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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 17, 1996
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
1-7585 95-3931727
(Commission File Number) (IRS Employer Identification No.)
23823 Valencia Boulevard, Valencia, CA 91355
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 805-255-4000
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Item 2. Acquisition or Disposition of Assets
(a) On April 17, 1996, The Newhall Land and Farming Company
(the "Company") closed escrow on the sale of its entire McDowell
Mountain Ranch project in Scottsdale, Arizona. Under the terms of
the Purchase and Sale Agreement, the Company sold its general and
limited partnership interests in McDowell Mountain Ranch Limited
Partnership, an Arizona limited partnership, to Sunbelt/H & H
L.L.C., a limited liability company, and McDowell Mountain Ranch
Investors, L.L.C., a Delaware limited liability company
("Buyer").
The sale was for $26.5 million cash, less certain
prorations and closing adjustments, and included all of the
assets and the assumption of all of the liabilities of McDowell
Mountain Ranch. The assets sold included principally land and
land development costs incurred in developing the first phase of
the 3,200 acre master-planned project. These inventory costs had
a carrying value of $16.1 million at the date of close. The sale
also included two notes receivable associated with prior land
sales. The remaining option to purchase the balance of the
project's land also has been included in the sale.
Liabilities assumed by the Buyer included the assumption
of all of the project's debt, including notes payable associated
with land purchases (but excluding future land options)
improvement district bonds and community facilities district
bonds. The debt assumed by the Buyer, carried at $16.3 million on
the Company's books at the date of close, has been reflected as
revenues for the sale.
The Company's decision to market and sell the entire
McDowell Mountain Ranch project was based upon the Company's
assessment that it had successfully achieved its goal of
maximizing the financial return in the project on a present value
basis through its entitlement and land development efforts, plus
initial sales program. The sale will contribute $44 million to
revenues and $24 million to net income, or 67 cents per unit, in
the second quarter of 1996.
Item 7. Financial Statements and Exhibits
(c) Exhibits (listed by numbers corresponding to Exhibit
Table of Item 601 in Regulation S-K):
10(a) Purchase and Sale Agreement between The Newhall Land
and Farming Company, a California limited partnership, and
McDowell Mountain Ranch, Inc., an Arizona corporation, as Seller,
and Sunbelt/H & H L.L.C., an Arizona limited liability company,
and McDowell Mountain Ranch Investors, L.L.C., a Delaware limited
liability company, as Buyer, for 100% of the limited and general
partnership interests in McDowell Mountain Ranch Limited
Partnership, an Arizona limited partnership.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
Registrant
By Newhall Management Limited Partnership,
Managing General Partner
By Newhall Management Corporation,
Managing General Partner
Date: April 25, 1996 By /s/ Donald L. Kimball
----------------------
Donald L. Kimball, Vice President -
Controller
Newhall Management Corporation
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit
Number Exhibit
10(a) Purchase and Sale Agreement between The
Newhall Land and Farming Company, a
California limited partnership, and
McDowell Mountain Ranch, Inc., an Arizona
corporation, as Seller, and Sunbelt/H & H
L.L.C., an Arizona limited liability
company, and McDowell Mountain Ranch
Investors, L.L.C., a Delaware limited
liability company, as Buyer, for 100% of
the limited and general partnership
interests in McDowell Mountain Ranch
Limited Partnership, an Arizona limited
partnership.
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EXHIBIT 10(A)
Purchase and Sale Agreement between The Newhall Land and Farming
Company, a California limited partnership, and McDowell Mountain
Ranch, Inc., an Arizona corporation, as Seller, and Sunbelt/H & H
L.L.C., an Arizona limited liability company, and McDowell
Mountain Ranch Investors, L.L.C., a Delaware limited liability
company, as Buyer, for 100% of the limited and general
partnership interests in McDowell Mountain Ranch Limited
Partnership, an Arizona limited partnership.
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=================================================================
PURCHASE AND SALE AGREEMENT
between
THE NEWHALL LAND AND FARMING COMPANY,
a California limited partnership,
and
McDOWELL MOUNTAIN RANCH, INC.,
an Arizona corporation,
as Seller,
and
SUNBELT/H & H L.L.C.,
an Arizona limited liability company,
and
McDOWELL MOUNTAIN RANCH INVESTORS, L.L.C.,
a Delaware limited liability company,
as Buyer
100% of the limited and general partner interests
in McDOWELL MOUNTAIN RANCH LIMITED PARTNERSHIP,
an Arizona limited partnership
=================================================================
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TABLE OF CONTENTS
RECITALS................................................. 1
AGREEMENT................................................ 2
1. DEFINITIONS..................................... 2
1.1 "AGREEMENT"............................ 2
1.2 "AGREEMENT DATE"....................... 2
1.3 "ASSOCIATION DOCUMENTS"................ 2
1.4 "CFD DEVELOPMENT AGREEMENT"............ 2
1.5 "CLOSING".............................. 2
1.6 "CODE"................................. 2
1.7 "DECLARATION".......................... 2
1.8 "DEVELOPMENT AGREEMENT"................ 2
1.9 "DEVELOPMENT PLAN"..................... 3
1.10 "DISTRICT"............................. 3
1.11 "ENVIRONMENTAL LAW OR ORDER"........... 3
1.12 "ESCROW AGENT"......................... 3
1.13 "HAZARDOUS MATERIALS".................. 3
1.14 "ID DEVELOPMENT AGREEMENT"............. 3
1.15 "IMPROVEMENT DISTRICT"................. 3
1.16 "LOTS"................................. 3
1.17 "MAPS OF DEDICATION"................... 3
1.18 "MASTER PLANS"......................... 4
1.19 "PARTNERSHIP AGREEMENT"................ 4
1.20 "PARTNERSHIP INTERESTS"................ 4
1.21 "PERSON"............................... 4
1.22 "PERSONAL PROPERTY".................... 4
1.23 "PROJECT".............................. 4
1.24 "PROPERTY"............................. 4
1.25 "PURCHASE PRICE"....................... 4
1.26 "REAL PROPERTY"........................ 4
1.27 "TAXES"................................ 5
1.28 "TITLE INSURERS"....................... 5
1.29 "TITLE COMMITMENTS".................... 5
2. AGREEMENT OF PURCHASE AND SALE.................. 5
3. PURCHASE PRICE.................................. 5
3.1 EARNEST MONEY DEPOSIT.................. 5
3.2 BALANCE OF PURCHASE PRICE.............. 6
3.3 DISPOSITION OF EARNEST MONEY........... 6
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4. PURCHASE PRICE ADJUSTMENT......................... 6
4.1 ADJUSTMENT SCHEDULE...................... 6
4.2 RECURRING EXPENSES....................... 7
4.3 POST-CLOSING ADJUSTMENT.................. 8
5. CONDITIONS PRECEDENT.............................. 8
5.1 BUYER'S CONDITIONS PRECEDENT............. 8
5.1.1 SURVEY AND TITLE................ 8
5.1.2 SUITABILITY OF ASSETS AND
LIABILITIES AND OTHER MATTERS... 11
5.1.3 NO MATERIAL ADVERSE CHANGE...... 12
5.1.4 ACCURACY OF REPRESENTATIONS
AND WARRANTIES.................. 12
5.1.5 PERFORMANCE OF AGREEMENTS....... 13
5.1.6 NO LITIGATION................... 13
5.1.7 CONSENTS, WAIVERS, LICENSES
AND FILINGS..................... 13
5.1.8 ESTOPPELS....................... 13
5.1.9 AMENDMENT TO PARTNERSHIP
AGREEMENT....................... 14
5.1.10 REQUIRED ACTION.................. 14
5.1.11 CONSENTS AND NOTICES............. 14
5.1.12 PARCEL O TRACT DECLARATION....... 14
5.1.13 PHASE I REPORT................... 14
5.1.14 STAINED AREAS 15
5.1.15 RIGHT TO WAIVE; DEEMED APPROVAL.. 16
5.2 SELLER'S CONDITIONS PRECEDENT............ 16
5.2.1 NO MATERIAL CHANGE.............. 16
5.2.2 REQUIRED ACTION................. 16
5.2.3 ACCURACY OF REPRESENTATIONS
AND WARRANTIES.................. 16
5.2.4 CONSENT UNDER OPTION
AGREEMENTS...................... 16
5.2.5 PERFORMANCE OF AGREEMENTS....... 17
5.2.6 RIGHT TO WAIVE; DEEMED
APPROVAL........................ 17
6. TITLE INSURANCE POLICIES; ASSIGNMENT OF PARTNERSHIP
INTERESTS; OTHER TRANSFERS........................ 17
6.1 OWNER'S TITLE INSURANCE POLICY........... 17
6.2 ASSIGNMENT OF PARTNERSHIP INTERESTS...... 17
6.3 TRANSFER OF OTHER ASSETS................. 18
6.3.1 TRADENAME AND SERVICE MARKS..... 18
6.3.2 CONTRACTS AND PERMITS........... 18
6.3.3 PERSONAL PROPERTY............... 18
7. THE ESCROW........................................ 19
7.1 ESCROW INSTRUCTIONS...................... 19
7.2 OPENING.................................. 19
7.3 CLOSING.................................. 19
7.4 ACTION AT THE CLOSING BY SELLER.......... 19
7.5 ACTION AT THE CLOSING BY BUYER........... 20
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7.6 CLOSING COSTS............................ 21
7.7 ESCROW CANCELLATION CHARGES.............. 21
8. BUYER'S ADDITIONAL COVENANTS. . ................. 22
9. SELLER'S ADDITIONAL COVENANTS. 22
9.1 CONDUCT OF BUSINESS OF COMPANY........... 22
9.2 EXCLUSIVE DEALING.... 22
9.3 MAINTENANCE OF THE PROJECT............... 22
9.4 PURCHASE AND SALE AGREEMENTS............. 23
9.5 POST-CLOSING TRANSFERS................... 23
9.6 POST-CLOSING BALANCE SHEET UPDATE........ 23
9.7 WAIVER OF CONTRIBUTION................... 23
10. REPRESENTATIONS AND WARRANTIES OF BUYER........... 23
10.1 NO CONFLICT.............................. 23
10.2 DUE ORGANIZATION, ETC.................... 24
10.3 NO LITIGATION............................ 24
10.4 INVESTIGATION OF THE PROJECT BY BUYER.... 24
10.5 INVESTMENT REPRESENTATIONS............... 25
11. REPRESENTATIONS AND WARRANTIES OF THE SELLER...... 26
11.1 ORGANIZATION; AUTHORITY.................. 26
11.2 PARTNERSHIP AGREEMENT.................... 26
11.3 NO LITIGATION OR ADVERSE EVENTS.......... 26
11.4 NO DEFAULTS.............................. 27
11.5 INTENTIONALLY OMITTED.................... 27
11.6 PARTNERSHIP INTERESTS.................... 27
11.7 FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES.............................. 28
11.8 BOOKS AND RECORDS........................ 28
11.9 ACCOUNTS RECEIVABLE...................... 28
11.10 CONDUCT IN THE ORDINARY COURSE OF
BUSINESS................................. 28
11.11 PERSONAL PROPERTY........................ 29
11.12 LISTS OF PROPERTIES, CONTRACTS AND
OTHER DATA............................... 29
11.13 COMPLIANCE WITH CONTRACTS................ 30
11.14 COMPLIANCE WITH LAWS..................... 30
11.15 EMINENT DOMAIN........................... 30
11.16 NON-FOREIGN PERSON....................... 30
11.17 BANKRUPTCY............................... 30
11.18 NO SALES CONTRACTS....................... 31
11.19 LICENSES, PERMITS, AUTHORIZATIONS........ 31
11.20 CONDITION OF ASSETS...................... 31
11.21 EMPLOYMENT MATTERS....................... 31
11.22 INTELLECTUAL PROPERTY RIGHTS............. 32
11.23 TAX MATTERS.............................. 32
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11.24 ENVIRONMENTAL MATTERS.................... 33
11.25 TOTALITY OF ASSETS....................... 34
11.26 TRANSACTIONS WITH AFFILIATES............. 34
11.27 BURDENSOME AGREEMENTS.................... 34
11.28 ABSENCE OF CERTAIN BUSINESS PRACTICES.... 34
11.29 DISCLOSURE............................... 35
11.30 PROJECT DEVELOPMENT...................... 35
11.31 IMPROVEMENT ENCROACHMENTS................ 35
11.32 DODGE EASEMENTS.......................... 35
11.33 LOT PREMIUMS............................. 36
11.34 ASSOCIATION.............................. 36
11.35 SECTION 404 PERMIT....................... 36
11.36 MASTER PLANS............................. 36
11.37 BROKERAGE AGREEMENT...................... 36
11.38 HERBERGER OPTIONS........................ 37
11.39 GUARANTEED OBLIGATIONS................... 37
11.40 EMPLOYEE BENEFIT PLANS................... 37
11.41 ACCURACY OF THIRD PARTY REPORTS.......... 39
11.42 WATER.................................... 39
11.43 DEDICATIONS UNDER CULTURAL RESOURCES
SURVEY................................... 39
11.44 CERTIFICATE OF PURCHASE.................. 39
12. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION AND NEWHALL........................... 39
12.1 DUE ORGANIZATION; AUTHORITY.............. 40
12.2 NO CONFLICT.............................. 40
12.3 TITLE TO PARTNERSHIP INTERESTS........... 40
13. SURVIVAL AND LIMITATIONS.......................... 41
13.1 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES............................... 41
13.2 LIMITATIONS.............................. 41
14. INDEMNIFICATION................................... 42
14.1 INDEMNITY BY SELLER...................... 42
14.2 INDEMNITY BY BUYER....................... 43
14.3 PAYMENT OF INDEMNIFICATION............... 43
14.4 NOTICE AND DEFENSE OF CLAIMS............. 43
14.5 TAX MATTERS.............................. 44
14.6 BASKET................................... 48
14.7 SURVIVAL OF CLAIMS....................... 48
14.8 INTEGRATION.............................. 49
15. ATTORNEYS' FEES................................... 49
16. NOTICES........................................... 49
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17. SELLER'S REMEDIES................................. 51
17.1 PRE-CLOSING.............................. 51
17.2 POST-CLOSING............................. 52
18. BUYER'S REMEDIES.................................. 52
18.1 PRE-CLOSING.............................. 52
18.2 POST-CLOSING............................. 52
19. TERMINATION OF AGREEMENT.......................... 52
20. SURVIVAL OF COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES.................... 53
21. MODIFICATION OF AGREEMENT......................... 53
22. FURTHER INSTRUMENTS............................... 53
23. ENTIRE AGREEMENT.................................. 53
24. INUREMENT......................................... 53
25. APPLICABLE LAW.................................... 54
26. DESCRIPTIVE HEADINGS.............................. 54
27. TIME OF THE ESSENCE............................... 54
28. CONDEMNATION...................................... 54
29. TIME PERIODS...................................... 54
30. ASSIGNMENT........................................ 54
31. CONSTRUCTION...................................... 54
32. INTERPRETATION.................................... 55
33. EXHIBITS.......................................... 55
34. COUNTERPARTS...................................... 55
35. RECORDATION....................................... 55
36. BUYER'S ASSUMPTION, GUARANTY AND INDEMNITY........ 55
36.1 SECURITY FOR THE ASSUMPTION, GUARANTY
AND INDEMNITY AGREEMENT.................. 56
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36.2 ADDITIONAL SECURITY FOR THE ASSUMPTION, GUARANTY
AND INDEMNITY AGREEMENT........................... 57
36.3 CONTINUATION OF SECURITY FOR THE ASSUMPTION,
GUARANTY AND INDEMNITY AGREEMENT; NEWHALL
OBLIGATION........................................ 58
36.3.1 PARTIAL RELEASE CONDITION................ 58
36.3.2 FULL RELEASE CONDITION................... 59
36.3.3 REDUCTION OF LETTER OF CREDIT AMOUNT..... 59
36.3.4 NEWHALL OBLIGATION....................... 60
36.3.5 INSURANCE FOR PARTNERSHIP ASSETS......... 60
36.4 BUYER'S ADDITIONAL COVENANTS...................... 60
36.5 RIGHTS RESERVED TO NEWHALL........................ 61
37. LIMITATION OF RECOURSE OF SELLER'S PARTNERS....... 61
38. BROKER'S COMMISSION............................... 61
39. STATEMENT OF BUYER'S INTENT REGARDING NEWHALL'S
EMPLOYEES......................................... 61
40. DISCLAIMER OF ADDITIONAL DISTRICT BOND FINANCING.. 62
41. LIMITATION OF RECOURSE OF INVESTORS............... 62
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LIST OF DEFINED TERMS
Adjustment Paragraph 14.5.8
Aggregate SCA Liability Paragraph 36.3.1
Agreement Paragraph 1.1
Agreement Date Paragraph 1.2
Association Documents Paragraph 1.3
Amended Commitment Paragraph 5.1.1.3
Association Paragraph 1.3
ASTM Standard Paragraph 5.1.13
Balance Sheet Date Paragraph 11.7
Broker Paragraph 38
CFD Development Agreement Paragraph 1.4
Certificate of Purchase Recital C
Chicago Paragraph 1.28
City Recital A
City Litigation Paragraph 11.3
Closing Paragraph 1.5
Closing Date Paragraph 7.3
Code Paragraph 1.6
Commission Agreement Paragraph 11.37
Commonly Controlled Entity Paragraph 11.40.1
Conditions Paragraph 5
Confidential Information Paragraph 5.1.2
Contractor Paragraph 4.2
Corporation Recital B
Creditor's Rights Laws Paragraph 10.2
Current Owner's Commitment Paragraph 5.1.1.3
December 1995 Balance Sheet Paragraph 11.7
Declaration Paragraph 1.7
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Deeds of Trust Recital D
Development Agreement Paragraph 1.8
Development Plan Paragraph 1.9
District Paragraph 1.10
Dodge Paragraph 11.32
Dodge Access and Development Paragraph 11.32
Agreements
Dodge Easement Paragraph 11.32
Earnest Money Deposit Paragraph 3.1
Employees Paragraph 39
Employing Entity Paragraph 39
Environmental Law or Order Paragraph 1.11
ERISA Paragraph 11.40.1
Escrow Paragraph 7.1
Escrow Agent Paragraph 1.12
Final Return Paragraph 14.5.4
Full Release Condition Paragraph 36.3.2
Guidelines Paragraph 1.3
Hazardous Materials Paragraph 1.13
Herberger Guaranty Paragraph 36
Holdback Paragraph 4.2
ID Development Agreement Paragraph 1.14
Improvement District Paragraph 1.15
Indemnified Acquiring Party Paragraph 14.1
Indemnified Party Paragraph 14.3
Indemnified Selling Party Paragraph 14.2
Indemnifying Party Paragraph 14.3
Intellectual Property Rights Paragraph 11.22
Lender's Policy Paragraph 5.1.1.2(C)
Lender's Policy Endorsements Paragraph 5.1.1.2(D)
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Letter of Credit Paragraph 36.1
Losses Paragraph 14.1
Lots Paragraph 1.16
Maps of Dedication Paragraph 1.17
Master Plans Paragraph 1.18
McDowell Mountain Ranch Recital A
Newhall Recital B
New Phase I Report Paragraph 5.1.13
Objection Notice Paragraph 5.1.1.3
Old Republic Paragraph 1.28
Open Items Paragraph 5.1.2
Opening of Escrow Paragraph 7.2
Option Agreement Recital C
Owner's Policy Paragraph 5.1.1.2(A)
Owner's Policy Endorsements Paragraph 5.1.1.2(B)
Partial Release Condition Paragraph 36.3.1
Partnership Recital B
Partnership Agreement Paragraph 1.19
Partnership Interest Paragraph 1.20
Partnership's Financial Statements Paragraph 11.7
PBGC Paragraph 11.40.3.1
Permitted Transfer Paragraph 36.2
Person Paragraph 1.21
Personal Property Paragraph 1.22
Plans Paragraph 11.40.1
Post-Closing Period Paragraph 14.5.1
Pre-Closing Period Paragraph 14.5.1
Printed Instructions Paragraph 7.1
Project Paragraph 1.23
Property Paragraph 1.24
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Purchase Price Paragraph 1.25
Real Property Paragraph 1.26
Release Paragraph 36.3
Rules Paragraph 1.3
SCA Paragraph 36
SCA Release Paragraph 36.3.1
Security Agreements Paragraph 36.2
Securities Act Paragraph 10.5.4
Statement Paragraph 4.2
Survey Paragraph 5.1.1.1
Tax Appeal Paragraph 11.3
Taxes Paragraph 1.27
Ticor Paragraph 1.28
Title Commitments Paragraph 1.29
Title Exceptions Paragraph 5.1.1.3
Title Insurers Paragraph 1.28
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EXHIBITS
A-1 - Land Owned by Partnership
A-2 - Land Subject to Certificate of Purchase
A-3 - Land Subject to Options
B - Deeds of Trust
C - Association Documents
D - Declaration
E - Master Plans
F - Schedule of Partnership's Tangible Personal Property
G - Schedule of Items of Adjustment to Purchase Price
H - Form of Survey Certification
I - Open Feasibility Items
J-1 - Schedule of Parties from whom Estoppels are Required
J-2 - General Form of Estoppel Certificate
K-1 - Form of Assignment of Contracts and Permits
K-2 - Disclosed Contracts and Permits Held in Name of
Corporation or Newhall
L - Assignment of Partnership Interests
M - Assignment and Bill of Sale
N - Printed Form Escrow Instructions
O - Affidavit of Non-Foreign Person
P - Premium Lots with Unpaid Premium Participation Payments
Q - Assumption, Guaranty and Indemnity Agreement
R - Security Agreement
S-1 - Seller's Closing Certificate
S-2 - Buyer's Closing Certificate
T - Reaffirmation of Partnership Obligations
U - Indemnity Agreement
SCHEDULES
5.1.1.2 Form of Lender's Policy Endorsement
5.1.1.3 Approved Title Exceptions
11.2 Partnership Agreement
11.7 Partnership Financial Statements (12/31/95)
and Itemized Description of
Liabilities on 12/31/95 Balance Sheet
11.12.1 Insurance Requirements under Existing Contracts
11.12.2 Licenses and Permits
11.12.3 Contracts
11.12.4 Bank Accounts
11.12.5 Vehicles
11.12.6 Other Assets
11.38 Option Agreements (including Guaranty of Indebtedness)
11.39 Agreements and Commitments Giving Rise to Fixed
Obligation and Retained Obligation
11.40.1 Employee Benefit Plans
14.5.13 Allocation of Purchase Price
40 Documents Pertaining to Formation of District
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PURCHASE AND SALE AGREEMENT
(100% of the limited and general partner interests in
McDowell Mountain Ranch Limited Partnership)
This Purchase and Sale Agreement is made effective as of
the Agreement Date by and between THE NEWHALL LAND AND FARMING
COMPANY, a California limited partnership, and McDOWELL MOUNTAIN
RANCH, INC., an Arizona corporation (collectively, "Seller"), and
SUNBELT/H & H L.L.C., an Arizona limited liability company
("Sunbelt/HH"), and McDOWELL MOUNTAIN RANCH INVESTORS, L.L.C., a
Delaware limited liability company ("Investors") (Sunbelt/HH and
Investors being hereinafter collectively referred to as "Buyer").
RECITALS
A. Seller and Buyer acknowledge that "McDowell Mountain
Ranch" is intended to be developed as a master planned
residential and commercial real estate development project
located in the City of Scottsdale, Arizona ("City").
B. The present master developer of McDowell Mountain
Ranch is McDowell Mountain Ranch Limited Partnership, an Arizona
limited partnership ("Partnership"). The ownership interests in
the Partnership are owned by McDowell Mountain Ranch, Inc., an
Arizona corporation ("Corporation"), as general partner, as to a
1% interest, and The Newhall Land and Farming Company, a
California limited partnership ("Newhall"), as a general partner,
as to a 1% interest, and as a limited partner, as to a 98%
interest. Newhall is the sole shareholder of the Corporation.
C. The Partnership is the owner of fee simple title to a
portion of the Project, which portion is more particularly
described in the legal description attached hereto as EXHIBIT
"A-1". The Partnership is the holder of Certificate of Purchase
No. 53-52092 issued by the Arizona State Land Department on March
3, 1993, and recorded May 21, 1993 at Recording No. 93-0316248,
Records of the Maricopa County Recorder (the "Certificate of
Purchase"), pursuant to which the Partnership has the right to
acquire fee simple title to approximately 160 acres of land
within the Project as more particularly described in the legal
description attached hereto as EXHIBIT "A-2". The Partnership is
the optionee under 2 separate options to purchase parts of the
Project, pursuant to the two option agreements attached hereto as
SCHEDULE 11.38 (the "Option Agreements"). The portion of the
Project as to which the optionee has not yet exercised such
options to purchase is described in the legal description
attached hereto as EXHIBIT "A-3".
D. The Partnership is also the beneficiary under the
Deeds of Trust described in EXHIBIT "B" attached hereto (the
"Deeds of Trust"). The Deeds of Trust encumber certain parcels or
platted lots within the Project, which parcels and lots were
conveyed by the Partnership by Special Warranty Deeds to the
separate Trustors under such Deeds of Trust.
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E. Buyer desires to acquire the Partnership Interests
(as hereinafter defined), and Seller desires to sell the
Partnership Interests, all in accordance with the terms,
conditions and covenants of this Agreement.
NOW, THEREFORE, in consideration of the premises, the
terms, conditions and covenants contained herein and for other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement,
the terms below shall have the following meanings unless the
context requires otherwise.
1.1 "AGREEMENT". This Purchase an
Sale Agreement, as amended or supplemented from time to time by
mutual agreement of the parties.
1.2 "AGREEMENT DATE". The date
this Agreement has been signed by Seller and Buyer as indicated
by the latest date set forth below the parties' signatures
hereon.
1.3 "ASSOCIATION DOCUMENTS". The
adopted Articles of Incorporation and Bylaws for McDowell
Mountain Ranch Community Association, a non-profit corporation
(the "Association"), organized under the laws of the State of
Arizona, together with all adopted Association Rules and
Regulations (the "Rules") and Architectural and Landscaping
Guidelines (the "Guidelines"), all of which Association Documents
are described with particularity in EXHIBIT "C" attached hereto.
1.4 "CFD DEVELOPMENT AGREEMENT".
The District Development, Financing Participation and
Intergovernmental Agreement No. 1 between the District and the
Partnership executed as of January 31, 1994 and recorded February
24, 1994 at Recording No. 94-0151862, Official Records of
Maricopa County Recorder.
1.5 "CLOSING". The date and event
upon which Buyer acquires the Partnership Interests as set forth
in PARAGRAPH 7.3.
1.6 "CODE". The Internal Revenue
Code of 1986, as amended from time to time.
1.7 "DECLARATION". The Declara-
tion of Covenants, Conditions, Restrictions, Assessments,
Charges, Servitudes, Liens, Reservations and Easements for
McDowell Mountain Ranch, and all amendments and supplemental
declarations thereto, all of which are described with
particularity in EXHIBIT "D" attached hereto.
1.8 "DEVELOPMENT AGREEMENT". The
Development Agreement between the Partnership and the City dated
and recorded September 27, 1993 as Instrument No. 93- 0650347,
Official Records of Maricopa County Recorder.
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1.9 "DEVELOPMENT PLAN". The plan
of development of the Project approved by the City on March 16,
1993 in Zoning Case No. 74-ZN-92 and Ordinance No. 2525 and
attached as an exhibit to the Development Agreement, together
with the following amendments and/or supplements: the amendment
to R-4 ESL District Development Standards approved by the City on
March 5, 1996 in Zoning Case No. 74-ZN-92 No. 2.
1.10 "DISTRICT". The McDowell
Mountain Ranch Community Facilities District of Scottsdale,
Arizona as authorized under Arizona Revised Statutes Title 48,
Chapter 4, Article 6.
1.11 "ENVIRONMENTAL LAW OR ORDER".
Any applicable order, judgment, injunction, award, decree or writ
or any applicable law, statute, code, ordinance, regulation or
other requirement of any government or political subdivision
thereof, or any agency, regulatory authority or instrumentality
of such government or political subdivision, or any court or
arbitrator relating to pollution or protection of human health or
the environment, including without limitation any Environmental
Law or Order relating to emissions, discharges, releases or
threatened releases of hazardous or toxic materials into the
environment, or otherwise relating to the use, treatment,
storage, disposal, transport or handling of hazardous or toxic
materials.
1.12 "ESCROW AGENT". Old Republic
Title Agency, 10603 North Hayden Road, Suite H106, Scottsdale,
Arizona 85260-5571, Attn: Patti Shaw.
1.13 "HAZARDOUS MATERIALS". Oil,
petroleum or chemical liquids or solids, liquid or gaseous
products, hazardous waste, pollutants, contaminants, industrial
or toxic waste, asbestos, PCBs, radioactive material or any other
substances that are regulated under or pursuant to, or could give
rise to liability under, any Environmental Law or Order.
1.14 "ID DEVELOPMENT AGREEMENT".
Development Agreement No. 930130 between the Partnership and the
City executed as of November 1, 1993 and recorded November 10,
1993 at Recording No. 93-0779268.
1.15 "IMPROVEMENT DISTRICT". The
Bell Road Improvement District No. I3704 as authorized under
Arizona Revised Statutes Title 48, Chapter 4, Article 2.
1.16 "LOTS". The residential
building sites as shown on the final recorded plats for the
Project.
1.17 "MAPS OF DEDICATION". The Map
of Dedication for McDowell Mountain Ranch Phase One recorded
April 22, 1994 in Book of Maps 375, Page 8 and at Recording No.
94-324499, Official Records of the Recorder of Maricopa County,
Arizona, as modified by a Certificate of Correction recorded
February 1, 1995 at Recording No. 95- 0059652, Official Records
of the Recorder of Maricopa County, Arizona, and the Map of
Dedication for McDowell Mountain Ranch Phase Two recorded
September 29, 1995 in Book
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of Maps 404, Page 19 and at Recording No. 95-0597872, Official
Records of the Recorder of Maricopa County, Arizona.
1.18 "MASTER PLANS". The Master
Plans approved by the City as required under the Development Plan
consisting of a Circulation Plan, Water Plan, Wastewater Plan,
Drainage Plan and Environmental Design Plan, all of which are
described with particularity in EXHIBIT "E" attached hereto.
1.19 "PARTNERSHIP AGREEMENT". The
Partnership Agreement of the Partnership, dated August 6, 1993,
and any and all amendments, modifications and supplements thereto
and restatements thereof, including without limitation a First
Amendment dated as of November 1, 1993, a Second Amendment dated
as of January 1, 1995, and the amendment described in PARAGRAPH
5.1.9.
1.20 "PARTNERSHIP INTERESTS". One
hundred percent (100%) of all of the interests in the Partnership
including, but not limited to, all rights to capital, interest,
profits and surplus of the Partnership, all rights to specific
partnership property and all rights to participate in the
management of the Partnership.
1.21 "PERSON". Any individual,
company, firm, association, corporation, partnership, limited
liability company, trust, governmental entity or other legal
entity of any kind whatsoever.
1.22 "PERSONAL PROPERTY". All
tangible and intangible personal property owned by the
Partnership (including, but not limited to, the interest of the
Partnership as the optionee under the Option Agreements); and all
tangible and intangible personal property owned by Newhall or the
Corporation which, in the case of tangible personal property, is
located in the State of Arizona, and which in any case is used at
or in connection with or otherwise relating to the Project. The
tangible personal property owned by the Partnership as of the
Agreement Date is described in the schedule attached hereto as
EXHIBIT "F".
1.23 "PROJECT". The residential
and commercial real estate development which is intended to be
developed on property located in Scottsdale, Arizona, of which
the Property is a part, and which is more commonly known as
"McDowell Mountain Ranch". The term "Project" shall include the
land described in the Development Plan and Development Agreement.
1.24 "PROPERTY". The Real Property
and the Personal Property.
1.25 "PURCHASE PRICE". The total
consideration to be paid to acquire the Partnership Interests.
1.26 "REAL PROPERTY". The real
property, whether unimproved parcels of land or platted lots
owned by the Partnership, including the land and improvements
comprising the Community Center (which the Partnership is
obligated to convey to the
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Association) and Information Center at the Project, other
completed improvements within dedicated rights of way or within
common areas not yet dedicated or conveyed to the Association for
which the Partnership or the Association has maintenance
responsibility, the real property subject to the Certificate of
Purchase, and the real property subject to the Option Agreements.
The Real Property is described with particularity in the legal
descriptions attached hereto as EXHIBITS "A-1", "A-2" and "A-3".
1.27 "TAXES". (A) Any federal,
state, local, foreign and other net income, gross income, gross
receipts, profits, license, service, service use, franchise,
capital stock, payroll, employment, withholding (including,
without limitation, employees' income withholding and back-up
withholding), social security, unemployment, disability, ad
valorem, real property, personal property, sales, use,
transaction privilege, excise, severance, transfer, stamp,
occupation, premium, duties, customs and other taxes,
assessments, fees or charges of any kind whatsoever, including
any interest, penalties or additions on or to the foregoing,
whether disputed or not; (B) any liability for the amounts
described in clause (A) whether as a result of transferee
liability, of being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise through
operation of law; and (C) any liability for the payment of
amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other
express or implied agreement to indemnify any other person.
1.28 "TITLE INSURERS". (A) Old
Republic National Title Insurance Company ("Old Republic") as to
the first $25,000,000.00 of coverage under the Owner's Policy (as
hereinafter defined); (B) Ticor Title Insurance Company ("Ticor")
and Chicago Title Insurance Company ("Chicago") as to reinsurance
of the next $40,000,000.00 of coverage under the Owner's Policy,
provided, however, that the maximum amount of reinsurance to be
issued by Ticor or Chicago shall not exceed $25,000,000.00; and
(C) Old Republic as to the Lender's Policy (as hereinafter
defined).
1.29 "TITLE COMMITMENTS". The
Commitments for Title Insurance issued by Title Insurers in favor
of the Partnership as set forth in PARAGRAPH 5.1.1.2 hereof.
2. AGREEMENT OF PURCHASE AND SALE. Subject
to the terms, covenants and conditions of this Agreement, Seller
agrees to sell to Buyer and Buyer agrees to purchase from Seller
all of the Partnership Interests.
3. PURCHASE PRICE. The purchase price
(the "Purchase Price") to be paid for the Partnership Interests
shall be $26,500,000.00, subject to adjustment as provided in
PARAGRAPH 4 below. The Purchase Price shall be due and payable as
follows:
3.1 EARNEST MONEY DEPOSIT. Upon
the Opening of Escrow, and conditioned upon Buyer's prior receipt
of an insured closing protection letter issued by Old Republic in
a form reasonably acceptable to Buyer, Buyer shall deposit
earnest money (the "Earnest Money Deposit") of $750,000.00 with
Escrow Agent. The Earnest Money Deposit shall be non-refundable
(except as otherwise provided in this Agreement) and shall be
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immediately released and disbursed by Escrow Agent to Seller,
without further instruction or direction from either party.
3.2 BALANCE OF PURCHASE PRICE. On
or before the Closing Date, Buyer shall deposit with Escrow Agent
by wire transfer or other immediately available funds the full
remaining amount due of the Purchase Price.
3.3 DISPOSITION OF EARNEST MONEY.
The Earnest Money Deposit shall be applied as follows:
3.3.1 If this Agreement is
terminated under circumstances requiring that the Earnest Money
Deposit be paid to Buyer or if Seller breaches this Agreement and
Buyer elects to terminate this Agreement, then the Earnest Money
Deposit shall be paid and/or returned immediately to Buyer;
3.3.2 The Earnest Money
Deposit immediately shall be disbursed to Seller in the manner
required under PARAGRAPH 3.1 and shall be non-refundable, subject
to Buyer's right to terminate this Agreement under PARAGRAPH 5.1
or under the provisions of PARAGRAPHS 18.1 OR 28 and obtain a
refund of said Earnest Money Deposit;
3.3.3 If the Closing
occurs, the Earnest Money Deposit shall be credited to Buyer and
applied against the Purchase Price at Closing; and
3.3.4 If Buyer breaches this
Agreement and fails to close Escrow, then the Earnest Money
Deposit shall be retained by Seller as liquidated damages as
provided in PARAGRAPH 17.1.
4. PURCHASE PRICE ADJUSTMENT.
4.1 ADJUSTMENT SCHEDULE. At the
Closing, the Purchase Price shall be adjusted in accordance with
the items of revenue and expense as set forth on EXHIBIT "G". As
to those items which EXHIBIT "G" indicates are included in the
Purchase Price, the Purchase Price shall be decreased as to
revenues received by Seller or the Partnership prior to Closing
and shall be increased as to expenses paid by Seller or the
Partnership prior to Closing. For example, EXHIBIT "G" indicates
that amounts due under the Thompson Peak Limited Partnership note
payable are included in the Purchase Price, and that the next
payment of $151,647.98 is due under that note payable on May 31,
1996; if Seller pays that next payment prior to Closing, then the
Purchase Price would be increased by $151,647.98 at Closing, and
if Seller does not pay that next payment prior to Closing, then
there would be no Purchase Price adjustment at Closing with
respect to that item. As to those items which EXHIBIT "G"
indicates are not included in the Purchase Price, the Purchase
Price shall be increased by revenues and decreased by expenses in
the amounts set forth in EXHIBIT "G"; provided, however, that any
such item of revenue (or part thereof) received by Seller or the
Partnership prior to Closing and any such item of expense (or
part thereof) paid by Seller or the Partnership prior to Closing
shall not result in any adjustment to the Purchase Price to the
extent that it is received or paid. For
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example, EXHIBIT "G" indicates that $746,715.91 of infrastructure
construction cost is not included in the Purchase Price; if
Seller pays no amounts prior to Closing with respect to this
infrastructure construction cost, then the Purchase Price would
be reduced at Closing by $746,715.91; if, however, Seller pays
$46,715.91 prior to Closing with respect to this infrastructure
construction cost, then the Purchase Price would be reduced at
Closing by $700,000.00. If the update of SCHEDULE 11.7 delivered
by Seller pursuant to PARAGRAPH 7.4.8 differs from SCHEDULE 11.7
attached hereto or if the update of the December 1995 Balance
Sheet delivered by Seller pursuant to PARAGRAPH 7.4.11 differs
from the December 1995 Balance Sheet, in either case with respect
to any item(s) other than the items set forth on EXHIBIT "G,"
then the Purchase Price shall be further adjusted to the extent
of any such difference (i.e., by increasing the Purchase Price to
the extent of any reduction of liabilities, and by reducing the
Purchase Price to the extent of any increase in liabilities). If
the closing of the sale of any of the Property occurs prior to
the Closing hereunder (whether pursuant to a pending contract
referred to in SCHEDULE 11.12.3 or pursuant to a new contract
approved by Buyer pursuant to PARAGRAPH 9.1 OR 9.4), the Purchase
Price shall be reduced by the amount of the proceeds received by
the Seller or the Partnership pursuant to such sale.
4.2 RECURRING EXPENSES. Operation
of the Project and the Partnership's business and the income and
expense attributable thereto through 12:00 midnight on the
Closing Date shall be for the account of Seller and thereafter
for the account of Buyer; provided, however, that the obligations
and liabilities of Buyer under this Subparagraph shall be subject
to the limitations of this Agreement (including, but not limited
to, the provisions of PARAGRAPHS 11, 12, 13 AND 14). Rent, power
and utility fees and deposits (for the Information Center,
Community Center, Partnership office, construction trailer
maintained by the Partnership at the Project, and other similar
improvements served by utilities), and amounts owing to
contractors for work in process under any construction contracts
described in SCHEDULE 11.12.3 (to the extent that such amounts
owing to contractors are not dealt with on EXHIBIT "G") shall be
prorated as of the Closing Date. Within 15 days after the
Closing, Seller shall obtain and deliver to Buyer and Escrow
Agent a statement (a "Statement") from each contractor (a
"Contractor") under each construction contract described in
SCHEDULE 11.12.3, setting forth the total amount payable to such
Contractor for all work performed and materials provided to and
including the date of Closing. Seller shall be responsible for
timely payment of the amounts set forth in such Statements. At
Closing, Escrow Agent is authorized and instructed to retain in
escrow, from the Purchase Price proceeds otherwise payable to
Seller, the sum of $150,000.00 (the "Holdback"). Buyer and Seller
may from time to time draw upon the Holdback in payment of
amounts owing under any Statement, which draws may be made upon
presentation to Escrow Agent of a written demand signed by both
Buyer and Seller indicating the particular Statement to be paid,
which demand shall be accompanied by a conditional lien waiver
signed by the Contractor for the amount to be paid. Buyer and
Seller each agree to cooperate with each other in the withdrawal
of the Holdback in payment of Statements on or before the due
date thereof, and to execute and deliver such written demands
from time to time promptly after request to do so by the other
party. Disbursements of the Holdback by Escrow Agent in payment
of Statements as provided above shall be made only by check
payable to the Contractor providing the Statement. Upon delivery
to Buyer by Seller of reasonable evidence that all amounts owing
under all Statements required to be delivered by Seller under
this Subparagraph have been paid
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(either through direct payment by Seller or disbursement of the
Holdback as provided herein), Buyer and Seller shall execute and
deliver an instruction authorizing Escrow Agent to deliver to
Seller any Holdback remaining in escrow. Not later than 180 days
after the Closing, Buyer and Seller shall close out the Holdback
account and disburse any funds therein (which disbursement shall
be made to Seller if no such Statements then remain unpaid, or to
Contractors under any such Statement(s) which are then unpaid).
If upon the closing of the Holdback account as provided in the
preceding sentence, or if at any time prior to such closing of
the Holdback account, the Holdback is insufficient to pay all
Statements which Seller is required to provide and pay under this
Subparagraph, then Seller promptly shall pay such insufficient
amounts directly to all unpaid Contractors. Escrow Agent is
hereby authorized and instructed to invest the Holdback in an
interest bearing demand deposit account at a commercial bank
doing business in Maricopa County, Arizona. The Holdback shall be
disbursed by Escrow Agent only in strict accordance with the
provisions of this Subparagraph.
4.3 POST-CLOSING ADJUSTMENT.
Seller and Buyer shall jointly determine the adjustments required
by PARAGRAPHS 4.1 AND 4.2 at the Closing. All adjustments made at
Closing shall be tentative and shall be subject to final
adjustments within 180 days after Closing (which post-Closing
adjustments shall include, without limitation, any adjustments
necessary to account for any difference between the liabilities
set forth on the December 1995 Balance Sheet (as hereinafter
defined) and the liabilities set forth on the balance sheet
delivered at Closing pursuant to PARAGRAPH 7.4.11 and/or the
liabilities set forth on the balance sheet delivered after
Closing in accordance with PARAGRAPH 9.6).
5. CONDITIONS PRECEDENT. The obligations of
Buyer to purchase the Partnership Interests from Seller and to
close the transaction contemplated hereby and the obligations of
Seller to sell the Partnership Interests to Buyer and to close
the transaction contemplated hereby are subject to satisfaction
of each of the following conditions precedent (collectively the
"Conditions") within the time periods specified.
5.1 BUYER'S CONDITIONS PRECEDENT.
5.1.1 SURVEY AND TITLE.
5.1.1.1 DELIVERY
OF SURVEY. Within 10 days after the Agreement Date, Seller shall
deliver to Buyer and Escrow Agent an ALTA/ACSM survey (the
"Survey") of the Real Property (A) prepared by Clouse
Engineering, Inc., (B) dated not more than 30 days prior to the
Agreement Date, and (C) containing a certification in favor of
Buyer, the Partnership, Seller and Title Insurers in the form
attached hereto as EXHIBIT "H". Notwithstanding the foregoing,
the Survey may exclude (i) any portion of the Real Property
consisting of Lots or common areas as to which a subdivision plat
has been recorded as of the Agreement Date, and (ii) the as-built
location of any streets or roadways that abut only common areas
designated as such on a recorded subdivision plat (provided,
however, that the dedicated location of such streets or roadways
shall be shown on the Survey).
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5.1.1.2 DELIVERY OF
TITLE INSURANCE COMMITMENT. Within 10 days after the
Agreement Date, Seller shall cause Title Insurers to
deliver to Buyer and to Buyer's counsel at their
respective addresses given in PARAGRAPH 16 hereof,
current title insurance commitments (collectively, the
"Title Commitments") to issue to the Partnership as of
the date of the Closing the following:
(A) An ALTA extended
coverage owner's policy of title insurance (Form 1992)
in the amount of $65,000,000.00 (the "Owner's Policy"),
insuring that (i) fee simple title to the portion of
the Real Property described in EXHIBIT "A-1" attached
hereto is vested in the Partnership, (ii) fee simple
title to the portion of the Real Property described in
EXHIBIT "A-2" attached hereto is vested in Arizona
State Land Department and the interest under the
Certificate of Purchase is vested in the Partnership,
(iii) fee simple title to the portion of the Real
Property described in EXHIBIT "A-3" attached hereto is
vested in Thompson Peak Limited Partnership (as to all
Parcels on EXHIBIT "A-3" except Parcels 11 and 12) and
in The Herberger Foundation (as to Parcels 11 and 12
thereof) and the optionee's interest under the Option
Agreements is vested in the Partnership;
(B) The following
endorsements to the Owner's Policy: (i) Non-imputation,
(ii) Fairways, (iii) patent, (iv) water (covering
damage from extraction or development of water), (v)
use of land (No. 5), (vi) comprehensive (3R), (vii)
physically open street, (viii) deletion of
co-insurance, (ix) tax parcel (identifying all tax
parcels and confirming that such parcels are
coterminous with the Real Property), (x) survey, (xi)
deletion of creditor's rights exclusion (xii)
contiguity of parcels, (xiii) deletion of
apportionment, (xiv) subdivision (stating that any
subdivided parcels within the Real Property have been
subdivided and that a reference to the subdivision map
is sufficient as a legal description), (xv) a special
form indemnity for loss suffered by reason of failure
of Parcel O of the Project to have been validly
subjected to the Declaration, and (xvi) a special form
insuring that all parcels and portions of the Project
sold or transferred to third Persons have been removed
and released from the liens associated with the
Improvement District or, in the alternative, copies of
recorded documents evidencing such removal and release
(collectively, the "Owner's Policy Endorsements");
(C) An ALTA lender's
policy of title insurance (Form 1992) (or, to the
extent that the Partnership currently holds a lender's
policy of title insurance with respect to any Deed of
Trust, endorsements in the general form attached hereto
as SCHEDULE 5.1.1.2) in the aggregate amount of
$10,153,238.50 (less the aggregate amount of principal
payments, Additional Purchase Price payments, and
Marketing Fees paid by the trustors under the Deeds of
Trust) (the "Lender's Policy"), insuring the
Partnership's interest under and the priority of the
Deeds of Trust; and
(D) The following
endorsements to the Lender's Policy: Non-imputation,
deletion of creditor's rights exclusion, Fairways,
patent, no loss of priority due to partial releases
under the Deeds of Trust (as to those Deeds of Trust
for
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which partial releases have occurred), no loss of
priority due to subordination of the Deeds of Trust (as
to those Deeds of Trust for which subordination(s) have
occurred), and no modification, release or subordination
of the Deeds of Trust (collectively, the "Lender's
Policy Endorsements").
5.1.1.3 REVIEW
AND OBJECTION PROCEDURES. Buyer hereby acknowledges receipt of
Old Republic Title Agency Preliminary Memorandum Report No.
63-002.924, with search made to February 15, 1996, relating to
the issuance of the Owner's Policy (the "Current Owner's
Commitment"). Buyer has not yet received the Lender's Policy
Commitment or proposed forms of the Lender's Policy Endorsements
or Owner's Policy Endorsements. Buyer hereby approves the matters
disclosed in the Current Owner's Commitment which are set forth
in SCHEDULE 5.1.1.3 attached hereto. Buyer shall have 3 business
days from the delivery of all of the Lender's Policy Commitment,
the Survey, copies of specimen forms of the Owner's Policy
Endorsements and Lender's Policy Endorsements, and legible copies
of all Schedule B items and other recorded instruments referred
to in the Owner's Policy Commitment and the Lender's Policy
Commitment, to review and approve the specimen forms of the
Owner's Policy Endorsements and Lender's Policy Endorsements and
any matters disclosed on the Title Commitments or the Survey;
provided, however, that Buyer shall not be entitled to object to
any matter referred to on SCHEDULE 5.1.1.3. If Buyer fails to
object to any matter contained or depicted in the Survey, the
Title Commitments or the specimen forms of the Owner's Policy
Endorsements or Lender's Policy Endorsements by giving written
notice (an "Objection Notice") to Seller and Escrow Agent within
such 3 business day period, Buyer shall be deemed to have
approved, and this Condition shall be deemed to have been waived,
with respect to all such matters as to which no objection is
made. If Buyer timely delivers an Objection Notice, Seller may,
but shall not be obligated to, attempt to cure, prior to the
Closing, the matter(s) objected to by Buyer. Seller shall,
however, notify Buyer and Escrow Agent within 2 business days
after its receipt of Buyer's Objection Notice whether or not
Seller is willing to cure such objections. Seller shall have the
right to cure any such objection by causing Title Insurers to
issue an endorsement to the applicable Policy insuring over the
objectionable matter; provided, however, that the form of such
endorsement shall be subject to Buyer's review and approval. If
Seller notifies Buyer that Seller is unwilling to cure any
objection contained in an Objection Notice, then Buyer, within 2
business days following receipt of such notice from Seller, shall
elect by written notice to Seller and Escrow Agent to either (i)
waive the matter(s) previously objected to which Seller is
unwilling to cure and close the transaction contemplated hereby
in accordance with the terms hereof, or (ii) terminate this
Agreement, and in the event of such termination this Agreement
shall terminate and the Earnest Money Deposit shall be refunded
to Buyer. In the event Title Insurers issue an amendment or
supplement to either Title Commitment (an "Amended Commitment"):
(i) Buyer shall have 2 business days from receipt of the Amended
Commitment and legible copies of all new Schedule B items and
other new recorded instruments referred to in the Amended
Commitment to deliver an Objection Notice to Seller and Escrow
Agent notifying them of any objections to additional matters not
previously disclosed on the Title Commitment; (ii) Seller shall
have 2 business days after receipt of Buyer's Objection Notice to
notify Buyer and Escrow Agent as to whether or not Seller will
elect to attempt to cure any of such objections, and if Seller
elects to cure any objection, Seller shall have a minimum of 2
additional business days to cure such objection; and (iii) Buyer
shall have
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2 business days after receipt of notice of Seller's election not
to cure any objection within which to either (A) waive the
matter(s) disclosed on the Amended Commitment which were
previously objected to and which Seller is unwilling to cure and
close the transaction, or (B) terminate this Agreement; provided,
however, that Buyer shall have no right to object to any matter
described in an Amended Commitment which has previously been
approved or waived by Buyer or as to which Buyer has no right of
approval or objection as provided herein. If Seller fails to
notify Buyer within the requisite 2 business day period of
Seller's willingness to cure, Seller shall be conclusively deemed
to have elected not to cure Buyer's objections, in which event
Buyer must make one of the above described elections within 2
business days following expiration of the 2 business day period
for delivery of Seller's notice. If Seller elects to cure any of
the matters objected to by Buyer, but Seller fails to cure to
Buyer's reasonable satisfaction, not later than 2 business days
prior to the date set for the Closing, all of such matters which
Seller has elected to cure, then Seller shall be in breach of
this Agreement, and Buyer may elect to exercise any remedies
provided to Buyer under this Agreement, including, but not
limited to, the right to terminate this Agreement by written
notice to Seller and Escrow Agent delivered by 5:00 p.m. Phoenix
time on the last business day prior to the date set for the
Closing, and upon timely receipt of such notice, this Agreement
shall terminate, as provided in PARAGRAPH 18.1 of this Agreement.
If Seller does not elect, or is deemed not to have elected, to
cure any of the matters objected to by Buyer, and if Buyer fails
to timely notify Seller of Buyer's election to terminate the
Agreement, then Buyer shall be deemed to have elected to waive
the uncured matter(s) objected to by Buyer on the date which is 2
business days after the date Seller elects or is deemed to have
elected not to cure Buyer's objections. If necessary, the Closing
Date (as defined below) shall be extended for a period equal to
the number of days actually used by Buyer and/or Seller, not to
exceed the full time periods (if required by Buyer and/or Seller)
set forth above, for: (A) review of the Survey, Lender's Policy
Commitment, and proposed forms of Owner's Policy Endorsements and
Lender's Policy Endorsements; (B) review of an Amended
Commitment; (C) the making of objections to the Survey, Owner's
Policy Commitment, Lender's Policy Commitment, and/or proposed
forms of Owner's Policy Endorsements and Lender's Policy
Endorsements, and the making of objections to any additional
matters shown on an Amended Commitment as to which objection may
be made; (D) making an election to attempt to cure an objection
or not and, if election is made to cure, the minimum time period
to cure, plus 2 business days; and/or (E) electing whether to
waive the matters objected to or to terminate this Agreement, it
being agreed that notwithstanding any contrary provision hereof,
Buyer shall in all events have a minimum of 2 business days
within which to exercise its termination right as provided
herein. As used in this Agreement, the term "Title Exceptions"
shall mean (A) the matters set forth in SCHEDULE 5.1.1.3, (B) the
matters set forth in Schedule B of the Title Commitments and any
Amended Commitment(s) which are (i) approved (or deemed approved)
by Buyer as provided in this Subparagraph, (ii) objected to by
Buyer and such objection is thereafter waived by Buyer as
provided in this Subparagraph, or (iii) caused by the act of
Buyer, and (C) the matters set forth on the Survey approved (or
deemed approved) by Buyer as provided in this Subparagraph.
5.1.2 SUITABILITY OF ASSETS
AND LIABILITIES AND OTHER MATTERS. Subject to coordination of
scheduling with Seller so as not to interfere with or to be
impeded by Seller, Buyer and its consultants or agents, at any
time prior to Closing, may enter upon the
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Real Property and/or the Partnership's offices for the purposes
of reviewing the Partnership's books and records and all other
written materials respecting the Project including without
limitation surveys, soils, utilities, drainage and environmental
studies and may conduct physical site inspections of the Real
Property or any part thereof upon prior written notice to Seller.
In the event Buyer does not purchase the Partnership Interests,
any part of the Real Property (or vegetation thereon) which has
been disturbed by Buyer or its agents shall be restored by Buyer
substantially to its original condition. Buyer shall indemnify,
hold harmless and defend Seller (with legal counsel reasonable
satisfactory to Seller) for, from and against all claims,
damages, liabilities, costs and expenses (including reasonable
attorneys fees) for personal injury, physical damage to property
or mechanics' or materialmen's liens which may be asserted
against Seller, the Real Property or for any damage or
disturbance to the Real Property or vegetation as a result of any
such entry or inspections by Buyer, its agents or designees. As
of the Agreement Date, Buyer has not approved the feasibility
items described in EXHIBIT "I" attached hereto (the "Open
Items"). If Buyer disapproves any of the Open Items, in Buyer's
sole and absolute discretion, Buyer shall communicate notice of
such disapproval to Seller and Escrow Agent on or before 5
business days after the Opening of Escrow and of Buyer's decision
to terminate the Agreement, and this Agreement shall be
terminated and the Earnest Money Deposit (less the sum of $100.00
as consideration to Seller for Buyer's right to terminate
pursuant to this Paragraph together with one-half of any escrow
cancellation charges as provided in PARAGRAPH 7.7) shall be
refunded to Buyer. In the event that Buyer elects not to
consummate the purchase of the Partnership Interests, all
documents and other information provided by Seller to Buyer
promptly shall be returned by Buyer to the Partnership. Further,
Buyer shall use its good faith reasonable efforts to keep
confidential all information and documents received from Seller
or the Partnership in connection with the transaction described
in this Agreement (the "Confidential Information") and shall not
disclose the Confidential Information to any third Persons
without the prior written consent of Seller and the Partnership,
which may be withheld by the Partnership and/or Seller in its
sole discretion. Notwithstanding anything to the contrary in the
preceding sentence: (A) Buyer may disclose Confidential
Information to its employees, officers, directors, partners,
managers, members, consultants, attorneys, financial advisors,
insurance firms, lenders, and prospective purchasers, and (B) the
term "Confidential Information" shall not include (i) information
already known or available to Buyer from sources not related to
Seller, (ii) information that is or becomes generally available
to the public other than as a result of disclosure by Buyer, and
(iii) information that is required to be disclosed by law or by
regulatory or judicial process.
5.1.3 NO MATERIAL ADVERSE
CHANGE. On or before the Closing, there shall be no material
adverse change in the assets or liabilities, or the business or
financial condition of the Partnership.
5.1.4 ACCURACY OF
REPRESENTATIONS AND WARRANTIES. Except as to any breach of
representation or warranty waived by Buyer as provided in
PARAGRAPH 13.2.2, the representations and warranties of Seller
contained in this Agreement or in any Exhibit or Schedule
delivered pursuant hereto shall be true and correct on and as of
the Closing Date with the same effect as though such
representations and warranties had been made on and as of such
date.
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5.1.5 PERFORMANCE OF
AGREEMENTS. Each and all of the agreements of the Partnership and
Seller to be performed under this Agreement on or before the
Closing Date pursuant to the terms hereof shall have been duly
performed.
5.1.6 NO LITIGATION. On or
before the Closing, no action or proceedings shall have been
instituted or, to the knowledge of Seller, shall have been
threatened in writing, before a court or other government body or
by any public authority to restrain or prohibit any of the
transactions contemplated hereby.
5.1.7 CONSENTS, WAIVERS,
LICENSES AND FILINGS. On or before the Closing, all consents
(including, but not limited to, the consent of the seller under
each Option Agreement to the transactions described in this
Agreement which consent, as to Thompson Peak Limited Partnership,
shall contain an agreement by Thompson Peak Limited Partnership
to provide the covenants and warranties of title described in
PARAGRAPH 8), approvals, authorizations, licenses, registrations,
declarations or filings required to have been made or obtained
with respect to the transaction contemplated hereby shall have
been obtained or made, as the case may be. Seller shall use its
best efforts to obtain the foregoing consent of the seller under
each Option Agreement prior to Closing.
5.1.8 ESTOPPELS. On or
before the Closing, estoppel certificates shall have been
obtained and delivered to Buyer which have been executed by the
Persons identified on EXHIBIT "J-1" attached hereto, and each of
which shall (A) be dated not more than 15 days prior to Closing;
(B) be in the general form attached hereto as EXHIBIT "J-2", (C)
contain the additional provisions, if any, referred to on EXHIBIT
"J-1" with respect to the particular certificate, and (D) be free
of any qualifications, conditions or exceptions to the matters
set forth in the required form of estoppel certificate. Seller
shall use its good faith reasonable efforts to obtain the
estoppel certificates prior to Closing as provided herein;
provided, however, that (A) if Seller is unable, despite its good
faith reasonable efforts, to obtain an estoppel certificate from
any Person identified under the "Level Two" heading on EXHIBIT
"J-1", then this Condition shall be deemed satisfied as to any
such Person identified under the "Level Two" heading on EXHIBIT
"J-1" if Seller delivers to Buyer on or before the Closing a
certificate executed by Seller representing and warranting, to
Seller's knowledge, the same information as was required
hereunder for such Person; (B) if Seller is unable, despite its
good faith reasonable efforts, to obtain an estoppel certificate
from any Person identified under the "Level One (Category B)"
heading on EXHIBIT "J-1", then this Condition shall be deemed
satisfied as to any such Person identified under the "Level One
(Category B)" heading on EXHIBIT "J-1" if Seller delivers to
Buyer on or before the Closing a certificate executed by Seller
representing and warranting (without any knowledge limitation),
the same information as was required hereunder for such Person;
and (C) if Seller is unable, despite its good faith reasonable
efforts, to obtain an estoppel certificate from any Person
identified under the "Level One (Category A)" heading on EXHIBIT
"J-1", then the Closing Date shall be extended to the next
business day following the date on which all of the Level One
(Category A) estoppels are obtained, provided, however, that the
Closing Date shall not be extended pursuant to this clause (C) by
more than 30 days. Notwithstanding anything to the contrary in
the foregoing, (A) Buyer shall have the right, in addition to any
other rights and remedies available to Buyer hereunder,
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to require Seller to provide at the Closing a Seller's
certificate representing and warranting the same information as
was required hereunder (except for the second item as to the
Person in 1.D and the second and fourth items as to the Person in
1.E) for any Person identified on EXHIBIT "J-1" from whom Seller
is unable to obtain an estoppel (which Seller's certificate shall
not, except as to the "Level Two" Persons, contain any knowledge
limitation), and (B) except to the extent that any such
certificate does not include a knowledge limitation as to any
matter and this Agreement does include a knowledge limitation as
to such matter, the terms of this Agreement shall control in the
event of a conflict or inconsistency between the terms of any
such certificate executed by Seller and the terms of this
Agreement.
5.1.9 AMENDMENT TO
PARTNERSHIP AGREEMENT. On or before the Closing, (A) Seller shall
have caused the Partnership to amend its Partnership Agreement to
permit the transfer of the Partnership Interests and the
continued existence of the Partnership, and (B) Buyer shall have
approved the form and content of such amendment prior to the
execution thereof, which consent shall not be unreasonably
withheld by Buyer.
5.1.10 REQUIRED ACTION. On
or before the Closing, Seller shall have taken all applicable
corporate, partnership, and/or limited liability company action
necessary or appropriate to consummate the transaction
contemplated hereby.
5.1.11 CONSENTS AND NOTICES.
On or before the Closing, all necessary consents to the
assignments of the contracts and permits described in PARAGRAPH
6.3.2 shall have been obtained from the other parties thereto,
and Seller shall have given all necessary notices to such other
parties of such assignment, which are required under the terms of
the applicable contracts or permits being assigned or under
applicable law including, without limitation, the consents and
notices specified on EXHIBIT "K-2". Seller shall use its good
faith reasonable efforts to obtain the foregoing consents to
assignment prior to Closing.
5.1.12 PARCEL O TRACT
DECLARATION. On or before the Closing, there shall have been
obtained all necessary consents (including, but not limited to,
consents by all owners of all or any portion of Parcel O of the
Project, and all holders of liens on all or any portion of Parcel
O) to the re-recordation of the previously recorded Tract
Declaration (Instrument No. 95-0621754) and Supplemental
Declaration (Instrument No. 95-0621753) for the north half of
Parcel O previously sold by the Partnership to Fairfield
Investments, Inc. to include and attach a legal description of
such north half of Parcel O, and such Tract Declaration and
Supplemental Declaration shall have been re-recorded with the
legal description attached. Seller shall use its good faith
reasonable efforts to obtain the foregoing consents prior to
Closing.
5.1.13 PHASE I REPORT.
Within 10 days after the Agreement Date, Seller shall deliver to
Buyer a Phase I environmental report (A) prepared by Growth
Environmental Services, Inc., (B) dated not more than 30 days
prior to the Agreement Date, (C) containing a certification in
favor of Buyer, the Partnership, and Seller, (D) complying with
ASTM Designation E 1527-94, as described and clarified in that
certain letter from Robert D. Anderson to Joseph J. Moritz dated
March 15, 1996 (the "ASTM Standard"), and (E) covering the entire
Project (the "New Phase I Report"). Buyer shall have 3 business
days from the
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delivery of the New Phase I Report to review and object to any
matter contained in the New Phase I Report and/or any failure of
the New Phase I Report to comply with the ASTM Standard. If Buyer
fails to object to any matter contained in the New Phase I Report
or any failure of the New Phase I Report to comply with the ASTM
Standard by giving written notice to Seller within such 3
business day period, Buyer shall be deemed to have approved, and
this Condition shall be deemed to have been waived, with respect
to all such matters and all such noncompliance as to which no
objection is made. If Buyer timely delivers notice of objection
to any matter contained in the New Phase I Report or to any
failure of the New Phase I Report to comply with the ASTM
Standard, Seller may, but shall not be obligated to, attempt to
cure, prior to the Closing, the matter(s) objected to by Buyer.
Seller shall, however, notify Buyer within 2 business days after
its receipt of Buyer's notice of objection whether or not Seller
is willing to cure such objections. If Seller notifies Buyer that
Seller is unwilling to cure any such objection, then Buyer,
within 2 business days following receipt of such notice from
Seller, shall elect by written notice to Seller and Escrow Agent
to either (i) waive the matter(s) previously objected to which
Seller is unwilling to cure and close the transaction
contemplated hereby in accordance with the terms hereof, or (ii)
terminate this Agreement, and in the event of such termination
this Agreement shall terminate and the Earnest Money Deposit
shall be refunded to Buyer. If Seller fails to notify Buyer
within the requisite 2 business day period of Seller's
willingness to cure, Seller shall be conclusively deemed to have
elected not to cure Buyer's objections, in which event Buyer must
make one of the above described elections within 2 business days
following expiration of the 2 business day period for delivery of
Seller's notice. If Seller elects to cure any of the matters
objected to by Buyer, but Seller fails to cure to Buyer's
reasonable satisfaction, not later than 2 business days prior to
the date set for the Closing, all of such matters which Seller
has elected to cure, then Seller shall be in breach of this
Agreement, and Buyer may elect to exercise any remedies provided
to Buyer under this Agreement, including, but not limited to, the
right to terminate this Agreement by written notice to Seller and
Escrow Agent delivered by 5:00 p.m. Phoenix time on the last
business day prior to the date set for the Closing, and upon
timely receipt of such notice, this Agreement shall terminate, as
provided in PARAGRAPH 18.1 of this Agreement. If Seller does not
elect, or is deemed not to have elected, to cure any of the
matters objected to by Buyer, and if Buyer fails to timely notify
Seller of Buyer's election to terminate the Agreement, then Buyer
shall be deemed to have elected to waive the uncured matter(s)
objected to by Buyer on the date which is 2 business days after
the date Seller elects or is deemed to have elected not to cure
Buyer's objections. If necessary, the Closing Date (as defined
below) shall be extended for a period equal to the number of days
actually used by Buyer and/or Seller, not to exceed the full time
periods (if required by Buyer and/or Seller) set forth above,
for: (A) review of the New Phase I Report; (B) the making of
objections to the New Phase I Report; (C) making an election to
attempt to cure an objection or not and, if election is made to
cure, the minimum time period to cure, plus 2 business days;
and/or (D) electing whether to waive the matters objected to or
to terminate this Agreement, it being agreed that notwithstanding
any contrary provision hereof, Buyer shall in all events have a
minimum of 2 business days within which to exercise its
termination right as provided herein.
5.1.14 STAINED AREAS. On or
before the Closing, Seller shall have removed from the Project
and disposed of, all in accordance with applicable Environmental
Laws or Orders, the three soil stained areas and the concrete
washout area identified in that
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certain Updated Phase I Environmental Site Assessment prepared by
Growth Environmental Services, Inc., dated August 15, 1995.
5.1.15 RIGHT TO WAIVE; DEEMED
APPROVAL. The Conditions set forth in this PARAGRAPH 5.1 are for
the sole benefit of Buyer, and Buyer, in its sole discretion, may
at any time in writing waive any one or more of the Conditions
set forth in this PARAGRAPH 5.1, in which case the waived
Condition(s) shall be deemed to be fully satisfied. If any of the
Conditions described in this PARAGRAPH 5.1 is not satisfied on or
before the applicable date set forth above, Buyer, in its sole
and absolute discretion, may terminate this Agreement and the
Escrow by notice to Seller and Escrow Agent and receive a refund
of the Earnest Money Deposit, unless the failure of the Condition
results from a default by Seller, in which case Buyer may seek
such remedies for the default as may be permitted under this
Agreement. Except as specifically provided otherwise above in
this PARAGRAPH 5.1, failure by Buyer to timely notify Seller and
Escrow Agent of Buyer's objection, disapproval or rejection of
any of the Conditions above described in this PARAGRAPH 5.1 and
of Buyer's election to terminate as a consequence thereof within
the time period specified shall be deemed conclusively to
constitute Buyer's approval of such Condition and a waiver of
Buyer's right to terminate this Agreement with regard to such
Condition; provided, however, that if the failure of the
Condition results from a default by Seller, Buyer may seek such
remedies for the default as may be permitted under this
Agreement.
5.2 SELLER'S CONDITIONS PRECEDENT.
5.2.1 NO MATERIAL CHANGE. On
or before the Closing, there is no material adverse change in the
financial condition of Buyer that has a material effect on its
ability to close the Escrow as provided in this Agreement or to
cause the Partnership to perform its obligations under the
Assumption, Guaranty and Indemnity Agreement attached hereto as
EXHIBIT "Q".
5.2.2 REQUIRED ACTION. On
or before the Closing, Buyer shall have taken all applicable
corporate, partnership, and/or limited liability company action
necessary or appropriate to consummate the transaction
contemplated hereby.
5.2.3 ACCURACY OF
REPRESENTATIONS AND WARRANTIES. Except as to any warranty waived
by Seller as provided in PARAGRAPH 13.2.3, the representations
and warranties of Buyer contained in this Agreement or in any
Exhibit or Schedule delivered pursuant hereto shall be true and
correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and
as of such date.
5.2.4 CONSENT UNDER OPTION
AGREEMENTS. The consent of the seller under each Option Agreement
to the transactions described in this Agreement shall have been
obtained.
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5.2.5 PERFORMANCE OF
AGREEMENTS. Each and all of the agreements of Buyer to be
performed under this Agreement on or before the Closing Date
pursuant to the terms hereof shall have been duly performed.
5.2.6 RIGHT TO WAIVE; DEEMED
APPROVAL. The Conditions set forth in this PARAGRAPH 5.2 are for
the sole benefit of Seller, and Seller, in its sole discretion,
may at any time in writing waive any one or more of the
Conditions set forth in this PARAGRAPH 5.2, in which case the
waived Condition(s) shall be deemed to be fully satisfied. If any
of the Conditions described in this PARAGRAPH 5.2 is not
satisfied on or before the applicable date set forth above,
Seller, in its sole and absolute discretion, may terminate this
Agreement and the Escrow by notice to Buyer and Escrow Agent and
if the failure of the Condition results from a default by Buyer,
Seller may seek such remedies for the default as may be permitted
under this Agreement. Except as specifically provided otherwise
above in this PARAGRAPH 5.2, failure by Seller to timely notify
Buyer and Escrow Agent of Seller's objection, disapproval or
rejection of any of the Conditions above described in this
PARAGRAPH 5.2 and of Seller's election to terminate as a
consequence thereof within the time period specified shall be
deemed conclusively to constitute Seller's approval of such
Condition and a waiver of Seller's right to terminate this
Agreement with regard to such Condition; provided, however, that
if the failure of the Condition results from a default by Buyer,
Seller may seek such remedies for the default as may be permitted
under this Agreement.
6. TITLE INSURANCE POLICIES; ASSIGNMENT OF
PARTNERSHIP INTERESTS; OTHER TRANSFERS.
6.1 OWNER'S TITLE INSURANCE POLICY.
At the Closing, Seller shall cause Escrow Agent to deliver to
Buyer the Owner's Policy (together with the Owner's Policy
Endorsements and the written commitment of Ticor and Chicago for
reinsurance as provided in PARAGRAPH 1.28, which reinsurance
commitment permits direct access by the insured to the reinsurer)
and the Lender's Policy (together with the Lender's Policy
Endorsements), each as described in PARAGRAPH 5.1.1 and issued by
the Title Insurers in the manner provided in PARAGRAPH 1.28, or
the unconditional and irrevocable commitments of Title Insurers
to issue such Policies and Endorsements, the Owner's Policy and
the Lender's Policy to be subject only to (A) the usual printed
exclusions, conditions and stipulations set forth in the printed
form policy, and (B) the Title Exceptions. Seller shall pay (i)
the title insurance premium for the standard coverage portion of
the Owner's Policy, (ii) 50% of the premium for the Owner's
Policy Endorsements, (iii) all of the title insurance premium for
the Lender's Policy, (iv) 50% of the premium for the Lender's
Policy Endorsements. Buyer shall pay (i) the title insurance
premium for the extended coverage portion of the Owner's Policy,
(ii) 50% of the premium for the Owner's Policy Endorsements, and
(iii) 50% of the premium for the Lender's Policy Endorsements.
6.2 ASSIGNMENT OF PARTNERSHIP
INTERESTS. At the Closing, Seller shall execute and deliver to
Buyer an Assignment of Partnership Interests assigning and
transferring to Buyer the Partnership Interests, substantially in
the form attached hereto as EXHIBIT "L". Prior to Closing, Buyer
may by written notice to Seller and Escrow Agent designate one or
more
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of the Persons comprising the Buyer or one or more Person(s)
controlled by Buyer that will take title to the Partnership
Interests, so that the general and limited partner interests in
the Partnership are held by different Persons. Seller agrees to
assign and transfer the Partnership Interests to the Person(s) so
designated by Buyer. The assignment of the Partnership Interests
shall occur in the following sequence, so as to prevent a
dissolution of the Partnership under applicable law: (A) First,
the Corporation shall assign its general Partnership Interest to
one such Person designated by Buyer, and Newhall, in its capacity
as remaining general partner and as the limited partner in the
Partnership, shall consent to the assignment and to the admission
of the assignee as an additional general partner in the
Partnership; (B) Second, Newhall shall assign its general and
limited Partnership Interests to a different such Person (or
Persons) as designated by Buyer, and Buyer shall cause the Person
to whom the general Partnership Interest was assigned under the
preceding clause (A), in its capacity as general partner in the
Partnership, to consent to the assignment and to the admission of
the assignee (or assignees) as a limited partner (or limited
partners) in the Partnership. At the Closing and after the
assignment of Partnership Interests as provided in the preceding
sentence, Buyer shall cause the Persons owning 100% of the
Partnership Interests to execute and deliver a Security Agreement
as described in PARAGRAPH 36.2 and the other documents required
under PARAGRAPH 36.2, so that 100% of the Partnership Interests
are encumbered in the manner provided in PARAGRAPH 36.2.
6.3 TRANSFER OF OTHER ASSETS.
6.3.1 TRADENAME AND SERVICE
MARKS. At the Closing, Seller shall cause the Corporation to
execute and deliver to the Partnership instruments, in the form
required by law, assigning and transferring to the Partnership
(A) United States Patent and Trademark Office Certificate of
Registration No. 1,924,804 (for McDowell Mountain Ranch service
mark in Class 37 registered October 3, 1995), (B) United States
Patent and Trademark Office Certificate of Registration No.
1,924,796 (for McDowell Mountain Ranch service mark in Class 36
registered October 3, 1995), and (C) State of Arizona Certificate
of Trade Name No. 113580 (for McDowell Mountain Ranch trade name
registered to Newhall on September 17, 1992, and thereafter
assigned by Newhall to the Corporation pursuant to Assignment of
Trade Name filed with the Arizona Secretary of State on November
18, 1993).
6.3.2 CONTRACTS AND PERMITS.
At the Closing, Newhall and the Corporation shall each execute
and deliver to the Partnership an Assignment of Contracts and
Permits substantially in the form attached hereto as EXHIBIT
"K-1", assigning and transferring to the Partnership the
contracts and permits identified in EXHIBIT "K-2" of this
Agreement which are held by Newhall or the Corporation, as
applicable. In addition to such Assignment of Contracts and
Permits, Newhall (or the Corporation, as applicable) shall
execute and deliver to the Partnership at the Closing such other
instruments as may be required under applicable law to transfer
any particular contract or permit described in EXHIBIT "K-2".
6.3.3 PERSONAL PROPERTY. At
the Closing, Seller shall execute and deliver to the Partnership
(A) an Assignment and Bill of Sale substantially in the form
attached hereto as EXHIBIT "M", assigning and transferring to the
Partnership all Personal Property owned
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by Newhall and/or the Corporation which, in the case of tangible
Personal Property, is located in the State of Arizona, and which
in any case is used at or in connection with or otherwise
relating to the Project, and (B) such other instruments as may be
required under applicable law to transfer particular items of
Personal Property to the Partnership.
7. THE ESCROW.
7.1 ESCROW INSTRUCTIONS. Buyer
and Seller shall establish an Escrow (the "Escrow") with Escrow
Agent to facilitate the consummation of the transaction
contemplated by this Agreement. The standard form Escrow
Instructions (the "Printed Instructions"), attached hereto as
EXHIBIT "N", together with the provisions of this Agreement
applicable to Escrow Agent, shall together constitute escrow
instructions between Seller, Buyer and Escrow Agent. In the event
of any conflict or inconsistency between the provisions of the
Printed Instructions and this Agreement or any instrument or
document executed or delivered in connection with the transaction
contemplated hereby, the provisions of this Agreement, or such
instrument or document shall control.
7.2 OPENING. Seller and Buyer
shall open Escrow with Escrow Agent simultaneously upon their
execution hereof. For the purposes hereof, the term "Opening of
Escrow" shall be the date inserted at the end of this Agreement
by Escrow Agent, which date shall be the date on which this
Agreement, executed by Buyer and Seller, together with the
required Earnest Money Deposit is delivered to and accepted by
Escrow Agent.
7.3 CLOSING. The Closing shall
occur on or before March 29, 1996 (the "Closing Date") at 9:00
a.m. in the offices of Fennemore Craig, Two North Central Avenue,
Suite 2200, Phoenix, Arizona, or at such other time and location
as the parties may mutually agree.
7.4 ACTION AT THE CLOSING BY
SELLER. At the Closing, Seller shall deliver or cause to be
delivered to Escrow Agent for the account of Buyer (if not
otherwise delivered prior thereto) all of the following
instruments dated as of the Closing, fully executed by Seller
(and, if appropriate, acknowledged), which instruments shall be
executed and delivered in the following sequence:
7.4.1 Assignment from the
Partnership to the Corporation of the covenants and warranties of
title contained in the special warranty deeds recorded in
Instrument Nos. 93-0833538, 94-0823590, 95-0071407, 95-0621752,
and 95-0771675;
7.4.2 Assignments of
tradename and service marks as provided in PARAGRAPH 6.3.1;
7.4.3 Assignment of
Contracts and Permits as provided in PARAGRAPH 6.3.2 and any
other instruments required under PARAGRAPH 6.3.2;
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7.4.4 Assignment and Bill of
Sale as provided in PARAGRAPH 6.3.3 and any other instruments
required under PARAGRAPH 6.3.3;
7.4.5 Assignment of
Partnership Interests as provided in PARAGRAPH 6.2, in the
sequence and manner provided for in PARAGRAPH 6.2;
7.4.6 Assignment from the
Corporation to the Partnership of the title covenants and
warranties described in PARAGRAPH 7.4.1;
7.4.7 Affidavit of
Non-Foreign Person in the form of EXHIBIT "O";
7.4.8 An update of
EXHIBIT "G" and of SCHEDULE 11.7, dated as of the Closing Date;
7.4.9 Each original
promissory note referred to in the Deeds of Trust and originals
of each of the Deeds of Trust;
7.4.10 A closing certificate
restating and reaffirming, as of the Closing Date, the
representations and warranties of Seller set forth in PARAGRAPHS
11 AND 12 (except to the extent that a breach of any such
representations and warranties is waived by Buyer as provided in
PARAGRAPH 13.2.2), which certificate shall be in the form
attached hereto as EXHIBIT "S-1";
7.4.11 An update of the
December 1995 Balance Sheet, updated through February 29, 1996;
and
7.4.12 Such other funds,
instruments, or documents, including any original notes
receivable (other than those described in PARAGRAPH 7.4.9) and
deeds of trust securing the repayment of such notes in the
possession of Seller or the Partnership, as may be reasonably
necessary to fulfill the covenants and obligations to be
performed by Seller pursuant to this Agreement.
7.5 ACTION AT THE CLOSING BY
BUYER. At the Closing, Buyer shall deliver or cause to be
delivered to Escrow Agent for the account of Seller (if not
otherwise delivered prior thereto) all of the following, and with
respect to any instruments or documents referred to below, all
such items shall be dated as of the Closing, fully executed by
Buyer (or the Partnership as to the instruments described in
PARAGRAPHS 7.5.3 AND 7.5.6) and, if appropriate, acknowledged:
7.5.1 All funds referred to
in PARAGRAPH 3 necessary to pay the Purchase Price;
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7.5.2 Assignment of
Partnership Interests, which shall be signed by the Persons
provided for in PARAGRAPH 6.2, in the sequence and manner
provided for in PARAGRAPH 6.2;
7.5.3 Assumption, Guaranty and
Indemnity Agreement required under PARAGRAPH 36, executed by the
Partnership;
7.5.4 Letter of Credit
required under PARAGRAPH 36.1, in the form required under
PARAGRAPH 36.1;
7.5.5 Security Agreements and
Financing Statements required under PARAGRAPH 36.2;
7.5.6 After completion of the
transfer of all Partnership Interests to the Persons provided for
in PARAGRAPH 6.2, a Reaffirmation of Partnership Obligations in
the form attached hereto as EXHIBIT "T", executed by the
Partnership (it being agreed that Exhibit "A" of such
Reaffirmation shall contain a list of all contracts and
agreements of the Partnership disclosed in this Agreement or in
any Schedule or Exhibit attached hereto);
7.5.7 A closing certificate
executed by each of Sunbelt/HH and Investors, restating and
reaffirming, as of the Closing Date, its respective
representations and warranties set forth in PARAGRAPH 10 (except
to the extent that a breach of any such representations and
warranties is waived by Seller as provided in PARAGRAPH 13.2.3),
each of which certificates shall be in the form attached hereto
as EXHIBIT "S-2";
7.5.8 Indemnity Agreement
executed by the Partnership as required under PARAGRAPH 14.2, in
the form attached hereto as EXHIBIT "U"; and
7.5.9 Such other funds,
instruments, or documents as are reasonably necessary to fulfill
the covenants and obligations to be performed by Buyer pursuant
to this Agreement.
7.6 CLOSING COSTS. The Escrow
fee payable to Escrow Agent in respect of the assignment and
transfer of the Partnership Interests to Buyer shall be shared
equally by the parties. The title insurance premium for the
Owner's Policy, the Owner's Policy Endorsements, the Lender's
Policy, and the Lender's Policy Endorsements shall be allocated
between Buyer and Seller in the manner provided in PARAGRAPH 6.1.
7.7 ESCROW CANCELLATION CHARGES.
If this Escrow fails to close because of Seller's default, Seller
shall be liable for all actual escrow cancellation charges. If
this Escrow fails to close because of Buyer's default, Buyer
shall be liable for all actual escrow cancellation charges. If
this Escrow fails to close for any other reason, Seller and Buyer
shall each be liable for (one-half) 1/2 of all actual escrow
cancellation charges.
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8. BUYER'S ADDITIONAL COVENANTS. Buyer shall
use its good faith reasonable efforts to cause Thompson Peak
Limited Partnership to provide deeds for Land purchased after the
Closing under the Option Agreement with Thompson Peak Limited
Partnership containing covenants and warranties of title in
substantially the same form as those contained in the deeds
referred to in PARAGRAPH 7.4.1.
9. SELLER'S ADDITIONAL COVENANTS. In
addition to Seller's covenants set forth elsewhere in this
Agreement, Seller hereby covenants and agrees as follows:
9.1 CONDUCT OF BUSINESS OF COMPANY.
During the period from the Agreement Date to the Closing, Seller
shall cause the Partnership to continue to conduct its operations
in the ordinary and usual course of business and to use its best
efforts to preserve intact its respective business organization,
keep available the services of its officers and employees and
maintain ongoing relationships with licensors, suppliers,
distributors, consultants, contractors and others having business
relationships with them. Except as may be first approved by Buyer
or as is otherwise permitted or required by this Agreement,
Seller shall cause the Partnership and the Association to (A)
refrain from entering into any contract, agreement or commitment
or any modification or amendment of any contract, agreement or
commitment by which the Partnership or the Association is bound
or to which the Project or any assets of the Partnership or the
Association are subject, (B) maintain in full force and effect
until the Closing all policies of insurance presently carried by
the Partnership, (C) neither act nor fail to act in such a manner
as to cause an event which creates or, with the giving of notice
and/or the passage of time would create, a default under any
representation, warranty or covenant contained in this Agreement
or under any other contract, agreement or commitment by which the
Partnership or the Association is bound or to which the Project
or any assets of the Partnership or the Association are subject.
During the period from the Agreement Date to the Closing, Seller
shall cause the Partnership to notify Buyer of any material and
adverse change in the business or financial condition of the
Partnership.
9.2 EXCLUSIVE DEALING. During the
period from the Agreement Date to the Closing, Seller shall not
take and shall cause the Partnership to refrain from taking any
action to, directly or indirectly, encourage, initiate or engage
in discussions or negotiations with, or provide any information
to, any Person, other than Buyer, concerning any purchase of the
Partnership Interests or any merger, sale of substantial assets
or similar transaction involving the Partnership, other than real
estate purchase and sale transactions which may occur in the
ordinary course of the Partnership's business (which purchase and
sale transactions shall require the consent of Buyer as provided
in PARAGRAPHS 9.1 AND 9.4).
9.3 MAINTENANCE OF THE PROJECT.
During the period from the Agreement Date to the Closing, Seller
shall cause the Partnership and the Association to maintain the
Project in the same state of repair as of the date hereof, except
as the Project may be reasonably impacted by construction of
improvements within or serving the Project by the City, the
District and/or Seller and except as to changes in the state of
repair caused by Buyer, its agents, designees, invitees and
licensees.
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9.4 PURCHASE AND SALE AGREEMENTS.
During the period from the Agreement Date to the date of Closing
or date of termination, as the case may be, Seller shall not
permit the Partnership to enter into any purchase and sale
agreements for the sale of any part of the Property or any
material part of the assets of the Partnership without the prior
written consent of Buyer, which consent may be withheld in the
sole and absolute discretion of Buyer.
9.5 POST-CLOSING TRANSFERS. It is the
intent of this Agreement that all assets (including, but not
limited to, contracts, tangible and intangible personal property,
and real property) which, in the case of tangible personal
property, is located in the State of Arizona, and which in any
case are used at or in connection with or otherwise relate to the
Project or the business of the Partnership and which are owned by
or held in the name of the Corporation, Newhall, or any Person
affiliated with or related to the Corporation or Newhall, be
vested in the Partnership prior to the assignment of the
Partnership Interests to Buyer as provided herein. Without
limiting in any way any of the representations, warranties or
other agreements of Seller set forth in this Agreement, it is
hereby agreed that if, after the Closing, Buyer discovers that
any such asset is not vested in the Partnership, Seller shall
within 10 days after demand by Buyer execute such documents and
instruments as may be necessary to transfer the particular asset
to the Partnership, and Seller shall at its expense secure all
third-Person consents as may be required for the transfer. If
Seller transfers an asset and secures all required third-Person
consents thereto as provided in the preceding sentence, then
Seller shall be deemed to have cured any default hereunder by
Seller arising from its failure to transfer the asset at Closing
hereunder; provided, however, that such transfer and obtaining of
third-Person consent by Seller shall not relieve or release
Seller from any other liability or obligation that Seller may
have under this Agreement with respect to the asset transferred
(including, but not limited to, any liability or obligation with
respect to or arising from Seller's failure to disclose the asset
to Buyer).
9.6 POST-CLOSING BALANCE SHEET
UPDATE. On or before 10 business days after the Closing, Seller
shall deliver to Buyer an update of the balance sheet delivered
at Closing pursuant to PARAGRAPH 7.4.11, updated through the date
of Closing. Sunbelt/HH, in its capacity as general partner in the
Partnership, shall cause the Partnership to cooperate with Seller
in the preparation of such updated balance sheet.
9.7 WAIVER OF CONTRIBUTION. Seller
hereby waives and releases all claims for indemnity,
contribution, reimbursement or recovery from the Partnership
which may now or hereafter exist under Paragraph 3.6 of the
Partnership Agreement or under applicable statutes or common law.
10. REPRESENTATIONS AND WARRANTIES OF BUYER.
Sunbelt/HH and Investors hereby represent and warrant to and
covenant with Seller, each solely with respect to itself, as set
forth below in this PARAGRAPH 10.
10.1 NO CONFLICT. The execution,
delivery and performance by Buyer of its obligations under this
Agreement and all other agreements contemplated hereby will not
violate, contravene or result in a default under (A) any
provision of applicable law, the articles of incorporation and
bylaws, operating agreement or articles of organization or
partnership
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agreement of Buyer, (B) any bond, note or other evidence of
indebtedness, contract, mortgage, deed of trust, loan, lease or
other agreement or instrument to which Buyer is a party or by
which it is bound, or breach, invalidate, cancel, make
inoperative, materially interfere with or result in the
acceleration or maturity of any such items referred to in this
clause (B), or (C) any statute, law, rule or regulation, or any
judgment, order or decree of any governmental authority or court
having jurisdiction over Buyer. No consent, approval,
authorization or order of or qualification with any governmental
authority, judicial or administrative body or any other Person is
required for the execution and delivery of this Agreement by
Buyer or the performance by Buyer of its obligations under this
Agreement or any other agreement contemplated hereby.
10.2 DUE ORGANIZATION, ETC. Buyer is
duly organized, validly existing and in good standing under the
laws of its state of organization and (except for Investors) is
duly authorized to transact business in Arizona. Buyer has the
power and authority to own its properties and assets, to carry
out its business as presently conducted and to perform its
obligations under this Agreement and all other agreements
contemplated hereby. On or before the Closing the execution,
delivery and performance of this Agreement and all other
agreements contemplated hereby will have been duly and validly
authorized by all necessary action on the part of Buyer and this
Agreement and all other agreements contemplated hereby will be
valid and binding obligations of Buyer, enforceable against Buyer
in accordance with their respective terms, except as
enforceability may be limited by any Creditor's Rights Laws (as
hereinafter defined) and general principles of equity. Buyer
further represents that it is not a partner or joint venturer
with Seller in connection with the transactions contemplated by
this Agreement, and that it is entering into this Agreement and
any other contract, instrument and document contemplated hereby,
voluntarily and solely for its own benefit. As used in this
Agreement, the term "Creditor's Rights Laws" shall mean any
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting generally the enforcement of
creditors' rights.
10.3 NO LITIGATION. There are no
pending or to Buyer's knowledge, threatened, investigations,
actions, suits, proceedings or claims against or affecting Buyer
at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, agency or
instrumentality, domestic or foreign. To Buyer's knowledge, no
material investigation, action, suit, proceeding or claim is
threatened against or affecting Buyer or the transactions
contemplated hereby, at law or in equity or before or by any
federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, domestic or
foreign. Buyer is not operating under or subject to any order,
writ, injunction, decree or judgment of any arbitrator or
governmental authority.
10.4 INVESTIGATION OF THE PROJECT BY
BUYER. Prior to the Closing, Buyer shall have made its own
independent examination, inspection and investigation of the
condition of the Project (including, without limitation the
subsurface thereof, all soil, environmental, engineering and
other conditions which may affect construction thereon) and all
matters affecting the development thereof and of the condition
(financial and otherwise) of the Partnership and of its assets
and liabilities as it deems necessary or appropriate, and Buyer
is entering into this Agreement and purchasing the Partnership
Interests based upon the results of such inspections and
investigations and not in reliance on any statements,
representations, or
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agreements of Seller other than those contained in this
Agreement. Buyer acknowledges and agrees that it is acquiring the
Partnership Interests without any representation, warranty or
covenant from Seller, except for representations, warranties and
covenants of Seller as stated in this Agreement and the other
agreements contemplated hereby. Buyer acknowledges and agrees
that (A) it is not relying on any written financial performance
projections for the Partnership which Seller has given or caused
the Partnership to give to Buyer, (B) such financial projections
are not a prediction, guaranty, representation, warranty or
covenant of Seller as to the financial or other performance of
the Partnership, the Property or the Project for the period
covered by such financial projections or that the events set
forth in such financial projections shall occur, and (C) such
financial projections are merely a projection of future
performance of the Partnership and that actual results may vary
significantly.
10.5 INVESTMENT REPRESENTATIONS. Buyer,
in acquiring the Partnership Interests, hereby represents and
warrants to Seller as follows:
10.5.1 The acquisition of the
Partnership Interests is made as a principal for Buyer's sole
account for investment purposes only and not with a view toward
the distribution of all or any portion of Buyer's interest in the
Partnership except in compliance with the provisions of this
Agreement and any document or instrument executed by Buyer or any
holder of an ownership interest in Buyer in connection with the
transaction contemplated by this Agreement.
10.5.2 Buyer is aware of the
restrictions on transfer of the Partnership Interests provided
herein and in the Assumption, Guaranty and Indemnity Agreement
and/or the Security Agreement(s) and/or the Assignment(s) of
Partnership Interests and that the Partnership Interest will at
no time prior to the occurrence of the Partial Release Condition
or the Full Release Condition (as defined in PARAGRAPH 36.3) be
freely transferable or be assignable (except as provided in this
Agreement or in any agreement or other document executed in
connection with this Agreement) otherwise than to a Person
accepting similar restrictions on transferability and upon
compliance with all other applicable conditions of transfer.
10.5.3 Buyer has no reason to
anticipate any change in Buyer's circumstances, financial or
otherwise, which should cause Buyer to sell or distribute or
necessitate or require any sale or distribution of the
Partnership Interest.
10.5.4 Buyer is fully aware of the
restrictions on resale of the Partnership Interests under this
Agreement, the Assumption, Guaranty and Indemnity Agreement
and/or the Security Agreement(s) and/or the Assignment(s) of
Partnership Interests and under the Securities Act of 1933, as
amended (the "Securities Act"), the rules promulgated thereunder,
and applicable state securities laws; in particular, Buyer is
aware that the Partnership Interests have not been registered
under the Securities Act, may not be freely transferred and that
any sale thereof may have significant adverse tax consequences.
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10.5.5 Buyer is aware that the
Partnership Interests are being transferred by Seller in reliance
upon the exemption provided by ss.4(2) of the Securities Act, on
the grounds that no public offering is involved, and upon the
representations, warranties and agreements set forth in this
PARAGRAPH 10.5.
10.5.6 Buyer has such business and
financial experience alone, or together with its professional
advisers, that it has the capacity to protect its own interests
in connection with its acquisition of the Partnership Interests
hereunder; and Buyer has sufficient financial strength to hold
the Partnership Interests as an investment and bear the economic
risks of that investment (including, but not limited to, possible
complete loss of such investment) for an indefinite period of
time. Any Person designated by Buyer under PARAGRAPH 6.2 of this
Agreement to receive the Partnership Interests and any assignee
of Buyer pursuant to PARAGRAPH 30 of this Agreement shall satisfy
the foregoing requirements of this Subparagraph and shall
acknowledge and affirm the representations contained in PARAGRAPH
10.4 and PARAGRAPHS 10.5.1 THROUGH 10.5.6, inclusive, of this
Agreement.
11. REPRESENTATIONS AND WARRANTIES OF THE
SELLER. Corporation and Newhall hereby jointly and severally
represent and warrant to and covenant with Buyer as set forth
below in this PARAGRAPH 11, and hereby acknowledge that the
Partnership, each constituent of the Partnership and each
constituent of Buyer is an intended third party beneficiary of
each such representation, warranty and covenant.
11.1 ORGANIZATION; AUTHORITY. The
Partnership was formed on August 11, 1993, upon the filing of the
Partnership Agreement with the Arizona Secretary of State, and is
duly organized, validly existing and in good standing under the
laws of the State of Arizona. The Partnership is not the
successor to any other organization or entity, by way of merger,
consolidation, division, reorganization or otherwise and neither
had nor succeeded to any assets or liabilities of any nature
prior to its formation. The Partnership has the power and
authority to own all of its properties and assets, to carry on
its business as presently conducted and to perform all of its
obligations under this Agreement and all other agreements
contemplated hereby. On or before the Closing, the execution,
delivery and performance of this Agreement and all other
agreements contemplated hereby will have been duly and validly
authorized by all necessary action on the part of the Partnership
and this Agreement and all other agreements contemplated hereby
will be valid and binding obligations of the Partnership,
enforceable against the Partnership in accordance with their
respective terms, except as enforceability may be limited by
Creditor's Rights Laws and general principles of equity.
11.2 PARTNERSHIP AGREEMENT. The
Partnership Agreement is in full force and effect, a true,
complete and correct copy thereof is attached hereto as SCHEDULE
11.2, and there are no dissolution, termination or liquidation
proceedings pending or contemplated with respect to the
Partnership. There are no uncured defaults or breaches by any
partner under the Partnership Agreement.
11.3 NO LITIGATION OR ADVERSE EVENTS.
Except for the real property tax protest being pursued for
Maricopa County Assessor's tax parcel no. 217-200-01F
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constituting a portion of the Real Property, for tax years 1994
and 1995 (the "Tax Appeal") and the pending litigation in
Maricopa County Superior Court captioned McDowell Mountain Ranch
Limited Partnership, Plaintiff, vs. City of Scottsdale, HDR
Engineering, Inc., and Terrane Engineering Corporation,
Defendants, Case No. CV 95-08805 (the "City Litigation"), there
are no pending or to Seller's knowledge, threatened,
investigations, actions, suits, proceedings or claims against or
affecting the Partnership, the Association, the Property or the
Project at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign. To Seller's
knowledge, no material investigation, action, suit, proceeding or
claim is threatened against or affecting the Partnership, the
Property, the Project or the transactions contemplated hereby, at
law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, agency or
instrumentality, domestic or foreign. Neither Seller nor the
Partnership is operating under or subject to any order, writ,
injunction, decree or judgment of any arbitrator or governmental
authority.
11.4 NO DEFAULTS. Neither the
Partnership, the Association, Seller nor, to Seller's knowledge,
any other Person is in default under any agreement or instrument
to which the Partnership or the Association is a party or by
which the Partnership, the Association, the Property or the
Project is bound, such agreements are valid, binding (subject to
any proceedings under Creditor's Rights Laws not covered by
Seller's representation and warranty in PARAGRAPH 11.17) and in
full force and effect, and no event exists which with the passage
of time or the giving of notice or both will become a default
thereunder on the part of the Partnership, the Association,
Seller or, to Seller's knowledge, any other Person who is a party
thereto. Except for the consents to be obtained by Seller as
provided in PARAGRAPH 5.1.7, no consent, approval, authorization
or order of or qualification with any governmental authority,
judicial or administrative body or any other Person is required
under any agreement to which the Partnership or the Association
is a party or by which the Partnership, the Association, the
Property or the Project is bound in connection with the
transactions described in this Agreement (including, but not
limited to, the transfer of the Partnership Interests as provided
herein).
11.5 INTENTIONALLY OMITTED.
11.6 PARTNERSHIP INTERESTS. The
capitalization of the Partnership is as set forth in the
Partnership Agreement. There are no restrictions on the transfer
of the Partnership Interests other than those contained in the
Partnership Agreement, in this Agreement, or those arising from
federal and applicable state securities laws. All currently
issued and outstanding Partnership Interests were duly authorized
and validly issued in accordance with the terms of the
Partnership Agreement and in compliance with applicable laws. At
all times since inception of the Partnership the Corporation has
owned at least 1% of the total capital and profits interest in
the Partnership. There are and have been no partners of the
Partnership other than the Corporation and Newhall. Neither the
Corporation nor Newhall has taken any action that would subject
any limited partner in the Partnership to personal liability to
any third Person for any Partnership liability or obligation.
Except as created by this Agreement, there are no outstanding
subscriptions, options, warrants, preemptive or other rights or
other arrangements or commitments obligating the Partnership to
issue any Partnership Interests. At the Closing,
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upon receipt of the Purchase Price, Seller and the Partnership
will have transferred the Partnership Interests to Buyer free and
clear of all security interests, mortgages, pledges, liens,
encumbrances, claims and equitable interests of third Persons,
except for those described in PARAGRAPH 36.2.
11.7 FINANCIAL STATEMENTS;
UNDISCLOSED LIABILITIES. True and complete copies of the
unaudited financial statements of the Partnership as of December
31, 1995 and 1994 for the twelve month period then ended,
together will all related notes and schedules thereto
(collectively, the "Partnership's Financial Statements") are
attached hereto as SCHEDULE 11.7. The Partnership's Financial
Statements and the updates thereof delivered to Buyer pursuant to
PARAGRAPHS 7.4.11 AND 9.6 were prepared in accordance with the
books of account and other financial records of the Partnership,
present fairly the financial condition and results of operation
of the Partnership as of the dates thereof or for the periods
covered thereby, and have been prepared in accordance with
generally accepted accounting principles consistently applied.
Except as described on SCHEDULE 11.7, there are no liabilities of
the Partnership of any kind, whether accrued, absolute, fixed or
contingent, which are reportable under generally accepted
accounting principles consistently applied, other than
liabilities reflected or reserved against on the balance sheet
(the "December 1995 Balance Sheet") of the Partnership as of
December 31, 1995 (the "Balance Sheet Date"). SCHEDULE 11.7 also
sets forth a reasonable itemized description of the liabilities
reflected or reserved against on the December 1995 Balance Sheet.
Without limiting the generality or applicability of any other
provision of this Agreement, Seller shall be responsible for
payment and performance, in accordance with PARAGRAPH 14.1(B), of
any claim or liability relating to the Partnership or the Project
which first arises or accrues prior to Closing and is not
disclosed on the December 1995 Balance Sheet or is not reportable
under generally accepted accounting principles consistently
applied.
11.8 BOOKS AND RECORDS. The books
and records of the Partnership are complete and correct, have
been maintained in accordance with good business practices, and
accurately reflect the basis for the financial condition and
results of operation of the Partnership contained in the
Partnership's Financial Statements.
11.9 ACCOUNTS RECEIVABLE. All
accounts receivable reflected on the December 1995 Balance Sheet
and on the books and records of the Partnership as of the Closing
(i) represent or will represent bona fide claims against debtors
for sales or other charges actually made in the ordinary course
of business; (ii) are or will be (except in aggregate amount not
in excess of the reserves for doubtful accounts in effect at the
respective dates) valid and enforceable claims (subject to any
proceedings under Creditor's Rights Laws not covered by Seller's
representation and warranty in PARAGRAPH 11.17), not subject to
any valid defense or offset except as specifically provided in
the contract or agreement evidencing the receivable the existence
of which contract or agreement has been disclosed to Buyer under
this Agreement; and (iii) to Seller's knowledge, are collectible
in full (subject to any proceedings under Creditor's Rights Laws
not covered by Seller's representation and warranty in PARAGRAPH
11.17).
11.10 CONDUCT IN THE ORDINARY COURSE
OF BUSINESS. Since the Balance Sheet Date, the business of the
Partnership has been conducted in all respects in the ordinary
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course consistent with past practice. As amplification and
without limiting the generality of the foregoing, since the
Balance Sheet Date the Partnership has not: (i) written down or
written up (or failed to write down or write up in accordance
with GAAP) the value of any assets of the Partnership; (ii) made
any change in any method of accounting or accounting practice or
policy used by the Partnership; (iii) made any loan to,
guaranteed any indebtedness of or otherwise incurred any
indebtedness on behalf of any partner of the Partnership; (iv)
incurred any obligation or liability except in the ordinary
course of business; (v) mortgaged, pledged or subjected to any
other lien any of its assets; (vi) cancelled or compromised any
claim or liability; (vii) waived or released any rights of value
or modified any material agreement; (viii) made any distribution
to its partners or made any loans or advances to any Person, or
(ix) entered into any agreement to do any of the foregoing. Since
the Balance Sheet Date there has been no event or occurrence that
would or is reasonably likely to result in a material adverse
change in the business, financial condition, or results of
operations of the Partnership.
11.11 PERSONAL PROPERTY. The
Partnership has good and marketable title to, and in the case of
leases, a legal, valid and enforceable leasehold interest in, the
Personal Property, free and clear of all liens except those shown
on the December 1995 Balance Sheet and liens for current taxes
and assessments not yet due and payable. All leases pursuant to
which the Partnership leases any tangible Personal Property are
in good standing and are valid and binding (subject to any
proceedings under Creditor's Rights Laws not covered by Seller's
representation and warranty in PARAGRAPH 11.17) in accordance
with their respective terms. None of the rights of the
Partnership under any of such leases is subject to termination or
modification as a result of the transactions contemplated by this
Agreement.
11.12 LISTS OF PROPERTIES, CONTRACTS
AND OTHER DATA. SCHEDULES 11.12.1 TO 11.12.6 are complete and
correct and set forth the following:
11.12.1 SCHEDULE 11.12.1
lists all policies of insurance and insurance coverage which the
Partnership is required to maintain under any contract,
understanding or commitment to which the Partnership is a party
or to which it or any of its assets or properties are subject;
provided, however, that Seller shall cancel all of such
insurance, and any other policies or coverage insuring the
Property or other assets or operations of the Partnership, which
cancellation may be made without notice to Buyer and shall be
effective as of (but not prior to) the Closing;
11.12.2 SCHEDULE 11.12.2
lists all licenses, permits, authorizations, consents, orders,
franchises, rights, registrations and approvals required to
permit the operation of the Partnership or the development of the
Project;
11.12.3 SCHEDULE 11.12.3
lists all written and binding oral contracts, understandings and
commitments (including without limitation all outstanding
purchase orders, loan agreements, guarantees and indemnification
agreements) to which the Partnership is a party, or to which it
or any of its assets or properties are subject, except such
contracts, understandings and commitments which are listed on
other Schedules or Exhibits attached to this Agreement; and other
than the contracts described in EXHIBIT "K-2", neither Seller nor
any
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partner or affiliate of the Partnership or Seller has entered
into, holds or has any interest in any contract, agreement or
commitment relating to the Project;
11.12.4 SCHEDULE 11.12.4
lists the name of each bank, brokerage firm or other depository
in which the Partnership has an account or safe deposit box, the
number of any such account or box and the names of all Persons
authorized to draw thereon or have access thereto;
11.12.5 SCHEDULE 11.12.5
lists any automobiles, trucks or other vehicles owned by or
leased to the Partnership; and
11.12.6 SCHEDULE 11.12.6
lists all other assets of the Partnership not enumerated in this
Agreement or in the Schedules and Exhibits attached to this
Agreement.
One true and complete copy of each written document, if
any, referred to in SCHEDULES 11.12.1 TO 11.12.6 and in each
other Schedule or Exhibit to this Agreement have been provided to
or made available for inspection by Buyer.
11.13 COMPLIANCE WITH CONTRACTS.
The Partnership is in substantial compliance with all the terms
and provisions of all contracts, plans, indentures, leases,
policies, instruments and licenses to which the Partnership is a
party or by which it or any of its assets may be bound or
affected.
11.14 COMPLIANCE WITH LAWS. To
Seller's knowledge, the Partnership, the Property, the Project,
and the operation thereof by the Partnership are in compliance
with all applicable laws, ordinances, rules and regulations
(including without limitation those relating to zoning). The
Partnership, the Property, the Project, and the operation thereof
by the Partnership are in material compliance with all applicable
laws, ordinances, rules and regulations (including without
limitation those relating to zoning). Neither Seller nor the
Partnership has received notice of any violation of any
applicable law, ordinance, rule or regulation relating to it or
the Property or the Project, and Seller is not aware of any
threatened claim of such a violation (including any
investigations relating thereto).
11.15 EMINENT DOMAIN. To Seller's
knowledge, there is currently no existing, proposed, threatened
or contemplated eminent domain or similar proceeding, or private
purchase in lieu of such a proceeding that would affect the
Property or the Project in any material way. Neither Seller nor
the Partnership has been served with notice of any proceedings
described in the preceding sentence.
11.16 NON-FOREIGN PERSON. None of
the Partnership, the Corporation, or Newhall is a "foreign
person" as such term is defined in Section 1445(f) of the Code.
11.17 BANKRUPTCY. No attachments,
execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy or similar legal proceedings are pending
or,
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to Seller's knowledge, threatened against the Partnership, nor
are any such proceedings contemplated by the Partnership. The
Partnership has never been a debtor in any case commenced under
the United States Bankruptcy Code. To Seller's knowledge, no
attachments, execution proceedings, assignments for the benefit
of creditors, insolvency, bankruptcy or similar legal proceedings
are pending or threatened against any party to any agreement to
which the Partnership or the Association is a party or by which
the Partnership, the Association, the Property or the Project is
bound; provided, however, that Buyer acknowledges that Seller has
disclosed to it the fact that the consultant preparing the New
Phase I Report described in PARAGRAPH 5.1.13 has been reorganized
pursuant to a Chapter 11 bankruptcy proceeding.
11.18 NO SALES CONTRACTS. Except as
described in SCHEDULE 11.12.3, the Partnership has not entered
into for the three-year period immediately prior to the date of
this Agreement any contracts for the sale of the Property or the
Project (or any portion thereof) under which liabilities or
obligations of the Partnership are currently in effect. Except as
described in SCHEDULE 11.12.3, neither Seller nor the Partnership
nor, to Seller's knowledge, any prior owner of the Property or
the Project, has granted any right of first refusal, option or
other preferential right to purchase the Property or the Project
or any portion thereof to any Person.
11.19 LICENSES, PERMITS,
AUTHORIZATIONS. Except as disclosed in SCHEDULE 11.12.2 and
EXHIBIT "K-2", there are no licenses, permits, authorizations,
consents, orders, franchises, rights, registrations or approvals
required to permit the operation of the Partnership or the
development of the Project as of the Closing. Seller is not aware
of any impediment to the renewal of any renewable instrument
listed in SCHEDULE 11.12.2 or any permit listed in EXHIBIT "K-2".
The Partnership has not engaged in any activity that would cause
the revocation or suspension of any licenses, permits,
authorizations, consents, orders, franchises, rights,
registrations or approvals listed on SCHEDULE 11.12.2 and EXHIBIT
"K-2", and to Seller's knowledge, no action or proceeding looking
to or contemplating the revocation or suspension of any thereof
is pending or threatened.
11.20 CONDITION OF ASSETS. The
tangible assets of the Partnership are in a good state of repair
and operating condition, suitable for the uses for which
intended. The Partnership has in force adequate insurance to
provide for the reasonable protection of the assets of the
Partnership. Seller shall cancel all of such insurance, which
cancellation may be made without notice to Buyer and shall be
effective as of (but not prior to) the Closing.
11.21 EMPLOYMENT MATTERS. As of the
Closing, the Partnership will have no employees or consultants
and will not be bound by any collective bargaining agreements,
employment or consulting agreements, executive compensation
plans, bonus plans or other incentive compensation plans,
severance pay arrangements, pension plans, retirement plans
(funded or unfunded), any other employee benefit plan, group life
insurance, hospitalization insurance or other plans or
arrangements (formal or informal) providing for benefits for any
employee or consultant.
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11.22 INTELLECTUAL PROPERTY RIGHTS.
PARAGRAPH 6.3.1 sets forth all intellectual property rights and
all pending registrations and applications therefor, owned by,
used by or licensed to, the Partnership or in which the
Partnership has any interest (collectively, the "Intellectual
Property Rights"). The Partnership owns and holds good, valid and
indefeasible title to all Intellectual Property Rights described
in PARAGRAPH 6.3.1, free and clear of all security interests,
mortgages, pledges, liens, encumbrances, claims and equitable
interests of third Persons. To best of Seller's knowledge, the
Partnership is not infringing on or otherwise acting adversely to
the right or claimed right of any Person under or with respect to
any Intellectual Property Rights described in PARAGRAPH 6.3.1.
Neither Seller nor the Partnership has received notice of any
such claim. To Seller's knowledge, no third Person is infringing
on any of the Intellectual Property Rights of the Partnership.
The Partnership is not obligated to make payments by way of
royalties, fees or otherwise with respect to any Intellectual
Property Rights described in PARAGRAPH 6.3.1. The Partnership has
taken all actions necessary to obtain and maintain in good
standing all of the Intellectual Property Rights described in
PARAGRAPH 6.3.1. No Intellectual Property Rights described in
PARAGRAPH 6.3.1 will be impaired in any way by the consummation
of the transactions contemplated by this Agreement. Without
limiting the generality or applicability of any of Seller's
representations and warranties set forth in this Subparagraph,
Seller agrees that after Closing, Seller shall, upon request by
Buyer, reasonably cooperate with Buyer in (i) the prosecution of
any claim by Buyer or the Partnership against any third Person
relating to any infringement by the third Person of the
Intellectual Property Rights described in PARAGRAPH 6.3.1, or
(ii) the defense of any claim by a third Person made against
Buyer or the Partnership relating to any infringement of such
third Person's rights in connection with the Intellectual
Property Rights described in PARAGRAPH 6.3.1. The foregoing
cooperation by Seller shall be at no cost or expense to Seller,
unless the claim being prosecuted or defended arises from or
relates to a breach or default under any of Seller's
representations or warranties under this PARAGRAPH 11.22.
11.23 TAX MATTERS.
11.23.1 The Partnership and
Seller have duly filed with the appropriate federal, state and
local governmental agencies all returns and reports with respect
to Taxes relating to the Partnership or the Property including
all estimated tax returns and other information returns and
reports which are required to be filed by them and each such
document correctly reflected the facts regarding the income,
business, assets, operations, activities and status of the
Partnership or the Property and is complete, correct and in
accordance with all requirements of applicable law and
regulations. The Partnership and Seller have paid in full all
Taxes shown to be due on such tax returns and reports and any
assessments or deficiencies for Taxes claimed to be due by any
taxing authority or otherwise required to be paid or deposited by
them relating to the Partnership or the Property.
11.23.2 Except for the Tax
Appeal, the Partnership is not a party to and the Property is not
the subject of any pending action or proceeding, nor has any
action or proceeding been threatened by any governmental
authority, for assessment or collection of Taxes, and no claim
for assessment or collection of Taxes which previously has been
asserted relating to the Partnership or the Property remains
unpaid. There are no outstanding agreements
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or waivers extending the statutory periods of limitations for the
assessment or collection of Taxes against the Partnership or the
Property.
11.23.3 All Taxes imposed on
or with respect to the Partnership or the Property which are due
and payable on or before the date hereof have been or will be
paid on or before the date of Closing.
11.23.4 The Tax returns and
reports of the Partnership have never been examined by the
Internal Revenue Service or any state or local tax authority and
no such examination is pending.
11.23.5 No power of attorney
has been granted by the Partnership with respect to any matter
relating to Taxes which is currently in force.
11.23.6 The liabilities for
Taxes reflected on the December 1995 Balance Sheet are accurate
and the amounts reflected for Taxes therein are sufficient for
the payment of all accrued, unpaid or deferred Taxes imposed on
or with respect to the Partnership or the Property.
11.23.7 The Partnership is,
and at all times since the date of its formation has been, a
"partnership" for federal income tax purposes within the meaning
of Sections 761(a) and 7701(a)(2) of the Code and any applicable
Treasury Regulations promulgated thereunder.
11.23.8 The Corporation and
Newhall are, and at all times since the date the Partnership was
formed have been, "partners" in the Partnership within the
meaning of Sections 761(a) and 7701(a)(2) of the Code and any
applicable Treasury Regulations promulgated thereunder.
11.23.9 No Taxes or payments
to governmental authorities will be due from the Buyer or the
Partnership on or as a result of the transfer of the Partnership
Interests under this Agreement.
11.23.10 There are no liens
for Taxes (other than for current Taxes not yet due and payable)
upon the assets of the Partnership.
11.23.11 Except for the real
property tax allocation provisions under the Option Agreements
and any contract disclosed in SCHEDULE 11.12.3, the Partnership
is not a party to (nor will it become a party to) and neither the
Partnership nor the Property is bound by (nor will either of them
become bound by) any tax indemnity, tax sharing or tax allocation
agreement.
11.24 ENVIRONMENTAL MATTERS.
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11.24.1 Except as disclosed
in the New Phase I Report approved (or deemed approved) by Buyer
pursuant to PARAGRAPH 5.1.13, the Partnership is not in violation
of, nor has the Partnership any liability or obligation (whether
absolute, accrued, contingent or otherwise, and whether due or to
become due) under, any applicable Environmental Law or Order.
11.24.2 Except as disclosed
in the New Phase I Report approved (or deemed approved) by Buyer
pursuant to PARAGRAPH 5.1.13: Seller has no knowledge that there
exists or has existed any environmental hazard or Hazardous
Material on the Property, the Project or any other real
properties owned or leased by the Partnership (other than
Hazardous Materials placed thereon in connection with the normal
course of the Partnership's business in accordance with
applicable Environmental Laws and Orders or in connection with
construction activities in accordance with applicable
Environmental Laws and Orders); neither Seller itself nor the
Partnership has caused any generation, production, location,
transportation, storage, treatment, discharge, disposal, release
or threatened release of any Hazardous Material upon or under the
Property, the Project or any other real properties owned or
leased by the Partnership (other than Hazardous Materials placed
thereon in connection with the normal course of the Partnership's
business in accordance with applicable Environmental Laws and
Orders or in connection with construction activities in
accordance with applicable Environmental Laws and Orders); and to
Seller's knowledge neither the Property, the Project nor any
other property owned by the Partnership contains or in the past
contained any underground or above ground tanks for the storage
of Hazardous Materials, and neither Seller itself nor the
Partnership has placed any such underground or above ground
tanks.
11.25 TOTALITY OF ASSETS. No partner
or affiliate of the Partnership or Seller has any interest in any
assets or rights which relate to or are used in connection with
the operation of the Partnership or the Project except for (A)
the assets to be transferred to the Partnership pursuant to
PARAGRAPH 6.3, and (B) the interests of the Corporation and
Newhall on account of their Partnership Interests.
11.26 TRANSACTIONS WITH AFFILIATES.
Except as disclosed in the Partnership's Financial Statements,
the Partnership is not a party, directly or indirectly, to any
contract, lease, arrangement or transaction, whether for the
purchase, lease or sale of property, for the rendition of
services or otherwise, with an affiliate of the Partnership or of
Seller.
11.27 BURDENSOME AGREEMENTS. The
Partnership is not a party to any agreement (other than the
agreements specifically disclosed in this Agreement or any
Schedule or Exhibit attached hereto) the performance of which by
the Partnership in accordance with its terms will have a material
adverse effect on the business, financial condition, or assets of
the Partnership.
11.28 ABSENCE OF CERTAIN BUSINESS
PRACTICES. Neither the Partnership nor Seller nor any employee or
agent of either of them, nor any other Person acting on behalf of
either of them, has, directly or indirectly, given or agreed to
give any gift or similar benefit to any governmental employee or
other Person who is or may be in a position to help or hinder
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the Partnership (or assist the Partnership in any transaction)
which (i) subjects the Partnership to any damage or penalty in
any civil, criminal or governmental litigation or proceeding;
(ii) if not given in the past, would have had a material adverse
effect on the Partnership; or (iii) if not continued in the
future, would have a material adverse effect on the Partnership.
11.29 DISCLOSURE. No
representation or warranty contained in this Agreement, and no
statement, certificate, list or other information furnished by or
on behalf of Seller or the Partnership to Buyer in connection
with this Agreement, contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
11.30 PROJECT DEVELOPMENT. Seller
has no knowledge of any fact or matter that would materially
limit or in any manner materially interfere with the development
of the Project in accordance with the Development Plan and the
Master Plans (including, but not limited to, any soils or other
conditions on the Real Property). This representation and
warranty does not apply or extend to (A) any city-wide or
region-wide action by the City such as a moratorium or
development impact fee, or (B) inclusion of the Project within
the repayment area for costs associated with future construction
of a bridge over the CAP canal at the Thompson Peak Parkway
Alignment and relocation of the Department of Energy transmission
lines adjacent thereto.
11.31 IMPROVEMENT ENCROACHMENTS. To
the extent that any improvements constructed on the portion of
the Real Property excluded from the Survey as provided in
PARAGRAPH 5.1.1.1 encroach across the boundary line of the Lot or
dedicated roadway area on which the improvement is located, the
aggregate total area of all such encroachments (A) is not
material, and (B) does not cause a violation of applicable laws
(including, but not limited to, the natural area open space
requirements of the City).
11.32 DODGE EASEMENTS. No event of
default exists under the Dodge Access and Development Agreements
(as hereinafter defined). Seller has received no notice, and
Seller has no knowledge, that the right of access of David Elgin
Dodge and Anneliese Dodge (collectively, "Dodge") over land owned
by The Frank Lloyd Wright Foundation has been revoked. Seller has
not received notice from Dodge that Dodge intends to develop its
property and wishes to assign, convey, dedicate or construct
improvements within the easement area established under the Dodge
Access and Development Agreements. Development of the Project by
Seller and/or the Partnership has not been abandoned for 12
continuous months. No obligations of the Partnership under the
Dodge Access and Development Agreements are outstanding and
unperformed. As used in this Agreement, the term "Dodge Access
and Development Agreements" shall collectively mean (A) the
Easement dated November 12, 1976 by G.R. Herberger and Katherine
Kierland Herberger to David Elgin Dodge, recorded in Docket
11951, pages 1215 to 1217, records of Maricopa County, Arizona,
(B) the Easement dated November 12, 1976 by The Herberger
Foundation to David Elgin Dodge, recorded in Docket 11951, pages
1218 to 1220, records of Maricopa County, Arizona, (C) the First
Amendment to Easements dated June 4, 1993, between G.R. Herberger
and Katherine Kierland Herberger, as
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Trustees of the G.R. Herberger Revocable Trust Under Trust
Agreement dated December 24, 1981, The Herberger Foundation, and
David Elgin Dodge and Anneliese Dodge, recorded as Instrument No.
93-0551805, records of Maricopa County, Arizona, (D) the letter
dated March 16, 1993, from Newhall to David Elgin Dodge, accepted
by David Elgin Dodge and Anneliese Dodge, and joined by the G.R.
Herberger and Katherine Kierland Herberger, as Trustees of the
G.R. Herberger Revocable Trust Under Trust Agreement dated
December 24, 1981, The Herberger Foundation, and G&J Properties
Limited Partnership, and (E) that letter amending the document
described in item (D) dated May 12, 1995 from the Partnership to
David Elgin Dodge, accepted by David Elgin Dodge and Anneliese
Dodge, The Herberger Foundation and Thompson Peak Limited
Partnership.
11.33 LOT PREMIUMS. The premium
lots as to which premium participation payments remain payable
pursuant to the Deeds of Trust are as set forth on EXHIBIT "P"
attached hereto.
11.34 ASSOCIATION. The Association
is duly organized, validly existing and in good standing under
the laws of the State of Arizona. EXHIBITS "C" AND "D" list all
documents, rules, regulations, guidelines and other instruments
promulgated by the Association or governing the Association's
operation or activities. The number of Class A memberships
outstanding under the Declaration as of the Agreement Date is
1220, and the number of Class B memberships outstanding under the
Declaration as of the Agreement Date is 3004. The Partnership has
not exercised its right to convert Class B memberships to Class A
memberships as provided in Section 6.3 of the Declaration, and
the Partnership shall not exercise such right prior to Closing.
The Partnership is not in default of any of its liabilities or
obligations as declarant under the Declaration, and no event or
circumstance has occurred which with the giving of notice and/or
the passage of time would constitute such a default.
11.35 SECTION 404 PERMIT. As to
each parcel or other portion of the Project sold, transferred,
dedicated, conveyed or optioned by the Partnership, the Section
404 Permit issued to the Partnership by the U.S. Army Corps of
Engineers with respect to the Project (pursuant to Notification
of Section 404 Permission dated May 20, 1994) has been
transferred to the respective purchaser, transferee or optionee
of such parcel or other portion of the Project, in each instance
in accordance with applicable law.
11.36 MASTER PLANS. The Master
Plans are in full force and effect, have not been modified,
amended or supplemented, and have been approved by the City. All
master improvements constructed or installed within or otherwise
serving the Project have been constructed and installed in
substantial conformity with the Master Plans.
11.37 BROKERAGE AGREEMENT. The
total brokerage commission paid under that certain Commission
Agreement dated May 21, 1991, between Newhall, Las Colinas
Property Group, R.A. Ballard Company, Inc., Homes by Dave Brown,
and Lester G. Henel, as amended and assigned by Letter Agreement
from the Partnership dated December 1, 1993 (the "Commission
Agreement") is $261,843.65. If the options are exercised under
the Option
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Agreements as to all of the remaining Real Property subject to
the Option Agreements, then the brokerage commission remaining to
be paid under the Commission Agreement is $476,756.35.
11.38 HERBERGER OPTIONS. A true,
complete and correct copy of the Option Agreements, and any and
all amendments, modifications and supplements thereto and
restatements thereof, is attached hereto as SCHEDULE 11.38.
11.39 GUARANTEED OBLIGATIONS. If
no further options are exercised under the Option Agreements,
then the total current commitment, liability and obligation of
Newhall under the Fixed Obligation (as defined in the Option
Agreements) are the commitments, liabilities and obligations set
forth in the agreements and commitments described in SCHEDULE
11.39 (under the heading "Fixed Obligation"). The total current
commitment, liability and obligation of Newhall under the
Retained Obligation (as defined in the Option Agreements) and the
SCA (as defined in PARAGRAPH 36) are the commitments, liabilities
and obligations set forth in the agreements and commitments
described in SCHEDULE 11.39 (under the heading "Retained
Obligation").
11.40 EMPLOYEE BENEFIT PLANS.
11.40.1 SCHEDULE 11.40.1
lists all employee benefit plans (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained, contributed to or sponsored by
Seller or any member of a controlled group of organizations that
includes Seller ("Commonly Controlled Entity") within the meaning
of Section 414 of the Code or Section 210 of ERISA for the
benefit of any current or former employee, officer or director of
Seller (individually, a "Plan" and collectively, the "Plans").
Seller has delivered to Buyer correct and complete copies of the
plan documents, summary plan descriptions, summaries of material
modification, the most recent determination letter received from
the Internal Revenue Service, and the most recent Form 5500
Annual Report (including the attached schedules and audited
financial statements).
11.40.2 Each Plan (and each
related trust, insurance contract, or fund) has been established
and administered in accordance with its terms, and complies in
form and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws, rules
and regulations. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B, and the regulations
under each, have been met with respect to each Plan to which they
apply. Each Plan that is intended to meet the requirements for
tax- favored treatment under the Code or that is intended to be
qualified within the meaning of Code Section 401(a) has been
administered in accordance with such requirements and has
received a favorable determination letter from the Internal
Revenue Service with respect to the Plan in its current form
(including any and all amendments), and no action or proceeding
has been instituted or threatened that would affect the
qualification of such Plans. All contributions (including all
employer contributions and employee salary reduction
contributions) or premiums which are due before the Closing Date
under the terms of any Plan, the Code, ERISA, or other applicable
laws, rules and regulations, have been or will be timely made to
the Plan before the Closing Date.
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11.40.3 With respect to each
Plan that either Seller or any Commonly Controlled Entity
maintains or ever has maintained, or to which any of them
contributes, ever has contributed, or ever has been required to
contribute:
11.40.3.1 No such
Plan which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been completely or
partially terminated or been the subject of a "reportable event"
as to which notices would be required to be filed with the
Pension Benefit Guaranty Corporation ("PBGC"). No proceeding by
the PBGC to terminate any such employee pension benefit plan has
been instituted or threatened.
11.40.3.2 There have
been no prohibited transactions, within the meaning of Section
4975 of the Code or Section 406 of ERISA, with respect to any
such Plan, nor any breach of fiduciary duty, nor any other
failure to act or comply with ERISA in connection with the
administration or investment of the assets of any Plan. No
action, or other proceeding has been instituted or threatened
with respect to the administration or the investment of the
assets of any Plan (other than routine claims for benefits in the
ordinary course of Plan administration for which Plan
administrative procedures have not been exhausted). None of the
directors and officers (and employees with responsibility for
employee benefits matters) of Seller has any knowledge of any
basis for any such action, or other proceeding (and Seller will
promptly notify Buyer in writing of any of the foregoing arising
or threatened between the date hereof and the Closing Date).
11.40.3.3 Seller has
not incurred, and none of the directors and officers (and
employees with responsibility for employee benefits matters) of
Seller has any reason to expect that Seller will incur, any
liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
liability) or under the Code with respect to any such Plan that
is an employee pension benefit plan.
11.40.3.4 Neither
Seller nor any Commonly Controlled Entity (i) currently maintains
or contributes to any employee benefit plan subject to Title IV
of ERISA as to which the assets of each such Plan are not at
least equal in value to the present value of the benefit
liabilities (vested and unvested) of the Plan, determined in
accordance with PBGC methods, factors, and assumptions applicable
to an employee benefit pension plan terminating on the date for
determination; or (ii) has any liability for any lien imposed
under Section 302(f) of ERISA or Section 412(n) of the Code or
interest payment required under Section 302(e) of ERISA or
Section 412(m) of the Code or excise tax imposed by Section 4971
of the Code.
11.40.4 Neither Seller nor
any Commonly Controlled Entity contributes to, ever has
contributed to, or ever has been required to contribute to any
multiemployer plan written the meaning of Section 4001(a)(3) of
ERISA or has any liability (including withdrawal liability) under
any multiemployer plan.
11.40.5 Except as described
on SCHEDULE 11.40.1, Seller does not maintain and has not
maintained, or contribute, ever contributed, or has ever been
required to
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contribute to, any employee welfare benefit plan (within the
meaning of Section 3(1) of ERISA) providing medical, health, or
life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Section 4980B).
11.40.6 Seller specifically
acknowledges and understands that none of Buyer, the Partnership,
and the Employing Entity (as defined in PARAGRAPH 39) shall
assume any obligations of Seller with respect to Seller's
employees or employment practices or Plans, and Seller agrees to
indemnify, hold harmless and, at the option of Buyer, defend
Buyer, the Partnership and the Employing Entity for, from and
against any and all losses, damages, claims, actions,
proceedings, penalties, fines, liabilities, costs and expenses of
whatever nature, including reasonable attorneys' fees, arising
out of, resulting from or in connection with Seller's employees
or employment practices, or Plans, including, without limitation,
equal opportunity or workmen's compensation claims or Seller's
obligations to comply with the continuation health care coverage
requirements of Code Section 4980B (formerly 162(k)) and Sections
601 through 608 of ERISA, with respect to any current or prior
employee of Seller or any qualified beneficiary of such employee,
as defined in Code Section 4980B(g)(1) (formerly 162(k)(7)(B)).
The foregoing obligation of Seller shall not apply to any matter
described in the preceding sentence which arises solely from the
Employing Entity's separate employment after Closing of any
Employee identified in PARAGRAPH 39.
11.41 ACCURACY OF THIRD PARTY
REPORTS. Seller has no knowledge of any material inaccuracies or
incompleteness in any surveys respecting the Real Property,
environmental site assessments, property reports, subdivision
plat documents or any other reports, studies or plans prepared by
any third parties and furnished to Buyer by Seller or at Seller's
direction.
11.42 WATER. The only water used
at the Project is potable water provided by the City. No
untreated Central Arizona Project water or effluent is used at
the Project. Any irrigated plant material (other than turf)
within the Project is irrigated by drip (and not spray)
irrigation.
11.43 DEDICATIONS UNDER CULTURAL
RESOURCES SURVEY. None of the Real Property is now or has ever
been located within the approximately 698 acres of land
identified in the "Report of Findings, Cultural Resources Survey
of 2500 Acres in North Scottsdale, Arizona, T3N, R5E" prepared by
Recon Consultants, Inc., dated March 2, 1993, as such 698 acres
is currently configured or as it may have been configured from
time to time in the past.
11.44 CERTIFICATE OF PURCHASE. The
total amount paid by the purchaser under the Certificate of
Purchase is $304,769.36, and the amount remaining to be paid by
the purchaser under the Certificate of Purchase is $1,935,230.64.
12. INDIVIDUAL REPRESENTATIONS AND
WARRANTIES OF THE CORPORATION AND NEWHALL. The Corporation and
Newhall hereby represent and warrant to and covenant with Buyer,
each solely with respect to itself, as set forth below in this
PARAGRAPH 12, and hereby
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acknowledge that the Partnership, each constituent of the
Partnership, and each constituent of Buyer is an intended third
party beneficiary of each such representation, warranty and
covenant.
12.1 DUE ORGANIZATION; AUTHORITY.
The Corporation is duly organized, validly existing and in good
standing under the laws of the State of Arizona. Newhall is duly
organized, validly existing and in good standing under the laws
of the State of California and is duly qualified to transact
business as a foreign limited partnership in good standing under
the laws of the State of Arizona. The Corporation and Newhall
each have the power and authority to own all of their respective
properties and assets, to carry on their respective businesses as
presently conducted and to perform all of their respective
obligations under this Agreement and all other agreements
contemplated hereby. On or before the Closing, the execution,
delivery and performance of this Agreement and all other
agreements contemplated hereby will have been duly and validly
authorized by all necessary action on the part of each of the
Corporation and Newhall and this Agreement and all other
agreements contemplated hereby will be valid and binding
obligations of each the Corporation and Newhall, enforceable
against each of the Corporation and Newhall in accordance with
their respective terms, except as enforceability may be limited
by Creditor's Rights Laws and general principles of equity.
12.2 NO CONFLICT. The execution,
delivery and performance by each of the Corporation and Newhall
of its respective obligations under this Agreement (including,
but not limited to, the transfer of the Partnership Interests as
provided herein after the amendment of the Partnership Agreement
as provided in PARAGRAPH 5.1.9,) and all other agreements
contemplated hereby will not violate, contravene or result in a
default under (A) any provision of applicable law, the articles
of incorporation and bylaws or partnership agreement of the
Corporation and Newhall, as the case may be, (B) any bond, note
or other evidence of indebtedness, contract, mortgage, deed of
trust, loan, lease or other agreement, document or instrument to
which the Corporation, Newhall or the Partnership is a party or
by which the Property is bound, or breach, invalidate, cancel,
make inoperative, materially interfere with or result in the
acceleration or maturity of any such items referred to in this
clause (B), or (C) any statute, law, rule or regulation, or any
judgment, order or decree of any governmental authority or court
having jurisdiction over the Corporation, Newhall or the
Partnership or the Property. Except for the consents to be
obtained by Seller as provided in PARAGRAPH 5.1.7, no consent,
approval, authorization or order of or qualification with any
governmental authority, judicial or administrative body or any
other Person is required for the execution and delivery of this
Agreement by either the Corporation or Newhall or the performance
by either the Corporation or Newhall of their respective
obligations under this Agreement or any other agreement
contemplated hereby (including, but not limited to, the transfer
of the Partnership Interests as provided herein).
12.3 TITLE TO PARTNERSHIP
INTERESTS. Each of the Corporation and Newhall is the record
owner of the Partnership Interest set forth in the Partnership
Agreement free and clear of all liens and restrictions, and upon
the amendment of the Partnership Agreement as provided in
PARAGRAPH 5.1.9, each of the Corporation and Newhall will have
full power and authority to transfer good and valid title to such
Partnership Interests free and clear of any liens or
restrictions. Except as created by this Agreement, there are no
outstanding
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subscriptions, options, warrants, preemptive or other rights or
other arrangements or commitments obligating the Corporation or
Newhall to transfer or sell their respective Partnership
Interests.
13. SURVIVAL AND LIMITATIONS.
13.1 SURVIVAL OF REPRESENTATIONS
AND WARRANTIES. All representations and warranties contained in
this Agreement or in any document, certificate or instrument
delivered pursuant hereto shall survive the Closing for a period
of 3 years, and no claims shall be made under such
representations and warranties thereafter except for any claims
made prior to such date and except for claims made after such
date in respect of any matter relating to Taxes or in respect of
a breach of the representations and warranties contained in
PARAGRAPHS 11.1, 11.2, 11.6, 11.7, 11.12, 11.14, 11.24, 11.25,
11.30, 11.38, 12.1, 12.2 AND 12.3, which shall expire upon the
termination of the relevant statute of limitations period for a
cause of action arising thereunder. Any party making a claim
against the other party under any representations and warranties
in this Agreement shall give such other party notice of the claim
promptly after receipt by the claiming party of notice of (or
promptly after the claiming party gains actual knowledge of, as
applicable) such other party's breach or default under such
representation or warranty. If a claim is made against Seller in
connection with the breach or default under any of Seller's
representations and warranties in this Agreement or any other
matter for which Seller is responsible under this Agreement,
Seller shall have the right, at its sole expense, to prosecute in
the name of the Partnership claim(s) against any necessary third
Persons, and Buyer agrees to cause the Partnership to cooperate
with Seller in connection therewith, which cooperation shall be
at Seller's sole cost and expense. Seller shall indemnify, hold
harmless and defend the Partnership for, from and against all
Losses (as hereinafter defined) which may be asserted against or
incurred by the Partnership as a result of any claim(s)
prosecuted by Seller in the name of the Partnership as provided
in the preceding sentence.
13.2 LIMITATIONS.
13.2.1 Except as specifically
provided in PARAGRAPH 11.41, Seller does not warrant or represent
the accuracy or completeness of any surveys respecting the Real
Property, environmental site assessments, property reports, final
subdivision plat documents or any other reports, studies or plans
prepared by any third parties and furnished to Buyer by Seller or
at Seller's direction, and except as specifically provided in
PARAGRAPH 11.41, Seller shall have no liability to Buyer in
connection therewith.
13.2.2 In the event that,
prior to the Agreement Date, Buyer receives actual notice or
obtains actual knowledge of any information which indicates that
any of the representations and warranties of Seller set forth in
PARAGRAPHS 11 OR 12 are untrue, Buyer shall advise Seller in
writing of such notice or knowledge prior to completion of
execution of this Agreement by the parties. In the event that, on
or after the Agreement Date and prior to the Closing, Buyer
receives actual notice or obtains actual knowledge of any
information which indicates that any of the representations and
warranties of Seller set forth in PARAGRAPHS 11 OR 12 are untrue,
Buyer shall promptly advise Seller in writing of such notice or
knowledge.
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If Buyer advises Seller of such notice or knowledge pursuant to
the second sentence of this Subparagraph and Seller fails on or
before the Closing Date to cure the matter as to which such
notice is given, so that all of the representations and
warranties of Seller contained in PARAGRAPHS 11 AND 12 are true
and correct on and as of the Closing Date, then Seller shall be
in default hereunder and Buyer shall be entitled to pursue its
remedies as provided in PARAGRAPH 18.1. Buyer shall be deemed to
have waived any such breach of representation and warranty to the
extent Buyer fails to advise Seller of such notice or knowledge
as required by the first or second sentence of this Subparagraph
and thereafter consummates the transaction described in this
Agreement. In the event Buyer knowingly waives any breach of
representation or warranty as provided in this Subparagraph, then
Seller shall not be deemed in default under the particular
representation and warranty under PARAGRAPH 11 OR 12 (as
applicable) to the extent that such breach of representation and
warranty was waived.
13.2.3 In the event that,
prior to the Agreement Date, Seller receives actual notice or
obtains actual knowledge of any information which indicates that
any of the representations and warranties of Buyer set forth in
PARAGRAPH 10 are untrue, Seller shall advise Buyer in writing of
such notice or knowledge prior to completion of execution of this
Agreement by the parties. In the event that, on or after the
Agreement Date and prior to the Closing, Seller receives actual
notice or obtains actual knowledge of any information which
indicates that any of the representations and warranties of Buyer
set forth in PARAGRAPH 10 are untrue, Seller shall promptly
advise Buyer in writing of such notice or knowledge. If Seller
advises Buyer of such notice or knowledge pursuant to the second
sentence of this Subparagraph and Buyer fails on or before the
Closing Date to cure the matter as to which such notice is given,
so that all of the representations and warranties of Buyer
contained in PARAGRAPH 10 are true and correct on and as of the
Closing Date, then Buyer shall be in default hereunder and Seller
shall be entitled to pursue its remedies as provided in PARAGRAPH
17.1. Seller shall be deemed to have waived any such breach of
representation and warranty to the extent Seller fails to advise
Seller of such notice or knowledge as required by the first or
second sentence of this Subparagraph and thereafter consummates
the transaction described in this Agreement. In the event Seller
knowingly waives any breach of representation or warranty as
provided in this Subparagraph, then Buyer shall not be deemed in
default under the particular representation and warranty under
PARAGRAPH 10 to the extent that such breach or representation and
warranty was waived.
14. INDEMNIFICATION.
14.1 INDEMNITY BY SELLER. Subject
to the limitations in PARAGRAPH 18, the Corporation and Newhall
shall indemnify and hold harmless Buyer, the Partnership and each
constituent thereof and their respective affiliates, directors,
officers, partners, employees, agents and representatives (each
of which is referred to as an "Indemnified Acquiring Party") for,
from and against any and all claims, losses, damages, liabilities
and expenses, including without limitation amounts paid in
settlement, reasonable attorneys' fees, costs of investigation
and remediation, costs of judicial or administrative proceedings
and appeals therefrom, and costs of attachment or similar bonds
(collectively, "Losses"), asserted against, imposed upon or
incurred by an Indemnified Acquiring Party in connection with or
as a result of (A) any breach
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of any representation, warranty or covenant of Seller or the
Partnership contained in this Agreement or in any document,
certificate or instrument delivered by Seller or the Partnership
pursuant to this Agreement, or (B) any matter relating to the
Partnership or the Project which first arises or accrues on or
before the Closing, except for any such matter (i) constituting
or resulting from a breach of any of Buyer's representations,
warranties or covenants under this Agreement (without regard to
any survival limitation set forth herein), or (ii) which has been
included in the Purchase Price pursuant to EXHIBIT "G", or (iii)
which has been assumed, waived or accepted by Buyer pursuant to a
specific provision of this Agreement, (iv) which affects title to
the Real Property and is covered by the Owner's Policy or the
Lender's Policy, it being agreed that Buyer shall rely on the
Lender's Policy and the Owner's Policy for such matters described
in this clause (iv), or (v) which affects title to the Project
and is covered by the ALTA Owner's Policy No. 106 00031 issued by
Ticor, dated November 31, 1993, if prior to Closing Seller
secures at its expense a Fairways endorsement in form reasonably
acceptable to Buyer, insuring the continuing effect of such
Policy notwithstanding the transfer of the Partnership Interests
as provided herein.
14.2 INDEMNITY BY BUYER. Subject
to the limitations in PARAGRAPH 17, Sunbelt/HH, in its capacity
as general partner in the Partnership, shall cause the
Partnership to indemnify and hold harmless Seller and each
constituent thereof and their respective affiliates, directors,
officers, partners, employees, agents and representatives (each
of which is referred to as an "Indemnified Selling Party") for,
from and against any and all Losses asserted against, imposed
upon or incurred by an Indemnified Selling Party in connection
with or as a result of (A) any breach of any representation,
warranty or covenant of Buyer contained in this Agreement or in
any document, certificate or instrument delivered by Buyer
pursuant to this Agreement, or (B) any matter relating to the
Partnership or the Project which first arises or accrues after
the Closing, except for any such matter (i) constituting or
resulting from a breach of any of Seller's representations,
warranties or covenants under this Agreement (without regard to
any survival limitation set forth herein), or (ii) which has been
included in the Purchase Price pursuant to EXHIBIT "G", or (iii)
which has been assumed, waived or accepted by Seller pursuant to
a specific provision of this Agreement. At Closing, Sunbelt/HH,
in its capacity as general partner in the Partnership, shall
cause the Partnership to execute and deliver to Seller an
Indemnity Agreement in the form attached hereto as EXHIBIT "U",
confirming and agreeing to the indemnity set forth in this
Paragraph.
14.3 PAYMENT OF INDEMNIFICATION.
Each party who may call upon another party obligated to make an
indemnity payment hereunder is referred to as an "Indemnified
Party." Each party who is obligated to make an indemnity payment
hereunder is referred to as an "Indemnifying Party." All amounts
paid by an Indemnifying Party to any Indemnified Party hereunder
shall be paid solely in cash.
14.4 NOTICE AND DEFENSE OF CLAIMS.
Promptly after receipt by an Indemnified Party of notice of any
liability or claim by or asserted against the Indemnified Party
that is subject to indemnification under this PARAGRAPH 14, the
Indemnified Party shall give notice thereof to each Indemnifying
Party. The Indemnified Party shall permit the Indemnifying Party,
at its sole option and expense, to assume the defense of any such
claim by counsel
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selected by the Indemnifying Party and reasonably satisfactory to
the Indemnified Party, and to settle or otherwise dispose of the
same; provided, however, that the Indemnified Party may at all
times participate in such defense at its own expense; and
provided further that the Indemnifying Party shall not, in
defense of any such claim, except with the prior written consent
of the Indemnified Party, consent to the entry of any judgment or
enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff in question to the Indemnified Party and its affiliates
a release of all liabilities in respect of such claims, or that
does not result only in the payment of money damages by the
Indemnifying Party. If the Indemnifying Party shall fail to
undertake such defense within 15 days after such notice, or
within such shorter time as may be reasonable under the
circumstances, then the Indemnified Party shall have the right to
undertake the defense, compromise or settlement of such liability
or claim on behalf of and for the account of the Indemnifying
Party and, in such event, the Indemnifying Parties shall pay all
costs and expenses incurred by the Indemnified Party in
connection with the undertaking of such defense, compromise or
settlement. If an Indemnified Party fails to give an Indemnifying
Party prompt notice of any liability or claim subject to
indemnification as required by the first sentence of this
PARAGRAPH 14.4, then (i) if the Indemnifying Party is precluded
by the failure to give prompt notice from contesting the asserted
liability or claim, then the Indemnifying Party shall not have
any obligation to indemnify for any loss arising out of such
liability or claim, and (ii) if the Indemnifying Party is not so
precluded from contesting but such failure to give prompt notice
results in a detriment to the Indemnifying Party, then any amount
which the Indemnifying Party is otherwise required to pay to the
Indemnified Party pursuant to this PARAGRAPH 14 with respect to
such liability shall be reduced by the amount of such detriment.
14.5 TAX MATTERS. Seller and Buyer
agree as follows:
14.5.1 ALLOCATION OF TAXES.
For purposes of this Agreement, all Taxes imposed on or with
respect to the Partnership or the Property shall be allocated
between two periods. The first period (the "Pre-Closing Period")
shall begin on the date the Partnership was formed and end on the
date of Closing. The second period (the "Post- Closing Period")
shall begin on the day immediately after the Closing and shall
cover all periods thereafter. Notwithstanding anything to the
contrary in this PARAGRAPH 14.5: (A) real property taxes on the
Real Property for 1996 and subsequent years and any Taxes
reflected on EXHIBIT "G" for which Buyer receives a Purchase
Price adjustment at Closing shall be excluded from the
allocations provided under this PARAGRAPH 14.5, and (B) Seller
shall be entitled to continue its pursuit of the Tax Appeal at
Seller's sole expense and Seller shall be entitled to any
proceeds and benefits of the Tax Appeal relating to 1995 and
prior tax years (it being agreed that Buyer shall be entitled to
any such proceeds and benefits for 1996 and subsequent tax
years). Seller shall not withdraw or fail to pursue the Tax
Appeal without first giving the Partnership the opportunity to
take over the Tax Appeal at the Partnership's expense. If the
Partnership takes over the Tax Appeal as provided in the
preceding sentence, then (A) Seller shall be entitled to any
proceeds or refunds resulting from the Tax Appeal which relate to
1995 or prior tax years, provided that the Partnership shall be
entitled to offset its reasonable costs incurred in connection
with the Tax Appeal (including, but not limited to, reasonable
attorneys' fees) against any such
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proceeds or refunds, and (B) the Partnership shall be entitled to
any proceeds or refunds resulting from the Tax Appeal which
relate to 1996 or subsequent tax years.
14.5.1.1 PRE-CLOSING PERIOD.
The following Taxes shall be allocated to the Pre-Closing
Period:
i) All Taxes
determined by reference to income or gain incurred by the
Partnership during or with respect to periods through and
including the date of Closing (including, without limitation, any
Taxes imposed on income or gain resulting from the sale of the
Partnership Interests or any other transactions contemplated by
this Agreement);
ii) All transaction
privilege or other Taxes determined by reference to any
transactions or business activities involving the Partnership
and/or the Property which occur on or prior to the date of
Closing;
iii) All other Taxes
that are imposed on or with respect to the Partnership or the
Property for any period ending on or before the date of Closing;
and
iv) Any Taxes that are
imposed on or with respect to the Partnership or the Property for
any period beginning before the date of Closing and ending after
such date, but only to the extent that such Taxes are allocable
under applicable tax laws to the portion of any such period
ending on the date of Closing; provided that if such other Taxes
are not clearly allocable to a specific period under applicable
law, such Taxes shall be prorated based on the ratio of the
number of days included in the period ending at midnight on the
date of Closing to the total number of days included in the
entire period.
14.5.2 SELLER'S LIABILITY FOR
TAXES. Seller will be liable for and shall indemnify, defend and
hold harmless Buyer, the Partnership, and any successors thereto
or affiliates thereof for, from and against all Taxes imposed on
Seller and all Taxes imposed on or with respect to the
Partnership or the Property that are allocable to the Pre-Closing
Period, as provided above.
14.5.3 BUYER'S LIABILITY FOR
TAXES. Buyer shall be liable for and shall indemnify, defend and
hold harmless Seller for, from and against all Taxes imposed on
or with respect to the Partnership or the Property that are
allocable to the Post-Closing Period, as provided above.
14.5.4 INCOME TAX
DETERMINATIONS. In accordance with Section 708 of the Code and
the Regulations thereunder, the Partnership will be deemed to
have terminated for federal income tax purposes on the date of
Closing, as a result of the sale of the Partnership Interests
(notwithstanding its continuation without dissolution as a
limited partnership under Arizona law). As a result of such
deemed termination for federal income tax purposes, the
Partnership will be obligated to file a final federal income tax
information return (Form
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1065) for the portion of the 1996 calendar year beginning on
January 1, 1996 and ending on the date of Closing, with respect
to the "old tax partnership" that is deemed to have terminated on
the date of Closing (the "Final Return"). Buyer agrees to obtain
a new taxpayer identification number for the Partnership for the
period following the date of Closing and to file federal income
tax information returns as though the Partnership were a new
partnership for federal income tax purposes, created as of the
date of Closing. The parties will cause the Partnership to file
state income tax information returns on a basis comparable to the
returns filed for federal income tax purposes.
14.5.5 SELLER'S OBLIGATION
FOR TAX RETURNS. Seller, at Seller's expense, shall prepare and
timely file, or shall prepare for the Partnership to timely file,
the Final Return, the comparable state income tax information
returns and any federal, foreign, state and local income and
franchise tax reports and returns for any period which ends on or
prior to the date of Closing. All such returns and reports will
be prepared using tax accounting methods and principles which are
consistent with those used in the comparable returns and reports
for preceding tax periods, unless a different treatment is
required by law. Seller will submit to Buyer for its review and
comment, at least 10 days prior to the due date for filing,
copies of all returns and reports of Taxes which it is obligated
to file under this Agreement and shall, in good faith, consider
all comments made by Buyer. Subject to PARAGRAPH 14.5.7, Seller
shall timely pay any unpaid liability for Taxes reflected on each
return and report prepared by it pursuant to this Agreement.
Seller shall deliver to Buyer a complete and accurate copy of
each return and report prepared by it pursuant to this paragraph,
and, at the request of Buyer, shall make available to Buyer
copies of the permanent financial records (including tax
workpapers) with respect to the Partnership used to prepare such
return or report within 60 days after the date the return is
filed with the applicable governmental agency.
14.5.6 PREPARATION OF
RETURNS. Buyer or the Partnership shall timely prepare and file
all other required tax returns and reports for the Partnership.
14.5.7 PAYMENT OF INDEMNITY
Payment by Buyer or Seller, as indemnitor of any amount due under
PARAGRAPH 14.5.2 OR 14.5.3, shall be made within 10 days
following written notice by the indemnitee that payment of such
amounts to the appropriate Tax authority is due, provided that
such indemnitor shall not be required to make any payment earlier
than 2 business days before it is due to the appropriate Tax
authority. If Seller receives an assessment or other notice of
Tax due with respect to the Partnership for any period ending on
or before the date of Closing for which Seller is not
responsible, in whole or in part, pursuant to PARAGRAPH 14.5.2,
and Seller pays such Tax, then Buyer shall pay to Seller, in
accordance with the first sentence of this PARAGRAPH 14.5.7, the
amount of such Tax for which Seller is not responsible. In the
case of a Tax that is contested in accordance with the provisions
of PARAGRAPH 14.5.8, payment of the Tax to the appropriate Taxing
authority will not be considered to be due earlier than the date
a final determination to such effect is made by the appropriate
Taxing authority or a court or pursuant to the terms of such
PARAGRAPH 14.5.8.
14.5.8 NOTICE OF CLAIMS.
Buyer or the Partnership will give Seller prompt notice of any
proposed audit, proceeding, inquiry, claim, demand, suit or
adjustment
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(collectively, "Adjustment") pertaining to Taxes which might
result in an additional amount of Taxes due for which Seller
might be liable. If Buyer fails to give Seller prompt notice of
any Adjustment as required by this PARAGRAPH 14.5.8, then (i) if
Seller is precluded by the failure to give prompt notice from
contesting the asserted Tax liability in both the administrative
and judicial forums, then Seller shall not have any obligation to
indemnify for any loss arising out of such asserted Tax
liability, and (ii) if Seller is not so precluded from contesting
but such failure to give prompt notice results in a detriment to
Seller, then any amount which Seller is otherwise required to pay
Buyer pursuant to PARAGRAPH 14.5.2 with respect to such liability
shall be reduced by the amount of such detriment. Seller shall,
within 30 days of receiving notice from Buyer or the Partnership
of any Adjustment, notify Buyer of the intention of Seller to
undertake the defense and handling of such Adjustment at its own
expense. If Seller does not timely notify Buyer or the
Partnership of the intention of Seller to contest such
Adjustment, its right is thereafter forfeited. Neither Buyer nor
the Partnership shall then be required to contest such Adjustment
or defend against any proceeding to collect any deficiency in
Tax. If Seller does not timely elect to contest any Adjustment,
such Adjustment shall be considered a final determination unless
otherwise contested by Buyer or the Partnership. If timely notice
is received by Buyer or the Partnership of the intention of
Seller to contest such Adjustment, Buyer and the Partnership will
not concede the correctness of any part of such Adjustment and
will not enter into any closing or compromise agreement with
respect to any of the issues which form the basis for such
Adjustment, absent the written consent of Seller. Seller shall
advise Buyer or the Partnership of all meetings with
representatives of any audit authority, shall grant Buyer, the
Partnership or its designated representatives the right to attend
therein, and shall deliver to Buyer or the Partnership copies of
all correspondence pertaining to any Adjustment. Buyer shall, and
shall cause the Partnership to, cooperate with Seller in all
matters relating to any Adjustment, to make available all
necessary books and records of the Partnership for any period
covered by such Adjustment, and to authorize representatives of
Seller reasonably acceptable to Buyer to represent the
Partnership in connection with such Adjustment.
14.5.9 SETTLEMENT OF CLAIMS.
Seller will give Buyer prompt notice of any Adjustment pertaining
to Taxes which might result in an additional amount of Taxes due
for which the Partnership or Buyer might be liable, including any
adjustment or assessment of the Partnership for periods ending on
or before the date of Closing which could result in an increase
in the Tax paid or payable by the Partnership for periods after
the date of Closing. If any Adjustment relates to any Tax for
which Seller, on the one hand, and either the Partnership or
Buyer on the other, might be liable, Seller and Buyer shall
mutually agree on the manner of defense and resolution of such
Adjustment. Where one party wishes to consent to a settlement of
such Adjustment but the other party is not willing to agree, such
other party may continue or initiate any further proceedings at
its own expense, provided that the liability of the first party
shall not exceed the liability that would have resulted from the
proposed settlement of such Adjustment.
14.5.10 NOTICE OF AMENDMENT.
Seller shall promptly provide to Buyer after the date hereof a
true and complete copy of any amendment or adjustment to a return
or report of Taxes or other document filed with or issued by a
governmental authority
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after the date of Closing to the extent that such amendment or
adjustment affects Buyer's or the Partnership's liability for
Taxes hereunder.
14.5.11 ASSUMPTION AND
INDEMNITY BY SELLER. Seller agrees to assume liability for and to
pay all sales, transfer, stamp, real property transfer or gains
and similar Taxes, if any, incurred as a result of the
transactions contemplated by this Agreement. Seller agrees to
indemnify Buyer for any and all liabilities, losses, damages,
claims, costs expenses, awards, interest, judgments and penalties
(including, without limitation, attorneys' and consultants' fees
and expenses) incurred by Buyer arising out of Seller's failure
to make timely or full payments of such Taxes. Seller agrees to
file all required tax returns and reports due in connection with
the Taxes assumed under this paragraph.
14.5.12 ADJUSTMENTS TO
PURCHASE PRICE. Seller, Buyer and the Partnership agree to treat
all payments made under this PARAGRAPH 14.5 of the Agreement as
adjustments to the Purchase Price for Tax purposes.
14.5.13 PURCHASE PRICE
ALLOCATION. The parties acknowledge and agree that the Purchase
Price shall be allocated for tax purposes in the manner set forth
on I.R.S. Form 8594 (Asset Acquisition Statement under Section
1060) attached as SCHEDULE 14.5.13 hereto; provided that any
adjustment to the Purchase Price pursuant to PARAGRAPH 4 hereof
shall also be reflected as an adjustment on SCHEDULE 14.5.13,
with the amount of such adjustment to be allocated to the asset
directly associated with the adjustment to the Purchase Price,
provided that if there is no asset directly associated with any
particular adjustment to the Purchase Price, then the entire
amount of such adjustment shall be allocated to the Option
Agreements. The parties further agree to file their respective
I.R.S. Forms 8594 consistent with such allocation.
14.6 BASKET. An Indemnifying Party
shall not be liable for any amount unless and until the aggregate
amount recoverable from such Indemnifying Party exceeds
$130,000.00, at which time the Indemnifying Party shall be liable
for all amounts recoverable (including the first $130,000.00 of
such amounts); provided, however, that the above limitation shall
not apply to any matters relating to Taxes. The above limitation
shall also apply to claims (other than those relating to Taxes)
made separate and apart from a claim for indemnity, which claim
arises from the breach of a party's representations and
warranties under PARAGRAPH 10 (as to claims made by Seller
against Buyer) or PARAGRAPHS 11 AND 12 (as to claims made by
Buyer against Seller); amounts recoverable for claims described
in this sentence shall apply toward the $130,000.00 amount in the
first sentence of this Paragraph..
14.7 SURVIVAL OF CLAIMS. If
asserted in writing prior to the applicable expiration date set
forth in PARAGRAPH 13, claims for indemnification arising from a
breach of a representation or warranty shall survive until
resolved by mutual agreement between the Indemnifying Party and
the Indemnified Party or by judicial determination. Any claim for
indemnification arising from a breach of a representation or
warranty not so asserted in writing prior to the applicable
expiration date shall not thereafter be asserted and shall
forever be waived; provided, however, that the foregoing shall in
no way restrict claims based upon fraud.
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14.8 INTEGRATION. Except as
expressly provided in this Agreement and the other agreements,
instruments and documents to be delivered by Seller and the
Partnership pursuant hereto, no representations or warranties
have been or are made by Seller. The parties agree that all
undertakings and agreements heretofore made between them or their
respective agents or representatives are merged into this
Agreement and the other agreements, instruments and documents to
be delivered pursuant hereto, which alone fully and completely
express their agreement.
15. ATTORNEYS' FEES. If either party hereto
breaches any provisions of this Agreement, the breaching party
shall pay to the non-breaching party all reasonable attorneys'
fees and other costs and expenses incurred by the non-breaching
party in enforcing this Agreement or preparing for legal or other
proceedings regardless of whether suit is instituted. If it
becomes necessary for either party to employ legal counsel or to
bring an action at law or other proceeding to enforce any of the
terms, covenants or conditions of this Agreement, the prevailing
party in any such action or proceeding shall be entitled to
recover its costs and expenses incurred in such action from the
other party, including, without limitation, reasonable attorneys'
fees, reasonable expert witness' fees, costs of deposition
transcripts and tapes and other pre-trial discovery costs set by
the Court and not a jury, at both trial and appellate levels, and
if any judgment is obtained by the prevailing party, all such
costs, expenses and fees shall be included in the judgment. Buyer
and Seller acknowledge and agree that Buyer's termination of this
Agreement as a consequence of its disapproval of the results of
Buyer's inspections, examinations, reviews and investigations
conducted pursuant to PARAGRAPH 5.1.2 of this Agreement shall not
constitute a breach of this Agreement by Seller.
16. NOTICES. All notices or other
communications required or provided to be sent by either party or
Escrow Agent shall be in writing and shall be sent by United
States Postal Service, postage prepaid, registered or certified,
return receipt requested, or any nationally known overnight
delivery service, or by courier, or by facsimile, or in person.
All notices shall be deemed to have been given when received if
sent by United States Postal Service or facsimile, or upon
personal delivery if sent by overnight delivery service, courier
or personal delivery. All notices shall be addressed to the party
at the address below:
If to Seller:
THE NEWHALL LAND AND FARMING COMPANY
23823 Valencia Boulevard
Valencia, California 91355
Attn: Gary Cusumano, President
Fax: (805) 255-3960
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With a copy to (as to pre-Closing notices
only):
McDOWELL MOUNTAIN RANCH LIMITED PARTNERSHIP
7590 East Gray Road, Suite 204
Scottsdale, Arizona 85260
Attn: Curt Smith, President
Fax: (602) 443-4299
and to:
Francis J. Slavin, Esq.
FRANCIS J. SLAVIN, P.C.
2198 East Camelback Road, Suite 285
Phoenix, Arizona 85016
Fax: (602) 381-1920
If to Buyer:
John Graham, President
SUNBELT HOLDINGS, INC.
One Gateway
426 North 44th Street, Suite 375
Phoenix, Arizona 85008
Fax: (602) 267-9114
With a copy to:
Michael S. Meldman
HAAS AND HAYNIE CORPORATION
395 Oyster Point Blvd.
South San Francisco, CA 94080
Fax: (415) 873-9150
and to:
Jason M. Fish
FARALLON CAPITAL MANAGEMENT, INC.
One Maritime Plaza, #1325
San Francisco, CA 94111
Fax: (415) 421-2133
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and to:
Steven Carey, Esq.
PIRCHER, NICHOLS & MEEKS
1999 Avenue of the Stars
Los Angeles, CA 90067
Fax: (310) 201-8922
and to:
Lesa J. Storey, Esq.
FENNEMORE CRAIG
Two North Central Avenue, Suite 2200
Phoenix, Arizona 85004-2390
Fax: (602) 257-8527
With a copy to (as to post-Closing notices
only):
McDOWELL MOUNTAIN RANCH LIMITED PARTNERSHIP
7590 East Gray Road, Suite 204
Scottsdale, Arizona 85260
Attn: Curt Smith, President
Fax: (602) 443-4299
Any address or name specified above may be changed by notice
given to the addressee by the other party in accordance with this
PARAGRAPH 16. The inability to deliver because of a changed
address of which no notice was given, or rejection or other
refusal to accept any notice, shall be deemed to be the receipt
of the notice as of the date of such inability to deliver or
rejection or refusal to accept. Any notice to be given by any
party hereto may be given by the legal counsel for such party.
Any notice to be given to Escrow Agent shall be sent to the
address set forth on the Printed Escrow Instructions attached
hereto as EXHIBIT "N".
17. SELLER'S REMEDIES.
17.1 PRE-CLOSING. If Buyer shall
breach any of the terms or provisions of this Agreement or
otherwise default at or prior to Closing, and such breach or
default is not cured within 5 days after written notice thereof
is given by Seller to Buyer, then Seller's sole remedy shall be
to terminate this Agreement and to retain the Earnest Money
Deposit as liquidated damages. Seller and Buyer acknowledge that
it would be extremely difficult if not impossible to ascertain
Seller's actual damages and that the Earnest Money is a
reasonable forecast of just compensation to Seller resulting from
Buyer's breach. Upon termination of this Agreement by Seller and
payment to Seller of the sum of liquidated damages, neither party
shall have any further obligation or liability hereunder, except
indemnity obligations contained herein.
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17.2 POST-CLOSING. If, after the
Closing, Buyer shall breach any of the terms or provisions of
this Agreement, or if it shall be determined by a court of
competent jurisdiction that Buyer breached any of the
representations, warranties or covenants made by Buyer at, or as
of, the Closing, or if Buyer otherwise defaults in its
post-Closing obligations, and such breach or default is not cured
within 5 days after written notice thereof is given by Seller to
Buyer, then Seller shall have, in addition to the rights and
remedies set forth elsewhere in this Agreement and/or in any
documents or instruments delivered to Seller at the Closing, any
right or remedy available at law or in equity, including the
right to demand and have specific performance; provided, however,
that Seller shall only be entitled to seek recovery of actual
damages which directly result from Buyer's breach, Seller hereby
waiving any right to seek or obtain lost profits or other
speculative damages, and provided further, that Seller waives any
right to rescind the sale and purchase transaction.
18. BUYER'S REMEDIES.
18.1 PRE-CLOSING. If, on or before
the Closing, Seller breaches any of the terms or provisions of
this Agreement or otherwise defaults hereunder, and such breach
or default is not cured within 5 days after written notice
thereof is given by Buyer to Seller, then Buyer may (i) terminate
this Agreement by written notice to Seller and Escrow Agent,
receive a refund of the Earnest Money Deposit and recover from
Seller the actual damages which directly result from Seller's
breach; (ii) consummate the transaction contemplated hereby in
accordance with the terms hereof and recover from Seller (or, at
Buyer's election, offset against the Purchase Price payable by
Buyer at Closing) the actual damages which directly result from
Seller's breach; or (iii) institute all proceedings necessary to
specifically enforce the terms of this Agreement and cause title
to the Partnership Interests to be assigned and transferred to
Buyer; provided that if specific performance is not available as
a remedy to Buyer, Buyer may pursue any or all rights and
remedies available at law or equity. Notwithstanding any contrary
provision of this Agreement, (A) Buyer hereby expressly waives
its right to seek lost profits or other speculative damages; and
(B) as an express condition precedent to Buyer's right to seek a
decree of specific performance in a court of competent
jurisdiction, Buyer shall be required to first tender to Seller
full performance of its obligations required under this Agreement
in connection with the Closing.
18.2 POST-CLOSING. If, after the
Closing, Buyer brings an action against Seller alleging a breach
of any of the representations, warranties or covenants made by
Seller at, or as of, the Closing, Buyer shall have any right or
remedy available at law or in equity; provided, however, that
Buyer shall only be entitled to seek recovery of actual damages
which directly result from Seller's breach, Buyer hereby waiving
any right to seek or obtain lost profits or other speculative
damages; and provided, further, that Buyer waives any right to
rescind the sale and purchase transaction except for fraud or
intentional misrepresentation of a material matter.
19. TERMINATION OF AGREEMENT. Wherever
this Agreement provides that this Agreement may be terminated by
Buyer by the delivery of written notice, such termination shall
be effective for all purposes if the termination notice is signed
by any one of the Persons then
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comprising the Buyer hereunder, and the execution of such
termination by all Persons then comprising the Buyer shall not be
required. If this Agreement is terminated by Buyer, as allowed
hereunder or is deemed terminated by Buyer hereunder, Escrow
Agent shall return to Buyer the Earnest Money Deposit together
with all earnings thereon, less Buyer's share of Escrow
Termination Fees (and less the $100.00 of consideration payable
by Buyer to Seller if the termination is pursuant to PARAGRAPH
5.1.2), as appropriate. If this Agreement is terminated under
such circumstances and Seller holds all or a part of the Earnest
Money Deposit, then Seller immediately shall pay such Earnest
Money Deposit to Buyer (less the $100.00 of consideration payable
by Buyer to Seller if the termination is pursuant to PARAGRAPH
5.1.2). In any event of termination, Escrow Agent shall return
all documents to the parties who supplied the documents. Upon
such return of Earnest Money Deposit (or retention of Earnest
Money Deposit by Seller as liquidated damages) and delivery of
documents, the Escrow shall be deemed canceled, Buyer's
obligation to purchase the Partnership Interests from Seller
shall be deemed terminated and Seller's obligation to sell the
Partnership Interests to Buyer shall be deemed terminated. All
indemnity obligations contained herein shall survive the
termination of this Agreement.
20. SURVIVAL OF COVENANTS, AGREEMENTS,
REPRESENTATIONS AND WARRANTIES. Subject to the limitations set
forth in PARAGRAPH 13, all covenants, agreements, representations
and warranties set forth in this Agreement shall survive the
Closing and shall not merge into the Assignment of Partnership
Interests or other instrument executed or delivered in connection
with the transaction contemplated hereby.
21. MODIFICATION OF AGREEMENT. No modification
of this Agreement shall be deemed effective unless in writing and
signed by the parties hereto, and any waiver granted shall not be
deemed effective except for the instance and in the circumstances
particularly specified therein and unless in writing and executed
by the party against whom enforcement of the waiver is sought.
22. FURTHER INSTRUMENTS. Each party, promptly
upon the request of the other or upon the request of the Escrow
Agent, shall execute and have acknowledged and delivered to the
other or to Escrow Agent, as may be appropriate, any and all
further instruments reasonably requested or appropriate to
evidence or give effect to the provisions of his Agreement and
which are consistent with the provisions hereof.
23. ENTIRE AGREEMENT. This Agreement
constitutes the entire contract between the parties with regards
to the purchase, sale and development of the Property. All terms
and conditions contained in any other writings previously
executed by the parties and all other discussions, understandings
or agreements regarding the Partnership Interests and the subject
matter hereof shall be deemed to be superseded hereby.
24. INUREMENT. Subject to restrictions on
assignment set forth in PARAGRAPH 30, this Agreement shall be
binding upon and inure to the benefit of the successors and
assigns, if any, of the respective parties hereto.
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25. APPLICABLE LAW. This Agreement shall
be governed by, interpreted and construed and enforced in
accordance with the laws of the State of Arizona.
26. DESCRIPTIVE HEADINGS. The descriptive
headings of the paragraphs of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any provisions hereof.
27. TIME OF THE ESSENCE. Time is of the
essence of this Agreement. The parties hereby waive any so called
"13-day notice requirement" contained in the Printed Escrow
Instructions.
28. CONDEMNATION. In the event that between the
date hereof and the Closing, all or any part of the Project shall
be taken or appropriated for public or quasi-public use by right
of eminent domain, or if proceedings in condemnation or eminent
domain shall be instituted or threatened, Buyer, at its option,
may elect to (i) terminate this Agreement by written notice to
Seller within 10 business days following Buyer's receipt of
written notice of such event, whereupon this Agreement shall
terminate, the Earnest Money Deposit shall be refunded to Buyer,
and thereafter neither party shall have any further obligation or
liability hereunder, or (ii) proceed with the purchase of the
Partnership Interests, in which event Buyer shall be entitled to
the condemnation proceeds relating to the Project. If prior to
the Closing such proceeds are paid to Seller, the amount of such
proceeds paid to Seller shall be applicable towards the Purchase
Price.
29. TIME PERIODS. In the event the time
for performance of any obligation hereunder expires on a
Saturday, Sunday or legal holiday, the time for performance shall
be extended to the next day which is not a Saturday, Sunday or
legal holiday.
30. ASSIGNMENT. Neither Seller nor Buyer shall
prior to the Closing voluntarily or by operation of law assign or
otherwise transfer or encumber all or any part of Buyer's or
Seller's interest in this Agreement or in the Project or the
Partnership Interests without the prior written consent of the
other party which may be withheld by such other party in its sole
and absolute discretion. Any attempt to assign, transfer or
encumber shall be void and shall be a breach of this Agreement.
In the event that Buyer or Seller assigns its rights hereunder
with the other party's prior written consent as required by this
PARAGRAPH 30, such assignment shall be conditioned upon the
delivery to the non-assigning party of written notice of such
assignment together with an executed copy of documents pursuant
to which such assignee assumes all of an assigning party's
covenants under this Agreement and agrees to be bound by all of
the terms, conditions and provisions hereof. Any such assignment
shall not affect or limit the liability of an assigning party
hereunder, even if, after such assignment, the terms of this
Agreement are materially altered, without the assigning party's
consent, which consent shall not be necessary.
31. CONSTRUCTION. The parties agree that
each party and its counsel have reviewed and revised this
Agreement and that any rule of construction to the effect that
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ambiguities are to be resolved against the drafting party shall
not apply in the interpretation of this Agreement or any
amendments or exhibits hereto.
32. INTERPRETATION. In this Agreement the
neuter gender includes the feminine and masculine, and the
singular number includes the plural, and the words "person" and
"party" include corporation, partnership, individual, firm,
trust, or association wherever the context so requires.
33. EXHIBITS. All exhibits attached hereto
and referred to in this Agreement are incorporated herein by this
reference and are part of this Agreement.
34. COUNTERPARTS. This Agreement may be
executed simultaneously or in counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same Agreement.
35. RECORDATION. Neither this Agreement
nor memorandum thereof shall be recorded or filed.
36. BUYER'S ASSUMPTION, GUARANTY AND INDEMNITY.
Buyer acknowledges that Newhall has executed and delivered a
Guaranty of Indebtedness to certain predecessors-in- interest of
Thompson Peak Limited Partnership, an Arizona limited
partnership, and to The Herberger Foundation, an Arizona
non-profit corporation, as of October 28, 1993, a copy of which
Guaranty of Indebtedness is attached hereto as part of the
documents comprising SCHEDULE 11.38 hereof (the "Herberger
Guaranty"). Newhall has also executed and delivered to the
District, as Issuer, and First Interstate Bank of Arizona, N.A.,
as Trustee, a Standby Contribution Agreement Amended and Restated
as of October 1, 1994 relating to issuance of two series of the
Issuer's District General Obligation Bonds in the aggregate
amount of $11,950,000.00, a copy of which Standby Contribution
Agreement has previously been provided to Buyer by Seller (the
"SCA"). Buyer acknowledges that Newhall's liability and
obligations under the Herberger Guaranty and the SCA shall
continue after the Closing. Consequently, Sunbelt/HH (in its
capacity as general partner in the Partnership) agrees to cause
the Partnership, subject to the terms and conditions of this
PARAGRAPH 36, to: assume all obligations and liabilities of
Newhall under the Herberger Guaranty and the SCA, guaranty to
Newhall the prompt payment of all obligations and liabilities
thereunder and the timely performance of all other covenants of
Newhall to be performed thereunder, and indemnify, hold harmless
and defend (with legal counsel reasonably acceptable to Newhall)
Newhall for, from and against any and all claims, damages,
liabilities, costs and expenses (including without limitation
reasonable attorneys' fees) which may be asserted against Newhall
under the terms, conditions and provisions of either the
Herberger Guaranty or the SCA; provided, however, that the
obligations of the Partnership under this Paragraph shall not
apply to any such claims, damages, liabilities, costs or expenses
for which Seller is responsible under this Agreement or which
constitute or result from a breach of any of Seller's
representations, warranties or covenants under this Agreement
(without regard to any survival limitation set forth in this
Agreement); and further provided, however, that notwithstanding
any contrary provision hereof, the foregoing indemnity obligation
of the Partnership shall be subject to the provisions of
PARAGRAPHS 14.3 AND 14.4.
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Seller and Sunbelt/HH (in its capacity as general partner in the
Partnership) shall use reasonable efforts to cause, either before
or after the Closing, Thompson Peak Limited Partnership, The
Herberger Foundation, and the Trustee under the SCA,
respectively, to commit to giving any notice or demand under the
Herberger Guaranty or under the SCA to both Newhall and the
Partnership. If any notice or demand under the Herberger Guaranty
or the SCA is not given to both Newhall and the Partnership, but
it is given to one of them, then the party to whom notice is
given shall, within 5 business days after its receipt thereof,
cause to be delivered to the party not receiving the notice or
demand a copy of such notice or demand, whether such notice or
demand is delivered before or after the Closing. Sunbelt/HH (in
its capacity as general partner in the Partnership) agrees to
cause the Partnership to execute and deliver at the Closing an
Assumption, Guaranty and Indemnity Agreement substantially in the
form of EXHIBIT "Q" attached hereto.
36.1 SECURITY FOR THE ASSUMPTION,
GUARANTY AND INDEMNITY AGREEMENT. In order to secure the
Partnership's obligations under the Assumption, Guaranty and
Indemnity Agreement, Sunbelt/HH (in its capacity as general
partner in the Partnership) agrees to cause the Partnership to
deliver to Newhall, at the Closing, an irrevocable standby letter
of credit in the amount of $2,000,000.00, in form reasonably
acceptable to Newhall and issued by a commercial bank which is a
member of the federal reserve system and which has its principal
offices in Los Angeles, California or Phoenix, Arizona, and which
financial institution is also reasonably acceptable to Newhall
(it being agreed by Newhall that Bank One, Arizona, NA is
acceptable to Newhall) (such letter of credit, as increased
and/or reduced in accordance with the provisions hereof, together
with all replacements and renewals thereof, being hereinafter
referred to as the "Letter of Credit"). Sunbelt/HH shall provide
a proposed form of the Letter of Credit to Newhall on or before 3
days after the Opening of Escrow. The Letter of Credit shall
provide that it may be drawn upon by Newhall (A) from time to
time upon the occurrence of an Event of Default (as defined in
the Security Agreements described in PARAGRAPH 36.2) which is
then continuing, in an amount equal to the amount of the demand
received by Newhall for payment under the SCA (or the amount due
under the Herberger Guaranty, as applicable) which demand (or
amount due, as applicable) was not paid by the Partnership and
resulted in such Event of Default, and (B) in full in the event
that Buyer or the Partnership has not caused a replacement Letter
of Credit to be issued to Newhall not later than 10 days before
the expiry date of the Letter of Credit to be replaced by a
substitute Letter of Credit. Any funds drawn by Newhall under the
Letter of Credit pursuant to clause (A) of the preceding sentence
shall be applied by Newhall toward payment of the demand received
by Newhall for payment under the SCA (or amount due under the
Herberger Guaranty, as applicable) which resulted in such Event
of Default; and any funds drawn by Newhall under the Letter of
Credit pursuant to clause (B) of the preceding sentence shall (i)
be held by Newhall as cash collateral for the payment and
performance of the Partnership's obligations under the
Assumption, Guaranty and Indemnity Agreement (without any
obligation of Newhall to pay to the Partnership interest on such
funds while they are held by Newhall), (ii) shall be applied by
Newhall from time to time upon the occurrence of an Event of
Default (as defined in the Security Agreements) which is then
continuing, in an amount equal to the amount of any demand
received by Newhall for payment under the SCA (or amount due
under the Herberger Guaranty, as applicable), which demand (or
amount due, as applicable) is not paid by the Partnership and
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results in such Event of Default, and (iii) shall be remitted by
Newhall to the Partnership (to the extent remaining after
applications by Newhall pursuant to clause (ii)) upon the
occurrence of the Full Release Condition described in PARAGRAPH
36.3 or to the extent that a partial release of the Letter of
Credit would have been required under PARAGRAPH 36.3.3.
36.2 ADDITIONAL SECURITY FOR THE ASSUMPTION,
GUARANTY AND INDEMNITY AGREEMENT. In order to further secure the
obligations of the Partnership under the Assumption, Guaranty and
Indemnity Agreement, Buyer agrees to cause each and every holder
of any Partnership Interests to execute and deliver to Newhall at
the Closing a Security Agreement substantially in the form
attached hereto EXHIBIT "R" (such Security Agreements executed by
such holders of Partnership Interests being hereinafter
collectively referred to as the "Security Agreements") and a
Uniform Commercial Code Financing Statement, in proper form, for
each and every jurisdiction in which the filing of a Financing
Statement is necessary or appropriate, for the purpose of
granting Newhall a first and prior perfected security interest in
100% of the Partnership Interests and to perform such other acts
as are reasonably necessary to perfect Newhall's security
interest in 100% of the Partnership Interests. Until the Partial
Release Condition (as defined in PARAGRAPH 36.3) (or, if earlier,
the Full Release Condition) occurs, no such Partnership Interests
may be transferred, assigned, mortgaged, encumbered or
hypothecated without the prior written consent of Newhall, except
for Permitted Transfers (as hereinafter defined). As used in this
Agreement, the term "Permitted Transfer" shall mean (A) the
transfer, assignment, mortgage, encumbrance or hypothecation of
all or any portion of the Partnership Interests as collateral
security for a single level of non-participating financing
provided to Buyer and/or the Partnership by an institutional
third-party lender in connection with the development and/or
operation of the Project or any portion thereof, which financing
and security shall be superior to the security interests granted
to Newhall pursuant to this PARAGRAPH 36 and the Security
Agreements, and/or (B) a transfer, assignment, mortgage,
encumbrance or hypothecation by one partner in the Partnership of
all or any portion of its interest in the Partnership, which
transfer, assignment, mortgage, encumbrance or hypothecation is
to or in favor of another partner in the Partnership or the
Partnership, which transfer, assignment, mortgage, encumbrance or
hypothecation or the enforcement thereof does not dissolve the
Partnership and which in all events shall be subordinate and
inferior to the security interests granted to Newhall pursuant to
this PARAGRAPH 36 and the Security Agreements. Newhall agrees to
promptly execute such subordination agreements as may be
reasonably requested by the Partnership or Buyer to evidence the
subordination of Newhall's interest in connection with a
Permitted Transfer described in clause (A) of the preceding
sentence (which subordination agreements shall contain reasonable
nondisturbance, attornment, notice and cure/reinstatement and
subrogation provisions, and such other provisions as may be
acceptable to such third-party lender), and Buyer agrees to
promptly execute (and cause the Partnership to execute) such
subordination agreements as may be reasonably requested by
Newhall to evidence the subordination of a partner's interest or
the Partnership's interest in connection with a Permitted
Transfer described in clause (B) of the preceding sentence.
Furthermore, until the Partial Release Condition (or, if earlier,
the Full Release Condition) occurs, the Partnership shall not,
without the consent of Newhall, assign, convey or transfer all or
any part of the Property to another Person without the consent of
Newhall, provided that the consent of Newhall shall not be
required for sales in the ordinary course of the Partnership's
business or as collateral security
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for a single level of non-participating financing provided to
Buyer or the Partnership by an institutional third-party lender
in connection with the development and/or operation of the
Project or any portion thereof. Each partner granting a security
interest pursuant to the terms and conditions of this PARAGRAPH
36.2 agrees to provide Newhall with any and all further
assurances reasonably requested by Newhall in order to maintain
the perfected security interest granted under such partner's
Security Agreement, including, without limitation, UCC
Continuation Statements renewing/continuing the filings made
pursuant to the Security Agreement. Upon the occurrence of an
Event of Default (as defined in the Security Agreements) which is
then continuing, Newhall shall have the immediate right to
exercise any and all remedies provided to it as a secured party
under the Security Agreements; provided, however, that Newhall
shall be required to proceed first against the Letter of Credit,
and Newhall shall be entitled to proceed against the Partnership
Interests only if the amounts drawn or then available to be drawn
by Newhall under the Letter of Credit in connection with such
Event of Default are insufficient to pay the demand under the SCA
(or the amount due under the Herberger Guaranty, as applicable)
which gave rise to such Event of Default. Notwithstanding any
contrary provision of this PARAGRAPH 36, Buyer shall have the
right to convert the Partnership to a limited liability company,
subject to the following: (A) the limited liability company shall
assume and be liable for all obligations and liabilities of the
Partnership (to the extent consistent with the representations,
warranties and covenants of Seller under this Agreement, without
regard to any survival limitations set forth in this Agreement),
and (B) Buyer shall execute and deliver to Seller, or cause to be
executed and delivered to Seller, all documents and instruments
reasonably necessary to cause the security interests described in
this PARAGRAPH 36.2 to remain in full force and effect as to 100%
of the member and manager interests in such limited liability
company. The term "Permitted Transfer" shall include a conversion
of the Partnership to a limited liability company in accordance
with the terms and conditions of the preceding sentence.
36.3 CONTINUATION OF SECURITY FOR
THE ASSUMPTION, GUARANTY AND INDEMNITY AGREEMENT; NEWHALL
OBLIGATION.
36.3.1 PARTIAL RELEASE
CONDITION. The obligations of each Person executing a Security
Agreement shall remain in full force and effect until the
occurrence of the Partial Release Condition, at which time the
Security Agreements (and all obligations thereunder of each
Person executing the Security Agreements) shall terminate and
shall be released, terminated, discharged, extinguished, and
otherwise rendered null and void and of no further force or
effect. As used herein, the term "Partial Release Condition"
shall mean that either (A) Newhall's liability and obligation
under the SCA has been released, terminated, discharged,
extinguished, and is otherwise null and void and of no further
force or effect (the "SCA Release"), or (B) if the SCA Release
has not occurred, the amount of the Letter of Credit is greater
than or equal to 150% of the Aggregate SCA Liability (as
hereinafter defined). Notwithstanding anything to the contrary in
this Subparagraph, the Partial Release Condition may not occur at
any time that an Event of Default (as defined in the Security
Agreements) has occurred and is continuing or a monetary default
has occurred and is continuing which monetary default, with the
passage of time and/or the giving of notice, would constitute
such an Event of Default. Buyer and the Partnership shall have
the right to increase the amount of the Letter of Credit in order
to cause the satisfaction of the foregoing condition (B). As used
herein, the term
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"Aggregate SCA Liability" shall mean a written projection of the
aggregate monetary obligation of the Partnership under the
Assumption, Guaranty and Indemnity Agreement with respect to the
SCA, prepared by an independent financial auditor taking into
account the amount, interest rate and payment terms of District
bonds then outstanding, the secondary assessed valuation of
properties within the boundaries of the District, and such other
factors as such financial auditor deems relevant for purposes of
such calculation. Newhall shall have the right to select the
independent financial auditor who will determine the Aggregate
SCA Liability, which selection shall be subject to approval by
the Partnership. The Partnership shall have the right, by
delivery of written notice to Newhall, to request a determination
of the Aggregate SCA Liability at any time, and from time to
time, until the Full Release Condition occurs; provided, however,
that the Partnership shall not be entitled to request an
Aggregate SCA Liability determination more than twice in any
calendar year. The Partnership shall pay the fees and costs
charged by the financial auditor for each Aggregate SCA Liability
determination requested by the Partnership. Within 10 days after
delivery of such determination request to Newhall, Newhall shall
deliver notice to the Partnership of its selected financial
auditor. If the financial auditor selected by Newhall is rejected
by the Partnership (which rejection shall be made by the delivery
of written notice to Newhall), then Newhall shall select another
such financial auditor for approval by the Partnership, and this
process shall continue until the selection of a financial auditor
acceptable to both Newhall and the Partnership.
36.3.2 FULL RELEASE CONDITION.
Notwithstanding any contrary provision hereof (or of the Security
Agreements or the Assumption, Guaranty and Indemnity Agreement),
all of the obligations of Buyer and the Partnership under this
PARAGRAPH 36 and all documents and instruments to be executed and
delivered pursuant hereto including, but not limited to, the
Letter of Credit, the Security Agreements (if not previously
terminated and released as the result of the occurrence of the
Partial Release Condition), and the Assumption, Guaranty and
Indemnity Agreement) shall terminate and shall be released,
discharged, extinguished, and shall otherwise be null and void
and of no further force or effect upon the occurrence of the Full
Release Condition. As used herein, the term "Full Release
Condition" shall mean that (A) the SCA Release has occurred, and
(B) all Land under the Option Agreements has been purchased and
paid for. Notwithstanding anything to the contrary in this
Subparagraph, the Full Release Condition may not occur at any
time that an Event of Default (as defined in the Security
Agreements) has occurred and is continuing or a monetary default
has occurred and is continuing which monetary default, with the
passage of time and/or the giving of notice, would constitute
such an Event of Default.
36.3.3 REDUCTION OF LETTER OF
CREDIT AMOUNT. If at any time the sum of the Aggregate SCA
Liability (as determined pursuant to PARAGRAPH 36.3.1) plus the
outstanding indebtedness under the Improvement District bonds
constituting an assessment lien against the Land not yet
purchased under the Option Agreements or not yet released from
the lien of any carryback financing under the Option Agreements,
is less than the amount of the Letter of Credit, Newhall shall
not unreasonably withhold its consent to a reduction of the
amount of the Letter of Credit to an amount equal to such
Aggregate SCA Liability plus such outstanding indebtedness under
such Improvement District bonds.
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36.3.4 NEWHALL OBLIGATION.
Until such time as the Full Release Condition occurs, and
provided that no Event of Default (as defined in the Security
Agreements) is then continuing, Newhall shall not take any action
or fail to take any action which causes or with the giving of
notice and/or the passage of time would cause, a default under
the Herberger Guaranty or the SCA.
36.3.5 INSURANCE FOR
PARTNERSHIP ASSETS. Until the Full Release Condition occurs,
Sunbelt/HH (in its capacity as general partner in the
Partnership) hereby covenants with Seller that Sunbelt/HH, in its
capacity as general partner in the Partnership, shall cause the
Partnership to maintain in force adequate insurance to provide
for the reasonable protection of the assets of the Partnership,
which coverage shall include, to the extent reasonably available
at no material cost, an agreement by the insurer to waive its
right of subrogation against Seller in connection with any matter
covered by such insurance for which Seller has a contractual
indemnity obligation hereunder.
36.4 BUYER'S ADDITIONAL COVENANTS.
Until the first to occur of the Partial Release Condition or the
Full Release Condition, Buyer hereby covenants with Seller that,
without prior consent of Newhall, which consent shall be
exercised in Newhall's sole discretion, Buyer shall not, except
for sales in the ordinary course of the Partnership's business
and Permitted Transfers: (i) sell, assign, transfer, pledge,
hypothecate or encumber voluntarily or by operation of law any of
Buyer's ownership interest in the Partnership; (ii) cause the
Partnership to convey or consent to the conveyance by the
Partnership of all or substantially all of the Property to
another Person (other than the conveyance of the last 10% of such
Property and the providing of the financial assurance described
in the last sentence of this Paragraph); (iii) dissolve or cause
or acquiesce in the dissolution of the Partnership or distribute
or cause or acquiesce in the distribution of the Property to the
partners of the Partnership and/or their successors and assigns;
(iv) amend or acquiesce in the amendment of the terms under which
the District has been formed to authorize the issuance by the
District of additional bonds in excess of the $20,000,000.00
currently authorized bonding capacity of the District; (v) cause
or participate or acquiesce in the formation of any other
municipal improvement district, community facilities district or
other type or form of public financing of existing or future
infrastructure or improvements in, upon or benefitting the
Property. Furthermore, if, at such time that 90% of the Property
has been sold by the Partnership, the Partial Release Condition
or the Full Release Condition has not occurred, then Sunbelt/HH
(in its capacity as general partner in the Partnership) shall
cause the Partnership to provide to Newhall additional financial
assurance, such as a new Letter of Credit (or an increase in the
amount of the then-existing Letter of Credit, if it has not then
been released) or a collateral assignment of sales proceeds
receivable reasonably acceptable to Newhall, to adequately assure
an unencumbered source of readily available funds to discharge in
full the amount of any remaining liability and obligation of the
Partnership under the Assumption, Guaranty and Indemnity
Agreement; provided, however, that in no event shall the
additional financial assurance described in this sentence exceed
the amount described in PARAGRAPH 36.3.3. No release or
termination of the Security Agreements shall occur as the result
of the provision of additional assurance pursuant to the
preceding sentences, unless the Partial Release Condition or the
Full Release Condition has then occurred or occurs thereafter.
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36.5 RIGHTS RESERVED TO NEWHALL.
Newhall is hereby reserved and granted the right after 10 days
prior written notice to Buyer, but Newhall shall have no
obligation, to cure any default by the Partnership in the payment
of any special assessments and/or ad valorem taxes levied or
imposed against the Property and/or under the Certificate of
Purchase. In addition, Newhall is hereby reserved and granted the
right after 10 days prior written notice to Buyer (or such
shorter notice period as may be necessary to prevent the lapse,
expiration and/or revocation of the Partnership's rights under
the Option Agreements, but in no event shall the notice period
under this sentence be less than 3 business days), but Newhall
shall have no obligation, to cause the exercise of rights and the
payment of funds under the Option Agreements so as to prevent the
lapse, expiration and/or revocation of the Partnership rights
under the Option Agreements. Any funds advanced by Newhall in the
exercise of its rights reserved and granted under this PARAGRAPH
36.5 shall be repaid within 30 days of presentation to Buyer and
the Partnership of a statement by Newhall. The amount of any
advance shall bear interest at the rate of 18% per annum from the
date on which demand for payment is made upon the Partnership by
Newhall until paid in full. The payment of such advances plus
interest and expenses originally incurred by Newhall in
connection with any such advance, including without limitation,
reasonable attorneys' fees, shall be secured for repayment by the
Assumption, Guaranty and Indemnity Agreement and the Security
Agreement(s).
37. LIMITATION OF RECOURSE OF SELLER'S
PARTNERS. The liabilities and obligations of Newhall and the
Corporation under this Agreement shall be joint and several.
Buyer acknowledges that if Seller breaches this Agreement, Buyer
shall have no recourse to the assets, properties or funds of any
partner, officer, director, employee or shareholder of Newhall or
the Corporation or any partner of Newhall, and no such partner,
officer, director, employee or shareholder shall have any
personal liability to Buyer. Buyer's sole recourse shall be to
the assets and properties of Seller.
38. BROKER'S COMMISSION. Upon but only in the
event of Closing, Buyer shall pay a commission to Nathan &
Associates, Inc. ("Broker") pursuant to the terms of a separate
agreement between Buyer and Broker. Except for the foregoing
commission to Broker, each party warrants and represents to the
other that no real estate sales or brokerage commissions, finders
fees or similar payments are or will be due in connection with
this transaction, as the result of any act(s) of the party so
representing. Each party shall defend, indemnify and hold the
other harmless for, from and against any claims by third Persons,
made as a result of any act(s) of the party so representing, for
real estate sales or brokerage commissions, finders fees or
similar payments in connection with the transactions provided for
herein, and all costs and expenses incurred by the indemnitee in
connection therewith including, but not limited to, reasonable
attorneys' fees.
39. STATEMENT OF BUYER'S INTENT REGARDING
NEWHALL'S EMPLOYEES. Buyer acknowledges that Seller has requested
that Sunbelt/HH use its good faith reasonable efforts to employ
the following employees of Newhall employed on behalf of the
Partnership following the Closing of the sale of the Partnership
Interests: Curt Smith, Mark Hammons, Kirby Brandon, Allen
Heytens, Judy Rulli, Sandy Esmay, Leslie Savage, and Carol Bailey
(the "Employees"). Sunbelt/HH hereby agrees to use its good faith
reasonable efforts to employ the
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Employees following the Closing of the sale of the Partnership
Interests, which employment will be through Sunbelt Holdings I
L.L.C. or one of its affiliated or related entities (the
"Employing Entity"); provided, however, that the failure of
Sunbelt/HH to do so, so long as Sunbelt/HH has used its good
faith reasonable efforts shall not constitute an event of default
under this Agreement or under any document or instrument executed
and delivered in connection with the Closing of the sale of the
Partnership Interests. On or before the Closing, Seller shall
terminate the employment of the Employees to be employed by
Buyer. Seller shall be responsible for, and shall indemnify and
hold harmless (in accordance with the provisions of PARAGRAPH 14)
Buyer and each Indemnified Acquiring Party for, from and against
(A) all claims of any Employee resulting from or relating to its
termination by Seller, and (B) all vacation, sick leave,
severance pay, and other benefits accrued with respect to the
Employees as of the Closing.
40. DISCLAIMER OF ADDITIONAL DISTRICT BOND
FINANCING. At Buyer's request and at no cost or liability
whatsoever to Newhall, Newhall agrees reasonably to cooperate
with Buyer and to assist Buyer and/or the Partnership with any
future application filed by either of them with the District
seeking approval of the issuance by the District of additional
bonds for the acquisition and/or construction of infrastructure
in, upon or for the benefit of the Project. Newhall especially
disclaims any obligation or requirement, and Buyer waives any
right to demand or require Newhall, to make available to Buyer,
the District, the City, the Partnership or any other Person
financial support of any kind whatsoever for any future District
bond issue. Seller has given Buyer, and Buyer has had ample
opportunity to review, copies of all documents pertaining to the
formation of the District and the authorization and issuance of
District bonds as more particularly described in SCHEDULE 40.
Buyer acknowledges that there is no guarantee or assurance by the
District, the City, Newhall, the Corporation and/or any other
Person that the District ever will issue or authorize the
issuance of any additional District bonds or that the district
will provide any other form of funds or financing for the
acquisition and/or construction of infrastructure in, upon or for
the benefit of the Project or the Buyer, the Partnership or their
respective successors and/or assigns. Buyer acknowledges further
that neither Newhall, the Corporation, the Partnership, nor any
employee, agent, consultant or attorney on behalf of Newhall, the
Corporation and/or the Partnership has represented to Buyer, its
employees, agents, consultants or attorneys that the District
ever will issue any additional bonds or other form of funds or
financing to be used in the development or construction of
improvements in, upon and/or for the benefit of the Project.
Furthermore, Buyer acknowledges that the Purchase Price has been
negotiated between Seller and Buyer based upon the understanding
by Buyer that there is no assurance that additional District bond
financing will be made available by the District for the future
acquisition and/or construction of infrastructure in, upon or for
the benefit of the Project.
41. LIMITATION OF RECOURSE OF INVESTORS.
Notwithstanding anything to the contrary herein, Seller
acknowledges and agrees that (A) the investment of Investors in
the Partnership, the Project and the transactions described in
this Agreement is as a limited partner only, (B) if Buyer or the
Partnership breaches or fails to perform any of their respective
obligations under this Agreement or any other agreement, document
or instrument described in or executed pursuant to this Agreement
(including, but not limited to, the Security Agreement and the
Assumption, Guaranty and Indemnity Agreement), then (i) Seller
shall have no recourse
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to the assets, properties or funds of Investors or of any member
or manager in Investors, (ii) neither Investors nor any such
member or manager in Investors, nor any officer, director,
employee or shareholder of Investors or any such member or
manager shall have any personal liability to Seller or any other
Person, and (iii) Seller's sole recourse shall be to the assets
and properties of the Partnership and Sunbelt/HH and, in the
event of an Event of Default (as defined in the Security
Agreements), to the Partnership Interests and the Letter of
Credit pursuant to the terms of the Security Agreements.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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BUYER:
SUNBELT/H & H L.L.C., an Arizona limited
liability company
By: SUNBELT HOLDINGS I L.L.C., an Arizona
limited liability company
Its: Member
By: SUNBELT HOLDINGS MANAGEMENT, INC.,
its Manager
By: /s/ John W. Graham
Its: President
By: H & H McDOWELL MOUNTAIN RANCH
LIMITED PARTNERSHIP, a California
limited partnership
Its: Member
By: HAAS AND HAYNIE CORPORATION, a
California corporation
Its: General Partner
By: /s/ Paul B. Fay III
Its: President
McDOWELL MOUNTAIN RANCH INVESTORS, L.L.C.,
a Delaware limited liability company
By: FARALLON CAPITAL MANAGEMENT,
INC., a Delaware corporation
Its: Manager
By: /s/ Jason M. Fish
Its: Managing Director
Date of Execution: March 19, 1996
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SELLER:
THE NEWHALL LAND AND FARMING
COMPANY, a California limited partnership
By: NEWHALL MANAGEMENT LIMITED
PARTNERSHIP, a California Limited
Partnership
Its Managing General Partner
By: NEWHALL MANAGEMENT
CORPORATION, a California corporation
Its Managing General Partner
By: /s/ Gary M. Cusumand
Its: President
By: /s/ Stuart R. Mork
Its: Chief Financial Officer
McDOWELL MOUNTAIN RANCH, INC., an
Arizona corporation
By: /s/ Erik R. Higgins
Its: Assistant Treasurer
Date of Execution: March 19, 1996
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ESCROW AGENT ACCEPTANCE:
Escrow Agent hereby agrees to be bound by the provisions
hereof and to perform its obligations as set forth herein in
accordance with the terms hereof, and to prepare and file all
necessary information, reports and returns regarding the
transaction contemplated hereby as required by the Internal
Revenue Code of 1986 (the "Code"), including, without limitation,
I.R.S. Form 1099-B. Escrow Agent agrees to indemnify, hold
harmless and defend Buyer, Seller and their respective attorneys
for, from and against all claims, costs, liabilities, penalties
or expenses resulting from Escrow Agent's failure to file all
appropriate reports and forms required to be filed under the
Code, including, without limitation reasonable attorneys fees.
OLD REPUBLIC TITLE INSURANCE AGENCY,
INC., an Arizona corporation
By:
Its: Branch Manager
Date of Execution: ___________________, 1996
