoever, directly or indirectly arising out of or attributable to Hazardous
Materials (as defined on Exhibit "H"), affecting the Model(s) or the Project
including the use, generation, storage, release, threatened release, discharge,
disposal or presence of Hazardous Materials on, under or about the Models
(whether occurring prior to or during the term of the ownership of the Models by
AMH or otherwise and regardless of by whom caused, whether by Builder or any
predecessor in title or any owner of land adjacent to the Models or any other
third party, or any employee, agent, tenant of any other third party, or any
employee, agent, tenant, contractor or subcontractor of Builder, or any
predecessor in title or any such adjacent land owner) including, without
limitation; the following as they relate to the Model(s) or the Project(s):
1) Claims of third parties (including governmental agencies)
for injury to or death of any person or for damage to or destruction of any
property;
2) Claims for response costs, clean-up costs, costs and
expenses of removal and restoration, including fees of attorneys and experts,
and costs of determining the existence of Hazardous Materials and reporting same
to any governmental agency;
3) Any and all other claims for expenses or obligations,
including attorneys' fees, costs, and other expenses related to Hazardous
Materials and the Models;
4) Any and all penalties threatened, sought or imposed on
account of a violation of any Hazardous Materials Laws;
5) Any loss occasioned by diminution in the value of the
Models which may result from any of the foregoing, and (b) soils settlement,
soils subsidence, and other soils problems and defects. Notwithstanding the
foregoing, Builder's indemnification and defense obligations to AMH and Related
Persons as set forth in this Paragraph 21 shall not apply to any claim,
liability, loss or expense arising out of the acts, including negligent or
intentional wrongful acts, or failures to act by AMH and/or Related Persons, or
AMH's contractors or employees.
22. Insurance.
----------
22.1 Liability Insurance. The Builder shall, at Builder's sole cost and
expense, procure and maintain at all times during the term of this Lease a
policy of commercial general liability insurance insuring Builder, and naming
AMH as an additional insured, against any liability arising out of the
ownership, use, occupancy, or maintenance of the Models and appurtenant areas.
Such insurance shall at all times be in an amount of not less than $1,000,000.00
for injury to or death of any one, or more than one, person in any one accident
or occurrence, and in an amount of not less than $500,000.00 for liability for
property damage. Builder shall provide AMH with certificates of insurance
evidencing such insurance coverage prior to the applicable Lease Commencement
Date and whenever reasonably requested by AMH. No policy of liability
14
insurance procured by or on behalf of Builder as required hereunder shall be
cancelable or subject to reduction of coverage or other modification except at
Builder's expense after thirty (30) days prior written notice to AMH by the
insurer. All such policies shall be written as primary policies, not
contributing with and not in excess of coverage which AMH may carry. Builder
shall, within thirty (30) days prior to the expiration of such policy, furnish
AMH with evidence of renewals or binders. Builder shall have the right to
provide such insurance coverage pursuant to blanket policies obtained by Builder
provided such blanket policies expressly afford coverage for the Models and to
Builder as required by this Lease.
22.2 Property Insurance. Builder, at Builder's expense, shall procure
and maintain at all times during the term of this Lease a policy or policies of
insurance covering loss or damage to the Models in the amount of the full
replacement value thereof (exclusive of Builder's trade fixtures and equipment
but including all options, extras and upgrades) providing protection against all
perils included within the classification of fire, extended coverage, vandalism,
malicious mischief, sprinkler leakage and special extended peril (all-risk).
Certificates evidencing such insurance shall be delivered to AMH prior to the
Lease Commencement Date. Such insurance shall provide for payment of loss
thereunder to AMH or secured lenders or partners/financiers as their interests
may appear.
22.3 Waiver of Subrogation. AMH and Builder each hereby waive any and
all rights of recovery against the other and against the officers, employees,
agents and representatives of the other, on account of loss or damage occasioned
to such waiving party of its property or the property of others under its
control caused by fire or any of the extended coverage risks described above to
the extent that such loss or damage is required to be insured against under this
Lease. The insuring party shall, upon obtaining the policies of insurance
required under this Lease, give notice to the insurance carrier or carriers that
the foregoing mutual waiver of subrogation is contained in this Lease.
23. Damage or Destruction.
----------------------
If a Model is damaged, whether partially or completely, by any casualty
at any time during the Lease Term, Builder shall have the option of either (i)
repairing such damage and rebuilding the Model at Builder's sole cost and
expense (for any costs not covered by insurance) as soon as reasonably possible
and this Lease shall continue in full force and effect, or (ii) terminating the
Lease by paying the "Release Price" for the Model as set forth in Exhibit "C"
hereof. In either event, there shall be no abatement of Rent during any period
of repair or reconstruction unless caused by AMH. Furthermore the Model shall be
reconstructed to the same plans and specifications as originally constructed and
finished in first class, lien free and new condition.
24. Assignment & Subletting.
------------------------
24.1 AMH's Consent Required. Builder shall not assign, transfer,
mortgage, pledge, hypothecate or encumber (referred to collectively as
"Assignment") this Lease or any interest
15
herein, and shall not sublet the Models or any part thereof, without the prior
written consent of AMH, and any attempt to do so without such consent being
first had and obtained shall be wholly void and shall constitute a breach of
this Lease, subject to applicable cure and grace periods. The foregoing
provisions shall not apply to any Assignment by Builder to any affiliate or
successor in interest of Builder, and AMH's consent shall not be required so
long as Builder provides AMH with prior notice of such an Assignment. Notice is
hereby given of Builder's and Guarantor's intention to form "drop down"
subsidiaries to which all assets, liabilities and obligations will be
transferred concurrent with the Builder's and Guarantor's merger into Homeplex
Mortgage Investment Corporation (Homeplex). Homeplex will sign a guarantee of
the lease concurrently with the merger. Notwithstanding any contrary provision
herein, AMH shall not unreasonably withhold or delay its consent to any
collateral assignment or other encumbrance of the Lease by Builder to any and
all institutional lenders with loans secured by interests in the Projects from
time to time.
24.2 No Release of Builder. No consent by AMH to any assignment or
subletting by Builder, nor any Assignment to an affiliate of Builder, shall
relieve Builder of any obligation to be performed by the Builder under this
Lease, whether occurring before or after such consent, assignment, subletting or
after Assignment to an affiliate of Builder. The consent by AMH to any
assignment or subletting shall not relieve Builder from the obligation to obtain
AMH's express written consent to any other assignment or subletting. The
acceptance of Rent by AMH from any other person shall not be deemed to be a
waiver by AMH of any provision of this Lease or to be a consent to any
assignment, subletting or other transfer. Consent to one assignment, subletting
or other transfer shall not be deemed to constitute consent to any subsequent
assignment, subletting or other transfer.
24.3 Collateral Assignment by AMH. AMH shall have the right, without
obtaining the consent of Builder, to assign this Lease as collateral to secure
repayment of financing obtained by AMH. Such an assignment for collateral
purposes shall not affect any of the rights and duties of the parties hereunder.
25. Subordination.
--------------
25.1 Generally. This Lease, at AMH's election, shall be subject and
subordinate to the lien of any mortgages or deeds of trust in any amount or
amounts whatsoever hereafter placed on or against the land or improvements or
either thereof, or on or against AMH's interest or estate therein, without the
necessity of the execution and delivery of any further instruments on the part
of Builder to effectuate such subordination. Such election may be made by AMH by
unilaterally recording a declaration of subordination in the official records of
the county in which the Models are located. Such recorded, written election
shall have the effect of subordinating this Lease to the mortgage or deed of
trust described in such election. Any mortgagee or beneficiary of a deed of
trust may also elect to have this Lease prior to the lien of its mortgage or
deed of trust by giving notice thereof to AMH and to Builder.
16
25.2 Subordination Agreements/Non-Disturbance. Builder covenants and
agrees to execute and deliver upon demand without charge therefore such further
instruments evidencing such subordination of this Lease to such mortgages or
deeds of trust as may be reasonably required by AMH. If requested, AMH shall
provide Builder with non-disturbance and attornment agreements from secured
parties for Builder's execution concurrently with closing and executing the
lease.
25.3 Quiet Enjoyment. AMH covenants and agrees with Builder that upon
Builder paying Rent and other monetary sums due under the Lease and performing
its covenants and conditions, Builder shall and may peaceably and quietly have,
hold and enjoy the Models for the Lease Term.
25.4 Covenant to Pay. So long as Builder has paid the rent when due,
AMH covenants and agrees to pay when due the obligations under all Deeds of
Trust encumbering the Models(s) and in the event AMH fails to satisfy any
obligation under any said Deed of Trust, Builder shall have the right, but not
the obligation, to cure any said default and AMH shall reimburse Builder
therefore, immediately on demand. AMH shall give Builder prior written notice of
any material modifications to any deed of trust encumbering a model which would
materially affect Builder rights under this Lease.
26. Default; Remedies.
------------------
26.1 Default. The occurrence of any of the following with respect to
any Model shall constitute a default of this Lease by Builder with respect to
that Model, or, at the election of AMH, with respect to all the Models.
26.1.1 Any failure by Builder to pay the Rent under Paragraph
4.1 and 4.2 above after becoming due, it being understood that BUILDER SHALL
HAVE NO GRACE PERIOD AND SUCH FAILURE SHALL BE AN IMMEDIATE DEFAULT HEREUNDER.
26.1.2 The abandonment or vacation of a Model by Builder
without the written consent of AMH as provided in Paragraph 5.2 above, it being
understood, however, that if Builder promptly provides AMH with a Termination
Notice in connection with such vacation or abandonment, Builder shall have the
right to terminate the Lease for the Model in question, provided that the
minimum lease term, as shown on Exhibit "G", has expired or, pursuant and
subject to the provisions of Paragraph 5.2 above, in which event Builder shall
not be in default hereunder so long as (i) Builder pays AMH the appropriate
Release Price for such Model, if applicable, and (ii) Builder remains obligated
to pay Rent for such Model (with the Lease for such Model to remain in effect)
for a period of at least ninety (90) days beginning on the date the Termination
Notice was received by AMH. Builder shall have five (5) days after receiving
written notification from AMH to cure the unauthorized abandonment or vacation
of a Model by
17
Builder. If Builder is in default under any provisions of this Paragraph 26,
Builder may not terminate, assign or transfer the lease on any unit nor attempt
to sell any unit without the prior written consent of AMH.
26.1.3 A failure by Builder to observe and perform any other
material provisions of this Lease to be observed or performed by Builder with
respect to any Model, which failure continues for thirty (30) days after written
notification from AMH to Builder of Builder's failure to observe or perform the
obligation in question; provided, however, if the nature of such default is such
that the same cannot reasonably be cured within such thirty (30) day period,
Builder shall not be deemed to be in default if Builder, within such period,
commences such cure and thereafter diligently prosecutes the same to completion.
26.1.4 A default by Builder of its obligations under the
Purchase Agreement, taking into account all applicable grace and cure periods,
including without limitation the obligations of Builder set forth in Paragraph 4
therein.
26.1.5 The making by Builder of any general assignment or
general arrangement for the benefit of creditors; the filing by or against
Builder of a petition to have Builder adjudged a bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in
the case of a petition filed against Builder, the same is dismissed within sixty
(60) days); the appointment of a trustee or receiver to take possession of
substantially all of Builder's assets or of Builder's interest in this Lease,
where possession is not restored to Builder within thirty (30) days; or the
attachment, execution or other judicial seizure of substantially all of
Builder's assets or of Builder's interest in this Lease where such seizure is
not discharged within thirty (30) days. Builder may not terminate any lease on
any unit while a default exists under this Paragraph 26.1.5.
26.2 Remedies. In the event of any such default by Builder with respect
to any Model, AMH may, at any time after any applicable grace period has
expired, exercise any of the following rights and remedies with respect to that
Model or with respect to all Models, with notice and demand, and without
limiting AMH in the exercise of any right or remedy at law or in equity which
AMH may have by reason of such default or breach:
26.2.1 Maintain this Lease in full force and effect and
recover the Rent and other monetary charges as they become due, without
terminating Builder's right to possession, irrespective of whether Builder shall
have abandoned the Model or other Models. In the event AMH elects to not
terminate the Lease, AMH shall have the right to attempt to re-let the Model or
the Models at such rent and upon such conditions and for such a term as AMH
deems desirable. In this connection, AMH shall have the right to enter into an
agreement to sell the Model or Models, and AMH shall have the right to take all
acts necessary to maintain or preserve the Model or Models as AMH deems
reasonable and necessary without being deemed to have elected to terminate the
Lease, including removal of all persons and property from the Model or Models by
lawful means; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Builder. In the event any such
reletting occurs, this Lease shall terminate automatically upon the new tenant
taking possession of the Model or
19
Models. If AMH sells the Model or Models, the Lease shall terminate
automatically upon the close of escrow for such Model or Models.
26.2.2 Terminate Builder's right to possession of a Model or
Models by any lawful means, in which case this Lease shall terminate and Builder
shall immediately surrender possession of the designated Model or Models to AMH.
In such event AMH shall be entitled to recover from Builder all damages incurred
by AMH by reason of Builder's default including without limitation thereto, the
following: (a) the amount of any unpaid Rent which had been earned at the time
of such termination by AMH plus interest thereon from the date of the default at
the rate of 18% per annum, plus (b) the amount by which the unpaid rent which
would have been earned after termination by AMH until the time of award exceeds
the amount of such Rental loss that is proved could have been reasonably avoided
plus interest on such excess from the date of termination at the rate of
eighteen percent (18%) per annum by law; plus (c) the amount by which the unpaid
Rent for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that is proved could be reasonably avoided by
reletting or selling or otherwise; plus (d) any other amount necessary to
compensate AMH for all the detriment proximately caused by Builder's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom; plus (e) at AMH's election, such
other amounts in addition to or in lieu of the foregoing as may be permitted
from time to time by applicable state law. Upon any such termination and
re-entry AMH shall have the right to make any reasonable repairs, alterations or
modifications to the Models which AMH in its sole discretion deems reasonable
and necessary. As used in clause (c) of the second sentence of this
subparagraph, the "worth at the time of award" is computed by discounting future
rents payable for the remainder of the Lease Term at the discount rate of the
U.S. Federal Reserve bank at the time of award plus one percent (1%).
26.3 Late Charges. Builder hereby acknowledges that late payment by
Builder to AMH of Rent and other sums due hereunder will cause AMH to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on AMH
by the terms of any mortgage or trust deed covering the Models. Accordingly, if
any installment of Rent or any other sum due from Builder shall not be received
by AMH or AMH's designee when due, Builder shall pay to AMH a late charge equal
to six percent (6%) of such overdue amount. The parties hereby agree that such
late charge represents a fair and reasonable estimate of the costs AMH will
incur by reason of late payment by Builder. Acceptance of such late charge by
AMH shall in no event constitute a waiver of Builder's default with respect to
such overdue amount, nor prevent AMH from exercising any of the other rights and
remedies granted hereunder.
26.4 Default by AMH. AMH shall not be in default unless AMH fails to
perform obligations required of AMH after receiving notification of such failure
from Builder. However, if the cure of the default cannot be completed
immediately, AMH shall have a reasonable period of time to complete the cure of
such default provided that (a) AMH commences to cure such default immediately
upon receipt of Builder's notice, and (b) AMH diligently and without
interruption pursues such cure to completion.
19
26.5 No Waiver of Remedies. AMH's exercise of any remedy provided for
herein with respect to a Model or the Models shall not preclude pursuit of any
other remedy provided for herein or of any other remedy provided by law. AMH's
exercise of any remedy provided for herein shall not constitute a forfeiture or
waiver of any monthly installment of Rent payable to AMH hereunder or of any
damages accruing to AMH by reason of Builder's violation of any of the terms,
provisions and covenants herein contained. Forbearance by AMH to enforce one or
more of the remedies herein provided shall not be deemed or construed to
constitute a waiver of any other violation or default. The loss or damage that
AMH may suffer by reason of termination of this Lease or the deficiency from any
reletting as provided for above shall include the expense of repossession,
necessary travel costs from Orange County, California to the Model or Models to
take such action as may be required, the costs of Conversion, the costs of
(reletting including brokers commissions), marketing costs (including brokers
commissions), any necessary alterations or repairs undertaken by AMH following
possession, reasonable attorneys fees, and all other damages AMH may incur by
reason of such default. The prevailing party in any suit or other action arising
out of or in connection with this Lease shall be awarded reasonable attorneys'
fees, reasonable expert and non-expert witness costs and expenses, and other
reasonable costs and expenses, including reasonable travel costs, incurred in
connection with that suit.
27. Guaranty.
---------
AMH and Builder acknowledge and agree that the delivery by Builder to
AMH of a guaranty of Builder's obligations pursuant to the Purchase Agreement
and this Lease, executed by the Guarantor identified in Exhibit "F" attached to
the Purchase Agreement, is a material consideration for AMH's execution of the
Purchase Agreement and this Lease and that AMH would not execute and deliver the
Purchase Agreement and this Lease but for such guaranty. Accordingly,
concurrently with the execution and delivery of the Purchase Agreement and this
Lease by Builder, Builder shall deliver to AMH a written guaranty executed by
Guarantor in the form of Exhibit "F" attached to the Purchase Agreement.
28. Miscellaneous.
--------------
28.1 Estoppel Certificate. Builder shall, at any time upon not less
than ten (10) days prior written notice from AMH execute, acknowledge and
deliver to AMH a statement in writing (a) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the Rent and other charges are paid in
advance, if any, and (b) acknowledging that there are not, to Builder's
knowledge, any uncured defaults on the part of AMH hereunder, or specifying such
defaults if any are claimed. Any such statement may be conclusively relied upon
by a prospective purchaser or encumbrancer of the Model(s). Builder's failure to
deliver such statement within such time shall be conclusive upon Builder (a)
that this Lease is in full force and effect, without modification except as may
be represented by AMH, (b) that there are no uncured defaults in AMH's
performances and (c) that not more than one month's
20
Rent has been paid in advance. If AMH desires to finance or refinance said
Models, or any part thereof, Builder hereby agrees to deliver to any lender
designated by AMH such public financial statements of Builder as may be
reasonably required by such lender. All such financial statements shall be
received by AMH in confidence and shall be used only for the purposes herein set
forth.
28.2 Entire Agreement. This instrument along with any exhibits and
attachments hereto, and along with the Purchase Agreement and Exhibits thereto,
constitutes the entire agreement between AMH and Builder relative to the Models,
and this Lease and the exhibits and attachments may be altered, amended or
revoked only by an instrument in writing signed by both AMH and Builder. AMH and
Builder agree hereby that all prior or contemporaneous oral or written
agreements between and among themselves and their agents or representative
relative to the leasing of the Models are merged in or revoked by this Lease.
28.3 Severability. If any term or provision of this Lease shall, to any
extent, be determined by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each term and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
28.4 Costs of Suit. Should AMH be made a party to any litigation
instituted by any third party against Builder and/or AMH, arising out of AMH's
ownership of the models, or for the foreclosure of any lien for labor or
material furnished to or for Builder or any such other person acting on behalf
of Builder or otherwise arising out of or resulting from any act or transaction
of Builder or of any such other person, acting on behalf of the Builder, Builder
covenants to save and hold AMH harmless from any judgment rendered against AMH
or the Models, or any part thereof, and from all costs and expenses, including
reasonable attorneys' fees, incurred by AMH in or in connection with such
litigation. Any liens created by AMH shall be the sole responsibility of AMH.
28.5 Binding Effect; Choice of Law. All of the provisions of this Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. This Lease
shall be deemed executed in the State of California and the laws of the State of
California shall govern this Lease. All disputes with Builder shall be resolved
in the court of appropriate jurisdiction in the State of California.
28.6 Surrender of Models. The voluntary or other surrender of this
Lease, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of AMH, terminate all or any existing subleases or subtenancies, or
may, at the option of AMH, operate as an assignment to it of any or all such
subleases or subtenancies.
28.7 Holding Over. If Builder remains in possession of all or any part
of the Models after the expiration of the Lease Term hereof, with or without the
express or implied consent of AMH, such tenancy shall be from month to month
only, and not a renewal hereof or an extension for any further term, and in such
case, Rent and other monetary sums due hereunder shall be payable in the amount
and at the time specified in this Lease and such month to month tenancy
21
shall be subject to every other term, covenant and agreement contained herein.
Notwithstanding anything contained in the immediately preceding sentence but
subject to paragraph 5.2.1 above, after the expiration of the Lease Term with
respect to any Model, AMH may terminate Builder's tenancy in that Model by
giving Builder ten (10) days written notice of the termination.
28.8 Recording. Builder shall not record this Lease nor a memorandum of
this Lease, and such recordation shall, at the option of AMH, constitute a
non-curable default of Builder hereunder.
28.9 Notices. All notices, requests, demands and other communication
given or required to be given hereunder shall be in writing and personally
delivered or sent by United States registered or certified mail, return receipt
requested, or sent by nationally recognized courier service such as Federal
Express. The parties may also deliver notices to each other by electronically
transmitted facsimile copies ("FAX"). Notices shall be addressed to the parties
to the respective addresses set forth below. Delivery of any notice or other
communication hereunder shall be deemed made on the date of actual delivery
thereof to the address of the addressee, if personally delivered, and on the
date indicated in the return receipt or courier's records as the date of
delivery or as the date of first attempted delivery, if sent by mail or courier
service. Any notice sent by FAX shall be deemed to be received as of the receipt
of such FAX by a party, provided that such FAX notice is followed up within
twenty-four (24) hours by any type of notice otherwise provided for in this
Paragraph 28.9. Any party may change its address for purposes of this Paragraph
28.9 by giving notice to the other party as herein provided.
TO BUILDER: MONTEREY HOME CORPORATION
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (PHONE) (▇▇▇) ▇▇▇-▇▇▇▇ (FAX)
and
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇
500 Dial Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇ FAX
TO AMH: c/o AMHM-1, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (PHONE) (▇▇▇) ▇▇▇-▇▇▇▇ (FAX)
22
28.10 Time. Time is of the essence of this Lease with respect to the
performance of every provision of the Lease in which time of performance is a
factor.
28.11 Reasonableness. Whenever this Lease permits any party the right
to request or require documents or other information, such party shall act
reasonably and in good faith.
IN WITNESS WHEREOF, AMH and Builder have each executed this Lease as of
the date first indicated above.
AMH: AMHM-1, L.P., a California limited partnership
Date of Execution: By: AMHW Corp., a California corporation
Dec. 20, 1996 General Partner
---------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇, Executive Vice President
BUILDER: MONTEREY HOMES ARIZONA II, INC.
an Arizona Corporation
Date of Execution: By: /s/ ▇▇▇▇▇ ▇▇▇▇ VP
12/20/96 --------------------------------------------
--------------- ▇▇▇▇▇ ▇▇▇▇, Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
23
List of Exhibits
----------------
Exhibit "A" Model Chart and Purchase Price Schedule
Exhibit "B" Early Termination Release Prices
Exhibit "C" Form of Sales Report
Exhibit "D" Form of Acknowledgment of Lease Term Expiration
Exhibit "E" Buyer's Addendum #1 to Real Estate Purchase Contract
Exhibit "F" Guarantee
Exhibit "G" Minimum Lease Term and Termination Schedule
Exhibit "H" Hazardous Materials Laws and Hazardous Materials Definition
Model Chart
Phoenix - 1
Exhibit "A"
MONTERY
AMH / Monterey Homes - Phoenix
Annual Rent
House Model Plan Lot Total AMH LIBOR + Lease
# Subdivision Name # # Address Town State Sq. Ft. AMH 640 b.p. Term
Price Monthly Rent
------------------------------------------------------------------------------------------------------------------------------------
12.0%
(1)
1 Canada Vistas Cancun 9312 16 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 2,905 $ 355,000 $ 3,550 6 Months
2 Grayhawk Siena 9525 112 ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 2,885 $ 260,000 $ 2,600 1 Year (2)
------------------------------------------------------------------------------------------------------------------------
3 Palos Verdes Valencia 9527 3 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ 3,047 $ 270,000 $ 2,700 6 Months
4 Palos Verdes Montecito 9522 5 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ 2,298 $ 200,000 $ 2,000 6 Months
------------------------------------------------------------------------------------------------------------------------
5 Sunridge Veracruz 9317 25 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 3,710 $ 440,000 $ 4,440 1 Year (2)
------------------------------------------------------------------------------------------------------------------------
PHOENIX TOTAL 14,845 $ 1,525,000 $15,250
AMH / Monterey Homes - TUCSON
Annual Rent
House Model Plan Lot Total LIBOR + Lease
# Subdivision Name # # Address Town State Sq. Ft. AMH 640 b.p. Term
Price Monthly Rent
------------------------------------------------------------------------------------------------------------------------------------
12.0%
(1)
1 The Estates Ventana 9403 38 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 4,279 $405,000 $4,050 1 Year (2)
2 The Estates Taos 9402 39 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 3,672 $435,000 $4,350 1 Year (2)
--------------------------------------------------------------------------------------------------------------------
3 The Retreat Palazzo 9523 360 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 2,372 $225,000 $2,250 1 Year (2)
4 The Retreat Valencia 9526 361 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 3,047 $290,000 $2,900 1 Year (2)
5 The Retreat ▇▇▇▇▇▇ 9521 362 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 1,968 $230,000 $2,700 1 Year (2)
6 The Retreat Montecito 9522 363 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 2,298 $220,000 $2,200 1 Year (2)
--------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 9311 305 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 2,630 $260,000 $2,600 1 Year
8 The Park Veracruz 9317 306 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 3,710 $355,000 $3,550 1 Year
9 The Park Cancun 9312 307 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ 2,905 $280,000 $2,800 1 Year
--------------------------------------------------------------------------------------------------------------------
TUCSON TOTAL 26,881 $2,700,000 $27,000
--------------------------------------------------------------------------------------------------------------------
MONTEREY TOTAL 41,726 $4,225,000 $42,250
(1) Start rate of 11.5% annual rate for initial 3 months, then adjustable
monthly based on 90 LIBOR + 650 basis points
(2) Lease term of one (1) year plus up to two (2) six (6) month options
Monterey Homes
Phoenix - 1
Exhibit "B"
L8EX6
AMH / Monterey Homes - Phoenix
Early Minimum
House Model Plan ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
# ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ # # ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Price Price
------------------------------------------------------------------------------------------------------------------------------------
1 Canada Vistas Cancun 9312 16 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ $405,000 $400,000
2 Grayhawk Siena 9525 112 ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ $305,000 $300,000
3 Palos Verdes Valencia 9527 3 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $305,000 $300,000
4 Palos Verdes Montecito 9522 5 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ $235,000 $230,000
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ 25 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ $495,000 $490,000
AMH / Monterey Homes - Tucson
(1) (2)
Early Minimum
House Model Plan Lot Termination Sales
# Subdivision Name # # Address Town State Price Price
------------------------------------------------------------------------------------------------------------------------------------
1 The Estates Ventana 9403 38 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
2 The Estates Taos 9402 39 ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
3 The Retreat Palazzo 9523 360 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
4 The Retreat Valencia 9526 361 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
5 The Retreat ▇▇▇▇▇▇ 9521 362 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
6 The Retreat Montecito 9522 363 ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 9311 305 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
8 The Park Veracruz 9317 306 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
9 The Park Cancun 9312 307 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ (1) (2)
(1) Appraised value as determined by independent apprisal at the time of Lease
Termination Notice, plus $5,000.00
(2) Appraised value as determined by independent appraisal at the time of Lease
Termination Notice.
EXHIBIT "C"
[OMITTED]
EXHIBIT "D"
FORM OF ACKNOWLEDGMENT OF LEASE TERM EXPIRATION
House No. ____________________________
Builder: _____________________________
City: ________________________________
1. City: _________________________________________________________________
2. Name of Project: ______________________________________________________
3. Legal Description:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The Lease Expiration Date for the Model described above was or will be the
_____day of _____________, 19____.
Dated: ___________________________
AMHM-1, L.P., a California MONTEREY HOMES ARIZONA II, INC.
limited partnership an Arizona Corporation
By: AMHW Corp., a California By: _____________________________
corporation, Its: _____________________________
its general partner
By: _____________________________ By: _____________________________
Its: _____________________________ Its: _____________________________
EXHIBIT "E"
Addendum #1 to Real Estate Purchase Contract
--------------------------------------------
This Addendum, when executed together with the Real Estate Purchase Contract
(the "Contract") will further describe the terms and understandings between
Buyer and Seller concerning the property at:
Address:_____________________________________________________
IMPORTANT: The Terms and Conditions of This Addendum Shall Supersede Any Terms
and Conditions to the Contrary in the Real Estate Purchase Contract:
1. Buyer understands that the above referenced property has been used as a model
home and / or sales facility by Monterey Homes ("Builder"). Considering the
purpose of a display model home, Buyer understands that although the home has
not been used as a residence, there is a certain amount of wear and / or use
that prevents Seller from warranting this property as a new home.
2. Since the model may have been constructed with certain options, features and
landscaping, along with decorator items which are not available through the
Builder and, since the date these items were installed, there exists the
possibility that these options or items have been changed or discontinued due to
availability, the Seller cannot warrant or be responsible for replacement of
these items other than what is specifically written in the Agreement.
3. Seller agrees to provide the Buyer with a one-year home warranty effective
upon closing or settlement and the remainder of the Builder's structural
warranty applicable to the home, if any. The one-year warranty shall be either a
commercially available warranty from a reliable company selected by Seller or
the Builder's warranty. The terms and Conditions of the warranty(s) shall be per
the Warranty Booklet(s) issued to Buyer at settlement or close of escrow.
4. EXTERIOR
LANDSCAPING - Builder may have installed and maintained various types
of trees and shrubs and ground cover. There is no warranty on any landscaping
items. Seller agrees to maintain the property in a diligent manner up to closing
or settlement. Any necessary replacement of trees, shrubs, plants or grass
during the escrow period will be at the sole discretion of the Seller.
Replacements may not be restricted to same size or type of landscaping being
replaced.
SPRINKLER SYSTEM - Underground sprinkler systems and related devices
are not covered by warranty and are the sole responsibility of Buyer from close
of escrow. Any adjustments or changes in the system after closing or settlement
are the Buyer's responsibility.
CONCRETE DRIVES, WALKS AND PATIOS - Buyer accepts "AS IS".
LIGHTING-Builder may have attached additional exterior lights for
display purposes. Seller will warrant these as pa rt of the standard one year
warranty. Other lighting not attached to the home will be removed at the
Builder's discretion and electrical capped off. Exterior light bulbs or globes
are not warranted.
5. INTERIOR
SALES OFFICES AND DESIGN CENTERS - If areas of the interior of the home
have been used as a sales office, design center or other model related use,
Seller will make modifications to the space to conform with production homes of
the same model and such work shall be complete at the time of closing or
settlement.
1
HARD FLOOR COVERING & CARPETING - Since the model homes receive a great
amount of foot traffic from interested buyers, there is no warranty coverage for
minor wear, stains, scratches or discoloration due to fading. The carpet will be
professionally cleaned prior to closing or settlement for your convenience.
WALLS - The models may be displayed with various types of wall
treatments, including special decorator paints, wallpaper, paneling, built-in
shelves, draperies or partial window coverings. The wallpaper and paneling will
be accepted "AS IS". Cabinets and countertops throughout the home will be
accepted "AS IS" with Buyer's acknowledgment that minor wear, scratches or
discoloration could exist. Buyer understands that nails or nail holes for
pictures do exist and there is possible fading around non-permanent wall
decorations which are not included in this sale. Built-in units are accepted "AS
IS" and are not the responsibility of Seller past closing or settlement.
Draperies and window coverings are decorator items. Buyer understands that some
are functional and some may not be functional but decorative only. Buyer accepts
these items "AS IS". Buyer should be aware that installation of these window
coverings might not support any additional draperies without reinforcements of
rods to the wall. Walls painted any other than Builder's standard "white" may
not be accurately matched and will not be touched up prior to closing or
settlement. Any repairs by Seller that involve or affect a decorator treatment
will not obligate Seller to match or replace that treatment.
Seller may make substitutions at Seller's discretion.
6. GARAGE - If the garage has been used as a sales office or for some other
model related use, Seller will make modifications to conform with normal
production homes and such work shall be complete at the time of closing or
settlement.
7. FENCING - Seller will provide rear yard fencing to conform with Builder's
normal fencing policy, if any. Material will be the same as included in
production homes delivered by Builder and the work shall be complete at time of
close of escrow or settlement.
8. MISCELLANEOUS - Buyer understands that for security or control purposes
Builder has made some modifications to the property or home. These include, but
are not limited to: windows screwed shut, installation of additional walks and
installation of wrought iron trap fences in the front yards. Seller will remove
screws from windows, remove additional walkways in front yard and trap fences.
Minor touch up will be done at Seller's discretion and is not an obligation of
Seller. Builder may have obtained various use permits or variances from local
governing bodies to merchandise the model homes. Buyer agrees to hold Seller
harmless in their application or use by Buyer. Buyer agrees to allow Seller to
change any item required by governing agencies to conform to code.
AGREED AND ACCEPTED:
SELLER.- AMHM-1, L. P. BUYER:_______________________
By: AMHW Corp. _______________________
Its: General Partner
By:______________________________
Its:_____________________________
2
IN WITNESS WHEREOF, the parties have executed this Guarantee as of the
date and year first set forth above.
AMHM-1, L.P., a California limited partnership
By: AMHW CORP., a California corporation
its general partner
By:________________________________
Its:_______________________________
Guarantor: MONTEREY HOMES CONSTRUCTION II, INC.
an Arizona Corporation
By:_________________________________________
Its:________________________________________
By:_________________________________________
Its:________________________________________
MONTEREY HOMES CONSTRUCTION I, INC.
an Arizona Corporation
By:_________________________________________
Its:________________________________________
By:_________________________________________
Its:________________________________________
Signature blocks continued on page five and incorporated as part of this
agreement.
4
MONTEREY HOMES CORPORATION
an Arizona Corporation
By:_________________________________________
Its:________________________________________
By:_________________________________________
Its:________________________________________
5
Exhibit "F"
Transaction No.: 22
Builder: Monterey
City: Phoenix, AZ
Tucson, AZ
GUARANTEE AGREEMENT
This Guarantee Agreement ("Guarantee") is made and entered into this ________
day of December, 1996, by and between AMHM-1, L.P., a California limited
partnership ("AMH") and MONTEREY HOMES CONSTRUCTION II, INC., and to be executed
by MONTEREY HOMES CONSTRUCTION I, INC., and MONTEREY HOMES CORPORATION, Arizona
Corporations upon consummation of the merger ("Guarantor").
RECITALS
A. AMH has entered into a certain Revolving Model Home Purchase Agreement and a
Revolving Model Home Lease Back Agreement with Monterey Homes Arizona II, Inc.,
an Arizona corporation (the "Purchase Agreement", the "Lease", and "Builder").
The Purchase Agreement and the Lease to which this Guarantee relates are
designated by the same Transaction Number as this Guarantee.
B. The parties have agreed that Guarantor, which is the parent, affiliate or
successor in interest of Builder, shall guarantee all the obligations of Builder
under the Purchase Agreement and the Lease.
Now therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows.
1. Independent and Unconditional Guarantee. Guarantor hereby
independently and unconditionally guarantees all the obligations of the Builder
under the Purchase Agreement and the Lease. This Guarantee creates joint and
several liabilities and obligations. AMH need not first make demand upon Builder
nor shall AMH be required to exercise or exhaust any rights or remedies against
Builder under the Purchase Agreement or the Lease Agreement prior to seeking to
enforce the same against Guarantor.
2. Independent Remedies Against Guarantor. If Builder fails to remedy
any default in the Purchase Agreement or Lease, AMH may pursue any remedies at
law or in equity against Guarantor, without having to proceed first against
Builder, and Guarantor shall be jointly and severally liable to AMH with Builder
for all expenses, including attorneys' fees incurred by AMH and all amounts paid
by AMH in taking any such action or obtaining the performance of Builder or
Guarantor.
1
3. No Releases. AMH and Builder may without notice to or the consent of
Guarantor, at any time and from time to time (a) amend any provision of the
Purchase Agreement or the Lease or any other documents evidencing the
obligations of Builder under the Purchase Agreement or Lease, or (b) make any
agreement with Builder to compromise, discharge or release Builder from any
obligations under the Purchase Agreement or the Lease, and the guarantee made by
Guarantor shall not be impaired or affected by any of the foregoing. Guarantor
hereby waives any and all legal requirements that AMH institute any action or
proceeding at law or in equity against Builder prior to proceeding to enforce
this Guarantee as a condition precedent to bringing an action against the
Guarantor pursuant to this Guarantee. Until all obligations of Builder under the
Lease have been fulfilled in every way, Guarantor shall not be released by any
act or thing which might, but for this Guarantee, be deemed a legal or equitable
discharge of a surety including any act by AMH which might have the effect of
destroying Guarantor's rights of subrogation against Builder, or by reason of
any waiver, extension, modification, forbearance or delay of AMH or its failure
to proceed promptly or otherwise against either Builder or Guarantor. Guarantor
hereby expressly waives and surrenders any defense to this liability under this
Guarantee based upon any of the foregoing acts, things, agreements or waivers.
4. Cumulative Remedies. All remedies afforded to AMH by reason of this
Guarantee are separate and cumulative remedies and none of such remedies,
whether exercised by AMH or not, shall be deemed to be in exclusion of any one
of the other remedies available to AMH, and shall not in any way limit or
prejudice any other legal or equitable remedy available to AMH.
5. Release Upon Satisfaction of Obligations. Notwithstanding anything
herein contained, this Guarantee shall become null and void upon the
satisfaction of all duties of Builder under the Purchase Agreement and the
Lease, at which time, AMH shall return all original copies of this Guarantee to
Guarantor and deliver to Guarantor such instrument of release as Guarantor may
reasonably request.
6. Notices. All notices, requests, demands and other communication
given or required to be given hereunder shall be in writing and personally
delivered or sent by United States registered mail, return receipt requested, or
sent by nationally recognized courier service such as Federal Express. The
parties may also deliver notices to each other by electronically transmitted
facsimile copies ("Fax"). Notices shall be addressed as follows:
To AMH: c/o AMHM-1, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN.: ▇▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇; (▇▇▇) ▇▇▇-▇▇▇▇ (Fax)
2
To Guarantor: Monterey Home Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN.: ▇▇▇▇▇ ▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (FAX)
and
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ and Bosco
500 Dial Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇ (FAX)
Delivery of any notice or other communication hereunder shall be deemed made on
the date of actual delivery thereof to the address of the addressee, if
personally delivered, and on the date indicated in the return receipt or
courier's records as the date of delivery or as the date of first attempted
delivery, if sent by mail or courier service. Any notice sent by FAX shall be
deemed to be received as of the receipt of such FAX by a party, provided that,
such FAX notice is followed up within twenty-four (24) hours by any type of
notice otherwise provided for in this Paragraph. Any party may change its
address for purposes of this Paragraph by giving notice to the other party as
herein provided.
7. Choice of Law. This Guarantee is and shall be deemed to be a
contract entered into pursuant to the laws of the State of California and shall
in all respects be governed, construed, applied and enforced in accordance with
the laws thereof. All disputes shall be resolved in a court of law in Orange
County, California.
8. Successors and Assigns. This Guarantee shall inure to the benefit of
AMH and the successors and assigns of AMH in and to that property which is the
subject of the Purchase Agreement and the Lease. No consent of either Builder or
Guarantor is required for any assignment by AMH of its rights in and to such
property. This Guarantee shall be binding upon the successors and assigns of
Guarantor.
9. Counterpart Execution. This Guarantee may be executed in two or more
counterpart copies, all of which when taken together, shall constitute original
copies and one and the same document.
3
IN WITNESS WHEREOF, the parties have executed this Guarantee as of the
date and year first set forth above.
AMHM-1, L.P., a California limited partnership
By: AMHW CORP., a California corporation
its general partner
By: _____________________________
Its: _____________________________
Guarantor: MONTEREY HOMES CONSTRUCTION II, INC.
an Arizona Corporation
By: _________________________________
Its: _________________________________
By: _________________________________
Its: _________________________________
MONTEREY HOMES CONSTRUCTION I, INC.
an Arizona Corporation
By: _________________________________
Its: _________________________________
By: _________________________________
Its: _________________________________
signature blocks continued on page five and incorporated as part of this
agreement.
4
MONTEREY HOMES CORPORATION
an Arizona Corporation
By: _________________________________
Its: _________________________________
By: _________________________________
Its: _________________________________
5
EXHIBIT "G"
Estimated Lease Term and Termination Schedule
Estimated
Lease Maximum
Model Termination Mandatory
Project Name Address Date Lease Term*
------- ---- ------- ---- -----------
1. Canada Vistas Cancun ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ 07/01/97 6 Months
2. Grayhawk Siena ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 07/01/98 12 Months
3. Palos Verdes Valencia ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 07/01/97 6 Months
4. Palos Verdes Montecito ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 07/01/97 6 Months
5. Sunridge Cyn Veracruz ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, Fountain Hls 07/01/98 12 Months
6. The Estates Ventana ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
7. The Estates Taos ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
8. The Retreat Palazzo ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
9. The Retreat Valencia ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
10. The Retreat ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
11. The Retreat Montecito ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 07/01/98 12 Months
12. The Park Babados ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ 01/01/98 1 Year
13. The Park Veracruz ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ 01/01/98 1 Year
14. The Park Cancun ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ 01/01/98 1 Year
* The lease may be terminated at Builder's option, subject to Section 5.2. Maximum lease term is three (3)
years.
Exhibit "H"
"Hazardous Materials Laws" shall mean all federal, state and local
laws, ordinances, rules and regulations now and hereafter in force, as amended
from time to time, in any way relating to or regulating human health or safety,
or industrial hygiene or environmental conditions, or protection of the
environment, or pollution or contamination of the air, soil, surface water or
groundwater, and includes the Comprehensive Environmental Response, Compensation
and Liability act of 1980, 42 U.S.C. ss. 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the Clean Water Act,
33 U.S.C. ss. 1251, et seq.
"Hazardous Materials" shall mean any substance or material that is
described as a toxic or hazardous substance, waste or material or a pollutant or
contaminant, or words of similar import, in any of the Environmental Laws, and
includes asbestos, petroleum (including crude oil or any fraction thereof,
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas
useable for fuel, or any mixture thereof), petroleum products, polychlorinated
biphenyls, urea formaldehyde, radon gas, radioactive matter, medical waste, and
chemicals which may cause cancer or reproductive toxicity.