<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
AMENDMENT NO. 1 TO
FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 31, 1996
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Commission File No. 1-13362
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SENIOR TOUR PLAYERS DEVELOPMENT, INC.
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(Name of Small Business Issuer as specified in its charter)
Nevada 04-3226365
(State or other jurisdiction (I.R.S. Employer
incorporation or organization Identification Number)
266 Beacon Street, Boston, MA 02116
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(Address of principal executive offices)(Zip Code)
(617) 266-3600
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(Issuer's Telephone Number, Including Area Code)
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ItEM 7. PRO FORMA FINANCIAL STATEMENTS & EXHIBITS
The following exhibits are filed as part of this report.
Exhibit
10.24 Purchase Agreement - Las Vegas Golf Center, LLC
10.25 First Amended And Restated Limited Liability Company Agreement of
Las Vegas Golf Center, L.L.C.
10.26 Las Vegas Golf Center, L.L.C. Membership Interests Purchase and Sale
10.27 Letter of Understanding - Membership Interest Purchase & Purchase
Option Agreement
- - -
SIGNATURES
In accordance with requirements of the Securities Exchange Act of 1934, the
registrant caused this amendment to its report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
Dated: March 19, 1997 By: /s/ Lawrence P. Butler
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Lawrence P. Butler
Chief Financial Officer
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Exhibit 10.24
AGREEMENT
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THIS AGREEMENT dated November 29, 1996 by and between LARRY K. WHITE
("LKW"), DONALD A. WEBER ("DAW") (collectively "Sellers") and SENIOR TOUR
PLAYERS DEVELOPMENT, INC. ("STPD" "Buyer" or "Buyers"), a Nevada Corporation.
WITNESSETH
WHEREAS, LKW owns and holds in the aggregate, beneficially and of record,
sixteen (16%) percent of the membership interests ("Interests") in Las Vegas
Golf Center, L.L.C., a Delaware limited liability company ("LVGC"), and DAW owns
and holds in the aggregate, beneficially and of record, five and one-half (5.5%)
percent of the Interests in LVGC; and
WHEREAS, STPD, or its nominee, desires to purchase from each of the
Sellers, and each of Sellers desires to sell to STPD, all of Sellers' Interests.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Subject to the terms of this Agreement, each of Sellers hereby agree to
sell, transfer, convey, assign and deliver to STPD, or its Nominee, and STPD, or
its Nominee, hereby agrees to purchase, acquire and accept from each of the
Sellers, all of such Seller's right, title and interest (whether held
beneficially or of record) in and to such Seller's Interest.
2. The aggregate purchase price to be paid by STPD for the Interests shall
be (i) Four Hundred Thousand Dollars ($400,000) ("Cash Consideration") and (ii)
Three Hundred Twenty Three Thousand, Two Hundred Eighty Nine (323,289) shares of
common stock, $0.001 par value per share, of STPD ("STPD Shares"), payable as
follows:
Cash Consideration: $20,000 on or before December 15, 1996
$180,000 on or before January 15, 1997
$200,000 on or before January 15, 1998
STPD Shares: 161,645 on or before January 15, 1997
161,644 on or before January 15, 1998
Each of the STPD shares shall be duly authorized, validly issued, fully
paid and non-assessable, and shall be restricted security, as defined in Rule
144 promulgated under the Securities Act of 1933, as amended by the Securities
and Exchange Commission. Sellers agree to vote their shares for management's
slate of directors through December 31, 1998.
<PAGE> 2
3. Sellers hereby irrevocably and unconditionally (i) consent, in
accordance with the requirements of Article VI of the LVGC Agreement, to the
admission of STPD to LVGC as a member and the substitution of STPD for the
Sellers as Members, and (ii) waives any and all requirements and conditions of
execution and delivery by STPD of any assumption of any of the liabilities or
obligations of any of the Sellers under the LVGC Agreement.
4. At any time, at STPD's request and without further consideration, each
of the parties hereto shall promptly execute and deliver such documents and
instruments, and take all such other action, as STPD may reasonably request,
more effectively to transfer, convey and assign to STPD, and to confirm STPD's
admission of LVGC as a Member and the STPD's title to, all of the Sellers'
respective Interests, to assist STPD in exercising all rights with respect
thereto and to carry out the purpose and intent of this Agreement.
5. The parties hereto agree to their respective representations and
warranties as contained in Exhibit A attached hereto and incorporated herein.
6. The parties hereto agree to the indemnification provisions contained in
Exhibit B attached hereto and incorporated herein.
7. The closing shall be held in Las Vegas, Nevada on December 3, 1996 at
2:00 p.m. with the location to be agreed upon by the parties.
8. Simultaneous with the Closing ("Closing" or "First Closing") hereof,
Sellers shall cause Golf Centers of America, Inc. to assign and transfer to Las
Vegas Golf Center the Ground Lease and Sublease, as specified in Paragraph 2.06
of Exhibit A, and each of any outstanding contracts, as specified in Paragraph
2.11 of Exhibit A, to LVGC pursuant to documentation reasonably satisfactory in
form and substance to STPD and its counsel.
9. Each of the Sellers consents to the placing of the following legend on
the certificate or certificates for STPD Shares to be issued to each such Seller
in connection with the purchase or their respective Interests by STPD hereunder:
The Shares of Common Stock represented by this certificate have not
been registered under the Securities Act of 1993 or applicable state
securities laws and may be sold, pledged, assigned or otherwise
transferred only if a registration statement with respect to such
transaction is in effect pursuant to the provisions of such law or if,
in the opinion of counsel reasonably satisfactory to the issuer, and
exemption from the registration requirements of such laws is
available.
10. STPD agrees to grant Sellers the right to demand registration of their
STPD Shares on a Form S-3 registration statement or similar Form at any time
after July 1, 1997. STPD shall use its best efforts to cause a registration
statement to become effective immediately following July 1, 1997 or as soon as
practicable thereafter. STPD shall be responsible for the costs of any such
registration.
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11. This agreement is subject to STPD's completing a satisfactory agreement
with the remaining member of the LVGC, LLC to STPD's absolute satisfaction.
12. STPD shall pay to Sellers a refundable deposit of $20,000 on or before
December 17, 1996, and the closing date for this transaction per paragraph 7
above, shall become on or before January 15, 1997, or at such earlier date as
STPD may choose.
IN WITNESS WHEREOF, the parties hereto have cause this AGREEMENT to be duly
executed on the date above written.
BUYER: SENIOR TOUR PLAYERS DEVELOPMENT, INC.
By: /s/ Stanton V. Abrams
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Its: President
SELLER: /s/ Larry K. White
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LARRY K. WHITE
/s/ Donald A. Weber
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DONALD A. WEBER
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Exhibit 10.25
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
LAS VEGAS GOLF CENTER, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER
APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS
FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS THAT ARE SET FORTH
HEREIN.
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TABLE OF CONTENTS
ARTICLE 1 FORMATION OF COMPANY, BASIC INFORMATION........................1
Section 1.1 Formation ........................................1
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Section 1.2 Name .............................................2
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Section 1.3 Term..............................................2
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Section 1.4 Character of Business.............................2
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Section 1.5 Registered Agents ................................2
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Section 1.6 Certain Definition................................2
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Section 1.7 Title to Property ................................7
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ARTICLE II CERTAIN INCORPORATED MATTERS....................................7
Section 2.1 Tax and Accounting................................7
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ARTICLE III CAPITALIZATION AND LOANS BY MEMBERS........................... 8
Section 3.1 (Intentionally Deleted)
Section 3.2 Additional Capital Contributions by the Members.. 8
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Section 3.3 Default; Remedies................................ 9
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Section 3.4 Member Loans..................................... 9
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ARTICLE IV DISTRIBUTIONS..................................................10
Section 4.1 Distributions....................................10
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Section 4.2 Timing of Distributions .........................10
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Section 4.3 Distributions of Capital ........................10
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ARTICLE V POWERS, RIGHTS AND DUTIES OF MEMBERS..........................11
Section 5.1 Authority of Members.............................11
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Section 5.2 Unilateral Sale Rights Upon Deadlock.............14
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Section 5.3 Certain Obligations of Managing Member...........15
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Section 5.4 Other Activities.................................18
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Section 5.5 Liability of Members.............................19
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Section 5.6 Indemnity of Members ...........................19
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Section 5.7 Indemnification by Members.......................19
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Section 5.8 Additional Members...............................20
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Section 5.9 Company Accounts ................................20
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Section 5.10 Compensation of Managing Member ................20
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ARTICLE VI TRANSFER OF COMPANY INTERESTS................................20
Section 6.1 Restrictions on Transfer.........................21
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Section 6.2 Effect of Assignment; Documents..................21
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ARTICLE VII CERTAIN REMEDIES.............................................22
Section 7.1 Security Agreement...............................22
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Section 7.2 Termination of Management Rights.................23
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Section 7.3 Arbitration .....................................24
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Section 7.4 No Partition ....................................26
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Section 7.5 Attorney's Fees .................................26
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Section 7.6 Cumulative Remedies..............................26
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Section 7.7 No Waiver .......................................26
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ARTICLE VIII DISSOLUTION OF THE COMPANY...................................27
Section 8.1 Events Giving Rise to Dissolution ...............27
---------------------------------
Section 8.2 (Intentionally Deleted)
Section 8.3 Procedure .......................................27
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ARTICLE IX MISCELLANEOUS ...............................................28
Section 9.1 Notices..........................................28
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Section 9.2 Acknowledgment by Members .......................29
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Section 9.3 Construction.................................29
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Section 9.4 Time is of the Essence.......................29
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Section 9.5 Entire Agreement.............................29
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Section 9.6 Amendments...................................30
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Section 9.7 Governing Law, Venue.........................30
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Section 9.8 Successors and Assigns ......................30
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Section 9.9 Captions.....................................30
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Section 9.10 Severability.................................30
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Section 9.11 Counterpart..................................30
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Section 9.12 No Third Party Beneficiaries.................30
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Section 9.13 Certain Terminology .........................30
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Section 9.14 Brokers......................................30
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Section 9.15 Survival ....................................31
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Section 9.16 Non-Business Days ...........................31
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Section 9.17 Incorporation of Exhibits ...................31
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Section 9.18 Intent.......................................31
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Section 9.19 Commissions on Sale or Sublease .............31
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FIRST AMENDED AND RESTATED
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LIMITED LIABILITY COMPANY AGREEMENT
-----------------------------------
OF LAS VEGAS GOLF CENTER, L.L.C.
--------------------------------
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is
made and entered into as of the 18th day of December, 1996, by and among THE
RANCHITO COMPANY LLC, a Nevada limited liability company ("Ranchito"), SENIOR
TOUR PLAYERS DEVELOPMENT, INC., a Nevada limited liability company ("STPD"),
PAUL FIREMAN, an individual residing in Massachusetts ("PF").
R E C I T A L S :
- - - - - - - -
WHEREAS, Ranchito, STPD and PF wish to form a limited liability
company pursuant to the Delaware Limited Liability Company Act, 6 Del. C.
[Section]18-010, et. seq., (the "Act") as amended from time to time, by filing a
Certificate of Formation of the Company with the Office of the Secretary of
State of the State of Delaware and entering into this Agreement;
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
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FORMATION OF COMPANY; BASIC INFORMATION
---------------------------------------
Section 1.1 FORMATION. The Members hereby agree to form the
Company as a limited liability company under and pursuant to the provisions of
the Act and agree that the rights, duties and liabilities of the Members shall
be as provided in the Act, except as otherwise provided herein. If there is a
conflict between the provisions of this Agreement and the Act, the provisions of
the Act shall control (it being understood that if the Act provides for a
particular rule but allows the members of a limited liability company to provide
to the contrary in their limited liability company agreement, and if the parties
hereto have so provided hereunder, then such provisions shall not be deemed to
constitute a conflict for purposes of the foregoing). The "Managing Member" (as
defined below) shall file a Certificate of Formation of the Company consistent
with this Agreement and any assumed or fictitious or business name statement or
certificate or any similar document required by the Act or applicable law to be
filed in connection with the formation and operation of the Company, and
Managing Member shall perform such other actions as are required under the Act
and applicable law in order to qualify the Company to conduct the business
contemplated by this Agreement (including any required publication) in the State
of Nevada. The Members further agree to acknowledge, file, record, and publish
as necessary, such amendments to the foregoing as may be required by this
Agreement, the Act or applicable law, and such other documents as may be
appropriate to comply with such requirements for the formation, preservation, or
operation of the Company. Upon termination of the Company, Managing Member shall
promptly execute and cause to be filed all filings required under the Act and
other applicable laws. Managing Member shall promptly deliver to the Members
copies of all filings made on behalf of the Company in accordance with this
Section 1.1.
<PAGE> 6
Section 1.2 NAME. The Company's business shall continue to be
conducted solely under the name of "LAS VEGAS GOLF CENTER, L.L.C." or any
fictitious name upon which the Members may agree and for which the appropriate
certificate of fictitious name shall be filed with the appropriate government
agency.
Section 1.3 TERM. The term of the Company shall continue until,
and shall be terminated on December 31, 2025, inclusive, unless sooner
terminated as hereinafter provided.
Section 1.4 CHARACTER OF BUSINESS. The Company may engage in
any lawful purpose expressly approved in writing by the Members, except for
banking or insurance. The principal purpose of the Company shall be to expand,
improve, maintain, operate, market, finance, sell and otherwise use or realize
the economic benefit from the "Project" (as defined below) for profit and to
engage in all activities related thereto, all in accordance with the "Business
Plan" (as defined below).
Section 1.5 REGISTERED AGENTS AND OFFICES. The Company's
registered agent and office in the following jurisdictions shall be as follows:
Massachusetts: Senior Tour Players Development, Inc.
c/o Mr. Stanton V. Abrams
266 Beacon Street
Boston, Massachusetts 02116
Delaware: Paracorp Incorporated
15 East North Street
Dover, Delaware 19901
Nevada: Paracorp Incorporated
318 North Carson Street
Carson City, Nevada 89701
At any time and with written notice to the other Members, Managing
Member may designate other registered agents and/or registered offices.
Section 1.6 CERTAIN DEFINITIONS. As used herein, the following
terms have the following meanings:
"ACCOUNTS" means the "Operating Account" and the "Money Market
Account," each as defined in Section 5.9.
"ADJUSTED ADDITIONAL CAPITAL CONTRIBUTIONS" means at any time,
with respect to any Member, an amount equal to the aggregate sum of such
Member's Additional Capital Contributions, reduced by the amount of
Distributable Cash distributed to such Member pursuant to Section 4.1B.
"ADJUSTED DEFICIENCY CONTRIBUTIONS" means at any time, with
respect to any Member, an amount equal to the aggregate sum of such Member's
Deficiency Contributions, reduced by the amount of Distributable Cash
distributed to such Member pursuant to Section 4.1A.
2
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"AFFILIATE" of a person or entity (or words of similar import,
whether or not capitalized) includes (1) any officer, director, employee,
trustee, shareholder, member, partner or relative within the third degree of
kindred of the person or entity in question; (2) any corporation, partnership,
limited liability company, trust or other entity controlling, controlled by or
under common control with the person or entity in question or any Affiliate of
the person or entity in question (whether directly or indirectly through one or
more intermediaries); and (3) any officer, director, trustee, employee,
shareholder, member or partner of any person or entity described in (2) above.
For the purpose of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies, whether through the ownership of voting securities or by contract or
otherwise.
"APPLICABLE RATE" means the lesser of (1) ten percent (10%); and
(2) the maximum interest that may be charged under any applicable usury law.
"BANKRUPTCY/DISSOLUTION EVENT" with respect to a person or entity,
means the commencement or occurrence of any of the following with respect to
such person or entity: (1) a case under Title 11 of the U.S. Code, as now
constituted or hereafter amended, or under any other applicable federal or state
bankruptcy law or other similar law; (2) the appointment of (or a proceeding to
appoint) a trustee or receiver of any property interest; (3) an attachment,
execution or other judicial seizure of (or a proceeding to attach, execute or
seize) a substantial property interest; (4) an assignment for the benefit of
creditors; (5) the taking of, failure to take, or submission to any action
indicating (after reasonable investigation) an inability to meet its financial
obligations as they accrue; or (6) a dissolution or liquidation; provided,
however, that the events described in Clauses (1), (2) or (3) shall not be
included if the same are (a) involuntary and not at any time consented to, (b)
contested within thirty (30) days of commencement and thereafter diligently and
continuously contested, and (c) dismissed or set aside, as the case may be,
within ninety (90) days of commencement.
"BUDGETS" shall mean (1) the development and construction budget
for any applicable phase of the Project set forth in the applicable Development
Plan, and (2) the Capital Budget, and Operating Budget and in the event that the
Management Agreement is terminated, such substitute budgets as may be agreed
upon in writing by the Members.
"BUSINESS AGREEMENT" shall mean any loan agreement, mortgage,
easement, covenant, restriction or other agreement or instrument at any time or
times affecting all or a portion of any of the "Company Property" (as defined
below).
"BUSINESS PLAN" means the business plan for the Company which is
approved by the Members and adopted by the Company and attached as EXHIBIT "A"
as the same may be amended from time to time with the approval of the Members in
accordance with this Agreement. The Business Plan shall be deemed to include (1)
the Development Plan and (2) the Budgets.
"CARRYOVER AMOUNT" means, in respect of any Member for any Company
Year commencing on or after January 1, 1997, an amount equal to the excess, if
any, of (1) the aggregate maximum amount of Distributable Cash distributable to
such Member pursuant to Section 4.1C for all Company Years prior to such Company
Year, over (2) the aggregate sum of all Distributable Cash actually distributed
to such Member pursuant to Sections 4.1C and 4.1D for all Company Years prior to
such Company Year.
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"CLAIM" means any obligation, liability, claim (including any
claim for damage to property or injury to or death of any persons), lien or
encumbrance, loss, damage, cost or expense (including any judgment, award,
settlement, reasonable attorneys' fees and other costs and expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim [including appellate proceedings], and any collection costs or enforcement
costs).
"COLLATERAL AGREEMENT" means any agreement, instrument, document
or covenant made or entered into under, pursuant to, or in connection or
concurrently with this Agreement, and any certifications made in connection
therewith or amendment or amendments made at any time or times heretofore or
hereafter to any of the same.
"COMPANY" means the limited liability company governed by this
Agreement.
"COMPANY PROPERTY" means all property, of whatever kind or nature,
owned by the Company from time to time.
"COMPANY YEAR" means (1) that portion of the current calendar year
(i.e., the calendar year in which the date hereof occurs) which occurs on or
after the date hereof and prior to the termination of the Company in accordance
with this Agreement, (2) each full calendar year on or after the date hereof and
prior to the termination of the Company in accordance with Agreement, and (3)
that portion of the calendar year in which the Company terminates in accordance
with this Agreement that is on or after the date hereof and prior to such
termination.
"CURE PERIOD" means (1) ten (10) days after written notice from a
Member to a defaulting Member specifying the nature of a default or breach under
this Agreement, in connection with a monetary default that is not a "Noncurable
Default" (as defined below); (2) thirty (30) days after written notice from a
Member to a defaulting Member specifying the nature of a default or breach under
this Agreement, in connection with a non-monetary default that is not a
Noncurable Default (provided, however, that if such non-monetary default cannot
reasonably be cured within such thirty (30) day period, and such defaulting
Member promptly commences the cure of such default and diligently pursues such
cure to completion, then such thirty (30) day period shall be extended to the
extent reasonably necessary, but in no event after the date that is ninety (90)
days after such written notice); and (3) no period at all for a Noncurable
Default. A "Noncurable Default" means any of the following: (a) a breach of
Section 6.1 or any other restriction upon transfer or hypothecation, and (b) a
material breach constituting fraud or willful misconduct.
"DEADLOCK" means the failure of the Members to unanimously approve
a Major Decision; provided, however, that no such Member shall declare a
Deadlock for thirty (30) calendar days following any such failure, during which
thirty (30) day period such Members shall discuss their respective reasons for
approving or disapproving the Major Decision at issue and their respective
recommendations (if any) for resolving the dispute. If, following the expiration
of said thirty (30) day period, the Members are still unable to unanimously
approve such Major Decision, then a Deadlock shall exist for purposes of Section
5.2. Notwithstanding the foregoing, no Deadlock shall exist for purposes of
Section 5.2, (i) when a Member desires approval (and any other such Member is
not willing to grant approval) to alter, amend, modify or otherwise change any
provision of this Agreement or any matter already specifically approved by the
Members in any then applicable Business Plan, Budget or otherwise, (ii) when a
Member fails to
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approve any assignment or transfer of all or any portion of a Member's interest,
or (iii) with respect to matters involving breaches of express duties or
obligations of any Member hereunder.
"DEVELOPMENT PLAN" means the preliminary construction plan,
budget, financing plan and development schedule that has been approved by all
the Members with respect to "Phase I" of the development of the Project and
which is attached hereto as EXHIBIT "B". Such preliminary construction plan,
budget, financing plan and development schedule, as the same may be updated and
amended from time to time as provided herein, are referred to herein as the
"Phase I Plans". As soon as practicable following the date hereof, Managing
Member shall prepare and submit to the Members for their review a preliminary
construction plan, budget, financing plan and development schedule with respect
to "Phase II" of the development of the Project. Such preliminary construction
plan, budget, financing plan and development schedule, as the same may be
updated and amended from time to time as provided herein, referred to herein as
the "Phase II Plans". The Phase II Plans may be implemented only upon the prior
written consent of the Members. The preliminary construction plan, budget,
financing plan and development schedule with respect to any additional phases of
the development of the Project (the "Post Phase II Plans") shall be prepared and
submitted by Managing Member to the Members for their review as soon as
practicable and the approval and implementation of any Post-Phase II Plan shall
be subject to identical terms and conditions as applied under this Agreement to
Phases I and II. The Phase I Plans, Phase II Plans and Post-Phase II Plans are
sometimes hereinafter individually and collectively referred to as the
"Development Plan".
"DISTRIBUTABLE CASH" means, for the applicable period, the
"Distributable Operating Cash Flow" and "Net Capital Proceeds" (each as defined
below) received by the Company during such period.
"DISTRIBUTABLE OPERATING CASH FLOW" for the applicable period
means the amount by which (1) the gross cash revenues and funds received from
Company operations during such period (excluding sale proceeds, financing
proceeds, condemnation proceeds [other than an award for a temporary taking], or
casualty insurance proceeds [other than the proceeds from rental income or
business interruption insurance], and funds received as capital contributions or
loans from any Member); exceed (2) the sum of (a) cash expenditures made by the
Company or which the Company is obligated to make for or during such period in
connection with the Company's operations or in connection with the Company
Property, including business taxes and real and personal property taxes and
assessments, insurance premiums, leasing commissions and fees, tenant
improvements and other capital costs, all expenditures made or required to be
made by the Project Manager under the Management Agreement, management fees
payable to Project Manager under the Management Agreement, and other operating
costs (except to the extent paid from any working capital reserve or other
reserves reasonably established by Managing Member and except to the extent
deducted in the calculation of Net Capital Proceeds), (b) all installments and
payments of principal and interest and other sums and amounts paid or payable
for or during such period on or in connection with any secured or unsecured
indebtedness of the Company, and (c) the establishment or additions to the
Working Capital Reserve and such other reserves as may be reasonably established
by Managing Member. If the amount described in Clause (2) above for the
applicable period exceeds the amount described in Clause (1) for such period,
then such excess shall be referred to herein as the "NEGATIVE CASH FLOW" for
such period. For purposes of determining Distributable Operating Cash Flow and
Distributable Cash allocable to any Company Year, the Members shall prorate the
revenues and expenses of the Company as of midnight of the last day of such
Company Year to determine whether such revenues
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and expenses (and accordingly Distributable Operating Cash Flow and
Distributable Cash) are attributable to such Company Year; for this purpose, any
Net Capital Proceeds shall be deemed to be attributable to the Company Year in
which the capital event giving rise to the same occurred.
"LEASE" means that certain Lease and Concession Agreement entered
into as of January 3, 1995, by and between Clark County, Nevada, and Golf
Centers of America, and assigned by an Assignment of Lease from Golf Centers of
America to the Company pursuant to Section 3.1B of the original Las Vegas Golf
Center, L.L.C. Agreement, and approved by the Clark County Board of
Commissioners as of December 17, 1996. Such Section 3.1B is intentionally
deleted from this First Amended and Restated Agreement as the prior assignment
of said lease is not material to the contribution of the current Members
"LIMITED LIABILITY COMPANY AGREEMENT" or this "AGREEMENT" means
this Agreement, as amended, modified or supplemented from time to time.
"MANAGEMENT AGREEMENT" means that certain agreement captioned
"MANAGEMENT AGREEMENT," dated as of the date hereof, by and between the Company,
as owner, and STPD, as manager. The following terms shall have the respective
meanings specified for the same in the Management Agreement: "Capital Budget"
and "Operating Budget".
"MANAGER OWNERSHIP/CONTROL REQUIREMENT" as of any particular date
means that Managing Member (1) is not then dead, insane, incapacitated or
subject to a Bankruptcy/Dissolution Event; (2) is actively involved in the
management and affairs of the Project.
"MANAGING MEMBER" means Stanton V. Abrams for STPD, subject to
Section 7.2.
"MATERIAL" means that as to "BUDGETS" there shall not be more than
a 15% deviation in the aggregate per Company Year.
"MEMBER" means Ranchito, STPD, and/or PF.
"NET CAPITAL PROCEEDS" means Net Financing Proceeds and Net Sale
Proceeds.
"NET FINANCING PROCEEDS" and "NET SALE PROCEEDS" mean,
respectively, the net proceeds from (1) any financing or refinancing of the
Company Property or any part thereof (other than proceeds from the Construction
Loan), and (2) any sale, disposition, taking or loss (including the proceeds
from any eminent domain proceeding or conveyance in lieu thereof [other than an
award for a temporary taking] or from casualty insurance [other than rental
income or business interruption insurance] or title insurance) of the Company
Property or any part thereof. In the computation of Net Financing Proceeds and
Net Sale Proceeds there shall be deducted the payment of all costs and other
expenses related thereto and approved by the Members and the satisfaction of any
debt being refinanced or discharged and any other debts or liabilities of the
Company for which the Members decide to use the same and the setting aside of
any reserves therefrom reasonably deemed proper by the Members.
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"PROFIT PERCENTAGES" means the following percentage for each
Member:
MEMBER PROFIT PERCENTAGE
------ -----------------
Ranchito 30%
STPD 21.5%
PF 48.5%
"PROJECT" means all of the assets, properties and business of
every kind, character, or description, whether tangible, intangible, real,
person, or mixed, and wherever located, comprising the golf driving range and
related facilities that the Company intends to plan, finance, lease, develop,
construct, manage, own, and operate on a site located in the City of Las Vegas,
State of Nevada.
"PROJECT MANAGER" means STPD.
"REQUIREMENTS" means this Agreement, the Business Plan (including
the Budgets) and the Business Agreements.
Section 1.7. TITLE TO PROPERTY. Title to the assets and property
of the Company shall be held in the name of the Company.
ARTICLE II
----------
CERTAIN INCORPORATED MATTERS
----------------------------
Section 2.1 TAX AND ACCOUNTING. Each and all of the provisions
of EXHIBIT "C" are incorporated herein and shall constitute part of this
Agreement. EXHIBIT "C" provides for, among other matters, the maintenance of
capital accounts, the allocation of profits and losses, and the maintenance of
books and records. The Company shall be operated as a partnership solely for
state and federal income tax purposes.
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ARTICLE III
-----------
CAPITALIZATION AND LOANS BY MEMBERS
-----------------------------------
Section 3.1 Intentionally Deleted.
Section 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS BY THE MEMBERS.
Subject to the limitations hereinafter set forth in this Section, each Member
shall contribute from time to time its Profit Percentage of anticipated Negative
Cash Flow and any "Financing Shortfall" (as defined below). No additional
capital contributions shall be required by any Member other than as expressly
provided in this Section 3.2.
A. Procedure.
---------
(1) DEPOSIT. On or before the first (1st) day of each
calendar month, each Member shall contribute to the Company by deposit into the
Operating Account the amount to be contributed by such Member specified in the
Contribution Request, if any, for such month (collectively in connection with a
Contribution Request, the "Subsequent Contribution"), subject to the terms and
conditions set forth below. Managing Member agrees to use any and all
contributions made in conformity with the Requirements (except as otherwise
agreed in writing by the Members).
(2) CONTRIBUTION REQUESTS. If Managing Member reasonably
anticipates that there will be Negative Cash Flow for any given calendar month
or that all or a portion of a Financing Shortfall must be funded during any such
calendar month, then at least ten (10) days prior to the first (1st) day of such
calendar month, Managing Member shall submit a written contribution request for
such month to the Members describing such Negative Cash Flow or Financing
Shortfall (as the case may be) and meeting the requirements of this Subsection
(2) ("Contribution Request"). Each Contribution Request shall (1) describe in
reasonable detail the anticipated Negative Cash Flow or Financing Shortfall for
such month with reference to the Budgets; (2) indicate the amounts expended by
the Company to date in connection with the Project in accordance with the
Budgets; (3) describe the portion of expenditures for such month anticipated to
be funded from available Company funds; (4) describe the portion of expenditures
for such month which is to be funded by contributions from the Members; and (5)
set forth each Member's required contribution. Managing Member may submit
Contribution Requests to the Members no more frequently than once each month
(except as provided in the last sentence of this Subsection), unless each Member
has given its prior written consent in each instance. The amounts contributed by
each Member pursuant to this Section are referred to herein as such Member's
"Additional Capital Contributions".
(3) CONSTRUCTION FINANCING. The Members anticipate that
the Company will finance the development and construction of the improvements
contemplated by the Development Plan through borrowings from an institutional
lender or lenders in the maximum amount that may be available from time to time
(the "Construction Loan"). The Construction Loan may be secured by the Lease and
such other assets of the Company specifically related to the Project as the
lender may reasonably require; provided, however, that any such Construction
Loan shall in all events (i) be non-recourse as to the Members and their
respective Affiliates, unless each Member or Affiliate thereof with respect to
whom it shall be on a recourse basis gives his or its
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prior written consent, and (ii) be for such term and have such other provisions
as are set forth on EXHIBIT "E" attached hereto. To the extent the Company is
unsuccessful in financing the full amount contemplated by the Development Plan,
any such shortfall (a "Financing Shortfall") shall be contributed by the Members
as provided in this Section 3.2.
B LIMITATIONS UPON CONTRIBUTION OBLIGATION.
Notwithstanding anything to the contrary in this Agreement, in no event shall
the total contributions of the Members under this Section 3.2 exceed Two Hundred
and Fifty Thousand Dollars ($250,000) in the aggregate (without taking into
account any distributions made or to be made pursuant to Article IV of this
Agreement), without the prior written consent of all Members.
Section 3.3 DEFAULT; REMEDIES. Upon the failure of a Member (a
"Defaulting Member") to make any capital contribution required by 3.2 (the
portion thereof not contributed by such Defaulting Member being referred to
herein as the "Deficiency"), then each of the other Members (individually, a
"Non-Defaulting Member") who is not then in default under Article III may, in
its sole and absolute discretion, contribute all or any portion of such
Deficiency, within five (5) days after the date the Deficiency was required to
be contributed, and any contributions made by a Non- Defaulting Member pursuant
to this sentence shall be referred to as a "Deficiency Contribution." However,
if there is more than one Non-Defaulting Member desiring to make a Deficiency
Contribution, then they shall share in such Deficiency Contribution on a pro
rata basis (based upon the relative proportions of their then respective Profit
Percentages) or in such other proportions as they may agree. Defaulting Member
shall not receive any distribution of Distributable Cash under Article IV until
such time that Defaulting Member's Deficiency amount has been fully paid plus
15% interest per annum, compounded quarterly to the Non-Defaulting Member who
has made a Deficiency Contribution on behalf of the Defaulting Member. Such
payment may be made by Defaulting Member by credit of Distributable Cash as
described above, or by outside source. If there is more than one Non-Defaulting
Member having made a Deficiency Contribution, then they shall share in such
distribution of Defaulting Member's credit of Distributable Cash on a pro rata
basis according to their Profit Percentage. The exercise by the Company and/or
the Members of the rights set forth in this Section 3.3 shall preclude the
exercise of any other right or remedy of the Company or any Member under this
Agreement, at law or in equity, against any Defaulting Investor (or any
"Transferee" thereof (as defined below), as the case may be) for failure to make
any required capital contribution.
Section 3.4 MEMBER LOANS. Except as otherwise expressly provided
under this Agreement, any Member making a loan to the Company shall be entitled
to interest thereon at the Applicable Rate, compounded monthly, and the same,
together with interest as aforesaid, shall be repaid before any distribution
shall be made under Article IV hereof. However, except as otherwise expressly
provided under this Agreement, no such loan to the Company shall be made without
the prior written consent of the Members.
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<PAGE> 14
ARTICLE IV
----------
DISTRIBUTIONS
-------------
Section 4.1 DISTRIBUTIONS. Subject to Sections 3.3 and 3.4, each
distribution of Distributable Cash for each Company Year shall be made as
follows:
A. FIRST LEVEL. All such Distributable Cash shall first
be distributed, in preference and priority to any other distribution of such
Distributable Cash, to the Memberrs pro rata and in proportion to their
respective Adjusted Deficiency Contributions to the extent thereof.
B. SECOND LEVEL. The balance, if any, of such
Distributable Cash remaining after the distributions pursuant to Subsection 4.1A
above shall be distributed to the Members pro rata and in proportion to their
respective Adjusted Additional Capital Contributions to the extent thereof.
C. THIRD LEVEL. The balance, if any, of such
Distributable Cash remaining after the distributions pursuant to Subsections
4.1A and 4.1B above shall be distributed to the Members pro rata and in
proportion to their respective Profit Percentage.
D. INSTALLMENT SALES. The cash portion of the sale
price of the Project or any part thereof, together with all installments and
payments of cash (including interest) of or against any deferred portion of such
purchase price, shall be distributed in accordance with the levels provided
above, with each person or entity entitled to payment under a level receiving
the entire amount of such cash until the sum payable under such level shall have
been discharged in cash.
Section 4.2 TIMING OF DISTRIBUTIONS. Distributions of
Distributable Cash shall be made on a quarterly basis concurrently with the date
the "Periodic Report" (as defined below) for the immediately preceding quarter
is required to be delivered pursuant to this Agreement, unless otherwise agreed
by the Members. Each Periodic Report for such last quarter shall include a
calculation by Managing Member of the amount of Distributable Cash for such
quarter.
Section 4.3 DISTRIBUTIONS OF CAPITAL. Except as expressly
provided in this Agreement or as otherwise agreed by the Members, no Member
shall be entitled to withdraw capital or to receive distributions of or against
capital without the prior written consent of, and upon the terms and conditions
agreed upon by, the Members. Each Member shall look solely to the assets of the
Company for return of such Member's capital contributions.
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<PAGE> 15
ARTICLE V
---------
POWERS, RIGHTS AND DUTIES OF MEMBERS
------------------------------------
Section 5.1 AUTHORITY OF MEMBERS. Management of the Company
shall be vested in Managing Member and the Members in accordance with this
Agreement.
A. AUTHORITY OF MANAGING MEMBER. Except as otherwise
provided in this Agreement, Managing Member shall have full power and authority
to manage the operations and affairs of the Company and to act for and to bind
the Company to the extent provided by the Act, and shall have the duty and
authority, on behalf of the Company, to do all things appropriate to the
accomplishment of the purposes of the Company, including the following (but all
subject to and in accordance with the Business Plan):
(1) Filing appropriate organizational documents
for the Company with the appropriate governmental authorities.
(2) Operating the Company Property and entering
into leases and other agreements and undertakings pertaining to the operation of
the Company Property.
(3) Employing consultants, attorneys, accountants
and agents.
(4) Executing contracts, agreements, deeds and
other writings.
(5) In general, managing the business and affairs
of the Company and taking such actions as may be necessary or appropriate
thereto.
B. MAJOR DECISIONS. Managing Member shall fully consult
with the Members at all times to the extent reasonably practicable, and each of
the following matters ("Major Decisions") must be previously approved in writing
by the Members, however, such approval shall not be unreasonably withheld:
(1) The adoption of, and any material supplement
to, revision of, or deviation from the Business Plan.
(2) Without limitation on Subsection B(1) above,
the adoption of, and any material supplement to, revision of, or deviation from
any of the Budgets (subject to Subsection (3) below). Managing Member agrees to
submit to the members, at least thirty (30) days prior to each calendar year
during the term hereof, the proposed Operating Budget and Capital Budget for
such calendar year, which shall be in the same form as the forms of the initial
Operating Budget and Capital Budget attached as Exhibit "A" to the Management
Agreement, and which proposed Operating Budget and Capital Budget shall be
subject to the prior written approval of the Members, which shall not be
unreasonably withheld. If the Operating Budget or Capital Budget is not approved
in writing by the Members for any particular year, then until such Budgets are
approved in writing by the Members, Managing Member shall obtain the Members'
prior written approval of all capital expenditures (other than capital
expenditures in accordance with the prior year's Budgets which were not expended
in the prior year but which are required to be expended by the Company pursuant
to authorized Company contracts), and Managing Member shall to the extent
practicable operate within the prior year's approved Operating Budget.
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<PAGE> 16
(3) Any deviation from or expenditure
inconsistent with any of the Budgets (or the entry into any agreement therefor).
Notwithstanding the foregoing, the Members' consent to an expenditure payable to
a third party exceeding the amount specified for such expenditure in any
applicable Development Plan, Operating Budget and Capital Budget shall not be
required in any of the following circumstances: (a) Managing Member, in his
reasonable judgment, deems these to be an emergency requiring such expenditures
to effectuate immediate action necessary for the protection of the Company
Property or persons; (b) such expenditure would not cause the aggregate amount
of the expenses (excluding the expenses described in Clause (c) below) within
the applicable Budget to exceed one hundred fifteen percent (115%) of the entire
amount of budgeted expenses (excluding the expenses described in Clause (c)
below) in the applicable Budget (taking into account the amounts expended to
date and reasonably anticipated expenses); or (c) expenditures for debt service,
real property taxes and assessments, utilities and insurance (to the extent
required to be carried under the Management Agreement) for the Company.
(4) Any material activity or expenditure which is
materially inconsistent with the Business Plan.
(5) Any material modification or termination of
the Management Agreement.
(6) Any transaction or matter that is not in the
ordinary course of the Company's business relating to the Project.
(7) Without limitation on Subsection B(6) above,
taking any action with respect to any new projects or acquisition of any
property by the Company other than the Project.
(8) Without limitation on Subsection B(6) above,
any sale or financing of the Project and any other capital transaction involving
more than Five Hundred Thousand Dollars ($500,000) in gross value, and the terms
of such sale or financing.
(9) Any compensation or reimbursement to, or
other transaction with any Affiliate of Managing Member.
(10) The entry into or any material concessions by
or restrictions on the Company or the Project in connection with obtaining
zoning, variances, map approval, entitlements, permits or other governmental
approvals.
(11) Any other decision or action which requires
the approval of the Members as provided elsewhere in this Agreement.
Any approval by the members pursuant to this Subsection B must be in writing;
provided, however, that Managing Member may give the Members written notice of
any proposed Major Decision, and if a Member does not object to the same or
request further information with respect thereto within fifteen (15) days after
receipt of such notice, then such Member shall be deemed to have approved the
proposed Major Decision.
C. PROHIBITED ACTS. No Member shall have any authority
to:
(1) Unilaterally amend this Agreement.
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<PAGE> 17
(2) Extend the term of the Company.
(3) Do any act in contravention of this Agreement
or which would make it impossible to carry on the business of the Company.
(4) Possess any Company Property or assign the
rights of the Company in specific Company Property for other than a Company
purpose.
(5) Admit a person or entity as a Member except
as provided in this Agreement.
(6) Permit the Company to merge or consolidate
with any other entity.
(7) Engage in any transaction with itself or an
Affiliate, even if approved by the Members, except upon terms which are fair as
respects the Company and competitive with the terms available to the Company
from non-Affiliates.
(8) Make, execute or deliver on behalf of the
Company any assignment for the benefit of creditors or any guarantee, indemnity
bond or surety bond, other than reasonable and customary bonds and assurances to
governmental agencies in connection with the obtaining of entitlements and other
governmental approvals or to lenders in connection with development or
construction financing; or obligate the Company or any Member as a surety,
guarantor or accommodation party to any obligation.
(9) Lend funds belonging to the Company or any
Member to any Member or third party or extend to any person, firm or
corporation, credit on behalf of the Company.
(10) Borrow on behalf of the Company, or pledge,
mortgage or encumber, or grant of a security interest in, any Company Property,
without the unanimous consent of the Members.
(11) Confess any judgment on behalf of the
Company.
(12) Distribute any property in kind to any
Member.
(13) Take any action outside the purposes
specified in Section 1.4.
D. REQUIRED SIGNATURES. Each Member's signature (or a
written resolution or written consent granting Managing Member sole authority to
sign) shall be required for all contracts (including documents related to the
sale, financing or transfer of any portion of the Project) entered into by or on
behalf of the Company; provided, however, that only Managing Member's signature
will be required for contracts and agreements that are permitted to be entered
into without the consent of the Members under Section 5.1 B(5).
E. AFFILIATE TRANSACTIONS. Notwithstanding anything to
the contrary herein, any decision by the Company to terminate or exercise any
right (including any right to approve or any right to receive documents) or
remedy under any contract between the Company and the Project Manager or an
Affiliate of the Project Manager may be made jointly by Ranchito and PF. If a
contract with Project Manager or such
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<PAGE> 18
Affiliate is terminated, any substitute contract shall be with a third party
reasonably satisfactory to the Members (including STPD). In addition,
notwithstanding anything to the contrary herein (including any loss of voting
rights), any act or other transaction between the Company on the one hand, and
any Member or its Affiliates on the other hand, shall require the prior written
approval of the non-interested Members.
F. DETERMINATIONS BY THE MEMBERS. Except as expressly
provided herein, any approval, consent, judgment, option, rights or other
determination to be made by a Member shall be in the sole and absolute
discretion of such Member. Any approval, consent, judgment, or other
determination to be made by the Members under and in connection with this
Agreement shall be made jointly by the Members and shall therefore require their
mutual written agreement.
Section 5.2 UNILATERAL SALE RIGHTS UPON DEADLOCK. In the event a
Deadlock occurs at any time following the third (3rd) anniversary of the date of
this Agreement, any Member, shall have the right to unilaterally (without the
consent of any other Member(s)) propose that the Company sell the Project (and
all matters incidental thereto), subject to compliance with the provisions of
this Section 5.2. This Section shall not apply to a sale which the Members
jointly agree in writing to pursue.
A. SALE TERMS. Except as otherwise approved by the
Members, the purchase price for the Project or the portion thereof to be sold or
disposed of shall be payable (1) entirely in cash; or (2) by taking title
subject to or assuming existing indebtedness; or (3) both. In addition, the
terms of the sale of the Project (other than the purchase price) shall be
subject to the reasonable approval of the Members.
B. SALE TO AFFILIATE. No sale of the Project shall be
made to an Affiliate of a Member, without the prior written approval of the
other Members.
C. RIGHT OF FIRST OPPORTUNITY. Prior to consummating a
proposed sale under this Section 5.2, if a Member desires to sell, then that
"Selling Member" shall provide the "Non-Selling Members" with a right to
purchase the Selling Member's interest in the Company on and subject to the
terms and conditions hereinafter stated:
(1) Selling Member shall give written notice (the
"Proposed Sale Notice") to Non-Selling Members setting forth the "Basic Sale
Terms" (as hereinafter defined) of such proposed sale. As used herein, "Basic
Sale Terms" means a good faith offer the Selling Members would be willing to
accept from an unrelated third party containing the proposed purchase price, the
amount of cash payable to the Company by the purchaser at the closing, any other
material economic terms of the proposed sale, and the estimated closing date of
the transaction. The Basic Sale Terms shall otherwise comply with the
requirements of Subsection A above.
(2) Non-Selling Members shall have fifteen (15)
days (the "Election Period") after the giving of the Proposed Sale Notice to
elect to purchase Selling Member's interest in the Company (such election to be
made, if at all, by giving written notice thereof to Selling Member within the
Election Period). The purchase price of Selling Member's Company interest and
the terms of such purchase will be such as will produce for Selling Member the
same consideration and security at the same time or times as Selling Member
would have received if the proposed sale of the Project by the Company had been
consummated (and no sales commissions had been paid by the Company [i.e.,
without any deduction for a sales commission]) and the Company had been
dissolved and wound up following such sale and the proceeds of such sale and
other
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<PAGE> 19
assets of the Company had been distributed to the Members in accordance with the
provisions of this Agreement. In addition, Selling Member shall be required to
pay any sales commissions to which any broker or brokers engaged by Selling
Member (on behalf of the Company for the sale of the Property) are entitled for
a sale of Selling Member's Company interest pursuant to this Section 5.2.
(3) If Non-Selling Member fails to make the
election to purchase, then Selling Member may close a sale at any time or times
during the one hundred eighty (180) day period (the "Closing Period") that
commences on the first (1st) day after the Election Period, for a purchase price
and on terms which are at least as favorable to the Company as the Basic Sale
Terms contained in the Proposed Sale Notice; but if a sale for such purchase
price and on such terms is not consummated within such period, then the rights
of Non-Selling Members to notice and purchase as aforesaid will continue as to
any sale occurring subsequent to such period. A sale shall be deemed "at least
as favorable" as that set forth in the Proposed Sale Notice if the net purchase
price (after the payment by the Company of all of its expenses associated with
the sale, including any real estate commissions) shall be at least as high as
that set forth in the Proposed Sale Notice (after deduction for the expenses
therein set forth).
(4) If Non-Selling Member makes the election to
purchase, then such election shall be deemed to create a contract between
Non-Selling Member and Selling Member pursuant to which Non-Selling Member
agrees to acquire the interest of Selling Member in the Company on the terms
specified in Clause (2) above, except that (a) within ten (10) days after the
Election Period, Non-Selling Member shall deliver to Selling Member five percent
(5%) of the purchase price payable under Clause (2) above as a deposit which is
non-refundable and liquidated damages (but credited towards such purchase price
if the closing of such sale occurs) unless the closing of such sale fails to
occur due to the Selling Member's default, and (b) the closing date for such
sale shall be the date which is sixty (60) days after the making of such
election. If Non-Selling Member makes the election to purchase but the closing
fails to occur due to Non-Selling Member's default (or if Non-Selling Member
fails to make the five percent (5%) deposit described above within the ten (10)
day period described above), then without limitation on the Selling Member's
other rights and remedies (including specific performance and damages),
Non-Selling Member's rights under this Subsection 5.2 will be permanently lost.
Section 5.3 Certain Obligations of Managing Member
--------------------------------------
A. GENERALLY. Managing Member shall fully and
faithfully discharge its obligations and responsibilities, shall devote such
time and attention to Company affairs as may be reasonably necessary for the
proper management and supervision of the Company's business and the discharge of
its duties under this Agreement. Managing Member shall diligently perform its
obligations hereunder relative to the entitlement, development, financing,
operation, marketing and sale of the Project in accordance with its reasonable
business judgment, and shall make its personnel and the personnel of its
Affiliates available to the Company to the extent necessary in order that such
obligations may be adequately discharged.
B. PROJECT ADMINISTRATION. Without limitation on the
foregoing or other provisions of this Article V, Managing Member shall monitor
the Project within the time schedules set forth in, and in full compliance with,
all Requirements, and shall, at all times, exercise good faith and shall use
diligent and professional efforts to promote and protect the best interests of
the Project and the Company (without consideration being made to the separate
interests of any particular Member). It is understood that certain
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<PAGE> 20
Project responsibilities have been delegated to STPD under the Management
Agreement and, notwithstanding anything contained herein to the contrary,
Managing Member shall not be in default hereunder because of STPD's default or
failure to perform under the Management Agreement so long as Managing Member has
taken all reasonable steps that a prudent supervising owner would take to
prevent such default, to minimize its adverse effects and to cause it to be
promptly cured. Without limiting the generality of the foregoing, Managing
Member shall have the following duties and obligations:
(1) Except to the extent delegated to STPD under the
Management Agreement (in which event Managing Member shall monitor the same),
obtain the necessary entitlements for the Project, including negotiation with
governmental authorities to obtain any agreements, governmental approvals,
building permits and other permits and licenses as are necessary for the
Project.
(2) Exerting diligent and professional efforts within
the limits of its authority and duties hereunder and monitoring the Project as a
whole so that the same is completed in accordance with the time schedule set
forth in the Business Plan.
(3) Monitoring and enforcing STPD's activities and
performance under or in connection with the Management Agreement, including:
(a) Monitoring on a regular and continuing basis
the cost of materials, labor, equipment and other items used in the planning,
development, construction and marketing of the Project, and, where increases in
costs will cause any Budget for a particular cost item to be exceeded, make
recommendations to the Company as to the most appropriate method of limiting the
effect of such cost increases.
(b) Procurement of insurance for the Company and
the Property through an agent acceptable to the Members, including casualty,
public liability, workers' compensation and all other insurance required by law
or under any Business Agreement, and such other insurance as may be required by
the Members, with amounts and coverages approved by the Members.
(c) In the event the Management Agreement is
terminated, satisfying to the best of Managing Member's ability the obligations
of the "Manager" under the Management Agreement until a replacement Manager is
hired by the Company.
(4) Direct coordination with and supervision of all
litigation and other legal matters, and the preparation of all legal
documentation, including sale contracts, and all other necessary or appropriate
documents and instruments.
(5) Payment or contestation of all real and personal
property taxes and assessments for the Project.
(6) The use of diligent and professional efforts to
comply with all Business Agreements in connection with the performance of
Managing Member's duties and obligations under this Agreement.
(7) Conducting meetings of the Company, as may be
reasonably required by the Members, for the purpose of reviewing the progress of
the Project.
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(8) Recommending, and if approved in writing by the
Members, seeking and facilitating debt and equity financing (if necessary for
operating deficits, construction financing and permanent financing) in
accordance with terms approved by the Members.
(9) Overseeing tax issues for partnership (including
serving as "tax matters partner," preparation of partnership returns, state
business tax filings, franchise filings).
(10) Preparing such reports as the Members may reasonably
request and responding to Member inquiries on operations and performance.
C. Books and Records. Managing Member shall cause to be kept
proper and complete records and books of account in which shall be entered fully
and accurately all transactions and other matters relating to the Company's
business as are usually entered into such records and books of account kept for
business of a like character. The Company's records and books shall be kept on a
accrual basis, except as the Members may otherwise determine. At all times, such
books and records shall be available at the Company's principal place of
business for inspection, examination, photocopying or audit by any Member, or
the duly authorized representative thereof, during reasonable business hours and
upon reasonable advance notice.
D Reports. Subject to Section 5.3B, Managing Member shall
provide the Members with reports as follows:
(1) An annual report of all income and all expenses
within one hundred twenty) (120) days of the end of the calendar year, audited
by an independent nationally recognized accounting firm reasonably satisfactory
to Investor.
(2) Copies of the Company's annual federal and state
income tax returns together with a copy of that certain IRS form commonly
referred to as a "Schedule K-1," plus a copy of its California and Delaware
equivalents, within ninety (90) days following the end of each calendar year.
(3) Copies of all reports received from STPD under the
Management Agreement promptly after the same are received by Managing Member.
(4) A quarterly report for each calendar quarter,
certified by Managing Member to be true, accurate and complete in all material
respects, and submitted to the Members within twenty (20) days of the end of
each such calendar quarter (the "Periodic Report"). Each Periodic Report shall
be in the form approved by the Members, and shall include the following:
(a) An operating statement and report of
financial condition of the Company for such period.
(b) A Contribution Request containing Managing
Member's estimate of the amount needed to be contributed by the Members pursuant
to Article III for the succeeding quarter.
(c) A variance report, comparing actual costs and
expenses and revenues with budgeted costs and expenses and revenues on a
category basis along with a reasonably detailed explanation of all material or
significant variances and all changes in any time schedules relating thereto.
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(d) Quarterly reports, within twenty (20) days
after the end of each quarter, which shall describe in reasonable detail the
daily occupancy and room rates (and average daily room rate) for such quarter,
which such other detail as may be reasonably requested by the Members.
(e) At least sixty (60) days prior to each
Company Year of the Company, proposed annual updates for the Members' approval
of the Business Plan including the Budgets).
(f) If applicable, a calculation by Managing
Member of the amount of Distributable Cash for the preceding and following
calendar quarter and a calculation by Managing Member of the respective
distributions if any, to Members pursuant to Article IV.
E. WORKING CAPITAL RESERVE AND OTHER RESERVES. In
addition to the FF&E and working capital reserves (collectively, the "STPD
Reserves") established by STPD pursuant to the Management Agreement, Managing
Member, in its reasonable discretion, shall establish and maintain such other
reasonable reserves for future costs, expenses and payments or for substantial
costs (including capital repairs, improvements and replacements), to the extent
the payment of such costs is not contemplated by the STPD Reserves, including a
working capital reserve (the "Working Capital Reserve") to pay third party costs
of the Company incurred in accordance with this Agreement (such as attorneys'
fees, business taxes and licensing expenses and consultant fees).
Section 5.4 OTHER ACTIVITIES. Except as otherwise provided in
this Agreement or in any agreement among the Members: (1) each Member recognizes
that each other Member has an interest in investing in, developing,
constructing, operating, transferring, leasing and otherwise using real property
and interests therein for profit, and engaging in any and all activities related
or incidental thereto and that each will make other investments consistent with
such interests; (2) neither the Company nor any Member shall have any right by
virtue of this Agreement or the Company relationship created hereby in or to any
other ventures or activities in which any Member is involved or to the income or
proceeds derived therefrom; (3) the pursuit of other ventures and activities by
any Member, even if competitive with the business of the Company (except as to
the Expansion Opportunity described below), is hereby consented to by the other
Members and shall not be deemed wrongful or improper; (4) no Member and no
Affiliate of a Member shall be obligated to present any particular investment
opportunity to the Company, even if such opportunity is of a character which, if
presented to the Company, could be taken by the Company; and (5) each Member and
each Affiliate of a Member shall have the right to take for its own account, or
to recommend to others, any such particular investment opportunity.
Notwithstanding the provisions of this Section 5.4, Managing Member covenants
and agrees that in the event the Lessor under the Lease is willing to lease
other real property which is adjacent to the Project for either the expansion of
the golf facilities comprising the Project or the development and construction
of a golf course (either 9-hole or 18-hole) or any other improvements (any such
opportunity being sometimes hereinafter referred to as an "Expansion
Opportunity"), Managing Member shall not conduct substantive negotiations with
any potential equity partner with respect to such Expansion Opportunity (i)
without first giving the Members written notice (a "First Negotiation Notice")
identifying the Expansion Opportunity and describing in then available
reasonable detail the nature, terms and conditions of the proposed Expansion
Opportunity, and (ii) without giving the Members a period of thirty (30)
calendar days following their receipt of the First Negotiation Notice (the
"First Negotiation Period") within which to negotiate and attempt to reach
agreement among themselves regarding the Company's participation in such
Expansion Opportunity. Until
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<PAGE> 23
the earlier of (i) the expiration of the First Negotiation Period, or (ii) the
unanimous waiver by the Members of their rights hereunder with respect to any
such Expansion Opportunity (the "First Negotiation Waiver"), the Members shall
in good faith negotiate regarding the possibility of the Company participating
in the Expansion Opportunity. Upon the expiration of the First Negotiation
Period or the earlier delivery of a First Negotiation Waiver any and all rights
of the Members under this Section 5.4 with respect to any such Expansion
Opportunity shall terminate and, thereafter, any Member shall be entitled to
participate with any other potential equity partner in the Expansion Opportunity
which was the subject of the First Negotiation Notice.
Section 5.5 LIABILITY OF MEMBERS. Subject to the provisions of
any other agreement to which the Members are parties, and except for the
obligations to a Member or Members or the Company imposed under such other
agreement, no Member shall be liable, responsible or accountable in damages or
otherwise to the Company or the other Member for any action taken or failure to
act by such Member in its business judgment on behalf of the Company within the
scope of the authority conferred on it by this Agreement unless such action or
omission constitutes a breach or default under this Agreement, a breach of
fiduciary duty, gross negligence or willful misconduct. Unless otherwise agreed
upon in writing by the Members or provided by the Act: (1) no Member shall be
liable for the debts, liabilities, contracts or any other obligations of the
Company, (2) the Members shall be liable to make contributions only to the
extent required under Article III, (3) no Member shall be required to make any
other contributions or to loan any amounts to the Company, (4) no Member shall
have personal liability for the repayment of the contributions or loans of any
other Member. Except as expressly provided in the Act, nothing in this Agreement
shall confer any rights or remedies under or by reason of this Agreement on any
person or entity other than the Members and their respective successors and
assigns, nor shall anything in this Agreement relieve or discharge the
obligation or liability of any third person to any party to this Agreement, nor
shall any provision of this Agreement give any third person any right of
subrogation or action over or against any party to this Agreement. Without
limitation on the foregoing, no third party shall have any right to enforce any
contribution obligation on a Member, except as may be required by the Act.
Section 5.6 INDEMNITY OF MEMBERS. The Company shall indemnify,
defend and hold each Member harmless from and against any Claims suffered or
sustained by it by reason of any acts, omissions or alleged acts or omissions by
such Member on behalf of the Company within the scope of authority conferred on
it by this Agreement, including any judgment, award, settlement, reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim; provided that
the acts or omissions or alleged acts or omissions upon which such actual or
threatened action, proceeding or claim is based were in good faith in accordance
with its business judgment and did not constitute a breach or default under this
Agreement, the Management Agreement or any Collateral Agreement, a breach of
fiduciary duty, gross negligence or willful misconduct.
Section 5.7 INDEMNIFICATION BY MEMBERS. Each Member shall
indemnify, protect, defend and hold the Company, each other Member, the Company
Property and the Project harmless from and against any and all Claims suffered
or sustained by it by reason of any act or omission constituting (a) a breach of
any representation or warranty by such Member or any Affiliate under this
Agreement; (b) any other breach or default by such Member or any Affiliate under
this Agreement; or (c) a breach of fiduciary duty, gross negligence or willful
misconduct by such Member or any Affiliate.
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<PAGE> 24
Section 5.8 ADDITIONAL MEMBERS. Except as otherwise specifically
provided in Article VI, no person or entity shall become an additional member
without the prior written consent of the Members. In the event such consent is
granted, the existing Members and such new Member shall execute such documents
as may be reasonably required by the existing Members to effect such admission,
including, without limitation an amendment to this Agreement.
Section 5.9 COMPANY ACCOUNTS. All funds of the Company shall be
deposited by Managing Member into a federally insured operating account
("Operating Account"). In addition, Managing Member shall transfer portions of
the balance of the Operating Account which are not immediately needed to pay for
Company operations from time to time to a federally insured money market account
in accordance with sound cash management principles ("Money Market Account").
The Operating Account and Money Market Account (collectively, the "Accounts")
shall be maintained in the name of the Company with a money center financial
institution approved by the Members. The funds within the Accounts shall be
segregated from, and not commingled with any accounts of any Member or Affiliate
thereof, or any other accounts that the Members may hereafter establish for the
Company from time to time. The investment of the funds within the Accounts shall
be directed by Managing Member, subject to the approval by the Members.
Withdrawals from the Accounts shall be made upon such signature or signatures as
Managing Member may designate, and shall be made only in connection with
expenses related to the Company Property which are in conformance with the
Requirements.
Section 5.10 COMPENSATION OF MANAGING MEMBER. Managing Member
shall not receive any fee or other compensation in connection with the
performance of its obligations under this Agreement except as otherwise set
forth in any applicable Budget.
ARTICLE VI
----------
TRANSFER OF COMPANY INTERESTS
-----------------------------
Section 6.1 Restrictions on Transfer
------------------------
A. Except as otherwise provided herein, no sale,
exchange, delivery, assignment, transfer, disposal, encumbrance, pledge or
hypothecation, whether voluntary, involuntary, by operation of law, or resulting
from death, disability or otherwise (a "Transfer") shall be made by a Member of
the whole or any part of its interest in the Company (including its interest in
the capital or profits of the Company) without the prior written consent of the
Members. For all purposes of this Agreement, an involuntary Transfer shall
include the entry of a final order of a court in a divorce proceeding that is
not subject to appeal, directing transfer of an interest in the Company, or any
other Transfer occasioned by a separation agreement or a divorce proceeding that
is not subject to appeal.
B. No Transfer in violation of the provisions hereof
shall be valid or effective for any purpose, and no consent to one or more of
the same shall be deemed consent to any other of the same.
C. Notwithstanding anything contained in this Article
VI to the contrary, the following Transfers of all or any part of a Member's
interest in the Company, directly or indirectly, voluntarily or involuntarily,
to any of the following (collectively,
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<PAGE> 25
"Permitted Transferees") shall not be prohibited or restricted by the
provisions of Section 6.1A:
(1) Any Transfer of all or any portion of an
interest in the Company to any other Member;
(2) Any Transfer of all or any portion of an
interest in the Company by any individual Member to a corporation, partnership,
limited liability company or other entity one hundred percent (100%) owned and
controlled, directly or indirectly, by such Member;
(3) Any Transfer of all or any portion of an
interest in the Company by any individual Member to an intervivos trust
established for the exclusive benefit of such Member, his spouse, lineal
descendants and/or lineal ancestors, provided such Member is a trustee thereof
with the power to make all decisions on behalf of said trust;
(4) In the event of the death or incapacity of an
individual Member, any Transfer to such Member's spouse, lineal descendants
and/or lineal ancestors, or to a testamentary trust established for the benefit
of such persons;
Any such Permitted Transferee shall receive and hold
the interest being transferred subject to the terms of this Agreement and to the
obligations of the transferor Member, and there shall be no further transfer of
such interest except to a trust, person or entity to whom such Permitted
Transferee could have transferred his or her interest in the Company in
accordance with this Section 6.1C had such Permitted Transferee originally been
named as a Member hereunder, or in accordance with the other terms of this
Agreement.
Section 6.2 EFFECT OF ASSIGNMENT; DOCUMENTS. In the event of any
Transfer permitted hereunder, subject to Article VIII, the Company shall not be
terminated but instead shall continue as before, with, however, the addition or
substitution of such new Member. No such Transfer shall relieve the assignor
from any of its obligations under this Agreement without the prior written
consent of the other Members (which consent shall not be unreasonably withheld
as to obligations assumed by an assignee provided, among other matters, the
assignment is permitted hereunder and the other Members are reasonably satisfied
that the assignee is sufficiently creditworthy to timely satisfy such
obligations). Notwithstanding the foregoing, as a condition to any sale or
assignment by a Member, the transferee or assignee must execute and deliver to
the other Members an assumption (in form reasonably satisfactory to the other
Members) of all the obligations of the assignee under this Agreement arising
from and after the date of such assignment. If any Transfer is made in violation
of this Article VI, the transferee shall have no right to become a Member and
shall have no right to participate in the management and affairs of the Company.
The transferee in such case shall be entitled only to receive the share of the
distributions payable to it under Article IV to which the transferring Member
would have been entitled.
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ARTICLE VII
-----------
CERTAIN REMEDIES
----------------
Section 7.1 Security Agreement
------------------
A. ASSIGNMENT. Each Member shall and does hereby assign
and transfer to the Company and the other Members, all of its or his right,
title and interest in and claims against the Company (or any successor thereto)
now or at any time or times hereafter held, including, its interest in the
capital and the profits and losses of the Company.
B. OBLIGATIONS SECURED. The property and interests
assigned and transferred as aforesaid by each Member shall constitute and shall
be held as collateral security for each and all of the obligations of such
Member, and such Member hereby grants to the Company and each other Member a
security interest in the property and interests assigned and transferred as
aforesaid for such purposes (and hereby waives any guarantor or suretyship
defense that may otherwise apply with respect thereto).
C. REMEDIES. Subject to the last sentence of Section
3.3, in the event a Member shall breach or default in, or fail to comply with,
any of its obligations secured hereby and such breach shall continue past the
expiration of the Cure Period, then the Company and the other Members, or any of
them, in addition to its or their other rights and remedies (including those
provided by law and those provided by any other agreement or security
agreement), may (1) pursue the remedies against the property and interests
transferred and assigned hereunder available under the applicable provisions of
law, including the applicable provisions of any state commercial code, and (2)
cause to be paid to it or them any sum payable on account of or with respect to
the property and interests assigned as security as aforesaid (including any
distribution with respect to a Company interest) and apply such sum to the
amount to which the Company and such other Member, or any of them, are or become
entitled with respect to the obligation or obligations secured hereunder.
Notwithstanding the foregoing, if Managing Member is entitled to and timely
delivers an "Arbitration Notice" (as defined below) pursuant to Section 7.2
below, then the Cure Period (or any period that the Members may take action
under this Section against Managing Member by reason of a Noncurable Default)
shall be tolled as and to the extent provided in Section 7.2B below.
(1) Any foreclosure of a Member's interest
pursuant to this Section may, at the election of such foreclosing party, be made
subject to this security agreement as to any future obligations and liabilities
of such foreclosed interest under this Agreement (with the result that the
security agreement under this Section 7.1 shall not be terminated by a
foreclosure [as to future obligations and liabilities] and therefore the Company
and the other Member may make multiple foreclosures of each Member's interest in
the Company).
(2) Each Member shall execute and cause to be
filed such financing statements as the Company or the other Member shall from
time to time reasonably request to perfect or maintain the perfection of the
security interests herein granted to the Company or such other Member hereunder.
(3) Each Member shall have priority to the
Company with respect to the rights assigned hereunder.
(4) Notwithstanding anything to the contrary
herein, the
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<PAGE> 27
foreclosing party shall have the right to assign its security interest to an
Affiliate in order to avoid a dissolution of the Company in connection with a
foreclosure under this Section.
Section 7.2 Termination of Management Rights
--------------------------------
A. TERMINATION NOTICE. The Members may deliver a
termination notice to STPD ("Termination Notice") removing it as Managing Member
of the Company upon the occurrence of any of the following events:
(1) Any act of fraud, dishonesty or
misappropriation of Company assets by STPD.
(2) Any material breach of this Agreement
(including the failure to timely make a contribution under Article III or a
breach of Article VI) by STPD which is not cured within the applicable Cure
Period.
(3) The failure by STPD to provide reasonably
effective management of the Company and the Company Property in his capacity as
Managing Member pursuant to Article V hereof in a manner substantially
consistent with prevailing commercial practices for the performance of Managing
Member's obligations hereunder (and such failure has or is reasonably expected
to have a material and adverse effect upon the Company Property or the Company),
and the failure to correct such deficiencies within the applicable Cure Period.
(4) The occurrence of a Bankruptcy/Dissolution
Event with respect to STPD or the failure to satisfy the Manager
Ownership/Control Requirement that is not a breach of Article VI.
B. PROCEDURE; ARBITRATION. The Termination Notice shall
specify with particularity the basis for the same and shall become effective the
later of (1) (10) ten days after the date of the Termination Notice, or (2) if
applicable, after the expiration of the applicable Cure Period set forth above.
Notwithstanding the foregoing, STPD may dispute the existence of grounds for the
termination described in Subsection A(1), A(2) or A(3) (but not Subsection A(4))
by written notice ("Arbitration Notice") to the Members within ten (10) days
after its receipt of the Termination Notice. In the event an Arbitration Notice
is given within the period set forth above, then (a) the dispute shall be
resolved in accordance with the procedures set forth in Section 7.3, (b) the
applicable Cure Period set forth above (or any period that the Members may take
action against Managing Member under this Section by reason of a Noncurable
Default) shall be tolled pending the resolution of the dispute in accordance
with such procedures, and (c) if the dispute is arbitrated pursuant to Section
7.3A(2) below and the arbitrators uphold the termination, then the Termination
Notice shall become effective after the expiration of the applicable Cure Period
set forth above (subject to Clause (b) above). A Termination Notice shall become
effective immediately solely in connection with a termination described in
Subsection A(4) above.
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C. Effect of Termination Notice. If a Termination
Notice becomes effective, then:
(1) If the Termination Notice becomes effective,
then (a) a designee appointed by the Members shall become the Managing Member of
the Company with all the power and authority previously possessed by STPD as
Managing Member, and (b) STPD shall remain a Member in the Company, but with no
power, authority or right to vote, approve or act for or bind the Company with
respect to any matter in connection with the Company or its operation.
(2) STPD shall execute and acknowledge any
required amendments to this Agreement reflecting the foregoing, in such form and
content as the Members may reasonably prescribe.
(3) STPD' obligations under this Agreement shall
in no event be limited (except that he shall no longer be obligated to perform
the obligations of Managing Member).
Section 7.3 Arbitration
-----------
A. SUBJECT TO THE PROVISIONS OF THIS SECTION 7.3, ANY
DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF, CONNECTED WITH OR INCIDENTAL TO
THIS AGREEMENT OR A BREACH THEREOF (INCLUDING, WITHOUT LIMITATION, A DISPUTE
BETWEEN THE MEMBERS AND DFS UNDER SECTION 7.2 AS TO THE EFFECTIVENESS OF A
TERMINATION NOTICE) SHALL BE RESOLVED AS FOLLOWS:
(1) IN THE EVENT OF ANY SUCH DISPUTE, CLAIM OR
CONTROVERSY, THE APPLICABLE PARTIES SHALL MEET, NEGOTIATE IN GOOD FAITH, AND
ATTEMPT TO RESOLVE AMICABLY, WITHOUT LITIGATION OR FORMAL ARBITRATION, ANY SUCH
DISPUTE, CLAIM OR CONTROVERSY. IF SUCH PARTIES ARE UNABLE TO RESOLVE THE MATTER
THEMSELVES WITHIN THIRTY (30) DAYS, ANY SUCH PARTY SHALL HAVE THE RIGHT BY
GIVING WRITTEN NOTICE TO THE OTHER PARTY OR PARTIES TO INITIATE NON-BINDING
MEDIATION UNDER THE AUSPICES OF A MEDIATOR AS THE APPLICABLE PARTIES SHALL
MUTUALLY AGREE.
(2) IN THE EVENT THE APPLICABLE PARTIES ARE
UNABLE OR UNWILLING TO RESOLVE ANY SUCH DISPUTE, CLAIM OR CONTROVERSY THROUGH
THE MEDIATION PROCESS DESCRIBED IN SUBSECTION (1) ABOVE, THEN ANY SUCH PARTY MAY
BY WRITTEN NOTICE TO THE OTHER PARTY OR PARTIES ELECT TO HAVE THE MATTER
RESOLVED BY FINAL AND BINDING ARBITRATION TO BE CONDUCTED IN LOS ANGELES,
CALIFORNIA (OR SUCH OTHER LOCATION AGREED UPON BY THE MEMBERS), IN ACCORDANCE
WITH THE FOLLOWING:
(a) THE PARTY OR PARTIES DESIRING
ARBITRATION (INDIVIDUALLY AND COLLECTIVELY, THE "REQUESTING PARTY") SHALL GIVE
WRITTEN NOTICE OF THAT FACT TO THE OTHER PARTY OR PARTIES (INDIVIDUALLY AND
COLLECTIVELY, THE "RESPONDING PARTY"), ACCOMPANIED BY A DESIGNATION OF AN
ARBITRATOR; IF THE RESPONDING PARTY FAILS TO DESIGNATE ANOTHER ARBITRATOR BY
WRITTEN NOTICE TO THE REQUESTING PARTY WITHIN THE TIME PERIOD DESCRIBED BELOW,
THE ARBITRATOR SHALL BE THE PERSON DESIGNATED
24
<PAGE> 29
BY THE REQUESTING PARTY; IF THE RESPONDING PARTY DESIGNATES ANOTHER ARBITRATOR
WITHIN SUCH PERIOD, THEN THE TWO ARBlTRATORS SO DESIGNATED SHALL SELECT A THIRD
ARBITRATOR AS SOON AS PRACTICABLE THEREAFTER, AND THE ARBITRATION SHALL BE
CONDUCTED BY ALL THREE ARBITRATORS. FOR PURPOSES OF THE PRECEDING SENTENCE, THE
REQUIRED TIME PERIOD SHALL BE 15 DAYS AFTER SUCH DESIGNATION.
(b) THE MEMBERS AND THE ARBlTRATORS SHALL USE
THEIR MUTUAL DILIGENT EFFORTS TO CAUSE THE ARBITRATION TO BE CONDUCTED AND A
DECISION RENDERED WITHIN NINETY (90) DAYS THEREAFTER.
(c) THE ARBlTRATORS SHALL CONDUCT THE ARBITRATION
GENERALLY IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION,
WITH SUCH MODIFICATIONS THEREOF AS THEY MAY DEEM APPROPRIATE; WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE ARBITRATORS MAY AFFORD THE PARTIES THE
OPPORTUNITY TO CONDUCT DISCOVERY IN ACCORDANCE WITH SUCH RULES AND LIMITATIONS
AS THE ARBlTRATORS MAY PRESCRIBE.
(d) THE ARBITRATORS MAY RETAIN COUNSEL (WHICH ARE
NOT AFFILIATES OF ANY MEMBER) TO ADVISE THEM AS TO THE INTERPRETATION OF THIS
AGREEMENT OR OTHER LEGAL MATTERS, THE COST OF WHICH SHALL BE A COST OF THE
ARBITRATION.
(e) THE ARBITRATORS SHALL BE ENTITLED TO
REASONABLE COMPENSATION AND REIMBURSEMENT OF EXPENSES AS MUTUALLY AGREED WITH
THE MEMBERS, OR IF THEY ARE UNABLE TO AGREE THEN AS REASONABLY DETERMINED BY THE
ARBITRATORS.
(f) THE COMPENSATION OF THE ARBlTRATORS AND OTHER
COSTS OF THE ARBITRATION SHALL BE PAID BY THE MEMBERS IN SUCH EQUITABLE
PROPORTIONS AS MAY BE DETERMINED BY THE ARBlTRATORS.
(g) THE AWARD AND ALL OTHER DECISIONS OF THE
ARBlTRATORS SHALL BE FINAL AND BINDING UPON THE MEMBERS AND THE COMPANY, AND A
JUDGMENT MAY BE RENDERED THEREON IN ANY COURT OF RECORD, EXCEPT THAT ANY MEMBER
MAY CONTEST AND OBTAIN JUDICIAL REVIEW OF THE REASONABLENESS OF THE ARBlTRATORS'
DETERMINATION OF COMPENSATION PURSUANT TO CLAUSE (a) ABOVE.
B. THE ONLY ISSUES TO BE DETERMINED BY THE ARBITRATORS SHALL
BE THE EFFECTIVENESS OR INEFFECTIVENESS OF A TERMINATION NOTICE. THE ARBlTRATORS
SHALL HAVE NO AUTHORITY TO AWARD ANY LEGAL OR EQUITABLE RELIEF (INCLUDING
MONETARY DAMAGES). THE PARTIES RESERVE THEIR RIGHT TO A TRIAL BY A COURT OF LAW
OR EQUITY OF ANY CLAIM FOR LEGAL OR EQUITABLE RELIEF AS A CONSEQUENCE OF ANY
MATTER COVERED BY SECTION 7.2, ALTHOUGH IN ANY SUCH TRIAL THE DECISION OF THE
ARBlTRATORS SHALL BE BINDING
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<PAGE> 30
WITH RESPECT TO THE ISSUES DETERMINED BY THEM.
C. DISPUTES UNDER PROVISIONS OF THIS AGREEMENT OTHER
THAN SECTION 7.2 SHALL NOT BE RESOLVED BY ARBITRATION UNLESS THE PARTIES
OTHERWISE AGREE, EXCEPT THAT THE ARBITRATORS SHALL HAVE THE AUTHORITY TO
DETERMINE ISSUES UNDER OTHER PROVISIONS OF THIS AGREEMENT TO THE EXTENT
NECESSARY TO RESOLVE A DISPUTE UNDER SECTION 7.2 AS TO THE EFFECTIVENESS OF A
TERMINATION NOTICE.
D. EACH ARBITRATOR SHALL BE AN INDEPENDENT COMMERCIAL
PROPERTY DEVELOPMENT, CONSULTING, OR MANAGEMENT FIRM THAT IS THEN ACTIVE (AND
HAS AT LEAST FIVE YEARS EXPERIENCE) WITH COMMERCIAL PROPERTIES SIMILAR TO THE
PROPERTY. NO ARBITRATOR SHALL BE IN THE EMPLOY OF THE COMPANY, ANY MEMBER OR ANY
AFFILIATE OF THE FOREGOING DURING THE PENDENCY OF THE ARBITRATION.
NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE
ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY
INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT
DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION TO NEUTRAL ARBITRATION.
____Ranchito ____STPD ___PF
Section 7.4 NO PARTITION. Each Member hereby irrevocably waives
any and all rights that it may have to maintain any action for partition of any
of the Company Property.
Section 7.5 ATTORNEYS' FEES. Subject to Section 7.3, if the
Company or any Member obtains a judgment against any other Member in connection
with a dispute arising under or in connection with this Agreement (whether in an
action or through arbitration), such party shall be entitled to recover its
court (or arbitration) costs, and reasonable attorneys' fees (including the
reasonable value of in-house attorney services) and disbursements incurred in
connection therewith and in any appeal or enforcement proceeding thereafter, in
addition to all other recoverable costs.
Section 7.6 CUMULATIVE REMEDIES. No remedy conferred upon the
Company or any Member in this Agreement is intended to be exclusive of any other
remedy herein or by law provided or permitted, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity or by statute (subject, however, to the limitations
expressly herein set forth).
Section 7.7 NO WAIVER. No waiver by a Member or the Company of
any breach of this Agreement shall be deemed to be a waiver of any other breach
of any kind
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<PAGE> 31
or nature, and no acceptance of payment or performance by a Member or the
Company after any such breach shall be deemed to be a waiver of any breach of
this Agreement, whether or not such Member or the Company knows of such breach
at the time it accepts such payment or performance. No failure or delay on the
part of a Member or the Company to exercise any right it may have shall prevent
the exercise thereof by such Member or the Company at any time such other may
continue to be so in default, and no such failure or delay shall operate as a
waiver of any default.
ARTICLE VIII
------------
DISSOLUTION OF THE COMPANY
--------------------------
Section 8.1 EVENTS GIVING RISE TO DISSOLUTION. No act, thing,
occurrence, event or circumstance shall cause or result in the dissolution of
the Company; except that the happening of any one of the following events
(individually, a "Dissolution Event") shall work an immediate dissolution of the
Company:
A. The death, incapacity, insanity, retirement or resignation
of Managing Member followed by the failure of the Members to designate another
Managing Member within ninety (90) after the occurrence of any such event.
B. The sale of all of the real estate assets of the Company
(provided, however, that if a portion of the purchase price of such sale is
evidenced by a promissory note, the Company shall not be dissolved by reason of
such sale so long as the Company is the holder of such promissory note).
C. The unanimous agreement in writing by the Members to
dissolve the Company.
D. The termination of the term of the Company pursuant to
Section 1.3 of this Agreement.
Without limitation on the other provisions hereof, neither the assignment of all
or any part of a Member's interest in the Company permitted hereunder nor the
admission of a new member shall work the dissolution of the Company. Except as
otherwise provided in this Agreement, each Member agrees that, without the
consent of the Members, a Member may not retire or withdraw from or cause a
voluntary dissolution of the Company.
Section 8.2 [Intentionally deleted]
Section 8.3 Procedure
---------
A. In the event of the dissolution or termination of the
Company for any reason, the Managing Member shall commence to wind up the
affairs of the Company and to liquidate its investments. The Member obligated to
wind up the affairs of the Company as aforesaid is herein called the "Winding-Up
Member." The Members shall continue to share profits, losses, gain or loss on
sale or disposition, and Distributable Cash during the period of liquidation in
the same manner and proportion as though the Company had not dissolved or
terminated. The Winding-Up Member shall have full right and unlimited discretion
to determine in good faith the time, manner and terms of any sale or sales of
Company Property pursuant to such liquidation having due regard to the activity
and condition of the relevant market and general financial and economic
conditions.
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B. Following the payment of all debts and liabilities of the
Company and all expenses of liquidation, and subject to the right of the
Winding-Up Member to set up such cash reserves as and for so long as it may deem
reasonably necessary in good faith for any contingent or unforeseen liabilities
or obligations of the Company, the proceeds of the liquidation and any other
funds of the Company shall be distributed in accordance with Section 4.1 hereof
(after deducting from the distributive share of a Member any sum such Member
owes the Company).
C. Each Member shall look solely to the assets of the Company
for all distributions with respect to the Company and its capital contribution
thereto and share of profits or losses thereof and shall have no recourse
therefor (in the event of any deficit in a Member's capital account or
otherwise) against the other Members; provided that nothing herein contained
shall relieve any Member of such Member's obligation to make the capital
contributions herein provided or to pay any liability or indebtedness owing the
Company by such Member, and the Company and the other Members shall be entitled
at all times to enforce such obligations of such Member. No holder of an
interest in the Company shall have any right to demand or receive property other
than cash upon dissolution and termination of the Company.
D. Upon the completion of the liquidation of the Company and
the distribution of all Company funds, the Company shall terminate and the
Winding-Up Member shall have the authority to execute and record a certificate
of termination of the Company, as well as any and all other documents required
to effectuate the dissolution and termination of the Company.
ARTICLE IX
----------
MISCELLANEOUS
-------------
Section 9.1 NOTICES. Any notice which a party is required or may desire
to give the other party shall be in writing and may be delivered (1) personally,
(2) by United States registered or certified mail, postage prepaid, (3) by
Federal Express or other reputable courier service regularly providing evidence
of delivery (with charges paid by the party sending the notice); or (4) by
telecopy, provided that such telecopy shall be immediately followed by delivery
of such notice pursuant to Clause (1), (2) or (3) above. Any such notice shall
be addressed as follows (subject to the right of a party to designate a
different address for itself by notice similarly given):
To STPD and/or Managing Member:
------------------------------
Mr. Stanton V. Abrams
c/o Senior Tour Players Development, Inc.
266 Beacon Street
Boston, Massachusetts 02116
Telephone: 617-266-3600
Telecopy: 617-266-1343
28
<PAGE> 33
To Ranchito:
-----------
The Ranchito Company, LLC
13849 Weddington Street
Sherman Oaks, California 91401
Attention: Mr. Lodwrick Cook
Telephone: 213-486-2533
Telecopy: 213-486-0186
To PF:
-----
Mr. Paul Fireman
c/o Mr. Arnold Mullen
-
-
Telephone:
Telecopy: 561-684-2168
Any notice so given by United States mail or courier service shall be deemed to
have been given on the date delivered (whether accepted or refused) as evidenced
by the return receipt or other proof of delivery. Any notice not so given by
U.S. mail or courier service shall be deemed to be given upon receipt of the
same by the party to whom the same is to be given.
Section 9.2 ACKNOWLEDGMENT BY MEMBERS. Each Member acknowledges the
following: (A) it is familiar with the business proposed to be conducted by the
Company; (B) it has been advised that its interest in the Company may not be
sold, transferred, or otherwise disposed of except as provided herein; (C) it
understands that the securities being acquired hereby have not been registered
under the Securities Act of 1933, (the "Securities Act"), or any State
securities laws, in reliance on an exception for private offerings and,
therefore, the securities cannot be resold unless they are registered under the
Securities Act and applicable State securities laws or unless an exemption from
such registration is available; (D) it is a "sophisticated investor" with
substantial prior experience in high-risk business investments and is aware of
and familiar with the risks associated with a private limited liability company
and would quality as an "accredited investor" as such term is defined in Rule
501 of Regulation D, as enacted pursuant to Sections 3(b) and 4(2) of the
Securities Act; and (E) it is purchasing the Company Interest for his, her, or
its own account, for investment only and with no present intention of
distributing, reselling, pledging, or otherwise disposing of its interest; and
(F) it is familiar with the type of investment which the Company Interest in the
Company constitutes and has reviewed the purchase of the interest with its tax
and independent legal counsel and investment representatives to the extent he
deems necessary.
Section 9.3 CONSTRUCTION. Every covenant, term, and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Member (notwithstanding any rule of law requiring an
Agreement to be strictly construed against the drafting party).
Section 9.4 TIME IS OF THE ESSENCE. Time is of the essence with respect
to this Agreement.
Section 9.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties. This Agreement supersedes any prior agreement or
understandings between the parties.
29
<PAGE> 34
Section 9.6 AMENDMENTS. This Agreement may be amended by written
agreement of amendment executed by all Members, but not otherwise, unless
expressly provided herein.
Section 9.7 GOVERNING LAW; VENUE. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware (without regard to conflicts of laws). Each party
hereby consents to the exclusive jurisdiction of any state or federal court
located within California, waives personal service of any and all process upon
it, consents to service of process by registered mail directed to it at the
address stated in Section 9.1, and acknowledges that service so made shall be
deemed to be completed upon actual delivery thereof (whether accepted or
refused). In addition, each party consents and agrees that venue of any action
instituted under this Agreement or any agreement executed in connection herewith
shall be proper only in California and hereby waives any objection to venue.
Section 9.8 SUCCESSORS AND ASSIGNS. Except as herein otherwise
specifically provided, this Agreement shall be binding upon and insure to the
benefit of the parties and their legal representatives, successors and assigns.
Section 9.9 CAPTIONS. Captions contained in this Agreement in no way
define, limit or extend the scope or intent of this Agreement.
Section 9.10 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to the persons or circumstances, shall not be affected thereby.
Section 9.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
Section 9.12 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to confer any rights or remedies upon any
person, other than the parties hereto and, subject to the restrictions on
assignment herein contained, their respective successors and assigns.
Section 9.13 Certain Terminology
-------------------
A. Whenever the words "including," "include" or "includes" are
used in this Agreement, they should be interpreted in a non-exclusive manner as
though the words, "without limitation," immediately followed the same.
B. Except as otherwise indicated, all Article, Section and
Exhibit references in this Agreement shall be deemed to refer to the Sections
and Articles in, and the Exhibits to, this Agreement.
Section 9.14 BROKERS. Each Member represents and warrants to the other
Members and the Company that no broker or finder has been engaged by it in
connection with any of the transactions contemplated by this Agreement or to its
knowledge is in any way connected with any of such transactions. In the event of
a Claim for broker's or finder's fee or commissions in connection herewith, then
each Member shall indemnify, protect, defend and hold the Company, the other
Members, and the Company Property harmless from and against the same if it shall
be based upon any statement or agreement alleged to have been made by it or its
Affiliates.
30
<PAGE> 35
Section 9.15 SURVIVAL. All warranties, representations, covenants,
obligations and agreements contained in this Agreement shall survive the Closing
and any and all performances hereunder. All warranties and representations shall
be effective regardless of any investigation made or which could have been made
by the party benefiting from such warranties and representations. Unless
otherwise expressly provided herein, all obligations and liabilities accruing
prior to the termination of this Agreement shall survive the termination hereof.
Section 9.16 NON-BUSINESS DAYS. Whenever action must be taken
(including the giving of notice or the delivery of documents) under this
Agreement during a certain period of time or by a particular date that ends or
occurs on a non-business day (i.e., Saturday, Sunday or a holiday recognized by
the U.S. federal government or the State of California or Delaware), then such
period or date shall be extended until the immediately following business day.
Section 9.17 INCORPORATION OF EXHIBITS. All exhibits attached and
referred to in this Agreement are hereby incorporated herein as fully set forth
in (and shall be deemed to be a part of) this Agreement.
Section 9.18 INTENT. It is the intent of the Members that the Company
shall always be operated in a manner consistent with its treatment as a
"partnership" for federal and state income tax purposes. It also is the intent
of the Members that the Company not be operated or treated as a "partnership"
for purposes of Section 303 of the federal Bankruptcy Code. No Member shall take
any action inconsistent with the express intent of the parties hereto.
Section 9.19 COMMISSIONS ON SALE OR SUBLEASE. If during the term of the
Company the Company enters into a contract for the sale of all or substantially
all of the Project (exclusive, however, of any purchase and sale of the Project
pursuant to Section 5.2 hereof), or enters into a sublease for all or any
portion of the Project, the Company shall pay to such person or entity as the
Managing Member may designate (including, notwithstanding anything contained
herein to the contrary, an Affiliate of the Managing Member) (the "Designated
Broker") a brokerage commission in an amount equal to (i) in the case of any
such sale, five percent (5%) of the gross purchase price payable in connection
therewith, or (ii) in the case of any such sublease, five percent (5%) of the
gross rental contemplated thereby; provided, however, that any such commission
shall be reduced by the amount of any commission, fee or similar compensation
any cooperating broker is entitled to receive with respect to such sale or
sublease (as the case may be). Any such commission shall be payable in full at
the time of the closing of such sale or the consummation of such sublease, as
the case may be. If for any reason any such sale fails to close, or any such
sublease is not consummated, no such commission shall be due or payable in
connection therewith. For and in consideration of such commission, the
Designated Broker shall (i) in the case of subleases, diligently pursue new,
renewal, extension or replacement subtenants on the best terms available in the
market and negotiate sublease terms, consistent with the then applicable
Business Plan, with prospective and renewal subtenants, and (ii) in the case of
the sale of all or substantially of the Project, identify potential purchasers
and negotiate sale terms, consistent with the then applicable Business Plan,
with prospective purchasers.
31
<PAGE> 36
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
RANCHITO: THE RANCHITO COMPANY, LLC, a
Nevada limited liability company
By: /s/ Lodwrick M. Cook
-------------------------------------
Lodwrick M. Cook, Managing Member
STPD: SENIOR TOUR PLAYERS DEVELOPMENT, INC, a
Nevada corporation
By: /s/ Stanton V. Abrams
-------------------------------------
Stanton V. Abrams, President
PF: /s/ Paul Fireman
-------------------------------------
PAUL FIREMAN
32
<PAGE> 1
EXHIBIT 10.26
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
by and among
DANIEL F. SELLECK,
ROBERT D. SELLECK,
ROBERT D. SELLECK, II,
as the "Sellers,"
and
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
and
ITS NOMINEE
as the "Buyers,"
and
THE RANCHITO COMPANY LLC,
Dated as of December 11, 1996
<PAGE> 2
MEMBERSHIP INTERESTS PURCHASE AGREEMENT
MEMBERSHIP INTERESTS PURCHASE AGREEMENT (this "Agreement"), made as of the
11th day of December, 1996, by and among Daniel F. Selleck, an individual
("DFS"), Robert D. Selleck, an individual ("RDS"), Robert D. Selleck, II, an
individual ("RDSII"), (collectively and together the "Sellers"), Senior Tour
Players Development, Inc., a Nevada corporation ("STPD") (collectively and
together with a nominee to be designated by STPD, the "Buyers"), and The
Ranchito Company LLC, a Nevada limited liability company ("Ranchito").
RECITALS:
---------
A. WHEREAS, the Sellers own and hold in the aggregate, beneficially and of
record, 48.5% of the membership interests (the "Interests") in Las Vegas Golf
Center, L.L.C., a Delaware limited liability company ("LVGC");
B. WHEREAS, Ranchito owns and holds, beneficially and of record, 30% of the
interests in LVGC;
C. WHEREAS, Buyers have entered into an agreement to purchase beneficial
and record interests in LVGC of 21.5% from Larry K. White ("White") and Donald
Weber ("Weber"), which will be consummated prior to the consummation of the
transaction contemplated by this Agreement;
D. WHEREAS, the Buyers desire to purchase from each of the Sellers, and
each of the Sellers desires to sell to the Buyers, all of such Seller's
Interest;
E. WHEREAS, each of the Buyers desires to be admitted to LVGC as a member
thereof (a "Member");
F. WHEREAS, Ranchito desires to consent to the purchase by the STPD and its
nominee of the Sellers' Interests and to the admission of each of the Buyers to
LVGC as a Member of LVGC, and upon such admission, the Buyers and Ranchito
desire to amend and the Limited Liability Company Agreement, dated as of October
14, 1996, of LVGC (as amended to date, the "LVGC Agreement"); provided that
Ranchito has approved the nominee designated by STPD pursuant to sec. 6.1 of the
LVGC Agreement; and
G. WHEREAS, Sellers and STPD, among others, were parties to an Agreement
dated November 8, 1996, ("Initial Agreement") related to the transfer of the
interests by Sellers to STPD and STPD and Sellers' wish to terminate the Initial
Agreement so that each party's rights and obligations shall be governed by this
agreement.
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<PAGE> 3
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF MEMBERSHIP INTERESTS
-----------------------------------------
1.01 PURCHASE OF THE MEMBERSHIP INTERESTS FROM THE SELLERS. Subject to and
upon the terms and conditions of this Agreement, at the closing of the
transaction contemplated by this Agreement (the " Closing"), each of the Sellers
shall sell, transfer, convey, assign and deliver to the Buyers, and the Buyers
shall purchase, acquire and accept from each of the Sellers, all of such
Seller's right, title and interest (whether held beneficially or of record) in
and to such Seller's Interest.
1.02 CONSENT TO PURCHASE AND SALE AND ADMISSION TO LVGC["divided by"
sign]. Each of the Sellers and Ranchito hereby irrevocably and unconditionally
(i) consents, in accordance with the requirements of Section 6.1 of the LVGC
Agreement, to (a) the sale by each of the Sellers to the Buyers (STPD and its
nominee), and the purchase by the Buyers (STPD and its nominee) from each of
the Sellers, of all of each such Seller's Interest, and (b) the sale by White
and Weber to the Buyers, and the Buyers purchase from White and Weber, of their
interests, (ii) consents, in accordance with the requirements of Article VI of
the LVGC Agreement, to the admission of the Buyers to LVGC as Members and the
substitution of the Buyers for (a) the Sellers and/or (b) White and Weber as
Members, and (iii) waives any and all requirements and conditions, whether
imposed by Section 6.2 of the LVGC Agreement or otherwise, of execution and
delivery by the Buyers of any assumption of any or all liabilities or
obligations of any of the Sellers (except as set forth in the Seller Disclosure
Agreement) under the LVGC Agreement, and acknowledges and agrees that the
Buyers shall be admitted to LVGC as Members and substituted for the Sellers as
Members upon the closing notwithstanding non-compliance with any such
requirement or failure to satisfy any such condition.
1.03 AMENDMENT AND RESTATEMENT OF LVGC AGREEMENT; MANAGEMENT AGREEMENT.
Immediately upon effectiveness of the transactions referred to in Sections 1.01
and 1.02, (i) the LVGC Agreement shall be amended as the First Amended and
Restated Limited Liability Company Agreement of LVGC (the " Amended LVGC
Agreement") in the form of EXHIBIT A hereto, and (ii) LVGC and STPD shall enter
into the Management Agreement, dated as of the Closing Date, in the form of
EXHIBIT B attached hereto (the "New LVGC Management Agreement"). Each of the
Buyers and Ranchito (each, a "Post-Closing Member") shall (a) execute and
deliver the Amended LVGC Agreement to each other Post-Closing Member, and (b)
cause LVGC to execute and deliver the New LVGC Management Agreement; and STPD
shall execute and deliver the New LVGC Management Agreement; in each case at the
Closing.
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<PAGE> 4
1.04 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyers' request and without further consideration, each of the
parties hereto shall promptly execute and deliver such documents and
instruments, and take all such other action, as the Buyers may reasonably
request, more effectively to transfer, convey and assign to the Buyers, and to
confirm each Buyer's admission to LVGC as a Member and the Buyers' title to, all
of the Sellers' respective Interests, to assist the Buyers in exercising all
rights with respect thereto and to carry out the purpose and intent of this
Agreement, provided that no such documents shall subject Seller to any
additional costs or liabilities.
1.05 Sale of the Interests and Purchase Price Therefor.
-------------------------------------------------
(a) The aggregate purchase price to be paid by the Buyers for the
Interests shall be (i) One Million Five Hundred Thirty-Two Thousand Fifty
Dollars ($1,532,050) payable by STPD or its nominee (the "Cash Consideration"),
and (ii) Three Hundred Sixty-Nine Thousand Five Hundred Forty-Seven (369,547)
shares of common stock, $0.001 par value per share, of STPD, payable by STPD
(the "STPD Shares" and, together with the Cash Consideration, the "Purchase
Price"), payable in the manner described in Sections 1.05(b) and 1.05 (c). Each
of the STPD Shares shall be duly authorized, validly issued, fully paid and
non-assessable, and shall be a restricted security, as defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
by the Securities and Exchange Commission (the "Commission").
(b) At the Closing:
(i) Each of the Sellers shall deliver to each of the Buyers an
Instrument of Assignment in the form of Exhibit C (an "Instrument of
Assignment") with respect to such Seller's Interest, transferring such interest
to STPD and its nominee (to be held severally and not as tenants in common or
otherwise jointly).
(ii) STPD or its nominee shall deliver to the Sellers'
Representative (as defined below) the Cash Consideration of $1,532,050 (the
"Closing Payment") in cash, by certified or cashier's check, or by wire transfer
of immediately available funds to an account specified by the Sellers
Representative in writing to not later than three days prior to the Closing Date
to be distributed by the Sellers' Representative to the Sellers in amounts set
forth opposite each Seller's respective name in the column entitled " Closing
Payment" on SCHEDULE I.
(c)
(i) STPD shall deliver to the Sellers' Representative
certificates representing the STPD Shares, in the names of the respective
Sellers and in amounts set forth opposite each Seller's respective name in the
column entitled "STPD Shares" on SCHEDULE I.
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<PAGE> 5
1.06 SHAREHOLDERS AGREEMENT. At Closing, the Sellers shall execute a
Shareholders Agreement with STPD in the form attached hereto as Exhibit D.
1.07. CONSULTING AND NON-COMPETITION AGREEMENT OF SELLECK. At Closing,
LVGC, and Selleck Properties, Inc. ("Selleck") shall execute a consulting and
non-competition agreement ("Consulting Agreement") in conformity with Section
5.4 of the LVGC Agreement and in the form attached hereto as Exhibit E.
1.08. TERMINATION OF GCA GUARANTY. At Closing, STPD shall release and
terminate that certain Guaranty Agreement made by Golf Centers of America, Inc.
in favor of STPD, dated November 8, 1996, as amended.
1.09. REGISTRATION RIGHTS AGREEMENT: At Closing, Sellers and STPD shall
enter into a Registration Rights Agreement in the form attached hereto as
Exhibit F.
1.10. TERMINATION OF AGREEMENT: STPD, Sellers, LVGC, and Ranchito agree
that the Agreement dated November 8, 1996 with various other parties is hereby
terminated without liability to any party and STPD, Sellers, and Ranchito will
use their best efforts to obtain the consent of GCA, Selleck Properties, Inc.,
Weber and White to such termination.
1.11. Sellers' Representative.
-----------------------
(a) In order to efficiently administer (i) the waiver of any condition
to the obligations of the Sellers to consummate the transactions contemplated
hereby, (ii) the defense and/or settlement of any claims for which the Sellers
may be required to indemnify the Buyers pursuant to Section 11.03 hereof, and
(iii) the giving to the Sellers of any notice required or permitted to be given
to the Sellers hereunder, the Sellers hereby designate DFS as their
representative (the "Sellers' Representative").
(b) The Sellers hereby authorize the Sellers' Representative (i) to
take all action necessary in connection with the waiver of any condition to the
obligations of the Sellers to consummate the transactions contemplated hereby,
or the defense and/or settlement of any claims for which the Sellers may be
required to indemnify the Buyers pursuant to Section 11.03 hereof, (ii) to give
and receive all notices required to be given under the Agreement, and (iii) to
take any and all additional action as is contemplated to be taken by or on
behalf of the Sellers by the terms of this Agreement.
(c) In the event that the Sellers' Representative dies, becomes unable
to perform his responsibilities hereunder or resigns from such position, Sellers
entitled to receive a majority of the Purchase Price hereunder as set forth on
SCHEDULE I hereto shall select another
-4-
<PAGE> 6
representative to fill such vacancy and such substituted representative shall be
deemed to be the Sellers' Representative for all purposes of this Agreement.
(d) All decisions and actions by the Sellers' Representative,
including, without limitation, any agreement between the Sellers' Representative
and the Buyers relating to the defense or settlement of any claims for which the
Sellers may be required to indemnify the Buyers pursuant to Section 11.03
hereof, shall be binding upon all of the Sellers, and no Seller shall have the
right to object, dissent, protest or otherwise contest the same.
(e) By their execution of this Agreement, the Sellers agree that:
(ii) the Buyers shall be able to rely conclusively on the
instructions and decisions of the Sellers' Representative as to the settlement
of any claims for indemnification by either or both of the Buyers pursuant to
Section 11.03 hereof or any other actions required to be taken by the Sellers'
Representative pursuant hereto, and no party hereunder shall have any cause of
action against the Buyers for any action taken by the Buyers in reliance upon
the instructions or decisions of the Sellers' Representative;
(iii) all actions, decisions and instructions of the Sellers'
Representative shall be conclusive and binding upon all of the Sellers and no
Seller shall have any cause of action against the Sellers' Representative for
any action taken, decision made or instruction given by the Sellers'
Representative under this Agreement, except for fraud or willful breach of this
Agreement by the Sellers' Representative;
(iv) the provisions of this Section 1.06 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Seller may have in connection
with the transactions contemplated by this Agreement;
(v) remedies available at law for any breach of the provisions of
this Section 1.06 are inadequate; therefore, the Buyers shall be entitled to
temporary and permanent injunctive relief without the necessity of proving
damages if the Buyers bring an action to enforce the provisions of this Section
1.06; and
(vi) the provisions of this Section 1.06 shall be binding upon
the executors, heirs, legal representatives and successors of each Seller, and
any references in this Agreement to a Seller or the Sellers shall mean and
include the successors to the Sellers' rights hereunder, whether pursuant to
testamentary disposition, the laws of descent and distribution or otherwise.
(d) All fees and expenses (if any) incurred by the Sellers'
Representative shall be paid by the Sellers in proportion to their respective
entitlements to receive payment of Purchase Price amounts as set forth on
SCHEDULE I attached hereto.
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<PAGE> 7
1.10. CLOSINGS. Unless this Agreement has been terminated and the
transactions contemplated herein have been abandoned pursuant to Section 10.01
hereof, (a) the Closing shall be held in Los Angeles, California, with the
location in Los Angeles to be agreed upon by the parties, at 10:00 a.m. local
time on April 10, 1997, or such earlier date as shall be designated by Buyers
with five (5) business days prior written notice to Seller, unless another date
or place is agreed to in writing by the Buyers and the Sellers' Representative
(with the date on which such Closing actually takes place being herein referred
to as the " Closing Date"),
1.11. CERTAIN DEFINITIONS. For purposes of this Agreement:
-------------------
(a) "Property" shall mean the real property described in EXHIBIT G.
(b) "Project" shall mean the golf driving range and related facilities
and improvements which are currently under construction on the Property and are
more particularly described on the Plans and Specifications.
(c) "Plans" shall mean the following drawings and plans:
(i) Park West Landscape, Inc. July 30,1996, Las Vegas Sports
Park Planting;
(ii) Scott Bernet Architects, February 17, 1996, Las Vegas Sports
Center, as amended on August 22, 1996 and September 15,
1996;
(iii) Engineering Ventures, Inc. Las Vegas Sports Center Phase I,
Waterline Improvement Plans, May 23, 1996, as amended August
22, 1996, and Precise Grading Plans for Pro-Golf Expansion,
undated;
(iv) Nordquist Associates, Inc. Landscaping, Las Vegas Sport
Center, April 18, 1996.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
-------------------------------------
SELLERS AND RANCHITO REGARDING THE INTERESTS
--------------------------------------------
2.01 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each Seller severally
represents and warrants to each of the Buyers, as of the date hereof and as of
the Closing Date subject to the provisions of Paragraph 6.09, as follows:
(a) This Agreement has been duly and validly executed and delivered by
such Seller and constitutes a valid and binding legal obligation of such Seller
enforceable against such Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting the rights of creditors generally or
the availability of specific performance, injunctive relief and other equitable
remedies and to general principles of equity (regardless of whether such
principles are considered in a proceeding in equity or at law).
(b) Such Seller is a Member of LVGC possessing the rights, privileges,
liabilities and obligations specified in the LVGC Agreement and has good, valid
and marketable title to the Interest which is to be transferred to the Buyers by
such Seller pursuant hereto, free and clear of any and all covenants,
-6-
<PAGE> 8
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
(c) Such Seller has the legal capacity to enter into this Agreement
and to transfer, convey and sell to the Buyers at the Closing the Interest to be
sold by such Seller hereunder and, upon consummation of the purchase and sale
contemplated hereby at the Closing, each of the Buyers will acquire from such
Seller good, valid and marketable title to the portion of such Interest being
sold by such Seller to such Buyer hereunder, free and clear of all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever, with the
exception of the consent of the other members of LVGC and the consent required
from Clark County.
(d) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby on the part of such Seller do not and
will not violate any applicable law, ordinance, statute, rule, regulation,
order, decree or judgment, conflict with or result in the breach of any material
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge, or encumbrance upon the Property by reason
of, the terms of any contract, mortgage, lien, lease, agreement, indenture,
instrument, order, decree or judgment to which such Seller is a party or which
is or purports to be binding upon such Seller or LVGC or which otherwise affects
the Property, which will not be discharged, assumed or released at the Closing
subject to the conveyance of the White and Weber interests to Buyers and the
terms of the LVGC Agreement and the consent of Clark County. To the best of such
Seller's knowledge, no other action by any federal, state or municipal or other
governmental department, commission, board, bureau or instrumentality is
necessary to make this Agreement a valid instrument binding upon such Seller in
accordance with its terms. No other consent of any individual, governmental or
regulatory authority or other person or entity is required in connection with
the execution, delivery or performance of this Agreement by such Seller or the
consummation by such Seller of the transactions contemplated hereby subject to
the conveyance of the White and Weber interests to the Buyers.
(e) No broker of finder has acted for such Seller in connection with
this Agreement or the transactions contemplated hereby, and no broker or finder
is entitled to any brokerage or finder's fee or other commissions in respect of
such transactions based upon agreements, arrangements or understandings made by
or on behalf of such Seller.
(f) Such Seller has actually made all such contributions to the
capital of LVGC as are reflected in the LVGC Agreement (including, without
limitation, Section 3.1A thereof) or elsewhere on the books and records of LVGC
as having been made or deemed to have been made by such Seller. The $684,000
representing Sellers' aggregate and combined capital account balances as
represented in the Balance Sheet of LVGC as of November 30, 1996 and attached
herein as Exhibit H is comprised of $484,000 actual cash consideration
contributed to the LVGC by Sellers, and $200,000 which was credited towards
Sellers' LVGC capital accounts for expenses incurred by GCA and Selleck
Properties, Inc. prior to the formation of LVGC.
-7-
<PAGE> 9
2.02 REPRESENTATIONS AND WARRANTIES OF RANCHITO. Ranchito represents and
warrants to each of the Buyers, as of the date hereof and as of the Closing
Date, as follows:
(a) Ranchito is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Nevada, and has all
requisite power and authority to own its properties and to carry on its business
as now being conducted. Ranchito has full power and authority to execute and
deliver this Agreement and the documents and instruments contemplated herein and
to perform its obligations hereunder and thereunder.
(b) The execution and delivery of this Agreement and the documents and
instruments contemplated herein by Ranchito and the performance by Ranchito of
its obligations hereunder and thereunder have been duly authorized by all
requisite actions on the part of Ranchito. This Agreement and all such other
documents and instruments constitute the valid and legally binding obligations
of Ranchito, enforceable against Ranchito in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws affecting the rights of creditors
generally or the availability of specific performance, injunctive relief and
other equitable remedies and to general principles of equity (regardless of
whether such principles are considered in a proceeding in equity or at law). The
execution, delivery and performance of this Agreement and all such other
documents and instruments by Ranchito will not, with or without the giving of
notice or the passage of time or both, (i) violate the provisions of any law,
rule or regulation applicable to Ranchito; (b) violate the provisions of
Ranchito's organizational documents; (c) violate any judgment, decree, order or
award of any court, governmental body or arbitrator applicable to Ranchito; or
(d) conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration under, or
cause the creation of any lien, charge or encumbrance upon the properties or
assets of Ranchito pursuant to, any indenture, mortgage, deed of trust or other
agreement or instrument to which Ranchito is a party or by which Ranchito is or
may be bound.
(c) Ranchito is a Member of LVGC possessing the rights, privileges,
liabilities and obligations specified in the LVGC Agreement, and no other person
or entity claiming by, through or under Ranchito has any rights or interests
(beneficial or of record, and whether those of an assignee or otherwise) in the
Interest owned and held by Ranchito. Ranchito has actually made all such
contributions to the capital of LVGC as are reflected in the LVGC Agreement
(including, without limitation, Section 3.1A thereof) or elsewhere on the books
and records of LVGC as having been made or deemed to have been made by Ranchito.
2.03 ADDITIONAL REPRESENTATIONS OF THE SELLERS. The Sellers jointly and
severally represent and warrant to each of the Buyers, as of the date hereof and
as of the Closing Date, that (i) no person or entity other than the Sellers,
Ranchito, White and Weber, or any Permitted Transferee (as such term is defined
and used in the LVGC Agreement) of White and Weber has any rights or interests
(beneficial or of record, and whether those of a member, of an assignee or
otherwise) in any Interest, and (ii) the copy of LVGC Agreement previously
delivered by the
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Sellers to the Buyers is true, correct, and complete, and the LVGC Agreement has
not been amended, modified, restated, terminated or superceded since the date
thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
REGARDING LVGC
--------------
Except as set forth on the Seller Disclosure Schedule (as defined in
Section 3.01), the Sellers, jointly and severally, represent and warrant to each
of the Buyers, as of the date hereof and as of the First Closing Date subject to
the provisions of Paragraph 6.09, as follows:
3.01 SELLER DISCLOSURE SCHEDULE. The Seller Disclosure Schedule, marked as
Schedule 3.01 hereto (the "Seller Disclosure Schedule"), is divided into
sections which correspond to the Sections of this Article III; however, specific
cross-references to the Seller Disclosure Schedule are not necessarily included
in the Sections of this Article III. The Seller Disclosure Schedule is accurate
and complete. Disclosure in one section of the Seller Disclosure Schedule will
constitute disclosure for purposes of all Sections of this Agreement.
3.02 ORGANIZATION. LVGC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority and all material licenses, permits and
authorizations to own, lease and operate its properties and assets and to carry
on its business as it is now being conducted. LVGC is duly qualified or licensed
to do business as a foreign limited liability company and is in good standing in
each jurisdiction in which the character or location of the properties and
assets owned, leased or operated by it or the nature of the business conducted
by it requires such qualification or licensing, except where the failure to be
so qualified, licensed or in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, results of operations
or financial condition of LVGC or on the value of the Interests to be purchased
by the Buyers hereunder (the "LVGC Material Adverse Effect"). LVGC does not own
or hold any rights to acquire any shares of stock or any other equity security
or interest in any corporation, partnership or other entity.
3.03 NO RIGHTS TO ACQUIRE INTERESTS. Except as may be expressly provided in
the LVGC Agreement, there are no outstanding options, warrants, conversion
privileges or other rights to purchase or acquire any of Seller's Interests
(including, without limitation, assignee interests therein) or to Seller's
knowledge, other equity securities of LVGC or any outstanding securities that
are convertible into or exchangeable for such Interests, securities or rights
except Buyer's right to purchase the interests of White and Weber; and there are
no contracts, commitments, understandings, arrangements or restrictions by which
LVGC is bound to issue or acquire any additional Interests or other equity
securities or any options, warrants, conversion
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<PAGE> 11
privileges or other rights to purchase or acquire any Interests or other equity
securities of LVGC or any securities convertible into or exchangeable for such
Interests, securities or rights.
3.04 NO DEFAULT. LVGC is not in default under, and no condition exists that
with notice or lapse of time, or both, would constitute a default of LVGC under
(i) any mortgage, loan agreement, evidence of indebtedness, or other instrument
evidencing borrowed money to which LVGC is a party or by which LVGC or the
properties or assets of LVGC are bound or (ii) any judgment, order or injunction
of any court, arbitrator, or governmental agency.
3.05 INVESTIGATIONS; LITIGATION. There are no claims, actions, suits or
proceedings by any private party or by any governmental body or authority
(including any nongovernmental self-regulatory agency), nor any investigations
or reviews by any federal, state, local or foreign body or authority (including
any nongovernmental self-regulatory agency), against or affecting LVGC, that are
pending or, to the knowledge of any of the Sellers, threatened, at law or in
equity. To the knowledge of any of the Sellers, there is no basis for any such
investigation, review, claim, action, suit or proceeding.
3.06 ASSETS. LVGC's unaudited financial statement as of November 30, 1996
("LVGC Balance Sheet") and The Seller Disclosure Schedule sets forth a true,
correct and complete list of (i) all assets of LVGC as of the date hereof (the
"Assets"), and (ii) all claims, liabilities, mortgages, liens (including,
without limitation, any mechanics', materialmen's and other vendor's liens),
pledges, security interests, charges, encumbrances and equities of any kind
affecting the Assets except matters disclosed in the title report (collectively,
the "Encumbrances"). All of the Assets are used by LVGC in the ordinary course
of business and, since the date of its formation, LVGC has not owned any
properties or assets other than (i) the Assets and (ii) personal property
disposed of by LVGC in the ordinary course of its business prior to the date
hereof which was not and is not material to LVGC or the Project. LVGC has good,
valid and marketable title and interest in and to all Assets reflected on the
LVGC Balance Sheet and Seller Disclosure Schedule. Other than as disclosed on
the Seller Disclosure Schedule, such Assets are not subject to any Encumbrance
except as described in the title report (whether or not of record).
3.07 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the Seller
Disclosure Schedule and the LVGC Balance Sheet or the title report, LVGC does
not have any liability or obligation, secured or unsecured, whether accrued,
absolute, contingent, unasserted, or otherwise.
3.08 LEASES. Except for (i) that certain Lease and Concession Agreement
dated January 3, 1995 (the "Ground Lease") by and between Clark County, Nevada
(the "County") and Golf Centers of America, Inc., a California corporation
("GCA"), assigned (or to be assigned) to LVGC by GCA at or prior to the Closing,
and (ii) that certain Sublease dated November 4, 1996 (the "Sublease") by and
between GCA, as Lessor, and Pro-Golf of Nevada, Limited Liability Company, a
Nevada limited liability company, as Lessee, assigned (or to be assigned) to
LVGC by GCA at or prior to the Closing, there are no other leases, subleases,
tenancy or occupancy
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<PAGE> 12
agreements with respect to the Property. The Ground Lease and the Sublease are
referred to together herein as the "Leases." The copies of the Leases delivered
to Buyer prior to the date hereof are true, complete and accurate copies of such
Leases and have not been amended, modified, terminated or superseded.
3.09 LEASES -- TITLE. At the time of the Closing, LVGC shall be the sole
Concessionaire (as such term is defined and used in the Ground Lease) under the
Ground Lease and shall own all of the legal and beneficial right and title to
the interest of said Concessionaire in and to such Ground Lease subject to (a)
Buyer's acquisition of the Interests of White and Weber and (b) the County's
approval of the transfer of the Leases to LVGC. At the time of the Closing, LVGC
shall be the sole lessor under the Sublease and shall own all of the legal and
beneficial right and title to the lessor's interest in and to such Sublease
subject to (a) Buyer's acquisition of the Interests of White and Weber and (b)
the County's approval of the transfer of the Leases to LVGC.
3.10 LEASES -- DEFAULTS AND DISPUTES. Neither LVGC, as Concessionaire under
the Ground Lease, nor any tenant or subtenant of the Property, is in default
under any of the Leases. LVGC has not received any notice of any claim, dispute,
termination, or default from the County under the Ground Lease, or any tenant
under any of the Leases, and there is no dispute or any existing and uncured
material default, or any claim of default, by the County, by LVGC or by any
tenant under any of the Leases. No tenant has asserted any defense, set-off, or
counterclaim with respect to its tenancy or its obligation to pay rent and other
charges pursuant to any of the Leases.
3.11 LEASING COMMISSIONS. There are no rental, lease or other commissions,
now or hereafter payable to any person or entity with respect to any of the
Leases, except as set forth on the Seller Disclosure Schedule.
3.12 LEASES -- PREPAID RENTS AND SPECIAL CONSIDERATION. No rent or other
charge under any of the Leases has been paid for more than thirty (30) days in
advance of its due date, and (ii) no tenant or subtenant is entitled to receive
any rent concession (not yet given) in connection with its tenancy, except as
disclosed in any such lease.
3.13 CONTRACTS AND AGREEMENTS. The Sellers have delivered to the Buyers on
or prior to the date hereof true, complete and accurate copies of all
architectural, management, leasing, brokerage, service, equipment, supply,
maintenance or concession agreements with respect to the Property and/or the
Project (the "Contracts"), a list of which is attached hereto as Exhibit I.
Except as provided below with respect to the Construction Contract (as defined
below), all contractors, subcontractors, suppliers, architects, engineers and
others who have performed services or labor or supplied material in connection
with LVGC's or GCA's acquisition, development, ownership or management of the
Property and/or the Project, have been paid in full. Other than this Agreement,
the New LVGC Management Agreement, the Leases, the Contracts and the
Construction Contract, the matters disclosed in the Seller Disclosure Schedule
or the title report, there are no leases, architectural, construction,
development or service contracts,
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<PAGE> 13
management agreements or other agreements, instruments or arrangements in force
or effect to which LVGC is a party or which otherwise grant to any person or
entity whatsoever any right, title, interest or benefit in or to all or any part
of the Property and/or the Project or any rights relating to the use,
development, construction, operation, management, maintenance or repair of all
or any part of the Assets, the Property and/or the Project from and after the
First Closing Date. Except as otherwise set forth in the Seller Disclosure
Schedule, LVGC is not in default under any of the Leases, the Contracts and the
Construction Contract, nor, to the best knowledge of any of the Sellers or LVGC,
does there exist any event that, with notice or the passage of time or both,
would constitute a default or event of default by LVGC under any of the Leases,
the Contracts and the Construction Contract.
3.14 CONSTRUCTION CONTRACT. The Sellers have delivered to the Buyers on or
prior to the date hereof a true, complete and accurate copy of that certain
construction contract entitled "AIA Document A101, 1987 Edition - Standard Form
of Agreement between Owner and Contractor, dated April 1, 1996 between GCA and
D& D Commercial Construction, Inc. (the "Contractor") (the "Construction
Contract"). The Contractor has been paid $1,724,562.00 through December 31,
1996, which amount is the total amount due Contractor to said date under the
Construction Contract as of such date.
3.15 PROPERTY TAXES. The Sellers have delivered to the Buyers prior to or
concurrent with the Sellers' execution of this Agreement copies of the most
recent bills for real estate taxes, personal property taxes and assessments or
charges by any governmental authority pertaining to the Property, if any. All
real estate taxes, personal property taxes and assessments or charges by any
governmental authority pertaining to the Property, if any, have been paid in
full.
3.16 COMPLIANCE WITH LAWS. Neither any Seller nor LVGC nor GCA has received
any notice or claim of any violations of law, municipal or county ordinances, or
other legal requirements (i) with respect to the Property or with respect to the
use, occupancy, development or construction of the Project thereon, or (ii)
otherwise relating to LVGC or its assets, properties, business or operations,
and, to the best knowledge of any of the Sellers or LVGC, no such violations
exist. All such permits, approvals, variances, licenses and orders as may be
required from any governmental authority with jurisdiction over the Property or
the Project for the construction, development, use and operation of the Property
and, when completed, the Project have been obtained and are in full force and
effect, and no violations exist thereunder. Upon completion of construction of
the Project in accordance with the Plans to Seller's knowledge, the Property
shall comply with all zoning, building, health, traffic, environmental, flood
control, fire safety, handicap and other applicable laws, regulations,
ordinances and rulings of all local, state and federal authorities and any other
governmental entity having jurisdiction over the Property or the Project.
3.17 HAZARDOUS SUBSTANCES. Neither any Seller nor LVGC nor GCA has ever
generated, stored or disposed of any hazardous substances on the Property,
except in compliance with all applicable laws, and except as disclosed in the
report entitled "Phase I Environmental Site
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Assessment, 42-Acre Parcel, NWC of Tropicana Avenue and Paradise Road, Clarke
County, Nevada," dated December 30, 1994 (the "Environmental Report"), prepared
by Converse Environmental Consultants Southwest, Inc. ("Converse"), no Seller is
aware of the generation, storage or disposal of such substances on the Property
by anyone else. Neither any Seller nor LVGC nor GCA has ever received any notice
from any governmental authority regarding the presence or alleged presence of
any hazardous substances on the Property. For the purposes of this Section 3.21,
"hazardous substances" shall mean (i) any "hazardous substance", "hazardous
material", "toxic substance" or "solid waste" as such terms are presently
defined in CERCLA, RCRA and the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.); (ii) any additional substances or materials which
are hereafter incorporated in or added to the definition or "hazardous
substance" for the purposes of such laws; (iii) any material, waste or substance
which is (A) petroleum, (B) asbestos or asbestos containing material, (C)
polychlorinated biphenyls, (D) flammable explosives, or (E) radioactive
materials; (iv) any additional substances or materials which are now or
hereafter considered to be "hazardous substances" (including, without
limitation, any asbestos containing materials) under any applicable law, rule or
regulation (whether local, state or Federal) relating to the Property; and (v)
any substance or material defined as a "Hazardous Material" under the Ground
Lease.
3.18 INDEPENDENT FACILITY. TO SELLER'S KNOWLEDGE, the Property is, and when
completed in accordance with the Plans the Project will be, an independent unit
which does not rely on any drainage, sewer, access, utility or other facilities
(other than the facilities of public utility or other facilities located in
public streets which are adjacent to the Property) located on any property not
included in the Property (i) to fulfill any zoning, building code or other
municipal or governmental requirements, (ii) for structural support or the
furnishing to the improvements thereon of any essential building systems or
utilities, including, but not limited to, electrical, plumbing, mechanical and
heating, ventilating and air conditioning, water and sanitary sewage systems,
(iii) to fulfill the requirements of any of the Leases or other agreement
affecting the Property or the Project. No land, building or other improvement
not included in any part of the Property relies on any part of the Property to
fulfill any zoning, building code or other governmental or municipal requirement
or for structural support or the furnishing to such building or improvement of
any essential building systems or utilities, except as disclosed in the title
report.
3.19 UTILITIES. All utilities and all public and quasipublic improvements
upon the Property (including, without limitation, all applicable electric lines,
gas, sewer and water lines, and telephone lines) are adequate to service the
requirements of the Project, when completed in accordance with the Plans, and
all payments currently due for the same have been made; and all necessary
easements, permits, licenses and agreements in respect of any of the foregoing
are installed and operating and all installation and connection charges have
been paid for in full.
3.20 LEGAL ACCESS. LVGC has legal access from a public way to the Property.
All necessary curb cuts, access permits and other governmental approvals
required to provide such access have been issued and are in full force and
effect.
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<PAGE> 15
3.21 LITIGATION. Sellers have no knowledge of any actual or pending
litigation, proceeding or investigation by any organization, person, individual,
or governmental board, commission, department, agency, or instrumentality
against LVGC or the Property. LVGC is not operating the Property or the Project
under or subject to, or in default with respect to, any order, writ, injunction,
or decree of any court or federal, state, municipal or other governmental agency
or department, commission, board, or instrumentality.
3.22 CONDEMNATION. No condemnation or eminent domain proceedings relating
to the Property are pending. To the best knowledge of any of the Sellers or
LVGC, there are no written or proposed plans to widen, modify, or realign any
street or highway or any existing or proposed condemnation or eminent domain
proceedings which would affect the Property, except the widening of Tropicana
Boulevard and Paradise Street.
3.23 No Other Activities or Employees.
--------------------------------
(a) LVGC is not engaged, and since the date of its formation has not
engaged, in any business activities other than such activities relating to the
Property and/or the Project.
(b) LVGC does not have, and since the date of its formation has not
had, any officers or employees, except as set forth in the LVGC Agreement.
3.24 Taxes.
-----
LVGC has filed on a timely basis all federal, state, local and foreign
Tax (as defined below) returns that were required to be filed, all of which
returns were accurate and complete in all material respects. LVGC has paid all
Taxes which have become due as they became due and withheld and remitted when
due any Taxes required to be withheld by it. No unsatisfied deficiencies have
been asserted or assessed against LVGC as a result of any audit by the Internal
Revenue Service or any state or local taxing authority, and no examination or
audit by any such authority is currently in progress or, threatened. "Taxes"
means all taxes and all charges, fees and similar assessments in the nature of a
tax (including, without limitation, those relating to income, receipts, excise,
real property, personal property, sales, use, transfer, withholding, employment,
payroll and franchises) imposed by the United States of America or any state,
local or foreign government, or any agency thereof.
3.25 BROKERS. None of the Sellers have employed any broker, agent or
finder, or incurred any liability for any brokerage fees, agents' commissions or
finder's fee in connection with the transactions contemplated hereby on behalf
of itself and/or LVGC.
3.26 ACCURACY OF INFORMATION. To the knowledge of the Sellers, no
representation or warranty by the Sellers in this Agreement contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statements
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<PAGE> 16
herein, in light of the circumstances under which they were made, not misleading
as of the date of the representation or warranty.
3.27 ABSENCE OF MANAGEMENT CONTRACT. None of the Sellers have entered into
a management agreement on behalf of themselves and/or LVGC for the management of
the Project.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STPD
--------------------------------------
Except as set forth on the STPD Disclosure Schedule (as defined in
Section 2.1), STPD represents and warrants to the Sellers, as of the date hereof
and as of the Closing Date, as follows:
4.01 STPD DISCLOSURE SCHEDULE. The STPD Disclosure Schedule, marked as
Schedule 4.01 hereto (the "STPD DISCLOSURE SCHEDULE"), is divided into sections
which correspond to the Sections of this Article IV; however, specific cross
references to the STPD Disclosure Schedule are not necessarily included in the
Sections of this Article IV. The STPD Disclosure Schedule is accurate and
complete. Disclosure in one section of the STPD Disclosure Schedule will
constitute disclosure for purposes of any other Section of this Agreement.
4.02 ORGANIZATION. Each of STPD and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and each has all requisite corporate power and authority and
possesses all material licenses, permits and authorizations to own, lease and
operate its properties and assets and to carry on its business as now being
conducted. Each of STPD and its subsidiaries are duly qualified or licensed to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the character or location of the properties and assets
owned, leased or operated by it or the nature of the business conducted by it
requires such qualification or licensing except where the failure to be so
qualified, licensed or in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, results of operations
or financial condition of STPD and its subsidiaries taken as a whole (the "STPD
MATERIAL ADVERSE EFFECT").
4.03 AUTHORITY AND VALIDITY OF AGREEMENT. STPD has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the Board of Directors of STPD, and no other
corporate proceedings on the part of STPD are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by STPD and constitutes a valid
and binding legal obligation of STPD, enforceable against STPD in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or
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<PAGE> 17
similar laws affecting the rights of creditors generally or the availability of
specific performance, injunctive relief and other equitable remedies and to
general principles of equity (regardless of whether such principles are
considered in a proceeding in equity or at law).
4.04 CONSENTS AND APPROVALS. Except for any applicable requirements of the
Securities Act and state securities laws, and the approval of the Financing (as
defined in Section 803) by the STPD Board of Directors no consent, approval,
order or authorization of or from, or registration, notification, declaration or
filing with (hereinafter sometimes separately referred to as "CONSENT" and
sometimes collectively as "CONSENTS") any individual, governmental or regulatory
authority or other person or entity is required in connection with the
execution, delivery or performance of this Agreement by STPD or the consummation
by STPD of the transactions contemplated hereby, except any Consent which, if
not received or made, is not reasonably likely to have a STPD Material Adverse
Effect.
4.05 CAPITALIZATION. The authorized capital stock of STPD consists of
15,000,000 shares of STPD Common Stock and 5,000,000 shares of Preferred Stock,
of which there are 2,933,333 shares of STPD Common Stock and 0 shares of
Preferred Stock issued and outstanding. All issued and outstanding shares of
STPD Common Stock and Preferred Stock are validly issued, fully paid,
nonassessable and free of preemptive rights. All STPD Shares to be issued and
delivered to the Sellers pursuant to Article I hereof will be, at the time of
issuance and delivery, validly issued, fully paid, nonassessable and free of
preemptive rights. There are not any outstanding or authorized subscriptions,
options, warrants, calls, rights, commitments, restrictions, arrangements or any
other agreements of any character that, directly indirectly, (a) obligate STPD
to issue any shares of capital stock or any securities convertible into, or
exercisable or exchangeable for, or evidencing the right to subscribe for, any
shares of capital stock, (b) call for or relate to the sale, pledge, transfer or
other disposition or encumbrance by STPD of any shares of its capital stock, or
(c) relate to the voting or control of such capital stock except as otherwise
set forth in Section 4.05 of the STPD Disclosure Schedule.
4.06 COMMISSION REPORTS. STPD has duly and timely made all required filings
with the Commission under the Securities Act and the Securities Exchange Act of
1934, as amended, and all of the reports, forms and documents so filed complied
in all material respects with all applicable requirements. As of their
respective filing dates or the date of any amendment thereto, none of such
reports, proxy statements or registration statements contained any untrue
statements of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except to the
extent corrected by a subsequently filed report, form or document. The audited
consolidated financial statements and unaudited interim financial statements and
schedules of STPD contained in such public reports (or incorporated therein by
reference) were prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as noted therein, and fairly
present the consolidated financial condition and results of operations of STPD
and its subsidiaries as at the respective dates thereof and for the periods
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<PAGE> 18
indicated therein, subject (in the case of interim unaudited financial
statements) to normal year-end audit adjustments, none of which will be
material.
4.07 NON-CONTRAVENTION. Neither STPD nor any of its subsidiaries are in
default under, and no condition exists that with notice or lapse of time would
constitute a default of STPD or any of its subsidiaries under, (i) any mortgage,
loan agreement, evidence of indebtedness, or other instrument evidencing
borrowed money to which STPD or any of its subsidiaries are bound, or (ii) any
judgment, order, or injunction of any court, arbitrator, or governmental agency.
4.08 NO UNDISCLOSED LIABILITIES. Except for liabilities and obligations
incurred in the ordinary course of business since September 30, 1996, neither
STPD nor any of its subsidiaries nor any of the property or assets of STPD or
any of its subsidiaries is subject to any material liability or obligation that
was required to be included or adequately reserved against in STPD's
consolidated unaudited interim financial statements for the period ended
September 30, 1996 as filed with the Commission or described in the notes
thereto and was not so included, reserved against, or described.
4.09 INVESTIGATIONS; LITIGATION. There are no claims, actions, suits or
proceedings by any private party or by any governmental body or authority
(including any nongovernmental self regulatory agency), nor any investigations
or reviews by any federal, state, local or foreign body or authority (including
any nongovernmental self regulatory agency), against or affecting STPD or any of
its subsidiaries, that are pending or, to STPD's knowledge threatened, at law or
in equity To the best of STPD's knowledge, there is no basis for any such
investigation, review, claim, action, suit or proceeding.
4.10 ABSENCE OF CERTAIN CHANGES. Except as authorized by this Agreement,
and except as in the ordinary course of business and consistent with past
practice, since September 30, 1996, there has not been:
(a) Any material adverse change in the business, financial condition,
operations or assets of STPD or any of its subsidiaries;
(b) Any damage, destruction, or loss, whether covered by insurance or
not, materially adversely affecting the properties or business of STPD or any of
its subsidiaries;
(c) Any sale or transfer by or STPD or any tangible or intangible
asset other than in the ordinary course of business, any mortgage or pledge or
the creation of any security interest, lien, or encumbrance on any such asset,
or any lease of property, including equipment, other than tax liens with respect
to taxes not yet due and contract rights of customers in inventory, with the
exception of the loans incurred by STPD in connection with its mortgage loan to
the Project;
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<PAGE> 19
(d) Any declarations, setting aside, or payment of a distribution in
respect of or the redemption or other repurchase by STPD of any stock of STPD;
(e) Any material transaction not in the ordinary course of business of
STPD or any of its subsidiaries;
(f) The lapse of any material trademark, assumed name, trade name,
service mark, copyright, or license of any application with respect to the
foregoing;
(g) The grant of any increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit-sharing, or other plan) other than customary increases on a periodic
basis or required by agreement or understanding in the ordinary course of
business and in accordance with past practice;
(h) The discharge or satisfaction of any material lien or encumbrance
or the payment of any material liability other than current liabilities in the
ordinary course of business;
(i) The making of any material loan, advance, or guaranty to or for
the benefit of any person except the loan granted by NationsCredit in connection
with the construction of The Badlands Golf Course ("Badlands Loan"), the
creation of accounts receivable in the ordinary course of business; or
(j) An agreement to do any of the foregoing.
4.11 TITLE TO PROPERTY; CONDITION. STPD and/or one of its subsidiaries has
good and merchantable right, title and interest in and to all of the real and
personal property and all other assets reflected in STPD's consolidated balance
sheet as of September 30, 1996, included in STPD's unaudited consolidated
financial statements which are set forth in STPD's most recent Form 10-QSB for
the quarter ended September 30, 1996 ("STPD'S LATEST BALANCE SHEET") and all of
the assets purchased or otherwise acquired since the date of STPD's Latest
Balance Sheet (except for such assets as may have been sold or otherwise
disposed of in the ordinary course of business since the date of STPD's Latest
Balance Sheet), and such assets are not subject to any mortgage, pledge, lien or
security interest of any kind or nature (whether or not of record) not reflected
in STPD's Latest Balance Sheet, except (i) The Badlands Loan, (ii) statutory
liens for property taxes not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing the payment or
performance of any obligation of STPD or its subsidiaries, the payment or
performance of which is not delinquent, or that is payable without interest or
penalty subsequent to the date on which this representation is given, (iii)
claims, easements, liens, and other encumbrances of record pursuant to filings
under real property recording statutes which do not interfere with the
marketability of title of such property, and (iv) as described in STPD's Latest
Balance Sheet or the notes thereto. The items of equipment and other personal
property of each of STPD and its subsidiaries that are necessary to the conduct
of their respective businesses of are in good operating condition and repair and
fit for the intended
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purpose thereof, ordinary wear and tear excepted, and no material maintenance,
replacement or repair has been deferred or neglected.
4.12 TAX RETURNS. Each of STPD and its subsidiaries has prepared in a
substantially correct manner and has filed all federal, state, local, and
foreign tax returns and reports heretofore required to be filed on or prior to
the date hereof and has paid all taxes shown as due thereon. No taxing authority
has asserted any deficiency in the payment of any tax or informed STPD or any of
its subsidiaries that it intends to assert any such deficiency or to make any
audit or other investigation of STPD or any of its subsidiaries for the purpose
of determining whether such deficiency should be asserted against STPD or any of
its subsidiaries.
4.13 INSURANCE. Each of STPD and its subsidiaries maintains adequate
insurance policies covering fire and other casualty, general liability, theft,
life, workers' compensation, health, directors and officers liability, business
interruption and other forms of insurance as are customarily carried by similar
businesses. Neither STPD nor any of its subsidiaries are in default with respect
to its respective obligations under such policy maintained by it. Neither STPD
nor any of its subsidiaries have been notified of the cancellation of any of its
respective insurance policies or of any material increase in the premiums to be
charged for such insurance policies.
4.14 COMPLIANCE WITH LAW. To the knowledge of STPD, the assets, properties,
business and operations of STPD and all of its subsidiaries are and have been in
compliance in all material respects when taken a whole with all laws applicable
to the ownership and conduct of their assets, properties, business and
operations.
4.15 NO BROKERS OR FINDERS. Neither STPD nor any of its officers, directors
or employees has employed any broker, agent or finder or incurred any liability
for any brokerage fees, agents' commissions or finders' fees in connection with
the transactions contemplated hereby.
4.16 ACCURACY OF INFORMATION. To the knowledge of STPD, no representation
or warranty by STPD in this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading as of the date of the
representation or warranty.
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<PAGE> 21
ARTICLE V
ARTICLE V (Intentionally Omitted)
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<PAGE> 22
ARTICLE VI
COVENANTS OF THE SELLERS
------------------------
Except in the ordinary course of business and consistent with past
practice, and except as may be expressly authorized by this Agreement or
otherwise agreed in writing by the Buyers, and to the extent of their authority
under the LVGC Agreement and to the extent of their authority as officers and
directors of GCA, from the date hereof until the Closing:
6.01 AGREEMENTS AS TO SPECIFIED MATTERS. The Sellers shall not permit LVGC
or GCA to:
(a) Declare, pay or set aside for payment any distribution in respect
of any Interest; or
(b) Issue any Interests or issue or sell any securities convertible
into, or exchangeable for, or options, warrants, or rights to subscribe to, any
Interests or repurchase, reacquire, cancel or redeem any such Interests (in each
case, whether in whole or in part), or admit any new member to LVGC.
6.02 CONDUCT OF LVGC'S BUSINESS. Sellers shall cause each of LVGC and GCA
to operate its respective business in accordance with the reasonable judgment of
its Managing Member (as such term is defined and used in the LVGC Agreement)
(with respect to LVGC) or its Board of Directors (with respect to GCA), as the
case may be, diligently and in good faith, consistent with past management
practices. Each of LVGC and GCA will continue to use its reasonable efforts to
preserve its present relationships with persons having business dealings with
it. LVGC shall not incur any liabilities or obligations other than in the
ordinary course of business.
6.03 ASSETS. Sellers shall cause each of LVGC and GCA to use, preserve and
maintain its respective assets, property, and rights now owned by it, as far as
practicable, in the ordinary course of business, to the same extent and in the
same condition as said assets, property, and rights are on the date of this
Agreement. Without the prior consent of the Buyers, the Sellers shall not permit
LVGC or GCA to encumber or dispose of any of its respective assets or make any
commitments relating to such assets, property, or business, except in the
ordinary course of LVGC's or GCA's (as the case may be) business.
6.04 INSURANCE. Sellers shall cause each of LVGC and GCA to keep or cause
to be kept in effect and undiminished the insurance now in effect on its
respective various properties and assets, and will purchase such additional
insurance, at the Buyers' cost, as the Buyers may request.
6.05 EMPLOYEES. Sellers shall not permit LVGC to hire or employ, or offer
to hire or employ, any person.
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6.06 NO VIOLATIONS. Sellers shall cause each of LVGC and GCA to comply in
all material respects with all statutes, laws, ordinances, rules, and
regulations applicable to it in the ordinary course of business.
6.07 NO SOLICITATION. The Sellers shall not permit LVGC or GCA or its
respective agents to, directly or indirectly, solicit, or initiate discussions
or negotiations with, provide any nonpublic information to, or enter into any
agreement with, any third party concerning any disposition of any of the
Interests, any of the assets of LVGC, the Property or the Project (other than
pursuant to this Agreement) (such proposals, announcements or transactions being
called herein "Acquisition Proposals"). Notwithstanding the foregoing, Sellers
shall be able to conduct negotiations for and enter into a standby agreement or
agreements ("Standby Agreement") which is initiated by a third party or parties,
provided that Sellers shall not disclose the terms of this Agreement to any
third party or parties and any such Standby Agreement shall take effect only in
the event the transactions contemplated herein are not consummated through no
fault or responsibility of Sellers.
6.08 CONSUMMATION; CONSENTS; REMOVAL OF OBJECTIONS. The Sellers shall, and
to the extent of their authority, shall cause LVGC and GCA to, subject to the
terms and conditions herein provided, use their respective best efforts (which
shall not include incurring any additional costs or liabilities in the case of
GCA and costs and liabilities not in excess of $25,000 in the case of LVGC) to
take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation; (i) obtaining all Consents of any person
or entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein; (ii) the removal or
satisfaction, if possible, of any objections to the validity or legality of the
transactions contemplated herein; and (iii) the satisfaction of the conditions
to consummation of the transactions contemplated hereby.
6.09 SUPPLEMENTS TO SELLER DISCLOSURE SCHEDULE. Prior to the Closing, the
Sellers shall supplement or amend the Seller Disclosure Schedule with respect to
any event or development which is necessary to correct any information set forth
on the Seller Disclosure Schedule or in any representation or warranty of any of
the Sellers which has been rendered inaccurate by reason of such event or
development.
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<PAGE> 24
ARTICLE VII
COVENANTS OF STPD
-----------------
Except in the ordinary course of business and consistent with past
practice, and except as may be expressly authorized by this Agreement or
otherwise agreed in writing by the Sellers, from the date hereof until the
Closing:
7.01 AGREEMENTS AS TO SPECIFIED MATTERS. STPD shall not:
----------------------------------
(a) Declare, pay or set aside for payment any dividend or other
distribution in respect of its capital stock;
(b) Except as set forth in Schedule 4.01, issue any shares of its
capital stock or issue or sell any securities convertible into, or exchangeable
for, or options, warrants, or rights to subscribe to, any shares of its stock or
subdivide, or in any way reclassify any shares of its capital stock or
repurchase, reacquire, cancel or redeem any such shares.
7.02 CONDUCT OF STPD'S BUSINESS. STPD shall operate its business in
accordance with the reasonable judgment of its management diligently and in good
faith, consistent with past management practices.
7.03 ASSETS. STPD shall use, preserve and maintain the assets, property,
and rights now owned by it, as far as practicable, in the ordinary course of
business, to the same extent and in the same condition as said assets, property,
and rights are on the date of this Agreement, and no unusual or novel methods of
manufacture, purchase, sale, management, or operation of said properties or
business or accumulation or valuation of inventory will be made or instituted.
7.04 NO VIOLATIONS. STPD shall comply in all material respects with all
statutes, laws, ordinances, rules, and regulations applicable to it.
7.05 CONSUMMATION; CONSENTS; REMOVAL OF OBJECTIONS. STPD shall, subject to
the terms and conditions herein provided, use its best efforts to take or cause
to be taken all actions and do or cause to be done all things necessary, proper
or advisable under applicable laws to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated hereby, including without
limitation: (i) obtaining all Consents of any person or entity, whether private
or governmental, required in connection with the consummation of the
transactions contemplated herein; (ii) the removal or satisfaction, if possible,
of any objections to the validity or legality of the transactions contemplated
herein; and (iii) the satisfaction of the conditions to consummation of the
transactions contemplated hereby.
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<PAGE> 25
7.06 SUPPLEMENTS TO DISCLOSURE SCHEDULE. Prior to the Closing, STPD shall
supplement or amend the STPD Disclosure Schedule with respect to any event or
development which is necessary to correct any information set forth on the STPD
Disclosure Schedule or in any representation and warranty of STPD which has been
rendered inaccurate by reason of such event or development.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF THE BUYERS
--------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
obligations of the Buyers to effect the transactions contemplated herein will be
subject to the satisfaction at or prior to the Closing (unless another date is
specified) of each of the following conditions:
8.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Sellers and Ranchito contained in this Agreement, including,
without limitation, in the Seller Disclosure Schedule, will be in all material
respects true, complete and accurate as of the date when made and at and as of
the Closing as though such representations and warranties were made at and as of
such time, except for changes specifically permitted or contemplated by this
Agreement, and except insofar as such representations and warranties relate
expressly and solely to a particular date or period, in which case they will be
true and correct in all material respects at the Closing with respect to such
date or period.
8.02 DUE DILIGENCE. Buyers shall complete a due diligence review of LVGC,
the Property and the Project to the satisfaction of Buyers in their sole and
absolute discretion on or before 5:00 p.m. Pacific Standard Time December 18,
1996 ("Due Diligence Date").
8.03 FINANCING. Buyers shall on or before February 15, 1997 obtain suitable
debt and/or equity financing for the purchase of Sellers' interests and the
completion of the Project on terms satisfactory to Buyers, STPD's Board of
Directors, and Ranchito.
8.04 PERFORMANCE. The Sellers and Ranchito will have performed and complied
in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied with by them
at or prior to the Closing.
8.05 ASSIGNMENT OF CERTAIN CONTRACTS. The Lease, the Sublease, the
Construction Contract and each of the Contracts shall have been assigned and
transferred to LVGC, pursuant to documentation reasonably satisfactory in form
and substance to the Buyers and their respective counsel.
8.06 REQUIRED APPROVALS, WAIVERS AND CONSENTS.
----------------------------------------
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(a) All action required by law and otherwise to be taken by the
Sellers and Ranchito to authorize the execution, delivery and performance of
this Agreement by the Sellers and Ranchito and the consummation of the
transactions contemplated hereby will have been duly and validly taken.
(b) All Approvals, Waivers and Consents of or from all third parties
required hereunder in order for the Sellers and Ranchito to consummate the
transactions contemplated herein will have been delivered, made or obtained, and
the Buyers will have received copies thereof.
8.07 TITLE INSURANCE. A leasehold owners binder of title insurance on ALTA
Form (4-6-90), in a form satisfactory to the Buyers and their counsel in their
sole discretion, will have been obtained and made available to the Buyers at
Buyer's expense by the Due Diligence Date, which binder shall contain such
affirmative assurances and coverages as are satisfactory to the Buyers in their
sole discretion, including, without limitation, assurance that the Project can
be completed in accordance with the Plans without violation of any of the
matters listed on Schedule B of said policy. Upon receipt of the title insurance
binder, Buyer shall give Seller written notice of any defects or exceptions in
title. Any exception or defect not reported to Sellers by the Due Diligence Date
shall be waived. It shall, however, be a condition of closing that no new
exceptions or defects arise from the date from the Due Diligence date.
8.08 ENVIRONMENTAL UPDATE. An update dated within 30 days prior to the
Closing Date (the "Update Report") of the Environmental Report will have been
obtained by Buyer, at Buyer's expense by the Due Diligence Date, which Update
Report shall not disclose any new material facts concerning the condition of the
Property, and shall include the agreement by Converse that Buyers may rely on
the contents of the Environmental Report as if it were originally prepared for
the Buyers.
8.09 ALTA SURVEY. An ALTA as-built survey of the Property, satisfactory in
all respects to the Buyers and their respective counsel in their sole
discretion, shall have been obtained by Buyer at Buyer's expense by the Due
Diligence Date.
8.10 ADVERSE CHANGES. From the date of this Agreement to the Closing, no
material adverse change (whether or not such change is referred to or described
in any supplement to the Seller Disclosure Schedule) will have occurred in the
business, financial condition, working capital, assets, liabilities (absolute,
accrued, contingent or otherwise) or operations of LVGC, GCA (to the extent
relating to the Property or the Project).
8.11 NO PROCEEDING OR LITIGATION. No suit, action, investigation, inquiry
or other proceeding by any governmental or regulatory authority or other person
or entity will have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby or which, if successfully
asserted, would individually or in the aggregate otherwise have an LVGC Material
Adverse Effect.
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<PAGE> 27
8.12 LEGISLATION. No law will have been enacted which prohibits, restricts
or delays the consummation of the transactions contemplated hereby or any of the
conditions to the consummation of such transaction.
8.13 ACCEPTANCE BY COUNSEL. The form and substance of all legal matters
hereby and of all papers delivered hereunder will be reasonably acceptable to
each of Buyers' attorneys.
8.14 CERTIFICATES. The Buyers will have received such certificates of LVGC,
GCA, each of the Sellers and Ranchito, in a form and substance reasonably
satisfactory to the Buyers, dated the Closing Date, to evidence compliance with
the conditions set forth in this Article VIII and such other matters as may be
reasonably requested by the Buyers.
8.15 CLOSING DELIVERIES. At the Closing, the following shall be delivered:
(c) Instruments of Assignment relating to the Sellers' respective
Interests, duly executed and acknowledged by each of the Sellers.
(d) A Consent to Assignment and Modification of Lease and Concession
Agreement in the form attached hereto as EXHIBIT J, duly executed, attested and
acknowledged by all parties thereto.
(e) An Assignment of Sublease and Guaranty with Spousal Consents in
the form attached hereto as EXHIBIT K, duly executed by subtenant and the
Guarantors under the Guaranty of Sublease dated November 4, 1996 and their
respective spouses.
(f) An Estoppel Certificate in the form attached hereto as EXHIBIT L,
duly executed by Pro-Golf of Nevada, L.L.C.
(g) Such affidavits and indemnities as the Buyers' title insurance
company may reasonably require in order to omit from its title insurance policy
all exceptions for (i) judgments, bankruptcies or other returns against persons
or entities whose names are the same as or similar to Sellers' name; (ii)
parties in possession other than under the rights to possession granted under
the Leases; and (iii) mechanics' liens.
(h) A Contractor's Consent to Assignment and Estoppel Agreement in the
form attached hereto as EXHIBIT M, duly executed by the Contractor.
(i) Complete original prints of the Plans for the Project.
(j) Original prints (or photocopies if original prints are unavailable
to the Seller) of all current site plans, surveys, soil and substrata studies,
architectural drawings, engineering plans and studies, floor plans, landscape
plans and other plans or studies of any kind
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that relate to all or any part of the Property or the Project, as well as copies
of all certificates, licenses, permits, authorizations and approvals issued for
or with respect to the Property or the Project by governmental and
quasi-governmental authorities having jurisdiction.
(k) An Architect's Consent to Assignment and Estoppel Agreement in the
form attached hereto as EXHIBIT N, duly executed by the Architect, Scott Bernet
Architects, A.P.C..
(l) The consent of Clark County, Nevada to the Sublease.
(m) A Cooperation Agreement between GCA and LVGC, in the form attached
hereto as EXHIBIT O, with respect to the permits and approvals relating to the
Property and the Project, duly executed by the Sellers in their capacities as
shareholders and officers of GCA.
(n) An opinion of Allen, Matkins, Leck, Gamble and Malloy LLP, counsel
to the Sellers, in the form attached hereto as EXHIBIT P.
(o) A Release Agreement among the Sellers, the Buyers and LVGC, in the
form attached hereto as EXHIBIT Q, relating to the release of any claims of the
Sellers against LVGC, duly executed by each of the Sellers (the "Release
Agreement").
(p) The Amended LVGC Agreement in accordance with terms of Exhibit A,
executed and delivered by Buyers and Ranchito.
(q) The New Management Agreement in the form attached hereto as
Exhibit B executed and delivered by STPD and LVGC.
(r) The Registration Rights Agreement in the form attached hereto as
Exhibit F executed and delivered by Sellers and STPD.
(s) The Consulting and Noncompetition Agreement in the form attached
hereto as EXHIBIT E executed and delivered by LVGC and Selleck.
ARTICLE IX
CONDITIONS TO THE OBLIGATION OF THE SELLERS
-------------------------------------------
Notwithstanding anything in this Agreement to the contrary, the obligations
of the Sellers to effect the transactions contemplated herein will be subject to
the satisfaction at or prior to the Closing of each of the following conditions:
9.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Buyers contained in this Agreement, including, without
limitation, the STPD Disclosure Schedule,
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will be in all materials respects true, complete and accurate as of the date
when made and at and as of the Closing as though such representations and
warranties were made at and as of such time, except for changes permitted or
contemplated by this Agreement, and except insofar as the representations and
warranties relate expressly and solely to a particular date or period, in which
case they will be true and correct in all material respects at the Closing with
respect to such date or period.
9.02 PERFORMANCE. The Buyers will have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by the Buyers at or
prior to the First Closing.
9.03 Required Approvals and Consents.
-------------------------------
(a) All action required to be taken by the Buyers to authorize the
execution, delivery and performance of this Agreement by the Buyers and the
consummation of the transactions contemplated hereby will have been duly and
validly taken.
(b) All Consents of or from all third parties required hereunder in
order for the Buyers to consummate the transactions contemplated herein will
have been delivered, made or obtained, and the Sellers will have received copies
thereof.
9.04 ADVERSE CHANGES. From the date of this Agreement to the Closing, no
material adverse change (whether or not such change is referred to or described
in any supplement to the STPD Disclosure Schedule) will have occurred in the
business, financial condition, working capital, assets, liabilities (absolute,
accrued, contingent or otherwise) or operations of STPD.
9.05 NO PROCEEDING OR LITIGATION. No suit, action, investigation, inquiry
or other proceeding by any governmental or regulatory authority or other person
or entity will have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby or which, if successfully
asserted, would individually or in the aggregate otherwise have an STPD Material
Adverse Effect.
9.06 LEGISLATION. No law will have been enacted which prohibits, restricts
or delays the consummation of the transactions contemplated hereby or any of the
conditions to the consummation of such transactions.
9.07 ACCEPTANCE BY COUNSEL. The form and substance of all legal matters
contemplated hereby and of all papers delivered hereunder will be reasonably
acceptable to Allen, Matkins, Leck, Gamble & Mallory LLP.
9.08 CERTIFICATES. The Sellers will have received such certificates of the
Buyers' respective officers, in form and substance reasonably acceptable to the
Sellers and Ranchito, dated
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the First Closing Date, to evidence compliance with the conditions set forth in
this Article IX and such other matters as may be reasonably requested by the
Sellers.
9.09 TERMINATION OF GUARANTEE. Prior to or at the Closing, any and all
guarantees made by GCA in favor of STPD with respect to that certain loan in the
aggregate amount of $1,100,000 made by STPD to LVGC shall be terminated, and any
other obligations of GCA with respect to the foregoing loan shall be assumed by
LVGC. The guaranty shall be marked "Cancelled" and returned to GCA.
ARTICLE X
TERMINATION AND ABANDONMENT
---------------------------
10.01 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time, but not later
than the Closing:
(a) By mutual written consent of the Buyers and the Sellers; or
(b) By the Buyers on or before December 18, 1996 if Buyers are not
satisfied with their due diligence of LVGC, the Property and the Project in
their sole and absolute discretion.
(c) By the Buyers on or before February 15, 1997 if Buyers have not
obtained suitable financing under Section 8.03.
(d) By the Buyers on or before April 10, 1997 if any of the conditions
provided for in Article VIII to be satisfied or waived by the Closing Date has
not been satisfied or waived in writing by the Buyers prior to such date; or
(e) By the Sellers on or before April 10, 1997 if any of the
conditions provided for in Article IX have not been satisfied or waived in
writing by the Sellers prior to such date.
10.02 PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to Section 10.01, written notice thereof will forthwith be
given to the other party or parties, and the provisions of this Agreement
(except to the extent provided in Section 12.01) will terminate, and the
transactions contemplated herein will be abandoned, without further action by
any party hereto. If this Agreement is terminated as provided herein: (i) each
party will, upon request, redeliver all documents, work papers and other
material of any other party (and all copies thereof) relating to the
transactions contemplated herein, whether so obtained before or after the
execution hereof, to the party furnishing the same; (ii) the confidentiality
obligations of Section 13.02 will continue to be applicable; and (iii) except as
provided in this Section 10.02, no party will have any liability for a breach of
any representation, warranty, agreement, covenant or
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other provision of this Agreement, unless such breach was due to a willful or
bad faith action or omission of such party or any representative, agent,
employee or independent contractor thereof.
10.03 MEMBERSHIP INTEREST REPURCHASE RIGHT. In the event that this
Agremeent is terminated by Buyer pursuant to Section 8.03, STPD shall have the
right at its sole election to require Sellers to purchase the interests in LVGC
purchased by STPD from Larry K. White and Donald Weber equaling 21.5% of the
outstanding interests of LVGC ("Minority Interest") for a purchase price of
$1,167,000, ("Purchase Price") by notifying Sellers in writing of said election
and of Seller's obligation to purchase the Minority Interest from STPD. Sellers
shall, within one hundred twenty (120) days of the date of such notice from
STPD, consummate the purchase of the Minority Interest by paying the Purchase
Price to STPD in cash, certified funds, or by wire transfer of immediately
available funds to an account specified by STPD in writing and receive in
exchange therefor, an assignment of said Minority Interest and STPD's rights
under its agreement with White and Weber. If Sellers default in the purchase of
the Minority Interest as aforesaid, STPD shall become on the day of default the
exclusive manager of the Project in accordance with the Management Agreement set
forth as Exhibit B. This right of exclusive management shall constitute
liquidated damages for Sellers' default and shall be STPD's sole remedy in lieu
of any other remedy at law or in equity.
10.04 ADJUSTMENT TO MANAGEMENT FEE. In the event that STPD has not
terminated this Agreement pursuant to Section 8.03 and STPD does not exercise
its right under Section 10.03 above, then Sellers and STPD shall re-negotiate
the management fee to STPD for the Project, but in no event shall STPD receive a
management fee of less than 3% of gross revenues.
10.05 STPD DEFAULT. In the event that STPD has terminated this Agreement
pursuant to Section 8.03 and subsequently defaults and does not consummate the
closing of the transactions hereunder due to no fault or responsibility of
Sellers, then Seller shall be entitled to purchase the Minority Interest and an
assignment of STPD's rights under its agreement with White and Weber from STPD
for the sum of $700,200 payable by cash, certified funds or by wire transfer of
immediately available funds to an account specified by STPD in writing. In order
to exercise this right, Seller must notify STPD in writing within thirty (30)
days of the date of default and purchase the Minority Interest within sixty (60)
days thereafter. This right to purchase and receive an assignment of the
Minority Interest from Buyer shall constitute liquidated damages for Buyer's
defaults and shall be Sellers' sole remedy in lieu of any other remedy at law or
in equity. If, however, STPD has not purchased the Minority Interest, then STPD
shall pay to Sellers liquidated damages of $100,000 as Sellers sole remedy in
lieu of any other remedy at law or in equity.
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ARTICLE XI
SURVIVAL AND INDEMNIFICATION
----------------------------
11.01 SURVIVAL. The representations and warranties of each of the parties
hereto will survive the Closing until the first anniversary of the Closing Date.
11.02 INDEMNIFICATION BY THE SELLERS. Each Seller, jointly and severally
(but severally and not jointly with respect to such Seller's representations and
warranties set forth in Article II), agrees to indemnify and hold harmless each
of the Buyers and its respective directors, officers, employees and agents, from
and against any and all loss, liability or damage suffered or incurred by any of
them (including, without limitation, legal fees and expenses incurred in
connection with enforcing the indemnification rights of the Buyers pursuant to
this Section 11.02), by reason of (i) any untrue representation of, or breach of
warranty by, the Sellers in any part of this Agreement, provided, however, that
no claim for indemnity may be made pursuant to this Section 11.02 after the
first anniversary of the Closing Date; and (ii) any nonfulfillment of any
covenant, agreement or undertaking of any of the Sellers in any part of this
Agreement which by its terms is to remain in effect after the Closing and has
not been specifically waived in writing at the Closing by the Buyer or Buyers
entitled to the benefits thereof.
11.03 INDEMNIFICATION BY THE BUYERS. Buyer agrees to indemnify and hold
harmless each of the Sellers and its respective agents, from and against any and
all loss, liability or damage suffered or incurred by any of them (including,
without limitation, legal fees and expenses incurred in connection with
enforcing the indemnification rights of the Sellers pursuant to this Section
11.04), by reason of (i) any untrue representation of, or breach of warranty by,
the Buyers in any part of this Agreement, provided, however, that no claim for
indemnity may be made pursuant to this Section 11.03 after the first anniversary
of the Closing ; and (ii) any nonfulfillment of any covenant, agreement or
undertaking of any of the Buyers in any part of this Agreement which by its
terms is to remain in effect after the First Closing and has not been waived in
writing at the First Closing by the Seller or Sellers entitled to the benefits
thereof.
11.04 CLAIMS FOR INDEMNIFICATION. The parties intend that all
indemnification claims hereunder be made as promptly as practicable by the party
seeking indemnification (the "Indemnified Party"). Whenever any claim arises for
indemnification hereunder, the Indemnified Party will promptly notify the party
from whom indemnification is sought (the "Indemnifying Party") of the claim and,
when known, the facts constituting the basis for such claim. In the case of any
such claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings of a third party, the notice to the Indemnifying
Party will specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Indemnified Party will not settle or compromise
any claim by a third party for which it is entitled to indemnification hereunder
without the prior written consent of the Indemnifying Party, which will not be
unreasonably withheld. If the Indemnifying Party is of the opinion that the
Indemnified Party is not entitled to indemnification, or is not entitled to
indemnification in the amount claimed in such
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<PAGE> 33
notice, it will deliver, within ten (10) business days after the receipt of such
notice, a written objection to such claim and written specification in
reasonable detail of the aspects or details objected to, and the grounds for
such objection. If the Indemnifying Party filed timely written notice of
objection to any claim for indemnification, the validity and amount of such
claim will be determined by arbitration pursuant to Section 13.17 hereof.
ARTICLE XII
DEVELOPER'S FEE
12.01 DEVELOPER'S FEE. Sellers shall be entitled to be paid out of the
costs of the Project a developer's fee. which will be paid in addition to the
Cash Consideration, of $137,500 ("Developer's Fee") to be paid on the earlier of
(a) the closing of a first Deed of Trust loan with an institutional lender which
approves the Developer's Fee, provided that STPD has been paid its development
fee of $112,500 as a priority and (b) the Closing Date.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 EXPENSES. Each of the parties hereto will bear its own costs, fees
and expenses in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, fees,
commission and expenses payable to brokers, finders, investment bankers,
consultants, exchange or transfer agents, attorneys, accountants and other
professionals, whether or not the transactions contemplated herein are
consummated.
13.02 CONFIDENTIALITY. The parties hereto shall not use, or permit the use
of, any of the information relating to any other party hereto furnished to it in
connection with the transactions contemplated herein ("Information") in a manner
or for a purpose detrimental to such other party or otherwise than in connection
with the transaction, and they shall not disclose, divulge, provide or make
accessible (collectively, "Disclose"), or permit the disclosure of, any of the
Information to any person or entity, other than their respective directors,
officers, employees, investment advisors, accountants, counsel and other
authorized representatives and agents, except as may be required by judicial or
administrative process or, in the opinion of such party's regular counsel, by
other requirements of law, unless the disclosing party first obtains the prior
written consent of the other parties hereto. The term "Information" as used
herein will not include any information relating to a party which the party
disclosing such information can show: (i) to have been in its possession prior
to its receipt from another party hereto; (ii) to be now or to later become
generally available to the public through no fault of the disclosing party;
(iii) to have been available to the public at the time of its receipt by the
disclosing party; (iv) to have been received separately by the disclosing party
in an unrestricted manner from a person entitled to disclose such
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<PAGE> 34
information; or (v) to have been developed independently by the disclosing party
without regard to any information received in connection with this transaction.
The parties hereto also shall promptly return to the party from whom originally
received all original and duplicate copies of written materials containing
Information should the Closing not occur. A party hereto will be deemed to have
satisfied its obligations to hold the Information confidential if it exercises
the same care as it takes with respect to its own similar information. This
Section 13.02 shall survive the Closings and any termination of this Agreement.
13.03 PUBLIC ANNOUNCEMENTS. None of the parties hereto will make any public
announcement with respect to the transactions contemplated herein without the
prior written consent of the other parties, which consent will not be
unreasonably withheld or delayed; provided, however, that any of the parties
hereto may at any time make any announcements which are required by applicable
law so long as the party so required to make an announcement promptly upon
learning of such requirement notifies the other parties of such requirement and
discusses with the other parties in good faith the exact proposed wording of any
such announcement.
13.04 RESTRICTIVE LEGEND. Each of the Sellers consents to the placing of
the following legend on the certificate or certificates for STPD Shares to be
issued to each such Seller in connection with the purchase of their respective
Interests by the Buyers hereunder:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS AND MAY BE SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED ONLY IF A REGISTRATION
STATEMENT WITH RESPECT TO SUCH TRANSACTION IS IN EFFECT PURSUANT
TO THE PROVISIONS OF SUCH LAW OR IF, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER, AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS IS AVAILABLE.
13.05 MAINTENANCE OF AND ACCESS TO BOOKS AND RECORDS. For three (3) years
after the date hereof, the Buyers and Ranchito shall cause LVGC to maintain all
of its financial, accounting, tax and other books and records with respect to
any period prior to the date hereof and to cooperate with and provide the
Sellers and their authorized representatives reasonable access to any and all of
such records during normal business hours.
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<PAGE> 35
13.06 Further Assurances; Cooperation; Notification.
---------------------------------------------
(a) Each party hereto will, before, at and after the Closings, execute
and deliver such instruments and take such other actions as the other party or
parties, as the case may be, may reasonably require in order to carry out the
intent of this Agreement.
(b) At all times from the date hereof until the Closing, each party
will promptly notify all other parties in writing of the occurrence of any event
which it reasonably believes will or may result in a failure by such party to
satisfy the conditions specified in Article VI and Article VII hereof.
13.07 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended or modified by the parties hereto at any time prior to the
Closing with respect to any of the terms contained herein, provided, however,
that all such amendments and modifications must be in writing duly executed by
all of the parties hereto.
13.08 WAIVER OF COMPLIANCE: CONSENTS. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be expressly waived
in writing by the party or parties entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy will preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent will be given in writing in
the same manner as for waivers of compliance.
13.09 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement will entitle
any person or entity (other than a party hereto and his, her or its respective
successors and assigns permitted hereby) to any claim, cause of action, remedy
or right of any kind.
13.10 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder will be made in writing and will be deemed to
have been duly given and effective: (i) on the date of delivery, if delivered
personally; (ii) on the earlier of the fourth (4th) day after mailing or the
date of the return receipt acknowledgment, if mailed, postage prepaid, by
certified or registered mail, return receipt requested, or delivered by a
nationally recognized overnight delivery firm; or (iii) on the date of
transmission, if sent by facsimile, telecopy, telegraph, telex or other similar
telegraphic communications requirement:
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<PAGE> 36
If to the Sellers:
To: Daniel F. Selleck, Sellers' Representative
c/o Selleck Properties, Inc.
5655 Lindero Canyon Road, #301
Westlake Village, California 92136
Phone: (818) 991-7890 Ext. 2
Fax: (818) 991-8811
With a copy to:
Allen, Matkins, Leck, Gamble & Mallory LLP
515 South Figueroa Street, Seventh Floor
Los Angeles, California 90071-3398
Attention: Anthony S. Bouza, Esq.
Phone: (213) 955-5614
Fax: (213) 620-8816
or to such other person or address as the Sellers' Representative will furnish
to the other parties herein in writing in accordance with this Section 12.09.
If to the Buyers:
To:
Senior Tour Players Development, Inc.
266 Beacon Street
Boston, Massachusetts 02116
Attention: Stanton V. Abrams, President
Phone: (617) 266-3600
Fax: (617) 266-1343
With a copy to:
Davis, Malm & D'Agostine, P.C.
One Boston Place
Boston, Massachusetts 02108
Attention: Alan L. Stanzler, Esq.
Phone: (617) 367-2500
Fax: (617) 523-6215
-35-
<PAGE> 37
If to Ranchito:
To: The Ranchito Company, LLC
Lodwrick M. Cook
13849 Weddington Street
Sherman Oaks, California 91401
With a copy to:
Sherri Cook
The Ranchito Company, LLC
13849 Weddington Street
Sherman Oaks, California 91401
or to such other person or address as the relevant Buyer will furnish to the
other parties hereto in writing in accordance with this Section 12.09 (provided,
however, that any such writing shall be deemed furnished to all of the Sellers
if furnished to the Sellers' Representative).
13.11 ASSIGNMENT. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned (whether voluntarily,
involuntarily, by operation of law or otherwise) by any of the parties hereto
without the prior written consent of the other parties. In no event shall STPD
be relieved of liability hereunder by its transfer of certain rights to its
nominee.
13.12 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the internal
substantive laws of the State of Nevada (without regard to the laws of conflict
that might otherwise apply) as to all matters, including without limitation
matters of validity, construction, effect, performance and remedies.
13.13 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
13.14 HEADINGS; REFERENCES. The table of contents and the headings of the
Articles and Sections of this Agreement are inserted for convenience only and
shall not constitute a part hereof. All references to Articles, Sections,
Schedules and Exhibits are to the Articles and Sections hereof, and the Exhibits
and Schedules hereto, unless the context clearly indicates otherwise.
13.15 ENTIRE AGREEMENT; SEVERABILITY. The Seller Disclosure Schedule, the
STPD Disclosure Schedule and all other Schedules and Exhibits and other writings
referred to in this Agreement and in such Disclosure Schedules or any such other
Schedule or Exhibit or other
-36-
<PAGE> 38
writing are part of this Agreement, and together with this Agreement they embody
the entire agreement and understanding of the parties hereto in respect to the
transactions contemplated by this Agreement and together they are referred to as
"this Agreement" or the "Agreement." There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all prior
and contemporaneous oral and written agreements and understandings between the
parties with respect to the transaction or transactions contemplated by this
Agreement. Provisions of this Agreement shall be interpreted to be valid and
enforceable under applicable law to the extent that such interpretation does not
materially alter this Agreement; provided, however, that if any such provision
shall become invalid or unenforceable under applicable law, such provision will
be stricken to the extent necessary and the remainder of such provisions and the
remainder of this Agreement will continue in full force and effect.
13.16 INJUNCTIVE RELIEF. It is expressly agreed among the parties hereto
that monetary damages would be inadequate to compensate a party hereto for any
breach by any other party of its covenants and agreements in Sections 6.07 and
12.02 hereof. Accordingly, the parties agree and acknowledge that any such
violation or threatened violation will cause irreparable injury to the other and
that, in addition to any other remedies which my be available, such party will
be entitled to injunctive relief against the threatened breach of Sections 6.07
and 13.02 hereof or the continuation of any such breach without the necessity of
proving actual damages and may seek to specifically enforce the terms hereof.
13.17 ARBITRATION. Except as otherwise expressly provided in Section 13.16
or elsewhere in this Agreement, any controversy or claim arising out of or
relating to this Agreement, or the making, performance or interpretation hereof,
including without limitation alleged fraudulent inducement hereof, will be
settled by binding arbitration in Las Vegas, Nevada, in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association. Judgment upon any arbitration award may be entered in any court
having jurisdiction thereof.
13.18 ATTORNEYS' FEES. If any arbitration, litigation or similar
proceedings are brought by any party to enforce any obligation or to pursue any
remedy under this Agreement, the party prevailing in any such arbitration,
litigation or similar proceeding shall be entitled to costs of collection, if
any, and reasonable attorneys' fees incurred in connection with such proceedings
and in collecting or enforcing any award granted therein.
-37-
<PAGE> 39
13.19 LIMITATION AS TO RANCHITO. The provisions of this Agreement as to
Ranchito are limited to those sections which specifically refer to Ranchito, and
Ranchito shall have no liability or responsibility with respect to this
Agreement except as specifically enumerated herein.
13.20 LIMITATION AS TO SELLER'S WARRANTIES AND REPRESENTATIONS.
Notwithstanding any provision herein to the contrary, Sellers shall not have any
liability for any claim arising out of a breach of any warranty or
representation if the claim was caused solely by the actions of White and/or
Weber or the information was solely and exclusively known by White and/or Weber.
13.21 No Limitation of Rights of STPD:
-------------------------------
Nothing contained in the Agreement shall in any way limit any rights or
remedies against LVGC that STPD may have in connection with the promissory note
and leasehold mortgage held by STPD on the Project.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYERS:
- - -------
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
By:
---------------------------------
Name:
Title:
SELLERS:
- - --------
------------------------------------
DANIEL F. SELLECK
------------------------------------
ROBERT D. SELLECK
------------------------------------
ROBERT D. SELLECK, II
-38-
<PAGE> 40
RANCHITO: THE RANCHITO COMPANY LLC
- - --------
By:
---------------------------------
Name:
Title:
-39-
<PAGE> 41
<TABLE>
SCHEDULE I
----------
- - -----------------------------------------------------------
<CAPTION>
Closing STPD
Seller's Name and Address Payment Shares
- - ------------------------- ------- ------
- - -----------------------------------------------------------
<S> <C> <C>
- - -----------------------------------------------------------
Daniel F. Selleck $781,550.00 183,517
- - -----------------------------------------------------------
Robert D. Selleck $134,017.00 25,388
- - -----------------------------------------------------------
Robert D. Selleck, II $616,483.00 160,642
- - -----------------------------------------------------------
</TABLE>
<PAGE> 42
LIST OF EXHIBITS
Exhibit A First Amended and Restated Limited Liability Company Agreement of
Las Vegas Golf Center, L.L.C.
Exhibit B New LVGC Management Agreement
Exhibit C Instrument of Assignment
Exhibit D Shareholders' Agreement
Exhibit E Consulting And Non Competition Agreement
Exhibit F Registration Rights Agreement
Exhibit G Real Property Description
Exhibit H LVGC Balance Sheet as of November 30, 1996
Exhibit I List of Contracts
Exhibit J Consent to Assignment And Modification of Lease And Concession
Agreement
Exhibit K Assignment of Sublease And Guaranty With Spousal Consents
Exhibit L Estoppel Certificate
Exhibit M Contractor's Consent to Assignment And Estoppel Agreement
Exhibit N Architect's Consent to Assignment And Estoppel Agreement
Exhibit O Cooperation Agreement Between GCA And LVGC
Exhibit P Opinion of Allen, Matkins, Leck, Gamble And Mallory, LLP
Exhibit Q Release Agreement Among the Sellers, the Buyers And LVGC
<PAGE> 43
AGREEMENT
THIS AGREEMENT dated November 29, 1996 by and between LARRY K. WHITE
("LKW"), DONALD A. WEBER ("DAW") (collectively "Sellers") and SENIOR TOUR
PLAYERS DEVELOPMENT, INC. ("STPD" "Buyer" or "Buyers"), a Nevada Corporation.
WITNESSETH
WHEREAS, LKW owns and holds in the aggregate, beneficially and of record,
sixteen (16%) percent of the membership interests ("Interests") in Las Vegas
Golf Center, L.L.C., a Delaware limited liability company ("LVGC"), and DAW owns
and holds in the aggregate, beneficially and of record, five and one-half (5.5%)
percent of the Interests in LVGC; and
WHEREAS, STPD, or its nominee, desires to purchase from each of the
Sellers, and each of Sellers desires to sell to STPD, all of Sellers' Interests.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Subject to the terms of this Agreement, each of Sellers hereby agree to
sell, transfer, convey, assign and deliver to STPD, or its Nominee, and STPD, or
its Nominee, hereby agrees to purchase, acquire and accept from each of the
Sellers, all of such Seller's right, title and interest (whether held
beneficially or of record) in and to such Seller's Interest.
2. The aggregate purchase price to be paid by STPD for the Interests shall
be (i) Four Hundred Thousand Dollars ($400,000) ("Cash Consideration") and (ii)
Three Hundred Twenty Three Thousand, Two Hundred Eighty Nine (323,289) shares of
common stock, $0.001 par value per share, of STPD ("STPD Shares"), payable as
follows:
Cash Consideration: $20,000 on or before December 15, 1996
$180,000 on or before January 15, 1997
$200,000 on or before January 15, 1998
STPD Shares: 161,645 on or before January 15, 1997
161,644 on or before January 15, 1998
Each of the STPD shares shall be duly authorized, validly issued, fully
paid and non-assessable, and shall be restricted security, as defined in Rule
144 promulgated under the Securities Act of 1933, as amended by the Securities
and Exchange Commission. Sellers agree to vote their shares for management's
slate of directors through December 31, 1998.
3. Sellers hereby irrevocably and unconditionally (i) consent, in
accordance with the requirements of Article VI of the LVGC Agreement, to the
admission of STPD to LVGC as a member and the substitution of STPD for the
Sellers as Members, and (ii) waives any and all requirements and conditions of
execution and delivery by STPD of any assumption of any of the liabilities or
obligations of any of the Sellers under the LVGC Agreement.
4. At any time, at STPD's request and without further consideration, each
of the parties hereto shall promptly execute and deliver such documents and
instruments, and take all such other action, as STPD may reasonably request,
more effectively to transfer, convey and assign to STPD, and to confirm STPD's
admission of LVGC as a Member and the STPD's title to, all of the Sellers'
respective Interests, to assist STPD in exercising all rights with respect
thereto and to carry out the purpose and intent of this Agreement.
5. The parties hereto agree to their respective representations and
warranties as contained in Exhibit A attached hereto and incorporated herein.
6. The parties hereto agree to the indemnification provisions contained in
Exhibit B attached hereto and incorporated herein.
7. The closing shall be held in Las Vegas, Nevada on December 3, 1996 at
2:00 p.m. with the location to be agreed upon by the parties.
8. Simultaneous with the Closing ("Closing" or "First Closing") hereof,
Sellers shall cause Golf Centers of America, Inc. to assign and transfer to Las
Vegas Golf Center the Ground Lease and Sublease, as specified in Paragraph 2.06
of Exhibit A, and each of any outstanding contracts, as specified in Paragraph
2.11 of Exhibit A, to LVGC pursuant to documentation reasonably satisfactory in
form and substance to STPD and its counsel.
9. Each of the Sellers consents to the placing of the following legend on
the certificate or certificates for STPD Shares to be issued to each such Seller
in connection with the purchase or their respective Interests by STPD hereunder:
The Shares of Common Stock represented by this certificate have not
been registered under the Securities Act of 1993 or applicable state
securities laws and may be sold, pledged, assigned or otherwise
transferred only if a registration statement with respect to such
transaction is in effect pursuant to the provisions of such law or if,
in the opinion of counsel reasonably satisfactory to the issuer, and
exemption from the registration requirements of such laws is
available.
10. STPD agrees to grant Sellers the right to demand registration of their
STPD Shares on a Form S-3 registration statement or similar Form at any time
after July 1, 1997. STPD shall use its best efforts to cause a registration
statement to become effective immediately following July 1, 1997 or as soon as
practicable thereafter. STPD shall be responsible for the costs of any such
registration.
IN WITNESS WHEREOF, the parties hereto have cause this AGREEMENT to be duly
executed on the date above written.
<PAGE> 44
BUYER: SENIOR TOUR PLAYERS DEVELOPMENT, INC.
By:
----------------------------------------------
Its: President
SELLER: ---------------------------------------------------------
LARRY K. WHITE
-------------------------------------------------
DONALD A. WEBER
CALCULATION OF SHARES
Original Shares: 142,236
Original Cash: $830,000
Revised Cash: 400,000
Difference $430,000
Stock Price Per Share $ 2.375
$430,000 = 181,053 shares
2.375
+ 142,236 original shares
Revised # of Shares = 323,289 shares
<PAGE> 1
Exhibit 10.27
LETTER OF UNDERSTANDING
MEMBERSHIP INTEREST PURCHASE & PURCHASE OPTION AGREEMENT
MEMBERSHIP INTEREST PURCHASE & PURCHASE OPTION AGREEMENT ("Agreement"),
made as of the 14th day of December, 1996, by and between Senior Tour Players
Development, Inc., a Nevada corporation with a principal place of business at
266 Beacon Street, Boston, MA 02116 ("STPD"), and Paul Fireman, an individual
investor with a business address at 1601 Forum Place, Suite 905, West Palm
Beach, Florida 3341-8105.("Fireman" or "Buyer").
RECITALS:
---------
WHEREAS, STPD, upon approval from its Board of Directors, shall enter into
an agreement to purchase beneficial and record interests in Las Vegas Golf
Center, LLC ("LVGC") of 21.5% from Larry K. White and Donald Weber, which
purchase will be consummated prior to or simultaneously with the consummation of
the transaction contemplated by this Agreement; and
WHEREAS, STPD, upon approval from its Board of Directors, shall enter into
an agreement to purchase beneficial and record interests in LVGC of 48.5% from
Daniel F. Selleck, an individual, Robert D. Selleck, an individual, and Robert
D. Selleck, II, an individual, which purchase will be consummated prior to or
simultaneously with the consummation of the transaction contemplated by this
Agreement; and
WHEREAS, Buyer wishes to purchase from STPD and STPD desires to sell to
Buyer beneficial and record interests in LVGC of 48.5%; and
WHEREAS, STPD wishes to have a 3-year option to repurchase from Buyer
beneficial and record interests in LVGC of 13.5%; and
WHEREAS, Buyer desires to be admitted to LVGC as an individual member
thereof;
NOW THEREFORE, in consideration of the mutual convenants, promises, and
consideration hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, STPD and Fireman
(together the "Parties") hereby agree as follows:
<PAGE> 2
1. STPD shall enter into a purchase agreement with Don Weber and Larry White for
the purchase of beneficial and record interests in LVGC of 21.5% on the terms
and conditions contained in that certain purchase agreement dated November 29,
1996.
2. STPD has or will enter into a purchase agreement to purchase beneficial and
record interests in LVGC of 48.5% from Daniel F. Selleck, an individual, Robert
D. Selleck, an individual, and Robert D. Selleck, II, an individual, on the
terms and conditions contained in that certain purchase agreement dated
December 11, 1996.
3. STPD agrees to sell to Buyer, and Buyer agrees to purchase from STPD
beneficial and record interests in LVGC of 48.5%. The aggregate purchase price
to be paid by Buyer for the 48.5% interest shall be $2,167,993 cash
consideration payable at closing.
4. In consideration of receiving 50,000 shares of unregistered common stock of
STPD, Buyer agrees to grant STPD an option to purchase from Buyer a 13.5%
membership interest in LVGC. The purchase option shall be on the following terms
and conditions:
a. During the thirty-six month period following the acquisition by Buyer of
the 48.5% LVGC membership interest, STPD shall have the option to purchase from
Buyer beneficial and record interests in LVGC, of not more than 13.5% on the
following terms:
i. If STPD shall exercise its purchase option on or before December 31,
1997, STPD shall pay Buyer $900,000 total cash consideration for beneficial and
record interests in LVGC of 13.5%.
ii. If STPD shall exercise its purchase option after December 31, 1997 but
on or before December 31, 1998, STPD shall pay Buyer $1,075,000 total cash
consideration for beneficial and record interests in LVGC of 13.5%.
iii. If STPD shall exercise its purchase option after December 31, 1998 but
on or before December 31, 1999, STPD shall pay Buyer $1,350,000 total cash
consideration for beneficial and record interests in LVGC of 13.5%.
5. During any calendar year in which STPD exercises the purchase option
described in paragraph 4 herein, the cash flow distributed or distributable from
LVGC to
<PAGE> 3
Buyer and STPD shall be pro rated among the Parties by taking the total annual
LVGC cash flow during the year the option is exercised and pro rating such cash
flow between Fireman and STPD based on the weighted average % of beneficial
interest held during the year by each of the Parties.
AGREED TO AND ACCEPTED:
SENIOR TOUR PLAYERS DEVELOPMENT, INC.
-------------------------------------
By: Stanton V. Abrams, President
BUYER
/s/ Arnold Mullen
-------------------------------------
Paul Fireman By: Arnold Mullen
