REAL PROPERTY PURCHASE AGREEMENT
This Agreement is made and entered into this 17th day of January, 2002, in
Glendale, Arizona, by and between Ussery Accounting Services, LLC, an Arizona
limited liability company, for the benefit of Muzz Investments, LLC, an Arizona
limited liability company (hereinafter "Buyer"), and AZCO Mining, Inc., a
Delaware corporation (hereinafter "Seller").
RECITALS
A. Seller owns in fee simple the real property consisting of approximately
5 acres and the building and improvements thereon. The street address of the
property is at 7239 North El Mirage Road, City of Glendale, County of Maricopa,
State of Arizona. The legal description which is attached hereto as Schedule A
and incorporated herein by this reference, which real property is hereinafter
referred to as the "Real Property."
B. Seller intends to sell to Buyer, and Buyer intends to purchase from
Seller, an undivided interest in the Real Property upon the terms and conditions
set forth hereinbelow.
NOW, THEREFORE, in consideration of the mutual covenants to be kept and
performed by the parties hereto and other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Agreement for Sale. The Seller agrees to sell and the Buyer agrees to
purchase an undivided Forty percent (40%) interest in the Real Property as
tenants in common upon the terms and conditions set forth hereinbelow. The Real
Property is being sold on an undivided interest basis, and not as an entire
parcel and not by the square foot. There shall be no adjustment in price for any
deviation from the square footage from that represented to any party. 2.
Purchase Price. The purchase price for the Real Property is Three Million and
no/100 Dollars -------------- ($3,000,000.00) (hereinafter the "Purchase
Price"). The Purchase Price shall be paid in full by wire transfer at close of
escrow.
3. Covenants and Restrictions.
3.1 Seller represents and warrants that, to the best of its knowledge, the
covenants, agreements, or other contractual limitations which may limit Buyer's
use of the Real Property will be disclosed in the title report from Westland
Title Agency of Arizona.
3.2 Seller represents and warrants to and covenants with Buyer that Seller
will have good and defensible title in fee to the Real Property on or before the
date of Close of Escrow, free and clear of all financial liens, by, through, or
under Seller, except only for those liens and encumbrances set forth in the
title report from Westland Title Agency of Arizona, and that, as of the Close of
Escrow, no other party shall have any rights in the Real Property.
3.3 Except as reflected in the preliminary title report at the time of
execution of this Agreement, there are no claims, actions, suits, or other
proceedings pending or threatened by any governmental department or agency or
any other corporation, partnership, entity, or person whomsoever, nor any
voluntary actions or proceedings contemplated by Seller, which in any manner or
to any extent may detrimentally affect Buyer's right, title, or interest in and
to the Real Property or the value of the Real Property or Seller's ability to
perform Seller's obligations under this Agreement.
3.4 Seller owns the Real Property in fee simple absolute, subject only to
the matters reflected in the preliminary title report.
3.5 There is no pending or threatened condemnation or similar proceeding
affecting any part of the Real Property, and Seller has not received any notice
of any such proceeding and has no knowledge that any such proceeding is
contemplated.
3.6 No work has been performed or is in progress at the Real Property and
no materials have been furnished to the Real Property which might give rise to
mechanic's, materialmen's, or other liens against any part of the Real Property.
3.7 Seller is not prohibited from consummating the transactions
contemplated by this Agreement by any law, regulation, agreement, instrument,
restriction, order, or judgment.
3.8 There are no parties in adverse possession of the Real Property; there
are no parties in possession of the Real Property except Seller and the holders
of the Leases; and no party has been granted any license, lease, or other right
relating to the use or possession of the Real Property other than the holders of
the Leases.
3.9 There are no attachments, executions, assignments for the benefit of
creditors, receiverships, conservatorships, or voluntary or involuntary
proceedings in bankruptcy or pursuant to any other laws for relief of debtors
contemplated or filed by Seller or pending against Seller or affecting or
involving the Real Property.
3.10 There is no default, nor has any event occurred which with the passage
of time or the giving of notice or both would constitute a default in any
contract, mortgage, deed of trust, lease, or other instrument which relates to
the Real Property or which affects the Real Property in any manner whatsoever.
3.11 There are no contracts or other obligations outstanding for the sale,
exchange, or transfer of all or any part of the Real Property.
3.12 There are no written modifications of the Leases other than those
which have been provided to Buyer. The Leases have not been modified by any oral
agreements.
3.13 There are no violations of laws, rules, regulations, ordinances,
codes, covenants, conditions, restrictions, instructions, or agreements
applicable to the Real Property. Seller has not received notices from any
insurance companies, governmental agencies, or any other person with respect to
violations concerning the Real Property. If any notices of violations are
received prior to Close of Escrow, Seller shall immediately submit copies to
Buyer and Buyer's review and acceptance shall be a condition precedent to Close
of Escrow.
3.14 Seller has taken all actions necessary to protect and preserve all
grandfathered water rights with respect to the Real Property.
3.15 There has been no production, discharge, disposal, or storage on,
from, or onto the Real Property or any lot or adjacent property, of any
petroleum products or hazardous waste, hazardous materials, or other toxic
substance or any activity which could have otherwise contaminated the Real
Property, and there is no proceeding or inquiry by any governmental body with
respect to contamination of the Real Property. Neither the Real Property nor any
improvements or fixtures located on the Real Property contain any hazardous
building materials or toxic substances, including, without limitation, asbestos,
or PCB's, and the Real Property does not contain and has never contained any
underground tank.
3.16 Seller shall have performed fully and complied with the Agreements
required to be performed or complied with by it prior to at the Close of Escrow,
including satisfaction of the requirements contained in the Requirements section
or Schedule B of the preliminary title report referred to in this Agreement.
3.17 Seller will not at any time prior to Close of the Escrow grant to any
person an interest in the Property.
3.18 Seller will not at any time prior to the Close of Escrow join in,
consent to, request, or apply for any change in the current zoning with respect
to the Property.
3.19 Seller expressly warrants that there is access to and from the Real
Property to a public street or highway.
3.20 Seller represents and warrants that it is a Delaware corporation in
good standing and that it and its Officer undersigned have the authority to
enter into this transaction and to execute all documents related to this
transaction.
3.21 Buyer represents and warrants that it is an Arizona limited liability
company in good standing and that it and its Member or Manager undersigned have
the authority to enter into this transaction and to execute all documents
related to this transaction.
4. Payment; Feasibility Period.
4.1 Earnest Money. Not required.
4.2 Payment of Purchase Price. Buyer shall pay to Seller the balance of the
Purchase Price, which is Three Million and no/100 Dollars ($3,000,000.00), less
closing costs at the Close of Escrow.
4.3 Inspections. Buyer shall have the right and option before the Close of
Escrow to perform such inspections, tests, studies, and analyses as it deems
necessary or appropriate.
5. Title, Survey, and Escrow.
5.1 Conveyance by General Warranty Deed. Seller shall duly execute,
acknowledge, and deliver to Escrow Agent, for recordation upon close of escrow,
a General Warranty Deed on Escrow Agent's standard form, conveying an undivided
interest in the Real Property to Buyer.
5.2 Affidavit of Value. Buyer and Seller shall execute, acknowledge and
deliver to Escrow Agent the Affidavit of Real Property Value required by Arizona
Rev. Statutes,ss.11-1134.
5.3 Title Insurance. As a condition of Buyer's obligation to close Escrow,
Westland Title Agency of Arizona Title Company shall be prepared to issue to
issue its standard coverage owner's policy of title insurance, insuring fee
title to the Real Property in the amount of the Purchase Price, free and clear
of all liens and encumbrances, subject only to the standard exceptions in the
policy and to matters in Schedule B of the Preliminary Title Report to be
prepared by the Title Agency and approved as follows: Seller shall cause (1) an
ATLA boundary survey of the Real Property (the "Survey") to be delivered to
Buyer before the Close of Escrow and (2) Title Agency to deliver to Seller and
Buyer a title commitment for the Real Property (the "Title Commitment") together
with all Schedule B documents. Buyer shall advise Seller within five (5) days of
receipt of each such item which Survey items or exceptions to the Title
Commitment, if any, will not be accepted by the Buyer. If Buyer fails to give
Seller notice of any objections to the Title Commitment or the Survey within
such period, Buyer shall be deemed to have accepted and approved the condition
of the Survey and the title as reflected in the Title Commitment. Seller shall
have five (5) days after receipt of Buyer's objections, if any, to give Buyer
notice: (i) that Seller will remove any objectionable exceptions from the Title
Commitment and provide Buyer with evidence satisfactory to Buyer of such
removal, or provide Buyer with evidence satisfactory to Buyer that the
exceptions will be removed prior to the Close of Escrow, or (ii) that Seller
elects not to cause such exception to be removed. If Seller fails to give notice
to Buyer within such period, Seller will be deemed to have given notice to Buyer
under clause (ii) on the fifth (5th) day after Seller's notice of objection. If
Seller gives or is deemed to have given notice under clause (ii), Buyer shall
have five (5) days to proceed with the purchase and take the Real Property
subject to the exceptions with no reduction in the Purchase Price or to
terminate this Agreement. If Buyer fails to give notice of its election within
five (5) days, then Buyer shall be deemed to have elected to terminate this
Agreement. If Seller gives notice pursuant to clause (i), but fails to remove
the objectionable title exception from the Title Commitment prior to Close of
Escrow, and the Buyer is unwilling to take title subject thereto, then Buyer may
elect to terminate this Agreement, and the Earnest Money, together with any
interest accrued thereon, shall be repaid to Buyer, and the parties shall be
excused from further performance hereunder.
5.4 Opening and Close of Escrow. Upon executing this Agreement, Seller
shall cause escrow to be opened at Westland Title Agency of Arizona, 7720 North
16th Street, Suite 300, Phoenix, Arizona 85020, Attention Helen Martinez Mendez
(hereinafter the "Escrow Agent"). "Opening of Escrow" shall occur on the date
that both a fully execute counterpart of this Agreement and the Initial Earnest
Money deposit have been received by the Escrow Agent. "Close of Escrow" shall
occur as soon as possible but not later than January 15, 2002.
5.5 Charges. All real property taxes, general and special bonds or
improvements, assessments, and other public or governmental charges or
assessments, liens, or encumbrances against the Real Property, including
assessments, liens, or encumbrances for sewers, water, drainage, or other public
improvements, accruing prior to the Close of Escrow shall be paid in full by the
Seller, whether or not such assessments or charges have been levied as of the
Close of Escrow. Real property taxes relating to the current tax year shall be
prorated between Seller and Buyer as of Close of Escrow, based upon the Buyer's
undivided interest in the Real Property and the portion of the real property
taxes for the tax parcels included within the Real Property and upon the latest
estimates available for the amount of taxes that will be due and payable with
respect to the real property.
5.6 Expenses of Escrow. Title insurance premiums and all other costs or
expenses of escrow shall be paid as follows: Seller shall pay the premium for a
standard owner's policy of title insurance in the amount of the Purchase Price.
In the event Buyer elects to obtain an extended coverage owner's policy of title
insurance, Buyer shall pay for the increased premium for an extended coverage
owner's policy of title insurance and the cost of any endorsements which the
Buyer may require, but Buyer shall not delay the Close of Escrow or increase any
amount to be paid by Seller hereunder. The cost of recording the Special
Warranty Deed to Buyer and any loan fees or recording fees for loan documents
shall be paid by Buyer. All expenses of Escrow and Closing, including other
recording fees, shall be allocated to and paid by Seller and Buyer in accordance
with the manner in which such costs are customarily paid by such parties in
sales of similar property in Maricopa County, Arizona, provided, however, that
each party shall pay its own attorneys fees.
6. Conditions Precedent.
6.1 Buyer's Receipt of Discounted Payoff of that certain Promissory Note
dated July 25, 2001, wherein Stardust Structured Investments No. 4, LLC as the
Debtor and Ussery Accounting Services, LLC for the benefit of Buyers as the
Payee.
6.2 Close of escrow for the property being sold herein, wherein American
Sand and Rock, Inc. is the Seller and Seller is the Purchaser in Escrow Number
02-00066-02 at Westland Title Agency of Arizona.
6.3 Seller and Buyer executing the Triple Net Lease on an undivided
interest of Industrial Land and Building for the Subject property.
6.4 Seller and Buyer executing a Deed of Trust on Seller's interest in
certain mining claims located at the Black Canyon Mica Mine, situated on the
borders of Maricopa and Yavapai Counties, Arizona.
6.5 Seller and Buyer executing a Repurchase Option for the benefit of
Seller.
6.6 Seller and Buyer executing a Sale Option for the benefit of Buyer.
6.7 Execution of a Co-Tenancy Agreement between Seller and Buyer.
6.8 Seller's delivery to Buyer of a Common Stock Purchase Warrant for
2,550,000 shares of common stock.
6.9 Seller shall provide to Buyer a Certified Resolution that all actions
of Seller, its shareholders or its Board of Directors necessary to authorize the
transactions contemplated by this Agreement, have been taken and that the
Officer who executes this Agreement is duly and properly authorized to do so on
behalf of Seller.
In the event that any of the foregoing conditions precedent is not
satisfied by the party responsible for satisfying it and is not waived by the
other party, the other party shall have the right to terminate this Agreement
effective immediately upon notice to the party who did not satisfy the condition
precedent and to the Escrow Agent.
7. Possession by Buyer. Possession of the undivided interest in the Real
Property shall be delivered to Buyer upon the Close of Escrow. Prior to Close of
Escrow, all risk of loss and damage to the Real Property from whatever source or
cause shall be the sole responsibility of Seller.
8. Plans and Environmental Report. Within three (3) days of executing this
Agreement, Seller shall deliver to Buyer a copy of each environmental report,
survey, plan, or other architectural renderings performed on the Real Property
which is in Seller's possession. These reports are supplied to Buyer as a
courtesy, and Seller makes no warranty or representation as to their accuracy or
completeness or as to Buyer's ability to rely thereon. Seller recommends that
Buyer conduct its own independent evaluation of the accuracy of any
environmental report, survey, plan, or other architectural renderings supplied
to Buyer by Seller.
9. Inspection and Information.
9.1 Independent Inspection. Buyer acknowledges that it has independently
inspected the Real Property and has made and entered into this Agreement based
upon its own inspection and its own examination of the condition of the Real
Property.
9.2 Information. Buyer acknowledges that any and all real property tax
information, engineering data, feasibility or marketing reports, soil reports,
or other information of whatever type Buyer has received or may receive from
Seller or its agents is furnished on the express condition that Buyer shall make
its own independent verification of the accuracy of such information. Buyer
agrees that it shall not attempt to assert any liability against Seller or its
agents for furnishing this information, and Buyer hereby covenants and agrees to
indemnify and hold harmless Seller and its agents from any and all such claims
of liability.
9.3 No Warranties. No person acting on behalf of Seller or Buyer is
authorized to make, and Seller and Buyer acknowledge that neither Seller nor
Buyer has made, any warranty, representation, guarantee, or promise, except as
set forth herein and in the documents described in Article 6. No agreement,
statement, representation, or promise made by Seller or Buyer which is not
contained herein or in the documents described in Article 6, shall be valid or
binding upon Seller or Buyer. The only representations or warranties with the
respect to the subject matter of this transaction, either express or implied by
law, are set forth herein and in the documents described in Article 6, and Buyer
and Seller each waive any right to any warranty implied by law.
10. Remedies.
10.1 Seller's Remedies. If Buyer defaults in Buyer's obligation to purchase
the Real Property within the time and in the manner prescribed in this
Agreement, Seller shall be released from all obligations in law and in equity to
convey the Real Property to Buyer. Seller and Buyer agree that it would be
impractical or extremely difficult to fix the actual damages suffered by Seller
as a result of Buyer's default, that all deposit money paid under Paragraph 4
above constitutes a reasonable estimate of Seller's damages in the event of
Buyer's default, and that all deposit money paid under Paragraph 4 above shall
be paid to and retained by Seller as liquidated damages in the event of Buyer's
default. Seller shall additionally have the right to file suit in law or in
equity against Buyer for Buyer's default.
10.2 Buyer's Remedies. If Seller defaults in Seller's obligation to sell
the Real Property within the time and in the manner prescribed in this
Agreement, Buyer's sole and exclusive remedy is either to (i) cancel and
terminate this Agreement, whereupon the Earnest Money shall be repaid to Buyer,
and Buyer shall be released from all obligations in law and in equity to
purchase the Real Property from Seller, or (ii) enforce specific performance of
this Agreement.
11. Notices. All notices or other communications made pursuant to this
Agreement shall be in writing and shall be deemed properly delivered, given, or
served when either (i) personally delivered against a signed receipt of
delivery, (ii) mailed by certified mail or registered mail, postage prepaid,
(iii) sent via reputable overnight delivery carrier, such as FedEx, or (iv) sent
via facsimile transmission to the parties as follows:
To Seller: AZCO Mining, Inc.
Attention: Lawrence Olson
7239 North El Mirage Road
Glendale, AZ 85307
Facsimile: (623) 935-0781
With a copy to: Moore & Benham, PLC
Attention: James Benham, Esq.
1144 East Jefferson
Phoenix, Arizona 85034
Facsimile: (602) 262-2943
To Buyer: Muzz Investments, LLC
Attention: Michael S. Musulin
13125 North 75th Place
Scottsdale, Arizona 85260
Facsimile: (480) 348-7459
With a copy to: Ussery Accounting Services, LLC
C/O Bessie Ussery
1144 East Jefferson
Phoenix, Arizona 85034
Facsimile: (602) 262-2943
All notices so given shall be deemed effective upon receipt or rejection at the
address of addressee if sent in accordance with this (i), (ii), or (iii) of this
paragraph or upon transmission if sent in accordance with (iv) of this
paragraph. Either party may change its address or facsimile number for the
purpose of this paragraph by giving the other party three days' written notice
of the change in the manner provided by this paragraph.
12. Real Estate Broker. Buyer represents and warrants that its Member and
Manager, Michael S. Musulin, is a licensed real estate broker in the State of
Arizona. Seller represents and warrants that it has not used a broker or realtor
in connection with this transaction. Each party hereby indemnifies the other and
shall hold the other harmless from and against any claims arising from the
breach of any warranty or representation of this paragraph.
13. Assignments and Binding Effect. Buyer intends that the Deed be issued
to Muzz Investments, LLC as replacement property in a Section 1031 Exchange.
Other than the Assignment to Muzz Investments, Buyer shall not assign this
Agreement or any interest herein without Seller's written consent, which consent
shall not be withheld unreasonably. If Seller consents to an assignment by
Buyer, Buyer shall sell, assign, and transfer to Assignee all of Buyer's right,
title, and interest to and in this Agreement. Assignee, by executing an
assignment approved by Seller, accepts all of Buyer's interest in this Agreement
and agrees to perform all of Buyer's obligations according to the terms and
conditions of this Agreement. This Agreement is binding upon and inure to the
benefit of the heirs, executors, administrators, successors, and assigns of the
parties. Notwithstanding the above, Buyer may assign this Agreement at any time
and without Seller's consent to an entity owned or controlled by Buyer.
14. Entire Agreement. Subject to the conditions precedent set forth in
Article 6 of this Agreement, this instrument constitutes the entire agreement
between the parties. Neither party shall be bound by any terms, conditions,
statements, or representations, oral or written, not herein contained. Each
party hereby acknowledges that in executing this Agreement, he or it has not
been induced, persuaded, or motivated by any promise or representation made by
the other party, unless expressly set forth herein. All previous negotiations,
statements and preliminary instruments by the parties or their representatives
are merged in this Agreement.
15. Amendments. This Agreement may be amended only by a written document
signed by each party to this Agreement.
16. Further Documents. Seller and Buyer shall expeditiously, diligently and
with good faith take such steps as are necessary to consummate the transaction
contemplated herein with all due haste and will fully cooperate and assist each
other in such matters as the context hereof dictates. Further, the parties
themselves or through and by their agents, shall execute and deliver any and all
further documents required to Close Escrow.
17. Counterparts. This Agreement may be executed in counterpart, each of
which shall be deemed an original but all of which together shall constitute one
Agreement.
18. Severability. Should any term, part, or provision of this Agreement or
any document required herein to be executed or delivered at Closing be declared
void, invalid, or unenforceable by any Court of competent jurisdiction, all
remaining terms, parts, or provisions shall remain valid and enforceable.
19. Time is of the Essence. Except as otherwise specifically stated in this
Agreement, the parties agree and acknowledge that time is of the essence in each
and every provision of this Agreement.
20. Survival. The provisions of this Agreement survive the Close of Escrow.
21. Exhibits. All exhibits and schedules attached hereto or referred to
herein are incorporated herein by this reference and made a part of this
Agreement as if set forth fully in the body of this Agreement.
22. Applicable Law. This Agreement shall be construed under and subject to
the laws in effect in the State of Arizona.
23. Interpretations.
23.1 Construction. The parties agree and acknowledge that each party and
its counsel have negotiated, reviewed, and revised this Agreement and that any
rule that ambiguities in the Agreement be construed against the drafting party
shall not apply in the interpretation of this Agreement or any amendments,
exhibits, or schedules hereto.
23.2 Interpretation. In this Agreement, the neuter gender includes the
masculine and the feminine, and the singular number includes the plural, and the
words "person" and "party" include corporation, partnership, individual, form,
trust, or association wherever the context so requires.
23.3 Recitals and Captions. The recitals and captions of the paragraphs and
subparagraphs of this Agreement are for the convenience and reference of the
parties only, and the words contained therein shall in no way be held to
explain, modify, amplify, or aid in the interpretation or construction of the
provisions of this Agreement.
24. No Recordation. Seller and Buyer agree that this Agreement shall not be
recorded, but that a memorandum of this Agreement may be recorded at the request
of any party.
25. Condition of Property. From the Opening of Escrow until the Close of
Escrow, Seller shall refrain from further encumbering, licensing, granting any
easements, rights of way, or other encroachments or contracting to do so,
provided, however, that Seller may be allowed to engage in this activity with
the written consent of Buyer, which consent shall not be unreasonably withheld.
26. Escrow Instructions. This Agreement shall constitute the Escrow Agent's
instructions.
27. Legal Representation and Attorneys Fees. It is hereby acknowledged by
all parties to this Agreement that this Agreement is being prepared by the law
firm of Moore & Benham, P.L.C., on behalf of the Seller. Seller shall be
responsible for paying any and all legal fees related to this transaction to
Moore & Benham, P.L.C. Inasmuch as Moore & Benham, P.L.C. has performed legal
services for Buyer on other, unrelated matters, Buyer consents to Moore &
Benham, P.L.C. representing only the Seller in this matter and waives any and
all real or potential conflicts of interest. Buyer has been informed and is
aware and acknowledges that it has been advised that it has every legal right to
seek its own independent counsel and has had the opportunity to do so. In the
event of any litigation between the parties hereto to enforce any provision or
right arising herein, the unsuccessful party in such litigation, as determined
by the Court, agrees to pay the successful party, as determined by the Court,
all costs and expenses, including, but not limited to, reasonable attorneys fees
incurred by the successful party, which fee is to be determined by the Court.
IN WITNESS WHEREOF, this Agreement was executed by the parties on the dates
set forth below.
SELLER: BUYER:
AZCO MINING, INC., a Delaware Ussery Accounting Services, corporation
LLC, an Arizona limited f/b/o Muzz Investments, LLC, an Arizona
liability company limited liability company
By:____________________________ By:_________________________________
Ryan A. Modesto, Secretary Bessie R. Ussery, Manager
Date: ______________ Date: ______________
APPROVED: APPROVED:
MUZZ INVESTMENTS, LLC
By:______________________________ By: ________________________________
Lawrence G. Olson, President Michael S. Musulin, Manager