EXHIBIT 10.34
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is entered into by Xxxxxx Travel
Centers, Inc., a Nevada Corporation ("Exchangor"), and XXXX XXX TITLE COMPANY,
INC., a New Mexico corporation ("Qualified Intermediary/Escrow Agent") based on
the following facts:
RECITALS
A. Exchangors own the following described real properties located in Las
Cruces, New Mexico (which are sometimes referred to individually as a
"Relinquished Property" and collectively as the "Relinquished Properties"):
1. Xxx 0 xx Xxxxxxx Xxxxxxxxxxx Xx. 0 Xxxxxx Xx. 0
B. Exchangor has entered into the following described agreements (which
are sometimes referred to individually as a "Sale Agreement" and collectively as
the "Sale Agreements") for the sale of the Relinquished Properties to
("Purchaser"):
1. An agreement December 2, 2003 for the sale of Xxx 0 xx Xxxxxxx
Xxxxxxxxxxx Xx. 0 Xxxxxx Xx. 0; and
C. Exchangor does not desire to sell the Relinquished Properties in
taxable transactions, but desire to transfer such properties to Qualified
Intermediary/Escrow Agent in exchange for one or more properties (collectively
the "Replacement Property") to be identified by Exchangor within the 45-day
period after the closing of the first of the Sale Agreements to close, in a
transaction that qualifies as a tax deferred exchange pursuant to Section 1031
of the Internal Revenue Code of 1986, as amended.
D. For a fee, as hereinafter stated, Qualified Intermediary/Escrow Agent
has agreed to facilitate such an exchange transaction.
NOW, THEREFORE, IT IS AGREED:
1. RELINQUISHED PROPERTIES.
1.1 TRANSFERS BY EXCHANGOR. Subject to the terms, conditions,
covenants and agreements herein,
1.1.1 Exchangor do hereby assign to Qualified Intermediary/Escrow
Agent all of their rights in and to the Sale Agreements;
1.1.2 Prior to the closing of each Sale Agreement, Exchangor
shall notify Purchaser that Exchangor has assigned its rights in such Sale
Agreement to Qualified Intermediary/Escrow Agent; and
1.1.3 On the closing of each Sale Agreement, Exchangor shall
transfer the Relinquished Property described in such Sale Agreement to Qualified
Intermediary/Escrow Agent by warranty deed, subject to matters of record and
such Sale Agreement.
1.2 TRANSFERS BY QUALIFIED INTERMEDIARY/ESCROW AGENT. Qualified
Intermediary/Escrow Agent shall, on the closing of each Sale Agreement, convey
the Relinquished Property described in such Sale Agreement to Purchaser pursuant
to such Sale Agreement.
1.3 LIMIT OF QUALIFIED INTERMEDIARY/ESCROW AGENT'S OBLIGATIONS.
Qualified Intermediary/Escrow Agent's sole obligation with respect to each
Relinquished Property is the obligation to convey it to Purchaser upon the terms
and conditions set forth in the Sale Agreement for such Relinquished Property.
All of the other obligations imposed upon Exchangor under the Sale Agreements,
including liabilities and obligations relating to representations and warranties
with respect to the Relinquished Properties, shall continue to be solely the
obligations of Exchangor.
2. SALES PROCEEDS. Qualified Intermediary/Escrow Agent shall deposit the
net proceeds from the sale of the Relinquished Properties to Purchaser (the
"Exchangors' Property Proceeds") into a separate escrow account established by
Qualified Intermediary/Escrow Agent (the "Escrow Account") under this Agreement,
subject to the following terms:
2.1 Qualified Intermediary/Escrow Agent shall be the trustee of the
Escrow Account. Exchangor shall be the beneficiary of the Escrow Account.
2.2 The Escrow Account shall be an interest bearing account in a
federally insured bank or as otherwise directed in writing by Exchangor.
2.3 Exchangors' rights to receive, pledge, borrow or otherwise obtain
the benefit of the Escrow Account are hereby limited to the circumstances
described in paragraph 5 hereof.
2.4 Exchangor shall be entitled to receive interest earned upon the
Escrow Account, but such right shall be limited to the circumstances described
in paragraph 5 hereof.
3. REPLACEMENT PROPERTY.
3.1 DESIGNATION. Exchangor shall identify the Replacement Property by
delivering to Qualified Intermediary/Escrow Agent, within the "Identification
Period," one or more written notices signed by Exchangor unambiguously
describing the Replacement Property. The "Identification Period" begins on the
closing of the first of the Sale Agreements to close and ends at midnight on the
45th day thereafter. Exchangor may identify up to three (3) different
replacement properties, or any number of replacement properties so long as their
aggregate fair market value does not exceed two hundred percent (200%) of the
fair market value of the Relinquished Properties. Exchangor may revoke any
identification of replacement property by delivering to Qualified
Intermediary/Escrow Agent, within the Identification Period, written notice
signed by Exchangor.
3.2 ACQUISITION OF REPLACEMENT PROPERTIES. Exchangor shall be solely
responsible for negotiating and entering into one or more contracts for the
acquisition of the Replacement Property. Prior to the closing of any agreement
for the purchase of a Replacement Property, Exchangor shall assign its rights in
such agreement to Qualified Intermediary/Escrow Agent. Notice of such assignment
shall be given to the seller of the Replacement Property prior to the closing of
the purchase of the Replacement Property. Qualified Intermediary/Escrow Agent
covenants and agrees to use the Exchangors' Property Proceeds (and any interest
earned thereon), and any additional consideration deposited by Exchangor, if
any, pursuant to paragraph 4 hereof, for the purpose of acquiring the
Replacement Property and in payment of Qualified Intermediary/Escrow Agent's
fees and the costs and expenses of acquiring the Replacement Property.
3.3 TRANSFER OF REPLACEMENT PROPERTY. Qualified Intermediary/Escrow
Agent shall, on the date of the closing of its acquisition of any Replacement
Property, transfer such Replacement Property to Exchangor by special warranty
deed and all other necessary documents.
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4. ADDITIONAL CONSIDERATION. In the event that the funds in the Escrow
Account are insufficient to provide for payment in full of the cash required to
acquire the Replacement Property identified by Exchangor, Exchangor shall (a)
pay to Qualified Intermediary/Escrow Agent such additional amount as may be
required to enable Qualified Intermediary/Escrow Agent to acquire the
Replacement Property, in cash or readily available funds; (b) instruct Qualified
Intermediary/Escrow Agent to accept the Replacement Property, "subject to"
existing encumbrances in an amount determined by Exchangor; (c) instruct
Qualified Intermediary/Escrow Agent to incur purchase money indebtedness with
Exchangor to be solely liable on the same; or (d) any combination of (a), (b),
or (c) as Exchangor determines, it being expressly understood and agreed that
Qualified Intermediary/Escrow Agent shall not be liable for any indebtedness
assumed or incurred to acquire the Replacement Property.
5. FAILURE OF EXCHANGE. Notwithstanding anything that may be construed to
the contrary herein, Exchangor shall have no right to receive the Escrow Account
monies prior to the end of the "Exchange Period" except as provided in this
paragraph 5. The "Exchange Period" begins on the closing of the first of the
Sale Agreements to close and ends at midnight on the earlier of the 180th day
thereafter or the due date (including extensions) for Exchangors' federal income
tax return for the taxable year in which the transfer of the first of the
Relinquished Properties to be transferred occurs.
In the event that Exchangor fails to designate the Replacement
Property within the Identification Period, then Qualified Intermediary/Escrow
Agent, upon written demand from Exchangor, shall pay to Exchangor, in cash or
readily available funds, the remaining funds in the Escrow Account at the
earliest practicable date.
In the event that the Replacement Property has been identified within
the Identification Period and Exchangor receives all of the Replacement Property
to which they are entitled under this Agreement, then Qualified
Intermediary/Escrow Agent, upon written demand from Exchangor, shall pay to
Exchangor, in cash or readily available funds, the remaining funds, if any, in
the Escrow Account at the earliest practicable date.
In the event that the Replacement Property has been identified within
the Identification Period and after the end of the Identification Period there
occurs a material and substantial contingency that (a) relates to the deferred
exchange, (b) is provided for in writing, and (c) is beyond the control of
Exchangor or a related party, then Qualified Intermediary/Escrow Agent, upon
written demand from Exchangor, shall pay to Exchangor, in cash or readily
available funds, the remaining funds in the Escrow Account at the earliest
practicable date.
Nothing contained herein shall give Exchangor the right to receive,
pledge, borrow or otherwise obtain the benefit of the funds in the Escrow
Account except as specifically provided for herein. Moreover, this Agreement may
not be modified, amended or terminated after the closing of any Sale Agreement
to give Exchangor such right.
6. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION BY EXCHANGOR.
6.1 REPRESENTATIONS AND WARRANTIES BY QUALIFIED INTERMEDIARY/ESCROW
AGENT. To induce Exchangor to enter into this Agreement, Qualified
Intermediary/Escrow Agent represents and warrants the following:
6.1.1 Qualified Intermediary/Escrow Agent has the authority to
enter into this Agreement and to perform the obligations to be performed by it
hereunder, and this Agreement is valid and binding upon it in accordance with
its terms.
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6.1.2 To the best of Qualified Intermediary/Escrow Agent's
knowledge, it is not a "disqualified person" (as defined in Treasury Regulation
Section 1.1031(k)-1(k)) with respect to Exchangor. Qualified Intermediary/Escrow
Agent makes no representation or warranty of any kind to Exchangor concerning
the federal income tax aspects of the exchange transaction provided for herein.
6.2 REPRESENTATIONS AND WARRANTIES BY EXCHANGOR. To induce Qualified
Intermediary/Escrow Agent to enter into this Agreement, Exchangor represents and
warrants the following:
6.2.1 Exchangor has the authority to enter into this Agreement
and to perform the obligations to be performed by Exchangor hereunder, and this
Agreement is valid and binding upon Exchangor in accordance with its terms.
6.2.2 Exchangor has sought their own independent tax advice and
are entering into this Agreement based upon such independent advice and upon
their own judgment.
6.3 INDEMNIFICATION. Exchangor do hereby indemnify and agree to save
Qualified Intermediary/Escrow Agent harmless from all loss, liability, expense
or damage (except resulting from Qualified Intermediary/Escrow Agent's gross
negligence or wrongful acts) incurred by Qualified Intermediary/Escrow Agent as
a result of participating in the exchange herein provided for, including any
loss, liability or expense arising out of the claims of Purchaser or any third
party and any loss or claim as a result of damages to the Relinquished
Properties at the time of conveyance to Purchaser, and including reasonable
attorneys' fees and costs of any litigation incurred defending any such claims
(as well as, without limitation, any declaratory judgment or interpleader
brought by Qualified Intermediary/Escrow Agent based on the advice of its own
counsel if necessary in its reasonable opinion to respond to conflicting demands
or due to uncertainty as to how to proceed).
7. FEES. Exchangor shall pay to Qualified Intermediary/Escrow Agent for
its services hereunder a minimum fee of $250.00 (plus applicable gross receipts
tax) plus, if there is more than one Replacement Property, an additional fee of
$125.00 (plus applicable gross receipts tax) for each Replacement Property in
excess of one Replacement Property. The minimum fee shall be payable at the
closing of the first of the Sale Agreements to close. Any additional fee shall
be payable at the closing of the purchase of the Replacement Property to which
it is attributable. Qualified Intermediary/Escrow Agent may withhold its fees
from the funds in the Escrow Account.
8. MISCELLANEOUS.
8.1 ATTORNEYS' FEES. In the event legal action is commenced to
enforce or interpret, or for breach of, any provision of this Agreement, the
prevailing party shall be entitled to recover from the losing party costs and
expenses incurred, including, but not limited to, reasonable attorneys' fees, in
addition to all other relief and remedies to which the prevailing party may be
entitled.
8.2 HEADINGS AND COUNTERPARTS. The headings of this Agreement are for
purposes of reference only and shall not limit or define the meaning of any
provision of this Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
8.3 SURVIVAL OF PROVISIONS. The covenants and agreements of this
Agreement shall survive any closing and the doctrine of merger shall not apply
to this transaction.
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8.4 MODIFICATION. No amendment of this Agreement shall be valid
unless reduced to writing and executed by the parties hereto.
8.5 BINDING EFFECT. All terms and conditions herein shall be binding
upon the heirs, personal representatives and successors in interest of the
parties hereto.
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New Mexico. Time is of the essence with
respect to any covenant or obligation imposed by this Agreement.
8.7 ENTIRE AGREEMENT. The foregoing constitutes the entire agreement
between the parties and all prior or contemporaneous negotiations and/or
understandings are superseded and merged herewith.
8.8 FURTHER DOCUMENTATION. Each party agrees in good faith to execute
such further or additional documents as may be necessary or appropriate to fully
carry out the intent and purpose of this Agreement.
8.9 IRS FORMS. If required by Qualified Intermediary/Escrow Agent to
do so, Exchangor shall execute and deliver to Qualified Intermediary/Escrow
Agent an affidavit that Exchangor are not "foreign persons" within the meaning
of Section 1445 of the Internal Revenue Code of 1986, as amended, and setting
forth Exchangors' United States taxpayer identification numbers.
8.10 DIRECT DEEDING. Notwithstanding anything that may be construed to
the contrary herein, Qualified Intermediary/Escrow Agent (pursuant to its powers
and authority to acquire and direct the transfer of title as to either the
Relinquished Properties or Replacement Property) may, at its sole discretion,
direct the transfer of the Relinquished Properties or the Replacement Property,
or all of them, to occur by direct deeds without actual title by deed going
through Qualified Intermediary/Escrow Agent.
8.11 RESIGNATION. Qualified Intermediary/Escrow Agent shall have the
right to resign as Qualified Intermediary/Escrow Agent under this Agreement upon
giving Exchangor 10 days written notice of its intent to resign. Exchangor shall
then identify to Qualified Intermediary/Escrow Agent an acceptable successor
Qualified Intermediary/Escrow Agent and Qualified Intermediary/Escrow Agent,
after deduction of any fees due, shall deliver, convey, and assign all rights
and obligations herein, together with all funds or documents held pursuant to
the terms hereof, to such successor Qualified Intermediary/Escrow Agent and,
after such assignment, conveyance, and delivery, and acceptance by such
successor, Qualified Intermediary/Escrow Agent shall be relieved of any further
liability or obligations herein.
8.12 NOTICE.
Xxxxxx Travel Centers, Inc.
Xxx 0000
Xxx Xxxxxx, Xxx Xxxxxx 00000
Notice to Qualified Intermediary/Escrow Agent shall be given to:
Xxxx Xxx Title Company, Inc.
000 X Xxxxx Xxxxxxx
Xxx Xxxxxx, Xxx Xxxxxx 00000
Notice shall be effective upon the earlier of (1) receipt or (2) 3 days from the
date of mailing, if sent by certified or registered mail, return receipt
requested.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates specified below. The effective date of this Agreement shall be the later
of said dates.
EXCHANGORS: /S/ XXXXXXX X. XXXXXX
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Xxxxxx Travel Centers, Inc.
Date: March 24, 2004
QUALIFIED INTERMEDIARY/ESCROW AGENT:
XXXX XXX TITLE COMPANY, INC., a New Mexico corporation
By: /S/ XXXXX X. XXXXXXX, CEO
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Date: March 24, 2004
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