When Recorded, return to:
Joseph P. Martori
Martori Enterprises Incorporated
2777 E. Camelback Road
Phoenix, Arizona 85016
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is made effective the 31st day of
March, 1994, by and between INDIAN WELLS PARTNERS, LTD., a California limited
partnership ("Seller"), and MARTORI ENTERPRISES INCORPORATED, an Arizona
corporation ("Buyer").
1. Option Agreements.
1.1. Upon execution hereof, this Agreement shall constitute a
binding contract between Buyer and Seller concerning 667 "Jerome," every year,
time share units at Los Abrigados Resort, Sedona, Arizona, consisting of (a) the
real property described on Exhibit "A" attached hereto (the "Real Property") and
(b) the contract rights of a Member described in Exhibit "B" attached hereto
(the "Membership Rights"). The Real Property and Membership Rights are referred
to collectively herein as the "Property," and individually or in the plural as a
"Unit" or "Units".
1.2 Commencing July 1, 1994, Seller shall have the option to
sell to Buyer, and Buyer shall have the obligation to purchase from Seller,
Units in accordance with the terms and conditions hereof (the "Sell Option").
The Sell Option shall consist of the Regular Option and the Bulk Option. The
Regular Option shall entitle Seller to sell to Buyer from time to time Units in
groups of twenty-five (25) Units; provided, however, that Buyer shall only be
required to purchase one such group of Units in any thirty (30) day period.
Seller may exercise its Regular Option upon no less than thirty (30) days prior
written notice to Buyer. The Bulk Option shall entitle Seller to sell to Buyer
from time to time one half (1/2) of Seller's then-remaining Units; provided,
however, that Buyer shall only be required to purchase one such group of Units
in any three hundred sixty five day (365) day period. Seller may exercise its
Bulk Option upon no less than one hundred eighty (180) days prior written notice
to Buyer. Upon exercise of the Bulk Option, Seller's Regular Option shall abate
for a period of one hundred eighty (180) days.
1.3 Commencing July 1, 1995, Buyer shall have the option to
purchase from Seller, and Seller shall have the obligation to sell to Buyer,
Units in accordance with the terms and conditions hereof (the "Purchase
Option"). The Purchase Option shall entitle Buyer to purchase from Seller from
time to time Units in groups of no less than twenty-five (25) Units. Buyer may
exercise its Purchase Option upon no less than thirty (30) days prior written
notice to Seller.
1.4 Any written notice provided under this Section 1 (the
"Option Notice") shall specify the Units the subject thereof and the date and
time of closing.
2. Purchase Price. The purchase price for each Unit shall be Two
Thousand One Hundred Dollars ($2,100.00) (the "Purchase Price"), in United
States funds, payable to Seller in cash, wire transfer or cashier's check drawn
on an institution and in a form acceptable to Seller.
3. Closing. Consummation of any purchase of Property contemplated
hereby (the "Close" or "Closing") shall take place on such date and at such time
as may be specified in the Option Notice. Except as provided below, such
Closings shall be without the necessity of an escrow and title insurance, and
rather will be between Seller and Buyer in accordance with the terms and
provisions of this Agreement.
4. Optional Title Insurance and Establishment of Escrow. Upon Buyer's
written election within ten (10) days after receipt of any Option Notice, an
escrow (the "Escrow") shall be established at such escrow company as may be
specified in such written election ("Escrow Agent") to facilitate consummation
of the purchase and sale of the Property in accordance with the terms and
conditions of this Agreement and said Option Notice and to provide Buyer, at its
sole cost and expense, an owner's policy of title insurance insuring its
interest in the Units the subject of the Option Notice. The cost of the Escrow
and all other closing costs not otherwise specifically provided for under this
Agreement shall be paid by Buyer. Upon such election, Buyer shall immediately
deposit a fully executed copy of this Agreement and the Option Notice with the
Escrow Agent. The opening of such Escrow shall be deemed to have occurred upon
the date of such deposit with Escrow Agent (the "Opening of Escrow"). As soon
thereafter as practicable, Buyer and Seller shall execute the printed form
escrow instructions of Escrow Agent, with such changes as the parties may agree,
and deposit same with Escrow Agent. Upon execution of the printed form escrow
instructions, this Agreement and the Option Notice shall become an addendum to
said printed form escrow instructions and together they shall constitute the
purchase contract for the Property the subject of the Option Notice and joint
instructions to the Escrow Agent. In the event of any conflict or inconsistency
between any provision of this Agreement and the Option Notice and any provision
in the printed form escrow instructions and the matters entered thereon, the
provision of this Agreement and the Option Notice shall control.
4.1. The paragraphs of Escrow Agent's printed escrow
instructions dealing with the "13 day" notice and cure period for default; all
provisions relating to real estate brokers or their commissions; and any
provisions agreeing to indemnify Escrow Agent from any form of its negligence or
intentional wrongful acts, are deemed stricken therefrom.
4.2. THE PARTIES UNDERSTAND AND AGREE THAT, EXCEPT AS MAY BE
PROVIDED IN THIS SECTION 4, NO TITLE INSURANCE IS BEING ISSUED IN CONNECTION
WITH THIS TRANSACTION AND THAT BUYER IS RELYING ENTIRELY ON ANY WARRANTIES,
COVENANTS AND REPRESENTATIONS OF THE SELLER HEREIN AND IN THE DEEDS DELIVERED
PURSUANT HERETO, NOTWITHSTANDING ANY INVESTIGATION OR KNOWLEDGE BY BUYER, WHICH
INVESTIGATION OR KNOWLEDGE SHALL NOT DIMINISH ANY RIGHTS OR REMEDIES OF BUYER
HEREIN.
5. Transfer. At Close, Seller shall convey fee simple title to the Real
Property to Buyer by executing and delivering a special warranty deed in the
form attached hereto as Exhibit "C" (the "Deed"). The Property will be conveyed
subject to that certain lease dated December 21, 1992 (and amended thereafter)
wherein Seller is Landlord and Los Abrigados Partners Limited Partnership, an
Arizona limited partnership, is Tenant (the "Lease"). Effective upon Close and
with respect to the Units the subject of the Close, and further subject to
Seller's properly assigning its rights under the Lease to Buyer, Buyer shall
assume the future obligations of Seller under the Lease. Buyer shall be entitled
to a pro-rata portion of the rent payable under the Lease, based upon the number
of Units it owns of the total 667 Units the subject of this Agreement.
Prior to each Close, Seller agrees to provide to Buyer a properly
executed and acknowledged "Non-Foreign Affidavit," Deed and Affidavit of Value
for the Units the subject of the Closing.
6. Remedies upon Default. Provided a party has then performed in all
material respects its obligations hereunder, in the event of the other party's
default, then such non-defaulting party shall be entitled to seek any remedy
available in law or equity, including without limitation specific performance of
this Agreement. If Buyer, without default on its part, is prepared to Close at
the Closing Date and Seller is in default on such date, Buyer shall not be
required to deposit the closing funds, or to leave same on deposit in any Escrow
if deposited (and Buyer may withdraw same upon demand including any interest
thereon), in order to exercise its rights and remedies hereunder.
7. No Brokers. The parties warrant to one another that neither has
utilized a broker, agent or finder (collectively "Broker") entitled to a
commission or other payment for this transaction. If any Broker shall assert a
claim to a fee, commission or other compensation on account of alleged
employment as a broker, agent or finder or for performance of services as a
broker, agent or finder in connection with this transaction, the party hereto
under whom the broker, agent or finder is claiming shall defend, indemnify and
hold harmless the other party against and from any such claim and all costs,
expenses and liabilities incurred in connection with such claim or any action or
proceeding brought thereon (including, but without limitation, counsel and
witness fees and court costs in defending against such claim). The provisions of
this paragraph shall survive the Close.
8. Seller's Representations, Warranties and Additional Covenants.
Seller hereby represents, warrants and covenants, as of the date hereof and as
of each Closing hereunder (with the understanding that Buyer is relying on said
representations, warranties and covenants), that:
8.1. Organization. Seller is a duly organized and validly
existing California limited partnership with full right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, and has taken all action necessary to authorize Seller's execution of,
and performance under, this Agreement.
8.2. Authority. The individual(s) executing this Agreement on
behalf of Seller is duly authorized to do so, and upon execution of this
Agreement by said individual(s) (and by Buyer), this Agreement shall be binding
and enforceable against Seller in accordance with its terms.
8.3. Litigation. There are no actions, suits, decrees, orders,
judgments, proceedings or investigations pending or threatened, by any person or
entity, governmental or otherwise, affecting any portion of the Property or any
interest therein, nor does Seller have any knowledge of any facts or conditions
that may give rise to same.
8.4. Compliance With Other Documents. The execution and
delivery of this Agreement and the documents described herein, the consummation
of the transactions contemplated thereby and the performance by Seller of its
obligations herein and under such documents will not result in any breach of, or
constitute a default under, any mortgage, deed of trust, lease, bank loan,
financing or security agreement, or any other instrument or agreement to which
Seller is a party or by which Seller may be bound or affected.
8.5. Status of Title on Deeds. Seller warrants that the status
of title to the Property will in each case be as stated in the Deed, which is
Exhibit "C" hereto, at the time of recording thereof with the Coconino County,
Arizona, Recorder in connection with the Closing.
It shall be a condition precedent to Buyer's obligation to further
perform or consummate its purchase of the Property that the Seller's covenants
in this Agreement shall be performed in a timely manner, and the Seller's
covenants, representations and warranties in this Agreement shall be true at the
date hereof and on and as of the Close. They and the following indemnity shall
survive the Close of Escrow and Seller will defend, indemnify and hold Buyer
harmless from all loss, cost, damages, judgments, claims, suits and expense
(including reasonable attorneys' fees) for any breach or inaccuracy in the
foregoing covenants, warranties or representations. No knowledge or
investigation by Buyer shall diminish or waive the effectiveness, validity and
binding nature of the covenants, warranties, representations and indemnity
herein.
9. Buyer's Representations, Warranties and Additional Covenants. Buyer
hereby represents, warrants, and covenants, as of the date hereof and as of each
Closing hereunder (with the understanding that Seller is relying on said
representations, warranties and covenants) that:
9.1. Organization. Buyer is a duly organized and validly
existing Arizona corporation with full right, power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby, and has
taken all action necessary to authorize Buyer's execution of, and performance
under, this Agreement.
9.2. Authority. The individual(s) executing this Agreement on
behalf of Buyer is duly authorized so to do, and upon execution of this
Agreement by said individual(s) (and by Seller), this Agreement shall be binding
and enforceable against Buyer in accordance with its terms.
It shall be a condition precedent to Seller's obligation to further
perform or consummate its sale of the Property that the Buyer's covenants in
this Agreement shall be performed in a timely manner, and the Buyer's
representations and warranties in this Agreement shall be true at the date
hereof and on and as of the Close. They and the following indemnity shall
survive the Close and Buyer will defend, indemnify and hold Seller harmless from
all loss, cost, damages, judgments, claims, suits and expense (including
reasonable attorneys' fees) for any breach or inaccuracy in the foregoing
covenants, warranties or representations. No knowledge or investigation by
Seller shall diminish or waive the effectiveness, validity and binding nature of
the covenants, warranties, representations and indemnity herein.
10. Condemnation or Destruction. In the event that prior to the Close
any portion of the Property is damaged or destroyed by any casualty or is taken
by condemnation or the exercise of the right of eminent domain or proceedings
therefor are instituted or threatened, at its election, Buyer may:
10.1. Cancel this Agreement, and all documents and sums
deposited by Buyer in Escrow (if any) shall be promptly returned to Buyer; or
10.2. Proceed with the purchase of the Property as provided in
this Agreement, and Buyer shall receive all proceeds of any insurance in the
case of damage or destruction, or the proceeds of any condemnation or eminent
domain proceeding and this Agreement shall otherwise remain in full force and
effect. In the event the proceeds of the insurance or condemnation do not equal
the full value of the portion damaged or taken, the Purchase Price shall be
reduced by the amount of the shortfall, with the adjustment to be made by refund
from Seller if the amount is not known until after Closing.
11. Risk of Loss. The risk of loss with respect to the Property to and
until the Close, including without limitation loss or damage to the Property by
fire, wind, storm, tornado or any other casualty, whether an act of God or
otherwise, shall be borne by Seller, except as may otherwise be expressly
provided in this Agreement.
12. Expenses. Except as may be expressly provided to the contrary in
this Agreement, Buyer shall bear all of the costs, expenses and fees (including
attorneys' fees) in connection with the transaction contemplated hereby.
13. Notices. Any and all notices required or permitted hereunder shall
be given in writing to the following parties, addressed as follows:
IF TO SELLER: Indian Wells Partners
Attn: Jerome M. White
10801 National Boulevard, Ste. 600
Los Angeles, California 90064
Telephone: (310) 474-9534
Telecopy: (310) 475-0985
and to:
Lawrence S. Held
250 Mira Verde Drive
La Habra Heights, California 90631
With Required
Copies To: George C. Wallach, Esq.
Brown & Bain, P.A.
2901 North Central Avenue
Phoenix, Arizona 85012
Telephone: (602) 351-8230
Telecopy: (602) 351-8516
IF TO BUYER: Martori Enterprises Incorporated
Attn: Joseph P.Martori
2777 E. Camelback Road
Phoenix, Arizona 85016
Telephone: (602) 957-2777
Telecopy: (602) 957-2780
IF TO ESCROW
AGENT (if any): To such address as Escrow Agent may
specify in writing
or at any other address designated by notice in writing by Buyer, Seller or
Escrow Agent. Any written notice that is telecopied to the number shown above,
or hand-delivered to the address shown above, shall be deemed a valid notice and
shall be effective when received. Any written communication mailed to the
addresses shown above shall be effective when received. Copies of all notices to
Buyer or Seller shall be given, at the same time and in the manner set forth
above, to Escrow Agent, if any. Copies of all notices by Buyer or Seller to
Escrow Agent shall be given, at the same time and in the manner set forth above,
to the other party hereto.
14. Attorneys' Fees. In the event either Seller or Buyer commences
litigation to enforce or interpret any of the terms or conditions of this
Agreement and/or to recover damages or for other relief on account of the breach
of this Agreement, the prevailing party in such litigation shall be entitled to
receive, in addition to all other relief to which such party shall be entitled,
all costs and expenses, including reasonable attorneys' fees, incurred by the
prevailing party (which costs and expenses shall be fixed by the court sitting
without a jury, the parties hereby waiving any entitlement to a trial by jury on
all issues in such litigation). If the court awards both parties relief, such
sums shall be awarded among the parties as the Court determines in its
discretion.
15. Possession. Buyer shall be entitled to possession of the portion of
the Property at the Close.
16. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties to this Agreement and their respective legal
representatives, successors and assigns.
17. Further Instruments and Documents. Each party hereto shall,
promptly upon the request of the other or Escrow Agent, have acknowledged and
delivered to the other any and all further instruments and assurances reasonably
requested or otherwise necessary to carry out the intent of this Agreement.
18. Construction. The parties agree that each party has reviewed this
Agreement and that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not apply to the interpretation
of this Agreement.
19. Severability and Waiver. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision hereof. Any waivers must be in writing and signed by the party
sought to be charged. The waiver by any party of a right provided hereunder
shall not be deemed to be a continuing waiver of that right or a waiver of any
other right.
20. Time. Timeliness is the essence of this Agreement. All times
referred to herein are Phoenix, Arizona times. The expiration time on the last
day to perform an obligation, or the last day of any stated period, shall be
5:00 p.m., unless specifically stated otherwise.
21. Assignment. Either Buyer or Seller may assign this Agreement
without the prior written consent of the other party.
22. Gender. The use of the masculine, feminine or neuter shall be
deemed to include the others when the context requires, and the use of the
singular or plural shall be deemed to include the other when the context
requires.
23. Counterparts. This Agreement may be executed in any number of
counterparts, and when a counterpart hereof has been executed and delivered by
both Buyer and Seller, this Agreement shall be deemed binding upon the parties
hereto.
24. Affidavit as to "Nonforeign" Status. On or before each Close, and
as a condition to Buyer's obligation to close, Seller shall deliver or cause to
be delivered to Buyer a "Nonforeign Affidavit" as defined in Section 1445 of the
Internal Revenue Code. In the event that Seller fails to provide the
certification provided for above, or if Buyer has actual knowledge that the
information contained in the certification is false, Buyer is expressly
authorized (but not required) to withhold (or direct Escrow Agent to withhold)
from the Purchase Price a sum equal to the amount required to be withheld
pursuant to Section 1445(a) of the Internal Revenue Code (as such amount shall
reasonably be determined by Buyer), which sum shall be paid by Buyer or Escrow
Agent to the United States Treasury pursuant to the requirements of Section
1445. Any amount so paid shall, nevertheless, be considered for all purposes as
a payment by Buyer to Seller on account of the Purchase Price.
25. Business Day. A "business day" is any day, other than a Saturday or
Sunday, on which ILX Incorporated's corporate offices are open for business
during normal business hours and is not a federal or State of Arizona, or State
of California holiday. If the due date of any performance falls on a
non-business day, the day of performance is extended to the next succeeding
business day.
26. Headings. The paragraph captions or headings contained herein are
inserted only for convenience of reference and are in no way to be used in the
interpretation of this Agreement or as a description, expansion, modification or
limitation of the scope of the particular paragraphs to which they refer. Any
reference to a paragraph shall include all its subparagraphs.
27. Exhibits. All exhibits attached to this Agreement are incorporated
herein by this reference.
28. Arizona Law. The parties agree that Arizona law will control both
this Agreement, any Escrow and the Closing documents and agree that any
litigation related to either this Agreement, any Escrow or the Closing documents
will have Maricopa County, Arizona, as the proper venue.
29. Integration. This Agreement contains the complete understanding and
agreement of the parties hereto with respect to the subject matter hereof, and
all prior representations, negotiations and understandings, written or oral, are
superseded hereby and merged into this Agreement. No party shall be liable or
bound to any other party hereto in any manner by any agreement, warranty,
representation or guarantee, except as specifically set forth herein or in any
instrument executed pursuant hereto.
30. Consideration. The parties hereto acknowledge and agree there is
adequate, good and valuable consideration in hand received for the making and
entering into this Agreement and each and every obligation and undertaking
herein.
31. "Doing Business Name". The parties acknowledge that Seller is
registered as a foreign limited partnership with the Arizona Secretary of State
under the trade name "Indian Wells Realty Partners Limited Partnership."
IN WITNESS WHEREOF, the parties agree to the foregoing.
SELLER: BUYER:
INDIAN WELLS PARTNERS, LTD., MARTORI ENTERPRISES
INCORPORATED
a California limited partnership an Arizona corporation
By: Lawrence S. Held By: Joseph P. Martori
-------------------------------- --------------------------------
Lawrence S. Held Joseph P. Martori
Its: General Partner Its: Chairman
The obligations of Buyer under this Option Agreement are personally guaranteed
to the fullest extent by Joseph P. Martori, a single man, and Edward J. Martori,
a single man.
Joseph P. Martori
-------------------------------------- ---------------------------------
Joseph P. Martori Edward J. Martori
STATE OF )
) ss.
County of )
On this the day of , 199 , before the
undersigned Notary Public personally appeared Lawrence S. Held, a General
Partner of INDIAN WELLS PARTNERS, LTD., a California limited partnership, and
acknowledged that as such officer, being authorized so to do, he/she executed
the foregoing Option Agreement for the purposes herein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------
Notary public
My Commission Expires:
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STATE OF Arizona )
) ss.
County of Maricopa )
On this the 29th day of March, 1994, before the undersigned Notary
Public personally appeared Joseph P. Martori , the Chairman of MARTORI
ENTERPRISES INCORPORATED, an Arizona corporation, and acknowledged that as such
officer, being authorized so to do, he/she executed the foregoing Option
Agreement for the purposes herein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Mia A. Green
--------------------------------------
Notary public
My Commission Expires:
May 14, 1994
SUMMARY
OF
EXHIBITS
EXHIBIT DESCRIPTION
------ -----------
A Legal Description
B Membership Rights
C Form of Deed from Seller
EXHIBIT "A"
LEGAL DESCRIPTION
LEGAL DESCRIPTION
An undivided 667/8,925 fee simple interest in and to the real property situated
in Coconino County, Arizona, more particularly described in Docket 1422, page
850, at the office of the Coconino County Recorder, Coconino County, Arizona.
Subject to the terms and conditions set forth in the Membership Plan for Sedona
Vacation Club at Los Abrigados (the "Plan") recorded on September 16, 1991, in
the official records of the Coconino County Recorder, Coconino County, Arizona
at Docket 1422, page 850.
EXHIBIT "B"
MEMBERSHIP RIGHTS
EXHIBIT "C"
FORM OF DEED FROM SELLER
When Recorded, return to:
Joseph P. Martori
Martori Enterprises Incorporated
2777 E. Camelback Road
Phoenix, Arizona 85016
SPECIAL WARRANTY DEED
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, INDIAN WELLS PARTNERS, LTD., a California limited
partnership ("Grantor"), hereby conveys to MARTORI ENTERPRISES INCORPORATED, an
Arizona corporation ("Grantee"), the following property situated in Coconino
County, Arizona, together with all rights and privileges appurtenant thereto:
an undivided /8,925 fee simple interest in and to the real property
situated in Coconino County, Arizona, more particularly described in
Docket 1422, page 850, at the office of the Coconino County Recorder,
Coconino County, Arizona.
Subject to the terms and conditions set forth in the Membership Plan
for Sedona Vacation Club at Los Abrigados (the "Plan") recorded on September 16,
1991, in the official records of the Coconino County Recorder, Coconino County,
Arizona at Docket 1422, page 850, and to current taxes and other assessments,
reservations in patents and all easements, rights of way, covenants, conditions,
restrictions, obligations and liabilities as may appear of record. Subject to
the foregoing matters, the Grantor warrants the title to Grantee, and to its
successors and assigns, against the acts of Grantor only against all persons
whomsoever.
This Warranty Deed shall not be conveyed separate from Grantee's Certificate of
Membership in Sedona Vacation Club Incorporated and all such conveyances or
transfers of any nature shall be accomplished in accordance with the terms and
conditions set forth in the Plan.
By Acceptance of this Warranty Deed, Grantee acknowledges that Grantee
shall have no right to compel a partition of the above described real property.
TYPE OF MEMBERSHIP: JEROME-EVERY YEAR
Dated this day of , 199 .
------- --------------------- --
INDIAN WELLS PARTNERS, LTD.,
a California limited partnership
Jerome M. White
Its: General Partner
By:
---------------------------------
Lawrence S. Held
Its: General Partner
STATE OF )
) ss.
County of )
On this the day of , 199 , before the
------ ------------------- --
undersigned Notary Public personally appeared
, the of INDIAN WELLS
---------------------------- --------------------------
PARTNERS, LTD., a California limited partnership, and acknowledged that as such
officer, being authorized so to do, he/she executed the foregoing Special
Warranty Deed for the purposes herein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------
Notary public
My Commission Expires:
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STATE OF )
) ss.
County of )
On this the day of , 199 , before the
------- ------------------ ---
undersigned Notary Public personally appeared
, the of INDIAN WELLS
---------------------------- --------------------------
PARTNERS, LTD., a California limited partnership, and acknowledged that as such
officer, being authorized so to do, he/she executed the foregoing Special
Warranty Deed for the purposes herein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------
Notary public
My Commission Expires:
----------------------