Document:

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                                                                    EXHIBIT 10.2

                                  VERSATA, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

      I.    PURPOSE OF THE PLAN

            This Employee Stock Purchase Plan is intended to promote the
interests of Versata, Inc., a Delaware corporation, by providing eligible
employees with the opportunity to acquire a proprietary interest in the
Corporation through participation in a payroll deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.

            Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

      II.   ADMINISTRATION OF THE PLAN

            The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

      III.  STOCK SUBJECT TO PLAN

            A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The number of shares of Common Stock
initially reserved for issuance over the term of the Plan shall be limited to
500,000 shares.

            B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of the second
fiscal quarter each year, beginning in the year 2000, by an amount equal to one
percent (1%) of the total number of shares of Common Stock outstanding on the
last trading day of the immediately preceding first fiscal quarter, but in no
event shall any such annual increase exceed 1,000,000 shares.

            C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date,
(iv) the maximum number and/or class of securities by which the share reserve is
to increase automatically each calendar year pursuant to the provisions of
Section III.B of this Article One and (v) the number and class of securities and
the price per share in effect under each outstanding purchase right in order to
prevent the dilution or enlargement of benefits thereunder.

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      IV.   OFFERING PERIODS

            A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive overlapping offering periods until such time
as (i) the maximum number of shares of Common Stock available for issuance under
the Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated.

            B. Offering periods shall commence at semi-annual intervals on the
first business day of February and August each year over the term of the Plan.
Accordingly, two (2) separate offering periods shall commence in each calendar
year over the term of the Plan. Each offering period shall be of twenty-four
(24) months' duration unless otherwise determined by the Plan Administrator
prior to the start date of such offering period. However, the initial offering
period shall commence at the Effective Time and terminate on the last business
day in January 2002. The second offering period shall commence on the first
business day in August 2000 and terminate on the last business day in July 2002.
The date on which an offering period begins shall be designated the Start Date
of such offering period.

            C. Each offering period shall be comprised of a series of one or
more successive Purchase Intervals. Purchase Intervals shall run from the first
business day in February to the last business day in July each year and from the
first business day in August each year to the last business day in January in
the following year. However, the first Purchase Interval in effect under the
initial offering period shall commence at the Effective Time and terminate on
the last business day in July 2000.

            D. Should the Fair Market Value per share of Common Stock on any
Purchase Date within an offering period be less than the Fair Market Value per
share of Common Stock on the Start Date of that offering period, then that
offering period shall automatically terminate immediately after the purchase of
shares of Common Stock on such Purchase Date and participants in such terminated
offering period shall automatically be enrolled in the new offering period
commencing on the next business day following such Purchase Date.

      V.    ELIGIBILITY

            A. Each individual who is an Eligible Employee on the Start Date of
any offering period under the Plan may enter that offering period on such start
date.

            B. Each individual who first becomes an Eligible Employee after the
start date of an offering period may enter a subsequent offering period on the
Start Date of that offering period.

            C. An Eligible Employee may participate in only one offering period
at any time.

            D. Except as provided in Section IV.D above, to participate in the
Plan for a particular offering period, the Eligible Employee must complete the
enrollment forms prescribed by the Plan Administrator (including a stock
purchase agreement and a payroll deduction authorization) and file such forms
with the Plan Administrator (or its designate) on or before the scheduled Start
Date of such offering period.

                                       2.
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      VI.   PAYROLL DEDUCTIONS

            A. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock during an offering period may be any
multiple of one percent (1%) of the Cash Earnings paid to the Participant on
each payroll date during each Purchase Interval within that offering period, up
to a maximum of fifteen percent (15%). The deduction rate so authorized shall
continue in effect throughout the offering period, except to the extent such
rate is changed in accordance with the following guidelines:

                  (i) The Participant may, at any time during the offering
      period, reduce his or her rate of payroll deduction to become effective as
      soon as possible after filing the appropriate form with the Plan
      Administrator. The Participant may not, however, effect more than one (1)
      such reduction per Purchase Interval.

                  (ii) The Participant may, prior to the commencement of any new
      Purchase Interval within the offering period, increase the rate of his or
      her payroll deduction by filing the appropriate form with the Plan
      Administrator. The new rate (which may not exceed the fifteen percent
      (15%) maximum) shall become effective on the start date of the first
      Purchase Interval following the filing of such form.

            B. Payroll deductions shall begin on the first pay day
administratively feasible following the Start Date of the offering period and
shall (unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be required to be held in any segregated account or trust fund and may be
commingled with the general assets of the Corporation and used for general
corporate purposes.

            C. Payroll deductions shall automatically cease upon the termination
of the Participant's purchase right in accordance with the provisions of the
Plan.

            D. The Participant's acquisition of Common Stock under the Plan on
any Purchase Date shall neither limit nor require the Participant's acquisition
of Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.

      VII.  PURCHASE RIGHTS

            A. GRANT OF PURCHASE RIGHTS. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Start Date of the
offering period and shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive installments over the
remainder of such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.

                                       3.
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            Under no circumstances shall purchase rights be granted under the
Plan to any Eligible Employee if such individual would, immediately after the
grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.

            B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant on each such Purchase Date. The purchase shall be
effected by applying the Participant's payroll deductions for the Purchase
Interval ending on such Purchase Date to the purchase of whole shares of Common
Stock at the purchase price in effect for the Participant for that Purchase
Date.

            C. PURCHASE PRICE. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each Purchase Date within
the offering period shall be equal to eighty-five percent (85%) of the lower of
(i) the Fair Market Value per share of Common Stock on the Start Date of that
offering period or (ii) the Fair Market Value per share of Common Stock on that
Purchase Date.

            D. NUMBER OF PURCHASABLE SHARES. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed 2,500 shares, subject to periodic adjustments in the event of certain
changes in the Corporation's capitalization. In addition, the maximum number of
shares of Common Stock purchasable in total by all Participants on any one
Purchase Date shall not exceed 125,000 shares, subject to periodic adjustments
in the event of certain changes in the Corporation's capitalization. However,
the Plan Administrator shall have the discretionary authority, exercisable prior
to the start of any offering period under the Plan, to increase or decrease the
limitations to be in effect for the number of shares purchasable per Participant
and in total by all Participants on each Purchase Date during that offering
period.

            E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not applied to
the purchase of shares of Common Stock on any Purchase Date because they are not
sufficient to purchase a whole share of Common Stock shall be held for the
purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
total by all Participants on the Purchase Date shall be promptly refunded.

            F. TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:

                  (i) A Participant may, at any time prior to the next scheduled
      Purchase Date in the offering period, terminate his or her outstanding

                                       4.
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      purchase right by filing the appropriate form with the Plan Administrator
      (or its designate), and no further payroll deductions shall be collected
      from the Participant with respect to the terminated purchase right. Any
      payroll deductions collected during the Purchase Interval in which such
      termination occurs shall, at the Participant's election, be immediately
      refunded or held for the purchase of shares on the next Purchase Date. If
      no such election is made at the time such purchase right is terminated,
      then the payroll deductions collected with respect to the terminated right
      shall be refunded as soon as possible.

                  (ii) The termination of such purchase right shall be
      irrevocable, and the Participant may not subsequently rejoin the offering
      period for which the terminated purchase right was granted. In order to
      resume participation in any subsequent offering period, such individual
      must re-enroll in the Plan (by making a timely filing of the prescribed
      enrollment forms) on or before the scheduled Start Date of that offering
      period.

                  (iii) Should the Participant cease to remain an Eligible
      Employee for any reason (including death, disability or change in status)
      while his or her purchase right remains outstanding, then that purchase
      right shall immediately terminate, and all of the Participant's payroll
      deductions for the Purchase Interval in which the purchase right so
      terminates shall be immediately refunded. However, should the Participant
      cease to remain in active service by reason of an approved unpaid leave of
      absence, then the Participant shall have the right, exercisable up until
      the last business day of the Purchase Interval in which such leave
      commences, to (a) withdraw all the payroll deductions collected to date on
      his or her behalf for that Purchase Interval or (b) have such funds held
      for the purchase of shares on his or her behalf on the next scheduled
      Purchase Date. In no event, however, shall any further payroll deductions
      be collected on the Participant's behalf during such leave. Upon the
      Participant's return to active service (x) within ninety (90) days
      following the commencement of such leave or (y) prior to the expiration of
      any longer period for which such Participant's right to reemployment with
      the Corporation is guaranteed by statute or contract, his or her payroll
      deductions under the Plan shall automatically resume at the rate in effect
      at the time the leave began, unless the Participant withdraws from the
      Plan prior to his or her return. An individual who returns to active
      employment following a leave of absence which exceeds in duration the
      applicable (x) or (y) time period will be treated as a new Employee for
      purposes of subsequent participation in the Plan and must accordingly
      re-enroll in the Plan (by making a timely filing of the prescribed
      enrollment forms) on or before the scheduled Start Date of the offering
      period.

            G. CHANGE IN CONTROL. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Change in Control, by applying the payroll deductions of each Participant for
the Purchase Interval in which such Change in Control occurs to the purchase of
whole shares of Common Stock at a purchase price per share equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the Start Date of the offering period in which such Change in Control
occurs or (ii) the Fair

                                       5.
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Market Value per share of Common Stock immediately prior to the effective date
of such Change in Control. However, the applicable limitation on the number of
shares of Common Stock purchasable per Participant shall continue to apply to
any such purchase, but not the limitation applicable to the maximum number of
shares of Common Stock purchasable in total by all Participants on any one
Purchase Date.

            The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Control, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Change in Control.

            H. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
of Common Stock to be purchased pursuant to outstanding purchase rights on any
particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.

            I. ASSIGNABILITY. The purchase right shall be exercisable only by
the Participant and shall not be assignable or transferable by the Participant.

            J. STOCKHOLDER RIGHTS. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.

      VIII. ACCRUAL LIMITATIONS

            A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423)) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000.00) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.

            B. For purposes of applying such accrual limitations to the purchase
rights granted under the Plan, the following provisions shall be in effect:

                  (i) The right to acquire Common Stock under each outstanding
      purchase right shall accrue in a series of installments on each successive
      Purchase Date during the offering period on which such right remains
      outstanding.

                  (ii) No right to acquire Common Stock under any outstanding
      purchase right shall accrue to the extent the Participant has already

                                       6.
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      accrued in the same calendar year the right to acquire Common Stock under
      one or more other purchase rights at a rate equal to Twenty-Five Thousand
      Dollars ($25,000.00) worth of Common Stock (determined on the basis of the
      Fair Market Value per share on the date or dates of grant) for each
      calendar year such rights were at any time outstanding.

            C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the payroll
deductions which the Participant made during that Purchase Interval with respect
to such purchase right shall be promptly refunded.

            D. In the event there is any conflict between the provisions of this
Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.

      IX.   EFFECTIVE DATE AND TERM OF THE PLAN

            A. The Plan was adopted by the Board on November 16, 1999 and shall
become effective at the Effective Time, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the stockholders of
the Corporation and (ii) the Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with
the Securities and Exchange Commission), all applicable listing requirements of
any stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is listed for trading and all other applicable requirements
established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect, and all sums collected from Participants during
the initial offering period hereunder shall be refunded.

            B. Unless sooner terminated by the Board, the Plan shall terminate
upon the earliest of (i) the last business day in January 2010, (ii) the date on
which all shares available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Change in Control. No
further purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.

      X.    AMENDMENT OF THE PLAN

            A. The Board may alter, amend, suspend or terminate the Plan at any
time to become effective immediately following the close of any Purchase
Interval. However, the Plan may be amended or terminated immediately upon Board
action, if and to the extent necessary to assure that the Corporation will not
recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the Effective
Time

                                       7.
<PAGE>   8

be subsequently revised so as to require the Corporation to recognize
compensation expense in the absence of such amendment or termination.

            B. In no event may the Board effect any of the following amendments
or revisions to the Plan without the approval of the Corporation's stockholders:
(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock purchasable
under the Plan or (iii) modify the eligibility requirements for participation in
the Plan.

      XI.   GENERAL PROVISIONS

            A. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation; however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale or other disposition
of any shares purchased under the Plan.

            B. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by each, to
terminate such person's employment at any time for any reason, with or without
cause.

            C. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.

                                       8.
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                                   SCHEDULE A

                          CORPORATIONS PARTICIPATING IN

                          EMPLOYEE STOCK PURCHASE PLAN

                            AS OF THE EFFECTIVE TIME

                                  Versata, Inc.

<PAGE>   10

                                    APPENDIX

            The following definitions shall be in effect under the Plan:

            A. BOARD shall mean the Corporation's Board of Directors.

            B. CASH EARNINGS shall mean the (i) regular base salary paid to a
Participant by one or more Participating Companies on each payroll date during
such individual's period of participation in one or more offering periods under
the Plan plus (ii) all overtime payments, bonuses, commissions, profit-sharing
distributions and other incentive-type payments received on each such date. Such
Cash Earnings shall be calculated before deduction of (A) any income or
employment tax withholdings or (B) any contributions made by the Participant to
any Code Section 401(k) salary deferral plan or Code Section 125 cafeteria
benefit program now or hereafter established by the Corporation or any Corporate
Affiliate. However, Cash Earnings shall NOT include any contributions made on
the Participant's behalf by the Corporation or any Corporate Affiliate to any
employee benefit or welfare plan now or hereafter established (other than Code
Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings).

            C. CHANGE IN CONTROL shall mean a change in ownership of the
Corporation pursuant to any of the following transactions:

                  (i) a merger or consolidation in which securities possessing
      more than fifty percent (50%) of the total combined voting power of the
      Corporation's outstanding securities are transferred to a person or
      persons different from the persons holding those securities immediately
      prior to such transaction, or

                  (ii) the sale, transfer or other disposition of all or
      substantially all of the assets of the Corporation in complete liquidation
      or dissolution of the Corporation, or

                  (iii) the acquisition, directly or indirectly, by a person or
      related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by or is under common
      control with the Corporation) of beneficial ownership (within the meaning
      of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
      percent (50%) of the total combined voting power of the Corporation's
      outstanding securities pursuant to a tender or exchange offer made
      directly to the Corporation's stockholders.

            D. CODE shall mean the Internal Revenue Code of 1986, as amended.

            E. COMMON STOCK shall mean the Corporation's common stock.

            F. CORPORATE AFFILIATE shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.

                                      A-1.
<PAGE>   11

            G. CORPORATION shall mean Versata, Inc., a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of Versata, Inc. which shall by appropriate action adopt the Plan.

            H. EFFECTIVE TIME shall mean the time at which the Underwriting
Agreement is executed and the Common Stock priced for the initial public
offering of such Common Stock. Any Corporate Affiliate which becomes a
Participating Corporation after such Effective Time shall designate a subsequent
Effective Time with respect to its employee-Participants.

            I. ELIGIBLE EMPLOYEE shall mean any person who is employed by a
Participating Corporation on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).

            J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

                  (i) If the Common Stock is at the time traded on the Nasdaq
      National Market, then the Fair Market Value shall be the closing selling
      price per share of Common Stock on the date in question, as such price is
      reported by the National Association of Securities Dealers on the Nasdaq
      National Market. If there is no closing selling price for the Common Stock
      on the date in question, then the Fair Market Value shall be the closing
      selling price on the last preceding date for which such quotation exists.

                  (ii) If the Common Stock is at the time listed on any Stock
      Exchange, then the Fair Market Value shall be the closing selling price
      per share of Common Stock on the date in question on the Stock Exchange
      determined by the Plan Administrator to be the primary market for the
      Common Stock, as such price is officially quoted in the composite tape of
      transactions on such exchange. If there is no closing selling price for
      the Common Stock on the date in question, then the Fair Market Value shall
      be the closing selling price on the last preceding date for which such
      quotation exists.

                  (iii) For purposes of the initial offering period which begins
      at the Effective Time, the Fair Market Value shall be deemed to be equal
      to the price per share at which the Common Stock is sold in the initial
      public offering pursuant to the Underwriting Agreement.

            K. 1933 ACT shall mean the Securities Act of 1933, as amended.

            L. PARTICIPANT shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.

            M. PARTICIPATING CORPORATION shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from time to time by the
Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan are listed in attached Schedule A.

                                      A-2.
<PAGE>   12

            N. PLAN shall mean the Corporation's Employee Stock Purchase Plan,
as set forth in this document.

            O. PLAN ADMINISTRATOR shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.

            P. PURCHASE DATE shall mean the last business day of each Purchase
Interval. The first Purchase Date shall be July 30, 2000.

            Q. PURCHASE INTERVAL shall mean each successive six (6)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant.

            R. START DATE shall mean the date on which an offering period begins
and shall be either the first business day in February or August each year
provided, however, that the Start Date of the initial offering period shall be
the Effective Time.

            S. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.

            T. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

                                      A-3.<PAGE>   1
                                                                  EXHIBIT 10.193

                           PURCHASE AND SALE AGREEMENT

      This Purchase and Sale Agreement ("Agreement") is entered into as of this
6th day of October, 1999 by and between PREFERRED EQUITIES CORPORATION, a Nevada
corporation ("Seller"), and COVINGTON NEVADA CORP., a Nevada corporation, or
assign(s) (as defined in Section 12.14 below) ("Buyer").

                                    RECITALS:

                  A. Seller owns real  property  located in the City of Pahrump,
County of Nye, State of Nevada, commonly known as Calvada Championship Golf
Course and Calvada Executive Golf Course ("Golf Courses" or "Clubs"), and more
particularly described in EXHIBIT A, attached hereto and incorporated herein by
this reference (the "Land"). The Land is currently improved by two (2) 18-hole
golf courses, clubhouse, maintenance building, driving range and other
improvements described in Section 1.2 of this Agreement.

                  B.  Seller  desires  to sell to Buyer,  and Buyer  desires  to
purchase from Seller, the "Property" (as defined in Article 1 below) upon the
terms, conditions and warranties set forth below.

                  C.  Buyer  currently  intends  to  operate  the  Club  as golf
facilities.

      NOW THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as follows:

                               TERMS OF AGREEMENT

            ARTICLE 1 - AGREEMENT TO SELL AND PURCHASE; THE PROPERTY

      Upon the terms and conditions contained in this Agreement, Seller agrees
to sell and convey the Property to Buyer, and Buyer agrees to purchase the
Property from Seller, free and clear of all encumbrances except the "Permitted
Encumbrances" (as defined in Section 4.3 of this Agreement).

      The property to be purchased and sold pursuant to this Agreement is
described as follows (collectively, the "Property"):

      1.1. LAND. The Land is more particularly described in EXHIBIT A, attached
hereto and incorporated herein by this reference.

      1.2. BUILDINGS AND OTHER IMPROVEMENTS. All existing buildings, structures
and other improvements located upon the Land, including, without limitation, a
clubhouse building, a maintenance facility, two (2) eighteen (18) hole golf
courses, including the Calvada Championship Golf Course and the Calvada
Executive Golf Course with driving range and practice areas, landscaping
improvements, manmade lakes and water retention ponds, irrigation system,
parking facilities, and all other improvements located on the Land
(collectively, the "Improvements").
<PAGE>   2

      1.3. WATER RIGHTS AND MINERAL RIGHTS. All water rights, riparian rights,
appropriative rights, water allocations and water stock, including all of
Seller's rights and interests under the "Water Documents" (as defined in Section
7.21, below) and all minerals, oil, gas and other hydrocarbons located in or
beneath the Land, along with all rights to surface and subsurface entry
(collectively, the "Water and Mineral Rights"). Notwithstanding anything herein
to the contrary, Buyer will be subject to the terms of the Tri-Partite Agreement
for Utility Services between Buyer, Seller and Central Nevada Utilities Company,
which is further described on EXHIBIT C, attached (the "Tri-Partite Agreement")
and Buyer acknowledges that such Tri-Partite Agreement must be executed by all
parties and delivered to the Escrow Holder on or before the end of the Due
Diligence Period (as defined in Section 6.2). Further, it is understood that the
combined total duty of water rights available for use on the Championship Golf
Course is approximately 1,319.94 acre-feet. The combined total duty of water
rights available for the Executive Golf Course is approximately 479.74
acre-feet. These water rights were previously conveyed by Seller to Central
Nevada Utilities Company (CNUC) and are "dedicated" for use on the Golf Courses.

      1.4. APPURTENANCES. All appurtenances, hereditaments, easements,
reversionary rights and all other rights, privileges and entitlements belonging
to or running with the Land, all awards for damage to the Land or taking by
eminent domain, and all zoning and land use entitlements and development rights
pertaining to the Land (collectively, the "Appurtenances"). The Land, the
Improvements, the Water and Mineral Rights, and the Appurtenances are
collectively referred to herein as the "Real Property."

      1.5. TANGIBLE PERSONAL PROPERTY. All of Seller's interest in the tangible
personal property located on or used in the operation, maintenance, repair or
ownership of the Real Property, including: (a) all fixtures, furniture,
furnishings, equipment, machinery, tools, repair parts, goods, supplies,
televisions, communications equipment, kitchen utensils, linen, glassware,
china, appliances, golf carts, equipment, motor vehicles, gasoline and
lubricants, fertilizer, seed, sand, chemicals, irrigations parts and supplies;
and (b) all food and beverage items and all professional shop merchandise, goods
and inventory, and further including, without limitation, the personal property
described in EXHIBIT B attached hereto and incorporated herein by this reference
(the foregoing shall collectively be referred to herein as the "Personal
Property").

      1.6. INTANGIBLE PERSONAL PROPERTY. All of Seller's right, title and
interest in the intangible property that is appurtenant to the ownership,
operation and use of the Real Property and the Personal Property, including: (a)
all governmental permits, approvals, licenses and certificates of occupancy; (b)
all architectural and engineering drawings; (c) any proprietary rights Seller
may have with respect to the name "Calvada Championship Golf Course" and
"Calvada Executive Golf Course"; (c) tradenames, trademarks, services marks and
logos; (e) all product and service warranties and guaranties; (f) all rights to
the recovery of judgments, books and records, and telephone numbers; and (g) all
of "Seller's Receivables" (as defined below), (collectively, the "Intangible
Property"). As used in this Agreement, the term "Seller's Receivables" shall
mean: (1) delinquent or uncollected membership dues, charges, payments or fees
existing as of the Closing Date (as defined in Section 3.3); or (2) unpaid
amounts with respect to tournaments, banquets and other functions held at the
Golf Course prior to the Closing Date.

                                      -2-
<PAGE>   3

                       ARTICLE 2 - PURCHASE AND SALE PRICE

      The total purchase and sale price for the Property shall be Two Million
Two Hundred Fifty Thousand Dollars ($2,250,000.00) ("Purchase Price").

   2.1. PAYMENT OF PURCHASE PRICE.

      (a) Deposit. On or before three (3) business days after the "Escrow
Opening Date" (as defined in Section 3.1 of this Agreement), Buyer shall deposit
into the "Escrow" (as defined in Section 3.1 of this Agreement) the amount of
One Hundred Thousand Dollars ($100,000.00) in cash ("Deposit"). Immediately upon
receipt of the Deposit, the "Escrow Holder" (as defined in Section 4.1 of this
Agreement) shall invest these funds in insured money market funds or other
investments approved by Buyer, and shall confirm in writing to Seller and Buyer
that Escrow Holder has invested the funds. The Deposit shall be applied to the
Purchase Price or paid in accordance with Section 2.3 of this Agreement.

      (b) Balance of Purchase Price. The balance of the Purchase Price in the
amount of Two Million One Hundred Fifty Thousand Dollars ($2,150,000.00) (less
the accrued interest imputed on the Deposit, and plus or minus the costs and
prorations as provided in Sections 3.10 and 3.11 of this Agreement) shall be
deposited by Buyer in cash into the Escrow not later than twenty-four (24) hours
prior to the Closing Date. As used in this Agreement, the term "cash" shall mean
immediately available United States funds transferred by certified check or wire
transfer.

      (c) Inventory Amounts. Prior to the Closing Date, Seller shall maintain
the level of inventories at the Property similar to the level it carries as a
regular course of business (the "Inventory Amount"), and shall regularly
supplement such inventories and purge such inventories of obsolete items. Items
in the Inventory Amount owned by Seller shall be included as part of the
Purchase Price.

   2.2. ALLOCATION OF PURCHASE PRICE.

      2.2.1. Allocation. The Purchase Price shall be allocated to the Property
by the reasonable determination of Buyer, and Buyer shall provide Seller its
allocation on or prior to the Closing. The parties acknowledge and agree that
the allocations made by Buyer may be adjusted on or prior to the Closing in
order to reflect the valuations of the various categories of Property during the
Due Diligence Period (as defined in Section 7.2 below).

      2.2.2. Purchase of Personal Property. The parties acknowledge and agree
that on or prior to the Closing, Buyer may assign and transfer to third
party(ies) selected by Buyer ("Operator") Buyer's right to purchase the Personal
Property and Intangible Property. In the event of such transfer, Operator shall
purchase directly from Seller and Seller shall transfer directly to the Operator
all or a portion of the Personal Property and Intangible Property for a purchase
price equal to the agreed-upon value of such Personal Property and Intangible
Property, as set forth above.

      2.3. TREATMENT OF DEPOSIT. The Deposit shall be applied to the Purchase
Price in the event that the Closing takes place at the time and in the manner
provided in this Agreement. The

                                      -3-
<PAGE>   4

Deposit shall be paid to Seller as liquidated damages upon cancellation of the
Escrow by Seller, pursuant to Section 3.7(b) of this Agreement following a
"Buyer Default" (as defined in Section 3.7(b) of this Agreement). The Deposit
shall be immediately returned to Buyer upon cancellation of the Escrow by Buyer:
(a) pursuant to Section 3.7(a) of this Agreement following a "Seller Default"
(as defined in Section 3.7(a) of this Agreement); (b) Buyer's election not to
proceed with the Closing pursuant to Section 6.3 of this Agreement; or (c) after
any of the conditions precedent to Buyer's obligations under this Agreement are
not satisfied prior to the Closing.

                           ARTICLE 3 - ESCROW; CLOSING

      3.1. JOINT INSTRUCTIONS; OPENING OF ESCROW. The purchase and sale of the
Property will be completed through an escrow (the "Escrow") at the office of
United Title Company (Susan Coleman) ("Escrow Holder"). This Agreement will
constitute joint escrow instructions to the Escrow Holder in connection with the
escrow. Within two (2) business days after Seller and Buyer execute this
Agreement, which is to occur on or before October 5, 1999, the parties shall
open the Escrow with the Escrow Holder by delivering a fully executed copy of
this Agreement to the Escrow Holder. Escrow shall be deemed to be opened on the
date inserted herein: October 6, 1999. The Escrow Holder, upon its receipt of an
original of this Agreement duly executed by Seller and Buyer ("Escrow Opening
Date"), shall immediately notify Seller and Buyer in writing of the Escrow
Opening Date.

      3.2. ADDITIONAL INSTRUCTIONS. Seller and Buyer hereby agree to execute
such additional instructions consistent with this Agreement as may be reasonably
required by the Escrow Holder.

      3.3. CLOSING DATE. The delivery of the Deed (as defined in Section 3.4) to
Buyer (such event being referred to herein as the "Closing") shall occur on a
date on or prior to ten (10) calendar days after the expiration of the "Due
Diligence Period" (as defined in Section 6.2 of this Agreement), as the same may
be extended. The date on which the Closing takes place is hereinafter referred
to as the "Closing Date."

      3.4. SELLER'S DELIVERIES PRIOR TO CLOSING. At least five (5) business days
prior to the Closing Date, Seller shall deliver to Buyer or the Escrow Holder
the following documents, all of which shall be in form and substance reasonably
acceptable to Buyer:

                  (a) A general  warranty grant deed to the Real Property,  duly
executed and acknowledged by Seller and in recordable form (the "Deed");

                  (b) A bill of sale with respect to the  Personal  Property and
Intangible Personal Property duly executed by Seller (the "Bill of Sale");

                  (c)  Two  (2)  original  counterparts  of  an  assignment  and
assumption of contracts and warranties duly executed by Seller, pursuant to
which Seller shall assign and Buyer shall assume certain contracts and
agreements approved by Buyer (the "Assignment of Contracts");

                  (d) Two (2)  original  counterparts  of an  assignment  of the
"Water Documents" (as defined in Section 7.21) duly executed by Seller (the
"Assignment of Water Documents") and

                                      -4-
<PAGE>   5

including the fully executed Tri-Partite Agreement, which shall have been
delivered to the Escrow Holder as described in Section 1.3 above;

                  (e) An affidavit of non-foreign status under the Internal
Revenue Code duly  executed by Seller;

                  (f) A letter from Seller  describing any pending or threatened
litigation or claims affecting the Property;

                  (g) An assignment of all trade names, including the names set
out in Section 2.6 above;

                  (h) A good standing letter from the appropriate state agency
regarding the payment of all taxes; and

                  (i) Any other documents, certificates or instruments necessary
to close the purchase and sale transaction contemplated by this Agreement.

      3.5. BUYER'S DELIVERIES PRIOR TO CLOSING. Prior to the Closing Date, Buyer
shall deliver to Seller or the Escrow Holder the following documents:

                  (a) Two (2) original counterparts of the Assignment of
Contracts duly executed by Buyer (or Operator);

                  (b) Two (2) original counterparts of the Assignment of Water
Documents duly executed by Buyer; and

                  (c) All other  documents  necessary to carry out and close the
purchase and sale transaction contemplated by this Agreement.

      3.6. ACTIONS AT CLOSING. At the Closing, the Escrow Holder shall do the
following:

                  (a) Cause the Deed (and such other documents as are
customarily filed for record) to be recorded in the real estate records of Nye
County, State of Nevada;

                  (b) Deliver to Buyer the Bill of Sale, one complete original
counterpart of the Assignment of Contracts, the Assignment of Water Documents,
such other documents delivered by Seller to the Escrow Holder, and the "Title
Policy" (as defined in Section 4.3 of this Agreement) or commitment therefor;
and

                  (c) Deliver to Seller the Purchase  Price (less any prorations
and costs to be paid by Seller pursuant to Sections 3.10 and 3.11 of this
Agreement) and one complete original counterpart of the Assignment of Contracts,
the Assignment of Water Documents, and a file-stamped conformed copy of the
Deed, showing the recording information thereon and a copy of the Bill of Sale.

                                      -5-
<PAGE>   6

         3.7.     CANCELLATION OF ESCROW.

                  (a) If the Closing does not occur at the time and in the
manner provided in this Agreement due to the failure of Seller to comply with
any of its obligations under this Agreement ("Seller Default"), Buyer shall have
the right to cancel the Escrow by written notice to Seller and Escrow Holder.
Upon such cancellation, all title charges and costs of the Escrow shall be paid
by Seller, and Escrow Holder shall promptly return to Buyer the Deposit,
together with all interest accrued thereon.

                  (b)In the event that the Closing does not occur at the time
and in the manner provided in this Agreement due to the failure of Buyer to
comply with any of its obligations under this Agreement ("Buyer Default"),
Seller shall have the right to cancel the Escrow by written notice to Buyer and
the Escrow Holder. Upon such cancellation, all title charges and costs of the
Escrow shall be paid by Buyer, and the Deposit, together with all interest
thereon, shall be paid in accordance with Article 11.

                  (c) In the event that Closing does not occur due to Buyer's
election to terminate this Agreement pursuant to Section 6.3, the Escrow shall
automatically be cancelled, the Deposit shall be immediately returned to Buyer,
together with all interest thereon, and Buyer and Seller shall each pay one-half
(1/2) of the title charges and all costs for cancellation of the Escrow.

                  (d) Upon any cancellation of the Escrow, all instruments and
documents  deposited with the Escrow Holder shall be returned to the parties who
deposited the same.

                  (e) The  rights and  remedies  set forth in this  Section  3.7
shall not be exclusive of any other rights or remedies which Buyer may have by
law or in equity in the event of breach of this Agreement, including, without
limitation, the right to specific performance.

      3.8. POSSESSION. Possession and the right to possession of the Property
shall be delivered to Buyer on the Closing Date. The risk of loss or destruction
to any of the Property occurring as a result of any cause shall be upon Seller
until delivery of the Deed from Seller to Buyer. The risk of loss of and
destruction to any of the Property occurring as a result of any cause shall be
upon Buyer after Buyer takes possession of the Property.

      3.9. DAMAGE AND DESTRUCTION; CONDEMNATION. If, prior to the Closing, there
is any damage to or destruction of any part of the Property, Seller shall
repair, restore or replace such damaged Property in a good and workmanlike
manner to a condition at least as good and useful as that in which it existed
prior to such damage or destruction. If Seller is unable to repair, restore or
replace such damage or destruction prior to the Closing, then at Buyer's option:
(a) the Closing shall be extended in order to permit Seller to complete such
repair, restoration or replacement prior to the Closing; (b) the Closing shall
occur on the Closing Date as the same may have been extended pursuant to clause
(a) of this Section, and Seller shall deposit into Escrow prior to the Closing
or Escrow Holder shall retain from the sale proceeds an amount equal to one
hundred ten percent (110%) of the amount reasonably estimated by Buyer and
Seller to complete the required repairs,

                                      -6-
<PAGE>   7

restorations or replacements for application to the costs incurred by Buyer to
complete such repairs, restorations or replacements, with the balance of such
retention (together with any interest earned on the retention) being paid over
to Seller following the completion of such repairs, restorations or
replacements; or (c) this Agreement shall terminate upon written notice to
Seller and the Escrow Holder, in which case neither party shall have any further
rights or obligations under this Agreement, the Deposit shall be immediately
returned to Buyer, and Seller shall pay all title charges and all costs for
cancellation of the Escrow.

      In the event the Property or any portion thereof is taken by eminent
domain or any condemnation proceedings are commenced prior to the Closing, then
Buyer may elect either: (i) to proceed with the transaction, in which case Buyer
shall receive an assignment of any condemnation award; or (ii) to terminate this
Agreement upon written notice to Seller and the Escrow Holder, in which case
neither party shall have any further rights or obligations under this Agreement,
the Deposit shall be immediately returned to Buyer, and Seller shall pay all
title charges and all costs for cancellation of the Escrow.

      3.10. FEES AND CLOSING COSTS. The fees and costs incidental to the Closing
shall be paid as follows:

            (a) Seller shall pay: (i) the cost of releasing any encumbrance
affecting the Property; (ii) all real estate transfer, documentary and excise
taxes payable in connection with conveying the Property to Buyer or otherwise in
connection with recording the Deed; (iii) any sales, use or equivalent tax in
connection with the transfer to Buyer (or Buyer's assignee) of the Personal
Property or in connection with Seller's operation of the Property; and (iv) the
cost of the preliminary title report, the title commitment and the Uniform
Commercial Code search report furnished pursuant to Section 4.1 of this
Agreement; (v) the cost of the premium for the "Title Policy" as defined in
Section 4.3 of this Agreement and endorsements thereto; and (vi) one-half of the
escrow fees and charges of the Escrow Holder plus any fees and charges relating
to the reconveyance of existing liens or encumbrances.

            (b) Buyer shall pay: (i) the cost of recording the Deed; (ii) the
cost to update or upgrade the "Survey" (as defined in Section 4.2 of this
Agreement); (iii) the cost of a Phase I environmental site assessment report
("Phase I Report"); (iv) the cost of an engineering report for the inspection of
the improvements to the Property; and (v) one-half of the escrow fees and
charges of the Escrow Holder exclusive of any fees and charges relating to the
reconveyance of existing liens or encumbrances.

            (c) Buyer and Seller shall each pay their own legal fees and other
incidental expenses related thereto incurred in connection with the transaction
contemplated by this Agreement.

      3.11. PRORATIONS. Prorations between Seller and Buyer shall be made at the
Closing as follows:

            (a) All taxes and assessments on the Property for all prior years
and all current year taxes and assessments that are due and payable on or before
the Closing shall have been paid

                                      -7-
<PAGE>   8

in full by Seller or Seller's predecessor in interest on or before the Closing.
Accrued but not yet payable general real estate, personal property and ad
valorem taxes and assessments for the current year only shall be prorated on the
basis of the most recent available information, as adjusted by any known changes
relating to the period during which the Closing occurs.

            (b) All charges for gas, electricity, water, telephone, sewer and
other utilities shall be prorated on the basis of the most recent available
information, as reasonably adjusted to account for known variances from usage
that would not otherwise be reflected in such information.

            (c) Any income or expense items under the Contracts shall be
prorated as of the Closing Date.

            (d) All prepaid membership dues or other membership charges shall be
prorated as of the Closing Date, which will result in Buyer receiving a credit
to the Purchase Price for such prorated amount.

            (e) All membership dues that were billed (regardless of whether or
not they were collected) for the month during which the Closing occurs shall be
prorated as of the Closing Date, which will result in Buyer receiving a credit
to the Purchase Price for such prorated amount.

            (f) Buyer shall receive a credit to the Purchase Price in the
aggregate amount of all refundable membership deposits.

            (g) Buyer shall receive a credit to the Purchase Price for all
merchandise gift certificates sold before the Closing, but not redeemed as of
the Closing.

            (h) Any other costs or expenses in connection with the transaction
contemplated by this Agreement shall be apportioned between the parties in the
manner customary in Nye County, Nevada.

      For purposes of calculating prorations, Buyer shall be entitled to the
income from the Property and responsible for the expenses of the Property, for
the entire day upon which the Closing occurs. All such prorations shall be made
on the basis of the actual number of days of the month which shall have elapsed
as of the day of the Closing and based upon a three hundred sixty (360) day
year. The amount of such prorations shall be subject to adjustment in cash after
Closing outside of Escrow, as and when more complete and accurate information
becomes available. Seller and Buyer agree to cooperate and use their best
efforts to make such adjustments not later than sixty (60) days after the
Closing Date (which cooperation may include permitting reasonable inspections of
Seller's or Buyer's books and records). Except as set forth in this Section
3.11, all items of income and expense for the period prior to the Closing Date
will be for the account of Seller, and all items of income and expense for the
period on and after the Closing Date will be for the account of Buyer, all as
determined by the accrual method of accounting. Bills and invoices received
after the Closing which relate to expenses incurred, services performed, goods
or materials delivered, or other amounts applicable to the period prior to the
Closing shall be paid by Seller.

      At least three (3) business days prior to the Closing Date, Seller shall
deliver to

                                      -8-
<PAGE>   9

Buyer a tentative statement of prorations (the "Statement of Prorations")
setting forth a preliminary determination of all items to be prorated, pursuant
to this Section 3.11, and supported by all detail reasonably necessary to make
such determination. Prior to the Closing, Buyer and Seller shall agree on the
Statement of Prorations.

                                ARTICLE 4 - TITLE

      4.1. TITLE COMMITMENT AND UCC SEARCH. Buyer shall arrange for United Title
Company ("Title Company") to furnish to Seller and Buyer a current preliminary
title report ("PTR") and/or title commitment for the purpose of issuing title
insurance covering the Real Property, together with copies of all documents
shown as exceptions in the PTR and/or title commitment for title insurance.
Buyer shall obtain the results of a search of the Uniform Commercial Code
financing statement indices of the Secretary of State of Nevada and the Nye
County Clerk, under the name of Seller and any tradename used by Seller in
connection with the operation of the Golf Course, together with copies of any
financing  statements or fixture filings referenced in the search report.

      4.2. SURVEY. Within five (5) business days after the Escrow Opening Date,
Seller shall furnish to Buyer and the Title Company the existing survey
("Survey") of the Real Property. At Seller's expense, Buyer may elect to have
the Survey updated or upgraded to an ALTA survey with certifications acceptable
to Buyer and/or as required to enable the Title Company to issue the Title
Policy. The term "Survey," as used in this Agreement, shall include any such
updates or upgrades to the Survey.

      4.3. TITLE INSURANCE. At the Closing, the Title Company shall furnish to
Buyer an ALTA owner's policy of title insurance ("Title Policy"), together with
endorsements reasonably required by Buyer, or a commitment by the Title Company
to issue the Title Policy with such endorsements. The Title Policy shall be in
the amount of the Purchase Price, and shall insure title to the Real Property to
be vested in Buyer free and clear of all liens, assessments, taxes,
indebtedness, and other encumbrances except non-delinquent taxes and
assessments, the matters disclosed by the Survey, and the exceptions approved or
deemed approved by Buyer pursuant to Article 6 of this Agreement (collectively,
the "Permitted Encumbrances").

                   ARTICLE 5 - DELIVERY OF DOCUMENTS BY SELLER

      Within three (3) business days after the Escrow Opening Date, Seller shall
deliver to Buyer the documents listed on SCHEDULE 1 (the "Due Diligence Request
List"), attached hereto, and incorporated herein. Within three (3) business days
after the Escrow Opening Date, Seller shall attach a detailed and itemized list
of all items requested and delivered pursuant to the heading "Operational
Contracts" of the Due Diligence Request List (collectively, the "Contracts") as
EXHIBIT C, which is incorporated herein by reference.

      Seller shall promptly deliver to Buyer a copy of any tax bills received by
Seller after the date of this Agreement, even if received after the Closing. All
changes in the Inventory of the Personal Property shall be made only in the
normal and ordinary course of business. Not earlier

                                      -9-
<PAGE>   10

than five (5) business days or later than two (2) business days prior to the
Closing, Seller shall certify as to the accuracy of the Inventory Amount as of
the Closing. If such Inventory shall reflect that any of the Inventory has been
removed other than in the ordinary course of business, Seller shall replace such
item of Inventory with an item of like kind, character and quality, or, at
Buyer's election, the Purchase Price shall be reduced by the fair market value
of the item of Inventory so missing. The certified inventory of the Personal
Property shall be attached to the Bill of Sale.

                        ARTICLE 6 - BUYER'S DUE DILIGENCE

      6.1. BUYER'S INSPECTION. With prior notification to Seller and with
minimal interference to or interruption of Golf Course operations, Buyer, its
agents and representatives shall be entitled: (a) to enter onto the Property to
perform customary inspections and tests of the Property and the structural and
mechanical systems within the Improvements, (b) to examine and copy books and
records maintained by Seller or its agents relating to receipts and expenditures
pertaining to the Property; and (c) to interview the managers and employees of
Seller having management roles with respect to the operation of the Property.
After making such tests and inspections, Buyer agrees to promptly restore the
Property to the condition in which it existed prior to such tests and
inspections. Buyer shall indemnify and hold harmless Seller against any claims
related to such tests and inspections of the Property.

      6.2. DUE DILIGENCE PERIOD. This Agreement and each of Buyer's obligations
under this Agreement are expressly conditioned upon Buyer's approval of the
Property and all conditions or matters related thereto (the granting or
withholding of such approval shall be in the sole and absolute discretion of
Buyer) on or before thirty (30) days after the delivery of all documents by
Seller to Buyer, including all of the items required under Schedule 1 pursuant
to Article 5 ("Due Diligence Period"). Buyer's approval of the Property shall
constitute a condition precedent to Buyer's obligations under this Agreement and
the consummation of the transactions contemplated hereby. If Buyer fails to give
written notice to Seller of Buyer's disapproval of any condition or matter
related to the Property on or before the last day of the Due Diligence Period,
then this condition precedent shall be deemed satisfied.

      6.3. BUYER'S DISAPPROVAL. The following provisions shall apply if Buyer
disapproves any condition or matter related to the Property during the Due
Diligence Period.

                  (a) If Buyer  disapproves  any condition or matter  related to
the Property, then Buyer shall elect either (i) to terminate this Agreement upon
written notice to Seller and the Escrow Holder, in which case neither party
shall have any further rights or obligations under this Agreement, the Deposit
shall be immediately returned to Buyer, and Buyer shall pay all title charges
and costs for cancellation of Escrow, or (ii) to give written notice to Seller
on or before the last day of the Due Diligence Period of such disapproval, which
notice shall specify the matters disapproved by Buyer.

                  (b) If Buyer gives notice to Seller of any disapproved matters
pursuant to Section 6.3(a)(ii) above, then Seller shall elect either (i) to cure
the disapproved items to Buyer's reasonable satisfaction prior to the Closing,
or (ii) not to cure the disapproved items. Unless Seller notifies Buyer in
writing, on or before five (5) business days following Seller's receipt of
Buyer's

                                      -10-
<PAGE>   11

disapproval notice, of Seller's election not to cure some or all of the
disapproved items, it shall be conclusively presumed that Seller has elected to
cure the disapproved items.

            (c) If Seller elects not to cure some or all of the disapproved
items pursuant to Section 6.3(b)(ii) above, then for a period of five (5)
business days after Seller's written notice to Buyer of Seller's election, Buyer
shall have the right either (i) to waive Buyer's disapproval and proceed with
the Closing, or (ii) to terminate this Agreement upon written notice to Seller
and Escrow Holder. If Buyer terminates this Agreement, neither party shall have
any further rights or obligations under this Agreement, the Deposit shall be
immediately returned to Buyer, and Buyer and Seller shall each pay one-half
(1/2) of the title charges and costs for cancellation of Escrow.

      6.4. EXTENSION OF DUE DILIGENCE PERIOD. In the event: (a) the Survey to be
furnished by Seller to Buyer pursuant to Section 4.2 of this Agreement has not
been completed to the reasonable satisfaction of Buyer; (b) any of the documents
to be delivered to Buyer pursuant to Article 5 of this Agreement are not
provided to Buyer within the time periods set forth in the respective Sections
and in the form required by such Sections; (c) the issuance of a Alcohol License
satisfactory to Buyer is not completed; (d) soil test results including
representative sampling of greens, including greens number 13 and 14 have not
been obtained; or (e) Buyer is making a diligent, persistent and good faith
effort to pursue its inspection of the Property and through no fault of Buyer,
such inspection is reasonably delayed, then the Due Diligence Period shall be
extended for such period of time as designated by Buyer, not, however, to exceed
one hundred twenty (120) days. If Seller has elected to cure any matter or
condition disapproved by Buyer, the Due Diligence Period shall be extended for
the period of time necessary for Seller's cure of such disapproved matter or
condition.

      6.5. TERMINATION OF DISAPPROVED CONTRACTS. On or before the Closing,
Seller shall terminate those Contracts which Buyer has disapproved pursuant to
Section 6.3 of this Agreement, other than any Contracts which would subject
Seller to a cost or penalty in excess of One Thousand Dollars ($1,000.00)
("Penalty Contracts"). Penalty Contracts shall be specifically identified on
Exhibit C. Except for Penalty Contracts, Seller acknowledges that Buyer shall
have no obligation to assume any Contracts except the approved Contracts and
that Buyer shall have no obligation to hire or otherwise engage any employee of
Seller except as otherwise approved by Buyer.

      6.6. REMOVAL OF EQUIPMENT, TRASH, ETC.. As a condition of Closing, Seller
shall remove prior to Closing any equipment, trash or other items (collectively,
the "Removal Items") which Buyer may reasonably determine. Buyer shall notify
Seller of any Removal Items in writing during the Due Diligence Period.

              ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller hereby makes the following representations and warranties, each of
which is material to this transaction, and upon which Buyer is relying in
entering into this Agreement. Seller acknowledges that Article 8 of this
Agreement also contains covenants of Seller in addition to the representations
and warranties set forth below. Seller recognizes that Buyer is relying upon
said representations and warranties as part of Buyer's due diligence
investigation of the Property.

                                      -11-
<PAGE>   12

      7.1. CAPACITY OF SELLER. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and is
qualified to do business in the State of Nevada. Seller has the requisite right,
power, legal capacity, and authority to enter into this Agreement and to fully
perform each and all of its obligations under this Agreement. Seller has
obtained all necessary approvals, releases or consents from third parties in
order to enter into this Agreement and consummate the transactions contemplated
by this Agreement.

      7.2. SELLER NOT A "FOREIGN PERSON". Seller is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended.

      7.3. MARKETABLE TITLE TO PERSONAL PROPERTY. Seller shall convey to Buyer
good and marketable title to the Personal Property and Intangible Property, free
and clear of all liens and encumbrances, except the Permitted Encumbrances. None
of the Personal Property or Intangible Property is subject to claims by third
parties pursuant to any contracts, including contracts set out on Exhibit C.

      7.4. IMPROVEMENTS AND EQUIPMENT IN GOOD CONDITION. To the best of Seller's
knowledge: (a) all Improvements were constructed or installed in conformity with
applicable local, state and federal laws, regulations, permits and requirements;
(b) all Improvements were constructed or installed in a good and workmanlike
manner with materials of good quality and all Improvements are free of any
design or construction defects; (c) all Improvements and Personal Property are
in good and operable condition and will remain so through the Closing Date; and
(d) there are no present violations of applicable state, county and city
building, electrical, plumbing or heating, ventilation and air conditioning
codes, and Seller has not received any notice from any governmental agency or
any other third party of the violation of any of the foregoing.

      7.5. NO CONDITIONS AFFECTING INSURABILITY. Seller has not received from
any insurance carrier of (or is otherwise not aware of) any defects or
inadequacies in the Property which would adversely affect the insurability of
the Property or the cost of such insurance.

      7.6. UTILITIES; ACCESS. To the best of Seller's knowledge: (a) all water,
sewer, gas, electric, telephone, and drainage facilities and all other utilities
required by law for the present use and operation of the Property are installed
across public property or valid easements to the boundary lines of the Land, and
are connected pursuant to valid permits, and such facilities are adequate to
service the Property and are in good operating condition; and (b) there are no
conditions that will result in the termination of the present availability to
the Property of such utility services or the termination of access to the
Property. Seller has not received any notice from any governmental agency or any
other third party regarding the termination of such utility services or the
termination of access to the Property.

      7.7. LICENSES AND EASEMENTS. To the best of Seller's knowledge: (i) Seller
has obtained all licenses, permits, easements and rights-of-way, including proof
of dedication, required from all governmental authorities having jurisdiction
over the Property or from private parties for the present use and operation of
the Property and to assure vehicular and pedestrian ingress to and egress from
the Property at all access points currently being used; and (ii) Seller has
obtained adequate easements benefiting the Real Property to accommodate water
run-off and drainage from

                                      -12-
<PAGE>   13

the Real Property, including, without limitation, easements for the use of water
lines, pipes, ditches, drainage channels, or other drainage facilities which are
located outside of the Real Property and are connected to any storm drain or
other water run-off facility located within the Real Property.

      7.8. CONTRACTS. Seller has delivered to Buyer true, complete and correct
copies of all Contracts. The Contracts are in full force and effect, without
default by any party thereto and without any claims made for off-set, except as
set forth on EXHIBIT D, which exhibit shall be attached hereto and incorporated
herein by this reference by Seller within three (3) business days of the Escrow
Opening Date. The Contracts constitute the entire agreement with such third
parties and have not been amended, modified, or supplemented except for such
amendments, modifications and supplements delivered to Buyer. No verbal or
written contracts or agreements (other than the Contracts) with vendors,
suppliers or any other third parties relating to the operation, management,
maintenance or use of the Property will survive the Closing. Seller has neither
entered into any contracts or agreements nor made any verbal or written
commitments to any entity relating to the Property which will survive the
Closing, imposing upon the Property any obligation to contribute property, to
pay money, or to construct, install, or maintain any improvements on or off the
Property.

      7.9. COMPLIANCE WITH APPLICABLE LAWS. To the best of Seller's
knowledge: (i) the Real Property is properly zoned for its present and intended
use as a golf course and for all existing associated uses, and Seller has
received no notices from any governmental authority or any other third party
advising Seller of a violation of any zoning laws, ordinances, general or
specific plans or other governmental requirements; and (iv) the transfer of the
Property to Buyer will comply with all subdivision, zoning and land use laws,
ordinances, codes and legal requirements.

      7.10. ABSENCE OF CLAIMS AND ACTIONS. Except as set forth on EXHIBIT E, to
be attached hereto by Seller and incorporated herein by this reference within
three (3) business days of the Escrow Opening Date, there are no pending or to
the best of Seller's knowledge threatened claims, actions, suit, litigation,
governmental investigations, or judicial or administrative proceedings involving
the Property or Seller's rights to the Property, or which might impede the
Closing or which would interfere with Buyer's intended use of, and benefit from,
the Property. If there are any such claims, actions, suits or judicial or
administrative proceedings (including those set forth on EXHIBIT E), Seller
agrees it will bear sole responsibility for the defense of such claims, actions,
suits or judicial or administrative proceedings, including without limitation
any awards, judgments, damages, costs of relief, payments made in settlement,
costs, expenses and attorneys' fees.

      7.11. ABSENCE OF CONDEMNATION PROCEEDINGS. To the best of Seller's
knowledge, there is presently no pending or threatened eminent domain or
condemnation proceeding affecting the Property or any portion thereof.

      7.12. NO UNRECORDED ENCUMBRANCES. To the best of Seller's knowledge, there
are no unrecorded liens, encumbrances, easements, options or rights of first
refusal that affect the Property.

      7.13. NO HAZARDOUS MATERIALS. There has been no generation, treatment,
discharge or storage on the Land or in the Improvements or in any groundwater or
aquifer below the surface of

                                      -13-
<PAGE>   14

the Land by Seller, or to the best of Seller's knowledge, by any prior owner or
occupant of the Property or any other person, of any hazardous or toxic
substance, material or waste in violation of any applicable federal, state or
local environmental laws, ordinances, restrictions, permits or regulations.
Seller has not received any notices or demands from any governmental agency or
other third party regarding the existence of any hazardous or toxic substance,
material or waste on the Property or in the Improvements or requiring the
removal, clean-up or remediation of any environmental condition relating to the
Property. To the best of Seller's knowledge, the Property is not subject to any
enforcement action by any governmental agency regarding the environmental
condition of the Property and the Property has not been assigned an
identification number, nor is the Property the subject of an environmental
report by the State of Nevada. Seller further represents and warrants that with
respect to any underground or above-ground storage tanks located on the Real
Property, Seller has obtained all necessary permits and licenses and renewals
thereof for such tanks. Seller has no knowledge of any leaks or discharge of
fluids from any underground or above-ground storage tanks.

      7.14. LABOR MATTERS. Seller has no collective bargaining agreement
affecting the Property. To the best of Seller's knowledge, there have been no
demands for collective bargaining by any union or labor organization or other
organization of Seller's employees, and no arbitration proceedings are pending
or threatened against or affecting Seller.

      7.15. MEMBERSHIPS. Seller has delivered to Buyer or made available to
Buyer at the Golf Course (or will deliver to Buyer prior to the Closing) all
membership applications and contracts and agreements between Seller and members
of the Golf Course. EXHIBIT F, attached hereto and incorporated herein by this
reference is a true, complete and correct list of all members of the Golf Course
and includes: (a) the member's name; (b) the type of memberships; (c) the
effective date of the membership; (d) the amount of the initiation deposit that
has been paid in cash (with respect to those members that elected an installment
plan for payment of the initiation deposit, this amount includes both the
initial cash down payment plus any amount paid under the "Member Note," as
defined below); (e) the outstanding principal balance of any promissory note
executed by a member with respect to the initiation deposit (the "Member Note");
and (f) any terms of the membership or any rights, privileges or obligations of
the member which are different from other memberships in that category (for
example, pre-paid dues). Seller has delivered to Buyer copies of the rules and
regulations, by-laws, and all other documents and information pertaining to the
rights and obligations of the members. No representations or statements (either
verbally or in writing) have been made by Seller to any member of the Golf
Course that: (i) memberships in the Golf Course are equity memberships; (ii)
members have a right to participate in the ownership, management or operation of
the Golf Course; (iii) members have a right to share in any profits from the
refinancing or sale of the Golf Course; (iv) memberships in the Golf Course are
perpetual or non-terminable; (v) members have a right to receive a refund or
return of their initiation fee or security deposit; or (vi) members enjoy
contractual rights other than the right to use the Golf Course in accordance
with the by-laws and the rules and regulations. Seller has not made and agrees
not to make any solicitations of members of the Golf Course, nor use or sell the
membership list in any way or form. There are no outstanding complimentary,
gratuitous or reduced rate passes, reserved tee times or other special rights,
coupons, promises, representations, statements or agreements, verbal or written,
for any golf privileges or services or rights to use the Property.

                                      -14-
<PAGE>   15

      7.16. PUBLIC IMPROVEMENT OBLIGATIONS. To the best of Seller's knowledge,
there are no pending or threatened governmental proceedings, lawsuits,
investigations, bond issuances or proposals for public improvement assessments,
pay-back agreements, road extension or improvement agreements, utility
moratoriums, use moratoriums, or improvement moratoriums affecting the Property.

      7.17. USE OF GOLF COURSE. Except for the memberships listed on EXHIBIT F,
to be attached hereto by Seller within three (3) business days of the Escrow
Opening Date, Seller has made no representations, statements, promises or
agreements (either verbally or in writing) to any person or entity, including,
without limitation, home builders, prospective home buyers, owners, or occupants
of the land surrounding the Golf Course, regarding any of the following: (a) the
right to membership in the Golf Course or the intent to operate the Golf Course
as a private or semi-private country club; (b) the right to play golf on the
Golf Course or any other use of the Property, except on the same terms and
conditions as offered to the public; (c) the right to participate in the
operation or management of the Property; or (d) the manner in which the Golf
Course will be operated, managed, maintained or improved.

      7.18. OPERATING STATEMENTS. All of the financial information for the
Property provided pursuant to the Due Diligence Request List (the "Operating
Statements") are complete, true and correct in all material respects, and they
accurately describe the financial condition of the Property as of the date
prepared. Since the date of the Operating Statements, there has been no material
change in the financial condition of the Property.

      7.19. CORRECT AND COMPLETE DOCUMENTATION. The documents delivered to Buyer
pursuant to this Agreement are true, correct and complete. To the best of
Seller's knowledge, Seller has provided or made available to Buyer all documents
and information in Seller's possession or in the possession of Seller's agents
or consultants regarding matters which affect the operation of the Property or
the physical and environmental condition of the Property.

      7.20. THIS AGREEMENT NOT IN CONFLICT. Neither this Agreement nor the
consummation of the transactions contemplated by this Agreement will result in a
breach of or constitute a default under any other agreement, commitment or
obligation to which Seller or the Property is bound.

      7.21. WATER RIGHTS. Seller has delivered to Buyer true, correct and
complete copies of all documents, agreements and permits (and amendments or
modifications thereto) evidencing Seller's entitlement to a water supply
adequate for the continued operation and maintenance of the Golf Course in the
same manner as the Golf Course is being operated and maintained as of the Escrow
Opening Date (collectively, the "Water Documents"). There are no other
agreements or documents concerning the supply of water to irrigate the Golf
Course and Seller is not in default under or in breach of any of the Water
Documents. Except for the Tri-Partite Agreement, Seller has not previously
assigned or transferred any of its water rights or interests under the Water
Documents. Further, it is understood that the combined total duty of water
rights available for use on the Championship Golf Course is approximately
1,319.94 acre-feet. The combined total duty of water rights available for the
Executive Golf Course is approximately 479.74 acre-feet. These water rights were
previously conveyed by Seller to Central Nevada Utilities Company (CNUC) and are
"dedicated" for use on the Golf Courses.

                                      -15-
<PAGE>   16

      7.22. PAYMENT OF TAXES. Seller has filed all federal, state, municipal,
county and local tax returns and reports required by law and has paid all taxes,
assessments, penalties and other charges due and payable relating to the
Property or the use and operation thereof, including sales taxes. There are no
pending lawsuits, actions, claims, proceedings, disputes, examinations or audits
as to taxes or assessments of any nature relating to the Property or the use and
operation thereof.

      7.23. SELLER'S FINANCIAL CONDITION. Seller has not: (a) filed any
voluntary petition in bankruptcy (liquidation or reorganization) or suffered the
filing of any involuntary petition by its creditors; (b) made a general
assignment for the benefit of creditors; (c) suffered the appointment of a
receiver or trustee to take possession of all or substantially all of Seller's
assets; (d) suffered the attachment or other judicial seizure of all or
substantially all of its assets; or (e) admitted in writing its inability to pay
its debts as they come due.

      7.24. WARRANTIES SURVIVE CLOSING. The representations and warranties made
in this Agreement by Seller shall be continuing and shall be deemed remade by
Seller as of the Closing with the same force and effect as if in fact made at
that time. The representations and warranties made in Sections 7.4(d), 7.6, 7.7,
7.8, 7.13 and 7.15 shall survive for a period of one (1) year after the Closing
Date. The representations and warranties of Section 7.10 shall survive the
Closing Date with respect to all claims, actions, suits and proceedings that
either: (a) seek relief not covered totally by insurance; or (b) seek relief
based on misrepresentation or similar tort; or (c) are threatened or pending as
of the Closing Date. The covenant set forth as the last sentence of Section 7.10
shall survive indefinitely. The effect of the representations and warranties
made in this Agreement shall not be diminished or deemed to be waived by any
inspections, test or investigations made by Buyer or its agents.

               ARTICLE 8 - REPRESENTATIONS AND WARRANTIES OF BUYER

      As an inducement to Seller to enter into this Agreement, Buyer hereby
makes the following representations and warranties, each of which is material to
this transaction, and upon all of which Seller is relying in entering into this
Agreement.

      8.1. CAPACITY OF BUYER. Buyer has the requisite right, power, legal
capacity and authority to enter into this Agreement and to fully perform each
and all of its obligations under this Agreement. All of the documents to be
executed by Buyer which are to be delivered to Seller or the Escrow Holder will
be duly authorized, executed and delivered by Buyer and will be the legal, valid
and binding obligations of Buyer enforceable against Buyer in accordance with
their respective terms, and will not violate any provisions of any agreement to
which Buyer is a party or to which Buyer is subject. In addition, if Buyer
elects to close, Buyer agrees to honor all existing membership agreements and
discounts, provided it has received notice and details pursuant to the terms
hereof, Buyer acknowledges that an independent discount has been offered by
Seller in materials provided to Seller.

                         ARTICLE 9 - COVENANTS OF SELLER

      9.1. NO NEW CONTRACTS. Seller shall not, without the prior written consent
of Buyer, enter into any Contract with respect to the Property that will survive
the Closing or will otherwise affect the use, operation or enjoyment of the
Property after Closing.

                                      -16-
<PAGE>   17

      9.2. INSURANCE TO REMAIN IN FORCE THROUGH CLOSING. The insurance policies
covering the Property which are in existence as of the date of this Agreement,
or equivalent coverage, shall remain continuously in force through the Closing
Date.

      9.3. MAINTENANCE OF PROPERTY. Prior to the Closing, Seller shall operate,
manage and maintain the Property in a manner sufficient to prevent any material
diminution of its present condition or value, and shall maintain present
services and sufficient inventory for the efficient operation and management of
the Property in the same manner and level as the Property is being operated and
managed as of the date of this Agreement.

      9.4. PAYMENT OF BILLS. Seller has paid, or will pay all bills and invoices
for labor, goods, materials and services relating to the Property, utility
charges, and employee salary and all other accrued benefits and entitlements
relating to the period prior to the Closing Date.

      9.5. NO ENCUMBRANCES OR TRANSFERS. No part of the Property, or any
interest in the Property, will be alienated, liened, encumbered or otherwise
transferred, except that easements may be recorded pursuant to the Tri-Partite
Agreement. If Seller is under contract to purchase the Property (or any portion
thereof) from a third party, Seller shall not amend or modify such contract to
the detriment of Buyer's interests hereunder.

      9.6. CHANGES IN CONDITIONS. Seller shall promptly notify Buyer of any
material change in any condition, event or circumstance with respect to the
Property or of any event or circumstance which makes any representation or
warranty of Seller hereunder materially untrue or misleading, or any covenant of
Seller hereunder incapable or less likely of being performed.

      9.7. TERMINATION OF CONTRACTS. Except for the Contracts approved by Buyer
pursuant to Article 6 hereof, Seller shall terminate prior to the Closing Date
all other contracts and agreements relating to the Property.

      9.8. TERMINATION OF EMPLOYEES; OBLIGATION FOR BENEFITS. Seller shall
terminate the employment of all Golf Course employee salaries, vested and
non-vested benefits, vacation pay and seniority rights due and owing as of the
Closing Date. Seller shall have paid and remains liable for all salaries,
compensation, benefits and vacation compensation for all employees and
independent contractors up to the date of Closing.

      9.9. USE OF NAME. Without the prior written consent of Buyer, Seller shall
not itself, nor shall Seller authorize or permit any affiliated entity of Seller
or any other person or entity to: (a) use the name "Calvada Championship Golf
Course" or "Calvada Executive Golf Course" in any promotional or marketing
information and materials relating to the sale of land around the Golf Course;
or (b) make any statements or representations (either verbally or in writing) as
to the right to play golf or to otherwise use the Golf Course.

      9.10. ALCOHOL LICENSE. Buyer agrees to take such actions and act with due
diligence in connection with the Alcohol License and make such filings as are
necessary to obtain an Alcohol License. Seller shall reasonably cooperate with
Buyer.

                                      -17-
<PAGE>   18

      9.11. EXPENSES. Other than Buyer's costs associated with Buyer's due
diligence and as otherwise provided for in this Agreement, Seller covenants to
pay all expenses incurred prior to Closing, even if the invoicing and/or payment
of the expenses are received or due after Closing.

      9.12. WEEKLY FINANCIAL REPORTS. Seller agrees to deliver weekly financial
reports from the Escrow Opening Date until the Closing.

      9.13. SURVIVAL OF COVENANTS. The liability of Seller for a breach of any
of the covenants contained in this Agreement to be performed after the Closing
shall survive the Closing and shall not be merged into any instrument of
conveyance delivered at the Closing.

                ARTICLE 10 - CONDITIONS PRECEDENT TO BUYER'S DUTY

                            TO CLOSE THIS TRANSACTION

      In addition to the conditions precedent set forth in Article 6 of this
Agreement, the following are conditions precedent to Buyer's obligations under
this Agreement.

      10.1. SELLER'S PERFORMANCE OF COVENANTS. Seller's timely performance in
full of all covenants and duties to be performed by Seller under this Agreement
on or prior to the Closing.

      10.2. SELLER'S REPRESENTATIONS ARE TRUE. The representations and
warranties made by Seller to Buyer in this Agreement shall be true and correct
on the Closing with the same force and effect as though those representations
and warranties had been made on the Closing Date. If requested by Buyer, Seller
shall execute and deliver to Buyer or the Escrow Holder prior to the Closing a
certificate updating the representations and warranties of Seller through
Closing and disclosing any new matters relating to the Property.

      10.3. SELLER'S CURE OF DISAPPROVED CONTINGENCY ITEMS. Prior to the
Closing, Seller shall have cured to Buyer's reasonable satisfaction those
matters or conditions that were disapproved by Buyer and which Seller elected to
cure, pursuant to Section 6.3(b)(i).

      10.4. ALCOHOL LICENSE. The receipt of satisfactory confirmation that
Alcohol License will be available for use on the Property at Closing.

                         ARTICLE 11 - LIQUIDATED DAMAGES

      BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT IN THE EVENT BUYER
DEFAULTS AFTER THE EXPIRATION OF THE DUE DILIGENCE PERIOD ON ITS OBLIGATIONS
UNDER THIS AGREEMENT, SELLER WILL SUFFER DAMAGES IN AN AMOUNT WHICH WILL, DUE TO
THE SPECIAL NATURE OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT, BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO ASCERTAIN. IN ADDITION, BUYER WISHES TO
HAVE A LIMITATION PLACED UPON THE POTENTIAL LIABILITY OF BUYER TO SELLER IN THE
EVENT BUYER DEFAULTS AFTER THE EXPIRATION OF THE DUE DILIGENCE PERIOD ON ITS
OBLIGATIONS UNDER THE AGREEMENT, AND BUYER WISHES TO INDUCE SELLER TO WAIVE
OTHER REMEDIES WHICH SELLER MAY HAVE IN THE EVENT OF SUCH A DEFAULT. BUYER AND
SELLER, AFTER DUE NEGOTIATION, HEREBY ACKNOWLEDGE AND AGREE THAT THE AMOUNT OF
THE DEPOSIT, AS THE SAME EXISTS FROM TIME TO TIME UNDER THIS AGREEMENT,
REPRESENTS A

                                      -18-
<PAGE>   19

REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL SUSTAIN IN THE EVENT OF
SUCH A DEFAULT BY BUYER. BUYER AND SELLER HEREBY AGREE THAT SELLER MAY, IN THE
EVENT OF A BUYER DEFAULT, TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO BUYER
AND ESCROW HOLDER, CANCEL THE ESCROW, AND RETAIN THE DEPOSIT AS LIQUIDATED
DAMAGES. FOLLOWING TERMINATION OF THIS AGREEMENT, CANCELLATION OF THE ESCROW,
AND RETENTION OF THE DEPOSIT AS LIQUIDATED DAMAGES PURSUANT TO THIS ARTICLE 11,
ALL OF THE RIGHTS AND OBLIGATIONS OF BUYER AND SELLER UNDER THIS AGREEMENT SHALL
BE TERMINATED. SELLER HEREBY AGREES THAT ITS RETENTION OF THE DEPOSIT AS
LIQUIDATED DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY OF SELLER UPON THE
OCCURRENCE OF A BUYER DEFAULT, AND SELLER HEREBY WAIVES AND RELINQUISHES ALL
OTHER RIGHTS AND REMEDIES SELLER MAY HAVE BY LAW OR IN EQUITY IN THE EVENT OF A
BUYER DEFAULT.

         BUYER  AND  SELLER  HEREBY  ACKNOWLEDGE  THAT EACH OF THEM HAS READ AND
UNDERSTANDS  THE TERMS AND  PROVISIONS OF THIS ARTICLE 11 AND BY THEIR  INITIALS
IMMEDIATELY  BELOW, BUYER AND SELLER HEREBY AGREE TO BE BOUND BY THESE TERMS AND
PROVISIONS.

/s/ CGB
-----------------                                            -------------------
SELLER'S INITIALS                                            BUYER'S INITIALS

                           ARTICLE 12 - MISCELLANEOUS

      It is further agreed by and between the parties as follows:

      12.1. RECIPROCAL INDEMNITY.

                  12.1.1.  Seller's Indemnity of Buyer.  Seller shall indemnify,
protect, defend and hold harmless Buyer and Operator and their owners, lessees,
operators, officers, directors, members, partners, employees and agents from and
against all claims, demands, lawsuits, actions, proceedings, liabilities,
damages, losses and expenses, including reasonable attorneys' fees
(collectively, "Claims") relating to: (a) the ownership, use, operation,
maintenance and improvement of the Property prior to the Closing; and (b) the
generation, treatment, discharge or storage prior to the Closing of any
hazardous wastes, substances or materials on the Property or in any groundwater
or aquifer below the Property in violation of applicable laws.

                  12.1.2.  Buyer's Indemnity of Seller.  Buyer shall indemnify,
protect, defend and hold harmless Seller and Seller's owners, officers,
directors, members, partners, employees and agents from and against all Claims
relating to: (a) the ownership, use, operation, maintenance and improvement of
the Property on or after the Closing; and (b) the generation, treatment,
discharge or storage first occurring on or after the Closing of any hazardous
wastes, substances or materials on the Property or in any groundwater or aquifer
below the Property in violation of applicable laws.

      12.2. ADDRESSES FOR NOTICES. All notices, demands, requests or replies
(collectively, the "Notices") provided for or permitted by this Agreement shall
be in writing and may be delivered by any one of the following methods: (a) by
personal delivery; (b) by deposit with the United States Postal Service as
certified or registered mail, return receipt requested, postage prepaid to the
addresses stated below; (c) by prepaid telegram; (d) by prepaid deposit with an
overnight express

                                      -19-
<PAGE>   20

delivery service; or (e) by means of electronic facsimile transmission ("fax").
Notice deposited with the United States Postal Service in the manner described
above shall be deemed effective three (3) business days after deposit with the
Postal Service. Notice by telegram or overnight express delivery service shall
be deemed effective one (1) business day after transmission to the telegraph
company or after deposit with the express delivery service. Notice by personal
delivery shall be deemed effective at the time of personal delivery. Notice by
fax shall be deemed effective at the time the fax transmission is confirmed to
have been received by the recipient.

         For purposes of Notices, the address of Seller shall be:

         Preferred Equities Corporation
         Attention: Jon A. Joseph
         General Counsel
         4310 Paradise Road
         Las Vegas, Nevada 89109
         Telefax: 702/369.4398

         With a copy to:

         Jerome Cohen
         1125 NE 125th Street #206
         North Miami, Florida 33161
         Telefax: 305/899.1824

         and the address of Buyer shall be:

         Covington Nevada Corp.
         Attention: Kenneth Sheer
         4679 El Camino Cabos
         Las Vegas, Nevada 89117
         Telefax: 702/257.7694

         With copy to:

         Cohen, Todd, Kite & Stanford, LLC
         Attention: Thomas H. Bergman, Esq.
         525 Vine Street 16th Floor
         Cincinnati, Ohio  45202

         Telefax: 513/421.3919

         12.3.  OTHER  DOCUMENTS.  Seller and Buyer agree that they will, at any
time and from time to time after the Closing, upon the request of the other
party, execute, acknowledge and deliver all such further deeds, assignments,
transfers, advances and other documents as may be reasonably required for the
consummation of the transaction hereunder.

                                      -20-
<PAGE>   21

      12.4. AMENDMENT. No amendment or modification of this Agreement shall be
valid unless the amendment or modification is in writing and signed by both
parties.

      12.5. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties and incorporates all prior agreements and understandings. No
previous agreement or understanding, verbal or written, of the parties or any of
their agents shall be binding or enforceable, unless specifically incorporated
in this Agreement.

      12.6. NO PRESUMPTION REGARDING DRAFTER. Seller and Buyer acknowledge and
agree that the terms and provisions of this Agreement have been negotiated and
discussed between Seller and Buyer, and that this Agreement reflects their
mutual agreement regarding the subject matter of this Agreement. Because of the
nature of such negotiations and discussions, it would not be appropriate to deem
either Seller or Buyer to be the drafter of this Agreement, and therefore no
presumption for or against the drafter shall be applicable in interpreting or
enforcing this Agreement.

      12.7. TIME OF THE ESSENCE. Time is of the essence of this Agreement. The
parties understand that the time for performance of each obligation has been the
subject of negotiation by the parties.

      12.8. ENFORCEABILITY OF ANY PROVISION. If any agreement, condition,
obligation, covenant, warranty or other provision of this Agreement shall be
determined to be unenforceable, invalid or void, such determination shall not
affect, impair, invalidate or render unenforceable any other agreement,
condition, obligation, covenant, warranty or other provision of this Agreement.

      12.9. COUNTERPARTS. This Agreement and any amendment may be executed in
counterparts, and upon all counterparts being so executed, each counterpart
shall be considered as an original and all counterparts shall be considered as
one agreement.

      12.10. EFFECT OF TITLES. The title of the various articles and sections of
this Agreement are solely for the purpose of convenience and shall not be relied
upon in construing any provision of this Agreement.

      12.11. BROKERS' COMMISSIONS. Pursuant to IRS 645 Nevada Real Estate
License Law and Rules and Regulations, it is hereby disclosed that Americor
Realty (Kenneth Sheer), UK America Corp. (James P. Martin) and Vestar &
Associates (Ronald J. Obser) represent Buyer, and VGA Industrial Property Group
(Al Kingham) represents Seller. No other brokers are hereby recognized in this
transaction. Buyer and Seller shall be responsible for the compensation of their
respective Brokers.

      12.12. ATTORNEYS' FEES. In the event of a dispute in connection with this
Agreement involving the non-performance by a party of its obligations, the
prevailing party shall be entitled to reasonable attorneys' fees and all other
expenses reasonably incurred in connection with such dispute, whether or not
litigation is commenced, in addition to all other relief to which the party is
entitled. If the successful party recovers judgment in any legal action or
proceeding, the attorneys' fees and all other expenses of litigation shall be
included in and made part of any such judgment.

                                      -21-
<PAGE>   22

      12.13. APPLICABLE LAW. The laws of the State of Nevada shall be applied in
interpreting and enforcing this Agreement.

      12.14. ASSIGNMENT BY BUYER. Buyer shall have the right to assign Buyer's
rights and to delegate Buyer's obligations under this Agreement to an affiliate
of Buyer or of Buyer's general partner or any entity principally owned or
controlled by Barry Lang, Gerald Wendel or Kenneth Sheer (collectively, the
"assignee(s)"), provided that Buyer shall not be released from any liability
under this Agreement.

      12.15. 1031 EXCHANGE. Buyer may desire, at its sole and absolute
discretion, to acquire the Property as "replacement property" for purposes of a
delayed tax-deferred exchange involving like-kind and/or like-class property
which qualifies under Section 1031 of the Internal Revenue Code, as amended, and
similar state statutes ("Exchange"). Seller agrees to cooperate with Buyer, at
no added cost or expense to Seller, in effecting an Exchange, provided the same
shall not extend the Closing Date.

      12.16. CONFIDENTIALITY. Buyer and Seller shall keep confidential the
existence and the terms of this Agreement, except as to their employees,
consultants, attorneys, accountants and other agents that may be involved in
conducting the due diligence related to the transactions contemplated by this
Agreement. Notwithstanding the previous sentence, upon the Closing Buyer shall
be permitted to make public announcements and disclosures regarding the terms of
the transaction.

      12.17. OTHER OFFERS. Upon execution of this Agreement by Seller, Seller
shall not discuss or negotiate the sale of the Property with third parties, nor
provide financial or other information with respect to the Property to such
third parties, nor accept other offers to purchase or transfer the Property or
any part thereof.

      12.18. BULK SALES. Seller agrees to pay or otherwise discharge, and Seller
shall indemnify, defend and hold harmless Buyer and Buyer's partners, owners,
officers, directors, partners, employees and agents from and against all claims
or liabilities asserted or arising by reason of any failure on the part of
Seller to comply with the provisions of the Nevada Uniform Commercial Code, and
any other statutes relating to the bulk transfer of property in connection with
the transactions contemplated by this Agreement.

      12.19. RIGHTS GRANTED HEREIN. Seller acknowledges and agrees that the
rights granted to Buyer herein shall run in favor of Operator, and such rights
may be enforced by Buyer or Operator in accordance with the terms and conditions
hereof.

                                      -22-
<PAGE>   23

      IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.

                                     SELLER:

                                     PREFERRED EQUITIES CORPORATION

                                     By: [SIGNATURE ILLEGIBLE]
                                        ------------------------------------

                                     Its: VP/CAO
                                         -----------------------------------

                                     BUYER:

                                     COVINGTON NEVADA CORP.

                                     By:
                                        ------------------------------------

                                     Its:
                                         -----------------------------------

                                      -23-
<PAGE>   24

                                    EXHIBIT A

                               DESCRIPTION OF LAND

<PAGE>   25

                                    EXHIBIT B

                        DESCRIPTION OF PERSONAL PROPERTY

<PAGE>   26

                                    EXHIBIT C

                                LIST OF CONTRACTS

<PAGE>   27

                                    EXHIBIT D

                         OFF-SET AND DEFAULTED CONTRACTS

<PAGE>   28

                                    EXHIBIT E

    PENDING CLAIMS, ACTIONS, SUITS, LITIGATIONS, GOVERNMENTAL INVESTIGATIONS
                   AND JUDICIAL OR ADMINISTRATIVE PROCEEDINGS

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