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EXHIBIT 10.40
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of the 5th day
of December, 1997 by Genesis Investment Group, Inc., an Arizona corporation
("Seller") and wholly owned subsidiary of ILX Incorporated, an Arizona
corporation ("ILX"), and Goodyear 93, L.L.C., an Arizona limited liability
company ("Buyer").
WHEREAS, Lomacasi Resort Incorporated, an Arizona corporation ("LRI")
and wholly owned subsidiary of Seller, is the sole general partner of The Sedona
Real Estate Limited Partnership #1, an Arizona limited partnership
("Partnership"), the sole asset of which Partnership is the Lomacasi Cottages
("Lomacasi") in Sedona, Arizona;
WHEREAS, Buyer desires to acquire control of Lomacasi, and Buyer
therefore has offered to purchase all of the capital stock of LRI, upon the
terms and conditions set out herein; and
WHEREAS, Seller owns, and desires to sell to Buyer, all of the capital
stock of LRI, upon the terms and conditions set out herein.
NOW, THEREFORE, in consideration of the recitals, covenants and
representations and warranties set out herein, the parties hereby agree as
follows:
1. Purchase of LRI Shares. Buyer hereby agrees to purchase from Seller,
and Seller hereby agrees to sell, transfer, endorse, convey and assign to Buyer,
free and clear of any and all pledges, liens, security interests and other
encumbrances whatsoever, 100% of the issued and outstanding shares of the
capital stock of LRI, consisting of 1,000 shares of LRI common stock, no par
value per share (collectively, the "LRI Shares").
2. Purchase Price. As full and complete consideration for the purchase
of the LRI Shares, Buyer shall sell, transfer, endorse, convey and assign to ILX
as Seller's nominee, for and on behalf of Seller, free and clear of any and all
pledges, liens, security interests and other encumbrances whatsoever, 500,000
shares of ILX common stock (collectively, the "ILX Shares"), which ILX Shares
are valued at $1.25 per share.
3. Closing. The closing ("Closing") of the stock purchase transaction
described herein shall occur at the offices of Meyer, Hendricks, Xxxxxx & Xxxxx,
P.A., 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, on December
5, 1997, at an hour to be determined by Buyer and Seller. At the Closing: (a)
Buyer duly shall assign to ILX the ILX Shares; and (b) Seller duly shall endorse
and deliver to Buyer all certificates representing the LRI Shares.
4. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller that: (a) Buyer is duly organized, validly existing and in
good standing under the laws of the State of Arizona; (b) Buyer has taken all
actions necessary or appropriate to authorize the execution and performance of
this Agreement; (c) the individual executing this Agreement on Buyer's behalf is
duly authorized to do so; (d) when executed, this Agreement will constitute
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the valid and binding obligation of Buyer and will be enforceable against Buyer
in accordance with its terms; (e) Buyer holds good and marketable title to the
ILX Shares, free and clear of any and all pledges, liens, security interests and
encumbrances, and free and clear of any rights of first refusal or other
restrictions on transfer; and (f) upon completion of the Closing, ILX will hold
good and marketable title to the ILX Shares, free and clear of any and all
pledges, liens, security interests and other encumbrances, and free and clear of
any restrictions on transfer other than any that may arise under applicable
state and federal securities laws.
5. Representations and Warranties of ILX and Seller. ILX and Seller
jointly and severally represent and warrant to Buyer that: (a) Seller, ILX, LRI
and the Partnership are duly incorporated or organized, respectively, validly
existing and in good standing under the laws of the State of Arizona; (b) Seller
and ILX have taken all corporate actions necessary or appropriate to authorize
the execution and performance of this Agreement; (c) the individual executing
this Agreement on ILX's and Seller's behalf is duly authorized to do so; (d)
when executed, this Agreement will constitute the valid and binding obligation
of ILX and Seller and will be enforceable in accordance with its terms; (e) no
litigation is pending or has been threatened that in any manner involves or
relates to Lomacasi, the Partnership, LRI, or the LRI Shares; (f) the
Partnership has no indebtedness, obligations or liabilities of any kind or
description, except as otherwise set forth in Section 6; (g) LRI has no
indebtedness, obligations or liabilities of any kind or description; (h) LRI has
not issued or made any agreement to issue any securities (including, without
limitation, common stock, preferred stock, debt instruments, debentures, bonds,
options, warrants, convertible securities and any and all other securities)
other than the LRI Shares; (i) Seller holds good and marketable title to the LRI
Shares, free and clear of any and all pledges, liens, security interests and
encumbrances, and free and clear of any rights of first refusal or other
restrictions on transfer; (j) upon completion of the Closing, Buyer will hold
good and marketable title to the LRI Shares, free and clear of any and all
pledges, liens, security interests and other encumbrances, and free and clear of
any restrictions on transfer other than any that may arise under applicable
state and federal securities laws; (k) neither the Partnership nor LRI has
failed to pay any applicable taxes when due, nor is either in breach or default
under any contract or other agreement to which it is subject or by which any of
its assets are bound, except, however, that the Partnership currently is in
arrears with respect to the obligation described in Section 6(b); (l) Seller has
provided to Buyer copies of all contracts, agreements, formation and governance
documents, title documents, maps, plats and other written information in the
possession of ILX or Seller concerning LRI, the Partnership, or both; (m)
neither the execution nor the performance of this Agreement will violate or
cause any default or breach under or with respect to, or cause any acceleration
of any payment due under, any agreement to which Seller, LRI or the Partnership
is a party or by which any of their respective assets are bound other than the
two promissory notes described in Sections 6(a) and (b) and the deeds of trust
securing payment thereof; (n) LRI owns, free and clear of any and all pledges,
liens, security interests and other encumbrances, and free and clear of any
restrictions on use or transfer, a 75% general partnership interest in the
Partnership; (o) the First Amended Certificate of Limited Partnership and
Amended Agreement of The Sedona Real Estate Limited Partnership #1, dated March
1, 1996 (the "Partnership Agreement"), is and remains in full force and effect,
has not been amended, and is the governing document of the Partnership; (p) to
Seller's knowledge, The Sedona Land Company, a Nevada corporation, and the
Xxxxxx Trust, are the sole limited partners of the Partnership, and they
collectively hold a 25% limited partnership
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interest in the Partnership; (q) at no time has LRI received any request for
consent to any transfer or encumbrance of any interest in the Partnership, and
at no time has LRI consented to any such matter, whether under Section 4.3 or
10.1(a) of the Partnership Agreement or otherwise; and (r) to Seller's
knowledge, the representations and warranties in this Section 5 do not contain
any untrue statements of fact or omit to state any fact necessary in order to
make them not misleading.
6. Indebtedness of the Partnership. ILX and Seller jointly and
severally certify to Buyer that the Partnership's only debts are those listed
below, and that each is as described below:
(a) Promissory Note dated November 13, 1995, payable to the
order of Stonefield, Inc., a Nevada corporation, made by Xxxxxxx X. Xxxxxx, in
the original principal amount of $550,000, assigned to the Partnership on
November 13, 1995, secured by a first deed of trust on Lomacasi; the principal
amount due thereon was, as of September 30, 1997, $524,990. All accrued interest
has been paid to November 17, 1997 with respect to this Promissory Note;
(b) Promissory Note dated November 15, 1995, made by the
Partnership and payable to the order of Xxxx X. Xxxxx, Successor Trustee of the
Xxxx Xxxx Xxxxxx Living Trust 11 Under Trust Agreement Dated August 21, 1991, in
the original principal amount of $1,500,000, secured by a second deed of trust
on Lomacasi; the principal amount due thereon was, as of September 30, 1997,
$1,620,658. As of November 17, 1997, unpaid interest in the amount of $69,041
had been accrued and was payable with respect to this Promissory Note; and
(c) Indebtedness of the Partnership to LRI, the principal
amount of which was, as of September 30, 1997, $826,219.
7. Negative Capital Account Balances of the Limited Partners. ILX and
the Seller jointly and severally certify to Buyer that, as of September 30,
1997, The Sedona Land Company had a negative Partnership capital account balance
in the amount of $204,156, and the Xxxxxx Trust had a negative Partnership
capital account balance in the amount of $79,784.
8. Certain Conditions. The following shall constitute a condition to
the obligations of the Buyer hereunder: the Partnership and ILX shall have
entered into a Management Contract regarding the future operation of Lomacasi.
9. Due Diligence by Buyer. Buyer understands that it is responsible for
its own due diligence for every aspect or prospective aspect of this
transaction, except the matters represented, warranted or certified in Sections
5, 6 and 7; and Buyer acknowledges that it is acquiring an interest in Lomacasi
(indirectly, by acquiring the LRI Shares), and Lomacasi, being the sole asset of
the Partnership, is acquired "as is, where is."
10. Proration of Property Taxes. The parties acknowledge that real
property taxes in the amount of $12,600 have been assessed with respect to
Lomacasi; and the parties agree,
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therefore, that Seller shall pay that amount to or for the benefit of Buyer at
the Closing, as directed in the Management Contract to be executed concurrently
with this Agreement.
11. General Provisions. (a) The headings herein are for convenience of
reference only and do not define, modify, expand or limit the text in this
Agreement; (b) subject to Section 11(g), the representations, warranties and
certifications contained herein shall survive the Closing; (c) this Agreement
shall be governed by Arizona law; (d) each party, upon reasonable request, shall
execute any additional documents and take any additional actions necessary or
appropriate to implement the transactions described herein; (e) this Agreement
shall not be assigned or amended without the written consent of all parties; (f)
the prevailing party in any dispute hereunder shall be entitled to recover its
attorneys' fees and costs from the other party or parties; (g) any lawsuit on
any claim arising out of the transactions described in this Agreement, including
any alleged breach of any of the representations, warranties or certifications
in Xxxxxxx 0, 0, 0 xx 0, xxxxx xx brought within one year after discovery of the
basis for such claim, otherwise such claim shall be unenforceable; provided,
additionally, that this Section 11(g) shall not be interpreted as lengthening
any period for making claims or filing suit established by any applicable
statute of limitation; and (h) the parties intend that this Agreement be
enforceable by specific performance.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BUYER: GOODYEAR 93, L.L.C., an Arizona limited liability company
Xxxxx Xxxxxx, Manager
SELLER: GENESIS INVESTMENT GROUP, INC.
an Arizona corporation
Xxxxxx X. Xxxxxxx, Chairman
ILX INCORPORATED, an Arizona corporation
Xxxxxx X. Xxxxxxx, Chairman
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