AGREEMENT AND PLAN OF MERGER
AMONG
FAMILY GOLF CENTERS, INC.,
PHILADELPHIA FAMILY GOLF CENTERS, INC.
PINLEY ENTERPRISES, LTD.
AND
EACH OF THE STOCKHOLDERS
OF
PINLEY ENTERPRISES, LTD.
DATED AS OF JUNE 5, 1997
TABLE OF CONTENTS
ARTICLE I THE MERGER
Section 1.1 The Merger
Section 1.2 Closing
Section 1.3 Effective Time
Section 1.4 Conversion of Shares
Section 1.5 Adjustment to Exchange Ratio
Section 1.6 Exchange of Securities
Section 1.7 Definition of Subsidiary and Affiliate
ARTICLE II CERTAIN MATTERS RELATING TO THE SURVIVING
CORPORATION
Section 2.1 Certificate of Incorporation of the
Surviving Corporation
Section 2.2 By-Laws of the Surviving Corporation
Section 2.3 Directors and Officers of the Surviving Corporation
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Section 3.1 Existence, Good Standing, Corporate
Authority
Section 3.2 Authorization, Validity and Effect of
Agreements
Section 3.3 Capitalization
Section 3.4 Parent Reports and Financial Statements
Section 3.5 No Violation
Section 3.6 No Brokers
Section 3.7 Parent Common Stock
Section 3.8 Interim Operations of Merger Sub
Section 3.9 Absence of Certain Changes
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS
Section 4.1 Existence, Good Standing, Corporate
Authority
Section 4.2 Authorization, Validity and Effect of
Agreements
Section 4.3 Compliance with Laws
Section 4.4 Capitalization
Section 4.5 Subsidiaries
Section 4.6 Other Interests
Section 4.7 No Violation
Section 4.8 Conduct of Business
Section 4.9 Litigation
Section 4.10 Absence of Certain Changes
Section 4.11 Trademarks and Patents
Section 4.12 Properties
Section 4.13 Material Contracts
Section 4.14 Taxes
Section 4.15 Employee Benefit Plans
Section 4.16 Labor Matters
Section 4.17 Absence of Indemnifiable Claims, etc.
Section 4.18 No Brokers
Section 4.19 Financial Condition
Section 4.20 Questionable Payments
Section 4.21 Liabilities
Section 4.22 Environmental Matters
Section 4.23 Insurance
Section 4.24 Full Disclosure
ARTICLE V COVENANTS
Section 5.1 Alternative Proposals
Section 5.2 Interim Operations of PEL
Section 5.3 Filings; Other Action
Section 5.4 Inspection of Records
Section 5.5 Further Action
Section 5.6 Stock Price Guarantee
Section 5.7 Expenses
Section 5.8 Survival of Representations and Warranties
of The Selling Stockholders
Section 5.9 Adjustments
ARTICLE VI CONDITIONS
Section 6.1 Conditions to Obligation of PEL to
Effect the Merger
Section 6.2 Conditions to Obligation of Parent and
Merger Sub to Effect the Merger
ARTICLE VII TERMINATION
Section 7.1 Termination
Section 7.2 Effect of Termination
ARTICLE VIII INDEMNIFICATION
Section 8.1 Obligation of PEL and the Selling Stockholders to Indemnify
Section 8.2 Obligation of Parent to Indemnify
Section 8.3 Notice and Opportunity to Defend
Section 8.4 Escrow Fund
Section 8.5 Limitation on Indemnification
ARTICLE IX GENERAL PROVISIONS
Section 9.1 Notices
Section 9.2 Assignment, Binding Effect
Section 9.3 Entire Agreement
Section 9.4 Amendment
Section 9.5 Governing Law
Section 9.6 Counterparts
Section 9.7 Headings
Section 9.8 Interpretation
Section 9.9 Waivers
Section 9.10 Incorporation of Schedules and Exhibits
Section 9.11 Severability
Section 9.12 Enforcement of Agreement
SCHEDULES
Schedule 4.12(a) Assets and Property Owned by PEL
Schedule 4.12(b) Liens
Schedule 4.12(c) Assets and Property Leased by PEL
Schedule 4.13 Material Contracts of PEL
Schedule 4.15 Employee Benefit Plans
Schedule 4.16 Name, Title and Salary of Employees
Schedule 4.20 Assumed Liabilities
Schedule 4.23 Insurance
EXHIBITS
Exhibit A Restricted Securities Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of June 5, 1997 (the
"Agreement") among Family Golf Centers, Inc., a Delaware corporation
("Parent"), Philadelphia Family Golf Centers, Inc., a Delaware corporation and
the wholly-owned subsidiary of Parent ("Merger Sub"), Pinley Enterprises,
Ltd., a Pennsylvania corporation ("PEL"), Xxxxxx Xxxxxx ("Xxxxxx") and Xxxxxx
X. Xxxxxxxxx ("Xxxxxxxxx"), (Xxxxxx and Xxxxxxxxx shall collectively be
referred to herein as the "Selling Stockholders").
WHEREAS, the parties wish to provide for the terms and conditions
upon which PEL will be acquired by Parent by means of a merger of PEL with and
into Merger Sub;
WHEREAS, it is the intention of the parties to this Agreement that
for federal income tax purposes, the merger provided for herein shall qualify
as a "reorganization" within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code");
and
NOW THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.3 of this
Agreement), PEL shall be merged with and into Merger Sub in accordance with
the laws of the States of Pennsylvania and Delaware and the terms of this
Agreement (the "Merger"), whereupon the separate corporate existence of PEL
shall cease, and Merger Sub shall continue as the surviving corporation of the
Merger (Merger Sub, in such capacity hereinafter sometimes referred to as the
"Surviving Corporation"). The name of Merger Sub as the Surviving Corporation,
shall be changed, by virtue of the Merger, to " Philadelphia Family Golf
Centers, Inc."
Section 1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at
the offices of Parent, 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 at 10:00
a.m. on the first business day after all the conditions set forth in Article
VI of this Agreement (other than those that are waived by the party or parties
for whose benefit such conditions exist) are satisfied; or (b) at such other
place, time, and/or date upon which the parties hereto may otherwise agree.
The date upon which the Closing shall occur is referred to herein as the
"Closing Date."
Section 1.3 Effective Time. As soon as practical after all the
conditions to the Merger set forth in Article VI of this Agreement have been
fulfilled or waived and this Agreement shall not have been terminated as
provided in Article VII hereof, the parties hereto shall cause certificates of
merger to be properly executed and filed in accordance with the laws of the
States of Pennsylvania and Delaware and the terms of this Agreement. The
parties hereto shall also take such further actions as may be required under
the laws of the States of Pennsylvania and Delaware in connection with the
consummation of the Merger. The Merger shall become effective at such time as
the certificates of merger are duly filed with the Secretary of State of the
States of Pennsylvania and Delaware or at such later time as is specified in
the certificates of merger (the "Effective Time"). From and after the
Effective Time, the Surviving
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Corporation shall possess all the rights, privileges, powers and franchises
and be subject to all of the restrictions, disabilities, liabilities and
duties of PEL and Merger Sub, all as provided under applicable law.
Section 1.4 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
PEL or the holder of any of the following securities:
(a) PEL Common Stock. Subject to Section 1.6, each share of
Common Stock, par value $1.00 per share, of PEL (the "PEL Common
Stock") issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive 20 validly issued,
fully paid and non-assessable shares of Common Stock, par value $.01
per share, of Parent which is listed on the Nasdaq National Market
under the symbol "FGCI" (the "Parent Common Stock") and $150.00 in
cash (such ratio, as adjusted as contemplated pursuant to Section 1.5
being referred to herein as the "Exchange Ratio"). All such shares of
PEL Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive
the shares of Parent Common Stock to be issued pursuant to this
Section 1.4 with respect thereto upon the surrender of such
certificate in accordance with Section 1.6.
(b) PEL Stock Owned by PEL. All shares of PEL Common Stock
which immediately prior to the Effective Time are held directly by
PEL in its treasury, if any, shall be cancelled and retired and shall
cease to exist, and no capital stock of Parent or other consideration
shall be delivered with respect thereto.
(c) Merger Sub Common Stock. Each share of capital stock of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall remain outstanding and shall continue as one share of
capital stock of the Surviving Corporation and each certificate
evidencing ownership of any such shares shall continue to evidence
ownership of the same number and kind of shares of the Surviving
Corporation.
Section 1.5 Adjustment of Exchange Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of Parent Common Stock or PEL Common Stock, respectively,
shall have been changed into a different number of shares or a different class
as a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange, recapitalization
or other similar transaction, the Exchange Ratio shall be appropriately
adjusted.
Section 1.6 Exchange of Securities.
(a) Promptly after the Effective Time, Parent shall upon
surrender of the stock certificates representing all of the issued
and outstanding shares of PEL Common Stock: (i) deliver to Xxxxxx a
certificate representing 7,500 shares of Parent Common Stock plus
$75,000.00 by bank check or the wire transfer of funds, (ii) deliver
to Pinciotti a certificate representing 7,500 shares of Parent Common
Stock plus $75,000.00 by bank check or the wire transfer of funds,
and (iii) deliver to the Escrow Agent (the "Escrow Agent"), under the
Escrow Agreement referred to in Section 6.2(d) and 6.2(g) (the
"Escrow Agreement") a certificate representing 5,000 shares of Parent
Common Stock, such certificate to be held and dealt with as provided
in the Escrow Agreement. The shares of PEL Common Stock so
surrendered shall forthwith be cancelled. No interest will be paid or
accrued on the unpaid dividends and distributions, if any, payable to
the holder of shares of PEL Common Stock.
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(b) All shares of Parent Common Stock issued upon conversion
of the shares of PEL Common Stock in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of PEL Common Stock.
Section 1.8 Definition of Subsidiary and Affiliate. As used in this
Agreement, (i) a "Subsidiary" of any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party or
any other Subsidiary of such party is a general partner or at least a majority
of the securities or other interests having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party, by any one or more
of its Subsidiaries, or by such party and one or more of its Subsidiaries (ii)
an "Affiliate" of any party means any individual, corporation or other
organization, whether incorporated or unincorporated, which directly or
indirectly controls, or is controlled by, or is under common control with,
such party. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
any corporation or other organization, whether incorporated or unincorporated,
whether through the ownership of voting securities, by contract or otherwise.
ARTICLE II
CERTAIN MATTERS RELATING TO
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of Merger Sub, as in effect at
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law.
Section 2.2 By-laws of the Surviving Corporation. The By-laws of
Merger Sub, as in effect at the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law.
Section 2.3 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation and all such directors will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualify in the manner provided in the Certificate of
Incorporation and By-laws of the Surviving Corporation, or as otherwise
provided by applicable law. The officers of Merger Sub immediately prior to
the Effective Time shall be the officers of the Surviving Corporation and all
such officers will hold office until their respective successors are duly
appointed and qualify in the manner provided in the By-laws of the Surviving
Corporation, or as otherwise provided by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to PEL as of the date
hereof and at the Effective Time as follows:
Section 3.1 Existence, Good Standing, Corporate Authority. Parent and
each of its Subsidiaries are corporations or partnerships duly organized,
validly existing and in good standing under the laws of their respective
jurisdiction of incorporation. Each of Parent and each of its Subsidiaries is
duly licensed or qualified to do business as a foreign corporation or
partnership and is in good standing under the laws of any other state of the
United States in which the character of the properties owned or leased by it
or in
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which the transaction of its respective business makes such qualification
necessary, except where the failure to be so qualified or to be in good
standing would not have a material adverse effect on the business, results of
operations or financial condition of Parent and its Subsidiaries taken as a
whole (a "Parent Material Adverse Effect"). Parent and each of its
Subsidiaries have all requisite corporate power and authority to own, operate
and lease their respective properties.
Section 3.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and all agreements and documents to be
executed and delivered in connection herewith (the "Ancillary Agreements").
The execution and delivery of this Agreement (and the agreements contemplated
hereby) and the consummation by Parent and Merger Sub of the transactions
contemplated hereby has been duly authorized by all requisite corporate
action. This Agreement constitutes, and all Ancillary Agreements to be
executed and delivered in connection herewith (when executed and delivered
pursuant hereto for value received) will constitute, the valid and legally
binding obligations of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
Section 3.3 Capitalization. The authorized capital stock of Parent
consists of 50,000,000 shares of Parent Common Stock and 2,000,000 shares of
preferred stock, par value $.10 per share (the "Parent Preferred Stock"). As
of April 30, 1997, there were 11,878,617 shares of Parent Common Stock and no
shares of Parent Preferred Stock, issued and outstanding. Since such date, no
additional shares of capital stock of Parent have been issued, except (i)
pursuant to the exercise of options outstanding under Parent's 1994 Stock
Option Plan 1996 Stock Incentive Plan and 1997 Stock Incentive Plan (the
"Parent Stock Option Plans") and (ii) in connection with other acquisitions of
golf recreational facilities. Parent has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the stockholders of Parent on any matter. All issued and
outstanding shares of Parent Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate Parent or any of its Subsidiaries to issue, transfer, redeem or sell
any shares of capital stock of Parent or any of its Subsidiaries except (i) as
contemplated by this Agreement, (ii) pursuant to the Parent Stock Option Plans,
(iii) pursuant to other acquisitions of golf recreational facilities, and
(iv) as described in the Parent Commission Filings (as hereinafter defined).
Section 3.4 Parent Reports and Financial Statements. Parent has
heretofore made available to PEL true and complete copies of all reports,
registration statements, and other documents (in each case together with all
amendments thereto) filed by Parent with the Commission since January 1, 1997
(such reports, registration statements, definitive proxy statements and other
documents, filed with the Commission prior to January 1, 1997 together with
any amendments thereto, are sometimes collectively referred to as the "Parent
Commission Filings"). As of their respective dates, each of the Parent
Commission Filings complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations under each such Act, and none of the Parent Commission Filings and
no representation or warranty by Parent or Merger Sub in this Agreement and
the Ancillary Agreements contained as of such date any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 3.5 No Violation. Neither the execution and delivery by
Parent and Merger Sub of this Agreement, nor the consummation by Parent and
Merger Sub of the transactions contemplated hereby in accordance with the
terms hereof, will (a) conflict with or result in a breach of any provisions
of the Certificate of Incorporation or Bylaws of Parent or any of its
Subsidiaries; (b) result in a breach or
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violation of, a default under, or the triggering of any payment or other
material obligations pursuant to, or accelerate vesting under, the Parent
Stock Option Plans, or any grant or award made under the foregoing; (c)
violate, conflict with, result in a breach of any provision of, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination, or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other material obligations pursuant to,
result in the creation of any lien, security interest, charge or encumbrance
upon any of the material properties of Parent or its Subsidiaries under, or
result in being declared void, voidable, or without further binding effect,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any material license, franchise, permit, lease,
contract, agreement or other instrument, commitment or obligation to which
Parent or any of its Subsidiaries is a party, or by which Parent or any of its
Subsidiaries or any of their respective properties is bound or affected,
except for any of the foregoing matters which would not have a Parent Material
Adverse Effect; (d) contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent or any of its Subsidiaries which would
have a Parent Material Adverse Effect; or (e) other than the filings provided
for in Section 1.3, filings under applicable federal, state and local
regulatory laws, filings required under the Exchange Act, the Securities Act,
the NASD, or applicable state securities and "Blue Sky" laws or filings in
connection with the maintenance of qualification to do business in other
jurisdictions (collectively, the "Regulatory Filings"), require any material
consent, approval or authorization of, or declaration, of or registration
with, any domestic governmental or regulatory authority, the failure to obtain
or make would have a Parent Material Adverse Effect.
Section 3.6 No Brokers. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of PEL or Parent to pay any finder's fee, brokerage or agent's
commissions or other like payment in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
Parent and Merger Sub are aware that Southampton Golf Center, Inc., an
affiliate of PEL, is to pay a commission to Blue Sky Commercial and Xxxxxx
Xxxxxx & Associates (the "Brokers") on the Closing Date.
Section 3.7 Parent Common Stock. The issuance and delivery by Parent
of shares of Parent Common Stock in connection with the Merger and this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of Parent. The shares of Parent Common Stock to be issued
in connection with the Merger and this Agreement, when issued in accordance
with the terms of this Agreement, will be validly issued, fully paid and
nonassessable and not subject to preemptive rights of any sort.
Section 3.8 Interim Operations of Merger Sub. Merger Sub will be
formed solely for the purpose of engaging in the transactions contemplated
hereby, and immediately prior to the Effective Time will have engaged in no
other business activities, will have no Subsidiaries, and will have conducted
its operations only as contemplated hereby.
Section 3.9 Absence of Certain Changes. Except as otherwise disclosed
in the Parent Commission Filings, since December 31, 1996 there has not been
any Parent Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS
Each of the Selling Stockholders jointly and severally hereby
represents and warrants to Parent as of the date hereof and at the Effective
Time as follows:
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Section 4.1 Existence, Good Standing, Corporate Authority. PEL is a
corporation duly organized, validly existing and in good standing under the
laws of Pennsylvania. PEL is duly licensed or qualified to do business as a
foreign corporation or partnership and is in good standing under the laws of
any other state of the United States in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualifications necessary, except where the failure to be so qualified or to be
in good standing would not have a material adverse effect on the business,
results of operations or financial condition of PEL taken as a whole (a "PEL
Material Adverse Effect"). PEL has all requisite corporate power and authority
to own, operate and lease its properties. The copies of PEL's Certificates of
Incorporation and Bylaws previously delivered or made available to Parent are
true and correct.
Section 4.2 Authorization, Validity and Effect of Agreements. PEL has
the requisite corporate power and authority to execute and deliver this
agreement and all agreements and documents to be executed and delivered in
connection herewith. The execution and delivery of this Agreement (and the
agreements contemplated hereby) and the consummation by PEL of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
to be executed and delivered in connection herewith (when executed and
delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of PEL, enforceable against PEL in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
Section 4.3 Compliance with Laws.
(a) PEL hold all permits, licenses, variances, exemptions,
orders and approvals of any court, arbitral, tribunal, administrative
agency or commission and other governmental or other regulatory
authority or agency ("Governmental Entities") necessary for the
lawful conduct of its business (the "Permits").
(b) PEL is in substantial compliance with the terms of the
Permits.
(c) PEL is in substantial compliance with all laws,
ordinances or regulations of all Governmental Entities, including,
but not limited to, those related to zoning, occupational health and
safety, controlled substances or employment and employment practices.
(d) As of the date of this Agreement, no investigation,
review, inquiry or proceeding by any Governmental Entity with respect
to PEL is pending or threatened.
(e) PEL is not subject to any agreement, contract or decree
with any Governmental Entities arising out of any current or
previously existing violations, however, PEL has received a letter
from Upper Southampton Township dated May 21, 1997 directing
compliance with a violation alleged therein, which violation has been
cured.
Section 4.4 Capitalization. The authorized capital stock of PEL
consists of 1,000 shares of PEL Common Stock. As of April 30, 1997, there were
1,000 shares of PEL Common Stock issued and outstanding, 500 of which are
owned of record and beneficially by Xxxxxx and 500 of which are owned of
record and beneficially by Pinciotti. Since April 30, 1997, no additional
shares of capital stock of PEL have been issued. PEL has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of PEL on any matter. All issued and
outstanding shares of PEL Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. There are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible
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securities, or other rights, agreements or commitments which obligate PEL to
issue, transfer, redeem or sell any shares of capital stock of PEL.
Section 4.5 Subsidiaries. PEL does not have any Subsidiaries.
Section 4.6 Other Interests. PEL does not own, directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership joint venture, business, trust or entity.
Section 4.7 No Violation. Neither the execution and delivery by PEL
of this Agreement, nor the consummation by PEL of the transactions
contemplated hereby in accordance with the terms hereof, will (a) conflict
with or result in a breach of any provisions of the Certificate of
Incorporation or Bylaws of PEL; (b) violate, conflict with, result in a breach
of any provision of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination, or in a right of termination or cancellation of, accelerate the
performance required by, result in the triggering of any payment or other
material obligations pursuant to, result in the creation of any lien, security
interest, charge or encumbrance upon any of the material properties of PEL
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust or any material license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which PEL is a party, or by which PEL or its properties is bound or affected;
(c) contravene or conflict with or constitute a violation of any provisions of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to PEL; or (e) other than the Regulatory Filings, required any
consent, approval or authorization of, or declaration, of or registration
with, any domestic governmental or regulatory authority.
Section 4.8 Conduct of Business. The business of PEL is not being
conducted in default or violation of any term, condition or provisions of (a)
its respective Certificate of Incorporation or By-Laws or similar
organizational documents; (b) any note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or agreement of any kind to which PEL is
now a party or by which PEL or its properties or assets may be bound; or (c)
any federal, state, local or foreign statute, law, ordinance, rule, regulation
or approval applicable to PEL.
Section 4.9 Litigation. There are no actions, suits or proceedings
pending against PEL or threatened against PEL at law or in equity, or before
or by any federal or state commission, board, bureau, agency or
instrumentality.
Section 4.10 Absence of Certain Changes. Since December 31, 1996, PEL
has conducted its business only in the ordinary course of such business, and
there has not been (a) any PEL Material Adverse Effect; (b) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock; or (c) any material change in its accounting principles,
practices or methods, except any such change after the date of this Agreement
required by generally accepted accounting principles.
Section 4.11 Trademarks and Patents.
(a) PEL does not own or have the right to any material
computer software, software programs, patents, patent applications,
trademarks, trademark applications, trade secrets, formulations,
service marks, trade names, copyrights, inventions, drawings,
designs, customer lists, proprietary know-how or information or other
rights with respect thereto (collectively, the "Proprietary Rights")
and there are no Proprietary Rights currently pending.
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(b) PEL has not disclosed any of its material trade secrets
to any Person without obtaining an agreement obligating the recipient
to maintain the confidentiality thereof and PEL has taken reasonable
security measures to protect the confidentiality and value of its
trade secrets.
Section 4.12 Properties. Schedule 4.12(a) hereto sets forth a
complete and accurate description and list of all assets and property owned by
PEL, including real property. PEL has good and valid title (good and
marketable title in the case of owned real property) to all of its assets and
properties, free and clear of any lien, claim or other encumbrance except as
disclosed on Schedule 4.12(b) hereto. PEL has not received notice that any of
its assets or properties is in violation in any material respect of any
existing law or any building, zoning, health, safety or other ordinance, code
or regulation. The plant, facilities and equipment of PEL necessary to the
operation of its business are in operating condition and repair sufficient for
the operation of the business as presently conducted. Schedule 4.12(c) sets
forth a complete list of all leases of real or personal property to which PEL
is a party. Such leases are valid and subsisting leases, upon consummation of
the transaction contemplated hereby, shall continue to entitle the Surviving
Corporation to the use and possession of the real or personal property
purported to be covered thereby for the terms specified in such leases and for
the purposes for which such real or personal property is now used.
Section 4.13 Material Contracts. Except as set forth on Schedule
4.13, neither PEL nor its properties is a party to, bound by, or subject to
(a) any loan agreements, guaranties or other evidence of indebtedness; (b) any
agreement relating to the ownership or control of any interest in a
partnership, corporation, limited liability company, joint venture or other
entity or similar arrangement; (c) any employment contracts or consulting
arrangements entered into by PEL or agreements or arrangements with respect to
severance or similar matters; (d) any agreement or arrangement restricting in
any manner (i) PEL's right to compete with any other person or entity; (ii)
the right of any other party to compete with PEL; or (iii) the ability of such
person or entity to employ any of PEL's employees; (e) any secrecy or
confidentiality agreement; (f) any contract, agreement or arrangement
containing change of control provisions; (g) any agreement or arrangement
between PEL and any of its officers, directors or other Affiliates; or (i) any
contract, agreement or arrangement requiring a payment in excess of $25,000 in
any twelve month period; or (j) any other material contract, agreement or
arrangement, including equipment leases (collectively, the "PEL Contracts").
Schedule 4.13 sets forth a description of each of the PEL Contracts. All the
PEL Contracts are valid, subsisting, in full force and effect, and binding
upon PEL in accordance with their terms, and binding upon the other parties
thereto in accordance with their terms. PEL is not (with or without notice or
lapse of time or both) in default under any PEL Contract nor is any other
party to any such contract or other agreement (with or without notice or lapse
of time or both) in default thereunder.
Section 4.14 Taxes. PEL (a) has timely filed all material federal,
state and foreign tax returns required to be filed by it for tax years ended
prior to the date of this Agreement or requests for extensions have been
timely filed and any such request shall have been granted and not expired, and
all such returns are complete and accurate in all material respects; (b) has
paid or accrued all taxes shown to be due and payable on such returns and has
paid or accrued all payroll, sales, and admissions taxes and such other taxes
as have been due and payable; and (c) has properly accrued all such taxes for
such periods subsequent to the periods covered by such returns. [PEL validly
elected and has maintained without revocation subchapter S corporation status
for federal and state tax purposes.]
Section 4.15 Employee Benefit Plans. All employee benefit plans and
other benefit arrangements covering employees of PEL (the "PEL Benefit Plans")
and all employee agreements providing compensation, severance or other
benefits to any employee or former employee of PEL are set forth on Schedule
4.15 hereto. True and complete copies of all PEL Benefit Plans, including any
related trust or
8
funding vehicles, policies or contracts, have been made available to Parent.
None of the PEL Benefit Plans is intended to be qualified under Section 401(a)
of the Code nor does PEL have any "pension plans" as such term is defined in
Section 3(2) of ERISA, with respect to which payments must be made to the
Pension Guaranty Corporation.
Section 4.16 Labor Matters. PEL is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or threatened against PEL relating to its
business. There are no organization efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of PEL. There is no labor strike, dispute, slowdown or work stoppage
pending or threatened against PEL nor has it experienced any of the same
during the last three years. All employees of PEL are employed at will. A list
of PEL's employees, together with such employee's current job title and salary
history during the last three years, is described on Schedule 4.16.
Section 4.17 Absence of Indemnifiable Claims, etc. There are no
losses, claims, damages, costs, expenses, liabilities or judgments which would
entitle any director, officer or employee of PEL to indemnification by PEL
under applicable law, the articles of incorporation or by-laws of PEL or any
insurance policy maintained by PEL.
Section 4.18 No Brokers. PEL has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of PEL or Parent to pay any payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby. PEL is aware that Southampton Golf Center, Inc., an
affiliate of PEL, is to pay a commission to Blue Sky Commercial on the Closing
Date.
Section 4.19 Financial Condition. PEL has delivered to Parent true
and correct copies of the following, initialed by the chief executive officer
of PEL: audited financial statements consisting of balance sheets and income
statements of PEL as of December 31, 1996 and financial statements for the
three months ended March 31, 1997. Each such balance sheet presents fairly the
financial condition, assets, liabilities, and stockholders' equity of PEL as
of its date; each such statement of income presents fairly the results of
operations of PEL for the period indicated. The financial statements referred
to in this Section 4.20 are in accordance with generally accepted accounting
principles. Since December 31, 1996 and since March 31, 1997:
(i) There has at no time been a material adverse
change in the financial condition, results of operations,
businesses, properties, assets, liabilities, or future
prospects of PEL.
(ii) PEL has not authorized, declared, paid, or
effected any dividend or liquidating or other distribution
in respect of its capital stock or any direct or indirect
redemption, purchase, or other acquisition of any stock of
PEL.
(iii) The operations and businesses of PEL have
been conducted in all respects only in the ordinary course.
(iv) PEL has not suffered an extraordinary loss
(whether or not covered by insurance) or waived any right of
substantial value.
9
There is no fact known to PEL which materially adversely affects or in the
future (as far as PEL can foresee) may materially adversely affect the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of PEL or the Surviving Corporation.
Section 4.20 Liabilities. Other than the liabilities and obligations
of PEL listed on Schedule 4.20 hereto which the Surviving Corporation is
assuming and which do not, in the aggregate, exceed $664,000 PEL does not have
and has not incurred any other liabilities or obligations.
Section 4.21 Questionable Payments. Neither PEL, nor any director,
officer, agent, employee, or other person associated with or acting on behalf
of PEL, nor any stockholder of PEL has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback, or other unlawful
payment.
Section 4.22 Environmental Matters.(a) No notice, notification,
demand, request for information, citation, summons or order has been issued,
no complaint has been filed, no penalty has been assessed and no investigation
or review is pending or threatened by any Governmental Entity (a) with respect
to any alleged violation by PEL of any law, ordinance or regulation of any
Governmental Entity, with respect to any generation, treatment, storage,
recycling, transportation or disposal or release, as defined in 42 USMC '
9601(22) ("Release") of any toxic, caustic or otherwise hazardous substance,
including petroleum, its derivatives, by-products and other hydrocarbons,
whether or not regulated under federal, state or local environmental statutes,
ordinances, rules, regulations or orders ("Hazardous Substance") generated by
the Company.
(b) (i) PEL has not handled any Hazardous Substance
on property now or previously owned or leased by PEL; (ii) no polychlorinated
biphenyls or urea formaldehyde is or has been present at any property now or
previously owned or leased by PEL; (iii) no asbestos is or has been present at
any property now or previously owned or leased by PEL; (iv) there are no
underground storage tanks for Hazardous Substances, active or abandoned, at
any property now or previously owned or leased by PEL; (v) no Hazardous
Substance has been Released at, on or under any property now or previously
owned or leased by PEL; and (vi) no Hazardous Substance has been released or
is present, in a reportable or threshold planning quantity, where such a
quantity has been established by statute, ordinance, rule, regulation or
order, at, on or under any property now or previously owned by PEL.
(c) PEL has not transported or arranged for the
transportation, directly or indirectly, of any Hazardous Substance to any
location which is listed or proposed for listing under the Comprehensive
Environmental Responses, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
claims against PEL for cleanup costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to, claims
under CERCLA.
(d) No oral or written notification of a Release of
a Hazardous Substance has been filed by or on behalf of PEL and no property
now or previously owned or leased by PEL is listed or, to the Selling
Stockholders' knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, or any similar state list of sites requiring
investigation or clean-up.
(e) There are no environmental liens on any of the
real property or other properties owned or leased by PEL, and no governmental
actions have been taken or are in process which
10
could subject any of such properties to such liens and PEL would not be
required to place any notice or restriction relating to the presence of
Hazardous Substances at any property owned by any of them in any deed to such
property.
(f) There have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by
or which are in the possession of PEL in relation to any property or facility
now or previously owned or leased by PEL which have not been delivered to
Parent prior to the date hereof.
4.23 Insurance. Schedule 4.23 sets forth all policies or
binders of fire, liability, workmen's compensation, vehicular or other
insurance held by or on behalf of PEL (specifying the insurer, the policy
number or covering note number with respect to binders, and describing each
pending claim thereunder of more than $10,000, setting forth the aggregate
amounts paid out under each such policy through the date of this Agreement and
the aggregate limit of any of the insurer's liability thereunder). Such
policies and binders are in full force and effect and insure against risks and
liabilities customary for the business in which PEL is engaged. PEL is not in
default with respect to any provision contained in any such policy or binder
and has not failed to give any notice or present any claim under any such
policy or binder in due and timely fashion. Except for claims set forth on
Schedule 4.23 there are no outstanding unpaid claims under any such policy or
binder. PEL has not received a notice of cancellation or non-renewal of any
such policy or binder. PEL has no knowledge of any inaccuracy in any
application for such policies or binders, any failure to pay premiums when due
or any similar state of facts which might form the basis for termination of
any such insurance.
4.24 Full Disclosure. All documents and other papers
delivered by or on behalf of PEL in connection with this Agreement and the
transactions contemplated hereby are true, complete and authentic. The
information furnished by or on behalf of PEL to Parent and its representatives
in connection with this Agreement and the transactions contemplated hereby
does not contain any untrue statement of a material fact and does not omit to
state a material fact required to be stated therein or necessary to make the
statements made, in the context in which made, not false or misleading. There
is no fact which PEL has not disclosed to Parent in writing which materially
adversely affects, or so far as PEL can now foresee will materially adversely
affect, the assets, properties, business or condition (financial or otherwise)
or prospects of PEL or the ability of PEL to perform this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Alternative Proposals. Prior to the Effective Time each
of PEL and the Selling Stockholders agree (a) that they shall not, and shall
direct and cause officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by them) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of
the assets of or any equity securities of PEL (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Alternative Proposal,
or otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal; (b) that they will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing, and it will
take the necessary steps to inform the individuals or entities referred to
above of the obligations undertaken in this Section 5.1; and (c) that they
will notify
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Parent immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with them.
Section 5.2 Interim Operations of PEL. Prior to the Effective Time,
unless Parent has consented in writing thereto, PEL:
(i) I Shall conduct its operations according to its
usual, regular and ordinary course in substantially the same manner as
heretofore conducted;
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(ii) Shall use its reasonable efforts to preserve
intact its business organizations and goodwill, keep available the services of
officers and employees and maintain satisfactory relationships with those
persons having business relationships with it;
(iii) Shall not amend its Certificate of
Incorporation or Bylaws or comparable governing instruments;
(iv) Shall promptly notify Parent of any material
emergency or other material change in its condition (financial or otherwise),
business, properties, assets, liabilities, prospects or the normal course of
its business or of its properties, any material litigation or material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach of any
representation or warranty contained herein;
(v) Shall not (A), issue any shares of its capital
stock, effect any stock split or otherwise change its capitalization as it
existed on the date hereof; (B) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock; (C) increase any compensation or enter into or
amend any employment agreement with any of its present or future officers,
directors or employees; (D) grant any severance or termination package to any
employee or consultant; or (E) adopt any new employee benefit plan (including
any stock option, stock benefit or stock purchase plan) or amend any existing
employee benefit plan in any respect;
(vi) Shall not declare, set aside or pay any
dividend or make any other distribution or payment with respect to any shares
of its capital stock or other ownership interests;
(vii) Shall not enter into any transaction, or
agree to enter into any transaction, outside the ordinary course of business,
including, without limitation, any transaction involving a merger,
consolidation, joint venture, partial or complete liquidation or dissolution,
reorganization, recapitalization, restructuring or a purchure, sale, lease or
other disposition of assets or capital stock;
(viii) Shall not incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of others;
(ix) Shall not make any loans, advances or capital
contributions to, or investments in, any other person;
(x)Shall not make or commit to make any capital
expenditures;
(xi) Shall not apply any of its assets to the
direct or indirect payment, discharge, satisfaction or reduction of any amount
payable directly or indirectly to or for the benefit of any Affiliate or enter
into any transaction with any Affiliate.
(xii) Shall not alter the manner of keeping its
books, accounts or records, or change in any manner the accounting practices
therein reflected;
(xiii) Shall not grant or make any mortgage or
pledge or subject itself or any of its properties or assets to any lien,
charge or encumbrance of any kind; and
13
(xiv) Shall maintain insurance on its tangible
assets and its businesses in such amounts and against such risks and losses as
are currently in effect.
Section 5.3 Filings; Other Action.
(a) Subject to the terms and conditions herein
provided, PEL and Parent shall use all reasonable efforts to take, or cause to
be taken, all action and do, or cause to be done, all things necessary, proper
or appropriate to consummate and make effective the transactions contemplated
by this Agreement. If, at any time after the Effective Time, any further
reasonable action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of Parent and PEL shall take all
such necessary action.
(b) (i) PEL and Parent shall give any notices to
third parties, and use all reasonable efforts to obtain any third party
consents, necessary, proper or advisable to consummate the transactions
contemplated in this Agreement.
(ii)In the event that either party shall fail to
obtain any third party consent described in subsection (b) (i) above, such
party shall use all reasonable efforts, and shall take any such actions
reasonably requested by the other party hereto, to minimize any adverse effect
upon PEL and Parent, its Subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
(c) From and after the date of this Agreement until
the Effective Time, each party hereto shall promptly notify the other of (i)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, or (ii) the failure of PEL
or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be likely to result in any condition to the obligations
of any party to effect the Merger and the other transactions contemplated by
this Agreement not to be satisfied; provided, however, that the delivery of
any notice pursuant hereto shall not cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement or otherwise limit or affect the remedies available hereunder to the
party receiving such notice.
Section 5.4 Inspection of Records. From the date hereof to the
Effective Time, PEL shall (a) allow all designated officers, attorneys,
accountants and other representatives of Parent reasonable access at all
reasonable times to the offices, records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of PEL; (b) furnish to Parent and its representatives such financial
and operating data and other information as such persons may reasonably
request; and (c) instruct the employees, counsel and financial advisors of PEL
to cooperate with the Parent and its representatives in its investigation of
PEL business.
Section 5.5 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
Section 5.6 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall, except as otherwise provided herein,
be paid by the Selling Stockholders if incurred by the Selling Stockholders or
PEL, and by Parent if incurred by Parent or Merger Sub.
14
Section 5.7 Survival of Representations and Warranties of PEL and the
Selling Stockholders. Notwithstanding any right of Parent to investigate the
affairs of PEL and notwithstanding any knowledge of facts determined or
determinable by Parent pursuant to such investigation or right of
investigation, Parent has the right to rely fully upon the representations,
warranties, covenants and agreement of the Selling Stockholders contained in
this Agreement. All such representations, warranties, covenants and agreements
shall survive the execution and delivery hereof and the Closing hereunder. All
representations, warranties, covenants and agreements made herein by Parent
and Merger Sub shall survive the execution and delivery hereof and the Closing
hereunder.
Section 5.8 Adjustments. The parties hereto agree that (i) all real
property taxes, personal property taxes, and similar ad valorem obligations
that are levied against PEL or its property, (ii) all expenses relating to
PEL's business, including, but not limited to, utilities, bank debt and trade
and accounts payable, and (ii) all revenue relating to PEL's business,
including accounts receivable, shall be apportioned between the Selling
Stockholders and Parent as of the Closing Date based on the portion of each
such expense or revenue attributable to the period falling before the Closing
Date on the one hand, which the Selling Stockholders shall bear the
responsibility and benefit of, and the portion of each such expense or revenue
attributable to the period falling on or after the Closing Date, on the other
hand, which Parent shall bear the responsibility and benefit of (the
"Post-Closing Adjustment"). On or about the 120th day following the Assumed
Closing Date, Parent shall deliver a notice to the Selling Stockholders
setting forth in reasonable detail the Post-Closing Adjustments. Within five
days of the Selling Stockholders' receipt of such notice either Parent or the
Selling Stockholders, as the case may be, shall remit to the other, the amount
equal to such Post-Closing Adjustment.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Obligation of PEL to Effect the Merger. The
obligation of PEL to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions:
(a) Parent shall have performed, in all material respects,
all of its agreements contained herein that are required to be performed by
Parent on or prior to the Closing Date, and PEL shall have received a
certificate of the President or Executive Vice President of Parent dated the
Closing Date, certifying to such effect.
(b) The representations and warranties of Parent and Merger
Sub contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing, and PEL shall have
received a certificate of the President or Executive Vice President of Parent,
dated the Closing Date, certifying to such effect.
(c) Parent shall have delivered to PEL a certified bank or
cashiers check made payable to PEL in the amount of $664,000, in full
satisfaction of all obligations of PEL to Summit Bank as assignee of First
Valley Bank.
(d) PEL shall have received the opinion of the General
Counsel of Parent, dated the Closing Date, in the form heretofore agreed to.
15
(e) Parent and the Selling Stockholders shall have entered
into an Escrow Agreement.
Section 6.2 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger. The obligations of Parent and Merger Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) PEL shall have performed, in all material respects, all
of its agreements contained herein that are required to be performed by PEL on
or prior to the Closing Date, and Parent shall have received a certificate of
the President or a Vice President of PEL, dated the Closing Date, certifying
to such effect.
(b) The representations and warranties of the Selling
Stockholders contained in this Agreement and in any document delivered in
connection herewith shall be true and correct as of the Closing, and Parent
shall have received a certificate from the Selling Stockholders, dated the
Closing Date, certifying to such effect.
(c) Parent shall have received the opinion of Xxxxxx X.
Xxxxx, P.C., counsel to PEL and the Selling Stockholders, dated the Closing
Date, in the form heretofore agreed to.
(d) The Selling Stockholders shall have executed and
delivered the Affiliate Letter addressed to Parent, substantially in the form
of Exhibit A hereto.
(e) Summit Bank shall have executed and delivered a
Certificate of Satisfaction and Release to Parent acknowledging receipt from
PEL of the aggregate amount of $664,000 in full satisfaction of all
obligations of PEL to it, and Summit Bank shall have each executed and
delivered UCC-3 Termination Statements to be filed in each office where a
UCC-1 Financing Statement is currently on file;
(f) Merger Sub shall have received the results of a title
search, in form acceptable to Merger Sub and a copy of the existing title
policy.
(g) Parent and the Selling Stockholders shall have entered
into an Escrow Agreement.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned, by written notice promptly given
to the other parties hereto, at any time prior to the Effective Time, whether
prior to or after approval by their respective stockholders:
Section 7.1.1 By mutual written consent of Parent and PEL;
Section 7.1.2 By either Parent or PEL, if a court of
competent jurisdiction or a Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and nonappealable;
16
Section 7.1.3 By Parent, if PEL fails to perform in all
material respects its obligations under this Agreement;
Section 7.1.4 By Parent, if there shall have occurred a PEL
Material Adverse Change since the date of this Agreement; or
Section 7.1.5 By PEL, if Parent fails to perform in all
material respects its obligations under this Agreement.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement and abandonment of the Merger as provided in Section 7.1
hereof, this Agreement shall forthwith become void and there shall be no
liability on the part of Parent or PEL, except as set forth in this Section
hereof and Article VIII and except to the extent that such termination results
from the willful breach of a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Obligation of the Selling Stockholders to Indemnify. Each
of the Selling Stockholders shall indemnify, defend and hold harmless Parent
and its assigns from and against any losses, liabilities, damages or
deficiencies (including interest, penalties and reasonable attorneys' fees and
disbursements) ("Losses") based upon, arising out of or otherwise in respect
of:
(i) the breach of any representation, warranty,
covenant or agreement of PEL or the Selling Stockholders
contained in this Agreement or in any document or other
writing delivered pursuant to this Agreement (determined for
this purpose as if all references to knowledge and
materiality are deleted); and
(ii) any liability or obligation of PEL arising
either prior or subsequent to the Effective Date which is
not expressly referred to in this Agreement or, if such
liability or obligation is expressly referred to in this
Agreement, to the extent the actual liability or obligation
exceeds the amount of such liability or obligation as herein
stated or identified; and
(iii) any liabilities or obligations of PEL
arising prior to the Closing Date other than those
specifically assumed hereunder.
8.2 Obligation of Parent to Indemnify. Parent shall
indemnify, defend and hold harmless each of the Selling Stockholders from and
against any losses, liabilities, damages or deficiencies (including interest,
penalties and reasonable attorneys' fees and disbursements) ("Losses") arising
out of or due to a breach of any representation, warranty, covenant or
agreement of Parent contained in this Agreement or in any document or other
papers delivered by Parent pursuant to this Agreement (determined for this
purpose as if all references to knowledge and materiality are deleted).
8.3 Notice and Opportunity to Defend. If any party (the
"Indemnitee") receives notice of any claim or the commencement of any action
or proceeding with respect to which any other party (or parties) is obligated
to provide indemnification (the "Indemnifying Party") pursuant to Section 8.1
or 8.2, the Indemnitee shall promptly give the Indemnifying Party notice
thereof; provided, however,
17
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure. The Indemnified Party shall
have the right to retain counsel of its own choice to represent it, and the
Indemnifying Party shall pay the fees, expenses and disbursements of such
counsel; and such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Indemnifying Party and any
counsel designated by the Indemnifying Party. The Indemnifying Party shall be
liable for any settlement of any claim against the Indemnified Party made with
the Indemnifying Party's written consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the prior
written consent of the Indemnified Party, settle or compromise any claim, or
permit a default or consent to the entry of any judgment in respect thereof,
unless such settlement, compromise or consent includes, as an unconditional
term thereof, the giving by the claimant to the Indemnified Party of an
unconditional release from all liability in respect of such claim.
8.4 Escrow Fund. The obligations of the Selling Stockholders
under Section 8.1 shall be satisfied first from the Escrow Fund and, if the
Escrow Fund is inadequate to provide indemnification in full, then directly
from the Selling Stockholders.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Notices. Any notice required to be given hereunder shall
be sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Parent or Merger Sub: If to PEL:
Family Golf Centers, Inc. Pinley Enterprises, Ltd.
000 Xxxxxxxxxxx Xxxx 0 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Senior Vice Attn: Xxxxxx X. Xxxxxxxxx
President Fax: (215)
Fax: (000) 000-0000
With copies to: With copies to:
Family Golf Centers, Inc. Xxxxxx X. Xxxxx, Esq.
000 Xxxxxxxxxxx Xxxx 0000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000 Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, General Counsel Attn: Xxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000 Fax: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
Section 9.2 Assignment, Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of
18
law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
Section 9.3 Entire Agreement. This Agreement and any documents
delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
Section 9.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to its rules of conflict of laws.
Section 9.6 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
Section 9.7 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.
Section 9.8 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
Section 9.9 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or
be construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
Section 9.10 Incorporation of Schedules and Exhibits. The Schedules
and Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein.
Section 9.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 9.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to seek
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an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
FAMILY GOLF CENTERS, INC.
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
PHILADELPHIA FAMILY GOLF CENTERS, INC.
By:/s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
PINLEY ENTERPRISES, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
/s/ Xxxxxx Xxxxxx
-------------------------------
XXXXXX XXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
XXXXXX X. XXXXXXXXX
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