PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
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THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (THIS
"AGREEMENT") is made and entered into as of May 25, 2000 (THE "EXECUTION DATE"),
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by and between NEVADA DIVERSIFIED EQUITY, LLC, A NEVADA LIMITED LIABILITY
COMPANY ("BUYER"), and DIAMOND KEY HOMES, INC., AN ARIZONA CORPORATION
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("SELLER"), for the purpose of setting forth the agreement of the parties and to
provide instructions to Title Guaranty Agency of Arizona, Inc. ("ESCROW AGENT"),
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with respect to the transaction contemplated by this Agreement.
RECITALS
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A. Seller is the owner of the following 188 residential lots located in
Tucson, Pima County, Arizona (COLLECTIVELY, THE "LOTS"):
(i) Fifty-Five (55) vacant lots known as Lots 1, 2, 3, 7-34, 127,
128, 132 138, 171, 173, 174, 176, 177, 178, 182, 183, 187, 188,
191, 192, 193, 234 and 236 (THE "CASTLE ROCK VACANT Lots") within
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the subdivision known as Castle Rock according to the plat
recorded in Book 41 of Maps, Page 1, in the Official Records of
Pima County, Arizona ("CASTLE ROCK");
(ii) Twenty-seven (27) lots known as Lots 4, 5, 6, 155, 156, 161, 162,
163, 164, 167, 168, 169, 170, 172, 175, 179, 180, 184, 189, 190,
194, 208, 225, 227, 230, 233 and 237 within Castle Rock (THE
"CASTLE ROCK SOLD LOTS") together with all improvements thereon
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consisting of partially completed pre-sold homes;
(iii)The six (6) lots known as Lots 181, 200, 221, 226, 228 and 232
within Castle Rock together with all improvements thereon
consisting of partially completed spec homes (THE "CASTLE ROCK
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SPEC LOTS");
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(iv) Two (2) vacant lots known as Lots 16 and 24 (THE "COPPER CREEK
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VACANT LOTS") at the subdivision known as Diamond Key at Copper
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Creek according to the plat recorded in Book 50 of Maps, Page 13,
in the Official Records of Pima County, Arizona ("COPPER CREEK");
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(v) Twenty-One (21) lots known as Lots 1-8, 10, 11, 13-15, 17-20,
26, 27, 39 and 52 within Copper Creek (THE "COPPER CREEK SOLD
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LOTS") together with all improvements thereon consisting of
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partially completed pre-sold homes;
(vi) Two (2) lots known as Lots 51 and 53 within Copper Creek together
with all improvements thereon consisting of partially completed
spec homes (THE "COPPER CREEK SPEC LOTS");
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(vii)Eighteen (18) vacant lots known as Lots 41, 43, 44, 48, 49, 54,
55, 56, 57, 58, 61, 89 and 91-96 (THE "DESERT VISTA VACANT LOTS")
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within the subdivision known as Desert Vista according to the
plat recorded in Book 47 of Maps, Page 89, in the Official
Records of Pima County, Arizona ("DESERT VISTA");
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(viii) Seven (7) lots known as Lots 52, 53, 59, 60, 62, 97 and 102
within Desert Vista (THE "DESERT VISTA SOLD LOTS") together with
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all improvements thereon consisting of partially completed
pre-sold homes;
(ix) Three (3) lots known as Lot 42, 90 and 98 within Desert Vista
together with all improvements thereon consisting of partially
completed spec homes (THE "DESERT VISTA SPEC LOT");
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(x) Two (2) vacant lots known as Lots 4 and 5 (THE "RITA RANCH
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VACANT LOTS") within the subdivision known as Castle Rock
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according to the plat for Block "A" at Hacienda del Oro recorded
in Book 50 of Maps, Page 10, in the Official Records of Pima
County, Arizona, as amended by a Declaration of Scrivener's Error
recorded in Docket 10686, Page 333, of the Official Records of
Pima County, Arizona ("RITA RANCH");
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(xi) Forty-Three (43) lots known as Lots 1, 2, 3, 6, 10, 27, 28, 32,
36-51, 53, 55, 56, 57, 60, 61, 63, 64, 65, 67, 68, 69 and 70-76
within Rita Ranch (THE "RITA RANCH SOLD LOTS") together with all
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improvements thereon consisting of partially completed pre-sold
homes;
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(xii)Two (2) lots known as Lots 78 and 62 within Rita Ranch together
with all improvements thereon consisting of partially completed
spec homes (THE "RITA RANCH SPEC LOTS");
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The Castle Rock, Copper Creek, Desert Vista and Rita Ranch subdivisions
shall, collectively, be referred to herein as the "PROJECTS". The Castle Rock
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Vacant Lots, the Copper Creek Vacant Lots, the Desert Vista Vacant Lots and the
Rita Ranch Vacant Lots shall, collectively, be referred to herein as the "VACANT
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LOTS". The Castle Rack Sold Lots, the Copper Creek Sold Lots, the Desert Vista
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Sold Lots and the Rita Ranch Sold Lots, together with any other Vacant Lots and
Spec Lots which Seller, prior to the Closing (as defined below) enters into an
agreement to sell such lots to third-party home buyers, shall, collectively, be
referred to herein as the "SOLD LOTS". The Castle Rock Spec Lots, the Copper
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Creek Spec Lots, the Desert Vista Spec Lot and the Rita Ranch Spec Lots shall,
collectively, be referred to herein as the "SPEC LOTS". The Spec Lots together
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with the Sold Lots shall, collectively, be referred to herein as the "LOTS UNDER
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CONSTRUCTION". The Lots together with the "Personal Property" and the
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"Intangible Property" (each as hereinafter defined) are sometimes, collectively,
referred to herein as the "PROPERTY". The parties acknowledge that between the
Execution Date and the Closing Date (as defined below) Seller may, subject to
the limitations set forth in Section 8.20 below, enter into Sales Contracts to
sell certain of the Vacant Lots and Spec Lots to third party home buyers, in
which case such Lots shall thereafter be referred to herein as "Sold Lots". The
parties further acknowledge that between the Execution Date and the Closing
Date, it is possible that a Sold Lot may be cancelled by a Sold Lot Buyer, in
which event such Lot shall thereafter be referred to herein as a Vacant Lot or a
Spec Lot, as the case may be.
B. Seller desires to sell, transfer and convey the Property to Buyer, and
Buyer desires to purchase and acquire the Property from Seller, upon and subject
to the terms and conditions set forth in this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree, and
instruct Escrow Agent, as follows:
1. PURCHASE AND SALE.
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Subject to all of the terms and conditions of this Agreement, Seller agrees to
sell, transfer and convey to Buyer, and Buyer agrees to purchase and acquire
from Seller, good and marketable fee simple interest in the Property, upon and
subject to the terms and conditions set forth herein.
2. DESCRIPTION OF PROPERTY.
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2.1 The Improvements. As used herein, the term "IMPROVEMENTS" shall mean
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all homes, buildings, improvements, landscaping, structures and fixtures now or
hereafter located on the Lots.
2.2 The Real Property. As used herein, the term "REAL PROPERTY" shall mean,
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collectively, all of Seller's right, title and interest in and to: (a) the Lots;
(b) the Improvements; (c) all apparatus, equipment and appliances affixed to and
used in connection with the operation or occupancy of the Lots and/or any of the
Improvements; and (d) all rights, privileges and easements appurtenant to or
used in connection with the Lots and/or any of the Improvements, including,
without limitation, all minerals, oil, gas and other hydrocarbon substances, all
development rights, air rights, water, water rights and water stock relating to
the Lots, all streets, alleys, easements, rights-of-way, public ways and other
rights of Seller appurtenant, adjacent or connected to the Lots.
2.3 The Personal Property. As used herein, the term "PERSONAL PROPERTY"
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shall mean (a) all furniture, appliances, telephones, computers, equipment,
rugs, artwork, decorator items, supplies and other personalty of any kind
contained in or used in connection with the "Models" (as defined below) and/or
the sales offices for the Projects to the extent owned by Seller (THE "MODEL
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FURNISHINGS"); (b) any construction trailers for the Projects owned by Seller,
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if any; (c) all brochures, pamphlets, supplies, marketing materials and
information and all salesperson files relating to the Projects; (d) all of
Seller's right, title and interest in and to any other tangible personal
property, furnishings, equipment and supplies situated on or used in connection
with the Lots, the Models or the Projects; with such Personal Property to
include, without limitation, all of the personal property described on Exhibit
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"A-1" attached hereto; and (e) the furniture, fixtures, equipment, appliances,
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computers, telephones and other personalty owned by Seller and located at
Seller's Tucson office located at 6740 N. Oracle Road, Suite 151, Tucson,
Arizona 85704, including, but not limited to, the personal property described on
Exhibit "A-2" attached hereto.
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2.4 The Intangible Property. As used herein, the term "INTANGIBLE PROPERTY"
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shall mean all of Seller's right, title and interest in and to the intangible
property owned by Seller or used by Seller in connection with the Lots, the
Models (as defined below) or any other part of the Projects and/or the Personal
Property, including, without limitation, (a) a separate Purchase Agreement,
Escrow Instructions and Receipt for each of the Sold Lots (including any Vacant
Lots and Spec Lots which Seller, between the Execution Date and the Closing
Date, enters into a contract to sell to third-party home buyers) together with
any existing addendums and amendments thereto by and between Seller and
third-party home buyers of the Sold Lots (EACH A "SOLD LOT BUYER" AND,
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COLLECTIVELY, THE "SOLD LOT BUYERS") together with all plot plans, documents,
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materials and information of any kind provided to or executed by the Sold Lot
Buyers and all earnest money deposits and other payments and deposits of any
kind paid prior to the Closing by the Sold Lot Buyers pursuant to such sales
contracts (COLLECTIVELY, THE "SALES CONTRACTS"); (b) all of the lessees' rights
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under the lease agreements described on Exhibit "B" to this Agreement relating
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to the model homes within the Projects (THE "MODEL LEASES") relating to Lots
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129, 130 and 131 at Castle Rock, Lots 21, 22 and 23 at Copper Creek, Lot 42 at
Desert Vista and Lots 7, 8 and 9 at Rita Ranch together with the model homes and
improvements constructed thereon (COLLECTIVELY, THE "MODELS"), subject, however,
to the provisions contained within Section 2.5 below; (c) the contracts
identified on Exhibit "C" attached hereto (COLLECTIVELY, THE "CONSTRUCTION
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CONTRACTS") which Seller represents to be all of the contracts between Seller
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and all contractors, subcontractors, materialmen, suppliers and professionals
regarding the Lots and which Seller represents to include all work necessary to
complete construction of all homes and improvements on the Lots Under
Construction;(d) all architectural, engineering and other plans, specifications
and drawings and all modifications thereto for all homes heretofore offered for
sale by Seller within the Projects and all architectural, engineering and other
plans, specifications and drawings necessary to construct the homes and
improvements heretofore constructed within the Projects as well as any homes
which are in the process of being constructed or which are proposed to be
constructed on any of the Lots (COLLECTIVELY, THE "PLANS"); (e) all books,
records, files (including salesperson files), documents, reports, test results,
environmental assessments, engineering reports, as-built plans, specifications
and other similar documents and materials relating to the use, operation,
maintenance, repair, construction or fabrication of all or any part of the
Property or the Projects; (f) all transferable business licenses and all
architectural, site, building, landscaping and other permits and all
applications, approvals, authorizations and other entitlements affecting any of
the Lots or any other portion of the Projects; (g) the Declarant's rights under
the Declarations of Covenants, Conditions and Restrictions that affect each
Project to the extent Seller owns such rights (THE "DECLARANT'S RIGHTS"); (h)
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all transferable guarantees and warranties relating to all or any of the Lots,
the Improvements, the Personalty, the Intangible Property or any other part of
the Projects; (i) all deposits of any kind paid by Seller related to the
Projects and/or the Lots, including, without limitation, all security deposits
and utility deposits; and (j) any of the leases (including construction trailer
leases) and agreements described on Exhibit "D" attached hereto (THE "OPERATING
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AGREEMENTS") which, during the Due Diligence Period, Buyer, in its sole and
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absolute discretion, may elect, by providing written notice to Seller and Escrow
Agent, to assume Seller's obligations thereunder which arise after the Closing,
with Seller to remain responsible for and to indemnify and hold Buyer harmless
from all claims and demands relating to costs, expenses and obligations payable
under such assumed Operating Agreements, if any, for periods prior to Closing.
2.5 Model Leases. The parties acknowledge that the Models on Rita Ranch
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Lots 8 and 9 and Copper Creek Lot 22 (THE "SOLD MODELS") are subject to existing
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sale contracts between the lessors of such Sold Models and third-party home
buyers (THE "MODEL SALE AGREEMENTS"), pursuant to which the Sold Models are
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anticipated to be conveyed to such third-party home buyers sometime during the
ninety (90) day period following the Execution Date. Notwithstanding the
provisions contained herein, the Model Leases for the Sold Models (THE "SOLD
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MODEL LEASES") shall not be assigned or conveyed to Buyer unless or until (a)
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the Model Sale Agreement(s) for the Sold Model(s) is cancelled and (b) Seller,
within ten (10) days of such cancellation of the corresponding Model Sale
Agreement(s) but not later than one hundred twenty (120) days after the Closing
Date, provides Buyer with written notice of its election to assign to Buyer the
affected Sold Model Lease(s). Upon any election by Seller pursuant to provision
(b) in the preceding sentence, Seller shall, within ten (10) days thereafter,
convey the subject Model Sale Agreement(s) to Buyer by an Assignment of Lease(s)
in the form attached hereto as Exhibit "I". Seller shall not modify any of the
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Model Sale Agreements without the prior written consent of Buyer. On or before
the respective closings under the Model Sale Agreements, Buyer shall remove all
the Model Furnishings from the subject Sold Models.
3. PURCHASE PRICE.
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3.1 Purchase Price Calculation. Subject to the adjustments provided for
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herein, the purchase price for the Property (THE "PURCHASE PRICE") shall equal
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Eight Million Four Hundred Fifty Thousand Dollars ($8,450,000). The Purchase
Price shall be payable as follows:
3.1.1 Deposit. Concurrently with the "Opening of Escrow" (as hereinafter
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defined), Buyer shall deposit into "Escrow" (as hereinafter defined) the sum of
One Hundred Thousand Dollars ($100,000), which amount together with any interest
earned thereon shall, collectively, be referred to herein as the "DEPOSIT".
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Escrow Agent shall invest the Deposit in insured money market accounts,
certificates of deposit or United States treasury bills, as Buyer may instruct
from time to time, provided that such investments are federally issued or
insured. At the "Closing" (as hereinafter defined), the Deposit shall be paid to
Seller and credited against the Purchase Price. In the event that the sale of
the Property is not consummated for any reason other than a default by Buyer
and, as a result, Buyer elects to cancel this Agreement as permitted herein, the
Deposit shall, upon such cancellation, be immediately returned to Buyer.
3.1 .2 Balance. At the Closing, Buyer shall pay to Seller the balance of
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the Purchase Price net of all adjustments as provided herein, which amount shall
be paid by wire transfer of immediately available federal funds.
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3.2 Adjustments to Purchase Price. The purchase price analysis attached to
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this Agreement as Exhibit "E" (THE "PURCHASE PRICE SUMMARY") SETS forth, among
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other things, amounts, assumptions and other information which Buyer deems
critical to its agreement to pay the Purchase Price, and Seller covenants that,
to its best knowledge, such information set forth on the Purchase Price Summary
is accurate as of the Execution Date. At the Closing and after the Closing to
the extent determined at Closing, the Purchase Price shall be adjusted as
follows:
(a) In the event closings for the sale of Lots 161 and 230 at Castle
Rock, Lot 57 at Rita Ranch and Lot 102 at Desert Vista pursuant
to the applicable Sales Contracts occur prior to the Closing (as
defined below), Seller shall be entitled to receive all net
proceeds, if any, payable to the sellers under the escrows for
those Sales Contracts; however, in such event, the Purchase Price
shall be reduced by an amount equal to the sum of the "Lot
Purchase Price" and the total and final "Work in Progress" for
such Lots as shown on page 2 of the Purchase Price Summary, as
such will be updated through the Closing Date.
(b) In the event that closings under any Sales Contracts in Section
3.2 (a) above occur prior to the Closing (as defined below), the
Purchase Price shall be reduced by an amount equal to the
"Contract Price" as shown on the Purchase Price Summary, as
updated through the Closing Date less any "Buyer Deposit",
"Inside Sales Commission", "Preferred Lender Incentive", "Outside
Sales Commission", "Cost to Complete" (as calculated on May 26,
2000) and "Sales Tax" for such Lots as set forth on the Purchase
Price Summary updated through the Closing Date plus any actual
seller closing cost paid on the escrow closing statement for such
unit and a fifteen hundred dollar ($1500) allowance to cover
warranty expenses that will remain the obligation of the Seller.
Notwithstanding any other provision contained in this Agreement
or any exhibit hereto, Buyer shall not have any obligation to pay
any "Costs to Complete" or any "Sales Tax" or any other amounts
with respect to the Lots for which an adjustment is made to the
Purchase Price pursuant to this Section 3.2 (b).
(c) The Purchase Price shall be reduced by an amount equal to the
total amount of all deposits and other payments of any kind paid
by all Sold Lot Buyers at any time prior to the Closing to the
extent that such amounts are not, at the Closing, held by the
escrow agents under the Sales Contracts (and which such escrow
agents must be irrevocably committed to release to Buyer as the
seller under such Sales Contracts upon the respective closings
under such Sales Contracts).
(d) The Purchase Price shall be reduced by an amount equal to the
amount, if any, by which the construction costs paid by Seller to
third-parties with respect to each Sold Lot is, as of the Closing
Date, less than the amount identified as "Work in Progress" on
the Purchase Price Summary as updated through the Closing Date
and thereafter. WORK IN PROGRESS", as shown on the Purchase Price
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Summary attached hereto as Exhibit "E", shall mean and include
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all costs of construction on and materials supplied to the Lots
Under Construction pursuant to the Construction Contracts through
April 25, 2000. However, prior to Closing, the "Work in Progress"
as shown on the Purchase Price Summary and as used in this
Agreement shall be updated to include all costs of construction
on and materials supplied to Lots Under Construction pursuant to
the Construction Contracts through May 25, 2000.
(e) The Purchase Price shall be reduced by an amount equal to the
amount by which the sale prices, lot premiums, lot prices and
discounts in any addendum to existing Sales Contracts or any new
Sales Contracts entered into between the Execution Date and the
Closing vary from the limitations contained in Section 8.20
below.
(f) In the event the Closing is delayed pursuant to any of the terms
in this Agreement, Seller shall continue to diligently and in
good faith proceed with the construction of the homes and related
improvements on Lots under Construction and Seller shall pay as
and when due all costs incurred in connection therewith
consistent with the Purchase Price Summary, and in such event,
the Purchase Price shall be increased by any amounts paid by
Seller for work performed on and materials supplied to Lots Under
Construction during the period from May 26, 2000 to the eventual
Closing Date, provided such amounts (a) are included within the
cost to complete as set forth on the Purchase Price Summary or
(b) are for options hereafter selected and change orders
hereafter made for the Lots Under Construction as permitted in
this Agreement.
(g) The Purchase Price may be further reduced in accordance with the
last sentence of 6.2.4 below.
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On the Closing Date, the parties shall update the Purchase Price Summary,
and upon such compilation, the parties shall execute the updated Purchase Price
Summary and forward a copy thereof to Escrow Agent. On the Closing Date, the
Purchase Price shall be reduced in accordance with this paragraph to take into
account any corrections or changes in the updated Purchase Price Summary, if
any. On the Closing Date, Buyer shall also receive as a credit against the
Purchase Price an amount equal to the sum of all unpaid rental, if any, payable
to the lessors under the "Model Leases" (as defined below) and any amounts due,
if any, to any parties under any Operating Agreements assumed by Buyer in
accordance with Section 2.4(j) above for periods prior to the Closing Date.
3.3 Post-Closing Adjustments. Seller shall be solely responsible for all
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work done and materials supplied to the Lots and the Property on or before May
25, 2000, and Seller shall, at Closing, pay all such unpaid amounts to the
contractors and materialmen to whom such amounts are due. Seller shall provide
Buyer and Escrow Agent with evidence of such payments together with
corresponding lien waivers relating to such payments. On or before May 29, 2000,
Seller shall provide Buyer with a detailed summary and list of all "Work in
Progress" through May 25, 2000. If, after the Closing Date, any subcontractor,
materialman or supplier or other person or entity makes any demand or claim or
takes any action or initiates any action with respect to any improvements
constructed or materials supplied prior to May 26, 2000, Seller and Saxton
Incorporated, a Nevada corporation, shall indemnify and defend Buyer and hold
Buyer harmless from any and all such claims, demands and actions and any
damages, losses, costs, fees (including, without limitation, attorneys' fees)
incurred in connection with or as a result of any such claims, demands and
actions, regardless of when any such claims, demands and actions are initiated.
In addition, if, during the three (3) month period after the Closing Date, any
adjustments to the Purchase Price are determined to be warranted pursuant to
Section 3.2 above, Seller agrees to recalculate the Purchase Price and pay to
Buyer an amount equal to the appropriate adjustment in the Purchase Price. At
Closing, Escrow Agent shall establish and Seller shall fund a holdback account
in the amount of Three Hundred Thousand Dollars ($300,000) (THE "HOLDBACK
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ACCOUNT") for the purpose of paying any amounts Seller may be obligated to pay
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to Buyer under this Section 3.3, and Seller hereby grants to Buyer a lien and
security interest in the Holdback Account. Seller hereby agrees to execute any
and all documents that may be necessary in order to perfect the security
interest granted by Seller to Buyer in the Holdback Account. Escrow Agent is
hereby authorized and instructed to release from funds in the Holdback Account
to Buyer any amounts which are determined to be owed by Seller to Buyer pursuant
to this Section 3.3. On the forty-sixth (46th) day following the Closing Date,
Escrow Agent shall release to Seller from funds held in the Holdback Account an
amount equal to $ 150,000 less the amount of any payments previously made to
Buyer from the Holdback Account and the amount of any claims of entitlement
theretofore made by Seller with respect to amounts in the Holdback Account. The
balance of any funds in the Holdback Account which are not paid or payable to
Buyer pursuant to this Section 3.3 shall be returned to Seller upon the later to
occur of (a) the ninetieth (90th) day following the Closing Date and (b) the
resolution of any dispute between Seller and Buyer under this Section 3.3. Buyer
shall provide Seller and Escrow Agent with a written notice of any claim of
entitlement to receive any funds in the Holdback Account (as defined below)
together with a detailed description of the basis for such claim (A "NOTICE OF
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CLAIM"). Within five (5) days of Seller's receipt of a Notice of Claim, Seller
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shall provide Buyer and Escrow Agent with a written detailed response either
approving the payment of such claim from funds held in the Holdback Account or
contesting such claim together with the basis for Buyer's denial of such claim.
Any dispute with respect to the Holdback Account (A "DISPUTE") shall be settled
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by binding arbitration in Pima County, Arizona in accordance with the
Construction Industry Arbitration Rules of the American Arbitration Association
then currently in effect. The arbitrator for such arbitration procedures (THE
"ARBITRATOR") shall be agreed upon by the parties, but if the parties are unable
to agree upon an arbitrator within ten (10) days of the inception of such
Dispute, the arbitrator will be appointed by the American Arbitration
Association in accordance with the arbitration rules referenced above.
Arbitration may be commenced upon written demand of any party to this Agreement
for resolution of such Dispute. The arbitration hearing shall be conducted at a
time and place set by the Arbitrator, provided that such hearing must occur
within thirty (30) days of the appointment of the Arbitrator. The decision of
the Arbitrator shall be issued within ten (10) days of the hearing and shall be
final, and judgment may be entered upon it in accordance with applicable law in
any court having jurisdiction thereof. The nonprevailing party shall pay all
costs of the arbitration including the costs and fees, including reasonable
attorneys fees, of the prevailing party. Notwithstanding any provision contained
in the Construction Industry Arbitration Rules of the American Arbitration
Association, a party to this Agreement may only appeal or otherwise challenge a
decision of the Arbitrator for the reasons set forth in A.R.S. 12-1512(A) (1)
(2) or (3) and for no other reasons.
4. OPENING OF ESCROW.
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Upon the Execution Date, Buyer and Seller shall cause an escrow ("ESCROW") to be
opened with Escrow Agent (THE "OPENING OF ESCROW") by delivery to Escrow Agent
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of a fully executed copy of this Agreement. Escrow Agent shall promptly deliver
to Buyer and Seller written notice of the date of the Opening of Escrow. This
Agreement shall constitute escrow instructions to Escrow Agent as well as 'he
agreement of the parties. Escrow Agent is hereby appointed and designated to act
as Escrow Agent and is hereby instructed to deliver, pursuant to the terms of
this Agreement, the documents and funds to be deposited into Escrow as herein
provided. The parties hereto shall execute such additional escrow instructions
(not inconsistent with this Agreement as determined by counsel for Buyer and
Seller) as Escrow Agent may deem reasonably necessary for its protection,
including Escrow Agent's general provisions (as may be modified by Buyer, Seller
and Escrow Agent). In the event of any inconsistency between the provisions of
this Agreement and such additional escrow instructions, the provisions of this
Agreement shall govern.
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5. ACTIONS PENDING CLOSING.
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5.1 Due Diligence.
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5.1.1 Property Documents. On or before the first (1st) Business Day
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after the Execution Date (THE "DOCUMENT DELIVERY DATE"), Seller shall, at its
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sole cost and expense, provide to Buyer true, correct and complete copies of all
of the documents described on Exhibit "F" attached to this Agreement, to the
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extent that such documents exist and are in Seller's possession (collectively,
the "DELIVERED DOCUMENTS") During the course of the Escrow, Seller shall make
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available to Buyer for its review and copying during normal business hours at
Seller's company office or at the sales office for the Projects, true, correct
and complete copies of all contracts, documents, reports, books, records and
other materials relating to the Property, to the extent that such items exist
and are in Seller's possession (collectively, together with the Delivered
Documents, the "PROPERTY DOCUMENTS") including, without limitation, the items
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described on Exhibit "G" attached hereto.
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5.1.2 Buyer's Diligence Tests. At all reasonable times from the
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Execution Date until 5:00 p.m., Phoenix time, on June 5, 2000 (THE "DUE
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DILIGENCE PERIOD"), Buyer, its agents and representatives shall be entitled at
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Buyer's sole cost and expense to: (a) enter onto the Lots and the Projects
during normal business hours to perform all inspections, investigations, studies
and tests of the Property (including, without limitation, physical, structural,
mechanical, architectural, engineering, soils, geotechnical and environmental
tests that Buyer deems reasonable); (b) review all Property Documents; and (c)
investigate such other matters as Buyer may desire. Buyer's entry onto and
inspections of the Property in accordance with the terms hereof shall not damage
the Property in any respect. Any entry by Buyer onto the Projects shall be
subject to, and shall be conducted in accordance with, all applicable laws.
Buyer shall keep the Property free and clear of any mechanic's or materialmen's
liens arising out of any entry onto or inspection of the Property. Buyer shall
indemnify, protect, defend and hold Seller (and Seller's members, managers,
agents, employees and representatives) harmless from and against any and all
claims (including, without limitation, claims for mechanic's liens or
materialmen's liens), causes of action, demands, obligations, losses, damages,
liabilities, judgements, costs and expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements) (COLLECTIVELY, "CLAIMS")
in connection with or arising out of any inspections carried on by or on behalf
of Buyer pursuant to the terms hereof; provided, however, that Buyer shall not
indemnify Seller for any Claims caused by Seller's negligence or misconduct. In
the event that this Agreement is terminated for any reason, Buyer shall repair
any damage to the Property caused by its entry thereon and restore the same to
the condition in which it existed prior to such entry. The provisions of this
Section 5.1.2 shall survive the Closing or the earlier termination of this
Agreement.
5.1 .3 Buyer's Termination Right. Buyer shall have the right at any
--------------------------
time on or before the last day of the Due Diligence Period (THE "DUE DILIGENCE
-------------
TERMINATION DATE") to terminate this Agreement by delivering a written notice of
----------------
such termination to Seller and Escrow Agent if Buyer determines in its sole and
absolute discretion that the Property or this Agreement are not acceptable to
Buyer, in which case the Deposit shall he returned to Buyer and this Agreement
shall automatically terminate and be of no further force or effect and neither
party shall have any further rights or obligations hereunder other than pursuant
to any provision hereof which are specified to survive the termination of this
Agreement. In the event that Buyer fails to deliver a written termination notice
to Seller and Escrow Agent on or before the Due Diligence Termination Date, then
Buyer shall be deemed to have unconditionally waived its termination right under
this Section 5.1.3.
5.2 Title.
5.2.1 Deliveries by Seller. As soon as practical following the
----------------------
Execution Date, Seller shall cause Escrow Agent to provide to Buyer (a) a
separate current commitment for an extended coverage owner's policy of title
insurance for the Lots within each of the four Projects as well as a separate
title report for the Models which are subject to the Model Leases (COLLECTIVELY,
THE "TITLE REPORTS") and (b) copies of all documents referenced as exceptions
--------------
therein (COLLECTIVELY, THE "TITLE DOCUMENTS").
----------------
5.2.2 Buyer's Review of Title. Buyer shall have until five (5)
--------------------------
Business Days following its receipt of the Title Documents to notify Seller in
writing of any objection which Buyer may have to any matters reported or shown
in the Title Documents or any updates thereof ("BUYER'S OBJECTION LETTER")
------------------------
(provided, however, that if any such updates are received by Buyer, Buyer shall
have an additional two (2) Business Days following Buyer's receipt of such
update and copies of all documents referenced therein to notify Seller of
objections to items shown on any such update which were not disclosed on the
previously delivered Title Documents). Matters reported in or shown by the Title
Documents (or any updates thereof) and not timely objected to by Buyer as
provided above shall be deemed to be "PERMITTED EXCEPTIONS." Seller shall have
--------------------
no obligation to cure or correct any matter objected to by Buyer. However, on or
before the second (2nd) Business Day following Seller's receipt of Buyer's
Objection Letter, Seller may elect, by delivering written notice of such
election to Buyer and Escrow Agent ("SELLER'S RESPONSE") whether to cause Escrow
-----------------
Agent to remove or insure over any matters objected to in Buyer's Objection
Letter. If Seller fails to deliver Seller's Response within the time frame set
forth above, it shall be deemed to be an election by Seller not to cause Escrow
Agent to so remove or insure over such objections. If Seller elects not to cause
Escrow Agent to so remove or insure over such matters, then Buyer must elect, by
delivering written notice of such election to Seller and Escrow Agent on or
before the earlier to occur of (a) the second (2nd) Business Day following
Buyer's receipt of Seller's Response, (b) if no Seller's Response is received by
6
<PAGE>
Buyer, the second (2nd) Business Day following the date on which Seller shall
have been deemed to have responded, as provided above or (c) the Closing Date to
(i) terminate this Agreement, in which case the Deposit shall be returned to
Buyer and neither party shall thereafter have any rights or obligations to the
other hereunder other than pursuant to any provision in this Agreement which
expressly survives such termination or (ii) proceed to a timely Closing
whereupon such objected to exceptions or matters shall be deemed to be Permitted
Exceptions. In the event that Buyer fails to make such election on a timely
basis, then Buyer shall be deemed to have elected to proceed to a timely Closing
in accordance with the preceding clause (ii). Notwithstanding the foregoing or
any other provision contained in this Agreement, Seller shall, at its sole cost
and expense, cause any and all financial liens, encumbrances and assessments of
any type to be paid in full and removed from title at or prior to the Closing,
and such payment and removal shall be specified as a title requirement in the
Title Reports. Also, Seller shall be responsible for providing the title company
with any affidavits, indemnities and other agreements and items as the title
company may require to insure over any mechanics or materialmen's liens arising
from Seller's work on the Lots and within the Projects. In the event that any
time period provided above has not expired as of the date scheduled for Closing,
the Closing shall be extended to the first (1st) Business Day after the
expiration of such periods.
5.2.3 Condition of Title at Closing. Upon the Closing, Seller shall
-------------------------------
sell, transfer and convey to Buyer fee simple title to the Real Property by duly
executed and acknowledged deeds in the form of Exhibit "H" attached hereto (THE
----------
"DEEDS"), subject only to the applicable Permitted Exceptions. Also, upon the
Closing, the Model Leases shall be conveyed to Buyer subject only to the
Permitted Exceptions.
6. CONDITIONS TO CLOSING.
-----------------------
6.1 Buyer's Closing Conditions. The obligation of Buyer to complete
---------------------------
the transaction contemplated by this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at the Closing) (the Buyer's Closing Condition's), which
conditions may be waived, or the time for satisfaction thereof extended, by
Buyer only in a writing executed by Buyer.
6.1 Title. Escrow Agent shall be prepared and irrevocably committed
-----
to issue to Buyer (with an effective date not earlier than the Closing Date),
(a) extended owner's policies of title insurance in favor of Buyer for the Lots
(i) showing fee title to the Lots vested in Buyer, (ii) with liability coverage
in an amount satisfactory to Buyer, (iii) with those endorsements reasonably
requested by Buyer (provided that such endorsements are available and are paid
for by Buyer in accordance with the terms hereof) and (iv) containing no
exceptions other than the applicable Permitted Exceptions (THE "OWNER'S TITLE
-------------
POLICIES") and (b) a leasehold policy of title insurance in favor of Buyer for
--------
the Models subject to the Model Leases (i) showing fee title to such Models
vested in the lessor under the Model Leases and showing the leasehold interest
therein vested in Buyer, (ii) with liability coverage in an amount satisfactory
to Buyer, (iii) with those endorsements reasonably satisfactory to Buyer
(provided that such endorsements are available and are paid for by Buyer in
accordance with the terms hereof) and (iv) containing no exceptions other than
the applicable Permitted Exceptions (THE "LEASEHOLD POLICIES").
-------------------
6.1.2 Seller's Due Performance. All of the representations and
--------------------------
warranties of Seller set forth in this Agreement shall be true, correct and
complete in all material respects as of the Closing Date, and Seller, on or
prior to the Closing Date, shall have complied with and/or performed all of the
obligations, covenants and agreements required on the part of Seller to be
complied with or performed pursuant to the terms of this Agreement.
6.1.3 Physical Condition of Property. The physical condition of the
--------------------------------
Property shall be substantially the same on the Closing Date as on the Execution
Date, except for any construction progress and any reasonable wear and tear.
6.1.4 Bankruptcy. No action or proceeding shall have been commenced by
----------
or against Seller or Saxton Incorporated (or any affiliates of such entities)
under the federal bankruptcy code or any state law for the relief of debtors or
for the enforcement of the rights of creditors, and no attachment, execution,
lien or levy shall have attached to or been issued with respect to Seller's
interest in the Property or any portion thereof.
6.1.5 Model Leases. At the Closing and subject to the qualifications
-------------
set forth in Section 2.5 above, Seller shall assign all of its rights, title and
interests and remedies under the Model Leases (except for the Sold Model Leases)
to Buyer, and Buyer shall assume the obligations of Seller with respect thereto,
pursuant to one or more assignment and assumption of leases in the form of
Exhibit "I" attached hereto (THE "ASSIGNMENTS OF LEASE").
---------- ----------------------
6.1.6 Consent of Lessors. At least two (2) Business Days prior to the
------------------
Closing, Seller shall provide to Buyer a Lessors' Consent to Assignment in the
form attached hereto as Exhibit "J"(THE "CONSENT OF LESSORS") regarding the
------------ ------------------
status of the Model Leases and providing the consent of the lessors under the
Model Leases to the assignment of the Model Leases to Buyer, which must also be
consented to by any holders of liens and encumbrances on the Models who must
agree to recognize the existence of and abide by the Model Leases.
6.1.7 Bills of Sale. At the Closing, Seller shall transfer to Buyer
---------------
all of the Personal Property and the Intangible Property, in each case free of
all liens and encumbrances (other than the Permitted Exceptions), pursuant to
one or more bills of sale, assignment and assumption in the form of Exhibit
-------
"K" attached hereto (THE "BILL OF SALE"). However, in the event that Buyer
-- --------------
7
<PAGE>
assigns its rights under this Agreement, as permitted under Section 16.7 below,
Buyer may, in its sole discretion, require that that portion of the personal
property described on Exhibit "A-2" be separately conveyed to Nevada Diversified
------------
Equity, LLC, as opposed to the assignee of Buyer's rights under this Agreement,
and in such event, Seller shall execute a separate Bill of Sale separately
conveying such portion of the personal property directly to Nevada Diversified
Equity, LLC.
6.1.8 Assignments of Construction Contracts. Guaranties and
----------------------------------------------------------
Warranties. At least two (2) Business Days prior to the Closing, Seller shall
----------
deliver to Buyer an Assignment of Construction Contracts in the form of Exhibit
-------
"L" attached hereto relating to all Construction Contracts and all work which
--
Seller has heretofore caused to be conducted on the Lots or within the Projects,
and Seller shall simultaneously provide Buyer with a Consent to Assignment (in
the form attached to Exhibit "L") executed by each and every contractor,
-----------
subcontractor, materialman and supplier which is a party to any Construction
Contract (COLLECTIVELY, THE "ASSIGNMENT OF CONSTRUCTION CONTRACTS"). The
---------------------------------------
requirement to provide Consents to the Assignment of Construction Contracts
shall be deemed satisfied if Seller provides such consents from contractors and
materialmen whose Construction Contracts represent ninety-five percent (95%) or
more of the costs to complete the construction for the Lots Under Construction
as of the Closing Date as determined on a Project by Project basis.
6.1.9 Assignments of Plans. At least two (2) Business Days prior to
----------------------
Closing, Seller shall deliver to Buyer an Assignment of Plans with respect to
the Plans in the form of Exhibit "M" attached hereto executed by Seller together
----------
with a Consent to Assignment (in the form attached to Exhibit "M") executed by
----------
each and every preparer to such Plans (COLLECTIVELY, THE "ASSIGNMENT OF PLANS").
-------------------
6.1.10 Assignment of Declarant's Rights. At the Closing, if and to the
--------------------------------
extent Buyer is the holder of the Declarant's or Developer's rights under any
Declaration of Covenants, Conditions and Restrictions affecting any of the
Projects, Seller shall execute and cause to be recorded, an Assignment of
Declarant's and/or Developer's Rights pursuant to which Seller shall assign such
Declarant's and/or Developer's rights to Buyer.
6.1.11 Assignment of Sales Contracts. At the Closing, Seller shall
--------------------------------
execute and deliver to Buyer two (2) originals of an Assignment of Sales
Contracts with respect to each Sales Contract in the form of Exhibit "N"
-----------
attached hereto (COLLECTIVELY, THE "ASSIGNMENT OF SALES CONTRACTS").
--------------------------------
6.1.12 Non-Foreign Affidavits. At the Closing, Seller shall deliver to
----------------------
Buyer one or more non-foreign affidavits executed by Seller (THE "NON-FOREIGN
-----------
AFFIDAVIT").
---------
6.2 Failure of Buyer's Closing Conditions. If any of Buyer's Closing
-----------------------------------------
Conditions have not been fulfilled within the applicable time periods, Buyer
may:
6.2.1 Waive the Buyer's Closing Conditions and close Escrow in
accordance with this Agreement, without adjustment or abatement of the Purchase
Price; or
6.2.2 Elect to extend the Closing Date (as defined below) to the
second (2nd) business day following Seller's eventual satisfaction or Buyer's
eventual waiver of the Buyer's Closing Conditions; or
6.2.3 Terminate this Agreement by written notice to Seller and Escrow
Agent, in which event the Deposit shall be returned to Buyer and all documents,
instruments and funds delivered into Escrow shall be returned to the party that
delivered the same into Escrow, and to the extent that the failure of any
applicable Buyer's Closing Condition is caused by a Seller default, Buyer shall
be entitled to pursue its rights and remedies pursuant to the terms of Section
12 hereof.
6.2.4 Notwithstanding any other provision contained herein, if Seller,
despite its good faith and diligent efforts, is unable on or before the
specified date to obtain the Consents it is required to provide in Sections
6.1.6, 6.1.8 and 6.1.9 above, then the Closing Date shall be extended by seven
(7) calendar days to allow Buyer the opportunity and right to seek to obtain
such Consents itself. In the event Buyer is unable to obtain such Consents with
such seven (7) calendar day period, Buyer must, within such period elect to
proceed as set forth in Section 6.2.1 or 6.2.3 above, as the provisions set
forth in Section 6.2.2 shall not be applicable with respect to such Consents
provided Seller used its good faith and diligent efforts to obtain such
Consents. However, if neither Seller nor Buyer is able to obtain all of the
Consents required under Section 6.1.9, then the Purchase Price shall be reduced
by $100,000.
6.3 Seller's Closing Conditions. The obligation of Seller to complete
---------------------------
the transaction contemplated by this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at the Closing) (THE "SELLER'S CLOSING CONDITIONS"),
---------------------------
which conditions may be waived, or the time for satisfaction thereof extended,
by Seller only in a writing executed by Seller:
6.3.1 Buyer's Due Performance. All of the representations and
-------------------------
warranties of Buyer set forth in this Agreement shall be true, correct and
complete in all material respects as of the Closing Date, and Buyer, on or prior
to the Closing Date, shall have complied with and/or performed all of the
obligations, covenants and agreements required on the part of Buyer to be
complied with or performed at or prior to Closing pursuant to the terms of this
Agreement.
8
<PAGE>
6.3.2 Bankruptcy. No action or proceeding shall have been commenced by
----------
or against Buyer under the federal bankruptcy code or any state law for the
relief of debtors or for the enforcement of the rights of creditors.
6.3.3 Deliveries. Buyer shall have delivered to Escrow Agent or
----------
Seller, as the case may be, such documents or instruments as are required to be
delivered by Buyer pursuant to the terms of this Agreement.
6.4 Failure of Seller's Closing Conditions. If any of the Seller's
-----------------------------------------
Closing Conditions have not been fulfilled within the applicable time periods,
Seller may:
6.4.1 Waive the Seller's Closing Condition and close Escrow in
accordance with this Agreement, without adjustment or abatement of the Purchase
Price; or
6.4.2 Terminate this Agreement by written notice to Seller and Escrow
Agent, in which event (a) the Deposit shall be returned to Buyer, (b) Escrow
Agent shall return all other documents, instruments and funds delivered into
Escrow to the party that delivered the same into Escrow and (c) the parties
shall have no further rights, remedies, obligations or liability under this
Agreement except such matters which are specifically provided to survive such
cancellation.
7. CLOSING.
-------
7.1 Closing Date. Subject to the provisions of this Agreement, the Closing
------------
shall take place on June 7, 2000, or on such other date as the parties hereto
may agree. As used herein, the following terms shall have the following
meanings: (a) the "CLOSING" shall mean the recordation of the Deeds in the
-------
official records of Pima County, Arizona (THE "OFFICIAL RECORDS"); and (b) the
-------
"CLOSING DATE" shall mean the date upon which the Closing actually occurs.
--------------
7.2 Deliveries by Seller. On or before the Closing Date, Seller, at its
----------------------
sole cost and expense, shall deliver or cause to be delivered into Escrow the
following documents and instruments, each dated as of the Closing Date, in
addition to all other items and payments required by this Agreement to be
delivered by Seller at the Closing:
7.2.1 Deeds. Original executed and acknowledged Deeds conveying the
Real Property to Buyer;
7.2.2 Non-Foreign Affidavits. Original executed Non-Foreign
-----------------------
Affidavits;
7.2.3 Assignments of Model Leases. Two (2) original executed
------------------------------
counterparts of each Assignment of Lease;
7.2.4 Bills of Sale. Two (2) original executed counterparts of each
---------------
Bill of Sale;
7.2.5 Assignments of Construction Contracts. Two (2) original executed
-------------------------------------
counterparts of the Assignments of Construction Contracts together with the
original Consents to be attached thereto.
7.2.6 Assignments of Plans. Two (2) original executed counterparts of
--------------------
each Assignment of Plans for each of the Plans together with the original
Consents to be attached thereto.
7.2.7 Assignment of Declarant's Rights. The original executed
-----------------------------------
Assignment(s) of Declarant's Rights.
7.2.8 Assignments of Sales Contracts. Two (2) original executed
---------------------------------
Assignments of Sales Contracts.
7.2.9 Consent of Lessors. The original Consent of Lessors executed by
------------------
the lessors of the Model Leases, provided Buyer shall provide Seller with five
(5) days advance notice of any such request.
7.2.10 Sales Contract Notices. If requested by Buyer, a separate
------------------------
letter to each of the Sold Lot Buyers, duly executed by Seller, dated as of the
Closing Date and addressed to each Sold Lot Buyer, informing such Sold Lot
Buyers of the assignment of the Sales Contracts to Buyer, provided Buyer shall
provide Seller with five (5) days advance notice of any such request.
7.2.11 Construction Contracts Notice. A separate letter to each of the
-----------------------------
parties to the Constructions Contracts, duly executed by Seller, dated as of the
Closing Date and addressed to each such party, informing such parties of the
assignment of the Construction Contracts to Buyer.
7.2.12 Proof of Authority. Such proof of Seller's authority and
--------------------
authorization to enter into this Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or delivering any instruments, documents or certificates on behalf of Seller to
act for and bind Seller as may be reasonably required by Escrow Agent or Buyer;
and
7.2.13 Other. Such other documents and instruments, signed and
-----
properly acknowledged by Seller, if appropriate, as may be reasonably required
by Buyer, Escrow Agent or otherwise in order to effectuate the provisions of
this Agreement and the Closing of the transaction contemplated herein.
9
<PAGE>
Notwithstanding any other provision contained in this Agreement, Buyer
may require that separate closing documents be executed with respect to that
part of the Property located within each of the four (4) Projects. Buyer shall
notify Seller of such election at least two (2) Business Days prior to the
Closing Date.
7.3 Deliveries by Buyer. On or before the Closing Date, Buyer, at its sole
-------------------
cost and expense, shall deliver or cause to be delivered into Escrow the
following funds, documents and instruments, each dated as of the Closing Date,
in addition to all other items and payments required by this Agreement to be
delivered by Buyer at the Closing:
7.3.1 Purchase Price. Cash in an amount equal to the sum of the
---------------
Purchase Price, as adjusted, and all of the Buyer's Closing Costs and less the
amount of the Deposit (and otherwise sufficient to close the transaction
contemplated herein);
7.3.2 Assignments of Lease. Two (2) original executed counterparts of
--------------------
each Assignment of Lease;
7.3.3 Bills of Sale. Two (2) original executed counterparts of each
---------------
Bill of Sale;
7.3.4 Assignments of Declarant's Rights. A counterpart of the original
---------------------------------
of each Assignment of Declarant's Rights.
7.3.5 Proof of Authority. Such proof of Buyer's authority and
--------------------
authorization to enter into this Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or delivering any instruments, documents or certificates on behalf of Buyer to
act for and bind Buyer as may be reasonably required by Escrow Agent or Seller;
and
7.3.6 Other. Such other documents and instruments, signed and properly
------
acknowledged by Buyer, if appropriate, as may reasonably be required by Seller,
Escrow Agent or otherwise in order to effectuate the provisions of this
Agreement and the Closing of the transaction contemplated herein.
7.4 Actions by Escrow Agent. Provided that Escrow Agent shall not have
-----------------------
received written notice from Buyer or Seller of the failure of any condition to
the Closing or of the termination of the Escrow and this Agreement, when Buyer
and Seller have deposited into Escrow the documents and funds required by this
Agreement and Escrow Agent is irrevocably and unconditionally committed to issue
the Owner's Title Policies in accordance with the terms hereof, Escrow Agent
shall, in the order and manner herein below indicated, take the following
actions:
7.4.1 Funds. Disburse all funds as follows:
-----
7.4.1.1 Pursuant to the "Closing Statement" (as hereinafter defined),
retain for Escrow Agent's own account all escrow fees and costs, disburse to
Escrow Agent the fees and expenses incurred in connection with the issuance of
the Owner's Title Policies and the Leasehold Policies and disburse to any other
persons or entities entitled thereto the amount of any other Closing Costs;
7.4.1.2 Disburse to Seller an amount equal to the Purchase Price, less
any adjustments provided for in Sections 3.2 and 3.3 above and less $300,000 as
funds to be deposited into the Holdback Account and less the prorations and
allocations of Closing Costs provided for herein; and
7.4.1.3 Disburse to the party who deposited the same any remaining
funds in the possession of Escrow Agent after payments pursuant to Sections
7.4.1.1 and 7.4.1.2 above have been completed;
7.4.2 Recording. Cause the Deeds and the Assignments of Declarant's
---------
Rights and any other documents which the parties hereto may mutually direct to
be recorded in the Official Records and obtain conformed copies thereof for
distribution to Buyer and Seller;
7.4.3 Perfection of Security Interest. File all documents necessary to
-------------------------------
perfect the security interest granted by Seller to Buyer pursuant to Section 3.3
of this Agreement;
7.4.4 Delivery of Documents. Deliver: (a) to Seller (i) one copy of
-----------------------
all documents deposited into Escrow and (ii) one conformed copy of each document
recorded pursuant to the terms hereof; and (b) to Buyer, (i) an original of all
documents deposited into Escrow (other than the Deeds, the Assignments of
Declarant's Rights and the Non-Foreign Affidavits), (ii) the original
Non-Foreign Affidavits and (iii) one conformed copy of each document recorded
pursuant to the terms hereof; and
7.4.5 Owner's Title Policies. Cause Escrow Agent to issue to Buyer the
----------------------
Owner's Title Policies and the Leasehold Policies.
7.5 Prorations.
----------
10
<PAGE>
7.5.1 Taxes, homeowners' assessments, utility costs and other expenses
affecting the Property shall be prorated between Buyer and Seller as of the
Closing Date based on a 365 day year; provided, however, any real property
assessments and improvement assessments of any kind affecting the Property and
any amounts owed to any homeowners' associations for the Projects shall, whether
or not then due, be paid in full by Seller at the Closing. For purposes of
calculating prorations, Buyer shall be deemed to be title holder of the Property
and, therefore, shall be responsible for the expenses incurred with respect to
the Property for the periods after 12:01 a.m. Arizona Time on the Closing Date.
All non-delinquent real estate taxes on the Property shall be prorated based on
the actual current tax bill.
7.5.2 Two (2) Business Days prior to the Closing Date, Escrow Agent
shall deliver to each of the parties for their review and approval a preliminary
closing statement (THE "PRELIMINARY CLOSING STATEMENT") setting forth: (a) the
------------------------------
proration amounts allocable to each of the parties pursuant to Section 7.5
hereof and (b) the Closing Costs allocable to each of the parties pursuant to
Section 7.6 hereof. Based on each of the party's comments, if any, regarding the
Preliminary Closing Statement, Escrow Agent shall revise the Preliminary Closing
Statement and deliver a final, signed version of a closing statement to each of
the parties at the Closing (THE "CLOSING STATEMENT").
------------------
7.6 Closing Costs. Each party shall pay its own costs and expenses
--------------
arising in connection with the Closing (including, without limitation, its own
attorneys' and advisors' fees, charges and disbursements), except the following
costs (THE "CLOSING COSTS"), which shall be allocated between the parties as
--------------
follows:
7.6.1 Escrow Agent's escrow fees and costs, which shall be paid one
half (1/2) by Seller and one-half (1/2) by Buyer;
7.6.2 The cost of the Owner's Title Policies and the Leasehold
Policies to the extent attributable to standard coverage shall be paid by Seller
with the cost of the Owner's Title Policies and the Leasehold Policies
attributable to extended coverage to be paid by Buyer;
7.6.3 The cost of any endorsements to the Owner's Title Policies and
the Leasehold Policies, which shall be paid by Buyer;
7.6.4 All other closing fees and costs shall be charged to the parties
in accordance with Escrow Agent's customary practices; and
7.6.5 All recording and filing fees, which shall be paid by Seller.
7.7 Deliveries Outside of Escrow. Seller shall deliver possession of
-----------------------------
the Property, subject only to the Permitted Exceptions, to Buyer upon the
Closing. Further, Seller hereby covenants and agrees to deliver to Buyer, on or
prior to the Closing, the following items:
7.7.1 Intangible Property. The Intangible Property, including, without
-------------------
limitation, the original Property Documents; and
7.7.2 Personal Property. The Personal Property, including, without
------------------
limitation, any and all keys, pass cards, remote controls, security codes,
computer software and other devices relating to access to the Improvements, the
Models or any other parts of the Property.
8. SELLER'S REPRESENTATIONS AND WARRANTIES.
------------------------------------------
Seller represents and warrants to and agrees with Buyer, as of the Execution
Date and as of the Closing Date, as follows:
8.1 Due Organization. Seller is a corporation duly organized and existing
-----------------
in good standing under the laws of the State of Arizona.
8.2 Seller's Authority: Validity of Agreements. Seller has full right,
----------------------------------------------
power and authority to sell the Property to Buyer as provided in this Agreement
and to carry out its obligations hereunder. The individual(s) executing this
Agreement and the instruments referenced herein on behalf of Seller have the
legal power, right and actual authority to bind Seller to the terms hereof and
thereof. This Agreement is, and all other instruments, documents and agreements
to be executed and delivered by Seller in connection with this Agreement shall
be, duly authorized, executed and delivered by Seller and shall be valid,
binding and enforceable obligations of Seller (except as enforcement may be
limited by bankruptcy, insolvency or similar laws) and do not, and as of the
Closing Date will not, violate any provisions of any agreement or judicial order
to which Seller is a party or to which Seller or the Property is subject.
8.3 Model Leases. The Model Leases are the only leases which affect the
-------------
Property. No default or dispute exists under or with respect to any of the Model
Leases. Exhibit "B" accurately describes the terms of each of the Model Leases.
----------
8.4 Contracts. Except for the Model Leases and except as set forth on the
---------
schedule attached hereto as Exhibit "D", neither Seller nor any of its agents
-----------
has executed any service, maintenance, repair, management, supply or other
contracts or leases (excluding the Sales Contracts and Construction Contracts)
affecting the Property or the Projects which would be binding on Buyer
subsequent to the Closing.
11
<PAGE>
8.5 Violations of Laws. To "Seller's Knowledge" (as hereinafter defined),
-------------------
Seller has not received any written notices of any violations of any laws,
ordinances, orders or requirements of any governmental authority, agency or
officer having jurisdiction against or affecting any or all of the Property or
the Projects, which have not previously been complied with.
8.6 Litigation. To Seller's Knowledge, (a) there are no actions,
----------
investigations, suits or proceedings (other than tax appeals or protests)
pending or threatened that have a material adverse effect on any or all of the
Property or the Projects, or the ownership, development, operation or sale
thereof, and (b) there are no judgments, orders, awards or decrees currently in
effect against Seller with respect to the ownership, development, operation or
sale of all of any part of the Property or the Projects which have not been
fully discharged prior to the Execution Date.
8.7 Zoning and Condemnation. To Seller's Knowledge, there are no pending
-------------------------
proceedings to alter or restrict the zoning or other use restrictions applicable
to all or any part of the Property or any part of the Projects, or to condemn
all or any portion of the Property or the Projects by eminent domain proceedings
or otherwise.
8.8 Ownership of Property. Seller owns and has the right, power and
-----------------------
authority to convey the Property to Buyer as contemplated by this Agreement.
8.9 Possession/Lease. To Seller's Knowledge, there are no parties in
----------------
adverse possession of the Property; there are no parties in possession of the
Lots or the Property except Seller and except the lessors under the Model
Leases; and no party has been granted any license, lease, or other right
relating to the use or possession of any part of the Property except the lessors
under the Model Leases.
8.10 Creditors Issues. To Seller's Knowledge, there are no attachments,
-----------------
executions, assignments for the benefit of creditors, receiverships,
conservatorships, or voluntary or involuntary proceedings in bankruptcy or
pursuant to any other laws for relief of debtors contemplated or filed by Seller
or pending against Seller or affecting or involving all or any part of the
Property.
8.11 Other Contracts. There are no contracts or other obligations
----------------
outstanding for the sale, exchange, leasing or transfer of all or any of the
Property.
8.12 Archaeological Issues. To Seller's Knowledge, there are no sites of
----------------------
historical or archaeological importance within the Projects.
8.13 Protected Species/Habitat. Seller has no actual knowledge of the
--------------------------
existence within the Projects of any plant, animal or bird or any habitat
associated with any species of plant, animal or bird that is protected under any
federal, state or local law or ordinance or which could otherwise impede or
delay Buyer's intended development and sale of any of the Lots.
8.14 Assessment Liens. To Seller's Knowledge, there is no improvement
-----------------
district (either in existence or planned) which includes the Lots, and there are
no assessment liens against all or any part of the Property.
8.15 Environmental. To Seller's Knowledge, there is not now and there never
-------------
has been a release or threatened release or disposal of any Pollutant or
Hazardous Substance (as those terms are used and defined in any applicable
federal, state or local law, ordinance or regulatory agency mandate regarding
human health and/or environmental conditions ("Environmental Law") in, on or
under the Lots or any other part of the Projects so as to result in a violation
or potential violation of any Environmental Law. Neither Seller nor, to Seller's
Knowledge, any other person or entity has used in any manner, stored, generated,
released or disposed of any Pollutant or Hazardous Substance in, on or under the
Lots or any other part of the Projects. To Seller's Knowledge, there is no
current or threatened legal or administrative proceeding or investigation by any
governmental authority or any other third party with respect to the presence of
any Pollutant or Hazardous Substance in, on or under the Lots or any other part
of the Projects or the migration of a Pollutant or Hazardous Substance in, on or
under or from the Lots or any other part of the Projects.
8.16 Storage Tanks. To Seller's Knowledge, there are no underground storage
-------------
tanks located on or under any of the Lots or any other part of the Projects.
8.17 Access. Each of the Lots has legal access to and from a public street
------
over paved roadways.
8.18 Utilities. All water, electric, gas, sewer, telephone, cable
---------
television and other utilities for each of the Lots are fully installed to the
lot lines for each of the Lots, and all such facilities are in good working
condition, and Seller is not aware of any defects or deficiencies regarding such
facilities.
8.19 Drainage/Grading. To Seller's Knowledge, there are no drainage or
----------------
grading problems on any Lots or within the Projects.
8.20 Sales Contracts. The Sales Contracts are in full force and effect and
---------------
no defaults exist under the Sales Contracts and no conditions or circumstances
exist which could, with the passage of time or the providing of notice,
constitute a default under the Sales Contracts nor, to Seller's knowledge, has
Seller received any written notice or demand from any Sold Lot Buyer or any
agent of any Sold Lot Buyer indicating a Sold Lot Buyer's desire to cancel a
Sales Contract or a Sold Lot Buyer's unhappiness with the home or improvements
being constructed pursuant to the Sales Contract except for those delivered to
by Seller to Buyer during the Due Diligence Period. In the event Seller
12
<PAGE>
hereafter receives any such notices during the course of the Escrow, Seller
shall immediately provide such notice(s) to Buyer and such shall not constitute
a default under this Agreement. Furthermore, to Seller's knowledge, there are no
facts, circumstances or conditions which could adversely affect any party's
ability to fully or timely perform its obligations under the Sales Contracts.
During the course of the Escrow, Seller shall not, without the prior written
approval of Buyer, enter into any addendum or modifications to any of the Sales
Contracts to the extent (a) such addendum or modification is not in the ordinary
course of Seller's business and/or (b) the effect of such proposed addendum or
modification, alone or in the aggregate, is to decrease the purchase price for a
Sold Lot by more than two percent (2%) of the sales price set forth in the
applicable Sales Contract. Furthermore, during the course of the Escrow, Seller
shall not enter into any new Sales Contracts relating to the Lots unless (a)
such Sales Contracts are on terms and conditions no less favorable than the
existing Sales Contracts and (b) the sales price for such Lot and the price for
any options and the lot premium for such Lot are not less than ninety-eight
percent (98%) of Seller's published prices for such items as of the Execution
Date.
8.21 Construction Defects. To Seller's Knowledge, (a) there are no defects
--------------------
or deficiencies in any of the improvements heretofore constructed by Seller with
respect to the Property or the Projects nor are there any defects or
deficiencies in any of the Intangible Property.
8.22 Construction Contracts. Except for any failure by Seller to have
-----------------------
previously paid amounts properly payable to subcontractors (all of which
indebtedness will be resolved and paid by Seller prior to Closing), there are no
defaults under the Construction Contracts nor are there any facts or
circumstances which could, with the passage of time or the providing of notice,
constitute a default under the Construction Contracts, and there are no existing
disputes between Seller and any parties with respect to the Construction
Contracts. In addition, to Seller's Knowledge, there are no facts, circumstances
or conditions which would adversely affect the ability of subcontractor to fully
and timely perform its obligations under the Construction Contracts.
8.23 Comprehensive Sale. The Property constitutes all of Seller's remaining
------------------
right, title and interest within the Projects.
8.24 Associations. Each of the homeowners' associations for the Projects is
------------
an Arizona non-profit corporation in good standing and, to Seller's Knowledge,
there are no disputes between the Associations and Seller with respect to any
matters related to any of the Projects or such Associations. In addition, the
Associations are adequately funded to handle Association affairs and a reserve
account has been established and funded in accordance with the reserve study
which has heretofore been prepared by independent third-parties for each of the
Projects. Also, all common area tracts within the Projects have been conveyed to
and are owned by the respective owners' associations for the Projects, free and
clear of liens.
8.25 Declarant's Rights. Seller does not own and has not previously
-------------------
assigned to any third-party any Declarant's rights relating to any of the
Projects.
8.26 Lot Premiums. The Purchase Price Summary accurately reflects the lot
-------------
premiums to be paid by each Sold Lot Buyer, and no third-party is entitled to
share in any of the lot premiums paid by any Sold Lot Buyer.
8.27 Sold Lot Buyer Deposits. All earnest money deposits paid by Sold Lot
------------------------
Buyers pursuant to the Sales Contracts are held by the escrows agents for each
of the Sales Contracts with the exception of the deposits identified on Exhibit
-------
"O" to this Agreement, which were paid directly by the Sold Lot Buyers to
--
Seller, and Buyer shall be entitled to a credit against the Purchase Price in
the total amount of the deposits paid to or held by Seller under the Sales
Contracts as of the Closing Date. Prior to the Closing, Seller shall cause each
of the escrow agents under the Sales Contracts to provide Buyer with an Consent
of Lessors confirming the total of the earnest money held by such escrow agents
under the Sales Contracts and further confirming such escrow agents' agreement
to release such monies to Buyer upon the closings under the Sales Contracts.
8.28 Construction Costs. Seller represents, warrants and covenants to Buyer
------------------
that Seller will, at or prior to the Closing, pay all fees, costs, charges,
wages and all other amounts due with respect to all services and work performed
and materials and supplies provided to or with respect to the Property on or
before May 25, 2000, and Seller hereby agrees to defend and defend Buyer and its
affiliates and hold Buyer and its affiliates harmless from any and all claims,
demands, actions and proceedings of any kind and any damages, losses, and fees
(including, without limitation, attorneys' fees) which may at any time arise or
be incurred in connection with or relating to any services or work performed and
materials and supplies provided to or with respect to the Property on or before
May 25, 2000. Seller shall not, during the course of the Escrow, incur any
construction or material costs which are not budgeted and accounted for in the
Purchase Price Summary or which are not incurred in connection with change
orders hereafter made and options hereafter selected subject to the restrictions
contained herein unless Seller notifies Buyer and Escrow Agent of such amounts
and unless Seller is irrevocably committed to pay such amounts at or prior to
the Closing.
8.29 Seller's Knowledge. As used herein, the term "SELLER'S KNOWLEDGE"
------------------- ------------------
shall mean the actual knowledge, without any additional investigation or
inquiry, of Eugene L. Baker and Christopher Ellis.
13
<PAGE>
8.30 Survival. All of the representations, warranties and agreements of
--------
Seller set forth in this Agreement shall be true upon the Execution Date, shall
be deemed to be repeated at and as of the Closing Date (except as otherwise set
forth in writing to Buyer) and shall survive for a period equal to one (1) year
from the Closing Date.
9. BUYER'S REPRESENTATIONS AND WARRANTIES.
-----------------------------------------
Buyer represents and warrants to Seller, as of the Execution Date and as of the
Closing Date, as follows:
9.1 Due Organization. Buyer is a limited liability company duly organized,
----------------
validly existing and in good standing under the laws of the State of Nevada.
9.2 Buyer's Authority; Validity of Agreements. Buyer has full right, power
-----------------------------------------
and authority to purchase and acquire the Property from Seller as provided in
this Agreement and to carry out its obligations hereunder. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Buyer have the legal power, right and actual authority to bind Buyer to the
terms hereof and thereof. This Agreement is, and all instruments, documents and
agreements to be executed and delivered by Buyer in connection with this
Agreement shall be, duly authorized, executed and delivered by Buyer and shall
be valid, binding and enforceable obligations of Buyer (except as enforcement
may be limited by bankruptcy, insolvency or similar laws) and do not, and as of
the Closing Date will not, violate any provision of any agreement or judicial
order to which Buyer is a party or to which Buyer is subject.
9.3 Survival. All of the representations, warranties and agreements of
--------
Buyer set forth in this Agreement shall be true upon the Execution Date, shall
be deemed to be repeated at and as of the Closing Date (except as otherwise set
forth in writing to Seller) and shall survive for a period equal to one (1) year
from the Closing Date.
10. ADDITIONAL COVENANTS AND AGREEMENTS.
--------------------------------------
10.1 "As-Is" Purchase. Subject to the representations, warranties and
-----------------
covenants of Seller contained in this Agreement and the other provisions
contained in this Agreement, all Property purchased by Buyer shall be purchased
strictly in "AS IS" condition, and Buyer accepts and agrees to bear all risks
regarding all attributes and conditions, latent or otherwise, of the Property
purchased by Buyer, except to the extent that Seller has caused, contributed to
or exacerbated any such risks or defects. Buyer has made or will, during the
Feasibility Period, make its own inspection and investigation of the Property,
including, without limitation, their subsurface, soil, engineering and other
conditions and requirements, whether there are any eminent domain or other
public or quasi-public takings of the Property contemplated, and all zoning and
regulatory matters pertinent to the Property, as Buyer deems necessary or
prudent. Subject to the representations, warranties, covenants and adjustments
provided for herein, Buyer shall purchase the Property based upon Buyer's own
inspection and investigation and not in reliance on any statement,
representation, inducement or agreement of Seller except as expressly provided
herein. Buyer agrees that, except as expressly provided in this Agreement,
neither Seller nor anyone acting on behalf of Seller has made any
representation, guarantee or warranty whatsoever, either written or oral,
concerning the Property.
10.2 Damage Caused by Seller. Notwithstanding Section 10.1 above, if Seller
-----------------------
at any time enters onto the Property or any other part of the Projects, and in
connection with such entry causes, contributes to or exacerbates any defects or
risks concerning the Projects, then Seller shall be responsible for, and shall
indemnify, defend and hold harmless Buyer and its respective affiliates,
officers, directors, employees, and shareholders from and against all actions,
claims, demands, causes or action, loss, liability or expense (including without
limitation, attorneys' fees and costs of litigation) arising from or in any way
connected with such actions of Seller.
11. RISK OF LOSS.
--------------
11.1 Condemnation. If, prior to the Closing, all or any portion of the
------------
Property is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), Seller shall
immediately notify Buyer of such fact. In such event, Buyer shall have the
option to terminate this Agreement upon written notice to Seller given not later
than five (5) days after receipt of such notice from Seller. Upon such
termination, the Deposit shall be returned to Buyer and neither party shall have
any further rights or obligations hereunder other than pursuant to any provision
hereof which expressly survives such termination. If Buyer does not elect or has
no right to terminate this Agreement, Seller shall assign and turn over to
Buyer, and Buyer shall be entitled to receive and keep, all awards for the
taking by condemnation and Buyer shall be deemed to have accepted the Property
subject to the taking without reduction in the Purchase Price.
11.2 Casualty. Prior to the Closing and notwithstanding the pendency of
--------
this Agreement, the entire risk of loss or damage by earthquake, hurricane,
tornado, flood, landslide, fire or other casualty shall be borne and assumed by
Seller. If, prior to the Closing, any damage occurs to any portion of the
Property as a result of any earthquake, hurricane, tornado, flood, landslide,
fire or other casualty, Seller shall immediately notify Buyer of such fact. In
such event, Buyer shall have the option to terminate this Agreement upon written
notice to Seller given not later than five (5) days after receipt of any such
notice from Seller. Upon such termination, the Deposit shall be returned to
Buyer and neither party shall have any further rights or obligations hereunder
other than pursuant to any provision hereof which expressly survives such
termination. If Buyer does not elect or has no right to terminate this
Agreement, Seller shall assign and turn over, and Buyer shall be entitled to
receive and keep, all insurance proceeds payable with respect to such damage or
destruction (which shall then be repaired or not at Buyer's option and cost) and
the parties shall proceed to the Closing pursuant to the terms hereof without
modification of the terms of this Agreement. If Buyer does not elect or has no
right to terminate this Agreement by reason of any casualty, Buyer shall have
the right to participate in any adjustment of the insurance claim.
14
<PAGE>
12. REMEDIES.
--------
If, prior to Closing, Seller breaches or defaults on its obligations under
this Agreement and if such breach or default is not cured within five (5) days
after the date Buyer provides Seller with notice of such breach or default,
Buyer may elect to either (a) terminate this Agreement, in which event the
Deposit shall be returned Buyer and Seller shall reimburse Buyer for all of
Buyer's reasonable out-of-pocket expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements) incurred in connection
with this Agreement or (b) proceed with whatever steps Buyer may deem necessary
to specifically enforce the performance of this Agreement. If, prior to Closing,
Buyer breaches or defaults on its obligations under this Agreement and if such
breach or default is not cured within five (5) days after the date Seller
provides Buyer with notice of such breach or default, Seller may, as its sole
remedy, elect to terminate this Agreement, in which event the Deposit shall be
paid to Seller as liquidated damages and not as a penalty, it being acknowledged
that the amount of damages Seller would suffer as a result of such default by
Buyer would be difficult to ascertain and that the Deposit constitutes a
reasonable estimate of such damages. In the event a breach or default occurs or
is first discovered after the Closing and if such breach or default is not cured
within five (5) days after the non-breaching party provides the breaching party
with notice of such breach or default, the non-breaching party shall have the
right to proceed with all actions available at law or in equity to enforce the
performance of this Agreement and recover any damages suffered or incurred by
the non-breaching party as a result of such breach or default. If Seller
breaches or defaults on its obligations under this Agreement and Buyer elects to
terminate this Agreement as a result thereof, the Deposit shall immediately be
returned to Buyer.
13. BROKERS' COMMISSION.
--------------------
Each party represents and warrants to the other that it has not employed
any broker or finder in connection with the transactions contemplated by this
Agreement. Each party shall indemnify, defend and hold harmless the other party
from all liability and expense, including, without limitation, reasonable
attorneys' fees, arising from any claim by any broker, agent or finder for
commissions, finder's fees or similar charges because of any act of such party.
Each party acknowledges that the other party and/or its principals and
affiliates may be or may be affiliated with licensed real estate brokers and/or
salespersons in the State of Arizona.
14. INTERSTATE LAND SALES FULL DISCLOSURE ACT.
----------------------------------------------
Seller and Buyer believe and intend that the sales provided for herein are
exempt from state subdivided land sales laws and the Interstate Land Sales Full
Disclosure Act by reason of being within one or more of the exemptions set forth
therein or in the regulations promulgated pursuant thereto. In support of such
exemption, Buyer represents and warrants to Seller as follows, which
representation and warranty shall be true and correct at all times during the
term of this Agreement and shall survive the term of this Agreement without
limitation: Buyer is regularly engaged in the business of constructing
residential, commercial or industrial buildings and/or reselling or leasing lots
to persons engaged in such business, is acquiring the Lots in the ordinary
course of that business and otherwise meets the exemption prerequisites set
forth in 15 U.S.C. Section 1702(a) (7) and further defined in 24 CFR 1710.5(g)
and 24 CFR 1710, Appendix A. Buyer shall indemnify, defend and hold harmless
Seller for, from and against any and all claims, demands, liabilities,
obligations, costs and expenses (including, without limitation, attorneys' fees
and costs) incurred as a result of any misrepresentation by Buyer in this
Section.
15. SALES TAX.
----------
Except as allocated to Buyer in the next sentence of this Section, Seller
shall be fully responsible for all sales taxes, transaction privilege taxes and
other taxes relating to all improvements made to the Property and the Projects
on or before the Closing, and Seller hereby agrees to indemnify, defend and hold
Buyer harmless from any and all claims, demands and liability related to such
taxes. Buyer shall be solely responsible for all sales taxes, transaction
privilege taxes and other taxes relating to actual costs incurred and paid in
connection with the construction of homes on the Lots (as opposed to offsite or
project improvements), and Buyer agrees to indemnify, defend and hold Seller
harmless from any and all claims, demands and liability related to such taxes.
16. MISCELLANEOUS PROVISIONS.
-------------------------
16.1 Governing Law. This Agreement and the legal relations between the
--------------
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Arizona without regard to its principles of
conflicts of law.
16.2 Entire Agreement. This Agreement, including the exhibits attached
-----------------
hereto, constitutes the entire agreement between Buyer and Seller pertaining to
the subject matter hereof and supersedes all prior agreements, understandings,
letters of intent, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements,
express or implied, made to either party by the other party in connection with
the subject matter hereof except as specifically set forth herein or in the
documents delivered pursuant hereto or in connection herewith.
15
<PAGE>
16.3 Modification; Waiver. No supplement, modification, waiver or
---------------------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
16.4 Notices. All notices, consents, requests, reports, demands or other
-------
communications hereunder (COLLECTIVELY, "NOTICES") shall be in writing and may
be given personally, by registered or certified mail, by telecopy or by Federal
Express (or other reputable overnight delivery service) as follows:
To Seller at: Diamond Key Homes, Inc.
2111 E. Highland Avenue, Suite 440
Phoenix, AZ 85016
Attention: Eugene L. Baker, President
Phone: 602-840-8000
Fax: 602-912-9400
To Buyer at: Nevada Diversified Equity, LLC
2525 E. Camelback Road, Suite 765
Phoenix, AZ 85016
Attention: John W. Pacheco
Phone: 602-381-6660
Fax: 602-381-6661
With copy to: C. Timothy White, Esq.
Tiffany & Bosco, P.A.
1850 North Central Avenue, Suite 500
Phoenix, AZ 85004-4546
Phone: 602-255-6003
Fax: 602-255-0103
To Escrow Agent at: Title Guaranty Agency of Arizona, Inc.
101 N. Wilmot Road
P.0. Box 16860
Tucson, AZ 85732-6860
Attention:
Phone: 520-750-8100
Fax: 520-750-8112
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given when received. All Notices given by telecopy shall be followed
by the delivery of a hard copy of such Notice, provided that such Notice shall
be deemed to have been given when received by telecopy.
16.5 Expenses. Subject to the provision for payment of the Closing Costs in
--------
accordance with the terms of Section 7.6 hereof and any other provision of this
Agreement, whether or not the transaction contemplated by this Agreement shall
be consummated, all fees and expenses incurred by any party hereto in connection
with this Agreement shall be borne by such party.
16.6 Severability. Any provision or part of this Agreement which is invalid
------------
or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
16.7 Assignment; Successors and Assigns; Third Parties. Seller shall not
---------------------------------------------------
sell, mortgage or otherwise encumber (except in the normal course of Seller's
business) Seller's interest in the Property prior to or after Closing. Seller
shall have no right to assign its rights under this Agreement to any party
without Buyer's consent, which consent shall not be unreasonably withheld. Buyer
shall, without the consent of Seller, have the right to assign its interest in
this Agreement to any entity or group owned, controlled, managed or affiliated
with Buyer, its principals, their partners, members, associates or those related
or affiliated directly or indirectly with Meritage Corporation or its affiliates
or principals. All of the rights, duties, benefits, liabilities and obligations
of the parties shall inure to the benefit of, and be binding upon, their
respective successors and assigns. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or entity, other than the parties hereto
and their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
16.8 Counterparts. This Agreement may be executed in as many counterparts
------------
as may be deemed necessary and convenient, and by the different parties hereto
on separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.
16.9 Headings. The Section headings of this Agreement are for convenience
--------
of reference only and shall not be deemed to modify, explain, restrict, alter or
affect the meaning or interpretation of any provision hereof.
16
<PAGE>
16.10 Time of Essence. Time shall be of the essence with respect to all
-----------------
matters contemplated by this Agreement.
16.11 Further Assurances. In addition to the actions recited herein and
-------------------
contemplated to be performed, executed, and/or delivered by Seller and Buyer,
Seller and Buyer agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered at the Closing or after the Closing any and
all such further acts, instruments, deeds and assurances as may be reasonably
required to consummate the transaction contemplated hereby.
16.12 Number and Gender. Whenever the singular number is used, and when
-------------------
required by the context, the same includes the plural, and the masculine gender
includes the feminine and neuter genders.
16.13 Construction. This Agreement shall not be construed more strictly
------------
against one party hereto than against any other party hereto merely by virtue of
the fact that it may have been prepared by counsel for one of the parties.
16.14 Exhibits. All exhibits attached hereto are hereby incorporated by
--------
reference as though set out in full herein.
16.15 Attorneys' Fees. In the event that either party hereto brings an
----------------
action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
16.16 Business Days. As used herein, the term "BUSINESS DAY" shall mean a
-------------- ------------
day that is not a Saturday, Sunday or legal holiday. In the event that the date
for the performance of any covenant or obligation under this Agreement shall
fall on a Saturday, Sunday or legal holiday, the date for performance thereof
shall be extended to the next Business Day.
16.17 Termination. In the event that this Agreement is terminated pursuant
-----------
to the terms hereof, this Agreement and all of the provisions hereof shall be of
no further force or effect and neither party shall have any further rights or
obligations hereunder other than pursuant to any provision contained in this
Agreement which expressly survives such termination. Buyer and Seller shall each
pay its own fees and expenses incident to the negotiation, preparation and
execution of this Agreement and the obtaining of the necessary approvals
thereof, including fees and expenses of its counsel, accountants and other
experts. In addition, Seller and Buyer (and their representatives) shall return
to the other all copies of books, records, documents and other papers given by
Seller or Buyer (or their representatives) to the other (or their
representatives); provided, however, that nothing contained herein shall relieve
-----------------
any party hereto from liability for any knowing breach or inaccuracy of any
representation or warranty contained herein or any failure to comply with or
satisfy any covenant or agreement contained herein. Notwithstanding anything
herein to the contrary, the obligations of the parties under Section 17 below
----------
shall survive any abandonment or termination of this Agreement.
17. NON-DISCLOSURE/CONFIDENTIALITY.
------------------------------
From and after the date of this Agreement until the Closing, or in the
event that the Closing shall not occur, then thereafter, Buyer shall not
disclose to any third-party (other than to its directors, officers and employees
having a need to know such information in connection with the transaction
contemplated hereby, or to its attorneys, accountants, consultants, investors
and lenders), or use for any purpose other than as contemplated by this
Agreement, any proprietary or confidential information regarding the Seller or
Saxton Incorporated. Buyer agrees not to disseminate any proprietary or
confidential information regarding the Seller or Saxton Incorporated to others
except as hereinabove described, nor to use or permit to be used through their
agents, employees or others on behalf of Buyer to damage the Seller or Saxton
Incorporated. The preceding two (2) sentences shall not apply to information
that (i) is, was or becomes generally known or available to the public or the
industry other than as a result of a disclosure by Buyer in violation of this
Agreement; (ii) was previously known by Buyer; (iii) is subsequently obtained by
Buyer from an independent third party source having no obligation of
confidentiality to Seller or Saxton Incorporated; or (iv) is required to be
disclosed by law. Buyer shall advise Seller, in writing, of any request,
including a subpoena or similar legal inquiry, to disclose any such confidential
information, such that Seller can seek appropriate legal relief.
18. PUBLIC ANNOUNCEMENTS.
---------------------
Buyer and Seller shall consult with each other before issuing any press
release or otherwise making any public statements with respect to this Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law on the advice of
counsel.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first
above written.
BUYER: NEVADA DIVERSIFIED EQUITY, LLC,
a Nevada limited liability company
By: DIVERSIFIED EQUITY FINANCIAL CORP.,
a Delaware corporation
By
-----------------------------------------
John W. Pacheco, President
SELLER: DIAMOND KEY HOMES, INC,
an Arizona corporation
By
-----------------------------------------
James C. Saxton, CEO
By
-----------------------------------------
Eugene L. Baker, President
ESCROW AGENT:
The undersigned Escrow Agent hereby accepts the foregoing Purchase and Sale
Agreement and Joint Escrow Instructions and agrees to act as Escrow Agent under
this Agreement in strict accordance with its terms.
TITLE GUARANTY AGENCY OF ARIZONA, INC.
By
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date: May ____, 2000
18
<PAGE>
AGREEMENT BY SAXTON
Saxton Incorporated ("SAXTON")hereby acknowledges and agrees that Nevada
----------
Diversified Equity, LLC and/or its assignee ("BUYER") is entering into the
Purchase and Sale Agreement and Joint Escrow Instructions to which this
Agreement is attached (THE "PURCHASE AGREEMENT") in reliance upon the reputation
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and financial strength of Saxton as a principal in Diamond Key Homes, Inc.
("SELLER"). Accordingly, Saxton hereby agrees to be jointly and severally
responsible for all obligations of Seller under the Purchase Agreement, and in
the event Seller fails to fully and timely perform any of its obligations under
the Purchase Agreement, Saxton shall, immediately upon the request of or demand
by Buyer, fully perform any and all such obligations.
SAXTON INCORPORATED,
a Nevada corporation
By
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Its
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