LOAN PURCHASE AGREEMENT
DATE: November 19, 1997
PARTIES: M & R INVESTMENT COMPANY, INC. ("M&R"); and
XXXX X. XXXXXXXX, as Trustee of the Xxxx X. Xxxxxxxx Family Trust
("Trust").
RECITALS:
A. M&R is the holder of that certain promissory note dated November
2, 1992, in the amount of Two Million Six Hundred Fifty Thousand Dollars
($2,650,000.00) (the "Note") executed by Baby Grand Corp., a Nevada
corporation ("Baby Grand").
B. The Note is secured by an Amended and restated Pledge Agreement
between M&R and Baby Grand dated November 2, 1992 (the "Pledge Agreement").
C. The Note and Pledge Agreement shall be referred to herein as the
"Loan."
D. The aggregate unpaid balance of the Loan as of November 1, 1997,
was One Million Nine Hundred Thirty-Six Thousand Five Hundred Ninety-Three
Dollars ($1,936,593.00).
E. Based upon knowledge and information known to the Trust,
including its Trustee, the Trust has elected to purchase the Loan. The
Trust has not relied upon any statement, representation, or warranty of M&R
or any other entity or person in electing to proceed with this transaction.
F. M&R is willing to sell the Loan to Trust provided that such sale
is made on a non-recourse basis, without any warranties or representations
whatsoever (other than as specifically set forth herein) on the terms
hereinafter set forth.
AGREEMENTS:
In consideration of the terms and conditions hereinafter set forth and
other good and valuable consideration, the parties agree as follows:
1. AGREEMENT TO SELL. M&R hereby agrees to sell, assign, transfer,
and convey to Trust, without warranty, recourse, or representation other
than expressly stated herein and Trust and agrees to purchase from M&R,
without warranty, recourse or representation other than as specifically
stated herein, on the terms and conditions stated herein, all of the right,
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title, and interest of M&R, as of the Closing Date, in and to the Loan and
each and every document encompassing the Loan.
2. PURCHASE PRICE.
A. The purchase price shall be Three Hundred Twenty Thousand
Dollars ($320,000.00) ("Purchase Price") plus a potential Contingent Bonus
Payment of Fifty Thousand Dollars ($50,000.00) as described in Paragraph B,
below. The Purchase Price shall be paid into escrow in cash and
distributed to M&R as follows:
(i) Two Hundred Thousand Dollars ($200,000.00) shall be
payable at the close of escrow upon delivery to the Trust of one million
thirty-six thousand one hundred sixty (1,036,160) shares of Common Stock of
Dunes Hotels and Casinos Inc., held by M&R pursuant to the Pledge
Agreement;
(ii) The balance of the Purchase Price, One Hundred Twenty
Thousand Dollars ($120,000.00) shall be distributed to M&R on a pro rata
basis ($.4906/share) as the remaining shares held by M&R pursuant to the
Pledge Agreement, two hundred forty-four thousand five hundred ninety-six
(244,596) shares are delivered to the Trust.
(iii) In the event any of the shares to be delivered
pursuant to subparagraph 2.A.(ii) are not delivered to the Trust on or
before January 1, 1998, the Trust reserves the right to withdraw any
remaining funds from escrow and shall be obligated to pay said sums to M&R
only at such future time as said shares are delivered to the Trust. Except
as set forth in this subparagraph 2.A.(iii), the Trust shall under no
circumstances be entitled to a refund or return of any portion of the
Purchase Price or Contingent Bonus Payment paid hereunder.
B. In the event the Trust receives any payment on the Note in
December, the Trust shall pay to M&R, immediately upon receipt of any such
payment, the sum of Fifty Thousand Dollars ($50,000.00) (the "Contingent
Bonus Payment"). The Contingent Bonus Payment is contingent upon the Trust
receiving said payment. Except for the Contingent Bonus Payment M&R shall
have no interest in or right to any future payments on the Note.
3. TRUST'S DUE DILIGENCE AND REPRESENTATION AND WARRANTY. The Trust
is a sophisticated purchaser with respect to the Loan and represents and
warrants to M&R that it has adequate information concerning the business
and financial affairs of Baby Grand to make an informed decision regarding
the purchase of the Loan. The Trust reaffirms and agrees that except as
set forth specifically herein it has not relied upon any representation or
warranty of M&R.
The transfer of the Loan which is provided for in this Agreement is
expressly made without recourse, warranty or representation of any kind,
express or implied (except as specifically set forth by Section 4, below.
The warranties and representations which are disclaimed hereby include, but
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are not limited to, all warranties and representations with respect to any
of the following:
A. The legality, validity, enforceability, collectibility or
sufficiency of the Loan;
B. The performance by Baby Grand of its obligations under the
Loan;
C. The existence or non-existence of any of the following with
regard to any of the Loan: (i) legal or equitable defenses; (ii) any
counterclaim; (iii) claims or rights of setoff, reduction, recoupment,
impairment, avoidance, disallowance, or subordination;
D. Any certificate, statement, representation or warranty made
by Baby Grand in connection with the Loan;
E. The value of the Collateral securing the Note;
F. The priority or perfection of liens (if any) securing the
Loan;
G. The accuracy, completeness, sufficiency or timeliness of the
filing of any document with any governmental authority; and
H. Financial condition of Baby Grand, or the willingness of
Baby Grand to satisfy its obligations under the Loan.
The trust hereby warrants, represents, and acknowledges that as of the
date hereof, and as of the closing date:
3.1 AUTHORITY. The Trust is a trust duly formed and validly
existing under the laws of the State of California and Xxxx X. Xxxxxxxx, as
Trustee, has all requisite power and authority to enter into this Agreement
and to perform its obligations hereunder. The execution, delivery and
compliance by the Trust with the terms of this Agreement, and the
consummation by the Trust of the transactions contemplated hereby have been
duly and validly authorized by all necessary actions on the part of the
Trust.
3.2 ENFORCEABILITY. This Agreement, upon its execution and
delivery, will constitute the valid, legal and binding obligations of the
Trust enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws effecting creditors' rights
generally and by equitable principles restricting the availability of
equitable remedies.
3.3 NO CONFLICTS. Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
performance of its obligations hereunder by the Trust will conflict with,
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or constitute a violation of, the Trust's organizational documents, or any
provision of any law, rule, regulation, or order to which the Trust is
subject, or conflict with or result in a breach of or constitute a default
(or an event which would constitute such a default with notice, or lapse of
time, or both) under any of the terms, conditions, or provisions of any
agreement or instrument to which the Trust is a party or by which it is
bound, or any order or decree applicable to the Trust (including, without
limitation, Borrowers), is required in connection with the execution,
delivery, and performance by Buyer of its obligations hereunder or the
consummation of the transactions contemplated hereby.
3.4 NO ADVERSE PROCEEDING. The Trust has no actual knowledge or
actual notice of any pending or threatened proceedings against or affecting
the Trust or its assets, before any federal, state, or other governmental
agency, authority, administrative or regulatory body, arbitrator, court, or
other tribunal, foreign or domestic, which, singly, or in the aggregate,
could materially and adversely affect the Trust's ability to consummate the
transactions contemplated hereby and to perform its obligations thereunder.
3.5 INDEPENDENCE OF TRUST. Xxxx X. Xxxxxxxx is the Trustee of
the Trust but has no claim of any nature or kind as a beneficiary of the
Trust. No creditor of the Trustee, in his individual capacity, has ever
made a claim or demand against the Trust or the Trust's assets and Trustee
is aware of no legal basis for any such claim or demand. Trustee has not
contributed any assets into the Trust. The Trust was created and
originally funded by Xxxx X. Xxxxxxxx and Xxxxxx Xxxxxxxx with assets in
which the Trustee had no interest or claim whatsoever.
3.6 NET WORTH OF TRUST. The Trust has a net worth as of the
date of this Agreement in excess of Seven Hundred Fifty Thousand Dollars
($750,000.00).
4. M&R'S REPRESENTATIONS AND WARRANTS. M&R makes the following
representations and warranties, and no others, to the Trust:
A. The aggregate unpaid balance of the Loan as of November 1,
1997, was One Million Nine Hundred Thirty-Six Thousand Five Hundred Ninety-
Three Dollars ($1,936,593.00);
B. M&R is the sole owner and holder of the Note and has not
previously conveyed or transferred any interest therein.
5. On or before November 25, 1997, escrow shall close. The escrow
holder shall be any qualified entity or firm selected by M&R. Prior to the
close of escrow, the parties shall do the following:
A. The Trust shall deposit the sum of Three Hundred Twenty
Thousand Dollars ($320,000.00);
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B. M&R shall deposit one million thirty-six thousand one
hundred sixty (1,036,160) shares of stock held pursuant to the Pledge
Agreement;
C. M&R shall deposit the Note, the Pledge Agreement, an
endorsement in the form of Exhibit "A" attached hereto ("Endorsement") and
an assignment in the form of Exhibit "B") attached hereto ("Assignment").
The parties shall instruct the escrow holder to do the following at the
close of escrow:
(i) Distribute Two Hundred Thousand Dollars ($200,000.00)
to M&R;
(ii) Deliver the original, duly executed Endorsement and
Assignment to the Trust together with the Note and Pledge Agreement;
(iii) Deliver instructions adequate to allow the escrow
holder to perform as set forth in Paragraph 2.A.(ii), above, together with
such other instructions as may be reasonably required to close this
transaction.
6. INDEMNITY. The Trust hereby agrees to indemnify, defend, and
hold M&R harmless from any and all future claims, demands, liability or
costs, including reasonable attorneys' fees, relating to or resulting from
any breach or violation of any of the representations and warranties of the
Trust set forth above or any subsequent claims by creditors of the Trust or
the Trustee, individually, attempting in any way to deprive M&R of the
benefits of this Agreement by asserting claims against or on behalf of the
Trust or the Trustee.
7. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the parties with respect to the transfer by M&R and
acquisition by the Trust of the Loan. This Agreement shall not be changed,
waived, discharged or terminated orally, and, instead, may only be changed,
waived, discharged r terminated by an instrument in writing, signed by the
party against whom enforcement of the change, waiver, discharge or
termination is sought.
8. COUNTERPART. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures hereto and hereby
were upon the same instrument. All such counterparts, held together,
constitute but one and the same document. Such counterparts may be
delivered pursuant to facsimile transmission, and such transmission(s)
shall be accepted in place of the original document.
9. SEVERABILITY. Each party of this Agreement is intended to be
severable. In the event that any provision of this Agreement is found by
any court or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the extent
necessary to render it enforceable and as so severed or modified, this
Agreement shall continue in full force and effect.
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10. RIGHTS CUMULATIVE; WAIVERS. The rights of each of the parties
under this Agreement are cumulative. The rights of each of the parties
hereunder shall not be capable of being waived or varied other than by an
express waiver or variation in writing. Any failure to exercise or any
delay in exercising any of such rights shall not operate as a waiver or
variation of that or any other such right. Any defective or partial
exercise of any of such rights shall not preclude any other or further
exercise of that or any other such right. No act or course of conduct or
negotiation on the part of any party shall in any way preclude such party
from exercising any such right or constitute a suspension or any variation
of any such right.
11. TIME OF ESSENCE. Time shall be of the essence of this Agreement.
12. GOVERNING LAW. This Agreement is in all respects to be governed
by the laws of the State of California and of any actions to enforce the
terms of this Agreement, such actions shall be commenced and maintained
within the State of California.
13. CONTINUING OBLIGATIONS. The obligations of the Trust and M&R
hereunder shall survive the closing of escrow.
14. CONFIDENTIALITY. Except to the extent necessary for M&R and/or
Dunes Hotels & Casinos Inc. to comply with securities reporting
requirements or as may be ordered by a court of competent jurisdiction, the
parties shall keep the terms and conditions of this Agreement confidential
and neither party nor any affiliated entity or person shall disclose any of
the terms and conditions hereof. Provided, however, nothing herein shall
limit or restrict efforts by the Trust or any successor in interest from
taking any and all reasonable and lawful action to collect sums due under
the Note and/or enforce its rights in all collateral securing the Note.
IN WITNESS WHEREOF, the parties have executed this agreement the day
and year first above written.
M&R: M & R INVESTMENT COMPANY, INC.
By: /S/ XXXXX X. XXXX
Xxxxx X. Xxxx, President
Trust: /S/ XXXX X. XXXXXXXX
XXXX X. XXXXXXXX, as Trustee of the Xxxx X.
Xxxxxxxx Family Trust
