AGREEMENT FOR PURCHASE AND SALE
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THIS AGREEMENT FOR PURCHASE AND SALE ("Agreement") is made as of the 10th day of
March 1995, by and between XXXX'X RANCH ASSOCIATES, an Arizona general
partnership ("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 Gila County,
Arizona comprised of a resort hotel known as Xxxx'x Ranch Lodge 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 also owns or controls the Water Company (as defined below).
C. Seller has agreed to sell, and Buyer has agreed to purchase, the
Resort and the Water Company 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 and Water Company.
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 Gila, State
of Arizona, described on Exhibit "A" attached hereto and incorporated
herein, together with all rights, privileges, easements and
appurtenances thereto, including, without limitation, all of Seller's
right, title and interest in and to any appurtenant water rights, and
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
located on, under or about the Property at the time of Closing,
including without limitation the stable facilities constructed pursuant
to the U. S. Forest Service Special Use Permit, and all facilities
owned by the Water Company (the "Improvements");
(c) All of the Resort, Water Company, restaurant, lounge, 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 A-1 attached hereto and incorporated herein (the "Personal
Property").
(d) All customer lists, 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 any
leases affecting the Property, Personal Property or Improvements (the
"Leases") and any management, service, concession, maintenance, utility
and other contracts and agreements with respect to the operation of the
Resort and maintenance of the Property, Personal Property and
Improvements (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 standard industry design or construction documents relating to
the present or future development of the Property and construction of
the Improvements (the "Plans and Specifications");
(g) All of Seller's right, title and interest in and to all water
and water rights, and all ditches and ditch rights, springs, water
xxxxx and well rights (including without limitation any Type II
rights), well registration statements and well permits, spring water
rights, permits and registrations,reservoirs and reservoir rights which
are, have been, or may be used in connection with the Resort, and
including, without limitation, all water well and spring improvements,
pump casings, lines, fixtures and equipment together with the water
right, priority and any other attendant property interest in the right
to use water produced from any such well or spring located on or off
the Property and further including, without limitation, all of Seller's
right, title and interest in any water stock or Water Company stock or
interests evidencing any of the above matters (the "Water Rights");
(h) 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, (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,
(iii) the goodwill associated with the Resort; (iv) all designs,
surveys, site plans, plats, operating materials, engineering reports
and other technical descriptions, (v) transferrable licenses and
permits necessary to operate the Resort as it is presently being
operated, and (vi) all other contracts, assets, and rights owned by
Seller, relating to the business, maintenance, construction, and/or
operation of the Resort (collectively the "Contract Rights and
Intangible Assets").
(i) All of Seller's right, title and interest in and to any
transferable 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,
(j) All of Seller's right, title and interest in Resort telephone
numbers and marketing materials used in marketing the Resort, whether
located at the Property or elsewhere, including existing videotapes,
photographs, brochures, film, copy and anything relating thereto; and
(k) The Water Company and the Related Water Assets, all as
defined in, and subject to, the provisions of Section 10.
All of the items described in subparagraphs (a) through (k) above shall be
referred to in this Agreement collectively as the "Resort".
1.02. Seller shall convey and Buyer shall accept title to the Property
and Improvements in accordance with the terms of this Agreement by special
warranty deed (Exhibit "I"), warranting title as against the acts of Seller only
and subject all matters of public record, current taxes and assessments, the
matters approved or deemed approved by Buyer pursuant to Section 3.06 hereof as
shown on Exhibit "B" attached hereto, and any matter which would be shown on an
accurate A.L.T.A. survey of the Property (collectively the "Permitted
Exceptions"). The Personal Property shall be conveyed to Buyer by Xxxx of Sale
(Exhibit "J") to be executed and delivered by Seller at Closing, free and clear
of liens and encumbrances. The Leases, Service Contracts, Ledgers, Plans and
Specifications and Contract Rights and Intangible Assets shall be conveyed by
Seller pursuant to an Assignment of Leases, Contract Rights and Intangible
Assets (Exhibit "K"), to be executed by Seller and Buyer at Closing.
1.03. Seller shall license the use of the "Xxxx'x Ranch" logo and the
use of the tradenames, "Xxxx'x Ranch," and other logos, trademarks and
tradenames used in connection with the Resort for such time as no default exists
and remains uncured under the Note, Deed of Trust and Security instruments given
pursuant to paragraph 2.01(c) of this Agreement, which license shall
automatically convey the logo and tradenames to Buyer upon payment in full of
the Purchase Price.
Section 2. Purchase Price, Apportionments, Escrow Agent.
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2.01. The purchase price ("Purchase Price") to be paid by Buyer to
Seller for the Resort shall be ONE MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($1,650,000.00), plus any additional sum for inventories existing as of Closing,
payable as follows:
(a) Fifty Thousand Dollars ($50,000.00) 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.
(b) $950,000.00 (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 and other loan and security documents by Seller in
favor of Bank One Arizona, N.A., attached hereto as Exhibit "T" (the
"Loan Documents"), in which case it shall be a condition to Seller's
obligation to close this transaction that Bank One simultaneously
release Seller from further liability on such obligations or (ii)
paying the loan evidenced by the Loan Documents in full at Closing.
(c) $350,000.00 (adjusted for any difference from the figures
shown in subparagraph (b) above, and for any adjustments described in
Paragraphs 2.03 and 10.05 below). The adjusted sum shall be evidenced
by a promissory note executed by Buyer at Closing, payable to Seller
and otherwise embodying the terms and conditions set forth in the form
of promissory note appearing at Exhibit "G" hereto (the "Note"). The
Note shall be secured by a Deed of Trust and Assignment of Rents and
Security Agreement encumbering the Property, executed by Buyer as
Trustor, conveying the Property in trust to Escrow Agent or its
affiliated trustee, as Trustee for the benefit of Seller as
Beneficiary, and otherwise embodying the terms and conditions set forth
in the deed of trust appearing at Exhibit "H" hereto (the "Deed of
Trust"). The Note shall be further secured by financing statements
covering the Personal Property and such other instruments as may
reasonably be required by Seller and Buyer on or before the Closing
Date (the "Security Instruments").
(d) $300,000.00 by issuance at Closing of one hundred fifty
thousand (150,000) 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 restricted stock and be subject to all
applicable federal and state securities laws including without
limitation Securities Exchange Commission Rule 144. Seller agrees to
execute at Closing an appropriate restricted stock letter in the form
attached hereto as Exhibit "S".
2.02. Except as set forth in paragraph 2.03, Seller shall retain all
the rights and all the obligations with respect to all accounts payable,
salaries and wages payable and payroll taxes associated therewith, unbooked
accounts payable, accounts and notes receivable, cash, cash equivalents,
security deposits, utility deposits, bank deposits, bank and operating accounts,
for the Resort existing as of the Closing Date, as well as for its prorata share
of real property taxes and 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 mutually acceptable to the parties, as Buyer may employ, shall receive
payments paid on all accounts receivable existing as of the Closing Date as
Seller's agent and shall remit all amounts received to Seller within ten (10)
business days of receipt. Such collections 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 extraordinary efforts or
legal action to collect. Collection of these accounts receivable as set forth
above shall be without cost to Seller. Adjustment for cash security deposits,
prepaid or accrued expenses shall be made as provided in Section 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 by detertmining any
amounts paid or to be paid by one party, but chargeable to the other party under
this Agreement. The computations of the Net Adjustment will be made as of the
Closing Date and exlude the cash payment described in Section 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 Seller shall deduct such amount from the principal
amount of the Note as of the Closing Date. If Buyer owes the Net Adjustment to
Seller, such amount shall be added to the principal amount of the Note, as of
the Closing Date. All adjustments reached and agreed to by the Adjustment Date,
or such later date as the parties may agree, and, with respect to subsequently
received information, the Supplemental Adjustment Date (defined below), shall be
final and no further adjustments shall be made. The parties acknowledge that
some items subject to adjustment may not be received prior to the Adjustment
Date. Accordingly, there shall be a supplemental adjustment determined thirty
(30) days after the Closing Date or such other date as the parties may agree if
all information has not been received (the "Supplemental Adjustment Date") for
such items, with such adjustment to be added to or deducted from the Note, as
appropriate, as of the Closing Date. Buyer and Seller agree that adjustments
will include, but not necessarily be limited to, the following:
(a) Sales Tax. Any sales tax collected prior to the Closing Date
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and not paid to the Arizona Department of Revenue on or before the
Adjustment Date, shall be an adjustment in favor of Buyer on the
Adjustment Date. Seller shall, upon presentation of a copy of the sales
tax return, with an allocation of Seller's responsibility therefor,
verify such allocation and reimburse Buyer for such amount within ten
(10) business days.
(b) Insurance. If Buyer continues any insurance that Seller has
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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) Lease Payments. All lease payments will be prorated to the
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Closing Date.
(d) Customer Deposits and Prepayments. All customer deposits and
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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 telephone numbers,
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and 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 to
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the Closing Date, and shall be an adjustment in favor of Seller on the
Adjustment Date.
(g) Payroll Related Expenses. Any Workmens Compensation deposits
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shall be prorated to the Closing Date, and shall be an adjustment in
favor of Seller on the Adjustment Date. Vacation and sick leave accrued
as of the Closing Date shall be an adjustment in favor of Buyer on the
Adjustment Date. For purposes of the foregoing, paid vacation and sick
leave shall be deemed paid on a first accrued-first paid basis.
(h) Guest Ledger. All amounts receivable for lodging provided
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prior to the Closing Date, as shown on the Guest Ledger, shall be
receivables to be received by Buyer on behalf of Seller as set forth
above. All amounts receivable for lodging provided during an
uninterrupted period beginning before the Closing Date and extending
until after the Closing Date shall be prorated to the Closing Date, and
shall be an adjustment in favor of Seller on the Adjustment Date.
2.04. The items below shall be paid as follows:
(a) Seller and Buyer shall each pay one-half (1/2) of the
standard escrow charges in connection with this Agreement.
(b) The cost of the owner's title policy provided for in
Paragraph 7.01 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.
(c) The cost of any extended lender's title insurance policy
shall be paid in full by Buyer.
(d) The charge of a collection agent ("Collection Agent") for
payments on the Note shall be paid one-half (1/2) by Seller and
one-half (1/2) by Buyer.
(e) Buyer shall pay the cost of a customary property tax advisory
service (for the benefit of Seller) until the Note is paid in full.
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 attach hereto as Exhibit "U".
2.06. First American Title Insurance Company (and its Gila County
affiliate) 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 7, 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. Escrow Agent, or
its collection affiliate, shall also act as Collection Agent (including
custodian of the Beneficiary Releases described in the Deed of Trust attached
hereto as Exhibit "H"). The parties agree, if required by Escrow Agent, to
execute and enter into Escrow Agent's standard form of escrow instructions, and
to execute collection instructions, all with such modifications as the parties
shall reasonably request.
Section 3. Feasibility and Investigation.
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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 (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 hereunder or by reason hereof except for those which by the provisions
hereof 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 conclusively 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 and soil/water
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 a "Phase I" environmental report
and any testing in connection therewith, testing of the water at xxxxx on the
Property or related to the Water Company's source and service of water.
Notwithstanding the foregoing, as soon as reasonably practicable after execution
of this agreement Seller, at its expense, shall provide Buyer with an XXXX Xxxxx
Class Survey of the Resort including such Table A items as specified by Buyer,
by an Arizona 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. If Buyer cancels this
transaction or otherwise fails to close, Buyer shall provide Seller with the
results and reports of all such matters which have been furnished to Buyer by
such agents. As soon as practicable after execution hereof, Seller shall provide
Buyer with copies of all existing surveys, relevant water reports, 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.
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 preliminary title
report or 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 same are subsequently prepared, agrees to undertake
reasonable efforts 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 precedure, Buyer conclusively
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 receipt 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 conclusively 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 conclusively 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, eliminated (or insured
over with Buyer's consent), Seller shall have until five (5) business
days prior to Close of Escrow (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 hereof causing such disability) to convey title to the
Property subject to and in acordance with the provisions of this
Agreement at Close of Escrow, 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 Close of Escrow. Buyer's failure to
give written notice as required by the preceding sentence conclusively
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 those which by the provisions
hereof 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 be deemed to be full performance and
discharge of every pre-closing condition on the part of Seller to be
performed pursuant to the provisions of this Agreement., but shall not
diminish Sellers warranties or any continuing obligation herein.
Section 4. Operations Prior to Closing.
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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 the Closing, except
as otherwise specifically treated in the adjustment provisions of this
Agreement. Not prepay any material item after the date of the Agreement without
the prior written consent of Buyer.
4.05. Except for room rental agreements in the ordinary couse of
business, not enter into any new agreement, nor amend, modify or terminate any
existing agreement relating to the Resort without having obtained the prior
written consent of Buyer in each such instance, which will not be unreasonably
withheld or delayed.
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 any customary compliance with governmental
requirements applicable to the Resort.
4.08. Promptly advise Buyer of any threatened or actual litigation or
governmental proceeding affecting the Resort. It shall be a condition precedent
to Buyer's obligation to close that there shall be no such threatened or actual
litigation or proceeding pending at Closing having a potential adverse effect
upon the Resort or Seller's ability to convey the Resort to purchaser, except
for the existing condemnation action in the Gila County, Arizona, Superior
Court, Cause Number CV-89-270, relating to Tract "J" of the Property west of
State Highway 260, and the water tanks and piping formerly connected therewith
(the "Condemnation Action").
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 room rental agreements in the ordinary course of
business, not create (or agree to create) any 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 consumation of this transaction by recording the Special
Warranty Deed ("Closing") 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 "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 Special Warranty Deed in the form attached as Exhibit
"I";
(2) An appropriate affidavit of real property value;
(3) A Xxxx of Sale in the form attached as Exhibit "J",
assigning and transferring to Buyer all of Seller's
right, title and interest in and to the Personal
Property, Ledgers, and the Plans and Specifications,
including without limitation those items shown on
Exhibit "A-1", free and clear of all liens, security
interests, encumbrances and other charges, except any
lien arising under the Deed of Trust and Security
Instruments;
(4) An Assignment of Leases, Contract Rights and Intangible
Assets in the form attached as Exhibit "K";
(5) Assignments of Seller's interest in all automobiles and
equipment leases and appropriate title transfer
documentation properly executed by Seller for all
vehicles and equipment owned by Seller and used for the
Resort;
(6) Notice of change in well ownership advising the Arizona
Department of Water Resources of the sale;
(7) License of Tradenames in the form attached hereto as
Exhibit "L";
(8) Any documents necessary to complete the sale and
transfer of the Water Company;
(9) Certificate of Non-Foreign Status in the form attached
hereto as Exhibit "M";
(10) Any Assignment (Conveyance of Water Right) form
advising the Arizona Department of Water Resources of
the transfer to Buyer of all water rights as necessary
to properly complete any chain of title as reflected in
the records of the Arizona Department of Water
Resources;
(11) Any Assignment of any Statement of Claimant in any
pending adjudication in the Superior Court, in and for
the County of Maricopa or Gila, State of Arizona,
pertaining to the Salt River or other relevant
Watershed; and
(12) Such other documents 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.
(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 appropriate affidavit of real property value;
(3) The Note, Deed of Trust and Security Instruments;
(4) Any assumption of the Loan Documents
(5) Such other documents as may be reasonably required by
Seller, its counsel, or Escrow Agent, to consummate the
transactions which are the subject matter of this
Agreement.
(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 follows, as of the
date hereof and as of the Closing:
6.01. Seller is a general partnership, duly organized and validly
existing under the laws of the State of Arizona.
6.02. Seller has the full right and authority to enter into and fully
perform its obligations under this Agreement.
6.03. The persons signing this Agreement on behalf of Seller are
authorized to do so, to bind Seller to the terms hereof, and are all the
partners of Seller.
6.04. Seller is the sole owner of the Resort subject to the limitations
stated in Section 1.01 and 1.02 hereof and in the Water Agreement.
6.05. The schedule of Leases set forth in Exhibit "D" 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 have been made available to Buyer 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 is attached hereto as Exhibit
"E" ("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. The originals shall be
delivered to Buyer at Closing.
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 not located within the boundaries of any city or town, and its
zoning is regulated by Gila County.
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 Gila County and the State of
Arizona, Seller has received no correspondence or formal notice from any
governmental authority of any .existing violation, which has not been cured as
of the Closing Date, or of any circumstances that with the passage of time or
failure to act, or both, would constitute a violation of any zoning or use
requirement of Gila County or the State of Arizona.
6.09. To the best of Seller's knowledge, except for the condemnation
action, 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 or
roadway adjoining the Property which would affect access to the Property, except
as set forth in Exhibit "P" attached hereto.
6.10. To the best of Seller's knowledge, and except as qualified by
Exhibit "Q" hereto, and related documents provided to Buyer prior to closing as
set forth on Exhibit "R" hereto, the water quality and water rights, sewage and
waste disposal septic systems and utility 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 "Q" attached hereto and in related
documents provided to Buyer prior to Closing as set forth on Exhibit "R" hereto,
Seller has not received notice of any uncured violations or infringements of any
laws, rules, regulations, ordinances, fire or safety codes, life safety
requirements, insurance requirements, covenants, conditions, restrictions,
trademark, service xxxx 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 "Q" attached hereto and in related
documents provided to Buyer prior to Closing as set forth on Exhibit "R" hereto,
to the best of Seller's knowledge:
(a) There are not presently, and have been no, above or
underground storage tanks, dry xxxxx, injection xxxxx, 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.
(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 business.
(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) Tonto Creek running through and adjacent to the Resort is not
contaminated by any Hazardous Material.
(g) Substances, including without limitation those introduced
into the septic tanks and leech fields on the Property, have not
contaminated Tonto Creek, the water from the well on the Property or
the water from the spring utilized by the Water Company so that it is
deemed unsafe (for drinking in the case of the well and spring, and for
wading or bathing in the case of Tonto Creek) pursuant to any
Environmental Law.
(h) The Resort is not a state or federal "superfund" site or
study site pursuant to Environmental Law.
(i) 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 Property by act or
omission to act of Seller or any person on the Resort property during
the period Seller has owned the Resort. This indemnity does not limit
any statutory or other legal rights available to Buyer.
(j) "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, regulaton, code,
ordinance or decree relating to health, environment, air, water
(including without limitation surface, ground, springs, streams and
creeks), soil, improvements and facilities, the protection of same, and
the contanimation and cleanup thereof.
(k) "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 "N" attached hereto, no actions, suits, proceedings or investigations
are pending or threatened against or relating to the Resort in any court or
before any federal, state, municipal or other governmental department, agency,
commission, board or bureau.
6.14. Except as set forth as a Permitted Exception on Exhibit "B"
attached hereto, and further except for current property taxes and assessments,
not delinquent, Seller has no knowledge of any tax, assessment, or other
obligation affecting the Premises which is, or may become, a lien on the
Premises.
6.15. Seller has delivered to Buyer statements of income and expense
dated January 1, 1989 through November 30, 1994 (the "Operating Statements") for
the operation of the Resort (excluding the Water Company) prepared by Seller. To
the best of Seller's knowledge the Operating Statements are true, correct, and
complete as of the date thereof and fairly present the financial operations of
the Resort for the period. Seller makes no representation as to the future
financial performance of the Resort or the financial viability of any other use
of the Resort, including, but not limited to, use of the Resort as a timeshare
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 "F" ("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 indemnify and hold Buyer harmless from any sums owing on liabilities
existing as of the Closing Date not set forth as an Existing Liability on
Exhibit "F" and not properly taken into account in the adjustments described in
Section 2.03 hereof.
6.17. Seller is not prohibited from consummating the transacton
contemplated by this Agreement or from conveying the Property 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 is required in order for Seller
to convey this Property 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.
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 due on the Loan Documents does not exceed Nine Hundred Forty
Thousand Dollars ($940,000.00), 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 be discharged without cause.
6.21 Seller's knowledge of damage to the Resort from past flooding is
described in Exhibit Q.
6.22 There is no default or breach under the U. S. Forest Service
Special Use Permit issued to Seller for the stables adjacent to the Resort nor
the concurrent Outfitter/Guide Permit issued in conjunction therewith, nor any
circumstance in connection with either that with the passage of time or failure
to act, or both, would constitute a default or breach, and the sublease to the
stable operator has been approved by the U. S. Forest Service in writing in
accordance with the permit. All such permits and the sublease are currently in
full force and effect, and Seller has no knowledge of any circumstance
indicating the U. S. Forest Service will refuse to transfer the Special Use
Permit to Buyer.
6.23 Seller holds, in good standing, a current Series 6 alcoholic
beverage license(s) from the State of Arizona Liquor Department in connection
with the operation of the Resort.
6.24 Up to the Closing Date, the Water Company's equipment and
facilities have been adequate to serve its current customers during peak demand
periods.
6.25 To the best of Seller's knowledge, except for the U.S. Forest
Service, the metered customers of the Water Company and as identified on Exhibit
"C" attached hereto, there are no other persons or real property with a right to
use the water from Indian Garden Spring (the "Spring") between the Spring and
the Property.
6.26 There is no default or breach under the Special Use permit from
the U.S. Forest Service to the Water Company for a springhouse for, and
pipelines from, the Spring, it is currently in full force and effect, and there
is not any circumstance that with the passage of time or failure to act, or
both, would constitute a default or breach thereunder, and Seller has no
knowledge of any circumstance indicating that the U. S. Forest Service at any
future annual renewal date (i) will not renew such permit, or (ii) that it will
increase the fees therefor.
6.27. Seller agrees to inform Buyer in writing immediately upon
obtaining actual knowledge that any of Seller's representations or warranties
herein are inaccurate.
6.28. 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.
6.29. "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 Xxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxxx, without independent inquiry
into the facts, the law or the public record.
6.30. In the Condemnation Action, Seller agrees to use its best good
faith efforts to procure the agreement of the State of Arizona that it will
issue to the Resort a sign permit to place on the condemned portion of Tract "J"
described in Section 4.08 above, a sign of substantially the same dimensions,
location (insofar as possible) and visibility to southbound travellers on State
Highway 260 as existed prior to the Condemnation Action. Seller agrees that if
necessary, Seller will reduce, up to Ten Thousand Dollars ($10,000.00), the
compensation it would otherwise receive from the condemning authority, by
settlement or otherwise, in order to acquire said permit. Except for the effect
of the foregoing, the parties agree that the conduct of, and all awards in, the
Condemnation Action are the Seller's, and Buyer has no interest therein. If
Seller fails to acquire said permit as described above, the Note amount will be
reduced by Ten Thousand Dollars ($10,000.00), with the principal and interest to
be treated in the manner described for a reduction in Section 10.05.
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, expense and liability to third parties arising out of acts
or omissions by Seller with respect to the Resort prior to the Closing Date.
Section 7. No Further Warranties By Seller.
--------------------------------
Buyer hereby acknowledges and agrees that:
(a) Neither Seller nor any person acting on behalf of Seller has
made warranties or representations of any nature, express or implied,
oral or written, concerning the Resort, this Agreement, or any matter
related thereto other than as expressly set forth herein;
(b) Neither Seller nor any person acting on behalf of Seller has
made any representations as to the physical condition, income, expense,
operation of the Resort or any other matter or thing affecting or
relating to the Resort other than as expressly stated herein; and
Section 8. Covenants, Representations and Warranties of Buyer.
---------------------------------------------------
Buyer covenants, represents and warrants to Seller as follows:
8.01. Buyer is a corporation duly organized and in good standing under
the laws of the State of Arizona.
8.02. Buyer has the full right and authority to enter into and fully
perform its obligations under this Agreement.
8.03. The persons signing this Agreement on behalf of Buyer are
authorized to do so, and to bind Buyer to the terms hereof.
8.04. Buyer shall assume all of the Existing Liabilities, as outlined
on Exhibit "F" hereto, and shall pay when due all items appearing thereon.
8.05. Buyer shall 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 or the operation thereof, provided however, that such
indemnification shall not (except asmay be otherwise herein specifically
provided) extend to any cost, expense or liability arising out of any omission
or act of Seller prior to Buyer's taking possession of the Resort.
8.06. 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, subject
to the express covenants, representations and warranties of Seller contained in
this Agreement. Buyer further acknowledges that, except as specifically set
forth in this Agreement, Seller has made no representations regarding the
structural, mechanical or design characteristics of the Resort, the condition of
any incinerator, boiler, other burning equipment, air conditioning equipment,
ventilation systems and equipment, maintenance equipment, mechanical systems,
plumbing, electrical wiring and fixtures, fixtures, sprinkler and fire safety
systems, lighting systems and fixtures, recreational fixtures and facilities,
walks and foundations, roofs, and any other such structural and mechanical
items.
8.07. Buyer accepts Seller's assignment to it of all Leases, Service
Contracts, and all warranties, guarantees, bonds, licenses, permits and Contract
Rights related to the Premises and assumes all obligations of Seller thereunder
arising, from and after the Closing Date.
8.08. 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.
8.09. Buyer agrees to inform Seller in writing immediately upon
obtaining actual knowledge that any of Buyer's representations or warranties
herein are inaccurate.
8.10. 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.
8.11. As of September 30, 1994 ILX Incorporated had issued and
outstanding 12,368,609 shares of voting, no par value, common stock, and 437,573
shares of non-voting, $10 par value, preferred stock. All outstanding shares are
validly issued, fully paid and non-assessable. There are outstanding
subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments obligating the company to issue or transfer from
treasury any additional shares of its capital stock of any class. The 150,000
shares of common stock described in paragraph 2.01(d) above is authorized but
unissued stock of Buyer, and on closing 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).
8.12. 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.
8.13. To the best of Buyer's knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding, or governmental
investigation pending 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.
8.14 Substantially all of the proceeds of the loan underlying the First
Lien (defined in Section 9.02 below) will be used for the refurbishment of and
construction of improvements to the Resort, which will include "soft costs" such
as but not limited to, architect's, engineer's, designer's, attorney's and
accountant's fees, and administrative overhead related directly to all the
foregoing activities at the Resort, together with a contingency fund not
exceeding $75,000.00. The loan underlying the First Lien will have an interest
rate not exceeding three (3) percentage points added to the prime rate as
announced by the lender from time to time, and a due date of not less than two
(2) years from the date of the loan. The documents underlying the First Lien
will contain a consent to the Seller's Deed of Trust (which will be junior to
the First Lien and subordinate to it).
8.15. 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 9. Title Insurance.
----------------
9.01. Seller agrees to undertake reasonable efforts to cause Escrow
Agent to deliver to Buyer, at Close of Escrow, an ALTA extended coverage owner's
title insurance (Form 1970-B if available) policy or a binding commitment to
issue the same as soon after Close of Escrow 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 owner's title insurance policy. If Buyer shall desire any
additional endorsements, the cost and responsibility for the acquisition thereof
shall be the responsibility of Buyer.
9.02. Buyer agrees to undertake reasonable efforts to cause Escrow Agent
to deliver to Seller, at Close of Escrow, an ALTA extended coverage Lender's
Policy of Title Insurance Form (1970-B if available) or a binding commitment to
issue the same as soon after Close of Escrow as is customary ("Lender's Title
Policy") in an amount equal to the original principal amount of the Note,
insuring that the Deed of Trust is an absolute, valid and enforceable lien in
favor of Seller against title to the Property subject only to the same
exceptions (other than those arising from Buyer's activities under Section 3
above) as are set forth in the above-described Owner's Title Policy (provided,
however, the exclusions shall not include monetary liens or encumbrances which
did not exist when the Property was conveyed by Seller to Buyer, except as may
be specifically approved in writing by Seller, and except for a lien (or liens)
senior to the Deed of Trust in an aggregate amount of not more than Two Million
Fifty Thousand Dollars ($2,050,000.00) (the "First Lien").
Section 10. Water Company
-------------
10.01. Included in this transaction is the sale (subject to the
contingency described below) of (i) the Xxxx'x Ranch Water Company which
supplies water to the Resort and other customers (the "Water Company"), and
(ii) the "Related Water Assets", which consist of (a) an approximately ninety
feet by forty five feet (90' x 45') piece of land on the west side of State
Highway 260 not taken in the Condemnation action and any tanks, equipment and
piping related thereto, (b) a "sleeved" culvert under State Highway 260 (to
the extent not owned by the State of Arizona), (c) a two hundred thousand
gallon water tank and the equipment, land and any easements related thereto, a
pumphouse and the equipment, land and any easements related thereto and (d) a
filtration and chlorination system and the equipment, land and any easements
related thereto. The land and easements referred to above in connection with
the Related Water Assets are described in Exhibit "P-1" attached hereto. The
equipment and any improvements connected therewith which comprise the
remainder of the Related Water Assets are described in Exhibit "P-2" attached
hereto.
10.02. All the outstanding stock of the Water Company and the Related
Water Assets are wholly owned or controlled by Seller and will be transferred to
Buyer at Closing (or later as described below)for no additional consideration,
pursuant to the sale agreement attached hereto as Exhibit "P" (the "Water
Company Agreement").
10.03. The parties agree that Seller will employ the counsel described
below in connection with the following:
(a) An application to the Arizona Corporation Commission (the
"Commission") to approve the transfer of the assets and Certificate of
Convenience and Necessity from the former Xxxx'x Ranch Water Company,
the charter of which expired, to the Water Company (the "Asset Transfer
Application"), for which O'Conner, Cavanaugh, et. al. (Phoenix,
Arizona) will be employed.
(b) An application to the Commission to approve a rate increase
for the Water Company (the "Rate Application"), for which Xxxxxxxxx,
Xxxxx, P.C. (Phoenix, Arizona) will be employed.
10.04. The foregong applications will be prosecuted diligently to
conclusion, and simultaneously insofar as practicable, as soon as reasonably
possible. Seller will pay the entire cost of the Asset Transfer Application and
the Rate Application whether or not Buyer acquires the Water Company
10.05. Buyer shall be under no obligation to acquire the Water Company
pursuant to the Water Agreement and the Related Water Assets on the Closing Date
or at all; however, Buyer shall have the exclusive right and option to do so
until fifteen (15) days after written notification to Buyer from Seller of the
final order of the Commission (with no further rights concerning appeal or
adjudication) on the last of the applications described above to be so decided.
If Buyer fails to close on the Water Agreement and the Related Water Assets
within such time limits, or notifies Seller in writing prior to such time that
it will not exercise the option to purchase, the principal balance of the Note
shall be reduced by Fifty Thousand Dollars ($50,000.00) and any Note interest
paid which is applicable to such principal, as of the date of such written
notification, or expiration of the option, which ever comes first.
(a) Buyer may not acquire the Related Water Assets unless it also
acquires the Water Company and vice-versa. The terms of this Agreement
shall apply to the acquisition of the Related Water Assets including
without limitation the forms of transfer and security documents and
covenants, representations and warranties.
(b) If Buyer does not acquire the Water Company and the Related
Water Assets, Seller will execute and record covenants, conditions and
restrictions, running with the real property and easements described in
Exhibit "P-1" attached hereto, which in general will restrict the use
of such real property and the improvements thereon to like-kind uses
related to water production, storage and distribution for the Water
Company, require that improvements thereon be maintained in good
condition and repair unless removed, and if such real property
interests are proposed to be transferred to a transferee that does not
also control the Water Company, Buyer will have a first right of
refusal (first opportunity to purchase), all in accordance with the
terms of Exhibit "P-3" attached hereto. 10.06. Seller agrees that Buyer
and its attorneys, Xxxxx & Xxxx, P.A.,shall have full access to the
proposed applications and information relating to the applications
within reasonable time prior to their filing may discuss such matters
with Sellers attorneys at any time and shall have the opportunity to
fully participate and express its desires in all major business
decisions concerning such applications, and Seller hereby directs and
authorizes its attorneys to act in a manner consistent with the above,
the parties acknowledging that the final decision and control of such
applications are Seller's. Xxxxx & Xxxx will be representing Buyer only
at Buyer's expense. The other attorneys named above will be
representing Seller only at Seller's expense.
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 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.
--------
All notices under this Agreement shall be in writing and shall be
effective when delivered personally, or received at the telefacsimile number
shown on Exhibit "C", or three (3) days after deposit in the United States mail,
postage prepaid, registered or certified mail, addressed as set forth in Exhibit
"C", or to such other address or facsimile number of which Seller, Buyer or
Escrow Agent shall have given notice.
Section 13. Survival of Representations, Warranties Covenants, and Obligations.
-------------------------------------------------------------------
Except as otherwise 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 thirty (30) months from the Closing Date and thereafter
terminate upon the expiration of such period, except the matters in Paragraph
6.12 (environmental) and its subparagraphs shall not be limited as to time and
shall survive the Closing indefinitely.
Section 14. Uniform Commercial Code - Bulk Transfer.
----------------------------------------
14.01. The parties believe that this sale is exempt from the
application of the Arizona bulk sale law under A.R.S. Section 47-6103(A) (1) 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, Buyer and Seller agree
to waive compliance, as between themselves, with the Bulk Sale Provisions of the
Uniform Commercial Code as in force in the State of Arizona.
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 (not including the Condemnation Action
as described in Section 6.30), 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.
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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 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).
16.03. If Seller shall breach or fail to perform or fulfill any of its
pre-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 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.
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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 Arizona.
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.,
Phoenix, Arizona 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 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, time is of the
essence of this Agreement and of every term and provision hereof.
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.
l7.10. If either Seller or Buyer shall bring any legal action or suit
for any relief against the other, declaratory or otherwise, arising out of this
Agreement, the losing party shall pay the successful party a reasonable sum for
its attorneys' fees, expenses,discovery costs and court costs as the court
sitting without a jury shall determine. Maricopa County shall be the venue for
any action, unless required by law in Gila County, Arizona.
17.11. Buyer agrees that neither this Agreement nor any memorandum or
notice thereof shall be recorded or tendered for recording in any land record
office having jurisdiction over the Property. Any violation of such covenant by
Buyer shall entitle Seller to cancel and terminate this Agreement, execute,
deliver, acknowledge and file on Buyer's behalf a termination notice or
memorandum and, for such purpose, Buyer hereby appoints Seller as its
attorney-in-fact, coupled with an interest, for Seller to so act in Buyer's
name, place and stead.
17.12. Buyer and Seller shall each provide the other at closing 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.
17.13. Set forth in Exhibit "C" is a list of any and all schedules and
riders which are attached hereto but which are not listed in the Table of
Contents. All exhibits, schedules, or riders attached to this Agreement are a
part of and are incorporated by reference into this Agreement with the same
effect as if they were recited at length in the body of this Agreement. The
parties will use their best good faith, reasonable efforts to agree upon the
form of the exhibits to this Agreement as soon as reasonably practicable, and in
no event later than three (3) 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 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PURCHASER: ILX INCORPORATED, an Arizona
corporation
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chairman
SELLER: XXXX'X RANCH ASSOCIATES, an
Arizona general partnership
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx,
as shareholder in Water Company partner
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx,
as shareholder in Water Company his spouse, partner
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 limted to, the
reports required pursuant to Section 6045 of the Code.
ESCROW AGENT: FIRST AMERICAN TITLE INSURANCE
COMPANY
By /s/Xxxxxx X. Xxxxx
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Its Escrow Officer
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