1
EXHIBIT 10.176
PURCHASE AND SECURITY AGREEMENT
This PURCHASE AND SECURITY AGREEMENT ("Agreement") is made and entered
into this ____ day of ________, 1999 by and between Preferred Equities
Corporation, a Nevada corporation, with its principal offices located at 0000
Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000 ("PEC") and Preferred RV Resort Owners
Association, a Nevada corporation, with its principal office located at 0000
Xxxxxxxx Xxx, Xxxxxxx, Xxxxxx 00000 ("Association").
WITNESSETH
WHEREAS, pursuant to that certain Public Offering Statement approved by
the State of Nevada on October 9, 1985 as amended on March 4, 1998 ("POS"), PEC
is the developer of that certain recreational vehicle campground located in Xxx
County, Nevada and commonly known as Preferred RV Resort ("Resort"), more
particularly described as:
Parcel 3 of Parcel Map of Calvada Valley Xxxx 0, Xxxxx 0, Xxx 0,
recorded April 26, 1994 as Document Number 351410 in the office
of the County Recorder of Xxx County, Nevada; and
WHEREAS, by contract with the Association ("Management Contract"), PEC
serves as manager of the Resort; and
WHEREAS, for purposes of this Agreement only, the Association alleges
and PEC acknowledges that it owes the Association assessments for 1231 interval
interests owned by PEC at the Resort ("Remaining Inventory"); and
WHEREAS, the Association wishes to purchase from PEC the Remaining
Inventory.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration acknowledged as received by the parties, the parties
hereto agree as follows.
1. PURCHASE PRICE.
PEC agrees to convey title, subject to the exceptions stated in the Preliminary
Title Report, attached hereto as Exhibit D, to all of the Remaining Inventory to
the Association in consideration of:
A. Forgiveness of PEC's past and current debt owed to the Association
in the amount of $433,687.00, including past assessments in the
amount of $180,512.00, pursuant to the independent audit prepared by
Main Xxxxxx as of December 1998, and including assessments for 1999
in the amount of $253,175.00 ("PEC's Obligation").
B. The additional sum of One Hundred Forty-One Thousand, Six Hundred
Seventy-Eight Dollars ($141,678.00), inclusive of interest at five
percent (5%) ("Secured Obligation") evidenced by a purchase money
promissory note ("Note") secured by a first deed of trust ("Deed of
Trust") on the Remaining Inventory, executed in favor of PEC, said
Note and Deed of Trust being attached hereto and incorporated herein
as Exhibits "B" and "C" to this Agreement. The term of the Note
shall be three (3) years
1
2
("Note Term"), payable in increments of One Hundred Fifty-Three
Dollars ($153.00) ("Release Fee") upon the sale of each of the first
Nine-Hundred Twenty-Six (926) interests in the Remaining Inventory
that are sold. The Association and PEC agree that the Note and Deed
of Trust will be administered through a title company mutually
agreed upon by the parties as trustee ("Trustee") and subject to the
payment by the Association of the Release Fee and such fees as may
be charged by the Trustee, the Trustee will release, from the lien
of the Deed of Trust, the subject intervals as they are sold by the
Association. All remaining intervals will be released when the Note
is paid in full. Any balance due at the end of the term of the Note
shall be due and payable in full on the Note maturity date.
2. ACTIONS TO BE TAKEN.
A. PEC shall, by the Effective Date of this Agreement (as hereinafter
defined) take the following actions.
1. Resign as the Association's management company pursuant to
the existing Management Agreement between PEC and the
Association.
2. Assure that all of its officers, employees and/or agents who
now serve on the Association's Board of Directors ("Board")
and/or hold officer positions with the Association resign
from those positions following the election of Xxxxx Xxxxx,
or such other person as may be designated by the
Association, to the position of President of the
Association.
3. Convey assets of the Resort and Association, as listed on
Exhibit "A" attached hereto and incorporated herein by this
reference ("Assets"), to the Association.
4. Record the Note and Deed of Trust in the office of the
County Recorder of Xxx County, Nevada.
5. Take all steps necessary to terminate that certain marketing
agreement, by and between PEC and Great Outdoor Resorts of
North America, LLC ("GORNA"), dated April 23, 1998,
including any updated codicil or marketing agreement
affecting the inventory. PEC will use its best efforts to
remove GORNA from the office currently used by GORNA for
sales activities located at the Resort.
6. Cooperate in and do all things necessary to facilitate the
State of Nevada approval of a new public offering statement
by the Association.
7. Cooperate in transferring all Association and Park
documents, files, owner lists and all other Association
and/or Park items in the possession of PEC, to the
Association.
B. The Association shall, by the Effective Date of this Agreement (as
hereinafter defined) use its best efforts to take the following
actions.
1. Through its president, Xxxxx Xxxxx, or other Association
nominee(s), appoint other directors, satisfactory to the
Association.
2
3
2. Through its newly constituted Board, unanimously vote, via
action acceptable to PEC, to (i) accept the resignations of
the Board members who represent PEC; (ii) ratify all of the
terms and conditions of this Agreement, without modification
and (iii) forgive PEC's Obligation subject to the purchase
of remaining inventory, the Note and affirmative vote of a
majority of non-Declarant owners (at the time this Agreement
is entered into, a majority of non-Declarant owners equals
six hundred seventy-one (671) votes), confirming the
forgiveness of PEC's Obligation, PEC's resignation as the
Association's management company and all other acts of the
newly constituted Board as reasonably requested by PEC,
including but not limited to the indemnifications discussed
in Section 6. of this Agreement ("Owners' Vote").
3. EFFECTIVE DATE OF THE AGREEMENT.
The effective date of this Agreement shall occur upon a) the Association's
presentation to PEC of satisfactory evidence of the Owners' Vote, said
presentation to occur no more than sixty (60) days from the date this Agreement
is entered into and b) termination of the agreement between PEC and Great
Outdoor Resorts of North America ("GORNA") dated April 23, 1998, pursuant to
terms therein ("Effective Date").
4. COSTS.
In the event of any litigation between the parties under this Agreement, the
parties hereto agree to pay their own attorneys' fees and court costs at all
trial and appellate levels. In addition, the parties agree as follows:
A. Owners' Vote.
The Association agrees to pay all costs associated with obtaining
the Owners' Vote as required herein.
B. Registration of Remaining Inventory with State of Nevada Real Estate
Division in Name of Association.
The Association agrees to pay all costs associated with the process
of registering the Remaining Inventory with the Nevada Real Estate
Division.
C. Purchase of Interests in Default.
The Association agrees to purchase from PEC all interests sold prior
to the Effective Date of this Agreement in default for a price
equaling the lesser of: i) the outstanding balance of the account or
ii) 50% of the sales price at the time of default. The only
purchasers to whom Paragraph 4.C. applies are those named in Exhibit
D attached hereto and incorporated herein.
D. Trustee Services.
The Association agrees to pay all costs associated with Trustee's
services as they apply to the administration of the Note secured by
the Deed of Trust. All costs
3
4
charged by the Trustee associated with the closing of this purchase
will be shared equally by PEC and the Association.
5. DEFAULT.
In the event the Secured Obligation is not paid within the Note Term, an
additional five percent (5%) interest shall be added to the remaining
balance of the Note and PEC retains all rights and remedies provided to
it as a secured priority lienholder (as evidenced by the Note and Deed
of Trust), at law and in equity.
6. RELEASE AND INDEMNITY.
In consideration of this Agreement and subject to its full implementation and
transfer of Remaining Inventory and Assets, as provided for herein, the
Association, on behalf of itself, officers, successors, subrogees, executors,
administrators and assigns, does hereby forgive PEC's Obligation and, in that
regard, does voluntarily and knowingly release and discharge PEC, its officers,
directors, affiliates, subsidiaries, parent company, agents, contractors and
employees, past, present and future, from any and all claims, liabilities,
demands, rights, damages, costs, attorneys' fees (including but not limited to
any claim of entitlement for attorneys' fees under any contract, statute, or
rule of law allowing a prevailing party or plaintiff to recover attorneys'
fees), expenses and controversies which Association may now have or have at
anytime in the future relating to PEC's Obligation, as defined hereinabove.
The Association agrees to fully exonerate, indemnify and hold PEC harmless from
and against all claims, liabilities, demands, rights, damages, costs, attorney's
fees (including but not limited to any claim of entitlement for attorneys' fees
under any contract, statute or rule of law allowing a prevailing party or
plaintiff to recover attorneys' fees), expenses and controversies, based upon or
arising out of the Association's sales practices or damage or injury (including
death) to persons or property caused by and/or sustained in connection with the
Association's management, operation, development and/or sales of interest in the
Resort upon the Effective Date of this Agreement; and further agrees, if
requested by PEC, to assume without expense to PEC, the defense of any such
claims or actions, unless such damage or injury was caused by PEC's negligence
or willful misconduct.
The parties agree and acknowledge that except as to forgiveness of PEC's
Obligation and indemnification of PEC for the future actions of the Association,
the Association does not intend and will not release, discharge or indemnify PEC
for any claims, liabilities, demands, rights, damages, costs, attorney's fees,
expenses and controversies which the Association, its members or any other
person (natural or corporate) may have now or in the future against PEC relating
to PEC's management, development or sale of interests in the Resort.
PEC shall fully exonerate, indemnify and hold the Association, its officials,
agents, contractors and employees, past, present and future, harmless from and
against all claims, liabilities demands, rights, damages, costs, attorneys' fees
(including but not limited to any claim of entitlement for attorney's fees under
any contract, statute, or rule of law allowing a prevailing party or plaintiff
to recover attorney's fees), expenses and controversies, based upon or arising
4
5
out of damage or injury (including death) to persons or property caused by
and/or sustained in connection with PEC's management, operation, development
and/or sales of interests in the Resort prior to the Effective Date of this
Agreement; and further agrees, if requested by the Association, to assume
without expense to the Association, the defense of any such claims or actions,
unless such damage or injury was caused by the Association's negligence or
willful misconduct.
Each of the parties hereto shall secure and/or maintain such general, business,
liability and/or errors and omissions insurance, with policy limits sufficient
to fully carry out its obligations under the terms of this section. Neither
party will allow such policies to lapse until such time as, by operation of law
of the applicable statutes of limitation or to otherwise, the insured party no
longer has any liability for its management, operation, development and/or sales
of interests in the Resort. Notwithstanding the parties obligation to secure and
maintain insurance, in no event shall the failure to secure or maintain
sufficient insurance obviate the parties' mutual obligation to indemnify under
this section, as provided in this section.
Nothing contained herein, and no action taken by any party to this Agreement
shall be construed as an admission by any party of liability in any respect, and
no action taken by any party in effectuating this Agreement may be used in any
future or pending litigation involving any of the parties to this Agreement, or
any other party, nor shall any such action be deemed an admission of liability
in any respect.
7. DISPUTE RESOLUTION/ARBITRATION.
In the event of any controversy, claim or dispute between the parties hereto
arising out of or relating to this Agreement or the breach thereof ("Disputed
Matter"), the parties to this Agreement hereby waive their right to litigation
proceedings in a court of law and agree that any such Disputed Matter shall be
settled first by mediation and, if unsuccessful, by binding arbitration, the fee
for which shall be advanced by the party requesting mediation or arbitration.
The cost of the proceedings shall ultimately be borne as determined by the
mediator or arbitrator. The site of any such mediation or arbitration proceeding
shall be Xxxxx County, Nevada; however, in the event the parties' waiver of
litigation proceedings is considered invalid for any reason, venue for any
litigation proceeding between the parties relating to this Purchase and Security
Agreement shall be in the Fifth Judicial District Court, in and for Xxx County,
Nevada.
8. MISCELLANEOUS PROVISIONS.
A. The parties hereto have read this Agreement and agree to the
conditions and obligations set forth herein; and have freely and
fully consulted with their legal counsel on the matters addressed
herein; and voluntarily execute this Agreement after having had full
opportunity to consult with legal counsel and/or other
representation, and without being pressured or influenced by any
statement or representation of any person acting on behalf of the
parties; accordingly, there is to be no presumption against the
draftsperson of this Agreement.
B. Time is of the essence for each and every provision of this
Agreement;
5
6
C. The rights and obligations under this Agreement shall inure to the
benefit of and shall be binding upon the parties' respective heirs,
successors and permitted assigns;
D. In construing this Agreement, the singular shall be held to include
the plural, the plural shall include the singular, the use of any
gender shall include all genders, and captions and paragraph
headings shall be disregarded. Headings are for convenience of
reference only and are not to be considered in the interpretation of
this Agreement;
E. This Agreement shall be governed and interpreted in all respects by
the laws of the State of Nevada;
F. This Agreement may be executed in counterparts, each of which shall
be fully effective as an original, and all of which together shall
constitute one and the same instrument.
G. This Agreement and all Exhibits hereto may be amended and/or
supplemented, through addenda executed by both parties, up to the
Effective Date, and the Agreement and all Exhibits hereto shall be
amended to reflect updated information updated, if necessary, upon
the Effective Date hereof. This Agreement may be terminated by
either party up to the Effective Date for any reason, effective
immediately upon receipt of written notice of termination to the
other party.
H. This Agreement, Note and Deed of Trust contain the entire agreement
between PEC and Association and no promise, inducement or
representation other than as set forth herein has been made, offered
or agreed upon between the parties.
I. This Agreement cannot be varied or modified orally and may only be
varied or modified by a written instrument duly executed by the
parties.
J. If any provision of this Agreement is held to be invalid, such
invalidity shall not affect the validity of any other provisions of
this Agreement which can be given effect without the invalid
provision, and to this end the provisions of this Agreement are
declared to be severable.
K. THIS AGREEMENT IS FOR PURPOSES OF THE PURCHASE OF THE REMAINING
INVENTORY SUBJECT TO THE NOTE SECURED BY DEED OF TRUST ONLY AND IS
NOT TO BE USED BY OR AGAINST ANY OF THE PARTIES HERETO AND/OR THE
INTERVAL OWNERS OF THE RESORT,
6
7
COLLECTIVELY OR INDIVIDUALLY, IN ANY ACTION OR PROCEEDING BY,
AGAINST OR BETWEEN THE PARTIES HERETO AND/OR THE INTERVAL OWNERS OF
THE RESORT COLLECTIVELY OR INDIVIDUALLY.
ENTERED INTO AS OF THE DATE FIRST APPEARING HEREIN.
PREFERRED EQUITIES CORPORATION, A NEVADA CORPORATION
By: ____________________________________
Name: Xxxxx X. XxXxxxxxx
Title: Executive Vice President and
Chief Operating Officer
PREFERRED RV RESORT OWNERS ASSOCIATION, A NEVADA CORPORATION
By: ____________________________________
Name: Xxxxx Xxxxx
Title: President
7
8
EXHIBIT A
ASSETS
1. Office Building, consisting of three (3) mobile units joined together.
2. All Association assets, including cash, real and personal property, all
accounting and tax records, all membership records, applicable insurance
policies and other important documents necessary to operation of the
Resort.
3. All accommodation units.
4. All vehicles leased-purchased by Owners' Assessments, including:
(a) One 1989 Ford Van: Vehicle Identification Number 29385
(b) One 1994 Ford Econoline: Vehicle Identification Number 35546
(c) One 1994 Ford Ranger: Vehicle Identification Number 67416
5. All Equipment purchased by Owners' Assessments, including:
(a) One 1996/1997 Xxxx Deere Gator tractor;
(b) Two Easy-Go Golf Carts
(c) Two Yamaha Golf Carts
(d) All office equipment, including computers, furniture, copier,
facsimile, etc. In the event the equipment is leased, PEC shall use
its best efforts to transfer the lease to the Association.
8
