Exhibit 10.1
 
 
REAL ESTATE PURCHASE AND SALE AGREEMENT
by and between
INTERMOUNTAIN COMMUNITY BANCORP,
an Idaho corporation
as “Seller”
and
SANDPOINT CENTER, LLC,
an Idaho limited liability company and
SANDPOINT CENTER II, LLC,
an Idaho limited liability company
collectively, as “Buyer”
 
 

 

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TABLE OF CONTENTS

             
SECTION 1 — SALE OF PROPERTY
    1  
1.1
  Real Property     1  
1.2
  Personal Property     1  
1.3
  Plans     1  
1.4
  Records     1  
1.5
  Intangible Property     1   SECTION 2 — PURCHASE PRICE; PAYMENT     1  
2.1
  Purchase Price     1  
2.2
  Payment of Purchase Price     2   SECTION 3 — BUYER’S CONTINGENCIES     2  
3.1
  Contingencies     2  
3.2
  Unilateral Right to Terminate Before the Contingency Date     3  
3.3
  Contingency Date; Notice to Proceed     3  
3.4
  Buyer’s Reports     3   SECTION 4 — CLOSING     3  
4.1
  Closing; Closing Date     3  
4.2
  Seller’s Closing Documents     3  
4.3
  Buyer’s Closing Documents     4  
4.4
  Buyer’s Conditions Precedent     5  
4.5
  Seller’s Conditions Precedent     5   SECTION 5 — CLOSING COSTS AND PRORATIONS
    5  
5.1
  Title Insurance and Closing Fee     5  
5.2
  Real Estate Taxes and Special Assessments     5   SECTION 6 — TITLE
EXAMINATION     6  
6.1
  Title Commitment and Survey     6  
6.2
  Buyer’s Objections     6  
6.3
  Supplemental Commitments; Objections     6   SECTION 7 — REPRESENTATIONS AND
WARRANTIES     6  
7.1
  Seller’s Representations and Warranties     6  
7.2
  Seller’s Indemnity     8  
7.3
  Seller’s Knowledge     8  
7.4
  Buyer’s Representations and Warranties     8  
7.5
  Buyer’s Indemnity     8  
7.6
  Buyer’s Acknowledgement     8  
7.7
  Property Sold As Is     9  
7.8
  Hazardous Materials; Compliance With Laws     9  
7.9
  Waiver     10   SECTION 8 — COVENANTS OF SELLER     10  
8.1
  Normal Operations     10  
8.2
  Management     10  
8.3
  Insurance     10  
8.4
  Further Assurances     10   SECTION 9 — CASUALTY; CONDEMNATION     10  

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              SECTION 10 — ASSIGNMENT     11   SECTION 11 — NOTICES     11  
SECTION 12 — REMEDIES     12   SECTION 13 — TAX DEFERRED EXCHANGE     12  
SECTION 14 — GENERAL PROVISIONS     12  
14.1
  Entire Agreement     12  
14.2
  Construction     12  
14.3
  Attorneys’ Fees     13  
14.4
  Additional Documents     13  
14.5
  Binding     13  
14.6
  Time of the Essence     13  
14.7
  Applicable Law and Venue     13  
14.8
  Counterparts; Facsimile Signatures     13  
14.9
  Survival     13  
14.10
  Brokers     13  
14.11
  Extension of Time     14  
14.12
  Confidentiality     14  

SCHEDULES AND EXHIBITS

     
Schedule 1.1(a)
  Legal Description of Sandpoint Center
Schedule 1.1(b)
  Legal Description of Parking Lot
Schedule 1.2
  Personal Property
Schedule 3.1(b)
  Due Diligence Materials
 
   
Exhibit A
  Deed
Exhibit B
  Bill of Sale
Exhibit C
  General Assignment
Exhibit D
  PSB Lease
Exhibit E
  CTA Assignment

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REAL ESTATE PURCHASE AND SALE AGREEMENT
     THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (“Agreement”) is entered into
as of August 26, 2009 (the “Effective Date”) by and between INTERMOUNTAIN
COMMUNITY BANCORP, an Idaho corporation (“Seller”) and SANDPOINT CENTER, LLC, an
Idaho limited liability company, and SANDPOINT CENTER II, LLC, an Idaho limited
liability company, or their assigns (collectively “Buyer”). In consideration of
this Agreement, Seller and Buyer agree as follows:
SECTION 1 — SALE OF PROPERTY
     Seller agrees to sell to Buyer, and Buyer agrees to buy from Seller, the
following property (collectively, “Property”):
     1.1 Real Property. The following real properties located in the City of
Sandpoint, Bonner County, Idaho (collectively the “Real Property”):
          (a) Sandpoint Center. The real property located at 414 Church Street,
Sandpoint, Idaho, described on the attached Schedule 1.1 (a) together with
(i) the commercial office building and other improvements constructed or located
thereon (the “Building”), and (ii) all easements and rights benefiting or
appurtenant thereto (collectively “Sandpoint Center”).
          (b) Parking Lot. That certain real property located at the Southwest
corner of 5th and Pine Street in Sandpoint, Idaho, described on the attached
Schedule 1.1(b) together with all easements and rights benefiting or appurtenant
thereto (the “Parking Lot”).
     1.2 Personal Property. The personal property owned by Seller described on
the inventory attached as Schedule 1.2 (the “Personal Property”).
     1.3 Plans. All originals and copies of the as-built blueprints, plans and
specifications regarding the Real Property and the Personal Property, if any
(“Plans”).
     1.4 Records. All records of Seller regarding the Real Property and the
Personal Property, including all records regarding management and leasing, real
estate taxes and assessments, insurance, tenants, maintenance, repairs, capital
improvements and services, but excluding tax returns and such other records as
are normally viewed as confidential (“Records”).
     1.5 Intangible Property. All intangible property, trade names, trademarks,
and service marks relating to the Real Property, specifically including the name
“Sandpoint Center” (“Intangible Property”) excluding, however, any trade names
relating to any business of the Seller or its subsidiaries, including without
limitation, “Intermountain Community Bancorp” and “Panhandle State Bank”.
SECTION 2 — PURCHASE PRICE; PAYMENT
     2.1 Purchase Price. The total purchase price (“Purchase Price”) to be paid
for the Property shall be Twenty-Four Million Eight Hundred Thousand Dollars
($24,800,000).

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     2.2 Payment of Purchase Price. The Purchase Price shall be payable as
follows:
          (a) Earnest Money. On the Effective Date, Buyer shall deposit Two
Hundred Fifty Thousand Dollars ($250,000) as earnest money (“Earnest Money”)
which Earnest Money shall be held by Sandpoint Title Insurance, Inc. (the “Title
Company”) who shall apply or dispose of the Earnest Money as provided in this
Agreement. Upon receipt, Title Company shall deposit the Earnest Money in an
interest-bearing account. Any interest earned on the Earnest Money will be part
of and distributed with the Earnest Money under this Agreement.
          (b) Balance Due At Closing. The balance of the Purchase Price as
adjusted by the prorations and credits specified herein shall be paid by Buyer
in cash or by wire transfer of funds on the Closing Date.
SECTION 3 — BUYER’S CONTINGENCIES
     3.1 Contingencies. The obligations of Buyer under this Agreement are
contingent upon each of the following:
          (a) Title. Title shall have been found acceptable, or been made
acceptable, in accordance with the requirements and terms of Section 6 below.
          (b) Access and Inspection. Seller shall have allowed Buyer, and
Buyer’s agents, access to the Property without charge and at all reasonable
times for the purpose of Buyer’s investigation and testing the same (including
environmental testing); provided, however, that Buyer shall not perform any
invasive testing including environmental inspections beyond Phase I assessment
or contact the tenants or property management personnel without obtaining the
Seller’s prior written consent, which shall not be unreasonably withheld or
delayed. Seller shall make available to Buyer and Buyer’s agents without charge
all plans and specifications, surveys, contracts, leases, maintenance
agreements, reports, notices, records, warranties, operating statements,
financial statements, inventories, licenses, permits and correspondence in
Seller’s possession relating to the Property (including, without limitation, any
information with respect to Hazardous Materials); and the right to interview all
tenants and any employees of Seller who may have knowledge of such matters.
Buyer acknowledges its receipt of the materials set forth on the attached
Schedule 3.1(b) (the “Due Diligence Materials”). Buyer shall pay all costs and
expenses of such investigation and testing, shall restore the Property, and
shall hold Seller and the Property harmless from all costs and liabilities
relating to Buyer’s activities (excluding liability resulting from the mere
discovery of existing conditions). On or before the Contingency Date (defined
below), Buyer shall have been satisfied (in its sole and absolute discretion)
with the results of all tests and investigations performed by it or on its
behalf.
          (c) Loan for Property. Buyer shall have obtained the binding
commitment from PSB to fund a new first loan in the amount of not more than
Twenty One Million Eighty Thousand Dollars ($21,080,000.00), due in not less
than twenty (20) years, to bear interest at a rate not to exceed five percent
(5%) for years one to ten of the loan term, six percent (6%) for the eleventh
through fifteenth year of the loan term, and seven percent (7%) for the
sixteenth through twentieth year of the loan term, with interest-only payments
for the first five years of the loan term and the remaining payments over the
term of the loan amortized over not less than twenty-

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five (25) years, and secured by a new first mortgage or deed of trust on the
Property (the “Loan”), and Buyer shall have approved the documents to evidence
the Loan, which approval shall be granted in Buyer’s sole and absolute
discretion.
     3.2 Unilateral Right to Terminate Before the Contingency Date.
Notwithstanding anything contained within this Agreement to the contrary, Seller
acknowledges and understands that up through and until 5:00 p.m. Pacific Time on
the Contingency Date, Buyer may within its sole discretion and for any or no
reason notify Seller in writing that Buyer elects to terminate this Agreement.
Seller acknowledges that Buyer has the right to so terminate this Agreement,
regardless of whether Seller would be willing or able to cure any such matter to
which Buyer objects. Upon such unilateral notice from Buyer, this Agreement
shall terminate, Title Company shall remit the Earnest Money immediately to
Buyer, together with any other funds, documents, or instruments that Buyer has
deposited with Title Company and neither party will have any further obligation
to the other, except those obligations that expressly survive the termination of
this Agreement.
     3.3 Contingency Date; Notice to Proceed. Following Buyer’s investigations
per Section 3.1 above, if Buyer, in its sole discretion, decides to proceed with
the purchase of the Property, then Buyer shall deliver written notice of its
election (the “Notice to Proceed”) to Seller on or before 5:00 p.m. Pacific Time
on the Effective Date (the “Contingency Date”) at which time the Earnest Money
will become non-refundable except as otherwise provided herein. If Buyer in its
sole discretion decides that it will not proceed with the purchase of the
Property, Buyer may on or before the Contingency Date give notice to Seller that
it is terminating this Agreement. If Buyer fails to notify Seller of its
decision on or before the Contingency Date, Buyer will be deemed to have
notified Seller on the Contingency Date that Buyer is terminating this
Agreement.
     3.4 Buyer’s Reports. If either party terminates this Agreement for any
reason, Buyer shall promptly deliver to Seller, at Buyer’s sole cost and
expense, copies of all reports, studies, surveys, drawings, and other documents
relating to the Property as are in Buyer’s possession or control.
SECTION 4 — CLOSING
     4.1 Closing: Closing Date. The closing of the purchase and sale
contemplated by this Agreement (the “Closing”) shall occur on August 28, 2009,
or such earlier date as is mutually agreed to in writing by Buyer and Seller
(the “Closing Date”). The Closing shall take place at the office of the Title
Company at 120 South Second Sandpoint, Idaho. Seller agrees to deliver
possession of the Property to Buyer on the Closing Date.
     4.2 Seller’s Closing Documents. On the Closing Date, Seller shall execute
and deliver to Buyer the following (collectively, “Seller’s Closing Documents”),
all in form and content reasonably satisfactory to Buyer:
          (a) Deed. A Warranty Deed in the form attached as Exhibit A to this
Agreement conveying the Property to Buyer, free and clear of all encumbrances,
except the Permitted Encumbrances.

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          (b) Bill of Sale. A Bill of Sale in the form attached as Exhibit B to
this Agreement conveying the Personal Property to Buyer without warranty (but
free and clear of any liens).
          (c) Assignment of Contracts and Intangibles. Two (2) counterpart
Assignment of Contracts and Intangibles in the form attached as Exhibit C to
this Agreement conveying Seller’s interest in such documents to Buyer (the
“General Assignment”).
          (d) PSB Lease. Two (2) counterpart leases by and between Buyer, as
landlord, and Panhandle State Bank, an Idaho state bank (“PSB”), as tenant, in
the form attached as Exhibit D to this Agreement (the “PSB Lease”).
          (e) CTA Assignment. Three (3) counterpart lease assignment and
subordination agreements in the form attached as Exhibit E to this Agreement
(the “CTA Assignment”) executed by between Seller, PSB, and CTA, Inc., a Montana
corporation.
          (f) FIRPTA Affidavit. A non-foreign affidavit, properly executed,
containing such information as is required by Internal Revenue Code
Section 1445(b)(2) and its regulations.
          (g) IRS Forms. A Designation Agreement designating the “reporting
person” for purposes of completing Internal Revenue Form 1099 and, if
applicable, Internal Revenue Form 8594.
          (h) Other Documents. All other documents reasonably determined by
Buyer or the Title Company to be necessary to effectuate the transfer the
Property to Buyer.
     4.3 Buyer’s Closing Documents. On the Closing Date, Buyer will execute and
deliver to Seller the following (collectively, “Buyer’s Closing Documents”):
          (a) Purchase Price. Funds representing the Purchase Price, in cash or
by wire transfer.
          (b) General Assignment. Two (2) counterpart General Assignments
executed by Buyer.
          (c) PSB Lease. Two (2) counterparts of the PSB Lease executed by
Buyer, as landlord, and PSB, as tenant.
          (d) CTA Assignment. Three (3) counterpart CTA Assignments executed by
Buyer.
          (e) IRS Form. A Designation Agreement designating the “reporting
person” for purposes of completing Internal Revenue Form 1099 and, if
applicable, Internal Revenue Form 8594.
          (f) Other Documents. All other documents reasonably determined by
Seller or the Title Company to be necessary to effectuate the transfer the
Property to Buyer.

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     4.4 Buyer’s Conditions Precedent. The obligation of Buyer to consummate the
conveyance of the Property hereunder is subject to the satisfaction of each of
the following conditions precedent:
          (a) The representations and warranties of Seller contained in
Section 7.1 above shall be true on and as of the Closing Date as if the same
were made on and as of that date.
          (b) Seller shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by Seller prior to or on the Closing Date.
          (c) Buyer’s timely approval or deemed approval of all contingencies
referred to in Section 3.1.
          (d) Buyer’s receipt of written confirmation from the Title Company
that the Title Policy shall issue concurrently with, and as of, the Closing Date
with no exceptions other than the PSB Lease and the Permitted Exceptions.
     4.5 Seller’s Conditions Precedent. The obligation of Seller to consummate
the conveyance of the Property hereunder is subject to the satisfaction of each
of the following conditions precedent:
          (a) The representations and warranties of Buyer contained in
Section 7.4 shall be true on and as of the Close of Escrow as if the same were
made on and as of that date.
          (b) Buyer shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by Buyer prior to or on the Close of Escrow.
          (c) There shall not have been filed by or against Buyer at any time
prior to the Close of Escrow any voluntary bankruptcy, reorganization or
arrangement petition.
SECTION 5 — CLOSING COSTS AND PRORATIONS
     Seller and Buyer agree to the prorations and allocation of costs as set
forth in this Section 5. Unless otherwise provided below, the following are to
be adjusted and prorated between Seller and Buyer as of 12:01 A.M., Pacific
Time, on the Closing Date, based upon a 365 day year, and the net amount thereof
shall be added to (if such net amount is in Seller’s favor) or deducted from (if
such net amount is in Buyer’s favor) the Purchase Price payable at Closing:
     5.1 Title Insurance and Closing Fee. Seller will pay all costs of the Title
Commitment, and the portion of the premium for Buyer’s title insurance policy
attributable to ALTA standard coverage, together with any endorsements which
Seller consents to provide in order to remedy any of Buyer’s title objections.
Buyer will pay all additional premiums required for extended coverage,
endorsements, or the issuance of any mortgagee’s title policy. Seller and Buyer
will each pay one-half (1/2) of any closing fee or charge imposed the Title
Company.
     5.2 Real Estate Taxes and Special Assessments. [Intentionally omitted].

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SECTION 6 — TITLE EXAMINATION
     Buyer’s title examination will be conducted as follows:
     6.1 Title Commitment and Survey. Buyer acknowledges its receipt of: (a) a
commitment (“Title Commitment”) for an ALTA Form 2006 Owner’s Policy of Title
Insurance insuring title to the Property in the amount of the Purchase Price,
issued by the Title Company, and (b) a current, ALTA/ACSM survey of the Property
prepared by J-U-B Engineers, Inc. (the “Survey”), and certified to Buyer.
     6.2 Buyer’s Objections. If Buyer has any objections to the form and/or
contents of the Title Commitment or the Survey (“Objections”), Buyer will give
written notice of such Objections to Seller on or before the Contingency Date.
Buyer’s failure to provide written notice of the Objections within such time
period will constitute waiver of the Objections. The PSB Lease and any matter
shown on the Title Commitment and not objected to by Buyer shall be a “Permitted
Encumbrance” hereunder. Seller will have five (5) days after receipt of the
Objections to cure the Objections, during which period the Closing will be
postponed, if necessary. Seller shall use its best efforts to correct any
Objections. If the Objections are not cured within such 5-day period, Buyer will
have the option to either: (a) terminate this Agreement; or (b) waive the
Objections and proceed to close. Buyer hereby objects to, and Seller hereby
agrees to remove, all deeds of trust, mechanics’ liens, judgments and other
monetary liens against the Property (except non-delinquent real property taxes).
     6.3. Supplemental Commitments; Objections. Seller shall cause the Title
Company to provide to Seller and Buyer supplemental reports to the Title
Commitment (together with copies of any underling exceptions identified therein)
covering any additions or deletions from the date of the Title Commitment
through the Closing Date. Buyer shall have five (5) business days following the
receipt of a supplemental report to notify Seller in writing of its disapproval
of any exception contained in that supplemental report; if Buyer’s disapproval
of any supplemental report exception is not so communicated to Seller, the
exception shall be considered a Permitted Encumbrance.
SECTION 7 — REPRESENTATIONS AND WARRANTIES
     7.1 Seller’s Representations and Warranties. Seller represents and warrants
to Buyer as follows:
          (a) Seller is a corporation duly organized and validly existing under
the laws of the State of Idaho. Execution of this Agreement by Seller and its
delivery to Buyer have been duly authorized by its respective members, and no
further action is necessary on the part of Seller to make this Agreement fully
and completely binding upon Seller in accordance with its terms. The execution,
delivery, and performance of this Agreement will not conflict with or constitute
a breach or default under the organizational documents of Seller or, to Seller’s
knowledge, (i) any material instrument, contract, or other agreement to which
Seller is a party which affects the Property; or (ii) any statute or any
regulation, order, judgment, or decree of any court or governmental authority.

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          (b) Seller is not a “foreign person”, “foreign partnership”, “foreign
trust” or “foreign estate”, as those terms are defined in Section 1445 of the
Internal Revenue Code.
          (c) There is no action, litigation, investigation, condemnation or
proceeding of any kind pending or to the best knowledge of Seller threatened
against Seller or any portion of the Property which would prevent Seller from
performing its obligations under this Agreement. Seller has not commenced any
claim, suit, action or other proceeding of any kind against a third party with
respect to the Property.
          (d) Seller is the sole fee owner of the Property and has good and
marketable title thereto.
          (e) Seller has obtained, or will obtain before Closing, all licenses,
permits, and approvals of any governmental authorities necessary for the
operation of an office building on the Property. No violations are or have been
recorded in respect of any such licenses or permits and, to Seller’s knowledge,
no proceedings are pending or threatened in writing, concerning the revocation
or limitation of any such license or permit. There is no governmental or public
action, pending or threatened in writing that would limit or affect operation of
the Property.
          (f) Seller has not received written notice of any violation of any
statute, law, ordinance, or regulation of any governmental authority that would
require remedial action by Seller or would require repairs or alterations to the
Property.
          (g) There is no pending or, to Seller’s knowledge, threatened
condemnation affecting the Property. There is no pending or, to Seller’s
knowledge, threatened proceeding that would adversely affect access to the
Property.
          (h) Seller has not caused or with knowledge allowed the use,
generation, manufacture, production, treatment, storage, release, discharge, or
disposal of any Hazardous Materials (as defined below) on, under, or about the
Property and has not caused or allowed the transportation of any Hazardous
Materials to or from the Property. Seller has not received any notice of
violation, administrative complaint, judicial complaint, or other notice
(i) alleging that conditions on the Property are or have been in violation of
any Environmental Law (as defined below), (ii) informing Seller that the
Property is subject to investigation or inquiry regarding the presence of
Hazardous Materials on or about the Property or (iii) alleging the potential
violation of any Environmental Law.
          (i) To the best of Seller’s knowledge, all documentation provided to
Buyer under this Agreement is true, correct, and complete in all material
respects.
          (j) Seller is not a party to any written sales contract, option
agreement, right of first refusal agreement, or other contract or agreement
providing for the sale or other conveyance of the Property, or any portion
thereof, except for this Agreement.
          (k) Seller is not in default under any agreement, lease or contract
concerning the Property to which Seller is a party, and, to Seller’s knowledge,
there exists no event, condition, or occurrence which, after notice or lapse of
time, or both, would constitute such a

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default by Seller of any of the foregoing. Seller has furnished or made
available to Buyer true and correct copies of all documents described in
exhibits to this Agreement.
          (l) No real estate, mortgage broker or any other commissions are owed
in connection with the sale of the Property to Buyer, or in connection with any
other transaction affecting the Property.
     7.2 Seller’s Indemnity. Seller will indemnify Buyer, its successors and
assigns, against, and will hold Buyer, its successors and assigns, harmless
from, any expenses or damages, including reasonable attorneys’ fees, that Buyer
incurs because of the breach of any of the above representations and warranties,
whether such breach is discovered before or after Closing.
     7.3 Seller’s Knowledge. Wherever herein a representation is made “to the
best knowledge of Seller”, such representation is limited to the actual active
knowledge of Seller’s Chief Financial Officer, Douglas M. Wright, without duty
of investigation or inquiry. Seller hereby represents that such individual is
the person affiliated with the Seller who is most involved with the operation,
management, and leasing of the Property, and is most likely to have knowledge
about the Property.
     7.4 Buyer’s Representations and Warranties. Buyer represents and warrants
to Seller as follows:
          (a) Buyer is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Idaho. Execution
of this Agreement by Buyer and its delivery to Seller have been duly authorized
by its respective members, and no further action is necessary on the part of
Buyer to make this Agreement fully and completely binding upon Buyer in
accordance with its terms. The execution, delivery, and performance of this
Agreement will not conflict with or constitute a breach or default under the
organizational documents of Buyer or, to Buyer’s knowledge, (i) any material
instrument, contract, or other agreement to which Buyer is a party which affects
the Property; or (ii) any statute or any regulation, order, judgment, or decree
of any court or governmental authority.
          (b) There is no action, litigation, investigation, condemnation or
proceeding of any kind pending or to the best knowledge of Buyer threatened
against Buyer which would prevent Buyer from paying and performing its
obligations under this Agreement.
     7.5 Buyer’s Indemnity. Buyer will indemnify Seller, its successors and
assigns, against, and will hold Seller, its successors and assigns, harmless
from, any expenses or damages, including reasonable attorneys’ fees, that Seller
incurs because of the breach of any of the above representations and warranties,
whether such breach is discovered before or after Closing.
     7.6 Buyer’s Acknowledgement. Buyer acknowledges that Buyer has or will have
had before the expiration of the inspection period set forth in Section 3
adequate opportunity to become fully acquainted with the nature and condition,
in all respects, of the Property, including but not limited to zoning, access,
visibility, signage, and the condition of Seller’s title thereto, the existence
or availability of all permits and approvals from governmental authorities, the
soil and

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geology thereof and the manner of construction and the condition and state of
repair or lack of repair of any improvements to the Property.
     7.7 Property Sold As Is. As a material inducement to the execution and
delivery of this Agreement by Seller and the performance by Seller of its duties
and obligations hereunder, Buyer hereby acknowledges, represents, warrants, and
agrees to and with Seller that:
          (a) Buyer is expressly purchasing the Property in its existing
condition, “AS IS, WHERE IS, AND WITH ALL FAULTS” with respect to any and all
facts, circumstances, conditions and defects relating to the Property;
          (b) Seller has no obligation to repair or correct any such facts,
circumstances, conditions or defects or to compensate Buyer for same;
          (c) Seller has specifically bargained for the assumption by Buyer of
all responsibility to inspect and investigate the Property and of all risk of
adverse conditions and has structured the purchase price in consideration
thereof;
          (d) Buyer has, or will have before satisfaction of the contingencies
set forth in Section 3.1, undertaken all such physical and/or legal inspections
and examinations of the Property as Buyer deems necessary or appropriate under
the circumstances as to the condition of the Property and the suitability of the
Property for Buyer’s intended use, and based upon same, Buyer is and will be
relying strictly and solely upon such inspections and examinations and the
advice and counsel of its own agents; and
          (e) except as expressly set forth elsewhere in this Agreement, Seller
is not making and has not made any representations or warranties with respect to
the physical condition or any other aspect of all or any part of the Property as
an inducement to Buyer to enter into this Agreement and thereafter to purchase
the Property, or for any other purpose.
     7.8 Hazardous Materials; Compliance With Laws. Without limiting the
generality of the foregoing but expressly subject to Seller’s representations
set forth in Section 7.1 above and Seller’s obligation to indemnify Buyer
pursuant to Section 7.2 above, Buyer specifically agrees that Seller shall have
no liability to Buyer and Buyer hereby waives any right to recourse against
Seller, whether arising at law or in equity, under contract, tort law, or
statute (specifically including any laws regulating Hazardous Materials (defined
below)) with respect to:
          (a) the presence or absence of defects or other adverse circumstances
related in any way to the Property or improvements thereon;
          (b) the condition of the soil;
          (c) the existence or non-existence Hazardous Materials;
          (d) any past use of the Property;
          (e) any legal or other restriction of the Property;

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          (f) the economic feasibility of the Property; or
          (g) the Property’s compliance or non-compliance with all laws, rules,
or regulations affecting the Property, including, without limitation, all
Environmental Laws (defined below) and the requirements of the Americans with
Disabilities Act, and the Fair Housing Amendments Act, or any similar state or
local statutes, ordinances, or regulations.
As used in this Agreement, the term “Hazardous Material” shall mean any
substance or material now or hereafter defined or regulated as a Hazardous
Material, hazardous waste, toxic substance, pollutant, or contaminant under any
Environmental Law, including, without limitation, petroleum, petroleum
by-products, and asbestos. As used in this Agreement, the term “Environmental
Law” shall mean any federal, state, or local law, regulation or ordinance
governing any substances that could cause actual or suspected harm to human
health or the environment.
     7.9 Waiver. Consummation of the transactions contemplated under this
Agreement by Buyer with actual knowledge of any breach by Seller of the
representations and warranties set forth herein shall constitute a waiver and
release by Buyer of any claims due to such breach.
SECTION 8 — COVENANTS OF SELLER
     8.1 Normal Operations. Until the Closing Date, Seller shall continue to
operate the Property in substantially the same manner as in the past and will
make all required repairs and perform all necessary maintenance to the Property.
     8.2 Management. Seller, or Seller’s agent or management company, shall
continue to manage the Property until Closing.
     8.3 Insurance. Until Closing, Seller shall maintain substantially the same
liability. casualty, and all other insurance on the Property as is in effect as
of the Effective Date.
     8.4 Further Assurances. For a reasonable time subsequent to Closing, Seller
shall execute and deliver such further instruments of transfer and shall take
such other actions as Buyer, its counsel or lender may reasonably request in
order to effectively transfer the Property to Buyer and complete all of the
transactions contemplated by this Agreement.
SECTION 9 — CASUALTY; CONDEMNATION
     If all or any part of the Property is substantially damaged by fire,
casualty, the elements or any other cause, Seller shall immediately give notice
to Buyer, and Buyer shall have the right to terminate this Agreement by giving
notice within ten (10) days after Seller’s notice. If Buyer shall fail to give
the notice, then the parties shall proceed to Closing, and Seller shall assign
to Buyer all rights to insurance proceeds resulting from such event and credit
Buyer for any insurance deductible. If eminent domain proceedings are threatened
or commenced against all or any part of the Real Property, Seller shall
immediately give notice to Buyer, and Buyer shall have the right to terminate
this Agreement by giving notice within ten (10) days after Seller’s notice. If
Buyer shall fail to give the notice, then the parties shall proceed to Closing,
and Seller shall assign to Buyer all rights to appear in and receive any award
from such proceedings.

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SECTION 10 — ASSIGNMENT
     Except as set forth in Section 14 below, Buyer may not assign its rights
under this Agreement without the prior written consent of Seller, which consent
shall not be unreasonably withheld; provided, however, Buyer may assign this
Agreement without Seller’s consent (but with prior written notice) to any
affiliated entity. Notwithstanding anything herein to the contrary, any such
assignment will not relieve such assigning party of its obligations under this
Agreement until the Closing.
SECTION 11 — NOTICES
     Any notice required or permitted hereunder shall be given by personal
delivery upon an authorized representative of a party hereto; or if mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; or if transmitted by facsimile copy (as verified with electronic
confirmation); or if deposited cost paid with a nationally recognized, reputable
overnight courier, properly addressed as follows:

     
If to Seller:
  Intermountain Community Bancorp
 
  801 W Riverside, Suite 400
 
  Spokane, WA 99201
 
  Attn: Douglas M. Wright
 
  Fax #: (509)363-0640
 
   
w/ copy to:
  Alston, Courtnage & Bassetti LLP
 
   
 
   
 
   
 
   
 
   
and to:
  Kane Corporation
 
 
 
   
 
   
 
   
 
   
If to Buyer:
  Sandpoint Center, LLC
 
  Sandpoint Center II, LLC
 
   
 
   
 
   
 
   
 
   
w/ copy to:
  Lukins & Annis, P.S.
 
   
 
   
 
   
 
   

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Notices shall be deemed effective on the earlier of the date of receipt or the
date of deposit, as aforesaid; provided, however, that if notice is given by
deposit, the time for response to any notice by the other party shall commence
to run one business day after any such deposit. Any party may change its address
for the service of notice by giving notice of such change three (3) days prior
to the effective date of such change.
SECTION 12 — REMEDIES
     If Seller fails without legal excuse to complete the sale of the Property,
Buyer may, as its sole and exclusive remedy, terminate this Agreement, receive a
refund of the Earnest Money, together with the sum of Two Hundred Fifty Thousand
Dollars ($250,000.00) as liquidated damages from Seller. In no event shall Buyer
have any claim for specific performance hereunder. Buyer’s remedies are
cumulative and the exercise of one remedy by Buyer will not preclude the
exercise of any other remedies.
     If Buyer fails without legal excuse to complete the purchase of the
Property, Seller may, as its sole and exclusive remedy, terminate this Agreement
by written notice delivered to Buyer in which case the Earnest Money shall be
forfeited to Seller as liquidated damages. In no event shall Seller have any
claim for specific performance hereunder. In any suit, action or appeal
therefrom, to enforce this Agreement or any term or provisions hereof, or to
interpret this Agreement, the prevailing party shall be entitled to recover its
costs incurred therein, including reasonable attorneys’ fees.
Seller’s Initials:                               Buyer’s Initials:
                    ;                     
SECTION 13 — TAX DEFERRED EXCHANGE
     Buyer may, at its option, elect to purchase the Property as part of a tax
deferred exchange under Section 1031 of the Internal Revenue Code and may
(notwithstanding the provisions of Section 10 above), assign this Agreement to
one or more third party exchange intermediaries for the purpose of effecting the
exchange. Seller agrees to cooperate with Buyer in effecting such exchange
provided that Seller shall not be required to incur any cost or liability as a
result of such cooperation. The failure of the exchange to qualify as an
exchange under Section 1031 shall not constitute grounds for rescission by
either party and shall not be deemed to be a failure of consideration.
SECTION 14 — GENERAL PROVISIONS
     14.1 Entire Agreement. This Agreement contains the entire understanding
between the parties and supersedes any prior understandings and agreements
between them respecting the subject matter hereof. There are no other
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto, relating to the subject matter of this Agreement. No
amendment of or supplement to this Agreement shall be valid or effective unless
made in writing and executed by the parties hereto.
     14.2 Construction. The headings and subheadings throughout this Agreement
are for convenience and reference only and the words contained in them shall not
be held to expand,

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modify, amplify or aid in the interpretation, construction or meaning of this
Agreement. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural as the identification of the
person or persons, firm or firms, corporation or corporations may require. All
parties hereto have been represented by legal counsel in this transaction and
accordingly hereby waive the general rule of construction that an agreement
shall be construed against its drafter.
     14.3 Attorneys’ Fees. In the event of litigation between the parties
hereto, declaratory or otherwise, in connection with or arising out of this
Agreement, the prevailing party shall recover from the non-prevailing party all
actual costs, actual damages and actual expenses, including attorneys’ fees and
charges, paralegal and clerical fees and charges and other professional or
consultants’ fees and charges expended or incurred in connection therewith, as
set by the court, including for appeals, which shall be determined and fixed by
the court as part of the judgment.
     14.4 Additional Documents. Each party agrees to take such actions and to
execute, acknowledge and deliver any and all documents and instruments as may be
reasonably requested by the other party to carry out the purposes of this
Agreement more effectively.
     14.5 Binding. Subject to any limiting provisions otherwise set forth in
this Agreement, this Agreement shall insure to the benefit of and be binding
upon the successors and assigns of the parties hereto.
     14.6 Time of the Essence. Time is of the essence in each and every covenant
and condition of this Agreement.
     14.7 Applicable Law and Venue. This Agreement shall be construed and
interpreted under the laws of the State of Idaho. Any cause of action arising
from or relating to this Agreement shall be brought in the Bonner County, Idaho,
and the parties hereby waive any argument that such forum is not convenient.
     14.8 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts and all counterparts shall be deemed to constitute a
single agreement. The execution of one counterpart by any party shall have the
same force and effect as if that party had signed all other counterparts. The
signatures to this Agreement may be executed on separate pages and when attached
to this Agreement shall constitute one complete document. This Agreement may be
signed by facsimile, and each facsimile copy so signed shall be deemed an
original hereof.
     14.9 Survival. All provisions of this Agreement having to do with
indemnification, liens, remedies, notices, attorneys’ fees, and brokerage
commissions shall survive any termination of this Agreement.
     14.10 Brokers . Each party represents and warrants to the other that it has
not dealt with any other brokers, finders or the like in connection with this
transaction, and agrees to indemnify and hold the non-indemnifying party
harmless from all claims, damages, costs or expenses of or for any other such
fees or commissions resulting from the indemnifying party’s actions or
agreements regarding the execution or performance of this Agreement, and will
pay all costs of

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defending any action or lawsuit brought to recover any such fees or commissions
incurred by the non-indemnifying party, including reasonable attorneys’ fees.
The provisions of this Section 14.10 shall survive the Closing.
     14.11 Extension of Time. If the date for any performance under this
Agreement falls on a weekend or holiday, the time shall be extended to the next
business day.
     14.12 Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material obtained about the other and, in the case of Buyer, about
the Property, and shall not disclose such information to any third party, except
as necessary for the performance of the parties’ obligations hereunder and the
completion of the transactions described herein. This provision shall survive
the Closing or any termination of this Agreement.
[Signatures on following page]

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     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the Effective Date.
SELLER:
INTERMOUNTAIN COMMUNITY BANCORP,
an Idaho corporation

                           Curt Hecker, Chief Executive Officer             

BUYER:

          SANDPOINT CENTER, LLC, an Idaho limited
liability company
      By:           Name:           Title:          

          SANDPOINT CENTER II, LLC, an Idaho limited
liability company
      By:           Name:           Title:          

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