AGREEMENT FOR TRANSFER OF
LIMITED PARTNERSHIP INTEREST
THIS AGREEMENT FOR TRANSFER OF LIMITED PARTNERSHIP INTEREST is entered
into to be effective as of August 29, 1997, by and between ILX Incorporated, an
Arizona corporation ("ILX") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, husband of ▇▇▇▇▇ ▇▇▇▇▇▇▇,
dealing with his sole and separate property, ("Mishkin").
RECITALS:
▇. ▇▇▇▇▇▇▇ desires to sell to ILX, and ILX desires to purchase from
Mishkin, all of his Class B Limited Partnership Interest (the "LAP Interest") in
Los Abrigados Partners Limited Partnership, an Arizona limited partnership
("LAP"), subject to the terms and conditions set forth in this Agreement.
B. The parties desire that the transfer of the LAP Interest be
effective as of January 1, 1997 (the "Effective Date").
AGREEMENTS:
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto agree as
follows:
1. Transfer of LAP Interest. Mishkin hereby sells to ILX and ILX hereby
purchases from Mishkin, all of Mishkin's right, title and interest in, to, and
under the LAP Interest, including without limitation all distributions payable
in respect of, and allocations attributable to, the LAP Interest from and after
the Effective Date.
2. Consideration. In consideration for Mishkin's transfer of the LAP
Interest, ILX shall, upon Closing (as defined herein):
a. Pay to Mishkin Seven Hundred Twenty Thousand Dollars
($720,000.00);
b. Execute and deliver to Mishkin a secured promissory
note (the "Note") in the form attached as Exhibit A,
in the original principal amount of Six Hundred
Seventy Five Thousand Dollars ($675,000.00);
c. Issue to Mishkin One Hundred Thousand (100,000)
shares of common stock of ILX, (the "ILX Shares").
3. Intent of LAP Transfer. Mishkin represents that the LAP Interest
constitutes all of his ownership interest in LAP and in the properties owned by
LAP. To the extent that, as of the Closing, Mishkin owns any other interest in
any such other properties, such interest shall be deemed transferred by this
Agreement except as otherwise agreed by the parties in writing. At the request
of ILX, Mishkin shall execute any additional documents to effect any intended
transfer not made by this Agreement or any document executed in connection
herewith.
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4. Closing; Manner of Transfer. The "Closing" of the transactions
contemplated hereby shall be held within five (5) days after notice to Mishkin
by ILX setting forth the exact time and place of Closing, and in any event
within thirty (30) days from the date of this Agreement. At the Closing, ILX
shall make the payments and deliver the documents referenced in this Agreement,
and Mishkin shall deliver the documents referenced in this Agreement, including
an assignment of the LAP Interest, in each case in a form satisfactory to all
parties.
5. Security Agreement. As security for the performance of ILX's
obligations under the Note, ILX shall grant to Mishkin a security interest in
the LAP Interest, evidenced by a security agreement in mutually satisfactory
form.
6. Valuation of ILX Shares. Having considered the price per share of
the ILX Shares as of the date of this Agreement, together with other pertinent
factors, the parties hereby agree that as of the date of this Agreement the
value of the ILX Shares being transferred by ILX to Mishkin is One Hundred
Twenty-five Thousand Dollars ($125,000), or One Dollar Twenty- five cents
($1.25) per share. Each party shall prepare its federal, state and local tax
returns in a manner consistent with the valuation set forth in this Agreement.
7. Representations and Warranties of Mishkin. Mishkin represents and
warrants to ILX as follows, as of the Effective Date and as of the Closing
hereunder:
7.1 Ownership of LAP Interest. Mishkin has good and marketable
title to the LAP Interest free of any lien, security interest, lease, or
encumbrance whatsoever. Upon delivery of appropriate instruments evidencing
transfer of the LAP Interest, ILX will own all right, title and interest in and
to the LAP Interest free and clear of any liens, encumbrances, equities or
claims.
7.2 Capacity. Mishkin has full power and authority to enter
into this Agreement and to carry out his obligations hereunder. This Agreement
constitutes a valid and legally binding obligation of Mishkin. Mishkin has no
legal obligation, absolute or contingent, to any person or firm to sell all or
any portion of the LAP Interest or with respect to the LAP Interest to effect
any merger, consolidation or other reorganization or to enter into any agreement
with respect thereto. To Mishkin's actual knowledge (as hereinafter defined),
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by Mishkin with any of the
provisions hereof will (i) violate, or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with the giving of
notice or the lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon the LAP Interest, under any term, condition or provision of any agreement
or other instrument or obligation to which Mishkin is bound, or by which the LAP
Interest or LAP is bound or (ii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Mishkin or LAP.
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7.3 No Breach of Statute, Decree or Order. To Mishkin's actual
knowledge no material claim, action or proceeding is pending or threatened
against Mishkin with respect to a default under, or a violation or breach in any
material respect of, any applicable statute, law, ordinance, decree, order, rule
or regulation of any governmental body, nor, to Mishkin's actual knowledge (as
hereinafter defined), is there any basis for such a claim, action or proceeding.
To Mishkin's actual knowledge (as hereinafter defined) the consummation of this
Agreement and the sale of the LAP Interest contemplated hereby will not
constitute or result in any such default, breach or violation.
7.4 Litigation. To Mishkin's actual knowledge (as hereinafter
defined) there is no material suit, claim, action, proceeding or governmental
investigation now pending or threatened against Mishkin ("Mishkin Third Party
Litigation"), nor to Mishkin's actual knowledge (as hereafter defined) is there
any condition or set of facts which could give rise to any material Mishkin
Third Party Litigation before any court, administrative or regulatory body or
governmental agency, concerning or affecting any of the transactions
contemplated by this Agreement. To Mishkin's actual knowledge (as hereinafter
defined), there is no decree, injunction or order of any court or governmental
department or agency outstanding against Mishkin relating to his ability to
transfer the LAP Interest.
7.5 Incorporation of Other Representations and Warranties. Any
representation, warranty or covenant set forth in any instrument transferring
any of the LAP Interest pursuant to this Agreement is incorporated herein by
this reference and made part hereof.
7.6 Survival. All representations, warranties and covenants
made by Mishkin in this Agreement are true and correct in all material respects
as of the Effective Date and as of the Closing, and shall survive the Closing of
the transactions contemplated hereby.
7.7 Definition of "Actual Knowledge". As used in this Section
7, "actual knowledge" means knowledge as of the date of this Agreement
irrespective of any inquiry or investigation into matters that may have been
known or should have been known prior to the date of this Agreement.
8. Representations and Warranties of ILX. ILX as to its assets and
activities, represents and warrants to Mishkin as follows, as of the Effective
Date and as of the Closing hereunder:
8.1 Capacity. ILX has full power to enter into this Agreement
and to carry out its obligations hereunder. This Agreement constitutes a valid
and legally binding obligation of ILX. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance by ILX with any of the provisions hereof will violate any order,
writ, injunction, decree, statute, rule or regulation applicable to ILX.
8.2 No Breach of Statute, Decree or Order. To the actual
knowledge of ILX (as hereinafter defined), no claim, action or proceeding is
pending or threatened against ILX
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with respect to a default under, or a violation or breach in any material
respect of, any applicable statute, law, ordinance, decree, order, rule or
regulation of any governmental body, nor, to the actual knowledge of ILX (as
defined herein), is there any basis for such a claim, action or proceeding. To
ILX's actual knowledge (as hereinafter defined), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby nor compliance by ILX with any of the provisions hereof will (i) violate,
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with the giving of notice or the lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien,
security interest, charge or encumbrance upon the ILX Shares, under any term,
condition or provision of any agreement or other instrument or obligation to
which ILX is bound, or by which the ILX Shares or ILX is bound or (ii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
ILX.
8.3 Litigation. To the actual knowledge of ILX (as hereinafter
defined), there is no material suit, claim, action, proceeding or governmental
investigation now pending or, threatened against ILX ("ILX Third Party
Litigation") before any court, administrative or regulatory body or governmental
agency, (i) arising out of or relating to any aspect of the business, or any of
the properties, of ILX or (ii) concerning or affecting any of the transactions
contemplated by this Agreement.
8.4 Survival. All representations, warranties and covenants
made by ILX in this Agreement are true and correct in all material respects as
of the Effective Date and as of the Closing, and shall survive the Closing of
the transactions contemplated hereby.
8.5 No Additional Warranties. ILX has made no representations
or warranties except as expressly set forth in this Agreement and Mishkin
acknowledges that he is relying on no representations or warranties of ILX other
than those expressly set forth herein.
8.6 Definition of "Actual Knowledge". As used in this Section
8, "actual knowledge" means knowledge as of the date of this Agreement of the
officer executing this Agreement on behalf of ILX, irrespective of any inquiry
or investigation into matters that may have been known or should have been known
prior to the date of this Agreement.
9. Agreements Regarding ILX Shares. With respect to the transfer of the
ILX Shares, the parties agree as follows:
9.1 Securities Filings. Each party shall be responsible and
shall timely file any documents or other items required to be filed with the
Securities and Exchange Commission and any state regulatory authority. If a
transaction by Mishkin requires any such filing, Mishkin shall notify ILX of the
occurrence of the transaction for purposes of permitting ILX to comply with its
reporting requirements.
9.2 Acknowledgement of Transfer Restrictions. Mishkin
acknowledges and understands that the ILX Shares have not been registered under
the Securities Act of 1933, as
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amended, or any applicable federal or state securities laws, that ILX is under
no obligation to do so, and that the ILX Shares are restricted securities as
defined in Rule 144 of the Securities Act of 1933, as amended (the Securities
Act"). Mishkin further understands that any sale or transfer of the ILX Shares
must be made in accordance with the Securities Act and any other applicable
federal or state securities laws or regulations. As used herein, "transfer"
shall mean a sale, exchange, pledge, hypothecation, gift, bequest, collateral
assignment, subordination to a security interest, attachment or any other
alienation, disposition or encumbrance of all or any part of the ILX Shares. Any
attempted transfer in violation of the provisions of this Agreement shall be
ineffective and void.
9.3 Investment Representation. Mishkin represents to ILX that
he is acquiring the ILX Shares pursuant to this Agreement for investment
purposes only, and without the intention to distribute or otherwise transfer all
or any portion of the ILX Shares. The ILX Shares are being offered and issued by
the Company in reliance upon the exemptions available pursuant to the Securities
Act and applicable state securities acts. Mishkin has been fully informed as to
the circumstances under which he is required to take and hold such ILX Shares,
pursuant to the requirements of the Securities Act, the rules and regulations
thereunder, and the applicable state securities laws. Mishkin has consulted with
his own counsel as to applicable limitations upon the resale of the ILX Shares,
and has not relied upon ILX to explain such limitations. An appropriate "stop
transfer" will be noted in the Company's records, and each certificate or other
instrument evidencing the ILX Shares shall bear a legend in recognition of the
foregoing.
9.4 Mishkin's Due Diligence. Mishkin represents and warrants
that he has been provided with access and the opportunity to obtain information
concerning the ILX Shares and the business of ILX, including ILX's public
filings, to address the principal officers of ILX with any and all questions
about LAP, including its financial position, and to evaluate the merits and
risks of an investment in ILX and of holding the ILX Shares. Mishkin further
represents and warrants that any questions raised by Mishkin concerning ILX or
the ILX Shares other than questions arising from ILX's representations and
warranties have been answered to the satisfaction of Mishkin.
9.5 Co-operation in Transfer. Subject in all instances to the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other applicable federal and state securities laws and
regulations, ILX agrees to reasonably co-operate with Mishkin in any transfer or
proposed transfer by Mishkin of the ILX Shares under Rule 144 of the Securities
Act.
10. Condition Precedent. As a condition precedent to ILX's obligations
to purchase the LAP Interest from Mishkin and to perform any of its obligations
under this Agreement, ILX shall consummate a financing transaction with Bank One
Arizona, N.A. for a loan to ILX of not less than $700,000.00, on terms
acceptable to ILX in its sole discretion. Mishkin agrees to cooperate with ILX,
including in his capacity as a limited partner of LAP, to facilitate the above
described loan.
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11. Mutual Releases. As part of the consideration for the execution and
performance by both parties of this Agreement, effective as of the Closing:
(a) ILX and Mishkin (including ▇▇▇▇▇ ▇▇▇▇▇▇▇), for themselves
and their respective affiliated entities, successors, subsidiaries, agents,
employees, representatives, and assigns do hereby fully release and forever
discharge each other and their heirs, successors, devisees, agents, independent
contractors, employees, attorneys, shareholders, officers, directors,
subsidiaries, representatives and assigns, of and from any and all liability,
obligations, claims and causes of action, known or unknown, which either of them
may now have or may hereafter have, growing out of or connected in any way with
any agreement, fact or event occurring prior to the date of this Agreement,
except for the obligations of the parties undertaken in this Agreement and in
the Note, the Security Agreement, the Assignment, the Assignment and Transfer
Agreement, and other documents executed in connection with this Agreement.
(b) Each party represents and warrants to the other that it
has not assigned or otherwise transferred any rights or claims that, but for
such transfer, would be subject to the foregoing release.
12. Miscellaneous
12.1 No Broker. Each party represents and warrants to the
other that no person has acted in the capacity of broker or finder on their
behalf to bring about the negotiation or consummation of this Agreement. Each
party shall indemnify and hold harmless each other against every claim or
liability asserted against any of them by any person acting or claiming to act
as a broker or finder on behalf of each other.
12.2 Notices. Any notice or other communication required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by facsimile or by registered mail, postage prepaid, addressed to the
appropriate party as follows:
In the case of Mishkin:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
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In the case of ILX:
ILX Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
Fax (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Colombo & ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
or such substituted address as any party (or other party to whom a copy is to be
sent) shall have given notice to the other in writing. Such notice shall be
deemed given the earlier of (i) upon delivery if delivered, (ii) upon
confirmation of facsimile transmission if sent by facsimile, or (iii) the day
after deposit in the U.S. mail if given by mail.
11.3 Amendment. This Agreement may be amended or modified in
whole or in part only by an agreement in writing executed in the same manner as
this Agreement and making specific reference hereto.
12.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original, but all of which
taken together shall constitute one instrument.
12.5 Binding on Successors and Assigns. This Agreement shall
be binding upon, inure to the benefit of and be enforceable by and against the
parties hereto and their respective successors, assigns, executors and personal
representatives.
12.6 Severability. If any one or more of the provisions
contained in this Agreement or any application thereof shall be invalid, illegal
or unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions of this Agreement and any other application thereof shall
not in any way be affected or impaired thereby; provided, however, that to the
extent permitted by applicable law, any invalid, illegal or nonenforceable
provision may be considered for the purpose of determining the intent of the
parties in connection with the other provisions of this Agreement.
12.7 Waivers. The parties may, solely by written agreement,
(a) extend the time for the performance of any of the obligations or other acts
of the parties hereto, (b) waive any inaccuracy in any of the representations
contained in this Agreement or in any document delivered pursuant to this
Agreement, (c) waive compliance with, or modify, any covenant or
8
condition contained in this Agreement, and (d) waive or modify performance of
any of the obligations of any of the parties hereto; provided, that no such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall operate as a waiver of, or an estoppel
with respect to, any subsequent or other matter or failure.
12.8 Headings. The headings of the Articles and Sections of
this Agreement are inserted for convenience only and in no way alter, amend,
modify, limit or restrict the contractual obligations of the parties.
12.9 Expenses. Except to the extent provided herein to the
contrary, each party hereto shall bear its own expenses and no party shall be
responsible for any debt, liability or obligation, cost, expense or fee of any
nature whatsoever (including, without limitation, any and all legal, accounting
and other professional fees and expenses) incurred by any other party in
connection with the negotiation, execution or performance of this Agreement.
12.10 Attorney's Fees in Dispute. Notwithstanding the
foregoing, should either party hereto institute any action or proceeding against
the other to enforce any provision hereof, for injunction or for damages by
reason of any alleged breach of any provision of this Agreement or for a
declaration of such party's rights or obligations hereunder, or any judicial
remedy, the prevailing party shall be entitled to receive from the losing party
such amount as the court or arbiter may adjudge to be reasonable for attorneys'
fees, costs and expenses of the prevailing party. Should relief be awarded to
both parties, such attorneys' fees, costs and expenses shall be adjudged against
the parties in any manner the court or arbiter shall deem equitable.
12.11 Representation by Counsel. Each party acknowledges that
it has had the opportunity to consult with, and has consulted with, independent
counsel regarding this Agreement and the transactions contemplated hereby, and
that the fact that this Agreement or other document or instrument that is part
of this transaction was prepared by counsel for any one or more of them shall
not affect the interpretation of this Agreement, or such other document or
instrument.
12.12 Entire Agreement; Law Governing. All prior negotiations
and agreements between the parties hereto are superseded by this Agreement, and
there is no representation, warranty, understanding or agreement other than
those expressly set forth herein or in an Exhibit or Schedule delivered pursuant
hereto, except as modified in writing concurrently herewith or subsequent
hereto. This Agreement shall be governed by and construed and interpreted
according to the laws of the State of Arizona.
12.13 Recording Fees and Documentary Taxes. All transfer
taxes, documentary fees and other costs relating to the transfer of the ILX
Shares shall be paid by ILX.
12.14 Announcements. Mishkin shall not make any public
disclosure of the transactions contemplated hereby or in connection herewith
without the prior written consent of
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ILX. Mishkin acknowledges that ILX will be issuing a press release and filing
appropriate documents with the Securities and Exchange Commission regarding the
transactions contemplated herein. Any press release to be issued by ILX in
respect of the transactions contemplated hereby will first be submitted to
Mishkin in a manner constituting notice under this Agreement, and shall be
subject to Mishkin's approval, which shall not be unreasonably withheld. If
Mishkin does not object to such press release within one (1) business day from
the date Mishkin is deemed to have received such press release, the press
release will be deemed approved.
12.15 Further Assurances. After the Closing hereunder, each of
the parties hereto shall execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered such instruments and documents and take
such action as may be necessary or advisable to carry out its obligations under
this Agreement and under any schedule, exhibit, document, agreement, certificate
or other instrument delivered pursuant hereto, and with respect to any filing or
other documentation required in connection with the LAP Interest.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of the Effective Date.
"MISHKIN" "ILX"
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
-------------------------------- -------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
ACCEPTED AND APPROVED:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 28th day of
August, 1997, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Notary Public
My Commission Expires:
7-1-99
----------------------
OFFICIAL SEAL
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public - State of Arizona
MARICOPA COUNTY
My Commission Expires July 1, 1999
10
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 25th day of
August, 1997, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Chairman of ILX Incorporated, on behalf
of the corporation.
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Notary Public
My Commission Expires:
March 20, 1998
----------------------
