AGREEMENT FOR
PURCHASE AND SALE OF
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL & 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
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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:
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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 & 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
sometimes 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 covenants and conditions
set forth herein, the sufficiency of such consideration being acknowledged, the
parties hereby agree as follows:
A G R E E M E N T
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Section 1. Sale of Resort
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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 on Exhibit "B" attached hereto and incorporated
herein, together will all rights, privileges, easements and
appurtenances thereto, including, without limitation, all of Seller's
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 appurtenances
presently located on, under or about the Property and any additional
items located thereon at the time of Closing (the "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 on 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
leases 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 they arise out of, are related to
the construction or development of, 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 "K-1" 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
transferable,(iii) the goodwill associated with the Resort, (iv) all
designs, surveys, site plans, plats, operating materials, engineering
reports and other technical descriptions, (v) transferable 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, Apportionments, 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 ($5,100,000.00)
(adjusted to the actual balance of principal and interest at Closing)
by, at Buyer's option, either (i) assumption at Closing of Seller's
existing obligations 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
(3,750,000) 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 and 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 terms 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 Date and for the period prior thereto, as well as for its
prorata 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
2.03 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 these 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 computations 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 shall 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 therefor, 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, prorated
as of the Closing Date.
(c) Certain Payments. All Lease, Service Contracts, 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) Employees 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
Workmen's 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 as 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, the 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 of this Agreement. Escrow
Agent has acknowledged its agreement to these provisions by signing in the place
indicated 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. In 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 after 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 its 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 I" environmental
report and any testing in connection therewith. Notwithstanding the foregoing,
as soon as reasonably practicable after 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 hereof,
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
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(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 Feasibility 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, or (ii) 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 discretion. 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 of the end of the Feasibility Period or five (5)
business days thereafter to advise Escrow Agent and Seller in writing
of its election either 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 thereof 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 election 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
therefor unless Seller voluntarily impairs title to the Property or
otherwise voluntarily causes such matter after execution hereof. The
acceptance of the Deed by Buyer shall not diminish Sellers warranties
or any continuing obligation herein.
Section 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 business practices.
4.03 Afford Buyer and its representatives full access to the Resort and to
Seller's books, records 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 otherwise
incurred in the ownership and operation of the Resort up to and including the
date of Closing, except as otherwise specifically treated in the adjustment
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 percent
(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
executory 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
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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 properly 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 Operations, 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 At 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
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. 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 governmental 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 Seller's knowledge, and except as qualified by 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, 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 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.
-13-
(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
on 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 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 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 Material" 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 former 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
Seller's 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 periods 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 employees. 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.
-15-
6.24 Up to the Closing Date, the Resort's 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 therefor, 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 on Exhibit "V"
attached hereto, and such furnishings will properly fulfill the obligations to,
and representations 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 Resort's: hotel
operation, casino operation, maintenance operation, food and beverage 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 all loss,
cost, damage,
-16-
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 Seller's
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 indemnifications and warranties or any omission 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 deems
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 any of Buyer's representations or warranties herein are
inaccurate.
-17-
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 restrictions (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 dates 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 title insurance policy or a binding
commitment to issue the same as soon after the Closing as is customary (the
"Owners Title Policy") insuring Buyer's 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 Agent's
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.
-18-
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. In 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 transferable
with the Resort if approved by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, which approval will not
be unreasonably withheld so long as the transferee 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 Buyer's 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 further 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 attorneys'
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(es) 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
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
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:
--------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Telefacsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
If to Escrow Agent:
-------------------
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------------------------------
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Telefacsimile:
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Telephone:
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with a required copy to:
--------
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Telefacsimile:
------------------------------
Telephone:
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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 casualty 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
specifically 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 its
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 attorney's 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
Feasibility 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 Exhibit "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 if they were recited at length in the body of
this Agreement. ▇▇▇▇▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇, ▇, 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 end 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 telefacsimile.
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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
SELLER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ HOTEL & CASINO, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ RESORTS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
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 statements 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 Commitments
V Timeshare Operation Items
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