Exhibit 10.32
ILX Incorporated definitive agreement dated October 30, 1996.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel Acquisition
Memorandum of Understanding
ILX Incorporated, an Arizona Corporation (NASDAQ: ILEX), will acquire by
purchase the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino situated in Las Vegas, NV from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino, Inc. for the purchase price of $16,800,000,
payable as follows:
$5,100,000 by assumption of certain existing mortgage indebtedness
$4,200,000 payable in cash
$7,500,000 payable by issuance of 3,750,000 shares of ILX
Incorporated common stock with a registration statement
to be filed on an appropriate form with the SEC within
90 days of closing.
The obligation of ILEX to consummate this transaction is expressly conditioned
upon the execution of a definitive agreement which, among other salient
provisions, requires the continued presence, cooperation, and participation of
Ms. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in future activities of the hotel & casino and other ILEX
related businesses to be set forth in detail in another definitive agreement.
Both parties will commence immediately to complete all remaining due diligence,
take any and all appropriate corporate action and seek governmental approvals,
if any, pertaining to the transactions contemplated with a view to closing in
the fourth quarter of 1996.
Dated this 27th day of September, 1996.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino, Inc. ILX Incorporated
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, CEO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chairman
AGREEMENT FOR
PURCHASE AND SALE OF
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL AND CASINO
LAS VEGAS, NEVADA
SELLER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL & CASINO, INC.
a Nevada corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ RESORTS, INC.
a Nevada corporation
BUYER: ILX INCORPORATED
an Arizona corporation
or its nominee
DATE October 30, 1996
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT FOR PURCHASE AND SALE ("Agreement") is made as of the 30th day of
October 1996, by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL & CASINO, INC., a Nevada
corporation and its wholly owned subsidiary ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ RESORTS, INC., a
Nevada corporation (collectively "Seller"), and ILX INCORPORATED, an Arizona
corporation, or its nominee ("Buyer").
R E C I T A L S
A. Seller is the owner of certain real property located in the city of Las
Vegas, ▇▇▇▇▇ County, Nevada, comprised of a resort hotel and casino known as
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel and Casino (a portion of which has been timeshared) and
certain related personal property and rights, tangible and intangible, as more
particularly described below (the real and personal property and rights may be
referred to herein as the "Resort", as such term is more fully defined below).
B. Seller has agreed to sell, and Buyer has agreed to purchase, the Resort
pursuant to the terms and conditions set forth below.
NOW, THEREFORE, In consideration of the mutual covenant and conditions set
herein, the sufficiency of such consideration being acknowledged, the parties
hereby agree as follows:
AGREEMENT
Section 1. Sale of Resort
1.01. Seller shall sell to Buyer, and Buyer shall purchase from Seller, at
the price and upon the terms and conditions set forth in this Agreement:
(a) All that real property located in the County of ▇▇▇▇▇, State of
Nevada, described in Exhibit "B" attached hereto and incorporated herein,
together with all rights, privileges, easements and appurtenances thereto,
including, without limitation, all of Sellers right, title and interest in
and to any appurtenant land lying within the right of way of any street,
road or alley, whether completed or proposed (the "Property").
(b) All existing and proposed buildings, parking facilities,
structures, signs, improvements, tenements, fixtures and appurtenences
presently located on, under or about the Property and any additional items
located thereon at the time of Closing ("Improvements").
(c) All of the Resort, restaurant, lounge, museum, showroom, casino,
gift shop, back bar, common area, and other furniture, furnishings,
equipment , fixtures, improvements, inventory, supplies and other items of
personal property and any vehicles customarily located on the Property or
used primarily in connection with the Resort, including those items set
forth an Exhibit "C" attached hereto and Incorporated herein (the "Personal
Property"), but specifically excluding those items set forth on Exhibit "T"
attached hereto and incorporated herein;
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(d) All customer lists, timeshare leads, and rental and booking
information owned by Seller (the "Ledgers") and used in conjunction with
the operation of the Resort:
(e) All of seller's right title and interest in and to: (i) any losses
affecting the Resort (the "Leases") that have not been paid as of Closing
and that Buyer specifically agrees to assume, if any, and (ii) any
management service, concession maintenance, utility and other contracts and
agreements with respect to the maintenance and operation of the Resort (the
"Service Contracts");
(f) All of seller's right title and interest in and to all
architectural drawings, plans and specifications, shop drawings and other
design or construction documents relating to the present or future
development of the Resort and construction of the Improvements (the "Plans
and Specifications");
(g) All of seller's right title and interest in and to any and all of
the following to the extent that they arise out of, are related to the
construction or development, or are, or have at any time been, used in
connection with the Resort (i) warranties, guarantees and Indemnities in
favor of Seller and claims of Seller against third parties with respect
thereto, with the exception of those claims described on Exhibit 10-KSB
attached hereto and incorporated herein. (ii) licenses, permits,
certificates of occupancy or similar documents, contract rights and other
agreements, whether oral or In writing, incident to the operation of the
Resort to the extent transferrable, (iii) the goodwill associated with the
Resort (iv) all designs, surveys, site plans, plats, operating materials,
engineering reports and other technical descriptions, (v) transferrable
licenses and permits necessary to operate the Resort as it is presently
being operated, and (vi) all other contracts, assets, and rights owned by
Seller, relating to the business, maintenance, construction and/or
operation of the Resort (collectively the "Contract Rights and Intangible
Assets");
(h) All of seller's right title and interest in and to any
transferable licenses and permits, including without limitation alcoholic
beverage licenses, used In the operation of the Resort and all other
personal property or rights, tangible or intangible, located at and used in
the operation of the Resort (collectively "Miscellaneous Items") ;
(i) All of seller's right title and interest in Resort telephone
numbers and marketing materials used in marketing the Resort, whether
located at the Resort or elsewhere, including existing videotapes,
photographs, brochures, film copy and anything relating thereto
("Advertising Materials"); and
(j) All of Seller's right title and interest in the timeshare
operation on the Property and any OPC license or lease (the "Timeshare
Operation") and all "in-house" timeshare contracts, purchase agreements and
notes receivable resulting from sales of timeshare Intervals at the Resort
prior to Closing and not sold to lenders (the "Timeshare Paper"), as more
particularly described on Exhibit A.
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All of the items described in subparagraphs (a) through (j) above are
referred to in this Agreement collectively as the "Resort". Any items
excluded from the foregoing are set forth on Exhibit "T" attached hereto.
1.02 Seller shall convey and Buyer shall accept title to the Property and
improvements in accordance with the terms of this Agreement by general warranty
deed (Exhibit "D"), subject to all matters of public record shown on the Owners
Title Policy, current taxes and current assessments, and any matter shown on the
A.L.T.A. survey of the Property described in paragraph 3.04 below and approved
by Buyer (collectively the "Permitted Exceptions"). The Personal Property and
Advertising Materials shall be conveyed to Buyer by ▇▇▇▇ of Sale (Exhibit "E")
to be executed and delivered by Seller at Closing, free and clear of liens and
encumbrances except the First Lien (as described hereinafter). The Leases,
Service Contracts, Ledgers, Plans and Specifications, Miscellaneous Items,
Timeshare Operation, Timeshare Paper, and Contract Rights and Intangible Assets,
shall be conveyed by Seller pursuant to an Assignment of Leases, Contract Rights
and Intangible Assets (Exhibit "F") or other appropriate assignment or
conveyance document free and clear of all liens except the First Lien, to be
executed and delivered by Seller and Buyer at Closing.
Section 2. Purchase Price, Appointments, Escrow Agent
2.01 The purchase price ("Purchase Price") to be paid by Buyer to Seller
for the Resort shall be SIXTEEN MILLION EIGHT HUNDRED THOUSAND DOLLARS
($16,800,000.00), plus any additional sum for inventories existing as of
Closing, payable as follows:
(a) Four Million Two Hundred Thousand Dollars ($4,200,000.00) In cash
at Closing (the "Down Payment"), plus any additional sum representing the
cost of any Resort Inventory of liquor, food, beverages and the gift shop
(the "Inventory"), to be valued as agreed by the parties at a joint
inventory conducted prior to Closing and as close thereto as practicable,
all of which shall be used by Seller to satisfy the obligations of Seller
described on Exhibit "P".;
(b) Five Million One Hundred Thousand Dollars ($5,l00,000.00)
(adjusted to the actual balance of principal and interest at Closing) by,
at Buyers option, either (i) assumption at Closing of seller's existing
obligation on the existing promissory note, deed of trust or mortgage, and
other loan and security documents by Seller in favor of Resort Funding,
Inc., attached hereto as Exhibit "G" (the " First Lien" or "Loan
Documents"), or (ii) paying the loan evidenced by the Loan Documents in
full at Closing; and
(c) Seven Million Five Hundred Thousand Dollars ($7,500,000.00) by
issuance at Closing of three Million seven hundred fifty thousand
(3,750,00) shares of ILX incorporated Common Stock (the "Shares"), valued
for purposes of this agreement at Two Dollars ($2.00) per share. Such stock
will be included in a registration statement to be filed on an appropriate
form with the United States Securities & Exchange Commission within thirty
(30) days after the date of substantial completion of those Exhibits to be
attached hereto hereinafter that provide material Information or additional
term to the overall transaction required to be disclosed in such
registration statement.
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2.02 Except as set forth In paragraph 1.01 and 2.03, Seller shall retain
all the rights and all the obligations with respect to all obligations and
liabilities of the Resort and its operation arising from or relating to the
period on and prior to the date of Closing, including without limitation, all
accounts payable, employees and employee claims, salaries and wages payable,
vacation pay for vacation earned, and payroll taxes associated therewith ,
unbooked accounts payable, accounts receivable, cash, cash equivalents, security
deposits, utility and telephone payments, utility deposits, bank deposits, bank
and operating accounts, and all other obligations for the Resort existing as of
and on the Closing Data and for the period prior thereto, as well as for its pro
rata share of current real property taxes and current assessments as of the
Closing Date. Seller's prorata share of real property taxes and assessments
shall be paid to Buyer in cash on the Adjustment Date as defined in paragraph
hereof if not known and prorated at Closing. Buyer, its wholly owned
subsidiary, or through a management company as Buyer may employ, shall receive
payments paid to the Resort on all seller's accounts receivable existing as of
the Closing Date as seller's agent and shall remit all amounts received to
Seller within thirty (30) days of receipt such receipt of accounts receivable
shall be undertaken In the usual and ordinary course of the Resort business and
Buyer shall not be required to undertake any solicitations or other effort or
legal action to collect Receipt of free accounts receivable as set forth above
shall be without cost to Seller. Any payment other than cash delivered for
Seller shall be transmitted in kind by Buyer without recourse to Buyer.
Adjustment for cash security deposits, prepaid or accrued expenses shall be made
as provided In paragraph 2.03 below.
2.03 Buyer and Seller agree that a prorated net adjustment (the "Net
Adjustment") shall be computed as of the Closing Date for any amounts actually
paid to (or to be paid to) and for any amounts actually paid by (or to be paid
by) one party, but otherwise under this Agreement belonging to the other party
or chargeable to the other party, as the case may be. The computation of the Net
Adjustment will be made as of the Closing Date and exclude the cash payment
described in paragraph 2.01 (a) above. Buyer and Seller agree to use their best
efforts to ensure that a full accounting of the Net Adjustments be Provided no
later than the Closing Date to the extent practicable (the "Adjustment Date").
If Seller owes the Net Adjustment to Buyer, then Buyer shall deduct such amount
from the Down Payment as of the Closing Date. If Buyer owes the Net Adjustment
to Seller, such amount shall be added to the Down Payment as of the Closing
Date. The parties acknowledge that some items subject to adjustment may not be
received prior to the Adjustment Date, and wherever the context requires,
Adjustment Date shall also mean Supplemental Adjustment Date as defined below.
Accordingly, there will be a supplemental adjustment determined thirty (30) days
after the Closing Date or such other date or dates as the parties may agree or
which may be necessary if all information has not been received (the
"Supplemental Adjustment Date(s)") for such items, with such supplemental
adjustments to be made as of the Closing Date and paid to the other party within
ten(10)days after the Supplemental Adjustment Date. Buyer and Seller agree that
adjustments will include, but not necessarily be limited to, the following:
(a) Sales and Other Taxes. Any sales, transaction privilege gaming or
other periodic taxes (except Seller's corporate income tax) based on
Pre-Closing Resort revenue, which taxes having been collected and not paid,
or which are due or to become due and the amount known or determinable at
Closing, shall be paid by Seller at Closing. All other such amounts not so
determinable on or before the Adjustment Date, shall be an adjustment in
favor of Buyer unless
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otherwise paid by Seller. Upon presentation by Buyer of a copy of the sales
or other tax return, with an allocation of seller's responsibility
therefore, Seller shall reimburse Buyer for such amount within ten (10)
business days after the date of such presentation.
(b) Insurance. If Buyer continues any insurance that Seller has
previously obtained with respect to the Resort, Buyer agrees to reimburse
Seller for the proportionate share of insurance costs prepaid by Seller for
any coverage continued by Buyer after Closing, shall be prorated as of the
Closing Date.
(c) Certain Payments. All Lease, Service Contract, utility and
telephone payments shall be prorated as of the Closing Date.
(d) Customer Deposits and Prepayments. All unearned customer deposits
and prepayments for services to be performed or goods to be delivered after
Closing shall be prorated in favor of Buyer as of the Closing Date.
(e) Utility and Equipment Lease Deposits. All utility and equipment
lease deposits shall be assigned to Buyer at Closing and shall be an
adjustment in favor of Seller on the Adjustment Date.
(f) License Fees. Any prepaid license fees shall be prorated as of the
Closing Date and shall be an adjustment in favor of Seller on the
Adjustment Date.
(g) Employee and Payroll Related Expenses. At buyer's option, Buyer
may require that all or any part of the resort's employees resign as of the
Closing Date. To the extent not so required by Buyer, any ▇▇▇▇▇▇▇'▇
Compensation premium deposits to be utilized by Buyer shall be prorated to
the Closing Date, and shall be an adjustment in favor of Seller on the
Adjustment Date. Current wages, salaries, vacation and sick leave accrued
as of the Closing Date shall be an adjustment in favor of Buyer on the
Adjustment Date computed as if the vacation will be taken and the sick
leave used. For purposes of the foregoing, paid vacation and sick leave
shall be deemed paid on a first accrued-first paid basis,
(h) Ledgers. All amounts receivable for lodging provided prior to the
Closing Date, as shown on the Ledgers, shall be receivables to be received
by Buyer on behalf of Seller or, set forth above.
(i) To the extent the foregoing prorations and adjustments are
specifically dealt with in the Hotel Facilities Lease, they shall be
resolved herein in a manner consistent with that document
(j)For all Purposes of proration and allocation of responsibility and
liability as described in this Agreement, Closing Date and the period prior
thereto are allocated to the Seller and the period after the Closing Date
is allocated to the Buyer. The words 'as of' or "on" the Closing or Closing
Date or similar wording, as well as the words "Closing"' or "Closing Date"
where appropriate in the context shall be interpreted accordingly,
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2.04 The items below shall be paid as follows:
(a) Seller shall pay all of the obligations described on Exhibit "P" from
the Closing funds through the Escrow Agent.
(b) Seller and Buyer shall each pay one-half (1/2) of the standard escrow
charges in connection with this Agreement.
(c) The cost of the owners title policy provided for in Paragraph 8.01
shall be paid on the Closing Date as follows:
(i) Seller shall be charged an amount equal to the premium for
standard coverage; and
(ii) Buyer shall pay the additional premium for extended coverage, and
the cost of any special endorsements as may be desired by Buyer.
(d) The cost of any extended lender's title insurance policy shall be paid
in full by Buyer.
2.05 Seller and Buyer hereby acknowledge and agree that the Purchase Price,
for all purposes relating to this Agreement shall be allocated among the various
assets comprising the Resort as the parties shall mutually agree In writing
prior to the end of the Feasibility Period and attached hereto as Exhibit "H".
2.06 First American Title Insurance Company, Las Vegas, Nevada shall act as
the escrow agent ("Escrow Agent") hereunder and shall, among other things, on
the Closing Date, assume responsibility for recording and/or filing all
necessary documents resulting herefrom, and shall cause the issuance of the
policies of title insurance required under Section 8, together with proper
issuance of any reinsurance agreements pertaining to such title insurance
policies, and otherwise accomplish the provisions by signing in the indicated
place on the signature page of this Agreement. The parties agree, if required by
Escrow Agent, to execute and enter into Escrow agent's standard form of escrow
instructions, all with such modifications as the parties shall reasonably
request.
Section 3. Feasibility and Investigation
3.01 In consideration of Buyer entering into the mutual covenants in this
Agreement at any time on or prior to the sixtieth (60th) day after the date of
this Agreement (or as other Terms of this Agreement may specifically extend such
period) (the "Feasibility Period"), Buyer may cancel this Agreement and all
agreements relating thereto (except for Its Indemnity relating to disturbance of
the Resort as described below in this Section) for any reason whatsoever in
Buyer's sole and absolute discretion, by providing to Seller and Escrow Agent
written notice of such cancellation. ln the event Buyer timely gives notice of
cancellation in accordance with the provisions hereof, this Agreement shall
become null and void and of no further force or effect whatsoever and neither
party shall have any further rights or obligations to the other
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hereunder or by reason hereof except for those provisions hereof which are
expressly stated to survive the termination of this Agreement. If, however,
Buyer shall fail to give notice of buyer's election to cancel at the time and in
the manner as above provided, then Buyer shall be deemed to have waived its
right to do so and Buyer shall continue to be bound by the remaining provisions
of this Agreement.
3.02 Buyer shall have the right to enter and examine the Resort and all
other items being sold pursuant to this Agreement at any time under the
execution of this Agreement and also have the Resort and such items examined and
copied by any persons whom it shall designate, including without limitation,
accountants, attorneys, contractors, engineers, and environmental testing
personnel. Seller shall permit access to the Resort by Buyer and any persons it
designates, and shall fully cooperate and afford them the opportunity to inspect
such items and perform any tests upon the Resort that Buyer deems necessary or
appropriate. Buyer may utilize the office equipment and office facilities at the
Resort without charge (except for any long distance telephone service). Buyer
will not unreasonably interfere with the business of the Resort.
3.03 As to any physical disturbance of the Property or Improvements or
physical injury to person caused by Buyer or seller's agents, upon completion of
such studies and investigations, if Buyer cancels the Agreement or thereafter
does not close, Buyer agrees to restore any physical damage to the Property or
Improvements caused by Buyer or its agents to the condition it was In prior to
such damage, and further, without regard to whether or not Buyer shall cancel or
close, to defend, indemnify and hold Seller harmless from and against all
physical Injury to persons arising from such activities by Buyer. These
covenants shall survive cancellation of this Agreement
3.04 Buyer shall pay the cost of any studies and examinations of the Resort
conducted by agents of Buyer, including any "Phase 1", environmental report and
any testing in connection therewith. Notwithstanding the foregoing, as soon as
reasonably practicable execution of this Agreement Seller, at its expense shall
provide Buyer with an ▇▇▇▇ ▇▇▇▇▇ Class Survey of the Resort including such Table
A items as specified by Buyer, by a Nevada licensed surveyor in good standing,
certified to Buyer, the title insurer and any lender connected herewith, with
such certification containing such other matters as Buyer shall reasonably
request. As soon as practicable after execution, Seller shall provide Buyer with
copies of all existing surveys, environmental reports and other studies and
reports relating to the Resort in seller's possession or under its reasonable
control.
3.05 Prior to the Closing, and under such reasonable terms and conditions
as Seller may impose, employees and agents of Buyer may stay at the Resort
without charge for lodging, except for incidentals consumed such as long
distance telephone, food and beverages, provided such stay is primarily for the
purpose of conducting feasibility examinations and investigations or otherwise
working on matters related to this transaction.
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3.06 Title Report
(a) As soon as practicable after execution hereof, Seller will, at Seller's
sole cost and expense, deliver to Buyer a commitment for title insurance
relating to the Property prepared by Escrow Agent and leading to the Issuance of
an extended owners policy, together with complete and legible copies of all
recorded documents referred to therein (the "Title Report") and, in the event
that the following are subsequently prepared, agrees to cause Escrow Agent to
deliver to Buyer any updates and supplements thereto or amendments thereof, in
each case together with complete and legible copies of all matters referred to
therein ("Amendments"). Buyer shall have until the later of the end of the
Period or five (5) business days after the date of delivery of any Amendment
(which, at Buyer's option, shall extend the Closing Date accordingly), to notify
Seller and Escrow Agent in writing of Buyer's objection to any matter(s)
indicated therein (but only, in the case of Amendments, with respect to matters
not appearing on the Title Report or any previously delivered Amendment).
Notwithstanding the foregoing. Buyer shall not be entitled to object to any
exception contained in the Title Report (or any Amendment thereof which is
caused by Buyer's activities under Section 3 hereof (excluding those resulting
from Buyer's discovery of any existing defect or condition).
(b) If Buyer fails to timely object to any title exception matter disclosed
in accordance with the above procedure, Buyer shall be deemed to have approved
the condition of title to the Property. If Buyer objects to any exception as
above provided, Seller shall have until five (5) business days after the date of
delivery of Buyer's objections to advise Escrow Agent and Buyer in writing with
respect to each specified objection of Seller's election either to (i) take no
action in connection therewith (ii) or attempt to cause any such matter(s) to be
cured or eliminated at or prior to Close of Escrow. Insuring over any such item
may be done only with Buyer's written consent in its sole direction. Seller's
failure to give notice within such five (5) business day period with respect to
any of Buyer's objections shall be deemed to constitute Seller's election to
take no action in connection therewith.
(c) In the event Seller elects or is deemed to have elected to take no
action with respect to any specified objection, Buyer shall have until the later
end of the Feasibility Period or five (5) business days thereafter to advise
Escrow Agent and Seller in writing of its election to (a) waive such previously
specified objection(s) and close the transaction contemplated hereby in
accordance with the remaining provisions of this Agreement and without any
abatement or reduction of the Purchase Price, or (b) cancel and terminate the
Agreement. Buyer's failure to give written notice within such period shall be
deemed to constitute Buyer's election to waive its previously specified
objections with respect to those matters as to which Seller has notified or is
deemed to have notified Buyer that Seller will take no action.
(d) With respect to those matters which Seller has notified Buyer that
Seller will attempt to cause to be cured or eliminated (or Insured over with
Buyer's consent), Seller shall have until five (5) business days prior to the
Closing (which shall be extended in accordance with the time periods herein)
within which to accomplish the same; provided, however, that if Seller fails to
do so within said period, or if Seller Shall be unable (other than due to its
voluntary act after execution
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hereof causing such disability) to convey title to the Property subject to and
in accordance with the provisions of this Agreement at the Closing, then Buyer,
as its sole and exclusive remedies, may elect either to (i) waive such
previously specified objection(s) and close the transaction contemplated hereby
in accordance with the remaining provisions of this Agreement and without any
abatement or reduction of the Purchase Price on account thereof, or (ii) cancel
this Agreement and the Escrow, said election of remedies to be evidenced by
buyer's giving written notice to each of Seller and Escrow Agent at or prior to
the Closing. Buyer's failure to give written notice as required by the preceding
sentence shall be deemed to constitute Buyer's to waive its previously specified
objection(s). If Buyer elects to cancel, this Agreement shall become null and
void and of no further force or effect and neither party shall have any further
rights or obligations to the other hereunder or by reason hereof, except for the
provisions hereof which are expressly stated to survive the termination of the
Agreement.
(e) Buyer specifically agrees that nothing herein contained shall be deemed
to impose on Seller any obligation to bring any action or proceedings, expend
any sums or take any other steps of whatever kind or nature in order to insure
over, remove or cure matters affecting title or to fulfill any condition or
expend any monies therefore unless Seller voluntarily Impairs title to the
Property or otherwise voluntarily causes such matter after execution hereof. The
acceptance of Deed by Buyer shall not diminish Seller's warranties or any
continuing obligation herein.
4. Operations Prior to Closing
Seller covenants and agrees that between the date hereof and the Closing,
Seller will:
4.01 Continue to operate the Resort as heretofore operated in the normal
course of business and in accordance with its customary business practices.
4.02 Perform required maintenance and replacements in accordance with its
customary practices.
4.03 Afford Buyer and its representatives full access to the Resort and to
Seller's books, and files relating to the Resort and make same available to
Buyer whether they are located on or off the Property, at reasonable times, and
without undue delay, up to and including the date of the Closing.
4.04 Pay, in the normal course of business, and, in any event prior to
Closing, sums due for work, materials or services furnished or a incurred in the
ownership and operation of the Resort up to and including the date of Closing,
except as otherwise specifically treated in the provisions of this Agreement.
Not prepay any material item after the date of this Agreement without the prior
written consent of Buyer.
4.05 Except for daily room rental agreements in the ordinary course of
business which are not discounted more than twenty-five percent (25%) from the
full "rack" rate, not enter into any new material agreement nor renew, amend,
modify or terminate any existing material agreement relating to the Resort
without having obtained the prior written consent of Buyer in each such
instance, which will not be
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unreasonably withheld or delayed. Material agreements will include, without
limitation, airline and travel agent commitments, automobile leases, or room or
other facility commitments which are discounted more than twenty-five (25%) from
their full rates.
4.06 Not grant or transfer or permit the grant or transfer of any interest
in the Resort or any item being sold pursuant to this Agreement or grant any
execution rights in connection therewith, except for any items being replaced
with comparable items of equal or greater value in the ordinary course of
business.
4.07 Not discontinue compliance with governmental requirements applicable
to the Resort.
4.08 Promptly advise Buyer of any threatened or actual litigation or
governmental investigation or proceeding affecting the Resort, its licenses, its
operation, or those persons materially involved in its operation. It shall be a
condition precedent to Buyer's obligation to close that there shall be no such
matters threatened or pending at Closing having a potential significant and
material adverse effect on the Resort or upon Seller's ability to convey the
Resort to Buyer.
4.09 Not permit any material alteration, structural modification or
additions to the Resort except in the nature of ordinary maintenance.
4.10 Except for daily room rental agreements in the ordinary course of
business, not create (or agree to create) any contract grant option, lease,
covenant restriction, easement encumbrance or lien on or affecting the Resort
nor do anything negatively affecting title thereto, without the prior written
consent of buyer.
4.11 As a condition precedent to Buyer's obligation to close, Seller shall
have duly performed all covenants and other obligations to be performed by it
under this Section 4.
Section 5. The Closing
5.01 The consummation of this transaction by recording the General Warranty
Deed in accordance with the provisions of the Agreement shall take place ten
(10) days (or as such time may be extended in accordance with the specific terms
of this Agreement) after the date of expiration of the Feasibility Period or
sooner at any time if desired by Buyer upon two (2) days written notice by
Buyer. The date of such recording is referred to in this Agreement as the
"Closing"' or the "Closing Date" At the Closing, the parties hereto agree to
take the following acts and make the following deliveries, all of which will be
deemed taken and delivered simultaneously and no one of which will be deemed
completed or delivered until all have been completed or delivered:
(a) Seller shall execute, acknowledge (as appropriate) and deliver to
Buyer and/or Escrow Agent the following documents:
(1) A General Warranty Deed in the form attached as Exhibit "D";
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(2) Any documents or affidavits required to be filed or recorded
therewith In connection with Nevada Law,
(3) A ▇▇▇▇ of Sale in the form attached as Exhibit "E"; assigning
and transferring to Buyer all of Seller's right, title and interest in
and to the Personal Property, Advertising Materials, Ledgers, and the
Plans and Specifications, including without limitation those items
shown on Exhibit "C", free and clear of all claims, liens, security
interests, encumbrances and other charges, except for the First Lien;
(4) An Assignment of Leases, Contract Rights and Intangible
Assets in the form attached as Exhibit "F", free and clear of all
claims, liens, security interests, and other charges, except for the
First Lien. The schedules to this assignment shall include the Leases,
Service Contracts, Ledgers, Plans and Specifications, Contract Rights,
Intangible Assets, Timeshare Operation items, Timeshare Paper and
related security agreements, and Miscellaneous items;
(5) Assignments of Seller's interest in all automobiles and
equipment lease-purchase contracts, and appropriate title transfer
documentation property executed by Seller for all such items owned by
Seller and used for the Resort free and clear of all claims, liens,
security interests, encumbrances and other charges, except for the
First Lien;
(6) Certificate of Non-Foreign Status in the form attached hereto
as Exhibit "I";
(7) If requested by Buyer, the resignations of all officers and
directors of the Timeshare Operation owners association who are
controlled by Seller, and corresponding replacement with persons
controlled by Buyer,
(8) If requested by Buyer, an assignment of all the developer's
and "declarant's" rights in the governing documents of the Timeshare
Operation, in the form of Exhibit "J" attached hereto;
(9) Such other documents required by this Agreement or as may
reasonably be required by Buyer, its counsel, or Escrow Agent in order
to consummate the transactions which are the Subject matter of this
Agreement, and;
(10) An opinion of Seller's counsel.
(b) At Closing, Buyer shall pay, execute, acknowledge (as appropriate)
and deliver to Seller and/or Escrow Agent the following:
(1) The Down Payment In cash or other immediately available funds;
(2) An assumption of the Loan Documents, if required;
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(3) Such other documents required by this Agreement or as may be
reasonably required by Seller, its counsel, or Escrow Agent to consummate
the transactions which are the subject matter of this Agreement; and
(4) An opinion of Buyer's counsel.
(c) At Closing, the Escrow Agent shall record and deliver the
foregoing documents as appropriate In connection with this Agreement.
Section 6. Covenants, Representations and Warranties of Seller
Seller represents covenants and warrants to Buyer as following, as of the
date hereof and as of the Closing:
6.01 Seller are corporations, duly organized and validly existing under the
laws of the State of Nevada.
6.02 Seller has the full right and authority to enter into and fully
perform its obligations under this Agreement subject to obtaining shareholder
approval of the transaction contemplated hereby.
6.03 The persons signing this Agreement on behalf of Seller are authorized
to do so and to bind Seller to the terms hereof.
6.04 All the Closing, Seller is the sole owner of the Resort subject only
to the First Lien.
6.05 The Schedule of Leases set forth in Exhibit "M" attached hereto
("Schedule of Leases") is accurate as of the date hereof, and there are no
leases or other tenancies in or related to the Resort other than those set forth
therein and room rentals in the ordinary course of business. Copies of all
Leases will be provided to Buyer during the Feasibility Period and all original
Leases shall be delivered to Buyer at Closing. Except as otherwise set forth in
the Schedule of Leases or elsewhere in this Agreement all of the Leases are in
full force and effect and none of them has been modified, amended or extended.
Moreover, Seller has no knowledge of any material breach or default, claim of
material breach or default thereunder, or any event which with the passage of
time will become a breach or default and has received no written notice of any
of the foregoing thereunder.
6.06 A schedule of the Service Contracts, oral or written (indicating
which), is attached hereto as Exhibit "N" ("Schedule of Service Contracts").
Except as otherwise set forth in the Schedule of Service Contracts or elsewhere
in this Agreement, the Service Contracts are in full force and effect and have
not been modified, amended or extended. Moreover, Seller has no knowledge of any
breach or default, claim of material breach or default thereunder, or any event
which with the passage of time will become a breach or default. Copies of all
Service Contracts will be provided to Buyer during the Feasibility Period and
the originals shall be delivered to Buyer at Closing. Except as stated on the
Exhibit, all Service Contracts may be canceled immediately upon notice of same,
without penalty or charge.
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6.07 A Permanent Certificate(s) of Occupancy for the Improvements has been
issued by the appropriate government authorities and has not been amended or
revoked and a copy will be delivered to Buyer during the Feasibility Period. The
Resort is located within the boundaries of the City of Las Vegas, Nevada
6.08 Except as set forth in Exhibit "O" attached hereto, the Property and
Improvements are, to the best of seller's knowledge, in substantial compliance
with the zoning and use requirements of applicable governmental entities. Seller
has received no correspondence or formal notice from any governmental authority
of any existing violation, which has not been cured, or of any circumstances
that with the passage of time or failure to act or both, would constitute a
violation of any applicable zoning or use requirement.
6.09 To the best of Seller's knowledge, there is no pending or contemplated
condemnation of the Property or Improvements, or any portion thereof, by any
governmental authority, nor is there any existing or proposed plan to widen,
modify or realign any street, alley or roadway adjoining the Property which
would affect access to or use of the Property.
6.10 To the best of Sellers knowledge, and except as qualified by Exhibit
"T" attached hereto, and in related documents set forth on the Exhibit and
provided to Buyer at least ten (10) days prior to the end of the Feasibility
Period, sewage and waste disposal systems and utility and telephone services now
serving the Property and the Improvements are adequate for the present operation
of the Resort.
6.11 Except as set forth in Exhibit "P" attached hereto, and in related
documents set forth on the Exhibit and provided to Buyer at least ten (10) days
prior to the end of the Feasibility Period, Seller has not received notice of
any uncured violations or infringements of any laws including without limitation
gaming laws and laws related to the Timeshare Operation, rules, regulations,
ordinances, fire or safety codes, life safety requirements, insurance
requirements, covenants, conditions, restrictions including without limitation
those relating to the Timeshare Operation on the Property, trademark service
▇▇▇▇ or tradename registrations, agreements, or rights applicable to the Resort
and, to the best of the Seller's knowledge, the Resort as customarily, and
presently, operated is in substantial compliance with all applicable laws, rules
and regulations.
6.12 Except as set forth in Exhibit "P" attached hereto, and in related
documents set forth on this Exhibit and provided to Buyer at least ten (10) days
prior to the end of the Feasibility Period, to the best of Seller's knowledge:
(a) There are not presently, and have been no, above or underground
storage tanks, dry ▇▇▇▇▇, injection ▇▇▇▇▇, or similar facilities, PCB
transformers, asbestos or Hazardous Material located on the Resort
(b) No notice pursuant to any Environmental Law has been received
from, given to, or is presently due to, any governmental authority pursuant
to such Environmental Law.
(c) There are not presently, and have been no, violations on or by the
Resort of any Environmental Law.
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(d) The Resort is not presently, and has not been, used for the
manufacture, collection, storage, handling, treatment or processing of any
Hazardous Material, nor as a Sanitary Landfill or open dump, except for
normal quantities of customary products used in the operation of the
Resort.
(e) There is not presently, and has not been, any spill, leakage or
release of any Hazardous Material on or into the soil, water or air, on or
at the Resort or at any real property within one mile of the boundaries of
the Resort.
(f) The Resort is not a state or federal "superfund" site or study
site pursuant to Environmental Law.
(g) Seller agrees to defend, indemnify and hold Buyer harmless from
all loss, cost damage and expense arising out of any alleged or actual
violation of, or liability under, any Environmental Law, for events and
conditions occurring on or to the Resort by act or omission to act of
Seller or any person on the Resort property during the period an and prior
to the Closing Date. This indemnity does not limit any statutory or other
legal rights available to Buyer. Buyer agrees to defend, indemnify and hold
Seller harmless from all loss, cost damage and expense arising out or any
alleged or actual violation of, or liability under, any Environmental Law,
for events and conditions occurring on or to the Resort by act or omission
to act of Buyer or any person on the Resort property during the period
after the Closing Date.
(h) "Environmental Law" means, in relation to the Resort and its
operations, any applicable federal, state, county, municipal or other
political subdivision or district statute, law, rule, regulation, code,
ordinance, or decree relating to health, environment, air, water, soil,
improvements and facilities, the protection of same, and the contamination
and cleanup thereof.
(i) Hazardous Materials means any hazardous waste, materials, gases,
liquids, substances, improvements or other items defined in any
Environmental Law and regulated thereunder or by any applicable
governmental authority pursuant thereto, including any notification
requirements thereunder to governmental authorities.
6.13 To the best of Seller's knowledge, and except as set forth on Exhibit
"K" attached hereto, no claims, actions, suits, proceedings or investigations by
governmental authorities, employees or other employees or other third parties
are pending or threatened against or relating to the Resort or its operation in
writing or in any court or before any federal, state, municipal or other
governmental department agency, commission, board or bureau.
6.14 Except as may be set forth on the Title Report and further except for
current property taxes and current assessments, not delinquent, Seller has no
knowledge of any delinquent tax, assessment or other obligation affecting the
Resort which is, or may become, a lien on the Resort.
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6.15 Seller has delivered to Buyer financial statements, Including
statements of Income and expenses dated ___________________ (the "Financial
Statements") for Seller prepared by KPMG Peat Marwick. To the best of Sellers
knowledge the Financial Statements are true, correct and complete as of the date
thereof and fairly present the financial operations of the Resort for the period
stated. Seller makes no representation as to the future financial performance of
the Resort.
6.16 A full and complete schedule of liabilities related to the Resort
which are to be assumed by Buyer pursuant to this Agreement is attached hereto
as Exhibit "L": ("Existing Liabilities"). The Existing Liabilities to the best
of Seller's knowledge are true and correct as to nature and amount. Seller
hereby agrees to defend, indemnify and hold Buyer harmless from any sums owing
on liabilities of the Seller existing on the Closing Date not set forth as an
Existing Liability on Exhibit "L".
6.17 Seller is not prohibited from consummating the transaction
contemplated by this Agreement or from conveying the Resort by any law,
regulation, agreement, instrument, restriction, order or judgment. No
permission, approval or consent by any third party or governmental authority, or
any individual or entity connected with Seller (other than that of Seller's
shareholders) is required in order for Seller to convey the Resort or to
consummate the transaction contemplated by this Agreement
6.18 Seller has paid in full for all labor performed at professional
services performed in respect to, and materials, machinery, fixtures and tools
delivered to, furnished to or incorporated into the Resort or which would
otherwise give rise to a lien or a right to lien the Resort except for the First
Lien.
6.19 The Loan Documents are not in default nor is there any existing
condition which would cause a default with the mere passage of time, the
principal balance and interest due on the Loan Documents does not exceed Five
Million One Hundred Thousand Dollars( $5,100,000.00). No additional principal
has been advanced or accepted pursuant to the Loan Documents.
6.20 All employees of and at the Resort including without limitation its
managers are employees at-will and may legally be discharged without cause at
any time, including immediately before Closing, without liability to the Buyer
or liability to the Resort if requested by Buyer, Seller will, in writing, give
notice to and discharge all employees of the Resort effective immediately prior
to Closing, and not do anything to interfere with any immediate rehire after
Closing of same or all of such employee's. Prior to any such events, Seller will
not encourage, support or entice in any way, any satisfactory employee to leave
the employ of the Resort.
6.21 Except as set forth on Exhibit "P" attached hereto and for normal wear
and tear, the Resort, including the buildings, systems, furniture, fixtures and
equipment are in good condition and repair.
6.22 All licenses and permits necessary to the operation of the Resort are
current and in good standing.
6.23 Seller holds, in good standing, current alcoholic beverage license(s)
from the appropriate governmental liquor authorities in connection with the
operation of the Resort.
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6.24 Up to the Closing Date, the Resorts equipment and facilities have been
adequate to serve its customers during peak demand periods.
6.25 Except as set forth on Exhibit "P" attached hereto, there are no
delinquent taxes, assessments, salaries, wages, contract payments, supplier
payments, or any other delinquent payments of any kind or nature owing from
Seller or the Resort and relating to the Resort its employees, contractors,
governmental authorities, or any other person or entity dealing with the Resort
and its operation. Any such delinquent payments listed on Exhibit "P" will be
paid by Seller at Closing from the Closing funds through the Escrow Agent.
6.26 Attached hereto as Exhibit "U" is a schedule of all commitments and
reservations for "free" rooms and rooms or other facilities discounted more than
twenty-five percent (25%) from the full rate therefore for any period after the
sixtieth (60th) day following the date of this Agreement.
6.27 The Timeshare Operation has been operated continuously from Its
inception to the present in compliance with all laws, rules and regulations
applicable thereto, including without limitation the sales connected therewith,
and there has been no misrepresentation to purchasers or failure of performance
In connection with any representation or written obligation to any purchaser,
except for tenth (10th) floor (of the Resort) furnishings represented to the
timeshare purchasers. An accurate list of (i) those furnishings, (ii) their
brand and purchase source, and (iii) their cost is set forth in Exhibit "V"
attached hereto, and such furnishings will properly fulfill the obligations to,
and representation made to, the timeshare purchasers. Also shown on Exhibit V is
an accurate schedule of all Resort timeshare purchasers (I) whose owners
association dues have been waived and the period of such waiver or (II) who are
delinquent in the payment of such dues, for how long and the amount of each such
delinquency.
6.28 Seller agrees to inform Buyer in writing immediately upon obtaining
actual knowledge that any of Seller's representations or warranties are
inaccurate,
6.29 It shall be a condition precedent to Buyer's obligation to close this
transaction that Seller's covenants, representations and warranties in this
Agreement be fully performed and true and accurate as of the Closing, and that
the lender will allow Buyer to assume the First Lien without material
modification thereof and without any substantial charge or fee to Buyer.
6.30 To the best of Seller's knowledge or references to "Seller's
Knowledge" in this Section 6 means any written notice received by Seller
relating to a representation and warranty matter herein, and the personal
knowledge of ▇▇▇▇ ▇▇▇▇▇▇, the general managers of each of the Resorts, hotel
operation, casino operation, maintenance operation, food and beverage operation,
maintenance operation, entertainment/museum operation and housekeeping
operation; ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
6.31 Seller agrees to defend, indemnify and hold Buyer harmless from all
loss, cost, damage and expense arising from any breach of, or inaccuracy in, the
covenants representations and warranties of Seller in this Agreement. Further,
except for liability expressly assumed by Buyer pursuant to the terms hereof,
Seller shall defend, indemnify and hold Buyer harmless from any and of loss,
cost damage,
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expense and liability to third parties arising out of the Resort, its condition
and operation (including without limitation the Timeshare Operation), and acts
or omissions by Seller on or prior to the Closing Date.
6.32 No investigation by, or knowledge of Buyer, shall diminish Sellers
indemnities herein or Seller's covenants, representations and warranties.
Section 7. Covenants, Representations and Warranties of Buyer
Buyer covenants, represents and warrants to Seller as follows:
7.01 Buyer is a corporation duly organized and in good standing under the
laws of the State of Arizona.
7.02 Buyer has the full right and authority to enter into and fully perform
its obligations under this Agreement.
7.03 The persons signing this Agreement on behalf of Buyer are authorized
to do so, and to bind Buyer to the terms hereof.
7.04 Buyer shall assume all of the existing liabilities, as shown on
Exhibit "L" attached hereto, and shall pay when due all items appearing thereon.
7.05 Buyer shall defend, indemnify and hold Seller harmless from any and
all liability to third parties arising out of, connected to or resulting from
any act transaction, or omission of Buyer occurring after the Closing Date with
respect to the Resort its condition or the operation thereof, provided however,
that such indemnification shall not (except as may be otherwise herein
specifically provided) extend to any cost expense or liability arising out of
seller's indemnification's and warranties or any omissions or act of Seller on
or prior to the Closing Date.
7.06 As of the Closing Date, Buyer has inspected the Resort and the books
and records of the Resort and has made all other inquiries which it deem
necessary" to satisfy itself as to the condition and the operation of the Resort
and agrees to accept possession of the Resort in its "as is" condition, except
for the express covenants, representations and warranties of Seller contained in
this Agreement
7.07 Buyer accepts Seller's assignment to it of all Leases, Service
Contracts and Contract Rights contained in Exhibit "F" related to the Resort and
assumes all obligations of Seller thereunder arising after the Closing Date.
7.08 If Buyer assigns its interest in this Agreement to a nominee, Buyer
shall guarantee the prompt payment and full performance of the nominee in form
approved by Seller.
7.09 Buyer agrees to inform Seller in writing immediately upon obtaining
actual knowledge that arty of Buys(s) representations or warranties herein are
inaccurate.
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7.10 The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not violate any provision of, or
result in the breach of, any of the terms, provisions, or conditions of, or
constitute a default under or conflict with respect to, any other agreement by
which Buyer is bound.
7.11 The Shares of common stock described in paragraph 2.01(c) above are
authorized but unissued stock of Buyer, and Buyer will deliver or issue to
Seller the Shares free and clear of all liens, encumbrances, security
agreements, options, claims, charges and restriction (except as may be imposed
by Rule 144 or other state or federal securities laws) and fully paid and
non-assessable.
7.12 The Financial Statements delivered to Seller have been prepared In
accordance with generally accepted accounting principles, and fairly present the
financial position of Buyer as of the respective date thereof, and the results
of its operations for the period(s) indicated.
7.13 To the best of Buyer's knowledge, there is no suit, action,
arbitration or legal, administrative, or other proceeding, or governmental
investigation pending or threatened against or affecting Buyer which if resolved
adversely to Buyer would have a material adverse affect on Buyer or its
business, assets, or financial condition.
7.14 It shall be a condition precedent to Seller's obligation to close this
transaction that Buyer's covenants, representations and warranties in this
Agreement be fully performed and true and accurate as of the Closing.
Section 8 Title Insurance
8.01 Seller agrees to cause Escrow Agent to deliver to Buyer, at the
Closing, an ALTA extended coverage owners 1% insurance policy or a binding
commitment to issue the same as soon after the Closing as is customary (the
"Owners Title Policy") Insuring Buyers title to the Property in The full amount
of the Purchase Price subject only to those matters which Buyer approves or is
deemed to have approved pursuant to Section 3.06 hereof and the printed
exclusions and conditions and customary exceptions set forth in Escrow Agents
usual form of ALTA extended coverage owners title insurance policy. If Buyer
shall desire any additional endorsements, the cost and responsibility for the
acquisition thereof shall be the responsibility of the Buyer.
8,02 Any Lender's title policy required by the First Lien lender at Closing
shall be Buyer's responsibility.
Section 9 Hotel Facilities Lease
9.01 Immediately after Closing, Buyer will lease certain of the Resort
facilities to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and/or her nominee ("Lessee") pursuant to the
lease to be attached hereto as Exhibit "Q" (the "Hotel Facilities Lease"), which
will be executed and delivered by said at Closing.
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9.02 In general, the lease will be for a period of ninety-nine (99) years
with an approximate monthly lease payment of $150,000 and will include the
following facilities: showroom, museum, gift shop, casino, back bar and certain
joint use areas. Lessee will maintain such facilities, plus the marquis sign and
the portable display signs around the Resort and Lessee will share prorata the
Resort's utilities, security, and engineering. ln addition, the lease will
provide for a license of the tradename "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino" and all
derivatives thereof, and all other logos, trademarks, tradedress and tradenames
used in connection with the Resort (collectively "Names and Marks"). Said
license will be transferrable with the Resort if approved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
which approval will not be unreasonably withheld so long as the transferree
meets certain conditions to be defined in the lease. In the event said approval
is not given, then the lease of facilities may be terminated by Seller;
9.03 The above Is Illustrative only, and the final terms of the Hotel
Facilities Lease shall be controlling.
Section 10 Certain Other Agreements
10.01 In consideration for the Use of her name and likeness and associated
goodwill and other services, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Will personally receive a
percentage of the net profit of any timeshare project at the Resort as set forth
in the Timeshare Profit Agreement attached hereto as Exhibit "R", to be executed
and delivered at Closing.
10.02 A life insurance policy acceptable to Buyer on ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇' life
in the amount of $10,000,000 Will be assigned by Seller to Buyer and made
payable to Buyer and delivered to Buyer at Closing.
10.03 On a per project basis, timely, good faith negotiations will take
place at either party's request to place ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ memorabilia and/or
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ museum displays at other ILX Incorporated locations.
10.04 Seller Will cause the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Participation Agreement",
attached hereto as Exhibit "S", wherein ▇▇. ▇▇▇▇▇▇▇▇ agrees to personally be
present, cooperate in and participate in the future activities of the Resort
(including without limitation the hotel and casino) and other ILX Incorporated
business activities (including without limitation Red Rock Collection
Incorporated) and allow for the use of her name and likeness, to be personally
executed by ▇▇. ▇▇▇▇▇▇▇▇ and delivered to Buyer at Closing.
10.05 As additional consideration to Buyer and as a condition to Buyer's
obligations to consummate the transactions hereunder, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have
entered into a merger agreement and related promotional agreements with Buyer's
wholly-owned subsidiary, Red Rock Collection Incorporated.
10.06 With reference to this agreement and the specific terms of paragraph
17.13 concerning the timing of exhibit preparation, both parties will commence
immediately, diligently and continuously to complete all remaining due
diligence, complete any and all necessary corporate action, procure any
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necessary government approvals, and negotiate the definitive exhibits to be
attached hereto, with the goal of Closing prior to the end of 1996.
10.07 Without modifying any other term of this Agreement, Closing shall be
conditional on the procurement of all required governmental approvals for the
transactions and activities contemplated by this Agreement and its exhibits and
the consummation to Buyers sole and exclusive satisfaction of the matters
described in Section 9 above and this Section 10.
10.08 If Seller is unable to procure the required governmental approvals
for its activities contemplated pursuant to the Hotel Facilities Lease
(including without limitation the appropriate gaming licenses for the casino
operation) within six (6) months after the date of Closing, then Buyer shall
have no other obligations under the Hotel Facilities Lease with respect to the
casino operation and Buyer shall have the right to operate the casino in its
name.
Section 11 Broker
Seller and Buyer hereby covenant and agree that each shall indemnify and
defend the other against any costs, claims or expenses, including Attorney's
fees, arising out of any real estate or other brokerage contract executed by, or
similar activities engaged in by, the indemnifying party. The obligations under
this paragraph shall survive the Closing or, if the Closing does not occur, the
termination of this Agreement
Section 12 Notices
12.01 All notices under this Agreement shall be in writing and shall be
effective when addressed to the person(s) and address(s) as set forth below, and
either:
(a) Delivered to the address(es) by United States Mail or an
established, reputable overnight courier such as Federal Express or UPS;
(b) Delivered by other messenger to an appropriate employee at such
address(es); or
(c) Received at the telefacsimile number(s) shown below.
12.02 Proof of delivery or receipt is the obligation of the sender. Refusal
of delivery shall constitute delivery.
12.03 Addresses and telephone numbers:
If to Buyer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
ILX Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇ ▇. Ciatu, General Counsel
ILX Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and with a required copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to Seller:
▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
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with a required copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ 891 01
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to Escrow Agent:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Telefacsimile:
---------------------------------
Telephone:
---------------------------------
with a required copy to:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Telefacsimile:
---------------------------------
Telephone:
---------------------------------
Section 13 Survival of Representations, Warranties, Covenants, and Obligations
Except as may be otherwise specifically provided in this Agreement, all
representations, warranties, covenants, indemnities, or other obligations of
both parties set forth in this Agreement shall not be merged into the deed to
Buyer or into any other document relating to the transaction contemplated by
this Agreement but shall survive the Closing for a period of three (3) years.
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Section 14 Uniform Commercial Code - Bulk Transfer
14.01 The parties believe that this sale is exempt from the application of
the Uniform Commercial Code bulk sale law as it does not involve a seller whose
principal business is the sale of inventory from stock, but involves a resort
hotel the business of which is principally the sale of services.
14.02 To the extent such provisions may apply, unless otherwise requested
by a party prior to the end of the Feasibility Period, Buyer and Seller agree to
waive compliance, as between themselves, with the Bulk Sale provisions of the
Uniform Commercial Code as it may be in force in the State of Nevada.
Section 15 Risk of Loss
15.01 In the event of any damage or loss to all or any substantial portion
of the Property due to casualty or the occurrence of a suit for a taking of any
portion thereof by governmental or quasi-governmental authority after the date
hereof and prior to the Closing Date, Buyer may, as its sole and exclusive
remedy, by written notice given to each of Seller and Escrow Agent on or prior
to the Closing Date, elect either to (i) cancel and terminate this Agreement and
the Escrow or (ii) receive, by assignment from Seller, all insurance proceeds
and/or condemnation awards, if any, received and/or to be received by Seller as
a result of such casulty or taking (in which case the parties shall proceed to
consummate the transaction without any resulting adjustment of the Purchase
Price).
Section 16 Cancellation and Termination: Remedies for Failure to Close
16.01 Wherever this Agreement provides that upon the occurrence of a
condition other than breach or default, one of the parties hereto may elect or
has the right to "cancel and terminate" the Agreement that phrase shall mean
that, unless otherwise herein provided, written notice thereof shall be given to
both Escrow Agent and the other party, and then this Agreement shall immediately
become null and void and of no further force or effect and neither party shall
have any further rights or obligations to the other hereunder or by reason
hereof except for those which by the provisions hereof are expressly stated to
survive any termination of this Agreement. If the notice is one of default or
breach and the matter stated in said notice is not cured, corrected or removed
within three (3) days after the date of receipt of the aforesaid written notice
(Seller and Buyer hereby waiving the "13 day" provision contained in any printed
form escrow instructions), then, unless a different time period and result is
specificaly stated in this Agreement, the notice may state cancellation shall
then occur and this Agreement shall automatically become null and void and of no
further force or effect and neither party shall have any further rights or
obligations to the other hereunder or by reason hereof except for those which by
the provisions hereof are expressly stated to survive any termination of this
Agreement
16.02 If Buyer shall breach or fail to perform or fulfill any of
Pre-closing or Closing obligations hereunder, then, provided that Seller is not
then in (default hereunder, Seller may elect to cancel this Agreement by notice
as provided above, or Seller may exercise any and all other remedies then
available to it at law or in equity (including without limitation bringing suit
for damages, specific performance or any other relief to which it may be
entitled).
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16.03 If Seller shall breach or fail to perform or fulfill any of its
pre-Closing or Closing obligations hereunder, then, provided that Buyer is not
then in default hereunder, Buyer may elect to cancel this Agreement by notice as
provided above, or Buyer may exercise any and all other remedies then available
to it at law or in equity (Including without limitation bringing suit for
damages, specific performance or any other relief to which it may be entitled).
Section 17 Miscellaneous Provisions
17.01 This Agreement and the various other documents required hereby embody
and constitute the entire understanding between the parties with respect to the
transaction contemplated herein, and all prior agreements, understandings,
representations and statements, oral or written, are merged into this Agreement.
Neither this Agreement nor any provision hereof may be waived, modified,
amended, discharged or terminated except by an instrument signed by the party
against whom the enforcement of such waiver, modification, amendment, discharge
or termination is sought and then only to the extent set forth in such
instrument.
17.02 This Agreement shall be governed by, and construed in accordance
with, the law of the State of Nevada.
17.03 The section and paragraph headings in this Agreement are inserted for
convenience of reference only and in no way define, describe, limit, expand or
modify the text, scope or intent of this Agreement or any of the provisions
hereof.
17.04 This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs or successors and permitted
assigns,
17.05 This Agreement shall not be binding or effective until properly
executed by both Seller and Buyer.
17.06 As used in this Agreement the masculine shall include the feminine
and neuter, the singular shall include the plural and the plural shall include
the singular, or vice-versa, all as the context may require.
17.07 Nothing in this Agreement, express or implied, is intended to confer
any rights or remedies whatsoever upon any person, other than the parties hereto
and their respective successors, assigns and transferees.
17.08 Unless provided to the contrary in any particular provision, all time
periods shall refer to calendar days and shall expire at 5:00 p.m., Las Vegas,
Nevada time, on the last of such days; provided, however, that if the time for
the performance of any obligation expires on a day other than a business day
(any day other than a Saturday, Sunday or State of Arizona, State of Nevada or
federal paid legal holiday), the time for performance shall be extended to the
next succeeding day which is a business day. Subject to the foregoing,
Timeliness is the essence of this Agreement and of every term and provision
hereof.
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17.09 Seller and Buyer hereby acknowledge that this Agreement is the result
of continual and ongoing negotiation between the parties. All parties have
arrived at this Agreement through the exercise of equal bargaining power and any
ambiguities herein should be construed against neither party, but should be
given a fair and reasonable interpretation.
17.10 If either Seller or Buyer shall bring any legal action or suit for
any relief against the other, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay the successful party a reasonable sum for
its attorneys fees, expenses, discovery costs and court costs as the court
sitting without a jury shall determine. Any party seeking to be indemnified or
held harmless by the other under the terms of this Agreement shall provide
notice to the Indemnifying party of receipt of any indemnified claim or cause of
action, and the indemnifying party shall have the option of joining in the
defense of such claim or cause of action.
17.11 Buyer and Seller shall each provide the other prior to the end of the
Feasibilty Period with appropriate resolutions in form and substance authorizing
the respective entities by and through their agents or officers to enter into
and execute this Agreement and the collateral documents associated herewith.
17.12 Neither Buyer nor Seller will make any public announcement concerning
the transactions contemplated hereby without the review, comment and approval of
the other, which review and comment will be promptly provided and which approval
will not ultimately be withheld so long as no securities law violation would
occur as a result of such announcement.
17.13 Set forth In Exhibt "A" is a list of any and all amendments,
schedules, riders, and other items which are attached hereto but which are not
listed elsewhere herein. All exhibits, schedules, riders or other items attached
to this Agreement are a part of and incorporated by reference into this
Agreement with the same effect as they were recited at length In the body of
this Agreement. ▇▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, P, T, U, V and the schedules to
Exhibit F are to be prepared initially by Seller. Seller will use its best
reasonable efforts to prepare, complete and deliver same to Buyer prior to the
end of the thirtieth (30th) day after the date of this Agreement failing which,
the Feasibility Period shall be extended to the date thirty (30) days after the
date the last of the foregoing completed exhibits is delivered to Buyer. The
parties will use their best good faith, reasonable efforts to agree upon the
form of the remaining exhibits to this Agreement as soon as reasonably
practicable, and in no event later than ten (10) days prior to the end of the
Feasibility Period. failing which, after the and of the Feasibility Period,
either party may cancel this Agreement prior to the occurrence of such
Agreement.
17.14 This Agreement may be executed in counterparts and all signature (and
any notary) pages may be attached to a single document . A telefacsimile
signature shall be valid as, an original signature and it shall be the
responsibility of the party (or its agent) telefaxing same to preserve the page
containing the original signature for inspection until the receiving party is
subsequently supplied with an Identical page containing an original signature,
which shall occur within seven (7) days after the date of such telefacsimilie.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER: ILX Incorporated, an Arizona
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
SELLER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL & CASINO, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇, CEO
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇, CEO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ RESORTS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇, CEO
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇, CEO
Escrow Agent hereby acknowledges its receipt of a fully executed copy of
this Agreement and agrees to perform the functions assigned to Escrow Agent
hereunder. Escrow Agent as the party responsible for closing the transaction
contemplated hereby within the meaning of Section 6045 (e) (2) (A) of the
Internal Revenue Code of 1986, as amended (the "Code"), further agrees to file
all necessary Information reports returns and statement regarding the
transaction required by the Code of such closing agent including, but not
limited to, the reports required pursuant to Section 6045 of the Code.
ESCROW AGENT:
-----------------------------------
BY:________________________________
Its:____________________________
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TABLE OF EXHIBITS
Exhibit Title
A Riders, Amendments and Miscellaneous Items
B Description of Real Property
C Schedules of Personal Property
D Deed
E ▇▇▇▇ of Sale
F Assignment of Leases, Contract Rights and Intangible Assets
G Loan Documents - First Lien
H Allocations
I Certificate of Non-Foreign Status
J Assignment of Declarant's Rights
K Suits, Proceedings, Investigations and Claims
K-1 Claims Not-Assigned
L Existing Liabilities to be Assumed by Buyer
M Schedule of Leases
N Schedule of Service Contracts
O Summary of Existing Zoning and Use Violations
P Summary of Certain Problems
Q Hotel Facilities Lease
R Timeshare Profit Agreement
S ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Participation Agreement
T Items Excluded From the Sale
U Discounted Room and Facility Committments
V Timeshare Operation Items
-27-
ADDENDUM
TO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL ACQUISITION
MEMORANDUM OF UNDERSTANDING
In connection with the Memorandum of Understanding (the "MOU") between the
undersigned dated September 27, 1996, the undersigned further agree that press
releases or other statements by either party or its respective affiliates
concerning the MOU, or any resulting definitive agreements, or the transactions
contemplated thereby, shall be jointly, expressly approved in writing in advance
by both parties, which approval shall not be unreasonably or untimely withheld
by either party.
Dated this 30th day of October, 1996.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hotel & Casino, Inc. ILX Incorporated
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------- -------------------------
Chief Executive Officer Chairman