-18-
AGREEMENT FOR OPTION TO PURCHASE
AND
PURCHASE AND SALE
OF
REAL PROPERTY
AND
ESCROW INSTRUCTIONS
THIS AGREEMENT FOR OPTION TO PURCHASE AND PURCHASE AND
SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS ("Agreement")
is made and entered into this _______ day of March, 1996, by
and between Arvida/JMB Partners, L.P.-II, a Delaware limited
partnership ("Arvida"), and Seagate at San Clemente, LLC, a
California limited liability company ("Seagate").
R E C I T A L S
WHEREAS, Arvida is the owner in fee of those certain
parcels of real property ("Property") located in southeast
Orange County, California, which are situated partially
within the incorporated limits of the City of San Clemente
and partially within the unincorporated territory of the
County of Orange, all of which are particularly described in
Exhibit "A," which is attached hereto and by this reference
made a part hereof; and
WHEREAS, Seagate desires to acquire the exclusive right
to purchase the Property, without becoming obligated to
purchase, at an agreed upon price and under specified terms
and conditions; and
WHEREAS, in the event Seagate elects to purchase the
Property, Seagate intends to develop thereon a mixed use
residential/commercial/industrial/recreational community;
and
WHEREAS, Phillips Development Company, a principal of
Seagate, is a partner of Arvida's predecessor in interest in
the Property and is familiar with the infrastructure
requirements necessary for and entitlements governing
development of the Property.
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
Terms of Option
Section 1.01. Grant of Option. Arvida hereby grants
to Seagate the exclusive right to purchase the Property at a
price and under the terms and conditions set forth in this
Agreement. For purposes of this Agreement, the term
"Property" shall include the fee simple interest in and to
the real property described in Exhibit "A" hereto, subject
to current taxes and assessments and all covenants,
conditions, restrictions, rights-of-way, easements,
reservations and other matters of record, to the extent the
same are valid, existing and affect the Property; together
with all improvements under the ownership of Arvida
constructed thereon, any and all plans, development
entitlements, and related architectural and engineering
documents in Arvida's possession on the date the escrow
established pursuant to Section 3.01 of this Agreement
closes, all agreements related to development of the
Property that are in effect on the date escrow closes (to
the extent Arvida may assign its interests in such
agreements to Seagate), and any and all entitlements Arvida
may own, if any, to water and sewer capacity to serve the
Property that Arvida has the right and power to convey.
However, except as otherwise provided in Section 4.01 of
this Agreement, Arvida makes no representation or warranty
as to the condition of title to the Property, to the
validity or status of any entitlements to develop the
Property, to the accuracy or efficacy of any architectural
or engineering documents related to development of the
Property or to the availability, validity and sufficiency of
any water and sewer capacity to satisfy requirements to
develop the Property. It is the intention of the parties
hereto that following conveyance of the Property to Seagate
in accordance with the terms of the Agreement, Arvida shall
have no interest in the Property, with the exception of a
note secured by a deed of trust for the Cancellation Fee (as
that term is defined in Section 2.11 of this Agreement);
provided, however, that Seagate shall not receive any right,
title or interest in or to, or right to use the names
"Arvida," "JMB," "Arvida/JMB," or any derivatives thereof.
Section 1.02. Option Period and Automatic Termination.
The option granted hereunder shall commence on the date
first above written and shall remain in effect until 5:00
p.m., March 7, 1996 ("Option Period"). In the event Seagate
fails to exercise the option granted hereunder in accordance
with its terms and within the Option Period, the option and
all rights of Seagate under the Agreement shall immediately
and automatically terminate without notice. Thereafter, at
the request of Arvida, Seagate shall execute and promptly
deliver to Arvida a quitclaim deed in the form of Exhibit
"B," which is attached hereto and by this reference made a
part hereof.
Section 1.03. Option Consideration. The option
granted hereunder is made in consideration of payment of the
sum of twenty-five thousand dollars ($25,000.00) by Seagate
to Arvida, receipt of which is hereby acknowledged.
Section 1.04. Application of Option Consideration to
Purchase Price. In the event the option granted hereunder
is exercised in accordance with its terms, the option
consideration set forth in Section 1.03 of this Agreement
shall be applied to the Purchase Price (as that term is
defined in Section 2.03 of this Agreement).
Section 1.05. Retention of Option Consideration. In
the event the option granted hereunder is not exercised, the
option consideration set forth in Section 1.03 of this
Agreement shall be retained by Arvida in consideration of
granting the option.
Section 1.06. Exercise of Option. If Seagate is not
in breach of this Agreement, the option granted hereunder
may be exercised by execution and delivery to Arvida prior
to expiration of the Option Period of a Notice of Exercise
of Option in the form of Exhibit "C," which is attached
hereto and by this reference made a part hereof.
ARTICLE 2
Terms and Purchase and Sale
Section 2.01. Purchase and Sale of Property. In the
event of an election by Seagate to exercise the option
granted in Section 1.01 of this Agreement, Seagate shall
purchase from Arvida and Arvida shall sell to Seagate the
Property, together with the items of personal property
listed in Exhibit "D," which is attached hereto and by this
reference incorporated herein, as hereinafter provided.
Section 2.02. Contingent Sale.
(a) Seagate hereby acknowledges that the Property is
encumbered by a debt in favor of the Santa Margarita Water
District ("District") and/or Improvement District nos. 7 and
7A of the District in the amount of approximately sixty-two
million dollars ($62,000,000.00) ("Debt"). The Debt was
incurred as a result of a bond issue by the District, the
proceeds of which were used to finance certain water and
sewer infrastructure benefiting the Property. The annual
debt service required to repay the bonds is approximately
six million dollars ($6,000,000.00) per year, and is the
obligation of the owner of the Property. Seagate further
acknowledges that the District levies standby charges, ad
valorem taxes and assessments on the Property to pay the
debt service on the bonds and to finance other facilities
and operations of the District that benefit the Property.
Sale of the Property by Arvida to Seagate is contingent upon
(1) a full and unconditional release of Arvida by the
District from all liabilities or obligations connected with
the Debt and standby charges, ad valorem taxes and
assessments for payment of debt service on the Debt and
other facilities and operations of the District, including ,
but not limited to, liabilities or obligations arising out
of that certain Agreement for Payment of Diemer Intertie
Sublease Payments, Principal and Interest on Bonds of
Improvement District No. 7 and Annual Budget Deficits, by
and between Arvida and the District, dated as of January 15,
1990, and that certain Letter of Credit Agreement by and
between Arvida and the District, dated July 27, 1990, given
at or before conveyance of the Property to Seagate; (2)
agreement by the District to apply the proceeds of an eleven
million four hundred thousand dollar ($11,400,000.00) letter
of credit posted by Arvida with the District to the
outstanding bond debt service assessments owed by Arvida to
the District; (3) waiver by the District of all interest and
penalties, if any, applied by the District to the
outstanding standby charges, ad valorem taxes and
assessments for bond debt service and other facilities and
operations of the District allegedly owed by Arvida to the
District; and (4) agreement by the District that the
assessments for bond debt service and other facilities and
operations of the District for the District's 1995/96 fiscal
year shall be prorated as between Arvida and Seagate as of
the close of escrow established in accordance with Section
3.01 of this Agreement on the basis of a 365 day year.
(b) Seagate hereby acknowledges the deed of trust in
favor of Bank of America NT & SA ("Bank of America") that
encumbers the Property. Sale of the Property by Arvida to
Seagate is contingent upon approval of the sale in
accordance with the terms and conditions of this Agreement
by Bank of America, a full and unconditional release of
Arvida from any and all liability, including, but not
limited to, any deficiency resulting from the difference
between the amount of the encumbrance represented by the
deed of trust and the Purchase Price (as that term is
defined in Section 2.03 of this Agreement), and a full
reconveyance by Bank of America of said deed of trust as it
relates to the Property.
(c) Arvida has posted security with the City of San
Clemente, County of Orange, and other government entities in
compliance with California law, local ordinances and
development approval conditions. Sale of the Property by
Arvida to Seagate is contingent upon exoneration and/or
release of Arvida from any and all liability for the
subdivision improvement bonds, letters of credit and other
security instruments listed on Exhibit "E," which is
attached hereto and by this reference incorporated herein.
(d) Sale of the Property by Arvida to Seagate is
contingent upon assumption of Arvida's obligations by
Seagate and/or release of Arvida for any and all liability
under the contracts and agreements listed on Exhibit "F,"
which is attached hereto and by this reference incorporated
herein.
(e) Sale of the Property by Arvida to Seagate is
contingent upon a notification filing, if required, made
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the expiration or termination of any
applicable waiting period thereunder.
Arvida hereby agrees to use commercially reasonable
efforts to satisfy and/or resolve those contingencies set
forth in subsections (a)-(c) of this Section 2.02. As used
in this Section 2.02, "Arvida" shall mean Arvida/JMB
Partners, L.P.-II, any present or future Constituent Partner
(as that term is defined in Section 5.02 of this Agreement)
in or agent of Arvida, and shareholders, officers,
directors, members, managers, employees, trustees,
beneficiaries or agents of any corporation or other entity
that is or becomes a Constituent Partner in Arvida.
Section 2.03. Purchase Price. The purchase price to
be paid by Seagate for the Property shall be twenty-five
million dollars ($25,000,000.00) ("Purchase Price"), as
hereinafter provided.
Section 2.04. Terms of Payment of Purchase Price. The
Purchase Price shall be paid by Seagate to Arvida, as
follows:
(a) The sum of two hundred thousand dollars
($200,000.00) shall be tendered by Seagate at such time as
the Notice of Exercise of Option required by Section 1.06 of
this Agreement is delivered to Arvida as a deposit to be
applied to the Purchase Price ("Deposit"), which Deposit
shall be payable to Escrow Holder (as defined in Section
3.01 of this Agreement) for deposit in the escrow
established pursuant to Section 3.01 of this Agreement. At
the direction of Seagate, Escrow Holder shall place the
Deposit in an interest bearing federally insured account
with a financial institution of Seagate's choice.
(b) The balance of the Purchase Price shall be paid to
Escrow Holder for deposit in escrow at least five (5)
business days prior to the Closing Date (as defined in
Section 3.04 of this Agreement) in accordance with Section
3.06 of this Agreement, unless payment is made by wire
transfer, in which case the balance of the Purchase Price
may be deposited with Escrow Holder on the Closing Date.
Section 2.05. Examination of Title to Property. From
and after the date of this Agreement until March 12, 1996
("Title Examination Period"), Seagate shall examine the
preliminary report of the Property ("Preliminary Report")
prepared by First American Title Insurance Company, dated
February 1, 1996, a copy of which is attached hereto as
Exhibit "G," and by this reference incorporated herein, and
raise reasonable objections, if any, to any of the
provisions thereof ("Title Objections"). In the event
Seagate raises reasonable objections to any provisions of
the Preliminary Report during the Title Examination Period
(but not otherwise), Arvida shall employ commercially
reasonable efforts to resolve Seagate's objections prior to
expiration of the Due Diligence Period (as defined in
Section 2.06 of this Agreement). If called upon by Arvida,
and to the extent it is reasonably able to do so, Seagate
shall cooperate in the resolution of Title Objections,
except that Seagate shall have no obligation hereunder to
contribute financially to the resolution of Title
Objections. Resolution of Seagate's objections, if any, may
include purchase of title indemnities or use of other
commercially reasonable devices, subject to the reasonable
approval of Seagate, and/or payment of liens or encumbrances
out of a portion of the Purchase Price. The encumbrance on
the Property imposed by the District on account of bonds
issued and sold by the District and its Improvement District
nos. 7 and 7A and current standby charges, ad valorem taxes
and assessments levied therefor and for other facilities and
operations of the District discussed in Section 2.02 of this
Agreement shall in no way constitute a Title Objection for
purposes of this Agreement.
Section 2.06. Due Diligence Period. From and after
delivery of the Notice of Exercise of Option required by
Section 1.06 of this Agreement until 5:00 p.m., March 21,
1996, Seagate shall undertake, perform and complete its due
diligence effort with regard to the transaction contemplated
by this Agreement ("Due Diligence Period"). In the event
Seagate reasonably determines during the Due Diligence
Period that an impediment (other than a Title Objection) to
acquisition of the Property ("Defect") exists, Seagate shall
notify Arvida in writing as soon as possible following such
determination, but in any event prior to expiration of the
Due Diligence Period. Arvida may elect to remedy a
Defect(s), if such Defect(s) may be remedied by Arvida, by
giving Seagate written notice of such election within five
(5) business days of receipt of timely written notice from
Seagate of the existence of a Defect(s). In such event,
Arvida shall employ commercially reasonable efforts to
remedy such Defect(s). Arvida's notice of election to
remedy a Defect(s) reasonably determined by Seagate to exist
shall specify the number of days (if any), up to a maximum
of ninety (90) days, that the Due Diligence Period shall be
extended and the Closing Date postponed to permit Arvida
sufficient time to remedy the Defect(s). The encumbrance on
the Property imposed by the District on account of bonds
issued and sold by the District and its Improvement District
nos. 7 and 7A and standby charges, ad valorem taxes and
assessments levied therefor and for facilities or operations
of the District discussed in Section 2.02 of this Agreement
shall in no way constitute a Defect for purposes of this
Agreement.
Section 2.07. Remedy for Failure to Resolve Title
Objections and Defects. In the event Seagate timely asserts
the existence of Title Objections, and/or Seagate timely
asserts the existence of a Defect(s), and Arvida fails to
provide timely written notice of an election to remedy such
Defect(s), or if timely written notice is given and Arvida
fails to remedy such Defect(s), or fails to remedy Title
Objections on or before the Closing Date, plus any extension
of the Closing Date pursuant to Section 3.04 of this
Agreement, then Seagate shall elect to:
(a) Terminate this Agreement; or
(b) Proceed to perform its obligations under this
Agreement.
The election shall be made in writing. The failure of
Seagate to make a written election shall be deemed an
election of option (a) above. In the event the election in
option (a) is made, Arvida and Seagate shall jointly
instruct Escrow Holder to immediately refund to Seagate the
Deposit, accrued interest thereon, if any, and instruments
deposited by Seagate in the escrow established by Section
3.01 of this Agreement. As a condition precedent to release
of said Deposit and instruments, Seagate shall execute and
deliver to Arvida a quitclaim deed in the form of Exhibit
"B" hereto. In the further event the election in option (a)
is made, so long as Arvida has employed commercially
reasonable efforts to remedy any Title Objections and
Defect(s) reasonably raised by Seagate, Arvida shall have no
liability for termination of this Agreement.
Section 2.08. Nonrefundable Deposit. The Deposit
shall become nonrefundable and shall be released to Arvida
without further instructions to Escrow Holder on the later
to occur of expiration of the Due Diligence Period or
resolution of Title Objections and Defect(s) reasonably
raised by Seagate.
Section 2.09. Brokerage Commission. Arvida hereby
acknowledges the employment by Seagate of Orange Coast
Realty and Investments as a real estate broker in
conjunction with this transaction. A brokerage commission
of one million dollars ($1,000,000.00) ("Brokerage
Commission") shall be paid to Orange Coast Realty and
Investments by Escrow Holder from proceeds due Arvida in
accordance with Section 3.07(c) and (d) of this Agreement.
No other Brokerage Commission or consultant's or finder's
fee shall be payable out of the proceeds payable to Arvida
to any person or entity claiming to have dealt with Seagate,
and Seagate shall indemnify, defend and hold Arvida free and
harmless from any such claims.
Section 2.10. Appeal of Real Property Tax Assessments.
Arvida has appealed the assessments of the Orange County Tax
Assessor on the various parcels comprising the Property for
the current and prior tax years. In the event Arvida
prevails in such appeal, Arvida shall be entitled to the
full and complete refund of real property taxes resulting
from the appeal. In the further event any such refund is
paid subsequent to the close of escrow, Seagate shall pay
Arvida all such sums within five (5) days of receipt
thereof. This Section 2.10 shall survive the closing and
delivery of documents specified in Section 3.07 of this
Agreement and any termination of this Agreement.
Section 2.11. Cancellation Fee. In connection with
finalizing the transaction contemplated by this Agreement
with the Bank of America, Seagate shall pay a cancellation
fee to Arvida in the amount of nine million five hundred
thousand dollars ($9,500,000.00) ("Cancellation Fee")
pursuant to the terms and provisions of a promissory note
secured by a deed of trust encumbering the Property in favor
of Arvida. Said note shall not bear interest. Arvida
hereby agrees to subordinate the aforementioned deed of
trust to encumbrances on the Property required to secure
financing for Seagate's acquisition of the Property, and for
financing of development and/or construction of improvements
on, or of benefit to, the Property. Said deed of trust
shall provide that partial reconveyances required to remove
the encumbrance of the deed of trust from portions of the
Property sold to third parties in the course of development
of the Property shall be given by Arvida or its successors
in and to the note and deed of trust without charge to
Seagate. The recourse of Arvida and each of its successors
and assigns under or in connection with this Agreement in
enforcement of the provisions, terms and conditions of said
note and deed of trust shall be limited to Seagate's
interest in the Property only.
ARTICLE 3
Escrow and Closing Procedures
Section 3.01. Escrow. This Agreement shall also
constitute escrow instructions of the parties hereto to
First American Title Insurance Company, 114 East Fifth
Street, Santa Ana, California 92701 ("Escrow Holder"). Upon
receipt of an original counterpart of this Agreement
executed by both parties hereto, together with a copy of a
Notice of Exercise of Option, Escrow Holder shall
immediately establish an escrow for the purpose of
consummating the transaction contemplated by this Agreement.
Supplementary escrow instructions may be prepared by Escrow
Holder and, if so prepared and agreed to by Arvida and
Seagate, shall be executed by both parties hereto.
Section 3.02. Title. On the Closing Date, title to
the Property is to be free of liens and encumbrances other
than (a) those included in the Preliminary Report approved
by Seagate in accordance with Section 2.05 of this
Agreement; (b) those that arise subsequent to publication of
the Preliminary Report which are reviewed and approved by
Seagate, which approval shall not be unreasonably withheld;
or (c) those that are or will be resolved with title
indemnities or other commercially reasonable devices
reasonably approved by Seagate. Arvida shall furnish
Seagate at Arvida's expense an owner's standard CLTA policy
of title insurance ("Title Policy") issued by the Title
Company. Alternatively, at Seagate's request, Arvida shall
furnish Seagate an owner's standard ALTA policy of title
insurance; however Seagate shall pay any additional cost in
excess of the premium that would have been charged for the
Title Policy for issuance of an owner's standard ALTA title
insurance policy, all costs of any endorsements or other
extended coverage in excess of the coverage in the Title
Policy to be provided by Arvida, and the cost of preparing a
survey of the Property, if required.
Section 3.03. Escrow Costs and Charges. The usual and
customary costs and charges of Escrow Holder incurred in
establishing, maintaining and closing the escrow established
pursuant to Section 3.01 of this Agreement ("Escrow Costs")
shall be borne in equal amounts by the parties hereto. The
cost of the Title Policy shall be paid to the Title Company
by Escrow Holder and, together with Arvida's share of the
Escrow Costs, which shall include payment of the documentary
transfer tax assessed by the County of Orange, debited from
funds deposited in escrow by Seagate that are due Arvida on
the Closing Date. Seagate may direct Escrow Holder to cause
payment of the documentary transfer tax to be evidenced by
an affidavit rather than placement of documentary transfer
tax stamps on the face of the grant deed conveying the
Property from Arvida to Seagate.
Section 3.04. Closing: Time and Place. The
consummation of the transaction contemplated by this
Agreement shall take place on or before May 3, 1996
("Closing Date"), at the offices of Escrow Holder, unless
the Closing Date has been postponed in accordance with
Section 2.06 of this Agreement or by mutual agreement of the
parties hereto. In the event the transaction contemplated
by this Agreement fails to close by the Closing Date, plus
any extension thereof authorized by this Agreement, and
provided Arvida is not in default in the performance of its
obligations under this Agreement, Arvida may, in its sole
and absolute discretion, terminate this Agreement, and
Seagate shall have no further rights hereunder.
Section 3.05. Deposits by Arvida. Not later than one
(1) day prior to the Closing Date, Arvida shall execute and
acknowledge, as necessary, and deliver to Escrow Holder the
following documents for the purpose of consummating the
transaction contemplated by this Agreement:
(a) A grant deed conveying the Property from Arvida to
Seagate in the form of Exhibit "H," which is attached hereto
and by this reference incorporated herein; and
(b) A bill of sale in the form of Exhibit "I," which
is attached hereto and by this reference incorporated
herein, evidencing sale of the personal property listed in
Exhibit "D" hereto; and
(c) An assignment and assumption agreement in the form
of Exhibit "J," which is attached hereto and by this
reference incorporated herein, memorializing assignment of
all of Arvida's right, title and interest in and to those
contracts and agreements listed on Exhibit "F" hereto, and
assumption of Arvida's obligations thereunder by Seagate;
and
(d) Such further documents and instruments as may be
reasonably necessary to carry out and effectuate the
purposes of this Agreement.
Section 3.06. Deposits by Seagate. Seagate shall
deposit the sum of two hundred thousand dollars
($200,000.00) with Escrow Holder in accordance with Section
2.04(a) of this Agreement. On or prior to the Closing Date,
Seagate shall deposit the balance of the Purchase Price in
accordance with Section 2.04(b) of this Agreement. No later
than one (1) day prior to the Closing Date, Seagate shall
deliver to Escrow Holder the following for the purpose of
consummating the transaction contemplated by this Agreement:
(a) Seagate's share of the Escrow Costs in readily
available funds; and
(b) Such documents and instruments as may be
reasonably necessary to carry out and effectuate the
purposes of this Agreement.
Section 3.07. Closing Procedures. Provided the
contingencies set forth in Section 2.02 of this Agreement
have been satisfied, and all other obligations of Arvida and
Seagate under this Agreement have been met, Escrow Holder
shall proceed to close the escrow established pursuant to
Section 2.01 of this Agreement by taking the following
actions in the order set forth:
(a) Date all undated documents as of the Closing Date;
(b) Complete all blanks in all documents deposited
with Escrow Holder which are intended to be completed by
Escrow Holder on the Closing Date;
(c) Deliver to Arvida by wire transfer or other
similarly expeditious means the Purchase Price less Arvida's
share of the Escrow Costs, the cost of the Title Policy,
Seagate's option consideration paid to Arvida in accordance
with Section 1.03 of this Agreement, Seagate's deposit
pursuant to Section 2.04(a) of this Agreement, if such
deposit was previously paid by Escrow Holder to Arvida, and
the Brokerage Commission;
(d) Deliver to Orange Coast Realty and Investments a
check in the amount of the Brokerage Commission;
(e) Cause to be recorded the grant deed in favor of
Seagate deposited with Escrow Holder by Arvida;
(f) Deliver to Seagate a conformed copy of the grant
deed deposited with Escrow Holder by Arvida and the bill of
sale evidencing sale of the personal property listed in
Exhibit "D," hereto; and
(g) Deliver to the respective counsel for the parties
listed in Section 5.03 hereof, copies of all documents and
supplementary escrow instructions required by, or made
pursuant to, this Agreement.
Section 3.08. Rights of Escrow Holder.
(a) If the escrow established pursuant to Section 3.01
of this Agreement shall be the subject of or in any way
involved in any litigation or controversy, the parties
hereto shall jointly and severally hold Escrow Holder free
and harmless from and against any loss or expense that may
be suffered by it by reason of such litigation or
controversy.
(b) In the event conflicting demands are made or
notices served upon Escrow Holder with respect to this
escrow, the parties hereto expressly agree that Escrow
Holder shall have the absolute right, at its election, to do
either or both of the following:
(1) Withhold and stop all further proceedings in,
and performance of, the escrow; or
(2) File a suit in interpleader and obtain an
order from the court requiring the parties to interplead and
litigate in such court their several claims and rights
amongst themselves. In the event such interpleader suit is
brought, Escrow Holder shall ipso facto be fully released
and discharged from all obligations to further perform any
and all duties or obligations imposed upon it by this
Agreement.
(c) Escrow Holder shall not be held liable for
sufficiency or correctness of the form, manner of execution
or validity of any instrument that may be deposited into the
escrow, nor as to the identity, authority or rights of any
person executing the same, or for failure to comply with any
provisions of any agreement, contract or other instrument
filed herein, and Escrow Holder's duties hereunder shall be
limited to the safekeeping of such money, instruments, or
other documents received by it as Escrow Holder, and for the
disposition of same in accordance with the written
instructions set forth herein and any supplementary escrow
instructions executed by both parties hereto, and as
accepted by Escrow Holder in the escrow.
(d) Prior to the Closing Date or termination of this
Agreement in accordance with the terms hereof, neither party
shall have the right to withdraw the instruments or monies
deposited by it with Escrow Holder, except as otherwise
provided in this Agreement or in supplementary escrow
instructions executed by both parties hereto.
(e) The escrow instructions contained in this
Agreement may be supplemented by any form instructions
customarily used by Escrow Holder that are signed by both
parties hereto, provided that in the event of conflict, this
Agreement shall in all events control.
Section 3.09. Closing Responsibilities of Escrow
Holder. The parties hereto hereby designate Escrow Holder
as the party responsible for closing the transaction
contemplated by this Agreement and filing all required forms
prepared by the parties hereto, if any, with the appropriate
governmental authorities.
ARTICLE 4
Representations, Warranties, Disclaimers and Disclosures
Section 4.01. Representations and Warranties of
Arvida. Except for the express representations of Arvida
set forth in this Section 4.01, Seagate shall acquire the
Property "As Is," and Arvida makes no representations or
warranties with respect to such Property. Arvida hereby
makes the following representations and warranties to
Seagate, which are true and correct as of the date hereof
and will remain so as of the Closing Date:
(a) Arvida is a limited partnership duly organized and
validly existing and in good standing in accordance with the
laws of the State of Delaware, is authorized to do business
in California and is possessed of all power and authority
necessary to enter into and perform its obligations under
this Agreement.
(b) The persons whose signatures are affixed to this
Agreement on behalf of Arvida have been duly authorized to
execute this Agreement by Arvida.
(c) The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved
by all necessary corporate action on behalf of Arvida. This
Agreement has been fully and validly executed and delivered
by or on behalf of Arvida and, assuming this Agreement has
been duly authorized, executed and delivered by Seagate,
constitutes the legal, valid and binding obligation of
Arvida, enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws
affecting the rights and remedies of creditors generally, as
well as principles of equity, regardless of whether the
application of such principles is considered in a proceeding
in equity or at law.
(d) Arvida is not a "foreign person" within the
meaning of Section 1445(f) of the Internal Revenue Code, and
Arvida is exempt from withholding under California law due
to the fact that Arvida resides or has a permanent place of
business in California.
(e) Except as otherwise set forth in Exhibit "F" of
this Agreement, to Arvida's actual knowledge, without
inquiry or investigation, and subject to any rights of ACI
General Engineering Constructors to store various pieces of
earthmoving equipment on the Property and Rancho Mission
Viejo Company and/or Santa Margarita Company to graze cattle
on the Property, which storage and grazing rights may
survive the closing of this transaction, there are no leases
or other occupancy agreements or options or rights of first
refusal to purchase with any party which would affect the
Property, or any portion thereof, subsequent to the Closing
Date;
(f) Except as otherwise set forth in Exhibits "E" and
"F" of this Agreement, to Arvida's actual knowledge, without
inquiry or investigation, there are no maintenance
agreements, service contracts, construction contracts,
repair orders or other similar agreements with any party
which would affect the Property, or any portion thereof,
subsequent to the Closing Date;
(g) Seagate hereby acknowledges that (a) a number of
persons have served as officers, directors, members,
managers, employees, trustees, beneficiaries, attorneys and
agents of Arvida, or of a Constituent Partner (as that term
is defined in Section 5.02 of this Agreement) in Arvida, who
may no longer serve in such capacity and who may or may no
longer have any relationship or connection with Arvida, or a
Constituent Partner in Arvida; (b) Arvida has reduced its
workforce with respect to the Property to one (1) person;
and (c) notices from insurance carriers of Arvida,
governmental entities and authorities, potential adverse
parties and others directed to Arvida may have been received
by such persons and not reported to the present management
of Arvida, in which case Arvida is unaware of such notices.
Accordingly, the following representations and warranties of
Arvida are based upon Arvida's actual knowledge, without
inquiry or investigation, and Seagate hereby acknowledges
that Arvida has not undertaken any inquiry of any present or
former officer, director, member, manager, employee,
trustee, beneficiary, attorney or agent of Arvida or any
Constituent Partner in Arvida, or search of its mail logs,
files and records to determine whether such notices were
transmitted to or received by Arvida:
(1) Arvida has not received any written notice
from any of Arvida's insurance carriers of any material
defects in or inadequacies of the Property, or any portion
thereof;
(2) There are no pending insurance claims with
respect to the Property or any portion thereof;
(3) Arvida has not received any written notice
from any governmental authorities that eminent domain
proceedings for the condemnation of the Property are
pending;
(4) Arvida has not received any written notice of
any threatened or pending litigation against Arvida or the
Property which would materially and adversely affect the
Property;
(5) Arvida has not received any written notice
from any governmental authority that the improvements
located on the Property are presently in violation of any
applicable statute or ordinance;
(6) Arvida has not received any written notice
from any governmental authority that Arvida's use of the
Property is presently in violation of any applicable zoning,
land use or other law, order, ordinance, rule or regulation
affecting the Property;
(7) Except as disclosed in Section 4.04(b) of
this Agreement, Arvida has not (1) received any written
notice from any governmental authority that there has
occurred any release (as defined in California Health and
Safety Code sections 25320 and 25321) of Hazardous
Substances (as hereinafter defined) located on or beneath
the Property or that there has occurred any violation of any
law, order, ordinance, rule or regulation relating to
Hazardous Substances with respect to the Property; (2) been
required by any governmental agency to undertake any
remediation activity with respect to Hazardous Substances on
the Property; and (3) used, handled, released, generated,
produced, stored or transported upon the Property any
Hazardous Substances other than standard office, household,
pool, landscaping, other maintenance supplies, construction
supplies and other such substances used in the ordinary
course of business in usual and customary quantities. As
used herein the term "Hazardous Substances" shall mean and
include any and all toxic or hazardous substances, materials
or wastes listed in the United States Department of
Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances (40
CFR Part 302), or which is a "Hazardous Substance" under
California Health and Safety Code Section 25316, and in any
and all amendments to any of the foregoing in effect as of
the date hereof.
The representations and warranties of Arvida set forth
in this Section 4.01 shall survive the closing and delivery
of documents specified in Section 3.07 of this Agreement
until December 31, 1996, following which date they shall
expire and be of no further force or effect.
Section 4.02. Representations and Warranties of
Seagate. Seagate hereby makes the following representations
and warranties to Arvida, which are true and correct as of
the date hereof and will remain so as of the Closing Date:
(a) Seagate is a limited liability company duly
organized and validly existing and in good standing in
accordance with the laws of the State of California, is
authorized to do business in California and is possessed of
all power and authority necessary to enter into and perform
its obligations under this Agreement.
(b) The person whose signature is affixed to this
Agreement on behalf of Seagate has been duly authorized to
execute this Agreement by Seagate.
(c) The execution, delivery and performance of this
Agreement has been duly and validly authorized and approved
by all necessary corporate action on behalf of Seagate.
This Agreement has been fully and validly executed and
delivered by or on behalf of Seagate and, assuming this
Agreement has been duly authorized, executed and delivered
by Arvida, constitutes the legal, valid and binding
obligation of Seagate, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other
similar laws affecting the rights and remedies of creditors
generally, as well as principles of equity, regardless of
whether the application of such principles is considered in
a proceeding in equity or at law.
Section 4.03. Disclaimer by Arvida. Other than the
representations and warranties set forth in Section 4.01 of
this Agreement, Arvida makes no representations or
warranties regarding any aspect of the transaction
contemplated by this Agreement, the status of title to the
Property, or any liens and/or encumbrances thereon, the
validity and authenticity of any documents and instruments
inspected in contemplation of such transaction, whether
provided to Seagate by Arvida or obtained independently by
Seagate, the entitlements governing development of the
Property, any other matter affecting the business, legal
status and economic viability of the Property, the value of
the Property, or the suitability of the Property for
acquisition, investment or any other disposition by Seagate.
Seagate hereby agrees that it has not relied on any
representations or statements made by Arvida, its general
partner or any of their officers, directors, employees,
agents or attorneys regarding the Property or any aspect
thereof in determining whether to enter into this
transaction.
Section 4.04. Disclosure by Arvida. Arvida hereby
makes the following disclosures regarding the location and
condition of the Property:
(a) The property is, or may be, impacted by various
regional elements. These include, but are not necessarily
limited to: proximity to the Camp Pendleton Marine Corps
facility, the San Onofre Nuclear Generating Station, the TRW
Capistrano Test Facility, the Prima Deshecha Regional Park
and Landfill, overflight from military and/or civilian
aircraft from Tustin and El Toro Marine Corps Air Stations
and Camp Pendleton, proximity to high voltage electrical
transmission facilities, and the proposed Foothill
Transportation Corridor. In addition, most properties
throughout south Orange County, including the Property, are
subject to various road and public facility impact fees and
other conditions of development.
(b) On January 11, 1990, the contents of a canister
containing O-chlorobenzylidene malononitrile (Agent cs),
which is designated an extremely hazardous substance in
Title 22 California Code of Regulations of Section 66680,
was spilled on the Property, contaminating an area of
approximately 200 square feet at the location depicted on
Exhibit "K," which is attached hereto, and by this reference
incorporated herein. Such affected area was subjected to a
decontamination process under the supervision of the Orange
County Health Care Agency; however, no representation is
made by Arvida as to the effectiveness of such
decontamination process.
Arvida makes no representations a) with regard to the
severity of the impacts disclosed in the disclosures listed
above, nor the degree to which such impacts will inhibit or
prevent development of all or a portion of the Property or
interfere with the quiet use and enjoyment of the Property;
or b) whether such impacts are inclusive of all potential
adverse impacts that may inhibit or prevent development of
all or a portion of the Property or interfere with the quiet
use and enjoyment of the Property. There may be additional
adverse impacts as of the date of this Agreement. Seagate
hereby acknowledges the disclosures listed above, and agrees
that it is the duty of Seagate to thoroughly investigate the
Property, including, but not limited to, an investigation of
environmental/toxic contamination of the Property, the
environs of the Property, and plans for development of
surrounding properties, and determine what impacts, if any,
may exist or potentially exist that could inhibit or prevent
development of all or a portion of the Property or interfere
with the quiet use and enjoyment of the Property.
ARTICLE 5
Miscellaneous
SECTION 5.01. LIQUIDATED DAMAGES. IN THE EVENT
SEAGATE DEFAULTS IN THE PERFORMANCE OF THIS AGREEMENT, THE
PARTIES HERETO AGREE THAT ARVIDA SHALL BE RELEASED FROM ANY
OBLIGATION TO SELL THE PROPERTY TO SEAGATE AND ARVIDA'S SOLE
REMEDY SHALL BE TO RETAIN, AS LIQUIDATED DAMAGES, THE
DEPOSIT PAID TO ESCROW HOLDER PURSUANT TO SECTION 2.04(a) OF
THIS AGREEMENT. THE PARTIES HERETO FURTHER AGREE THAT THE
AMOUNT OF LIQUIDATED DAMAGES ESTABLISHED BY THIS SECTION
5.01 IS A REASONABLE ESTIMATE, UNDER THE CIRCUMSTANCES
EXISTING ON THE DATE OF EXECUTION OF THIS AGREEMENT, OF WHAT
ARVIDA'S DAMAGES WOULD BE IN THE EVENT OF DEFAULT BY
SEAGATE.
INITIALED BY ARVIDA: _________
INITIALED BY SEAGATE: ________
Section 5.02. Non-Recourse. Notwithstanding anything
to the contrary in this Agreement or in any other agreement,
instrument or certificate delivered in connection herewith,
neither Arvida, any present or future Constituent Partner in
or agent of Arvida, nor any shareholder, officer, director,
member, manager, employee, trustee, beneficiary or agent of
any corporation or other entity that is or becomes a
Constituent Partner in Arvida, shall be personally liable,
directly or indirectly, under or in connection with this
Agreement or any other agreement, instrument or certificate
delivered in connection herewith, or any amendments or
modifications to any of the foregoing made at any time or
times; the recourse of Seagate and each of its successors
and assigns under or in connection with this Agreement and
such other agreements, instruments and certificates, and any
such amendments or modifications, shall be limited to
Arvida's interest in the Property only, and Seagate and each
of its successors and assigns waive any such personal
liability. As used in this Section 5.02, a "Constituent
Partner" in Arvida means any direct partner in Arvida and
any person or entity that is a partner in any partnership
that, directly or indirectly through one or more other
partnerships, is a partner in Arvida. This Section 5.02
shall survive the closing and delivery of documents
specified in Section 3.07 of this Agreement and any
termination of this Agreement.
Section 5.03. Notices. Any notice, demand or document
any party is required or may desire to give or deliver to or
make upon any other party shall be in writing and delivered
in person, given or made by commercial delivery service
(such as Federal Express) or given or made by United States
registered or certified mail, postage prepaid, return
receipt requested, addressed to such party at its address
set forth below, subject to the right of any party to
designate a different address by notice similarly given.
Any notice, demand or document served personally shall be
deemed delivered upon receipt, and if served by mail or
commercial delivery service shall be deemed delivered on the
date of receipt as shown by the addressee's registry or
certification receipt or on the date receipt at the
appropriate address is refused, as shown on the records or
manifest of the U.S. Postal Service or commercial delivery
service. The addresses for Arvida and Seagate are:
For Arvida: Arvida/JMB Partners, L.P.-
II
26461 Crown Valley Pkwy.
Suite 100
Mission Viejo, CA 92691
Attention: Mr. Glen Allen
(714) 367-8660
With a copy to: James Motta, President
and
Chief Executive Officer
Arvida Company
7900 Glades Road
Boca Raton, FL 33434
(407) 479-1100
Arvida Company
7900 Glades Road
Boca Raton, FL 33434
Attention: General Counsel
(407) 479-1100
Stephen A. Lovelette,
Treasurer
Arvida Company
c/o JMB Realty
900 North Michigan Avenue
Chicago, IL 60611-1575
(312) 440-4800
AND
Nossaman, Guthner, Knox &
Elliott, LLP
18101 Von Karman Avenue
Suite 1800
Irvine, CA 92715
Attention: Gregory W.
Sanders, Esq.
(714) 833-7800
For Seagate: Seagate at San Clemente,
LLC
c/o Phillips Development
Company
18012 Skypark Circle
Irvine, CA 92714
Attention: Bill Phillips
(714) 261-8820
With a copy to: Allen, Matkins, Leck,
Gamble & Mallory
18400 Von Karman Avenue
Irvine, CA 92715
Attention: John Gamble, Esq.
(714) 553-1313
Section 5.04. Other Documents. The parties hereto
shall cooperate in good faith to accomplish the objectives
of this Agreement and to that end shall execute and deliver
from time to time such other and further instruments and
documents as may be necessary and convenient to the
fulfillment of those purposes.
Section 5.05. Effect of Invalidation. If any one or
more of the provisions of this Agreement is for any reason
held to be invalid, illegal or unenforceable in any respect
by any court of competent jurisdiction, such invalidity,
illegality and unenforceability shall not affect the
validity and enforceability of the other provisions hereof,
and this Agreement shall be construed as though such
invalid, illegal or unenforceable provision had never been
contained herein.
Section 5.06. Entire Agreement. This Agreement
contains the entire agreement between the parties hereto
with respect to the matters set forth herein, supersedes all
prior agreements, understandings and representations by or
between the parties with respect thereto, and may not be
modified, amended or terminated except by written agreement
signed by the party against whom enforcement is sought.
Section 5.07 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
for all purposes be deemed to be an original and all of
which together shall constitute one and the same agreement
of the parties. Any signature page to any counterpart may
be detached from such counterpart without impairing the
legal effect of the signatures thereon and thereafter
attached to another counterpart identical thereto, except
having attached to it any such additional signature pages.
Section 5.08. Captions. Captions of the Articles and
Sections of this Agreement are for convenience only and
shall not be considered or referred to in resolving
questions of interpretation or construction.
Section 5.09. Attorney's Fees. Should either or both
of the parties hereto institute any action or proceeding in
any court to enforce any provision(s) of this Agreement, the
prevailing party shall be entitled to receive from the
losing party reasonable attorneys' and expert witness fees
and costs incurred in such action or proceeding, whether or
not such action or proceeding is prosecuted to judgment, and
in any appeals, in such amount as the court determines is
reasonable.
Section 5.10. Governing Law. This Agreement and the
transaction contemplated herein shall be governed by and
construed under the laws of the State of California.
Section 5.11. Time of the Essence. Time is of the
essence of all matters set forth in this Agreement.
Section 5.12. No Waiver. No waiver by any party of
any breach by any other party of any provisions of this
Agreement shall be effective unless in writing signed by the
waiving party. No such waiver shall be deemed or construed
to be a waiver of any subsequent or continuing breach of the
same or any other provisions of this Agreement; nor shall
any forbearance by any party from the exercise of a remedy
for any such breach be deemed or construed to be a waiver by
such party of any of its rights or remedies with respect to
such breach.
Section 5.13. Number and Gender. Masculine terms used
in this Agreement shall include the feminine and vice versa;
neuter terms shall include both masculine and feminine; and
the singular shall include the plural and vice versa,
whenever the context shall require it.
Section 5.14. Assignment. No party shall have the
right to assign this Agreement without the prior written
consent of the other party, and any purported assignment
without such consent shall be void and, at the option of any
other party, shall constitute a material default; however,
notwithstanding the foregoing, either party hereto may (a)
assign its interest in this Agreement, including its rights,
duties and obligations with respect thereto, subject only to
the right of the nonassigning party to reasonably approve
the creditworthiness and financial ability of the assignee
and/or assignee's principals to perform the assigning
party's obligations under this Agreement; or (b) assign its
interest in this Agreement to an affiliated, subordinate or
related entity, without regard to the creditworthiness or
financial ability of such entity, so long as the assigning
party remains principally liable for performance of the
assignee's obligations under this Agreement. This Agreement
shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, representatives,
successors and assigns.
Section 5.15. Calculation of Time. The time in which
any act required or permitted by this Agreement is to be
performed shall be determined by excluding the day upon
which the event occurs from whence the time commences. If
the last day upon which performance would otherwise be
required or permitted is a Saturday, Sunday or holiday, then
the time for performance shall be extended to the next day
which is not a Saturday, Sunday or holiday.
Section 5.16. Relationship. Nothing contained in this
Agreement shall be deemed or construed by the parties or by
any third person to create a relationship of principal and
agent or partnership or a joint venture between Arvida and
Seagate or between either or both of them and any third
party.
Section 5.17. Escrow Cancellation Charges. If the
Escrow established pursuant to Section 3.01 of this
Agreement fails to close by reason of Arvida's default
hereunder, Arvida shall pay all escrow cancellation charges.
If the escrow fails to close by reason of Seagate's default
hereunder, Seagate shall pay for all escrow cancellation
charges. If the escrow fails to close for any reason other
than the foregoing, Arvida, on the one hand, and Seagate, on
the other hand, shall each pay one-half of the escrow
cancellation charges.
Section 5.18. Representation by Attorney. Each party
acknowledges that he or it has been represented by
experienced and knowledgeable legal counsel in negotiating
the form and contents of this Agreement.
Section 5.19. Recitals Incorporated by Reference. The
Recitals of this Agreement are incorporated herein by this
reference and made a part of this Agreement.
Section 5.20. Confidentiality. Prior to closing, this
Agreement, and the provisions, terms and conditions hereof,
shall not be disclosed to any third party without the
consent of the nondisclosing party; provided, however, any
party may disclose the existence of this Agreement and the
provisions, terms and conditions hereof to such party's
partners or investors, or when required to do so in order to
comply with filing and/or reporting requirements of any
governmental regulatory agency or any lawful order thereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
ARVIDA
Arvida/JMB Partners, L.P.-II
a Delaware limited partnership
By: Arvida/JMB Managers-II, Inc.,
a Delaware corporation, its
General Partner
By:
____________________________
Its:
______________________
SEAGATE
Seagate at San Clemente, LLC
a California limited liability company
By: _________________________
Its: ___________________
OC/960370014
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT B
FORM OF QUITCLAIM DEED
EXHIBIT C
FORM OF NOTICE OF EXERCISE OF OPTION
EXHIBIT D
SCHEDULE OF PERSONAL PROPERTY
EXHIBIT E
SCHEDULE OF SUBDIVISION IMPROVEMENT BONDS,
LETTERS OF CREDIT AND OTHER SECURITY INSTRUMENTS
EXHIBIT F
CONTRACTS AND AGREEMENTS
EXHIBIT G
PRELIMINARY REPORT
EXHIBIT H
FORM OF GRANT DEED
EXHIBIT I
FORM OF BILL OF SALE
EXHIBIT J
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT K
MAP OF CONTAMINATED AREA