EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
BY AND AMONG
FAMILY GOLF CENTERS, INC.,
EAGLE QUEST GOLF CENTERS (U.S.), INC.
AND
TRIZECHAHN (USA) CORPORATION
November 27, 1998
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TABLE OF CONTENTS
Page No.
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ARTICLE I
DEFINITIONS............................................................................................-1-
1.01 Certain Definitions...........................................................................-1-
1.02 Terms Generally...............................................................................-9-
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES.................................................................-10-
2.01 Basic Transaction............................................................................-10-
2.02 Initial Purchase Price.......................................................................-10-
2.03 The Closing..................................................................................-10-
2.04 Deliveries at the Closing....................................................................-11-
2.05 Effective Date...............................................................................-11-
2.06 Net Working Capital Determination............................................................-11-
2.07 Adjustment to Initial Purchase Price.........................................................-13-
2.08 Intercompany Obligations.....................................................................-14-
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
.....................................................................................................-14-
3.01 Representations and Warranties of the Seller.................................................-14-
3.02 Representations and Warranties of each of the Buyer and Family Golf..........................-16-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING SKATENATION.................................................-17-
4.01 Organization, Qualification, and Corporate Power.............................................-17-
4.02 Capitalization...............................................................................-18-
4.03 Indebtedness.................................................................................-18-
4.04 Noncontravention.............................................................................-18-
4.05 Brokers' Fees................................................................................-19-
4.06 Subsidiaries.................................................................................-19-
4.07 Corporate Records............................................................................-19-
4.08 Financial Statements.........................................................................-19-
4.09 Events Subsequent to Most Recent Year End....................................................-20-
4.10 Undisclosed Liabilities......................................................................-23-
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4.11 Legal Compliance.............................................................................-23-
4.12 Tax Matters..................................................................................-23-
4.13 Property.....................................................................................-25-
4.14 Intellectual Property........................................................................-28-
4.15 Equipment....................................................................................-29-
4.16 Contracts....................................................................................-29-
4.17 Insurance....................................................................................-31-
4.18 Litigation...................................................................................-32-
4.19 Employees....................................................................................-32-
4.20 Employee Benefits............................................................................-33-
4.21 Guaranties...................................................................................-34-
4.22 Certain Business Relationships...............................................................-34-
4.23 Disclosure...................................................................................-34-
4.24 Disclaimer of other Representations and Warranties...........................................-35-
ARTICLE V
PRE-CLOSING COVENANTS.................................................................................-35-
5.01 General......................................................................................-35-
5.02 Notices and Consents.........................................................................-35-
5.03 Operation of Business........................................................................-36-
5.04 Notification.................................................................................-39-
5.05 Full Access..................................................................................-39-
5.06 Confidentiality..............................................................................-41-
5.07 Notice of Developments.......................................................................-42-
5.08 Litigation During Interim Period.............................................................-43-
5.09 SkateNation Stock Option Agreements..........................................................-43-
5.10 Datedown Endorsements........................................................................-43-
5.11 [Intentionally Omitted.].....................................................................-43-
5.12 Non-Solicitation.............................................................................-44-
5.13 Estoppel Certificates........................................................................-44-
5.14 Class B Shares...............................................................................-44-
ARTICLE VI
POST-CLOSING COVENANTS................................................................................-44-
6.01 Further Assurances...........................................................................-44-
6.02 Litigation Support...........................................................................-44-
6.03 Transition...................................................................................-45-
6.04 Confidentiality..............................................................................-45-
6.05 Use of Intellectual Property.................................................................-45-
6.06 Severance....................................................................................-46-
6.07 Non-Solicitation.............................................................................-46-
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6.08 Non-Competition..............................................................................-46-
6.09 Audited Year End Financials..................................................................-46-
6.10 Perry Power and Pro Start Trademarks.........................................................-46-
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE.....................................................................-47-
7.01 Conditions to Obligations of the Buyer and Family Golf.......................................-47-
7.02 Conditions to Obligation of the Seller.......................................................-49-
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT...............................................................-50-
8.01 Survival of Representations and Warranties...................................................-50-
8.02 Indemnification Provisions for Benefit of the Buyer..........................................-50-
8.03 Indemnification Provisions for Benefit of the Seller.........................................-52-
8.04 Matters Involving Third Parties..............................................................-52-
8.05 Determination of Adverse Consequences........................................................-53-
8.06 Exclusive Remedy.............................................................................-54-
8.07 Subrogation..................................................................................-54-
ARTICLE IX
TAX MATTERS...........................................................................................-54-
9.01 Section 338(h)(10) Election..................................................................-54-
9.02 Income Tax Periods Ending on or Before the Effective Date....................................-55-
9.03 Non-Income Tax Periods Ending on or Before the Effective Date................................-55-
9.04 Tax Periods Beginning Before and Ending After the Effective Date.............................-55-
9.05 Cooperation on Tax Matters...................................................................-56-
9.06 Tax Sharing Agreements.......................................................................-56-
9.07 Certain Taxes................................................................................-57-
ARTICLE X
TERMINATION...........................................................................................-57-
10.01 Termination of Agreement.....................................................................-57-
10.02 Effect of Termination........................................................................-57-
ARTICLE XI
MISCELLANEOUS.........................................................................................-59-
11.01 Press Releases and Public Announcements......................................................-59-
11.02 No Third Party Beneficiaries.................................................................-59-
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11.03 Entire Agreement.............................................................................-59-
11.04 Succession and Assignment....................................................................-59-
11.05 Counterparts.................................................................................-59-
11.06 Headings.....................................................................................-59-
11.07 Notices......................................................................................-60-
11.08 Governing Law................................................................................-61-
11.09 Amendments and Waivers.......................................................................-61-
11.10 Severability.................................................................................-61-
11.11 Expenses.....................................................................................-62-
11.12 Submission to Jurisdiction...................................................................-62-
11.13 Specific Performance.........................................................................-62-
11.14 Joint and Several Obligations................................................................-63-
11.15 Construction.................................................................................-63-
11.16 Incorporation of Exhibits and Schedules......................................................-63-
EXHIBITS
Exhibit A SkateNation Financial Statements (Section 4.08)
Exhibit B Estoppel Certificate (Section 5.13)
Exhibit C Severance Arrangements (Section 6.06)
Exhibit D SkateNation Secretary's Certificate (Section 7.01)
Exhibit E Opinion of Seller's Counsel (Section 7.01)
Exhibit F Non-foreign Seller Affidavit (7.01)
Exhibit G Opinion of Buyer and Family Golf's Counsel (Section 7.02)
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STOCK PURCHASE AGREEMENT
Agreement entered into on November 27, 1998, by and between FAMILY
GOLF CENTERS, INC., a Delaware corporation ("Family Golf"), EAGLE QUEST GOLF
CENTERS (U.S.), INC., a Delaware corporation and a wholly-owned subsidiary of
Family Golf (the "Buyer"), and TRIZECHAHN (USA) CORPORATION, a Delaware
corporation ( the "Seller"). Family Golf, the Buyer and the Seller are referred
to collectively herein as the "Parties."
WITNESSETH:
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WHEREAS, the Seller owns, or on the Closing Date will own, all of the
issued and outstanding shares of capital stock of SkateNation, Inc., a Delaware
corporation ("SkateNation"); and
WHEREAS, SkateNation is in the business of acquiring, developing and
operating commercial ice skating rinks through wholly-owned subsidiaries; and
WHEREAS, this Agreement contemplates a transaction in which the Buyer
will purchase from the Seller, and the Seller will sell to the Buyer, all of
the issued and outstanding shares of capital stock of SkateNation in return for
cash as provided for herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties hereto, intending to become legally
bound, hereby agree as follows.
ARTICLE I
DEFINITIONS
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1.01 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings unless the context otherwise requires:
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, determined after taking into consideration (a) all proceeds of
insurance collected by or paid to the Indemnified Party and (b) any current tax
savings to the extent such tax savings actually reduce the amount of any loss
therefrom.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a).
"Agreement" means this Stock Purchase Agreement, including all
exhibits and schedules thereto, between the Parties, as the same may be amended
from time to time in accordance with the provisions of Section 11.09 below.
"Assets" means all properties and assets, real and personal, tangible
and intangible, of every type and description, whether owned or leased or
otherwise possessed, used, held for use or usable in SkateNation's or any of
its Subsidiaries' businesses, including, without limitation, the Property, the
Equipment, the Intangible Property and the SkateNation Contracts.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that reasonably forms the basis for any
specified consequence.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in Xxx Xxxx, Xxx Xxxx xxx Xxxxxxx, Xxxxxx are
not open for the transaction of normal banking business.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Auditors" has the meaning set forth in Section 2.06 below.
"Buyer's Disclosure Schedule" has the meaning set forth in Section
3.02 below.
"Closing" has the meaning set forth in Section 2.03 below.
"Closing Date" has the meaning set forth in Section 2.03 below.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1986.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Confidential Information" means any information concerning the
businesses and affairs of SkateNation and/or its Subsidiaries other than
information that is already generally available to the public or is publicly
known or becomes publicly known through no fault of any of the Parties.
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"Disclosure Schedule" has the meaning set forth in Section 3.01 below.
"DOJ" means the Department of Justice.
"Effective Date" means November 1, 1998.
"Effective Date Balance Sheet" shall have the meaning set forth in
Section 2.06 below.
"Effective Date Financial Statements" has the meaning set forth in
Section 7.01 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Laws" means federal, state, local,
and foreign statutes, regulations and ordinances concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
"Environmental and Engineering Studies" has the meaning set forth in
Section 4.13(e) below.
"Equipment" means all fixed assets, machinery, equipment, furniture
and furnishings, fixtures and other leasehold improvements (other than
Improvements), vehicles, inventory and other tangible personal property owned
by SkateNation or any of its Subsidiaries or used, held for use or useable in
connection with the business conducted by SkateNation and its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with SkateNation for purposes of Code Section 414.
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"Estimated Net Working Capital" means ($686,042), which number shall
be calculated in accordance with clause 2.06(a)(ii) of this Agreement.
"Family Golf" has the meaning set forth in the preface above.
"Fee Owned Land" means the portion of the Land as to which SkateNation
or any of its Subsidiaries owns the fee interest.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 4.08 below.
"FTC" means the Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" has the meaning set forth in Section 4.13(h) below.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Hazardous Materials" shall mean any substance which is or contains:
(i) any "hazardous substance" as now or hereafter defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.) or any regulations promulgated thereunder; (ii)
any "hazardous waste" as now or hereafter defined in the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.) or regulations promulgated
thereunder; (iii) any substance regulated by the Toxic Substances Control Act
(15 U.S.C. Section 2601 et. seq.); (iv) gasoline, diesel fuel or other
petroleum hydrocarbons; (v) asbestos and asbestos containing materials, in any
form, whether friable or nonfriable; (vi) polychlorinated biphenyls; (vii)
radon gas; and (viii) any additional substances or materials which are now or
hereafter classified or considered to be hazardous or toxic under any laws,
ordinances, statutes, codes, rules, regulations, agreements, judgments, orders
and decrees now or hereafter enacted, promulgated, or amended, of the United
States, the states, the counties, the cities or any other political
subdivisions in which the Property is located and any other political
subdivision, agency or instrumentality exercising jurisdiction over the owner
of the Property, the Property or the use of the Property relating to pollution,
the protection or regulation of human health, natural resources or the
environment, or the emission, discharge, release or threatened
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release of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or waste into the environment (including ambient air,
surface water, ground water or land or soil).
"Hillgrove" means Xxxxxx X. Xxxxxxxxx, a shareholder and officer of
SkateNation on the date hereof.
"HSR Report" means the Notification and Report Form for certain
mergers and acquisitions mandated by the Xxxx-Xxxxx-Xxxxxx Act.
"HSR Rules" has the meaning set forth in Section 5.02(b) below.
"Improvements" means all buildings and structures owned or leased by
SkateNation or its Subsidiaries and located on the Land.
"Indemnified Party" has the meaning set forth in Section 8.04 below.
"Indemnifying Party" has the meaning set forth in Section 8.04 below.
"Independent Auditor" has the meaning set forth in Section 2.06 below.
"Initial Purchase Price" has the meaning set forth in Section 2.02
below.
"Intangible Property" means all certificates of deposit, bank
accounts, securities, partnership or other ownership interests, rights to
receive money or property by assignment, future interests, claims and rights
against third parties, accounts and notes receivables owned or held directly or
beneficially by or on behalf of the account of SkateNation or any of its
Subsidiaries, the Intellectual Property and any other intangible property of
any nature of SkateNation or any of its Subsidiaries.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, (b) all
trademarks, service marks, trade dress, logos, trade names, and corporate
names, including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (e) all
computer software (including data and related documentation), (f) all other
proprietary rights, and (g) all copies and tangible embodiments thereof (in
whatever form or medium).
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"Judgment" means any judgment, writ, order or decree of or by any
arbitrator, court, judge, justice or magistrate, including any bankruptcy court
or judge, and any order of or by any other Governmental Authority.
"Land" shall mean the land described on Schedule A to the Title
Insurance Policies.
"Leasehold Land" shall mean the portion of the Land owned by the
ground lessors under the Ground Leases.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Loans" means the loans evidenced and/or secured by the Loan
Agreements.
"Loan Agreements" means (i) the Master Loan Agreement, dated as of
October 1, 1997, among Nationsbank, N.A., SkateNation and certain of its
Subsidiaries, (ii) the Commercial Revolving Loan, Mortgage Loan and Security
Agreement, dated as of August 9, 1996, between Fleet National Bank and
International Skating Center of Connecticut, LLC and (iii) the Purchase Money
Note, dated as of August 9, 1996, between World Skate of Connecticut, LLC and
International Skating Center of Connecticut, LLC.
"Management Agreement" has the meaning set forth in Section 4.13(j).
"Material Adverse Effect" means any event(s), occurrence(s) or
condition(s) (other than general economic or industry trends) that individually
or in the aggregate have had, or could reasonably be expected to have, a
material adverse effect on the business, Assets, financial condition, or
results of operations of SkateNation and its Subsidiaries taken as a whole.
"Most Recent Year End" has the meaning set forth in Section 4.08 below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Working Capital" has the meaning set forth in Section 2.06 below.
"Net Working Capital Schedule" has the meaning set forth in Section
2.06 below.
"Ordinary Course of Business" means the ordinary course of business of
SkateNation and its Subsidiaries consistent with past custom and practice
(including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, partnership, limited liability
partnership, corporation, limited liability company, association, joint stock
company, trust, estate, joint venture, unincorporated organization, or
governmental entity (or any department, agency, or political subdivision
thereof).
"Permitted Exceptions" shall mean: (a) all matters shown on the Title
Insurance Policies, Title Reports and/or the Surveys made available to the
Buyer prior to the date hereof, (b) all matters reflecting the existence or
terms of leases or other occupancy agreements entered into after the date
hereof in the Ordinary Course of Business and not in violation of Seller's
obligations under this Agreement, including non-disturbance agreements, notices
(or short forms) of leases and financing statements pertaining to tenant
property; (c) all matters, whether or not of record, that arise out of the
actions of the Buyer or Family Golf or their respective agents, representatives
or contractors; (d) all matters disclosed on the Survey Updates, except for
matters that: (i) are not shown on or reasonably inferable from the Surveys; or
(ii) have a Material Adverse Effect; (e) all matters relating to the agreements
listed on Section 4.03 of the Disclosure Schedule; and (f) all other matters
that the Title Company is willing to insure over without additional premium or
indemnity by Buyer and that do not have a Material Adverse Effect.
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"Property" means, collectively, the Land and the Improvements.
"Purchase Price" has the meaning set forth in Section 2.07 below.
"Purchased Share" means any share of the Class A or Class B common
stock, no par value per share, of SkateNation.
"Related Persons" has the meaning set forth in Section 6.04 below.
"Remedies Exception" means (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application, heretofore
or hereafter enacted or in effect, affecting the rights and remedies of
creditors generally, and (ii) the exercise of judicial or administrative
discretion in accordance with general equitable principles, particularly as to
the availability of the remedy of specific performance or other injunctive
relief.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"RMSC Unauditeds" has the meaning set forth in Section 4.08 (a) below.
"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien (statutory or
other), encumbrance, hypothecation, charge, security interest, claim, option,
right to acquire, adverse interest, assignment, deposit arrangement,
restriction, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction) other than (a) mechanic's, materialmen's,
and similar liens for construction in progress or evidencing indebtedness for
related services that are not more than sixty days past due, (b) liens for
Taxes not yet due and payable or for Taxes that the taxpayer is contesting in
good faith through appropriate proceedings, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, (d) other liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money; and (e) easements and restrictions on the Property
which constitute Permitted Exceptions.
"Seller" has the meaning set forth in the preface above.
"Seller's Auditors" has the meaning set forth in Section 2.06 below.
"SkateNation" has the meaning set forth in the preface above.
"SkateNation Contracts" has the meaning set forth in Section 4.16
below.
"Space Lease" has the meaning set forth in Section 4.13 below.
"Subsidiary" when used with respect to any Person, means any other
Person of which (x) in the case of a corporation, at least (A) a majority of
the equity and (B) a majority of the voting interests are owned or controlled,
directly or indirectly, by such first Person, by any one or more of its
Subsidiaries, or by such first Person and one or more of its Subsidiaries or
(y) in the case of any Person other than a corporation, such first Person, one
or more of its Subsidiaries, or such first Person and one or more of its
Subsidiaries (A) owns a majority of the equity interests thereof and (B) has
the power to elect or direct the election of a majority of the members of the
governing body thereof or otherwise has control over such organization or
entity; provided that, for purposes of the agreements set forth in Article V
and Article VI, references to Subsidiaries shall not include any Person as to
which such first Person's voting interests are subject to a voting agreement,
proxy, management contract or other arrangement as a result of which such first
Person does not control such other Person in respect of actions to be performed
by such first Person pursuant to Article V or Article VI.
"Surveys" means the surveys listed on Schedule 4.13(f) of the
Disclosure Schedule.
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"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, required to be filed
under any statute, rule or regulation.
"Termination Date" has the meaning set forth in Section 10.01(b) below.
"Third Party Claim" has the meaning set forth in Section 8.04 below.
"Title Company" shall mean the various title insurance companies
providing the title insurance policies listed in Section 4.13(g) of the
Disclosure Schedule and the datedown endorsements or title reports or
commitments referred to in Section 5.10 below.
"Title Insurance Policies" hall mean the owner's and leasehold title
insurance policies listed on Schedule 4.13(g) of the Disclosure Schedule.
"Title Reports" shall mean the datedown endorsements or title reports
or commitments on the Title Insurance Policies to be obtained by or at the
behest of the Seller in accordance with Section 5.10 below.
"Unaudited Year End Financial Statements" has the meaning set forth in
Section 4.08 below.
"Unresolved Objections" has the meaning set forth in Section 2.06(b)
below.
1.02 Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The words
"herein", "hereof" and "hereunder" and words of similar import refer to this
Agreement (including the Exhibits and Schedules) in its entirety and not to any
part hereof unless the context shall otherwise require. As used herein, the
term "to the Seller's Knowledge" or any similar term relating to the knowledge
of the Seller means the actual knowledge, after reasonable inquiry, of Xxxxxxx
Xxxxxx, Vice President of Seller, Xxxxx Xxxxxx, Vice President of Seller,
Xxxxxx Xxxxxxxxx, President of SkateNation, Xxxxxx X. Xxxxx, Vice President of
Operations of SkateNation, Xxxxx Xxxx, the Chief Operating Officer of
SkateNation, and Xxxxxxxx Xxxxx, the Controller of SkateNation. "Reasonable
inquiry" means communication by any of the foregoing persons to the officers
and field personnel of SkateNation and its Subsidiaries (and, if applicable,
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such other person responsible for the administration or management of any part
of the businesses of SkateNation and its Subsidiaries) with primary
responsibility for the matter in question. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute
or regulation, to any successor provisions). Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Any reference in this Agreement to a "day" or a number of "days"
(without explicit reference to "Business Days") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action is to be
taken or given on or by a particular calendar day, and such calendar day is not
a Business Day, then such action shall be deferred until the next Business Day.
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES
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2.01 Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of the Purchased Shares, for the consideration
specified below in this Article II.
2.02 Initial Purchase Price. The Buyer shall pay to the Seller at the
Closing an amount (the "Initial Purchase Price") equal to (a) Twenty Nine
Million Dollars ($29,000,000), together with interest thereon at a rate of 7%
per annum from the Effective Date through the Closing; less the sum of (b) the
Estimated Net Working Capital plus (c) the sum of (i) the outstanding principal
balance plus accrued and unpaid interest through the Effective Date under any
of the Loans that remains outstanding immediately following the consummation of
the Closing; (ii) the outstanding principal balance plus accrued and unpaid
interest through the Effective Date under any of the Loans that Buyer repays
(or causes SkateNation to repay) simultaneously with the Closing; and (iii) any
prepayment or yield maintenance interest or payments (including breakage
costs), paid by Buyer or SkateNation to the holder of any Loan in connection
with the repayment thereof simultaneously with the Closing. The Initial
Purchase Price shall be paid at Closing in cash by wire transfer of immediately
available funds to one or more accounts specified by the Seller to the Buyer
prior to the Closing Date.
2.03 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Hill & Xxxxxx in
Boston, Massachusetts, commencing at 9:00 a.m. local time on Wednesday,
December 2, 1998, or, if later, but subject to the provisions of Section 10.01
below, the third Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
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contemplated hereby (other than conditions that are customarily satisfied at
the Closing itself), or such other date as the Parties may mutually determine
(the "Closing Date").
2.04 Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7.01 below, (ii) the Buyer will deliver to the Seller
the various certificates, instruments, and documents referred to in Section
7.02 below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of the Purchased Shares, endorsed in blank or accompanied by
duly executed assignment documents, with any requisite transfer stamps affixed
thereto, and (iv) the Buyer will deliver to the Seller the consideration
specified in Section 2.02 above.
2.05 Effective Date. It is the intention of the Parties that the
purchase and sale of SkateNation and its Subsidiaries be effective for all
purposes as of the Effective Date, provided that the Closing occurs in
accordance with and subject to the terms and conditions of this Agreement.
Accordingly, the net income earned and accrued, by or for the benefit of
SkateNation and its Subsidiaries, prior to the Effective Date in accordance
with GAAP applied on a basis consistent with prior periods, shall be for the
account of Seller for all purposes, including financial accounting and tax
purposes, and such net income earned and accrued from and after the Effective
Date, in accordance with GAAP applied on a basis consistent with prior periods,
shall be for the account of Buyer for all such purposes, including financial
accounting and tax purposes.
2.06 Net Working Capital Determination.
(a) Preparation and Delivery of Effective Date Balance Sheet and Net
Working Capital Schedule. Within 60 days after the Closing Date, the Seller
shall prepare and deliver to the Buyer and to the Buyer's Auditors (i) an
audited consolidated balance sheet of SkateNation and its Subsidiaries as of
the Effective Date, prepared in accordance with GAAP applied in a manner
consistent with the Unaudited Year End Balance Sheet (without giving effect to
any election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local or foreign tax law) (the "Effective Date Balance
Sheet"), and (ii) a schedule (the "Net Working Capital Schedule") setting forth
the Seller's calculation of the current assets (including cash and cash
equivalents, net accounts receivable, inventory and prepaid expenses, if any)
minus the sum of (x) current liabilities (including accounts payable and
accrued liabilities, construction accounts payable and deferred revenue but
excluding (A) the current portion of the Loans (and any reserves that cover any
contingent portion of any such Loans) and (B) the current liabilities due to
parent) plus (y) deferred revenues that are reflected as long term liabilities
of SkateNation and its Subsidiaries on the Effective Date Balance Sheet (the
"Net Working Capital"). Net Working Capital shall also exclude the following
items: (x) all current liabilities with respect to SkateNation's obligations to
(A) repurchase 550 shares of Class B Common Stock of SkateNation held by
Hillgrove under certain circumstances, (B) repay principal plus accrued
interest on the two promissory notes due to Hillgrove each in the principal
amount of $150,000 dated July 31, 1998 and due July 31, 1999 and July 31, 2000
and (C) make a payment to
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Hillgrove in respect of the working capital adjustment to purchase price set
forth in Section 2.5 of the Agreement dated as of July 23, 1998 between
SkateNation and Hillgrove, all of which obligations have been assumed by Seller
pursuant to the RMSC Agreement Amendment described in item 4.09 of the
Disclosure Schedule; and (y) any reserves for (A) tax audits or withholding tax
matters set forth in items 4.12(b) and (c) of the Disclosure Schedule, (B) the
Perry/Xxxxxxxx Claim and (C) the Employee Claims. The Net Working Capital
Schedule and the items that comprise it shall be audited by the Seller's
regular outside auditors (the "Seller's Auditors"). The Seller shall deliver
(x) with the Effective Date Balance Sheet, an audit opinion of Seller's
Auditors and (y) with the Net Working Capital Schedule, a report of the
Seller's Auditors that opines on the compliance of the Net Working Capital
Schedule with the requirements of this Agreement. The Seller and the Seller's
Auditors shall be given access to all books, records and documents and
financial staff of SkateNation and its Subsidiaries as they may reasonably
request for the purposes of preparing and opining on the Effective Date Balance
Sheet and the Net Working Capital Schedule.
(b) Resolutions of Objections to Effective Date Balance Sheet and Net
Working Capital Schedule. The Buyer and the Buyer's Auditors shall have 25 days
to examine the Effective Date Balance Sheet and the Net Working Capital
Schedule and deliver to Seller any written objections to the information set
forth therein. In connection with such examination, the Buyer and the Buyer's
Auditors shall be provided with such work papers and other supporting data as
they may reasonably request from the Seller and the Seller's Auditors (and such
25 day period shall be extended for each day any such work papers and other
supporting data are not provided to the Buyer and/or the Buyer's Auditors after
request therefor). If no written objections are delivered within such 25 day
period (as extended, if applicable), then the Effective Date Balance Sheet and
the Net Working Capital Schedule shall be deemed final and binding on the
Parties. In the event any such written objections are timely delivered to the
Seller, and the Parties are not able to resolve all of such objections within
10 Business Days after the date of such delivery, all objections that have not
been resolved shall be promptly delivered to Seller's Auditors and Buyer's
Auditors for resolution. The Parties shall use their reasonable commercial
efforts to cause the Seller's Auditors and the Buyer's Auditors to deliver to
the Parties as promptly as practicable, but in any event within 10 Business
Days after the date such objections are first delivered to the Seller's
Auditors and Buyer's Auditors, a report which sets forth their mutual
resolution of such objections and, if they are unable to resolve any such
objections, those objections that they are unable to mutually resolve
("Unresolved Objections"). The Parties shall cause the Unresolved Objections to
be promptly delivered to a third accounting firm, jointly selected by the
Seller's Auditors and the Buyer's Auditors (the "Independent Auditor") for
resolution. The Parties shall take such action as may be reasonably necessary
for the Independent Auditor to be given access to (i) all books, records and
documents and financial staff of the Seller and SkateNation and its
Subsidiaries and (ii) all work papers of the Seller, the Seller's Auditors, the
Buyer and the Buyer's Auditors related to the preparation and audit or
attestation of, or any objections to, the Effective Date Balance Sheet and/or
the Net Working Capital Schedule (as applicable). The Parties shall use
reasonable commercial efforts to cause the Independent Auditor to deliver its
report as to its resolution of the Unresolved Objections to
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the Parties as promptly as practicable, but in any event within 30 days after
the Unresolved Objections are first delivered to it. The Independent Auditor's
resolution of any Unresolved Objections shall be final and binding on the
Parties, absent manifest error. The fees and expenses of the Independent
Auditor shall be evenly shared by the Buyer and the Seller.
(c) Revisions to Effective Date Balance Sheet and Net Working Capital
Schedule. If there are any objections to the Effective Date Balance Sheet or
the Net Working Capital Schedule, then promptly (and in any event within two
days) following the resolution by the Parties, the Seller's Auditors and
Buyer's Auditors and/or the Independent Auditors of all such objections in
accordance with Section 2.06(b) above, the Effective Date Balance Sheet and/or
the Net Working Capital Schedule shall be revised by the Seller in accordance
with such resolutions and delivered to the Buyer and the Buyer's Auditors.
Within two Business Days after the receipt by Buyer and Buyer's Auditors of
such definitive Effective Date Balance Sheet and Net Working Capital Schedule
(or, if there are no such objections, within two Business Days after the
delivery by the Buyer to the Seller of written notice that the Buyer has no
objections or, if no such notice is given and no timely objection is made by
the Buyer in accordance with the third sentence of Section 2.06(b) above, on
the 27th day after the Effective Date Balance Sheet and the Net Working Capital
Schedule are first delivered to the Buyer and the Buyer's Auditors), the
Initial Purchase Price will be finally determined, and cash shall be paid to
the appropriate party, as set forth in Section 2.07 below.
2.07 Adjustment to Initial Purchase Price. The Initial Purchase Price
will be adjusted as follows:
(i) If the Net Working Capital exceeds the Estimated Net
Working Capital (which shall mean, to the extent that the Estimated
Net Working Capital is a negative number, that the Net Working Capital
is a smaller negative number or is a positive number), the Buyer will
pay to the Seller an amount equal to such excess by wire transfer or
delivery of other immediately available funds within three Business
Days after the date on which the Net Working Capital for SkateNation
and its Subsidiaries finally is determined pursuant to Section 2.06
above.
(ii) If the Net Working Capital is less than the Estimated
Net Working Capital (which shall mean, to the extent that the
Estimated Net Working Capital is a negative number, that the Net
Working Capital is a larger negative number), the Seller will pay to
the Buyer an amount equal to such deficiency by wire transfer or
delivery of other immediately available funds within three Business
Days after the date on which the Net Working Capital for SkateNation
and its Subsidiaries finally is determined pursuant to Section 2.06
above.
The Initial Purchase Price as so adjusted is referred to herein as the
"Purchase Price."
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2.08 Intercompany Obligations. All payables of SkateNation or any of
its Subsidiaries to the Seller, and all receivables of SkateNation or any of
its Subsidiaries from the Seller, shall be canceled and of no further force and
effect from and after the Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
---------------------------------------------------------
3.01 Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer and Family Golf that the statements
contained in this Section 3.01 are correct and complete as of the date of this
Agreement, except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule"). The
Disclosure Schedule is arranged in sections corresponding to the lettered and
numbered sections in this Agreement which require the disclosure. Any matter
disclosed in one section of the Disclosure Schedule may be cross-referenced in
other sections of the Disclosure Schedule, and upon such cross-referencing
shall be deemed disclosed for all purposes of the section of the Disclosure
Schedule in which such cross-reference is contained to the extent (i) this
Agreement requires such disclosure and (ii) the relevance and significance of
such disclosure is evident from such disclosure or cross-reference.
(a) Organization of the Seller. The Seller is (i) a
corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, (ii) duly
authorized to own, lease and operate its properties and to carry on
its business as it is now being conducted and (iii) duly qualified or
licensed and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or license
necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed or in good standing has not had and is not
reasonably likely to have, individually or in the aggregate, a
material adverse effect or materially impair the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(b) Authorization of Transaction. The Seller has full power
and authority to execute and deliver this Agreement and the documents
and certificates delivered in connection herewith and to perform its
obligations hereunder. The execution, delivery and performance by the
Seller of this Agreement have been duly authorized by the Board of
Directors of the Seller and by all other necessary corporate action on
the part of the Seller. This Agreement has been duly executed and
delivered by the Seller and constitutes the valid and legally binding
obligation of the Seller, enforceable against the Seller in accordance
with its terms, subject to the Remedies Exception. The Seller is not
required to give any notice, declaration, report or statement to, make
any filing with, or obtain any authorization, consent, declaration or
approval of any Governmental Authority or any other Person in
connection with the execution, delivery or performance by the
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Seller of the transactions contemplated by this Agreement or in order
to preclude any termination, suspension, modification or impairment of
any of the SkateNation Contracts or any legal or contractual right,
privilege, license or franchise which is included in the Assets,
except for the HSR Report required to be filed by Seller (or its
"ultimate parent entity") under the Xxxx-Xxxxx-Xxxxxx Act.
(c) Noncontravention. Neither the execution and delivery of
this Agreement by the Seller, nor the consummation by the Seller of
the transactions contemplated hereby, does or will (i) violate any
constitution, statute, regulation, rule or Judgment to which the
Seller or any of its assets (including the Purchased Shares) is
subject or bound or any provision of the Seller's charter or bylaws,
or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any material agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is bound or
to which any of its assets (including the Purchased Shares) are
subject.
(d) Brokers' Fees. The Seller has not entered into any
contract or other arrangement or understanding (written or oral,
express or implied) with any Person which may result in the obligation
of the Buyer, Family Golf or SkateNation or any of its Subsidiaries to
pay any fees or commissions to any broker, finder, or agent as a
result of the negotiations leading up to the execution and delivery of
this Agreement or the consummation of the transactions contemplated by
this Agreement.
(e) Purchased Shares. The Seller has good and marketable
title to and is the sole beneficial and record owner of 23,998
Purchased Shares, which shares represent all of the issued and
outstanding shares of capital stock of SkateNation, other than the
shares of such stock beneficially owned and held of record by
Hillgrove. The Purchased Shares owned of record by the Seller on the
date of this Agreement are owned by it free and clear of any
restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands of any nature whatsoever. None of the Purchased
Shares have been issued in violation of the preemptive rights of any
Person. At the Closing, the Seller will transfer and deliver to the
Buyer good and marketable title to all of the Purchased Shares
(including any shares of capital stock of SkateNation owned by
Hillgrove on the date hereof), and such Purchased Shares (i) will
represent all of the issued and outstanding shares of capital stock of
SkateNation and (ii) will be so transferred and delivered, and held by
the Buyer immediately after the Closing, free and clear of any
restrictions on transfer (other than applicable restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts (other than this
Agreement), commitments, equities, claims or demands of whatsoever
nature (other than such as may be created by the Buyer).
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(f) Seller's Balance Sheet. The Seller has provided the Buyer
with an unaudited consolidated balance sheet of Seller and its
subsidiaries as of June 30, 1998. To Seller's Knowledge, such balance
sheet fairly presents the financial position of Seller and its
subsidiaries on a consolidated basis as of such date in all material
respects.
3.02 Representations and Warranties of each of the Buyer and Family
Golf. Each of the Buyer and Family Golf represents and warrants to the Seller
that the statements contained in this Section 3.02 are correct and complete as
of the date of this Agreement, except as set forth in the disclosure schedule
delivered by the Buyer and Family Golf to Seller on the date hereof (the
"Buyer's Disclosure Schedule").
(a) Organization. Each of the Buyer and Family Golf is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Each of the Buyer and Family
Golf is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a
material adverse effect on the business, assets, financial condition,
or results of operations of Family Golf and its Subsidiaries
(including the Buyer) taken as a whole. The Buyer has full corporate
power and authority to carry on the business in which it is engaged
and to own and use the properties owned and used by it.
(b) Authorization of Transaction. Each of the Buyer and
Family Golf has full power and authority to execute and deliver this
Agreement and the documents and certificates delivered in connection
herewith and to perform its respective obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of each
of the Buyer and Family Golf, enforceable against the Buyer and Family
Golf in accordance with its terms and conditions, subject to the
Remedies Exception. Neither the Buyer nor Family Golf is required to
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Governmental Authority or any other Person
in order to consummate the transactions contemplated by this
Agreement, except for the HSR Report required to be filed by Family
Golf under the Xxxx-Xxxxx-Xxxxxx Act.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement by Buyer and Family Golf, nor the consummation of
the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule or Judgment to which either
the Buyer or Family Golf is subject or violate any provision of the
respective charter or bylaws of the Buyer or Family Golf or (ii)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under,
any material agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer or Family Golf is a party or by which
it is bound or to which any of its assets is subject, except where any
such breach or default would not have a material adverse effect on the
business, assets, financial condition, or results of operations of
Buyer or Family Golf and
-16-
its Subsidiaries (including the Buyer) or materially impair the
ability of the Parties to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. Neither the Buyer nor Family Golf has any
contract or other arrangement or understanding (written or oral,
express or implied) with any Person which may result in the obligation
of the Seller or any of its Affiliates to pay any fees or commissions
to any broker, finder, or agent as a result of the negotiation leading
up to the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement.
(e) Investment. The Buyer is not acquiring the Purchased
Shares with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES CONCERNING SKATENATION
-----------------------------------------------------
The Seller represents and warrants to the Buyer and Family Golf that
the statements contained in this Article IV are correct and complete as of the
date of this Agreement, except as set forth in the Disclosure Schedule.
4.01 Organization, Qualification, and Corporate Power. SkateNation is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Each of its Subsidiaries is a limited liability
company or a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each of SkateNation
and its Subsidiaries is duly authorized, qualified and licensed and is in good
standing to conduct business under the laws of each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or license necessary, except in such
jurisdictions where the lack of such qualification or license or the failure to
be in good standing would not have a Material Adverse Effect. Each jurisdiction
in which SkateNation or any of its Subsidiaries is authorized to conduct
business is identified in Section 4.01 of the Disclosure Schedule. Each of
SkateNation and its Subsidiaries has full corporate power and authority to
carry on the businesses in which they are engaged as such businesses are now
being conducted and to own, lease and use the properties currently owned,
leased and used by them. Section 4.01 of the Disclosure Schedule lists the
directors and officers of SkateNation and the managers or directors and
officers, as the case may be, of each of its Subsidiaries. The Seller has made
available to the Buyer true, correct and complete copies of the charter and
bylaws or other operational documents of SkateNation and of each of its
Subsidiaries (in each case as amended to date).
-17-
4.02 Capitalization. The entire authorized capital stock of
SkateNation consists of 120,000 shares of common stock, of which 100,000 shares
are designated Class A common stock, no par value per share, and 20,000 shares
are designated Class B common stock, no par value per share. There are 23,998
shares of Class A common stock issued and outstanding, 550 shares of Class B
common stock issued and outstanding and no shares of either class held in
SkateNation's treasury. All of the Purchased Shares have been duly authorized
and are validly issued, fully paid, and nonassessable. All of the shares of
Class A common stock are owned beneficially and held of record by the Seller.
As of the date hereof, all of the shares of Class B common stock are owned
beneficially and held of record by Hillgrove. There are no (i) outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts, commitments, arrangements or
understandings that could require SkateNation to issue, sell, or otherwise
cause to become outstanding any shares of its capital stock, (ii) outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to SkateNation, or (iii) voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of SkateNation. No capital stock of SkateNation has been issued in
violation of any preemptive rights.
4.03 Indebtedness. Section 4.03 of the Disclosure Schedule contains a
list of all outstanding loan or credit agreements, notes, bonds, mortgages,
indentures and other similar agreements and instruments pursuant to which
SkateNation or any of its Subsidiaries has borrowed money, including but not
limited to the Loan Agreements, and the respective amounts of principal and
accrued and unpaid interest outstanding thereunder as of the Effective Date.
4.04 Noncontravention. Neither the execution, delivery and performance
of this Agreement or any other document or certificate executed and delivered
in connection herewith, nor the consummation of the transactions contemplated
hereby or thereby, upon and subject to compliance with the Xxxx-Xxxxx-Xxxxxx
Act, does or will (i) violate any constitution, statute, regulation, rule or
Judgment to which SkateNation or any of its Subsidiaries is subject or bound,
or any provision of the charter or bylaws of SkateNation or of the charter,
bylaws, operating agreement or other organizational document of any of its
Subsidiaries, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under, any
SkateNation Contract or any legal or contractual right, privilege, license,
permit or franchise which is included in the Assets (or result in the
imposition of any Security Interest upon any of the Assets), except where any
such violation, conflict or default would not have a Material Adverse Effect or
materially impair the ability of the Parties to consummate the transactions
contemplated by this Agreement. Neither SkateNation nor any of its Subsidiaries
is required to give any notice, declaration, report or statement to, make any
filing with, or obtain any authorization, consent, declaration or approval of
any Governmental Authority in connection with the execution and delivery by the
Parties of, or the consummation of the transactions contemplated by, this
Agreement or in order to preclude any termination, suspension, modification or
impairment of any of the SkateNation Contracts or any legal or contractual
right, privilege, license, permit or franchise which is included in the Assets.
-18-
4.05 Brokers' Fees. Neither SkateNation nor any of its Subsidiaries
has entered into any contract or other arrangement or understanding (written or
oral, express or implied) with any Person which may result in the obligation of
the Buyer, Family Golf, or SkateNation or any of its Subsidiaries to pay any
fees or commissions to any broker, finder, or agent as a result of the
negotiations leading up to the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement.
4.06 Subsidiaries. Section 4.06 of the Disclosure Schedule sets forth
for each Subsidiary of SkateNation (i) its name and jurisdiction of
organization, (ii) its form of organization and capital structure, and (iii)
the capital stock or membership interests held by SkateNation in such
Subsidiary. SkateNation holds of record and owns beneficially all of the
outstanding shares of capital stock or other interests in each of its
Subsidiaries, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands of any nature whatsoever. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts, commitments,
arrangements or understandings that could require SkateNation to sell,
transfer, or otherwise dispose of any interest in any of its Subsidiaries or
that could require any Subsidiary of SkateNation to issue, sell, or otherwise
cause to become outstanding any of its own shares of capital stock or
membership interests or any shares of capital stock or membership interests in
any other Subsidiary. There are no (i) outstanding stock appreciation, phantom
stock, profit participation, or similar rights with respect to any Subsidiary
of SkateNation or (ii) voting trusts, proxies, or other agreements or
understandings with respect to the voting of any interests of any such
Subsidiary. None of SkateNation and its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation or other
investment in any Person which is not a Subsidiary.
4.07 Corporate Records. The minute books and transfer books of
SkateNation and each of its corporate Subsidiaries have been made available to
the Buyer, contain true and complete records in all material respects of all
meetings of, or written consents in lieu of meetings executed by, the
respective boards of directors (and all committees thereof) and shareholders of
SkateNation and each such Subsidiary. All material actions and transactions
taken or entered into by SkateNation or any such Subsidiary and requiring
action by its Board of Directors or shareholders have been duly authorized or
ratified as necessary and are evidenced in such minute books; except, with
respect to RMSC, RMS NJ and RMC, where the failure of such authorization,
ratification or evidence in the minute books would not have a Material Adverse
Effect. The stock certificate books and stock records of SkateNation and each
such Subsidiary, as made available to the Buyer, are true and complete.
4.08 Financial Statements.
(a) Attached hereto as Exhibit A are the following financial
statements (collectively the "Financial Statements"): (i) audited consolidated
balance sheets and statements of operations, shareholders' equity and cash
flows, including the notes thereto, as of and for the
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period from December 21, 1995 through September 30, 1996 and the fiscal year
ended September 30, 1997 for SkateNation and its Subsidiaries; (ii) unaudited
separate and combined balance sheets and statements of operation as of and for
the fiscal year ended September 30, 1998 (the "Most Recent Year End") for
SkateNation and its Subsidiaries (other than Recreational Management Services
Corporation ("RMSC"), Recreational Management Services of New Jersey, Inc.
("RMS NJ") and Recreational Management Corporation ("RMC")) (the "Unaudited
Year End Financial Statements"); (iii) unaudited balance sheets and statements
of income, changes in stockholders equity, and cash flows as of and for the
fiscal years ended September 30, 1995, 1996 and 1997 for RMSC, as of and for
the fiscal year ended September 30, 1997 for RMS NJ and as of and for the
fiscal years, ended July 31, 1996 and 1997 for RMC and (iv) unaudited balance
sheets and statements of income at and for the twelve month period ended
September 30, 1998 for each of RMSC and RMS NJ and at and for the fourteen
month period ended September 30, 1998 for RMC (the statements described in
items (iii) and (iv) above, the "RMSC Unauditeds"). The Financial Statements
(including the notes thereto) present fairly in all material respects the
financial position of SkateNation and its Subsidiaries as of such dates and the
results of operations of SkateNation and its Subsidiaries for such periods in
conformity with GAAP applied on a consistent basis throughout the periods
covered thereby; provided, however, that the Unaudited Year End Financial
Statements and the RMSC Unauditeds are subject to normal year-end adjustments
and lack footnotes and other presentation items and the RMSC Unauditeds have
not been prepared in accordance with GAAP.
(b) The books of account of SkateNation and each of its
Subsidiaries are true and complete in all material respects, have been
maintained in accordance with good business practices and, to Seller's
Knowledge, fairly reflect all of the properties, assets, liabilities and
transactions of SkateNation and each of its Subsidiaries in accordance with
GAAP consistently applied (provided that no representation is made with respect
to the presentation of the books and records of RMSC, RMC and RMS in accordance
with GAAP). To Seller's Knowledge, (i) all fees, charges, costs and expenses of
any nature whatsoever associated with the ownership, leasing, operation,
maintenance and management of the Assets and the businesses of SkateNation and
its Subsidiaries have been fully and properly charged and reflected, in all
material respects, in the Financial Statements and SkateNation's and each of
its Subsidiary's books and records and (ii) such Financial Statements and books
and records, do not, because of the provision of services or the bearing of
costs and expenses by the Seller or any other Affiliate of SkateNation or for
any other reason, understate the true costs and expenses of conducting the
businesses of SkateNation and its Subsidiaries.
4.09 Events Subsequent to Most Recent Year End. Since the Most Recent
Year End, to Seller's Knowledge, there has not been any Material Adverse
Effect. Without limiting the generality of the foregoing, since the Effective
Date:
(a) none of SkateNation and its Subsidiaries has sold,
leased, transferred, or assigned any of its Assets other than
immaterial Assets sold, leased, transferred or assigned in the
Ordinary Course of Business;
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(b) none of SkateNation and its Subsidiaries has entered into
any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more
than $50,000 or outside the Ordinary Course of Business;
(c) no party (including SkateNation or any of its
Subsidiaries) has accelerated, terminated (other than upon the
expiration of its term), modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $50,000 to which
SkateNation or any of its Subsidiaries is a party or by which it is
bound;
(d) none of SkateNation and its Subsidiaries has imposed, nor
has any other Person imposed, any Security Interest upon any of the
Assets;
(e) none of SkateNation and its Subsidiaries has purchased,
leased or acquired any Assets or made any capital or operating
expenditure (or series of related capital or operating expenditures),
capital addition or improvement, in either case, involving more than
$20,000 or outside the Ordinary Course of Business;
(f) none of SkateNation and its Subsidiaries has made any
capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related
capital investments, loans, and acquisitions) either involving more
than $20,000 or outside the Ordinary Course of Business;
(g) none of SkateNation and its Subsidiaries has issued any
note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligations involving more than $50,000 singly or in the aggregate
(other than indebtedness for money borrowed from the Seller before
November 1, 1998, consistent with past practices);
(h) there has been no change made or authorized in the
charter or bylaws of SkateNation or in the charter, bylaws, operating
agreement or other organizational documents of any of its
Subsidiaries;
(i) SkateNation has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash, securities, properties or otherwise) or redeemed,
purchased, or otherwise acquired any of its capital stock, or granted
any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital
stock;
(j) none of SkateNation and its Subsidiaries has experienced
any damage, destruction, or loss (whether or not covered by insurance)
to any material amount of its Assets;
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(k) none of SkateNation and its Subsidiaries has made any
loan to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of
Business or involving more than $25,000;
(l) none of SkateNation and its Subsidiaries has entered into
any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement
or adopted, amended, modified, or terminated any Employee Benefit
Plan;
(m) to Seller's Knowledge, except as expressly contemplated
by this Agreement, there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving SkateNation or its Subsidiaries;
(n) none of SkateNation and its Subsidiaries has discharged
or satisfied any Security Interest, or paid, canceled, compromised or
otherwise satisfied any obligation, indebtedness or liability
(absolute or contingent) other than the payment in the Ordinary Course
of Business of current liabilities shown on the Effective Date Balance
Sheet or incurred since the date thereof in the Ordinary Course of
Business.
(o) none of SkateNation and its Subsidiaries has (A)
increased the rate of compensation payable or to become payable by it
to any of its officers, directors, employees or agents, except for
increases in the Ordinary Course of Business or required under the
terms of employment agreements, or (B) granted, made or accrued any
bonus, incentive compensation, service award or other like benefit,
contingently or otherwise, to or for the credit of any of its
officers, directors, employees or agents, other than in the Ordinary
Course of Business, or made any employee welfare, pension, retirement,
profit sharing or similar payment except pursuant to regularly
scheduled payments required pursuant to the existing plans and
arrangements described in Section 4.23 of the Disclosure Schedule or
(C) paid or granted any right to receive any severance or termination
pay to any officer, director, employee or agent;
(p) none of SkateNation and its Subsidiaries has made any
change in any method of accounting or any accounting practice.
(q) none of SkateNation and its Subsidiaries has made any
payments to, or obligated itself to make any payments to, Seller or
any of its Affiliates (other than SkateNation or any of its
Subsidiaries), nor has Seller or any of its Affiliates (other than
SkateNation or any of its Subsidiaries) made any payments to, or
obligated itself to make any payments to, SkateNation or any of its
Subsidiaries after November 1, 1998.
(r) none of SkateNation and its Subsidiaries has entered into
any written commitment to do any of the foregoing.
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4.10 Undisclosed Liabilities. None of SkateNation and its Subsidiaries
has any Liability or other obligation which, singly or in the aggregate, would
be required to be reflected or reserved against in a balance sheet of
SkateNation and its Subsidiaries prepared in accordance with GAAP and, to
Seller's Knowledge, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them which if asserted could result in any such Liability or other
obligation, except for (x) Liabilities set forth on the face of the Unaudited
Year End Balance Sheet (rather than in any notes thereto), and (y) Liabilities
which have arisen after the Most Recent Year End in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, tort, infringement, or
violation of law).
4.11 Legal Compliance. Each of SkateNation and its Subsidiaries has
complied in all material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions and Judgments of Governmental
Authorities and courts of federal, state, local, and foreign governments (and
all agencies thereof)), other than Environmental Health and Safety Laws, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply, in each case, where such noncompliance or such filing or
commencement of action could reasonably be expected to have a Material Adverse
Effect. This Section 4.11 expressly does not cover (i) legal compliance with
respect to any Property or matters pertaining to Property and (ii) legal
compliance with Environmental, Health and Safety Laws, all of which is covered
solely and exclusively by Section 4.13 below.
4.12 Tax Matters.
(a) Each of SkateNation and its Subsidiaries has filed all
Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All Taxes owed by
SkateNation and its Subsidiaries (whether or not shown on any Tax
Return) have been paid or accrued. None of SkateNation and its
Subsidiaries is currently the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by a
Governmental Authority in a jurisdiction where any of SkateNation and
its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security
Interests on any of the Assets that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) SkateNation and each of its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) There is no dispute or claim concerning any Tax Liability
of SkateNation or any of its Subsidiaries either (i) claimed or raised
by any Governmental Authority in writing or (ii) to Seller's Knowledge
, based upon personal contact with any agent of any Governmental
Authority. Section 4.12(c) of the Disclosure Schedule lists all
federal,
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state, local, and foreign income Tax Returns filed with respect to
SkateNation and its Subsidiaries for taxable periods ended on or after
September 30, 1996, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by SkateNation or any of its Subsidiaries since September 30, 1996.
(d) None of SkateNation and its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(e) None of SkateNation and its Subsidiaries has filed a
consent under Code Section 341(f) concerning collapsible corporations.
None of SkateNation and its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments,
nor as a result of the transactions contemplated hereby will
SkateNation or any of its Subsidiaries be obligated to make any
payments, that will not be deductible under Code Section 280G or Code
Section 49(99) or subject to any taxes imposed by Code Section 49(99).
None of SkateNation and its Subsidiaries is a party to any Tax
allocation or sharing agreement which will not be terminated effective
as of the Closing. None of SkateNation and its Subsidiaries has been a
member of an Affiliated Group filing a consolidated federal income Tax
Return other than a group the common parent of which was the Seller.
(f) The unpaid Taxes of SkateNation and its Subsidiaries (i)
did not, as of the Most Recent Year End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the face of the Unaudited Year End Balance Sheet (rather than in any
notes thereto) and (ii) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of SkateNation in filing its Tax Returns.
(g) Each Affiliated Group has filed all Tax Returns that it
was required to file for each taxable period during which any of
SkateNation and its Subsidiaries was a member of the group, and has
paid all Taxes (whether or not shown thereon as owing), except where a
failure to file or pay Taxes would not have a material adverse effect
on the financial condition of SkateNation and its Subsidiaries taken
as a whole.
(h) None of SkateNation and its Subsidiaries has any
liability for the Taxes of any Person other than SkateNation and its
Subsidiaries (i) under Reg. Section 1.1502-6 (or any similar
provisions of state, local, or foreign law, as a transferee or
successor, by contract or otherwise), (ii) as a transferee or
successor, (iii) by contract or (iv) for any other reason.
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(i) Except as set forth in Section 4.12(i) of the Disclosure
Schedule, each of the Subsidiaries of SkateNation is, and will be on
the Closing Date, an entity that is disregarded as an entity separate
from its owner for federal income tax purposes within the meaning of
Treasury Regulation Section 301.7701-2(c)(2). No election shall be
made, and no action shall be taken to change the classification of any
of the Subsidiaries of SkateNation for federal income tax purposes on
or prior to the Closing Date. None of such Subsidiaries has any
contractual obligation to make an election to change its
classification under Section 7701 of the Code and the Treasury
Regulations promulgated thereunder.
(j) Notwithstanding anything in this Agreement to the
contrary, the Seller makes no representation or warranty, express or
implied, with respect to any matter covered by this Section 4.12
concerning RMSC, RMS NJ or RMC except for matters covered by Sections
4.12(a), (b) or (c) hereof.
4.13 Property.
(a) The Land constitutes all of the real property as to which
SkateNation or its Subsidiaries is the fee owner or the lessee under a
ground lease.
(b) There are no pending lawsuits or administrative
proceedings concerning the Property that, if adversely determined to
SkateNation or its Subsidiaries, can reasonably be expected to have a
Material Adverse Effect and, to the Seller's Knowledge, no such
proceeding or lawsuit is currently threatened;
(c) There are no pending condemnation proceedings concerning
the Fee Owned Land that, if adversely determined to SkateNation or its
Subsidiaries, can reasonably be expected to have a Material Adverse
Effect and, to Seller's Knowledge, no such proceeding: (i) is
currently pending concerning any Leasehold Land; or (ii) is currently
threatened concerning any Leasehold Land or Fee Owned Land.
(d) Neither SkateNation nor any of its Subsidiaries has
received any written notice from any city, village or Governmental
Authority requiring the correction of any condition with respect to
any Property by reason of a violation or alleged violation of any
applicable law or regulation which, if not cured, could reasonably be
expected to have a Material Adverse Effect, other than notices with
respect to violations or alleged violations that have been cured;
(e) The Seller has made available to the Buyer complete
copies of any third party reports that are in Seller's possession or
control, have been prepared within the last two years, and relate to
the physical or environmental condition of any of the Property,
including all reports concerning asbestos (the "Environmental and
Engineering Studies");
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(f) The Seller has provided or made available to the Buyer
complete copies of the Surveys listed in Section 4.13(f) of the
Disclosure Schedule. The Surveys constitute all of the Property
surveys in Seller's possession or control concerning the Property.
(g) The Seller has provided or made available to the Buyer
complete copies of the Title Policies listed in Section 4.13(g) of the
Disclosure Schedule. The Title Policies constitute the most recent
title insurance policies in Seller's possession or control concerning
the Property.
(h) Section 4.13(h) of the Disclosure Schedule contains a
list of all ground leases pursuant to which Property is leased to
SkateNation or any of its Subsidiaries (the "Ground Leases"). With
respect to each Ground Lease:
(i) the Seller has provided the Buyer with a copy
of the Ground Lease that is true, correct and complete;
(ii) the Ground Lease has not been amended or
modified;
(iii) to the Seller's Knowledge, the Ground Lease is
in full force and effect and is legal, valid, binding and enforceable
against the Ground Lessor, subject to the Remedies Exception; and
(iv) neither SkateNation nor any of its Subsidiaries
is in default in its obligations to pay rent or in any of its other
material obligations under the Ground Lease and, to the Seller's
Knowledge, no other party thereto is in default of its material
obligations under the Ground Lease; and
(v) no consent is required of any party to the
Ground Lease by virtue of the transactions contemplated by this
Agreement and the transactions contemplated by this Agreement will not
result in any termination of or modification to the Ground Lease.
(i) Section 4.13(i) of the Disclosure Schedule contains a
list of all leases pursuant to which SkateNation or its Subsidiaries,
as lessee, leases any portion of the Improvements from any Person (the
"Space Leases"). With respect to each Space Lease:
(i) the Seller has provided Buyer with a copy of
the Space Lease that is true, correct and complete;
(ii) the Space Lease has not been amended or
modified;
(iii) to the Seller's Knowledge, the Space Lease is
in full force and effect and, is legal, valid, binding and enforceable
against the Lessor, subject to the Remedies Exception; and
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(iv) neither SkateNation nor any of its Subsidiaries
is in default of its obligations to pay rent under the Space Lease or
in any of its other material obligations under the Space Lease and, to
Seller's Knowledge, no other party thereto is in default in any of its
material obligations under the Space Lease; and
(v) no consent is required of any party to the Space
Lease by virtue of the transactions contemplated by this Agreement and
the transactions contemplated by this Agreement will not result in any
termination of or modification to the Space Lease.
(j) To the Seller's Knowledge, neither SkateNation nor its
Subsidiaries nor any Ground Lessor under a Ground Lease or any Lessor under a
Space Lease has received any written notice from any governmental agency or
official within the twelve-month period prior to the date of this Agreement
regarding any actual or alleged material violation of Environmental, Health,
and Safety Laws relating to (i) the Property, (ii) to any management contract
or lease agreement between SkateNation or any of its Subsidiaries, on the one
hand, and a third party, on the other hand, covering SkateNation's or such
Subsidiary's management of ice skating rinks or other sports facilities (each
such contract, a "Management Agreement") or (iii) SkateNation or its
Subsidiaries and arising under Environmental, Health, and Safety Laws, which if
adversely determined to SkateNation, its Subsidiaries or the Ground Lessor or
Lessor, as the case may be, could reasonably be expected to have a Material
Adverse Effect.
(k) To the Seller's Knowledge, except as described in the
Environmental and Engineering Studies, each of SkateNation and its Subsidiaries
has complied and is in compliance, in each case in all material respects, with
all Environmental, Health, and Safety Laws and with all other applicable laws
(including rules, regulations, codes, plans, injunctions and Judgments of
Governmental Authorities) relating to the Property and has obtained, has
complied, and is in compliance with, in each case in all material respects, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Laws for the occupation of its facilities and
the operation of its businesses, in each case where noncompliance could
reasonably be expected to have a Material Adverse Effect.
(l) To Seller's Knowledge, since the date of the applicable
Environmental and Engineering Report with respect to any Property and except as
described in the Environmental and Engineering Studies, neither SkateNation nor
any of its Subsidiaries has taken any action or engaged in any activities nor
has any event, circumstance or condition occurred that could reasonably be
expected to form the Basis of any claim under any Environmental, Health and
Safety Law against SkateNation or any of its Subsidiaries by reason of its
ownership, lease, use or operation of such Property.
(m) To Seller's Knowledge, except as described in the
Environmental and Engineering Studies, all Improvements constituting part of
the Property are structurally sound in all material respects, and there are no
material deficiencies in the mechanical, plumbing, sewer,
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refrigeration, heating and electrical systems of any Improvement (a "material
deficiency" for this purpose meaning, as to the Improvement(s) on each
Property, a condition or conditions required a repair in excess of $25,000).
(n) Notwithstanding anything to the contrary in this
Agreement, Buyer acknowledges and agrees that, except for the representations
expressly set forth in this Section 4.13, the Seller makes no representations
or warranties of any kind, express or implied, concerning the Property, the
Ground Leases, the Space Leases, Hazardous Materials or Environmental, Health,
and Safety Laws, including: (1) the condition or safety of the Property,
including plumbing, sewer, heating and electrical systems, roofing, air
conditioning, foundations, soils and geology, lot size, or suitability of the
Property for a particular purpose; (2) whether any fixtures, plumbing or other
utilities are in working order; (3) the habitability or suitability for
occupancy of any structure and the quality of its construction; (4) whether the
Improvements are structurally sound, in good condition, or in compliance with
applicable city, county, state or federal statutes, codes or ordinances; (5)
the condition of title to the Property; (6) the projected profitability or
projected losses or expenses relating to the Property during any period after
the Closing; (6) the possible presence of Hazardous Materials in, under or near
the Property or any other matter concerning Environmental, Health, and Safety
Laws; and (7) the completeness or accuracy of any information provided to Buyer
by the Seller or its agents concerning the Property.
4.14 Intellectual Property.
(a) SkateNation has the sole and exclusive right to use each
of the trademarks, service marks, tradenames and logos set forth in
Section 4.14 of the Disclosure Schedule.
(b) Each of SkateNation and its Subsidiaries possesses or has
the right to use (in the manner and to the extent presently used) all
of the Intellectual Property used in the operation and conduct of its
business as presently conducted, without, to the Seller's Knowledge,
any material conflict or claim of conflict with the rights of others.
None of such Intellectual Property is subject to any outstanding
Judgment, or any stipulation or agreement, restricting the use thereof
by SkateNation or any of its Subsidiaries. None of SkateNation or its
Subsidiaries has entered into or is subject to any agreement to
indemnify any other Person against any charge of infringement of any
patent, trademark, tradename, service xxxx or copyright.
(c) To the Knowledge of the Seller, (i) none of SkateNation
and its Subsidiaries has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties and (ii) no third party has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of SkateNation and
its Subsidiaries.
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(d) Section 4.14 of the Disclosure Schedule sets forth an
accurate and complete list of the Intellectual Property owned or used
by SkateNation and its Subsidiaries in the conduct of their respective
businesses.
(e) Notwithstanding anything to the contrary in this
Agreement, Seller makes no representation or warranty, express or
implied, whether in this Section 4.14 or elsewhere in this Agreement,
with respect to the names "Perry Power" and "Pro Start".
4.15 Equipment.
(a) Each of SkateNation and its Subsidiaries owns or has the right to
use (in the manner and to the extent presently used) all of the Equipment used
in the operation and conduct of its businesses as presently conducted. Each of
SkateNation and its Subsidiaries has good and marketable title to, or a valid
Leasehold Interest in, all Equipment owned by it, free and clear of any
Security Interest. Each of SkateNation and its Subsidiaries is the sole and
exclusive owner of all of its Equipment, does not use any of such Equipment by
the consent of any other Person and is not required to and does not make any
payments to others with respect thereto. To Seller's Knowledge, each material
item of Equipment is in reasonable working order and repair, reasonable wear
and tear excepted. Since the Effective Date, there has been no material change
in the condition of the Equipment owned or leased by SkateNation or any of its
Subsidiaries, and no portion of such Equipment has been removed from its
respective location as of such date. Each piece of Equipment is located on the
Property or is otherwise within the physical control of SkateNation or one of
its Subsidiaries.
(b) To Seller's Knowledge, all of the Equipment used in the conduct of
the business of SkateNation and its Subsidiaries are being operated and
maintained in accordance with the requirements of all applicable contracts to
which SkateNation or any of its Subsidiaries is subject and all laws (including
the common law and any statute, ordinance, code or other law, rule or
regulation enacted, adopted, promulgated, applied or followed by any
Governmental Authority or court).
(c) The Equipment located on the Property on the date hereof
constitutes all of the Equipment pertaining to SkateNation and its
Subsidiaries' involvement in the ownership, operation or management of ice
skating rinks.
(d) No representations or warranties are made in this Section 4.15
with respect to the Property.
4.16 Contracts. Section 4.16 of the Disclosure Schedule lists the
following contracts and other agreements to which SkateNation or any of its
Subsidiaries is a party (together with the Ground Leases and the Space Leases,
the "SkateNation Contracts"):
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(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $50,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, or involve consideration in excess of $100,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of $50,000 or under which it has imposed a Security Interest
on any of its Assets;
(e) any agreement concerning confidentiality or
noncompetition, or which otherwise restricts in any material manner
the free use by SkateNation and its Subsidiaries of its Assets or data
made available to it in the Ordinary Course of Business;
(f) any agreement with the Seller or any Affiliates thereof
(other than SkateNation and its Subsidiaries);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan
or arrangement for the benefit of the current or former directors,
officers, and/or employees of SkateNation or any of its Subsidiaries;
(h) any collective bargaining agreement;
(i) any written agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of $25,000 or providing
severance benefits;
(j) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and/or employees;
(k) any agreement under which the consequences of a default
or termination could have a Material Adverse Effect;
(l) any agreement with any tenant of any space at the
Property that involves annual consideration in excess of $10,000;
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(m) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000 or
that is material to the business of SkateNation or any of its
Subsidiaries.
The Seller has made available to the Buyer a correct and complete copy of each
written agreement (as amended to date) listed in Section 4.16 of the Disclosure
Schedule. With respect to each agreement required to be identified in Section
4.16 of the Disclosure Schedule: (w) the agreement is in full force and effect
and, the Seller's Knowledge, is the legal, valid and binding obligation of the
parties thereto other than SkateNation or any of its Subsidiaries (the "Other
Parties") and enforceable against the Other Parties in accordance with its
terms, subject to the Remedies Exception; (x) neither SkateNation nor any of
its Subsidiaries nor, to the Seller's Knowledge, any of the Other Parties, is
in breach, violation or default, and to Seller's Knowledge, no event has
occurred which with notice or lapse of time or both would constitute a breach,
violation or default by SkateNation or any of its Subsidiaries, or permit
termination, modification, or acceleration by the Other Parties, under the
agreement; (y) neither SkateNation or any of its Subsidiaries nor, to the
Seller's Knowledge, any of the Other Parties, has repudiated any provision of
the agreement and (z) no consent is required of any of the Other Parties by
virtue of the execution, delivery or performance of this Agreement, and the
transactions contemplated by this Agreement will not result in the termination
or modification of the agreement. No representations or warranties are made in
this Section 4.16 with respect to the Ground Leases or the Space Leases.
4.17 Insurance. Section 4.17 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, automobile, casualty, liability, umbrella, and workers'
compensation coverage and bond and surety arrangements) to which SkateNation or
any of its Subsidiaries has been a party, a named insured, or otherwise the
beneficiary of coverage at any time since December 31, 1995:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the general type of coverage (including an indication of
whether the coverage was on a claims made, occurrence, or other basis)
and amount (including any deductibles and ceilings) of coverage; and
(e) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
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With respect to each insurance policy required to be disclosed in Section 4.17
of the Disclosure Schedule: (i) the policy is legal, valid, binding, and
enforceable by and in favor of SkateNation and its Subsidiaries, and in full
force and effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms immediately
following the consummation of the transactions contemplated hereby, and will
provide coverage to SkateNation and its Subsidiaries following the Closing Date
for claims relating to the period prior to the Closing Date, subject to any
limitations stated in any such policy; (iii) neither the Seller nor SkateNation
nor, to Seller's Knowledge, any other party to the policy is in breach,
violation or default (including with respect to the payment of premiums or the
giving of notices), and, to the Seller's Knowledge, no event has occurred
which, with notice or the lapse of time or both, would constitute such a
breach, violation or default by SkateNation or any of its Subsidiaries, or
permit termination, modification, or acceleration, under the policy; and (iv)
neither SkateNation nor any of its Subsidiaries nor, to the Seller's knowledge,
any other party to the policy has repudiated any provision thereof. Section
4.17 of the Disclosure Schedule is a true and complete list in all material
respects of all policies of insurance in force maintained by SkateNation and
any of its Subsidiaries, and describes any self-insurance or co-insurance
arrangements affecting SkateNation and its Subsidiaries.
4.18 Litigation. Section 4.18 of the Disclosure Schedule sets forth
each instance in which SkateNation and its Subsidiaries or their respective
businesses or Assets (i) is a party or otherwise involved or, to the Seller's
Knowledge, is threatened to be made a party or threatened to be involved to or
in any action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator which, individually or
in the aggregate, would, if determined adversely, have a Material Adverse
Effect or might have a material adverse effect on the transactions contemplated
hereby, or (ii) is subject to any outstanding injunction, Judgment, order,
decree, ruling, or charge.
4.19 Employees. To the Seller's Knowledge, no executive, key employee,
or group of employees has any plans to terminate employment with SkateNation or
any of its Subsidiaries. None of SkateNation and its Subsidiaries is a party to
or bound by any collective bargaining agreement, nor has SkateNation or its
Subsidiaries experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. To Seller's Knowledge, none
of SkateNation and its Subsidiaries has committed any unfair labor practice. To
the Seller's Knowledge, there are no organizational efforts presently being
made or threatened by or on behalf of any labor union with respect to employees
of SkateNation or any of its Subsidiaries. The Seller has made available to
Buyer a list containing the name of each salaried employee of SkateNation or
any of its Subsidiaries and his or her salary (on an annualized basis) as of
the date hereof.
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4.20 Employee Benefits.
(a) Section 4.20 of the Disclosure Schedule lists each
Employee Benefit Plan that SkateNation or any of its Subsidiaries
maintains or to which SkateNation or any of its Subsidiaries
contributes, and in which employees or former employees of SkateNation
or any of its Subsidiaries participates.
(i) To Seller's Knowledge, each Employee Benefit
Plan required to be listed in Section 4.20 of the Disclosure
Schedule (and each related trust, insurance contract or fund)
complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and
other applicable laws.
(ii) None of SkateNation and its Subsidiaries
maintains any Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) The Seller has delivered to the Buyer correct
and complete copies of the plan documents and summary plan
descriptions, the most recent Form 5500 Annual Report, and
all related trust agreements, insurance contracts, and other
funding agreements which implement each such Employee Benefit
Plan.
(b) With respect to each Employee Benefit Plan that
SkateNation and its Subsidiaries or any ERISA Affiliate maintains or
ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(i) No Such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or
partially terminated or been the subject to a Reportable
Event as to which notice would be required to be filed with
the PBGC. No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been instituted or threatened.
(ii) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan.
(iii) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to
the Seller's Knowledge, threatened, except where the action,
suit, proceeding, hearing or investigation would not have a
Material Adverse Effect.
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(iv) None of SkateNation, its Subsidiaries and any
ERISA Affiliate has incurred any Liability to the PBGC (other
than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under the Code
with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(c) None of SkateNation, its Subsidiaries nor any ERISA
Affiliate contributes to, ever has contributed to, or ever has been
required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan.
(d) None of SkateNation and its Subsidiaries maintains nor
ever has maintained nor contributes, nor ever has contributed, nor
ever has been required to contribute to any Employee Welfare Benefit
Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in
accordance with Part 6 of Title I of ERISA).
(e) SkateNation and its Subsidiaries have complied with the
applicable requirements of Parts 6 and 7 of Title I of ERISA with
respect to any Employee Welfare Benefit Plan providing health
benefits, except where such noncompliance would not have a Material
Adverse Effect.
4.21 Guaranties. None of SkateNation and its Subsidiaries is a
guarantor or co- borrower in respect of any Liability or obligation or is
otherwise liable for any Liability or obligation (including indebtedness) of
any other Person.
4.22 Certain Business Relationships. Neither the Seller nor any of its
Affiliates (other than SkateNation and its Subsidiaries) are involved in any
business arrangement or relationship with SkateNation or any of its
Subsidiaries, the continuation of which is material to the business and
operations of SkateNation and its Subsidiaries, and none of the Seller and its
Affiliates (other than SkateNation and its Subsidiaries) owns any Asset which
is used in the business of SkateNation and its Subsidiaries and is material to
the business and operations of SkateNation and its Subsidiaries. There are no
intercompany obligations between SkateNation and its Subsidiaries, on the one
hand, and the Seller or any of the Seller's Affiliates, on the other hand,
other than payables to and receivables from the Seller which shall be canceled
at or prior to the Closing in accordance with Section 2.06 above or which shall
be reimbursed by Buyer to Seller to the extent that such amounts are covered by
Section 5.03(e) of this Agreement.
4.23 Disclosure. To the Knowledge of Seller, the representations and
warranties contained in this Article IV (including, without limitation, the
Disclosure Schedule attached hereto) do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Article IV not misleading.
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4.24 Disclaimer of other Representations and Warranties. Except as
expressly set forth in Section 3.01 and this Section 4, the Seller makes no
representation or warranty, express or implied, at law or in equity, in respect
of SkateNation, its Subsidiaries, or any of their respective assets,
Liabilities or operations, including, without limitation, with respect to
merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
ARTICLE V
PRE-CLOSING COVENANTS
---------------------
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.01 General. Each of the Parties will use its commercially reasonable
efforts to take all actions and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Article VII below).
5.02 Notices and Consents.
(a) The Seller shall, or shall cause SkateNation and its
Subsidiaries to, give any notices to third parties, and shall cause
SkateNation and its Subsidiaries to use its good faith efforts to
obtain any third party consent, approval or authorization, required to
consummate the transactions contemplated by this Agreement; provided,
however, that no SkateNation Contract or other agreement or contract
to which SkateNation or any of its Subsidiaries is a party shall be
amended to increase the amount payable thereunder or to otherwise be
more burdensome to SkateNation, any of its Subsidiaries or the Buyer
after the Closing in order to obtain any such consent, approval or
authorization without the Buyer's prior written consent (it being
understood that an amendment for which the Buyer's prior written
consent was obtained and that is made in conformity with such consent
shall not constitute a breach by the Seller of any of the
representations, warranties or covenants made by them herein).
Notwithstanding the foregoing, the Buyer and Family Golf acknowledge
and agree that Seller shall have no obligation to obtain the consent
of any lender under the Loan Agreements. The Seller shall, and shall
cause SkateNation and its Subsidiaries to, cooperate with the efforts
of the Buyer and Family Golf, at the Buyer's and Family Golf's sole
cost and expense, to obtain the consent of such lenders to the
consummation of the transactions contemplated hereby. Buyer's
obligations hereunder are not contingent upon (i) the consent of any
or all lenders under the Loan Agreements or (ii) the receipt of
estoppel certificates from any of the lessors under the Ground Leases
or Space Leases. If any such consent or estoppel certificate is not
obtained, the Buyer and Family Golf acknowledge and agree that the
Buyer will,
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subject to the satisfaction of the other terms and conditions of this
Agreement, pay, or cause to be paid, at Closing any and all amounts
due under such Loan Agreements, including interest, penalties and
other fees (including but not limited to any consent or assumption
fees, but excluding any breakage costs), and will close the
transactions as contemplated by this Agreement.
(b) Each of the Parties will (and the Seller will cause
SkateNation and its Subsidiaries to) give any notices to, make any
filings with, and use commercially reasonable efforts to obtain any
authorizations, consents, declarations and approvals of Governmental
Authorities in connection with the matters referred to in Section
3.01(b), Section 3.02(b), and Section 4.04 above. Without limiting the
generality of the foregoing, each of the Parties will use its
reasonable best efforts to promptly comply with any applicable
requirements under the Xxxx-Xxxxx-Xxxxxx Act and the rules and
regulations promulgated thereunder, as in effect from time to time
(the "HSR Rules"), relating to filing and furnishing of information to
the FTC and the Antitrust Division of the DOJ, the Parties' actions to
include, without limitation: (i) using their reasonable best efforts
to comply with any additional requests for documents or information
made by the FTC, the DOJ or by a court with respect to the HSR Reports
and related materials previously filed by the Parties hereto or by any
other person which is part of the same "Person" (as defined in the
Xxxx-Xxxxx-Xxxxxx Act and HSR Rules), and assisting the other Parties
to so comply; (ii) taking all other action required by the
Xxxx-Xxxxx-Xxxxxx Act or HSR Rules, (iii) using their reasonable best
efforts to obtain an early termination of the applicable waiting
period; and (iv) using its reasonable best efforts to cause all such
other Persons to cooperate and assist in such compliance.
5.03 Operation of Business. The Seller covenants and agrees that,
except as permitted, required or specifically contemplated by, or otherwise
described in, this Agreement (including the schedules and exhibits thereto),
required by any change in applicable law or otherwise consented to or approved
in writing by the Buyer, during the period commencing on the date hereof and
ending on the Closing Date, the Seller shall cause SkateNation and each of its
Subsidiaries (provided that such obligation shall exclude those efforts that a
stockholder with 100% voting control of a Delaware corporation may not take
under Delaware law with respect to the various actions set forth below to be
taken or to be refrained from by the corporation over which it exerts 100%
voting control and the various corporate and other entities which are the
subsidiaries of the controlled corporation) to:
(a) conduct its business only in, and not take any action
except in, the Ordinary Course of Business.
(b) use reasonable commercial efforts (i) to preserve intact
its current business organizations and properties, including, without
limitation, its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers,
customers and employees, (ii) to preserve any license, franchise,
ordinance, authorization,
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permit, certificate, variance, exemption, concession, lease, right of
way, easement, instrument, order and approval, domestic or foreign, in
full force and effect, to preserve the good will of the Governmental
Authorities granting the same, and not to modify or change in any
material respect the same, (iii) to keep available the services of its
present officers and key employees, (iv) to maintain all of the
tangible Assets in reasonable and customary repair, operating order
and condition, (v) to preserve the goodwill of those having business
relationships with it, and (vi) to maintain the insurance referred to
in Section 4.17 of the Disclosure Schedule (or replacement insurance
of substantially the same type and quality);
(c) maintain its books, accounts and records (including,
without limitation, those relating to its business, the Assets and its
customers) in the usual, regular and ordinary manner in accordance
with GAAP and business practices applied on a basis consistent with
prior periods (provided, however, that with respect to RMSC, RMC and
RMS, the Parties agree that SkateNation may take certain actions
suggested by its accountants to properly account for various elements
of each such corporation's financial position in accordance with GAAP
that may not be consistent with financial reporting for prior
periods); to accurately maintain its minute books and to close its
stock transfer books until the Closing;
(d) not (i) make any change or amendments in its charter,
bylaws, operating agreement or other organizational documents (as the
case may be); (ii) authorize for issuance, issue, grant, sell,
deliver, dispose of, pledge or otherwise encumber any shares of its
capital stock or issue any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares
of its capital stock or other equity or voting interests, or any
rights, options, warrants, calls, commitments or other agreements of
any character to purchase or acquire any shares of its capital stock
or other equity or voting interests; (iii) issue, grant, sell or
deliver any debt securities or warrants or rights to acquire any debt
securities of SkateNation or any of its Subsidiaries or guarantee any
debt securities of others; (iv) incur or become subject to any
liability or obligation (provided, however, that the obligation
imposed by this clause (iv) is undertaken only to the extent of
SkateNation's and its Subsidiaries' good faith efforts with respect to
any liability or obligation, including but not limited to contingent
liabilities, to the extent that SkateNation and its Subsidiaries do
not have complete control over whether or not to incur such obligation
or liability), except current liabilities and obligations under
SkateNation Contracts and other agreements in the Ordinary Course of
Business; (v) discharge or satisfy any Security Interest, or pay,
cancel, compromise or otherwise satisfy any claim, obligation,
indebtedness or liability (absolute, accrued, contingent or otherwise)
other than the payment in the Ordinary Course of Business of current
liabilities shown on the Year End Balance Sheet or incurred since the
date thereof in the Ordinary Course of Business; (vi) declare, set
aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution (whether in cash, securities,
properties or otherwise) in respect of any shares of its capital stock
or other equity or
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voting interests, or purchase or redeem any of its capital stock or
other equity or voting interests; (vii) split, subdivide, combine,
reclassify or recapitalize the outstanding shares of its capital stock
or other equity or voting interests; (viii) sell, assign, transfer,
move or otherwise dispose of any tangible Assets, except for
dispositions of immaterial or obsolete tangible Assets in the Ordinary
Course of Business; (ix) acquire any Assets other than in the Ordinary
Course of Business or pursuant to SkateNation Contracts or other
agreements in effect on the date hereof; (x) modify or change any
SkateNation Contract (including, without limitation, a modification or
change in any respect to the loan agreements set forth in Section 4.03
of the Disclosure Schedule); (xi) enter into any new employment,
consulting, agency, commission, severance or termination agreement, or
employee benefit plan or program (including any Employee Benefit
Plan), make any amendment or modification to or terminate any existing
employment, consulting, agency or commission agreement or employee
benefit plan or program (including any Employee Benefit Plan) or grant
any increases in compensation or benefits, other than increases in
compensation in the Ordinary Course of Business granted to persons who
are not officers or directors of SkateNation or any of its
Subsidiaries; (xii) guarantee any indebtedness for money borrowed or
guarantee any other obligation of any Person, except with respect to
the endorsement of negotiable instruments in the Ordinary Course of
Business, or directly or indirectly make any loans to any officers or
directors of SkateNation or any of its Subsidiaries (other than
advances made in the Ordinary Course of Business); (xiii) secure any
of its outstanding unsecured indebtedness, provide additional security
for any of its outstanding secured indebtedness or grant, create or
suffer to exist any Security Interest on or with respect to all or any
part of the Assets or any proceeds thereof, except for the possible
lien of property taxes not yet due or payable; (xiv) cancel any debts
or waive any claims or rights under any SkateNation Contracts or other
agreements or with respect to the Assets; (xv) accelerate the payment
of, or otherwise prepay, any existing outstanding indebtedness for
borrowed money; (xvi) change its business policies or practices;
(xvii) make any change in its accounting policies or procedures,
except for changes mandated by applicable accounting standards or by
law; (xviii) offer any promotional incentives or discounts other than
those that are consistent with past practices, or (xix) enter into or
assume any contract, agreement, obligation, commitment or arrangement
with respect to any of the foregoing;
(e) not extend any loan to, or repay any loan from or other
payable to, or otherwise enter into any agreement with, the Seller or
any of its Affiliates; provided, however, that Seller may advance any
amounts or provide any tax services to or for the benefit of
SkateNation and its Subsidiaries that are necessary or appropriate in
its reasonable business judgment to preserve the business, operations,
Assets and/or prospects of SkateNation and its Subsidiaries with the
prior written consent of Buyer or Family Golf, which consent shall not
unreasonably be withheld, and Buyer shall reimburse Seller at Closing
for any such amounts advanced or the fair market value of any such tax
services provided (at an average hourly rate of $76.00);
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(f) maintain the inventory at each ice skating rink owned or
operated by SkateNation or any of its Subsidiaries at customary and
prudent levels;
(g) in general, use its best efforts not to take any action
or omit to take any action which would or might result in any of the
representations or warranties of the Seller made in this Agreement
being untrue or incomplete in any material respect, if such
representations and warranties were deemed to have been made at and as
of the time of such act or omission, in any material breach or
violation of any covenant or agreement of the Seller contained herein,
or in any breach or violation of, default under, or termination,
suspension, modification or impairment of, any SkateNation Contract,
title document, law (including the common law and any statute,
ordinance, code or other law, rule or regulation enacted, adopted,
promulgated, applied or followed by any Governmental Authority or
court) or Judgment and any order of or by any Governmental Authority,
to which SkateNation or any of its Subsidiaries is a party or by which
SkateNation or any of the Assets or the businesses of SkateNation and
its Subsidiaries and is bound or affected. No compensation shall be
paid or agreed to be paid (whether through a bonus, increased
management fee, incentive compensation arrangement or otherwise) to
any Person in connection with the renewal of, or efforts to effect the
renewal of, any of the SkateNation Contracts; and
The Parties expressly agree that SkateNation's or any of its
Subsidiaries' entering into management contracts with respect to ice skating
facilities at Orland Park, Illinois, Fox Valley, Illinois and St. Xxxx Ice
Arena and Fitness Center; (each such contract substantially in the form of
contract or description thereof delivered to counsel for Buyer on November 20,
1998) and one or more facilities management contracts and/or facilities
management leases relating to the ice skating rinks and which are terminable
without penalty by SkateNation or such Subsidiary on no more than 30 days'
notice and otherwise on terms that are commercially reasonable shall be deemed
to be in the Ordinary Course of Business and shall not require the approval of
Buyer or Family Golf (but Seller shall notify Buyer in writing of such action
as soon as is reasonably practicable).
5.04 Notification. The Seller shall promptly advise the Buyer orally
and in writing of any change (other than any change affecting the industry
generally) which, to the knowledge of the Seller, has had or is reasonably
likely to have a Material Adverse Effect.
5.05 Full Access.
(a) The Seller will permit, and the Seller will cause SkateNation and
SkateNation's officers, employees, counsel, accountants and other authorized
representatives to permit, representatives of the Buyer and Family Golf and
their respective counsel, accountants, employees and other authorized
representatives to have full access upon reasonable advance notice to
SkateNation and during normal business hours to all premises, Property
(including subsurface testing), personnel, books, records (including Tax
records), contracts, and other
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documents and data, of or pertaining to SkateNation and its Subsidiaries
(wherever located) in order that the Buyer may have the full opportunity to
make such investigations (including, without limitation, technical
investigations) as it shall desire to make of the affairs of SkateNation and
each of its Subsidiaries, and to verify the performance of and compliance with
the Seller's representations, warranties, covenants and conditions herein
contained. Such access will be subject to the following limitations: (a) such
access shall not violate any law or agreement to which SkateNation or any of
its Subsidiaries is a party or otherwise expose SkateNation or any Subsidiary
to a material risk of liability; (b) Buyer or Family Golf shall obtain Seller's
consent prior to contacting or communicating, in writing or otherwise, with any
employee of SkateNation or any of its Subsidiaries; (c) Buyer or Family Golf
shall give Seller notice at least two (2) Business Days before conducting any
inspections or communicating with any third party relating to any Property, and
a representative of SkateNation shall have the right to be present when Buyer
or Family Golf or its respective representatives conducts its or their
investigations on the property ; (d) none of Buyer, Family Golf or their
respective representatives shall interfere with the use, occupancy or enjoyment
of any tenants, subtenants or other occupants of the Property or their
respective employees, contractors, customers or guests; (e) none of Buyer,
Family Golf or their respective agents shall damage the Property or any portion
thereof; and (f) each of Family Golf and Buyer shall: (i) use reasonable
efforts to perform all on-site due diligence reviews and all communications
with any Person on an expeditious and efficient basis; and (ii) indemnify, hold
harmless and defend the Seller against, and hold the Seller harmless from, all
loss, Liability, claims, costs (including reasonable attorneys' fees), liens
and damages resulting from or relating to the activities of Buyer or its agents
under this paragraph. The foregoing indemnification obligation shall survive
the Closing or termination of this Agreement. SkateNation will provide counsel
to Family Golf with copies of all such documents as the Buyer shall reasonably
request.
(b) Without limiting the generality of the foregoing (i) the Seller
shall cause to be furnished to Buyer and Family Golf and their respective
officers, employees counsel, accountants and authorized representatives upon
their request the work papers of Pricewaterhousecoopers with respect to audits
performed or to be performed for SkateNation and its Subsidiaries for the
fiscal years ended 1997 and, when available, 1998 and any audit reports,
management letters or similar memoranda or correspondence prepared by such firm
and such additional financial and operating data and other information as the
Buyer and such other persons shall from time to time reasonably request, and
(ii) the Seller shall, and shall cause SkateNation and its Subsidiaries to,
promptly after the same become available, furnish to the Buyer such of the
financial data as is normally prepared by SkateNation and its Subsidiaries as
the Buyer may reasonably request, including, without limitation, any interim
quarterly and monthly financial statements or reports prepared by SkateNation
and its Subsidiaries after the date of this Agreement, when available,
accompanied by a statement on behalf of SkateNation by the controller thereof
that, in the opinion of such officer, such financial statements were prepared
on a basis consistent with the Year End Financial Statements (except as
otherwise stated in such financial statements) and present fairly the financial
condition, results of operations and cash flows of SkateNation and its
Subsidiaries as of the date and for the period indicated subject to normal
year-end adjustments,
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and (iii) the Seller shall, and shall cause SkateNation and each of its
Subsidiaries and their respective officers, accountants, attorneys, employees
and agents to, cooperate with the officers, employees, counsel, accountants and
other authorized representatives of the Buyer and Family Golf and make full
disclosure to such representatives of such additional information regarding
SkateNation and its Subsidiaries as such representatives may reasonably
request, all subject to any limitations with respect thereto set forth in
Section 5.04(a) above.
5.06 Confidentiality.
(a) Each of the Buyer and Family Golf agree that pending the Closing
it shall, and shall use its diligent efforts to cause its respective officers,
employees and authorized representatives to, (i) hold in strict confidence all
Confidential Information obtained by them from the Seller, SkateNation or any
of SkateNation's Subsidiaries; (ii) use all such Confidential Information
solely for the purpose of consummating the transactions contemplated hereby;
and (iii) use all such data and information solely for the purpose of
consummating the transactions contemplated hereby and, except as required by
applicable law or legal process, shall not, and shall use its diligent efforts
to ensure that such officers, employees and authorized representatives do not,
disclose such information to others without the prior written consent of the
Seller.
(b) The Seller agrees to, and agrees to cause SkateNation, its
Subsidiaries and their respective officers, employees and authorized
representatives to, use diligent efforts to (i) hold in strict confidence all
data and information obtained by it from the Buyer or Family Golf (unless such
information is or otherwise becomes (through no breach of this covenant) public
or readily ascertainable from public or published information) and (ii) use all
such data and information solely for the purpose of consummating the
transactions contemplated hereby and, except as required by applicable law or
legal process, shall not, and shall use its diligent efforts to ensure that
such officers, employees and authorized representatives do not, disclose such
information to others without the prior written consent of the Buyer and Family
Golf.
(c) In the event this Agreement is terminated, the Parties agree to
(i) return promptly, if so requested, each and every document furnished to it
by the other Party or any Affiliate of such other Party, in connection with the
transactions contemplated hereby and any copies thereof which may have been
made and to cause its representatives and any representatives of others to whom
such documents were furnished promptly to return such documents and any copies
thereof any of them may have made, other than documents that are publicly
available, (ii) to destroy any such documents and copies described in (i)
above, to the extent not returned to other Party, as well as any extracts,
summaries, compilations of Confidential Information and references thereto
which are in such Party's notes, documents, databases or other records and
(iii) refrain, and to use its diligent efforts to cause its officers, employees
and representatives to refrain, from using any of the data or information
referred to in subsection (a) or (b) of this Section 5.06, as the case may be,
for any purpose.
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(d) In the event that either Party or any other Person to whom such
Party transmits the Confidential Information under the terms of this Agreement
becomes legally compelled to disclose any of the Confidential Information, such
Party will provide the other Party to this Agreement with prompt written notice
in advance of such disclosure so that such other Party may seek a protective
order or other appropriate remedy. The Party subject to the legal requirement
to disclose will cooperate as reasonably requested by such other Party in
connection with such other Party's effort to obtain a protective order or other
appropriate remedy.
(e) Each of Buyer and Family Golf acknowledges and agrees that the
unaudited balance sheet of Seller provided to them pursuant to Section 3.01(f)
is Confidential Information and that all of the covenants in this Section 5.06
shall apply with respect to such balance sheet and any information contained
therein both before and after the Closing.
5.07 Notice of Developments.
(a) Each of the Seller, on the one hand, and the Buyer and Family
Golf, on the other hand, will give prompt written notice to the other of: (i)
any information that indicates that any of its representations or warranties
contained in this Agreement was not true and complete as of the date hereof in
all material respects or will not be true and complete in all material respects
as of the Closing Date, (ii) the occurrence or failure to occur of any event
which occurrence or failure to occur will result, or has a reasonable prospect
of resulting, in the failure to satisfy a condition specified in Article VII
hereof, (iii) the failure on its part to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it hereunder, (iv) any notice or other communication from any
third party or Governmental Authority alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement, and (v) any notice of, or other communication relating to, any
breach or violation of or default under or alleged breach or violation of or
default under any SkateNation Contract or any right to terminate or suspend or
to accelerate the maturity or performance of any obligation under, any such
contract that results or allegedly will result from the transactions
contemplated by this Agreement or any event which, with notice or lapse of time
or both, would become such a breach, violation or default or give rise to such
a right of termination, suspension or acceleration. Such information shall, to
the extent it amends a representation or warranty, be deemed a supplement to
the Disclosure Schedule that has amended such representation or warranty for
purposes of Article VIII hereof. The foregoing shall not in any manner be
construed or deemed to limit the ability of Buyer to determine not to close
under Section 7.01(a) to the extent that the information provided pursuant to
this Section 5.07(a) would, but for the application of the immediately
preceding sentence, cause such closing condition not to be fulfilled.
(b) In the event that, prior to Closing, the officers of any Party to
this Agreement obtain actual knowledge of any breach of warranty or
misrepresentation of another Party, such first-named Party shall immediately
notify the other Party thereof and shall afford the other Party a reasonable
period of time, not to exceed twenty days, in which to cure such breach or take
such
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action as may be appropriate to correct the circumstances giving rise to the
breach of warranty or misrepresentation. If a Party fails to notify the other
Party in accordance with this Section 5.07(b) (provided that the Party claiming
that the other Party has failed to so notify it shall have the burden of proof
on actual knowledge and failure to notify), such nondisclosing Party shall be
deemed to have waived its rights to indemnification with respect to such
undisclosed matter under this Agreement.
5.08 Litigation During Interim Period.
(a) The Seller covenants and agrees to advise the Buyer in writing
promptly of the assertion, commencement or threat of any claim, litigation,
proceeding or investigation involving SkateNation or any of its Subsidiaries of
which the Seller has knowledge where an adverse finding or judgment would be
reasonably likely to have a Material Adverse Effect.
(b) The Seller, on the one hand, and the Buyer and Family Golf, on the
other hand, will promptly give notice to the other upon becoming aware that any
legal action, proceeding or investigation is pending or threatened by or before
any court or arbitrator, or any Governmental Authority, in each case with
respect to the transactions contemplated by this Agreement. Each of the Seller,
the Buyer and Family Golf (i) will cooperate with the others in connection with
the prosecution, investigation or defense or any such legal action, proceeding
or investigation, (ii) will supply promptly all information reasonably
requested by the other, by any such court or arbitrator or Governmental
Authority in connection with the defense of any such legal action, proceeding
or investigation and (iii) will use all reasonable efforts to cause any such
legal action, proceeding or investigation to be determined as promptly as
practicable and in a manner which does not impact adversely on, and is
consistent with, the transactions contemplated by this Agreement.
5.09 SkateNation Stock Option Agreements. SkateNation shall terminate
each outstanding SkateNation stock option agreement and all options granted
thereunder.
5.10 Datedown Endorsements. Seller shall, or shall cause SkateNation
to, use its reasonable commercial efforts to obtain (i) a title report or
commitment for each Property that is dated no earlier than 15 days before the
closing and that shows no new title exceptions other than Permitted Exceptions;
and (ii) in any case in which a datedown endorsement can be obtained for no
charge, datedown endorsements to the Title Insurance Policies that change the
effective date thereof to a date not earlier than 15 days before the Closing
Date and which provide that such policies continue to be effective and contain
no exceptions set forth on Schedule B thereto other than Permitted Exceptions.
5.11 [Intentionally Omitted.]
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5.12 Non-Solicitation. Each of Buyer and Family Golf agrees that prior
to the Closing (and for a period of one year after the date of this Agreement,
if this Agreement is terminated), without the prior written consent of Seller,
it will not, and will use all commercially reasonable efforts to ensure that
its respective Affiliates do not actively solicit any employees of SkateNation
or any of its Subsidiaries to leave the employ of SkateNation or any such
Subsidiary or to become employed by, or perform services for, Buyer, Family
Golf or any Affiliate thereof.
5.13 Estoppel Certificates. The Seller shall, or cause SkateNation to,
use its reasonable commercial efforts to obtain an estoppel certificate,
substantially in the form of Exhibit B hereto, from the landlord (or, if
applicable, over landlord) of each Ground Lease.
5.14 Class B Shares. Seller shall take all such reasonable actions as
may be necessary to purchase, at the Seller's sole cost and expense, all of the
shares of Class B common stock owned by Hillgrove and to deliver to the Buyer
at the Closing all of the Purchased Shares, free and clear of any restrictions
on transfer (other than applicable restrictions under the Securities Act and
state securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts (other than this Agreement), commitments, equities, claims or
demands of whatsoever nature (other than such as may be created by the Buyer).
ARTICLE VI
POST-CLOSING COVENANTS
----------------------
The Parties agree as follows with respect to the period following the
Closing.
6.01 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Article VIII below). The Seller acknowledges and agrees that
from and after the Closing the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to SkateNation; provided, however, that Buyer shall
provide the Seller with access during regular business hour to all Tax and
other records necessary or appropriate for the Seller to comply with its
obligations under Article IX.
6.02 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement, or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction that was in
effect or occurred on or prior to the Closing Date involving SkateNation or any
of its Subsidiaries, each of the other Parties will
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cooperate with such contesting or defending party and its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Article VIII below).
6.03 Transition. The Seller will not take any action to discourage any
lessor, licensor, customer, supplier, or other business associate of
SkateNation or any of its Subsidiaries from maintaining the same business
relationships with SkateNation or any of its Subsidiaries after the Closing as
it maintained with SkateNation or any such Subsidiary prior to the Closing.
6.04 Confidentiality. For a period of three years from and after the
Closing Date, the Seller will, and will cause its Affiliates, directors,
officers, employees and other representatives (collectively, "Related Persons")
to, treat and hold confidential all of the Confidential Information and not use
any of the Confidential Information except in connection with this Agreement,
and deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential
Information which are in its or their possession. In the event that the Seller
or, to the Seller's Knowledge, any Related Person is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, the Seller will (or will cause such
Related Person to) notify the Buyer promptly of the request or requirement so
that the Buyer may seek an appropriate protective order or waive compliance
with the provisions of this Section 6.04. If, in the absence of a protective
order or the receipt of a waiver hereunder, the Seller or any Related Person
is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such Seller or
Related Person may disclose the Confidential Information to the tribunal;
provided, however, that the Seller shall, and shall use its reasonable
commercial efforts to cause any such Related Person of which the Seller has
knowledge to, use its or his best efforts to obtain, at the request of the
Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Buyer shall designate. Subject to Section 11.01, none of the Parties hereto
shall disclose to any Person who is not a Party to this Agreement any of the
material terms or conditions of this Agreement or the transactions contemplated
hereby; provided, however, that such terms, conditions or transactions may be
disclosed to any Person (i) to the extent receipt of the consent or approval of
such Person is necessary before the Buyer and Family Golf are obligated to
close the transactions contemplated hereby and (ii) such disclosure is limited
to that which is required, in the reasonable judgment of the Seller, to obtain
such Person's consent or approval.
6.05 Use of Intellectual Property. The Seller acknowledges and agrees
that as a result of the consummation of the transactions contemplated hereby,
the Buyer is acquiring the exclusive right to use the Intellectual Property
owned or used by SkateNation immediately prior to the Closing Date, including
the name "SkateNation," for which the Seller will receive full and
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adequate consideration, and that neither the Seller nor any Affiliate of the
Seller will use such Intellectual Property or such names or any similar names
subsequent to the Closing.
6.06 Severance. Each of Family Golf and the Buyer shall agree to cause
SkateNation to pay severance to those employees of SkateNation identified on
Exhibit C attached hereto whose employment is terminated by SkateNation within
twelve (12) months after the Closing Date, on the terms and in the amounts
described in such Exhibit C. Family Golf and Buyer shall be solely responsible
for all other costs and liabilities, if any, resulting from the termination of
any employees of SkateNation or its Subsidiaries upon or after the Closing.
6.07 Non-Solicitation. Seller agrees that it will not, and will use
its commercially reasonable efforts to ensure that its Related Persons do not,
solicit any employees of SkateNation or any of its Subsidiaries to leave the
employ of SkateNation or any of its Subsidiaries or to become employed by, or
perform services for, Seller or any Affiliate of Seller for a period of one
year after the Closing.
6.08 Non-Competition. For a period of two years from the Closing Date,
the Seller shall not, either directly or indirectly (through any Subsidiary or
joint venture) enter into, engage in, provide managerial, supervisory,
administrative or consulting services or assistance to, or own any beneficial
interest in, any business with operations engaged in the acquisition,
development, ownership, operation or management of commercial ice skating rinks
within 75 miles of any portion of the Property (the "Restricted Area"), without
the written consent of the Buyer; provided, however, that the foregoing
restriction shall not apply to any commercial ice skating rink that is located
within the Restricted Area if (i) such ice rink is located on, in or adjacent
to any commercial real estate owned, acquired or developed, in whole or in
significant part, by the Seller or any of its Affiliates or Subsidiaries; and
(ii) such ice rink does not represent more than 25% of the business or revenue
of such commercial real estate.
6.09 Audited Year End Financials. Within fifty days of the Closing
Date, Seller shall provide Buyer with audited balance sheets and statements of
operations, shareholders' equity and cash flow, including the notes thereto, as
of and for the fiscal year ended September 30, 1998 for SkateNation and its
Subsidiaries.
6.10 Perry Power and Pro Start Trademarks. Buyer agrees that if, in
connection with any litigation or settlement of any litigation with respect to
the Perry/Xxxxxxxx Claim described in Section 4.09 of the Disclosure Schedule
and as to which Seller is indemnifying Buyer pursuant to Article VIII of this
Agreement, Seller determines in its good faith business judgment that it is
necessary or advisable to assign the trademarks Perry Power and Pro Start to
Xx. Xxxxx and Xx. Xxxxxxxx or their designees, Buyer agrees that it will
cooperate with Seller in assigning such trademarks to Seller or directly to Xx.
Xxxxx, Xx. Xxxxxxxx or their designees, as requested by Seller, at Seller's
sole cost and expense.
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ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
---------------------------------
7.01 Conditions to Obligations of the Buyer and Family Golf. The
respective obligations of the Buyer and Family Golf to consummate the
transactions contemplated by this Agreement are subject to satisfaction (or,
where legally permissible, waiver by the Buyer and Family Golf) at or prior to
the Closing Date of the following conditions:
(a) the representations and warranties set forth in Section
3.01 and Article IV above (taken collectively and individually) shall
be true and correct in all material respects at and as of the Closing
Date, as though made again at and as of such date, without giving
effect to any amendment to the Disclosure Schedule delivered to the
Buyer after the date of this Agreement (provided, however, that this
subsection 7.01(a) shall not apply to any representations or
warranties made with respect to any of RMSC, RMC or RMS or their
respective businesses, financial conditions, assets, tax positions or
any other matters affecting any of such corporation(s));
(b) since the date of this Agreement, there shall have been
no Material Adverse Effect;
(c) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(d) the Seller shall have obtained, or shall have caused
SkateNation to obtain, (i) all of the third party consents specified
in Section 5.02 above (subject to the exceptions noted in such
Section) and provided written evidence of receipt of such consents in
form reasonably satisfactory to Buyer and (ii) all datedown
endorsements or title reports or commitments to Title Insurance
Policies specified in Section 5.10 above;
(e) no action, suit, or proceeding shall be pending before
any court or quasi- judicial or administrative agency of any
Governmental Authority or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would, and no statute, ordinance, rule, regulation
or other law shall have been enacted or promulgated by any federal,
state, local or foreign government or Governmental Authority which
would, (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) require any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(iii) affect adversely the right of the Buyer to own, and to exercise
all privileges of ownership of, the Purchased Shares and to control
SkateNation and its Subsidiaries, or (iv) have a material adverse
effect on the right of SkateNation and its Subsidiaries to own their
assets and to operate their businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
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(f) the Seller shall have delivered to the Buyer and Family
Golf a certificate, dated the Closing Date and executed by an officer
of Seller on behalf of the Seller, to the effect that each of the
conditions specified above in Section 7.01(a) through (e) is
satisfied;
(g) all applicable waiting periods (and any extensions
thereof) under the Xxxx- Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated, and the Parties and SkateNation shall have
received all other authorizations, consents, and approvals of, and all
requisite notices shall have been given to, the Governmental
Authorities referred to in Sections 3.01(b), 3.01(c), 3.02(b),
3.02(c), 4.04 and 5.02(b) above;
(h) The Seller's Secretary shall have executed and delivered
to the Buyer a certificate in form and substance as set forth in
Exhibit D attached hereto regarding the charter, and by-laws of the
Seller, authorizing resolutions adopted by the Seller's Board of
Directors, and incumbency of signing officers;
(i) the Seller shall have delivered to the Buyer long form
good standing certificates in respect of Seller and SkateNation issued
by the Secretary of State of Delaware, and a certificate of good
standing issued by the Secretary of State of each state in which
SkateNation is qualified to do business as a foreign corporation;
(j) the Seller shall have delivered to the Buyer a good
standing certificate in respect of each of SkateNation's Subsidiaries
issued by the Secretary of State of their respective jurisdictions of
organization and of each state in which each such Subsidiary is
qualified to do business as a foreign limited liability company or
corporation;
(k) the Buyer shall have received from counsel to the Seller
an opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to the Buyer and Family Golf, and dated as of the
Closing Date;
(l) the Buyer shall have received the resignations, effective
as of the Closing Date, of each director and officer of SkateNation
other than those whom the Buyer shall have specified to the Seller in
writing at least five Business Days prior to the Closing;
(m) the Buyer shall have received from Seller an affidavit in
form and substance as set forth in Exhibit F attached hereto regarding
Seller's status as a non-foreign corporation;
(n) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby shall have been reviewed
by and be reasonably satisfactory in form and substance to Xxxxx &
Xxxxx, LLP, counsel for the Buyer and Family Golf; and
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(o) Seller shall have delivered to Buyer an unaudited
consolidated balance sheet and statements of operations for
SkateNation and its Subsidiaries as of and for the one month period
ending on the Effective Date (the "Effective Date Financial
Statements") together with a certificate containing representations as
to such financial statements that are substantially similar to the
representations with respect to the unaudited financial statements set
forth in Section 4.08 hereof.
The Buyer and Family Golf may waive any condition specified in this Section
7.01 if they execute a writing so stating at or prior to the Closing.
7.02 Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction (or, where legally permissible, waiver
by the Seller) of the following conditions:
(a) the representations and warranties set forth in Section
3.02 above shall be true and correct in all material respects at and
as of the Closing Date, as though made again at and as of such date;
(b) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending before
any court or quasi- judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would (i) prevent consummation of any of the transactions contemplated
by this Agreement or (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(d) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in Section 7.02(a) through (c) is satisfied in all material respects;
(e) all applicable waiting periods (and any extensions
thereof) under the Xxxx- Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated, and the Parties and SkateNation shall have
received all other authorizations, consents, and approvals of
Governmental Authorities referred to in Section 3.01(b), 3.02(b),
3.02(c) and 4.04 above;
(f) the Seller shall have received from counsel to the Buyer
and Family Golf an opinion in form and substance as set forth in
Exhibit G attached hereto, addressed to the Seller, and dated as of
the Closing Date; and
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(g) all actions to be taken by the Buyer and Family Golf in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby shall have
been reviewed by and be reasonably satisfactory in form and substance
to Hill & Xxxxxx, counsel for the Seller.
The Seller may waive any condition specified in this Section 7.02 if Seller
executes a writing so stating at or prior to the Closing.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
---------------------------------------
8.01 Survival of Representations and Warranties. All of the
representations and warranties of the Seller contained in Section 4.01 and
Sections 4.03 through 4.11 and Sections 4.13 through 4.23 of this Agreement,
shall survive the Closing hereunder and continue in full force and effect for a
period of one year thereafter. All of the other representations and warranties
of the Parties and all covenants contained in this Agreement shall survive the
Closing and continue in full force and effect, subject to any applicable
statutes of limitations. The survival of any such representation or warranty is
subject to the limitation set forth in Section 5.07(b) of this Agreement.
Nothing contained in this Article VIII shall limit in any way the rights and
obligations of the parties pursuant to Article IX.
8.02 Indemnification Provisions for Benefit of the Buyer.
(a) In the event that the Seller breaches (or in the event
any third party alleges facts that, if true, would mean the Seller has
breached) any of its representations, warranties, and covenants
contained herein (other than the covenants in Sections 2.01 and 11.11
and Article IX and the representations and warranties set forth in
Sections 3.01, 4.05 and 4.12), provided that the Buyer makes a written
claim for indemnification against the Seller pursuant to Section 8.04
below within the applicable survival period, then the Seller agrees to
protect, defend, hold harmless and indemnify the Buyer from and
against any Adverse Consequences the Buyer shall suffer resulting from
or caused by the breach (or the alleged breach), including all Adverse
Consequences arising out of the enforcement of this Section 8.02;
provided, however, that the Seller shall not have any obligation to
compensate the Buyer in respect of any Adverse Consequences resulting
from any breaches or alleged breaches of the representations and
warranties, until the Buyer has suffered aggregate Adverse
Consequences, by reason of all such breaches under this Agreement, in
excess of $75,000, at which point the Seller will be obligated to
indemnify the Buyer from and against all Adverse Consequences relating
back to the first dollar.
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(b) In the event (x) the Seller breaches any of its covenants
in Sections 2.01, 11.11 and Article IX or any of its representations
and warranties in Sections 3.01, 4.05 and 4.12 above, (y) any claim or
assertion is made by any Person allegedly arising out of such Person's
right as a Shareholder, putative shareholder or former shareholder of
SkateNation or (z) the Buyer or Family Golf suffers any Adverse
Consequences from or by reason of any of the tax audit or withholding
tax matters set forth in items 4.12(b) and (c) of the Disclosure
Schedule, then the Seller agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer shall
suffer through and after the date of the claim for indemnification
caused by the breach by the Seller.
(c) Seller's aggregate liability under this Section 8 (other
than Sections 8.02(b) above and 8.02(d) and (e) below) shall not
exceed (i) Four Million Five Hundred Thousand Dollars ($4,500,000) for
any matters as to which Buyer makes a written claim for
indemnification pursuant to Section 8.04 on ore before the six-month
anniversary of the Closing Date and (ii) Two Million Five Hundred
Thousand Dollars ($2,500,000) (reduced by any indemnification paid
under clause (i) above) for any matter as to which Buyer makes a
written claim for indemnification pursuant to Section 8.04 between the
six-month anniversary of the Closing Date and the one year anniversary
of the Closing Date; provided, however, that (x) in no event shall
Seller's indemnification obligations under this Article VIII by reason
of any representations and warranties with respect to RMSC, RMC and
RMS and their respective businesses, financial conditions, assets, tax
positions or any other matters affecting any such corporation(s)
exceed One Million Dollars ($1,000,000) and (y) any Adverse
Consequences relating to any claim brought under Section 8.02(b) above
shall be counted toward the aggregate liability limits set forth in
clauses (i) and (ii) above to the extent that any such claim under
Section 8.02(b) is brought during the periods covered by clauses (i)
and (ii) above.
(d) In the event the Buyer or Family Golf suffers any Adverse
Consequences from or by reason of any of the Xxxx Xxxxx Lease Claim,
the Perry/Xxxxxxxx Claim or the Employee Claims (each as defined in
the Disclosure Schedule), provided that the Buyer makes a written
claim for indemnification against the Seller pursuant to Section 8.04
below before the one year anniversary of the Closing Date, then the
Seller agrees to protect, defend, hold harmless and indemnify the
Buyer from and against any Adverse Consequences the Buyer shall suffer
resulting from any of such claims, including all Adverse Consequences
arising out of the enforcement of this Section 8.02.
(e) In the event that the Buyer or Family Golf suffers any
Adverse Consequences from or by reason of any claims from Hillgrove
arising out of the RMSC Agreement Amendment (as defined in the
Disclosure Schedule) relating to Seller's obligations to pay Hillgrove
for his 550 shares of SkateNation Class B Common Stock, to repay his
two $150,000 principal amount promissory notes dated July 31, 1998 and
to pay any sums due to him under the working capital adjustment in
Section 2.5 of the Stock Purchase Agreement dated as of July 23, 1998
between SkateNation and Hillgrove, then
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the Seller agrees to protect, defend, hold harmless and indemnify the
Buyer from and against any Adverse Consequences the Buyer shall suffer
resulting from any of such claims, including all Adverse Consequences
arising out of the enforcement of this Section 8.02.
8.03 Indemnification Provisions for Benefit of the Seller. In the
event the Buyer breaches (or in the event any third party alleges facts that,
if true, would mean the Buyer has breached) any of its representations,
warranties, and covenants contained herein, and, if there is an applicable
survival period pursuant to Section 8.01 above, provided that the Seller makes
a written claim for indemnification against the Buyer pursuant to Section 8.04
below within such survival period, then the Buyer agrees to protect, defend,
hold harmless and indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (but excluding any Adverse Consequences the Seller
may suffer after the end of any applicable survival period) resulting from or
caused by the breach (or the alleged breach), including all Adverse
Consequences arising out of the enforcement of this Section 8.03; provided,
however, that the Buyer shall not have any obligations to compensate the Seller
in respect of any Adverse Consequences resulting from any breaches or alleged
breaches of the representations and warranties contained in Section 3.02 of
this Agreement (other than breaches or alleged breaches of the representation
and warranty set forth in Section 3.02(d) hereof) until the Seller have
suffered aggregate Adverse Consequences, by reason of all such breaches under
this Agreement, in excess of $100,000, at which point the Buyer will be
obligated to indemnify the Seller from and against all Adverse Consequences
relating back to the first dollar; provided, however, that this limitation
shall not apply with respect to Buyer's obligations set forth in Section 6.06
hereof.
8.04 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification against any
other Party (the "Indemnifying Party") under this Article VIII, then
the Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of
the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced; it being understood and agreed that the failure of the
Indemnified Party to so notify the Indemnifying Party prior to
settling a Third Party Claim (whether by paying a claim or executing a
binding settlement agreement with respect thereto) or the entry of a
judgment or issuance of an award with respect to a Third Party Claim
shall constitute actual prejudice to the Indemnifying Party's ability
to defend against such Third Party Claim.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to
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the Indemnified Party so long as (i) the Indemnifying Party notifies
the Indemnified Party in writing within 30 calendar days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party or Parties will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim (it being
understood by the Parties that the Indemnified Party may take such
actions as are reasonable in connection with its defense until it
receives such notice from the Indemnifying Party), and (ii) the
Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.04(b)
above, (i) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third
Party Claim (provided that the Indemnified Party will have the right
to employ separate counsel to represent the Indemnified Party (the
fees and expenses of which will be borne by the Indemnifying Party)
if, in the Indemnified Party's reasonable judgment, a conflict of
interest between the Indemnified Party and the Indemnifying Party
exists with respect to such claim), (ii) the Indemnified Party will
not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably),
and (iii) the Indemnifying Party will not, without the prior written
consent of the Indemnified Party, consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim in
which any relief other than the payment of money damages is sought
against any Indemnified Party, unless such settlement, compromise or
consent includes as an unconditional term thereof the giving by the
claimant, petitioner or plaintiff, as applicable, to such Indemnified
Party of a release from all liability with respect to such Third Party
Claim.
(d) In the event any of the conditions in Section 8.04(b)
above is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying
Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (iii) the Indemnifying Parties will
remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim to the fullest extent provided
in this Article VIII.
8.05 Determination of Adverse Consequences. All indemnification
payments under this Article VIII shall be deemed adjustments to the Purchase
Price, and the Parties agree that they will not take any positions or other
actions (including reporting adjustments on their
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applicable Tax Returns) inconsistent with this treatment. No Purchase Price
adjustment pursuant to Section 2.07, however, will be subject to the provisions
of Article VIII to the extent of the amount of such adjustment.
8.06 Exclusive Remedy. Except as set forth in this Section 8.06, in
Section 5.05 and in Article X hereof, the indemnification provided in this
Article VIII shall be the sole and exclusive remedy for any inaccuracy or
breach of any representation, warranty or covenant made by any Party in this
Agreement. Without limiting the generality of the foregoing, the Buyer and the
Seller hereby waive any statutory, equitable, or common law rights or remedies
relating to any environmental matters, including without limitation any such
matters arising under any Environmental, Health and Safety Laws and including
without limitation any arising under the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERLA"). The Seller hereby agrees that it
will not make any claim for indemnification or contribution against SkateNation
or any of it Subsidiaries with respect to or by reason of any Adverse
Consequences or other amounts that the Seller is obligated to indemnify the
Buyer and Family Golf against hereunder.
8.07 Subrogation. If Seller makes any payment under this Article VIII
due to, by reason of, or with respect to any breach of any representation,
warranty or covenant hereunder relating to any of RMSC, RMS or RMC or any other
Subsidiary, the stock or assets of which were acquired by SkateNation from a
third party, Seller shall be subrograted to all of Buyer's rights to
indemnification or other similar rights (x) from Hillgrove pursuant to Section
8 of the Stock Purchase Agreement dated as of July 23, 1998 between SkateNation
and Xxxxxx X. Xxxxxxxxx, with respect to any matters pertaining to RMSC, RMS or
RMC and (y) from such other sellers of the stock or assets of any other
Subsidiary pursuant to indemnification or comparable provisions of the
applicable stock or asset purchase agreement between SkateNation and such
Seller; provided, however, that the Parties agree that Seller shall not be
entitled to, and shall return to SkateNation or its Subsidiaries, any such
amounts received from Hillgrove (or such other seller) that Hillgrove (or such
other seller) has received or subsequently receives from SkateNation or any of
its Subsidiaries pursuant to Hillgrove's (or such other seller's) indemnity or
contribution rights against any of such entities.
ARTICLE IX
TAX MATTERS
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The following provisions shall govern the allocation of responsibility
as between the Buyer and the Seller for certain tax matters following the
Closing Date:
9.01 Section 338(h)(10) Election. The Seller will join with the Buyer
in making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local, or foreign tax law) with respect to
the purchase and sale of the Purchased Shares and the
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shares of capital stock of each of SkateNation's Subsidiaries hereunder. The
Seller will pay any Tax, including any liability of SkateNation and its
Subsidiaries for Tax resulting from the application to it of Treasury
Regulation Section 1.338(h)(10)-1(e)(5), attributable to the making of such
election and will indemnify the Buyer, Family Golf and SkateNation and its
Subsidiaries against any Adverse Consequences arising out of any failure to pay
such Tax. Seller will also pay any state, local, or foreign Tax (and indemnify
the Buyer, Family Golf and SkateNation and its Subsidiaries against any Adverse
Consequences arising out of any failure to pay such Tax) attributable to an
election under state, local or foreign law similar to the election available
under Section 338(g) of the Code (or which results from the making of an
election under Section 338(g) of the Code) with respect to the purchase and
sale of the Purchased Shares and the shares of capital stock of each of
SkateNation's Subsidiaries hereunder.
9.02 Income Tax Periods Ending on or Before the Effective Date. The
Seller shall prepare or cause to be prepared and file all Tax Returns for any
of SkateNation and its Subsidiaries in respect of Taxes based upon income for
all periods ending on or prior to the Effective Date. The Seller shall pay all
Taxes based upon income in respect of the periods covered by such Tax Returns,
whether or not shown as due on such Tax Returns, and SkateNation and its
Subsidiaries shall have no liability in respect of such Taxes.
9.03 Non-Income Tax Periods Ending on or Before the Effective Date.
The Seller shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns (other than returns for Taxes based upon income) for any of
SkateNation and its Subsidiaries for all periods ending on or prior to the
Effective Date. The Seller shall immediately reimburse SkateNation and its
Subsidiaries for any Taxes payable by any of SkateNation and its Subsidiaries
in respect of such periods in excess of any related reserves for Taxes set
forth in the Effective Date Balance Sheet. The Buyer shall immediately
reimburse the Seller for the amount of any Taxes paid by the Seller in respect
of such periods prior to the Effective Date for which the Buyer receives a
corresponding refund or credit for overpayment, to the extent such amount
exceeds any related Tax assets set forth in the Effective Date Balance Sheet.
9.04 Tax Periods Beginning Before and Ending After the Effective Date.
The Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of any of SkateNation and its Subsidiaries for Tax Periods if
such begin before the Effective Date and end after the Effective Date. The
Seller shall pay to the Buyer within twenty (20) days after the date on which
Buyer and Family Golf notify Seller of any Taxes paid (and provide proof of
payment) with respect to such periods an amount equal to the portion of such
Taxes which relates to the portion of such Taxable period ending on the
Effective Date to the extent such Taxes were not paid previously by Seller. For
purposes of this Section, in the case of any Taxes that are imposed on a
periodic basis and are payable for a Taxable period that includes (but does not
end on) the Effective Date, the portion of such Taxes which relates to the
portion of such Taxable period ending on the Effective Date shall (x) in the
case of any Taxes other than Taxes based upon or related to income or receipts,
be deemed to be the amount of such Tax for the entire Taxable period multiplied
by a fraction the numerator of which is the number of days in the Taxable
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period ending on the Effective Date and the denominator of which is the number
of days in the entire Taxable period and (y) in the case of any Tax based upon
or related to income or receipts be deemed equal to the amount which would be
payable if the relevant Taxable period ended on the Effective Date (in such
latter case, any net operating loss carryovers, tax credit carryovers, and
similar tax attribute carryovers from a Tax period ending before the Effective
Date to a Tax period which begins before the Effective Date and ends after the
Effective Date shall be applied first to the period through the Effective
Date).
9.05 Cooperation on Tax Matters.
(a) The Buyer and the Seller shall, and the Buyer shall cause
SkateNation to, cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party's request) the provision of
records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Seller agrees, and
the Buyer agrees to cause SkateNation (i) to retain all books and
records with respect to Tax matters pertinent to SkateNation and its
Subsidiaries relating to any taxable period beginning before the
Effective Date until the expiration of the statute of limitations
(and, to the extent notified by the Buyer or the Seller, any
extensions thereof) of the respective taxable periods, and to abide by
all record retention agreements entered into with any taxing
authority, and (ii) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Buyer or the Seller,
as the case may be, shall allow the other party to take possession of
such books and records.
(b) The Buyer and the Seller further agree, upon request, to
use commercially reasonable efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(c) The Buyer and the Seller further agree, upon request, to
provide the other party with all information that either party may be
required to report pursuant to Section 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.
9.06 Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving SkateNation or any of its Subsidiaries
shall be terminated with respect to SkateNation and its Subsidiaries as of the
Effective Date and, after the Effective Date, SkateNation and its Subsidiaries
shall not be bound thereby or have any liability or obtain any benefit
thereunder.
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9.07 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Seller when due, and the Seller will, at its own expense, file all necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Buyer will, and will cause its Affiliates to,
join in the execution of any such Tax Returns and other documentation.
ARTICLE X
TERMINATION
-----------
10.01 Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer and Family Golf may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing
(i) in the event the Seller is in breach of any representation,
warranty, or covenant contained in this Agreement in any material
respect, if the Buyer has notified the Seller in writing of the
breach, and the breach has continued without cure until the earlier of
the Closing or 20 days after the notice of such breach is delivered to
the Seller, or (ii) if the Closing shall not have occurred on or
before the later of (x) [10?] days after the date of this Agreement or
(y) such other date as the Parties shall have mutually determined in
writing (the "Termination Date"), by reason of any condition precedent
under Section 7.01 not being satisfied through no fault of the Buyer
or Family Golf; and
(c) the Seller may terminate this Agreement by giving written
notice to the Buyer and Family Golf at any time prior to the Closing
(i) in the event the Buyer or Family Golf is in breach of any
representation, warranty, or covenant contained in this Agreement in
any material respect, if the Seller has notified the Buyer and Family
Golf in writing of the breach, and the breach has continued without
cure until the earlier of the Closing or 20 days after the notice of
such breach is delivered to the Buyer and Family Golf, or (ii) if the
Closing shall not have occurred on or before the Termination Date, by
reason of any condition precedent under Section 7.02 not being
satisfied through no fault of the Seller.
10.02 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10.01 above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other
Party; provided, however, that:
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(a) if Buyer or Family Golf shall default in their obligation
to close the transactions contemplated hereby upon satisfaction by
Seller of the conditions set forth in Section 7.01 hereof on or before
the Termination Date, Seller shall be entitled to an amount equal to
Two Million Nine Hundred Thousand Dollars ($2,900,000) as liquidated
damages in lieu of all claims, actions or remedies, at law or in
equity, which Seller may have against Buyer and Family Golf arising
out of such breach. Buyer and Family Golf shall be jointly and
severally liable for any such amount. The Parties acknowledge that the
damages to Seller in the event of a breach of this Agreement by Buyer
would be difficult or impossible to determine, that the amount
specified in this subsection 10.02(a) represents the Parties' best and
most accurate estimate of the damages that would be suffered by Seller
if the transaction should fail to close and that such estimate is
reasonable under the circumstances existing as of the date of this
Agreement and under the circumstances that the Parties reasonably
anticipate would exist at the time of such breach. If Buyer and Family
Golf fail promptly to pay to Seller any amounts due under this
subsection 10.02(a), Buyer and Family Golf shall be obligated to pay
the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest
on the amount of any unpaid fee from the date such amount was required
to be paid at an interest rate equal to the prime rate published by
The Wall Street Journal from time to time. Seller's rights pursuant to
this subsection 10.02(a) are in addition to, and may be pursued
concurrently with, Seller's rights pursuant to Section 11.13.
(b) if Seller shall default in its obligation to close the
transactions contemplated hereby upon satisfaction by Buyer of the
conditions set forth in Section 7.02 hereof on or before the
Termination Date, Buyer shall be entitled to an amount equal to Two
Million Nine Hundred Thousand Dollars ($2,900,000) as liquidated
damages in lieu of all claims, actions or remedies, at law or in
equity, which Buyer or Family Golf may have against Seller arising out
of such breach. The Parties acknowledge that the damages to Buyer and
Family Golf in the event of a breach of this Agreement by Seller would
be difficult or impossible to determine, that the amount specified in
this subsection 10.02(b) represents the Parties' best and most
accurate estimate of the damages that would be suffered by Buyer and
Family Golf if the transaction should fail to close and that such
estimate is reasonable under the circumstances existing as of the date
of this Agreement and under the circumstances that the Parties
reasonably anticipate would exist at the time of such breach. If
Seller fails promptly to pay to Buyer and Family Golf any amounts due
under this subsection 10.02(b), Seller shall be obligated to pay the
costs and expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount
of any unpaid fee from the date such amount was required to be paid at
an interest rate equal to the prime rate published by The Wall Street
Journal from time to time. Buyer's and Family Golf's rights pursuant
to this subsection 10.02(b) are in addition to, and may be pursued
concurrently with Buyer's and Family Golf's rights pursuant to Section
11.13.
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(c) notwithstanding termination of this Agreement for any
reasons, the obligations of the parties set forth in Sections 5.05,
5.11 ,11.11, 11.12 and 11.13 of this Agreement shall survive
termination.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Press Releases and Public Announcements. No Party shall or shall
permit any of its Subsidiaries to (and each Party shall use its reasonable best
efforts to cause its Affiliates, directors, officers, employees, agents and
representatives not to) issue any press release, make any public announcement
or furnish any written statement to its employees relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the Buyer and the Seller (which approval shall not be unreasonably
withheld); provided, however, that a Party may issue a press release or make a
public announcement to the extent required by applicable law or any listing
agreement concerning such Party's or any of its Affiliate's publicly-traded
securities (and in each case the disclosing Party shall, to the extent
consistent with timely compliance with such requirement, consult with the other
Parties prior to making the required release or announcement).
11.02 No Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer upon any Person other than the
Parties or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
11.03 Entire Agreement. This Agreement constitutes the entire
agreement among the Parties with reference to the matters set forth herein and
supersedes any prior understandings, negotiations, agreements, or
representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
11.04 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties hereto.
11.05 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.06 Headings. The table of contents and section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
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11.07 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two Business Days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller: Trizec (USA) Holdings, Inc.
c/o TrizecHahn Corporation
BCE Place
000 Xxx Xxxxxx, Xxxxx 0000
X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 000
XXXXXX
Attn: Xx. Xxxxxxx Xxxxxx,
Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Buyer: Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxxx Xx., Esq.
Xxxxx & Xxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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If to the Process
Agent: TrizecHahn Office Properties Inc.
0000 Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx,
Regional Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, facsimile transmission, ordinary mail, or electronic mail),
but no such notice, request, demand, claim, or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
11.08 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of New York without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.
11.09 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence. No waiver shall be effective
hereunder unless contained in a writing signed by the Party sought to be
charged with such waiver.
11.10 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the greatest extent possible.
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11.11 Expenses. Unless otherwise provided herein, each of the Parties,
SkateNation and its Subsidiaries will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. The Buyer and the Seller agree that
they shall split equally the costs of the datedown endorsements or title
reports or commitments, survey updates and title reports contemplated hereby
and any Xxxx-Xxxxx-Xxxxxx Act filing fees. The Seller shall be solely
responsible for the fees, expenses and other charges of Everen Securities, Inc.
based on Everen's services performed for Seller pursuant to an engagement
letter between TrizecHahn Corporation and Everen dated March 20, 1998 and shall
indemnify, and hold harmless, the Buyer, Family Golf and SkateNation and its
Subsidiaries with respect to any claim for such fees, expenses and other
charges. The Seller shall be solely responsible for the fees and expenses of
Hill & Xxxxxx in connection with the transactions that are the subject to this
Agreement.
11.12 Submission to Jurisdiction. Each of the Parties irrevocably
submits to the jurisdiction of any state or federal court sitting in the City
of New York, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each of the Parties irrevocably
waives, to the fullest extent it may effectively do so, any defense of
inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety, or other security that might be required of any
other Party with respect thereto. Each Party appoints TrizecHahn Office
Properties, Inc. (the "Process Agent") as its agent to receive on its behalf
service of copies of the summons and complaint and any other process that might
be served in the action or proceeding. Any Party may make service on any other
Party by sending or delivering a copy of the process (i) to the Party to be
served at the address and in the manner provided for the giving of notices in
Section 11.07 above or (ii) to the Party to be served in care of the Process
Agent at the address and in the manner provided for the giving of notices in
Section 11.07 above. Nothing in this Section 11.12, however, shall affect the
right of any Party to bring any action or proceeding arising out of or relating
to this Agreement in any other court or to serve legal process in any other
manner permitted by law or at equity. Each Party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law or at equity.
11.13 Specific Performance. Without intending to limit the remedies
available to any of the Parties, each of the Buyer and Family Golf, on the one
hand, and the Seller, on the other hand, acknowledges and agrees that a
violation, breach or threatened breach by the other of any term of this
Agreement will cause such Parties or Party, as the case may be, irreparable
injury for which an adequate remedy at law is not available. Therefore, the
Parties agree that each Party shall have the right of specific performance and,
accordingly, shall be entitled to an injunction, restraining order or other
form of equitable relief, in addition to any and all other rights and remedies
at law, from any court of competent jurisdiction restraining any other Party
from committing any breach or threatened breach of, or otherwise specifically
to enforce, any provision of this Agreement and all such rights will be
cumulative. The parties further agree that
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any defense in any action for specific performance that a remedy at law would
be adequate is waived..
11.14 Joint and Several Obligations. All obligations of the Buyer
hereunder shall be joint and several obligations of the Buyer and Family Golf.
11.15 Construction. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
11.16 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
* * * * *
[END OF PAGE - SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Stock
Purchase Agreement as an instrument under seal on the date first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------
Title: Xxxxxx X. Xxxxxx, Senior Vice President
EAGLE QUEST GOLF CENTERS (U.S.), INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Title: Xxxxxx X. Xxxxxx, Senior Vice President
TRIZECHAHN (USA) CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------
Xxxxx X. Xxxxxx, Vice President
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