Exhibit 10.1
THE GREENS OF LAS VEGAS, INC.
MEMORANDUM OF UNDERSTANDING
DECEMBER 28, 2001
This Memorandum of Understanding (the "MOU") sets forth the terms of an
agreement by and among The Greens of Las Vegas, Inc., a Nevada corporation
("GOLV"), Sedona Worldwide Incorporated, an Arizona corporation ("SDWW"), ILX
Resorts Incorporated, an Arizona corporation ("ILX"), Xxx Xxxx ("Ball") and
Xxxxx Xxxxxx ("Xxxxxx"), to finance the construction of GOLV's putting facility
in Las Vegas and for general working capital.
1. TRANSACTION OUTLINE.
1.1 AMOUNT TO BE RAISED. The parties agree to use their mutual and
respective best efforts, as described below, to raise up to $5.5 million in
equity financing for GOLV, as outlined in this MOU, to finance the construction
of the putting facility in Las Vegas and for general working capital (the "GOLV
Capital").
1.2 REORGANIZATION. In order to raise the GOLV Capital, the parties
have agreed in principal to a plan of reorganization pursuant to which SDWW will
issue shares of its common stock at the closing of the Reorganization (the
"Closing") to GOLV (the "GOLV Shares") in a stock-for-assets, tax-free
reorganization (the "Reorganization"). On January 2, 2002, SDWW shall transfer
all of the assets relating to its "Sedona Spa" business, inclusive of the
proceeds of the "Initial Ball Shares", to ILX in consideration of the
forgiveness of any and all of SDWW's indebtedness to ILX, with the intention
that on January 2, 2002, and at the Closing, SDWW shall be a "shell company"
with no material assets or liabilities. The Closing will be contingent upon the
consummation of certain of the items set forth in Section 1 of this MOU to
insure that the GOLV Capital is raised in connection with the Reorganization.
Upon the Closing, SDWW will change its name to "Greens Worldwide, Inc." or such
other name as the parties agree to use. Hereinafter, SDWW after the Closing of
the Reorganization shall be referred to as "'GWWI."
1.3 $4.0 MILLION SALE OF COMMON STOCK. Upon the Closing, GWWI agrees
to sell 32.0 million shares of its common stock (the "New Shares") for $4.0
million cash. Purchasers of the New Shares will deposit good funds into an
escrow account established by the mutual agreement of the parties (the "Escrow")
on or before March 31, 2002 (the "Closing Date") with irrevocable instructions
to the Escrow agent to pay for such Shares contingent only upon the Closing and
the purchase of the ILX Shares (as defined in Section 1.5 below). The deposit by
the purchasers of the New Shares of good funds for the purchase of the New
Shares and the approval of the Escrow arrangements for the purchase of the New
Shares, by SDWW, ILX and GOLV shall be a condition precedent to the Closing of
the Reorganization.
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1.4 $1.0 MILLION SALE OF COMMON STOCK TO ILX. Upon the Closing, GWWI
agrees to sell 8.0 million shares of its common stock (the "ILX Shares") to ILX
or its affiliates ("ILX") for $1.0 million cash. ILX will deposit good funds
into the Escrow on or before the Closing Date with irrevocable instructions to
the Escrow agent to pay for the ILX Shares contingent only upon the Closing, the
completion of the other transactions described herein, and the purchase of the
New Shares. The deposit by ILX of good funds for the purchase of the ILX Shares
and the approval of the Escrow arrangements for the purchase of the ILX Shares
by SDWW, ILX and GOLV shall be a condition precedent to the Closing of the
Reorganization.
1.5 PURCHASE OF SHARES BY BALL; EMPLOYMENT AGREEMENT WITH BALL, GRANT
OF OPTION TO BALL.
1.5.1 On or before January 2, 2002, Ball shall purchase from SDWW
1.0 million shares of originally issued SDWW shares (the "Initial Ball Shares")
at a cash purchase price of $.08 per share. On or before March 31, 2002, Ball
shall purchase an additional 7.0 million shares of originally issued SDWW Shares
(the "Supplemental Ball Shares") at a purchase price of $.0714 per share in
exchange for a full recourse promissory note (the "Note") to SDWW from Ball in
the amount of Five Hundred Thousand Dollars ($500,000), upon terms and
conditions acceptable to Ball and ILX and secured by a pledge of the
Supplemental Ball Shares.
1.5.2 Upon the Closing, SDWW shall enter into an employment
agreement with Ball providing for his SERVICE to SDWW, the terms of which shall
be approved in writing by the parties hereto and its execution shall be a
condition precedent to the Closing.
1.5.3 In connection with the Reorganization, ILX will xxxxx Xxxx
and Xxxxxx an option to purchase 2,000,000 and 1,000,000 shares, respectively,
of SDWW owned by ILX at an initial exercise price of $.125 per share (the "Ball
and Xxxxxx Options"), which price shall increase at the rate of ten percent
(10%) per annum from the date of the Closing until the date of exercise. Other
terms of the Ball and Xxxxxx Options, including but not limited to provisions
for vesting, exercise, and expiration, shall be approved by the parties hereto
prior to the Closing.
1.6 GWWI BOARD COMPOSITION. At the Closing, the Board of Directors of
GWWI shall take such action as may be necessary to duly elect and appoint the
following persons as members of the Board of GWWI:
Xxxxxx X. Xxxxxxx, Xx. or Other ILX Nominee
Xxxxx Xxxx
Xxx XxXxxxxx or Other ILX Nominee
Xxxxx Xxxxxx
Other GOLV Nominee
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1.7 GWWI OFFICERS. At the Closing, the Board of Directors of GWWI
shall take such action as may be necessary to duly elect and appoint the
following persons as the officers of GWWI:
Xxxxx Xxxx, Chairman of the Board, Chief Executive Officer
Xxxxx Xxxxxx, President, Chief Operating Officer
___________, Secretary
As soon as practicable after the Closing, the Board of Directors will elect a
Chief Financial Officer for GWWI. Any amendments to the Bylaws of GWWI necessary
to effect the foregoing elections shall be accomplished as of the Closing.
1.8 $500,000 SALE OF STOCK TO GOLV STOCKHOLDERS. Prior to the Closing,
GOLV will be entitled to sell up to 5,000,000 shares of GOLV common stock at a
price of $.10 per share (the "Private Placement Shares").
1.9 LOCK-UP AND REGISTRATION RIGHTS AGREEMENT. As an additional
condition to the Closing, ILX, Ball, Heinen, Xxxxx Xxxxxx, Xxxxx Xxxx, and Xxxx
Xxxxxxx will enter into a lock-up and registration rights agreement with an
effective date immediately after the Closing in a form approved, executed, and
deposited in the Escrow by the parties hereto prior to the Closing.
2. DUE DILIGENCE. The parties and their respective agents, attorneys, and
representatives have had full and free access to the properties, books, and
records of SDWW and GOLV for due diligence purposes.
3. GOOD FAITH NEGOTIATIONS. The parties agree to negotiate in good faith
with respect to such additional terms and conditions as are usual and customary
in transactions such as the Reorganization and the raising of the GOLV Capital.
4. EXPENSES. Each party shall pay for its own legal and accounting fees
related to this MOU and the Reorganization. GOLV shall bear the cost of having
its counsel draft the required documents and agreements to effect the
consummation of the Reorganization and the raising of the GOLV Capital, no
portion of which shall be borne by SDWW or GWWI.
5. CONDUCT OF BUSINESS PENDING THE CLOSING. Prior to the consummation or
termination of the Reorganization and the sale of shares of GWWI, GOLV and SDWW
will conduct their respective businesses only in the ordinary course and none of
their respective assets relating to their respective businesses shall be sold or
disposed of except in the ordinary course of business or as contemplated by this
MOU and/or the Reorganization. The parties agree that prior to the Closing or
the termination of this MOU, neither GOLV nor SDWW shall, other than as set
forth above in this MOU, issue additional securities or rights to acquire any
securities without the consent of the other parties to this MOU. The parties
also agree that neither SDWW nor GOLV shall incur any additional indebtedness,
except in the ordinary course of business.
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6. REPRESENTATIONS OF SDWW. SDWW shall make the following representations
and warranties to GOLV and the other parties hereto, in connection with the
Reorganization, which shall survive the Closing of the Reorganization:
6.1 SDWW is a corporation duly organized, validly existing and in good
standing under the laws of Arizona, has the corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
it is now contemplated to be conducted in connection with the Reorganization.
6.2 SDWW has the requisite power and authority to enter into this MOU
and the agreements contemplated by the Reorganization and to carry out its
obligations under the agreements as contemplated hereby. The execution and
delivery of this MOU and the consummation of the transactions contemplated
hereby have been duly and validly authorized and no other proceedings on the
part of SDWW are necessary to authorize the MOU and the transactions
contemplated by the MOU. Except for required present or future filings under
state and federal securities laws, no authorization, consent or approval of, or
filing that has not been duly made with, any governmental body or authority, and
no authorization, consent or approval of any third party, is necessary for the
consummation by SDWW of the transactions contemplated by this agreement.
6.3 The execution and delivery of the MOU and the consummation of the
transactions contemplated by the Reorganization and compliance with their terms
does not as of the date of this MOU, and will not as of the Closing of the
Reorganization, (i) conflict with, or result in any violation of any provision
of, the Articles of Incorporation or Bylaws of SDWW, (ii) violate or conflict
with, or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to SDWW, or (iii) result in the creation or imposition of any lien on
any asset of SDWW.
6.4 No material action, suit or proceeding is pending, or, to the best
of SDWW's knowledge, is threatened against SDWW at law or in equity, or before
any national, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality.
6.5 SDWW agrees to make such additional representations, warranties,
and covenants in the connection with the Reorganization as are customary for a
transaction of the type contemplated.
7. REPRESENTATIONS OF GOLV. GOLV makes the following representations and
warranties to SDWW and the other parties hereto, which shall survive the Closing
of the Reorganization:
7.1 GOLV is a corporation duly organized, validly existing and in good
standing under the laws of Nevada, has the corporate power and authority to own,
lease and operate its properties and assets and to carry on its business as it
is now contemplated to be conducted in connection with the Reorganization, and
at the Closing will be duly qualified to do business and in good standing in
each jurisdiction in which its ownership or leasing of its properties or the
conduct of its business will require such qualification.
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7.2 GOLV has good and marketable title to its assets, free and clear
of any claim, mortgage, pledge, lien or encumbrance of any kind created by or
deriving from its businesses or any third parties.
7.3 GOLV has the requisite power and authority to enter into this MOU
and the agreements contemplated by the Reorganization and to carry out its
obligations the agreements as contemplated hereby. The execution and delivery of
this MOU and the consummation of the transactions contemplated hereby have been
duly and validly authorized and no other proceedings on the part of GOLV are
necessary to authorize the MOU and the transactions contemplated by the MOU.
Except for required present or future filings under state and federal securities
laws, no authorization, consent or approval of, or filing that has not been duly
made with, any governmental body or authority, and no authorization, consent or
approval of any third party, is necessary for the consummation by GOLV of the
transactions contemplated by this agreement.
7.4 The execution and delivery of this MOU and the consummation of the
transactions contemplated by the Reorganization and compliance with their terms
does not as of the date of this MOU, and will not as of the Closing of the
Reorganization, (i) conflict with, or result in any violation of any provision
of, the Articles of Incorporation or Bylaws of GOLV, (ii) violate or conflict
with, or result in a breach or termination of or default under, any agreement,
instrument, license, judgment, order, decree, statute, law or regulation
applicable to GOLV, or (iii) result in the creation or imposition of any lien on
any asset of GOLV.
7.5 No material action, suit or proceeding is pending, or, to the best
of GOLV's knowledge, is threatened against GOLV at law or in equity, or before
any national, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality.
7.6 GOLV agrees to make such additional representations, warranties,
and covenants in the connection with the Reorganization as are customary for a
transaction of the type contemplated.
8. CONFIDENTIALITY. The parties acknowledge that they hereby enter into
mutual non-disclosure and confidentiality agreements preventing the parties from
disclosing and requiring the parties to maintain the confidentiality of
proprietary business and technical information relating to the other parties.
Except as required by law, in the reasonable opinion of their respective
attorneys, the parties agree not to disclose any information concerning the
Reorganization to anyone other than their legal counsel, financial advisors, and
other professionals working on the Reorganization without the consent of the
other parties, which consent will not be withheld unreasonably.
9. 2002 ANNUAL MEETING OF SDWW STOCKHOLDERS. The parties agree that SDWW
will convene its annual meeting of its stockholders as soon as practicable after
the Closing, but not later than August 31, 2002, if so determined by the Board
of Directors of GWWI after the Closing, to vote on the approval of (i) the
reincorporation of SDWW in the State of Nevada, and (ii) a reverse stock split
of SDWW's outstanding shares at a ratio recommended by such Board of Directors
to facilitate the qualification of the Company's common stock on the Nasdaq
Small Cap Market and such other matters as such Board of Directors shall deem
necessary and/or advisable.
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10. ADDENDUM. The Addendum attached hereto as Exhibit "A" is hereby
incorporated into this MOU by reference.
11. MISCELLANEOUS. This MOU constitutes the entire agreement and
understanding of the parties hereto with respect to the matters and transactions
contemplated hereby and supersedes all prior agreements and understandings
whatsoever relating to such matters and transactions between the parties.
Neither this MOU nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
12. GOVERNING LAW. This MOU shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to the conflict
of laws provisions thereof.
13. ARBITRATION. Any dispute between the parties concerning the terms of
this MOU shall be resolved through binding arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association to be
conducted in Las Vegas, Nevada. The prevailing party in any such arbitration
shall be entitled to recover its reasonable attorneys fees and costs from the
other party.
14. BINDING NATURE. The parties acknowledge and agree that this MOU shall
be binding on the parties. However, the parties acknowledge their intention to
enter into additional agreements in connection with the Reorganization that will
include the terms and conditions of this MOU and such other terms and conditions
as are customary in a transaction such as the Reorganization and as may be
agreed upon by the parties. The undersigned parties agree to use their best
efforts to draft definitive Reorganization and other agreements incorporating
the terms of this MQU into such other agreements as may be required to effect
the intents and purposes outlined herein.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK. THE SIGNATURE PAGE FOLLOWS.)
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THE GREENS OF LAS VEGAS, INC.
By: ________________________________
Xxxxx Xxxxxx, President
Date:_______________________________
SEDONA WORLDWIDE INCORPORATED
By: ________________________________
Xxx X. Xxxxxxx, President
Date:_______________________________
ILX Resorts Incorporated
By: ________________________________
Xxxxxx X. Xxxxxxx, Chairman
Date:_______________________________
By: ________________________________
Xxx Xxxx
Date:_______________________________
By: ________________________________
Xxxxx Xxxxxx
Date:_______________________________
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