REAL ESTATE
PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT
(this “Agreement”) is made and entered into as of the
31 day of July, 2009, by and between VCG Real Estate Holdings,
Inc., a Colorado corporation (“Seller”), and Black
Canyon Highway LLC, a Texas limited liability company
(“Purchaser”). Seller and Purchaser may sometimes be
referred to herein individually as a “Party” or
collectively as the “Parties.”
PRELIMINARY STATEMENTS. Seller is the
owner of fee simple title to the real property located at 1902
North Black Canyon Highway, Phoenix, Arizona, legally described on
Exhibit A , attached hereto (the
“Property”). As used herein, the term
“Property” also includes all land, improvements and
fixtures situated thereon, and all easements and other
appurtenances in favor of or benefiting any part thereof. Purchaser
desires to purchase and Seller is willing to sell the Property,
pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of
the premises, and the mutual covenants and agreements contained
herein, and such other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Parties agree as
follows:
1. Definitions .
Capitalized terms used herein shall have the meanings specified
herein.
2. Purchase and Sale .
Subject to the provisions of this Agreement, at the Closing, and in
exchange for the Purchase Price, Purchaser shall purchase and
Seller shall sell, transfer and convey to Purchaser, all of
Seller’s entire right, title and interest in and to the
Property.
3. Purchase Price; Payment
and Financing . The total consideration to be paid to Seller by
Purchaser at the Closing for the Property (the “Purchase
Price”) shall consist of and be paid as follows:
(a) Purchaser shall deposit with
Stewart Title (the “Escrow Agent”) the sum of Two
Hundred Thousand and No/100 Dollars ($200,000.00), in cash, or by
wire transfer of immediately available funds (the “Closing
Payment”) and the Escrow Agent shall remit the Closing
Payment to Seller.
(b) Purchaser shall execute and
deliver to Seller’s parent corporation, VCG Holding Corp., a
Colorado corporation, a Secured Promissory Note in the amount of
Three Hundred Twenty-Two Thousand Nine Hundred Sixty-Three and
16/100 Dollars ($322,963.16) in the form attached hereto as
Exhibit B (the “$300,000 Note”).
(c) Purchaser shall assume all
of Seller’s rights, obligations and responsibilities existing
as of the Closing Date in, to and under the Secured Promissory
Note, dated May 1, 2003, in the original principal amount of
Two Million Four Hundred Thousand and No/100 Dollars
($2,400,000.00) (the “Sacred Ground Note”) issued by
Seller to Sacred Ground Resources, LLC, an Arizona limited
liability company (“Sacred Ground”), and agrees to be
bound by all the terms and conditions of the Sacred Ground Note and
that Purchaser shall be considered “Maker” under the
Sacred Ground Note. Purchaser agrees to indemnify and hold Seller
harmless from any obligations on the part of Purchaser arising from
and after the Closing and from all liabilities, costs and expenses
(including, without limitation, reasonable attorney’s fees)
incurred in connection with the Sacred Ground Note.
4. Title Insurance .
Seller has delivered to Purchaser a current commitment for title
insurance (on an ALTA form), issued by the Escrow Agent which shows
marketable fee simple title to the Property in Seller. Any
exceptions or other matters listed on the title commitment to which
Purchaser has not objected to in writing to Seller on or before the
Closing shall be deemed “Permitted Exceptions.”
Additionally, Purchaser agrees that that certain Deed of Trust,
Assignment of Rents and Security Agreement made May 1, 2003 by
and among the Company, as trustor, Transnation Title Insurance
Company, as trustee, and Sacred Ground Resources, L.L.C., as
beneficiary, shall be considered a Permitted Exception.
5. Entry Prior to
Closing . Purchaser and its employees, agents, and consultants
will have the right, upon prior notice to Seller, to enter upon the
Property at reasonable times prior to Closing to inspect, examine,
survey, perform physical and environmental non-invasive tests, and
otherwise do whatever Purchaser deems necessary or appropriate to
investigate any matter which Purchaser deems appropriate in order
to evaluate the Property. Purchaser agrees that Purchaser and its
agents and consultants will not disrupt or interfere with
Seller’s operations during Purchaser’s inspection of
the Property. All physical inspections of and/or on site visits to
the Property must be scheduled through Seller. Seller shall
reasonably cooperate with Purchaser in conducting the foregoing
activities. Purchaser shall not cause or permit any
mechanic’s liens, materialmen’s liens, or other liens
to be filed against the Property as a result of the inspections.
Purchaser shall promptly repair and restore any damage to the
Property caused by entry upon the Property by Purchaser. Purchaser
shall indemnify, defend, and hold harmless Seller and
Seller’s officers, directors, shareholders, customers,
invitees, members, partners, tenants, agents, and employees
(collectively, the “Indemnified Parties”), from and
against any and all actions, losses, costs, damages, claims,
liabilities, and expenses (including court costs and reasonable
attorneys’ fees) brought, sought, or incurred by or against
any of the Indemnified Parties resulting from, arising out of, or
relating to, entry upon the Property Purchaser caused by the gross
negligent or intentional misconduct of Purchaser or its agents.
Anything to the contrary recited herein, the foregoing
indemnification and repair and restoration obligations shall
expressly survive the Closing.
6. Conditions to Obligation
of Purchaser . Purchaser’s obligations to purchase the
Property and to pay the Purchase Price are subject to the following
conditions precedent having been fully satisfied or waived by
Purchaser at or prior to the Closing:
(a) The representations and
warranties of Seller contained in this Agreement must have been
true, accurate and correct on the date of this Agreement and must
be true, accurate and correct in all material respects on the date
of Closing;
(b) The Lease, dated as of
January 15, 2007, by and between Seller and Epicurean
Enterprises, L.L.C., an Arizona limited liability company
(“Epicurean”) shall have been terminated;
(c) Epicurean shall have
transferred to JGC Phoenix LLC, a Texas limited liability company
and affiliate of Purchaser (“JGC”), the Arizona
Series 6 Liquor License # 06070572 currently registered in
Epicurean’s name (the “Liquor License”) and shall
have executed and delivered to Seller, Purchaser or JGC, as the
case may be, such instruments of sale, transfer, conveyance,
assignment and delivery, and such consents, assurances, powers of
attorney and other instruments as is reasonably requested by such
party or its counsel in order to vest in JGC all right, title and
interest of Epicurean in and to the Liquor License, including, but
not limited to a bill of sale and Sections 5 and 11 of the
application to transfer the Liquor License from Epicurean to
JGC.
(d) Seller shall have executed
and delivered to Purchaser the deliverables set forth in
Section 11(a);
(e) Seller shall have paid all
real property taxes assessed against the Property for 2008;
(f) Seller shall have paid Seven
Hundred Eighty-Four and 84/100 Dollars ($784.84) in satisfaction of
unpaid business personal property taxes under Parcel
No. 949-83-271-6 for 2007;
(g) Seller shall give Purchaser
a credit at Closing in the amount of One Thousand Dollars
($1,000.00) in full satisfaction of any unpaid business personal
property taxes assessed or to be assessed on Epicurean for 2008
that has, will or may attach to the Property, regardless of the
amount assessed or to be assessed (the “2008 BPP
Taxes”). Purchaser agrees that Seller shall have no further
obligations to Purchaser with respect to the 2008 BPP Taxes and
Purchaser hereby releases Seller from any obligations or
liabilities with respect to the 2008 BPP Taxes;
(h) Seller shall have made a
payment in the aggregate amount of Twenty-Two Thousand Nine Hundred
Sixty-Three and 16/100 Dollars ($22,963.16) to Sacred Ground in
satisfaction of the payment due August 1, 2009 under the
Sacred Ground Note; and
(i) Seller shall have performed
and complied with all agreements, covenants, acts, undertakings and
conditions required by this Agreement prior to or at the
Closing.
7. Conditions to Obligation
of Seller . Seller’s obligations to sell the Property are
subject to the following conditions precedent having been fully
satisfied or waived by Seller at or prior to the Closing:
(a) The representations and
warranties of Purchaser contained in this Agreement must have been
true, accurate and correct on the date of this Agreement and must
be true, accurate and correct in all material respects on the date
of Closing;
(b) Purchaser shall have
performed and complied with all agreements, covenants, acts,
undertakings and conditions required by this Agreement prior to or
at the Closing;
(c) Purchaser shall have
executed and delivered to Seller the deliverables set forth in
Section 11(b); and
(d) Seller shall have received
written consent to the assignment and assumption of the Sacred
Ground Note from Seller to Purchaser from Sacred Ground Resources,
LLC, in form and substance satisfactory to Seller.
8. Representations and
Warranties . (a) Seller represents and warrants to
Purchaser the following:
(i) Other than the Permitted
Exceptions, Seller has valid fee simple title to the Property;
(ii) Seller is a corporation,
duly organized and validly existing under the laws of the State of
Colorado;
(iii) Seller has the power and
authority to enter into this Agreement and the documents
contemplated by Section 11(a), and to consummate the
transactions contemplated hereby. The parties signing this
Agreement and the documents contemplated by Section 11(a) on behalf
of Seller have the full legal power, authority and right to execute
and deliver this Agreement and the documents contemplated by
Section 11(a). This Agreement and the documents contemplated
by Section 11(a) constitute valid and legally binding agreements
enforceable against Seller in accordance with their terms;
(iv) The Property is not within
1,000 feet of another adult use.
(v) To Seller’s
Knowledge, the Property is free of any hazardous or toxic materials
or contaminants that would reasonably be expected to impair the
value of the Property in Purchaser’s hands and subject Bryan
Foster or Purchaser to a legal obligation to cleanse, treat or
detoxify any portion of the Property prior to resale and Seller has
not received any written notice from a governmental entity
regarding environmental claims with respect to the Property. For
purposes of this Agreement, “Seller’s Knowledge”
means the actual knowledge of Troy Lowrie without any obligation on
his party to conduct any due diligence or inquiry.
(vi) The Property is located in
an “A-1” zoned district in Phoenix, Arizona and, to
Troy Lowrie’s actual Knowledge, Epicurean has used the
Property since November 2, 1998 as a “bar” and
“adult live entertainment establishment” as those words
within quotation marks are defined by the Phoenix Zoning
Ordinances.
(vii) There are no actions
pending or, to Troy Lowrie’s actual knowledge, threatened,
against Seller that have resulted or could reasonably be expected
to result in a material adverse effect on the Property, or that
question the validity of this Agreement or of any action taken or
to be taken pursuant to or in connection with the provisions of
this Agreement.
All of the representations and warranties contained in this
Paragraph 8(a) shall be true and correct as of the Closing, and
shall survive the Closing for a period of six (6) months.
(b) Purchaser represents and
warrants to Seller the following:
(i) Purchaser is a limited
liability company, duly organized and validly existing under and
pursuant to the laws of the State of Texas; and
(ii) Purchaser has all
requisite power and authority to enter into this Agreement and the
documents contemplated by Section 11(b)(ii)-(vi), and to
consummate the transactions contemplated hereby and to fulfill its
obligations under this Agreement and the documents contemplated by
Section 11(b)(ii)-(vi). The parties signing this Agreement and
the documents contemplated by Section 11(b)(ii)-(vi) on behalf
of Purchaser have the full legal power, authority and right to
execute and deliver this Agreement. This Agreement and the
documents contemplated by Section 11(b)(ii)-(vi) constitute valid
and legally binding agreements enforceable against Purchaser in
accordance with their terms.
All of the representations and warranties contained in this
Paragraph 8(b) shall be true and correct as of the Closing, and
shall survive the Closing for a period of six (6) months.
(c) No Warranties . THE
PROPERTY IS BEING PURCHASED AND SOLD “AS IS”,
“WHERE IS” AND WITH “ALL FAULTS”, INCLUDING
WITHOUT LIMITATIONS, ALL MATTERS DISCLOSED, DISCOVERED OR
DISCOVERABLE BY PURCHASER AND ANY LATENT DEFECTS AND OTHER MATTERS
NOT DETECTED IN PURCHASER’S INSPECTIONS. EXCEPT TO THE EXTENT
SET FORTH IN SECTION 8(a) HEREOF, PURCHASER SPECIFICALLY
ACKNOWLEDGES AND CONFIRMS THAT SELLER HAS NOT MADE AND SELLER
SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES,
COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN AS TO,
CONCERNING, OR WITH RESPECT TO THE PROPERTY. THE PURCHASE PRICE AND
THE TERMS AND CONDITIONS SET FORTH HEREIN ARE THE RESULT OF
ARM’S-LENGTH BARGAINING BETWEEN PARTIES FAMILIAR WITH
TRANSACTIONS OF THIS KIND AND NATURE, AND THE AGREED UPON PURCHASE
PRICE, AND THE TERMS AND CONDITIONS SET FORTH HEREIN REFLECT THE
FACT THAT PURCHASER SHALL HAVE THE BENEFIT OF, AND IS RELYING UPON,
NO STATEMENTS, REPRESENTATIONS OR WARRANTIES WHATSOEVER, MADE BY OR
ENFORCEABLE AGAINST SELLER RELATING TO THE CONDITION, DIMENSIONS,
SOIL CONDITION, SUITABILITY, COMPLIANCE OR LACK OF COMPLIANCE WITH
ANY STATE, FEDERAL, COUNTY OR LOCAL LAW, ORDINANCE, ORDER, PERMIT
OR REGULATION, FINANCIAL PROJECTIONS, OR ANY OTHER ATTRIBUTE OR
MATTER OF OR RELATING TO THE PROPERTY, INCLUDING, WITHOUT
LIMITATION: (I) THE EXISTENCE OF SOIL INSTABILITY;
(II) THE SUFFICIENCY OF ANY DRAINAGE; (III) WHETHER THE
PROPERTY IS LOCATED WHOLLY OR PARTIALLY IN A FLOOD PLAIN OR A FLOOD
HAZARD BOUNDARY OR SIMILAR AREA; (IV) THE EXISTENCE OR
NON-EXISTENCE OF TOXIC OR HAZARDOUS WASTES OR MATERIALS IN, ON OR
ABOUT THE PROPERTY; (V) ANY OTHER MATTER AFFECTING THE
STABILITY OR INTEGRITY OF THE PROPERTY; (VI) THE FITNESS OR
SUITABILITY OF THE PROPERTY FOR PURCHASER’S INTENDED USE;
(VII) THE POTENTIAL DEVELOPMENT OF THE PROPERTY;
(VIII) THE EXISTENCE OF VESTED RIGHTS, LAND USE, DENSITY,
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