▇▇▇▇▇ POINTE
OPTION AGREEMENT
1. DEFINITIONS.
1.1. DEFINITIONS OF PERSONS.
1.1.1. "SELLER" means ▇▇▇▇▇ Pointe LLC, a Minnesota limited
liability company.
1.1.2. "BUYER" means ▇▇▇▇▇▇▇▇ Bros. Construction, Inc., a
Minnesota corporation.
1.1.3. "CITY" means the City of Shorewood, a Minnesota
municipal corporation.
1.1.4. "COUNTY" means Hennepin County, Minnesota.
1.1.5. "TITLE INSURER" means Chicago Title Insurance
Company, a Missouri corporation.
1.2. DEFINITIONS OF REAL PROPERTY.
1.2.1. "LOT" means a numbered parcel of land in the Property
established by a recorded final plat and authorized
under applicable zoning ordinances for development
with a single-family residential dwelling.
1.2.2. "OUTLOT" means a lettered parcel of land established
by a recorded final plat as a possible common area,
public area or future development area.
1.2.3. "PROPERTY" means the real property legally described
in EXHIBIT A.
1.3. DEFINITIONS OF OTHER TERMS.
1.3.1. "ACQUISITION AGREEMENT" means the Acquisition and
Closing Agreement between Buyer and Seller of even
date pursuant to which Seller purchased the Property
from Buyer.
1.3.2. "AGREEMENT" means this Option Agreement.
1.3.3. "AGREEMENT DATE" means May 16, 1997.
1.3.4. "ALLOCATION PERCENTAGE" for each Lot means the
percentage derived by dividing the value of each
separate Lot for which there has been no Closing, by
the total value of all Lots in the Property for which
there have been no Closings. The initial Allocation
Percentages and values of all Lots are attached as
EXHIBIT B hereto. As Closings occur, the Allocation
Percentages for the remaining Lots for which Closings
have not occurred shall be recalculated as provided
in Section 3.
1.3.5. "BUSINESS DAYS" means all days other than Saturdays,
Sundays and legal holidays defined in Minnesota
Statutes ss. 645.44 for the purpose of serving civil
process.
1.3.6. "CLOSE" OR "CLOSING" means the completion of the
transaction whereby Buyer purchases one or more Lots
in the Property and Seller deeds the Lot(s) to Buyer.
1.3.7. "CLOSING DATE" means the date on which the Closing of
each Lot occurs.
1.3.8. "DEVELOPMENT MANAGEMENT SERVICES" means the services
to be performed by Buyer pursuant to Section 5 of
this Agreement.
1.3.9. "OPTION PERIOD(S)" are set forth in Section 2.2.
1.3.10. "PROJECT COSTS" means the total sum of ALL EXPENSES
(other than those expressly excluded in this
subsection) paid or incurred by Seller in the
operation of its business, whether direct or
indirect. By way of example, Project Costs include
but are not limited to (a) Property acquisition and
development costs, whether incurred pursuant to the
Acquisition Agreement, this Agreement or otherwise,
(b) all loan fees, points, interest, mortgage
registration fees, appraisal fees and other financing
or holding expenses, (c) all legal, accounting,
engineering, survey, environmental, appraisal,
planning, brokerage or other professional fees, (d)
all real estate taxes and assessments, recording
fees, deed taxes, sales or use taxes (e) liability,
casualty, workers compensation and title insurance,
(f) development or "in lieu" fees and dedications,
(g) Property infrastructure costs, and (h)
organizational, operational and other indirect costs
of conducting Seller's business. The ONLY expenses of
Seller's business operations which are excluded from
the definition of Project Costs are (i) salaries or
other compensation paid to Seller's members, (ii)
capital distributions to Seller's members, and (iii)
income taxes payable by Seller.
1.3.11. "PROJECT PROFORMA" means the schedule of actual and
estimated Project Costs, disbursement schedules and
Lot Closings for the Property approved by the parties
from time to time. The initial Project Proforma is
attached as EXHIBIT C hereto.
1.3.12. "PROJECT RETURN" means the amount which is the sum of
the Project Costs PLUS simple interest on disbursed
Project Costs calculated at the rate of 2% per annum.
Project Costs disbursements shall be determined no
less frequently than monthly during the course of
development and sale of the Lots.
1.3.13. "PURCHASE PRICE" is defined in Section 3.
2. GRANT OF OPTION. Seller hereby grants to Buyer the exclusive Option to
purchase Lots platted on the Property ("OPTION"), in accordance with
the terms and conditions of this Agreement. The Option does not include
the right to purchase any Outlot or other portion of the Property not
platted as a residential Lot.
2.1. OPTION CONSIDERATION. The Parties expect to fund as much of
the Project Costs as possible through a development loan. As
sole consideration for the grant of the Option (i) Buyer shall
provide liability insurance pursuant to Section 7 insuring
Seller as a named insured, (ii) Buyer agrees to perform the
Development Management Services, and (iii) Buyer will pay
monthly the amount by which Project Costs exceed disbursements
from the development loan ("MONTHLY OPTION FEE"). The Monthly
Option Fee shall be payable on the first of each month,
commencing June 1, 1997, in the initial amount of $20,000 per
month, subject to adjustment periodically in accordance with
actual operating results. The Monthly Option Fee
shall be credited against the Purchase Price of the Lots
remaining subject to the Option after the development loan is
paid in full, based upon an equal allocation among such Lots.
2.2. OPTION PERIODS
2.2.1. INITIAL OPTION PERIOD; INITIAL TAKEDOWN. The "INITIAL
OPTION PERIOD" shall commence on the Agreement Date
and expire on December 31, 1997. In order to extend
the Option into the Second Option Period, Buyer must
Close on at least 9% of the Lots, as shown on the
recorded final plat of the Property ("INITIAL
TAKEDOWN") before the Initial Option Period expires.
2.2.2. SECOND OPTION PERIOD; SECOND TAKEDOWN. If Buyer
Closes on the Initial Takedown before the Initial
Option Period expires, the "SECOND OPTION PERIOD"
shall commence when the Initial Option Period expires
and shall expire on June 30, 1998 In order to extend
the Option into the Third Option Period, Buyer must
have Closed on at least a combined 35% of the Lots
("SECOND TAKEDOWN") before the Second Option Period
expires.
2.2.3. THIRD OPTION PERIOD; THIRD TAKEDOWN. If Buyer Closes
on the Second Takedown before the Second Option
Period expires, the "THIRD OPTION PERIOD" shall
commence when the Second Option Period expires and
shall expire on December 31, 1998. In order to extend
the Option into the Fourth Option Period, Buyer must
have Closed on at least a combined 64% of the Lots
("THIRD TAKEDOWN") before the Third Option Period
expires.
2.2.4. FINAL OPTION PERIOD; FINAL TAKEDOWN. If Buyer Closes
on the Third Takedown before the Third Option Period
expires, the "FINAL OPTION PERIOD" shall commence
when the Third Option Period expires and shall expire
on September 30, 1999.
2.3. EXERCISE OF OPTION. Provided that Buyer is not then in default
under this Agreement, this Option may be exercised with
respect to one or more whole Lots (but not partial Lots) shown
on a final recorded plat of the Property by delivering to
Seller a notice exercising this Option ("EXERCISE NOTICE").
The Exercise Notice: (a) must identify the Lot(s) to be
acquired by Buyer pursuant to the Exercise Notice; (b) must
specify a Closing Date for the purchase of the designated
Lot(s); and (c) must specify any title objections (in which
case the Exercise Notice shall be accompanied by a copy of
Buyer's title commitment and the documents forming the basis
of the title objection). The Closing Date must be during the
current Option Period. The selection of Lots designated for
purchase in the Exercise Notice shall be at Buyer's sole
discretion, provided that all Lots remaining subject to the
Option and any Outlots have access to a public road
right-of-way and municipal utilities.
2.4. FAILURE TO MEET DEADLINES. If Buyer fails to meet any of the
foregoing deadlines or if Seller believes that Buyer's
performance to meet the deadline was deficient in any respect,
Seller shall promptly notify Buyer of the deficiency and give
Buyer at least five (5) Business Days to cure the deficiency.
If Buyer fails to meet the deadline with said 5-day grace
period, this Agreement shall expire without further notice.
3. PURCHASE PRICE. The Purchase Price of each Lot shall be determined as
follows:
3.1. ALLOCATION PERCENTAGE. Buyer and Seller have agreed upon the
value of each Lot and the resulting initial Allocation
Percentage for each Lot in the Property as set forth in
EXHIBIT B hereto. As Closings occur for each Lot or group of
Lots, the Allocation Percentages for the remaining Lots for
which Closings have not occurred shall be recalculated based
upon the agreed upon values of such Lots. If at any time the
parties are unable to agree upon the Allocation Percentage,
the matter shall be conclusively determined by a majority vote
of a panel of three arbitrators. Buyer shall appoint one
arbitrator; Seller shall appoint another arbitrator; and the
two arbitrators so chosen shall appoint a third arbitrator.
Each arbitrator must have at least 5 years experience in land
development and single family home construction in Minnesota.
The arbitration shall be conducted under the Construction
Industry Rules of the American Arbitration Association.
3.2. PROJECT RETURN. For purposes of calculating the Purchase Price
of each Lot, the Project Return shall be determined based upon
the current Project Proforma approved by the parties from time
to time pursuant to Section 4. If Buyer exercises the Option
to purchase all the Lots, the Purchase Price of the final Lot
or group of Lots to Close shall be based on the actual Project
Return as of the date of the final Closing.
3.3. LOT PURCHASE PRICE. The Purchase Price of each Lot shall be
the product of (i) the Project Return determined pursuant to
Section 3.2 minus the amount of the Purchase Prices (exclusive
of any Lender Release Surcharges described below) paid to
Seller for previously Closed Lots, multiplied by (ii) the
Allocation Percentage for such Lot. The Purchase Price for a
particular Lot resulting from such calculations ("BASE PRICE")
shall, however, be subject to the following adjustments:
3.3.1. LENDER RELEASE SURCHARGE. If the Lot is subject to a
mortgage(s) securing financing contemplated by the
Project Proforma and the release price(s) which
Seller must pay to obtain the release of the Lot from
such mortgage(s) exceed the Base Price calculated
pursuant to Section 3.3 above, then such excess
("LENDER RELEASE SURCHARGE") shall be added to the
Base Price of the Lot. When the mortgage(s) have been
fully satisfied, the amount of any Lender Release
Surcharges shall be allocated equally among the
remaining Lots, the Base Price of which shall be
reduced by a like amount at Closing.
3.3.2. PURCHASE PRICE CREDITS. Buyer is not entitled to any
cash rebate or refund of Lender Release Surcharges.
Purchase Price credits for Lender Release Surcharges
are subject to strict compliance with the Lot Closing
requirements of Section 3.3.1.
4. DEVELOPMENT PLAN; PROJECT PROFORMA. The parties have agreed upon (i) a
proposed plan for developing the Property as single family residential
lots with necessary streets, utilities and other infrastructure
improvements pursuant to the approved Project Proforma and final plat
for the Property ("DEVELOPMENT Plan"). The Project Proforma shall be
updated to reflect actual Project Costs and results of operations at
the beginning of each Option Period and at such more frequent intervals
as the parties deem necessary or appropriate. Any material changes to
or deviations from the Development Plan or Project Proforma must be
approved
by the parties. Until Buyer receives notice from Seller to the
contrary, ▇▇▇▇▇ ▇▇▇▇▇▇ is Seller's "AUTHORIZED MEMBER" for purposes of
approving Development Plan and Project Proforma changes on behalf of
Seller. If the parties are unable to agree on a proposed change in the
Development Plan or Project Proforma, the matter shall be determined by
arbitration pursuant to the procedures specified in Section 3.1.
5. DEVELOPMENT MANAGEMENT SERVICES. Buyer shall manage and be responsible
for the day to day implementation of the Development Plan, including
coordination of all services by consultants hired pursuant to the
Development Plan. Buyer is responsible for filing the approved final
plat of the Property, processing and diligently attempting to obtain
any required zoning, rezoning or planned unit development approvals,
development agreements and utility service arrangements and preparing,
processing and administering plans, specifications and contracts for
the construction and installation of all grading, streets, curbs,
gutters, sanitary sewers, storm sewers, water facilities and
infrastructure improvements contemplated by the Development Plan. Buyer
shall also be responsible for forming and operating the homeowner
association, if any, as contemplated by the Development Plan, and
staffing positions on the board of directors and officers of the
association, as necessary, until such time as control of the
association passes to the residents.
5.1. SELLER APPROVAL. All applications, plans, specifications,
contracts and other documents necessary for implementation of
the Development Plan after the Agreement Date must be approved
by Seller's Authorized Member and must be in the name of and
executed by Seller as owner of the Property.
5.2. SELLER'S DEVELOPMENT PLAN COSTS. Seller is responsible for
satisfaction of all City and County conditions and
requirements (such as park and street dedications and transfer
of common areas to any owners association) and payment of all
third party costs and expenses associated with processing and
implementing the Development Plan, including reimbursement of
such third party expenses that may be advanced after the
Agreement Date by Buyer on Seller's behalf. All costs and
expenses incurred by Seller to implement the Development Plan
are included as a part of the Project Costs.
5.3. BUYER'S OVERHEAD COSTS. As consideration for the grant of the
Option, Buyer is responsible for paying its own overhead
expenses associated with the Development Management Services
furnished to Seller pursuant to this Section. Overhead as used
herein specifically includes salaries and payroll expenses of
Buyer's employees in directing, administering and supervising
development of the Property; all employee bonuses; the
services of the project manager and support staff necessary to
process and implement the Development Plan; general legal and
accounting fees; all transportation costs; and the operating
expenses of Buyer's home and branch offices such as rent,
utilities, insurance, stationery, office machines and supplies
and other office related expenses. Buyer is not entitled to
any fee or compensation for performing the Development
Management Services, even if Buyer does not exercise the
Option or Close on any Lots.
6. TITLE.
6.1. TITLE INSURANCE COMMITMENT. Buyer is responsible for obtaining
any title commitment or survey of the Property sufficiently in
advance of the scheduled Closing Date in order to satisfy any
title requirements of Buyer or Buyer's lender by the scheduled
Closing Date, subject to extension for title clearance matters
as provided below. Buyer shall pay for the cost of any survey
and title commitment.
6.2. PERMITTED ENCUMBRANCES; TITLE OBJECTIONS. Buyer's title
objections, if any, shall be contained in Buyer's Notice of
Exercise of the Option or deemed waived. No objections shall
be made for the following "PERMITTED ENCUMBRANCES":
6.2.1. LAWS AND ORDINANCES. Federal, state and local
building, zoning and environmental statutes,
ordinances and regulations;
6.2.2. MINERALS. Reservation of any minerals, or mineral
rights to the State of Minnesota;
6.2.3. ACQUISITION AGREEMENT EXCEPTIONS. All matters (other
than mortgages) existing at the time Buyer conveyed
title to Seller pursuant to the Acquisition
Agreement; and
6.2.4. DEVELOPMENT PLAN EXCEPTIONS. All matters resulting
from Buyer's implementation of the Development Plan
including, without limitation, the recorded plat,
utility and drainage easements, development
agreements, covenants and restrictions and similar
matters.
6.3. TITLE CLEARANCE. If any objections to title are made as
provided in Section 6.2, Seller shall clear all the title
objections within sixty (60) days after receipt of Buyer's
written title objections.
6.3.1. TIME EXTENSIONS. Pending correction of title, the
following time extensions shall occur automatically:
i. The expiration date of the remaining Option
Periods shall be extended for a period of
time equal to the number of days after the
day Seller received Buyer's title objections
and through the day title has been made
marketable and Seller has so notified Buyer;
and
ii. If a Closing Date has been scheduled, it
shall be postponed until the later of the
scheduled Closing Date or ten days after
title has been made marketable and Seller
has so notified Buyer.
iii. Liens for liquidated amounts that can be
released by payment or escrow from proceeds
of the Closing shall not cause any such time
extensions.
6.3.2. BUYER'S REMEDIES. Title clearance by Seller shall be
reasonable, diligent and prompt. If the Closing
proceeds will be inadequate to pay all liquidated
liens or if title is not made marketable within sixty
(60) days after Seller received Buyer's written
objections to title, Buyer may within seventy (70)
days after Seller received Buyer's written objections
to title:
i. terminate this Agreement, whereupon neither
party shall have any further obligations
under this Agreement;
ii. waive the objections and accept title
subject to the objections;
iii. require Seller to commence proceedings to
correct the title objections, said
proceedings to be at Seller's sole expense;
or
iv. commence proceedings to correct the title
objections and deduct the cost thereof from
the Purchase Price.
If Buyer does not timely give written notice of its election,
then Buyer shall be deemed to have elected to terminate pursuant to
Subsection (i).
7. PROPERTY ACCESS; INSURANCE. For so long as this Agreement is in force,
Buyer and its representatives may enter the Property for all purposes
reasonably necessary for Buyer to perform Buyer's Development
Management Services. Buyer shall defend, indemnify and hold harmless
Seller from any resulting liability, injury or damage to persons or
property. The indemnity provisions of this section shall survive the
expiration, termination or Closing of this Agreement. For so long as
this Agreement is in force, Buyer shall provide Seller with (i)
comprehensive general public liability insurance insuring Seller as a
named insured with coverage amounts not less than the coverage amounts
maintained by Buyer for Buyer's own business operations, and (ii)
evidence that Buyer maintains statutory workers compensation insurance.
The insurance required hereunder shall be issued by insurers reasonably
acceptable to Seller and shall be evidenced by certificates of
insurance which shall provide that not less than 10 days prior notice
will be given to Seller prior to cancellation or reduction in the
coverage or amounts. The evidence of insurance pursuant to this section
shall be furnished concurrently with the parties' execution of this
Agreement.
8. INTELLECTUAL PROPERTY.
8.1. OWNERSHIP. Buyer and Seller acknowledge, stipulate and agree
that all drawings, plans, submittals and other documents
prepared for the Property and all governmental approvals
obtained for the Property (collectively the "INTELLECTUAL
PROPERTY") shall remain Seller's property, provided that (i)
Buyer may utilize the Intellectual Property for development of
those Lots for which Closings have occurred, (ii) upon Buyer's
Closing on a Lot, any warranties and contract rights in which
Seller may then have an interest relating to work, labor,
skill or materials furnished in connection with the design,
development or improvement of such Lot shall be deemed
assigned to Buyer (such assignment shall not preclude the
coordinate assertion of such warranties and contract rights by
Seller with respect to Seller's interest in the Property) ,
and (iii) Seller will transfer the Intellectual Property to
Buyer at no additional cost when Buyer Closes on all Lots in
the Property. This paragraph shall survive the expiration or
termination of this Agreement and shall be enforceable at law
or in equity.
8.2. REPORTS. If this Agreement terminates and Buyer has not Closed
on all Lots in the Property, then within ten Business Days
after such termination, Buyer shall provide Seller with
full-size copies of all engineering reports, soil tests,
surveys, topographical maps and other Intellectual Property
relating to the Property which were prepared as a part of
Buyer's Development Management Services or which are
in Buyer's possession, together with a computer diskette(s)
containing all such information that is available in a format
readable by a computer.
9. CONDITION OF PROPERTY
9.1. AS-IS PURCHASE. Buyer is thoroughly familiar with the
Property, having sold it to Seller pursuant to the Acquisition
Agreement. Therefore, except as expressly contained in this
Agreement, Buyer agrees to accept the condition of the
Property, including specifically without limitation, the
environmental and geological condition of the Property, in an
"AS-IS" and with "ALL FAULTS" condition. Buyer's acceptance of
title to a Lot represents Buyer's acknowledgment and agreement
that, except as expressly contained in this Agreement (i)
Seller has not made any written or oral representation or
warranty of any kind with respect to the Property (including
without limitation express or implied warranties of title,
merchantability, or fitness for a particular purpose); (ii)
Buyer has not relied on any written or oral representation or
warranty made by Seller, its agents or employees with respect
to the condition or value of the Property; (iii) Buyer has had
an adequate opportunity to inspect the condition of the
Property, including without limitation, any environmental
testing, and to inspect documents applicable thereto, and
Buyer is relying solely on such inspection and testing; and
(iv) the condition of the Property is fit for Buyer's intended
use. Buyer agrees to accept all risk of Claims (including
without limitation all Claims under any Environmental Law and
all Claims arising at common law, in equity or under a
federal, state or local statute, rule or regulation) whether
past, present or future, existing or contingent, known or
unknown, arising out of, resulting from or relating to the
condition of the Property, known or unknown, contemplated or
uncontemplated, suspected or unsuspected, including without
limitation, the presence of any Hazardous Substance on the
Property, whether such Hazardous Substance is located on or
under the Property, or has migrated or will migrate from or to
the Property.
9.2. RELEASE. Buyer, for itself, its directors, officers,
stockholders, divisions, agents, affiliates, subsidiaries,
predecessors, successors, and assigns and anyone acting on its
behalf or their behalf hereby fully releases and forever
discharges Seller from any and all Claims (including without
limitation all Claims arising under any Environmental Law and
all Claims arising at common law, in equity or under a
federal, state or local statute, rule or regulation), past,
present and future, known and unknown, existing and
contingent, arising out of, resulting from, or relating to the
condition of the Property, and Buyer hereby waives any and all
causes of action (including without limitation any right of
contribution) Buyer had, has or may have against Seller and
its respective members, managers, agents, affiliates,
subsidiaries, predecessors, successors and assigns, grantors
or anyone acting on its behalf or their behalf with respect to
the condition of the Property, whether arising at common law,
in equity or under a federal, state or local statute, rule or
regulation. The foregoing shall apply to any condition of the
Property, known or unknown, contemplated or uncontemplated,
suspected or unsuspected, including without limitation, the
presence of any Hazardous Substance on the Property, whether
such Hazardous Substance is located on or under the Property,
or has migrated or will migrate from or to the Property.
9.3. INDEMNITY. To the extent permitted by applicable law, Buyer
agrees to indemnify, hold harmless and defend Seller and its
respective members, managers, agents, affiliates,
subsidiaries, predecessors, successors and assigns, grantors
or anyone acting on its behalf or their behalf for, from and
against any and all Claims (including without limitation all
Claims arising under any Environmental Law and all Claims
arising at common law, in equity or under a federal, state or
local statute, rule or regulation) past, present and future,
existing and contingent, known and unknown arising out of,
resulting from, or relating to the condition of the Property.
The foregoing shall apply to any condition of the Property,
known or unknown, contemplated or uncontemplated, suspected or
unsuspected, including without limitation, the presence of any
Hazardous Substance on the Property, whether such Hazardous
Substance is located on or under the Property, or has migrated
or will migrate from or to the Property, regardless of whether
the foregoing condition of the Property was caused in whole or
in part by the Seller's actions or omissions.
9.4. DEFINITIONS.
9.4.1. "ENVIRONMENTAL LAW" means the Comprehensive
Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss.
9601 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1201 et seq., the Clean Water Act,
33 U.S.C. ss. 1321 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Toxic Substances Control
Act, 33 U.S.C. ss. 1251 et seq., all as amended from
time to time, and any other federal, state, local or
other governmental statute, regulation, rule, law or
ordinance dealing with the protection of human
health, safety, natural resources or the environment
now existing and hereafter enacted; and
9.4.2. "HAZARDOUS SUBSTANCE" means any pollutant,
contaminant, hazardous substance or waste, solid
waste, petroleum product, distillate, or fraction,
radioactive material, chemical known to cause cancer
or reproductive toxicity, polychlorinated biphenyl or
any other chemical, substance or material listed or
identified in or regulated by any Environmental Law.
9.4.3. "CLAIM" or "CLAIMS" means any and all liabilities,
suits, claims, counterclaims, causes of action,
demands, penalties, debts, obligations, promises,
acts, fines, judgments, damages, consequential
damages, losses, costs, and expenses of every kind
(including without limitation any attorney's fees,
consultant's fees, costs, remedial action costs,
cleanup costs and expenses which may be related to
any claims).
10. CLOSING DOCUMENTS. The Closing of each Lot or group of Lots for which
Buyer has exercised the Option and delivery of all Closing documents
shall take place on the Closing Date at Buyer's offices, or at such
other place as may be agreed upon by Buyer and Seller. On the Closing
Date, Seller and Buyer shall execute, where necessary, and deliver to
each other the following:
10.1. DEED. A recordable Warranty Deed, on Minnesota Uniform
Conveyancing Blank Form No. 9-M, conveying the Lot(s) from
Seller to Buyer, free and clear of all liens, charges and
encumbrances, except the Permitted Encumbrances;
10.2. SELLER'S AFFIDAVIT. An affidavit by Seller stating that on the
Closing Date (i) there are no unsatisfied judgments, tax liens
or bankruptcies against or involving the Seller, (ii) there
has been no labor or material furnished to the Property for
which mechanics liens could be filed (or an appropriate
undertaking with Buyer's title insurance company for any
potential mechanics liens), and (iii) there is no other
unrecorded interest in the Property made or suffered by
Seller;
10.3. MISCELLANEOUS DOCUMENTS. Any other documents reasonably
required by the Title Insurer.
10.4. PURCHASE PRICE; POSSESSION. At the Closing, Buyer shall
deliver to Seller the Purchase Price of the Lot(s) in cash,
cashier's check or certified funds. Seller shall deliver
possession of the Lot(s) to Buyer on the Closing Date.
11. CLOSING COSTS.
11.1. REAL ESTATE TAXES.
11.1.1. PRIOR YEAR TAXES. Seller shall pay all real estate
taxes due and payable in years before the Closing and
all real estate taxes which have been deferred.
11.1.2. CURRENT YEAR TAXES. There shall be no proration of
real estate taxes due in the calendar year of
Closing. Seller shall pay all installments of current
taxes with a delinquency date prior to the date of
Closing and Buyer shall pay all installments with a
delinquency date on or after the date of Closing.
11.1.3. FUTURE YEARS TAXES. Buyer shall pay all real estate
taxes due in years after the calendar year of
Closing, except deferred taxes which are Seller's
responsibility.
11.2. SPECIAL ASSESSMENTS. At the Closing of the sale of each Lot,
Buyer shall assume all special assessments on the Lot,
including levied, deferred, pending and proposed special
assessments.
11.3. TITLE INSURER COSTS. Buyer shall pay all title costs,
including the abstracting, photocopying and service charges
for any title insurance commitment and background title
documents required by Buyer, and the premium for any owner's
or lender's title insurance policy required by Buyer. Any
Closing fees charged by the Title Insurer shall be paid by
Buyer.
11.4. RECORDING FEES. Buyer shall pay all document recording fees
and mortgage registration taxes required in connection with
the transaction. Buyer shall pay the state deed tax,
conservation fees, and any recording fees and taxes for title
clearance documents.
12. SELLER'S REPRESENTATIONS AND WARRANTIES. Subject to those matters
encompassed within Buyer's Acquisition Agreement representations and
warranties to Seller, Seller represents and warrants to Buyer as
follows:
12.1. LITIGATION. Seller does not have knowledge of any litigation,
investigation, condemnation or legal proceedings of any kind
pending against Seller or against the Property.
12.2. HAZARDOUS WASTE. To the best of Seller's knowledge:
12.2.1. SELLER'S USE. During the time that Seller has owned
the Property, it has not been used for the storage or
disposal of any hazardous waste; and
12.2.2. NO NOTICE OF CONTAMINATION. Seller has received no
notice from any governmental authority concerning the
removal of hazardous waste from the Property.
"Hazardous waste" means any waste, substance or other material
which is defined by or determined by any federal, state or
local statute, regulation, ordinance or ruling to be
hazardous, toxic, poisonous or dangerous.
12.3. STORAGE TANKS. Except as disclosed to Seller by Buyer at the
▇▇▇▇ ▇▇▇▇▇▇ originally acquired the Property from Buyer,
Seller knows of no underground or aboveground storage tanks
that now exist or ever existed on any portion of the Property.
If any tanks are discovered on the Property, Seller shall be
responsible for removing the tanks and any soils contaminated
with materials (such as petroleum products) which may have
leaked from the tanks, and the cost of such removal shall be
included in the Project Costs.
12.4. ▇▇▇▇▇. Except as disclosed to Seller by Buyer at the ▇▇▇▇
▇▇▇▇▇▇ originally acquired the Property from Buyer, Seller
does not know of any ▇▇▇▇▇ on the Property. Seller shall be
responsible for sealing all ▇▇▇▇▇ in accordance with all
applicable laws, and the cost thereof shall be included in the
Project Costs.
12.5. INDIVIDUAL SEWAGE TREATMENT SYSTEM. Except as disclosed to
Seller by Buyer at the ▇▇▇▇ ▇▇▇▇▇▇ originally acquired the
Property from Buyer, Seller does not know of any private sewer
system on the Property. Seller shall be responsible for
removing any private sewer systems on the Property and the
cost thereof shall be included in the Project Costs.
13. REPRESENTATIONS AND WARRANTIES GENERALLY.
13.1. SELLER'S REPRESENTATIONS AND WARRANTIES CONDITION PRECEDENT.
Seller agrees that the truthfulness and continuing accuracy of
each and every representation and warranty in this Agreement
is a condition precedent to the performance by Buyer of its
obligations hereunder. Upon the breach of or material change
in any of Seller's warranties, Buyer may, prior to the Closing
Date, terminate this Agreement or Buyer may elect to Close
this sale.
13.2. BUYER'S ACQUISITION AGREEMENT WARRANTIES. Nothing in this
Agreement shall be deemed to amend or supersede Buyer's
representations and warranties to Seller contained in the
Acquisition Agreement, which representations and warranties of
Buyer are hereby affirmed by Buyer and incorporated in this
Agreement as if set forth in their entirety.
13.3. SURVIVAL OF WARRANTIES AND REPRESENTATIONS. The parties'
representations and warranties in this Agreement shall be
deemed to have been remade as of Closing, as if made on and as
of such date, except for such factual matters, if any,
occurring subsequent to the date of this Agreement, which are
set forth in a certificate of changed circumstances delivered
on or before the Closing Date, which certificate upon delivery
shall be deemed to constitute a part of this Agreement,
provided that such matter shall not affect Buyer's termination
rights under Subsection 13.1. Consummation of this Agreement
by either party with knowledge of any breach by the other
party shall not be deemed a waiver or release of any claims
hereunder due to such breach. All representations and
warranties contained in this Agreement shall survive Closing.
14. CONDEMNATION. If any part of the Property is condemned under a power of
eminent domain, then Buyer may terminate this Agreement; or Buyer may
Close on the purchase and the condemnation proceeds received by Seller
shall be credited against the Purchase Price payable by Buyer.
15. NO BROKERS. Seller warrants to Buyer that Seller has not taken any
action in connection with this transaction which would result in any
real estate broker's fee, finder's fee, or other fee being due or
payable to any party. Buyer warrants to Seller that Buyer has not taken
any action in connection with this transaction which would result in
any real estate broker's fee, finder's fee, or other fee being due or
payable to any party. Seller and Buyer respectively agree to indemnify,
defend and hold harmless the other from and against any and all claims,
fees, commissions and suits of any real estate broker or agent with
respect to services claimed to have been rendered for or on behalf of
such party in connection with the execution of this Agreement or the
transaction contemplated herein. Buyer hereby discloses that Buyer is a
licensed real estate broker and is purchasing the Lots for Buyer's own
account.
16. NOTICE. Any notice or other communication under this Agreement shall be
in writing, addressed to the parties at their registered address on
file from time to time with the Office of the Minnesota Secretary of
State. Notices shall be deemed timely if sent on or before the deadline
OR if received on or before three Business Days after the deadline.
Delivery may be made by (1) United States Mail, registered or certified
mail, postage prepaid, return receipt requested; (2) commercial
delivery service with its customary receipts; or (3) noncommercial
delivery with a notarized affidavit of delivery to the relevant
address. Any person may change his address under this section by giving
notice to the other party.
17. MISCELLANEOUS.
17.1. SELLER'S BOOKS AND RECORDS. Seller shall keep and maintain
accurate financial books and records of the Project Costs in
accordance with generally accepted accounting principals.
These financial books and records shall include all supporting
documentation relative to Project Costs. Seller's books and
records shall be made available to Buyer at reasonable times
for inspection and audit by Buyer at Buyer's sole cost and
expense.
17.2. AMENDMENT. This Agreement may not be amended, waived, or
modified except by an instrument in writing executed by the
party against whom enforcement of such amendment, waiver or
modification is sought.
17.3. NO IMPLIED WARRANTIES. No representations or warranties have
been given by either party to the other which are not fully
embodied in this Agreement.
17.4. SEVERABILITY. If any term or provision of this Agreement is
invalid or unenforceable, the remainder of this Agreement
shall not be affected and shall remain in full force and
effect. It is the intention of the parties that if any
provision of this Agreement is held to be illegal, invalid or
unenforceable, there will be substituted in lieu thereof a
legal, valid and enforceable provision as similar in terms to
such unenforceable provision as is possible.
17.5. SURVIVAL. Except as may otherwise be expressly provided in
this Agreement, all covenants, agreements, obligations and
undertakings made by Seller and Buyer in or pursuant to this
Agreement shall survive Closing, whether or not so expressed
in the immediate context of any such covenant, agreement,
obligation or undertaking.
17.6. SUCCESSORS; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of Seller and Buyer, and their
respective successors. This Agreement may not be assigned by
either party without the prior written consent of the other,
which consent may be withheld in its sole discretion for any
reason whatsoever.
17.7. ATTORNEYS' FEES. If either party defaults under this
Agreement, the defaulting party shall be responsible for all
reasonable expenses (including attorneys' fees) incurred by
the other party in enforcing any rights and remedies under
this Agreement.
17.8. HOLD HARMLESS. Buyer shall hold Seller harmless from any and
all claims arising from third parties as a result of Buyer's
acts or omissions. Seller shall hold Buyer harmless from any
and all claims arising from third parties as a result of
Seller's acts or omissions.
17.9. AUTHORITY TO CONTRACT. Seller and Buyer represent to each
other that the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby are
within each of the party's purposes and powers and all
requisite action has been taken to make this Agreement the
valid and binding obligation upon each of the parties hereto.
17.10. RECORDING. This Agreement shall not be recorded, but a
memorandum of this Agreement in the form of EXHIBIT D may be
recorded by either party. This Agreement and Buyer's Option
shall be subordinate to any mortgage financing that Seller
deems reasonably necessary or appropriate to finance Project
Costs. Upon request Buyer shall execute and deliver such
recordable subordination agreements and other documents or
instruments reasonably required by any title insurance company
in order to establish the priority of any mortgage securing
such financing as a Property encumbrance with lien priority
over the Option.
17.11. STANDARD OF PERFORMANCE. Nothing contained in this Agreement
shall limit the right of a party to exercise its business
judgment, or act, in a subjective manner, with respect to any
matter as to which it has specifically been granted such right
or the right to act in its sole discretion or sole judgment or
the right to make a subjective judgment under any provision of
this Agreement, whether "objectively" reasonable under
circumstances, and any such exercise shall not be deemed
inconsistent with any covenant of good faith and
fair dealing otherwise implied by law to be part of this
Agreement; and the parties intend by this provision to set
forth their entire understanding with respect to the terms,
covenants, conditions and standards pursuant to which their
obligations are to be judged and their performance measured.
17.12. FIRST REFUSAL AGREEMENT. Concurrently with Seller's purchase
of the Property from Buyer Seller acquired all of Buyer's
rights pursuant to that Right of First Refusal Agreement with
Roman A. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated March 29, 1996, as
amended ( "FIRST REFUSAL AGREEMENT"). The First Refusal
Agreement was recorded on April 5, 1996, as Document No.
6557575, and amended by an Amendment and Assignment filed
concurrently with the deed conveying the Property to Seller.
If during the Option Period Seller receives notice of an
opportunity to acquire property ("SALE PARCEL") under the
First Refusal Agreement, Seller shall immediately notify Buyer
of same. If Buyer timely notifies Seller that Buyer desires to
purchase the Sale Parcel, then Seller will exercise the right
of refusal and thereafter substitute Buyer as the purchaser of
the Sale Parcel. If the First Refusal Agreement is still in
effect when Buyer Closes on all of the Lots in the Property,
Seller will assign the First Refusal Agreement back to Buyer
concurrently with the Closing of the last Lot(s).
17.13. ENTIRE AGREEMENT. The Acquisition Agreement and this Agreement
embody the entire agreement and understanding between Buyer
and Seller relating to the Property. The Acquisition Agreement
and this Agreement supersede all prior agreements between the
parties relating to the Property.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Agreement Date.
SELLER: BUYER:
▇▇▇▇▇ POINTE LLC ▇▇▇▇▇▇▇▇ BROS. CONSTRUCTION, INC.
By_________________________________ By_________________________________
Its______________________________ Its______________________________
EXHIBITS
A Legal Description of the Property
B Lot Values and Initial Allocation Percentages
C Project Proforma
D Memorandum of Option
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Lots 1 through 25, Block 1 and Lots 1 through ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, according to the recorded plat thereof.
EXHIBIT B
LOT VALUES
AND
INITIAL ALLOCATION PERCENTAGES
EXHIBIT C
PROJECT PROFORMA
EXHIBIT D
MEMORANDUM OF OPTION
________________________________________________________________________________
(SPACE ABOVE FOR RECORDER/REGISTRAR USE)
▇▇▇▇▇ POINTE
MEMORANDUM OF OPTION FOR PURCHASE OF REAL PROPERTY
This Memorandum of Option Agreement ("MEMORANDUM") is made as of
___________, 19__, by ▇▇▇▇▇ POINTE LLC, a Minnesota limited liability company
("SELLER"), and ▇▇▇▇▇▇▇▇ BROS. CONSTRUCTION, INC., a Minnesota Corporation
("BUYER").
PREAMBLE
A. Buyer and Seller have entered into that certain Option Agreement
dated _________, 19__ ("OPTION AGREEMENT") whereby Seller has granted to Buyer
an Option to purchase residential Lots platted on the property described on
EXHIBIT "1" attached hereto ("PROPERTY").
B. Buyer and Seller desire to execute and record this Memorandum to
evidence the existence of the Option Agreement and Seller's rights thereunder.
THEREFORE, in consideration of the covenants and agreements contained
in the Option Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, Seller and Buyer agree as
follows:
1. GRANT OF OPTION. Seller grants to Buyer an Option to purchase
residential Lots platted on the Property on the terms and conditions set forth
in the Option Agreement.
2. OPTION PERIOD. The Initial Option Period expires December 31, 1997;
provided that the Option may be extended to and including September 30, 1999, on
the terms and conditions specified in the Option Agreement.
3. LIMITED PURPOSE OF MEMORANDUM. The purpose of this Memorandum is
solely to give notice of the Option Agreement and all of its terms, to the same
extent as if the Option
Agreement were fully set forth herein. This Memorandum shall not be deemed to
supplement, amend or modify the terms and conditions contained in the Option
Agreement. Except as expressly provided herein, words and phrases in this
Memorandum have the same meanings as defined in the Option Agreement.
4. SUBORDINATION. The Option and the Option Agreement are subject and
subordinate to First and Second Mortgages in the amounts of $1,200,000 and
$1,815,000, respectively, executed by Seller to Builders Development & Finance,
Inc., and a Third Mortgage in the amount of $768,000 executed by Seller to
Buyer, all of which are recorded concurrently with this Memorandum.
The parties have executed this Memorandum effective as of
_____________, 19__.
SELLER: BUYER:
▇▇▇▇▇ POINTE LLC ▇▇▇▇▇▇▇▇ BROS. CONSTRUCTION, INC.
By_________________________________ By_________________________________
Its______________________________ Its______________________________
THIS INSTRUMENT WAS DRAFTED BY:
THIS INSTRUMENT WAS DRAFTED BY:
▇▇▇▇▇▇▇, STREET AND DEINARD P.A. (JCK)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STATE OF MINNESOTA )
) ss
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this ___ day of
_______, 19__ by _____________________, the ___________________ of ▇▇▇▇▇ Pointe
Limited Liability Company, a Minnesota limited liability company, on behalf of
the company.
[SEAL] ____________________________________
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 16th day of
May 1997 by ▇▇▇▇▇ ▇▇▇▇▇▇▇, the Vice-President of ▇▇▇▇▇▇▇▇ Bros. Construction,
Inc., a Minnesota corporation, on behalf of the corporation.
[SEAL] ____________________________________
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 16th day of
May, 1997, by ▇▇▇▇▇ ▇▇▇▇▇▇, the President of ▇▇▇▇▇ Pointe LLC, a Minnesota
limited liability company, on behalf of the company.
[SEAL] ____________________________________
Notary Public
EXHIBIT "1"
TO MEMORANDUM OF OPTION
LEGAL DESCRIPTION OF PROPERTY
Lots 1 through 25, Block 1 and Lots 1 through ▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, according to the recorded plat thereof.