Exhibit 10.5
CONTRACT OF SALE
This Agreement is entered into by and between SILVERLEAF RESORTS, INC.,
a Texas corporation ("Seller"), and XXXXXXX X. XXXXXXX and XXXXXX X. XXXXXX
(collectively referred to as "Purchaser")
WITNESSETH:
FOR AND IN CONSIDERATION of the promises, undertakings, and mutual
covenants of the parties herein set forth, Seller hereby agrees to sell and
Purchaser hereby agrees to purchase and pay for all that certain property
hereinafter described in accordance with the following terms and conditions:
ARTICLE I
PROPERTY
The conveyance by Seller to Purchaser shall include the following:
a. All of Seller's right, title and interest, if any, in and to
the unsold timeshare inventory described in Exhibit "A" attached hereto
and made a part hereof for all purposes (the "Timeshare Inventory");
b. All of Seller's right, title and interest, if any, in and to
the real property described in Exhibit "B" attached hereto and made a
part hereof for all purposes (the "Real Property");
c. All of Seller's right, title and interest, if any, in and to
the management agreements described in Exhibit "C" attached hereto and
made a part hereof for all purposes (the "Management Agreements"); and
d. All of Seller's right, title and interest in and to the
personal property described in Exhibit "D" attached hereto and made a
part hereof for all purposes (the "Personal Property").
The foregoing items are hereinafter collectively referred to as the "Subject
Property."
ARTICLE II
PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Subject
Property shall be the sum of One Million Three Hundred Thousand and No/100
Dollars ($1,300,000.00) (the "Sale Price"). The Sale Price shall be paid as
follows:
(a) $300,000.00 of the Sale Price shall be payable in cash at
closing as a down payment;
(b) The balance of the Sale Price shall be paid by Purchaser's
execution and delivery at the closing of a promissory note
(the "Note") payable to Seller in the amount of $1,000,000.00.
The Note shall include the following terms and be paid as
follows:
(i) $200,000.00 of the outstanding principal balance of the Note
shall be due and payable sixty (60) days from the date of
closing hereunder and shall bear no interest of any kind
whatsoever;
(ii) The remaining unpaid principal balance of the Note in the
amount of $800,000.00 shall bear interest at the rate of
eight percent (8%) per annum and shall be payable in the
following manner: on June 30, 2004, a principal payment in
the amount of $300,000.00, together with all then accrued
but unpaid interest on the outstanding principal balance of
the Note, shall be due and payable; on June 30, 2005, the
remaining unpaid principal balance of the Note in the amount
of $500,000.00, together with all then accrued but unpaid
interest on the outstanding principal balance of the Note,
shall be due and payable in full;
(iii) Purchaser shall have the option to extend the date on which
the last $250,000.00 of the principal balance of the Note
shall be due to June 30, 2006; if Purchaser exercises this
option, then on June 30, 2005, $250,000.00 of the then
unpaid principal balance of the Note, plus all then accrued
but unpaid interest on the entire unpaid principal balance
of the Note, shall be due, and on June 30, 2006, the
remaining $250,000.00 of the principal balance of the Note
plus all then accrued but unpaid interest thereon shall be
due and payable in full;
(iv) The Note shall provide that it may be prepaid at any time,
in whole or in part, without premium or penalty, and that
interest shall immediately cease to accrue on any part of
the Note so prepaid; any partial prepayment shall be applied
to the next maturing installment of principal due on the
Note; and
(v) The Note shall be secured by a Mortgage to be executed in
Seller's favor at the closing covering the Subject Property
which shall in all respects be in form and substance
satisfactory to counsel for both Seller and Purchaser.
ARTICLE III
PRE-CLOSING OBLIGATIONS OF SELLER
Within ten (10) days from the date of execution of this Contract,
Seller shall furnish to Purchaser each of the following (collectively, the "Due
Diligence Items"):
a. A list of all service contracts, warranties, management,
maintenance, or other agreements affecting the Subject Property to
which Seller is a party, if any, together with copies of same. Seller
agrees not to enter into any additional contracts, warranties, or
agreements prior to closing which would be binding on Purchaser and
which cannot be cancelled by Purchaser upon thirty (30) days written
notice without cost, penalty, or obligation unless such service
contracts or other agreements are approved in writing by Purchaser;
b. A schedule of all current or pending litigation with
respect to the Subject Property or any part thereof, if any, together
with a brief description of each such proceeding; and
c. A list of any unwritten agreements affecting the Subject
Property to which Seller is a party or of which Seller has knowledge,
if any.
Seller agrees to provide Purchaser with all additional documentation
pertaining to the Subject Property reasonably requested by Purchaser within ten
(10) days of Purchaser's request.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller makes the following warranties and representations to Purchaser:
a. Seller will convey title to the Subject Property to
Purchaser on the closing date subject to all matters of record and the
interests of timeshare purchasers but excluding monetary encumbrances.
All mechanic's liens, liens, mortgages or encumbrances of any nature
presently affecting the Subject Property will be paid off and released
on or before the date of closing so that at closing Seller will be in a
position to convey the Subject Property to Purchaser free and clear of
any such liens and mortgages. To enable Seller to convey the Subject
Property to Purchaser as provided herein and to close this transaction,
Seller may, at the time of closing, use the purchase money for the
Subject Property or any portion thereof to clear Seller's title to the
Subject Property of any or all liens, mortgages, or encumbrances,
provided that releases of all such liens, mortgages, or encumbrances
are recorded simultaneously with the closing or in accordance with
accepted conveyancing practices.
b. None of the Subject Property is held by Seller under a
lease or installment sale contract except as has been disclosed to
Purchaser in writing or will be disclosed to Purchaser in writing prior
to closing.
c. There is no action, suit, proceeding or claim presently
pending in any court or before any federal, state, county or municipal
department, commission, board, bureau or agency or other governmental
instrumentality or before any arbitration tribunal or panel, (i)
affecting the Subject Property, or any portion thereof, or Seller's
use, operation or ownership of the Subject Property, or (ii) affecting
Seller's ability to perform its obligations under this Contract, nor,
to the best knowledge and belief of Seller, is any such action, suit,
proceeding or claim threatened.
d. Seller is not aware of any attachments, executions,
assignments for the benefit of creditors, or voluntary or involuntary
bankruptcy proceedings, or proceedings under any debtor relief laws,
contemplated by or pending or threatened against Seller or the Subject
Property.
e. Except for the list of service contracts, warranties,
management, maintenance or other agreements to be delivered to
Purchaser pursuant to Article III hereinabove, Seller is not a party to
any contracts of construction, employment, management, service or
supply which would affect the Subject Property or operation of the
Subject Property after closing;
f. From the date of execution of this Contract through the
date of closing, Seller shall continue to maintain the Subject Property
in its present condition, subject to ordinary wear and tear and shall
continue to manage the Subject Property in the same manner as it is
currently being managed; Seller shall not remove any fixtures,
equipment, furnishings or other personal property from the Subject
Property unless replaced with items of equal or greater quality and
quantity, nor shall Seller in any manner neglect the Subject Property;
g. Except for the sale of timeshare interests in the ordinary
course of business, there are no contracts or other material
obligations, other than those matters set forth in the Due Diligence
Items, outstanding (i) for the sale, exchange or transfer of the
Subject Property or any portion thereof or the business operated
thereon by Seller, or (ii) creating or imposing any burdens,
obligations or restrictions on the use or operation of the Subject
Property and the business conducted thereon;
h. No contract or agreement delivered by Seller to Purchaser
has been amended, modified or supplemented in any way that will not be
disclosed to Purchaser in writing at the time of delivery to Purchaser
pursuant to Article III. Except for the sale of timeshare interests in
the ordinary course of business, there are no written or oral
agreements of any kind that constitute a lease or contract relating to
the Subject Property that will not be disclosed to Purchaser in writing
at the time of delivery pursuant to Article III;
i. Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and is
qualified to transact business in the state in which the Subject
Property is situated. This Contract has been duly and validly executed
and delivered by Seller to Purchaser and constitutes a legal, valid and
binding agreement of Seller, enforceable against Seller in accordance
with its terms, except as such enforcement may be limited by
bankruptcy, conservatorship, receivership, insolvency, moratorium or
similar laws affecting creditors' rights generally or by general
principles of equity;
j. Seller has the capacity and complete authority to enter
into and perform this Contract, and no consent, approval or other
action by any other party or entity will be needed thereafter to
authorize Seller's execution and performance of this Contract. None of
the execution and delivery of this Contract by Seller, the consummation
by Seller of the transaction contemplated hereby or compliance by
Seller with any of the provisions hereof will (i) conflict with or
result in any breach of any provisions of the formation documents of
Seller; (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to
any right to termination, cancellation or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Seller is a party or by which Seller or the Subject
Property may be bound; or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Seller or the Subject
Property; except in the cases of clauses (ii) or (iii) above, for
violations, breach or defaults (A) that would not in the aggregate have
a material adverse effect on the business or financial condition of
Seller and on the effectiveness of the transaction contemplated hereby
or (B) for which waivers or consents have been or will be obtained
prior to the closing date;
k. Seller is not a "foreign person" or "foreign trust" within
the meaning of the United States Foreign Investment and Real Property
Tax Act of 1980 and the Internal Revenue Code of 1986, as subsequently
amended; and
l. In the event that either Seller or Purchaser discovers
after closing that any asset or item which is currently owned by Seller
and which is currently being used in the operation of the Subject
Property has not been conveyed to Purchaser at closing, then Seller
will immediately, upon written notification from Purchaser, convey such
asset or other item to Purchaser for no additional consideration of any
kind whatsoever.
All of the representations and warranties contained in this Article IV are made
by Seller both as of the date hereof and as of the date of the closing
hereunder. Notwithstanding the foregoing or anything to the contrary contained
herein, it is understood and agreed that the representations and warranties set
forth hereinabove shall survive the closing of this Contract only for a period
of ninety (90) days following the closing date, but not thereafter, and Seller
shall have no liability of any kind whatsoever for any breach thereof except to
the extent a claim is asserted against Seller within such ninety (90) day
period. If any of the representations and warranties set forth hereinabove are
determined at any time on or before the date of closing to be untrue or
unfulfilled, then Purchaser, as Purchaser's sole and exclusive remedy, may
terminate this Contract by providing written notice of such termination to
Seller, in which event thereafter neither Seller nor Purchaser shall have any
further liabilities or obligations one unto the other.
ARTICLE V
CONDITION PRECEDENT TO CLOSING
Each of the Management Agreements which are being transferred to
Purchaser pursuant to this Contract have been executed by a different timeshare
owner's association (individually an "Association" and collectively the
"Associations"). The obligation of Seller to close this Contract shall be
subject to the delivery by Purchaser to Seller at closing of a release and debt
waiver agreement from each such Association which agreement must contain the
following provisions:
(a) Seller will waive payment of up to, but not in excess of,
$500,000.00 of indebtedness owed to Seller by certain of the
Associations as set forth in Exhibit "E" attached hereto and made a
part hereof for all purposes;
(b) In return for Seller's waiver of payment of debt, each of
the Associations listed on Exhibit "E" shall discharge and release
Seller, its officers, directors, employees, successors, assigns,
agents, and any subsidiary corporation of Seller from any and all
claims and obligations any such Association may have against Seller
whether same be known or unknown from the beginning of time and forever
into the future; and
(c) As identified in Exhibit "E", certain of the Associations
must agree that after closing each such Association will honor any
Bonus Time or Endless Escape privileges that have been granted to
Seller's customers during the period of time while the Subject Property
was owned by Seller.
ARTICLE VI
CLOSING
The closing hereunder shall take place at the offices of Meadows,
Owens, Collier, Reed, Cousins & Blau, LLP. The closing shall occur on or before
thirty (30) days from the date of execution of this Contract. Purchaser shall
notify Seller at least five (5) days in advance of the exact time and date of
closing.
ARTICLE VII
SELLER'S OBLIGATIONS AT CLOSING
At the closing, Seller shall do the following:
a. Deliver to Purchaser a quit claim deed covering the
Timeshare Inventory, duly signed and acknowledged by Seller, which deed
shall be in form reasonably acceptable to Purchaser.
b. Deliver to Purchaser a Special Warranty Deed covering the
Real Property, duly signed and acknowledged by Seller, which deed shall
be in form reasonably acceptable to Purchaser.
c. Deliver a xxxx of sale and a blanket assignment in form
reasonably acceptable to Purchaser, duly executed and acknowledged by
Seller, conveying and/or assigning to Purchaser the remainder of the
Subject Property.
d. Deliver such evidence or other documents that may be
reasonably required by Purchaser evidencing the status and capacity of
Seller and the authority of the person or persons who are executing the
various documents on behalf of Seller in connection with the sale of
the Subject Property.
e. Deliver a non-withholding statement that will satisfy the
requirements of Section 1445 of the Internal Revenue Code so that
Purchaser is not required to withhold any portion of the purchase price
for payment to the Internal Revenue Service.
f. Deliver to Purchaser any other documents or items necessary
or convenient in the reasonable judgment of Seller and Purchaser to
carry out the intent of the parties under this Contract.
ARTICLE VIII
PURCHASER'S OBLIGATIONS AT CLOSING
At the closing, Purchaser shall deliver to Seller the purchase price in
the manner described in Article II herein.
ARTICLE IX
COSTS AND ADJUSTMENTS
At closing, the following items shall be adjusted or prorated between
Seller and Purchaser:
a. Any real estate transfer taxes or sales taxes payable in
connection with the sale of the Subject Property shall be paid in full
by Purchaser.
b. Seller shall pay to Purchaser, in the form of a credit at
closing, any prepaid but unearned management fees in Seller's
possession.
c. Purchaser shall not be responsible for the payment of any
special assessments which have been levied by the Associations against
Timeshare Inventory for the period of time prior to closing.
d. All other income and ordinary operating expenses for or
pertaining to the Subject Property including, but not limited to,
public utility charges, maintenance, service charges, and all other
normal operating charges of the Subject Property shall be prorated as
of the closing date. Purchaser will pay for any title work.
e. All other normal and reasonable closing costs, including
but not limited to, recording and escrow fees shall be paid by
Purchaser; provided, however, that Seller and Purchaser each will be
responsible for the fees and expenses of their respective attorneys.
As soon as practicable after closing, and in any event within 90 days
thereafter, Seller and Purchaser shall cooperate in preparing and reaching a
post-closing settlement, accounting for any additional credits or debits between
the parties as necessary to carry out the intent of this Contract, including the
general principle that from and after the closing date, the revenues accruing
from the operation of the Subject Property and the expenses associated with
those revenues shall be credited or charged to Purchaser, and before the closing
date, such sums shall be credited or charged to Seller.
Seller agrees to indemnify and hold Purchaser harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature (except those items which under the terms of this Contract specifically
become the obligation of Purchaser), brought by third parties and based on
events occurring on or before the date of closing and which are in any way
related to the ownership, maintenance, or operation of the Subject Property, and
all expenses related thereto, including, but not limited to, court costs and
attorneys' fees.
Purchaser agrees to indemnify and hold Seller harmless of and from any
and all liabilities, claims, demands, suits, and judgments, of any kind or
nature, brought by third parties and based on events occurring subsequent to the
date of closing and which are in any way related to the ownership, maintenance
or operation of the Subject Property, and all expenses related thereto,
including, but not limited to, court costs and attorneys' fees.
ARTICLE X
POSSESSION OF PROPERTY
Possession of the Subject Property shall be delivered to Purchaser at
closing.
ARTICLE XI
NOTICES
All notices, demands, or other communications of any type given by the
Seller to the Purchaser, or by the Purchaser to the Seller, whether required by
this Contract or in any way related to the transaction contracted for herein,
shall be void and of no effect unless given in accordance with the provisions of
this paragraph. All notices shall be in writing and delivered to the person to
whom the notice is directed by facsimile transmission with a follow-up copy to
be delivered by United States Mail, as a registered or certified item, return
receipt requested. Notices shall be addressed as follows:
Seller: Silverleaf Resorts, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With Copy to: Meadows, Owens, Collier, Reed, Cousins & Blau, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Purchaser: Xxxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xx.
Xxxxx Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xx.
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With Copy to: Xxxxxx & Xxxxxx, LLP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Xxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
ARTICLE XII
REMEDIES
In the event that Seller fails to timely comply with all conditions,
covenants and obligations of Seller hereunder, and such failure continues for a
period of ten (10) days after written notice thereof is provided Seller by
Purchaser, such failure shall be an event of default and Purchaser shall have
the option (i) to terminate this Contract by providing written notice thereof to
Seller and the parties hereto shall have no further liabilities or obligations
one unto the other; (ii) to waive any defect or requirement and close this
Contract; or (iii) to xxx Seller for specific performance. In no event shall
Purchaser have the right to xxx Seller for damages, bring any action against the
Subject Property, or file notice of lis pendens regarding any claim of Purchaser
other than a claim for specific performance.
In the event that Purchaser fails to timely comply with all conditions,
covenants, and obligations Purchaser has hereunder, such failure shall be an
event of default, and, in such event,
Seller shall be entitled to exercise any legal or equitable remedies available
to Seller including a suit for specific performance or for damages.
ARTICLE XIII
ASSIGNMENT
Purchaser may not assign its rights and obligations under this Contract
to anyone other than a Permitted Assignee without first obtaining Seller's prior
written approval. Purchaser may assign its rights and obligations under this
Agreement to a Permitted Assignee without prior written consent of Seller. For
purposes of this Contract, a "Permitted Assignee" shall mean any partnership,
corporation, limited liability company or other business entity controlled by
Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx which has the financial ability to
perform Purchaser's obligations hereunder. For purposes of the preceding
sentence an entity shall be deemed to be controlled by a person if such person
owns 50% or more of the ownership interest in such entity, or has the right to
control 50% or more of such ownership interest through a contract or otherwise.
ARTICLE XIV
INTERPRETATION AND APPLICABLE LAW
Except as otherwise expressly provided herein, this Agreement shall be
construed and interpreted in accordance with the laws of the State of Texas.
Where required for proper interpretation, words in the singular shall include
the plural; the masculine gender shall include the neuter and the feminine, and
vice versa. The terms "successors and assigns" shall include the heirs,
administrators, executors, successors, and assigns, as applicable, of any party
hereto.
ARTICLE XV
AMENDMENT
This Contract may not be modified or amended, except by an agreement in
writing signed by the Seller and the Purchaser. The parties may waive any of the
conditions contained herein or any of the obligations of the other party
hereunder, but any such waiver shall be effective only if in writing and signed
by the party waiving such conditions and obligations.
ARTICLE XVI
AUTHORITY
Each person executing this Contract warrants and represents that he is
fully authorized to do so.
ARTICLE XVII
ATTORNEYS' FEES
In the event it becomes necessary for either party to file a suit to
enforce this Contract or any provisions contained herein, the prevailing party
shall be entitled to recover, in addition to all other remedies or damages,
reasonable attorneys' fees and costs of court incurred in such suit.
ARTICLE XIII
DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs contained in this
Contract are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
ARTICLE XIX
ENTIRE AGREEMENT
This Contract (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No representation,
warranty, covenant, agreement, or condition not expressed in this Contract shall
be binding upon the parties hereto or shall affect or be effective to interpret,
change, or restrict the provisions of this Contract.
ARTICLE XX
COUNTERPARTS
This Contract may be executed in a number of identical counterparts.
Each such counterpart is deemed an original for all purposes and all such
counterparts shall, collectively, constitute one agreement, but, in making proof
of this Contract, it shall not be necessary to produce or account for more than
one counterpart.
ARTICLE XXI
ACCEPTANCE
Buyer shall have until 5:00 o'clock p.m., June 20, 2003, to execute and
return a fully executed original of this Contract to Seller, otherwise this
Contract shall become null and void. Time is of the essence of this Contract.
The date of execution of this Contract by Seller shall be the date of execution
of this Contract. If the final date of any period falls upon a Saturday, Sunday,
or legal holiday under the laws of the State of Texas, then in such event the
expiration date of such period shall be extended to the next day which is not a
Saturday, Sunday, or legal holiday under the laws of the State of Texas.
ARTICLE XXII
REAL ESTATE COMMISSION
Seller represents and warrants to Purchaser that Seller has not
contacted or entered into any agreement with any real estate broker, agent,
finder, or any other party in connection with this transaction, and that Seller
has not taken any action which would result in any real estate broker's,
finder's, or other fees or commissions being due and payable to any other party
with respect to the transaction contemplated hereby. Purchaser hereby represents
and warrants to Seller that Purchaser has not contracted or entered into any
agreement with any real estate broker, agent, finder, or any other party in
connection with this transaction, and that Purchaser has not taken any action
which would result in any real estate broker's, finder's, or other fees or
commissions being due or payable to any other party with respect to the
transaction contemplated hereby. Each party hereby indemnifies and agrees to
hold the other party harmless from any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) resulting to the other party by reason of
a breach of the representation and warranty made by such party herein.
Notwithstanding anything to the contrary contained herein, the indemnities set
forth in this Article XXII shall survive the closing.
EXECUTED on this the 19th day of June, 2003.
SELLER:
SILVERLEAF RESORTS, INC., a Texas corporation
By: /s/ XXXXXX X. XXXX
------------------------------------------
Xxxxxx X Xxxx, Chief Executive Officer
EXECUTED on this the 17th day of June, 2003.
PURCHASER:
/s/ XXXXXXX X. XXXXXXX
------------------------------------------------
XXXXXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXX
------------------------------------------------
XXXXXX X. XXXXXX
List of Exhibits:
Exhibit A Timeshare Inventory
Exhibit B Real Property
Exhibit C Management Agreements
Exhibit D Personal Property Listing
Exhibit E Releases and Debt Waivers
