OPTION AGREEMENT
THIS OPTION AGREEMENT entered into this 25th day of July, 1994, by and between:
IMPERIAL PROPERTIES, an Arizona
general partnership Hereinafter referred to
4455 East Camelback, Suite 136C as "Optionor"
Phoenix, Arizona 85018
Facsimile (602) 952-1791
and
ILX INCORPORATED, an Arizona
corporation, Hereinafter referred to
2777 East Camelback Road as "Optionee"
Phoenix, Arizona 85016
Facsimile (602) 957-2780
In consideration of the payment of the sum of Ten Thousand Dollars ($10,000.00)
(the "Initial Option Money") by the Optionee to the Optionor, by check payable
to the order of the Optionor, the receipt whereof acknowledges, and also in
consideration of the promises, covenants and conditions hereinafter contained,
the parties agree as follows:
1. Grant of Option. The Optionor hereby irrevocably grants to the Optionee the
option (the "Option") to acquire, subject to the terms and conditions
hereinafter set forth, all of Optionor's right, title and interest in
certain unimproved real property containing, approximately 15.37 acres
located in Sedona, Coconino County, Arizona, together with all appurtenances
thereto and all of Optionor's water rights therein, if any, which property
is described in Exhibit A hereto (the "Property").
2. Term and Extended Term of Option. This Option shall continue in effect until
5:00 P.M. Mountain Standard Time (MST) on October 1, 1994 and may be
exercised in accordance with its terms at any time on or before its
expiration; provided, however, that this Option shall automatically expire
(without any notice from the Optionor to the Optionee) at 5:00 P.M. (MST) on
October 1, 1994, unless extended as provided herein.
3. Rights to Extend Option. Optionee shall have the right to extend the term of
the Option until 5:00 P.M. MST for nine additional periods of one calendar
month each (the last such period ending July 1, 1995 at 5:00 P.M. MST) by
paying to the Title Company (as defined in paragraph 7 herein) by certified
check or wired funds before the expiration of the Option (in addition to the
Initial Option money paid on the execution of this Option) the sum of Ten
Thousand Dollars ($10,000.00) for each such extension through the extension
which terminated at 5:00 P.M. MST on March 1, 1995 and Fifty Thousand
Dollars ($50,000.00) for each such extension thereafter, (the "Option
Extension Money"). All Option Extension Money, upon receipt by Title
Company, shall be promptly paid to Optionor. This Option shall automatically
terminate (without any notice from the Optionor to the Optionee) if the
Optionee does not, prior to the expiration of
EXHIBIT "A" & "B"
the Option pay to the Title Company by certified check or wired funds the
amount of the Purchase Price (as defined in Section 8 hereof) minus the
amount of the Initial Option Money and the Option Extension Money, if any
("Closing Money").
4. Exercise of Option. Optionee may exercise the Option herein only by paying
the Closing Money to the Title Company as provided herein prior to
expiration of the Option or any extensions thereof.
5. Failure to Exercise Option. If prior to the expiration of this Option or any
extension thereof, the Optionee does not pay to the Title Company the
Closing Money described in paragraph 3, the Optionor shall retain absolutely
all of the Initial Option Money and Option Extension Money, if any, paid as
consideration for the granting of or the extension of this Option. If the
Optionee pays the Option Extension Money and the Closing Money in accordance
with paragraphs 3 and 4, then Optionee shall be deemed to have fully
exercised this Option and the Initial Option Money and the Option Extension
Money, if any, shall be applied to the payment of the Purchase Price.
6. Sale Upon Exercise of Option. If the Option is exercised (in accordance with
its terms) the, Optionor shall sell and convey the Property to the Optionee,
and the Optionee shall acquire the Property through purchase from the
Optionor, subject to the terms and conditions contained in this Agreement.
7. Conditions of Sale. The conveyance of the Property under this Option shall
be subject to the following:
a. Present and future laws, ordinances, regulations restrictions, or orders
of any federal, state, county or municipal government or of any public
authority, including, without limitation, zoning and any other
restrictions imposed by governmental authority.
b. Facts that would be disclosed by an accurate survey or inspection of the
Property.
c. Those exceptions (the "Permitted Exceptions") as shown on that certain
Title Insurance Report No. 106078 attached hereto as Exhibit B and
issued effective June 15, 1994 (the "Commitment") issued by First
American Title Insurance Company (the "Title Company"), which Optionee
acknowledges approving by execution of this Option Agreement, and the
Updated Commitment as defined in paragraph 9, hereof.
d. Taxes and assessments imposed or assessed on the Property or accruing
after Closing (as defined).
8. Purchase Price. The purchase price for the Property (the "Purchase Price")
shall be the amount of Four Million Five Hundred Thousand Dollars
($4,500,000.00) The Purchase Price shall be payable by the Optionee on the
closing of this transaction (the "Closing") as follows:
a. The Initial Option Money in the amount of Ten Thousand Dollars
($10,000.00) shall be deemed credited to the benefit of the Optionee as
part payment on account of the Purchase Price.
b. The total Option Extension Money, if any, paid by Optionee to Title
Company shall be deemed credited to the benefit of the Optionee as
payment on account of the Purchase Price.
c. The balance of the Purchase Price shall be paid to Title Company in
cash, certified check or wired funds at exercise of the Option as
provided and payable to Optionor at Closing
9. Title. Within thirty (30) days after delivery of the Survey (as defined in
paragraph 14 hereof) to Optionor, Optionor shall cause the Commitment to be
updated to reflect any changes ("Survey Exceptions") by reason of said
survey (the "Updated Commitment"). Optionee shall then have thirty (30) days
from the receipt thereof to examine the Updated Commitment. In the event
Optionee fails to disapprove the Survey Exceptions in writing within said
thirty (30) day period, the Updated Commitment shall be deemed approved. In
the event Optionee disapproves any of the Survey Exceptions in writing and
Optionor does not cause such Survey Exceptions to be removed from the
Updated Commitment within thirty (30) days thereafter, Optionee may elect to
either (i) waive the Survey Exceptions and purchase the Property subject to
the Survey Exceptions; or (ii) elect to terminate this Option Agreement. In
the event that Optionee elects to terminate this Option Agreement, this
Option Agreement shall have no further force or effect.
10. Optionee's Right to Conduct Studies. Prior to the expiration of the Option,
the Optionee shall have the right to conduct feasibility studies on the
Property, such as engineering, surveying, zoning, financial, utility and any
further studies deemed necessary by the Optionee. All such tests and
activities shall be at the sole expense of the Optionee. Optionee shall
leave the Property in the same condition as it presently exists and will
repair or restore any damage caused thereby. Optionee will further indemnify
and save Optionor harmless from all damage, losses, claims, liens,
liabilities and expenses arising out of the entry of Optionee upon the
Property or the activities undertaken or performed by or on behalf of the
Optionee on the Property, together with reasonable attorneys fees, court
costs and other expenses incurred in connection with such damage or claims.
Optionee's obligations contained in this paragraph shall survive the
termination of this Agreement.
11. Escrow. Upon execution of this Option Agreement, the parties shall open an
escrow withthe Title Company as escrow agent to effectuate the transactions
contemplated hereby. The obligations relating to the Option (with the
exception of the payment of the Initial Option Money) and the Closing of the
purchase and sale of the Property shall be effected through the escrow. The
cost of customary escrow and closing fees shall be borne equally by Optionee
and Optionor. This Option Agreement shall not be merged into the escrow
instructions, but the latter shall be deemed ancillary to this Option
Agreement and the provisions of this Option Agreement shall be controlling.
12. Closing and Obligations at Closing. Subject to the automatic expiration of
this Option Agreement by the Optionee by failing to pay any of the Option
Extension Money due hereunder, the Closing shall take place at the office of
the Title Company, or at such other place as is mutually agreed to by the
parties within five business days after the Optionee's exercise of the
Option (the "Closing Date"). On the Closing Date, the obligations of the
Optionee and Optionor shall be as follows:
a. Optionee shall have caused the balance of the Purchase Price and its
portion of the closing costs to be paid into escrow subject to the
prorations as herein specified.
b. Optionor shall execute and deliver to Optionee through Escrow a Special
Warranty Deed, in form attached hereto as Exhibit C, delivering title to
the Property to Optionee subject only to those matters set forth in
paragraph 7, hereof.
c. Real estate taxes shall be prorated (based upon the most current
ascertainable tax bill and in accordance with local custom for
commercial transactions) as of the Closing Date.
d. Optionor shall pay for a standard owner's title insurance policy in the
amount of the Purchase Price. Optionee shall pay for any additional
title insurance coverage or endorsements.
e. All other expenses of the Property, including but not limited to, public
utility charges and rents, if any, shall be prorated as of the Closing
Date.
In the event Optionor complies with all requirements of this paragraph, the
Title Company shall without further notice, record the pertinent closing
documents at which time title and possession shall pass to Optionee.
13. Optionor's Representations. Optionor hereby makes the following
representations:
a. Optionor is duly organized and validly existing under the laws of the
State of Arizona and Optionor has full authority to enter into and
perform this Option Agreement, and the person or persons signing this
Option Agreement and any documents executed pursuant hereto on
Optionor's behalf have full power and authority to bind Optionor.
b. Optionor represents that there are no liens or encumbrances against the
Property other than those matters set forth in paragraph 7 above, and to
the best of Optionor's knowledge, there are no persons who claim rights
in the Property as licensees or lessees except the City of Sedona as a
lessee of a portion of the Property for parking, which lease may be
terminated on sixty (60) days' notice.
c. Except for the warranties as to the title as specifically set forth
herein, Optionee agrees that the Property shall be purchased in an "AS
IS" condition, with no representation or warranty of any type or nature
being made by Optionor. Optionee acknowledges and agrees that it is
purchasing the Property solely upon the basis of its investigation
described above and not on the basis of any representation, express or
implied, written or oral, made by Optionor or its agents, or employees.
Without limiting the generality of the foregoing, Optionor makes no
warranty as to the sufficiency of the Property for Optionee's purposes,
the environmental status of the Property, the square footage or acreage
contained within the Property, the accuracy of information contained in
documents delivered to Optionee which have been prepared by third
parties, the sufficiency or completeness of any plans for the Property,
or the approval of any governmental agency of any plans, plats, zoning,
or other development matters relating to the Property.
14. Survey. By execution hereof, Optionee acknowledges receipt of a survey of
the Property dated September 30, 1988 prepared by Landmark Engineering &
Survey, Inc. Within ninety (90) days after execution hereof, Optionee, at
its cost, shall either cause that survey to be updated or shall cause a
boundary and topographical survey of the Property to be prepared, either of
which shall bear a current date and shall include the legal description of
the Property and such matters as may be required by the Title Company to
issue an extended coverage owner's title insurance policy insuring title to
the Property (the "Survey"). The legal description of the Property in the
Survey, if different than Exhibit A, and if approved in writing by both
parties, shall become the legal description for all purposes of this Option
Agreement and shall replace the legal description in Exhibit A.
15. Default.
a. In the event Optionor fails or refuses to comply with the terms of this
Option Agreement, for any reason other than Optionee's failure to
perform its obligations as provided herein or its failure to make
payments required hereunder, Optionee shall only be entitled to enforce
this Option Agreement by specific performance.
b. In the event Optionee does not make the payments required herein or does
not perform as described herein at Closing, then all monies paid by
Optionee including the Initial Option Money and the Option Extension
Money shall remain the property of the Optionor as and for the
consideration of this Option Agreement.
c. Any notices required under this Option Agreement shall be sent by
facsimile, private carrier, personally delivered or certified mail,
postage prepaid, return receipt requested, addressed to the parties at
their addresses set forth herein with a copy to the Title Company.
Notices shall be deemed to be effective when received or delivered or on
the second business day after mailing.
16. Other Acts. Optionee and Optionor each hereby agree to perform such other
acts, and to execute, acknowledge, and/or deliver such other instruments,
documents, and materials (including escrow instructions) as may be necessary
to effect consummation of the transaction contemplated hereby.
17. Attorneys Fees. In the event either party is required to file an action in
order to enforce the terms of this Option Agreement or for a declaration of
rights hereunder, the prevailing party, as determined by the court in such
action, in addition to whatever other remedies it may be entitled, shall be
entitled to recover all of its court costs and attorneys fees as a result
thereof from the losing party.
18. Amendments. All amendments and/or supplements to this Option Agreement must
be in writing and executed by each party, however, such documents may be
executed in counterparts which shall be deemed to constitute one document.
19. Entire Agreement. This written Agreement is the entire agreement between the
parties relating to the subject matter hereof, and any representations,
warranties, promises, or conditions not incorporated herein shall not be
binding upon either party. This Agreement supersedes all preexisting
agreements between the parties and there are no other promises or
agreements, written or oral; and no agent of either party had or has
authority to make representations or other agreements which add to, delete
from, alter, modify or vary the covenants, terms or conditions of this
Agreement; and there have not been and are no other representations,
covenants, promises or agreements which have induced either of the parties
to enter into this Agreement.
20. Documents. All documents necessary to close this transaction shall be
executed by both parties prior to Closing and delivered to the Title Company
as escrow agent with instructions to hold such documents pending the actual
close of escrow.
21. Recording. The parties agree that a notice of the existence of this Option
Agreement in the form attached hereto as Exhibit D shall be executed and by
the parties and acknowledged at the time of the execution of this Option
Agreement. That notice shall be deposited with the Title Company as escrow
Agent along with one originally executed original of this Agreement and the
notice shall be recorded by the Title Company within ten (10) days after
execution of this Option Agreement. At the time of the execution of this
Option Agreement, a notice of termination of this Option in the form
attached hereto as Exhibit E shall also be executed by both parties and
acknowledged and shall be deposited with the Title Company as escrow agent
upon execution of this Option Agreement. Upon expiration or termination of
the Optionor or Optionee's failure to exercise the Option as herein
provided, the Title Company as escrow agent is directed by Optionor and
Optionee to record the Notice of Termination of Option.
22. Time of Essence. Time is of the essence in this Agreement. Notwithstanding
any provision herein to the contrary (including the times and dates set
forth in paragraphs 2 and 3 hereof) if a date specified herein for
performance falls on a Saturday or Sunday or date on which the Title
Company's office is closed, then the date for compliance shall be extended
through the next date when such office is open.
23. Commissions. Each party represents to the other that there are no
commissions owing to any real estate broker as a result of each party's
respective actions relating to the purchase of the Property pursuant to this
Option Agreement except that the Optionor has agreed and shall be
responsible to pay a commission to John D. Miller Real Estate Investments.
If such a commission is claimed b any third party against either the
Optionor or the Optionee the parties whose action cause the claim shall pay
or defend itself without claim against the other party to this Agreement and
shall indemnify such other party against any costs, losses or damages
incurred by such party because of any such claim.
24. Optionee's Owners Are Licensed Real Estate Brokers/Agents. All parties to
this Agreement hereby acknowledge that certain officers and directors of
Optionee and G.M. Sollenberger, a partner of the Optionor, are licensed real
estate brokers or agents in the State of Arizona.
25. Reporting of Property Investigation. Optionee agrees to provide Optionor
copies of all reports, studies and plans relating to the Property which are
prepared by independent third parties and obtained by Optionee. All reports,
studies and plans shall be retained in strict confidence by Optionor unless
the Option is terminated or expires or unless the Optionee fails to exercise
its Option in which event all original copies thereof shall be delivered to
Optionor and shall become the Optionor's property.
26. Successors. This Option Agreement shall be binding on the heirs, successors,
assigns and personal representatives of the parties hereto.
IN WITNESS WHEREOF the parties execute this Option Agreement as of the date
first above written.
IMPERIAL PROPERTIES, an Arizona
general partnership
By G.M. SOLLENBERGER
-----------------------------
G.M. Sollenberger, Partner
By R. ELDON SECHLER
-----------------------------
R. Eldon Sechler, Partner
ILX INCORPOPATED, an Arizona
corporation
By JOSEPH P. MARTORI, CHAIRMAN
-----------------------------
ACCEPTED FOR ESCROW
This Option Agreement shall constitute Escrow Agent's Escrow Instruction.
Escrow Agent is hereby released of any and all liabilities, claims, demands,
charges or costs whatsoever kind or nature in connection with the
disbursement(s) of the option extension money prior to close of Escrow and the
Optionor and Optionee understand that Escrow Agent has no responsibility and/or
liability whatsoever relative to the return of said funds should this Escrow
fail to consummation for any reason, including but not limited to:
1. Non-compliance by Optionor or Optionee with any of the terms, provisions
and/or conditions of this Option Agreement.
2. Any intervening matters of record subsequent to the date of the title
commitment that adversely affects the Optionor's ability to comply with the
terms and conditions of this Option Agreement.
3 . Escrow Agent or Title Insurer's unwillingness or inability for whatsoever
reason to close this escrow.
FIRST AMERICAN TITLE INSURANCE AGENCY OF
YAVAPAI, INC.
BY RAYMOND B. MARTIN
-----------------------------