EXHIBIT 10.17
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OPTION AND PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
BY AND BETWEEN
OTAY LAND COMPANY, LLC
("Owner")
and
LAKES KEAN ARGOVITZ RESORTS-CALIFORNIA, LLC
("Optionee")
NY2:\890364\01\76830.0194
OPTION AND PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
This OPTION AND PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
("Agreement") is made and effective as of October 15, 1999 ("Effective Date"),
by and between OTAY LAND COMPANY, LLC, a Delaware limited liability company
("Owner"), and LAKES KEAN ARGOVITZ RESORTS-CALIFORNIA, LLC, a Delaware limited
liability company, ("Optionee"), with reference to the facts set forth below.
RECITALS
A. Owner owns certain real property containing approximately
eighty-six (86) acres located in the County of San Diego, State of California,
more particularly described in Exhibit "A" attached hereto and incorporated
herein ("Property").
B. Optionee desires to enter into this Agreement to obtain an option
to purchase the Property from Owner on the terms and conditions set forth below.
Owner has agreed to grant to Optionee an option to purchase the Property on the
terms and conditions set forth below. Owner and Optionee acknowledge and agree
that the following facts are true and correct: (a) the amount of the Option
Payments (as defined below) has been specifically negotiated by the parties in
view of all relevant facts and circumstances existing on the Effective Date, (b)
the amount of the Option Payments will not put Optionee under economic
compulsion to exercise the Option (as defined below), and (c) this Agreement
exposes Owner to the risk of changes in market conditions if Optionee does not
elect to exercise the Option and Owner is required to remarket the Property.
NOW, THEREFORE, in consideration of the recitals set forth above, the
mutual agreements set forth herein and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
set forth below.
Article 1
DEFINED TERMS
Unless the context otherwise provides, the following terms have the
meanings set forth below.
1.1 Agreement. The term "Agreement" means this Option and Purchase
Agreement and Escrow Instructions executed between Owner and Optionee.
1.2 ALTA Standard Title Policy and ALTA Extended Title Policy. The
term "ALTA Standard Title Policy" means the American Land Title Association
("ALTA") owner's policy of title insurance with western regional exceptions
(ALTA Standard) (or its CLTA equivalent) to be issued by the Title Company (as
defined below) upon the Close of Escrow pursuant to the terms of this Agreement.
The term "ALTA Extended Title Policy" means the ALTA owner's additional coverage
policy of title insurance, Form B, which Optionee may request in lieu of the
ALTA Standard Title Policy in accordance with the provisions of Section 4.2.2 of
this Agreement.
1.3 Business Day. The term "Business Day" means any day other than a
Saturday or Sunday or legal holiday in the State of California.
1.4 Cash. The term "Cash" means (i) currency of the United States of
America, (ii) cashier's check(s) currently dated and payable to Escrow Agent or
Owner, as required under this Agreement, drawn and paid through a California
banking institution, tendered to Escrow Agent or Owner, as required under this
Agreement at least one additional Business Day before funds are required to be
available in Escrow or (iii) an amount credited by wire transfer into Escrow
Agent's or Owner's bank account as required under this Agreement.
1.5 Close of Escrow. The term "Close of Escrow" means the
consummation of the purchase of the Property by Optionee from Owner and the
recordation of Owner's Grant Deed (as defined below) in accordance with the
terms and provisions of this Agreement.
1.6 Closing Date. The term "Closing Date" means the date on which the
closing will be held as described in Section 3.2 of this Agreement.
1.7 Districts. The term "Districts" shall have the meaning set forth
in Section 5.7 below.
1.8 Effective Date. The term "Effective Date" means the date in the
first paragraph of this Agreement.
1.9 Environmental Laws. The term "Environmental Laws" means any
federal, state or local laws, ordinances, codes, statutes, regulations,
administrative rules, policies and orders, and other authority, existing on the
Effective Date, which classify, regulate, list or define Hazardous Materials.
1.10 Escrow. The term "Escrow" means the escrow to be opened by
Escrow Agent pursuant to the terms of this Agreement.
1.11 Escrow Agent. The term "Escrow Agent" means Chicago Title
Company, ▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.12 Feasibility Period. The term "Feasibility Period" means the
period beginning on October 15, 1999, and ending on December 15, 1999, during
which time Optionee shall have the right to conduct its investigations and
studies of the Property in accordance with Section 4.1 below.
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1.13 Governmental Action. The term "Governmental Action" means (a)
any order of a court of competent jurisdiction, and/or (b) any enactment of any
Governmental Agencies (as defined below) by the initiative/referendum process or
otherwise, affecting the Property either directly or indirectly including, but
not limited to: limitation on the number of building, grading or other permits
that can be issued during any given time period or imposition of obligations or
conditions in connection with the issuance of such permits, declaration of
policy, resolution, ordinance, statute, regulation, the enforcement of any
condition or agreement between Owner and any Governmental Agency or any other
enactment of any Governmental Agency and irrespective of whether the orders or
enactments listed immediately above contain the words "moratorium", "moratoria"
or similar words.
1.14 Governmental Agencies. The term "Governmental Agencies" means
any local, city, county, state and/or federal governmental or quasi-governmental
agencies, authorities or regulatory bodies, administrative agencies, community
facilities districts or other Districts, and any public or private utility
companies having jurisdiction over the Property.
1.15 Governmental Approvals. The term "Governmental Approvals" means
all agreements, entitlements, permits, licenses and other approvals that may be
required with respect to the Property.
1.16 Hazardous Materials. The term "Hazardous Materials" shall mean
any toxic or hazardous substance, material or waste or any pollutant or
contaminant or infectious or radioactive material which as of the Effective Date
is regulated under any Environmental Laws.
1.17 Notice of Approval. The term "Notice of Approval" means the
notice to be delivered to Owner if Optionee approves of its feasibility studies
during the Feasibility Period.
1.18 Notice of Disapproval. The term "Notice of Disapproval" means
the notice to be delivered to Owner if Optionee disapproves of its feasibility
studies during the Feasibility Period.
1.19 Option. The term "Option" shall mean the option to purchase the
Property granted by Owner to Optionee pursuant to this Agreement.
1.20 Option Expiration Date. The term "Option Expiration Date" means
December 15, 2000, subject to extension as provided in Section 2.3.1, upon which
the Option shall terminate unless previously exercised in accordance with this
Agreement.
1.21 Option Payments. The term "Option Payments" means collectively
the First Option Payment (as hereinafter defined) and the Second Option Payment
(as hereinafter defined), as set forth in Section 2.2.
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1.22 Optionee. The term "Optionee" means LAKES KEAN ARGOVITZ
RESORTS-CALIFORNIA, LLC, a Delaware limited liability company, or any assignee
permitted under Section 11.1 below.
1.23 Optionee's Agents. The term "Optionee's Agents" means the
agents, representatives, officers, employees, contractors and licensees of
Optionee and their successors and assigns.
1.24 Owner. The term "Owner" means Otay Land Company, LLC, a Delaware
limited liability company.
1.25 Owner Hazardous Materials Report. The term "Owner Hazardous
Materials Report" means the environmental reports made available to Optionee as
part of the Property Documents.
1.26 Prime. The term "Prime" means the rate announced from time to
time by Bank of America, N.T.&S.A. ("Bank of America") as its prime or reference
rate. If Bank of America ceases to announce a prime, the prime lending rate of
an equivalent lending institution selected by Owner will be substituted
therefor.
1.27 Preliminary Report. The term "Preliminary Report" means the
preliminary report to be issued by the Title Company with respect to the
Property.
1.28 Property. The term "Property" means the real property that is
the subject of this Agreement described in Exhibit "A" attached hereto and
incorporated herein.
1.29 Property Documents. The term "Property Documents" means the
documents relating to the Property made available to Optionee, including those
listed on Schedule "1" attached hereto and incorporated herein.
1.30 Purchase Price. The term "Purchase Price" means the purchase
price to be paid by Optionee to Owner for the purchase of the Property as
determined pursuant to Article 2 of this Agreement.
1.31 Title Company. The term "Title Company" shall mean and refer to
Chicago Title Company, ▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Article 2
GRANT OF OPTION
2.1 Grant of Option. Owner hereby grants to Optionee the exclusive
option (the "Option") to purchase the Property upon the terms and conditions set
forth herein.
2.2 Option Payments. The Option is granted in consideration of the
mutual covenants and agreements contained herein, including Optionee's payment
to Owner of the Option Payments set forth in this Section.
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2.2.1 First Option Payment. On the Effective Date, Optionee shall
deliver to Owner Cash in the amount of Fifty Thousand Dollars ($50,000.00) (the
"First Option Payment"). If Optionee timely delivers a Notice of Disapproval to
Owner, Owner shall return the First Option Payment to Optionee and this
Agreement shall terminate as provided in Section 3.3 below.
2.2.2 Second Option Payment. If Optionee delivers a Notice of
Approval, on or before the expiration of the Feasibility Period, Optionee shall
deliver to Owner additional Cash in the amount of Four Hundred Fifty Thousand
Dollars ($450,000.00) (the "Second Option Payment"). If Optionee does not timely
deliver the Second Option Payment, this Agreement and the Option shall terminate
as provided in Section 3.3 below.
2.2.3 Option Payments Earned Upon Delivery. Optionee acknowledges
and agrees that the Optionee's Option Payments constitute consideration to Owner
for the agreement of Owner to (a) enter into this Agreement with Optionee, (b)
not sell the Property to other parties while this Agreement is in effect, and
(c) subject to Optionee's properly exercising the Option, sell the Property to
Optionee on the terms and conditions and for the Purchase Price set forth in
this Agreement. Except as otherwise expressly provided in Section 3.3, the
Option Payments shall be fully earned by Owner upon delivery thereof and
non-refundable to Optionee, but the Option Payments actually made by Optionee
shall be applicable to the Purchase Price if Optionee properly exercises the
Option and the Close of Escrow occurs.
2.3 Exercise of Option. Optionee may exercise the Option at any time
prior to 5:00 p.m. California time on the Option Expiration Date by (i)
delivering to Owner and Escrow Agent written notice of exercise of the Option
and (ii) delivering to Escrow the balance of the Purchase Price as provided in
Section 2.4 below and the documents required by Section 3.4.1 below. If Optionee
fails to timely exercise the Option pursuant to the terms of this Agreement, the
Option shall terminate and Owner shall be entitled to retain the Option Payments
and any Extension Payments (as defined below) as consideration for the granting
of the Option to Optionee.
2.3.1 Extension of Option Expiration Date. Optionee will have the
right to extend the Option Expiration Date by up to eighteen (18) periods of one
(1) month each (each such extension shall be referred to as an "Extension") by
delivering to Owner, at least five (5) Business Days prior to the Option
Expiration Date, written notice thereof and an extension payment (the "Extension
Payment") in an amount equal to Sixty Thousand Dollars ($60,000.00) for each
Extension. Each Extension Payment shall be fully earned by Owner upon delivery
thereof as consideration for the extension of the Option Expiration Date and
shall be non-refundable to Optionee except as expressly provided in Section 3.3.
Any Extension Payments made by Optionee shall not be applicable to the Purchase
Price. Notwithstanding the foregoing, if the Close of Escrow does not occur or
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is delayed due to Owner's default, then Optionee will not be required to pay any
Extension Payment for the period of delay in the Close of Escrow caused by such
default.
2.4 Purchase Price. Upon Optionee's timely exercise of the Option in
accordance with Section 2.3 above, Owner shall be obligated to sell the Property
to Optionee, and Optionee shall be obligated to purchase the Property, on the
terms and conditions set forth in this Agreement. The Purchase Price shall be
Four Million One Hundred Thousand Dollars ($4,100,000). Not later than one (1)
Business Day prior to the Close of Escrow, Optionee shall deposit into Escrow
Cash in an amount equal to the balance of the Purchase Price (i.e., the Purchase
Price less the amounts of any Option Payments made by Optionee), together with
an amount sufficient to cover all of Optionee's closing costs, fees and charges.
Article 3
ESCROW; CLOSING; DELIVERIES
3.1 Escrow. Upon Optionee's exercise of the Option, the parties shall
promptly thereafter deliver to Escrow Agent three (3) fully executed
counterparts of this Agreement for use as escrow instructions and Escrow Agent
shall execute the consent of Escrow Agent which appears at the end of this
Agreement and deliver a fully executed original of this Agreement and the
consent to Owner and Optionee.
3.2 Closing Date. The Close of Escrow ("Closing Date") shall occur on
the date which is five (5) Business Days after the date Optionee exercises the
Option in accordance with this Agreement.
3.3 Termination Based on Failure to Close by the Closing Date or
Otherwise. Time is of the essence of each and every provision and each
obligation of this Agreement. If Escrow fails to close by the Closing Date or if
this Agreement is otherwise terminated for any reason other than Optionee's or
Owner's default, then, except for any indemnity obligations of Optionee under
this Agreement, the obligations of Optionee under Sections 5.3, 5.5, 13.11 and
13.20 of this Agreement and the obligations of Owner under Section 13.11 of this
Agreement, which shall survive the termination of this Agreement, the respective
rights, duties and obligations of Optionee and Owner under this Agreement shall
forthwith terminate without further liability. The parties shall immediately
thereafter sign such instructions and other instruments as may be necessary to
effect the cancellation of this Escrow, and each party shall pay its respective
share (if any) of Escrow cancellation charges as provided in Section 8.5. Upon
cancellation due to no fault of Optionee pursuant to Sections 4.1, 4.2, 4.3 or
12.1, subject to Section 5.3 below, Escrow Agent shall immediately return the
funds, if any, less applicable cancellation charges, and documents to the
parties that furnished them and Owner shall return the Option Payments to
Optionee. However, Optionee will not be entitled to a refund of any Extension
Payments unless this Agreement is terminated due to Owner's default including
any default under the last sentence of Section 4.2.1 or pursuant to Section
4.2.4 (Representations and Warranties of Owner). Optionee will not be entitled
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to reimbursement for any costs, expenses, losses or damages incurred by Optionee
in connection with Optionee's proposed use or development of the Property,
whether prior to or subsequent to the execution hereof, and Owner will not be
required to make any other payment to Optionee for alleged lost profits,
interest or otherwise. Optionee waives and releases any claim it may now or
hereafter have against Owner for such reimbursements or, payments.
3.4 Deliveries to Escrow Agent.
3.4.1 Optionee's Deliveries. At least one (1) Business Day
immediately preceding the Closing Date, unless a different date for delivery is
required under the terms of this Agreement, Optionee shall deliver to Escrow
Agent each of the items described below.
(a) Purchase Price. Cash in an amount equal to the balance
of the Purchase Price as set forth in Section 2.4.
(b) Prorations, Fees and Costs. The amounts, if any,
required of Optionee under Article 8 of this Agreement and any other amounts
required to be paid by Optionee prior to or on the Close of Escrow under this
Agreement.
(c) Documents. Executed counterparts of the Covenant (as
defined in Section 5.8) and of any other documents required to be executed under
the terms of this Agreement.
3.4.2 Owner's Deliveries. At least one (1) Business Day
immediately prior to the Closing Date, unless an earlier date for delivery is
required under the terms of this Agreement, Owner shall deliver to Escrow Agent
each of the items described below.
(a) Grant Deed. A grant deed substantially in the form of
Exhibit "B" attached hereto and incorporated herein ("Grant Deed").
(b) Certificate of Non-Foreign Status. A transferor's
certificate of non-foreign status attached to this Agreement as Exhibit "C"
("FIRPTA Certificate") properly executed by Owner and a California Form 590-RE
("Form 590").
(c) Documents. Executed counterparts of the Covenant (as
defined in Section 5.8) and of any other documents required to be executed under
the terms of this Agreement.
3.5 Dating Documents. Escrow Agent shall date any of the documents
deposited into Escrow under Sections 3.4.1 and 3.4.2 above as of the date of the
Close of Escrow.
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Article 4
APPROVAL OF FEASIBILITY PERIOD AND
CONDITIONS PRECEDENT TO CLOSE OF ESCROW
4.1 Feasibility Period. During the Feasibility Period, Optionee may
analyze the feasibility of the acquisition, ownership, use and development of
the Property. Optionee shall be solely responsible for any and all costs
incurred by Optionee in connection with its review and/or investigations of the
matters set forth in this Section. Owner shall allow Optionee to inspect and
copy at Owner's office any and all reports, studies and documents relating to
the Property that Owner may have in its actual possession (other than internally
prepared marketing materials and other proprietary, confidential or privileged
information) including the Property Documents described in Schedule "1" attached
hereto and incorporated herein. Optionee acknowledges and agrees that Owner is
making no representations or warranties regarding the accuracy, completeness or
sufficiency of any such materials and that Optionee will rely solely on its
review and investigation thereof. Optionee shall, subject to the requirements
set forth in Section 5.5 below, conduct such independent investigations, studies
and tests as it deems necessary or appropriate concerning Optionee's proposed
use, sale, development and/or the suitability of the Property for Optionee's
intended purposes. Owner at no cost to Owner agrees to reasonably cooperate with
Optionee in connection with such studies and investigations. Such investigations
may include, without limitation, investigations concerning the status of
existing entitlements and approvals, if any, and the need for and availability
of additional permits, licenses, entitlements or other approvals for development
of the Property, investigations regarding the existence of any Hazardous
Materials or any threatened or endangered species or archaeological artifacts,
soils and geological conditions, the imposition or increase of any fees, charges
or exactions by any Governmental Agencies, investigations regarding obligations
to construct improvements or other facilities and/or to provide subdivision
security in connection therewith and such economic feasibility and marketing
studies as Optionee deems appropriate.
4.1.1 Approval or Disapproval of Feasibility Studies. If Optionee
approves of its feasibility studies during the Feasibility Period, Optionee
shall deliver Notice of Approval and the Second Option Payment to Owner prior to
the expiration of the Feasibility Period. If Optionee gives written Notice of
Approval of its investigations during its Feasibility Period, then Optionee will
be deemed to have acknowledged that Optionee has conducted all investigations,
reviewed the status of all existing and proposed entitlements and performed all
analysis necessary to Optionee's decision to purchase the Property and has
approved of such review and investigations and satisfied itself as to all
aspects of the Property, including, without limitation, the matters described
above. If, for any reason, Optionee determines, in its reasonable discretion,
that it is not feasible for Optionee to purchase the Property, Optionee may
terminate this Agreement by delivering written Notice of Disapproval to Owner
prior to the expiration of the Feasibility Period. The failure of Optionee to
8
deliver such Notice of Disapproval to Owner prior to the expiration of the
Feasibility Period shall be deemed to be Optionee's approval of its feasibility
studies, in which case Owner shall be entitled to payment of the Second Option
Payment and to retain the First Option Payment. If Optionee delivers the Notice
of Disapproval on or before the expiration of the Feasibility Period, this
Agreement shall terminate in accordance with Section 3.3 above.
4.2 Conditions Precedent to Optionee's Obligations. The following are
conditions precedent to Optionee's obligation to purchase the Property:
4.2.1 Preliminary Report. Optionee may review and approve or
disapprove, in its sole discretion, the Preliminary Report on or before 5:00
p.m. on or before the date that is twenty (20) days after the receipt by
Optionee. If, prior to the Close of Escrow, the Title Company issues a
supplemental preliminary report ("Supplemental Report") showing new title
exceptions affecting the Property, Optionee shall have five (5) Business Days
after receipt of the Supplemental Report to review and approve any such new
exceptions, which approval shall not be unreasonably withheld with respect to
any Supplemental Reports received after the Feasibility Period. Optionee shall
be deemed to have approved any exceptions shown in the Preliminary Report and/or
any such new exceptions shown in any Supplemental Report if it does not deliver
written notice of disapproval to Owner during the applicable period set forth
above in this Section. If Optionee timely disapproves any exceptions shown on
the Preliminary Report or any new exceptions shown in a Supplemental Report,
Owner shall have five (5) Business Days to elect to cure any such exceptions by
delivering written notice to Optionee. If Owner does not deliver written notice
that it will cure such disapproved exceptions within such time period, Owner
shall be deemed to have elected not to cure such items. If Owner does not elect
to cure any such disapproved items, Optionee shall have (i) two (2) Business
Days after delivery of any notice from Owner of its election not to so cure such
items or (ii) seven (7) Business Days after delivery of Optionee's notice of
disapproval to Owner to either elect to waive its prior disapproval or to
terminate this Agreement. If Optionee so elects to terminate this Agreement,
then this Agreement shall terminate as provided in Section 3.3 above. Any title
exceptions shown in the Preliminary Report and any exceptions shown in any
Supplemental Report which are approved or deemed to be approved by Optionee
shall be referred to as the "Permitted Exceptions." Owner agrees that it will
not voluntary impose or create any exceptions to title that will be binding upon
the Property after the Close of Escrow and will materially and adversely affect
Optionee's proposed use and development of the Property unless Owner agrees to
remove the same on or before the Close of Escrow.
4.2.2 Conveyance of Title. The Title Company shall be committed
to issue an ALTA Standard Title Policy or, if requested by Optionee, an ALTA
Extended Title Policy (subject to the conditions set forth below) ("Title
Policy"), with the liability in an amount equal to the Purchase Price of the
Property subject to:
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(a) standard printed exceptions contained in the Title
Policy;
(b) all county and city taxes, assessments, special taxes
and bonds which are a lien not yet due and payable,
(c) all covenants, conditions, restrictions, easements,
reservations, rights, rights of way, encumbrances and other items shown on the
Preliminary Report or any Supplemental Report which are Permitted Exceptions;
(d) the Covenant and all matters shown on the Grant Deed;
and
(e) title exceptions caused by the acts and omissions of
Optionee.
Optionee agrees that its receipt of the Title Policy will fully
satisfy any express or implied warranty by Owner as to the condition of title to
the Property, and, if there are any title exceptions or defects, including
liens, encumbrances, covenants, conditions, reservations, restrictions,
rights-of-way or easements, which constitute a defect in title, Optionee shall
look solely to the remedies available under the Title Policy, and Owner shall
have no responsibility or liability therefor. If Optionee requests an ALTA
Extended Title Policy, Optionee shall be solely responsible for satisfying all
conditions to the issuance of the ALTA Extended Title Policy, including
obtaining any necessary survey, and for paying the premiums charged to issue the
ALTA Extended Title Policy in excess of the premiums for an ALTA Standard Title
Policy. In addition, Optionee's election to obtain an ALTA Extended Title Policy
shall in no way delay the Closing Date. If, for any reason, Title Company does
not commit to issue to Optionee an ALTA Extended Title Policy on the Closing
Date, then this Section 4.2.2 shall be deemed satisfied so long as Title Company
is committed to issue to Optionee an ALTA Standard Title Policy. After the
Feasibility Period, Optionee does not have the right to terminate this Agreement
as a result of any items appearing in any ALTA report, survey or inspection.
4.2.3 Agreement Upon Road Alignments. On or before the expiration
of the Feasibility Period, Optionee and Owner shall have agreed upon two (2)
alternate alignments for a road easement to be reserved by Owner in the Grant
Deed (the "Road Alignments") and upon a configuration of the Road Alignments to
facilitate vehicle entry into Optionee's parking facilities for its proposed
future casino operations, including structuring turn lanes, lights,
intersections, traffic configurations and other aspects of the Road Alignments
to maximize reasonable access for such vehicles ("Access Improvements"). The
road easement will be exclusive except that Optionee may use the road easement
for purposes that do not interfere with use of the road by Owner and its
invitees, successors and assigns and, if the road becomes a public road, such
easement shall be exclusive except to the extent the County of San Diego allows
other uses. Optionee will be solely responsible for obtaining approvals for and
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paying the costs of any Access Improvements. As depicted on Exhibit "A-1"
attached hereto and incorporated herein, the road easement area will contain
approximately 8.5 acres. Owner will have the right to construct the road, at no
expense to Optionee (except that Optionee shall be responsible for the cost of
the Access Improvements, any other improvements that provide access to the
Property and any other costs to accommodate Optionee's use or development of the
Property) to County of San Diego requirements and specifications and shall
reserve in the Grant Deed an easement for road, utility and related purposes,
including the right to construct, install, repair, maintain and replace the road
and related utilities. In addition, Optionee agrees that Owner shall have the
right to require Optionee to convey a new road easement within the Road
Alignments or fee title to the property within the road easement to the County
for road purposes, in which case for no additional consideration, Optionee will
promptly execute and deliver any documents reasonably necessary to effect such
conveyance. Upon agreement on the Road Alignments and the Access Improvements,
the parties shall execute an amendment to this Agreement setting forth the legal
description of the Road Alignments and a description of the Access Improvements.
If the parties are unable to reach agreement on the Road Alignments and/or the
Access Improvements during the Feasibility Period, then either party may
terminate this Agreement by delivering written notice to the other as provided
in Sections 4.2.5 and 4.3.4.
4.2.4 Representations and Warranties of Owner. All of the
representations and warranties of Owner contained in Section 6.7 shall be true
and accurate in all material respects as of the Close of Escrow and shall
survive the Close of Escrow for the period provided in Section 6.7.
4.2.5 Owner's Performance. Owner shall not be in default under
the terms and conditions of this Agreement.
4.2.6 Failure to Satisfy Conditions Precedent. The conditions set
forth in this Section 4.2 are for Optionee's benefit and can only be waived by
Optionee. If the conditions precedent set forth in this Section and Section 4.3
are neither satisfied nor waived by the Closing Date, and provided that Optionee
is not then in default under this Agreement, Optionee may terminate Escrow and
this Agreement by giving written notice of termination to Owner and Escrow
Agent. The Close of Escrow under this Agreement by Optionee constitute
satisfaction of the conditions precedent set forth above.
4.3 Conditions Precedent to Owner's Obligations. The following are
conditions precedent to Owner's obligation to close Escrow:
4.3.1 Optionee's Performance. Optionee shall not be in default
under the terms and conditions of any written agreements between Owner and
Optionee relating to the Property and all of Optionee's representations and
warranties under Section 6.6 below shall be true and correct as of the Close of
Escrow in all material respects.
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4.3.2 Agreement on Road Alignments. Optionee and Owner shall have
agreed upon the Road Alignments and the Access Improvements on or before the
expiration of the Feasibility Period.
4.3.3 Failure to Satisfy Conditions Precedent. The conditions set
forth in this Section 4.3 are for Owner's benefit and can only be waived by
Owner. If the conditions precedent set forth in Sections 4.2 and 4.3, are
neither satisfied nor waived by the Closing Date, Owner may terminate the Escrow
and this Agreement by giving a written notice of termination to Optionee and
Escrow Agent. Owner's inability to satisfy any of the conditions precedent set
forth in Sections 4.2 (other than Section 4.2.5) and 4.3 as specified above by
the Closing Date shall not be considered a breach of this Agreement. If Owner is
unable to satisfy any such conditions precedent and if Optionee is not then in
default under this Agreement, Optionee will be entitled, as its only remedy, to
elect not to exercise the Option and obtain a refund of its Optionee's Option
Payments (and, only to the extent provided in Section 3.3, any Extension
Payments) pursuant to Section 3.3, and Optionee will not, under any
circumstances, be entitled to any other reimbursement or to any other payment or
compensation from Owner except as expressly provided in Section 10.1 in the
event of a default by Owner.
Article 5
COVENANTS AND AGREEMENTS
5.1 No Concern. Escrow Agent shall have no concern with, and no
liability or responsibility for, this Article.
5.2 Additional Escrow Instructions. Optionee and Owner shall execute
any additional escrow instructions not inconsistent with the terms of this
Agreement that are reasonably required by Escrow Agent.
5.3 Assignment of Plans and Reports. If Escrow fails to close for any
reason, then all materials delivered by Owner to Optionee, and all feasibility
studies, economic reports, marketing studies, maps, surveys, environmental
reports, civil and soil engineering reports, site plans, plans and
specifications relating to the Property, and all other plans, reports and other
documents or work relating to the Property (collectively, the "Plans and
Reports") prepared by or on behalf of Optionee shall be deemed assigned to
Owner, without consideration or expense to Owner and shall be delivered to Owner
by Optionee as a condition to the return of the Option Payments to Optionee, if
applicable, within ten (10) days thereafter. If requested by Owner, Optionee,
within three (3) Business Days of Owner's request, shall execute an assignment
of the Plans and Reports. Notwithstanding the provisions of this Section 5.3,
Optionee shall be entitled to retain copies of all of the Plans and Reports.
5.4 Possession. Possession of the Property shall be transferred to
Optionee upon the Close of Escrow.
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5.5 Entry Onto Property.
5.5.1 Right to Enter. Provided Optionee has delivered to Owner a
certificate of insurance satisfying the requirements set forth in Section 5.5.3
below, during the Feasibility Period, Optionee and Optionee's Agents shall have
the right to enter onto the Property at reasonable times for the purpose of
conducting investigations and inspections deemed necessary by Optionee, except
as provided below. After expiration of the Feasibility Period, if this Agreement
is still in effect, and provided Optionee has delivered to Owner a certificate
of insurance satisfying the requirements set forth in Section 5.5.3 below and
gives Owner written notice of any such entry at least two (2) Business Days in
advance, Optionee and Optionee's Agents shall have the right to enter on to the
Property at reasonable times for the purpose of conducting investigations and
inspections deemed necessary by Optionee; provided, however, that other than
initial site reconnaissance, Optionee shall not conduct any investigation,
inspection or test on the Property without prior notice to Owner of the
investigation, inspection or test to be undertaken (including, without
limitation, with respect to any hazardous substance invasive testing, a written
plan for the testing program) and Owner's prior written approval, which approval
will not be unreasonably withheld, except as provided below. If Owner does not
respond to Optionee's request within three (3) Business Days after receipt, then
Optionee may send a second notice, and Owner's failure to disapprove in writing
the request within two (2) Business Days after receipt of such second notice
shall be deemed to constitute Owner's approval of the investigation, inspection
or test described on the written notice to Owner. Optionee's notice may include
a plan of extended and continual entry onto the Property to perform its due
diligence studies which notice will describe the activities and work Optionee
will perform. If Owner approves of such plan, Owner shall not then require a
separate notice of any entry thereafter made in accordance with such plan. If
such notice of extended entry does not clearly indicate the dates of any
specific activity, then Optionee shall deliver a notice specifying the dates and
type of investigation activity prior to any entry upon the Property in
connection with such activity. Optionee shall provide to Owner, promptly upon
receipt thereof, a copy of all written reports or other documents relating to
the investigation or inspection or test of the Property. Optionee shall (a)
perform all work permitted under this Agreement in a safe and professional
manner; (b) not allow any dangerous or hazardous condition created by Optionee
or Optionee's Agents to exist; (c) comply with all applicable laws and
governmental regulations and any instruction deemed reasonably necessary by
Owner; (d) obtain all permits required to be obtained by any Governmental
Agencies and pay any fees, costs, charges and expenses in connection with the
issuance of such permits; and (e) not interfere with Owner's activities and
cooperate and coordinate its activities with Owner's activities. Owner shall
have the right to have a representative accompany Optionee and its Agents at all
times while on the Property. Optionee acknowledges that the Property may contain
environmentally sensitive areas and natural hazards relating to undeveloped
lands (including steep terrain and dangerous animals). Optionee shall be solely
responsible for any damage to such sensitive areas and assumes the risk of such
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natural hazards. In addition to the consents required above, any investigation,
inspection or test (whether occurring during or after the Feasibility Period)
which physically alters or changes the conditions of the Property or that may
adversely affect any environmentally sensitive areas or endangered or threatened
species within the Property shall be subject to Owner's prior written approval,
which approval may be withheld in Owner's sole and absolute discretion. If the
transaction contemplated by this Agreement does not close, Owner shall have the
option to require Optionee, forthwith after termination of this Agreement, at
its sole cost and expense, repair any damage to the Property caused by Optionee
or its Agents. If Optionee fails to repair any such damage to the satisfaction
of Owner, and such failure continues for ten (10) days after written notice
thereof from Owner, then Owner may perform such repair on behalf of Optionee
without any liability to Optionee for any loss or damage by reason therefor, and
upon completion, Optionee shall pay Owner's costs for making such repairs plus
ten percent (10%) of such costs for overhead. Any amounts due hereunder shall
include interest from the date of notice thereof to Optionee of the costs
incurred by Owner at the rate of Prime plus two percent (2%) per annum, but in
no event shall the interest rate exceed the maximum rate allowed by law.
5.5.2 Indemnity of Owner. Optionee shall indemnify, protect,
defend (with legal counsel reasonably acceptable to Owner) and hold Owner, its
development manager and their past, present and future employees, officers,
directors, agents, representatives, members, managers, shareholders and
affiliates and their respective successors and assigns ("Owner's Indemnitees")
harmless from any and all claims, actions, costs, expenses, damages and
liabilities relating to Optionee's or Optionee's Agents' entry onto the Property
(including, but not limited to, claims of mechanics liens and attorneys' fees)
and from and against all costs, attorneys' fees, expenses and liabilities
incurred in connection with such claims or any actions or proceedings brought
thereon and any costs or expenses, including attorneys' fees, incurred by Owner
in connection with the enforcement of this indemnification provision. Optionee's
covenants in this Section shall survive the termination of this Agreement and
shall be binding on Optionee until such time as an action against Owner is
absolutely barred by the applicable statute of limitations.
5.5.3 Insurance. Optionee shall maintain, with insurance
companies acceptable to Owner, the following insurance: Worker's Compensation
Insurance as required by law and Employer's Liability Insurance; Comprehensive
General Liability or Commercial General Liability insurance (occurrence form
only; not claims made or modified occurrence form), with limits of not less than
Two Million Dollars ($2,000,000) combined single limit and not less than Two
Million Dollars ($2,000,000) on a general aggregate basis, for bodily injury,
death and property damage; and business automobile coverage with limits of at
least Two Million Dollars ($2,000,000) per occurrence and aggregate. Each policy
of insurance shall name Owner and its members as additional insureds. Further,
each policy of insurance shall state that such policy is primary and
noncontributing with any insurance carried by Owner or its members. Such policy
shall contain a provision that the naming of the additional insured shall not
14
negate any right the additional insured would have had as a claimant under the
policy if not so named and shall contain severability of interest and
cross-liability clauses. A certificate, together with certified copies of all
endorsements to the policy required to evidence the coverage which is to be
obtained hereunder, shall be delivered to Owner prior to any entry onto the
Property. The certificate shall expressly provide that no less than thirty (30)
days prior written notice shall be given Owner in the event of any material
alteration to or cancellation of the coverages evidenced by said certificate. A
renewal certificate for each of the policies required in this Section shall be
delivered to Owner not less than thirty (30) days prior to the expiration date
of the term of such policy. Any policies required by the provisions of this
Section may be made a part of a blanket policy of insurance with a "per project,
per location endorsement" so long as such blanket policy contains all of the
provisions required herein and does not reduce the coverage, impair the rights
of the other party to this Agreement or negate the requirements of this
Agreement.
5.6 No Public Report Optionee represents and warrants that it is an
experienced and sophisticated buyer represented by legal counsel and not in need
of consumer protection offered by a Public Report pursuant to California
Business and Professions Code Section 11018.2. Optionee acknowledges that Owner
will not obtain a Public Report in conjunction with the sale of the Property to
Optionee and waives any right of rescission arising out of the absence of a
Public Report.
5.7 Public Facilities Financing Districts. Optionee acknowledges that
the Property is subject to the lien of special taxes imposed by Chula Vista City
School District Community Facilities District No. 1, Chula Vista Elementary
School District Community Facilities District No. 1 and City of Chula Vista
Assessment District 90-2 (such districts and any other existing districts shall
be collectively referred to as the "Districts"). Prior to the Effective Date,
Optionee has executed a Notice of Special Tax in the form of Exhibit "D"
attached hereto and incorporated herein. Subject to Optionee's right to
disapprove any exceptions shown in a Supplemental Report pursuant to Section
4.2.1, any other such Districts are formed, Owner shall have the right to
require Optionee to execute any Notices of Special Tax prepared by Owner and
Optionee shall within three (3) Business Days after receipt therefrom execute
such Notice of Special Tax.
5.8 Right to Approve Development. Owner will retain certain property
located adjacent to the Property ("Adjacent Property"). Owner shall have the
right to approve any improvements Optionee proposes to construct within five
hundred (500) feet of the boundary line between the Property and any Adjacent
Property, which approval shall not be unreasonably withheld or delayed.
Similarly, Optionee shall have the right to approve any improvements proposed to
be constructed by Owner within five hundred (500) of the boundary line between
the Property and the Adjacent Property (other than improvements relating to the
road described in Section 4.2.3), which approval shall not be unreasonably
withheld or delayed. Optionee acknowledges that Owner intends to improve all or
part of the Adjacent Property with estate homes with an aggregate density not
greater than five (5) homes per acre or more and Optionee hereby approves of any
15
such improvements on the Adjacent Property. Without limiting Owner's approval
rights under this Section, Owner acknowledges that Optionee intends to improve a
portion of the Property with a gambling casino, parking and related facilities.
Upon the Close of Escrow, a covenant running with the land ("Covenant") in the
form of Exhibit "F" attached hereto and incorporated herein executed and
acknowledged by Owner and Optionee shall be recorded against the Property and
the Adjacent Property.
5.9 Changes to Physical Condition. Except as contemplated by Section
5.8, so long as this Agreement is in effect, Owner will not make any changes to
the physical condition of the Property that would materially and adversely
affect Optionee's proposed use and development of the Property without
Optionee's consent.
Article 6
REPRESENTATIONS AND WARRANTIES
6.1 Optionee's Independent Investigations Regarding the Property. By
its execution of this Agreement, Optionee acknowledges that it has made or will
make its own independent investigations as deemed necessary or appropriate
concerning the use, sale, development or suitability for development of the
Property and the status of any Governmental Approvals for the Property. Except
as otherwise specifically provided in Section 6.7 of this Agreement, Optionee is
relying solely on its own investigations and not on any representations made by
Owner. Optionee acknowledges that Owner has made no representations regarding
any development potential of the Property, the physical condition of the
Property, the status of any existing, pending or future entitlements and/or the
necessity or existence of any fees, dedications, charges or costs associated
with the development or marketing of the Property or future regulations relating
to the Property or whether any approvals or permits may be required or granted
or, if granted, whether such approvals or permits may be subject to reversal by
reason of challenges thereto by private parties or Governmental Agencies. If any
of the matters investigated by Optionee changes after the Feasibility Period or
new regulations or requirements of Governmental Agencies are imposed or there is
a challenge or reversal of any approvals or permits previously obtained,
Optionee will not be entitled to rescind this Agreement or its purchase of any
portion of the Property or to a return of its Option Payments.
6.2 As-Is Purchase. Optionee is relying solely upon its own
inspection, investigation and analyses of the foregoing matters in entering into
this Agreement and, except for the express representations and warranties of
Owner set forth in Section 6.7, is not relying in any way upon any
representations, statements, agreements, warranties, studies, reports,
descriptions, guidelines or other information or material furnished by Owner or
its representatives, whether oral or written, express or implied, of any nature
whatsoever regarding any such matters. Optionee further acknowledges and agrees
that the Property Documents and other documents or information provided by Owner
to Optionee are being made available to Optionee for informational purposes
only, and, Owner is making no representations or warranties regarding such
16
Property Documents, other documents or other information, including, without
limitation, the accuracy or completeness of any information contained therein.
Optionee will acquire the Property, if at all, on the Close of Escrow in its
then "As-Is" state and condition, without representation by Owner or its
representatives as to any matter, whether or not expressly mentioned herein.
Optionee, by its execution of this Agreement, represents and covenants that
Optionee will, during the Feasibility Period, satisfy itself as to the condition
of the Property and their suitability for the development purposes intended by
Optionee. No patent or latent condition affecting the Property in any way,
whether or not known or discoverable or hereafter discovered (collectively, the
"Property Conditions"), shall give Optionee the right to obtain a refund of its
Option Payments or affect its obligation to purchase the Property or any other
obligation contained in this Agreement, nor shall give rise to any right of
damages, specific performance, rescission or otherwise against Owner. Optionee
acknowledges that Owner only recently acquired the Property pursuant to an
estate sale administered by the Probate Court and has very limited information
regarding the Property.
6.3 Governmental Approvals. Optionee acknowledges that in entering
into this Agreement it is relying solely upon its own investigations regarding
any requirements for Governmental Approvals and not upon any representations
made by Owner. Owner makes no representation or warranties regarding the
development and/or use of the Property or any part thereof. Optionee has sole
responsibility for processing approvals and constructing improvements on the
Property. Owner has not obtained, and by accepting the Optionee's Option
Payments hereunder, Owner is not warranting that it has and will have obtained,
any governmental permits or other approvals for the development of the Property.
All expenses and responsibility associated with obtaining any Governmental
Approvals shall be the sole responsibility of Optionee. If Optionee fails to
obtain any Governmental Approvals required for development of the Property,
Optionee will not be entitled to rescind this Agreement, to the return of its
Option Payments or to reimbursement for any costs or expenses incurred by
Optionee in connection with Optionee's investigations or development of the
Property, whether prior or subsequent to the execution hereof, and Owner will
not, under any circumstances, make any other payment to Optionee for alleged
lost profits or otherwise. Optionee hereby waives and absolutely releases any
claim it may now or hereafter have against Owner for such reimbursements or
payments. Without limiting the generality of the foregoing, Optionee will not
have the right to any such payment because of Optionee's inability to obtain
construction or permanent financing for any Property, or by reason of any claim
under the doctrine of impossibility of performance.
6.4 Investigations Regarding Districts. Optionee shall make its own
investigations regarding the formation of any pending Districts or any Districts
formed prior to the Close of Escrow that may affect the Property and the
improvements that may be constructed under such Districts.
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6.5 Natural Hazard Disclosure Act. Prior to the Closing Date, Owner
shall provide Optionee with a Natural Hazard Disclosure Statement ("Natural
Hazard Disclosure Statement") in substantially the form attached hereto as
Exhibit "E" and incorporated herein by this reference pursuant to the Natural
Hazard Disclosure Act, California Government Code Sections 8589.3, 8589.4, and
51183.5, and California Public Resources Code Sections 2621.9, 2694, and 4136,
and any successor statutes or laws (collectively, the "Act"), provided that if,
as of the Close of Escrow, the Act does not require delivery of the Natural
Hazards Disclosure Statement to Optionee, then Owner shall have no obligations
under this Section. Optionee acknowledges and agrees that nothing contained in
the Natural Hazard Disclosure Statement shall release Optionee from its
obligation to fully investigate the condition of the Property, including,
without limitation, whether the Property is located in any natural hazard areas
and that Optionee has the expertise to perform such investigations and has
agreed to do so under the terms of this Agreement. Optionee further acknowledges
and agrees that the matters set forth in the Natural Hazard Disclosure Statement
may change on or prior to the Close of Escrow and that Owner has no obligation
to update, modify, or supplement the Natural Hazard Disclosure Statement. The
provision of the Natural Hazard Disclosure Statement to Optionee shall not be
deemed or construed to limit the scope or effect of Optionee's waiver under
Section 6.9 or the provisions contained in this Article. Optionee shall be
solely responsible for preparing and delivering its own Natural Hazard
Disclosure Statement to subsequent prospective purchasers of the Property.
6.6 Optionee's Representations and Warranties. In addition to any
other representations and warranties of Optionee hereunder, Optionee makes the
following representations and warranties to Owner. Such representations and
warranties shall be true and correct as of the Effective Date and on the Closing
Date, and shall survive the Close of Escrow. Optionee agrees to indemnify,
defend and hold Owner harmless from and against any losses, costs, damages and
expenses (including, but not limited to, reasonable attorneys' fees and costs)
incurred by Owner to the extent arising from any material breach by Optionee of
its representations and warranties set forth in this Section 6.6.
6.6.1 Ownership of Optionee. The sole members of Lakes Kean
Argovitz Resorts-California, LLC are Lakes Gaming Inc. ("Lakes Gaming") and Kean
Argovitz Resorts, Inc. ("Resorts"). ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ own one
hundred percent (100%) of the stock of Resorts and control the management of
Resorts. Lakes is a publicly traded company listed on NASDAQ. Neither ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ nor any of the officers or directors of Lakes Gaming (i)
have been convicted of a felony, (ii) are under indictment or, to their
knowledge, under investigation by any governmental authority for fraud or other
activities that would constitute a felony or (iii) are prohibited from doing
business in any state as a result of past activities.
6.6.2 Optionee's Authority. Optionee is a duly organized and
validly existing limited liability company formed under the laws of the State of
Delaware and duly qualified to transact business in the State of California. The
18
entry by Optionee into the transaction contemplated by this Agreement and the
performance by Optionee of all of its obligations in connection herewith have
been duly and validly authorized by all necessary action(s), are in accordance
with applicable law and are not in violation of Optionee's articles of formation
or operating agreement. This Agreement and all additional documents delivered in
connection with this Agreement have been duly and validly executed and delivered
to Optionee and constitute the legal, valid and binding obligations of Optionee.
Each individual signing this Agreement on behalf of Optionee represents and
warrants to Owner that he or she has authority to do so.
6.7 Owner's Representations and Warranties. For purposes of this
Section, the term "actual knowledge" of Owner or any other similar term shall
mean the actual knowledge of R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ without
investigation or inquiry or duty of investigation or inquiry. These two
representatives of Owner are the primary two officers of Owner involved in the
acquisition of the Property and the management and ownership of the Property for
Owner. Such individuals are making such representations and warranties on behalf
of Owner in their capacities as officers of Owner and not in their individual
capacities and, as a result, Owner (and not such individuals) shall be liable in
the event of a breach of such representations. Such representations and
warranties shall be true and correct as of the Effective Date and, unless Owner
provides Optionee with written notice of any change in such representations and
warranties, on the Closing Date, and shall survive the Closing Date only for a
period of one year. If Owner gives Optionee notice of any change in the
representations and warranties prior to the Close of Escrow, and if Optionee
nevertheless elects to proceed with the Close of Escrow, Optionee shall be
deemed to have waived any and all claims and other rights against Owner with
respect to the matters described in such notice. Owner will give Optionee notice
of any such change no later than the later of (i) five (5) Business Days prior
to the Closing Date or (ii) one (1) Business Day after Owner obtains actual
knowledge of such change. Any and all claims and other rights relating to any
actual or alleged breach of the representations and warranties contained in this
Section shall be deemed fully waived and released on the date which is one (1)
year after the Closing Date except to the extent any such claims or rights are
set forth in an action brought by Optionee against Owner no later than one (1)
year after the Closing Date. Subject to the foregoing time limitation on claims,
Owner agrees to indemnify, defend and hold Optionee harmless from and against
any losses, costs, damages and expenses (including, but not limited to,
reasonable attorneys' fees and costs) incurred by Optionee to the extent
resulting from any material breach by Owner of Owner's representations and
warranties set forth in this Section 6.7.
6.7.1 Pending Actions or Proceedings. Except as disclosed in the
Property Documents or this Agreement, Owner has no actual knowledge of (i) any
claims, actions, suits, condemnation actions or other proceedings pending or
threatened by any person or entity, or (ii) any violations of any law, statute,
governmental regulation or requirement that, in either case, may materially and
adversely affect the Property.
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6.7.2 No Agreements. To Owner's actual knowledge, there are no
agreements, leases, occupancy agreements, rights of first refusal, or options to
purchase that will be binding upon the Property after the Close of Escrow,
except as disclosed in the Property Documents or in the Preliminary Report or
otherwise included as part of the Permitted Exceptions.
6.7.3 Hazardous Materials. To Owner's actual knowledge, no party
has caused or permitted, any generation, location, transportation, storage,
treatment, discharge, disposal or release of any Hazardous Materials upon or
under the Property in violation of any Environmental Laws, except as disclosed
in the Property Documents or in this Agreement.
6.7.4 Owner's Authority. Owner is a duly organized and validly
existing limited liability company formed under the laws of the State of
Delaware, duly qualified to transact business in the State of California. The
entry by Owner into the transaction contemplated by this Agreement and the
performance by Owner of all of its obligations in connection herewith have been
duly and validly authorized by all necessary action(s), are in accordance with
applicable law and are not in violation of Owner's operating agreement or other
relevant agreements. This Agreement and all additional documents delivered in
connection with this Agreement have been duly and validly executed and delivered
to Optionee and constitute the legal, valid and binding obligations of Owner.
6.7.5 Title Defects. To Owner's actual knowledge, there are no
defects in Owner's title to the Property, except as disclosed in the Property
Documents or in the Preliminary Report or otherwise included as part of the
Permitted Exceptions.
6.8 Hazardous Materials.
6.8.1 Hazardous Materials Report. By its execution of this
Agreement, Optionee acknowledges its receipt of the Owner Hazardous Materials
Report. Optionee acknowledges and agrees that the Owner Hazardous Materials
Report is provided by Owner for informational purposes only, that Owner does not
make any representations or warranties as to the accuracy or completeness of the
Owner Hazardous Materials Report.
6.8.2 Optionee's Independent Review. Optionee shall conduct its
own investigations and studies of the Property as it deems necessary or
appropriate to determine the presence or absence of Hazardous Materials on or
within the Property. Optionee for itself and Optionee's Agents hereby (a) agrees
that Optionee is relying solely on its own investigation of the Property
covering the effect of any Hazardous Materials that may be on or within the
Property, whether disclosed by such investigations or not (collectively, the
"Hazardous Materials Effects") and (b) assumes the risk of any and all
liabilities, claims, demands, suits, judgments, losses, damages, expenses
(including, without limitation, attorneys' fees) and other obligations arising
out of or incurred in connection with the Hazardous Materials Effects, if any.
20
6.9 Assumption of Risks, Release and Indemnity. To the maximum extent
permitted by law, Owner and Owner's Indemnitees shall not be liable for any
loss, damage, injury or claim of any kind or character to any person or property
arising from or caused by: (a) the Property Conditions, the Property, the
development or use of the Property, and/or the construction, use or sale of
improvements on the Property; (b) the design, construction, engineering or other
work with respect to the Property provided or performed by or caused by or
attributed to Owner or Owner's Indemnitees either before or after the Effective
Date and/or the Close of Escrow, including any defects therein; (c) a violation
or alleged violation by Optionee, its employees or agents of any law now or
hereinafter enacted; (d) any slope failure or subsurface geologic or groundwater
condition; (e) the design, construction, engineering or other work with respect
to the Property provided or performed by or caused by or attributable to
Optionee or Optionee's Agents either before or after the Close of Escrow,
including any defect therein; (f) the application of the principles of strict
liability with respect to any act or omission by Optionee or Optionee's Agents
in connection with the Property; (h) the delivery of the Natural Hazards
Disclosure Statement; (i) any other cause whatsoever in connection with
Optionee's use of the Property or Optionee's performance or breach under this
Agreement; and (j) any Hazardous Materials Effects (collectively, the "Assumed
Risks"). Optionee, for itself and for the Optionee's Agents, hereby releases,
waives, discharges, covenants not to ▇▇▇, indemnifies, protects, defends (with
legal counsel acceptable to Owner) and agrees to hold harmless Owner and Owner's
Indemnitees, and each of them, from and against any and all any liability, loss,
damage, injury, claim, cost and expense (including attorneys' fees and costs) of
any kind or character to any person or property arising from, related to or
caused by the Assumed Risks. The foregoing waiver and indemnity shall apply to
any claim or action brought by a private party or by a Governmental Agency under
any statute or common law now or hereinafter in effect. With respect to design,
construction methods, materials, locations and other matters for which Owner has
given or will give its approval, recommendation or other direction, the
foregoing waiver and indemnity shall apply irrespective of Owner's approval,
recommendation or other direction. Optionee agrees that the above waiver and
release extends to all claims of any nature and kind whatsoever, known or
unknown, suspected or unsuspected, and Optionee, for itself and for the
Optionee's Agents, waives the benefits of California Civil Code Section 1542,
which provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the releasee, which if known by him must have materially affected his
settlement with the debtor."
Notwithstanding anything to the contrary set forth in this Section, nothing
contained in this Section shall operate to relieve Owner or Owner's Indemnitees
from any loss, damage, injury or claim to the extent found by a court of
21
competent jurisdiction to have been caused primarily by the active negligence or
willful misconduct of Owner or the Owner's Indemnitees (but the act or failure
to act of any consultant, contractor, or other agent or representative of Owner
or any Owner's Indemnitee other than an officer or employee of Owner shall not
be attributed to Owner or such Owner's Indemnitee).
Article 7
THE CLOSING
7.1 Close of Escrow. Escrow Agent shall close the Escrow on the
Closing Date by (i) filing for record the Covenant, the Grant Deed and such
other documents as may be necessary to procure the Title Policy and (ii)
delivering funds and documents as set forth in Article 9 WHEN AND ONLY WHEN each
of the conditions set forth below has been satisfied.
7.1.1 Funds and Instruments. All funds and instruments required
pursuant to Article 3 have been delivered to Escrow Agent.
7.1.2 Satisfaction of Conditions Precedent. Each of the
conditions precedent set forth in Article 4 has been, or upon such closing shall
be, satisfied as provided for in Article 4.
7.2 Recordation. Escrow Agent shall file the Grant Deed for
recordation in the Office of the County Recorder for San Diego County.
7.3 Earlier Closing. If all of the conditions set forth in Sections
7.1.1 and 7.1.2 become satisfied at a date earlier than the Closing Date, Escrow
Agent shall close the Escrow at such earlier date if Escrow Agent obtains the
consent of Optionee and Owner to do so.
Article 8
PRORATIONS, FEES AND COSTS
8.1 Thirty Day Month. Escrow Agent will prorate between the parties,
in cash, to the Close of Escrow, County, city and special district (if any) real
property taxes and assessments for the Property based on the latest information
available to Escrow Agent. All prorations and/or adjustments called for in this
Agreement are to be made on the basis of a thirty (30) day month, unless
otherwise specifically instructed in writing.
8.2 Supplemental Taxes. Any supplemental taxes arising on or after
the Close of Escrow shall be the sole responsibility of Optionee.
8.3 Owner's Fees and Costs. Owner shall pay (i) County Documentary
Transfer Tax in the amount Escrow Agent determines to be required by law, (ii)
the fee for the ALTA Standard Title Policy premium for the Property, (iii)
one-half of Escrow Agent's escrow fee and (iv) usual seller's document-drafting
and recording charges.
22
8.4 Optionee's Fees and Costs. Optionee shall pay (i) one-half of
Escrow Agent's escrow fee, (ii) usual buyer's document-drafting and recording
charges, (iii) if Optionee has requested an ALTA insurance policy, the
difference between the cost of an ALTA Standard Title Policy and an ALTA
Extended Title Policy, (iv) the cost for the joint protection or ALTA Lender's
Title Policy, and (v) the fee for any surveys obtained by Optionee and any
endorsements requested by Optionee.
8.5 Escrow Cancellation Charges Due to a Default. If Escrow fails to
close due to either party's default, the defaulting party shall pay all Escrow
cancellation charges. If Escrow fails to close for any reason other than the
foregoing, Optionee and Owner shall each pay one-half (1/2) of any Escrow
cancellation charges. "Escrow cancellation charges" means all fees, charges and
expenses incurred by Escrow Agent, including all expenses incurred in connection
with issuance of the Preliminary Report and other title matters.
Article 9
DISTRIBUTION OF FUNDS AND DOCUMENTS
9.1 Deposit of Funds. All cash, if any, received hereunder by Escrow
Agent shall be, until the Close of Escrow unless earlier released pursuant to
the terms of this Agreement, kept on deposit in an interest bearing account
reasonably acceptable to Optionee and Owner.
9.2 Payment of Liens at Closing. At the Close of Escrow, Escrow Agent
shall pay, from funds to which Owner is entitled and from funds, if any,
deposited by Owner with Escrow Agent, to the obligees thereof all liens and
encumbrances other than those permitted by this Agreement to be shown in the
Title Policy.
9.3 Recorded Documents. Escrow Agent shall cause the County Recorder
of San Diego County to mail Owner's Grant Deed (and each other document which is
herein expressed to be, or by general usage is, recorded) after recordation, to
the grantee, beneficiary or person (i) acquiring rights under said document or
(ii) for whose benefit said document was acquired.
9.4 Unrecorded Documents. At the Close of Escrow, Escrow Agent shall
deliver by United States mail (or will hold for personal pickup, if requested)
one (1) copy of each nonrecorded document received under this Agreement by
Escrow Agent to the payee or person (i) acquiring rights under the document or
(ii) for whose benefit the document was acquired. Copies of any original
documents delivered to one party shall be delivered to the other party.
9.5 Payment of Funds at Closing. At the Close of Escrow, Escrow Agent
shall wire (i) to Owner's account, or order, in accordance with instructions of
23
Owner, or shall hold for personal pickup, if requested, the Cash, plus any
proration or other credits to which Owner is be entitled less any appropriate
proration or other charges and (ii) to Optionee, or order, any excess funds
theretofore delivered to Escrow Agent by Optionee.
9.6 Conformed Copies. At the Close of Escrow, Escrow Agent shall
deliver to Owner a copy of the Owner's Grant Deed (conformed to show recording
date) and each document recorded to place title in the condition required by the
Agreement.
Article 10
REMEDIES
10.1 LIMITATION ON OPTIONEE'S REMEDIES. AS A MATERIAL INDUCEMENT AND
CONSIDERATION FOR OWNER TO ENTER INTO THIS AGREEMENT, OPTIONEE ACKNOWLEDGES AND
AGREES THAT IT IS BUYING THE PROPERTY FOR COMMERCIAL PURPOSES, THAT THE PROPERTY
IS NOT UNIQUE AND THAT THERE IS OTHER PROPERTY THAT IS AVAILABLE IN SAN DIEGO
COUNTY. ACCORDINGLY, OPTIONEE ACKNOWLEDGES AND AGREES THAT IF OWNER DEFAULTS IN
THE PERFORMANCE OF ANY OF ITS MATERIAL OBLIGATIONS UNDER THIS AGREEMENT,
OPTIONEE'S SOLE AND EXCLUSIVE REMEDY SHALL BE TO TERMINATE THIS AGREEMENT BY
WRITTEN NOTICE DELIVERED TO OWNER, RECEIVE A REFUND OF THE OPTION PAYMENTS AND
ANY EXTENSION PAYMENTS TOGETHER WITH INTEREST THEREON AT THE PRIME RATE, AND
RECOVER AN AMOUNT EQUAL TO OPTIONEE'S ACTUAL OUT OF POCKET COSTS IN CONNECTION
WITH ITS INVESTIGATIONS OF THE PROPERTY UP TO A MAXIMUM AMOUNT OF ONE HUNDRED
FIFTY THOUSAND DOLLARS ($150,000.00). OPTIONEE SHALL NOT BE ENTITLED UNDER ANY
CIRCUMSTANCES TO RECOVER ANY OTHER DAMAGES, INCLUDING LOST PROFITS RELATING TO
OPTIONEE'S PROPOSED DEVELOPMENT OF THE PROPERTY AND ANY OTHER COMPENSATORY OR
CONSEQUENTIAL DAMAGES, AND OPTIONEE HEREBY EXPRESSLY AND KNOWINGLY WAIVES ANY
AND ALL RIGHTS TO RECOVER ANY SUCH OTHER DAMAGES THAT MIGHT OTHERWISE EXIST,
INCLUDING ANY RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 3306. OPTIONEE FURTHER
EXPRESSLY AND KNOWINGLY WAIVES ANY AND ALL OTHER REMEDIES THAT MIGHT OTHERWISE
BE AVAILABLE AT LAW OR IN EQUITY AGAINST OWNER, INCLUDING, WITHOUT LIMITATION,
ANY AND ALL RIGHTS TO PURSUE AN ACTION AGAINST OWNER FOR SPECIFIC PERFORMANCE.
OPTIONEE SHALL NOT PREPARE, FILE OR RECORD A LIS PENDENS AGAINST THE PROPERTY IF
OWNER DEFAULTS IN THE PERFORMANCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND EXPRESSLY WAIVES ANY AND ALL RIGHTS TO DO SO. OPTIONEE ACKNOWLEDGES THAT A
MATERIAL INDUCEMENT TO OWNER'S DECISION TO SELL THE PROPERTY TO OPTIONEE IS THE
24
AGREEMENT OF OPTIONEE NOT TO IMPEDE OR INTERFERE WITH A SUBSEQUENT SALE OF THE
PROPERTY BY FILING AN ACTION FOR SPECIFIC PERFORMANCE AND/OR FILING A LIS
PENDENS AGAINST THE PROPERTY, AND THAT OWNER WILL BE DAMAGED IF OPTIONEE FAILS
TO COMPLY WITH THE REQUIREMENTS OF THIS SECTION. NOTWITHSTANDING THE FOREGOING,
IF THE CLOSE OF ESCROW DOES NOT OCCUR DUE TO OWNER'S DEFAULT, OPTIONEE MAY
ELECT, AS AN ALTERNATIVE TO THE REMEDY SET FORTH ABOVE, AS ITS SOLE AND
EXCLUSIVE REMEDY, TO SPECIFICALLY ENFORCE OWNER'S OBLIGATION TO EXECUTE AND
DELIVER THE GRANT DEED AND TO CONVEY THE PROPERTY TO OPTIONEE. OPTIONEE SHALL
NOT HAVE THE RIGHT TO SPECIFICALLY ENFORCE ANY OF OWNER'S OTHER OBLIGATIONS
UNDER THIS AGREEMENT REQUIRED TO BE PERFORMED PRIOR TO THE CLOSE OF ESCROW AND
SHALL NOT HAVE THE RIGHT TO RECOVER DAMAGES OF ANY KIND OR TO OBTAIN OTHER
EQUITABLE RELIEF, INCLUDING, WITHOUT LIMITATION, ANY EQUITABLE ADJUSTMENT TO THE
TERMS OF THE SALE OF THE PROPERTY, IN CONNECTION WITH ANY SUCH ACTION FOR
SPECIFIC PERFORMANCE. AS A CONDITION PRECEDENT TO OPTIONEE'S ELECTION TO PURSUE
AN ACTION FOR SPECIFIC PERFORMANCE, OPTIONEE SHALL HAVE FULLY PERFORMED ALL OF
OPTIONEE'S OBLIGATIONS AND MADE ALL DELIVERIES REQUIRED TO BE PERFORMED OR
DELIVERED ON OR BEFORE THE CLOSE OF ESCROW, INCLUDING WITHOUT LIMITATION,
DELIVERING TO ESCROW THE BALANCE OF THE PURCHASE PRICE AND ALL OTHER FUNDS
REQUIRED OF OPTIONEE ("CLOSING FUNDS") AND WITHOUT ASSERTING ANY EXCUSE OF
OPTIONEE'S PERFORMANCE DUE TO OWNER'S DEFAULT OR OTHERWISE; PROVIDED, HOWEVER,
IF OPTIONEE THEN HAS THE RIGHT TO ONE OR MORE EXTENSIONS PURSUANT TO SECTION
2.3.1, THEN OPTIONEE MAY PURSUE AN ACTION FOR SPECIFIC PERFORMANCE SO LONG AS
(i) OPTIONEE PROPERLY EXERCISES ITS EXTENSIONS AND FULLY PERFORMS ITS
OBLIGATIONS HEREUNDER, INCLUDING TIMELY PAYING DIRECTLY TO OWNER, OUTSIDE OF
ESCROW, CASH IN AN AMOUNT EQUAL TO EACH EXTENSION PAYMENT, (ii) OPTIONEE TIMELY
EXERCISES THE OPTION AND (iii) ON OR BEFORE THE CLOSING DATE, OPTIONEE FULLY
PERFORMS ALL OF OPTIONEE'S OTHER OBLIGATIONS AND MAKES ALL DELIVERIES, INCLUDING
DELIVERY OF THE CLOSING FUNDS, REQUIRED TO BE PERFORMED OR DELIVERED ON OR
BEFORE THE CLOSE OF ESCROW, ALL WITHOUT ASSERTING ANY EXCUSE OF OPTIONEE'S
PERFORMANCE. OPTIONEE ACKNOWLEDGES THAT OPTIONEE'S FULL PERFORMANCE OF ITS
OBLIGATIONS UNDER SECTIONS 2.3.1 AND 3.4.1 ABOVE IN EVERY DETAIL IS MATERIAL TO
OWNER, AND THEREFORE, IF OPTIONEE FAILS TO SATISFY ANY SUCH REQUIREMENTS, OWNER
SHALL BE ENTITLED TO AN IMMEDIATE DISMISSAL OF ANY SUCH ACTION AND AN IMMEDIATE
EXPUNGEMENT OF ANY LIS PENDENS; PROVIDED, HOWEVER, IF OWNER DOES NOT DELIVER THE
25
GRANT DEED TO ESCROW AGENT WITHIN THREE (3) BUSINESS DAYS AFTER OWNER RECEIVES
NOTICE THAT OPTIONEE HAS DELIVERED THE CLOSING FUNDS TO ESCROW AGENT, ESCROW
AGENT SHALL AUTOMATICALLY AND WITHOUT FURTHER INSTRUCTIONS RETURN THE CLOSING
FUNDS TO OPTIONEE, AND SUCH ACTION SHALL NOT AFFECT OPTIONEE'S RIGHTS UNDER THIS
SECTION.
10.2 WAIVER OF PUNITIVE DAMAGES. OPTIONEE AND OWNER EACH WAIVE ANY
AND ALL RIGHTS AGAINST THE OTHER TO AN AWARD OF PUNITIVE DAMAGES WITH RESPECT TO
ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT.
Article 11
ASSIGNABILITY; BANKRUPTCY
11.1 Assignment by Optionee. Optionee may not, voluntarily or by
operation of law, assign or otherwise transfer any of its rights or obligations
under this Agreement without obtaining the prior written consent of Owner, which
consent may be withheld by Owner in its sole, arbitrary and absolute discretion.
Any attempted assignment made in violation of this provision shall be null and
void. Notwithstanding the foregoing, Optionee may assign this Agreement to (i) a
wholly-owned subsidiary of Optionee or (ii) to a trust to be established
pursuant to guidelines of the United States Bureau of Indian Affairs solely for
the benefit of the Jamul Mission Indian Tribe, provided that Optionee gives
Owner prior written notice of such assignment and the assignee assumes all of
Optionee's obligations under this Agreement in a written assignment and
assumption agreement in favor of and acceptable to Owner.
11.2 Bankruptcy. If (a) all or substantially all of Optionee's assets
are placed in the hands of a receiver or trustee, and such receivership or
trusteeship continues for a period of thirty (30) days, (b) Optionee makes an
assignment for the benefit of creditors, (c) Optionee is adjudicated a bankrupt,
(d) Optionee institutes any proceeding under any law relating to bankruptcy
wherein Optionee seeks to be adjudicated a bankrupt, or to be discharged of its
debts, or to effect a plan of liquidation, composition or reorganization, (e) an
involuntary proceeding is filed against Optionee under any bankruptcy laws and
Optionee consents thereto or acquiesces therein by pleading or default or such
involuntary proceeding is not dismissed within ninety (90) days, or (f)
substantially all of Optionee's assets are attached or seized by judicial order
where such seizure is not discharged within thirty (30) days, then (i) Optionee
will be deemed to be in default hereunder, (ii) this Agreement, including,
without limitation, the right to purchase granted herein will not become an
asset in any of such proceedings, (iii) in addition to all other available
remedies, it will be lawful for Owner to declare this Agreement terminated, and
(iv) Optionee will have no further claim on the Property or hereunder or
26
otherwise and no right to the return of its Option Payments or any other
payments or expenses incurred pursuant to this Agreement.
11.3 Assignment by Owner. Owner may, at any time, assign or otherwise
transfer its rights and obligations under this Agreement, provided Owner gives
Optionee prior written notice of such assignment and the assignee assumes all of
Owner's obligations under this Agreement in a written assignment and assumption
agreement in favor of and acceptable to Optionee. Alternatively, Owner shall
have the right to assign all of its interest under this Agreement, provided it
provides advance written notice to Optionee and Owner is not relieved of any of
its obligations under this Agreement during the term hereof or those obligations
that survive the Close of Escrow.
Article 12
CONDEMNATION
12.1 Eminent Domain. If, prior to the Close of Escrow, all of the
Property is taken or appropriated by any public or quasi-public authority under
the power of eminent domain or such an eminent domain action is threatened
pursuant to a resolution of intention to condemn filed by any public entity,
then Optionee may terminate this Agreement without further liability hereunder.
If there is a partial taking of the Property or the threatened partial taking
pursuant to a resolution of intention to condemn, and if such taking would
materially and adversely affect Optionee's ability to develop a gaming casino
and related parking facilities, then Optionee may elect to either (a) terminate
this Agreement and receive a refund of all of Optionee's Option Payments or (b)
purchase the Property without a reduction in the Purchase Price, in which case
Owner will assign to Optionee all condemnation proceeds attributable to the
condemnation of the Property. The parties acknowledge and agree that any such
partial taking of the Property would adversely affect the value of the remaining
portion of the Property.
12.2 Condemnation. As used in this Article, "condemnation", or
"condemned" or "taking" shall mean the exercise of, or intent to exercise, the
power of eminent domain, expressed in writing, as well as the filing of any
action or proceeding for such purpose, by any person, entity, body, agency or
authority having the right or power of eminent domain (the "condemning
authority" herein), and shall include a voluntary sale by Owner to any such
condemning authority, either under the threat of condemnation or while
condemnation proceedings are pending, and the condemnation shall be deemed to
occur in point of time upon the actual physical taking of possession pursuant to
the exercise of said power of eminent domain.
Article 13
GENERAL PROVISIONS
13.1 Construction of Agreement. The Agreement contained herein shall
not be construed in favor of or against either party, but shall be construed as
27
if both parties prepared this Agreement. Optionee and Owner acknowledge that
they have been represented, or have had the opportunity to be represented, by
counsel of their own choice. Neither Optionee nor Owner is relying upon any
legal advice from the other party's counsel regarding the subject matter
thereof. Both parties acknowledge that they understand the terms and conditions
of this Agreement and the terms and conditions of all other documents and
agreements executed in connection herewith and that they sign the same freely.
Neither Optionee nor Owner shall deny the enforceability of any provision of
this Agreement or any of the other documents or agreements executed in
connection herewith on the basis that it did not have legal counsel or that it
did not understand any such term or condition. This Agreement and any
ambiguities or uncertainties contained in this Agreement shall be equally and
fairly interpreted for the benefit of and against all parties to this Agreement
and shall further be construed and interpreted without reference to the identity
of the party or parties preparing this document, it being expressly understood
and agreed that the parties hereto participated equally in the negotiation and
preparation of this Agreement or have had equal opportunity to do so.
Accordingly, the parties hereby waive the legal effect of California Civil Code
Section 1654 or any successor and/or amended statute which in part states that
in cases of uncertainty, the language of the contract should be interpreted most
strongly against the party who caused the uncertainty to exist.
13.2 Captions. The captions used in this Agreement are for
convenience only and are not a part of this Agreement and do not in any way
limit or amplify the terms and provisions hereof.
13.3 Governing Law. This Agreement and the documents in the forms
attached as exhibits hereto shall be governed by and construed under the
internal laws of the State of California without regard to choice of law rules.
This Agreement shall be deemed made and entered into in San Diego County.
13.4 Time of the Essence. Time is of the essence of each and every
provision of this Agreement and the Optionee, by execution of this Agreement,
specifically acknowledges the importance of observing each and every time period
in this Agreement.
13.5 Successors and Assigns. Subject to the restrictions and
prohibitions on assignment set forth in Article 11, each and all of the
covenants and conditions of this Agreement will inure to the benefit of and be
binding upon the successors in interest of Owner and the successors, heirs,
representatives and assigns of Optionee. As used in this Section, "successors"
means successors to the parties' interest in the Property, successors to all or
substantially all of the parties' assets, and successors by merger or
consolidation.
13.6 Remedies Cumulative. Except as expressly limited by this
Agreement, all rights, options and remedies of Owner contained in this Agreement
are cumulative, and no one of them is exclusive of the other, and Owner will
28
have the right to pursue any one or all of such remedies or to seek damages or
specific performance in the event of any breach of the terms hereof by Optionee
or to pursue any other remedy or relief that may be provided by law or equity,
whether or not stated in this Agreement.
13.7 Waiver. No waiver by Owner or Optionee of a breach of any of the
terms, covenants or conditions of this Agreement by the other party will be
construed or held to be a waiver of any succeeding or preceding breach of the
same or any other term, covenant or condition herein contained. No waiver of any
default by Owner or Optionee under this Agreement will be implied from any
omission by the other party to take any action on account of the default if the
default persists or is repeated, and no express waiver will affect any default
other than as specified in the waiver. The consent or approval by either party
to or of any act by the other party requiring consent or approval does not waive
or render unnecessary consent or approval to or of any subsequent similar acts.
13.8 Attorney's Fees. If any action, arbitration, judicial reference
or other proceeding is instituted between Owner and Optionee in connection with
this Agreement, the losing party shall pay to the prevailing party a reasonable
sum for attorneys' and experts' fees and costs incurred in bringing or defending
such action or proceeding and/or enforcing any judgment granted therein, all of
which shall be deemed to have accrued upon the commencement of such action or
proceeding and shall be paid whether or not such action or proceeding is
prosecuted to final judgment. Any judgment or order entered in such action or
proceeding shall contain a specific provision providing for the recovery of
attorneys' fees and costs, separate from the judgment, incurred in enforcing
such judgment. The prevailing party shall be determined by the trier of fact
based upon an assessment of which party's major arguments or positions taken in
the proceedings could fairly be said to have prevailed over the other party's
major arguments or positions on major disputed issues. For the purposes of this
section, attorneys' fees shall include, without limitation, fees incurred in the
following: (1) post-judgment motions; (2) contempt proceedings; (3) garnishment,
levy, and debtor and third party examinations; (4) discovery; (5) any appeals;
and (6) bankruptcy proceedings. This Section is intended to be expressly
severable from the other provisions of this Agreement, is intended to survive
any judgment and is not to be deemed merged into the judgment.
13.9 Severability. If any phrase, clause, sentence, paragraph,
section, article or other portion of this Agreement is held by any court of
competent jurisdiction to be illegal, null or void or against public policy, the
remaining portions of this Agreement will not be affected thereby and will
remain in force and effect to the fullest extent permissible by law.
13.10 Gender and Number. In this Agreement (unless the context
requires otherwise), the masculine, feminine and neuter genders and the singular
and the plural include one another.
29
13.11 No Real Estate Brokerage Commission. Owner shall not pay any
real estate, brokerage, finders or other commission or fee in connection with
the transaction contained in this Agreement. Each party hereby indemnifies,
protects, defends (with legal counsel acceptable to the other party) and holds
the other party free and harmless from and against any and all costs and
liabilities, including, without limitation, reasonable attorneys' fees, for
causes of action or proceedings that may be instituted by any broker, agent or
finder, licensed or otherwise, claiming through, under or by reason of the
conduct of such party in connection with this transaction.
13.12 Entire Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter of this
Agreement, and all prior and contemporaneous agreements, representations,
negotiations and understandings of the parties, oral or written, are hereby
superseded and are of no further force or effect and shall not be used to
interpret this Agreement. The foregoing sentence not affect the validity of any
instruments executed by the parties in the form of the exhibits attached to this
Agreement.
13.13 Notice and Payments. Any notice to be given or other document
to be delivered by any party to the other or others under this Agreement, and
any payments from Optionee to Owner, may be delivered in person to an officer of
any party, or may be deposited in the United States mail in the State of
California, duly certified or registered, return receipt requested, with postage
prepaid, or by Federal Express or other similar overnight delivery service, or
by facsimile, addressed to the party for whom intended, as follows:
To Owner at its Otay Land Company, LLC
business office: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Optionee at its Lakes Kean Argovitz Resorts-California, LLC
business office: c/o Kean Argovitz Resorts
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
30
With a copy to: Lakes Gaming, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Kean Argovitz Resorts
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Duckor ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Chicago Title Company
Agent to: ▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may from time to time, by written notice to the other, designate a
different address, which shall be substituted for the one above specified.
Unless otherwise specifically provided for in this Agreement, all notices,
payments, demands or other communications shall be in writing and shall be
deemed to have been duly given and received (i) upon personal delivery or (ii)
as of the third Business Day after mailing by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as set
forth above, or (iii) the immediately succeeding Business Day after timely
deposit with Federal Express or other equivalent overnight delivery system or
(iv) if sent by facsimile, upon confirmation if sent before 5:00 p.m. on a
Business Day or otherwise on the Business Day following confirmation of such
facsimile, and provided that notice is also sent on the same day by one of the
methods described above.
13.14 No Partnership or Joint Venture. Optionee and Owner expressly
acknowledge and agree that they are not joint venturers or partners, and do not
have fiduciary duties with respect to one another, in any manner whatsoever, in
connection with the acquisition, development or conveyance of the Property.
Nothing in this Agreement or any communication or other action between the
parties relating to the Property, is intended or shall be construed to create a
31
joint venture, partnership or fiduciary relationship between Optionee and Owner
or their respective owners.
13.15 Modification. No modification, waiver, amendment, discharge or
change of this Agreement shall be valid unless it is in writing and signed by
the party against which the enforcement of such modification, waiver, amendment,
discharge or change is or may be sought.
13.16 No Warranties. Except as otherwise specifically provided
herein, neither Optionee nor Owner has made any representations, warranties or
agreement by or on behalf of either party to the other party as to any matters
concerning the Property. Each party waives any rights of rescission and all
claims for damages or the right to bring a suit for specific performance by
reason of any representation, warranty, or agreement, if any, not contained in
this Agreement.
13.17 Counterparts. This Agreement may be executed in counterparts,
each of which, when taken together, will constitute a fully executed original.
13.18 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are incorporated herein by reference.
13.19 Not an Offer. Owner's delivery of unsigned copies of this
Agreement is solely for the purpose of review by the party to whom delivered,
and neither the delivery nor any prior communications between the parties,
whether oral or written, will in any way be construed as an offer by Owner, nor
in any way imply that Owner is under any obligation to enter the transaction
which is the subject of this Agreement. The signing of this Agreement by
Optionee constitutes an offer which will not be deemed accepted by Owner unless
and until Owner has signed this Agreement and delivered a duplicate original to
Optionee.
13.20 Confidentiality. Unless otherwise agreed to in writing by
Owner, Optionee will keep confidential the existence, terms and all other
matters relating to this Agreement and all documents, contracts, prices, plans,
specifications, strategies, marketing programs, financial statements, reports or
other information provided to, or generated by Owner relating to the Property
and will not disclose any such information to any person other than (i) those
employees and agents of Optionee who are actively and directly participating in
the evaluation of the Property, provided that any such disclosure shall be
limited to the information needed by such employees and agents to evaluate the
Property and any such employees and agents shall agree to maintain the
confidentiality of any such information, and (ii) the United States Bureau of
Indian Affairs to the extent required to comply with applicable legal
requirements. Optionee expressly covenants and agrees that it will not disclose
any code compliance, environmental or other regulatory matters to governmental
or other authorities without the express prior written approval by Owner unless
required by law, in which case Optionee shall immediately notify Owner thereof.
Upon any termination of this Agreement for any reason, Optionee will promptly
return to Owner copies of all documents or other information pertaining to the
32
Property provided to Optionee by Owner, including, without limitation, the
Property Documents. The provisions of this Section will survive the Closing or
earlier termination of this Agreement. In addition to any other remedies
available to Owner at law or in equity, Owner will have the right to terminate
this Agreement in the event of any breach by Optionee under this Section, and
Optionee acknowledges that any such breach will be a material breach.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above-written.
OWNER: OPTIONEE:
OTAY LAND COMPANY, LLC, a LAKES KEAN ARGOVITZ RESORTS-
Delaware limited liability company CALIFORNIA, LLC, a Delaware
limited liability company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- ------------------------------
Title: President Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------- ----------------------------
Title: Director/Member
---------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: President
---------------------------
[SIGNATURES OF TWO APPROPRIATE
OFFICERS OR BOARD RESOLUTION
REQUIRED.]
33
CONSENT OF ESCROW AGENT
The undersigned Escrow Agent hereby agrees to (i) accept the
foregoing Agreement, (ii) be escrow agent under said Agreement and (iii) be
bound by said Agreement in the performance of its duties as escrow agent;
provided, however, the undersigned shall have no obligations, liability or
responsibility under (i) this Consent or otherwise unless and until said
Agreement, fully signed by the parties, has been delivered to the undersigned or
(ii) any amendment to said Agreement unless and until the same shall be accepted
by the undersigned in writing.
DATED: CHICAGO TITLE COMPANY
----------------------- ("Escrow Agent")
By:
------------------------------------
Its:
--------------------------------