EXHIBIT 10.8
NOTTINGHAM SIXTH ADDITION
OPTION AGREEMENT
1. DEFINITIONS.
1.1. DEFINITIONS OF PERSONS.
1.1.1. "SELLER" means BF Holding Company, a Minnesota
corporation.
1.1.2. "BUYER" means Xxxxxxxx Bros. Construction, Inc., a
Minnesota corporation.
1.1.3. "CITY" means the City of Maple Grove, a Minnesota
municipal corporation.
1.1.4. "COUNTY" means Hennepin County, Minnesota.
1.1.5. "TITLE INSURER" means Chicago Title Insurance
Company, a Missouri corporation.
1.2. DEFINITIONS OF REAL PROPERTY.
1.2.1. "LOT" means a numbered parcel of land in the Property
as shown on a recorded final plat or a City approved
preliminary plat as the possible site of a
single-family attached or detached residential
dwelling.
1.2.2. "PROPERTY" means the real property legally described
in EXHIBIT A.
1.3. DEFINITIONS OF OTHER TERMS.
1.3.1. "ACQUISITION AGREEMENT" means the Acquisition and
Closing Agreement between Buyer and Seller of even
date pursuant to which Seller purchased the Property
from Buyer.
1.3.2. "AGREEMENT" means this Option Agreement.
1.3.3. "AGREEMENT DATE" means June 9, 1998.
1.3.4. "BUSINESS DAYS" means all days other than Saturdays,
Sundays and legal holidays defined in Minnesota
Statutes ss. 645.44 for the purpose of serving civil
process.
1.3.5. "CLOSE" OR "CLOSING" means the completion of the
transaction whereby Buyer purchases one or more Lots
in the Property and Seller deeds such Lot(s) to
Buyer.
1.3.6. "CLOSING DATE" means the date on which the Closing of
each Lot occurs.
1.3.7. "DEVELOPMENT MANAGEMENT SERVICES" means the services
to be performed by Buyer pursuant to Section 5 of
this Agreement.
1.3.8. "HOLDING FEE" means an amount calculated monthly on
the average outstanding Project Investment balance
during the previous month, such calculation to be at
the rate of 18% per annum based on a 360 day year.
Buyer may, but need not, pay the Holding Fee monthly
as invoiced by Seller or Buyer may elect to accrue
any or all monthly Holding Fees, provided that
Purchase Price payments to Seller shall be credited
first against accrued but unpaid Holding Fees and
next to the outstanding Project Investment. Any
accrued and unpaid Holding Fees shall be added to the
outstanding Project Investment for purpose of
calculating each subsequent month's Holding Fee.
1.3.9. "OPTION PERIODS" and the Lot takedown schedule are
set forth in attached EXHIBIT E.
1.3.10. "PROJECT INVESTMENT" means the total sum of all funds
actually paid out by Seller in satisfaction of costs
directly related to the acquisition , land planning
and development of the Property, including but not
limited to (a) that portion of the Property purchase
price paid by Seller in cash, (b) project consultant
costs such as engineering, survey, environmental,
architectural, and similar professional fees, (c)
contractor and construction costs and the cost of
construction materials, (d) the cost of letters of
credit securing subdivision improvements, (e) title
costs, recording fees, deed taxes, real estate taxes
and special assessments on the Property, (f)
development fees, and (g) reimbursements paid to
Buyer for any of the foregoing expenses that may be
advanced after the Agreement Date by Buyer in the
course of performing Development Management Services.
The Project Investment does NOT include (i) any
portion of the purchase price of the Property
satisfied by a credit against the Option
consideration due from Buyer under this Agreement
(ii) any financing costs incurred by Seller,
including loan fees, points, interest, mortgage
registration fees, appraisal fees and other financing
or holding expenses of Seller (iii) legal,
accounting, appraisal or other expenses incurred by
Seller in connection with the negotiation,
documentation, closing or administration of this
Agreement or the Acquisition Agreement, and (iv) any
allocation of Seller's overhead or other
administrative expenses.
1.3.11. "PROJECT PROFORMA" means the schedule of the
projected and actual Project Investment, projected
Project Investment disbursement schedules, and
projected Lot Closings for the Property as approved
by the parties from time to time. The initial Project
Proforma is attached as EXHIBIT B hereto.
1.3.12. "PROJECT RETURN" means the amount which is the sum of
the Project Investment PLUS the Holding Fee.
1.3.13. "PURCHASE PRICE" means the purchase price of each Lot
determined in accordance with Section 3 below.
2. GRANT OF OPTION. Seller hereby grants to Buyer the exclusive Option to
purchase the Lots on the Property ("OPTION"), in accordance with the
terms and conditions of this Agreement.
2.1. OPTION CONSIDERATION. As consideration for the grant of the
Option (i) Buyer has paid Seller $281,938.00 in the form of an
offsetting credit against the purchase price of the Property
paid by Seller pursuant to the Acquisition Agreement, and (ii)
Buyer agrees to perform the Development Management Services.
2.2. OPTION PERIODS AND TAKEDOWN SCHEDULE. The initial and
sequential quarterly Option Periods, together with the Lot
takedown schedule, are specified in EXHIBIT E attached hereto.
In order to automatically extend the Option through each
successive quarterly Option Period, before the expiration date
of the then current Option Period Buyer must have Closed on
the total cumulative number of Lots specified in the takedown
schedule for the current quarterly Option Period. If Buyer
fails to meet any of the foregoing Closing deadlines or if
Seller believes that Buyer's performance to meet the deadline
was deficient in any respect, Seller shall promptly notify
Buyer of the deficiency and give Buyer at least five (5)
Business Days to cure the deficiency. If Buyer meets the
deadline with said 5-day grace period, this Agreement shall
remain in full force and effect. If Buyer fails to meet the
deadline with said 5-day grace period, this Agreement shall
expire without further notice.
2.3. EXERCISE OF OPTION. Provided that Buyer is not then in default
under this Agreement, Buyer may exercise this Option and buy
one or more whole platted Lots for the Purchase Price (but not
partial Lots) by delivering to Seller a notice exercising this
Option ("EXERCISE NOTICE"). The selection of Lots designated
for purchase in the Exercise Notice shall be at Buyer's sole
discretion, provided that all Lots remaining subject to the
Option have access to a public road right-of-way and municipal
utilities.
2.3.1. EXERCISE NOTICE. Buyer's Exercise Notice: (a) must
identify the Lot(s) to be acquired by Buyer pursuant
to the Exercise Notice; (b) must specify a Closing
Date for the purchase of the designated Lot(s); and
(c) must specify any title objections (in which case
the Exercise Notice shall be accompanied by a copy of
Buyer's title commitment and the documents forming
the basis of the title objection). The Closing Date
must be during the current Option Period.
2.3.2. REVERTED OBLIGATIONS. Pursuant to the Acquisition
Agreement Seller assumed specified obligations of
Buyer pertaining to the Property which are described
in the Acquisition Agreement as the "BFH ASSUMED
OBLIGATIONS." Seller shall be released from the
following executory BFH Assumed Obligations
("REVERTED OBLIGATIONS"):
i. Effective at the Closing of each Lot, Seller
is released from any executory BFH Assumed
Obligations pertaining to that Lot which are
not budgeted in the Project Proforma.
ii. Effective at the Closing of the final Lot or
group of Lots, Seller is released from all
remaining executory BFH Assumed Obligations
pertaining to the Property.
Buyer shall be responsible for performing any
Reverted Obligations as if the effective date
specified in subsections (i) and (ii) above, as
applicable. The foregoing shall not be deemed to
release Seller from timely performance of those BFH
Assumed Obligations that are required to be performed
prior to a Lot Closing.
2.3.3. LETTER OF CREDIT OBLIGATIONS. Following the Closing
of the final Lot or group of Lots at which the
Purchase Price is paid in full, Buyer shall exercise
diligent efforts to obtain as soon as possible the
City's release of all outstanding letters of credit
for the Property issued to the City as security for
performance of Seller's BFH Assumed Obligations
(including outstanding letters of credit securing
Reverted Obligations).
3. PURCHASE PRICE. The Purchase Price of each Lot is initially the amount
set forth in EXHIBIT D; provided that at any time during the term of
the Option either party may require a recalculation and an adjustment,
if necessary, of the Purchase Prices of those Lots for which Closing
has not occurred in order to reflect changes in the Project Proforma.
If Buyer exercises the Option to purchase all of the Lots, the Purchase
Price of the final Lot or group of Lots to Close shall be recalculated
as of the date of the final Closing. The adjusted Purchase Price of the
final Lot(s) to close shall be the Project Return minus the amount of
all Holding Fees and Lot Purchase Prices previously paid to Seller.
4. DEVELOPMENT PLAN; PROJECT PROFORMA. The parties have agreed upon (i) a
proposed plan for developing the Property as single family detached
residential lots with necessary streets, utilities, common areas and
other infrastructure improvements pursuant to the approved Project
Proforma and final and City approved preliminary plats for the Property
("DEVELOPMENT PLAN"). The Parties shall in good faith update the
Project Proforma quarterly and at such more frequent intervals as they
deem necessary or appropriate in order to reflect actual Project
Investment and results of operations or to adjust the Lot Purchase
Prices. Any material changes to or deviations from the Development Plan
or Project Proforma must be approved by the parties. Until Buyer
receives notice from Seller to the contrary, Xxxxxxx X. Xxxxxx is
Seller's "DESIGNATED REPRESENTATIVE" for purposes of approving
Development Plan and Project Proforma changes on behalf of Seller.
5. DEVELOPMENT MANAGEMENT SERVICES. Buyer shall manage and be responsible
for the day to day implementation of the Development Plan, including
coordinating and supervising all services by consultants and
contractors hired pursuant to the Development Plan. Buyer is
responsible for (i) processing and diligently attempting to obtain any
required zoning, rezoning or planned unit development approvals,
development agreements and permits, and utility service arrangements
for the Property, (ii) preparing, processing and administering plans,
specifications and contracts for the construction and installation of
all grading, streets, curbs, gutters, sanitary sewers, storm sewers,
water facilities and
infrastructure improvements contemplated by the Development Plan and
Project Proforma, and (iii) coordinating and supervising all
construction activities. Buyer shall also be responsible for forming
and operating the homeowner associations contemplated by the
Development Plan, and staffing positions on the board of directors and
officers of the associations, as necessary, until such time as control
of the associations pass to the residents. For so long as this Option
remains in effect, Buyer shall appoint one-third and Seller shall
appoint two-thirds of the members of the architectural committees of
the associations.
5.1. SELLER APPROVAL. All applications, plans, specifications,
contracts and other documents necessary for implementation of
the Development Plan after the Agreement Date must be approved
by Buyer and Seller's Designated Representative and must be in
the name of and executed by Seller as owner of the Property.
Seller will cooperate with Buyer in implementing the
Development Plan, including execution of plats, development
agreements, easements and other documents and instruments
reasonably necessary in order to complete the platting and
development of the Property.
5.2. PAYMENT OF PROJECT INVESTMENT COSTS. Seller is responsible for
paying all Project Investment costs (as described in Section
1.3.10 above) incurred to implement the Development Plan in
accordance with the approved Project Proforma, provided that
all invoices for Project Investment costs must first be
approved by Buyer. Subdivision improvements are being
constructed under a contract with the City and paid through
special assessments on the Property. On November 15th special
assessment principal and interest payments are certified to
the next year's tax rolls. To avoid a full year's interest
being charged to Lots which Buyer anticipates acquiring in the
following year, Buyer may request and Seller will pay in full
the special assessments on specified Lots designated in a
notice delivered to Seller on or before November 1st of the
year in which the certification is to occur. Buyer's request
for payment of special assessments shall not be deemed a
material change in the Development Plan or the Project
Proforma.
5.3. BUYER'S OVERHEAD COSTS. As consideration for the grant of the
Option, Buyer is responsible for paying its own overhead
expenses associated with the Development Management Services
furnished to Seller pursuant to this Section. Overhead as used
herein specifically includes salaries and payroll expenses of
Buyer's employees in directing, administering and supervising
development of the Property; all employee bonuses; the
services of the project manager and support staff necessary to
process and implement the Development Plan; general legal and
accounting fees; all transportation costs; and the operating
expenses of Buyer's home and branch offices such as rent,
utilities, insurance, stationery, office machines and supplies
and other office related expenses. Buyer is not entitled to
any fee or compensation for performing the Development
Management Services, even if Buyer does not exercise the
Option or Close on any Lots.
6. TITLE.
6.1. TITLE INSURANCE COMMITMENT. Buyer is responsible for obtaining
any title commitment or survey of the Property sufficiently in
advance of each scheduled Closing Date in order to satisfy any
title requirements of Buyer or Buyer's lender by the scheduled
Closing Date, subject to extension for title clearance matters
as provided below. Buyer shall pay for the cost of any survey
and title commitment.
6.2. TITLE OBJECTIONS; PERMITTED ENCUMBRANCES. Seller is
responsible for obtaining satisfaction of any mortgage(s) or
other monetary lien placed on the Property after title was
conveyed to Seller pursuant to the Acquisition Agreement. Any
other title objections of Buyer must be contained in Buyer's
Notice of Exercise of the Option or deemed waived. No
objections shall be made for the following "PERMITTED
ENCUMBRANCES":
6.2.1. LAWS AND ORDINANCES. Federal, state and local
building, zoning and environmental statutes,
ordinances and regulations;
6.2.2. MINERALS. Reservation of any minerals, or mineral
rights to the State of Minnesota;
6.2.3. ACQUISITION AGREEMENT EXCEPTIONS. All matters (other
than mortgages) existing at the time Buyer conveyed
title to Seller pursuant to the Acquisition
Agreement; and
6.2.4. DEVELOPMENT PLAN EXCEPTIONS. All matters resulting
from Buyer's implementation of the Development Plan
including, without limitation, recorded plats,
utility and drainage easements, development
agreements, covenants and restrictions and similar
matters.
6.3. TITLE CLEARANCE. If any objections to title are made as
provided in Section 6.2, Seller shall clear all the title
objections within sixty (60) days after receipt of Buyer's
written title objections.
6.3.1. TIME EXTENSIONS. Pending correction of title, the
following time extensions shall occur automatically:
i. The expiration date of the remaining Option
Periods shall be extended for a period of
time equal to the number of days after the
day Seller received Buyer's title objections
and through the day title has been made
marketable and Seller has so notified Buyer;
and
ii. If a Closing Date has been scheduled, it
shall be postponed until the later of the
scheduled Closing Date or ten days after
title has been made marketable and Seller
has so notified Buyer.
iii. Liens for liquidated amounts that can be
released by payment or escrow from proceeds
of the Closing shall not cause any such time
extensions.
6.3.2. BUYER'S REMEDIES. Title clearance by Seller shall be
reasonable, diligent and prompt. If the Closing
proceeds will be inadequate to pay all liquidated
liens or if title is not made marketable within sixty
(60) days after Seller received Buyer's written
objections to title, Buyer may within seventy (70)
days after Seller received Buyer's written objections
to title:
i. terminate this Agreement, whereupon neither
party shall have any further obligations
under this Agreement;
ii. waive the objections and accept title
subject to the objections;
iii. require Seller to commence proceedings to
correct non liquidated title objections,
said proceedings to be at Seller's sole
expense; or
iv. commence proceedings and/or advance funds to
correct the title objections and deduct the
cost thereof from the Purchase Price.
If Buyer does not timely give written notice of its election,
then Buyer shall be deemed to have elected to correct the title
objections pursuant to Subsection (iv).
7. PROPERTY ACCESS; LIABILITY INSURANCE. For so long as this Agreement is
in force, Buyer and its representatives may enter the Property for all
purposes reasonably necessary for Buyer to perform Buyer's Development
Management Services and for the design, preconstruction and marketing
of residences. Buyer shall defend, indemnify and hold harmless Seller
from any resulting liability, injury or damage to persons or property.
The indemnity provisions of this section shall survive the expiration,
termination or Closing of this Agreement. For so long as this Agreement
is in force, Buyer shall maintain (i) comprehensive general public
liability insurance with coverage of not less than $2,000,000 single
coverage limits for each occurrence of injury or property damage, and
(ii) evidence that Buyer maintains statutory workers compensation
insurance. The insurance required hereunder shall be evidenced by
certificates of insurance which shall designate Seller as an additional
insured and shall provide that not less than 10 days prior notice will
be given to Seller prior to cancellation or reduction in the coverage
or amounts. The evidence of insurance pursuant to this section shall be
furnished concurrently with the parties' execution of this Agreement.
8. INTELLECTUAL PROPERTY.
8.1. OWNERSHIP. Buyer and Seller acknowledge, stipulate and agree
that all drawings, plans, submittals and other documents
prepared for the Property and all governmental permits and
approvals obtained for the Property (collectively the
"INTELLECTUAL PROPERTY") shall remain Seller's property,
provided that (i) Buyer may utilize the Intellectual Property
for development of those Lots for which Closings have
occurred, (ii) upon Buyer's Closing on a Lot, any warranties
and contract rights in which Seller may then have an interest
relating to work, labor, skill or materials furnished in
connection with the design, development or improvement of such
Lot shall be deemed assigned to Buyer (such assignment shall
not preclude the assertion of such warranties and contract
rights by Seller with respect to Seller's interest in the
Property) , and (iii) Seller will transfer the Intellectual
Property to Buyer at no additional cost when Buyer Closes on
all Lots
in the Property. This paragraph shall survive the expiration
or termination of this Agreement and shall be enforceable at
law or in equity.
8.2. REPORTS. If this Agreement terminates and Buyer has not Closed
on all Lots in the Property, then upon request by Seller,
Buyer shall provide Seller with full-size copies of all
engineering reports, soil tests, surveys, topographical maps
and other Intellectual Property relating to the Property which
(i) were prepared as a part of Buyer's Development Management
Services or which are in Buyer's possession, and (ii) which
have not been furnished to Seller prior to such termination.
9. CONDITION OF PROPERTY
9.1. AS-IS PURCHASE. Buyer is thoroughly familiar with the
Property, having sold it to Seller pursuant to the Acquisition
Agreement. Therefore, except as expressly contained in this
Agreement, Buyer agrees to accept the condition of the
Property, including specifically without limitation, the
environmental and geological condition of the Property, in an
"AS-IS" and with "ALL FAULTS" condition. Buyer's acceptance of
title to a Lot represents Buyer's acknowledgment and agreement
that, except as expressly contained in this Agreement (i)
Seller has not made any written or oral representation or
warranty of any kind with respect to the Property (including
without limitation express or implied warranties of title,
merchantability, or fitness for a particular purpose); (ii)
Buyer has not relied on any written or oral representation or
warranty made by Seller, its agents or employees with respect
to the condition or value of the Property; (iii) Buyer has had
an adequate opportunity to inspect the condition of the
Property, including without limitation, any environmental
testing, and to inspect documents applicable thereto, and
Buyer is relying solely on such inspection and testing; and
(iv) the condition of the Property is fit for Buyer's intended
use. Buyer agrees to accept all risk of Claims (including
without limitation all Claims under any Environmental Law and
all Claims arising at common law, in equity or under a
federal, state or local statute, rule or regulation) whether
past, present or future, existing or contingent, known or
unknown, arising out of, resulting from or relating to the
condition of the Property, known or unknown, contemplated or
uncontemplated, suspected or unsuspected, including without
limitation, the presence of any Hazardous Substance on the
Property, whether such Hazardous Substance is located on or
under the Property, or has migrated or will migrate from or to
the Property.
9.2. RELEASE. Buyer, for itself, its directors, officers,
stockholders, divisions, agents, affiliates, subsidiaries,
predecessors, successors, and assigns and anyone acting on its
behalf or their behalf hereby fully releases and forever
discharges Seller from any and all Claims (including without
limitation all Claims arising under any Environmental Law and
all Claims arising at common law, in equity or under a
federal, state or local statute, rule or regulation), past,
present and future, known and unknown, existing and
contingent, arising out of, resulting from, or relating to the
condition of the Property, and Buyer hereby waives any and all
causes of action (including without limitation any right of
contribution) Buyer had, has or
may have against Seller and its directors, officers,
stockholders, divisions, agents, affiliates, subsidiaries,
predecessors, successors and assigns, grantors or anyone
acting on its behalf or their behalf with respect to the
condition of the Property, whether arising at common law, in
equity or under a federal, state or local statute, rule or
regulation. The foregoing shall apply to any condition of the
Property, known or unknown, contemplated or uncontemplated,
suspected or unsuspected, including without limitation, the
presence of any Hazardous Substance on the Property, whether
such Hazardous Substance is located on or under the Property,
or has migrated or will migrate from or to the Property.
9.3. INDEMNITY. To the extent permitted by applicable law, Buyer
agrees to indemnify, hold harmless and defend Seller and its
respective members, managers, agents, affiliates,
subsidiaries, predecessors, successors and assigns, grantors
or anyone acting on its behalf or their behalf for, from and
against any and all Claims (including without limitation all
Claims arising under any Environmental Law and all Claims
arising at common law, in equity or under a federal, state or
local statute, rule or regulation) past, present and future,
existing and contingent, known and unknown arising out of,
resulting from, or relating to the condition of the Property.
The foregoing shall apply to any condition of the Property,
known or unknown, contemplated or uncontemplated, suspected or
unsuspected, including without limitation, the presence of any
Hazardous Substance on the Property, whether such Hazardous
Substance is located on or under the Property, or has migrated
or will migrate from or to the Property, regardless of whether
the foregoing condition of the Property was caused in whole or
in part by the Seller's actions or omissions.
9.4. DEFINITIONS.
9.4.1. "ENVIRONMENTAL LAW" means the Comprehensive
Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss.
9601 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1201 et seq., the Clean Water Act,
33 U.S.C. ss. 1321 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Toxic Substances Control
Act, 33 U.S.C. ss. 1251 et seq., all as amended from
time to time, and any other federal, state, local or
other governmental statute, regulation, rule, law or
ordinance dealing with the protection of human
health, safety, natural resources or the environment
now existing and hereafter enacted; and
9.4.2. "HAZARDOUS SUBSTANCE" means any pollutant,
contaminant, hazardous substance or waste, solid
waste, petroleum product, distillate, or fraction,
radioactive material, chemical known to cause cancer
or reproductive toxicity, polychlorinated biphenyl or
any other chemical, substance or material listed or
identified in or regulated by any Environmental Law.
9.4.3. "CLAIM" or "CLAIMS" means any and all liabilities,
suits, claims, counterclaims, causes of action,
demands, penalties, debts, obligations,
promises, acts, fines, judgments, damages,
consequential damages, losses, costs, and expenses of
every kind (including without limitation any
attorney's fees, consultant's fees, costs, remedial
action costs, cleanup costs and expenses which may be
related to any claims).
10. CLOSING DOCUMENTS. The Closing of each Lot or group of Lots for which
Buyer has exercised the Option and delivery of all Closing documents
shall take place on the Closing Date at Buyer's offices, or at such
other place as may be agreed upon by Buyer and Seller. On the Closing
Date, Seller and Buyer shall execute, where necessary, and deliver to
each other the following:
10.1. DEED. A recordable Limited Warranty Deed, on Minnesota Uniform
Conveyancing Blank Form No. 23-M, conveying the Lot(s) from
Seller to Buyer, free and clear of all liens, charges and
encumbrances, except the Permitted Encumbrances and any other
matter approved or waived by Buyer;
10.2. SELLER'S AFFIDAVIT. An affidavit by Seller stating that on the
Closing Date (i) there are no unsatisfied judgments, tax liens
or bankruptcies against or involving the Seller, (ii) there
has been no labor or material furnished to the Property for
which mechanics liens could be filed (or Seller's undertaking
with Buyer's title insurance company for any potential
mechanics liens), and (iii) there is no other unrecorded
interest in the Property made or suffered by Seller;
10.3. MISCELLANEOUS DOCUMENTS. Any other documents reasonably
required by the Title Insurer.
10.4. PURCHASE PRICE; POSSESSION. At the Closing, Buyer shall
deliver to Seller the Purchase Price of the Lot(s) in cash,
cashier's check or certified funds. Seller shall deliver
possession of the Lot(s) to Buyer on the Closing Date.
11. CLOSING COSTS; IMPOUND
11.1. REAL ESTATE TAXES.
11.1.1. PRIOR YEAR TAXES. Seller shall pay all real estate
taxes due and payable in years before the Closing and
all real estate taxes which have been deferred (which
amounts are includable in Seller's Project
Investment).
11.1.2. CURRENT YEAR TAXES. There shall be no proration of
real estate taxes due in the calendar year of
Closing. Seller shall pay all installments of current
taxes with a delinquency date prior to the date of
Closing (which amounts are includable in Seller's
Project Investment) and Buyer shall pay all
installments with a delinquency date on or after the
date of Closing.
11.1.3. FUTURE YEARS TAXES. Buyer shall pay all real estate
taxes due in years after the calendar year of
Closing.
11.2. SPECIAL ASSESSMENTS. At the Closing, Buyer shall pay all
special assessments on the Lot, including levied, deferred,
pending and proposed special assessments.
11.3. TITLE INSURER COSTS. Buyer shall pay all title costs,
including the abstracting, photocopying and service charges
for any title insurance commitment and background title
documents required by Buyer, and the premium for any owner's
or lender's title insurance policy required by Buyer. Any
Closing fees charged by the Title Insurer shall be paid by
Buyer.
11.4. RECORDING FEES. Buyer shall pay all document recording fees
and mortgage registration taxes required in connection with
the transaction. Buyer shall pay the state deed tax,
conservation fees, and any recording fees and taxes for title
clearance documents.
11.5. IMPOUND FOR LETTER OF CREDIT OBLIGATIONS. At the Closing Buyer
shall deliver to Seller funds (the "IMPOUND") in the amount of
$1,756 for each Lot which is then Closing. The Impound shall
be held by Seller in an interest bearing account without
penalty for early withdrawal pending the City's release of the
letters of credit for the Property issued to the City by
Builders Development and Finance, Inc. (the "L/C's"). If the
L/C's are drawn upon by the City, Seller may retain the
Impound and interest thereon to the extent of the L/C
drawings. If and when the L/C's are surrendered by the City
for cancellation, then the Impound and interest thereon shall
be returned to Buyer. If at any time the Impound exceeds the
amount of the outstanding L/C's, any such excess shall be
immediately returned to Buyer.
12. SELLER'S REPRESENTATIONS AND WARRANTIES. Subject to those matters
encompassed within Buyer's Acquisition Agreement representations and
warranties to Seller, Seller represents and warrants to Buyer as
follows:
12.1. LITIGATION. Seller does not have knowledge of any litigation,
investigation, condemnation or legal proceedings of any kind
pending against Seller or against the Property.
12.2. HAZARDOUS WASTE. To the best of Seller's knowledge:
12.2.1. SELLER'S USE. During the time that Seller has owned
the Property, it has not been used for the storage or
disposal of any hazardous waste; and
12.2.2. NO NOTICE OF CONTAMINATION. Seller has received no
notice from any governmental authority concerning the
removal of hazardous waste from the Property.
"Hazardous waste" means any waste, substance or other material
which is defined by or determined by any federal, state or
local statute, regulation, ordinance or ruling to be
hazardous, toxic, poisonous or dangerous.
12.3. STORAGE TANKS. Except as disclosed to Seller by Buyer at the
xxxx Xxxxxx originally acquired the Property from Buyer,
Seller knows of no underground or aboveground storage tanks
that now exist or ever existed on any portion of the Property.
If any tanks are discovered on the Property, Seller shall be
responsible for removing the tanks and any soils contaminated
with materials (such as
petroleum products) which may have leaked from the tanks, and
the cost of such removal shall be included in the Project
Investment costs.
12.4. XXXXX. Except as disclosed to Seller by Buyer at the xxxx
Xxxxxx originally acquired the Property from Buyer, Seller
does not know of any xxxxx on the Property. Seller shall be
responsible for sealing all xxxxx in accordance with all
applicable laws, and the cost thereof shall be included in the
Project Investment costs.
12.5. INDIVIDUAL SEWAGE TREATMENT SYSTEM. Except as disclosed to
Seller by Buyer at the xxxx Xxxxxx originally acquired the
Property from Buyer, Seller does not know of any private sewer
system on the Property. Seller shall be responsible for
removing any private sewer systems on the Property and the
cost thereof shall be included in the Project Investment
costs.
13. REPRESENTATIONS AND WARRANTIES GENERALLY.
13.1. SELLER'S REPRESENTATIONS AND WARRANTIES CONDITION PRECEDENT.
Seller agrees that the truthfulness and continuing accuracy of
each and every representation and warranty in this Agreement
is a condition precedent to the performance by Buyer of its
obligations hereunder. Upon the breach of or material change
in any of Seller's warranties, Buyer may, prior to the Closing
Date, terminate this Agreement or Buyer may elect to Close
this sale.
13.2. BUYER'S ACQUISITION AGREEMENT WARRANTIES. Nothing in this
Agreement shall be deemed to amend or SUPERSEDE Buyer's
representations and warranties to Seller contained in the
Acquisition Agreement, which representations and warranties of
Buyer are hereby affirmed by Buyer and incorporated in this
Agreement as if set forth in their entirety.
13.3. SURVIVAL OF WARRANTIES AND REPRESENTATIONS. The parties'
representations and warranties in this Agreement shall be
deemed to have been remade as of Closing, as if made on and as
of such date, except for such factual matters, if any,
occurring subsequent to the date of this Agreement, which are
set forth in a certificate of changed circumstances delivered
on or before the Closing Date, which certificate upon delivery
shall be deemed to constitute a part of this Agreement,
provided that such matter shall not affect Buyer's termination
rights under Subsection 13.1. Consummation of this Agreement
by either party with knowledge of any breach by the other
party shall not be deemed a waiver or release of any claims
hereunder due to such breach. All representations and
warranties contained in this Agreement shall survive Closing.
14. CONDEMNATION. If any part of the Property is condemned under a power of
eminent domain, then Buyer may terminate this Agreement; or Buyer may
Close on the purchase and the condemnation proceeds received by Seller
shall be credited against the Purchase Price payable by Buyer.
15. NO BROKERS. Seller warrants to Buyer that Seller has not taken any
action in connection with this transaction which would result in any
real estate broker's fee, finder's fee, or other fee being due or
payable to any party. Buyer warrants to Seller that Buyer has not taken
any action in connection with this transaction which would result in
any real estate broker's fee, finder's fee,
or other fee being due or payable to any party. Seller and Buyer
respectively agree to indemnify, defend and hold harmless the other
from and against any and all claims, fees, commissions and suits of any
real estate broker or agent with respect to services claimed to have
been rendered for or on behalf of such party in connection with the
execution of this Agreement or the transaction contemplated herein.
Buyer hereby discloses that Buyer is a licensed real estate broker and
is purchasing the Lots for Buyer's own account.
16. NOTICE. Any notice or other communication under this Agreement shall be
in writing, addressed as follows:
If to Seller: Builder's Development, Inc.
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
with a copy to: Xxxxxx & Xxxxxxx
0000 Xxxxx Xxxx Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
If to Buyer: Xxxxxxxx Bros. Construction, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
with copies to: Xxxxxxxx Bros. Construction, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
and
Xxxxxxx, Street and Deinard P.A.
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Notices shall be deemed timely if sent on or before the deadline OR if
received on or before three Business Days after the deadline. Delivery
may be made by (1) United States Mail, registered or certified mail,
postage prepaid, return receipt requested; (2) commercial delivery
service with its customary receipts; or (3) noncommercial delivery with
a notarized affidavit of delivery to the relevant address. Any person
may change his address under this section by giving notice to the other
party.
17. INDEMNIFICATION.
17.1. BY BUYER. Buyer shall indemnify Seller, its successors and
assigns, against, and shall hold Seller, its successors and
assigns, harmless from, any fines, penalties, liabilities,
claims, suits, actions, damages, losses, costs and expenses,
including reasonable attorneys' fees, which Seller may incur
because of any of the following:
17.1.1. Breach of any of Buyer's representations and
warranties in this Agreement.
17.1.2. Breach of any Reverted Obligations.
17.1.3. Any and all claims arising from third parties as a
result of Buyer's performance of the Development
Management Services or other acts or omissions of
Buyer.
17.2. BY SELLER. Seller shall indemnify Buyer, its successors and
assigns, against, and shall hold Buyer, its successors and
assigns, harmless from, any fines, penalties, liabilities,
claims, suits, actions, damages, losses, costs and expenses,
including reasonable attorneys' fees, which Buyer may incur
because of any of the following:
17.2.1. Any and all claims arising from third parties as a
result of Seller's acts or omissions.
17.2.2. Breach of any of Seller's representations and
warranties in this Agreement.
18. MISCELLANEOUS.
18.1. SELLER'S BOOKS AND RECORDS. Seller shall keep and maintain
accurate financial books and records of the Project Investment
and the cost components of the Project Investment in
accordance with generally accepted accounting principals.
These financial books and records shall include all supporting
documentation relative to Project Investment costs. Seller's
books and records pertaining to the Project Investment shall
be made available to Buyer at reasonable times for inspection
and audit by Buyer at Buyer's sole cost and expense.
18.2. AMENDMENT. This Agreement may not be amended, waived, or
modified except by an instrument in writing executed by the
party against whom enforcement of such amendment, waiver or
modification is sought.
18.3. NO IMPLIED WARRANTIES. No representations or warranties have
been given by either party to the other which are not fully
embodied in this Agreement.
18.4. SEVERABILITY. If any term or provision of this Agreement is
invalid or unenforceable, the remainder of this Agreement
shall not be affected and shall remain in full force and
effect. It is the intention of the parties that if any
provision of this Agreement is held to be illegal, invalid or
unenforceable, there will be substituted in lieu thereof a
legal, valid and enforceable provision as similar in terms to
such unenforceable provision as is possible.
18.5. SURVIVAL. Except as may otherwise be expressly provided in
this Agreement, all covenants, agreements, obligations and
undertakings made by Seller and Buyer in or pursuant to this
Agreement shall survive Closing, whether or not so expressed
in the immediate context of any such covenant, agreement,
obligation or undertaking.
18.6. SUCCESSORS; NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of Seller and Buyer, and their
respective successors. This Agreement may not be assigned by
either party without the prior written consent of the other,
which consent may be withheld in its sole discretion for any
reason or no reason whatsoever. Notwithstanding the
immediately preceding sentence, Seller may collaterally assign
its rights (but not delegate its duties) under this Agreement
as security for such financing as Seller deems reasonably
necessary or appropriate to fund its Project Investment
obligations. Seller shall promptly notify Buyer of any
collateral assignment of its rights under this Agreement or
any mortgage or other monetary encumbrance of the Property.
Any such encumbrance of the Property shall be subordinate to
this Agreement and Buyer's Option, and Seller shall be
responsible for obtaining a satisfaction of any such
encumbrance with respect to any portion of the Property to be
transferred pursuant to this Agreement.
18.7. ATTORNEYS' FEES. If either party defaults under this
Agreement, the defaulting party shall be responsible for all
reasonable expenses (including attorneys' fees) incurred by
the other party in enforcing any rights and remedies under
this Agreement.
18.8. AUTHORITY TO CONTRACT. Seller and Buyer represent to each
other that the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby are
within each of the party's purposes and powers and all
requisite action has been taken to make this Agreement the
valid and binding obligation upon each of the parties hereto.
18.9. RECORDING. This Agreement shall not be recorded, but a
memorandum of this Agreement in the form of EXHIBIT C may be
recorded by either party. This Agreement and Buyer's Option
shall be a priority encumbrance on the Property and Buyer is
not required to subordinate its Option or rights under this
Agreement to any mortgage or other encumbrance affecting the
Property.
18.10. STANDARD OF PERFORMANCE. Subject to Section 18.6 regarding
assignments, any consent or approval required of a party shall
be evaluated in good faith and such consent or approval shall
not be unreasonably withheld. The standards for assignments
shall be as set forth in Section 18.6. The parties intend by
this provision to set forth their entire understanding with
respect to the standards pursuant to which their obligation to
give consents and approvals are to be judged and their
performance in that regard measured.
18.11. ENTIRE AGREEMENT. The Acquisition Agreement and this Agreement
embody the entire agreement and understanding between Buyer
and Seller relating to the Property. The Acquisition Agreement
and this Agreement supersede all prior agreements between the
parties relating to the Property.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Agreement Date.
SELLER: BUYER:
BF HOLDING COMPANY XXXXXXXX BROS. CONSTRUCTION, INC.
By By
----------------------------------- -----------------------------------
Its Its
-------------------------------- --------------------------------
EXHIBITS
A Legal Description of the Property
B Project Proforma
C Memorandum of Option
D Initial Lot Purchase Prices
E Option Periods and Takedown Schedule
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
All of the following described real property located in the City of
Maple Grove, Hennepin County, Minnesota:
Lots 1 through 20, Block 1;
Lots 1 through 7, Block 2; and
Lots 1 through 7, Block 3;
All in Nottingham Sixth Addition according to the recorded plat thereof.
EXHIBIT B
PROJECT PROFORMA
EXHIBIT C
MEMORANDUM OF OPTION
--------------------------------------------------------------------------------
(SPACE ABOVE FOR RECORDER/REGISTRAR USE)
NOTTINGHAM SIXTH ADDITION
MEMORANDUM OF OPTION FOR PURCHASE OF REAL PROPERTY
THIS MEMORANDUM of Option Agreement ("MEMORANDUM") is made as of June
9, 1998, by BF HOLDING COMPANY, a Minnesota corporation ("SELLER"), and XXXXXXXX
BROS. CONSTRUCTION, INC., a Minnesota Corporation ("BUYER").
PREAMBLE
A. Buyer and Seller have entered into that certain Option Agreement
dated June 9, 1998 ("OPTION AGREEMENT") whereby Buyer has granted to Seller an
Option to purchase individual Lots on the property described on EXHIBIT "1"
attached hereto ("PROPERTY").
B. Buyer and Seller desire to execute and record this Memorandum to
evidence the existence of the Option Agreement and Seller's rights thereunder.
THEREFORE, in consideration of the covenants and agreements contained
in the Option Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, Seller and Buyer agree as
follows:
1. GRANT OF OPTION. Buyer grants to Seller an Option to purchase the
Property on the terms and conditions set forth in the Option Agreement.
2. OPTION PERIOD. The Initial Option Period expires September 30, 1998;
provided that the Option may be extended to and including June 30, 2000, on the
terms and conditions specified in the Option Agreement.
3. PRIORITY OF OPTION. This Option and Buyer's rights to acquire the
Property pursuant to the Option Agreement is a lien on the Property with first
priority over any mortgage or other encumbrance of the Property that may be
recorded concurrently with this Memorandum.
4. LIMITED PURPOSE OF MEMORANDUM. The purpose of this Memorandum is
solely to give notice of the Option Agreement and all of its terms, to the same
extent as if the Option Agreement were fully set forth herein. This Memorandum
shall not be deemed to supplement, amend or modify the terms and conditions
contained in the Option Agreement. Except as expressly provided herein, words
and phrases in this Memorandum have the same meanings as defined in the Option
Agreement.
The parties have executed this Memorandum effective as of June 9, 1998.
SELLER: BUYER:
BF HOLDING COMPANY XXXXXXXX BROS. CONSTRUCTION, INC.
By By
----------------------------------- -----------------------------------
Its Its
-------------------------------- --------------------------------
THIS INSTRUMENT WAS DRAFTED BY:
XXXXXXX, STREET AND DEINARD (JCK)
Suite 2300
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
(000) 000-0000
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of
June, 1998, by _____________________, the ___________________ of BF Holding
Company, a Minnesota corporation, on behalf of the corporation.
----------------------------------------
Notary Public
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this ___ day of
June, 1998, by _____________________, the ___________________ of Xxxxxxxx Bros.
Construction, Inc., a Minnesota corporation, on behalf of the corporation.
----------------------------------------
Notary Public
EXHIBIT "1"
TO MEMORANDUM OF OPTION
LEGAL DESCRIPTION OF PROPERTY
All of the following described real property located in the City of
Maple Grove, Hennepin County, Minnesota:
Lots 1 through 20, Block 1;
Lots 1 through 7, Block 2; and
Lots 1 through 7, Block 3;
All in Nottingham Sixth Addition according to the recorded plat thereof.
EXHIBIT D
INITIAL LOT PURCHASE PRICES
EXHIBIT E
OPTION PERIODS
AND
TAKEDOWN SCHEDULE
-------------------- ---------------------------------- ----------------
OPTION PERIOD CUMULATIVE TOTAL(1) OF LOTS TO REQUIRED
EXPIRATION DATES BE CLOSED BY APPLICABLE TAKEDOWN PER
OPTION PERIOD EXPIRATION PERIOD
DATE
-------------------- ---------------------------------- ----------------
9/30/98 1 1
-------------------- ---------------------------------- ----------------
12/31/98 4 3
-------------------- ---------------------------------- ----------------
3/31/99 9 5
-------------------- ---------------------------------- ----------------
6/30/99 16 7
-------------------- ---------------------------------- ----------------
9/30/99 22 6
-------------------- ---------------------------------- ----------------
12/31/99 28 6
-------------------- ---------------------------------- ----------------
3/31/00 32 4
-------------------- ---------------------------------- ----------------
6/30/00 34 2
-------------------- ---------------------------------- ----------------
-------------------------
(1) The specified number of required Lot Closings for each Option Period is
INCLUSIVE of the Closings required for all previous Option Periods. Closings in
excess of the number specified for an Option Period shall apply to the Closing
requirements for the next Option Period(s). For example, if 4 Lots are Closed by
September 30, 1998, the Option Period shall be deemed extended through March 31,
1999.
