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EXHIBIT 10.2
OPTION TO PURCHASE AND ESCROW INSTRUCTIONS
This Option to Purchase and Escrow Instructions ("Agreement") is made
this 9th day of October, 1996, by and between AMERICAN CASINO ENTERPRISES, INC.,
a Nevada corporation ("Optionor"); XXXXXXXXX & ASSOCIATES, INC., a Nevada
corporation, and XXXX XXXXXXXXX, individually ("Optionee"); and UNITED TITLE OF
NEVADA ("Title Company" and "Escrow Agent"); with reference to the following
facts, and is as following:
R E C I T A L S :
A. Optionor is or will be the owner of that certain real property (the
"Property") situate in the County of Xxxxx, State of Nevada, more particularly
described in Exhibit "A" attached hereto and incorporated herein by this
reference.
B. Optionee desires to obtain an option or options to purchase the
Property from Optionor, and Optionor desires to grant Optionee such option, all
upon the terms and conditions below set forth.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
below set forth, and other valuable consideration, Optionor and Optionee agree,
and hereby instruct Title Company, as follows:
1. GRANT OF OPTIONS. Optionor hereby grants to Optionee, and Optionee
hereby accepts from Optionor, the exclusive option to purchase the Property on
the terms and provisions set forth herein (the "Option").
2. OPTION CONSIDERATION. The consideration for the Option (the "Option
Consideration") is Optionee's non-refundable payment to Optionor, in good and
sufficient funds, of the amount of ONE HUNDRED AND NO/100THS DOLLARS ($100.00),
the receipt of which is hereby acknowledged by Optionor.
3. TERM OF OPTION. The term of the Option (the "Option Term") shall
commence on the Escrow Opening Date (below defined), and shall expire at 5:00
p.m. PST on the one hundred twentieth (120th) day from and after the Escrow
Opening Date.
4. EXERCISE. Optionee may exercise the Option only by delivering
written notice of such exercise (the "Exercise Notice") to Optionor and Escrow
Agent no later than 5:00 P.M. PST on the one hundred tenth (110th) day of the
Option Term, which Exercise Notice shall set a date for the close of Optionee's
purchase of the Property (the "Closing Date"), which date shall be no earlier
than three (3) nor later than ten (10) calendar days after delivery of the
Exercise Notice to Optionor or the last day of the Option Term.
5. SALE AND PURCHASE. Upon Optionee's exercise of the Option in
accordance with this Agreement, this Agreement shall constitute an agreement of
purchase and sale and escrow instructions for the purchase and sale of the
Property. Optionor shall sell to Optionee, and Optionee shall purchase from
Optionor, the Property for the purchase price and upon the terms and conditions
set forth in this Agreement.
6. PURCHASE PRICE.
6.1 Amount. The Purchase Price for the Property (the "Purchase
Price") shall be the sum of the following:
(a) The outstanding principal balance of the existing
promissory note (the "Note"), secured by the deed of trust presently encumbering
the Property;
(b) The cash portion of the purchase price paid by
Optionor at the closing of its purchase of the Property;
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(c) The amount of all payments made by Optionor
during the Option Term as required pursuant to the terms and provisions of the
Note; and
(d) An amount equal to the greater of (i) sixteen
percent(16%), per annum, of and added to the sum of 6.1(b) and (c) above or (ii)
fifty percent (50%) of the profit realized by Optionee should Optionee sell,
transfer, convey or assign its interest in the Property or this Agreement during
the Option Term (any such event, a "Transfer"). A Transfer shall not include any
transaction pursuant to which (i) Optionee retains at least a five percent (5%)
ownership interest in the Property or the entity which will purchase the
Property or (ii) maintains a continuing contractual relationship with the owner
of the Property pursuant to which Optionee renders substantive services to such
owner in connection with its development of the Property.
6.2 Method of Payment. The Purchase Price shall be paid at
Closing (below defined) in U.S. currency, by cashier's check issued by a bank or
other depository acceptable to Title Company or via wire-transferred funds.
7. ESCROW.
7.1 Opening. Immediately upon Optionor's and Optionee's
execution and delivery of this Agreement, and in no event later than three (3)
business days thereafter, Optionee shall deliver to Title Company a copy of a
fully executed original of this Agreement. The date by which such delivery is
made shall be the "Escrow Opening Date". This Agreement shall serve as escrow
instructions to Title Company, and Title Company is hereby authorized and
instructed to act in accordance with the terms of this Agreement. The parties
shall execute any additional instructions to Title Company necessary to carry
out the terms and conditions of this Agreement, provided such escrow
instructions shall be subject to approval by the parties hereto. The terms of
the escrow instructions shall not supersede the terms of this Agreement; and in
the event of conflict, the terms of this Agreement shall be controlling, unless
a contrary intent is clearly indicated by the parties.
7.2 Closing. Escrow shall close on the Closing Date or such
other date as is mutually acceptable to Optionor and Optionee.
8. TITLE. At Closing, Optionor shall deliver fee simple title to the
Property to Optionee, subject only to those exceptions to, and conditions of,
title to which Optionor took title to the Property from Optionee (the "Permitted
Exceptions").
9. DELIVERIES AT CLOSING.
9.1 Optionee's Deliveries. Optionee shall deliver to Title
Company, on or before Closing, the following:
9.1.1 Purchase Money. The Purchase Price in the form
provided for in Paragraph 6.2.
9.1.2 Additional Documentation. Such additional
documents and instruments as may be reasonably required by Title Company to
consummate the Closing.
9.2 Optionor's Deliveries. Optionor shall deliver to Title
Company, on or before Closing, the following:
9.2.1 The Optionor's Deed. A grant, bargain and sale
deed on Title Company's standard from (the "Optionor's Deed") conveying the
Property to Optionee (or any designee thereof as provided in writing by
Optionee) signed and acknowledged by Optionor.
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9.2.2 Optionor's IRS Section 1445 Affidavit. An
Affidavit on Title Company's standard form executed in satisfaction of the
requirements of Section 1445 of the United States Internal Revenue Code.
9.2.3 Optionor's Charges. If the funds deposited with
Title Company by Optionee are insufficient to (i) discharge all record
encumbrances other than the Permitted Title Exceptions and (ii) pay the charges
to Optionor under the Section of this Agreement entitled "Prorations, Fees and
Costs", Optionor shall deliver to Title Company sufficient funds and instruments
to discharge and pay such encumbrances and charges.
10. THE CLOSING.
10.1 Conditions to Closing. Title Company shall close Escrow
(the "Closing") on or before the Closing Date. Title Company shall effect the
Closing by (i) filing for record the Optionor's Deed (and such other documents
as may be necessary to procure the title policy); and (ii) delivering funds and
documents to the parties as appropriate WHEN AND ONLY WHEN each of the following
conditions has been satisfied:
10.1.1 Deliveries. All funds and documents described
in Section 9 have been delivered to Title Company.
10.1.2 Conditions Precedent. All of the conditions
precedent in Section 8 have been satisfied or waived in the manner set forth
therein.
10.1.3 Closing Statement. Title Company shall have
delivered to the parties and the parties shall have approved the proposed
closing statement.
10.1.4 Title Polices. Title Company is prepared to
issue an American Land Title Association ("ALTA") owner's policy of title
insurance with coverage in the amount of the Purchase Price, insuring that fee
simple title to the applicable portion of the Property vests in Optionee subject
only to (i) standard printed form exclusions from coverage of such policy of
title insurance, and (ii) the Permitted Title Exceptions.
11. PRORATIONS, CREDITS AND COSTS
11.1 Prorations. Escrow Agent shall prorate (that is,
apportion) between the parties, in cash, to the Closing Date on the basis of a
30-day month, the following:
11.1.1 Taxes. General and special real estate taxes
and assessments, based on the regular tax xxxx for the fiscal year in which the
Escrow closes (or, if such tax xxxx has not been issued as of the Closing Date,
the regular tax xxxx for the fiscal year preceding that in which the Escrow
closes).
11.1.2 Utilities. If applicable, all utilities,
including gas, water, sewer, electricity, telephone and other utilities supplied
to the Property shall be read as of the Closing Date. Optionor shall be
responsible for payment of all amounts applicable to time periods prior to the
Closing and Optionee shall be responsible for all time periods thereafter.
11.1.3 Other Items. All other applicable proratable
items including, without limitation, insurance premiums, licenses and permits.
11.2 Closing Costs. Each party shall pay the cost of
preparing the instruments to be furnished by such party and any attorneys' fees
incurred by such party. The cost of the ALTA title insurance policy premium, the
recording fee for the deed, the real estate transfer tax and the Escrow Agent's
fee shall
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be paid by Optionee. All other closing costs, shall be paid equally by the
parties.
12. WARRANTIES AND REPRESENTATIONS OF OPTIONOR. Optionor hereby
represents and warrants to Optionee all of the following, each of which is true
in all respects as of the date of this Agreement and shall be so at each
Closing.
12.1 Actions, Suits or Proceedings. Optionor has not received
notice of, and has no knowledge of, any actions, suits, or proceedings which are
pending or threatened before any governmental department, commission, board,
bureau, agency or instrumentality that would materially and adversely affect the
Property or the right to occupy or utilize it, and there is no litigation to
which Optionor is a party, pending or, to the actual knowledge of Optionor,
threatened, which adversely affects the Property.
12.2 Power and Authority. Optionor has the full right and
authority to enter into this Agreement and consummate the transactions
contemplated herein; each of the persons signing this Agreement and exhibits
attached hereto on behalf of Optionor is authorized to so sign; and the
execution, consent or acknowledgement of no other person or entity is necessary
in order to validate the execution of this Agreement by Optionor.
12.3 Other Agreements. Entry into this Agreement, and the
performance by Optionor of its obligations hereunder, does not contravene or
constitute a breach of any agreement, contract or indenture to which Optionor is
a party.
12.4 Condemnation. There are no condemnation or eminent domain
proceedings now pending or, to the knowledge of Optionor, anticipated with
respect to the Property.
12.5 Maintenance During Escrow and Condition at Closing.
Optionor shall maintain the Property until Closing in its present condition,
acts of God excepted.
12.6 Changes in Agreements; Title. Prior to Closing Optionor
will not knowingly violate or modify, either orally or in writing, any agreement
presently affecting the Property, or create or suffer to be created or incurred
any new agreements, liens or encumbrances affecting the Property, without
Optionee's prior written approval.
12.7 No Optionor Bankruptcy Proceedings. Optionor is not the
subject of a bankruptcy proceeding.
12.8 Notice of Change. Optionor will promptly notify Optionee
of any fact or circumstance which becomes actually known to Optionor between the
date of this Agreement and the Closing which renders untrue any representation
made by Optionor in this Section.
12.9 Existing Loan. Optionor will not prepay any portion of
the Note during the Option Term.
13. WARRANTIES AND REPRESENTATIONS OF OPTIONEE. Optionee warrants and
represents to Optionor as follows:
13.1 Power and Authority. Optionee has the full right and
authority to enter into this Agreement and consummate the transactions
contemplated herein; each of the persons signing this Agreement and exhibits
attached hereto on behalf of Optionee is authorized to so sign; and the
execution, consent or acknowledgement of no other person or entity is necessary
in order to validate the execution of this Agreement by Optionee.
13.2 Other Agreements. Entry into this Agreement, and the
performance by Optionee of its obligations hereunder, does not contravene or
constitute a
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breach of any agreement, contract or indenture to which Optionee is a party.
14. BROKERAGE COMMISSIONS. Each party warrants to the other that the
warranting party has incurred no obligations, by reason of this Agreement or the
transaction contemplated hereby, for a real estate brokerage commission or
finder's fee for which the other party would be liable. Each party will hold the
other party free and harmless from and against any damage or expense the other
party may incur by reason of the untruth as to the warranting party of the
foregoing warranty, including expenses for attorneys' fees and court costs.
15. NOTICES.
15.1 Time of Delivery, Addresses. Unless otherwise
specifically provided in this Agreement, all notices, demands or other
communications given hereunder shall be in writing and will be deemed to have
been duly delivered upon personal delivery, as of the next day after deposit
with a commonly accepted courier for over-night delivery, or as of the third
business day after mailing by United States certified mail, return receipt
requested, postage prepaid, and addressed as follows:
If to Optionor, to: Xxxxxxxxx & Associates, Inc.
Xxxx Xxxxxxxxx
0000 Xxxx Xxxxxx Xxxxxxxx Xxxx, Xxxxx 0
Xxx Xxxxx, Xxxxxx 00000.
With copy to: Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000-0000
If to Optionee, to: American Casino Enterprises, Inc.
0000 Xxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
With copies to: Xxxx Xxxxx, Esq.
Hale, Lane, Peek, Xxxxxxxx,
Xxxxxx, Xxxxxxxx and Pearl
000 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx, Xxxxxx 00000
Xxx X. Xxxxx, Esq.
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000-0000
If to Escrow Agent, to: United Title of Nevada
0000 X. Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
or such other address as any party may designate to the others for such purpose
in the manner set forth above.
16. GENERAL PROVISIONS.
16.1 Survival of Provisions. The representations, warranties,
agreements and indemnities set forth in this Agreement shall remain operative,
shall be deemed made at Closing, and shall survive the Closing for a period not
to exceed one year.
16.2 Possession. Possession of the Property shall be delivered
to Optionee at Closing.
16.3 Incorporation of Recitals and Exhibits. All recitals set
forth at the beginning of this Agreement and all exhibits attached to and
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referred to in this Agreement are incorporated into this Agreement as though
fully set forth in this Agreement.
16.4 Captions. Captions in this Agreement are inserted for
convenience of reference only and do not define, describe or limit the scope or
the intent of this Agreement.
16.5 Entire Agreement. This Agreement contains the entire
agreement between the parties relating to the transactions contemplated hereby,
and all prior or contemporaneous agreements, understanding, representations and
statements, oral or written, are merged into this Agreement.
16.6 Modification. No modification, waiver or discharge of
this Agreement shall be valid unless it is in writing and signed by the party
against which the enforcement of the modification, waiver or discharge is or may
be sought.
16.7 No Partnership or Joint Venture. Optionor or Optionee
shall not, by virtue of this Agreement or otherwise, in any way or for any
reason be deemed to have become a partner or joint venturer of the other in the
conduct of its business or otherwise.
16.8 Further Assurances; Development Agreement. Optionee is
currently a party to an agreement with Xxxxx County, Nevada, entitled
"Development Agreement Between Xxxxx County, Nevada and Xxxx Xxxxxxxxx" (the
"Development Agreement") which establishes, among other things, certain
conditional entitlements with respect to the development of the Property. In the
event Optionee does not purchase the Property from Optionor, Optionee shall upon
request of Optionor render reasonable and good faith efforts and cooperation to
obtain Xxxxx County's consent to the assignment of Optionee's rights under the
Development Agreement to Optionor. Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and shall
do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent and
agreements of the parties hereto.
16.9 Attorneys' Fees and Costs. If either party commences
litigation or other proceedings (including, without limitation, arbitration) for
the interpretation, reformation, enforcement or rescission of this Agreement,
the prevailing party shall be entitled to recover from the other party an amount
equal to reasonable attorneys' fees and court and other costs incurred.
16.10 Successors. All terms of this Agreement shall be binding
upon and inure to the benefit of the parties and their respective administrators
or executors, successors and assigns; provided, however, that Optionor may not
assign or delegate its rights and obligations hereunder, and Optionee may not
assign or delegate its rights and obligations under this Agreement without the
prior written consent of Optionor, which consent will be given provided that
concurrently with delivery of Optionor's consent, Optionor is paid its share of
Profits, if any, determined pursuant to Section 6.1(b) or (c) in connection with
such assignment.
16.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an original, but all
of which together will constitute but one instrument.
16.12 Time. Time is of the essence of this Agreement and in
the performance and enforcement of each of the premises, covenants,
representations and warranties of the parties contained herein. If an act is
required to be performed on a certain day and such day is not a regular business
day, the time
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of performance or measurement shall be extended to and including the next
regular business day. Optionee expressly acknowledges and agrees that Optionor
has purchased the Property for investment purposes, and the grant of the Option
to Optionee will require that Optionor remove the Property from the real estate
market for the Option Term. Accordingly, Optionor may insist upon the strict
adherence of Optionee to the time deadlines and requirements set forth in this
Agreement with respect to Optionee's exercise, if any, of the Option and the
performance of all other obligations of Optionee hereunder.
16.13 Authority. Each person signing this Agreement represents
and warrants that he or she has the proper authority to bind the party on whose
behalf he or she signs.
16.14 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year appearing with their respective signatures.
Date: October 9. 1996
"OPTIONOR"
AMERICAN CASINO ENTERPRISES, INC.,
a Nevada corporation
By:___/s/ Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx Xxxxxxxxx, Vice Pres.
"OPTIONEE"
XXXXXXXXX & ASSOCIATES, INC.,
a Nevada corporation
By: /s/ Xxxx X. Xxxxxxxxx
XXXX X. XXXXXXXXX, PRESIDENT
/s/ XXXX XXXXXXXXX, Individually
CONSENT OF TITLE COMPANY
United Title of Nevada agrees to (i) accept the foregoing agreement,
(ii) be Title Company under the Agreement and (iii) be bound by the Agreement in
the performance of its duties as Escrow Agent; however, the undersigned shall
have no obligations, liability or responsibility (i) under this consent or
otherwise, unless and until the Agreement, fully signed by the parties, has been
delivered to the undersigned, or (ii) under any amendment to the Agreement
unless and until the amendment is accepted by the undersigned in writing.
Date: 10/10/96
UNITED TITLE COMPANY,
a Nevada corporation
By: /s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
Its: Senior Escrow Officer
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Exhibit A
Parcel l:
The Southeast Quarter (SE 1/4) of Section 20, Township 22 South, Range 60
East, M.D.B. & M., Xxxxx City,
Nevada
Parcel 2:
The Southeast Quarter (SE 1/4) of the Southwest Quarter (SW 1/4) of the
Southwest Quarter (SW 1/4) of the Northeast Quarter (NE 1/4) of Section 20,
Township 22 South, Range 60 East, M.D.M., Xxxxx County, Nevada.
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